TMI Tax Updates - e-Newsletter
August 14, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Seizure of the cash by the police authorities - failure of the Income Tax department exercise requisition powers u/s 132A - When no such requisition was made, the police authority had no business to withhold the cash - HC
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Income Tax:
Tax Recovery proceedings - priority over other dues / secured creditors - the Revenue cannot prevent the petitioner-bank as a secured creditor from realizing its unpaid dues through sale of secured asset. - HC
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Income Tax:
Validity of intimation / adjustment u/s 143(1) - Exemption u/s 11A denied - Registration no. u/s 12AA was not mentioned in the ITR - Since the adjustment made by the AO is debatable, which requires verification from the assessment records, adjustment made by the revenue in the intimation u/s 143(1) is beyond the scope of section 143(1)
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Income Tax:
Deduction u/s 54F - satisfaction of relevant conditions - owning more than one house - another house was under construction and it cannot be said as another residential house owned by the assessee - exemption allowed.
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Income Tax:
TPA - CIT-(A) was not empowered to restore the issue to the file of the TPO for deciding afresh. He should have called for a remand report from the TPO and should have decided the issue after providing opportunity of being heard to the assessee. However, due to mistake on the part of the Ld. CIT-(A), the assessee cannot be allowed to suffer the justice
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Income Tax:
Accrual of income - Deferred Bank Guarantee Commission - he commission income arising from the guarantee given on behalf of the customer has been recognized by the assessee over the life of the bank guarantee. - No addition.
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Income Tax:
Rejecting of claim of loss - ad-hoc estimation of income - AO is allowed to make additions for want of evidences and the same should be fair and reasonable. - AO should avoid multiple additions on any account.
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Income Tax:
Revision u/s 263 - unexplained investments - non-initiation of penalty u/s u/s 271(1)(c) of the Act render the order erroneous and prejudicial to the interest of the revenue and upheld the revision u/s 263
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Income Tax:
Claim of exemption u/s.10(1) - agricultural nature of the income earned out of the sale of the flowering plants developed out of imported mother plants in Tissue Culture Laboratory - AO directed to exclude the said income from the total income
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Corporate Law:
Suspected to be the shell companies - investigation in respect of 331 companies by SEBI - the impugned communication issued by SEBI on the basis that the appellants (two companies) are ‘suspected shell companies’ deserves to be stayed.
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Central Excise:
Classification under Chapter Subheading No.8701.90 or under Chapter 8704.20 of Central Excise Tariff Act, 1985? - allegation that, the motor vehicles is used for transport of goods and not meant for agricultural use or engineering work. - whether or not designed to carry any load - to be classified as tractors
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (8) TMI 490
Powers to requisition u/s 132A - failure of the Income Tax department to exercise its requisition powers u/s 132A - police authorities had informed the Income Tax Department about the seizure of the cash - Held that:- When no such requisition was made, the police authority had no business to withhold the cash, if the same was not required for police parties and could not have been withheld under the powers of Criminal Procedure Code. So far as the police is concerned, when it was convinced that such amount was not involved in any illegal activity nor any offence was registered against the occupants of the car or any other person which may have link to such cash, the said authority had no reason to, in fact, no power to withhold such amount. It was always open for the competent authority acting under section 132A of the Act to requisition such amount, if the conditions contained therein were not satisfied. However, without any such requisition, it was not open to ask the police authorities not to release the amount which the said authorities otherwise did not require to withhold. Deputy Superintendent has imposed certain conditions one of them being that, if and when the Income Tax authorities required the persons from whom the amount was seized to appear and produce the amount, they would do so. - Decided against the revenue.
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2017 (8) TMI 489
Reopening of assessment - Deemed dividend u/s 2(22)(e) - Held that:- The petitioner has produced the audited accounts in the balancesheet which we have perused. The amount in question is shown as a demand to the said company. Loan is an advance made by the petitioner to the said company. The stand taken by the Assessing Officer in the reasons recorded that such sum was received by the petitioner from the company by way of a loan, is thus even otherwise not correct. We have therefore proceeded on such basis. If that be so, the reason for reopening the assessment completely lacked validity. The sole ground to reopen the assessment was that the loan received by the petitioner from private company should be treated as a deemed dividend in terms of section 2(22)(e) of the Act. When on facts the petitioner is able to show that the amount in question was advanced by the petitioner to the company and was not received by the company by way of a loan, section 2(22)(e) of the Act would have no applicability. - Decided in favour of assessee.
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2017 (8) TMI 488
Stay of the demand - Levying a penalty under Section 271(1)(c) - Held that:- Petitioner, has produced before this Court a copy of OM dated 31st July, 2017 which modifies the earlier OM, dated 29th February, 2016, issued by the Central Board of Direct Taxes (‘CBDT’) stating that standard rate for grant of stay had been revised from 15% to 20% of the disputed demand. The impugned order clearly makes no reference to the central issue in the pending appeal or the grievance of the Petitioner regarding the order passed by the AO. The impugned order in short is without reasons and is therefore unsustainable in law. For the above reasons, the impugned order is set aside and a direction is issued that the Petitioner’s application will once again be heard by the PCIT on merits and without reference to the OM dated 31st July, 2017, which, on the face of it, appears to curtail his discretion. The PCIT will dispose of the application with a reasoned order not later than two weeks from the date of receipt of this order. The CIT (A) shall also consider the request of the Petitioner for an expeditious disposal of the appeal.
