TMI Tax Updates - e-Newsletter
September 9, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Addition of unexplained liabilities - Cash credit - additions u/s 68 - The expression any sum is found credited in the books of the assessee means all entries on the credit side as well as on the debit side in the books of account - HC
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Income Tax:
Allowability of excise duty u/s 43B r.w. section 145A - valuation of closing stock - MODVAT credit cannot be reduced from the value of opening or closing stock - HC
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Income Tax:
Cancellation of registration of Trust u/s 12AA(3) Charitable purpose or not u/s 2(15) no material brought on record which could suggest that the assessee trust has deviated from its objects which it has been pursuing since last 130 years, the proviso to Sec. 2(15) of the Act is not applicable - AT
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Income Tax:
Receipts towards Area Development Fund (ADF) AO direct to exclude fully the amount included towards Area Development Fund in the income of the assessee and also to withdraw the amount allowed as a business expenditure towards ADF - AT
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Income Tax:
Deduction u/s 80IC - the cutting and polishing of diamond amounts to manufacturing or production of article or thing as envisaged for the purpose of claiming deduction u/s 80IC - AT
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Income Tax:
Amount mentioned in seized diary, part of consideration or not - Assessment u/s 153C - the action of the Revenue authorities in treating the amount represented by the pronote as well, as part of the consideration on the sale of the property is upheld - AT
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Income Tax:
Neither the freight nor the inspection charges are paid by the appellant company for any services rendered by these company in India, and nor the payments are made to these parties in India, and therefore, by no imagination either the provisions of section 194C or section 195 are applicable - AT
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Income Tax:
Non deduction of tax u/s 40(a)(ia) payment to non residents - the expertise and technology which was made available by the USA company is technical service within the meaning of Article 12(4)(b) of the DTAA between India and USA - AT
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Income Tax:
Collection of Entertainment tax is a trading receipt or not - irrespective of the fact that the multiplexes have been constructed out of own funds or borrowed funds the receipt of subsidy would be on capital account - AT
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Customs:
Revokation of CHA license - the first respondent is duty bound to initiate proceedings within 90 days from the date of receipt of offence report, there are no two opinions - HC
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Customs:
Validity of order passed after inordinate delay of 2 years in passing the order - it would be in the interest of natural justice to remand the matter back to the adjudicating authority for denovo adjudication. - AT
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Customs:
Payment of interest to the petitioner - especially when the respondent-State had retained such a substantial amount belonging to the petitioner with it for more than 8 years, in our opinion, it would be just and appropriate to compensate the petitioner - SC
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Service Tax:
Levy of Service tax on lottery tickets - Writ petition against letters issued from the Mumbai Office - territorial jurisdiction of the SIKKIM HIGH COURT - three communications in question quashed - HC
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Service Tax:
Levy of penalty for belated payment of service tax - penalty u/s 76 - when the intention to evade payment of service tax is not there, penalty cannot be levied following section 73(3) - AT
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Service Tax:
Administrative support agreement with various Tata companies - prior to 01/07/2003, the services rendered by the appellant do not merit classification under Management Consultancy Service - AT
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Service Tax:
Outdoor catering service - services provided to restaurant - The contention of the appellants that the food is not served by them requires verification. - AT
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Service Tax:
Availing benefit of abatement on Management, maintenance & repair services - Whether the services provided by the appellant could also be classified as works contract service was not agitated before the lower authorities - matter remanded back - AT
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Central Excise:
Waiver of pre-deposit - principle of natural justice - Tribunal to guide the Adjudicating Authorities so that they would properly adjudicate the cases with reasoned orders and after considering the evidence on record. - HC
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Central Excise:
Maintainability of appeal - Non compliance of provision of Section 35F - Failure to comply with an order of pre-deposit, passed under Section 35F of the Act would entail dismissal of the appeal. - HC
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VAT:
Issue of declaration form C under the Central Sales Tax Act, 1956 - withholding of issue of C form - Question was not merely of performance and non-performance of contractual obligations affecting the civil/contractual rights of the parties but also of liability to pay tax which was statutory exaction and therefore, the writ court, cannot shut its eyes and refuse to interfere - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (9) TMI 272
