TMI Tax Updates - e-Newsletter
August 8, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Accrual of income - Receipt on account of membership fees - giving the services of the water park to its members - The amount of membership fees would be considered as income from the year the business of the assessee commenced - HC
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Income Tax:
Undisclosed income - salary income - Assessment u/s 143(3) r.w. Section 158 BB(1)(c) and 158BC - non filing of return will not make the income as undisclosed income since TDS must have been deducted - HC
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Income Tax:
Validity of reopening of assessment - issue of notice and service of notice are two different aspects and what is covered by section 292BB is only “service of notice”. Non-issue of notice u/s. 143(2) within the period of limitation would not be covered under the ambit of section 292BB - AT
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Income Tax:
Addition u/s 69C - CIT(A) deleted the addition - in order to invoke the provisions of sec. 69C, should give a categorical finding that the assessee has incurred any expenditure - AT
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Income Tax:
Addition of salary expenses - merely because few employees have been paid salary as cash cannot justify disallowance unless the AO is able to bring any adverse material to suggest that the claim of salary incurred by the assessee is bogus - AT
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Income Tax:
Levy of penalty u/s 271(1) - where the actual sale consideration is replaced by the sale consideration determined as per DM circle rate under the deeming provisions of section 50C, the same cannot be basis for levy of penalty under section 271(1)(C) of the Act. - AT
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Income Tax:
Exemption u/s.54 - investment made in residential house situated outside India - the assessment year under consideration is 2010-2011 i.e. much prior to the amendment so brought in Finance (No.2) Bill, 2014. There is no reason to decline exemption u/s.54 during the A.Y.2010-11 - AT
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Income Tax:
Disallowance as per section 14A r.w.Rule 8D(2)(iii) - the expenses on account of auditor fee, legal and professional fees, profession tax, business support fees cannot be said to have any direct or proximate nexus with the activity of investment or earning the exempt income. - AT
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Customs:
Classification of Business satellite receivers – Heading 85.25 deals with transmission apparatus, even if apparatus transmitting signals have additional functions of reception of signals as well - Tribunal rightly classified goods under 8525.20 - SC
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Service Tax:
Online Information and Database Access or Retrieval (OIDAR) - appellant prima facie has reasonably good case that educational institutions, particularly, the Govt. institutions which are major recipients of OIDAR service did not/could not have used the said service for business or commerce as these are not institutions for business or commerce - AT
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Central Excise:
Classification of Nizral as shampoo or hair medicament - Classification CSH 3003.10 or under CSH 3305.99 - there is no force in the submission that the product must be equated with shampoo - held as medicament - SC
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Central Excise:
Suppression of facts - Extended period of limitation - The method or formula may have been incorrect or not the applicable one, but the revenue proceeded to approve the price list - Now revenue cannot turn around and allege suppression or mis declaration on the part of the assessee - HC
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VAT:
Detention of goods - goods were not accompanied with e-Transit pass - If the 1st respondent is of the view that the goods escaped the assessment, it is open to him to convey the same to the Assessing Officer by way of a communication for passing appropriate orders - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (8) TMI 234
Disallowance of deduction claimed under section 80IA - CIT(A) allowed claim - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (8) TMI 233
Income arising on purchase and sale of shares - business income OR income from investments under the head 'capital gains' - Held that:- On examination of the manner in which the Appellant carried out its activity of purchase and sale of shares facts are indicia of the Appellant doing business in shares as a dealer thereof and not as an investor. Normally, no investor would deal with six different share brokers, or for that matter borrow funds for the purposes of investment in shares. Further, the tax audit report filed by the Appellant had classified the Appellant's transactions in shares as shares trading transactions. Moreover, the impugned order of the Tribunal also records that the number of transactions carried out by two Appellants were 100 and 120 shares respectively in a very short period. Further, the turnover in case of the father was ₹ 4.89 Crores and in case of son was ₹ 4.12 Crores. All these were indicative of there being a regular systematic activity which is the activity of business being pursued by the Appellant. We do not find any merit in the submission that the Tribunal in the impugned order while dealing with the issue of charging tax under the head 'business income' or as 'capital gain' was influenced by the fact that some transactions were found to be bogus. In fact, the impugned order after making the above observation with regard to the Appellant's conduct, observes that notwithstanding the same, the income on purchase and sale of shares is taxable as business income. Tribunal was correct in treating the income arising on purchase and sale of shares as business income and not as income from investments under the head 'capital gains' as sought by the Appellants. - Decided against revenue.
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2015 (8) TMI 232
Retrospectivity of the amendment to Section 40(a)(ia) by the Finance Act, 2010 given effect from 01.04.2010 - Held that:- This question came up for consideration before the Gujarat High Court in the case of Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] after referring to the judgments of Allied Motors (P.) Ltd. Vs. CIT [1997 (3) TMI 9 - SUPREME Court] and CIT Vs. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT ] in giving retrospective operation to the said amendment notwithstanding that the parliament has expressly stated that it comes into effect from 01.04.2010. The said amendment is curative in nature. The tribunal committed an error in holding it as prospective. The substantial questions of law is answered in favour of the assessee and against the revenue.
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2015 (8) TMI 231
Accrual of income - Receipt on account of membership fees - giving the services of the water park to its members - commencement of commercial activities - Held that:- Tribunal has committed an error in passing the impugned order so far as considering the membership fees as income when the assessee had not resumed giving the services of the water park to its members. Under such circumstances, the amount received by way of membership fees was required to be considered as an advance and thereafter as and when the business commenced the amount of liability was required to be taxed over a period of time proportionately. The amount of membership fees would be considered as income from the year the business of the assessee commenced. See Commissioner of Income-tax vs. Bilahari Investment P. Ltd reported in [2008 (2) TMI 23 - SUPREME COURT] and in the Commissioner of Income Tax vs. Excel Industries Ltd & Mafatlal Industries P. Ltd reported in [2013 (10) TMI 324 - SUPREME COURT]. - Decided against the revenue and in favour of the assessee.
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2015 (8) TMI 230
Validity of assessment u/s 153A - reopening of assessment - Held that:- In case where the requisition is made, the assessment of that particular year is required to be done and the assessing officer is not required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which year search is conducted or requisition is made. The income tax officer after making a valid requisition under Section 132A was to proceed and make an assessment in accordance with the procedure prescribed under Section 132B of the Act by making an assessment of that relevant assessment year under Section 153A of the Act but had no jurisdiction to reopen the assessment of the preceding years. Consequently, the notices dated 15th October, 2012 issued under Section 153A of the Act reopening the assessment proceedings for the year 2006-07 to 2011-12 are all quashed. Notice for making the assessment for the assessment year 2012-13 is valid. - Decided partly in favour of assessee.
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2015 (8) TMI 229
Revision u/s 263 - case of the assessee that invocation of the power under Section 263 was illegal and that even on merits the order passed by the Commissioner was untenable - ITAT confirmed revision - Held that:- We have gone through the common order passed by the Tribunal. Reading of the order shows that the Tribunal has made reference to few judgments cited before it and finally concluded that the Commissioner has rightly exercised his jurisdiction under Section 263 of the Act. However, the Tribunal has not dealt with any of the contentions raised by the appellant on the merits of the matter. In other words, in so far as the contentions of the appellant on the merits of the issue, which were urged in the appeal memorandum are concerned, there is total non-application of mind on the part of the Tribunal. This necessitates re-consideration of the appeal by the Tribunal. - Decided partly in favour of assessee for statistical purposes.
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2015 (8) TMI 228
Undisclosed income - salary income - Assessment order passed under Section 143(3) r.w. Section 158 BB(1)(c) and 158BC - Held that:- Assessee was working as an Engineer under a Government Department. The income is a salaried income therefore, it cannot be considered to be of undisclosed nature. Tax must have been deducted from the salary income provided his salary is taxable. Looking to the order passed by the ITAT and looking to the evidences on record and looking to the facts and circumstances of the case and also looking to Section 158 BB(1)(c) to be read with Section 158 BC to be read with Section 143(3) of the Income Tax Act, 1961 it cannot be said that the income of the respondent was an undisclosed income as he was salaried man in the Government Department and TDS must have been deducted and therefore, only substantive question of law raised by this appellant that whether the Tribunal is justified on the facts and in the circumstances of the case in holding the salary incomes falling under the block period as disclosed, when no returns were filed for these years looking to Section 158 BB(1)(c) of the Income Tax Act, 1961. Answer of this substantive question of law is that no error has been committed by the Tribunal in deciding this issue. There was no other income with the salaried man which is taxable. - Decided in favour of assessee.
