TMI Tax Updates - e-Newsletter
July 7, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Taxability of trust - liability to deduct TDS u/s 194A - receipt of interest income - it is evident that whole of their income was exempt u/s 10(25) and 10(23AAA) of the Act. Therefore, there was no liability in respect of these trusts, warranting TDS u/s 194A - AT
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Income Tax:
Deduction u/s.80IA(4) - the contractor, who undertakes for road Widening of the National Highways from 2 lines to 4 lines, is eligible for deduction u/s 80IA(4) - AT
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Income Tax:
Disallowance of corporate social responsibility expenses - There is no dispute that the expenses in question are not incurred under the aforesaid statutory obligation. For this reason also, as also for the basic reason that the Explanation 2 to Section 37(1) comes into play with effect from 1st April 2015, we hold that the disabling provision of Explanation 2 to Section 37(1) does not apply on the facts of this case. - AT
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Income Tax:
Prize money winning out of unsold lottery tickets - business income OR income from other sources - A.O. treated this income separately and assessed the income as income from other sources and assessed tax accordingly - ITAT upheld the decision of CIT(A) who has deleted the additions - AT
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Income Tax:
Depreciation on golf course - @ 25% under the category of plant machinery OR 10% as allowable in the case of building which includes golf course - AO could not get an opportunity to verify and examine the same - matter remanded back - AT
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Income Tax:
Claim of refund - Condonation of delay in filing the return - genuine hardship - application u/s 119(2)(b) - The search and seizure proceedings were conducted on 23 group concerns of the assessee. Within one month, it was not possible for the petitioner to file return - delay condoned - HC
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Income Tax:
Reopening of assessment - suppression of sale - excise duty evasion proceedings were pending - When thus the AO had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as invalid - HC
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Income Tax:
Attachment orders u/s 281B - Assessment u/s 153A in pursuance of Search is pending - the orders of attachment directed to be lifted upon fulfillment of certain specific conditions - HC
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Income Tax:
Transfer of assessment cases u/s 127(2) - The power of transfer of cases therefore, would have to be exercised in proper cases when sufficient material on record justify such action. - HC
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Income Tax:
Maximum marginal rate u/s 164 - answerability of trustees to beneficiary is limited to beneficiary of a particular trust as per Trust Act and it cannot be stretched or reached to beneficiaries of beneficiary and then against beneficiaries’ beneficiary. - HC
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Income Tax:
Disallowance made under Section 80IA(4) - development of the infrastructure facilities or not - income from the container freight station (CFS) - appellant was declared as custodian of the containers - benefit of exemption allowed - HC
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Income Tax:
Amendment to Section 133(6) is constitutional valid - enough safeguard has been provided towards right to privacy - Co-operative Banks are expected to give out the details of its customers when required u/s 133(6) - Division bench HC uphold the decision of single member bench.
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Income Tax:
Penalty u/s 271D and 271E - assessee has accepted the deposits from its employee and members in cash, in violation of provisions of Section 269SS and 269T - All the members are agriculturists - the members of the society mostly reside in village with no banking facility - No penalty - HC
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Income Tax:
Revision u/s 263 - taxability of advances received - CIT had only tried to initiate proceedings with a view to start fishing and roving enquires in matters or orders which are already concluded - revision set aside - AT
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Income Tax:
The assessee's claim for exemption u/s 10A had been always allowed by the AO in the preceding financial years. It is a settled principle of law that a claim made u/s 10A for a particular year cannot be disallowed unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside - AT
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Customs:
Valuation - the ship demurrage charges cannot be included in the discharges of custom duty on the imported goods even if the assessments are made provisionally - AT
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Customs:
Second hand photocopiers are ‘capital goods’ and no licence is required for importing the same under the EXIM Policy - AT
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Service Tax:
Challenge to the Show Cause Notice (SCN) - Maintainability of writ petition - Business Auxiliary services (BAS) - The petitioner is a cricketer and is a former captain of the Indian Cricket Team - amounts received for writing articles in sports magazines as well as fee received for anchoring TV shows on Zee Bangla. - The show cause notice is hopelessly barred by limitation - demand set aside - HC
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Service Tax:
Claim of refund - refund claim was not accompanied by Form A-1 as provided in Notification No-17/2011 ST dated 01-03-2011 - service tax paid on purchase of software license meant for the authorized operations in their SEZ unit - refund allowed - AT
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Central Excise:
Demand of duty on export of goods without payment of duty - short shipped/shot export of goods - export of Linear Alkyl Benzene (LAB) under UT-I for export under the provision of Rule 19 of Central Excise Rules, 2002 - Natural loss allowed vide Circular No. 292/8/97-CX dated 24.01.1997 for NGL cannot be extended to LAB - Demand confirmed - CGOVT
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Central Excise:
Rebate / refund claim on export of goods - non-realization of foreign exchange - exporter has not submitted (BRCs) in respect of export clearances, even after lapse of substantial time - rebate denied - CGOVT
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Central Excise:
Loss of goods during manufacturing - Remission of duty on storage losses cannot be claimed by the respondent even when no remission application has been filed by them and it is established to the satisfaction of the competent authority that such loss is due to circumstances referred to in Rule 21 ibid. - CGOVT
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Central Excise:
Rebate of duty of input stage on export of goods - Rule 18 - excisable goods were cleared for export by them in respect of ARE-2, without obtaining prior permission of the Assistant Commissioner of Central Excise to the effect in terms of Notification No. 21/2004CE(NT) dated 06.092004 - Mandatory procedure cannot be ignored - rebate denied - CGOVT
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Central Excise:
Rebate claim of duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002 - applicant failed to follow procedure of self sealing and failed to submit triplicate and quadruplicate ARE-I - Denial of rebate is correct - CGOVT
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Central Excise:
Recovery of Rebate/ refund granted earlier - input stage rebate under Rule 18 had been granted to the respondent based on input output declaration which was subsequently found to be incorrect - demand confirmed - CGOVT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2016 (7) TMI 215
Claim of refund - Condonation of delay in filing the return - genuine hardship - application u/s 119(2)(b) - Held that:- It is clear that a search operation was carried out at the residence of members of the management of the company and the office of the company and its sister concerns. The authorities had seized thousands of loose papers, books of accounts of the company, hard disc and other relevant documents. The petitioner received seized material finally on 21.10.2013. The papers were thousands in numbers and entries were running on lacks. Documents, prior to the aforesaid date, were not in possession of the petitioner. Hence, the petitioner was not able to finalize the accounts and determine the tax liability. The search and seizure proceedings were conducted on 23 group concerns of the assessee. Within one month, it was not possible for the petitioner to file return because the petitioner in the return disclosed total income of ₹ 2,65,57,04,226/-. Petitioner claimed refund of ₹ 2,08,73,620/-. The business of the petitioner is quite huge. The seizure operations were carried out at headquarter of the petitioner company, residence of office bearers and near about 28 sister concerns. In these circumstances, looking to the magnitude of accounts, it is unreasonable to hold that the petitioner could have had completed the process within a period of one month after receiving the final set of documents on 21.10.2013. In our opinion, in the facts and circumstances of the case, there was “ genuine hardship” to the petitioner in not filing the return within time. Hence, it would be just and proper to condone the delay.
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2016 (7) TMI 214
Reopening of assessment - suppression of sale - excise duty evasion proceedings were pending - Held that:- The entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. - Decided against assessee
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2016 (7) TMI 213
Attachment orders u/s 281B - Assessment u/s 153A in pursuance of Search is pending - estimated tax liability - Held that:- Since the assessment pursuant to the search operations is pending, we would not comment on rival claims of the possible additions that may be made in the total income of the assessee. However, going by the rough formula presented by the revenue and in order to strike a balance between protecting the interest of the revenue and at the same time allowing the petitioner to carry on its normal business, we propose to provide for a formula. Even if the figure of addition of ₹ 60 and odd crores is taken for the purpose of roughly estimating the possible tax liability, the same cannot exceed ₹ 25 crores, at least of principal tax. As noted the contention of the counsel for the petitioner that number of immovable properties of the petitioner are unencumbered and free from any charge. Jantri value of such properties runs into several hundred crores of rupees. However, the petitioner company may be in the process of developing, constructing upon or selling such properties as part of its business activities. In view of such facts, the orders of attachment are directed to be lifted upon fulfillment of following conditions: I. The petitioner shall keep immovable properties unencumbered, not creating any charge whose jantri value together shall not be less than ₹ 25 crores till the assessments pursuant to notice under section 153A are completed. II. The petitioner shall give a list of such properties to the department latest by 05.07.2016 alongwith which, the petitioner shall indicate the current jantry rate with supporting documents. The petitioner shall also file an affidavit stating that such properties are free from any encumbrance and that the petitioner shall not create any charge on such properties till the assessments are completed. III. As soon as this is done, the order of attachment qua rest of the properties shall automatically stand lifted. In other words, the petitioner would be free to deal with the rest of the properties. IV. Jayantibhai Dalsukhbhai Panchal, the director of the petitioner company, who has sworn this petition, shall file an undertaking before this Court latest by 05.07.2016 declaring that whatever the tax with interest and penalty liabilities are ultimately crystallized, company shall pay to the department.
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2016 (7) TMI 212
Transfer of assessment cases - Power of the Principal Commissioner of Income-tax to transfer the case u/s 127(2) - Held that:- While recognizing wide discretionary powers of the competent Revenue Authorities to transfer assessment cases under section 127 of the Act in public interest, the Court also recognized a degree of prejudice or inconvenience that may be caused to the assessee whose assessment may be lifted from his principal place of business and may be put at the disposal of an assessing authority who may be situated at another place far away from the assessee's place of business. The power of transfer of cases therefore, would have to be exercised in proper cases when sufficient material on record justify such action. This is, however, not to suggest that transfer of cases for effective investigation and coordination can be resorted to only in cases of assesses who are subjected to search operations. This requirement may arise in other circumstances also. However, the sufficiency of reasons would have to be judged from case to case basis. In the present case, we find no such justification. Entire approach of the Principal Commissioner, was erroneous since he proceeded on an incorrect premise that the petitioner also was subjected to search operation. There being no further reliable material justifying such consolidation of cases, impugned order is set aside.