Addition of unexplained liabilities - Whether the Tribunal is justified in upholding the order of the CIT (A) in deleting the addition on account of unexplained liabilities Held that:- As decided in assessees own case for the earlier assessment year, it has been already been held that an entry of liability in the balance sheet can also be added in the income of the assessee u/s 68 of the Act relying upon Smt. Rekha Krishna Raj Vs. Income Tax Officer [2013 (7) TMI 523 - KARNATAKA HIGH COURT] - the essence of the word "cash credit" under the heading of Section 68 does not mean that credit should be cash credit - it may be a cash credit or it may be a credit representing the value of the supplies made by the suppliers on credit - once the credit so mentioned in the section was found to be not supported by any acceptable evidence than the sum so credited would be charged to income tax as the income of the assessee. Section 68 of the Act suggests that there has to be a credit of an amount in the books maintained by an assessee and such credit would be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source - The expression "any sum is found credited in the books of the assessee" means all entries on the credit side as well as on the debit side in the books of account - The word "credited" in relation to "any sum" does not mean an entry only on the credit side but would also include any entry on the debit side as well - The word "credited" means an entry of a sum in the books of account thus, no substantial question of law arises for consideration Decided against revenue.
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2014 (9) TMI 271
Allowability of excise duty u/s 43B r.w. section 145A - valuation of closing stock - Duty shown as payable but not paid to be allowed as expenditure or not Held that:- The manufactured sugar was lying in stock and the same were not cleared from the factory - the Tribunal was justified in holding that in respect of unsold sugar lying in stock, central excise liability was not incurred and consequently the addition of excise duty made by the assessing officer to the value of the excisable goods was liable to be deleted - The closing stock can consist of opening stock, purchases and manufactured stock - Reference was then made to the statutory mandate of Section 145A of the Act, that the valuation of the closing stock must include any tax, duty, cess or fee actually paid or incurred by the assessee to bring the goods to the place of its location and condition on the date of valuation - on manufactured goods, excise duty is payable after adjustment of CENVAT or MODVAT credit on the date of removal and not on the date of manufacture relying upon CBDT circular No. 772 dated 23.12.1998 and CIT Vs. Lakshmi Sugar Mills Co. Ltd. [2013 (7) TMI 385 - DELHI HIGH COURT] - MODVAT credit cannot be reduced from the value of opening or closing stock thus, the matter is to be remitted back to the Tribunal for fresh adjudication Decided in favour of revenue.
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2014 (9) TMI 270
Notice issued for reopening of assessment u/s 148 Notice issued after four years Change of opinion - Reason to believe Excessive claim for bad debts and depreciation on equipments leased - Held that:- It has been already decided in Commissioner of Income Tax v/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] that reason to believe that income chargeable to tax has escaped assessment would not mean a mere change of opinion - the reasons recorded for issuing the notice is with regard to excessive claim for bad debts and depreciation on equipments leased to RESL for AY 1998-1999 - no objection were raised by the Petitioner Bank to the grounds in support of the notice relied upon by the Revenue Petitioner Bank is aware and cannot dispute failure to disclose truly and fully material facts necessary for assessment - it will comes from a party seeking to invoke extra ordinary writ jurisdiction of this court to make a grievance of the reasons not indicating failure to disclose truly and fully all material facts necessary for assessment - The knowledge of the failure on the part of the Petitioner Bank is evident in its affidavit in rejoinder. The Petitioner Bank had made a claim for bad debts in its Return of Income without having taken into account the orders passed on 2nd March 1998 u/s 154 of the Act for the AY 1995-96 as the same, was subject to change in view of the further appeal - There is no merit in the submission that there was no full and true disclosure about the equipments being put to use - The equipment in question was windmill - Karnataka Electricity Board had issued a certificate that the windmill was connected to the grid on 31st March 1998 - Once the windmill was connected to the grid, it started contributing to the production of electricity- A windmill is put to use when it connected to the grid - The confirmation of Karnataka State Electricity Board is clear - there is no failure to make a full and true disclosure by the Petitioner - the certificate of Karnataka State Electricity Board was before the Assessing Officer while making the assessment under Section 143(3) of the Act and forming an opinion that the equipments were put to use on 31st March, 1998 - the ground that the equipments were not put to use on 31st March, 1998, is a mere change of opinion - the notice seeking to reopen the assessment on the ground of depreciation is merely a change of opinion on the part of the AO the notice issued for the aspect of bad debts is upheld whereas the part dealing with the depreciation is liable to be set aside Decided partly in favour of assessee.