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2017 (8) TMI 487
Tax Recovery proceedings - priority over other dues / secured creditors - attaching a particular immovable property for the pending dues of the Income Tax department - Held that:- The facts are not seriously in dispute. The borrower had created security interest in an immovable property by executing an equitable mortgage for availing cash credit facility from the petitioner bank. This was done on 24.11.2010. At that time, neither the assessment nor the income tax dues of the borrower were in picture. The dues which the Revenue now seeks to recover through the property in question, we are informed, pertain to assessment year 2012-13. In that view of the matter and in view of section 31B of the Recovery of Debts and Bankruptcy Act 1993, the Revenue cannot prevent the petitioner-bank as a secured creditor from realizing its unpaid dues through sale of secured asset.
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2017 (8) TMI 486
Kar Vivadh Samadhan Scheme (KVSS) benefit eligibility - withdrawing the benefit of KVSS alleging that the petitioner has not paid the amount demanded within due date - Held that:- Admittedly, the declaration filed by the petitioner was processed and an order in Form No.3 dated 06.05.1999 was issued, certifying that the petitioner paid the full tax arrears. On account of some mistakes, committed in the calculation, Revision Form 2A, dated 28.07.2000 was issued, stating that the petitioner has to pay further sum of ₹ 76,090 for being entitled to KVSS Scheme. The notice in Revised Form 2A, was received by the petitioner on 03.08.2000, and within 30 days from the receipt of the same on 31.08.2000, the petitioner has paid the said sum. However, the second respondent would state that the amount was not paid within 30 days from the date of the revised certificate. Similar is the stand taken in the counter affidavit by the respondents at para 10. The elementary principle is that, limitation can be computed only from the date of receipt of the order or the proceeding. A mere passing of order by an Officer and keeping it on his file will not be sufficient, but the order should be communicated to the assessee or the person aggrieved. Therefore, this Court finds that the petitioner has complied with the condition and paid the money within a period of 30 days from the date of receipt of the Revised Form Notice. Hence, the impugned orders have been passed on a thorough misconception of the legal position.
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2017 (8) TMI 485
Validity of intimation / adjustment u/s 143(1) - Exemption u/s 11A denied - Registration no. u/s 12AA was not mentioned in the ITR - Held that:- In this case, there was an evidence having filed application for registration but there was no evidence with the income tax department to show whether the revenue has rejected the assessee’s application for registration or not but allowed the exemption claimed by the assessee. Therefore, it is evident that the society has been granted the registration or deemed to have been granted the registration and the department has not cancelled the registration subsequently. The return of income was processed u/s 143(1) of the Act and the adjustment made by the income tax department withdrawing the exemption claimed u/s 11 of the Act unilaterally without putting the assessee on notice. The Act permits the adjustments u/s 143(1) of the Act, which are apparent from record. Since the adjustment made by the AO is debatable, which requires verification from the assessment records and there was no evidence to show that the registration applied for was rejected or cancelled, we hold that the adjustment made by the revenue in the intimation u/s 143(1) is beyond the scope of section 143(1) of the Act and accordingly, we set aside the orders of the lower authorities and delete the addition made by the A.O. - Decided in favour of assessee.
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2017 (8) TMI 484
Admission of additional evidences in violation of Rule 46A of the Income Rules, 1962 - allowing the earlier year peak while considering the computation of peak credit in respect of the impugned assessment year - Held that:- So far the submission of the additional evidence are concerned, the learned D.R. even though referred to the ground of appeal could not convinced as to how the CIT(A) had admitted the additional evidence in violation of Rule 46A. Even the nature of the additional evidence was also not brought to our knowledge. In view of this fact we dismiss this ground relating to the admission of the additional evidence in violation of Rule 46A. So far as giving of the peak credit for the earlier year while working out the peak credit of the impugned assessment year in respect of the same party we noted that the AO while working out the incremental credit for assessment years 2010-11 and 2011-12 in the aforesaid assessment year itself has allowed the credit for the preceding assessment year. Since in the impugned assessment year the AO has not considered the peak credit of A.Y. 2008-09 and taken A.Y. 2009-10 peak as first year, therefore the AO has in our view has committed a mistake. The method of computation of peak credit had even been accepted by the AO while working out the peak credit for subsequent assessment years which is apparent from para 4.1.20 of the assessment order. No illegality of infirmity in the order of the CIT(A) directing the AO to allow the credit for the peak pertaining to the earlier year, i.e. A.Y. 2008-09. Accordingly the order of the CIT(A) stand confirmed. Appeal filed by the Revenue dismissed.