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2016 (7) TMI 211
Revision u/s 263 on ‘Protective basis’ - Maximum marginal rate u/s 164 - whether the income did not ‘accrue’ or ‘arise’ to the specific beneficiary (the assessee) ? - whether CIT had no jurisdiction u/s 263 of the Act for direction for invoking the provisions of section 164(1) of the Act and also giving further finding that the statement in writing submitted under Explanation 1 to section 160(1) signed by one of the Trustees was not valid and hence the provisions of section 164A could not be applicable resu8lting in levy of tax at maximum marginal rate of tax? Held that:- As decided in Neo Trust [1992 (1) TMI 138 - ITAT AHMEDABAD-B] if a specific trust is having its beneficiaries, few as individuals and few as discretionary trusts, but share of each of individual as well as discretionary trusts is specific, keeping in view that trustees of First Level Trust are to be considered as representative assessee and they represent share of beneficiary, Assessing Officer can assess income of First Level Trust at maximum marginal rate as per section 164 to extent of respective share of such beneficiary trust (discretionary trust) and at normal rate as per section 161 to extent of share of individual beneficiaries. It is further held by this court that however if Second Level Trust which is a beneficiary of First Level Trust is found to be specific, then assessment of First Level Trust should rest there and assessment of First Level Trust would be made as per section 161; it would be wrong to contend that if beneficiary of Second Level Trust is a discretionary trust, then beneficiary of First Level Trust can also be taxed at maximum marginal rate under section 164 inasmuch as relationship between trustees in representative capacity and answerability of trustees to beneficiary is limited to beneficiary of a particular trust as per Trust Act and it cannot be stretched or reached to beneficiaries of beneficiary and then against beneficiaries’ beneficiary. Also see KV. Patel Family Trust Versus CIT [2014 (8) TMI 601 - GUJARAT HIGH COURT] In view of the aforesaid legal position, we answer the reference in favour of assessee
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2016 (7) TMI 210
Disallowance made under Section 80IA(4) - development of the infrastructure facilities or not - income from the container freight station (CFS) - appellant was declared as custodian of the containers and the imported goods received in containers from Haldia Dock Complex and the goods meant for export through Haldia Port via their CFS - Tribunal deleted the addition - Held that:- Substantial questions of law have already been answered against the revenue in the case of Commissioner of Income Tax Vs. A.L.Logistics Pvt Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] . Though A.L.Logistics's case have been challenged by the revenue before the Hon'ble Supreme Court, we are of the considered view that there cannot be any impediment in following the said decision to cases arising out of similar set of facts and law. However, when a petition is filed before the Hon'ble Supreme Court seeking leave to appeal and the same having been converted into an appeal by the Supreme Court, the High Court should not entertain a review petition. The High Court also cannot reverse and modify the order impugned before the Supreme Court. But the judgment rendered by the High Court is not erased. - Decided in favour of assessee
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2016 (7) TMI 209
Constitutional validity of the amendment to Section 133(6) - right to privacy - it was contended that, the Co-operative Banks are not expected to give out the details of its customers even under the Right to Information Act, the attempt to elicit such details through a notice issued under Section 133(6) is totally vitiated and arbitrary. - Held that:- The learned single Judge in its decision [2015 (1) TMI 1121 - KERALA HIGH COURT] after considering the safeguards incorporated in the statute found that sufficient guidelines were provided to guard against possible misuse of the provision. The decisions cited on either side have also been considered in extenso. The learned single Judge came to the conclusion that there was no arbitrariness or constitutional invalidity in the amendment in question. The standards to be applied when deciding the constitutional validity of a fiscal statute were also dealt with. The question whether right to privacy is a fundamental right or only a legal right as recognized in the Law of Torts is itself pending consideration before a Constitution bench of the Apex Court having been referred for an authoritative pronouncement by a three member bench in Justice K.S.Puttuswamy v. Union of India [2015 (8) TMI 526 - SUPREME COURT]. Even if it is a necessary corollary to the right to life, such a right would be subject to the reasonable restrictions which could be imposed by the State in exercise of its legislative power. When a legislation, especially one in the fiscal realm is being examined by courts to check whether it infringes the right of individuals to privacy in own affairs, it has to be borne in mind that the larger public and economic interest of nation is to be balanced against such right to privacy. All decisions which have espoused the right to privacy have been cautious in pointing out that such rights would not extend to militate against right of the State to gather information under its fiscal administration. - writ petition dismissed - Decided against the assessee. We do not find any ground to interfere with the decision of the learned single Judge in exercise of appellate jurisdiction through this intra court appeal filed under Section 5 of the Kerala High Court Act. These appeals therefore fail.
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2016 (7) TMI 208
Penalty u/s 271D and 271E - assessee has accepted the deposits from its employee and members in cash, in violation of provisions of Section 269SS and 269T - ITAT deleted the penalty - Held that:- All the members are agriculturists and having income from the agricultural activities. It has come on record that the members of the society mostly reside in village, which do not have any banking facility. The specific stand of the assessee before the AO was that amount was received from the employee and members of the society on account of urgent need as amanat rashi and no loan deposit was received by the society from any outsider. Precisely, the stand of the assessee was that it was under bona fide belief that amanat rashi received from its members do not constitute loan or deposit, which is required to be accepted by account payee cheque or draft. It is to be noticed that the AO had not given any finding whatsoever for rejecting the stand taken by the assessee, however, the CIT (A) and ITAT have concurrently found that the assessee, a cooperative society, working in remote area, ignorant about the relevant provisions, accepted the funds received as amanat rashi under the bona fide belief that the same do not constitute deposit or loan. The CIT (A) and ITAT have found the explanation furnished by the assessee in detail, as constituting reasonable cause in terms of provisions of Section 273B of the Act and thus, the finding arrived at by the CIT (A), affirmed by the ITAT, after due consideration of all the relevant aspects of the matter regarding the reasonable cause for failure on the part of assessee in complying with the provisions of Section 269SS and 269T, cannot be said to be capricious or perverse. No substantial question of law arises - Decided against revenue
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2016 (7) TMI 207
Revision u/s 263 - taxability of advances received - fishing and roving enquires - Held that:- We find that the assessee had placed various orders on record to prove that the advances received were already taxed in earlier years in piecemeal basis. We find that out of the advances received, ₹ 21,50,825/- , ₹ 48,86,847/-, ₹ 11,11,817/- , ₹ 5,06,066/- , ₹ 5,66,952/- were taxed in Asst Years 1999-2000 to 2003-04 respectively and ₹ 50,75,641/- was taxed in Asst Year 2005-06 in scrutiny proceedings. We find that merely because no adjustment entries were passed by the assessee in his books by transferring the advances received to its income, it could be seen beyond doubt that no concealment of income towards advance received has been made thereon. Hence the action of the assessee and consequential order passed by the ld. AO for Asst Year 2008- 09 cannot be treated as prejudicial to the interests of the revenue. We hold that the ld. CIT had only tried to initiate proceedings with a view to start fishing and roving enquires in matters or orders which are already concluded. Entire revision proceedings had been triggered merely on the basis that the advances received were remaining outstanding in the balance sheet as on 31.3.2008. This might at best could be construed only as an error committed by the assessee in his books. But that does not make the order of the ld. AO erroneous. In these circumstances, it could only be inferred that the ld. AO had taken one of the possible views by duly appreciating the contentions of the assessee that the advance received had already been taxed in the earlier years and he had rightly not brought the same to tax in the assessment even though the same is framed u/s 144 of the Act. Thus the order passed by the ld. AO is neither erroneous nor prejudicial to the interests of the revenue. Accordingly, the order passed by the ld. CIT u/s 263 of the Act is hereby quashed - Decided in favour of assessee
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2016 (7) TMI 206
Claim of exemption u/s 10 A - profit attribution between SEZ and non SEZ unit - Held that:- Assessee never stated before the ld. AO that no exports were made to Afghanistan and Pakistan from its non SEZ unit, instead it had only stated that exports from SEZ unit were made to Afghanistan and Pakistan. We hold that doubting the veracity of the transactions on this flimsy ground is not warranted. We hold that the assessee indeed had indulged in manufacturing activities in its SEZ unit during the year under appeal and had only continued the same from the earlier years. The previous year relevant to the Assessment Year 2011-12 is the seventh and the last year of availability of exemption u/s. 10A of the Act. The assessee's claim for exemption under section 10A of the Act had been always allowed by the assessing officer in the preceding financial years. It is a settled principle of law that a claim made under section 10A for a particular year cannot be disallowed unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside. When there is no change in the facts which were in existence during the earlier years with that of a subsequent assessment year, then the Income Tax officer cannot withdraw the claim for exemption under section 10A of the Act for subsequent years. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years. AO had not reworked the profits attributable to SEZ and non SEZ unit to justify his suspicion. In any case, there cannot be any outright rejection of the claim of exemption u/s 10 A of the Act. We find that the entire disallowance of claim of exemption u/s 10A of the Act which has been consistently claimed by the assessee over the years have been made by the ld. AO only on suspicion , surmise and conjecture and accordingly we have no hesitation to delete the same - Decided in favour of assessee TDS u/s 194C - Non deduction of tds on payment towards job work charges - addition u/s. 40(a)(ia) - Held that:- We find that the issue needs to be set aside to the file of the ld.AO to decide the issue afresh in the light of the decision rendered in Ansal Land Mark [2015 (9) TMI 79 - DELHI HIGH COURT ] wherein it was held that the second proviso to section 40(a)(ia) of the Act has been held to be retrospective in operation and accordingly no disallowance u/s 40(a)(ia) of the Act could be made in the hands of the payer (assessee herein) ) and the assessee is directed to produce evidence of the payee records to prove that the said job charges have been duly included in the returns filed by the said job worker. If the same is proved, then we direct the ld. AO not to make any disallowance u/s 40(a)(ia) of the Act in terms of second proviso to section 40(a)(ia) of the Act. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 205
Taxability of trust - liability to deduct TDS u/s 194A - receipt of interest income - whether the assessee's income was exempt under sections 10(25) and 10(23AAA)? - Held that:- The Punjab State Cooperative Bank Pension Fund and Board of Trustee Provident Fund are approved trusts created by assessee for the purpose of pension fund and Provident Fund respectively. Assessee has also enclosed copies of returns filed for assessment year 2012-13 in the case of Punjab State Cooperative Bank Pension Fund and Board of Trustee, Provident Fund. These entities have duly filed returns of income under section 139(1) of the Act. On perusal of the same, it is evident that whole of their income was exempt under sections 10(25) and 10(23AAA) of the Act. Therefore, there was no liability in respect of these trusts, warranting tax deduction at source under section 194A of the Act. Consequently, the orders passed under sections 201(1) and 201(1A) of the Act are liable to quashed in the facts and circumstances of the case. Assessee had furnished a certificate issued by the Chairman of Board of Trustees, Punjab State Cooperative Bank Ltd., Pension Fund, stating that they are in receipt of an amount as interest on term deposit with the assessee bank and the same was duly accounted in its books of account and the return of income has been filed for the relevant assessment year. Similar certificate is also issued by Punjab State Cooperative Bank, Provident Fund Trust. Therefore, it is evident from the certificates that these two entities who are in receipt of interest income from the assessee had duly accounted the same in their books of account and filed their return of income for the concerned assessment year. Hon'ble Apex Court in the case of Hindustan Coca-cola Beverages (P) Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA) had held that the recovery of tax cannot be made from the deductor when the deductee had filed the return and paid the tax on the same. - Decided in favour of assessee TDS u/s 194A - interest paid to Housefed Punjab and KRIBHCO - Held that:- On reading the memorandum of Finance Bill, 2015, it is clear that the exemption provided under section 194A(3)v) of the Act with regard to deduction of tax at source from interest payment by a cooperative society to another cooperative society existed before the amendment, and continue to apply to the cooperative bank even after the amendment. It was made further clear that such exemption to cooperative bank is available only when the depositor is a cooperative society. In the instant case, Housefed Punjab and KRIBHCO are cooperative societies who are members with the assessee society and interest received by them was exempted for tax deduction at source under section 194A(3)(v) of the Act. Hence, as rightly pointed out by the CIT (Appeals), the assessee was not liable under section 201(1) of the Act as an assessee in default for not deducting the tax under section 194A of the Act and consequently, interest under section 201(1) of the Act cannot also be levied. - Decided in favour of assessee
