TMI Tax Updates - e-Newsletter
September 15, 2017
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Disallowing compensation amount paid to the land owner - the applicability of provisions of section 37(1) cannot be excluded merely on account of the fact that the expenditure is covered u/s 35E of the Act.
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Income Tax:
Reopening assessment - validity of notice - - The Tribunal went into minutest details of the reasons recorded by the Assessing Officer and relied on the material which had come on record during the assessment which is impermissible - HC
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Income Tax:
Tax amnesty schemes - Whether the appeal before CIT(A) would be terms as pending where the higher appellate authority set aside the order and restore the same before CIT(A) - Held Yes - HC
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Income Tax:
ITAT was not justified in holding that interest income earned on Fixed Deposit Receipt should be allowed to be reduced from the cost of project instead of tax as an income from other sources - HC
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Income Tax:
If the unaccounted expenditure so incurred was from the 'on money' received by the assessee, then, the question of making any addition under Section 69C does not arise because the source of the expenditure is duly explained. It is only the 'on money' which can be considered for the purpose of taxation. - HC
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Income Tax:
Depreciation on boiler leased by the assessee - AO termed this as a colourable device to avoid tax - ITAT allowed claim - If it was not a bona fide business transaction, the assessee, after claiming benefit of depreciation in one year, could not have subjected itself to tax on the income arising from that very transaction - HC
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Customs:
100% EOU - The inter unit transfer would be on invoice on payment of applicable GST taxes. However, such transfer would be without payment of custom duty.
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Customs:
Goods imported for organising FIFA under 17, world cup, 2017, exempted from payment of Customs duty and IGST (CVD)
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Customs:
If the DRI authorities have not intercepted the goods prior to export, the fraudulent drawback amounts would have been received - The penalties imposed u/s 114 as well as 114AA of the Customs Act, 1962 are justified.
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Customs:
Revocation of CHA license - forfeiture of security deposit - time limitation - Where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all
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Corporate Law:
Obligation to comply with the Indian Accounting Standards (Ind AS) and Rule 4 of Companies (Indian Accounting Standards) Rules, 2015- Payment Banks, Small Finance Banks which are subsidiaries of Corporates -reg. - Circular
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Service Tax:
Valuation - includibility - Passenger Service Fee (PFS) and Airport Tax are not includable in the assessable value of the services provided by them
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Service Tax:
Liability of tax - freight / GTA - As the appellants were not required to issue consignment note as per Rule 4(B) of the STR, 1994, they are not liable to pay service tax
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Service Tax:
Works Contract Service - In cases where VAT has been paid on the full value of the contract, there is no value attributable to service and consequentially no service tax is payable.
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Service Tax:
Business Auxiliary Services - They have purchased the space in bulk and paid to airlines if the space is vacant, and have also suffered the loss. When the assessee are suffering with the transaction loss, then certainly they are not the agent. - demand set aside.
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Service Tax:
Franchisee Service - the amount received from MTIL, which is for the permission granted to MTIL to print and deliver in-flight magazine “Swagat” to the appellant - the scope of franchisee is very wide - demand of service tax sustained.
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Service Tax:
Refund claim - export of services - The Government has provided certain concession when the services were exported out of country. Such concession is subjected to various conditions and limitations. On fulfillment of such condition, the appellants shall be entitled for the rebate.
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Central Excise:
Refund claim - unjust enrichment - If the burden of Excise Duty is passed on to the others, it gets reflected in the Bills and invoices. That is a positive evidence. That was produced to show that no such burden is passed off - the adjudicating and appellate authority have gone about looking for negative evidence. Clearly, the very approach is wrong - HC
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Central Excise:
Cenvat Credit of duty, if any paid on the intermediate products by the job-workers, cannot be denied to the principal manufactures
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VAT:
Valuation - subsidy - includibility - even in spite of the incorporation of Explanation VII to Section 2(Iii) of the KVAT Act, the legal position that subsidy received by dealers like the respondents herein cannot form part of their turn over remains unaltered - HC
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VAT:
Insecticide - classification of goods - UPVAT - what is excluded from Entry 20 is not all kinds of products used as Mosquito repellent/destroyer but only a particular kind of product mentioned, therein, viz. coils, mats and liquids and no other. - HC
Articles
Notifications
Customs-
75/2017 - dated
13-9-2017
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Cus
Seeks to exempt goods imported for organising FIFA under 17, world cup, 2017
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86/2017 - dated
14-9-2017
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Cus (NT)
Amendment to notification no 82/2017-Cus (N.T.) dt 24.08.2017 and notification no 85/2017-Cus (N.T.) dt 07.09.2017
GST - States-
38/1/2017-Fin(R&C)(23/2017-Rate) - dated
28-8-2017
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate) dated 30th June, 2017
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38/1/2017-Fin(R&C)(20/2017-Rate) - dated
28-8-2017
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(17/2017-Rate) dated 30th June, 2017
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38/1/2017-Fin(R&C)(12) - dated
28-8-2017
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Goa SGST
Goa Goods and Services Tax (Fifth Amendment) Rules, 2017
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38/1/2017-Fin(R&C)(21/2017-Rate) - dated
22-8-2017
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(12/2017- -Rate) dated 30th June, 2017
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G.O. Ms. No. 097 - dated
22-8-2017
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/532(d-20)/2017, dated the 29th June, 2017.
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G.O. Ms. No. 096 - dated
22-8-2017
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/532(d-16)/2017,dated the 29th June, 2017.
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G.O. Ms. No. 095 - dated
22-8-2017
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/532(d-15)/2017, dated the 29th June, 2017,
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G.O. Ms. No. 094 - dated
22-8-2017
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/532(d-14)/2017, dated the 29th June, 2017.
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G.O. Ms. No. 093 - dated
18-8-2017
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/ 532(d-4)/2017 dated the 29th June, 2017, - regarding Tractor Parts.
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G.O. Ms. No. 092 - dated
17-8-2017
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Tamil Nadu SGST
Tamil Nadu Goods and Services Tax (Second Amendment) Rules, 2017.
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G.O. Ms. No. 193 - dated
30-8-2017
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Telangana SGST
Corrigendum – Notification G.O.Ms. No.110, Revenue (Commercial Taxes-II) Department, dated the 29th June, 2017.
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G.O. Ms. No. 186 - dated
21-8-2017
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Telangana SGST
Appointing the officers functioning under the Telangana Value Added Tax act, 2005 with New Designations under section 3 of the Telangana Goods and Service Tax Act, 2017.
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G.O. Ms. No. 184 - dated
18-8-2017
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Telangana SGST
Telangana Goods and Services Tax (Amendment) Rules, 2017.
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08/2017 - dated
11-8-2017
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Telangana SGST
Waybill to be issued by registered person will come into force with effect from 16-08-2017.
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01/2017 - dated
26-7-2017
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Telangana SGST
Extension of time limit for filing intimation for composition levy under the TGST Rules, 2017.
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F.1-11(91)-TAX/GST/2017(Part-V) - dated
6-9-2017
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Tripura SGST
Tripura State Goods and Service Tax (Sixth Amendment) Rules, 2017.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2017 (9) TMI 674
Additional Levy of IGST - Advance Authorization scheme - The grievance of the Petitioner is that it holds export orders placed on it prior to 1st July 2017 for the fulfilment of which it has to undertake imports of inputs. The Petitioner seeks to explain that, with the change brought about by the GST regime, the Petitioner would have no option but to pay IGST out of its sources causing a working capital blockage. Held that: - The exporter prices the export commodity on the basis of the extant FTP. The Indian exporters, in order to remain competitive in the global market, account for the exemptions/concessions given to such exporter under the FTP. Export orders are usually placed several months in advance and the price fixed is not variable beyond a point - If an additional levy is imposed, after the acceptance of such export orders, the resultant burden cannot possibly be passed on by the exporter to the buyers outside India. This might lead to the cancellation of such export orders placing the exporter in a piquant situation. The Petitioner-Exporter is not questioning the legislative competence to levy the additional IGST. It is only questioning the applicability of such levy even to imports that are made for fulfilment of export orders that have been placed on and accepted by the Petitioner prior to 1st July, 2017. Also, the Petitioner is seeking to only avail the credit outstanding in respect of advance authorizations issued to the Petitioner prior to 1st July 2017. The Court is of the view that the Petitioner has made out a prima facie case for grant of Prayer in the writ petition, i.e. a direction to the Respondents to allow the Petitioner to continue making the imports under the Advance Authorization licenses issued prior to 1st July, 2017 in terms of their quantity and value subject to terms - petition allowed - decided in favor of petitioner.
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Income Tax
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2017 (9) TMI 748
Taxability in India - Settlement commission order eligibility - Settlement Commission held that the Non- Resident Entities not having permanent establishment in India are not liable to pay taxation in respect of offshore transactions - DTAA - Held that:- The Settlement Commission considers the contracts. It looks into the aspect of the taxability of the portion said to be performed within India. It takes a particular view upon understanding the contract between the parties and gives reasons for such particular view as returned. As noted above, it is of view that, so far as the plant and machineries are concerned, the sale took place offshore and, therefore, is not taxable in India. So far as the supervisory contracts are concerned, the Settlement Commission is of the view that, the same is taxable and has determined the tax liability. The private respondents have accepted the same. Provisions in the contract allowing deferred payment to be made in India, by itself may not allow an inference that, the title to the goods stand transferred only upon such payment being made. An order passed by the Settlement Commission is justiciable. Jyotendrasinhji (1993 (4) TMI 1 - SUPREME Court ) is of the view that, an order of the Settlement Commission which is contrary to any of the provisions of the Income Tax Act, 1961 and prejudicial to the interest of the assessee is amenable to interference under Article 226 of the Constitution of India. An order of the Settlement Commission can also be interfered with if it is substantiated, the same is vitiated by fraud or bias or malice. None of the grounds noted for sustaining a challenge to an order passed by the Settlement Commission stands substantiated in the facts of the present case. The Writ Court is not called upon to reapprise the evidence produced before the Settlement commission, as an Appellate Court and arrived at a finding contrary thereto.
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2017 (9) TMI 747
Reopening of assessment - non appreciating the petitioner's objections - Held that:- Assessing Officer without appreciating the petitioner's objections to the notice of reopening, rejected the same. In facts of the case, we would like to request the Assessing Officer to reexamine the objections in peculiar facts pointed out in such objections as well as those urged before us. For the above purpose, following directions are issued: (i) It will be open for the petitioner to file supplementary objections with additional documents if so desired, latest by 25.09.2017 before the Assessing Officer. (ii) The Assessing Officer shall dispose of the objections of the petitioner which are already on record and additional objections if so raised in terms of above para (i). (iii) For such purpose, impugned order dated 29.08.2016 is set aside. Till the Assessing Officer passes a fresh order disposing of the objections of the petitioner, interim relief granted pending the petition directing the Assessing Officer not to pass the final order on assessment shall continue.
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2017 (9) TMI 746
TDS u/s 194H/194C - TDS on discounts offered by its collection agents/franchises etc - Disallowance under Section 40(a) (ia) - Held that:- It is acknowledged by the learned counsel for the Revenue that, in view of the fact that the ITAT had allowed the Assessee’s appeal for AY 2006-07, the rectification made by the ITAT by way of the impugned order dated 31st May 2016, at the instance of the Assessee, should be sustained. The learned counsel for the Revenue states that he is not aware as to whether the ITAT’s order in the assessee’s appeal for AY 2006-07 has been challenged by the Revenue. In terms of the ITAT’s order the rectified para 7 of its order dated said that before the Ld. CIT(A) assessee has stated that the receipt include payments received form SRL Labs, walk in patients and pathological labs owned by the assessee. The working submitted by the assessee show that the amount of discount given to the Collection Centre is ₹ 11,78,24,030/- as against the disallowance of ₹ 16,80,66,667/- made by the AO. Keeping in view the above facts and circumstances and following the order dated 16.12.2011 of the Tribunal in the assessee’s own Appeal for the same assessment year 2006-07, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, we affirm the same and the Ground No.1 raised by the Revenue stands rejected. No substantial question of law
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2017 (9) TMI 745
Penalty under Section 271(1)(c) - whether advance against depreciation (AAD) can be taxed under Section 28(1)? - Held that:- Assessee did not press its appeal before the ITAT. The issue was in fact decided in favour of a similarly placed party by the Supreme Court in its decision in National Hydroelectric Power Corpn. Ltd. v. Commissioner of Income Tax [2010 (1) TMI 281 - SUPREME COURT]. This was obviously a debatable issue that did not warrant penalty. Recovery of transmission charges - ITAT noticed adequate disclosure had been made by the Assessee in Note Nos. 14(D) and 17 of the audited accounts of the Assessee. Therefore, there was no failure on the part of the Assessee to make a complete disclosure. In the facts and circumstances, the impugned order of the ITAT deleting the penalty under Section 271 (1) (c) of the Act, cannot be said to be erroneous.