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2014 (9) TMI 269
Estimated disallowance out of electricity expenses - Enhancement of addition by CIT(A) Held that:- CIT(A) rightly noted that from the communication dated 18/02/2009 of the Supdt. Engineer, Operation Circle, AP Transco, Mahaboobnagar Division, it reveals that A.P. Transco had resolved to consider the request of Mahaveer Ferro Alloys for waiver of deemed energy charges and revision of bills to the extent of amount that is allowable as per revised guidelines of APERC and had accordingly revised annual load factor charges towards deemed energy for the period from May, 2005 to July, 2005 - after going through the agreement entered by the assessee with M/s Ramkumar Agarwal on 01/04/2008, the assessee has taken all assets and liability as per Annexure-A to the agreement - There is no mentioning of this liability, which Ramkumar Agrwal is required to be incurred towards business taken over by the assessee - Assessee is entitled for assets mentioned in the Annexure-A to the agreement and the assessee is liable for liabilities mentioned therein - the assessee cannot claim any liability other than the mentioned in the Annexure-A to the agreement - there is no question of adjusting the liability with electricity deposit as this deposit is independent asset and nothing to do with this expenditure and this expenditure not incurred for the purpose of asesssees business - the CIT(A) is justified in rejecting the claim of the assessee and the order of the CIT(A) is confirmed Decided against Assessee. Unexplained credits - Receipts of deposits against sales - Failure to produce documentary evidences Held that:- CIT(A) rightly held that the assessee had furnished a certificate furnished by the Team Ferro Alloys Pvt. Ltd. confirming the deposit of the amount made with Mahavir Ferro Alloys which was subsequently taken over by the assessee as per agreement dated 01/04/2008 - the source of the deposit is properly explained and therefore, it cannot be brought to tax as unexplained credit or deposit the order of the CIT(A) is upheld Decided against Revenue. Rental income treated as business income TDS deducted by M/s Team Alloys Total income to be taxed and expenses regarding business should be allowed or not Held that:- CIT(A) observed that lease rent to be treated as income from property/rent, as per the provisions of sec.194-I of the I.T. Act, 1961, under which the TDS was made for the payments related to the said lease rent, as referred in the assessment order, the assessee is eligible for standard deductions as per sec.24 of the I.T. Act,1961 - CIT(A) has rightly directed the AO to re-compute the income treating the same as business income by excluding the electricity charges relying upon Universal Plast Ltd. Versus Commissioner of Income-Tax [1999 (3) TMI 15 - SUPREME Court ] - the order of the CIT(A) is upheld Decided against Revenue. Protective addition treated as unexplained deposits in bank CIT(A) relied upon one document and ignored seized material Liabilities form part of total investment or not Held that:- CIT(A) rightly observed that the additions made by the AO on protective basis in the assessment order of the assessee - the cash deposits into the bank of the assessee which were drawn to meet the liability of M/s Mahavir Ispat Pvt Ltd, the addition is to be considered in the hands of Mahavir Ispat Pvt Ltd only also in The Deputy CIT Central Circle-4, Hyderabad Versus Sri Ramprasad Agarwal And Others [2014 (4) TMI 631 - ITAT HYDERABAD] it has been held that the estimation of unaccounted turnover on the basis of unaccounted electricity charges which is in proportion to the accounted electricity charges and accounted turnover Decided against Revenue. Unexplained cash credit u/s 68 Held that:- CIT(A) held that the facts further reveal that the liability is not an onetime credit, but is the running account for an expense incurred for the business purpose - CIT(A) rightly was of