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2015 (8) TMI 227
Transfer pricing adjustment - selection of comparable - Held that:- Avani Cimcon company is engaged in the development of software products as well as software services. However, there are no segmental details available in the financial account of this company. Therefore, this company cannot be considered as a good comparable of the assessee company which is purely a software development company and not in software product. See M/s. 3DPLM Software Solutions Ltd. [2014 (12) TMI 612 - ITAT BANGALORE] Bodhtree Ltd is in the business of software products and was engaged in providing open & end to end web solutions software consultancy and design & development of software using latest technology unlike a software development services company as like assessee, thus we direct the AO/TPO to exclude this company from the list of comparables. See M/s CISCO Systems India Pvt. Ltd case [2014 (11) TMI 849 - ITAT BANGALORE]. Celestial Labs Ltd. ompany is functionally dis-similar and different from the assessee in the case on hand and is therefore not comparable and also that the findings rendered in the cited decisions for the earlier years i.e. Assessment Year 2007-08 is applicable for this year also, thus we direct the TPO/AO to exclude this company from the list of comparables. E-Zest Solutions Ltd. is engaged in the business of consultancy services and technical services which is categorized as KPO services hence, it is functionally not comparable to the assessee Infosys Technologies Ltd. cannot be considered as good comparables of the assessee because this company own intangibles apart from the industry leader in the field. Kals Information Systems Ltd was developing software products and not purely or mainly software development service provider. We therefore accept the plea of the Assessee that this company is not comparable. Persistent Systems Ltd. in the absence of segmental details / information a company cannot be taken into account for comparability analysis, we hold that this company ought to be omitted from the set of comparables for the year under consideration Quintegra Solutions Limited be excluded from the list of comparables in the case on hand since it is engaged in proprietary software products and owns its own intangibles unlike the assessee in the case on hand who is a software service provider. Tata Elxsi Ltd should not be regarded as a comparable as software segment of this company comprises the activity of product designing services and therefore, this company is not purely software development service provider Thirdware Solutions Ltd company is engaged in the software development products as well as software development. However, no segmental information is available on this company. Further this company acquired intangible assets and derived revenue based on sales of licences. Thus this company was found to be functionally dissimilar to that of pure software development service provider. Wipro Ltd company is a industry leader and also owns tangibles. He has further submitted that this company is engaged in product development and services. However, the segmental information is not available. He has pointed out that there is a amalgamation during the year and the software service revenue to the sales is less than 75%., thus we direct the AO/TPO to exclude this company from the list of comparables. Softsol India Ltd - if the filter of RPT at 15% is applied in a particular comparable then, this filter should also applied to all other comparables companies. The assessee has also disputed functional comparability of this company and contended that this company is engaged in the software product development. However, the relevant record has not been produced before us to show the functional profile and the revenue generated activity of this company. In view of the facts and circumstances of the case, we are of the considered opinion that the functional comparability as well as the applicability of RPT filter is required to be properly examined at the level of TPO. Accordingly, we set aside the functional comparability and application of the RPT filter to the record of the TPO. Mindtree in the absence of relevant facts and record, we are not in a position to give any finding regarding the comparability of this company. Therefore, a lapse on the part of TPO in some other case cannot be a ground of rejection of this company in the present case. Accordingly, in the facts and circumstances of the case, we remit this issue to the record of the TPO/AO to re-examine the functional comparability of this company by verifying the relevant facts. Lucid Software be omitted from the list of comparables for the period under consideration in the case on hand as , is engaged in the software product development and not software development services, it is functionally different and dis-similar Denial of deduction u/s 10A - Held that:- Following the order of the co-ordinate bench of this Tribunal in assessee’s own case we decide this issue in favour of the assessee and direct the AO to allow the claim of deduction u/s 10A of the IT Act, 1961 as where a firm is converted into a company and there was change only in the composition of ownership and not the undertaking and business, the exemption allowed to the firm u/s 10A of the Act, could not be denied to the company merely because it had been separately granted recognition. - Decided in favour of assessee.
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2015 (8) TMI 226
Validity of reopening of assessment - non service of notice u/s. 143(2) before completion of the assessment u/s. 147 - DR relied on the provisions of section 292BB of the Act and submitted that non-issue of notice u/s. 143(2) within the time specified under the proviso to sec. 143(2)(ii) will not render the order of reassessment null and void - Held that:- The two provisos in sub-section (1) to section 148 has been inserted with retrospective effect from 1st October, 1991. The gist of the two provisos may suitably be stated thus- Where a return has been furnished daring the period commencing on 1st October, 1991 and ending on 30th September, 2005, in response to a notice of reassessment served under section 148, and subsequently a notice has been served under section 143(2) [or 143(2)(ii), as the case may be] after the expiry of twelve months as specified in the relevant proviso but before the expiry of the time-limit for making the assessment, reassessment or re-computation as specified in section 153(2), such (otherwise time-barred) notice shall be deemed to be a valid notice. Further, the new Explanation inserted with effect from 1st October, 2005, specifically clarifies that the aforestated (newly inserted) provisos shall not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. The purpose of the amendment is to ensure that notices which were issued and barred by limitation and those which were not issued and which could not have been issued should be validated by the Finance Act, 2006 with retrospective effect from 1st April, 1990 amending section 142 for the purpose of validating notices which were otherwise not issued or served within the time-limit. The invalidity of notice as well as the absence of any notice became fatal to the proceedings and are sought to be validated and justified by the retrospective amendments. The explanation clarifies that the amended provisions will not apply to any return which has been furnished on or after 1st October, 2005, in response to a notice served under section 148(1) of the Act. Thus the legislature has accepted the position that issue and service of notice u/s.143(2) of the Act within the time limit laid down in those provisions is mandatory. We therefore, of the view that issue and service of notice u/s. 143(2) of the Act within the period of limitation contemplated under the proviso to sec. 143(2)(ii) is mandatory for validity of assessment u/s. 147 of the Act. Applicability of provisions of section 292BB - It is clearly from the statutory provisions that these provisions only insulate the AO from the proof of service of notice u/s. 143(2) of the Act. It does not in any way insulate the AO from default in issuing notice u/s. 143(2) within the period of limitation contemplated therein. When the records show that there was no issue of notice u/s. 143(2) within the period of limitation prescribed under the said proviso, the Revenue cannot take advantage of the provisions of section 292BB. In other words, “issue of notice” and “service of notice” are two different aspects and what is covered by section 292BB is only “service of notice”. Non-issue of notice u/s. 143(2) within the period of limitation would not be covered under the ambit of section 292BB of the Act. The decision of the Tribunal in the case of Amithi Software Technologies Pvt. Ltd. (2014 (2) TMI 989 - ITAT BANGALORE) clearly supports the plea of the assessee in this regard. We therefore hold that assessment proceedings are invalid for the reason that notice u/s. 143(2) had not been issued and served within the time limit prescribed by those provisions. Accordingly, the order of assessment is annulled. - Decided in favour of assessee.
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2015 (8) TMI 225
Transfer pricing adjustment - Computation of Arms Length Price - selection of comparable - Held that:- CIT(A) was justified in applying the turnover filter and excluding companies whose turnover was beyond ₹ 200 Crores. No company which was included by the CIT(A) on the basis of the filter of diminishing revenue and therefore the grievance projected by the Revenue is found to be without any basis and hence dismissed. Standard deduction of 5% of the arm’s length price allowed to the Appellant by the CIT(A) - if the difference between the arithmetic mean of the profit margins comparable companies ultimately retained and the profit margin of the Assessee is more than 5% than no deduction under the proviso to Sec.92C(2) of the Act could be allowed to an Assessee. TATA Elxsi Ltd was rightly excluded from the list of comparable companies as it is specialised Embedded Software Development Service Provider and that it cannot be compared with any other software development company. Thirdware Solutions Ltd., and Geometric Software Solutions Ltd. were held to be functionally different from a company rendering software development services thus directed to be excluded as relying on case of Sunquest Information Systems (I) Pvt.Ltd [2015 (6) TMI 723 - ITAT BANGALORE] M/S.Exensys Software Solutions Ltd company has to be excluded for the reason that it is functionally different from a software development service provider such as the Assessee because it operates three business segments viz., provision of software services, BPO services and software products. Sankhya Infotech Limited (‘Sankhya’) company activities set out as compared in the context of a software development company such as the Assessee makes it amply clear that this company Sankhya cannot be regarded as a comparable. The same is directed to be excluded from the list of comparable companies. Bodhtree Consulting Ltd is directed to be excluded from the list of comparable companies as this company has erratic margins and growth over the years. The margins of Bodhtree are consistently changing. This reflects that the revenue recognition policy followed by Bodhtree is not proper and is resulting in consistent change in margins. Further, the growth rate over the years is also fluctuating to extremes. Further, growth in revenues is not supported by growth in expenses. Method of computation of deduction u/s.10A - Held that:- Expenses that are reduced from the export turnover should also be reduced from the total turnover .CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein held that whatever is excluded from the export turnover should also be excluded from the total turnover for the purpose of computing deduction u/s.10A of the Act. - Decided in favour of assessee.