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2017 (9) TMI 744
Reassessment proceedings validity - Assessment order in terms of Section 153(2) - Penalty u/s 271(1)(c) - period of limitation - Held that:- In the present case, on the date that the stay order stood vacated only 13 days were left for completion of the proceedings. Since this period was less than 60 days, the period of limitation got extended to 60 days from the date of such vacation of stay, i.e. 60 days from 9th November 2016. This, therefore, meant that the order in the re-assessment proceedings had to be necessarily passed on or before 8th January 2017. This is the only interpretation that is possible on a collective reading of Section 153 (2), Explanation 1, clause (ii) and the first proviso thereto. The decision of the Madras High Court in Thanthi Trust (1988 (11) TMI 77 - MADRAS High Court ) turned on the fact that the Madras High Court narrowly interpreted that the word ‘assessment’ occurring in Explanation 1 (ii) to not take within its ambit reassessment proceedings. Yet, there appears to be a contradiction in terms because the Madras High Court proceeded to exclude the period during which there was stay of the proceedings in terms of that very Explanation. Further, no reference was made to the proviso below Explanation 1. The Madras High Court proceeded on the assumption that there was a time of period of 4 years from the last date of the assessment year in which the notice was served. Going by that yardstick in the present case, the reassessment order would still be time-barred. Court holds that in the present case the impugned assessment order dated 30th January 2017 was time barred and it is accordingly hereby set aside. Consequently, demand notice dated 30th January 2017 and the penalty order dated 26th July 2017, passed by the AO under Section 271(1) (c) of the Act, are also hereby set aside.
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2017 (9) TMI 743
Reopening assessment - validity of notice - Tribunal held that the formation of the belief by the Assessing Officer that income chargeable to tax had escaped assessment was not correct - Held that:- The Tribunal went into minutest details of the reasons recorded by the Assessing Officer and relied on the material which had come on record during the assessment and the appellate proceedings to hold that such reasons were not valid. In other words, without so saying, the Tribunal held that the formation of the belief by the Assessing Officer that income chargeable to tax had escaped assessment was not correct. As noted, as the judicial trend suggests that in a case where the return of an assessee is accepted under section 143(1) of the Act without scrutiny, the Assessing Officer of course, subject to the limitation provision contained in the Act, would have a right to reassess the income provided that he forms a belief that income chargeable to tax had escaped assessment. The validity of such formation of belief is of course open to challenge. Nevertheless, in our opinion, it is not permissible to criticize the formation of belief and to declare it as invalid from the inception by carrying out threadbare examination of documents, materials and the evidences which have come on record during the assessment proceedings. It is one thing to hold that a certain addition or disallowance made by the Assessing Officer was impermissible on the basis of materials on record. It is entirely another thing to say that on the assessment of evidence on record the formation of belief by the Assessing Officer that income chargeable to tax had escaped assessment was wrong. In the present case, the Tribunal has evaluated the evidence on record in minutest detail as if each limb of the Assessing Officer's reasons recorded for issuing notice of reopening was in the nature of an addition made in the order of assessment which had either to be upheld or reversed, which was simply impermissible. - order of ITAT set aside. - Decided in favour of revenue
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2017 (9) TMI 742
Reopening of assessment - impugned order does not return any finding with regard to the objection raised by the petitioner - Held that:- It is incumbent upon the authority to consider and decide the objection raised by the petitioner in respect of the reasons given for reopening the assessment under Section 147(2) read with Section 148 of the Income Tax Act, 1961. In the instant case, the impugned order not having dealt with the objections raised, the Assessing Officer ought not to have proceeded further and passed the order of assessment. An assessee is entitled to know the reasons for the invocation of Section 147 read with Section 148 of the Income Tax Act, 1961 and the fate of the objections raised with regard thereto. The fate of the objections in the present case has not been made known to the petitioner by a speaking order. In such circumstances, interest of justice would be sub-served by setting aside the impugned order dated July 31, 2017 and requesting the Assessing Officer to dispose of the objections raised by the petitioner on July 26, 2017 to the reasons for invoking the Section 147 read with Section 148 of the Income Tax Act, 1961 as expeditiously as possible and preferably within a period of two weeks from the date of communication of this order to him as prayed for on behalf of the Department.
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2017 (9) TMI 741
Tax amnesty schemes - Whether the appeal before CIT(A) would be terms as pending where the higher appellate authority set aside the order and restore the same before CIT(A) - Applications for settlement under the Direct Tax Dispute Resolution Scheme 2016 rejected - Held that:- As noticed that the Scheme was promulgated with effect from 1.6.2016. The appellate Commissioner disposed of the appeal on 2.6.2016. There is of course, no bar in the appellate Commissioner proceeding ahead with the pending appeals merely because the Scheme was promulgated nor we see any lack of bona fide on his part in doing so. However merely because by reviving the appeals before the Commissioner, the petitioner may get benefit of the Scheme on the ground that the appeal would now be deemed to be pending on the date of declaration, should not persuade us to take a view any different from what we normally would have in such set of facts and circumstances. If by setting aside the appellate order and placing it back before the Commissioner for fresh disposal after giving an opportunity of hearing to the assessee, the resultant effect unintended or indirectly is that the petitioner's declaration of the Scheme becomes valid, so be it. The tax amnesty schemes are neither unknown nor uncommon. The legislation often times comes up with Schemes to reduce tax litigations offering reduced tax or immunity from penalty or prosecution, the prime purpose being reduction of pending taxation related litigation. The idea behind promulgation of the Scheme is not to make the Scheme and then to deny the benefit of the Scheme to as many people as possible. The idea is always to give the benefit of the Scheme to one who is otherwise eligible, makes the declaration and fulfills all conditions of the Scheme. Under the circumstances, impugned orders AnnexureB to both the petitions by which the appellate Commissioner disposed of the respective appeals, are set aside. The appeal proceedings for the assessment years 2007-2008 and 2011-2012 are revived and placed back before the appellate Commissioner Resultantly, the impugned orders at AnnexureA in both the petitions by which the designated authority had rejected the petitioner's declaration under the Scheme are also set aside. The designated authority shall take into account the changed circumstances arising out of this judgment and proceed as if on the date of the declaration for the assessment years 2007-2008 and 2011-2012, the appeals of the petitioner were pending.
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2017 (9) TMI 740
Disallowance U/s 40(ba) - payments made by the assessee to ITD Cementation India Limited were only on account of salary and related expenses - Held that:- Consistent stand should be taken and similar treatment should be given to the accounts as in the preceding assessment years. The alternate argument is made and is noted in paragraph 49 of the Tribunal's order. The departmental representative referred to the remand report and thereafter supported the finding of the Commissioner of Income Tax (Appeals). There were written submissions filed by the assessee's representative. In consideration of this issue as well, we note that the Tribunal has made identical observations and to some extent it's observations in paragraphs 15 to 21 accord with paragraphs 50 to 55. However, we are of the firm view that Section 40(ba) was referred in the passing, but not attracted as far as the disallowance of administrative expenses in the sum of ₹ 2,39,64,463/. Once the Assessing Officer has checked debit notes raised by the ITD Cementation India Limited and they were test checked and the amount of expenditure claimed by the assessee was verified and the genuineness of the same has been proved, then, we do not see any reason to interfere with the finding of fact recorded in paragraph 54 of the Tribunal's order. All the more, when Section 40(ba) was not attracted as far as this disallowance is concerned. Despite his persuasive ability, when Mr. Ahuja would submit that even the reframed question (a1) is the substantial question of law, we are unable to agree with him. We affirm the findings of fact by the Tribunal and dismiss this Appeal to that extent. We have expressed our displeasure and unhappiness at the manner in which the Tribunal approached the matter/issue insofar as the applicability of Section 40(ba) (question no. 10(a) reproduced above) of the IT Act is concerned, we allow this Appeal. We set aside the Tribunal's order to that extent. We restore the issue to the file of the Tribunal for being decided afresh on merits and in accordance with law.
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2017 (9) TMI 739
Unexplained unsecured loans - addition u/s 68 - ITAT deleted addition - Held that:- Tribunal, in concurring with the First Appellate Authority, found that the Assessing Officer had made addition under Section 68 without any reasonable basis. FAA has analyzed the transaction with each and every creditor and assigned reasons as to why the loans have to be treated as genuine. The assessee has produced details like copy of PAN card, copy of return of income, balance sheet with all the annexures and copy of bank accounts before the Assessing Officer. If there was any doubt, the Assessing Officer should have made further investigation. Once the initial burden was discharged, the Assessing officer had then to find out that despite production of record in relation to these parties, the version of the assessee cannot be accepted. It is in these circumstances that the First Appellate Authority rightly stepped in. Tribunal's order, it quoted that two of the creditors not only appeared before the Assessing Officer, but had also admitted of giving loan. There was nothing suspicious or doubtful in the version of these persons. That is why the order of the First Appellate Authority was upheld. It did not suffer from any legal infirmity. Tribunal did not agree with the Assessing Officer but with the First Appellate Authority because there was overwhelming documentary evidence on record to support the conclusion of the First Appellate Authority. - Decided against revenue Addition towards transportation charges - CIT-A deleted addition confirmed by ITAT - Held that:- Tribunal did not rest its conclusions only on the finding that the Assessing Officer has not carried out a complete exercise. The Tribunal perused the material produced on record. It agreed that there is a proof of actual performance of transportation work, lifting of waste, payment of Tax deducted at Source, full addresses and confirmation of accounts with Permanent Account Number. Even the mode of payment is by account payee cheques. If there was further doubt about the transactions, the Assessing Officer was free to make inquiries with the Regional Transport Office. Tribunal agreed with the First Appellate Authority in holding that mere nonattendance or mere non service without anything more could not be reason enough to sustain the addition. It is in these circumstances, that the First Appellate Authority has rightly stepped in according to the Tribunal. No substantial question of law. - Decided against revenue
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2017 (9) TMI 738
Claim of provision for “Mark to Market” loss - when it was crystallized - Held that:- We are of the opinion that interest of justice would be served if the order of the Tribunal is set aside as far as this issue is concerned as well and the Tribunal be directed to consider it afresh when the appeals as aforesaid are being decided. We therefore permit both sides to argue on the question of the claim of provision for “Mark to Market” loss and whether it was contingent as urged and whether it was crystallized at the end of the year and therefore not allowable as revenue deduction in the previous relevant year. We keep open all contentions of both sides even with regard to this issue. The Tribunal to decide this ground without being influenced by the earlier order or any finding and conclusion therein.
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2017 (9) TMI 737
Interest income - income earned on FDRs made out of the unutilised fund borrowed for the setting up of the business - whether should be reduced from the cost of the project instead of taxing it as an income from other sources - Held that:- Interest on Fixed Deposit Receipt has no immediate nexus with the business of Assessee company. Business is yet to commence. So long as Assessee had no business income, the interest earned can not be treated as business income. Thus in our view, it has to be treated as "income from other sources". We answer question no.1, holding that Tribunal was not justified in holding that interest income earned on Fixed Deposit Receipt should be allowed to be reduced from the cost of project instead of tax as an income from other sources. We also answer question no. 2 against Assessee company and in favour of Revenue, holding that Tribunal was not justified by not following the law laid down in Tuticorin Alkali Chemical and Fertilizers Ltd. Vs. ITC (1997 (7) TMI 4 - SUPREME Court) and Commissioner of Income Tax Vs. Indo Gulf Fertilizer and Chemical Corporation Limited (2005 (8) TMI 45 - ALLAHABAD High Court ). Similarly, question no. 3 is also answered by holding that Tribunal was not justified in taking a view so as not to allow Section 56 to be attracted in the case in hand.