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2016 (7) TMI 204
Disallowance u/s.80IA(4)- income derived from activity of development of eligible infrastructural facilities - Held that:- As decided in assessee's own case for AY 2008-09 the assessees of this kind are deemed fulfilling the conditions specified in the said sub-section (4) of Section 80IA of the Act. It is the finding of the Hyderabad Bench of the Tribunal in the case of' M/s KMC Constructions Ltd (2012 (5) TMI 181 - ITAT HYDERABAD ) that the contractor, who undertakes for road Widening of the National Highways from 2 lines to 4 lines, is eligible for deduction u/s 80IA(4) - Decided in favour of assessee
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2016 (7) TMI 203
Overburden removal expense - revenue or capital expenditure - Held that:- The overburden removal is a continuous process even as the coal extraction is on and there is removal of overburden from between the coal seams as well. It is not a onetime process that the removal of overburden takes the assessee to a stage where the coal can be extracted without any further activities to be carried out so far as overburden removal is concerned. The mechanism of open cast mining, on the first principles, is such that removal of overburden is a continuous process. For these reasons also, removal of overburden cannot seen in an isolated manner as a capital expenditure. Ironically, even as the case involves substantial tax revenue, the manner in which the authorities below have dealt with the matter, as would be evident from extracts reproduced earlier, is somewhat superficial and leaves a lot to be desired. The authorities below have not even set out, or dealt with, break up or the exact nature of expenses or the complete details of nature of work carried out under, what is termed as, mine development. Be that as it may, under the scheme of the Act, it is not for this Tribunal to supplement the work of the Assessing Officer or to go the areas which he has left untouched. Given this legal position, the views of the coordinate bench are equally applicable on the facts before us as well. We, therefore, see no reasons to take any other view of the matter than the view taken by the coordinate bench in the case of Northern Coalfield Ltd (2015 (6) TMI 36 - ITAT JABALPUR). - Decided in favour of assessee Disallowance of corporate social responsibility expenses - CIT(A) deleted the addition - Held that:- the amendment in the scheme of Section 37(1) is not specifically stated to be retrospective and the said Explanation is inserted only with effect from 1st April 2015. In this view of the matter also, there is no reason to hold this provision to be retrospective in application. As a matter of fact, the amendment in law, which was accompanied by the statutory requirement with regard to discharging the corporate social responsibility, is a disabling provision which puts an additional tax burden on the assessee in the sense that the expenses that the assessee is required to incur, under a statutory obligation, in the course of his business are not allowed deduction in the computation of income. This disallowance is restricted to the expenses incurred by the assessee under a statutory obligation under section 135 of Companies Act 2013, and there is thus now a line of demarcation between the expenses incurred by the assessee on discharging corporate social responsibility under such a statutory obligation and under a voluntary assumption of responsibility. As for the former, the disallowance under Explanation 2 to Section 37(1) comes into play, but, as for latter, there is no such disabling provision as long as the expenses, even in discharge of corporate social responsibility on voluntary basis, can be said to be “wholly and exclusively for the purposes of business”. There is no dispute that the expenses in question are not incurred under the aforesaid statutory obligation. For this reason also, as also for the basic reason that the Explanation 2 to Section 37(1) comes into play with effect from 1st April 2015, we hold that the disabling provision of Explanation 2 to Section 37(1) does not apply on the facts of this case. - Decided against the revenue.
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2016 (7) TMI 202
Prize money winning out of unsold lottery tickets - business income OR income from other sources - A.O. treated this income separately and assessed the income as income from other sources and assessed tax accordingly - CIT(A) deleted the additions - Held that:- in the other years the Revenue has not disputed the winning from the lottery which was subject to TDS as income from other sources. We also find that there is a clear finding of AO with regard to the income arising to an agent in respect of prize on unsold/unclaimed lottery tickets is business income. There is no doubt that the assessee is an authorized agent of Government of West Bengal. Further, we also find that the tickets which have not be sold during the year, there is no need to mention the stock of these tickets as it has no value at all. So the reason for not allowing the claim of the assessee that the tickets which won the prize are not reflecting in the closing stock audited financial statement is not tenable. It is pertinent to note that the AO accepted a business loss at 2,56,31,331.00 as claimed by the assessee for the assessment year under consideration as against the business loss sustained by the assessee of ₹ 2,08,32,311.00 vide profit and loss account and such loss can be attributed was mainly due to unsold tickets. In view of the above discussion, that the prize money on unsold tickets is a business income and not the income from other sources as held by the AO. Therefore, the order of CIT-A is justified in deleting the addition made by the AO - Decided in favour of assessee Cash deposits found in bank account as unexplained investment under section 69 - Held that:- The assessee discharged its duty in giving details regarding the identity of all the parties before the authorities, now onus shifts to revenue authorities to bring evidence contrary to submissions of the assessee. We also conscious of the fact that the concerned financial year is 2003-04 and the summons were sent in the year 2012 and all the three parties either closed the business or changed to other business and we also find force in the arguments of the Ld.AR that the parties in the lottery ticket business are illiterate and doing their business in villages in unorganized manner. Therefore, we are of the view that the assessee submitted all the details of the seven parties and offered its explanation that the said amounts were received from debtors as security deposit before the AO as required under section 69 of the Act and there was no evidence contrary to assessee except the summons were not served and in our view it is not sufficient to attract the provision under section 69 of the Act, thus, the order of CIT-A is not justified with regard to three parties i.e Archana Nandi, New Kalpataru Agency, Shri Jahar Saha and Shri Dhiren and addition made by the AO to an extent of ₹ 21,00,000/-is deleted and sole ground raised by the assessee in cross objection is allowed.- Decided in favour of assessee
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2016 (7) TMI 201
Reopening of assessment - Held that:- On a vigilant perusal of documents and details referred by the counsels and reasons for reopening of assessment, it is amply clear that the assessee did not classify the golf course as per provisions of the Act as to whether it is part of ‘building’ or ‘plant and machinery’ and claimed depreciation @ 25% which was allowed @ 10% only in A.Y. 2003-04 and thus, in our considered opinion it can safely be presumed that the assessee did not disclose all material facts fully and truly for the claim of deprecation on golf course. Further, we are also in agreement with the contention of the ld. CIT-DR that the assessee did not properly disclose income from Labunum Project as per percentage completion method because page No. 4 of the assessee’s paper book reveals that entire sales was completed upto A.Y. 2001-02 and only there was a sale of ₹ 3,10,99,749/- in F.Y. 2001- 02 which is less than 2% of the total sales which resulted into under statement of income from sale of apartments of ₹ 3.89 crores. From the assessee’s paper book page 89, note on Labunum profitability it has been mentioned that profit for the F.Y. 2000-01 has been arrived on the basis of matching the revenue for the number of apartments sold in the F.Y. with the corresponding cost of the apartment and to support this factual contention, the assessee also enclosed a statement on profitability from Labunum Project which reveals that total sale value was of ₹ 174.99 crores whereas the Revenue recognised from sales was 171.10 crores resulting into understatement of sale receipts by ₹ 3.89 crores and this treat6metn given by the assessee was not in accordance with the well accepted principles of percentage of completion accounting method. Thus, these facts clearly establish the mistake apparently showing that there was failure on the part of the assessee to disclose all relevant facts necessary for assessment truly and fully for the period under assessment. Hence, the AO was well within his valid jurisdiction while issuing notice u/s 148 of the Act beyond four years for initiation of proceedings of reassessment u/s 147 of the Act. On the third issue, the ld. AR fairly submitted that after settlement of interest in respect of loan advanced by M/s Gilt Facilities P. Ltd, the amount of interest including ₹ 61,11,162/- was related to prior period and not for A.Y 2001- 02. As per the details filed during the assessment proceedings available at pages 31 to 45 of assessee’s paper book, it is amply clear that on 16.4.2001, Gilt Facilities confirmed the calculation forwarded by the assessee that an amount of ₹ 1,28,74,844/- was accepted as due from the assessee to M/s Gilt Facilities P. Ltd as interest on surplus money lying with the assessee. This calculation undisputedly includes impugned amount which clearly shows that the interest amount of ₹ 61.11 lakhs was not related to A.Y 2001-02. In our considered opinion, from the correspondence copy of the agreement dated 16.8.1995 between the assessee and M/s Gilt Facilities P. Ltd it is clear that an agreement was entered with the said company and because there was a delay on the part of the assessee company, therefore, as per agreement, M/s Gilt Facilities P. Ltd vide letter dated 16.2.2001 demanded interest on unutilised amount @ 25% per annum and the assessee vide reply dated 20.3.2001 informed M/s Gilt Facilities P. Ltd that interest @ 16% per annum is acceptable and finally vide letter date 31.3.2001, M/s Gilt Facilities P. Ltd accepted the proposal of the assessee and this liability stood crystallised during the period under consideration. In view of above facts, it cannot be said that the assessee did not disclose truly and fully all material facts on the issue of interest claim. Therefore, on the third count, action of the AO cannot be held as valid for assuming jurisdiction to reopen the assessment and to issue the notice u/s 147/148 of the Act. Addition being the difference between the budget cost of the flats - Held that:- From the statement submitted by the assessee during the assessment proceedings, available at page 5 and 6 we observe that the assessee has recorded total sales value of ₹ 174.99 crores whereas sales value has been recognised @ 98% of ₹ 171.10 crores and proportionate project cost of ₹ 156.15 crores has been debited to Profit and loss account and in our humble understanding, this calculation is not in accordance with percentage of completion method. If assessee has incurred some more cost in the subsequent A.Ys, but the total sales value was received during the year under consideration, then the sales value has to be recognise accordingly. In view of the above, we are of the considered opinion that the issue requires examination and verification at the end of the AO according to the percentage of completion method consistently and regularly followed by the assessee and accepted by the department. Therefore, this issue is restored to the file of the AO for a fresh adjudication after affording due opportunity of being heard to the assessee. Treatment to prior period interest as expenditure of the year under consideration - Held that:- The alleged interest amount relates to prior period however, it was accrued and crystallised during the financial period under consideration and entire amount was paid to Gilt was parted after deduction of tax at source and same amount was offered to tax by the recipient Gilt Facilities P. Ltd. From the copies of the agreement dated 16.8.1995 and correspondence between the assessee and M/s Gilt Facilities P. Ltd, it is clear that the issue of interest was raised and settled during F.Y. 2000-01 and the assessee paid interest to M/s Gilt Facilities P. Ltd as per computation agreed between them. However, from the copy of the chart showing the calculation of total interest amount paid by the assessee to M/s Gilt Facilities P. Ltd reveals that the impugned amount was related to prior period but during the prior period there was no occasion for the assessee to claim the same as expenditure because this liability was accrued and crystallised after long conversation and correspondence with the Gilt Facilities P. Ltd as per agreement dated 16.8.1995 and the assessee paid amount after deduction of tax and the same was offered to tax by the recipient Gilt Facilities P. Ltd during A.Y 2001-01. Depreciation on golf course - @ 25% under the category of plant machinery OR 10% as allowable in the case of building which includes golf course - Held that:- Facts regarding this issue have to be dealt in respect to golf course of 300 acres land and how it became plant and machinery attracting 25% depreciation. The AO has to examine these details to ascertain the issue between the parties as stated above. We also note that the assessee in its written submissions before the authorities below as well as before the Tribunal has submitted the details of construction on the 300 acres of land converting it into a golf course, but these details have not been submitted before the AO and the AO could not get an opportunity to verify and examine the same. Therefore, in our considered opinion, this issue requires detailed verification and examination at the end of the AO after affording due opportunity of hearing to the assessee and without being prejudiced from the earlier assessment and first appellate order. Addition being the capital gain on agreement to sale - Held that:- CIT(A) was right in drawing conclusion that there was neither sale of land nor transfer of possession as per clause (i) to (v) of section 2(47) of the Act pertaining to sale of immovable property and he rightly concluded that these provisions covers a situation where registration of sale deed has been completed. As per clause (v) of section 2(47), any transaction involving the allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882, but in the present case, the AO could not controvert this fact that the possession of the land in question was not transferred to the assessee and thus applicability of clause (v) of section 2(47) of the Act as part performance of contract cannot be inferred. On the basis of above discussion, we are unable to see any perversity, ambiguity or any other valid reason to interfere with the impugned order on this issue and thus we uphold the same.
