TMI Tax Updates - e-Newsletter
September 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Nature of the transaction - lease agreement or in the nature of transfer of capital assets - the leasehold right, given to SGL for a period of ten years, of the plant and machinery along with land and building, is not a 'capital asset' within the meaning of Section 2(14)(a) - HC
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Income Tax:
Estimation of income - genuineness of fall in price / loss - taxing authorities are entitled to look at the surrounding circumstances to find out the reality of the affairs on the test of human probabilities - HC
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Income Tax:
Interest payable on FCCBs - There cannot be an exclusion clause if it is not falling within that provision but for the exclusion. Hence, the presence of exclusion in Section 9(1)(v)(b) proves that it is falling within the ambit of deeming provision. - It has neither accrued nor arisen in India nor is deemed to accrue or arises in India in the hands of non-resident investors and therefore, no TDS is deductible - AT
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Income Tax:
Deduction u/s 80IB - Central Sales-tax assessment order is a quasi judicial order which cannot be ignored and in case we believe the story of Revenue authorities it will amount to disbelieve the Central Sales-tax Act which is not permissible because the order of is of a quasi judicial body - AT
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Income Tax:
Transfer pricing adjustment - in arriving at the operating cost in transfer pricing matters the principles of Cost Accounting will not be strictly applicable where cost of finance may be treated differently. - AT
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Income Tax:
Living allowance received in USA is not taxable in India, therefore, assessees are entitled for exemption u/s 10(14)(i) - assessees would become entitled to get tax credit in respect tax paid on living allowance in USA - AT
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Income Tax:
Adjustment of seized cash towards advance tax liability - Explanation to section 132B cannot help the case of the Revenue as the Explanation has been inserted much after the conclusion of the assessment year under consideration. - adjustment of advance tax liability allowed - AT
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Income Tax:
Maintainability of the invocation of section 154 - The allowance of deduction of the impugned sums u/s. 43B was thus clearly a mistake apparent from record, liable to be rectified u/s. 154. - AT
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Income Tax:
TDS liability - The ultimate liability for tax being not there (since the firm which received the interest from the assessee had paid tax on such interest) did not dilute the requirements for the non-compliance of which interest is levied under section 201(1A) - AT
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Customs:
Determination of CVD - valuation u/s 4 or 4A - Set Top Boxes imported by the appellants are not leviable to CVD on RSP/MRP basis in terms of Section 4(A) of the Central Excise Act except for the Set Top Boxes actually sold - AT
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Corporate Law:
Application for injunction in a defamation action brought by the National Stock Exchange ("NSE") - The NSE complains that an article published on their online news and analysis journal or website moneylife in, is per se defamatory. - complaint dismissed with heavy cost - HC
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Indian Laws:
RTI - seeking information related to third party - information sought by the erstwhile partner - before directing the disclosure of information, the State Information Commission ought to have issued notice to the petitioners and heard them on their objection to the disclosure of information. - HC
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Indian Laws:
Offence u/s.138 of the Negotiable Instruments Act - cheques were returned unpaid owing to "insufficient funds" - Only when such Trust/College is arrayed as an accused, petitioner may be proceeded against on the assertion that he is incharge of and responsible to the Trust/College in the conduct of its affairs. - HC
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Wealth-tax:
Once the learned CWT(A) held the land of the assessee to be exempt on one count, i.e., the land being classified as agricultural land in the records of the Govt. and used for agricultural purposes, this finding was sufficient to delete the addition for the purpose of wealth tax - AT
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Service Tax:
Cenvat credit - input services - construction services in relation to construction dormitory - he construction of dormitory for this purpose of stay of technicians / engineers is integrally connected with the manufacturing activity of the appellant - credit allowed - AT
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Service Tax:
Job work or contract labor - activity of cutting, drilling, punching, bending, notching of materials as the work orders within the factory of principal - in the facts and circumstances, not liable to service tax as Manpower Recruitment or Supply Agency service - AT
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Service Tax:
Services rendered by the assessee in this case to the re-insurer abroad and the transaction with the foreign re-insurer would have to be necessarily accepted as 'export of service'. - HC
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Service Tax:
Sale and disposal of detained aircraft - Detention of Aircrafts and Helicopters belonging to M/s. Kingfisher Airlines to recover Service Tax amount due to the Government - Sale proceeds from the sale of aircraft shall not be disbursed and released but should be brought in this Court. - HC
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Service Tax:
CENVAT Credit - input service - construction of residential colony/dormitory adjacent to the factory premises was the necessity because of the location of the factory in a remote area - credit allowed - AT
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Service Tax:
Denial of CENVAT Credit - Invocation of extended period of limitation - for invocation of extended period there has to be some evidence that an assessee knew that they were liable to pay duty - when CENVAT credit is reflected in periodical returns then extended period can not be invoked - AT
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Service Tax:
Denial of CENVAT Credit - input services - appellant is entitled to take cenvat credit of insurance premium charges paid by them when there is no dispute that the goods were delivered at the customers place - AT
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Central Excise:
Classification of goods - printing of gray wrappers which is used in the packaging of cigarette packs. - goods in question are properly classified under heading 4901.90 which attracts NIL rate of duty and no demands of duty can survive against the assessee. - AT
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Central Excise:
Classification of mixtures - under Chapter 9 or Chapter 21 - The Spice Board clearly indicates the garlic and tamarind as Indian spices. Hence, the addition of these items if at all cannot be a consideration for excluding the classification for spice mixtures under Chapter 9 - AT
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Central Excise:
Classification of the product Niacin (feed grade) - animal feed - That the appellant mixed Niacin with Atta before clearance makes no difference because we are concerned with the classification of the product manufactured by them i.e. Niacin - correctly classifiable under Tariff Item 29362920 - AT
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Central Excise:
Interest - Whether the appellant is required to pay interest for the intervening period where they have reversed the cenvat credit taken wrongly by them - cenvat credit wrongly taken was lying in the Cenvat credit account unutilized. - No interest - AT
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VAT:
State has no constitutional power to Levy Cess on every wedding and connected celebrations conducted in hotels, having classification of "Three Star" and above and in auditoriums which have a seating capacity, including that of dining halls, above 500 - in this case luxury tax was already in force - HC
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VAT:
Cancellation of eligibility certificate - exemption from sales tax - new industries to be established within the State of Assam after April 1, 1991 as per industrial policy - it is not a case of obtaining eligibility certificate by fraud or by furnishing of wrong information. - exemption resotred - HC
Notifications
Income Tax-
198/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Empathy Foundation, Chembur (West), Mumbai
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197/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sevasangh, Sarvajanik Hospital Trust, Gujarat
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196/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – READS – Rural Education and Development Society, Tiruvannamalai
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195/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – ENT Charitable Trust, Mumbai
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194/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Sevalaya, Thiruninravur
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193/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Manava Seva Dharma Samvardhani, Chennai
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192/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Arpit Mahila Evam Gramin Vikas Sansthan, Uttar Pradesh
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191/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Navsari Lions Sarvajanik Charitable Trust, Gujarat
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190/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Dr. Babasaheb Ambedkar Vaidyakiya Pratisthan, Aurangabad
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189/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – VAANI, Deaf Children’s Foundation, Kolkata
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188/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Parivar Education Society, Kolkata
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187/2015 - dated
20-7-2015
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IT
U/s. 35AC, IT ACT, 1961 - Eligible Projects Or Schemes, Expenditure On – Vinay Vihar Education Trust, Gujarat
Case Laws:
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Income Tax
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2015 (9) TMI 1187
Nature of the transaction - lease agreement or in the nature of transfer of capital assets - Whether the Tribunal was right in law in holding that lease for a period of ten years of plant and machinery along with land and building was a capital asset within the meaning of section 2 (14)? - Held that:- It might be possible in theory for a leasehold right to be construed as a capital asset since the words used in Section 2 (14) (a) are indeed of a wide amplitude, in the context of the present case, where under the lease agreement dated 24th February 1994 what is given to SGL is a limited right to hold and possess the facilities leased to it for a limited period of ten years, with further restriction on sub-letting it or transferring any right or interest therein to anyone without the permission of the lessor and with the lease agreement making it explicit that at the end of the lease period the facilities leased it SGL would revert to the Assessee, it is difficult to hold that the leasehold rights given to the Assessee under the lease agreement is a 'capital asset'. Consequently, question is answered by holding that the leasehold right, given to SGL for a period of ten years, of the plant and machinery along with land and building, is not a 'capital asset' within the meaning of Section 2 (14) (a) of the Act. Was there a 'transfer' of a capital asset? - Held that:- The mere fact that the Assessee may have applied under Section 230A of the Act to seek permission of the Department cannot be held against it as far as the correct legal position is concerned. In other words the fact that certain columns in the concerned form were filled by the Assessee to imply that there was a transfer of leasehold/ownership rights cannot be read to constitute a waiver by the Assessee of the legal defences that flow from a correct interpretation of the clauses of the lease agreement and from a correct reading of Section 2 (47) with Section 45 of the Act. This Court is also unable to agree with the contention of the learned counsel for the Revenue that the lease of the plant and machinery can be separated from the lease of the land and buildings and the former transaction held to be valid and the latter a sham transaction. The Court is of the view that the context in which the decision in Shin Satellite Public Co. Ltd. v. Jain Studios Ltd. (2006 (1) TMI 552 - SUPREME COURT OF INDIA ) was rendered was entirely different from the present case and that decision is of no assistance to the Revenue here Whether a transaction pertaining to land and building or of plant and machinery could be treated as sale of either the leasehold rights in respect of the land or the sale of the plant and machinery itself? - Held that:- The order of the CIT (A) dated 30th August 2011 has been perused by the Court. It holds that the sale of the land by the Assessee to an unrelated third party, M/s. Blossom Automotives, for a consideration of ₹ 4.01 crores took place on 8th September 2005 and after accepting the Assessee's valuation of the said land the CIT (A) has directed that the Assessee be taxed on long term capital gains arising out of the said sale of the land. The said order also shows that for the building, which was also sold as part of the sale of land, the Assessee has continued to claim depreciation till the date of such sale. The fact that the Assessee continued to claim depreciation on the plant and machinery and building is another indication that the Assessee continued to assert ownership of the assets in question during the relevant AYs. The above order of the CIT (A) forms part of the records of the Department and has naturally not been disputed by it. Although this development could not have been anticipated at the time the AO or the CIT (A) decided the issue in the present case, it completely vindicates the Assessee's stand in relation to the nature of the transaction forming the subject matter of the lease agreement. Consequently, there are several factors in favour of the Assessee that persuade the Court to hold, that the ITAT was not right in holding that the transaction of lease of the facilities was a sale of leasehold rights and that there was in any event a sale of the plant and machinery. Decided in favour of the Assessee and against the Revenue. Whether there could be said to be any capital gains under Section 45 of the Act? - Held that:- In light of the above discussion, the question will have to be answered in favour of the Assessee and against the Revenue. The Court is of the view that the transaction in question was nothing more than a transaction of lease and has been acted upon by the parties as such. This was not a device adopted by the Assessee for tax avoidance. ITAT erred in holding that the transaction in question was chargeable to capital gain under Section 45 of the Act. There was no occasion for the ITAT to remand the matter to the AO for re-computation of the capital gains. - Decided in favour of assessee.