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2017 (8) TMI 483
Penalty u/s 271(1)(c) - disallowing the commission payment challenging the capabilities of Ms. Divya Khanna to provide tips for purchasing shares etc. to assessee - subjective satisfaction - Held that:- In the instant case, when the AO has not disputed the particulars of income furnished by the assessee nor he has disputed the amount on which commission is claimed to have been paid by the assessee, the disallowance on the ground of challenging the capabilities of Ms. Divya Khanna to provide tips for purchasing shares etc. is merely a subjective findings which are not sustainable. These days it is a matter of common knowledge that persons of 20 years of age are capable enough to advice and carry on such business even on their own. When the AO himself has allowed the commission of ₹ 5,00,000/- having been paid to Mr. Sanjeev Khurana, merely disallowing the commission payment on the basis of subjective satisfaction without calling upon the assessee as to what type of advice and know-how has been provided by Ms. Divya Khanna to earn the business income on which tax has already been paid, the penalty cannot be imposed nor does it amount to furnishing of inaccurate particulars. So, in the given circumstances, we are unable to hold that the assessee has furnished inaccurate particulars of income for making payment of ₹ 6,00,000/- to Ms. Divya Khanna so as to attract the penalty u/s 271(1)(c) of the Act, hence we hereby delete the penalty - Decided in favour of assessee.
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2017 (8) TMI 482
Reopening of assessment - Assessment u/s 153A relied upon - Held that:- It is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information available with the AO. Thus respectfully following the decision of Co-ordinate Bench of the ITAT, Amritsar in the case of ACIT vs. Arun Kapur (2012 (6) TMI 403 - ITAT AMRITSAR) and Rajat Shubra Chatterji vs. ACIT, New Delhi [2016 (7) TMI 258 - ITAT DELHI] hold that provisions of sec. 153C of the Act were applicable in the present case for framing the assessment, if any, which excludes the application of sec. 147 of the hence, notice issued under sec. 148 of the Act and assessment framed in furtherance thereto under sec. 147 read with section 143(3) of the Act are void ab initio. Hence, the reassessment in question is accordingly quashed. - Decided in favour of assessee.
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2017 (8) TMI 481
Disallowance of expenditure - business setting up in the year under consideration or not - proof of commencement of business - accrual or receipt of income - Held that:- AO and the FAA had taken note of expenditure incurred only they had dealt with the concept of setting up of business and commencement of business. We find that after getting approval from FIPB the assessee had made downstream investments of ₹ 22.3 crores in a Bangalore based Hospitality Venture, that for acquisition of a plot of land it had provided ₹ 20 crores as application money in a JV,that had started consultation and preparing feasibility reports. In our opinion, the accrual or receipt of income is not the only criteria to decide the taxability of the assessees. Business is a complex commercial activity and it takes quite a long time to start the practical operations. Therefore, such an issue has to be decided after considering the surrounding circumstances. In the appeal before us, the AO and the FAA have held that expenses incurred were pre-operative period. Besides, the assessee is a company and it has to incur certain expenses for functioning of corporate entity. Thus the assessee had set up the business and that expenditure incurred by it has to be allowed as business expenditure – except for the expenditure incurred on account of ROC charges for increase in authorised capital. In its letter to the AO, dtd. 28.11.2011, the assessee had agreed that it had no objection if the disputed demand was disallowed. We direct the AO to allow the remaining expenses. - Decided in favour of assessee in part. Assessment of income - activity of receiving interest income or receiving some profit on redemption of short term mutual fund investment - under the head income from other sources or business income - benefit of netting of income - Held that:- We find that the assessee company was incorporated to carry on business of setting up of new hotels and investment in hotel projects. It had never applied to RBI for getting a certificate of registra-tion as NBFC. Just because it sold some debentures it cannot be treated an NBFC or an investment company. In our opinion, activity of receiving interest income or receiving some profit on redemption of short term mutual fund investment was not in nature of business. Income arising out of above two activities cannot be termed business income and that the revenue authorities have rightly taxed it under the head income from other sources. Confirming the order of the FAA, we decide second ground of appeal against the assessee. As far as netting of interest is concerned, it is found that the FAA has not dealt with the issue.In our opinion, even if income is to be assesseed under the head income from other sources,benefit of netting of income cannot be denied to the assessee. AO is directed accordingly.
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2017 (8) TMI 480
Deduction u/s 54F - satisfaction of relevant conditions - owning more than one house - another house was under construction - Held that:- What is relevant is whether the assessee satisfies the conditions of section 54F of the Act in the year under consideration. Before us, the Ld. senior DR could not controvert findings of the Ld. CIT-(A). In view of the facts and circumstances of the case, we are of the view that the assessee is entitled for deduction under section 54F of the Act because house property at 9, Mehandi Farms was under construction during the year under consideration and it cannot be said as another residential house owned by the assessee. As the assessee owned only one residential house at D-3/8 Vasant Vihar, New Delhi, the assessee is entitled for deduction under section 54F Act for investment in construction of the house property at 9, Mehandi Farms. - Decided in favour of assessee. Disallowance of vehicle running and maintenance expenses - allowable business expenditure - Held that:- Assessing Officer has failed to bring on record any documentary evidence to establish that business promotion expenses were utilised for personal purpose. Similarly regarding for disallowance out of vehicle running and maintenance expenses, the only basis adopted by the Assessing Officer, is status of the assessee and no other cogent material has been brought on record for disallowing the expenses. In our opinion, the finding of the Ld. CIT-(A) on the issue in dispute is well reasoned and no further interference is required in said finding.- Decided in favour of assessee.