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2016 (7) TMI 200
Addition in respect of purchases - Held that:- On submitting documentary evidence of purchase, consumption and sale of computer components the assessee had discharged its burden of proof. The AO had not produced any evidence that could prove the non genuineness of the transaction. - Decided in favour of assessee
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2016 (7) TMI 199
Taxability of the amount paid to the non-resident / foreign companies under the contract - assessed u/s 44BB or 44DA - Held that:- The pith and substance of each of the contracts/agreements is inextricably' connected with prospecting, extraction or production of mineral oil. The dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils though there may be certain ancillary works contemplated thereunder. If that be so, we will have no hesitation in holding that the payments made and received by the non-resident assessees or foreign companies under the said contracts is more appropriately assessable under the provisions of section 44BB and not section 44D. See OIL & NATURAL GAS CORPORATION LIMITED Versus COMMISSIONER OF INCOME TAX & ANOTHER [2015 (7) TMI 91 - SUPREME COURT] - Decided in favour of assessee
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2016 (7) TMI 198
Rectification of mistake - difference between the gross receipts as per the TDS certificate and turnover as per the Profit & Loss Account - Held that:- No information could be furnished as to whether the assessee’s application under S.154 was forwarded to the concerned Assessing Officer, and if so, the date of forwarding of the same. Since the application is filed on 26.8.2013, we reasonably presume that it is forwarded within a period of 15 days, and at any rate, before the end of that year. Till date, no action was taken by the Assessing Officer, which implies that the Assessing Officer has not passed any order, and therefore, it is deemed to have been accepted. At any rate, this information was already filed before the Assessing Officer and it was in the knowledge of the CIT(A) in the first round of litigation and also before the Tribunal, which had taken cognisance of the petition filed under S.154, to set aside the matter for reconsideration. Assessing Officer could have verified the status of the petition filed under S.154. This is a normal practice that when an appeal is filed before the CIT(A), a copy of the appeal papers is sent to the Assessing Officer and it is the duty of the Assessing Officer to send his note on the appeal filed by the assessee, so as to assist the first appellate authority in coming to appropriate conclusion. The Assessing Officer has neither acted upon the petition filed under S.154 nor objected to the material filed alongwith the petition filed under S.154 of the Act. In fact, during the course of assessment proceedings, the assessee furnished the details of earlier two years to submit that the gross receipts as per the TDS Certificates cannot be taken as the basis for working out the turnover of a particular year. The Assessing Officer has not commented upon the same. Having regard to the overall circumstances of the case, we are of the view that the learned CIT(A) was justified in taking cognisance of the material and upon verification, he has correctly taken a view that the advances received cannot be taken as part of the current year’s turnover. The details available on record are not doubted even at this stage by the Revenue. Under these circumstances, it is not necessary for the CIT(A) to give detailed reasons, when he, upon verification of the details, notices that the figures are reconcilable. Under these circumstances, we uphold the order of the learned CIT(A) - Decided against revenue
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2016 (7) TMI 197
Unexplained investment u/s.68 - genuineness of the share capital introduced - Held that:- In view of the findings recorded by CIT(A), all share holders are produced with their books & Bank statements, hence covered by Bombay High court in CIT v/s Tania Investment (2009 (3) TMI 473 - BOMBAY HIGH COURT ). All are assessed since last 10 years. Acknowledgements of filling returns filed by share holders with AO under proceedings u/s 131. Majority share holders are assessed u/s 143(3) & before CIT(Appeal) & Tribunal. Six companies are listed in recognised stock exchanges. Copy of share certificate was filed by share holders with AO. under proceedings u/s 131. Net worth of share holders were from 142 lacs to 50 Crores. The share holders are identified Covered by Bombay High Court in CIT v/s Creative World Telefilms Ltd (2009 (10) TMI 587 - Bombay High Court ).Share holders have their bank accounts, S.S.Securities also have bank accounts, other creditors mentioned by AO. who gave funds to S.S.Securities also have bank accounts. No cash was deposited anywhere. Under KYC norms banks are instructed by RBI to collect photo, Address proof, PAN cards Photo ID etc. The A.O. is totally silent on these facts. Share holders filed their balance sheets along with list of investments where investment in assessee company is clearly shown in schedule of investment. In view of the above, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of share capital. The detailed findings recorded by CIT(A) have not been controverted by department by brining any positive material on record. Accordingly, we do not find any reason to interfere in the finding so recorded by CIT(A) resulting into deletion of addition made on account of share capital. - Decided in favour of assessee
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2016 (7) TMI 196
Revision u/s 263 - default in claim of deduction under section 54F - CIT(A) was of opinion that the sale of land would not give rise to a long term capital gain, but a business income - Tribunal upholding the order passed by the CIT under section 263 on merits and still storing the issue of allowability of deduction to the file of Assessing Officer - Held that:- Though in the order of assessment, the Assessing Officer has not discussed the claim of the assessee of long term capital gain and deduction under section 54F of the Act out of such capital gain, he had raised multiple queries about said aspects. In the order sheet, the Assessment Officer had called upon the assessee to furnish various details including the details of fixed assets and details of sale of land . Thus, details the assessee had provided under a communication made in October, 2012 in which he had provided details of fixed assets and details of sale of land. Though final order of assessment was silent on this aspect, the Assessing Officer had carried out inquiries about the nature of sale of land and about the validity of the assessee's claim of deduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could not be exercised, called for no interference. Since with respect to computation and assertions of other aspects of deduction under section 54F of the Act, the Tribunal has remanded the proceedings, nothing stated in this order would affect either side in considerations of such claim. - No substantial question of law
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2016 (7) TMI 195
Reopening of assessment - accommodation entities received - Held that:- From the recording of reasons, it cannot be stated that the reasons do not indicate the manner in which the income chargeable to tax had escaped assessment. If the standpoint of the Assessing Officer is correct and at this stage in absence of any contrary contentions and in view of the materials pointed out in the reasons recorded, we would like to proceed on such basis; unescapable conclusion would be that the assessee's income to the tune of ₹ 2.10 crores remained unassessed. According to the reasons, the receipt of a sum of ₹ 2.10 crores from two companies of SCS i.e. Acacio and Adamina was in return of the cash or other credits from the assessee given to SCS. If that be so, the sources of such funds remained unexplained. These observations, of course, are in the context of the contentions of the petitioner which are directed against the notice for re-opening of the assesment. Surely, the assessment would be framed on the basis of material that may be available on record and in accordance with law. - Decided against assessee
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2016 (7) TMI 194
Benefit of Voluntary Disclosure of Income Scheme (VDIS) - Held that:- The issue involved in this matter is squarely covered by the decision in case of Nitin P. Shah alias Modi v. Deputy Commissioner of Income Tax [2004 (12) TMI 64 - GUJARAT High Court ] where this Hon'ble Court has held that the certificate issued under Section 68 (2), cannot be cancelled or revoked. Identical issue was also raised before the Hon'ble High Court of Allahabad in case of Bhagwat Prasad v. Commissioner of IncomeTax (2003 (4) TMI 63 - ALLAHABAD High Court ) wherein it has been held that once a valid certificate had been granted to the petitioner by the CIT under the VDIS 1997, he was entitled to the immunity under Section 68 of the Finance Act, 1997 and the impugned proceedings under Section 158BD taken against the petitioner were illegal. - Decided in favour of assessee
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2016 (7) TMI 193
Deduction u/s.80P(2)(a)(i) - A.O. disallowed the exemption to short term / long term capital gains and restricted the deduction under Section 80P on profits relating to business of banking - Held that:- By virtue of the decision of the Apex Court in the case of C.I.T. v. Karnataka State Coop. Apex Bank [2001 (8) TMI 9 - SUPREME Court] , the entire issue has been settled and decided in favour of the assessee as observed that there is nothing in the phraseology of section 80P(2)(a)(i) which makes it applicable only to income derived from working or circulating capital. It was further observed that from investment made, in compliance with statutory provisions to enable it to carry on banking business out of reserve fund by a cooperative society is exempt under section 80P(2) (a)(i) of the Act and placement of such funds being imperative for the purpose of carrying on banking business, income therefrom would be income from the assessee's business. In that view of the matter, the Revenue's objection to the deduction claimed by the assessee to its so called non-banking profits must rest here. The assessee had derived income from sale of Government securities and other approved investments. Such proceeds were thereafter invested in securities and deposits which may not have been approved under section 71 of the Gujarat Cooperative Societies Act. What we are concerned with is the treatment that such income out of sale proceeds and securities should receive and not what income from further investments should receive. In short, claim for deduction under section 80P(2) of the Act raised by the assessee related to income derived from sale of approved securities.That being the position, the assessee was justified in claiming deduction as available under law. See ITO WARD-1 ANAND Versus ANAND MERCANTILE CO OP BANK LTD [2011 (9) TMI 1085 - GUJARAT HIGH COURT]- Decided in favour of assessee
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2016 (7) TMI 192
Entitlment to deduction u/s. 80IB (10) - ITAT allowed the claim - Held that:- In case of Commissioner of Income Tax vs. Voora Property Develop P. Ltd.(2015 (3) TMI 456 - MADRAS HIGH COURT ) held and observed that when the project fulfilled the criteria for being approved as a housing project, the deduction under Section 80IB(10) could not be denied on the ground that the assessee had obtained a separate plan permits for the six blocks. In this case also, the assessee had claimed deduction on the basis of composite development of housing project under six different blocks, the combined area of which exceeded one acre. - Decided against revenue Belated deposit of tds - disallowance u/s 40(a)(ia) - ITAT delted the addition - Held that:- The assessee having deducted tax at source, had deposited such tax with the Revenue not by 31.03.2006, as was required, but on 31.05.2006, which was before filing of the return. In that view of the matter, the Tribunal followed the decision of the Gujarat High Court in case of Commissioner of Income Tax, Ahmedabad IV vs. Omprakash R. Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT ], in which, it was held that the amendment made to Section 40 (a) (ia) by the Finance Act of 2010 granting additional time for depositing the TDS upto the due date of filing of the return would apply with retrospective effect from the date of the insertion of Section 40(a)(ia) i.e. from 01.04.2005. Since the assessee had deposited the tax before the due date of filing of the return, the Tribunal granted the benefit correctly.- Decided against revenue
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2016 (7) TMI 191
Transaction of shares - business income or capital gain - whether the Income-tax Appellate Tribunal was right in holding that the appellant's intention was to trade in shares and not to hold the same as investment portfolio? - Held that:- The impugned order of the Tribunal has elaborately dealt with the contention of the appellant that as for the earlier and subsequent assessment years profits arising on account of purchase and sale of shares has been classified as short term capital gains, the same should be done in the subject Assessment years. The Tribunal on analysis of the facts noticed that the facts in the subject assessment year are different from the facts in the earlier and subsequent assessment years. Particularly the number of transactions in shares were in single or double digits in the years sought to be compared while transactions of purchase and sale of shares is of the magnitude of 346 transactions in the subject assessment year. Further differences in facts was also brought out in a chart in the impugned order on 13 parameters between the subject assessment year and the earlier and subsequent assessment years. In these circumstances the impugned order very correctly holds that the rule of consistency would not apply in the present case as there is a change in facts existing in the subject assessment year. There is no merit in the submission that reliance on the inadequate mention in the Balance Sheet is immaterial since the appellant an individual for the reason that she was carrying a business in Futures and Options. Thus the obligation on the part of the assessee to file its Balance Sheet and disclose its investments. The last submission that appeals raising an identical question i.e. classification of Income as short term capital gains or business Income have been admitted for our consideration would requires admission of this appeal is not acceptable. This for the reason that appeals are admitted keeping in context the facts which give rise to the questions which were posed for our consideration. The order passed at the stage of admission of a tax appeal, cannot be treated as precedent. Thus the view taken by the Tribunal on the facts as existing in the present case is a possible view. Appeal dismissed.