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2017 (9) TMI 736
Unaccounted sales - ITAT allowing relief of ₹ 6,51,08,354/out of ₹ 7,63,83,662/as unaccounted sales on the ground that the same was offered in the hands of MD Anil Gupta - Held that:- We direct the Assessing Officer to examine the entire addition of ₹ 7,63,83,662/made allegedly on account of sales outside the books of account. This issue will be examined afresh and a speaking order will be passed by the Assessing Officer after hearing both sides and in accordance with law. While doing so, he shall not be influenced
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2017 (9) TMI 735
Addition u/s 69C - additions towards unexplained expenditure as well as on-money - Held that:- both the amounts, namely the 'on money' as well as the unexplained expenditure cannot be brought to tax, according to the Tribunal. If the unaccounted expenditure so incurred was from the 'on money' received by the assessee, then, the question of making any addition under Section 69C does not arise because the source of the expenditure is duly explained. It is only the 'on money' which can be considered for the purpose of taxation. That is what the Tribunal therefore concluded and once the 'on money' is considered as revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount. It is not a general or vague observation and finding or an inference drawn contrary to any specific legal provision but it is a conclusion imminently possible from the facts and circumstances peculiar to the assessee and its business. It is not as if any general observations have been made, particularly on law by the Tribunal and we, therefore, do not see its reasoning in paras 39 and 40 in isolation or read it out of context. If we peruse the order of the Tribunal in its entirety and for all the relevant assessment years, then, the reasons in paras 38 and 40 cannot give rise to any substantial question of law. It is a factual exercise which has been performed by the Tribunal and its conclusion that there could not be a double addition given the explanation for the source of expenditure, is also a permissible one. It is not as if such a conclusion is unknown to law. That is not even the stand of the Revenue before us. - Decided in favour of assessee.
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2017 (9) TMI 734
Relief admissible under section 35B - weighted deduction under Section 35B - assessee is a general insurance company - scope of Section 44 of the Income Tax Act, 1961 - Held that:- Commissioner of Income Tax v. Hero Cycles Pvt. Ltd. and another [1997 (8) TMI 6 - SUPREME Court] says when the Act speaks of section 28 to section 43B, then each one of the sections from section 28 to section 43B will be included. The newly inserted section 35B was not specifically mentioned because it was not necessary to do so, just as it was not necessary to specifically mention section 35B in section 29, which lays down that computation of profits and gains of business or profession shall be computed in accordance with the provisions contained in sections 30 to 43C. Moreover, when the Act specifically says that profits and gains of insurance business shall be computed in accordance with the rules contained in the First Schedule then such computation has to be made according to that rule and not any other rule. We are unable to accept the contention that the benefit of section 35B should also be given to any insurance company. - Decided against assessee.
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2017 (9) TMI 733
Depreciation on boiler leased by the assessee - AO termed this as a colourable device to avoid tax - Held that:- It cannot be said that the assessee bought and leased back the asset to M/s. Bombay Dyeing solely for the purpose of avoiding tax. The assessee is earning rental income from the transaction which was subjected to tax. If it was not a bona fide business transaction, the assessee, after claiming benefit of depreciation in one year, could not have subjected itself to tax on the income arising from that very transaction. This was taken by the Tribunal to be an important feature of the transaction and the matter as a whole. It is in these circumstances, and looking at the issue in an overall manner, that the Tribunal held that the transaction cannot be termed as dubious or colourable device, but a genuine business transaction. - In arriving at the conclusion that the transaction was genuine, therefore, the Tribunal has not misdirected itself, nor its conclusion can be termed as perverse. Technical know how fees - allowable revenue expenditure - whether expenses resulted in bringing into production of new types of machines and know how was to become the property of the assessee which clearly amounts to capital expenditure? - Held that:- The Tribunal has found in this case that the Assessing Officer was in error in holding that the expenditure was not a revenue expenditure. - the assessee was already in possession of the technology which required updation. The updated technology was mainly aimed at reduction and control of heat requirement, upgrading of existing equipment and general cost production. - in this age of vast advancing technology, it is difficult to hold that the technology acquired by the assessee would be enduring. No new asset is required by the assessee. - To be allowed as revenue expenditure. Revenue appeal dismissed.
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2017 (9) TMI 732
Penalty u/s 271(1)(c) - reopening of assessment - disallowance of interest on loans - Held that:- It is a fact that in the reasons for reopening of the assessment, A.O. has mentioned a very small amount of interest of ₹ 61,063. Therefore, even the A.O. was not aware of the exact amount to the extent of which income has escaped assessment. The A.O. merely on vague and inaccurate figure reopened the assessment. Therefore, nothing could be detected against the assessee specifically at the stage of reopening of the assessment. The assessee when received notice under section 148, declared additional income of ₹ 31,88,093 on account of disallowance of interest on loans. Therefore, the assessee made full disclosure without there being anything detected against the assessee and as such, it may be a bonafide mistake of the assessee in not declaring the total disallowance of interest in the original return of income. Therefore, on such facts, penalty cannot be leviable against the assessee. Merely because assessee had claimed expenditure, which it was not acceptable to the Revenue, that by itself would not attract levy of penalty under section 271(1)(c) of the I.T. Act - Decided in favour of assessee.
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2017 (9) TMI 731
Disallowance u/s 14A r.w.r. 8D - assessee has not claimed any expenditure against the investment - Held that:- The assessee has not claimed any expenditure against the investment income. The AO has made the addition on estimate basis which is not permissible under the law. We have no reason to disagree with the claim of the assessee that no further expenditure over and above the expenses already disallowed in the return of income is required to be disallowed under section 14A of the IT Act. Accordingly, it is held that the disallowance made by the Assessing Officer under section 14A of the IT Act by application of Rule 8D of the IT Rules is directed to be deleted and accordingly, the grounds raised by the assessee stand allowed.
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2017 (9) TMI 730
Revision u/s 263 - treatment to income from sale of property - CIT revised the assessment order on the ground that income from sale of property should be assessed under the head ‘Income from capital gains’ and not under the head ‘Income from business’ - nature of property sold - Held that:- The assessee, though claims the impugned property is a business asset, the rental income from the said property has been assessed under the head ‘Income from house property’. The asset has been considered as capital asset in the books of account of the assessee. Once the property has been treated as capital asset, any surplus from sale of such property should be assessed under the head ‘Income from capital gains’. Further, while computing capital gains, if the sale consideration is less than the guidance value, as per the provisions of section 50C, guidance value shall be the full value of consideration for the purpose of computation of long term capital gain. The law is very clear. AO, ignoring all the facts, has simply accepted the income declared by the assessee towards sale of property under the head ‘Income from business’. Though the AO has conducted certain enquiries, but failed to apply his mind to the facts of the present case in the light of provisions of the Act. The AO ought to have assessed the surplus under the head ‘Income from capital gains’. However, he accepted income declared by the assessee under the head ‘Income from business’. Therefore, it cannot be held that the AO has conducted necessary enquiries at the time of completion of assessment on the issues. Therefore, the CIT was right in revising the assessment order u/s 263 of the Act. - Decided against assessee.
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2017 (9) TMI 729
Bogus purchases from alleged hawala operators - information received from DGIT (Inv) further supported by the list prepared by Maharashtra Sales-tax department - estimation of net profit on bogus purchases - Held that:- In the absence of any finding as to the incorrectness in books of account and stock registers, purchases cannot be doubted. Under these facts and circumstances it can be concluded that the assessee has obtained bills to reduce profits. Hence, what needs to be taxed in this case is only the profit element embedded in such purchases, but not the entire purchases from the above parties. Hon’ble Gujarat High Court in the case of CIT vs Smit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) has taken a view that no uniform yardstick can be applied for estimation of net profit which depends upon facts and circumstances of each case. The Hon’ble High Court further observed that in such cases, the profit element embedded in such purchases can only be added to the income of the assessee. The ITAT, Mumbai Benches in several cases has upheld estimation of net profit at 12.5% on such purchases. Therefore, considering the overall facts & circumstances of the case and also relying upon the ratio of case laws discussed above, we are of the view that in the case of bogus purchases, only profit element embedded in such purchases needs to be taxed but not total purchases. Accordingly, we direct the AO to estimate net profit at 12.5% on total alleged bogus purchases. - Decided in favour of assessee partly .
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2017 (9) TMI 728
Penalty u/s 271(1)(c) - error in calculating the interest on F.D. - Held that:- We have seen that during the assessment proceedings the assessee has accepted the error in calculating the interest on F.D. and the difference of ₹ 94,530/- was added to the total income of the assessee. Further addition on account of interest income of ₹ 10,83,695/- was added by the AO only after verification from Bank of India, Stock Exchange Branch. We have further noted that the verification was carried out by the AO only at the instance of the assessee’s request letter dated 18.12.2005. The AO deputed the Tax Inspector only on the request of the assessee for verification of the credits in the bank account of the Assessee. In our considered view the assessee has sufficiently explained the addition made by the AO which is the sufficient explanation as per section 271(1)(c).Considering the fact that the assessee has sufficiently explained the facts, hence no penalty was leviable. The ground of appeal of the assessee is allowed.
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2017 (9) TMI 727
DEPB income in computing Section 80HHC deduction without taking into account net profit element therein - Held that:- As decided in Topman Exports case (2012 (2) TMI 100 - SUPREME COURT OF INDIA) holding the field till date that only the net profit component is to be taken as income. It further emerges that hon’ble jurisdictional high court’s judgment in Avani Exports vs. CIT (2012 (7) TMI 190 - GUJARAT HIGH COURT) has quashed retrospective operation of the above Section 80HHC amendments (supra) inserting two clauses as unconstitutional. We therefore direct the Assessing Officer to finalize assessee’s deduction claim u/s.80HHC afresh thereby computing the same as per law after affording it adequate opportunity of hearing. This first substantive ground is accepted for statistical purposes. Prior period expenditure disallowance - said amount comprises of various heads of advertisement, processing fees, sample fees, membership subscription, maintenance, finished goods purchases, travelling charges, research and other expenses - Held that:- Both the lower authorities are fair enough in not disputing assessee’s basic plea that it had received the impugned bills only in the relevant previous year. The assessee’s case therefore is that all the said expenses have crystallized in the impugned assessment year. AO holds that there is no such evidence of crystallization of the expenses in question. We observe in these peculiar facts that the assessee could not have paid or claimed the impugned bills without receiving the same from its payees. Non receipt of the corresponding earlier assessment years forms a sufficient reason on assessee’s part in not raising its claim in earlier years. Both the lower authorities admittedly do not doubt genuineness of the above expenses. There is further no denial of the fact that the assessee has all along been taxed at uniform rate in said earlier as well as in the impugned assessment year. Hon’ble jurisdictional high court’s decision in PCIT vs. Adani Enterprises [2016 (7) TMI 1250 - GUJARAT HIGH COURT] holds that such prior period expenses ought not to be disallowed if an assessee is assessed at the same rate in the two sets of assessment years. We adopt the same analogy herein as well to delete the impugned disallowance. Transfer pricing adjustment - Held that:- We adopt the very course of action herein as well to restore the instant issue back to the Assessing Officer for afresh decision as finalized in preceding two assessment years. We are well conscious of the fact that our earlier remand order had restored the impugned ALP issue to the CIT(A). We however feel that the Assessing Officer needs to re-adjudicate the issue instead of the CIT(A) to avoid multiplicity of proceedings before the assessing authority and the CIT(A) since we have already restored first substantive ground hereinabove to former authority only. This substantive ground is therefore taken as accepted for statistical purposes. Disallowing Section 80G deduction claim - Held that:- Both the lower proceedings on the ground that assessee did not file the relevant receipts of donations as well as their nexus with its business as stipulated u/s.31of the Act. The very factual position continues herein as well. We therefore reject assessee’s instant last substantive ground. TPA - corporate guarantee adjustment - Held that:- Case file indicates that a co-ordinate bench in assessee’s appeal itself for assessment year 2010-11 has already deleted the said corporate guarantee adjustment after concluding that the same is not an international transaction u/s.92B of the Act. Learned Departmental Representative fails to indicate any distinction on facts or law in the impugned assessment year. We therefore adopt the very reasoning herein as well to delete the impugned corporate guarantee adjustment. Section 36(1)(iii) interest disallowance - Held that:- Both the lower authorities have erred in invoking the impugned disallowance of interest in assessee’s strategic interest free advances made to its sister concerns. This second substantive ground is accordingly accepted. Section 35(2AB) deduction disallowance deleted as relying on assessee own case for assessment year 2006-07 Amount spent on clinical trial/research & development - Total weighted deduction - Held that:- It is evident that the DRP has worked out the impugned disallowance merely because the assessee has mentioned in its reconciliation an amount of ₹ 4,67,54,326/- is to be disallowed as per DSIR’s form 3CL. There is therefore no independent adjudication. It emerges that the assessee’s endeavor before the DRP was to appraise it about DSIR’s form 3CL instead of suo mottu making the impugned disallowance. We notice in this factual backdrop that a co-ordinate bench in assessee’s case holding that once an assessing authority accepts revenue expenditure claim regarding an amount spent on clinical trial/research & development, the very sum is eligible for the impugned weighted deduction as well since there is no stipulation incorporated in the Act that the same would be allowable only to the extent of relevant figures stated in Form no. 3CL . This is admittedly not the Revenue’s case that the assessee has not incurred the impugned expenditure for the above specified purpose u/s.35(2AB) of the Act. We therefore draw support from the above co-ordinate bench finding in assessee’s appeal for assessment year 2007-08 for directing the Assessing Officer to delete the impugned disallowance. Disallowing u/s.14A in relation to exempt income from dividends - Held that:- Both the learned representatives inform us very fairly that a coordinate bench in assessment year 2007-08 has already restricted an identical disallowance to the extent of exempt income amount. We therefore follow the very course of action herein as well to restrict the impugned disallowance to ₹ 5,808/- only. The assessee’s additional substantive ground as well as main ground pleaded herein partly succeed Section 80IB deduction disallowance - Held that:- We treat assessee’s above excise refund component to be an income eligible for Section 80IB deduction. Allocation of research and development expenses in proportion to turn over in Jammu unit - house R&D - Held that:- The assessee admittedly has three production divisions at Jammu, Ankleshwar and Dholka; respectively. Case records indicate the same to be operating exclusively for formulation (domestic sales), bulk drugs (domestic and export sales) and formulations (domestic and international sales); respectively. The assessee pleaded before the DRP at page 409 that it had not done any research and development for any of the formulation product manufactured in Jammu unit in relevant previous year. The same has neither been specifically rebutted nor accepted in DRP’s directions. Nor is there any specific material quoted to disturb assessee’s accounts separately maintaining each and every minute detail pertaining to these three units in question. It thus emerges that the authorities below have adopted adhocism in applying the above turnover formula for allocating the impugned expenditure. Hon’ble Bombay high court’s decision in Zhandu Pharmaceutical Works Ltd. vs. CIT (2012 (9) TMI 620 - BOMBAY HIGH COURT ) deletes similar disallowance in absence of non establishment of any nexus between R&D facilities and other units. We find that the authorities below have nowhere arrived at such a nexus in instant case as well. We therefore delete the impugned allocation by adopting the above discussed reasoning. The assessee succeeds in its substantive ground. Foreign currency loss disallowed - Held that:- We find that hon’ble jurisdictional high court’s decision in Pankaj Oil Mills vs. CIT (1976 (5) TMI 3 - GUJARAT High Court) holds inter alia that hedging contracts; in order to be out of speculative transactions, must be in respect of raw materials only in manufacturers’ cases though they could be both with regard to sales and purchases, such hedging contracts need not succeed the contract for sale and actual delivery of goods manufactured, but the latter could be subsequently entered into within reasonable time not exceeding the relevant assessment year in normal circumstances and such transactions should not exceed the total stock of the raw material or merchandise on hand including existing stocks as well as that acquired under the firms contract of purchases in order to be genuine and valid hedging contract of sales; respectively. Learned Departmental Representative fails to indicate any distinction therein vis-ŕ-vis those involved in the instant adjudication. We therefore direct the Assessing Officer to delete the impugned disallowance. Disallowing sales promotion expenditure u/s. 37(1) deleted. Business promotion expenses are allowable as business expenditure not hit u/s. 37(1) explanation.