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2015 (8) TMI 224
Reopening of assessment - validity of reassessment - notice u/s 148 was not issued/served upon the assessee within the statutory period of limitation as per assessee - Held that:- On careful consideration of the facts in the light of submission of the appellant, it is evident that the ld. AO had sent the notice u/s 148 dated 18.3.2011 at the previous address of the appellant, which was changed 6 years ago by the appellant. Necessary information was specifically given to the AO in this regard and even the address was changed in the PAN data base. It is very likely that the AO, simply attached the information received from the Investigation wing with the return for the AY 2004-05 and issued the notice u/s 148, without bothering to find out whether the appellant continues to be at the same address at which it had filed the return 5 years ago. Neither did he check the address from the current return nor from PAN data base. It is thus evident that the notice sent at wrong address was to return back. Strangely the AO has also acknowledged these facts in the impugned order. Thus if the notice dated 18.3.2011 had returned before 31.3.2011, why the AO not applied mind in the matter to find out the correct address, by looking at data base of his assesses. The argument that it was the appellant, who had at some point of time given this address, is of no relevance, as the AO was in possession of the new address, which was duly informed by the appellant, and from which later returns were filed and which was also available in the PAN data base. Thus the reassessment proceedings in pursuance of the notice u/s 148, which was not served upon the appellant (within the prescribed time) as bad in law. Further, on perusal of the copy of the notice the same shows that the notice u/s 148 is silent about the assessment year for which the proceedings were to be reopened. Thus the notice u/s 148 as invalid.- Decided in favour of assessee. Addition u/s 68 - CIT(A) deleted the addition - Held that:- The appellant had furnished all relevant information to substantiate the identity, genuineness and creditworthiness of the share applicants by filing conformation, their PAN/ITR Details, copy of bank statements, ROC documents for allotment of shares. Appellant had duly discharged the onus and it was the responsibility of the AO to have made necessary verification in respect of the evidences furnished by the Appellant. Since the ld. AO made no efforts at any stage, be at the stage of recording of the reason for reopening of the case or at the assessment stage, the Appellant had duly substantiated the necessary requirements for holding cash credit as explained. Factually also, there were no specific adverse observations nor any contradiction observed by the AO in respect of such evidences and hence the action of the AO in holding the same as unexplained cash credit was without any basis, cogent grounds and was therefore unjustified. See CIT vs. Lovely Exports P. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2015 (8) TMI 223
Addition u/s 69C - CIT(A) deleted the addition - Held that:- In the instant case, we notice that the assessing officer has placed heavy reliance on certain documents first referring to the seized material. The AO himself observes that the page 81 pertains to Consignment Purchases. There should not be any dispute that the assessee would be acting as an agent only in respect of Consignment purchases and hence the concerned principal would be liable to answer the differences, if any, in the transactions. In respect of transactions found in page 82 relating to M/s Haryana Steels, the assessee has stated that they are also related to consignment purchase. We notice that the assessing officer has, in fact, examined Ledger account copy of the assessee as available in the books of M/s Haryana Steels and found that there are differences. Though the AO observes that the assessee could not reconcile the difference, yet we notice that there was a difference of a meager amount, which the assessee has explained that it could be a rebate difference. We notice that the assessing officer has not examined M/s Haryana Steels in order to disprove the claim of the assessee. Without examining the explanations given by the assessee and without disproving the same, we are of the view that the AO was not justified in drawing adverse inferences against the assessee. AO, in order to invoke the provisions of sec. 69C, should give a categorical finding that the assessee has incurred any expenditure. In the instant case, the assessing officer has not even attempted to find out as to whether the relevant transactions, in which the alleged rate difference was found, pertain to the assessee or not. In this regard, the AO should have examined the books of accounts maintained by the assessee, which he has failed to do. In our view, the AO could not have drawn adverse inference without examining the books of account in order to find out as to whether the said transactions belong to the assessee, particularly in view of the fact that the assessee has been acting as consignment agent also. Hence we are of the view that the rate difference noticed in the documents cannot come to the support of the AO. In the instant case, the view of the AO could have been upheld if he had made one to one comparison of purchase bills found during the course of search/survey with the entries recorded in the books of account, conducted necessary investigation/enquiries and then established the fact of unaccounted payments. Admittedly, in the instant case, the AO has failed to do this exercise. - Decided against revenue.
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2015 (8) TMI 222
Disallowance of bad debts - CIT(A) deleted disallowance - Held that:- From the facts on record, Ld. CIT(A) observed that the assessee had a long business relations with these parties and they were not only old but valuable customers/suppliers of the assessee who given significant business to the assessee. The Ld. CIT (A) takes note that the amounts written off in the case of Ajit Hospital and Gopal Surgical were in respect of sales made by the assessee to these parties. Whereas, in the case of Aesculap the amount represented the excess payment made by the assessee to foreign supplier. The assessee had filed details of bad debts written off with copies of accounts of debtors of the amounts written off stating that they were business transactions and we have perused the same which is placed and finds that the explanation of the assessee is corroborated by the documents placed on record. Having considered all the facts of the case, we find that the Assessing Officer was not justified in making the impugned disallowance as the amounts in question were written off by the assessee in accordance to section 36(2) and 36(1)(vii) of the Act. Accordingly, the addition made by the Assessing Officer was rightly deleted by the Ld. CIT(A) - Decided against revenue. Addition on account of sundry creditors - CIT(A) deleted addition - Held that:- A perusal of the letter of assessee shows that Amitabh Mendiratta was a retainer of the assessee who left the institution on 31.03.2008 and went abroad. The amount shown as sundry creditor by the assessee is the amount due to said Amitabh Mendiratta. Just because the assessee could not give the confirmation about the said amount which is due for Amitabh Mendiratta does not mean that it is a bogus entry made by the assessee.We find that the AO mis-directed himself by not going through the entire explanation given by the assessee in respect to his explanation in respect to the sundry creditor as observed by the ld. CIT (A). Therefore, considering the facts of the case, ld CIT(A) has concluded that that there is no justification for the Assessing Officer to make the impugned addition. Accordingly, he deleted the addition which does not need any interference on our part - Decided against revenue. Addition on account of proportionate disallowance of commission expenses - CIT(A) deleted addition - Held that:- CIT (A) took note of the fact that the assessee had fully explained the accounting of the impugned commission income. According to the ld. CIT (A), the Assessing Officer had failed to appreciate the correct factual position. The ld. CIT (A) has taken note that the assessee had accounted for these two amounts in his books of account since these had been actually received during the relevant year. The ld. CIT (A) has observed in respect to commission expenses were concerned, they had been paid to the assessee's agents in India who had rendered services to the assessee. The ld. CIT (A) has made a finding that the payments of commissions were made after deducting corresponding TDS as per law. In the said facts and circumstances, ld. CIT (A) held that there was no justification for making any proportionate disallowance out of commission expenses - no infirmity in the findings of the ld. CIT (A). Therefore, she has rightly deleted the addition - Decided against revenue. Addition on account of contravention of provisions of section 40A(3) - CIT(A) considering the practical problem with the local and small time shopkeepers, justified the cash payment for purchase of gift and she deleted the addition - Held that:- The view adopted by the Ld. CIT(A) is not correct because she was doubting whether the gift purchase by assessee was for a single transaction on a given day. We find on perusal sale bill of gift for ₹ 41,600/- dated 08.08.2008, which was paid in cash, so is in contravention of section 40A(3) of the Act. Therefore, we find that the AO has disallowed the amount of ₹ 41,600/- on valid ground. In our view, the AO rightly held that since the assessee failed to furnish any evidence to prove that these payments did not fall within any of the exceptions of Rule 6DD, there was a contravention to the provisions laid down in section 40A(3) - Decided in favour of assessee. Addition of salary expenses - CIT(A) deleted addition - Held that:- Out of 14 employees to whom the assessee claims to have paid the salary, only 3 were not given salary by cheque. Other 11 employees were paid by account pay cheque and cash. The assessee had produced the appointment letters of the said employees and confirmation from them that they have received the said salary as claimed by the assessee. We were taken through the month wise chart showing details of salary paid to employees of the assessee for the period from 1.04.2008 to 31.03.2009 along with confirmation and appointment letter of the employee are on record. In the light of the said evidences, merely because few employees have been paid salary as cash cannot justify disallowance unless the AO is able to bring any adverse material to suggest that the claim of salary incurred by the assessee is bogus - Decided in favour of assessee. Addition on account of negative cash balance - Held that:- Finding of CIT(A) cannot be countenanced. The undisputed position is that there was negative cash balance on 01 November 2009 of ₹ 51,707/-. The basis of CIT (A) that expenditure incurred as per cash book of ₹ 4,600/- was not actually expended on 28/Feb/2009 is unsupported by any material. It is an afterthought of the assessee, as cash book has been maintained and produced in the course of the proceedings. As regards the explanation of ₹ 10,000/- that the same was incurred out of own sources does not deserve any merit as it is a more self serving explanation without any basis. We therefore reverse the conclusion of CIT(A) and uphold the action of AO in bringing to tax a sum of ₹ 57,707/- as unexplained income of the assessee. - Decided in favour of revenue.