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2017 (8) TMI 479
Accrual of income - Addition on Deferred Bank Guarantee Commission - method of accounting - Held that:- As part of the banking activities, the assessee gives guarantee on behalf of its customers and in consideration thereof, the assessee charged commission from such customers. The commission income arising from the guarantee given on behalf of the customer has been recognized by the assessee over the life of the bank guarantee. On perusal of the statement of facts filed before the Ld. CIT-(A), it is evident that assessee has followed consistent method of accounting of crediting income over the period of life of the bank guarantee, following the decision of the Hon’ble Calcutta High Court (1993 (5) TMI 172 - CALCUTTA HIGH COURT ) in its own case for assessment year 1981-82. The Ld. CIT-(A) has allowed relief to the assessee following the above decision of the Hon’ble Calcutta High Court. In view of above, we do not find any error in the finding of the Ld. CIT-(A) on the issue in dispute - Decided in the favour of the assessee. Disallowance on account of freight and forwarding & clearing charges - allowable business expenditure - Japanese food stuffs imported for the expat employees - assessee submitted that to develop a congenial business relations and create new business opportunities so as to expend the client base of the bank, it had to serve customary foodstuffs to entertain such Japanese customers visiting various branches of the bank - Held that:- In view of the identical issue adjudicated by the Tribunal in the case of the assessee itself, respectfully following the same, we consider the expenditure in dispute as allowable business expenditure - Decided in the favour of the assessee. Transfer pricing adjustment on account of marketing and support services - ECBs issued by Head Office and foreign branches - violation of principle of natural Justice - Held that:- We have observed that the Ld. TPO has made adjustment without providing any opportunity of hearing or issuing any show cause to the assessee for proposing the adjustment. The action of the TPO is definitely in violation of the principles of the natural Justice. We are also equally aware of the fact that the Ld. CIT-(A) was not empowered to restore the issue to the file of the TPO for deciding afresh. He should have called for a remand report from the TPO and should have decided the issue after providing opportunity of being heard to the assessee. However, due to mistake on the part of the Ld. CIT-(A), the assessee cannot be allowed to suffer the justice. Further, we note that issue in dispute in the case of Credit Lyonnais (2014 (7) TMI 1 - ITAT MUMBAI) was in respect of interest of charges received from foreign branches regarding syndicating of loan, whereas the issue in dispute in present case is regarding fee from foreign branches in respect of continued ECB. The decision of the said case is distinguishable on facts. Thus we restore the issue of computation of arm’s length price in respect of the international transaction of marketing and support services for ECBs issued by Head Office and foreign branches, to the file of the Transfer Pricing Officer (TPO)/ AO for deciding afresh in accordance with law.
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2017 (8) TMI 478
Disallowance u/s 14A - revision u/s 263 - Held that:- When the assessee has no exempt income, the question of disallowance u/s14A r.w.Rule 8D is not called for. The same view is expressed by the decision of Hon’ble Madras High Court in Redington (India) Ltd. Vs. Addl.CIT, [2017 (1) TMI 318 - MADRAS HIGH COURT], Hon’ble Delhi High Court in Chem Investments Vs. CIT, [2015 (9) TMI 238 - DELHI HIGH COURT] and Principal CIT Vs. Sintex Industries Ltd.,[2017 (5) TMI 1160 - GUJARAT HIGH COURT] held that no disallowance is called for when assessee makes small investment from the surplus funds. There was no dividend income earned by the assessee and the case was taken for revision to disallow the business loss claimed against the property income which was examined by the AO and dropped the assessment proceedings and the Ld. CIT also satisfied that there is no case for revision on account of incorrect set off of business loss. With regard to the issue of disallowance u/s 14A as per the judicial pronouncements no disallowance is called for when there is no exempt income. Therefore, we are of the considered opinion that there is no case for revision of order u/s 263 and accordingly we set aside the orders of the CIT and allow the appeal of the assessee.
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2017 (8) TMI 477
Reopening of assessment - assessee’s failure to file the return of income u/s 139 - Held that:- As the validity of the notice issued u/s 148 and reassessment order made u/s 143(3) r.w.s 147 are concerned, we find, notice issued and reassessment made should be upheld considering assessee’s failure to file the return of income in time as provided u/s 139(1) of the Act. Regarding grant of adequate opportunity of the Commissioner of Income (Appeals), we are of the view that the said ground is not supported by any evidence. We find that the Commissioner of Income Tax (Appeals) has granted a number of opportunities as detailed above for both the appeals and decided the case of the assessee. Rejecting of claim of loss - ad-hoc estimation of income - Held that:- There is no dispute on the fact that the assessee conducted the hotel business during the year under consideration, assets were put to use, expenditure are required to be incurred for conducting hotel business. Therefore, the Assessing Officer is under obligation to allow the business expenditure as per the provisions of the Act. However, the Assessing Officer is allowed to make additions for want of evidences and the same should be fair and reasonable. Assessing Officer should avoid multiple additions on any account. We find the reassessments under consideration are prima facie unreasonable and unsustainable in the present forum. For example, the Assessing Officer cannot estimate profits of the hotel business on one side and also add entire business expenditure on the other. Considering the same, we are of the view that the matters on the merits of additions on both assessment years should be remanded to the Assessing Officer’s file for fresh reassessment with the following directions. (1) The Assessing Officer shall gather data needed for GP/NP estimation from the comparable hotel industries from the comparable location/area/town and if necessary, resort to estimation provided, the books of account fail to meet the requirement of the law and if they are any way to be rejected; (2) Once estimation of GP/NP is done, Assessing Officer shall not add the expenditure claimed in the profit and loss account; (3) Assessing Officer shall allow the statutory deductions if any, as per the law out of the said estimated profits of business. Assessing Officer shall note that the best judgment assessment involves fair judgment assessment. Further, it goes without saying that the Assessing Officer shall grant reasonable opportunity of being heard to the assessee as per the set principles of natural justice
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2017 (8) TMI 476
TDS u/s 195A - assessee in default u/s 201(1)/201(1A) - non deduction of tds - period of limitation - Held that:- In the instant case the property was registered on 18.7.2007 and the assessee is liable to deduct the TDS during the F.Y.2007-08 and the 4 years time limit for initiating action u/s 201/201A expires before March 2012. In the instant case, notice u/s 195 treating the assessee as assessee in default was issued on 11.08.2013 beyond the 4 years of the financial year in which the assessee required to deduct tax at source. As held by Hon’ble Delhi High Court, the time limit for initiating the proceedings u/s 201 and 201(1A) is 4 years and it is barred by limitation. Therefore, following the decision of Hon’ble Delhi High Court, we are unable to sustain the orders of the lower authorities. Accordingly, the order passed u/s 201 / 201(1A) is set aside and the appeal of the assessee is allowed.