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2017 (9) TMI 726
Addition u/s 14A - assessee has not claimed the dividend income from investments in foreign subsidiary companies as exempt - Held that:- From the computation statement as well as the Balance Sheet as submitted by the assessee we noted that the assessee had made investments in foreign subsidiary companies and from those companies it got the dividend income. The assessee has not claimed the said dividend income as exempt. The dividend income has been shown as income from other sources and due tax has been computed by the assessee in the computation statement. Therefore no question arises on making disallowance in respect of investment made in foreign subsidiary company. The assessee has also made investments in Indian companies but did not earn any dividend income. In view of the decision in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] no expenses can be disallowed under section 14A as the assessee has not earned any exempt income - Decided in favour of assessee Addition made on account of inclusion of cenvat credit in valuation of closing stock - Held that:-the profit computed under the inclusive and the exclusive method of accounting are the same and there would not be any change even if the profit computed by the assessee is adjusted in accordance with the provisions contained u/s 145A of the I.T. Act because to the extent the closing stock will be increased. In respect of raw materials the cost of the purchase and the opening stock will be increased by the component of the excise duty. Since the issue involved related to the valuation of the closing stock in respect of raw material, the question of any disallowance u/s 43 B will also not arise. We have already held that he profit of the assessee cannot be effected if the assessee followed the inclusive method of accounting or the exclusive method of accounting because in any case the stock is increased to that extent the debit side in the P & L account which will be increased by the increase in value of opening stock as well as the cost of the purchase due to the inclusion of the excise duty incurred by the assessee at the time of the purchase of the raw materials. In view of the aforesaid discussion the second ground is allowed. Disallowance of foreign exchange loss on forward contracts related to foreign exchange currency - Held that:- As decided in case of M/s. D. Chetan & Co. [2016 (10) TMI 629 - BOMBAY HIGH COURT] forward contract in foreign exchange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity. Tribunal was justified in deleting the addition of 'Mark to Market' Loss made by the Assessing Officer on account of disallowance of loss on foreign exchange forward contract loss. - Decided in favour of assessee Disallowance of repairs and maintenance of plant and machinery - Held that:- In the interest of justice and fair play to both parties set aside the order of the CIT(A) on this issue and restore this issue to the file of the AO with direction that the AO shall verify whether the assessee had made the payment to these parties through an account payee cheque and has duly accounted for the payment after deducting TDS on the bills. In the case the AO is not satisfied he may make and independent inquiry from the concerned parties and taken decision n accordance with law as in our opinion keeping in view the quantum of repairs and maintenance incurred by the assessee at ₹ 97,15,541/-, the sum of ₹ 4,42,822/- is very small. Non-production of bills relating to this amount should not be considered as these expenses are non-genuine. Thus, this ground is allowed for statistical purposes. Disallowance of repairs and maintenance of other assets - no vouchers were produced - Held that:- A.R. has drawn out attention to the letter dated 23.12.2011 from which it is apparent that the assessee had duly produced the bills for verification. Therefore, in our opinion, the observation made by the AO that the assessee did not produce the bills does not have any leg to stand. Not only this we also noted that in the preceding assessment year 2007-08 the assessee had incurred expenditure on other repairs and maintenance to the extent of ₹ 89,41,982/- and during the impugned assessment year there is only a minor increase of ₹ 15,20,117/-. If we compare these figures as percentage to the sale we noted that there has been slight decrease in the expenses. We, therefore, delete the said disallowance. Claim of depreciation by the assessee on UPS @60% - Held that:- This issue is duly covered by the decision in the case of DCIT vs. Datacraft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] in which it was specifically held that the UPS shall be entitled for depreciation @60%. UPS was an essential ingredient in order to run computer effectively, therefore the assessee shall be entitled for depreciation @60%
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2017 (9) TMI 725
Life Membership Fee received - revenue receipt or capital receipt for a trust - corpus donations u/s 11 (1)(d) - Held that:- I find that the facts of this case indicate that the assessee has been capitalizing the life membership fee receipt since beginning and it has been so accepted by the Revenue earlier. The lump sum payment was dissected into two parts. One being entrance fee and other part commuted payment in liew of annual subscriptions. It was expounded that the element of entrance fee was to maintain parity with ordinary members, and the same was of return for investing the right of membership and hence it was the capital receipt, the other element was the consolidation of the revenue receipt and hence taxable. From this it follows that treatment of life membership fee depends upon its objective/attribution. The assessee has made submissions before the learned CIT(A) that part of life membership fee is attributed towards subscription of magazine, which is otherwise charged to normal members. In such circumstances, in my considered opinion, prima facie the entire life membership fee in this case cannot be attributed to revenue receipt. However, the necessary facts towards objective/attribution of the life membership fee need to be brought on record. Hence, deem it appropriate to remit the issue to the file of the assessing officer. The assessing officer is directed to obtain the necessary information regarding the objective/ attribution of life membership fee and, thereafter, decide as per the above case law from jurisdictional High Court in the case of WIAA Club vs. CIT [1979 (1) TMI 5 - BOMBAY High Court]. The issue raised is remitted to the file of the assessing officer
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2017 (9) TMI 724
Penalty u/s 271(1)(c) - deduction u/s 80IB was claimed on the basis of an audit report signed by a Chartered Accountant - Held that:- Additions were made by the ld. AO, it is evident that on all grounds on which penalty was levied, there is no dispute that the assessee had not suppressed any facts and the claim has been made on the basis of audited accounts and on the basis of audit report, duly signed by the CA. Hence penalty on the ground of concealment of particulars of income could not have been levied. Disallowance of claim of Additional depreciation allowance under Section 32(1)(iia) - higher amount of depreciation allowance in the subsequent years - higher WDV - Held that:- We find that there is no dispute about the fact that assessee had acquired certain plant and machinery which was owned by the assessee and was also put to use during the current year. The assessee is, therefore eligible to claim depreciation thereon under Section 32. However, the assessee had interpreted the term “installed capacity” to mean “total installed capacity” of all units taken together whereas the AO has taken the 'installed capacity' to mean installed capacity of the eligible units only. The impact of this action of the AO is that the appellant will be entitled for higher WDV on this amount and shall be able to claim higher amount of depreciation allowance in the subsequent years. Thus, in view of the above, it is evident that in view of debatable nature of the issue, it cannot be held that inaccurate particulars were filed by the appellant, since the claim of the appellant regarding depreciation allowance was on a different interpretation of the term “installed capacity” as compared to the view taken by the Ld. AO. It is evident that such a view could be debatable and hence in the absence of any inaccuracy in the claim of the appellant, it cannot be held that the appellant had filed inaccurate particulars of income on this issue. Reduction of the amount of deduction under Section 80IB by exclusion of interest income from the computation of eligible profit - Held that:- On careful consideration, as the interest income from deposits made with suppliers and interest from the customers on delayed payment, is derived from the business of the appellant, it cannot be said with certainty that the same had to be taxed under 'Income from Other Sources'. Accordingly, no penalty can be levied on the same. However, since assessee had admitted to treat interest from bank deposits as “Income from Other Sources”, the amount of penalty is restricted to the addition in respect of interest on deposit in bank of ₹ 30,824 only. Disallowance of donation - Held that:- As find that the use of nomenclature “donation” is the root cause of this dispute. This amount comprises of payment of ₹ 16,857 to a widow of an employee of the appellant company, which was incurred for the purpose of maintaining harmonious relationship with the staff and it is more in the nature of “staff welfare” than 'donation'. Regarding the balance amount of of ₹ 6,000, paid to Helpage (India), no receipt was furnished before me. Further, no receipt in respect of other donations of ₹ 2,5OO was filed. In view of the same, the inaccuracy in filing particulars of income was established to the extent of ₹ 8,5OO on this ground. Levy of penalty was rightly confirmed to the extent of inaccurate particulars of income filed by the assessee in respect of income amounting to ₹ 39,324 only by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the order of the Ldc. CIT(A) on the issue in dispute and reject the grounds raised by the Revenue. Appeal of the Revenue is dismissed.