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2016 (7) TMI 190
Reopening of assessment - reasons to believe - Held that:- AO had issued a detailed questionnaire which was duly replied by the assessee. It has furnished statutory audit accounts under the Companies Act as well as audit report in Form No.3CA and 3CD along with return. The assessee has submitted all other details called for by the AO. In the reasons recorded by the AO to reopen the assessment, nowhere it has been alleged that the assessee has failed to disclose any particular item fully and truly. The proviso appended to section 147 puts fetter on the power of the AO to reopen the assessment in the case where originally the assessment was passed under section 143(3) and four years have expired. In such cases no notice under section 148 can be issued unless it is established that income chargeable to tax has escaped assessment on account of failure of the assessee to disclose all material facts fully and truly. No such allegation has been leveled by the AO. Therefore, the ld.CIT(A) has rightly quashed the re-assessment order. - Decided against revenue
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2016 (7) TMI 189
Addition towards negative closing stock - Held that:- We find that the assessee had duly filed the reconciliation statement immediately after the survey and also during the assessment proceedings on 5.12.2011 objecting to the negative stock stated by the ld. AO and also stated that there is positive stock of 819.49 grams on the date of survey and there is no need to make any addition in that regard by filing a detailed reconciliation statement which was ignored by the ld AO. The Ld. CITA had duly considered the reconciliation statement and had granted relief to the assessee. We hold that the assessee is at liberty to file a reconciliation statement pointing out the discrepancies in stocks and other records that were found at the time of survey due to various reasons such as not updating the records properly, incorrect recording of facts, etc. We find that the ld. AO had not considered the explanation submitted by the assessee regarding the reasons for negative stock of Readymade Ornaments, particularly when there was practically no sales in manufactured jewellery despite having made substantial quantity of jewellery and also when he did not try to ascertain the treatment of quantity of gold and broken jewellery as reported by himself in question no. 17 of the statement forming part of the paper book filed before us. Hence the addition cannot be made as an automatic measure. - Decided in favour of assessee Addition made towards concealed profit - Held that:- The method of accounting regularly employed for valuation of stock by adopting Average Cost Price (LIFO method) which is one of the recognized method for valuing stock and which has been consistently followed by the assessee for several years has been discarded without giving any reason by the ld. AO and the valuation of stock of gold was done at market price thereby increasing the profit of the assessee notionally which is without any basis or reasoning. The closing stock as per audited accounts was ₹ 3,25,27,574/- upto the date of survey, whereas the valuation done by the department at market price was worked out at ₹ 4,01,84,320/-. This has resulted in excess valuation of closing stock at ₹ 76,56,746/- thereby notionally increasing the profit of the assessee. It is well settled that though the principle of res judicata does not apply to income tax proceedings, the principle of consistency cannot be given a go by when there is no change in facts and circumstances of the case.- Decided against revenue We also find that the ld. CITA had observed that valuation of stock as per books was taken by the ld. AO at ₹ 2,24,89,465/- , whereas in the stock summary it was ₹ 2,82,93,585/- . The ld. CITA had observed that since this valuation of ₹ 2,82,93,585/- was part of the profit of ₹ 46,26,796/- as reported by the ld. AO , but while working out the profit, he had taken the valuation of stock at ₹ 2,24,89,465/- thereby adding a sum of ₹ 58,04,120 (2,82,93,585-2,24,89,465) as excessive profit without giving any reason. The ld. CITA also found that the depreciation and other deductions should have been given to the assessee to the extent of ₹ 3,57,362/- which was not given by the ld. AO. We find that ignoring the profit and adopting the notional profit arrived by the ld. AO at ₹ 2,48,71,438/- would only result in assessee deriving abnormal profit at 54.76% which is practically not possible in the business of the assessee. CITA had made a fair determination of profit after giving due effect to the discrepancies of the ld. AO in his computation. - Decided against revenue Addition towards unexplained investment in purchase of flat - Held that:- We find that the assessee had disclosed more figure in his audited balance sheet towards purchase of flat at Puri at ₹ 31,94,854/- with clearly explained sources and whereas the figure mentioned in the loose sheet was only ₹ 28,42,938/-. Hence, there is no case for making any addition towards the same - Decided against revenue
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2016 (7) TMI 188
Disallowance u/s 80IC - Held that:- The objections of the Assessing Officer that the new business is by transfer of earlier business and no production has been actually made by the assessee are contrary to the record. Hence, we do not see any reason to interfere with the order of the ld. CIT(A) and the same is hereby upheld. Thus, the ground raised by the Revenue is rejected. - Decided in favour of assessee.
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2016 (7) TMI 187
Eligibility for deduction u/s 80HH and 80I - non maintenance of separate book of accounts - quantum of deduction - Held that:- In the present case the gross total income of the assessee includes income from manufacturing activity of an industrial undertaking irrespective of the fact that the activities is being carried out either at small scales or large scale and such activity was significant or not compared to total turnover of the assessee including income of the business which is not eligible for such deduction. In view of above we hold that the assessee is eligible for deduction u/s 80HH of the Act on the income from manufacturing activity. On careful consideration above it was the duty and onus on the shoulder of the assessee to show that he was also engaged in manufacturing activities and the gross total income declared by it also include income from manufacturing activity and on the basis of foregoing discussion we have held that the assessee is entitled for deduction u/s 80HH and 80I of the Act on the part of income earned from manufacturing activities. However, for want of adequate material on the record of the Tribunal, it is not possible for us to calculate quantum of deduction and thus we find it appropriate to send the issue for limited purposes i.e. for calculation of deduction u/s 80HH on the income earned from manufacturing activities during the relevant periods under consideration for all five assessment years. Hence, we direct the AO to calculate the quantum of deduction for all the five assessment years under consideration.
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2016 (7) TMI 186
Reopening of assessment - notice sent on incorrect address - Held that:- It is undisputed fact that the notice u/s. 148 of the Act dated 22.3.2011 which is foundation stone of reassessment proceedings u/s. 147, was issued at an incorrect address due to mistake attributable to the AO and could not be served upon the assessee within the statutorily prescribed time of 6 years and even thereafter, before the order of reassessment was passed. Therefore the reassessment proceedings are bad in law and deleted the addition. - Decided in favour of assessee.
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2016 (7) TMI 185
Agricultural land or Non agricultural land - nature of land - Gain on sale of agricultural lands exempt from tax as per the provisions of section 2(14) - Held that:- The purchase and sale of land within a short span of period is not in dispute and further, the assessee got converted the land in question from agriculture to non-agricultural industrial purpose with the sole purpose and intent to sell the land for industrial purpose. When the land was already converted from agriculture to non-agricultural industrial use then merely it was wrongly shown in the revenue record as agricultural land would not change the actual fact of conversion from agriculture to non-agriculture purpose. Since the assessee has claimed to have some ancestral agricultural land which is not subject matter of the dispute in this case therefore, offering agriculture income and acceptance of the same wouldn’t not change the character of the land in question at the time of sale. Considering the fact that the land in question were held by the assessee for a very short period of time and the intended future use is undisputedly for non- agriculture industrial purpose as the land was sold to the purchaser with the condition for non-agricultural use clearly established that the assessee did not intend to use the land in question for agriculture purpose in the past as well as in future. Thus we have no hesitation to hold that the land in question does not fall under the exclusion clause (iii) of section 2(14) of the income tax act. Accordingly, we set aside the impugned order of the CIT (A) and restore the order of the A.O. - Decided in favour of revenue
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2016 (7) TMI 184
Long term capital gain - selection of assessment year - transfer - Held that:- There is no transfer of capital asset in assessment year 2007-08. There is no accrual or receipt of any income in favour of the assessee on account of capital gains in assessment year 2007-08. Therefore, whole of the addition in assessment year under appeal i.e. 2007-08 is unjustified. We, accordingly, set aside the orders of the authorities below and delete the entire addition on account of capital gains in assessment year under appeal, however, revenue authorities are at liberty to consider the issue of accrual or receipt of capital gain in assessment year 2009-10 in accordance with law, if so advised. - Decided in favour of assessee
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2016 (7) TMI 183
Denial of deduction under section 80IA of the Act with respect to Daman Unit-1 - Held that:- We are unable to uphold the stand of the Revenue that the Daman Unit-1 has been set-up with value of old machinery in excess of 20% of the total value of machinery and, therefore, on facts also, we find no reason to affirm the denial of deduction under section 80IA of the Act with respect to Daman Unit-1. Thus, on this aspect assessee succeeds. Denial of claim of deduction u/s. 80IA of the Act in respect of Daman Unit-2 - Held that:- The Hon’ble Madras High Court in the case of CIT vs. Premier Cotton Mills Ltd. (1999 (2) TMI 41 - MADRAS High Court ) has laid down that even a single legal entity may own and operate more than one industrial undertaking and the fact of common ownership would not render the undertaking, which is otherwise capable of being separately viewed, into a common undertaking. In our view, the fact that the new undertaking so established by way of expansion is located adjacent to the existing undertaking would not render the new undertaking ineligible for the claim of deduction u/s. 80 IA/80IB of the Act. Therefore, having regard to the factual matrix, which clearly establishes that the Daman Unit-2 was separate unit having its own plant and machinery, manufacturing of products, independent funds, and separate labour force, it cannot be considered as a mere part of the Daman Unit-1 so as to defeat its claim of deduction u/s. 80IA/80IB of the Act. Thus, on this aspect also assessee succeeds.