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2017 (8) TMI 475
Revision u/s 263 - unexplained investments - A.O. in the re-assessment order did not initiate penalty proceedings u/s 271(1)(c) - Held that:- In this case, the assessment was completed u/s 143(3) r.w.s. 147 of the Act. A survey u/s 133A of the Act was conducted and during the course of survey, evidence was found regarding unexplained investment in the form of deposits made in the bank account. Consequently re-assessment was made by the A.O. The A.O. in the re-assessment order did not initiate penalty proceedings u/s 271(1)(c) of the Act. Therefore, the CIT called for the record u/s 263 of the Act and held that though it is a prima facie case for initiation of penalty proceedings, the A.O. has not initiated the penalty proceedings. Therefore, held that omission to initiate penalty proceedings during the course of assessment proceedings renders the assessment order erroneous and prejudicial to the interest of the revenue. In the instant case, the CIT has set aside the order u/s 143(3) of the Act only with a limited purpose of initiating penalty proceedings u/s 271(1)(c) of the Act, therefore, the facts of the case relied upon by the assessee are not applicable to the assessee’s case. Hon’ble Allahabad High Court in [2004 (9) TMI 45 - ALLAHABAD High Court] relied upon by the CIT held that non-initiation of penalty proceedings renders the assessment as erroneous and prejudicial to the interest of the revenue. Similarly, in the case of CIT Vs. Ashok Construction Limited [2005 (1) TMI 18 - ALLAHABAD High Court ] held that non-initiation of penalty u/s 271B of the Act render the order erroneous and prejudicial to the interest of the revenue and upheld the revision u/s 263 of the Act. Therefore, we hold that the CIT(A) has rightly exercised the power u/s 263 of the Act and directed the A.O. to initiate penalty proceedings and no interference is called for. Appeal filed by the assessee is dismissed.
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2017 (8) TMI 474
Set-off of losses - assessee installed tall windmills relevant to the Assessment Year 2007-08 - assessee opted 2010-11 as the initial assessment year - losses pertain to AY 2007-08 to 2009-10 - eligibility for set off against the profits of the other income of the ineligible units - Held that:- Tribunal in Poonawalla Estates Stud & Agro Farm Pvt. Ltd. Vs. ACIT [2010 (9) TMI 1080 - ITAT PUNE] was approved by the Hon’ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT (2010 (3) TMI 860 - Madras High Court ). Therefore, the CIT(A) has not properly appreciated the said decision (supra). In the remand proceedings, CIT(A) is directed to consider the existing legal position on the issue under consideration and allow the claim of the assessee in accordance with law. Assessee shall be given reasonable opportunity of being heard to the assessee in accordance with the principles of natural justice. In the process, we find there is no reason for disallowing the claim of the assessee and the losses of the earlier assessment years prior to A.Y. 2010-11 are eligible for set off against the profits of the other income of the ineligible units of the earlier years. AO has grossly erred in disallowing the said set off of the said brought forward losses against the income earned from the windmills of the eligible units in the current year under consideration. Whether the assessee is justified in not making a claim u/s.32 while quantifying the allowable deduction u/s. 80IA(4) - Held that:- On considering the facts we find there is some confusion with regard to the issue adjudicated by the CIT(A). Further, we find relevant Ground No.2 is the relevant one which is raised by the assessee before the CIT(A) and contrary to the same, the adjudication of the CIT(A) is on different issue and not in the issue of allowing depreciation while computing the total income of the assessee and not while computing deduction allowable u/s.80IA(4)(iii)(a) of the Act. The issue, in principle, should be decided in favour of the assessee as the computing of total income is done in accordance with the provisions of sections 28 to 44 which include section 32 of the Act. CIT(A) is directed to grant reasonable opportunity to the assessee and consider the Ground No.2 raised before him in proper perspective and decide the issue afresh in accordance with law Appeal of the assessee is allowed for statistical purposes.