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2017 (9) TMI 723
Disallowance u/s 14A - computation of claim - Held that:- From the perusal of financial statement, we have noted that the interest free funds available with the assessee are more than the investment made during the year. The Hon’ble Bombay High Court in Reliance Utility and Power Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT ) held that where both the interest free funds and interest bearing funds are available and the interest free funds are more than the investment made the presumption is that the investment is made out of interest free funds available with the assessee. The High Court further held that for the years for which Rule 8D is not applicable and in the event the AO is not satisfied with the working given by the assessee, the disallowance under section 14A has to be made on reasonable basis. The Hon’ble jurisdictional High Court in HDFC Bank Ltd. ( 2016 (3) TMI 755 - BOMBAY HIGH COURT) held that while considering disallowance under Section 36(1)(iii) the application of Section 14A of the Act would apply. Considering the fact that no interest bearing funds were utilized in earning the exempt income. Thus, no interest disallowance can be made while disallowance u/s 14A of the Act. AO has not recorded his dissatisfaction about the claim of assessee, further the lower authority has not disputed that the majority investments are in group companies. Tribunal has taken a consistent view to allow reasonable disallowance and restricted the disallowance u/s 14A of the Act to 1% of the dividend income. See DCIT, Circle-4, Kolkata Versus Ashoka Trading Co. Pvt. Ltd. [2012 (3) TMI 494 - ITAT KOLKATA ] Disallowance u/s 14A (MAT) while determining book profit under section 115JA - Held that:- In this regard the AO is directed to re-work the disallowance following our determination of disallowance u/s14A in the above paras under the normal provision of the Act. Thus, this ground of appeal is partly allowed. Disallowance of vendor development expenses - Held that:- Identical ground of appeal was decided in favour of assessee in appeal for AY 1997-98 and 1998-99 wherein held the assessee had incurred an expenditure that in the books of account it had treated the expenditure as deferred revenue expenditure, that in the computation of income and during the assessment proceedings it claimed that expenditure was of revenue nature, that the AO had not given any finding about allowability of the expenditure, that the expenditure was incurred for developing the tools/components. In our opinion, the entries in the books of account do not decide allowability of expenditure as revenue expenditure. Nor are the books decisive to hold expenditure as capital expenditure. What has to be seen is the nature of expenditure. The FAA has given categorical finding of fact that expenditure did not add to the fixed capital of the assessee or helped it in acquiring the source of profit. FAA was justified in allowing the expenditure as revenue expenditure. Disallowance of consultancy fee for business process Re-engineering - Held that:- Identical ground of appeal was decided in favour of assessee in appeal for AY 1997-98 and 1998-99 held that the expenditure incurred by the assessee on account of consultancy fee for business process re-engineering was revenue expenditure, that it had not started any new line of business, that the consultancy fee was also not paid for setting up any new business, that same was paid for purposes of improving the profitability of existing business. Disallowance of Product Development Expenses - Held that:- It is noted that similar disallowance made by AO in assessment year 2003-04 onwards which were deleted by First Appellate Authority, and the revenue has not filed further appeal before the Tribunal. The orders in all subsequent years have attained finality. The product development expenses include expenses on development of new product and variants of existing product. It has been explained that such development takes a span of time before commercial production. In our view, such an expenditure is a regular developmental activity under taken by the assessee in its existing course of business and not a new line of business. Thus such expenditure is revenue in nature. Disallowance on feeder line for power supply by treating it as Capital expenditure - Held that:- The expenditure incurred on feeder line for power supply is not capital expenditure as no asset was added in the asset of the assessee. The expenses incurred on feeder line are revenue in nature. Hence, this ground of appeal is also dismissed. Allowing the disallowance of contribution for Railway Bridge - Held that:- Hon’ble Gauhati High Court in CIT Vs Bongaigaon Refinery and Petrochemical Ltd (1996 (6) TMI 64 - GAUHATI High Court ) for expenses incurred for Railway track and siding. Further, the Hon’ble Madras High Court in CIT Vs Coats Viyella India Ltd [2000 (11) TMI 24 - MADRAS High Court ] that expenditure incurred on construction of new bridge in place of old one for movement of goods and workmen is revenue expenditure. We are of the considered view that the assessee is neither the owner of the bridge nor new capital asset was added in the asset of the assessee. Thus, we do not find any illegality or infirmity in the order of the ld CIT(A). Admission of additional ground of appeal - Held that:- Commissioner (Appeals) erred in law in not admitting the additional ground of appeal. Considering the facts of the case and the nature of additional grounds of appeal, we admit the additional grounds and restore the additional ground of appeal to the file of ld. CIT(A) to consider the claims of assessee afresh and passed the order in accordance with law. Deduction under section 80 HHC - Held that:- Considering the fact that the assessee has raised additional ground of appeal related to deduction under section 80 HHC for the first time before the Tribunal, we admit the additional ground of appeal and restore the same to the file of assessing officer to consider these additional grounds of appeal as well and pass the order in accordance with law. The AO shall grant sufficient opportunity to the assessee before passing the order. With these observation the additional ground of appeal raised before us are allowed for statistical purpose. Disallowance u/s 43B in respect of Sales tax collected under UP State Government Scheme - AR of the assessee submitted that the ld CIT(A) has allowed deduction in AY 2001-02, being the assessment years in which the agreement for deferment of sale tax has been entered into with the UP 33 Government, thus this ground of appeal has become infructuous. Considering the contention of ld AR of the assessee that this ground of appeal is dismissed being infructuous.
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2017 (9) TMI 722
Depreciation on Goodwill - whether it is an asset covered under Explanation 3(b) of section 32 - Held that:- Following the order passed by the coordinate Bench of the Tribunal in assessee’s own case for AY 2007-08 and 2008-09 and the appeal filed by the Revenue in Hon’ble High Court has also been dismissed in the light of the decision rendered by Hon’ble Supreme Court in CIT vs. Smifs Securities Limited (2012 (8) TMI 713 - SUPREME COURT), we are of the considered view that the Goodwill is an asset squarely covered under Explanation 3 (b) to section 32(1) of the Act and is not covered under the expression ‘any other business or commercial rights of similar nature. So, in terms of BTA dated 15.12.2005, the Goodwill being an intangible property right is entitled for depreciation - Decided against revenue.
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2017 (9) TMI 721
Cancellation of registration granted u/s. 12A - assessee not engaged in any real charitable activities - assessee has given corpus donation to a trust - Held that:- We find that the activities/ objects of the trust have not been doubted and on the basis of same activities/ objects registrations u/s 12AA was awarded to the assessee. Simply the assessee has given corpus donation to a trust cannot be the basis for the denial of the registration certificates as discussed above. It is also important to note that the activities of the assessee have not been doubted in all other years as discussed above. As such the activities of the trust were duly accepted by the Revenue as evidenced from the details submitted by the AR in the preceding paragraph and placed on record. The ld. DR has not brought anything on record contrary to the finding of ld. AR. Thus the amount of donation given by the assessee trust to the other trust is very much charitable activities. In this connection the CBDT has issued instruction No. 1132 date 05.01.1978 wherein it was clarified that the payment of a sum by one Charitable Trust to another for utilization by the donee-trust towards its charitable objects is proper application of income for a charitable purpose. No hesitation in reversing the order of ld. CIT(Ex) and accordingly the appeal of the assessee is allowed.
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2017 (9) TMI 720
STCG on sale of two residential flats - character of capital assets transferred - period of holding - claiming indexation for computing long term capital gain - Held that:- The tile, interest and rights in the flats is created wherein specific flat was earmarked and allotted by the builder in favour of the assessee in September 2005, hence, the period of holding in these case W.r. t. flats being held by the assessee for more than three years before the same were sold by the assessee in October/December, 2009. The claim of the assessee hereby allowed by us by holding that the assessee transferred long term capital asset being flats on October/December 2009 which were acquired in September 2005 i.e. period of holding is more than thirty six months in the case of both the flats. We would like to also make it clear that the assessee will be entitled for cost inflation index(CII) based on the actual payments made and date of payment, accordingly CII will be worked out with reference to amount of payment and date of payment, on progressive payments. We order accordingly.
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2017 (9) TMI 719
Income arising from sale of flats - nature of income - capital gain or income from other sources - admission of additional evidences - Held that:- We have observed that the assessee company is engaged in the development of land, construction of buildings and sale of flats. The assessee had sold five flats during the year against which three agreements were submitted by the assessee before the lower authorities. The assessee could not submit the other two agreements of the flat which was stated to be sold during the year viz. flat No. 7 & 16 in E Building, J P Nagar. Now, it has come on record that these agreements have been located and application is moved by the assessee to admit the same as an additional evidence under the Income-tax(Appellate Tribunal) Rules, 1963. The said agreements were stated by the assessee to be not traceable due to death of the Managing Director of the assessee company. As observed that these additional evidence being two agreements which the assessee could not submit before the authorities below and infact these two agreements goes to the root of the matter and are important for adjudicating the issues covered by this appeal because the authorities below made additions to the income from unsubstantiated sources mainly on the grounds that these agreements were not traceable.Thus, we are inclined to set aside and restore the issues covered by this appeal to the file of the AO for de-novo determination of the issue on merits in accordance with law. Appeal of the assessee allowed for statistical purpose.
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2017 (9) TMI 718
Disallowing compensation amount paid to the land owner for using the land for mining under section 37(1) - whether provisions of section 35E are attracted in the instant case? - Held that:- For applicability of section 35E, both the nature and period of occurrence of the expenditure are relevant. In the instant case, it is not in dispute that the year under consideration is not the year when the commercial production has started. The assessee has entered into lease agreement with the Government of Rajasthan way back in the year 2000 and thereafter, it has started commercial production and reported revenues to tax. In view of the same, given that the expenditure under consideration has been incurred much after the start of the commercial production, one of the conditions for invoking section 35E are not satisfied. We therefore need not examine the second condition regarding nature of the expenditure as the same would be purely academic in nature. The provisions of section 35E are therefore not applicable in the instant case. Therefore, the applicability of provisions of section 37(1) cannot be excluded merely on account of the fact that the expenditure is covered under section 35E of the Act. The applicability of provisions of section 37(1) have therefore to be tested independently on satisfaction of other conditions specified therein. Given that the piece of land falls within the mining area in respect of which assessee has an existing right to carry on its mining operations and the fact that assessee wishes to carry on the mining area in that area, the assessee was required to pay compensation to the land owner so that the latter doesn’t obstruct or challenge the carrying of the mining activity underneath the surface of land which belongs to him. The payment is for the purposes of removing the disability or obstruction and to facilitate the carrying on its business. No fresh rights have been acquired by the assessee by virtue of paying the said compensation. The assessee was already having a right to carry on the mining operations. The fact that land stand mutated in the name of the Government of Rajasthan post surrender by Shri Ranga also shows that the land or the surface rights therein have not being acquired by the assessee. In light of above discussions and respectfully following the decision in case of Bikaner Gypsum (1990 (10) TMI 2 - SUPREME Court), the assessee deserve to succeed in the instant case. The AO is therefore directed to allow the claim of deduction u/s 37(1) of the Act.
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2017 (9) TMI 717
Reopening of assessment - bogus purchases - Held that:- In the instant case there was specific information before the AO from the Sales Tax Department, Maharashtra about the assessee who obtained bogus purchase bills from the accommodation entry providers. Therefore, the AO has rightly reopened the assessment by issuing notice u/s 148 of the Act. Profit estimated fro bogus purchases - Held that:- We find that to ascertain the genuineness of the unverifiable purchases, the AO called for information u/s 133(6) from the five parties. The letters were returned back by the postal authorities unserved with the remarks ‘not known’. The AO then asked the assessee to produce the above parties for examination in person to establish their identity and substantiate the claim of purchases from those parties. The assessee however, failed to produce those parties for examination in person. Also we find that barring the ledger account and cheque payments, no other documents such as octroi receipts, transport bills were produced before the AO by the assessee during the course of assessment proceedings. In the case of CIT vs. Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT), has held that where purchases were not bogus but were made from parties other than those mentioned in the books of account, not entire purchase price but only profit element embedded in such purchases can be added to the income of the assessee. That being the position, not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. Thus we estimate @ 12.5% the profit embedded in the said bogus purchases. Disallowance of the other expenses to 5% - CIT(A) has restricted the disallowance on the reason that the appellant had maintained the verifiable vouchers and payment had been made through banking channels in majority of cases, except petty expenses - Held that:- We find that the above estimated disallowance is not supported by the material on record. Therefore, the disallowance of ₹ 1,40,395/- for the AY 2010-11 and ₹ 2,00,162/- for AY 2011-12 arrived at by the Ld. CIT(A) are deleted.
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2017 (9) TMI 716
Penalty u/s. 271(1)(c) - ineligible notice - notice issued under section 274 r.w.s. 271 is a stereotype one – not tick marked for which limb of the two limbs to section 271(1)(c) the penalty is initiated - Held that:- Notice issued under section 274 must reveal application of mind by the Assessing Officer and the assessee must be made aware of the exact charge on which he had to file his explanation. The Court observed, vagueness and ambiguity in the notice deprives the assessee of reasonable opportunity as he is unaware of the exact charge he has to face. The Hon'ble Jurisdictional High Court in Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT), following the decision in CIT v/s Manjunatha Cotton & Ginning Factory, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held, order imposing penalty has to be made only on the ground on which the penalty proceedings has been initiated. In addition to the aforesaid binding judgments, there are several orders passed by co-ordinate Benches of the Tribunal on this very point. In all those orders also penalty levied u s. 271(l)(c) of the Act on the basis of similar vague notice was cancelled. Thus no merit for the penalty so imposed u/s. 271(1)(c) of the IT Act. - Decided in favour of assessee.