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2015 (9) TMI 1186
Print distribution and the subsequent compensation paid due to the loss incurred by the theater owners in exhibiting the films "Kuselan" and "Kathanayakudu" by the assessee/appellant - revenue v/s capital expenditure - whether the payment made by the assessee to PSEL, by way of compensation as goodwill gesture to maintain its goodwill, should be treated as revenue or capital in nature? - Held that:- The Tribunal holds that payments made by the assessee is to protect its goodwill in the market and even if the payment is believed to be genuine, even then the same has to be held to be capital in nature and, therefore, cannot be allowed under Section 37 of the Act. However, on the other hand, the Tribunal holds that the assessee had made the payment in the form of compensation to stay afloat in the business. This would satisfy the contention of the assessee that the payment was made for the purpose of staying afloat in the business, made voluntarily and it is a commercial expediency. This finding of the Tribunal, on the face of it, appears to be in support of the assessee that because of commercial expediency, to stay afloat in business, the said amount was paid. The above findings of the Tribunal clearly depicts the dual stand taken by the Tribunal in its order and a paradox. The Tribunal has taken divergent views, one by holding that the expenditure is capital in nature, supporting the department and, on the other hand, has reasoned that it is compensation paid to stay afloat in business, meaning thereby commercial expediency. In any event, the assessee has, under the agreement, shown the reason for payment in question and we have extracted the said reason in the earlier part of the order. However, the said aspect has not been discussed by the Tribunal. It is an issue on fact on which the Tribunal ought to have given its finding as to whether the agreement and the payment justified the plea of commercial expediency to stay afloat in the business. The finding of the Tribunal ought not to be mutually destructive, one that supports the view of the Department and the other leaning on the view of the assessee. We, therefore, hold that on facts the Tribunal should be called upon to address the issue as to whether the payment made by the assessee, as goodwill, is capital in nature or is it a payment made for the purpose of staying afloat in business as a measure of commercial expediency. This Court is of the considered opinion that the Tribunal has to record its finding on these questions of fact and, therefore, the matter should be remanded to the Tribunal. Thus without going into the questions of law raised, this appeal is disposed of and the matter is remanded to the Tribunal for fresh consideration in the light of the discussion as above. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1185
Estimation of income - genuineness of fall in price / loss - AO relied upon various surrounding circumstances such as sales made by a sister concern of the Respondent-Assessee Canon Steels Pvt. Ltd. to conclude that there was no crash in the market, warranting a loss - Breach of the natural justice - Whether the Tribunal after upholding the contention of the Appellant that the orders of the Assessing Officer & Commissioner of Income Tax (Appeals) were passed in breach of the natural justice in the absence of the cross examination, is correct in sustaining the orders on the basis of other circumstances? Held that:-Tribunal by the impugned order accepted the Respondent's appeal before it to the extent the order of the Assessing Officer and the CIT(A) placed reliance upon the statements of the three persons made to the Commissionerate at Ludhiana without being available for cross examination. This was not permissible as being in breach of natural justice. However, after holding the above, the impugned order proceeds to consider the other evidence on record to examine whether or not the disallowance of loss by the lower authority could be sustained even after ignoring the statements of persons who were not offered for the cross examination. The impugned order found that both the Assessing Officer and the CIT(A) had on the basis of other evidences and surrounding circumstances as set out above, concluded that loss claimed, was not genuine. The impugned order also relied upon the dictum set out by the Apex Court in CIT v/s. Durga Prasad More [1971 (8) TMI 17 - SUPREME Court ] and Sumati Dayal v/s. CIT [1995 (3) TMI 3 - SUPREME Court ] that taxing authorities are entitled to look at the surrounding circumstances to find out the reality of the affairs on the test of human probabilities (de hors the evidence recorded on commission). This is so, as observed by the Apex Court "apparent being not real." In the circumstances, it concluded that the loss was not genuine. The finding of fact recorded by the impugned order is not shown to be perverse and/or arbitrary. It is a possible view in the context of facts arising in this case for consideration. Thus, the question as proposed for our consideration does not give rise to any substantial question of law. Accordingly, we see no reason to entertain the present Appeal.
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2015 (9) TMI 1184
Interest payable on FCCBs - liability to deduct tax at source u/s 196C r.w.s. 115AC - accrual of income - Held that:- Identical issue came up before the Tribunal in assessee’s own case for AY 2009-10 [2013 (1) TMI 518 - ITAT AHMEDABAD] wherein held a specific exclusion is provided in clause (b) of Section 9(1)(v) to exclude interest payment to non resident investors by an Indian resident if such interest payment is in respect of amount borrowed outside Indian and is used outside India for investment or for business carried out outside India. It could not be established or shown by the revenue that the facts of the present case are not falling within this exclusion clause of Section 9(1)(v)(b) of the Act and the only argument of the revenue is this that as per the A.O., it is falling within the ambit of income accrued and arisen in India and, therefore, it is not required to examine the provisions of Section 9(1)(v)(b). We find no merit in this contention because for the purpose of deciding as to whether any income is falling within the ambit of income accrued or arise in India, we have to consider the total factual and legal position and it is admittedly an income falling within the ambit of deemed income to accrue or arise in India, because there is a specific exclusion on that account. There cannot be an exclusion clause if it is not falling within that provision but for the exclusion. Hence, the presence of exclusion in Section 9(1)(v)(b) proves that it is falling within the ambit of deeming provision. It cannot be accepted that the same income can also fall within the ambit of income accrued and arisen in India. Since, the income in question in the present case is falling within the ambit of this exclusion clause of income deemed to accrue or arise in India as per the provisions of Section 9(1)(v)(b), it cannot fall within the ambit of income accrued and arisen in India and hence, we find no merit in the arguments of the revenue that the income in question has accrued and arisen in India and consequently, we do not find any reason to interfere in the order of Ld. CIT(A). In the light of above discussion, we have no hesitation in holding that in the present case, interest payment by the assessee to non-resident investors cannot be said to have accrued or arisen in India and it also cannot be said that this interest income can be deemed to have accrued or arisen in India. Therefore, no TDS is to be deducted by the assessee from this payment in question. It has neither accrued nor arisen in India nor is deemed to accrue or arises in India in the hands of non-resident investors and therefore, no TDS is deductible. We, therefore, decide this issue in favour of the assessee and decline to interfere with the order of the CIT(A). - Decided against revenue.
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2015 (9) TMI 1183
Disallowance of claim of deduction u/s 80IB - Held that:- Central Sales-tax assessment order is a quasi judicial order which cannot be ignored and in case we believe the story of Revenue authorities it will amount to disbelieve the Central Sales-tax Act which is not permissible because the order of is of a quasi judicial body. It should not be contradicted by other quasi judicial body under the Income-tax Act. In the facts and circumstances the Assessing Officer summoned the purchaser of good and the purchaser confirmed the purchase of goods. In response to the compliance placed at page 96 of the Paper Book the Assessing Officer was not justified in keeping silent on the issue. It is not justified for Revenue authorities to keep silence on third party evidence on which the assessee has no control like confirmation of purchases in reply to summons, machinery purchase bills, wage sheet. Even evidences like direct orders/certificates issued by government authorities in their statutory capacities after due verification in the form of SSI Registration Certificate, Exemption Certificate from VAT department, Test report from electricity department, Order of assessment under Central Sales-tax Act. The Assessing Officer was not justified to disbelieve the same on the basis of surmises and conjectures. In view of the above factual and legal discussion the assessee is held to be eligible for deduction under section 80IB. Assessing Officer is directed accordingly. - Decided in favour of assessee. Addition on differences in balances of sundry creditors - Held that:- It is undisputed that the document was filed by the assessee as claimed and as evident from the details. This certificate was placed before the authorities below and in such situation it is not proper on the part of both the authorities below to negate the claim of assessee. In the interest of justice, we think it just and proper to restore the matter to the file of Assessing Officer with direction to adjudicate the issue afresh, after providing reasonable opportunity to the assessee of being heard. Since we restore this issue on technical ground, we refrain from commenting on merit on the issue. - Decided in favour of assessee for statistical purposes. Disallowance of rent expenses and freight expenses - non-deduction of TDS u/s 40(a)(ia) and consequent claim of 80IB of same was also disallowed - Held that:- In the interest of justice the Assessing Officer is directed to allow the deduction under section 80IB to the extent of disallowances of rent and freight charges under the provisions of sec.40(a)(ia) discussed above
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2015 (9) TMI 1182
Disallowance of unexplained investment - CIT(A) deleted the addition - Held that:- In the facts and circumstances of the case, the CIT(A) has rightly observed that the assessee has discharged his onus fully by filing the complete details of bank transactions, name and address, Permanent Account Number, above all declaration on oath in shape of Affidavit wherein the said Party Rakesh Panchal H.U.F. has owned up the entire transactions of the Bank account. It is for the Assessing Officer of Rakesh Panchal HUF to verify as to why there is no income generated from several transactions in the bank account or for that matter conduct other inquiries. The assessee having discharged its onus clearly confirming that whatever transactions were outside the books have been owned up before the Settlement Commission and these transactions of Rakesh Panchal HUF are not owned up before the Settlement Commission and before the Assessing Officer the said person himself was owning up all these transaction, there is no question of making addition of ₹ 58,01,339/- as unexplained investment. The addition made was therefore rightly deleted by CIT(A) - Decided in favour of assessee. Disallowance of unexplained expenditure - CIT(A) deleted the addition - Held that:- We find that CIT(A) has rightly deleted the impugned addition by observing that the law is very clear that when the Assessing Officer has not found any evidence of assessee having incurred any expenditure for discounting of cheques, the addition made only on presumption and suspicion cannot be made u/s 69C. The addition is accordingly deleted. Nothing contrary has been brought to our knowledge by the Revenue.- Decided in favour of assessee. Unexplained cash credits u/s 68 - CIT(A) deleted the addition - Held that:- No infirmity in the order of CIT(A), since he has given reasoned finding that the Auditors had obtained all material and confirmations, which explained the genuineness, capacity and creditworthiness of all the creditors and credits appearing in bank account. After verifying and satisfying themselves, the Auditors had finally given their opinion that income earned in the above 10 concerns/persons from mutual funds, share investment and other income. Thus all other bank entries and credits therein stand clearly explained and could not be considered as unexplained. In view of this, the addition made deserved to be deleted. - Decided in favour of assessee.
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2015 (9) TMI 1181
Addition made by the AO on account of deduction u/s 80HHC on DEPB - CIT(A) deleted the addition - Held that:- Respectfully following the ratio laid down by the Hon’ble Supreme Court in the aforesaid referred to judgment [2015 (4) TMI 193 - SUPREME COURT] do not see any merit in this ground of the departmental appeal wherein held that we find that in essence the High Court has quashed the severable part of third and fourth proviso to sec. 80HHC (3) and it becomes clear therefrom that challenge which was laid to the conditions contained in the said provisos by the respondent has succeeded. However, to make the position crystal clear, we substitute the direction of the High Court with the following direction :- Having seen the twin conditions and since 80HHC benefit is not available after 1.4.05, we are satisfied that cases of exporters having a turnover below and those above 10 cr. Should be treated similarly. This order is in substitution of the judgment in Appeal. - Decided against revenue. Disallowance on account of depreciation - CIT(A) deleted the addition - Held that:- In the present case, it is noticed that the disallowance of depreciation on vehicles was restricted by the ld. CIT(A) to the extent of 6% by following the decision of the ITAT in assessee’s own case for the preceding assessment year 2001,2002, during the course of hearing, nothing contrary to the said decision was brought on record. Therefore, we do not see any valid ground to interfere the findings of the ld. CIT(A). As regards to the disallowance of depreciation on the building, the ld. CIT(A) categorical stated that the assessee had claimed the depreciation @ 5% on the additions made after 30.09.2001 while the AO allowed the depreciation @ 5% on all the additions in the building account without considering that certain additions were prior to 30.09.2001 on which the depreciation at the rate of 10% was available. The ld. CIT(A) deleted the addition after considering the various details which were called for and were duly submitted by the assessee. Therefore, the impugned addition was also rightly deleted by the ld. CIT(A).The remaining addition on account of depreciation on Plant and Machinery was also made by the AO by assuming the installation date to be post 30.9.2001 while the ld. CIT(A) categorically stated that the assessee furnished all the details called for with proper evidences and after being satisfied, he deleted the addition made by the AO, on the basis of the evidences furnished by the Assessee. We therefore, do not see any merit in this ground of the departmental appeal since nothing contrary to the observations of the ld. CIT(A) is brought on the record.As regards to the Cross Objections filed by the assessee, the ld. Counsel for the assessee submitted that he has the instruction not to press the same and gave in writing C.O.’s withdrawn.” In view of that the Cross Objections filed by the assessee are dismissed as withdrawan.
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2015 (9) TMI 1180
Addition on account of suppressed sale - CIT(A) deleted the addition holding that books of accounts maintained in computerized environment were accurate and reliable - Held that:- We find that the Assessing Officer had proceeded to estimate this suppressed sales on the ground that the gross profit was negative during the months of October, 2004 to October, 2005 and the Assessing Officer adopted gross profit rate of 6.73%. This approach of the Assessing Officer is totally erroneous and cannot be accepted for the reason that the daily sales statement prepared by the assessee cannot be rejected. In this nature of business, the daily sales statement prepared at each shop is of paramount importance and cannot be simply brushed aside without assigning any reasons. Furthermore, in this kind of business the purchases are fully verifiable and Excise Department of the State Govt. has full control over the quantity of purchase and sales simply because the gross profit returned in certain months is lower than the average profit declared by the assessee, cannot be sole ground to estimate the suppressed sales. The Assessing Officer had also not brought on record any comparable instance to prove that the profit declared by the assessee were wrong. It is trite law that no addition can be made on mere surmises and conjectures. Thus, we do not find any infirmity with the reasoning adopted by the learned CIT(A), nor any evidence was brought on record in rebuttal of the conclusion drawn by the CIT(A). In these circumstances, we hold that the order of CIT(A) is well reasoned and therefore the same is hereby sustained. Accordingly, grounds of appeal filed by the Revenue are dismissed. - Decided in favour of assessee.