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2017 (8) TMI 473
Claim of exemption u/s.10(1) - agricultural nature of the income earned out of the sale of the flowering plants developed out of imported mother plants in Tissue Culture Laboratory - Held that:- As decided in assessee's own case for earlier AYs [2017 (8) TMI 445 - ITAT PUNE] the authorities belong indeed erred in law and on facts of this case in holding that the impugned income is not agricultural income. We, therefore, direct the Assessing Officer to treat the said income as agricultural income under section 2 (1A)(b)(i) of the Act. As a corollary to this direction, the Assessing Officer shall also exclude the said income from the total income under section 10(1) of the Act. The assessee gets the relief accordingly.
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Customs
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2017 (8) TMI 459
Import of restricted item - old and used digital multifunctional print and copier machines - misdeclaration of value - Held that: - the restrictions were imposed from June 2012 whereas the appellants imported the multifunctional copying machines prior to June 2012 when the said item was not made restricted - the appellant's case is covered by the decision of the Madras High Court in the case of Sai Graphic Systems [2013 (5) TMI 650 - MADRAS HIGH COURT], which is squarely applicable in the facts and circumstances wherein the Hon'ble High Court of Madras has held that import of goods have taken place earlier i.e., before 5th June 2012. Therefore, such reliance made on the Notification will not help the respondents in any manner to advance their case - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (8) TMI 456
Suspected to be the shell companies - investigation in respect of 331 companies by SEBI - suspension of trading in securities - Held that:- As rightly contended by counsel for appellants, letter addressed by MCA on 09.06.2017 merely required SEBI to investigate as to whether the 331 companies named therein which were suspected to be shell companies, were in fact shell companies and whether the said companies had any credentials/ fundamentals and if so SEBI was required to take action in accordance with SEBI Act and the regulations framed thereunder. Without conducting any investigation in respect of 331 companies which as per the letter of MCA dated 09.06.2017 were suspected to be shell companies, SEBI on 07.08.2017 (nearly after two months) sought to take action on the letter of MCA, by directing the three stock exchanges to suspend the trading in the securities of those companies on daily basis, by moving the securities of those companies under Stage VI of GSM against all those companies out of the 331 companies which were listed on their exchanges. Thus, it is apparent that SEBI passed the impugned order without any investigation. Even if the letter of MCA dated 09.06.2017 was considered by SEBI to be a direction given for implementation without investigation, very fact that SEBI took nearly two months to comply with the directions given by the MCA clearly shows that there was no urgency in issuing the impugned communication without even investigating the credentials/ fundamentals of those companies. In the facts of these two appeals, we are prima facie of the opinion, that the impugned communication issued by SEBI on the basis that the appellants are ‘suspected shell companies’ deserves to be stayed. Accordingly while staying the communication of SEBI dated 07.08.2017, qua the two appellants, we direct BSE and NSE to forthwith reverse their decisions both dated 07.08.2017 in case of these two appellants.
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2017 (8) TMI 455
Scheme of Amalgamation - Held that:- On perusal of the Scheme and the documents produced on record, it appears that all the requirements of section 230 and 232 of the Companies Act, 2013 are satisfied. The Scheme appears to be genuine and bona fide and in the interest of the shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. The Scheme, which is at Exhibit-A to TP Nos. 48, 49, 50 and 51 of 2017 and at Exhibit-M to TP No.52 of 2017, is hereby sanctioned and it is declared that the same shall be binding on the petitioner companies, viz. Cello Pens Private Limited, Cello Tips and Pens Private Limited, Cello Writing Instruments and Containers Private Limited, Pentek Pen and Stationery Private Limited and Cello Plastic Products Private Limited, their shareholders, creditors and all concerned under the scheme. It is also declared that the four Transferor Companies viz. Cello Pens Private Limited, Cello Tips and Pens Private Limited, Cello Writing Instruments and Containers Private Limited, Pentek Pen and Stationery Private Limited shall stand dissolved without winding up.
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Insolvency & Bankruptcy
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2017 (8) TMI 454
Corporate insolvency procedure - Insolvency and Bankruptcy Code, 2016 - qualification to maintain an application as an 'Operational Creditor' - Held that:- The matter is covered against the Applicant by our order in case Col. Vinod Awasthy v. AMR Infrastructures Ltd. [2017 (5) TMI 663 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI] wherein held that the 'Operational Creditors' are those persons to whom the 'Corporate Debt' is owed and whose liability from the entity comes from a transaction on operations. The final report of the Committee in para 5.2.1 defines 'Operational Creditor' like the wholesale vendor of spare parts whose spark plugs are kept in inventory by Car Mechanic and who gets paid only after spark plugs are sold to acquire the status of 'Operational Creditor' so and so forth. The Petitioner in the present case has neither supplied any goods nor has rendered any service to acquire the status of an 'Operational Creditor'. We are further of the view that given the time line in the code it is not possible to construe section 9 read with section 5(20) & (21) of the Code so widely to include within its scope even the cases where dues are on account of advance made to purchase the flat or a commercial site from a construction company like the Respondent in the present case especially when the Petitioner has remedy available under the Consumer Protection Act and the General Law of the land. Therefore we are not inclined to admit the petition.
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Service Tax
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2017 (8) TMI 471
Refund claim - service tax paid erroneously - rejection on the ground of time limitation - Section 11B of the Central Excise Act, 1944 - appellant case is non-applicability of time limit in cases of payment in respect of non-taxable service - Held that: - the time limit under Section 11B of the Central Excise Act, 1944 is applicable even in cases of payment of service tax paid due to mistake of law - the refund claim is filed beyond the period of limitation as provided under Section 11B of the Central Excise Act, the refund claim rightly rejected - appeal dismissed - decided against appellant.