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Customs
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2017 (9) TMI 687
Provisional release of goods - Section 110 A of the Customs Act - misdeclaration of cargo - watches-branded or unbranded - Held that: - report has been sought for by DRI from Expert, and the report is awaited - there will be a direction to the respondents to consider the petitioner's representation/application, dated 29.07.2017, for provisional release of the goods on receipt of the report from the Expert and pass orders on merits and in accordance with law - petition allowed by way of remand.
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2017 (9) TMI 686
DFIA licence - transfer of license - Whether CESTAT is right in law in holding that the Respondents are liable to import Lactose against DFIA licence when the same was admittedly not used as an ingredient in the export product? Held that: - In a recent judgment of this Court in Commissioner of Customs (Export) V/s. USMS Saffron Co. Inc. [2016 (2) TMI 1032 - BOMBAY HIGH COURT], it was held it is the DFIA Licence in question is material and where the DFIA does not contain any entry restricting saffron and the Licence Authority did not deem it proper to impose any liability, there was no violation of any of the conditions of the DFIA and the N/N. 98/2009 allowing the duty free import is applicable - In the present case it is an admitted fact that the DFIA Licence bearing endorsement of transfer was issued prior to the issuance of the Circular dated 31st January 2011 and hence, the N/N. 98/2009 dated 11th September 2009 was applicable in the case of the import of lactose. The CESTAT upon considering the facts of the present case is justified in arriving at the finding that the change in Policy would not be applicable to the licence issued prior thereto and hence the Respondents are entitled to the benefit of N/N. 98/2009 – CUS, in terms of the DFIA present to the Customs. Appeal dismissed - decided against appellant.
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2017 (9) TMI 685
Suspension of operation of the Importer-Exporter Code Numbers - Foreign Trade (Development and Regulation) Act 1992 - Held that: - though the power is conferred on the Director General to suspend the code numbers. However, before any order is passed, the person who is likely to be affected should be informed by notice in writing on the ground on which it is proposed to suspend or cancel the importer-exporter code numbers and also should be given a reasonable opportunity for making a representation in writing. There is no dispute that before the impugned orders are passed, the petitioners were not given the opportunity. The petitioners does not have any information as to what transpired after the above interim order, whether any enquiry was conducted or investigation was completed - For all these years, no counter affidavit has been filed by the respondent/Department, and therefore, the impugned order cannot be given effect to at this juncture, having been kept in abeyance from 2006 - petition allowed - decided in favor of petitioner.
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2017 (9) TMI 684
Jurisdiction - power of DRI to issue SCN - whether DRI is competent to issue show-cause notice? - Held that: - w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as proper officer for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28. Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect - Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN or adjudicate for the period prior to 8.4.2011. Recently, the Hon’ble High Court of Delhi in the case of BSNL Vs. UOI [2017 (6) TMI 688 - DELHI HIGH COURT] has dealt with the identical issue where the notice was also issued by DRI. The Hon’ble High Court of Delhi has considered the judgment in the case of Mangli Impex Vs. UOI which is stayed by the Hon’ble Supreme Court. Finally the Hon’ble High Court has granted liberty to the petitioner by observing that petitioner is permitted to review the challenge depending on the outcome of the appeals filed by the UOI in the Supreme Court against the judgment of the Court in the case of Mangli Impex Ltd. Appeal allowed by way of remand.
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2017 (9) TMI 683
Penalty u/s 114 (i) of the CA, 1962 - smuggling - red sanders - prohibited goods - absolute confiscation - Held that: - the appellant, a Merchant Exporter, had entered into a contract with a stranger Shri P.K. Tiwari, and therefore, the penal responsibility would be shifted on the appellant as the stranger is absconding - It is noted that the appellant attempted to export the goods upon dealing with a stranger, Shri P.K. Tiwari without verifying the antecedents and the penal consequence thereon would be upon the appellant. The submission of the Ld. Counsel that the appellant had informed the Customs authorities is an incidental nature and could not establish the innocence of the appellant. Therefore, the imposition of penalty on the appellant is justified - the imposition of penalty upon the appellant is upheld subject to the amount of the penalty is reduced to ₹ 15,00,000/- - decided partly in favor of appellant.
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2017 (9) TMI 682
Mis-declaration of export goods - fraudulent Drawback - case of appellant is that they never carried out any such activity and their IEC Code was used without authorization by other persons for filing the export related documents - Penalty - Held that: - In the documents, the export goods were declared to be leather jacket, waist coat, shoes, skirt, pant etc., but, on examination of the goods, it was found to be old and used items of negligible or no commercial value. The goods were further found not to match with the documents - mis-declaration on the part of the Appellants with a view to claim huge amount of drawback fraudulently stands established. If the DRI authorities have not intercepted the goods prior to export, the fraudulent drawback amounts would have been received in the account of M/s Krish Exports. The investigations undertaken by DRI have established that Shri Manish Singh of M/s Tara India was the kingpin in the export fraud - The penalties imposed on M/s Krish Exports under Section 114 as well as 114AA of the Customs Act, 1962 are justified. Appeal dismissed - decided against appellant.
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2017 (9) TMI 681
Revocation of CHA license - forfeiture of security deposit - time limitation - Regulation 22 of Customs House Agents Licensing Regulation, 2004 - Department took two years and five months to complete the proceedings - fraudulent export - Held that: - Regulation 22 framed the time schedule for completion of the revocation proceedings - The Commissioner of Customs shall furnish the copy of the enquiry report to the Customs Broker to submit the representation within a period of not less than 30 days. Thereafter, the Commissioner of Customs may pass such order within 90 days from the date of submission of the report by the Deputy Commissioner or the Assistant Commissioner of Customs Regulation 20(5) of Customs Brokers Licensing (Amendment) Regulations (CBLR), 2013. The enquiry officer had taken 18 months to complete the enquiry against the stipulated period of 3 months. It is noted that the Commissioner of Customs had taken 10 months as against the stipulated period of 90 days - The Tribunal in the case of Hindustan Shipping Agency V. Commr. of Customs (Port), Kolkata [2016 (12) TMI 889 - CESTAT KOLKATA], has held that The time limit prescribed by law is mandatory and the appellant is not permitted to suffer in view of the decisions of the Tribunal. Where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all - In the present case, the said Rule would squarely apply. Therefore, the impugned order, passed by the Commissioner of Customs cannot be sustained under the law - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (9) TMI 676
Insolvency Application - application filed by the applicant bank as a Financial Creditor against the Corporate Debtor on the ground that the Corporate Debtor has defaulted in the payment of a sum - statutory period computation - Held that:- It is not in doubt that the main insolvency application has been filed by State Bank of India being the Financial Creditor for unleashing the Corporate Insolvency Resolution Process against the Corporate Debtor on 27.6.2017. The amount which is clamed as per the insolvency application filed by the Financial Creditor is stated to be in a sum of ₹ 63,53,44,632.63/-. It is also evident from the amount claimed that it is quite substantial sum which the Financial Creditor despite repeated notices as well as approaching other forums have not be in a position to recover and this ultimately had made the Financial Creditor Bank to seek and avail the provisions of IBC, 2016 by approaching this Tribunal bringing to light the insolvency of Corporate Debtor. The statutory period fixed is 14 days and in so far as this Tribunal is concerned will operate from the date of listing before this Tribunal. The first date of listing of the matter from the records it is seen is on 5.7.2017 and as stated in the application it was again re-posted to 6.7.2017, on which date this Tribunal was compelled to dismiss the petition for non-prosecution, due to non-appearance of the Petitioner. It is further seen from the records that application for restoration of the insolvency application has been filed on 7.7.2017. The applicability of Rule 48 of National Company Law Tribunal Rules, 2016 will not be applicable to IBC,2016 stricto senso as evident from the time period provided therein for an application for restoration is 30 days whereas under IBC, 2016 this Tribunal is required to deal with the application for Insolvency itself within a period of 14 days. Keeping in view as from the date of first posting on 5.7.2017, 14 days period has not expired and also taking into consideration that the applicant bank has acted promptly in filing the application for restoration that too within the said period of 14 days, even taking into consideration the date of presentation, being 27.07.2017, we allow this application and the insolvency application in IBC No. 189/2017 stands restored to its original state, subject however to payment of costs in a sum of ₹ 25,000/- to Prime Minister's National Relief Fund within ten days from the date of this order. List the main C.P. on 11.8.2017.
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Service Tax
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2017 (9) TMI 715
Valuation - includibility - PSF - Airport charges - whether PSF and Airport charges collected by the appellant are to be included in the service provided by them under the category of Transportation of Passengers by Air services or not? - Held that: - the appellant has complied with the condition of Rule 6 of Service Tax (Determination of Value) Rules, 2006 and the same are not includable in the assessable value of service provided by the appellant, as the impugned period is, post 27.02.2010 - the said issue has been examined by this Tribunal in the appellant's own case, wherein this Tribunal has made it clear that these charges are not to be included in the assessable value of the services provided by the appellant Moreover, as per the exemption N/N. 12/2010 dated 12.02.2010, statutory taxes charged by any government on Air passengers would be excluded from the taxable value for the purpose of levy of tax and therefore, the service tax is not payable by the appellant. Passenger Service Fee (PFS) and Airport Tax are not includable in the assessable value of the services provided by them - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 714
Refund claim - N/N. 41/2007-ST dt. 06.10.2007 - rejection on the ground of time bar - Held that: - appellants refund claim for the quarter ended December 2007, is filed on 19.09.2008. The said refund claim, by any stretch of imagination, is beyond the period of sixty days as provided under notification No.41/2007-ST, dt. 06.10.2007 - this belated filing of refund claim for the quarter ended December 2007 has correctly been rejected by lower authorities. As regards second refund claim for the quarter ended June 2008, the said refund claim is undisputedly filed on 10.09.2008. Time limit prescribed under N/N. 41/2007-ST dt. 06.10.200 was amended by N/N. 32/2008, dt. 18.11.2008 wherein the time limit was extended for filing the refund claims from sixty days to six months - the refund claim for the services received and used during the quarter was filed on 10.09.2008 well within the time as extended under N/N. 32/2008 and as clarified by Board Circular dated 12.03.2009 - the refund claim for the quarter ended June 2008 needs to be granted to the appellant. Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 713
Rectification of Mistake - Business Auxiliary Services - Rent-a-Cab Operator service - Held that: - As regard the claim of the appellant that the service is classifiable under "Rent-a-Cab Operator" and same is taxable prior to 1-6-2007, we are of the view that in the earlier order this tribunal has classified the service under Tour operator, therefore now the same attained finality, particularly in the appellant's own case, therefore appellant cannot raise this issue at this stage - out of all types of BAS, some service on which tour operator has paid service tax is a matter of fact which needs verification. Penalties - Held that: - since in the earlier order involving the same issue, penalties were set aside, following the same, we set aside the penalty. As regard correct service tax liability, the matter is remanded to the original adjudicating authority to pass a fresh order. Application allowed in part and part matter on remand.
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2017 (9) TMI 712
Refund claim - duty paying documents - debit notes - whether valid documents or not for claiming refund? - Held that: - refund of Cenvat credit of ₹ 28,93,933/- was proposed to be denied on the ground that the same was based on the debit notes and that the said debit notes did not appear to be valid document for taking Cenvat credit under the Cenvat Credit Rules, 2004 - refund claim for the period from quarter October to December, 2010 wherein Original Authority through Order-in-Original dated 09/02/2012 for the period from quarter October to December, 2010 has held that the said debit notes were issued for valid input services and documents were also proper documents for taking credit and subsequent refund - Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 711
Liability of tax - freight - appellant availed the services of Goods Transport Operators for inward transportation of marble blocks from mines area to their factory - whether the appellant is liable to pay service tax on freight? - Held that: - similar issue decided in the case of M/s. Nandganj Sihori Sugar Co. Versus CCE. Lucknow [2014 (5) TMI 138 - CESTAT NEW DELHI], where it was held that When the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called “Goods Transport Agency” and, hence, in these cases, the service of transportation of sugarcane provided by the transporters would not be covered by Section 65(105)(zzp), and hence there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency. As the appellants were not required to issue consignment note as per Rule 4(B) of the STR, 1994, they are not liable to pay service tax - appeal allowed - decided in favor of appellant.