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2015 (9) TMI 1179
Rectification of mistake - whether dividend income can be taxed as income under the head ‘Income from business’? - Held that:- A mistake apparent from record means an ‘obvious or patent mistake’ or a ‘glaring and obvious mistake’. Hotly debatable issues are excluded; hardly debatable issues are included. The issue may be complicated, yet the mistake may be simple. It is a mistake apparent from record. The test is not complexity of the issue but simplicity of the mistake.The question whether dividend income can be taxed as income under the head ‘Income from business’, in our considered view, is hardly debatable. See case of F.C. Sondhi & Company (Indi) Pvt. Ltd. vs. DCIT [2015 (9) TMI 1099 - ITAT AMRITSAR] To perpetuate an error is no heroism. To rectify it is the compulsion of judicial conscience. In this, we derive comfort and strength from wise and inspiring words of Justice Bronson in Pierce vs. Delameter ‘a Judge ought to be wise enough to know that he is fallible, and, therefore, ever ready to learn; great and honest enough to discard all mere pride of opinion and follow the truth wherever it may lead; and courageous enough to acknowledge his errors. See Distributors (Baroda) Private Limited Versus Union of India And Others [1985 (7) TMI 1 - SUPREME Court ] We are, therefore, unable to accept Revenue’s contention that a considered opinion expressed by the Tribunal, after applying its mind to an issue in appeal, cannot be unsettled even if the mistake in the process of reasoning is a simple mistake apparent from record on which no two views are possible. Thus we recall both the orders passed by this Tribunal for fresh hearing in terms of the directions set out above
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2015 (9) TMI 1178
Eligibility of deduction u/s 54F - CIT(A) allowed relief - Held that:- This Tribunal in catena of decisions has held that the thrust of the section 54F is on the investment of the net consideration received on the sale of the original asset and start of the construction of a new residential house and does not prescribe completion of construction of the residential house within the period of three years. This view has been held by ‘B’ Bench of the Tribunal at Chandigarh in the case of Smt. Rajneeth Sandhu vs. DCIT (2010 (7) TMI 806 - ITAT CHANDIGARH ). The Hon'ble Karnataka High Court in the case of CIT vs. Sambandham Uday Kumar (2012 (3) TMI 80 - KARNATAKA HIGH COURT) has extensively considered the issuen the instant case, the material on record discloses that the assessee had invested ₹ 2,16,61,670/- as on 31.10.2006 within twelve months from the date of realization of sale proceeds of shares. The developer acknowledging the said amount has given particulars of the stage of construction. According to him, only minor fittings like window shutters and some electrical work were required to be made. In fact, the report of the inquiry conducted by the Department also discloses the flooring work, electrical work, fitting of door and window shutters were still pending. The assessee has produced before the authorities the registered sale deed dated 7.11.2009 showing the transfer of the property in his favour. The said document discloses marble tiles flooring has been done, electricity, water and sanitary connections have been given, wood used is teak in respect of doors and windows. The assessee has been put in possession of the property and he is in occupation. Therefore, the assessee has invested the sale consideration in acquiring a residential premises and has taken possession of the residential building and is living in the said premises. The object of enacting section 54 of the Act i.e., to encourage investment in a residential building is completely fulfilled. Thus justified in extending the benefit of section 54F of the Act to the assessee and the said order does not suffer from any infirmity which calls for interference - Decided in favour of assessee. Addition of the unexplained investment - CIT (A) held that the addition made by the AO in the hands of the assessee u/s 68 is to be assessed in the hands of the assessee’s wife i.e. Smt. K. Saritha - Held that:- Admittedly the sum of ₹ 22.00 lakhs has been advanced by Mr. I.V. Satish to the assessee’s wife who has invested the same for purchase of a site. No doubt Mr. Satish is the contractor who has received an advance of ₹ 1.00 crore from the assessee for construction of the building, but as rightly observed by the CIT (A), the sum of ₹ 22.00 lakhs advanced by Mr. I.V. Satish is not to the assessee, but to the assessee’s wife, who is an independent assessee. Since the investment made in the site is by the wife of the assessee, as rightly held by the CIT (A), the said amount, if at all is to be brought to tax, it can be only in the hands of the assessee’s wife and not in the assessee’s hands. Therefore, we see no reason to interfere with the order of the CIT (A) on this issue as well. - Decided against revenue.
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2015 (9) TMI 1177
Revision u/s 263 - Disallowance u/s 14A - Held that:- We find force into the contention of the ld.counsel for the assessee that the ld.CIT was not justified in terming the order of the AO as erroneous and prejudicial to the interests of the Revenue. The assessee has demonstrated that investments were made out of interest-free funds. Under these facts, the ld.CIT(A) was not justified to restore the issue with regard to disallowance of expenditure u/s.14A of the Act to the file of AO for fresh decision. In respect of Long term capital loss, it is demonstrated by the assessee that investments in government securities, is normal business activity of the assessee Any profit or loss from the sale of ‘investment’ is taxed under the head ‘Capital gain’, such profit or loss from the sale of ‘stock-in-trade’ is considered under the head “profits and gains of business or profession”. The instant loss of ₹ 77,000, arising from the sale of stock-in-trade referred to as “current investments”, in our considered opinion has been rightly held by the learned CIT(A) to be a business loss. Accordingly this ground is not accepted. In the present case, the assessee has shown the investment as stock-in-trade as noted by the ld.CIT that the security was sold within one year and three months of the purchase that it shows that it was not the permanent investment of the bank as the bank has not waited till the maturity of the security. Therefore, in our considered view, the ld.CIT was not justified in exercising her jurisdiction u/s.263 of the Act - Decided in favour of assessee.
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2015 (9) TMI 1176
Credit for MAT paid in earlier assessment years at par with other prepaid taxes - Held that:- After hearing the rival submissions and perusing the material available on record, we find that the Hon’ble Supreme Court in the case of Sage Metals Limited reported in (2012 (10) TMI 802 - SUPREME COURT) has held as under:- “Entitlement of MAT credit is not dependent upon any action taken by the Department. However, quantum of tax credit will depend upon the assessment framed by the Assessing officer. Thus, the right to set off arises as a result of the payment of tax under section 115JA(1) although quantification of that right depends upon the ultimate determination of total income for the first assessment year”. Therefore, as rightly pointed out by the ld. Sr. Counsel for the assessee, first the total income has to be determined for the assessment year 1999- 2000 and 2000-2001. We, accordingly, restore the matter back to the file of Assessing Officer for fresh adjudication in accordance with law after providing reasonable opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes.
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2015 (9) TMI 1175
Disallowance invoking section 40(a)(i) - non deduction of TDS on such payments made to its associated enterprise, UPSWWF USA - Held that:- Similar issue had come up before the Tribunal in assessee’s own case for A.Y.2008-09 [2015 (6) TMI 383 - ITAT MUMBAI] and the matter has been remanded back to the file of the Assessing Officer for a decision afresh. It was also a common point between the parties that in this year too, following the said precedent the matter be remanded back to the file of Assessing Officer for a decision afresh in accordance with law. - Decided in favour of assessee for statistical purposes. Disallowance of depreciation on fixed assets purchased from UPS-WWF in the previous year relevant to the assessment year 2008-09 - Held that:- The claim of the Ld. Representative for the assessee was that the depreciation claimed by the assessee in this year deserves to be allowed since the depreciation on the same assets in the earlier assessment year stands allowed. The aforesaid factual matrix is not assailed by the Ld. Departmental Representative and the same is also borne out of the order of the Tribunal for A.Y.2008-09 [2015 (6) TMI 383 - ITAT MUMBAI]. As a consequence, we uphold the plea of the assessee and direct the Assessing Officer to allow the depreciation of ₹ 9,95,919/- claimed by the assessee and accordingly assessee succeeds on this ground. - Decided in favour of assessee. Addition u/ s. 40(a)(i) - whether assessee and RMS were in contractural relationship - Held that:- Assessing Officer in the draft assessment order, we find that the decision of the DRP cannot be faulted. It is also noticed that the Assessing Officer has invoked section 40(a)(i) of the Act on the basis of his stand for earlier assessment year 2008-09 [2015 (6) TMI 383 - ITAT MUMBAI]. The Tribunal in its order for assessment year 2008-09 considered similar transaction and held that the payments made to RMS-USA for Debtor collection services did not fall for taxation in India and thus, there was no obligation on the part of the assessee to deduct tax at source on such payments, which were made as reimbursement to UPSWWFUSA. Be that as it may, in our considered opinion the finding of the DRP, which we have adverted to in the earlier paras is quite unexceptional and does not require any interference from our side. No cogent reasoning or material has been brought out by the Revenue to demonstrate as to in what manner amount received by RMS-USA, a non-resident, for Debtor management services abroad is liable to be taxable in India. Therefore, we hereby affirm the conclusion of the DRP on this aspect and Revenue fail in its Ground of appeal - Decided in favour of assessee. Direction of DRP to determine the quantum of Transfer Pricing (TP) adjustment while computing the arm's length price of the international transactions entered into by the assessee with its associated enterprise - Held that:- the Ground of appeal raised by the Revenue. At the outset, one may observe that the Ground raised by the Revenue is quite misconceived in as much as it is based on a wrong perspective to the effect that the DRP has held the subvention income to be an operating income. As can be seen from the directions of the DRP, the subvention income has not been held to be considered as part of the operating income. Thus, this aspect of the controversy manifested in the Ground of Revenue is misconceived and liable to be dismissed. Even otherwise, we find that there is no scope for any intervention in the directions of the DRP, which we have extracted above, as the same are quite apt and the same are factually borne out of the record. The order of the DRP on this aspect is hereby affirmed and accordingly Revenue fails in its Ground - Decided against assessee.
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2015 (9) TMI 1174
Disallowance of expenses claimed with respect to Sarvoday Hospital - Held that:- The rent figures of the agreement entered by the Assessee with Smt. Ramilaben Patel, his wife, did not match with the rent receipts as shown in the Profit and Loss account of Sarvoday Hospitals. Before us, ld. A.R. has not placed any material on record to controvert the findings of ld. CIT(A) nor has placed any material on record to demonstrate as to whether the business was carried in subsequent years. In view of these facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Assessee is dismissed - Decided against assessee. Treating the rental income as income from house property - Held that:- While changing the head of “income from business” to “income from house property”, Ld. CIT(A) has noted that Assessee was asked to justify as to how the activity of letting out of premises constituted business of the Assessee to which Assessee could not satisfactorily furnish any explanation. Before us, it is Assessee’s submission that the business was let out on account of temporary lull however no evidence has been placed on record to substantiate the claim of temporariness of the stopping of business. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Assessee is dismissed - Decided against assessee. Treating agriculture income as income from other sources - Held that:- A.O while making addition has noted that Assessee did not furnish any evidence of carrying out agriculture operations. Before us, ld. A.R. has placed on record the copy of certificate of land holding of the Assessee and family members upport of carrying of agriculture operations. We find that the aforesaid certificates are in vernacular language and Assessee has not filed its English Translation. We further find that the aforesaid documents were not made available by the Assessee before A.O. and ld. CIT(A) and the same have been placed before us for the first time. In view of the aforesaid facts, we are of the view that the issue of agricultural income vis-ŕ-vis the land holding of the Assessee needs to be re-examined at the end of A.O. We therefore remit the issue to the file of A.O to decide the issue afresh - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1173
Bogus purchases - addition in respect of sundry creditors - Held that:- Find force in the contentions of the ld. counsel for the assessee that only on the basis of sample check on random basis the entire liabilities cannot be treated to be bogus liabilities. At the most, the Assessing Officer if intended to make an addition on the basis of random check, it can only be restricted at ₹ 9,13,613/-, but the entire outstanding liabilities cannot be treated to be bogus on the basis of sample check. But in any case, the ld. CIT(A) has estimated the profit of the assessee @ 7.5% of the gross receipts resulting into an addition of ₹ 9,63,634/-. We have also carefully examined the findings of the ld. CIT(A) and we find that the ld. CIT(A) has properly adjudicated the issue in the given facts and circumstances of the case. Since we find no infirmity therein, we confirm his order on this issue. - Decided against revenue. Addition out of purchases as the purchases were not fully verifiable - CIT(A) deleted the addition - Held that:- Revenue could not place any evidence to justify that the assessee has not maintained complete details such as bills and vouchers for purchases. Since no specific defect was pointed out by the Assessing Officer, we find no merit in the disallowance. Accordingly we confirm the order of the ld. CIT(A) on this issue who has rightly deleted the addition. - Decided against revenue.
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2015 (9) TMI 1172
Transfer pricing adjustment - Revenue is aggrieved by the direction of the DRP who had directed the TPO to exclude the forex loss from the computation of operating cost of the assessee - Held that:- In transfer pricing matters, comparisons are drawn in regard to transactions made by the assessee with its Associated Enterprises (AE) and transactions between the business entities who are unrelated parties. In that context operating cost of the assessee company which has transactions with its AEs is compared with operating cost of business entities that are not related to each other. While determining the operating cost, various factors come into play, which may be both internal as well as external. The decisions of each entity in respect of various factors controlling the cost will affect the operating cost. Various risk factors are taken into consideration while making financial commitments, one among them is risk pertaining to foreign exchange fluctuations. Since the holding period with respect to sundry creditors who are raw materials suppliers or debtors arising out of sale transactions is with the management which exposes the entities to forex risks. Therefore, the profit or loss arising out of foreign exchange fluctuations will be directly attributable to the operational cost which has to be essentially taken into consideration while arriving at the operating cost of the entities while computing the profit level indicator (PLI) in transfer pricing matters. Unless there is an abnormal situation resulting in abnormal forex fluctuations, the profit or loss arising due to forex fluctuations cannot be ignored while arriving at the operating cost for deriving the PLI in Transfer pricing matters. It is pertinent to mention here that in arriving at the operating cost in transfer pricing matters the principles of Cost Accounting will not be strictly applicable where cost of finance may be treated differently. For the afore-stated reasons we do not find any merit in the arguments advanced by the Ld. A.R. We hereby hold that profits or loss arising out of foreign exchange fluctuations has to be taken into consideration while arriving at the operation cost in transfer pricing matters. Accordingly, we hereby set aside the order of the Ld.DRP and uphold the order of the Ld. Assessing Officer who has only adopted the order of the Ld. TPO. - Decided in favour of revenue.