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2017 (8) TMI 470
Non-payment of service tax - it was the case of Revenue that the appellant had collected the service tax and not paid to the Department - Held that: - in the case of IWI Crogenic Vaporization System India Vs. CCE Cus. and ST, Vadodara-II [IWI Crogenic Vaporization System India], this Tribunal has held that if the service tax has been recovered from the recipient and not paid the same to the Department, it tantamounts to intention to evade duty - in the case of Triton Communication Pvt. Ltd. [2005 (7) TMI 595 - CESTAT, MUMBAI], this Tribunal has held that financial crisis is not a reasonable cause for non-payment of service tax especially when the same is collected from the service recipient - appeal dismissed - decided against appellant.
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Central Excise
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2017 (8) TMI 469
Reversal of CENVAT credit - non-maintenance of separate records for taxable and exempt activity - trading activity - effect of amendment, retrospective or prospective? - Held that: - The provision for payment of the aforesaid amount in view of not maintaining separate books of accounts was enforced vide Notification No.13 of 2011 dated 31st Mrach, 2011 w.e.f. 1st April, 2011 as is evident on the plain reading of the said notification. The subsequent Notification dated 20th June, 2012 enforced w.e.f. 1st July, 2012 is only a repetition of the above amended Rule 6 in a different form and therefore the provision for payment of 6% of the value of the goods on the difference of sale and purchase price of the goods traded or 10% of the cost of the goods sold, whichever is more, remained in existence w.e.f. 1st April, 2011 - the Adjudicating Authority or the Commissioner (Appeals) were not right in holding that the said provision had come into effect from 1st July, 2012 and thus, disallowing the benefit thereunder to the respondent - appeal dismissed - decided against Revenue.
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2017 (8) TMI 465
Penalty u/s 78 - payment of tax with interest in being pointed out - Held that: - the situation in the present case is of a Revenue neutrality. It has been held consistently by the Tribunal and Courts that in case of revenue neutrality, intention of evasion of duty cannot be alleged as neither there is a gain/loss to the revenue or to the assesee. In the present case, the appellants have made out a fit case for waiver of penalty, as no suppression of fact is coming out from the overall circumstances available in the case. We, therefore, set aside the penalty imposed under Section 78, remaining part of the order is upheld. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 464
Limits in the litigation policy for filing the appeals - scope of input services - Held that: - CBEC vide Circular No.390/Msc/163/2010-JC dated 26/12/2014 has clarified that each order-in-original would constitute a separate case and would have to be tested individually for the qualification under litigation policy - Different services may be allowed or not allowed as input services depending on the nature of goods manufactured or the services provided - the impugned order is set aside and the matter remanded to the Commissioner (Appeals) to give specific findings in respect of each services on which credit has been denied by the original adjudicating authority - appeal allowed by way of remand.
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2017 (8) TMI 463
Simultaneous penalty on partnership firm and on partner - The basic allegation against the firm is that they have cleared the excisable goods without payment of duty against the said certificates to premises other than ones mentioned in those certificates - Held that: - on the same allegation when the penalty has been imposed on the partnership firm, then no separate penalty on the partner is warranted under Rule 26 - penalty imposed on appellant set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 462
Maintainability of appeal - refund application of unutilised CENVAT credit - Held that: - in the first round of litigation, the Commissioner (A) vide order dated 4.7.2012 in the order portion has allowed three appeals of the appellant and set aside the impugned order and only for the purpose of quantification, he has observed that the same will be done by the original authority as per Rule 5 of CCR, 2004 and notification issued thereunder - Revenue was not satisfied with this order and they have challenged this order before the Tribunal by filing three appeals and all the three appeals of the Revenue were dismissed by this Tribunal vide order dated 8.10.2015. Further, the Revenue has challenged the order of the Tribunal dated 8.10.2015 before the Hon'ble High Court of Karnataka which is still pending. Since the issue involved in the present appeal is yet to attain finality and is still pending before the Hon'ble High Court of Karnataka as stated by both the sides, therefore, it was premature for the original authority to proceed with the matter and decide the refund claim of the appellant - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 461
Classification of goods - Tractors - classified under Chapter Subheading No.8701.90 or under Chapter 8704.20 of Central Excise Tariff Act, 1985? - allegation that, the motor vehicles is used for transport of goods and not meant for agricultural use or engineering work. - whether or not designed to carry any load - Held that: - the issue is squarely covered in favor of the assessee in the assessee's own case decided by the Mumbai Bench VOLVO INDIA PVT. LTD. Versus COMMISSIONER OF CUSTOMS, NHAVA SHEVA [2004 (8) TMI 476 - CESTAT, MUMBAI], where it was held that the disputed items are to be classified under Chapter 8701.90 - Appeal dismissed - decided against Revenue.