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2016 (7) TMI 182
Deduction u/s. 80IB(10) - AO had held that occupancy certificates (OC) was received by the assessee after the due date i.e. 31.3.2008 in case of KP and therefore, the assessee was not entitled to claim deduction u/s. 80IB(10) - FAA held that amended provisions were not applicable to KP - Held that:- Amended provisions were applicable to the projects that were approved before 1. 4. 2005. Thus we hold that assessee was not entitled to claim deduction u/s. 80IB in respect of building A-1, A-2, C-3, C-4, Club-house of KP. As far as building No. B- 1, B-2, B-3, B-4, C-1, C-2 are concerned it is found that OC was obtained on or before 31. 3. 2008, therefore, claim made by the assessee u/s. 80IB cannot be denied for those buildings. See Commissioner of Income-tax, Bhopal Versus Global Reality [2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT] - Decided in favour of revenue in part.
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2016 (7) TMI 181
Eligibility of exemption u/s 54 - assessee has filed a belated return - due date of filing the return - Held that:- As decided in CIT-II, Chandigarh Versus Ms. Jagriti Aggarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] due date of filing the return of income as per section 139 of the Act with reference to exemption u/s 54, is subject to the extended period provided under sub section (4) of section 139. It is undisputed that investment in the present appeal were done before this date. Furthermore, Chandigarh Bench of the Tribunal on an identical lines in Sh. Mohan Singh Vs. ACIT [2015 (7) TMI 1111 - ITAT CHANDIGARH] in the similar issue of belated return has granted the benefit of section 54 to the assessee. It is not the case that the said decision of the ITAT has been reversed by the Hon'ble Jurisdictional High Court. - Decided in favour of assessee
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2016 (7) TMI 180
Depreciation on technical know-how - Held that:- The assessee company entered into Memorandum of Understanding (MOU) for transfer of business as going concern with M/s Premium Energy Transmission Ltd. (PET Ltd.). The assessee claimed to have acquired technical know-how. It was disclosed in the accounts and financial statements as an asset and depreciation was claimed on the same for the A.Y. 2005-06. The return was processed u/s 143(1). Thus the depreciation claimed on the block of assets, being technical know-how was not disturbed by the Revenue in the first year of claim. PET Ltd. filed its return of income and offered ₹ 2.75 crores as its profit, on sale of know-how to the assessee company. For the A.Y. 2006-07 the assessee company filed its return of income declaring the written down value of know-how and claiming depreciation thereon. The assessment order was passed by the A.O. u/s 143(3) of the Act and the claim of depreciation on technical know-how fees was not disturbed. During this year the A.O. for the reasons given in his order, seeks to disturb the opening written down value. In our considered view this is not permitted in law. Thus the order of the First Appellate Authority, to the extent of his decision to allow depreciation on technical know-how fees is to be upheld. - Decided in favour of assessee Rate of depreciation on computer peripherals - Held that:- The issue is covered by the decision of Hon’ble Delhi High Court in the case of CIT vs. BSES Yamuna Power Ltd. (2010 (8) TMI 58 - DELHI HIGH COURT ) and ACIT vs. Caparo Maruti Ltd. Delhi [2012 (4) TMI 665 - ITAT DELHI] saying as computer peripherals are the part of the computer system, they are entitled to depreciation at the higher rate of 60%.- Decided in favour of assessee Addition made on account of difference in trading a/c u/s 145A - Held that:- The A.O. has enhanced the figures of sales, closing stock, opening stock and purchases, by the amount of excise duty while adopting inclusive method. While doing so, he should have reduced the excise duty actually paid by the assessee of ₹ 1,71,31,908/- as it has been already included. In view of the above discussion we uphold the order of the First Appellate Authority in deleting the addition - Decided in favour of assessee
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2016 (7) TMI 179
Reopening of assessment - Deduction under Section 10B - Held that:- Since the issue on merits regarding the restriction of the deduction under Section 10B of the Act arising from the original assessment order has been decided by this Tribunal therefore, subsequent revision order becomes infructuous. Accordingly, we set aside the impugned revision order. - Decided in favour of assessee.
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2016 (7) TMI 178
TDS u/s 194J - non deduction of tds - recovery of dues - Held that:- It is not clear from the records as to what is the component of the professional charges paid beyond ₹ 20,000/- so as to determine the liability to TDS u/s 194J of the Act. In these circumstances, we deem it fit to grant early hearing of these appeals on 05.09.2016 and till such time, the revenue is directed not to take coercive measures for recovery of the dues from the assessee in this regard. Both the parties are informed in the open Bench regarding the date of hearing and no fresh notice would follow for the same. Hence the Stay Applications of the assessee for all the assessment years are disposed of as directed above.
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2016 (7) TMI 177
Penalty u/s 271(1)( c) - addition u/s 69C of the Act in respect of unexplained expenditure - Held that:- The quantum addition has been deleted by the Tribunal and since the ld.CIT(A) has correctly deleted the penalty by a reasoned order on the ground that quantum having been deleted by the Tribunal. We also do inclined to interfere in the reasoned order of the ld.CIT(A). - Decided against revenue
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Customs
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2016 (7) TMI 227
Import of goods in a baggage without declaration - restricted goods - 164 cartons of Cigarettes, one taka of black burkha cloth, 44 gold chains of different types/sizes weighing in toÉl 500 grams approximately. - it was submitted that, he applicant had approached the Customs officer on duty in the arrival lounge to declare the goods brought by him and had requested the officer to fill up the Customs declaration form. That had neither entered the green channel nor concealed any goods/ information from the Customs officers. That the applicant was not given an opportunity to make a true declaration of the goods brought by him and was apprehended by the officers before he could enter the red channel for payment of appropriate duties of Customs. Held that:- Government observes that it is an uncontested fact that the impugned goods were not declared to the Customs under Section 77 of the Customs Act, 1962 and the passenger passed through the green channel. Government finds no merit in the plea of the applicant that it is difficult to conceal valuable goods like gold below the pant belt. It is a fact on record that during the search, it was found that the applicant had concealed two packets wrapped with brown tape around his stomach under the pant belt which on examination, were found to contain in all 44 gold chains of different types/sizes, totaling weighing 500 grams. Also, in his statement recorded under Section 108 he admitted that he had concealed the above said gold chains in order to avoid Customs Duty. Government observes that one of the contention of the applicant 'is that there is no column in the declaration form for declaration of gold and cigarettes. This is incorrect in as much as the declaration form has the column for declaring dutiable goods and the applicant cigarettes and the gold brought in by knew that the impugned goods had to be declared but has not declared it purposely with the intention of evading duty. This plea also holds no ground in view of the fact on record that the applicant is a frequent traveller. Government also observes that the applicant's averment on cross examination of witness does not cut any ice to prove his innocence. - confiscation and levy of penalty upheld - Decided against the applicant.
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2016 (7) TMI 226
Levy of penalty for abatement - alleged violation of having filed an invalid Pre-shipment Inspection Certificate (PSIC) - confiscation and redemption fine - Held that:- The purpose of PSI Certificate is that the consignment does not contain any types of arms, ammunition, mines, shells cartridges or any other explosive materials in any form used or otherwise and that the consignment was checked for radiation level and it does not contain radiation level (gamma and neutron) in excess of natural background. It is not the case of the Customs that the PSI Certificate filed by the importer does not furnish the aforesaid information, required to decide whether the said consignment should be prevented from import or not. It is a factual admission of the customs that the inspection report furnished by M/s. ValueguruEngineers, does not contain any information that would render the consignment as not importable. Non-compliance with the fulfilment of the conditions may entail 100% goods carried by the consignment being subjected to inspection and that would not tantamount to improper import of goods u/s 111 of the Customs Act, 1962. - Revenue has failed to bring home the charge of abatement against the appellant. - No penalty - Decided in favor of appellant.
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2016 (7) TMI 225
Condonation of delay in filing an appeal - Tribunal rejected the condonation application since the requirement of mandatory deposit u/s 129E of Customs Act, 1962 was not met - Held that:- After amendment to Section 129E of Customs Act, 1962, it is necessarly to be complied with by every person filing the appeal before this forum under Section 129A of Customs Act, 1962. Therefore, the Appellant should first comply with the provisions of Section 129E of Customs Act,1962 and thereafter approach this Tribunal for condonation of delay, which the Tribunal is empowered to consider in view of Section 129A(5) of Customs Act, 1962. Therefore, the present miscellaneous application is premature, accordingly rejected being not maintainable with the liberty to the applicant to approach this Tribunal after compliance with the provisions of Section 129E of the Customs Act,1962. - Decided against the assessee.
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2016 (7) TMI 224
Valuation - inclusion of ship demurrage charges in the transaction value - the appellant is unable to complete the discharge of cargo within the agreed time due to several reasons, and when the vessel is detained at the port for certain period, which is beyond the agreed period due to external circumstances, due to the reasons beyond the control of the appellant - Held that:- the ship demurrage charges cannot be included in the discharges of custom duty on the imported goods even if the assessments are made provisionally. - Decided in favor of assessee.
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2016 (7) TMI 223
Demand of duty for non-export of imported marble after processing - Revenue alleged that There was discrepancy of imported marbles noticed on physical examination. Appellant did not maintain properly. There was diversion of imported material and indigenous material were only exported. - Held that:- Revenue found stock discrepancy, that went against appellant. When the probability is weighed, the appellant failed to prove leading cogent evidence that exports were made out of the foreign materials imported. Physical verification results demonstrated discrepancy of stock which was acknowledges by appellant. Revenue need not prove where the discrepant goods have gone. It is assessee to explain the shortfall. But failed to do so. Demand of duty confirmed - redemption fine and penalty reduced to some extent - Decided against the appellant.
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2016 (7) TMI 222
Import of second hand photocopier machines - restricted goods - requirement of license to import - Held that:- second hand photocopiers are ‘capital goods’ and no licence is required for importing the same under the EXIM Policy. - there can only be one conclusion that the confiscation ordered by the Customs under Section 111(d) of the Customs Act, 1962, is not legal and redemption fine and penalty imposed under Section 112 of the Customs Act, 1962, therefore, is hereby set aside. - Decided in favor of assessee.