the view that being the power supplier to one of the units of the company, the liability arisen during the year, which has been discharged in the subsequent year, thus, it cannot be treated as credit for the purpose of section 68 or the unexplained cash credit thus, the order of the CIT(A) is upheld Decided against Revenue. Addition of unexplained jewellery Jewellery belonged to family members or not Held that:- Minimum amount of jewellery to be considered in each hand of the family members of the assessee as per the CBDT Instruction No. 1916, dated 11/05/1994 assessee rightly contended that the intention underlining the CBDT Instruction issued on 11/056/1994 is also relevant with reference to deeming provisions of section 69A - 500 grams jewellery is permitted to be retained in the case of a married lady, 250 grams for unmarried lady and 100 grams for male member of the family assessee also contended that there is no granting of cross-examination to the deponent in the affidavit though the donor of the gold jewellery to the assessee has confirmed giving the gift relying upon Mehta Parikh and Co. Vs. CIT [1956 (5) TMI 4 - SUPREME Court] thus, the matter is to be remitted back to the Ao to reappraise possession of the jewellery and give corresponding relief on the basis of the holding of each person of family and the family members are staying under single roof, if it is supported by documentary evidence Decided in favour of Assessee.
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2014 (9) TMI 268
Non-deduction of TDS on agency / sales commission payments made to non-resident agents Invocation of section 40(a)(i) r.w. section 195 Held that:- Following the decision in GE India Technology Centre Private Ltd. Versus Commissioner of Income Tax & Anr. [ 2010 (9) TMI 7 - SUPREME COURT OF INDIA] - The assessee company is engaged in the business of manufacturing an export of leather goods - it is availing the services of certain non-resident agents for procuring export orders for the assessee for which it is paying commission the non-resident agents have no business connection in India nor they have any permanent establishments in India - They are procuring export orders for the assessee - the non-resident agents are operating outside the country and all the services are rendered abroad only - though the non-residents are rendering services to the assessee (Indian company), these services are rendered totally outside the country. In such a situation the payments (commissions) made to such agents are not liable to be taxed in India - sales commission paid by the assessees to non-residents are not chargeable to tax in India, therefore provisions of section 195 are not applicable - in all the cases assessees paid sales commission to its non-resident agents for the services rendered by them outside India and the sales commission is not chargeable to tax in India so as to deduct TDS on such payments under section 195 of the Act the order of the CIT(A) is upheld Decided against Revenue. Restriction of disallowance u/s 14A r.w. Rule 8D Held that:- CIT(A) has elaborately considered the issue on analyzing balance sheets of the assessee for the year ending 31.03.2008, 31.03.2009 & 31.03.2010 and the investments made by the assessee for the past 11 years i.e. 31.03.2003 to 31.03.2013 held that total interest free own funds of the assessee ranged from 42.95 crores in the financial year 2002-03 to ₹ 50.20 crores in the financial year 2011-12 - Out of these amounts paid up share capital amount was ₹ 1.20 crores and the balance is reserves and surplus from accumulated profits from the years - These are all non-interest bearing own and free funds available with the assessee company and investments in the partnership firm in none of the years starting from financial year 2002-03 to 2012-13 exceeded the amounts of above free funds available with the assessee company there was no reason to interfere with the findings of the CIT(A) Decided against Revenue.