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2017 (8) TMI 460
CENVAT credit - various input services - civil structure and architectural services - Held that: - I allow the appeal of the appellant and hold that the civil construction, pest control service, pandal and shamiana, garden maintenance, air travel service fall in the definition of input services - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (8) TMI 458
Sealing of premises - Held that: - by Amending Act 6 of 2006, section 67 was substituted from the original, in which, these powers are completely missing. Thus the legislature while reenacting section 67 consciously omitted the powers of the Commissioner for sealing such premises - There is nothing in this order suggesting that the seal was put temporarily so that the search can be resumed after the brief break. Even otherwise, according to the respondents, the business premises do not have too many documents or articles. It is therefore not possible to appreciate why the search would have continued more than a month after it was initiated - sealing the premises of the petitioner is set aside. Cancellation of petitioner's registration - case of petitioner is that no notice was served to the petitioner before this order was passed - Held that: - the petitioner was not served with any notice of proposed cancellation of registration before such action was taken by the authority under order dated 27.06.2017. If the notice dated 23.03.2017 was not served and the notice dated 12.06.2017 of the hearing dated 19.06.2017 was served after the date had passed, clearly the petitioner had no opportunity to appear before the authority and to defend its position - even otherwise, the order of cancellation of registration suffers from legal errors. As per the show cause notice dated 23.03.2017, the authorities believed that the petitioner had discontinued the business during the assessment year 2016-17. If that be so, nothing would justify cancellation of registration with effect from 22.06.2010 - canceling the petitioner's registration is set aside. Petition allowed - decided in favor of petitioner.
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2017 (8) TMI 457
Hire Purchase Agreement - sales tax payable on machineries - Held that: - the issue as to whether sales tax is 4% or 8% or as to whether the sale tax component is included in the 60 EMIs, boils down to arithmetics and mere reconciliation of accounts and numbers - The writ petitioner shall furnish a bank guarantee from a reputed bank favouring TIIC (making TIIC the beneficiary) for a sum of ₹ 17,00,000/-, within a fortnight from the date of receipt of a copy of this order - petition disposed off.
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Wealth tax
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2017 (8) TMI 472
Condonation of delay - re-filing the appeal is regarding the practice directions issued by the Court pertaining to filing of soft copies of the paperbooks in tax matters - Held that:- Sufficient advance notice had been given to the litigants and Advocates about the filing of soft copies of the paperbooks. Further, the Registry of the Court had made appropriate arrangements for scanning services at the filing counters to facilitate the making of soft copies so that the inconvenience if any caused to the Advocates and the litigants is minimized. In any event the change could not have entailed a delay of more than two years. It is not possible to accept that no one followed up on the filing of appeals and allowed a period of more than three years to elapse before the appeal could be re-filed. The Department has a cell in the High Court which is under the supervision of a Deputy CIT. He ought to be keeping track of the filing of appeals and should be able to know if any appeal entrusted to the panel counsel for filing has not been listed even once before the Court for a long time. Condonation of the delay of 1280 days in re-filing the appeal is dismissed
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Indian Laws
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2017 (8) TMI 468
Grant of licence in the existing premises - sale of liquor - time within which all documents are to be produced - main grievance of the petitioners is that it is difficult for the petitioners, who have to re-locate their Restaurants, to submit applications with all the enclosures in such short time without having appropriate premises - Held that: - this Court is of the view that no prejudice would be caused to the respondents, if the petitioners can be given time to produce all the relevant documents and permissions - petition allowed - decided in favor of petitioner.
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2017 (8) TMI 467
Grant of licence in the existing premises - sale of liquor - time within which all documents are to be produced - main grievance of the petitioners is that it is difficult for the petitioners, who have to re-locate their Restaurants, to submit applications with all the enclosures in such short time without having appropriate premises - Held that: - this Court is of the view that no prejudice would be caused to the respondents, if the petitioners can be given time to produce all the relevant documents and permissions - petition allowed - decided in favor of petitioner.
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2017 (8) TMI 466
Grant of licence in the existing premises - sale of liquor - time within which all documents are to be produced - main grievance of the petitioners is that it is difficult for the petitioners, who have to re-locate their Restaurants, to submit applications with all the enclosures in such short time without having appropriate premises - Held that: - this Court is of the view that no prejudice would be caused to the respondents, if the petitioners can be given time to produce all the relevant documents and permissions - petition allowed - decided in favor of petitioner.
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2017 (8) TMI 453
Dishonoring of cheque - offence under Section 138 of the Negotiable Instruments Act - whether the cheque was issued for towards discharge of debt or other liability as envisaged under Section 138 of the Act? - Held that:- There was no dispute with regard to the compromise Ex.CW2/X or the issuance of the post dated cheques in favour of the respondent. These facts not only proved by the respondent and his witnesses but even admitted by the witnesses examined by the petitioner. It is further proved on record that petitioner did not have sufficient funds in his account as it stands duly proved that petitioner had only ₹ 1309/- in his account. Petitioner had though tried to prove that he himself ordered “stop payment” because the land was already in the name of the Parkash Chand but the record clearly belies the version put-forth as it is a case where the cheque has not been dishonoured on account of ‘stop payment’ but on account of ‘insufficient funds’. Further story put up by the petitioner through DW3 Anil Gupta that respondent was not in a position to execute the sale deed and therefore he got the payment stopped is also not borne out or rather is contrary to the record and again deserves to be rejected for the aforesaid reasons. The findings record by the learned Courts below appears to have been based upon the correct appreciation of the pleadings and evidence and otherwise are in tune with law and therefore, warrants no interference. No merit in this revision petition
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