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2015 (8) TMI 221
Double deduction of depreciation - assessee is a trust engaged in charitable activities and registered u/s.12A - assessee claim of depreciation on fixed assets during the year disallowed citing as double deduction - CIT(A) allowed claim - Held that:- By way of amendment in Finance Act 2014 in Section 11(6) of the Act, depreciation will not be allowed while computing application of income w.e.f.1-4-2015. Thus, the amended provisions are applicable w.e.f.A.Y.2015-2016. However, the section does not mention anything for applicability prior to A.Y.2015-16 cases. So cases prior to A.Y.2015-2016 have to be decided as per the law applicable during that period.In view of the above amended provision, which is applicable w.e.f. Assessment Year 2015-2016, we do not find any infirmity in the order of CIT(A) for allowing assessee’s claim for depreciation relying on the decision of jurisdictional High Court case of Indraprastha Cancer Society [ 2014 (11) TMI 733 - DELHI HIGH COURT ] in respect of assessment years falling prior to 2015-2016. The decision of the Hon’ble jurisdictional High Court in the case of CIT Vs. Institute of Banking Personnel (2003 (7) TMI 52 - BOMBAY High Court ) is squarely applicable in this case. - Decided against revenue Carry forward of deficit on account of excess expenditure denied - CIT(A) allowed the appeal of assessee - Held that:- The issue of excess application of income of earlier years to be carried forward is decided in favour of the assessee in the decision of Higher Judicial Forum in Commissioner of Income-Tax Versus Institute Of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court] as referred to and relied by the CIT(A). Therefore, respectfully following the decision relied upon by the CIT(A) and applicable under the facts and circumstances of the case, these grounds of the Revenue are dismissed. - Decided against revenue
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2015 (8) TMI 220
Gain from the sale of shares - capital gain OR business income. - assessee trust contends that the gain was capital gain exempt from tax u/s 10(38) - Held that:- As held by CIT(A) and not refuted by the Department, that the Trust is expressly prohibited from undertaking any business activity. Moreover, the avowed intention of the Trust has never been disproved and it is only that the alleged intention of carrying on business has been superimposed thereon. This has rightly been rectified by the ld. CIT(A) by making detailed observations regarding the observation of the A.O., that the intention of the Settlors themselves was to carry on business activity, being extraneous, a valid Trust having come into existence and such Trust having not been found to be ingenuine; that the acquisition of shares was not a voluntary purchase made by the assessee Trust, but they were contributed to its corpus at the time of the very inception of the Trust; that the assessee’s claim holding pattern by way of diversification of asset was also not repelled by the A.O.; that the fact that a Portfolio Manager was appointed is synchronous with the intent and objective of the creation of the Trust; and that holding the shares of just one corporate entity not being desirable was a decision as per the prudence of the Trust. We, for the above discussion, are ad idem with the ld. CIT(A), in arriving at the conclusion that from the sale of shares undertaken by the assessee during the year under consideration, no business activity stands made out. Therefore, we uphold the action of the ld. CIT(A) in directing the A.O. to treat the gain in question as a capital gain. However, this gain was claimed by the assessee as exempt u/s 10(38) of the Act. As per this provision, any income arising from the transfer of a long term capital asset, being an equity share in a company, shall not be included while computing the total income. This has not been taken into consideration by the ld. CIT(A), though this provision is clearly applicable to the facts of the case. Accordingly, the grievance of the assessee is found to be justified and is accepted as such. We hold that the profit on the transfer of shares is assessable as capital gain exempt u/s 10(38) of the Act. - Decided in favour of assessee.
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2015 (8) TMI 219
Disallowance of commission on performance guarantee - Held that:- The contention of the assessee is that the expenditure was required to be incurred under a contract, therefore being a contractual liability, the assessee was required to make the payment of commission as per the terms of the agreement. The liability of the expenditure is not disputed and the expenditure has been disallowed on the basis that the details were not available before the authorities below. Under these facts of the case and taking a note of the fact that the assessee has produced copies of various agreements relating to the payment of commission were required to be paid by the assessee, we are of the considered view that the AO should verify the evidences placed before him about the quantum of commission paid and also the nature of services received by the assessee. Thus, grounds raised in this appeal are restored to the file of AO for verification and the appeal of the assessee for AY 2004-05 and for this AY 2005-06 also is treated as allowed but for statistical purposes.
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2015 (8) TMI 218
Validity of assessment u/s 153C - whether on 8.5.2009, when proceedings were initiated against the assessee u/s. 153C, there was material to show that the document found and seized in the course of search of Skyline group of cases belonged to the assessee? - Held that:- The condition precedent for issuing notice u/s. 153C is that the document seized in the course of search of Skyline group of cases should belong to the assessee. In the present case, what was found was a photocopy of the agreement for sale dated 18.4.2004. Purchaser has not signed this document. In the course of search nobody was examined nor post-search investigations was made regarding the absence of signature of the assessee in this document. The document in question is a photocopy of agreement for sale dated 18.4.2004, which is signed only by the Vendors and in which the assessee’s name as purchaser is found, but the assessee’s signature is not found in the said document. As we have already observed, there has been no post-search enquiries on the aforesaid document. In such circumstances, we fail to see as to how the AO formed an opinion that the document found in the course of search belongs to the assessee. The proceedings against the assessee commenced on issue of notice u/s. 153C on 8.5.2009. In the order u/s. 153C, there is a reference to the agreement for sale seized and the difference in value between registered document and agreement for sale. There is a reference to show cause notice dated 18.11.2004 issued to assessee and reply dated 19.11.09 filed by the assessee. The order of assessment was passed by the AO on 29.12.2009 and there is no reference to any other document or statement in the order of assessment. Even before us, no material was placed regarding the basis on which satisfaction note dated 8.5.2009 was recorded by the AO. In these circumstances, we are of the view that assumption of jurisdiction u/s 153C of the Act was not proper and therefore the proceedings for both the assessment years are required to be quashed. We also derive support for the above conclusion from the decision of Vijaybhai N Chandrani v. ACIT,(2010 (3) TMI 770 - Gujarat High Court ), wherein it was held that the fact of a reference to the name of person in the seized document cannot be the basis to come to the conclusion that the document belonged to the said person. - Decided in favour of assessee.
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2015 (8) TMI 217
Levy of penalty u/s 271(1) in relation to disallowance of excess claim of interest deduction under section 24(b) - Held that:- The appellant has taken a plausible view that she was eligible for interest deduction to the extent of ₹ 150,000/-. In our view, where the claim of the appellant is not under dispute and on quantum of deduction, the appellant has taken a plausible view, the AO can differ with the said view by way of disallowing the excess claim but the same cannot be a basis for levy of penalty. In result, the levy of penalty on account of excess claim of interest deduction u/s 24(b) of the Act is deleted. - Decided in favour of assessee. Levy of penalty in relation to short computation of long term capital gains - Adjustment on account of increase in sale consideration - Held that:- On reading of section 50C(1) of the Act and applying the same in context of subject facts, it is clear that it is a deeming provision where the value adopted for determining the stamp duty by the state Government authority is considered and replaced for the actual sale consideration accrued/received by the appellant. It is not the case of the Department that the appellant has received more than the value disclosed as sales consideration and has failed to disclose the same in her return of income. Where the actual sale consideration is less than the stamp duty value and by virtue of a deeming fiction, the latter is deemed by the AO to be the full value of consideration, it cannot be said that the appellant has concealed her income or furnished inaccurate particulars of income. All the primary facts have been duly disclosed by the appellant including DM Circle rate and the same have not been disputed. The fact that the assessee agreed to the addition is not conclusive proof that the sale consideration as per agreement was incorrect and wrong. We are therefore of the view that where the actual sale consideration is replaced by the sale consideration determined as per DM circle rate under the deeming provisions of section 50C, the same cannot be basis for levy of penalty under section 271(1)(C) of the Act. - Decided in favour of assessee. Adjustment on account of cost of acquisition/improvement - Held that:- cost of acquisition and cost of improvement has been reduced from ₹ 45,76,000 to ₹ 38,32,240 resulting in disallowance of cost by ₹ 7,43,760 for want of documentary evidence. As far as penalty is concerned, nothing has been brought on record as to whether the appellant has concealed any income or has furnished inaccurate particulars of income. On account of nonacceptance of the explanation of the assessee, the additions can be made but penalty under section 271(1)(c) cannot be levied. Penalty levied deleted - Decided in favour of assessee.
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2015 (8) TMI 216
Disallowance u/s 14A - CIT(A) directed disallowance to be at 5% instead of 15% - Held that:- CIT(A) has only followed the decision of the Tribunal in the assessee’s own case wherein the Tribunal has held only remission could be possible which can be considered as prayed before the Settlement Commission on the very issue of rendering additional income being exempt income for taxation. The Hon’ble Settlement Commission has settled the expenditure to be considered for earning the said income at 5% thereof which we are inclined to uphold to be considered as against estimated by the Assessing Officer and confirmed by the learned CIT(A) at 15%. The disallowance of expenses therefore is directed to be at 5% instead of 15% for earning the said income be considered - Decided against revenue. Disallowance being ‘write off of non-convertible debentures’ on the ground that there is no actual write off - Held that:- he issue is covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of UCO Bank (1999 (9) TMI 4 - SUPREME Court ) and also by the decision of the co-ordinate Bench of the Tribunal in the assessee’s own case. In view of the same, we remand this issue to the file of the AO for re-consideration - Decided in favour of assessee for statistical purposes. Disallowance of the expenditure on Vysyamulya Project (computerization of branches) on the ground that the same is capital expenditure - Held that:- Similar issue had arisen in the case of IBM India Ltd. [2013 (10) TMI 1225 - KARNATAKA HIGH COURT] wherein held that when the software is fitted to a computer system to work, it enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Though certain application is an enduring benefit, it does not result into acquisition of any capital asset. It merely enhances the productivity or efficiency and therefore, it has to be treated as revenue expenditure.- Decided in favour of assessee. Disallowance of the claim of ₹ 1 lakh u/s 36(1)(viia) - Held that:- The actual provision made in the books by the Assessee on account of PBDD (irrespective of whether it is rural or non- rural) has to be seen. To the extent PBDD is so created, then subject to the permissible upper limits referred to above, the deduction has to be allowed to the Assessee. The question of bifurcating the PBDD as one relating to rural advances and other advances (Non-rural advances) does not arise for consideration. Since the facts of the case are similar for the relevant assessment year also, we direct the AO to allow deduction subject to the permissible limits referred to u/s 36(1)(viia) of the Act - Decided in favour of assessee. Disallowance of amortization of cost over face value of investment held to maturity stating that the same is not revenue expenditure in terms of sec.37(1) - Held that:- Tribunal, in the case of Sir M.Visveswaraya Co-op. Bank Ltd. (2012 (9) TMI 774 - ITAT, BANGALORE) has considered this issue at length to held that the assessee therein is entitled to claim deduction of the amortization of the premium on Government securities. Since facts of the case before us are also similar, we are inclined to follow the decisions of the co-ordinate Benches of the Tribunal and we direct the AO to allow the deduction. - Decided in favour of assessee. Addition of the write off of non-convertible debentures, depreciation on investment, depreciation on leased assets and provision for NPA while arriving at the book profits /s 115JB - MAT provisions - Held that:- We are inclined to agree with the learned counsel for the assessee that the provisions of sec.115JB are not applicable to a banking company. See M/s. Canara Bank Versus Commissioner of Income-tax (LTU), Bangalore [2012 (11) TMI 139 - ITAT BANGALORE]Decided in favour of assessee.