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2017 (9) TMI 710
Works Contract Service - purely sales contract where no element of service was involved - levy of VAT and/or service tax? - Held that: - since VAT / sales tax stand paid on the entire value of the contracts, no service tax can be charged since service tax as well as sales tax are mutually exclusive. Classification of service - whether composite contracts to be classified under WCS or under erection, commissioning or installation service? - Held that: - CBEC Circular No.62/11/2003-ST dated 21.8.2003 has clarified that the goods portion of work contract is to be ascertained from the payment of VAT and after deducting such value attributable to goods, the balance is to be determined as value of service. In cases where VAT has been paid on the full value of the contract, there is no value attributable to service and consequentially no service tax is payable. Management, maintenance or repair service - Held that: - The adjudicating authority has reduced such demand after considering the reconciliation statement of the department itself. He has excluded the value of goods in the contracts in which VAT or WCS tax as applicable was paid by the applicant - Since the finding of the adjudicating authority is based on scrutiny of all the contracts and reconciliation statement of the department, we find no reason to interfere with such finding. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 709
Business Auxiliary Services - the amount collected as excess freight represents charges for rendering BAS - Held that: - in the case of Greenwich Meridian Logistics (I) Pvt. Ltd. [2017 (3) TMI 873 - CESTAT MUMBAI], the Tribunal has observed that, in the shipping line there is possibility of trading in space or slots on vessels. It cannot be stated that such trading was figment and only freight was transacted - it also appears that the assessee-Appellants were never appointed by the airlines as ‘Commission Agent’. They have purchased the space in bulk and paid to airlines if the space is vacant, and have also suffered the loss. When the assessee-Appellants are suffering with the transaction loss, then certainly they are not the agent. CBEC vide Circular No.197/7/2016-ST dated 12.08.2016 has clarified that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India. Appeal allowed - decided in favor of assessee-Appellants.
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2017 (9) TMI 708
Franchisee Service - the amount received from MTIL, which is for the permission granted to MTIL to print and deliver in-flight magazine “Swagat” to the appellant - Held that: - MTIL is paying a fixed monthly amount to the appellant for permitting the usage of the appellant’s name and the magazine for generating the revenue - the scope of franchisee is very wide - As such, the amount received by the appellant from MTIL is liable to be taxed under the said tax entry. Time Limitation - Held that: - the appellant is a Government of India Undertaking. As such, a rebuttable presumption is created regarding non-existence of intention to evade payment of service tax. However, in this particular case, the Revenue has produced sufficient evidence to rebut such presumption. It is seen that in spite of a notice issued under Section 77 of the Act, the appellant did not furnish the required details for quantification of tax liability - extended period of limitation upheld. Penalty - Held that: - the appellants had entertained a belief regarding non-liability of service tax and accordingly had not discharged the same, in time - Section 80 can be invoked for waiver of penalty imposed on the appellant. Appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 707
Refund claim - export of services - denial of refund on the ground that the appellants failed to produce supporting agreements to ascertain the classification of service and accordingly the benefit of refund of service tax on services exported cannot be granted in terms of N/N. 11/2005-ST dated 19/04/2005 - time limitation - scope of Section 11B - whether the payments made by the appellants are to be treated within the scope of the Finance Act, 1994 to which limitation as prescribed u/s 11B of CEA, 1944 has been made applicable? - Held that: - the appellants rendered taxable service and their claim for rebate of such tax paid, is governed by the provision of Finance Act, 1994, Export of Service Rules, 2005 and accordingly, the provisions of Section 11B of Central Excise Act in so far as limitation is concerned, will be rightly applicable to the appellants. The tax is paid on taxable services. The Government has provided certain concession when the services were exported out of country. Such concession is subjected to various conditions and limitations. On fulfillment of such condition, the appellants shall be entitled for the rebate. Time limit u/s 11B - Held that: - The appellants did render service which are liable to service tax. The claim for rebate has to be within the ambit of the provision of Section 11B of Central Excise Act, 1944 made applicable to the service tax collected in terms of Finance Act, 1994. The present appellants claim for rebate is barred by limitation - appeal dismissed - decided against appellant.
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Central Excise
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2017 (9) TMI 706
Exemption Notification 8/97 dated 1.3.1997 - eligibility for benefit - imported paper cones used for winding of yarn - the decision in the case of Commissioner of Central Excise, Pune-II Versus Abhishek Cotspin Mills Ltd. [2016 (8) TMI 979 - CESTAT MUMBAI] contested, where it was held that paper cones are packing materials, and were permitted to import the same as such without payment of duty - Held that: - the decision in the above case upheld - appeal dismissed.
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2017 (9) TMI 705
Condonation of delay - 100% EOU - denial of eligibility for concession - demand of duty - the decision in the case of M/s Winsome Yarns Ltd., Shri Manish Bagrodia, M.D., Shri N.K. Maheshwari, Director and Shri S.K. Sharma, V.P. Versus CCE, Chandigarh [2016 (10) TMI 608 - CESTAT CHANDIGARH] contested, where it was held that appellant eligible to claim exemption - Held that: - delay not condoned - The appeals are dismissed on the ground of delay as well as on merits.
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2017 (9) TMI 704
Interpretation of statute - Penalty u/r 209A of CER, 1944 - Whether provisions of Rule 209A are attracted only if the persons concerned have physically dealt with excisable goods with the knowledge or belief that such goods were liable to confiscation & that the provisions are not attracted unless the person concerned has physically dealt with such goods? - Held that: - reliance placed in the case of The Commissioner of Central Excise Versus M/s. Ramesh Kumar Rajendra Kumar & Co. & others [2010 (9) TMI 371 - BOMBAY HIGH COURT], where it was held that Rule 209A can be invoked and the penalty imposed only when the person has physically dealt with the excisable goods with the knowledge or belief that the goods are liable for confiscation. In the present case, the allegation was of unused gate passbooks being misused by the Respondents for the purpose of issuing fake/forged gate passes to assist M/s. Singhal Swaroop Ispat Ltd. There was no case of the Respondents having physically dealt with the excisable goods with the knowledge or belief that such goods were liable to confiscation - rule 209A cannot be invoked. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 703
100% EOU - Maintainability of appeal - pre-deposit - Appellant had not deposited 7.5% as required u/s 35F of the CEA, 1944 - Held that: - the Respondent always has discretion to appropriate the amount recovered against particular dues. We find that the Appellate Tribunal has justifiably considered that for the amount of ₹ 5,15,10,018/- is recoverable for which the concerned Appeal had been filed by the Appellant before the Appellate Tribunal, no amounts had been appropriated. From the total amount recoverable of ₹ 6,65,65,049/- for the period 2005 till 2010, only a sum of ₹ 36.58 lakhs had been recovered - there is no infirmity in the impugned order which has held that since the amount of 7.5% has not been deposited as mandated u/s 35F of the CEA, the Appeal is not maintainable - appeal dismissed being not maintainable.
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2017 (9) TMI 702
Refund claim - unjust enrichment - Classification of goods - power driven pumps (Mono Block Pump Sets) - The assessee claimed these stators and rotors as parts of mono bloc pump sets which were exempted under Tariff Item 68 as per N/N. 73/68 - Revenue took a view that the rotors and stators are parts of motor failing under Tariff Item 30-D and should suffer duty before they were captively used in the manufacture of mono bloc pumps - Whether the Tribunal is right in ordering refund based on its earlier decision, when the question of refund is barred by limitation? - Held that: - For the failure to record a finding specifically that the duty paid for the period beyond 1983 up to 28.02.1986 has been passed on to the others and, consequently, the claim would amount to unjust enrichment, on the part of both the adjudicating authority and the appellate authority, the Tribunal has arrived at the correct conclusion. The claim for refund is maintainable and the said claim is not barred by limitation, as was held by the Commissioner (Appeals) on 18.07.2005 has attained finality. So, the question of examining the claim for refund on merits does not arise now, once again. The only area of scrutiny is liable to be confined as to whether the actual refund to the assessee would amount to unjust enrichment. This question is not examined from the point of finding out as to whether duty burden is already passed on to the others or not. Surmises and conjectures are drawn by setting out that though Excise Duty is not shown separately in the bills or invoices, but, in the absence of supporting documents that the burden of duty has not been passed on to the others, the claim for refund is rejected. If the burden of Excise Duty is passed on to the others, it gets reflected in the Bills and invoices. That is a positive evidence. That was produced to show that no such burden is passed off. It is, thus, clear that far from finding out as to whether or not the duty burden has been passed on to the others, the adjudicating and appellate authority have gone about looking for negative evidence. Clearly, the very approach is wrong. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 701
Jurisdiction - whether Tribunal had jurisdiction to entertain the Appeal against the order of Commissioner (Appeals), wherein the issue of “Duty Drawback” had been determined by the learned Commissioner (Appeals)? - Held that: - under the Central Excise Rules, 2002, “Rebate of Duty” has been specifically provided which reads that Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitation, if any, and fulfilment of such procedure, as may be specified in the notification. Since “Rebate of duty” is separately provided for it cannot be equated with “drawback” under Rule 2 of the said Rules - there is no bar in entertaining an Appeal against the order of Commissioner (Appeals), determining the duty drawback - CESTAT has properly exercised jurisdiction - appeal dismissed - decided against Revenue.
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2017 (9) TMI 700
Principles of Natural Justice - service of order - The claim of the petitioner in the writ petition is that the Order-in-Original was never served on the petitioner and that therefore the petitioner was completely in the dark until a garnishee notice was served on the bank - Held that: - It is too hard to believe that a person who participated in the personal hearing on 24-7-2013 and submitted written arguments on the same date, got into a sense of false security as though no Order-in-Original could have been passed for four years thereafter. The reach of Section 37C cannot be extended to such an extent that unless an acknowledgement card containing the signature of the assessee is produced, the service of the Order- in-Original upon the assessee cannot be treated as completed. Once a registered letter or a speed post is proved to have been submitted at the post office and the necessary registration fee or speed post fee paid therein, a presumption would normally arise that in due course, the said registered letter reached the addressee in 48/72 hours - the burden shifts to the assessee to show that despite the entry in the online tracking system, they did not receive the copy of the order. By producing the printout of the online tracking system, the Revenue has proved in this case that they addressed, pre- paid and posted by registered speed post, the letter containing the Order-in-Original. Once these requirements of Section 27 of the General Clauses Act, 1897, are satisfied, the requirements of Section 37C of the Central Excise Act, 1944, would also stand satisfied - petition dismissed - decided against petitioner.
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2017 (9) TMI 699
Waiver and stay of pre-deposit - Section 35(G) of the Customs Act, 1962 - Held that: - On and from 06-8-2014, the requirement of pre-deposit has been amended. By the said amendment, it is enough if an assessee pays 10% of the demand, for the purpose of maintaining an appeal. But unfortunately, the Order-in-Original in the case of the petitioner was passed on 31-01-2012, prior to the amendment. Therefore, the Tribunal had the discretion to permit waiver from 0% to 100% - Since no reason has been stated by the Tribunal for coming to the conclusion, the order of the Tribunal requires to be set aside - the petitioner is granted a time of 8 (eight) weeks from the date of receipt of a copy of this order to deposit a sum of ₹ 10,00,000/- - petition allowed.
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2017 (9) TMI 698
SSI exemption - use of brand name of others - whether the petitioner is entitled for the exemption from payment of duty on goods bearing the brand name of another person cleared from their factory in terms of the relevant Notifications? - Held that: - The said issue has been finally decided in the assessee's own case Kali Aerated Water Work, Salem Versus Commnr. of Central Excise, Madurai [2015 (6) TMI 226 - SUPREME COURT], where it was held that the appellant has been using his own brand name 'Kalimark' and it belongs to the appellant - petition allowed - decided in favor of petitioner.
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2017 (9) TMI 697
Refund claim - rejection on the ground that the cost certificate submitted by the appellant-assessee did not correctly arrive at the valuation to decide 115% of cost of production - Held that: - valuation based on costing can be made for clearances prior to 2003 when the cases were pending - reliance placed in the case of NATIONAL ALUMINIUM CO. LTD. Versus COMMISSIONER OF C. EX., BHUBANESWAR-I [2005 (3) TMI 186 - CESTAT, NEW DELHI]. Whether the Board circular dt. 1.7.2002 is only clarificatory and Valuation Rules, 2000 will prevail over the said circular? - Held that: - valuation under Rule 4 / Rule 11 was not a subject matter before the original authority. Neither it was a subject matter before the first appellate authority. The issue before the lower authorities for a decision was whether the appellant-assessee correctly arrived at the 115% based on costing in terms of Board's circular dt.1.7.2002 - As such, it is not legally tenable for the Revenue to take up an issue which was not all proposed, discussed or decided by both the lower authorities. Since no proposal was made against the appellant-assessee to change the method of valuation in the proceedings before the lower authorities, we cannot go into the said issue for a decision - appeal dismissed. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 696
CENVAT credit - job-work - respondents have taken the credit of same duty twice - N/N. 214/86-CE - Held that: - the issue whether the principal manufacturer can taken Cenvat Credit on the inputs contained in the goods received from the Job workers on which duty has been paid, is no longer res integra, and decided in the case of M/s. Bharat Heavy Electricals Ltd. Versus CCE & ST. - Meerut-I [2014 (3) TMI 203 - CESTAT NEW DELHI], where it was held that The intermediate products made out of inputs are different from inputs and just because the Appellant have availed Cenvat Credit in respect of the inputs, the Cenvat Credit of duty, if any paid on the intermediate products by the job-workers, cannot be denied to the principal manufactures - credit remains allowed - appeal dismissed - decided against Revenue.