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2015 (9) TMI 1171
Addition u/s 68 - Held that:- Keeping in view that the transactions are through banking channels and there is no material on record to prove the contrary, have no hesitation in holding that the assessee had discharged the burden of proving the genuineness of the cash credit. Under the law, the amount cannot be treated as the income from undisclosed sources of the assessee, when there is neither direct nor circumstantial evidence on record to hold that the said amount actually belonged to or was owned by the assessee. As regards the creditworthiness of the lender, the Assessing Officer admitted that the assessee had submitted a copy of I.T.R. filed in U.S.A. by Shri Susheel Shukla for the period 1.1.2004 to 31.12.2004 relevant to assessment year 2004, wherein annual income of 22,201 U.S. Dollar had been declared. A copy of return is available in assessment records of the assessee, which was produced during the course of proceedings before this Bench. It is relevant to observe here that both the authorities below have not questioned this document i.e. I.T.R. submitted by Shri Susheel Shukla. The officer who has framed the assessment of the assessee is Assessing Officer as well as Investigating Officer. He has not given any comments as regards the genuineness of the I.T.R. filed by Shri Susheel Shukla. The learned CIT (Appeals) has also not offered his views on this document. Thus, it can be concluded that the Revenue has accepted this document as genuine. In this return Shri Susheel Shukla has declared annual income of 22,201 U.S. Dollars for the year 2004. The source of income is shown from wages, salary, tips, etc. As per the said return, Shri Susheel Shukla was employed with firm namely V Paul Associates INC 1010 Rockville Pike Suit 206, Rockville MD 20852. Employers' EIN No. is 52-178748 and Phone No. is 301- 315-9172. As per the said return the total tax to be paid was 1,784 U.S. Dollars. There is no dispute that Shri Susheel Shukla was residing in U.S.A. since long. Considering the above, financial capacity of the lender to pay 10,000 U.S. Dollars cannot be doubted. In view of the decision of Hon'ble Gauhati High Court in the case of Nemi Chand Kothari v. CIT [2003 (9) TMI 62 - GAUHATI High Court] a creditor's creditworthiness has to be judged vis-ŕ-vis transaction, which has taken place between the assessee and the creditor and, it is not the business of the assessee to find out the source of money of his creditor or genuineness of the transaction. Thus no addition is required to be made in the hands of the assessee under section 68 of the Act - Decided in favour of assesse.
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2015 (9) TMI 1170
Calculation mistake committed by the Transfer Pricing Officer (TPO) in computing the profit margin of two comparable companies - Held that:- When there is a specific challenge to the calculation of OP/TC of the relevant segment of this company and the TPO has not mentioned how he determined this percentage of profit, we are helpless to evaluate the contention of the ld. AR. Under such circumstances, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is sent back to the file of AO/TPO. We order accordingly and direct the TPO to incorporate in his order the relevant figures leading to the determination of the computation of OP/TC at 26.45%. Needless to say, the assessee will be allowed a reasonable opportunity of being heard. If, after considering the objections of the assessee, the TPO finds that this calculation of profit rate of 26.45% is incorrect as has been contended before us, then the TPO/AO should consider the correct percentage and, consequently re-determine the arm’s length price (ALP) of the international transaction. Similar is the position regarding working of OP/TC of M/s Agricultural Finance Corporation Ltd. The TPO computed PLI of this company at 7.43%. The ld. AR contends that this figure is incorrect. No relevant details leading to the computation of this profit rate are available in the TPO’s order, which position has been admitted by the ld. DR as well. Following the view taken hereinabove, we set aside the impugned order to this extent also and remit the matter to the file of AO/TPO for incorporation of correct OP/TC of this company in the profit rates of comparables, after allowing a reasonable opportunity of being heard to the assessee. Consideration by the TPO of deferred revenue expenditure as operating expense in the computation of the assessee’s own operating profit rate - Held that:- Neither the dates of incurring such revenue expenses, though capitalized as deferred revenue expenditure, are available on record nor there is any record to link these expenses with the earning of revenue from the AE. In the absence of the necessary details of these two factors relevant for deciding the question as to whether or not these should be treated as operating cost of the year and then their extent, we consider it appropriate to send the matter back to the file of the AO/TPO. The assessee incurred total preliminary expenses amounting to ₹ 25,498/- in the preceding year and only 20% of such expenses was written off in this year. However, the TPO instead of adding back such 20% to the overall net profit by treating it as nonoperating, by mistake added back the full amount of ₹ 25,498. The effect of this exercise done by the TPO is that 80% of ₹ 25,498 which was not debited to the Profit and loss account also got treated as nonoperating expense, which position is not correct. In the fresh exercise of finding out the amount to be treated as operating or non-operating out of total deferred revenue expenses, the TPO will also take the aspect of Preliminary expenses into consideration.Ex consequenti, the impugned order is set aside on this score and the matter is sent back to the file of the AO/TPO for a fresh determination in accordance with our above observations. Treatment of M/s Artefacts Software and Finance Ltd. as a comparable company - Held that:- The mere making of a claim does not make a comparable company incomparable or vice versa. Simply, the ball is sent to the court of the TPO for vetting such a claim made by the assessee and then decide whether it is really comparable or not. Throwing out a case at the very threshold without any examination, cannot be construed as proper. The Special Bench of the Tribunal in DCIT vs. Quark Systems (P) Ltd. (2009 (10) TMI 591 - ITAT, CHANDIGARH) has held that the assessee can rightly claim that it wrongly chose a company as comparable which is actually not comparable. Under the given circumstances, we set aside the impugned order on this score and remit the matter to the file of AO/TPO for examining the assessee’s contention about the non-comparability of this company. If the related party transactions of this company turn out to be what has been contended by the ld. AR, then it would make the transaction as controlled. There is hardly any need to accentuate that only uncontrolled transactions can be considered for benchmarking. If on the other hand, the TPO finds the contention of the assessee as incorrect, he will continue to treat this company as comparable. - Decided in favour of assessee for statistical purposes.
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2015 (9) TMI 1169
Penalty levied u/s 271(1)(c) - Held that:- The assessing officer issued the penalty notice without specifying the charge under which the notice was issued. Before us, the Ld D.R could not distinguish the above said decision. Hence, on this legal ground also, the assessee’s appeal is required to be allowed. In view of the foregoing discussions, we set aside the orders passed by Ld CIT(A) for both the years under consideration and direct the assessing officer to delete the penalty levied u/s 271(1)(c) of the Act in both the years. - Decided in favour of assessee.
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2015 (9) TMI 1168
Denial of exemption under section 10(14)(i) - Held that:- The entire controversy is almost revenue neutral because even if it is held that assessees were not eligible for exemption under section 10(14)(i) in respect of living allowance, then in view of DTAA with USA, the assessees would become entitled to get tax credit in respect tax paid on living allowance in USA. However, as we have already held that living allowance is not taxable in India, therefore, assessees are entitled for exemption under section 10(14)(i). Therefore, they cannot claim tax credit in respect of tax paid in USA on living allowance because as very fairly pointed out by the ld. senior counsel for the assessees, DTAA would come into play only when a particular receipt is taxable in both the countries - Decision in the case of Saptarshi Ghosh [2011 (9) TMI 397 - ITAT, KOLKATA] followed - Decided in favour of assessee.
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2015 (9) TMI 1167
Adjustment of seized cash towards advance tax liability - Held that:- Judicial view on Revenue Department's liability towards amount received by it from the tax payer. Revenue cannot keep the assessee's money with itself and claim that it has no liability or less liability towards the assessee by way of an Explanation inserted to negate the effect of judicial decisions without removing the statutory basis of the decisions. Explanation to section 132B, will act prospectively, Hence, the reliance by the learned D.R. on the insertion of this Explanation to section 132B cannot help the case of the Revenue as the Explanation has been inserted much after the conclusion of the assessment year under consideration. On the basis of above discussion and precedent, we hold that there is no infirmity in the order of learned CIT(Appeals) allowing adjustment of cash seized during search towards advance tax liability. - Decided against revenue.
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2015 (9) TMI 1166
Validity of Re-opening of assessment u/s. 147 - after the end of four years from the assessment year when scrutiny assessment has been completed on the addition u/s. 41(1) of interest waived by the banks - Held that:- There is no merit in Revenue's appeal. First of all as rightly pointed out by the Ld.CIT(A), the AO has examined this issue of 'interest waiver' by the bank and show caused assessee, why it shall not be taxed u/s. 41/28/56 vide letter dt. 07-03-2007. Therefore, the waiver of interest by IDBI/ICICI Bank is very much within the knowledge of the AO who has enquired the same in the course of original assessment. Not only that the entire transaction was disclosed in the notes to the accounts of the annual report. The AO's reasoning in reopening can only be considered as change of opinion. Moreover, all the facts were disclosed by assessee and therefore, there is no failure on the part of assessee in disclosing fully and truly all material facts. Therefore, we are of the opinion that reopening of the assessment after four years from the end of the assessment year cannot be justified. - Decided against revenue.
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2015 (9) TMI 1165
Maintainability of the invocation of section 154 - rectification of mistake - Held that:- These are section 154 proceedings, scope of which is limited to mistakes apparent from record, so that issues that admit of debate stand excluded at the threshold. The discharge of the liability, implying payment to the beneficiaries, the employees to whom it is due/payable, and for payment to whom the sum/s is set aside, either by the assessee or on its behalf by the transferee company, has not been shown or even claimed, much less during the relevant previous year, which alone is relevant for claiming or being allowed deduction u/s. 43B, i.e., the provision under which the allowance had been earlier made, and stands reversed subsequently through recourse to s. 154. The primary condition of s. 43B, thus, stands not met - a fact which is not denied and, besides, is borne out of the record. A mistake, rectifiable u/s. 154, it is trite, could be either of fact or of law. The allowance of deduction of the impugned sums u/s. 43B was thus clearly a mistake apparent from record, liable to be rectified u/s. 154. This, quite simply, is the only issue relevant and, in any case, represents the core of the matter; the various aspects discussed being only to address the various arguments/contentions raised, and which again clarify an undisputed state of affairs, both on facts and in law. The deduction, therefore, could only be claimed in the year of payment. As clarified in Mysore Spg. & Mfg. Co. Ltd. v. CIT [1966 (2) TMI 82 - BOMBAY HIGH COURT], we may further add, it is not necessary that the particular business, to which the deduction (in computing its business income) relates, is carried out by the assessee during the relevant year. We decide accordingly. - Decided against assessee.
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2015 (9) TMI 1164
Disallowance of share issue expenses to be amortized u/s.35D - CIT(A) deleted the addition - Held that:- A similar issue came up for our consideration in assessee's own case for the assessment year 1999-2000 [2011 (4) TMI 556 - MADRAS HIGH COURT] wherein held there is no particulars with regard to the expenditure incurred by the assessee to claim deduction and further the expenditure incurred by the assessee is to be treated as a capital expenditure and not as a revenue expenditure. The decision of the Assessing Officer is also liable to be confirmed for another reason. In the appeals before the Commissioner of Income-tax and the Tribunal, both the authorities have not gone into the merits of the case or perused the materials to show the expenditure incurred by the assessee. On the other hand, both the authorities by simply stating that the claim of the assessee for the previous assessment years had been allowed, the claim of the assessee. - Decided in favour of assessee. Re computation of addition of depreciation on the basis of final opening WDV - Held that:- The Commissioner of Income Tax (Appeals) gave direction to the Assessing Officer to recompute the depreciation on the basis of written down value after giving effect to the Tribunal order in assessee's own case for the assessment year 2002-03. Being so, we find no infirmity in the order of the Commissioner of Income Tax (Appeals). This ground of the Revenue is rejected.- Decided in favour of assessee. Eligibility for deduction u/s.80HHC on the issue of adjustment of negative profit and export incentives without application of eligibility conditions in the 3rd and 4th proviso to sec 80HHC (3) of the I.T. Act as allowed by CIT(A) - Held that:- The Gujarat High Court in the case of Avani Exports & Others (2012 (7) TMI 190 - GUJARAT HIGH COURT ) quashed the amendment made by the Taxation Law and (Amendment) Act, 2005 with retrospective effect from 1st April, 1998 by way of adding second, third, fourth and fifth proviso to section 80HHC (3), only to the extent that the operation of the said section could be given effect from the date of amendment and not in respect of earlier assessment years of the assessees who export turnover is above ₹ 10 crores. Since, in the present case, the assessment year involved is 2003-04, being so, the issue of amendment has no consequence to the assessee's case. Accordingly, we uphold the finding of the Commissioner of Income Tax (Appeals) on this issue.- Decided in favour of assessee. Claim of deduction u/s.35(2AB) - CIT(a) held that the assessee is eligible for ₹ 70,65,156/- and not for weighted portion of the claim of ₹ 35,32,578/- u/s.35(2AB) - Held that:- Respectfully, following the decision of the Tribunal in assessee's own case wherein held The sec 35(1) provides for deduction of expenditure other than the capital expenditure laid out or expended on scientific research related to the business. The nature of the expenses claimed are like civil work including refurnishing of floor, painting work, carpentry work, general housekeeping, gardening, false ceiling, cleaning door, repairing, salary paid to personal in R & D unit whose serves Associated Enterprise in administrative in nature, security guard expenses, interest expense etc. The expenses are essentially incurred for repair and maintenance of existing R&D facility and for general upkeeping of the R &D unit which was subject to inspection by various authorities like US FDA etc. and not for construction of new building or extension of the existing building. Even otherwise, these expenses are allowable u/s.37 of the I.T. Act, 1961, thus this ground of the Revenue is dismissed - Decided in favour of assessee.