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2015 (8) TMI 215
Addition on account of unaccounted sales - CIT(A) deleted part addition - Held that:- AO without controverting the submissions/evidence furnished by the assessee treated the total cash deposits as income of the assessee. The AO did nothing to demonstrate that the purchase of retail business had been accounted for in the purchase of whole sale business. The above finding of the ld.CIT(A) has not been controverted by the Revenue by placing any material on record. Under these facts, we do not any reason to interfere with the order of the ld.CIT(A), same is hereby confirmed - Decided against revenue. Addition made on account of bogus cash-credit- CIT(A) directing the AO to verify the contentions of the assessee regarding addition - Held that:- Out of these nine persons, three persons are assessed to tax and their identity is also established, accordingly appellant has proved identify, genuineness of the transactions and creditworthiness of the creditors in respect of these persons.As far as genuineness of the transactions with other six persons is concerned, confirmation from these persons are already on record. Since amounts involved are small and these persons are intimately related with the appellant, it can be safely assumed that these amounts are accrued with these persons over a period of time. In this regard, the appellant has rightly placed reliance on Sunil Dua v/s. CIT (2008 (1) TMI 634 - Delhi High Court ) In view of the above facts, loans from these should be accepted. It will be worthwhile to mention here that my predecessor in appeal - Decided against revenue.
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2015 (8) TMI 214
Limitation for completion for 153C proceeding - Held that:- With the combined reading of proviso to section 153C and section 153A(1)(b), it is clear that in the case of the person in whose case action is required under section 153C, the Assessing Officer is empowered to take action under section 153C for the year in which the seized document is received by him and the preceding six years. In the present case as mentioned by the Assessing Officer in paragraph 2 of his order, the seized material was received on March 12, 2009 from the Assistant Commissioner of Income-tax, Central Circle-17. Thus, the year in which seized material was seized is previous year 2008-09 relevant to the assessment year 2009-10. The preceding six years would be assessment years 2008-09, 2007-08, 2006-07, 2005-06, 2004-05 and 2003-04. Therefore, after considering the facts of the assessee's case and a combined reading of section 153C as well as section 153A, in our opinion, the issue of notice under section 153C for the assessment years 2001-02 and 2002-03 is barred by limitation. Accordingly, we quash the same and consequentially, the assessment order passed in pursuance to the notice issued under section 153C is also quashed. - Decided in favour of assessee.
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2015 (8) TMI 213
Addition on account of bogus long term capital gains - CIT(A) deleted the addition - Held that:- CIT(A) has rightly observed that the Assessing Officer is misconceived in her conclusions that off market share dealings are not permissible in demat account. Both market and off market share transactions are by law, permitted to be credited to and debited to the demat account. Ld. CIT(A) has also observed that documents also indicate that the transaction(s) cannot be on accommodation entry. Therefore, Ld. CIT(A) opined that the assessee succeeds in this ground. In view of the above, we find that Ld. CIT(A) has rightly deleted the addition - Decided in favour of assessee. Addition regarding fresh unsecured loans - CIT(A) deleted the addition - Held that:- CIT(A) has observed that in the present case after having given the names and addresses, apart from the PAN and some cases even copies of return of income of the credits, it is held that the assessee has discharged the burden placed on him. We find that Ld. CIT(A) has rightly further observed that once the said details were available before the AO, he could have made enquiries, such as issuance of notices under section 131 or 133(6) to obtain the bank accounts of the said credits. We find that Ld. CIT(A) by following the judgment of CIT vs. Orissa Corporation (1986 (3) TMI 3 - SUPREME Court ) has held that the assesse deserves to succeed. CIT(A) has rightly deleted the addition - Decided in favour of assessee.
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2015 (8) TMI 212
Claim of exemption u/s.54 denied - investment made in residential house situated outside India - Held that:- The Finance (No.2) Bill, 2014 brought an amendment in Section 54, wherein sub-section (1), for the words “constructed, a residential house”, the words “constructed, one residential house in India” has to be substituted w.e.f. 1st day of April, 2015. Thus, it is clear from the amendment so brought for claiming exemption u/s.54, that new residential house should to be constructed in India only w.e.f. assessment year 2015-2016.. However, the assessment year under consideration is 2010-2011 i.e. much prior to the amendment so brought in Finance (No.2) Bill, 2014. There is no reason to decline exemption u/s.54 during the A.Y.2010-11 under consideration. As during the year under consideration, assessee was entitled for exemption u/s.54 even if investment was made in residential house situated outside India, provided that assessee has to comply with other conditions of Section 54. Since the AO has out-rightly declined exemption on this plea without examining the other conditions of Sec.54 so as to make assessee eligible, we accordingly restore the appeal to the file of the AO for verifying other conditions to be fulfilled for grant of exemption u/s.54 in both the appeals of the assessees. The AO is also at a liberty to verify actual acquisition of house property outside India, in terms of transfer deeds so executed in favour of assessee. - Decided in favour of assessee for statistical purposes
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2015 (8) TMI 211
Disallowance as per section 14A r.w.Rule 8D(2)(iii) - Disallowance of administrative expenses - the entire administrative expenses was incured by the assessee for the purpose of investment in shares - Held that:- The Assessing Officer while making the disallowance u/s 14A worked out the disallowance under Rule 8D(2)(iii) at ₹ 20,86,230/- which shows that the working under the provisions of Rule 8D negates the actual total expenditure debited by the assessee in the P&L account on administrative and other expenses. In any case, disallowance cannot be made more than the total expenses debited to the P&L Account. From the details of the expenses, it is clear that most of the expenses are specific in nature and exclusively incurred for the business activity of the assessee. Therefore, the expenses on account of auditor fee, legal and professional fees, profession tax, business support fees cannot be said to have any direct or proximate nexus with the activity of investment or earning the exempt income. Thus the disallowance u/s 14A can be made only to the extent of allocation of these expenses which has direct or proximate nexus with earning of exempt income. From the details of the expenses, we find that the prining and stationary expenses and bank charges & commision are only two items which could have direct or proximate nexus with the investment and exempt income. Therefore, the disallwoance u/s 14A r.w. Rule 8D(2)(iii) cannot exceed to the allocable expenses incurred by the assessee for a composite activity resulting taxable and exempt income. The working of disallowance under Rule 8D(2)(iii) by the Assessing Officer clearly shows that it exceeds not only the expenses debited and claimed by the assessee which could have a proximate nexus with the earning of exempt income but also to the total expenditure debited by the assessee in the P&L account under the head administrative and other expenses. Therefore, it turns out to be contradictory to the actual facts and gives absured results in complete disregard to the scheme of disallowance u/s 14A. Accordingly, we delete the disallowance made by the Assessing Officer. - Decided in favour of assessee.
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2015 (8) TMI 210
Disallowance u/s s.40(a)(ia) - TDS made is not at the correct rate as per Chapter XVII B - CIT(A) deleting the disallowance - Held that:- As relying on M/s. S.K.Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] wherein held that Section 40(a)(ia) refers only to the duty to deduct tax and pay to government account there is nothing in the said section to treat the assessee as defaulter where there is a shortfall in deduction. And if there is any shortfall due to any difference of opinion the assessee can be declared to be an assessee in default u/s. 201 but no disallowance u/s 40(a)(ia) is allowed - Decided in favour of assessee. Levy of interest u/s 234B - Held that:- Neither the AO, nor the Ld. CIT(A) have narrated the facts of the case under which the assessee has been found liable by the AO to pay interest u/s 234B of the Act. The Ld. CIT(A) has given relief by deleting the interest charged u/s 234B on the basis that the issue is covered in favour of the assessee, by the decision of DIT vs. Maersk Co. Ltd. (2011 (4) TMI 886 - Uttarkhand High Court). Nothing has been argued on behalf of the revenue that the decision followed by the Ld. CIT(A) does not cover the issue on hand. The revenue submits that it has preferred SLP against the said decision of Hon’ble Uttrakhand High Court in the case of DIT vs. Maersk Co. Ltd. (supra). The ratio laid down by the Hon’ble Uttarakhand High Court in the case of Maersk Co. Ltd. is that, when a duty was cast on the payer to deduct tax at source, on failure of the payers to do so, no interest u/s 234B could be imposed on the assessee. In absence of any stay granted by the Hon’ble Supreme Court in the Special Leave Petition, the Ld. CIT (A) was bound to follow the same - Decided in favour of assessee.