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Corporate Laws
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2016 (7) TMI 217
Scheme of Amalgamation is sanctioned. As directed that the petitioners shall preserve their books of Accounts, papers and records and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. The petitioner shall further ensure statutory compliance of all applicable laws. On the sanctioning of the Scheme of Amalgamation, the Petitioner Companies shall not be absolved of any of their statutory liabilities. The petitioner Companies shall lodge a copy of this order, the schedule of immovable assets of the petitioner companies as on the date of this order and the Scheme, duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamp Duty, if any, on the same within sixty (60) days from the date of the order.
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2016 (7) TMI 216
Scheme of Amalgamation is sanctioned. The sanction of the scheme is subject to the sanction of the Scheme by the Hon’ble High Court of Judicature at Bombay in the petition tiled by the Transferee Company. It is further directed that the petitioner companies shall preserve their books of accounts, papers and record and shall not to dispose of the records without the prior permission of the Central Government under Section 396-A of the Companies Act, 1956. The petitioner companies are also directed to ensure compliance of all applicable laws and it is also observed that sanction of the Scheme shall not absolve the petitioner companies from any of the statutory liability, if any.
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Service Tax
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2016 (7) TMI 237
Challenge to the Show Cause Notice (SCN) - Maintainability of writ petition - Business Auxiliary services (BAS) - The petitioner is a cricketer and is a former captain of the Indian Cricket Team - Amount received for brand endorsement/brand promotion - amounts received for writing articles in sports magazines as well as fee received for anchoring TV shows on Zee Bangla. - extended period of limitation - allegation of suppression of facts - Held that:- if it is finally decided that the extended period of limitation was wrongly invoked by the authority in issuing the impugned show cause notice, the logical conclusion that would follow is that the show cause notice was issued without jurisdiction. Since the petitioner has challenged the jurisdiction of the authority to issue the impugned show cause notice, in my view, the writ petition cannot be rejected at the threshold. Whether or not the petitioner will ultimately succeed on merits is a different question altogether. However, in my opinion, it cannot be said that the writ petition is not maintainable at all and should not be entertained for adjudication. - the preliminary issue of maintainability of the writ petition is decided in favour of the petitioner. Invocation of extended period of limitation in the SCN - Held that:- the petitioner was prompt and diligent in responding to all the notices issued by the Department and in his replies, the petitioner clearly explained the nature and scope of his activities. Subsequently, copies of contracts entered into by the petitioner with the corporate entities were also made available to the Department. In my view, there was full and sufficient disclosure of the nature of the petitioner’s activities to the Department and it cannot be said that the petitioner suppressed material facts to deceive the Department with intent to evade payment of service tax. It is also be noted that it is stated in the last paragraph of the impugned show cause notice that the same is ‘based on records made available’. On a plain reading this means that the notice was issued on the basis of records and materials submitted by the petitioner. Hence, there does not seem to be any basis in the Department’s contention that the petitioner suppressed material facts with intent to evade payment of service tax. Suppression of fact in the context of this case can only mean non-disclosure of correct information deliberately to evade payment of service tax. The impugned show cause notice is hopelessly barred by limitation. There was no ground or justification whatsoever for issuing such notice by invoking the extended period of limitation. Demand of service tax under Business Auxiliary Services (BAS) - Held that:- It was not the intention of the legislature that any and every kind of activity which can loosely be termed as ‘Business’ would attract service tax. It being a taxing provision, the same must be construed strictly and any benefit of doubt in the matter of interpretation of the provision must go in favour of the assessee. Writing articles for newspapers or sports magazines or for any other form of media cannot by any stretch of imagination be said to be amounting to rendering business auxiliary service within the meaning of Sec. 65(19) or business support service under Sec. 65(104c) of the Finance Act, 1994. For similar reasons, the remuneration received by the petitioner for anchoring TV shows cannot be brought within the service tax net. Television shows are meant for entertainment of the viewers. In contemporary world watching television is a primary form of recreation. It would be absurd to say that anchoring TV shows amounts to rendering business auxiliary service or business support service. Regarding, brand endorsement - Held that:- by amendment of the Finance, Act, 1994, a new taxable service category of ‘Brand Promotion’ was introduced with effect from 1 July, 2010 - Since brand endorsement was not a taxable service during the period of time for which the tax demand has been raised, such demand cannot be sustained. Such service rendered by the petitioner could not be taxed under the head of business auxiliary service as has been sought to be done. As regards the remuneration received by the petitioner for playing IPL cricket, in my opinion, the service tax demand raised on such amount under the head of ‘Business Support Service’, is also not legally tenable. - The petitioner was under full control of the franchisee and had to act in the manner instructed by the franchisee. The apparel that he had to wear was team clothing and the same could not exhibit any badge, logo, mark, trade name etc.. The petitioner was not providing any service as an independent individual worker. His status was that of an employee rather than an independent worker or contractor or consultant. In my opinion, it cannot be said that the petitioner was rendering any service which could be classified as business support service. He was simply a purchased member of a team serving and performing under KKR and was not providing any service to KKR as an individual. Validity of circular / clarifications issued by the CBEC - Held that:- if such circulars/instructions/clarifications are contrary to or inconsistent with the statutory provision in question or seek to create a liability which the statute does not contemplate, such circular/instruction is liable to be struck down. A misconceived and legally untenable interpretation of a statutory provision and/or an erroneous understanding thereof, which if applied by the quasi-judicial authorities will unduly prejudice the citizens of the country, cannot be allowed to stand. The remuneration received by the petitioner from the IPL franchisee could not be taxed under business support service. The show cause notice impugned in this petition is without jurisdiction as being time barred. The demand made in the show cause notice is barred by limitation. - Show cause notice quashed - Decided in favor of assessee / petitioner.
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2016 (7) TMI 236
Cenvat Credit - service tax credit on the input services attributable to trading sales - Though the petitioner had challenged this order by filing the writ petition, the petitioner has paid the entire amount without prejudice to their rights. - The petitioner pleads that the petitioner may be permitted to file an appeal against the impugned order before the Commissioner (Appeals). Admittedly, the period of limitation stipulated for filing the appeal has already over. Held that:- considering the peculiar facts and circumstances of the case, the Writ Petition is disposed of, giving liberty to the petitioner to file an appeal before the Commissioner (Appeals) and if such appeal is filed within a period of 30 days from the date of receipt of a copy of this order, the Commissioner (Appeals) shall entertain the appeal petition without reference to limitation.
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2016 (7) TMI 235
Claim of refund - refund claim was not accompanied by Form A-1 as provided in Notification No-17/2011 ST dated 01-03-2011 - service tax paid on purchase of software license meant for the authorized operations in their SEZ unit - Held that:- The appellant has DTA operation also and if they file such declaration it would be a false declaration. The contention of the appellant that they are not required to file Form A-1 declaration as per the notification and that they may not be forced to file a declaration which is not applicable to them is not without force . The conditions mentioned in clause (f) (i) and (h) of the notification goes to show that Form A-1 is not to be furnished invariably in all refund application. It has to be furnished wherever applicable i.e when the applicant is carrying exclusively SEZ operations. The finding in the impugned order that appellant has to furnish Form A-1 is not legal or proper. This finding in the impugned order is set aside. - the appeal is allowed by way of remand with the findings made in regard to the requirement to file Form A-1. - Decided in favor of assessee.
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Central Excise
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2016 (7) TMI 234
Waiver of pre-deposit - Demand of duty - clandestine removal of goods - Maintainability of writ petition - alternative appellant remedy - Despite there being an appellate remedy under Section 35B of the Act, the petitioners claim that the appeal would not be efficacious in view of the statutory pre-deposit that is required to be made and that, in any event, the challenge is primarily on the ground of the breach of the principles of natural justice. - Appellant had misrepresented himself before its customers as manufacturer. Held that:- The object of the present exercise is not to dissect the order or tear it to shreds. The Commissioner has otherwise exercised his jurisdiction with consummate aplomb; except that he may have slipped on prejudice. It is only to point out that when a citizen is charged with having done something wrong and some material is provided by such citizen to disabuse the authority of its impression, such evidence has first to be discredited upon a cogent discussion thereon before the original suspicion of wrongdoing is exalted to a final finding. It is such exercise which has been missed in the impugned order. It is for such reason that the decision-making process cannot stand the scrutiny in this extraordinary jurisdiction of overall superintendence. That does not mean that these petitioners are paragons of virtue. It is evident from the material obtained by the department from respectable organisations, including government companies and private sector undertakings, that the petitioners held themselves out of as manufacturers of the electrical and transmission goods that the petitioners sold to such purchasers. It was incumbent on the Commissioner to have otherwise come to a cogent finding that the petitioners could be regarded as manufacturers within the meaning of the said Act and found liable to pay the duty. That the petitioners may have misrepresented to their purchasers as to their status may not have been the only relevant consideration for the Commissioner. However, to the extent it is evident from even the submission of the petitioners as recorded in the order impugned that the petitioners may have represented themselves as manufacturers to their purchasers, it is necessary that the petitioners be put on terms and required to make a deposit for the matter to be considered afresh by the concerned Commissioner. Petitioner directed to deposit a sum of ₹ 50 lakh (against the demand of ₹ 11 crore) with the department within four weeks from date. - Decided partly in favor of petitioner.
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2016 (7) TMI 233
Demand of duty on export of goods without payment of duty - export of Linear Alkyl Benzene (LAB) under UT-I for export under the provision of Rule 19 of Central Excise Rules, 2002 - it was noticed that 7.921 M.T. of LAB were short shipped/not exported by the applicants. - Condonation of delay in filing revision application due the reason the applicant was pursing the matter with the wrong forum - Held that:- As such after excluding time elapse before Tribunal, the applicant filed the Revisional Application in 49 days. As such the Applicant has been filed within the stipulated period. Government now proceeds to examine the case on merits. Commissioner (Appeals) has held the applicant to be ineligible for the benefit of Circular No. 292/8/97-CX dated 24.01.1997 holding the said Circular to be applicable to NGL only. On perusal of the above Circular, it is crystal clear that the benefit is only admissible to the Natural Gasoline Liquid (NGL) and not for any other commodity. The Board after considering the nature of loss being occurred specifically in NGL has prescribed the percentage for the particular item only. Admittedly, the goods manufactured and cleared by the assessee is not NGL and as such they are not eligible for the benefit of the above circular, as rightly held by the Commissioner (Appeals). - Demand confirmed - Decided against the assessee.