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2015 (9) TMI 1163
TDS liability - treating the assessee as an 'assessee in default' - Held that:- Provisions of section 201(1) have to be interpreted in the manner they have been incorporated in the Act. A general rule in this regard can be told in simple language that deduct tax at source in case of doubt. In the case before us the assessee had paid interest amount to two parties without deducting taxes. In our opinion sub-section (1B) of section 197A (inserted w.e.f 01/06/2002) has overriding effect over sub-section (1A) for those cases where 'the aggregate of the amounts of such incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeded the maximum amount which is not chargeable to income-tax'. If such income i.e. income of the nature referred in sections 193, 194A and 194K exceeds the thresh hold of a particular sum during a particular year, the provisions of sub-section (1A) of section 197A shall not apply and the declaration in Form 15G becomes immaterial. It is clear that the assessee failed in its statutory obligation and therefore, it is an A-I-D for the amount of tax not deducted U/S.194A on payment of interest. The provisions of the Act envisage that wherever deductibility arises, the deductor may not deduct tax only in two conditions firstly, where the case falls under the purview of section 197A and secondly, where AO authorises him to do so by issuing a certificate u/s. 197 (read with Rule 28AA) on an application made by the payee/deductee. In no other circumstances the payer of interest can justify upon deduction of tax by taking shelter of ultimate tax effects of the payee. In the case before us, the assessee was not able to demonstrate that either of the two conditions existed in the matter under appeal. We further find that the FAA has given a categorical finding of fact that the assessee had failed to prove that the deductee included the amount received from the deductor in his return of income. In these circumstances, we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity. As far as charging of interest u/s.201(1A) it is true that use of the expression is not always determinative of the fact whether a provision is directory or mandatory in nature, but the context in which expression is used in section 201(1A) makes it clear that the levy is mandatory. The purpose of the levy is to claim compensation on the amount which ought to have been deducted and deposited and has not been done. The ultimate liability for tax being not there (since the firm which received the interest from the assessee had paid tax on such interest) did not dilute the requirements for the non-compliance of which interest is levied under section 201(1A) - Decided against assessee.
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Customs
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2015 (9) TMI 1201
Confiscation of goods - recovery of seized foreign origin goods - Held that:- Section 111 of the Customs Act, 1962 provides that any prohibited goods found concealed in any manner in any conveyance shall be liable to confiscation. Section 112 of the Customs Act, 1962 provides that any persons, who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 shall be liable to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater. - seized goods was valued worth ₹ 4,00,000/-. Therefore, the appellate authority imposed the penalty. The penalty imposed upon the appellants is less than the value of the goods, which has been upheld by the learned Tribunal - Decided against assessee.
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2015 (9) TMI 1200
Confiscation of goods - Imposition of redemption fine - Penalty u/s 112(a) - Contravention of licensing terms - Held that:- Tribunal had recorded that as per the provisions of the licensing notes, the secondary/defective HR Coils could be imported only at the ports of Mumbai, Chennai or Kolkatta. The import of goods at ICD, Ludhiana by the assessee was contrary to the licencing note No.4 of Chapter 72 of the ITC (HS) as there was restriction about the port at which the goods could be imported and, therefore, the goods had been rightly confiscated. The Tribunal, however, waived off the penalty on the appellant under Section 112(a) of the Act and reduced the quantum of redemption fine from ₹ 3,00,000/- to ₹ 1,00,000/-. The Tribunal had taken a lenient view and it would not give any substantive right to the appellant to get the redemption fine of ₹ 1,00,000/- set aside on the ground that once penalty has been waived, no redemption fine could be sustained especially when the appellant had violated the provisions of the licencing note. - No question of law arises - Decided against assessee.
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2015 (9) TMI 1199
Suspension of CHA license - Held that:- No illegality in the common order of the Tribunal. On the admitted facts, it is clear that no show cause notice was issued. However, the Department proceeded to treat the order of suspension itself as a show cause notice on the ground that the same contains the details of allegations. But, this is clearly not in the light of the provisions of the Regulations. - licence itself is due to expire on 18.11.2015. - Decided against Revenue.
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2015 (9) TMI 1198
Seizure of goods - Imposition of redemption fine - Held that:- Order in Original was passed on 1st April, 2005 after recording the statement under Section 108 of the Customs Act, 1962 and thereafter notice was issued and adequate opportunity of being heard was also given to this appellant. At length there is a discussion about the goods seized from the premises of this appellant in the Order in Original dated 1st April, 2005 and ultimately redemption fine was imposed of ₹ 3.00 Lacs and a penalty upon this appellant was imposed of ₹ 50000 - order passed by the Joint Commissioner of Customs dated 1st April, 2005 has also been taken in review under Section 129(d) of the Customs Act, 1962 by Commissioner of Customs, Patna and the direction has been given to the Joint Commissioner of Customs that if the seized goods are found to be in possession of this appellant in violation of Section 111 of the Customs Act, then custom duty ought to have been levied from this appellant and without demanding the custom duty, an order was passed by the Joint Commissioner of Custom and the Commissioner of Customs, Patna has further directed to prefer appeal against the Order in Original passed by the Joint Commissioner of Customs dated 1st April, 2005. - matter remanded back - Decided in favour of assessee.
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2015 (9) TMI 1197
Confiscation of seized diamonds under Section 111(d), (f), (i) and (m) - imposition of penalties - Smuggling - It is seen that in the context of section 111(d) or 113(d), in several precedents, the definition of 'prohibited goods' as contained in section 2(33) of the Customs Act, 1962 has been applied liberally, including in Om Prakash Bhatia vs. Union of India, [2003 (7) TMI 74 - SUPREME COURT OF INDIA] and Sheikh Mohd. Omer vs. Collector, [1970 (9) TMI 36 - SUPREME COURT OF INDIA]. - Under section 125 of the Customs Act, unless the importation or exportation of goods is expressly 'prohibited', the Adjudication Authority is obliged to offer to the Owner the goods an option to pay fine in lieu of confiscation. Since the import of 'cut and polished diamonds' is not expressly prohibited under Section11 of the Customs Act, 1962 or by any other statutory notification, we find merit in the ground that an option to redeem them on payment of fine in lieu of confiscation was mandatory. However, after conclusion of the hearing, on instructions, advocate for Ms. Kanchna informed that now she will not avail the option of redemption even if granted. Therefore, we are not interfering with the order of absolute confiscation. Since the courier parcel was in the name of his sister, considering the gravity and penal consequences and due to natural love and affection he initially accepted under pressure the ownership and importation of the seized courier parcel. He categorically stated that he was not concerned with the seized goods and as such he was not opposing the confiscation of the seized goods. However, he strongly opposed imposition of any penalty whatsoever on him under the provisions of the Customs Act, 1962. However, adjudication qua him was not completed with five weeks and thereafter he filed application for settlement as co-applicant, which was dismissed. No admission was made by these brothers even before the Settlement Commission. It is seen that his subsequent statements, which were also recorded under section 108, do not incriminate him or Nilesh Patel. These statements cannot be ignored. His explanation therefore seems plausible. The adjudicating authority has recorded that Ms. Kanchana appears to have been pressurized to file an affidavit giving untenable grounds such as non dutiability of the seized diamonds and conflicting reasons for sending concealed diamonds for collection by Jimmy who was not even known to Shri Bhargav Patel or his parents in India. We find that on the contrary she admitted her duty liability not only before Settlement Commission but also during the adjudication proceedings. There is no cogent evidence to show that she was so pressurized and this finding is based only on suspicion. There is no document or material or circumstantial evidence showing that Bhargava Patel had placed any order either verbal or written, or made compensatory payment, for the seized diamonds. In view of the above, we find that role of Mr. Bhargav Patel and Nilesh Patel in the smuggling of the diamonds under seizure is not established even on preponderance of probability and penalties imposed on them are set aside. - Decided partly in favour of appellants.
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2015 (9) TMI 1196
Determination of CVD - valuation u/s 4 or 4A - whether Set Top Boxes (STBs) which are part of the Customer Premises Equipment (CPE) and imported by the appellants should be subjected to countervailing duty under Section 3(2) of the Customs Tariff Act by assessment in terms of Section 4 or in terms of Section4A of the Central Excise Act. - Held that:- The retail sale price is defined as the maximum price at which retail package may be sold. And retail package means packages which are intended for retail sale to the ultimate consumer. In other words the retail price will be required to be declared on the package only if it is intended for retail sale. The Ld. Counsels have contended that there is no sale at all. They have referred to the definition of 'sale' under the Legal Metrology Act, and emphasized that unless there is transfer of property it cannot be said that sale has taken place. It is seen from the definition that there should be a transfer of property for any consideration or there should be a transfer on the hire-purchase system or by any system of payment by any installments. We find in the present case that there is no transfer of property or hire-purchase system involved nor there is a system of payment by installments. Thus there appears to be no sale in the use of the Set Top Box by the ultimate consumer. During the course of arguments it emerged that Dish TV had recovered damages from the subscribers in case a Set Top Box is damaged. In such cases the replacement box is sold to the subscriber at a cost. Therefore in such cases, as an element of sale is involved, CVD would be payable under Section 4A of the Act. Accordingly, it is ordered that assessment be done and duty be paid on MRP basis in such cases. Set Top Boxes imported by the appellants are not leviable to CVD on RSP/MRP basis in terms of Section 4(A) of the Central Excise Act except for the Set Top Boxes actually sold - Decided partly in favour of assessee.
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2015 (9) TMI 1195
Denial of exemption claim - import of C.S. Seamless Line Pipesagainst Warehouse Bills of Entry. - M/s Jindal carried out certain processes such as Coating etc on this imported pipes in the warehouse and thereafter, filed ex-bond Bills of Entry and Coastal shipping bills. - The goods were removed from Mundra to Mumbai High and claimed exemption - Adjudicating authority, observed that the Appellant diverted the goods unathorisedly - Whether the Appellant is eligible to avail the benefit of exemption Notification No.21/2002-Cus, dt.01.03.2002 (Sr.No.215) in respect of surplus quantity of 410 Coated Pipes, seized by the Customs authorities. Held that:- In the case of Ramsons Garments Finishing Equipments Pvt.Ltd [2007 (1) TMI 16 - CESTAT, BANGALORE], the Appellant imported machinery and equipments and claimed the benefit of Notification No.29/1999-Cus, dt.28.02.1999, subject to the condition that the imported machinery and equipments were for use of textile industry. The Appellant, out of the total imported machineries, a few of them sold to hospital/dry cleaners. The Adjudicating authority denied the benefit of the exemption notification on the ground that the imported machineries had not been used in the textile industry. The Tribunal after dealing with various decisions and conditions, held that in absence of condition of actual use in the notification, the benefit of notification cannot be denied merely the goods in dispute were used in hospital and not in the textile industry. Similarly, in the instant case, the Appellant complied with all conditions mentioned in the notification at the time of clearance of the goods for ONGC Project. There is condition for requirement of end use certificate in the notification. There is no dispute that the excess goods were intended for use in the project and therefore, the benefit of the said notification cannot be denied. - impugned order is set aside - Decided in favour of assessee.