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2015 (8) TMI 209
Validity of block assessment order - CIT (A) held it as void ab initio - Held that:- In the case of the assessee, it is observed that notice under section 158BD was served beyond the time limit specified under section 158BE of the Act. Therefore, the assessment is void ab initio - Decided in favour of assessee.
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Customs
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2015 (8) TMI 259
Classification of goods – Bituminous Coal or Steam Coal – Whether petitioner was eligible for benefit of exemption available to imports from Indonesia – Issue regarding classification was decided in case of Coastal Energy Pvt. Ltd. [2014 (8) TMI 246 - CESTAT BANGALORE] wherein tribunal held that appellants claim classifying product imported as bituminous coal was not correct – Therefore if appellants raise any issue which was not covered by decision of tribunal, that can be considered by original authority – Impugned orders set aside and matter remanded to original authority for fresh adjudication.
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2015 (8) TMI 243
Levy of Anti-dumping Duty - failure to fulfill its export obligation goods were imported against advance licenses without payment - Appellant duly paid entire duty payable towards BCD, SAD and SCD after considering partial exports already made however did not make any payment towards ADD Appellant disputed that Anti-dumping duty was exempt under Notification No.69 of 2000 and no interest was chargeable on any of four duties inasmuch as bond furnished did not stipulate payable of interest in case of default Held that:- Interest was only liable to be paid if at time of clearance of imported materials importer executes bond in which such interest was stated to be payable As bonds were executed therefore no interest was payable on any of customs duties that were due from appellant Also section 18(3) for levy of interest was added with effect from 2006 whereas provisional assessment were made in 1998 and final assessment in 2004, as both dates being prior to 2006 no interest was chargeable. Whether Anti-dumping duty can be included in calculating special customs duty and special additional duty. - Held that:- It was clear that no exception was carved out before 19.5.2000 in favour of Blast Furnace Manufacturers either when provisional Anti-dumping duty was first imposed or when final Notification was issued Therefore Notification of 2000 creating exception in favour of persons like appellant had no reference to earlier proceedings and was obviously intended to apply only prospectively Additional duty and special additional duty as per Customs tariff act, was only surcharge or additional duty of customs whereas Anti-dumping duty apart from being levied separately from levy of customs duty was also levied in completely different manner from that of customs duty After 2002, provision relating to additional duty and special additional duty have been amended so as to expressly not include Anti-dumping duty Impugned judgment of CESTAT set aside Appeal allowed Decided in favour of assessee. Levy of penalty - Held that:- the appellant has not diverted goods meant for export to the domestic tariff area. We are satisfied that market considerations made it difficult, if not impossible, for the appellant to fulfill its export obligations and are, therefore, of the view that the penalty imposed in the present case ought to be set aside. - Decided in favor of assessee.
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2015 (8) TMI 242
Exemption under Kar Vivad Samadhan Scheme – notice of demand - tax arrears - Levy of additional customs duty – ship breaking and disposing of the scrap – Whether appellants was covered by Section 95(ii)(b) and/or (c) of Act,1998, making them ineligible to utilise benefit of Scheme – Held that:- Section 28 deals with recovery of dues not levied or short levied or erroneously refunded or where any interest payable was not paid, part paid or erroneously refunded – Thus, contingency of issuing show-cause notice would arise where duty was not paid either on ground that it was not levied at all or was short levied – Indubitably, there was amount of duty payable, which had remained unpaid on date of making declaration by appellants under Section 88 It would be absurd to hold that though there was tax arrear, as appellants were liable to pay tax/duty demanded, and still Scheme was inapplicable – Therefore, when it was found in broader sense that there were tax arrears and appellants were called upon to pay said tax, mischief contained in Section 95(ii)(b) would not be attracted – Impugned judgment of High Court was erroneous and warrants to be set aside – Appellants shall be entitled to benefit of Kar Vivad Samadhan Scheme – Decided in favour of Appellant.
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2015 (8) TMI 241
Classification of goods – Business satellite receivers – Entries 85.25 and 85.28 – Held that:-reading of Entry 85.28, would show that it pertains to only those apparatus which have function of receiving signals only and that they are reception apparatus – Moment particular apparatus has transmission function as well, that would be excluded from Chapter Heading 85.28 – Heading 85.25 deals with transmission apparatus, even if apparatus transmitting signals have additional functions of reception of signals as well – Therefore Tribunal rightly classified goods of respondent under 8525.20 – Order of commissioner taking contrary view was incorrect – Appeal dismissed – Decided in favour of Assesse.
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2015 (8) TMI 240
Transaction value of goods imported – fixation of price on contemporaneous import made by another firm – Held that:- when the Department doubted the valuation of the goods, as declared in the Bill of Entry, or for that matter in the invoice which was produced from the trader by showing the evidence to the effect that the same goods were imported at the same time at a much higher rate it was open to the Department to fix the transaction value on that basis. - We further find that respondent had imported 30,000 pieces only for which Bill of Entry was filed and not actual import of 90,000 pieces as accorded by Tribunal – Therefore, quantities also approximately same and there was not much difference between two – Impugned order of tribunal set aside – Decided in favour of Revenue.
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2015 (8) TMI 239
Penalty - Diamonds recovered from aircraft confiscated - Tribunal reduced penalty - Assessee claims complete exoneration - Supreme Court after hearing counsel for both parties condoned delay in filing appeal - After going through records of case, Supreme court was of considered opinion that appeal was devoid of merit and was liable to be dismissed - Decision of high court in Shaikh Mohammed Azam Versus Commissioner of Customs & Others[2014 (5) TMI 602 - BOMBAY HIGH COURT] was upheld as there was independent material to support charge of appellant - Also department not only relied on statement of Paowala which was stated to be retracted but other materials in form of identification carried out by travel agent.
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Corporate Laws
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2015 (8) TMI 238
Composite scheme of arrangement and amalgamation – Regional Director, Ministry of Corporate Affairs opposed scheme as rule that transferee company only can allot shares towards consideration of transfer, and not any other person was not in consonance with section 394 of Companies Act, 1956 – Held that:- Clauses (i) to (vi) of Section 394(1), were merely enabling provisions and cannot be construed as compulsory in nature – Company Court, while sanctioning scheme, may or may not make said provisions – Acceptance of any particular consideration was part of commercial wisdom to be exercised by shareholders of transferor company – As long as such consideration was not against public interest, it was not for company court to accept or reject such consideration – Regional Director made it clear that there was no harm to public interest by present scheme – Thus it was not for present Court to reject consideration, which was accepted by shareholders of transferor company–Scheme of arrangement making provisions for consideration in terms of allotment of shares of companies other than transferee companies approved – Petition allowed – Decision of Miheer Mafatlal vs. Mafatlal Industries Ltd. [1996 (9) TMI 488 - SUPREME COURT OF INDIA], Pantaloon Retail (India) Limited Company [2010 (8) TMI 921 - BOMBAY HIGH COURT]followed – Decided in favour of petitioner. Composite scheme of arrangement and amalgamation – Regional Director, Ministry of Corporate Affairs opposed scheme having regard to definitions of 'demerger' and 'resulting company' contained in Section 2(19AA) and 2(41A) read with Section 2(19AAA) of Income-tax Act, 1961 – Held that:- scheme of arrangement permissible both under Companies Act and Income-tax Act, does not amount to 'demerger' within meaning of Income-tax Act –Provision of scheme relating to demerger makes it clear that in case scheme was inconsistent with Section 2(19AA), provisions of Section 2(19AA) shall prevail and scheme shall stand modified – Also sanction of scheme, does not bind Income-tax Department to take any particular view of scheme of arrangement insofar as tax implications of transaction were concerned.
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2015 (8) TMI 237
Scheme of Amalgamation - Dispensing convening of meetings of equity shareholders and unsecured creditors to consider and approve, proposed Scheme of Amalgamation under Sections 391 and 394 Companies Act, 1956 read with Rules 6 & 9 of Companies (Court) Rules, 1959 – Held that:- board of directors of transferor and transferee companies in their separate meetings unanimously approved proposed Scheme of Amalgamation – Equity shareholders and unsecured creditors of transferor company no. 1, 2, 3, 4, 5, 6 &7 and transferor company have given their consents/no objections in writing to proposed Scheme of Amalgamation and were found in order – Application stands allowed – Decided in favour of Applicants.