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2017 (9) TMI 695
Exemption under N/N. 6/2002 dated 1.3.2002 - water supply scheme projects - Revenue held a view that wherever there is no treatment plant the whole exemption will not apply - Held that: - similar issue decided in the case of Jain Irrigation Systems Ltd Versus Commissioner of Central Excise & Customs-Nashik [2017 (3) TMI 990 - CESTAT MUMBAI], where it was held that where certificates are the qualification for exemption, it is not open to the central excise authority to overrule that certification - denial of exemption untenable. Demand u/s 11D - Held that: - there is no evidence that the sales document namely invoices etc. indicated any excise duty separately so that the buyer has paid any money representing excise duty to the appellant. In the absence of such situation, the provisions of Section 11D cannot be attracted and the impugned order is without merit. Penalty - Held that: - Since the main appeal is allowed, there is no question of penalty on other appellants. Appeal allowed - decided in favor of appellant.
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2017 (9) TMI 694
CENVAT credit - SFIS certificate - N/N. 34/2006-CE dated 14.06.2006 - case of the Department is that since the goods were cleared under N/N. 34/2006-CE without payment of duty they are liable to pay 10% of the value of the goods as exempted goods in terms of Rule 6 of CCR, 2004 - Held that: - there is no dispute on the fact that the respondent has cleared the goods under N/N. 34/2006-CE which was issued under SFIS Scheme. According to which the manufacturer is allowed to clear the goods without payment of duty and the duty payable on such goods is debited from the SFIS Scrip by the recipient of the goods - it cannot be said that the goods cleared by the respondent is exempted - Rule 6(3)(b) of Cenvat Credit Rules 2004 is not applicable - appeal dismissed - decided against Revenue.
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2017 (9) TMI 693
100% EOU - refund of unutilised CENVAT credit - whether the first appellate authority is correct in allowing the appeal filed by Dr. Reddy's Laboratories against the Order-in-Original (Refund) No.172/2009-10 dated 18.09.2009 restricted the refund amount of unutilised CENVAT credit or otherwise? Held that: - As there is no clarification as to whether Revenue has preferred an appeal against the earlier order, the first appellate authority, in the case in hand was correct in holding that the refund of the CENVAT credit on the inputs and input services cannot be restricted, more so if the assessee is in 100% EOU - refund allowed - appeal dismissed - decided against Revenue.
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2017 (9) TMI 692
Classification of goods - Waste and scrip - Held that: - it is clear that even though the description and chapter heading is not mentioned steel scrap is arising out of the manufactured of final product - The appellant also could not produce any evidence to rebut this position, therefore the demand confirmed to the tune of ₹ 1,23,189/- is correct and legal - demand upheld. Penalty of ₹ 1,23,189/- to 25%, subject to the condition that the duty, interest and 25% penalty stands paid within one month from the date of the receipt of this order - appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 691
Refund of unutilised CENVAT credit - Rule 5 of CCR, 2004 read with N/N. 4/2006-CE(NT) and 5/2006-CE(NT) dt. 14.3.2006 - denial on the ground that refund u/r 5 of accumulated cenvat credit is admissible only from the final product which are exported under bond without payment of duty - the appellant exported on payment of duty under claim for rebate - Held that: - There is a specific condition under notification issued and Rule 5 that refund of accumulated credit shall not be allowed in case the goods are cleared under claim of rebate or drawback - rejection justified - appeal dismissed - decided against appellant.
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2017 (9) TMI 690
Clandestine removal - opportunity to cross-examine - evidences - Held that: - the case be decided on the basis of the available evidences without going into the issue of cross-examination of Shri Umesh Modi - Shri Dhiman Partner of the appellant firm in his confessional statement admitted the clandestine removal and also confirmed the transaction recorded in the record of Shri Umesh Modi related to the clandestinely removed goods, they also admitted the payment has been made in cash. The said statement of Shri Dhiman has never been retracted - the goods have been clandestinely cleared by the appellant - appeal dismissed - decided against appellant.
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2017 (9) TMI 689
Refund of amount paid subsequent to the passing of the order-in-appeal - time limitation - Section 11B - Held that: - The period of 1 year provided u/s 11B should be taken from the date of payment of the duty and not from the date of the order-in-appeal, as the refund is against the amount paid subsequent to the passing of the order-in-appeal - all facts has not been verified properly by both the authorities below - appeal allowed by way of remand.
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2017 (9) TMI 688
Suo-moto re-credit of CENVAT account which was earlier reversed - Held that: - the issue is of suo moto availment of CENVAT credit on which a separate SCN dt. 2.8.2001 was issued on the ground that the appellant availed the CENVAT credit without physically received the input - Since the main issue i.e. availment of CENVAT credit without physical receipt of input has attained finality against the appellant in the proceedings of SCN dt. 2.8.2001 and no further appeal against the Tribunal’s order was filed by the appellant the issue stand finally decided against them - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2017 (9) TMI 680
Valuation - subsidy - includibility - whether the subsidy received by the companies would form part of the turnover for the purpose of levy of tax under the Kerala Value Added Tax Act? - Held that: - Subsidy is given to the manufacturer/dealer to make up the difference between the Retention Price and the price fixed by the Government under the Fertiliser Control Order. Though subsidy paid is for the benefit of the consumer public to ensure that the prices are kept at a reasonable level and at the same time, a reasonable return on investment is also ensured to the manufacturers/dealers, the subsidy is not a consideration for the sales effected. It is also not a reimbursement of the difference in the purchase price and sale price, but what is paid as subsidy is the difference between the maximum price specified in the Fertiliser Control Order and the Retention Price Scheme. The dealer sells the products namely, fertiliser, liquefied Petroleum Gas or PDS Kerosene as the case may be, at prices fixed by the Government of India and what is reimbursed by the Government of India is not part of the price or the difference between the purchase price or sale price. Only if what is reimbursed is the balance of the price, then and then alone, Explanation VII would be of relevance. Therefore, even in spite of the incorporation of Explanation VII to Section 2(Iii) of the KVAT Act, the legal position that subsidy received by dealers like the respondents herein cannot form part of their turn over remains unaltered. Appeal dismissed - decided against Revenue.
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2017 (9) TMI 679
Revision of assessment - case of petitioner is that till the review is decided by the second respondent, the petitioner's assessment need not be revised - Held that: - Considering the fact that already one of the dealers, who is similarly placed to that of the petitioner has filed a review petition, pursuant to the direction issued by this Court and the matter is now pending consideration before the authority, similar direction should be issued in the instant case, so as to protect the interest of the dealer as well as to ensure that correct rate of tax is collected from the dealer and the interest of the Revenue would also safe-guarded - the writ petition is disposed of, by directing the petitioner to file a review petition under Section 48-A (4) of the TNVAT Act to review Clarification dated 22.07.2014.
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2017 (9) TMI 678
Levy of Sales Tax - Sale of SIM cards - activation charges - sales or service tax - Whether the trial Court was right in concluding that the provision of SIM Cards and collection of activation charges was only a service and would not attract Sales tax under the Pondicherry General Sales Tax, 1967? - Held that: - Apex Court in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) Versus UNION OF INDIA [2006 (3) TMI 1 - Supreme court], where placing reliance in the case of Idea Mobile Communication Limited .Vs. Commissioner of Central Excise & Customs., Cochin [2011 (8) TMI 3 - SUPREME COURT OF INDIA], it was held that no Sales Tax can be levied on the value of the SIM Cards and activation charges - the same is a kind of service, and there is no element of sale involved. Interest - relevant date - Held that: - The sum of ₹ 5,35,643/- claimed by the plaintiff includes the interest up to 01.11.2007. The suit has been filed on 24.08.2007. Therefore, the trial Court was in error in granting interest from the date of the suit till date of realization. Actually interest should have been granted, subsequent to the suit only on the sum of principal amount viz., ₹ 3,97,050. The defendants are directed to pay a sum of ₹ 5,35,643/- jointly and severally with subsequent interest at 6% p.a., on the principal amount of ₹ 3,97,050/- from the date of filing of the suit till date of realisation - appeal allowed - decided partly in favor of appellant.
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2017 (9) TMI 677
Insecticide - classification of goods - whether the Tribunal erred in law in classifying "Good Knight Advanced Fast Card" under the residuary entry without establishing that "Good Knight Advanced Fast Card" can by, no conceivable process of reasoning be brought under Entry No. 20 Schedule II of U.P. VAT Act, 2008? Held that: - It is settled law that when one particular item is covered by one specified entry then the Revenue is not permitted to travel to the residuary entry - It is settled law that onus or burden to show that a product falls within a particular tariff item is always on the Revenue. If the Revenue leads no evidence then the onus is not discharged. The Tax Authority would have to make an enquiry to produce evidence to show that in common parlance 'Fast Card' is a product akin to Mosquito repellent/destroyer Mat. Mats, coils, liquid, spray and fast card may or may not qualify as mosquito repellent/destroyer but having due regard to their chemical composition some of the products may be insecticide within the meaning of the Insecticide Act, but that what is excluded from Entry 20 is not all kinds of products used as Mosquito repellent/destroyer but only a particular kind of product mentioned, therein, viz. coils, mats and liquids and no other. Had the legislature intended to exclude all kinds of products used as Mosquito repellent/destroyer, as opined by the Tribunal, the legislature would have aptly used the expression "excluding Mosquito repellent/destroyer" or "excluding All Mosquito repellent/destroyer" or "excluding Mosquito repellent/destroyer coils, mats, liquids etc.". The expressions, hereinabove, is not unknown to the legislature, rather, similarly worded expression has been employed in other entries of the same Schedule - Tribunal committed gross error in misreading the exclusion clause of Entry 20 to conclude that the intention of the legislature was to exclude all Mosquito repellent/destroyer including Fast Card since being a Mosquito repellent/destroyer - Tribunal committed an error in coming to a conclusion that Mats would include Fast Card. To reach such a conclusion Tribunal embarked upon a course of comparing the shape and size of the product viz. Mats and Fast Card. In classification, such a course is not available, if adopted may lead to erroneous results deviating from the intended intention of the legislature as expressly provided from the plain language employed by the legislature. The matter is remitted to the Tribunal to decide afresh in the light of the settled principle of law - revision allowed by way of remand.
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Indian Laws
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2017 (9) TMI 675
Arbitration proceedings - delays in the project - Appellant-Aravali Power Company Pvt. Ltd., scheduled date of completion of work was 19.05.2011 but the progress of work was quite slow which compelled the Appellant to cancel certain remaining works by its letters dated 18.07.2014, 24.10.2014, 30.06.2015 and 08.07.2015 - Held that:- In the present case, the Arbitrator undoubtedly is an employee of the Appellant but so long as there is no justifiable apprehension about his independence or impartiality, the appointment could not be rendered invalid and unenforceable. The exercise was undertaken by the High Court, “in order to make neutrality or to avoid doubt in the mind of the petitioner” and ensure that justice must not only be done and must also be seen to be done. In effect, the High Court applied principles of neutrality and impartiality which have been expanded by way of Amendment Act, even when no cause of action for exercise of power under Section 11(6) had arisen. The procedure as laid down in unamended Section 12 mandated disclosure of circumstances likely to give rise to justifiable doubts as to independence and impartiality of the arbitrator. It is not the case of the Respondent that the provisions of Section 12 in unamended form stood violated on any count. In any case the provision contemplated clear and precise procedure under which the arbitrator could be challenged and the objections in that behalf under Section 13 could be raised within prescribed time and in accordance with the procedure detailed therein. The record shows that no such challenge was raised within the time and in terms of the procedure prescribed. As a matter of fact, the Respondent had participated in the arbitration and by its communication dated 04.12.2015, had sought extension of time to file its statement of claim. In the circumstances, the High Court was clearly in error in exercising jurisdiction in the present case and it ought not to have interfered with the process and progress of arbitration. We therefore accept the challenge raised by the Appellant and reject that raised by the Respondent.
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