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Corporate Laws
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2015 (9) TMI 1194
Application for recall of the Scheme of Arrangement and Amalgamation - scheme was approved / sanctioned by the court vide order dated 17-6-2011 - SEBI has alleged that the Petitioners have suppressed from this Court, inter alia, the facts to achieve their objective of increasing their shareholding - SEBI also received a complaint that the consideration offered is detrimental for the interest of the equity shareholders. - whether the parties have as alleged by SEBI not disclosed the relevant facts but have suppressed the same from their shareholders or from the BSE/NSE or from the Regional Director or the Official Liquidator or this Court, thereby committing a fraud as alleged. Held that:- It is clear that there was no suppression of any relevant and/or material fact whilst obtaining orders on either the 2010 Scheme or the 2011 Scheme. The question therefore of any fraud committed by the Companies which have approached the Court seeking orders on the said Schemes by suppression of facts as alleged does not arise and in fact the Regional Director has, with the exception of certain objections which have been complied with, informed the Court that the Scheme is in the interest of the shareholders of the Company. The question therefore of setting aside the orders sanctioning the Scheme of Arrangement and Amalgamation or sanctioning amendments to the Scheme on the ground of alleged suppression thereby perpetrating a fraud on this Court does not arise. This Court has hereinabove already recorded its finding that SEBI has failed to establish any fraud played by NFCL/KFL by way of suppression of facts and is therefore not entitled to the reliefs as prayed for in the above Applications. However, SEBI has in support of its case also alleged that NFCL/KFL has perpetrated a fraud on the shareholders of NFCL in view of several other grounds. The contention raised by SEBI to the effect that the valuation is “unrealistic, perverse and incredibly high” on account of the fact that GT had used arbitrary growth rates to project the revenue for the year beyond 2012 and has not provided any rationale for arriving at the growth rates also cannot be accepted in view of what is stated hereinabove as well as the fact that the GT Report and the letter of GT dated 22nd July 2013 make it clear that GT had reviewed the data provided by the Management for reasonableness and consistency and that GT did not accept the projections at face value. SEBI has failed to make out any case of fraud in GT arriving at the above exchange ratio. The Composite Scheme of 2011 as stated hereinabove has already been made effective and shares have been allotted to the respective shareholders. Subsequent to the Composite Scheme, dividends have been declared and paid. The shares of the demerged entity viz. NORL have been listed on 23rd March, 2012, and are being traded on the Bombay Stock Exchange (“BSE”) and National Stock Exchange (“NSE”). In fact, as regards the Resultant Company No. 1 (Originally KFL and now renamed NFCL), BSE and NSE granted in principle approval for listing on 8th December, 2011 and 13th January, 2012, respectively. In the circumstances, the question of granting any reliefs as prayed for or otherwise to SEBI does not arise and the above Applications are dismissed with costs.
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2015 (9) TMI 1193
Application for injunction in a defamation action brought by the National Stock Exchange ("NSE") - The NSE complains that an article published on 19th June 2015 by Defendants Nos. 2 and 3, Ms. Sucheta Dalal and Mr. Debashish Basu, on their online news and analysis journal or website moneylife in, is per se defamatory. - Ms. Dalal is the Managing Editor of Moneylife; Mr. Basu is its Executive Editor. Their article accuses the NSE of actively permitting, in circumstances that I will describe in somewhat greater detail shortly, illicit trading advantages being afforded to a select few using high-end technology. Held that:- this is not directly a question of freedom of press or free speech. At the same time I do not believe that a defamation action should be allowed to be used to negate or stifle genuine criticism, even pointed criticism or criticism that is harshly worded; nor should it be allowed to choke a fair warning to the public if its interest stands threatened in some way. It is to me a matter of very great dismay that the NSE should have attempted this action at all. Except where it is shown that the article complained of is facially defamatory, that is to say, it is prima facie intended to defame or libel, an injunction will not readily be granted. Every criticism is not defamation. Every person criticized is not defamed. We forget that it is these persons we are so wont to mock who are, truly, the watchdogs of our body politic, the voice of our collective conscience, the sentinels on our ramparts. They may annoy. They may irritate. They certainly distress and cause discomfort. That is not only their job. It is their burden. Watchdogs respond to whistles and whistles need whistleblowers; and between them if they can ask what others have not dared, if they can, if I may be permitted this, boldly go where none have gone before; if they can, as they say, rattle a few cages, then that is all to the good. Neither of our principal stock exchanges are strangers to scandal; no matter what the NSE may think of itself, and even if Dr. Tulzapurkar insists that the past is the past and irrelevant today, public memory is not that short. The scams that beleaguered our exchanges in the past, and those that continue to occupy the time of this Court have at least in part come to light because of persons like Ms. Dalal and her fellow travellers. If regulatory agencies have been compelled to make changes, and if our own Supreme Court has felt it necessary to step in with drastic orders, it is because every oversight process has either failed or been subverted. The Plaintiffs are in error when they describe Ms. Dalal as some out-of-control lone wolf. The nation may or may not want to know; Ms. Dalal does. So do her readers. And, as it happens, so do I. She is certainly entitled to ask, to question, to doubt and to draw legitimate conclusions. Today, all our institutions face the crisis of dwindling public confidence. Neither the NSE nor the judiciary are exceptions to this. It presents a very real dilemma, for the existence of our institutions is posited on that very public confidence and faith and its continuance. The challenge is, I think, in finding legitimate methods of restoring that public trust, that balance. Hence the cries for transparency and accountability everywhere; and I see no reason why the NSE should be any exception to this. As a result, there is no prima facie case made here at all, nor is there any question of balance of convenience or any sort of prejudice being caused to the Plaintiffs if the injunction sought is declined. I will not grant the injunction sought. The Notice of Motion is dismissed. The previous ad-interim order is vacated. Our Courts are not to be treated as playgrounds for imagined and imaginary slights for those who command considerable resources. There will be an order of costs in the amount of ₹ 1.5 lakhs each in favour of Ms. Dalal and Ms. Basu separately. In addition, the Plaintiff will pay an amount of ₹ 47 lakhs in punitive and exemplary costs payable not to the Defendants but to public causes, viz., in equal parts to the Tata Memorial Hospital and the Masina Hospital, it being made clear that these amounts are to be used only for the free treatment of the indigent. - Decided against the petitioner.
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FEMA
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2015 (9) TMI 1192
Petitioner challenges at pre-detention stage his detention - Conservation of Foreign Exchange and Prevention of Smuggling Act, 1974 (COFEPOSA) - smuggling of gold. - absence of "live link" due to time gap between the detention order dated 31st March, 2015 and the occurrence on 7th July, 2014 - Held that:- While deciding the issue whether the proposed deteun has absconded, the courts would have to examine the factual matrix. - in the facts of the present case we would not like to dismiss the present petition only on the ground of abscondence. We would like to dismiss the writ petition primarily for the reason that the petitioner has not been able to make an exceptional ground, to accept the present writ petition at the pre-detention stage. It is certainly not an exceptional case, which would justify interference and exercise of writ jurisdiction without recourse to the normal and mandated statutory procedure. The aforesaid facts including the question of "live link" etc. could be appropriate and properly examined and decided first under the normal statutory provisions. Case for interference at the pre-detention stage under the exceptions is not made out. - Decided against the petitioner.
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Service Tax
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2015 (9) TMI 1222
Cenvat credit - input services - construction services in relation to construction dormitory - Held that:- Although it is alleged in the show cause notice that the dormitory is located outside factory premises but the appellant in reply to the show cause notice has clearly mentioned that this dormitory is constructed within factory premises and the said fact has not been contradicted by the Adjudicating Authority or the first appellate authority. In these circumstances, it is held that dormitory is located within the factory and same can be verified by the department on visiting the factory premises. As the dormitory is located within the factory and the use of the dormitory is for the technicians / engineers for their stay in the factory itself which is required for maintenance of plant and machinery and these technicians / engineers should be available immediately as the factory is located in a remote area. Therefore, I hold that the construction of dormitory for this purpose of stay of technicians / engineers is integrally connected with the manufacturing activity of the appellant - in the case of ITC Ltd (2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT), the High Court of Andhra Pradesh has held that maintenance of residential colony in the remote area is entitled to take input services credit for the services of maintenance of residential colony as the factory is located in remote area. Therefore, the credit is available as that service has been availed in the business of manufacturing activity. Further, I find that in appellants own case for earlier period this Tribunal has allowed the cenvat credit on the impugned input service. - Decided in favour of assessee.
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2015 (9) TMI 1221
Commission agent / distributor of BSNL sim cards - Receipt of commission - business of marketing and selling of Pre-paid and Post-paid mobile connections, Pre-paid Recharge vouchers - Held that:- Issue involved in this case is now squarely settled by the judgment of the Tribunal in the case of G.R. Movers [2013 (6) TMI 339 - CESTAT NEW DELHI], wherein identical issue was considered. Aggrieved by such an order of the Tribunal, Revenue preferred an appeal before the Hon'ble High Court of Allahabad and their Lordships dismissed the appeal filed by the Revenue which is reported at [2013 (11) TMI 1558 - ALLAHABAD HIGH COURT] - Demand of service tax set aside - Decided against Revenue.
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2015 (9) TMI 1220
Manpower Recruitment or Supply Agency service - Job work or contract labor - activity of cutting, drilling, punching, bending, notching of materials as the work orders within the factory of principal - Imposition of interest and penalties - Held that:- the department's case that the respondents were supplying labour seems to be incorrect as the first appellate authority scanned the bill raised by respondents which indicates that the charges which are paid to the respondents are in respect of lump sum job and various activities involved depending upon the quantum of material. It is also seen that the first appellate authority has recorded factual finding that M/s. Amitasha Enterprises P. Ltd. supplies the galvanised material to the respondent and further activity are carried out by the respondent within the factory premises of M/s. Amitasha Enterprises P. Ltd., and it is also undisputed that M/s. Amitasha Enterprises P. Ltd. was discharging the Central Excise duty on such goods. - respondent was correct in bringing to our knowledge the judgment of the Tribunal in M/s. Yogesh Fabricators [2015 (8) TMI 1013 - CESTAT MUMBAI] which is squarely covering the issue in their favour. - impugned orders are correct and legal and does not suffer from any infirmity - Decided against Revenue.
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2015 (9) TMI 1219
Insurance as well as reinsurance broker – international insurance - service providers situated abroad - import of services and / or export of services - reinsurance brokerage was not included in the taxable value of ‘insurance auxiliary service’ rendered to insurers/reinsurers for the disputed period. - reverse charge - effective date of levy. Held that:- Net premium payable by the New India Assurance Co. Ltd. to the reinsurer in London is ₹ 2,101,200/-. After extending the benefit of 10% commission, the net premium due to Heath Lambert Limited comes to ₹ 18,91,080/-. Under the terms of contract, for providing the service as re-insurance broker, which fact is not disputed, a sum of ₹ 16,18,960/- alone is remitted to M/s.Heath Lambert Group as client money as set out by the assessee in the letter to the Chief Manager, Bank of India, Overseas Branch, Chennai dated 25.1.2006 as net premium, retaining the balance amount as commission/brokerage. This transaction is illustrative of series of transactions which had taken place over the period in dispute in the show cause notice. In effect, in respect of remitting the entire amount to the re-insurer and getting the brokerage separately, the assessee, in this case, in relation to the trade practice prevalent in the trade internationally and following the practice and procedure that is followed by the re-insurance brokers with the reinsurance companies, the assessee had retained that portion of the commission or brokerage and remitted the balance to the re-insurance company at London. Services rendered by the assessee in this case to the re-insurer abroad and the transaction with the foreign re-insurer would have to be necessarily accepted as 'export of service'. Once we hold that it is export of service, we will now look into the provisions of the Service Tax Act. - Decision in the case of JB Boda & Company Private Ltd. [1996 (10) TMI 70 - SUPREME Court] followed. - Decided in favor of assessee. Insofar as Notification Nos.6/99 dated 09.04.1999 and the rescinding Notification No.2/03 dated 01.03.2003 and the subsequent Notification No.21/03 dated 20.11.2003 are concerned, though relied upon by the assessee at the first instance in the light of J.B.Boda's case, we feel that may not be really necessary to resolve the issue raised in the present case, as all these Notifications granted exemption from payment of service tax to any person, in respect of which payment is received, specified under sub-section (48) of Section 65 of the Finance Act provided, to any person, in respect of which payment is received in India in convertible foreign exchange from whole of service tax. Role of the assessee is collecting and remitting the premium. There is also a commitment on the part of the assessee in relation to any claims that may arise from New India Assurance Co. Ltd. in respect of re-insurance contract. IRDA (Insurance Brokers) Regulations further casts a duty on the assesee as to how the money collected in relation to the re-insurance contract should be dealt with by the broker. The terms contained in Regulation 23 speaks for itself that the role of the assessee as an insurance broker is not merely receiving and transmitting the amount as has been propounded by the Adjudicating Authority and the Tribunal. There is much more to be done by the Insurance broker even as per the IRDA (Insurance Brokers) Regulations, of which much emphasis has been made by the Tribunal in paragraph No.15. If this is the role of the assessee, we fail to understand how the Tribunal could have said that it is just forwarding the premium amount to the re-insurer company. That finding, of the tribunal in confirming the demand, is a fallacy in the light of the findings given by the Supreme Court in JB Boda's case (supra), as also the provisions of the Service Tax Act, more particularly, the binding circular of the Reserve Bank of India dated 25.4.2003. On the issue of non-receipt of the commission or brokerage in convertible foreign exchange, the Adjudicating Authority as well as the Tribunal have time and again misdirected themselves to hold that since the New India Assurance Co. Ltd. have paid the premium amount, it cannot be treated as receipt of amount in convertible foreign exchange and for this, Mr.M.Santhanaraman, learned Standing Counsel appearing for the Department submitted that there is no specific agreement as in the case of J.B.Boda (supra) and therefore, it stands distinguished. Under RBI Regulations, there was a requirement of such an agreement under law and the permission of the RBI has to be obtained before remitting the foreign exchange. That issue does not arise in the present case and the provisions of the Service Tax Act does not impose such a condition. In any event, as we have held that the basis of the circular, which is clarified that Notification Nos.6/99 dated 09.04.1999, 9/01 dated 16.07.2001, 13/02 dated 01.08.2002 and 2/03 dated 01.03.2003 would not apply to export of service, the question of receiving the payment in convertible foreign exchange does not arise. Even the Export of Service Rules, 2005 does not put an embargo in relation to taxable service as specified in Rule 3(3)(i), (ii) and (iii) of the Export of Service Rules. - Decided in favour of assessee.