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FEMA
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2015 (8) TMI 236
Waiver of pre deposit - contravention of Section 3(b) and 6(2) of FEMA read with Regulation 5 of Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000 read with para 8 of Schedule I to Regulation 5(1) of Foreign Exchange Management (Transfer of Issue of Security by a person resident outside India) Regulations, 2000 - Imposition of penalty - Amount remitted for franchisee in IPL, reached BCCI through concerns abroad rather than the Indian subsidiary without making compliance with the Regulations under the Foreign Exchange Management Act, 1999. Held that:- Once the Appellants claim that there is no revenue or financial loss and that the remittance to India has come through proper channels, namely through the banks, then, whether obtaining of permissions and approvals subsequently and whether incorporation of an Indian subsidiary later on would enable the Appellants to claim any benefit or seek any relief are other core questions involved in the Appeals. The Appellants would have to satisfy the Tribunal that monies may have been remitted by certain companies or concerns abroad to BCCI, but reached it not through an Indian subsidiary is something which should not invite penal consequences. Once the monies have reached the beneficiary through appropriate banking channels, then, there is no violation or breach of law is the case put up by the Appellants in these Appeals. Chairman was required to apply his mind to the differences that were noted by him. It was open for him to find out as to whether the Appellants having made out a prima facie case, could any relief be granted and in terms of the legal provisions. If the legal provisions enable the Tribunal to consider the case of “undue hardship”, whether that term is to be given a restricted meaning, namely, financial hardship alone or whether that should take in its import a prima facie case being made out and the point being arguable, a party would suffer unless the condition of pre-deposit is waived totally or partially. Prima facie case in favour of appellant. Appellants would have to satisfy the Tribunal that monies may have been remitted by certain companies or concerns abroad to BCCI, but reached it not through an Indian subsidiary is something which should not invite penal consequences.
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Service Tax
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2015 (8) TMI 258
Condonation of delay - tribunal denied to condone the delay - Held that:- Order of the Tribunal is set aside, without creating any precedent. However, Assessee need to deposit the entire basic duty component within fortnight - Decided conditionally in favour of assessee.
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2015 (8) TMI 257
Waiver of pre deposit - reverse charge mechanism - Online Information and Database Access or Retrieval (OIDAR) - Extended period of limitation - Held that:- demand of ₹ 8,46,91,054/- under OIDAR service was beyond the period of one year. In this regard it is to note that the adjudicating authority has extended the benefit of Section 80 of the Finance Act, 1994 to the appellant for waiver of penalty under Sections 76, 77 and 78 of the Act. Revenue is not in appeal there-against. Viewed in the light of the fact that benefit of Section 80 of the Act has been extended by the adjudicating authority, the appellant's contention that it is a strong ground to grant waiver of pre-deposit of demand pertaining to beyond normal period of one year is clearly persuasive. We also note that the appellant prima facie has reasonably good case that educational institutions, particularly, the Govt. institutions which are major recipients of OIDAR service did not/could not have used the said service for business or commerce as these are not institutions for business or commerce and therefore impugned service tax under OIDAR service under reverse charge mechanism was not payable at all. - Partial stay granted.
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2015 (8) TMI 256
Penalty u/s 76 & 78 - Services of Erection, Commissioning or Installation and Management, Maintenance or Repair Services - Held that:- Entire service tax of ₹ 7,19,763/- was paid alongwith interest and 25% penalty. It was the case of the advocate appearing on behalf of the appellant that the payment particulars have been incorrectly stated in Para 29 and 36.9 of the Adjudication order and entire penalty of 25% payable under Section 78 of the Finance Act, 1994 stand paid and thus no penalty is required to be paid under Section 76 of the Finance Act, 1994. It is observed from the order dated 22.4.2014 passed by the first Appellate authority that he has not deliberated on the issue of reconciliation of payment particulars and the amounts paid by the appellant. For the purpose of reconciliation of the payments made vis-`-vis duty liability of the appellant, the matter is required to be remanded back to the original adjudicating authority - Decided in favour of assessee.
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2015 (8) TMI 255
Restoration of appeal - Non compliance with pre deposit order - Held that:- There has been delay of more than 5 years in complying with the pre-deposit order. However, on perusal of payment details, the appellant took initiative to pay the amounts in various instalments starting from 2009 to Dec 2013 which clearly indicates appellant's genuine interest in pursuing the appeal. Keeping in view conduct of appellant and their financial constraints as well as the case law relied upon, the delay is condoned - Appeal restored.
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2015 (8) TMI 254
Waiver of pre deposit - GTA service - Transportation of lime stones from mines - Held that:- The total demand is made on the total payment made to the truck owners for the period 2006-07 to 2010-11. The issue of fortnightly bill payments and also whether issue of consignment note needs detailed consideration. However, taking into account the appellant's submission that in certain number of cases for each trip where the freight amount exceeds ₹ 750 per ton, as per their own worksheet total freight amount paid by them works out to ₹ 6,52,881/-. Appellants have not made out a prima facie case for waiver of predeposit. Accordingly, we direct the appellant to predeposit a sum of ₹ 1,00,000 within 4 weeks - Partial stay granted.
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Central Excise
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2015 (8) TMI 250
Classification of Nizral as shampoo or hair medicament - Classification CSH 3003.10 or under CSH 3305.99 - Held that:- the product in question 'Nizral Shampoo' is classifiable under CSH 3003.10 and not CSH 3305.99 - product known as 'Nizral Shampoo' gives the nomenclature of the product as shampoo. However, the respondent claim that it is a patent or proprietary medicament as it's essential characteristics is therapeutic in nature. It is the common case of the counsel for the parties the pre-dominant use of the product in question is to be taken into consideration while deciding the classification issue. Therefore, it is to be determined as to whether the product in question is primarily used as a shampoo or it is used as a medicament. The use is suggested only on the advice of a Doctor and there is a suggestion that Doctor should be consulted for any further information. The respondent has also provided the literature/material showing that dandruff is a disorder which affects the hairy scalp. It is generally triggered by a single celled organism which is kind of fungus, with scientific name 'Pityrosporum Ovale'. For treatment of this disease, Nizral Shampoo 2% (i.e. shampoo containing 2% 'Ketoconazole') is shown as 'a new medicine' use whereof cures clears a dandruff. It is suggested that it should be used once a week and on other days, normal shampoos may be used which clearly shows that 'Nizral Shampoo' is to be used like a medicine, unlike other normal Shampoos. - In fact, notwithstanding the fact that the appellants have described the product as Selsun Shampoo, the Central Board of Excise and Customs, as noticed earlier, has classified the same as patent and proprietary medicine. Therefore, there is no force in the submission that the product must be equated with shampoo. - judgment of the Tribunal does not call for any interference - Decision in the case of B.P.L. Pharmaceuticals Ltd. v. CCE, Vadodra [1995 (5) TMI 98 - SUPREME COURT OF INDIA] followed - Decided against Revenue.
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2015 (8) TMI 249
Reversal of CENVAT Credit - Credit on common inputs - Non maintenance of separate accounts - Procedure under Rule 57CC (9) is not complied with - Whether the Tribunal is justified in allowing the appeal when Rule 57CC (1) of Central Excise Rules, 1944 is straight away attracted and when sub-rule (9) is not complied with - Held that:- For claiming the benefit under Section 57CC (9) of the Act, the manufacturer has to maintain separate books of accounts, sub-section (2) to Section 73 of the Finance Act, 2010 mandates that the assessee has to make an application to the Commissioner of Central Excise along with documentary evidence and a Certificate from the Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods within a period of six months from the date on which the Finance Bill, 2010 received the assent of the President. However, in the present case, even as per the show cause notice and the order of adjudication, it is clear that the input credit has been reversed by the respondent/assessee even prior to the amendment. In such view of the matter, the Tribunal, following the decision of the Allahabad High Court in Hello Mineral Water case (2004 (7) TMI 98 - HIGH COURT OF JUDICATURE AT ALLAHABAD), which followed the decision of the Apex Court in Chandrapur Magnet Wires case (1995 (12) TMI 72 - SUPREME COURT OF INDIA) rightly set aside the demand. - Decided against Revenue.
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2015 (8) TMI 248
Validity of decision of settlement commission - Scope of section 32-E and 32-F(2) - Settlement commission closed the proceedings - Settlement Commission has found that the applicant-petitioner has not made full and true disclosure of the duty liability and the computation and calculation of the same is not in order - Under Valuation of goods - actual amortization cost of moulds was not included into the assessable value for payment of excise duty. Held that:- Settlement Commission ought to have understood that section 32-E of the Central Excise Act, 1944, deals with application for settlement of cases and by sub-section (1) what the law postulates is a proper application to the Commission to have a case settled. The application must be in such form and must be made in such manner as is prescribed by the Rules. It should contain full and true disclosure of the duty liability which has not been disclosed before the Central Excise Officer having jurisdiction; the manner in which the liability has been derived, the additional amount of excise duty accepted to be payable and such other particulars as may be prescribed and set out in sub-section (1) of section 32-E Matter proceeded upto sub-section (4) of section 32-F of the Central Excise Act, 1944. There are certificates which have been obtained and placed on record by both the appellant-petitioner and the Revenue. The Revenue faults the contents of that certificate and by raising several pleas. However, the Bench viz. the Settlement Commission found that the petitioner is contesting the methodology of the Department in arriving at the demand in the show-cause notice. A reference is made to the certificate of the Chartered Engineer and the recalculation of the duty payable on that basis by the petitioner. Thereafter, Revenue's objection to the certificate is noted and particularly that there is no documentary evidence to support the claim. The Bench felt that a legal settlement is not possible without going into a lot of details of the disputes as far as the methodology is concerned. If the Revenue is not accepting the certificate or the lower amount, the Bench is then not handicapped and just cannot fold its hands in cases like the present one. It is not a dismissal based on a conclusion that the disclosure is not full and true. If it was indeed not so, there was no occasion for issuing further directions and to permit parties to examine certificates and equally the Revenue to file the report. All this means that unmindful of the statutory obligation and duty, the Commission wanted to abruptly end the proceedings. - If such an approach is adopted, the very purpose of setting up a Commission and enabling settlement of disputes expeditiously and promptly is defeated. That is to encourage settlement of claims which are long overdue and by pendency of which larger public interest cannot be sub-served. Delay in recovery of taxes harms the National economy and one need not over-emphasize this aspect. - matter restored before the Settlement Commission - Decided in favour of assessee.