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2016 (7) TMI 232
Rebate / refund claim on export of goods - non-realization of foreign exchange - exporter has not submitted (BRCs) in respect of export clearances - Commissioner (Appeals) observed that submission of BRCs have not been envisaged as precondition for grant of rebate under Notification No. 19/2004-CE(NT) dated 06.09.2004 read with Rule 18 of the Central Excise Rules, 2002. Held that:- It is a fact on record that the stipulated period of one year for the realization of export proceeds had been exceeded much before issue of the show cause notices. The question of submission of BRC would not arise when rebate is filed and sanctioned within one year of the date of export. However, in a scenario as in the present case were pending the sanction of rebate, the Bank Remittance Certificate had become due, it cannot be held that rebate ought to be sanctioned as it is not a prescribed document at the time of filing of rebate. It is also a fact on record that till date the respondent has failed to submit the BRCs to the department. Though it is claimed by them before the Revisionary Authority that remittance has been received by them partially, no evidence has been produced to that effect. It is a universally known principle that one of the main reasons any export incentive including rebate is allowed is to encourage export- generated foreign exchange earnings for the country. From a harmonious reading of Rule 18 of Central Excise Rules, Notification No. 19/2004-CE(NT) dated 06.09.2004, relevant provisions of Foreign Exchange Management Act, Foreign Trade Policy and RBI guidelines as applicable, it can be concluded that exports are entitled for rebate benefit only if export realization is received, which has not happened in the present case. Rebate / refund claim cannot be granted - Decided in favor of revenue.
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2016 (7) TMI 231
Loss of goods during manufacturing - Procedure of Remission of duty not followed - Rule 21 of Central Excise Rules, 2002 - Cenvat Credit on inputs - On scrutiny of ER-I returns for the month of April 2009 to March2010, it has been observed that the respondent has shown some quantity of Denatured Rectified Spirit as process loss after production of the finished goods. The respondent has not mentioned any reason for this process loss in their ER-I return. Held that:- Government observes that the respondent has suo moto claimed remission without fulfilling the conditions laid down under Rule 21 of Central Excise Rules, 2002 and obtaining permission from the Commissioner. - in the case of Commissioner of Customs & Central Excise Vs M/S U.P. State Sugar Corporation Ltd, the Hon'ble High Court of judicature at Allahabad [2015 (5) TMI 944 - ALLAHABAD HIGH COURT] has held that, "if in the facts of the case, the assesse claims remission from excise duty of goods said to have been lost in natural course, within the permissible limit, as per the circulars, he has to follow the procedure prescribed under Ru/e 21 of the Rules. Only after an order is made granting remission in respect of the goods so lost due to natural circumstances, he could be exempted from payment of excise duty" Remission of duty on storage losses cannot be claimed by the respondent even when no remission application has been filed by them and it is established to the satisfaction of the competent authority that such loss is due to circumstances referred to in Rule 21 ibid. - Demand confirmed - Decided in favor of revenue.
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2016 (7) TMI 230
Rebate of duty of input stage on export of goods - Rule 18 - excisable goods were cleared for export by them in respect of ARE-2, without obtaining prior permission of the Assistant Commissioner of Central Excise to the effect in terms of Notification No. 21/2004CE(NT) dated 06.092004 - Held that:- The applicant cannot claim the input rebate as a matter of right when he has failed to follow the provisions of Notification No. 21/2004-CE(NT) without giving explanation for any valid reasons for not filing the declaration. In this case applicant has not admitted the occurrence of any unintentional procedural lapse and rather termed the demand of such declaration as illegal and bad in law. The condition is of such a nature that the declaration has to be filed and verification of the input output ratio is to be carried out prior to export of goods because once the goods are exported no such verification could be possible to ascertain the correctness. Government, therefore, holds that non fulfilling the statutory conditions laid down under the impugned Notification and not following the basic procedure of export as discussed above, cannot be treated as just a minor or technical procedural lapse for the purpose of availing the benefit of rebate on the impugned goods. As such there is no force in the plea of the applicant that this lapse should be considered as a procedural lapse of technical nature which is condonable in terms of case laws cited by applicant. - Rebate claim denied - Decided against the assessee.
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2016 (7) TMI 229
Rebate claim of duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002 - applicant failed to follow procedure of self sealing as provided in para 3(a)(xi) of the Notification No. 19/2004-CE(NT) dated 06.09.2004 and failed to submit triplicate and quadruplicate ARE-I to range Superintendent vide Order-in-Original No.22/10-11/ACC Rebate/Raigad dated 07.0412010. Held that:- if goods are cleared from a factory for export under claim for rebate it has to be under the cover of an ARE-I duly certified for purpose of identity of goods either by the Superintendent/lnspector or the person from the factory as the case may be. This duly verified/certified ARE-I is then certified by the Customs after due verification/examination that goods have been exported. Government notes that the verification on ARE-I prior to clearance from factory and thereafter by the Customs at the time of export helps to establish that the goods which were cleared from the factory are the same which are exported and without having followed the procedure as described in the Notification it cannot be established that goods which were cleared from factory were the ones actually exported or goods exported cannot be correlated with goods cleared from factory. Government notes that it is an undisputed fact on record that in the present case the goods have been cleared by the applicant from the factory of the manufacturer on invoices only between 19.04.2007 to 23.04.2007 and dispatched to JNPT Container Terminal for stuffing. They had prepared the ARE-I only on 24.04.2007 subsequent to clearance from the factory after the complete consignment was received at JNPT. Not following the basic procedure of export cannot be treated as a minor procedural lapse for the purpose of availing benefit of rebate of duty on impugned export goods. As such, there is no merit in the plea of the applicant that the lapse on their part be considered as procedural laps of a technical nature which may be condoned. - Rebate claim denied. - Decided against the assessee.
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2016 (7) TMI 228
Recovery of Rebate/ refund granted earlier - input stage rebate under Rule 18 had been granted to the respondent based on input output declaration which was subsequently found to be incorrect - respondent had mis-declared that the waste obtained would not be reprocessed/recycled further to obtain menthol which led to wrong fixation of the input output norm 1.250 kg DMO 1.000 kg menthol by the Division Office which effect was required to be fixed as 1:1 as the respondent was recycling/reprocessing the mother liquor and other wastes to obtain further menthol. Held that:- the Commissioner (Appeals) has erred in holding that revenue has also not appealed against the fixation of norms dated 19.08.2009. He has overlooked the fact that the respondent suppressed the fact of recycling/reprocessing of the mother liquor and other wastes to obtain further menthol from the department since 2008 and mis-declared which led to wrong fixation of the input output norm which were subsequently correctly re-fixed as 1:1 to which the respondent had agreed vide letter dated 17.02.2011. Thereafter, the rebate sanctioned on the basis of the earlier fixation of norms has been appealed against. Thus the order of appellate authority is not proper as it did not take into consideration the mis-representation of facts by the respondent to avail excess monetary benefit and subsequent re-fixing of input output norms. Commissioner (Appeals) has passed the impugned Order-in-Appeal without taking into consideration the admission statement of Shri Ram Ashish Yadav, Deputy Manager (Production) who was in charge of production of the unit and Shri Vinod Rana, Deputy Manager (Commercial) under whose supervision record of production and clearance was maintained, dated 09.02.2011 recorded under Section 14 of the Central Excise Act, 1944 as these were not placed before him. He has also ignored the fact that the respondent vide letter dated 17.02.2011 had voluntarily agreed to re-fixing of norms. Matter remanded back to Commissioner (Appeals) for fresh consideration - Decided in favor of revenue.
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CST, VAT & Sales Tax
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2016 (7) TMI 221
Release (refund) of pre-deposit amount as per the direction of the tribunal - unjust enrichment - The Government filed rectification application No.6/2014 seeking recall of the order on the ground that the same was passed on an apparent error. This application came to be dismissed by the Tribunal by an order dated 21.2.2014. This is how the Government has challenged the said three orders passed by the Tribunal on 27.2.2009, 9.1.2014 and 21.2.2014. Held that:- neither the question of unjust enrichment formed part of the discussion in the original order of the Tribunal nor the Tribunal's order dated 27.2.2009 contained any directions for refund. It was thereafter, not open for the Tribunal to give consequential directions in separate Misc. proceedings taken out by the parties five years after the order was passed by the Tribunal. For such reasons, the orders dated 9.1.2014 and 21.2.2014. are set aside. In the meantime, respondent assessee has already received the refund. Under what circumstances, the refund was released is not known to us and is not necessary for us to go into. We merely take note of the submissions made by the counsel for the respondent. - Petitions disposed of.
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2016 (7) TMI 220
Restoration of appeal which was dismissed for want of pre-deposit - Mischief in generating 'C' Form - interstate sale - revenue proposed to deny the benefit of concessional rate duty. - Counsel for the petitioner submitted that the petitioner has sold the goods to the registered dealer and was therefore, entitled to claim concessional rate of duty. Whatever be the action of such purchasing dealer, the petitioner cannot be denied the concessional rate of duty. - Held that:- the petitioner having already deposited the sum of ₹ 4,00,000/- with the department as per the direction by the Tribunal, this shall be treated as their fulfillment of predeposit condition before the first Appellate Authority, who shall hear the petitioner's appeal on merits. The Tribunal in the impugned order dated 14.03.2016 has made certain strong observations on merits. The Appellate Authority shall decide the appeal unmindful of these observations. - Decided in favor of petitioner.
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2016 (7) TMI 219
Detention of movement of goods (consignment) accompanied by the Invoice to unregistered dealers in the Form No.8 or Form No.8B - petition prays to declare that the invoice to be raised on effecting sales to unregistered dealers in terms of Rule 58(10) of the Kerala Value Added Tax Rules, 2005 are in Form No.8 - Kerala Value Added Tax Act, 2003 (KVAT) - Held that:- there cannot be any doubt regarding the workability of the Rule. “End customer” is apparently a person who purchases a product for his own use or is not purchased for resale. If the petitioner or like persons are satisfied that a product is purchased for end use, necessarily they can issue invoice under Form No.8B. Whereas, if the petitioner or like persons are satisfied that the purchase is not for an “end customer”, they are entitled to issue invoice under Form No.8 It is not an instance where the goods can be detained. It is always open for the officer concerned to make an adjudication without detaining the goods in any manner. The respondent authority shall not detain the goods merely for the reason that the invoice form used is either Form 8 or Form 8B, as far as unregistered dealer is concerned. However it shall be open for the respondents to take appropriate proceedings in accordance with law.
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2016 (7) TMI 218
Validity of re-assessment - Cancellation of registration certificate - Demand of VAT @12.5% rejecting the benefit of composition scheme - rate of tax on paving bricks/blocks - 4% or 12.5% - distinction between bricks and paving bricks/ blocks - whether the nature of activity is works contract or not - Section 15 r/w Rule 137 of Rule 15 of the Karnataka Value Added Tax Act, 2003 (KVAT) - Held that:- although the KVAT Act or Rules do not prescribe any provision for hearing a dealer prior to cancellation of the certificate issued by the authorities for payment of tax by way of composition under Section 15 of the Act, we are of the view that the principles of natural justice have to be read as part and parcel of Rule 145 of the Rules which deals with cancellation of certificate. If the facts of the present case are further examined, it is not the case of the appellant - revenue that at any point of time, notice was issued under Rule 145 of the Rules, by the concerned officer for cancellation of certificate nor it is even the case of the appellant-revenue that the certificate has been cancelled and notice was given in Form VAT-11. Under these circumstances, if the certificate is not cancelled and order of reassessment has been made, in our view, the same would run counter to the scheme of composition of tax as provided and conceived under Section 15 read with and the relevant Rules referred to above. - Benefit of composition allowed.
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