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2015 (9) TMI 1218
Recovery of service tax dues - Sale and disposal of detained aircraft - Detention of Aircrafts and Helicopters belonging to M/s. Kingfisher Airlines to recover Service Tax amount due to the Government - difficulties and availability of records and documents - aircrafts / helicopters are in the custody of Mumbai International Airport Private - third Respondent/owner has no objection to the aircraft being sold and disposed of by the Service Tax Commissioner/Commissionerate. Held that:- The said third Respondent would render all assistance in that behalf. However, Mr. Khambata for the appellant seeks leave of this Court to have access to the documents and records in relation to the subject aircraft once the Service Tax Commissioner takes custody and possession of the same. Mr. Khambata submits that this is in order to enable and facilitate the valuation being privately done by the third Respondent and the reports being handed over to the Commissioner which would assist him to determine the upset price. Sale proceeds from the sale of aircraft shall not be disbursed and released but should be brought in this Court. We grant leave to the third Respondent and the learned Counsel appearing for the same to raise this issue once we have the affidavit of the airlines before us.
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2015 (9) TMI 1217
Denial of CENVAT Credit - Goods Transport Agency services - contravention of Rule 3 (4) of the Cenvat Credit Rules - Held that:- The decision relied on by the Tribunal in R.R.D. Tex case (2007 (5) TMI 84 - CESTAT, CHENNAI), was also upheld by this Court in Commissioner - Vs - R.R.D. Tex Pvt. Ltd. (2013 (7) TMI 920 - MADRAS HIGH COURT). - A cursory reading of the above orders clearly reveal that the decision is squarely applicable to the facts of the present case. Following the same, the substantial questions of law are answered in favour of the assessee and against the Revenue. - Decided against Revenue.
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2015 (9) TMI 1216
Denial of CENVAT Credit - input service - inclusive part of Rule 2(i) - construction services - Held that:- In the case of Ultratech Cement (2010 (10) TMI 13 - BOMBAY HIGH COURT), the Hon’ble Bombay High Court upon analysis of the inclusive part of the definition of input service, have held that the definition of input service is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product. In the present case, construction of residential colony/dormitory adjacent to the factory premises was the necessity because of the location of the factory in a remote area, where if the accommodation is not provided to the staff/workers, the continuous/round the clock manufacturing activity will hamper. Further, the cost towards such construction has also been considered as expenditure in the books of accounts of the respondent. Thus, I am of the opinion that such construction activity is in relation to the business of the respondent, and therefore, service tax paid for accomplishing the purpose of business, merits consideration as input service for the purpose of Cenvat benefit. - respondent is eligible for cenvat credit on the disputed services and, therefore, there is no infirmity in the impugned order - Decided against Revenue.
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2015 (9) TMI 1215
Denial of CENVAT Credit - Invocation of extended period of limitation - Held that:- -after relying upon the Apex Court decision in the case of Padmini Products vs. CCE [1989 (8) TMI 80 - SUPREME COURT OF INDIA], held that for invocation of extended period there has to be some evidence that an assessee knew that they were liable to pay duty. That mere failure to pay duty or taking license is not enough to invoke extended period - when CENVAT credit is reflected in periodical returns then extended period can not be invoked. A perusal of the records of this appeal reveals that the factual matrix is similar to the facts available before the CESTAT, New Delhi in the case of CCE, Jaipur vs. Pushp Enterprises [2010 (11) TMI 835 - CESTAT, NEW DELHI]. Accordingly, it is held that extended period is not invokable in the present appeal - Decided in favour of assessee.
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2015 (9) TMI 1214
Denial of CENVAT Credit - input services - Credit of Service Tax paid on transit insurance payment in respect of insurance of goods during transit from the factory to customers premises - Place of removal - Held that:- Sales are on FOR destination basis. Infact decision of this case support the case of the appellant. Further, I find that a similar issue came up before the Tribunal in the case of Suzuki Motorcycle (I) Pvt. Ltd. reported in [2015 (7) TMI 633 - CESTAT NEW DELHI] wherein this Tribunal has observed that merely because the appellant stand reimbursed part of the advertisement expenses from their parent company, does not mean that appellant would become disentitled for the service tax actually paid by them and this Tribunal allowed the cenvat credit on advertisement expenses which has been reimbursed by the parent company. In this case, insurance expenses have been paid by the appellant for transportation of the goods upto the place of buyer and same has been reimbursed by the buyer of the goods. Therefore, the facts of the case in hand are similar to the facts of Suzuki Motorcycle (PI) Pvt. Ltd. (supra). In these circumstances, I hold that appellant is entitled to take cenvat credit of insurance premium charges paid by them when there is no dispute that the goods were delivered at the customers place. - Decided in favour of assessee.
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Central Excise
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2015 (9) TMI 1223
Denial of CENVAT Credit - input services - Services of Pandal and Shamiana, tour operator and construction services do not qualify as input services as per Rule 2(l) of the Cenvat Credit Rules 2004 - Held that:- It is not disputed by the Revenue that the services in question were not availed by the appellant in the course of their business of manufacturing of excisable goods. Therefore, I hold that Cenvat Credit to the appellant cannot be denied. On the one hand they are claiming tour operator services and on the other hand they are claiming construction service of residential colony. From the facts of the case and adjudication by the lower authorities it is not disputed that appellant has not constructed residential colony and appellant has not used tour operator services for carrying their employees from their residence to the factory and factory to residence. When these facts are admitted facts then claim of the appellant is entertainable and appellant is entitled to take Cenvat Credit. Without going into the case laws relied upon by the Ld. Counsel for appellant as the decision of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT) covers the entitlement of Cenvat Credit. Therefore, I hold that appellant is entitled to take Cenvat Credit. - Impugned order is set aside - Decided in favour of assessee.
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2015 (9) TMI 1211
Denial of MODVAT Credit - denial of credit on the ground that mines are not part of the appellant's premises and on the other ground that these goods are not covered in list of captive mines and listed in Rule 57B (2) - Held that:- Regarding parts of machineries as at Sl.No.3, 4 & 5 the Emitting Electrodes are made up of steel and are used in Electrostatic Precipitator Classifier in Pollution Control Equipment; Classifier Housing is a stationery part and is located at top of the vertical mill which are used coal mill, cement mill and raw mill. Similarly steel casings are outer covers of equipment like bag filters, Bucket Elevators. There is no dispute that these are parts of capital goods. On perusal of Board's circular No.27/110-96-TRU dt.2.12.96 it is categorically clarified that all parts and components and accessories which are used in the capital goods under Rule 57Q and even if it is classified under any other chapter heading are eligible for modvat credit. We find that in the case of CCE Hyderabad Vs India Cement (2004 (12) TMI 187 - CESTAT, BANGALORE) and ACC Ltd. Vs CCE (2005 (1) TMI 558 - CESTAT, NEW DELHI) wherein the Tribunal consistently held that parts and accessories are eligible for capital goods credit. In the appellant's own case in the case of Madras Cements ltd. Vs CCE Trichy (2006 (5) TMI 303 - CESTAT, CHENNAI) this Bench of the Tribunal has already disallowed the credit on steel wires which has attained finality. Therefore, this Bench cannot interfere with that decision and the said order has not been appealed by appellant. Accordingly, we hold the credit on steel wires are ineligible. - Decided partly in favour of assessee.
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2015 (9) TMI 1210
Classification of goods - printing of gray wrappers which is used in the packaging of cigarette packs. - Classification under heading 4823.90 or under heading 4901.90 - Manufacturing of goods through job worker - held that:- Goods were being manufactured through their job workers and they were not themselves manufacturing - As such, we note that the classification under sub-heading 4901.90 of the Central Excise Tariff Act holding the goods to be products of printing industries and thus attracting NIL rate of duty in the case of Sri Kumar Agencies has almost reached finality, even though the same stands appealed against by the Revenue before the Hon’ble Supreme Court but there is no stay of operation of the same. - goods in question are properly classified under heading 4901.90 which attracts NIL rate of duty and no demands of duty can survive against the assessee. If that be so, no penalties can be imposed against M/s. VST Industries Ltd. or the other appellants who are employees of M/s. VST Industries Ltd. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (9) TMI 1209
Valuation - Held that:- Coca Cola (India) Ltd. was required advertise the product of the respondent along with their own product. It was obligatory on the part of the buyer to advertise the respondent's product in all advertising done by Coca Cola (India) Ltd. on television and press. We also have gone through the show-cause notice and we find that the price offered to Coca Cola (India) Ltd. are in the range 35% to 55% of the normal wholesale price. We also observe that the so called special packing is not very different. CCI have asked the respondent to pack specific number of confectionary items in every polybag. This is for bringing in line with their own system of packing i.e. cratewise. We do not find any specific details so as to indicate that the packing was very different and that would reduce the cost of the product to almost half to one third. - respondent has not been able to produce any quantity discount schedule so as to justify such low values due to higher quantity. Similarly, respondent has not been able to product any costing data relating to packing so as to justify such lower values. - Decided in favour of Revenue.
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2015 (9) TMI 1208
Valuation - normal value under old section 4 - Demand of differential duty - Penalty u/s 11AC - Interest u/s 11AB - Held that:- Period 1999 when the old Section 4 was in force and the concept was of the normal value of the goods and not of the transaction value. We also note that at the time of issuance of the show-cause notice itself revenue has claimed that the normal value of the said pillow is ₹ 162/-. Appellant has not questioned the same and did not produce any evidence to show that they were selling at some other price to other customers. - The invoice and the documents nowhere indicates that the pillow sold were old and damaged. Appellants have also not been able to produce any evidence in support of their contention that the pillow were old and damaged. No statutory or other records could be produced by them which would indicate that the pillow manufactured in 1994 were lying with them till 1999. Normal price at which such pillow were being sold will be the correct assessable value for the goods in question. Accordingly, on merits, we find that the case made by the revenue is correct and we therefore uphold the same. The contention of the appellant was that the extended period of limitation cannot be invoked as all the information was available with the department. We are not impressed with the said argument. The appellant were doing self assessment at the relevant time and the fact that they have sold the pillow at such a low price was suppressed and in our view the extended period of limitation has been correctly invoked. - penalty under Section 11AC is also upheld. Interest under Section 11AB will also be chargeable - Decided against assessee.
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2015 (9) TMI 1207
Classification of mixtures of spices - whether under Chapter 9 of the Central Excise Tariff as claimed by the appellant or under Chapter 21 as stated by the Department - Held that:- The conclusion of the Original Authority is not substantiated to the effect that how such addition of certain chemicals or additives has taken away the essential character of the spice mix. The predominant and the critical character of the mix is derived from the spices only. The addition of additives and chemicals for whatever proportion has not taken away the essential character of the spice mix in its flavour, aroma, etc. There is no concrete evidence or discussion in the finding of the Original Authority to that effect. Further, the addition of ingredients like onion powder, garlic powder and tamarind, etc was considered as addition of other materials. This is factually incorrect as the garlic and turmeric or tamarind are the spices as understood in common parlance as well as by the experts in the field. The Spice Board clearly indicates the garlic and tamarind as Indian spices. Hence, the addition of these items if at all cannot be a consideration for excluding the classification for spice mixtures under Chapter 9. Having closely examined the scope of entry under Heading No.2103 and the scope of Chapter 9 of the Central Excise Tariff, we come to the conclusion that the spice mixtures produced by the appellants are to be classified under Chapter 9 and not under Heading No.21. - Decided in favour of assessee.