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2015 (8) TMI 247
Restoration of appeal - Tribunal dismissed appeal as non prosecution - Held that:- considering the number of adjournments already granted in the case and the number of occasions on which the case was adjourned at the instance of the appellant/assessee and having regard to the different reasons, which were compelling in nature for which the adjournment were sought for, the Tribunal ought not to have dismissed the appeal for non-prosecution and ought to have considered granting one more opportunity to the appellant/assessee to prosecute its case. There is absolutely no reason to arrive at a conclusion that the assessee was not interested in prosecuting the appeal. The first respondent/Tribunal by dismissing the appeal by observing so deprived the assessee of its right to prosecute the appeal on merits. As such, the impugned order calls for interference by this Court and the matter be remanded back for fresh consideration - Decided in favour of assessee.
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2015 (8) TMI 246
Denial of CENVAT Credit - Capital goods - M.S.Plates, M.S.Angles, M.S.Channels and H.R. Plates, which were purchased and utilized in the construction/erection of plant. - Held that:- Revenue relied upon decision of Saraswati Sugar Mills V. Comissioner of Central Excise, Delhi - III. There is no change in the circumstance and this Court had already considered the issue and held that the decision reported in (Saraswati Sugar Mills V. Commissioner of Central Excise, Delhi - III) in [2011 (8) TMI 4 - SUPREME COURT OF INDIA] is distinguishable on facts. This Court applied the principles laid down in the decision reported in [2010 (7) TMI 12 - SUPREME COURT OF INDIA] (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and held in favour of the assessee. - Following the principles laid down in the decision (Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd.) and the earlier decision of this Court in [2013 (1) TMI 5 - Madras High Court] , we are inclined to allow the appeal, thereby set aside theorder of the Tribunal - Decided in favour of assessee.
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2015 (8) TMI 245
Exemption claim - Manufacturing activity - Job work - No final product emerged - Held that:- It become manifest from the reading thereof that neither the provision of Section Note 5(f) nor that of Section Note 5(b) would be applicable in the instant case inasmuch as no new item came into existence. It is only when after taking the delivery of these job work done by the respondent that M/s. Dhvani Terefab Export Pvt. Ltd. sent the goods to another processor who undertook the remaining process of knitted pile fabric at his end by cutting, sewing and hamming, that the product of towel came into existence. - though the reasoning given by the Tribunal appears to be faulty, in any case demand by the Assistant Commissioner was also erroneous and the only conclusion would be to set aside the same. - Decided against Revenue.
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2015 (8) TMI 244
Suppression of facts - Extended period of limitation - Valuation - Job work - Held that:- Tribunal found that whenever grey fabrics were received for processing from Kandivli Unit of assessee the price lists were filed. The name of the assessee as owner of manufacturer of grey fabrics was indicated in the remarks column. The grey fabrics received from third party at Dombivli unit for processing were indicated in the price list in that behalf in the similar column. Further, the assessee never suppressed that it adopted a certain method of valuation and the formula emerging from the judgment of the Supreme Court in Ujagar Prints (1989 (1) TMI 124 - SUPREME COURT OF INDIA). That method or formula may have been incorrect or not the applicable one, but the revenue proceeded to approve the price list. The revenue had several options and remedies so also courses open in law and precisely under the Central Excise Act, 1944. The Tribunal indicates as to how the Revenue could have insisted on the revision of the price list if the Ujagar formula was inapplicable. If this was the course adopted by the Revenue while scrutinizing and verifying the records and for purpose of assessment, then, the Tribunal rightly concluded that nothing prevented the Revenue from questioning the stand of the assessee. If the Ujagar formula was inapplicable or was misapplied to the given facts and circumstances, then, the revenue could have proceeded and in accordance with law. If it has omitted to do it, then, it cannot turn around and allege suppression or mis declaration on the part of the assessee. This is a finding of fact emerging from the materials produced on record. - The adjudication by the Tribunal in the appeal is within the four corners of Section 11A and the ingredients thereof required to be established by the Revenue. This is how it proceeded and held in favour of the assessee, then, the order in that behalf cannot be held to be vitiated and to such an extent as would enable us to answer the substantial question of law in favour of the Revenue. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (8) TMI 253
Detention of goods - Non availability of goods vehicle record - Held that:- It is an admitted case of movement of goods without any document like KK Form, Invoice and e-transit pass - a reading of the impugned order clearly shows that even the goods vehicle record was also not available with the driver. Therefore, rightly, the Deputy Commercial Tax Officer, Roving Squad III, Enforcement (North), has detained the goods. Hence, if the petitioner comes forward with an option of payment of one time tax and seeks for release of goods, the same may be directed to be considered by the respondent. Further, according to him, as far as compounding of offence is concerned, if the petitioner is so aggrieved, it is for him to work out his remedy in accordance with law. - petitioner readily agreeing for the said proposition made by the learned Additional Government Pleader (Taxes) appearing for the respondent, submitted before this Court that the petitioner is prepared to pay one time tax, even tomorrow and he would be contesting the matter with regard to compounding of offence, as the transaction was genuine. - Petition disposed of.
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2015 (8) TMI 252
Levy of VAT on return of processed goods - Job work - taxability of the returned goods in the form of catalysts to its owners, namely the customers of the Petitioners - AO treats these activities as inter State sale of goods and on the footing that the Petitioners have failed to obtain the requisite 'F' Form, which is claimed to be mandatory - Maharashtra Value Added Tax Act, 2002. (MVAT) Held that:- Petitioners are agreeable to go back to the Assessing Officer, but by keeping open all questions and contentions raised in the Writ Petition - orders passed by the Assessing Officers fail to take note of any objections nor does it make a proper and complete reference to the Circulars in the field. It is in these circumstances and parties like the Petitioner should not be deprived of a fair and reasonable opportunity of placing their version that the present order has been passed. - Matter remanded back. Needless to clarify that the issue of section 6A being ultra vires the constitutional mandate enshrined in Articles 14, 19(1)(g) and 265 etc. is kept open and for being raised in an appropriate case.
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2015 (8) TMI 251
Detention of goods - goods were not accompanied with e-Transit pass - Held that:- reason given by the 1st respondent appears to be correct for detention of the goods viz., the goods were not accompanied with e-Transit pass, which has been generated only on 17.06.2015 at about 09' 0 clock, in view of the fact that this petitioner's goods have moved with invoice dated 13.6.2015 mentioning all the particulars, 1st respondent in all fairness ought not to have detained the goods and vehicle, in view of the Circular No.33/2014Q4/7752/2014 dated 17.07.2014 of the Principal Secretary/Commissioner of Commercial Taxes, Chepauk, Chennai. - 1st respondent is directed to release the goods along with the vehicle on production of a copy of this order. If the 1st respondent is of the view that the goods escaped the assessment, it is open to him to convey the same to the Assessing Officer by way of a communication for passing appropriate orders - Decided in favour of assessee.
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Wealth tax
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2015 (8) TMI 235
Validity of notice issued u/s 17 - Notice issued on he basis of audit objection - Addition in net wealth - Business Income - Assessing Officer observed that in this case the assessee was not carrying on any business in the impugned premises - Property given on lease rent - Held that:- There is nothing on the record to suggest that the Assessing Officer had issued the notice u/s 17 of the Act based on the audit objection. How the assessee came to the conclusion that the notice issued by the Assessing Officer was based on the objection of the audit, is not known. No material has been pointed out by the assessee that the notice u/s 17 of the Act was based on the basis of the audit objection. - The Assessing Officer had applied his mind after issuing the notice u/s 17of the Act. Therefore the question of change of opinion does not arise. This aspect was considered by the CWT(Appeals) by following the decision of the Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007 (5) TMI 197 - SUPREME Court) upheld the notice issued by the Assessing Officer u/s 17. We find no infirmity in the order passed by the CWT(Appeals). Any house which an assessee may occupy for the purpose of any business or profession carried on by him. As per clause (3) if the assessee occupies the house for the purpose of any business or profession it is excluded from “assets”. Therefore no wealthtax is required to be paid. But in the present case the assessee had leased out the land, building and machinery to a third party. Therefore, it cannot be said that the assessee has occupied land and building for the purpose of its business. Whatever portion was occupied by the assessee the same was excluded by the Assessing Officer and therefore we are of the opinion that as per sec. 2(ea) of the Act the assets leased out by the assessee are not excluded from the definition of “assets” - Decided against assessee.
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