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2015 (9) TMI 1206
Classification of the product Niacin (feed grade) - animal feed - Chapter Heading 29.36 or Tariff Item 23099090 - Held that:- Tariff Item 29362920 specifically covers Nicotinic acid (nicotinamide). Following cannons of interpretation of the Central Excise Tariff, a more specific heading is to be preferred in terms of Rule 3(a) of the Rules for Interpretation of the Tariff Act. Even according to the HSN Notes of Chapter 23 (our tariff being based on HSN System of Nomenclature) under heading 23.09 it is specifically mention in exclusion clause (e) that vitamins are excluded from heading 23.09. In the present case the goods are not a preparation for animal feed. The goods are Niacin itself. It is not used as animal feed directly. As held in the case of Sonam International (supra) a vitamin is added in a miniscule proportion in animal feed. That the appellant mixed Niacin with Atta before clearance makes no difference because we are concerned with the classification of the product manufactured by them i.e. Niacin. Therefore we hold that the product Niacin Feed Grade has been correctly classified under Tariff Item 29362920 and duty is payable accordingly. Extended period of limitation - Held that:- The appellant had clearly declared the description of the product as "Niacin Feed Grade" in all their E.R. 1s. Therefore there being no misstatement, duty is payable only for the normal period of time limitation. For the same reason that extended time period is not applicable, confiscation, fine and penalty are also not sustainable. However, interest would be payable under Section 11AB corresponding to the amount of duty upheld. Duty demand is upheld only for normal period of limitation under Section 11A - decided partly in favor of assessee.
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2015 (9) TMI 1205
Demand of interest - Whether the appellant is required to pay interest for the intervening period where they have reversed the cenvat credit taken wrongly by them - Held that:- In the case of Bill Forge, the Hon’ble Karnataka High Court has taken note of the decision of Honble Apex Court in Ind-Swift Laboratories Ltd. (2011 (2) TMI 6 - Supreme Court) and thereafter arrived at the decision that if the cenvat credit lying in the cenvat credit account which has been taken wrongly but reversed before utilization, in that situation, interest is not payable, the said view of the Hon’ble High Court of Karnataka was followed by this Tribunal in Gurmehar Construction vs. CCE, Raipur (2014 (7) TMI 849 - CESTAT NEW DELHI). In this case also, it is the contention of the learned Counsel that cenvat credit wrongly taken was lying in the Cenvat credit account unutilized. If the said contention is correct, then the appellant is not required to pay interest on wrongly taken reversed cenvat credit following the decision of Gurmehar Construction vs. CCE, Raipur (supra). The adjudicating authority if desires, may call for the records to verify the fact that during the intervening period, sufficient amount way lying in the cenvat credit account. - Appeal disposed of.
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2015 (9) TMI 1204
Duty demand - SAD - appellant is availing area based exemption for VAT purposes - clearance of goods to another EOU which is in DTA - Held that:- issue has been settled in appellants own case reported as [2009 (6) TMI 48 - CESTAT, NEW DELHI] wherein Larger Bench of this Tribunal has held that appellant is required to pay SAD on their clearances. Therefore, on merits, the appellants have no case. We are holding that appellants are required to pay SAD on their clearance. In case when appellant is clearing the goods to another EOU, in that case appellant is required to pay SAD as there is no sale. Further, the value of goods may be taken as cum duty price. Therefore, matter required quantification of the demand against the appellant for giving these two benefits. Accordingly, we remand the matter to the adjudicating authority for quantification of the correct demand of duty payable by the appellant. Thus after granting benefit of clearance of one EOU to another EOU without SAD and the amount of goods shall be taken as cum duty price. As the issue has been settled by the Larger Bench of this Tribunal, therefore, no malafide can be attributed to the appellant therefore, penalty on the appellant is not imposable. - Decided partly in favour of assessee.
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2015 (9) TMI 1203
Applicable basic excise duty rate - Applicability of education cess and secondary and higher education cess third time - Held that:- There is no dispute that the appellant has applied the incorrect rate of duty. However, it is the submission that they have been indicating the rate of duty applied by them in the monthly returns and the department never pointed out that the duty rate has gone up and so they are required to pay higher rate of duty and as soon as this was pointed out, they immediately paid the differential duty. Under the circumstances, there is no wilful misstatement on the part of the appellant. There is no suppression of fact and none of the ingredients to imposed penalty under Section 11AC are present in the case. Under the circumstances, penalty imposed under Section 11AC corresponding to the first issue is set aside. Issue is decided in appellants favour in the case of Kumar Arch Tech Pvt. Ltd. (2013 (4) TMI 482 - CESTAT NEW DELHI) and in view of this position, the third time demand relating to education cess and secondary and higher education cess no more survives and the demand on this count is, therefore, set aside. Since the demand has been set aside, no penalty is imposable on this count. - Decided in favour of assessee.
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2015 (9) TMI 1202
Wrongful availment of CENVAT Credit - Capital goods - Power of commissioner to remand back u/s 35A - Held that:- Commissioner (Appeals) after analyzing the facts brought on record, opined that in the interest of justice, the actual use of the disputed items whether in structurals or otherwise need to be verified by the lower authority before passing any order in this regard. I do agree with the said proposition of the Ld. Commissioner (Appeals) and with the consent of both sides, the matter is remanded to the adjudicating authority for necessary verification as to whether the disputed items have been used as structural steels or otherwise - Decided in favour of Revenue.
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CST, VAT & Sales Tax
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2015 (9) TMI 1213
Constitutional validity of Levy of Cess on every wedding and connected celebrations conducted in hotels, having classification of "Three Star" and above and in auditoriums which have a seating capacity, including that of dining halls, above 500 - legislative power to levy cess - object of raising the required revenue to form a "matrimony fund" for girls, from economically weaker sections. - The petitioners also bring to focus the fact of the specific activity being covered under the Finance Act, 1994 and the Kerala Tax on Luxuries Act, 1976 [for brevity "Act of 1976"], which levies tax in the nature of "tax on luxuries". Held that:- The levy is only on the event of renting out a Three Star hotel or an auditorium; that too, only when it is rented out specifically for weddings or connected ceremonies. Unless the (taxing) event of renting for wedding occurs, there is no levy and that cannot be sustained as a levy on the "building" as such. The correlation to Entry 62 List II also cannot be sustained, since there is already a levy by virtue of the Act of 1976, on the activities for which the Three Star hotels or auditoriums, covered under the impugned enactment are taxed. Any amenity or service provided in a hotel, auditorium or kalyanamantapam where the rate of charges for such amenity or service is above a specified limit; are deemed to be luxury and is taxed under Entry 62. The tax levied is on the aspect of luxury enjoyed. The fees now sought to be levied, tracing the power to Entry 66 List II and correlating it with Entry 62, cannot be sustained in view of the specific intention professed for providing marriage assistance to the under-privileged. This is not to say that good intentions of the Government alone could sustain the levy. Taxing the 'haves' to enrich the 'have-nots' though an extolled virtue; it has certain restrictions when applied to a system built on rule of law. While exercising powers of taxation under a constitutional framework, State can ill afford to put on the mantle of a Robin Hood. The primary object and the essential purpose of the levy as also the ultimate result is the constitution of a fund; 'Mangalya Nidhi', to assist the under-privileged women, in getting married. There is absolutely no service offered and no regulatory measure employed. The levy definitely is not a fee and can only be treated as a tax; for which the source is unavailable under any of the fields of legislation enumerated in the Seventh Schedule to the Constitution of India. The State Legislature has to be found to be incompetent to enact the impugned legislation under Article 246 of the Constitution of India. The impugned legislation in so far as it relates to Section 11 of the Kerala Finance Act, 2013 and Rules framed thereunder, is ultra vires the powers of the State Legislature as conferred by the Constitution of India and the State is restrained from levying and collecting the cess in accordance with such enactment. - Decided in favor of petitioners.
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2015 (9) TMI 1212
Cancellation of eligibility certificate - exemption from sales tax - new industries to be established within the State of Assam after April 1, 1991 as per industrial policy - commercial production commenced from February 5, 1996. The finished product was washed clean coal and the raw materials used were raw coal, lump coal and medium coal - eligibility certificate was valid from February 5, 1996 to February 4, 2003, i.e., for a period of seven years. Held that:- it is not a case of obtaining eligibility certificate by fraud or by furnishing of wrong information. Nothing has been pointed out regarding violation of any of the conditions mentioned in the eligibility certificate. It is quite clear that the eligibility certificate granted to respondent No. 1 was cancelled because of change of opinion as to the eligibility of respondent No.1 to get the benefit. This is not permissible. - Decided against the revenue.
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Wealth tax
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2015 (9) TMI 1188
Valuation of the land for Wealth Tax purposes - urban land or agricultural land - revenue contended that the documents submitted by the assessee do not specifically indicate that construction is not allowed over the land of the assessee. - CWT(A) deleted the consequent addition made by the WTO. Held that:- Therefore, though the amendment to Section 2(ea) of the Wealth Tax Act was brought in post the passing of the WTO’s orders dated 16.12.2011 and the entitlment of the assessee to seek refuge thereunder arose to the assessee only by virtue of the passing of the Finance Act, 2013, the WTO did not consider it enough fullfilment of the conditions of Rule 46A of the Inocme Tax Rules, 1962. Now, this being not correct, as the assessee squarely falls under Rule 46A(c) of the Rules, having been prevented by sufficient cause from producing before the WTO, evidence relevant to the additional plea raised before the CWT(A), the learned CWT(A) correctly took the additional evidence into consideration. So far as regards the merits of the issue, the very fact that the WTO left the issue open to be “treated accordingly” by the CWT(A), shows the direct applicability of the additional evidence to the issue and its unimpeachable value in support of the assessee’s claim of the land in question being classified as agricultural land in the Govt. records and of it being used for agricultural purposes. The learned CWT(A) did treat the issue accordingly. Once the learned CWT(A) held the land of the assessee to be exempt on one count, i.e., the land being classified as agricultural land in the records of the Govt. and used for agricultural purposes, this finding was sufficient to reverse the orders passed by the WTO, which has correctly been done. - Decided against the revenue.
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Indian Laws
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2015 (9) TMI 1191
RTI - delay in providing the information - The petitioner submitted a reply on 19.09.2007 itself to the second respondent stating that since the information was not furnished within thirty days as required under the provisions of the Act, the petitioner is entitled for the information free of cost as per Section 7(6) of the Act. Challenging the demand of the said amount, the petitioner filed an appeal before the first respondent. The first respondent passed an order on 12.02.2008 dismissing the appeal, challenging which the present Writ Petition was filed. Held that:- The priced material is indicated as publications printed matter, text, maps, plans, floppies, CDs, samples, models or material in any other form, which are priced, the sale price thereof. A building plan of a particular premises is not open for sale and it is not priced. Hence, it cannot be called as a priced material. In respect of other than priced material, the actual cost of the copy has to be recovered from the party. Thus, the first respondent committed an error in coming to the conclusion that the information sought by the petitioner is a priced material and also upholding the demand made by the second respondent. If it is a priced material, the sale price should have been indicated. In case of other than priced material, the actual cost should have been calculated. Either way it has nothing to do with the calculation of the amount as done by the second respondent. The respondents directed to furnish the required information to the petitioner as per the Rules provided under the Act, and the Writ Petition is, accordingly, allowed.
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2015 (9) TMI 1190
RTI - seeking information related to third party - information sought by the erstwhile partner - seeking information relating to the registration of the firm in the Food and Civil Supply Department and the work which had been assigned to the firm. - Held that:- In the present case, the fourth respondent sought extensive disclosure in regard to the business of the partnership firm. There is a serious element of contest between the petitioners and the fourth respondent as to whether the fourth respondent continues to be a partner. Whereas the fourth respondent asserts that he continues to be a partner, the contention of the petitioners is that the fourth respondent has retired from the partnership firm. We clarify that we are not expressing any view on the merits as admittedly one suit which has been filed by the fourth respondent is pending. The facts which have come on the record are sufficient to hold that before directing the disclosure of information, the State Information Commission ought to have issued notice to the petitioners and heard them on their objection to the disclosure of information. The proceedings before the Public Information Officer and before the State Information Commission have to be conducted in a manner consistent with the principles of natural justice and where a disclosure of this nature is sought in regard to the business of the partnership firm, it was but necessary that the petitioners should have been heard before any final order was passed. However, we clarify that the issue as to whether information which has been sought by the fourth respondent should or should not be disclosed in view of the provisions of the Act is kept open. All the rights and contentions of the parties are left open to be adjudicated upon. - Decided in favor of third party (petitioner)
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2015 (9) TMI 1189
Offence u/s.138 of the Negotiable Instruments Act - cheques were returned unpaid owing to "insufficient funds" - Held that:- Two of the cheques are drawn on the account of the College and one on the account of the Trust. Only the signatory of the cheque/Chairman of the College has been arrayed as an accused. When admittedly, borrowings were effected towards development of the College constituted under the Trust, the liability therein primarily would be that of the Trust/College. Only when such Trust/College is arrayed as an accused, petitioner may be proceeded against on the assertion that he is incharge of and responsible to the Trust/College in the conduct of its affairs. That he is so would find support from the fact that he is the signatory of the cheque. However, in the absence of arraying the Trust/College, the question of vicarious liability of petitioner does not arise. This Criminal Revision shall stand allowed. The judgments of Courts below shall stand set aside. Petitioner is acquitted of all Charges. Fine amount, if any paid, shall be refunded to petitioner. Bail bonds, if any, shall stand cancelled. - Decided in favor of petitioner.
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