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2014 (9) TMI 267
Cancellation of registration of Trust u/s 12AA(3) Charitable purpose or not u/s 2(15) Held that:- The assessee trust is carrying on these activities since its inception and was allowed exemption/registration u/s. 12AA of the Act and is also a notified trust u/s. 10(23C)(iv) of the Act - The CBDT Circular No. 11/2008 dt. 19.12.2008 has explained the implications arising from the amendment brought to the provisions of Sec 2(15) of the Act - The CBDT clarifies that the newly inserted proviso to Sec. 2(15) will not apply in respect of the first three limbs of Sec. 2(15) i.e. relief of the poor, education or medical relief - even the CBDT does not lay down any guidelines for determining whether the entity is carrying on any commercial activity - the fundamental or dominant function of the Trust is to provide asylum for old, maimed, sick, dry, weak, disabled and stray animals and birds, more particularly cows and other such milk cattle and to bring about improvement in breeding cattle for the beneficial promotion, upkeep, maintenance and propagation of cows. Thus the dominant object is to run Panjrapole and the activities related to it. The Trust is engaged in multi series activities of diverse nature but the primary and the dominant activity is Panjrapole - The predominant object of Panjrapole activity has been held to be a charitable purpose in Commissioner Of Income-Tax, Gujarat Versus Swastik Textile Trading Company Pvt. Limited [1977 (7) TMI 30 - GUJARAT High Court] the trust would not loose its character of charitable purpose merely because some profits arises from the activity of the sale of milk - Such activity cannot be carried on in such a manner that it does not result in any profit - It be indeed be difficult for persons in-charge of a trust or institution to carry on the activity such that the expenditure balances the income and there is no resulting profit - there was no material which may suggest that the assessee-trust was conducting its affairs solely on commercial lines with a motive to earn profit - There is also no material brought on record which could suggest that the assessee trust has deviated from its objects which it has been pursuing since last 130 years, the proviso to Sec. 2(15) of the Act is not applicable on the facts of the case and the assessee deserves continuance of registration u/s. 12AA of the Act the DIT(E) is directed for the continuance of the registration Decided in favour of Assessee.
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2014 (9) TMI 266
Determination of Arms length price TNM method rejected and CUP method invoked - Addition of international transaction of export of finished goods to AE Held that:- The adoption of CUP method is to be treated as the most appropriate method for the purposes of comparability analysis is liable to be upheld relying upon Serdia Pharmaceuticals (India) (P.) Ltd. v. ACIT [2010 (12) TMI 60 - ITAT, Mumbai] - though the transfer pricing legislation does not prescribe a particular order of preference for the methods for determining the arm's length price, but the selection of most appropriate method essentially requires the methods to be ranked on a rational basis - the CUP method has been rightly selected as the most appropriate method in order to determine the arm's length price of the international transactions of export of finished goods to the associated enterprises. There is nothing in the phraseology of Rule 10B(3) of the rules to suggest that the adjustment to an uncontrolled transaction is permissible only under the TNM method and not to the other methods enumerated in Rule 10B(1) of the rules - even in relation to the present situation whereby the comparability analysis has been carried out by adopting the CUP method, the adjustments to the uncontrolled comparable transaction which are permissible and justifiable in law and on facts of the case, in order to facilitate comparability of the international transaction with the uncontrolled comparable transactions deserve to be allowed so far as adjustments proposed by the TPO on account of the international transaction of export of finished goods to the associated enterprises is concerned, it shall be scaled down to ₹ 36,91,536/- as against ₹ 71,01,810/- determined by the TPO Decided partly in favour of Assessee. The comparable transaction picked-up by the TPO, namely, agreement between assessee and Henkel USA is a transaction between two related/associated enterprises and therefore it is a controlled transaction and not an "uncontrolled transaction" - Such a transaction undertaken between two controlled entities, in our view cannot be considered as a 'comparable uncontrolled transaction', as envisaged in clause (a) of sub-rule (1) of rule 10B of the Rules - the adjustment made by the TPO by considering the agreement between Henkel USA and assessee as an arm's length price for the international transaction has to fail - the addition made by the TPO is to be set aside. The entire purpose of the transfer pricing analysis is to compute the income arising from an international transaction, having regard to its arm's length price - The 'international transaction' in question, relates to import of raw materials by the assessee from its associated enterprises - what is expected of the TPO is to consider the transactions of import of raw materials by the assessee from its associated enterprises in its entirety - as factually demonstrated by the assessee, TPO has ignored certain transactions of import of raw materials from the associated enterprises where the prices charged by the associated enterprises were lower than the prices charged by the non- associated enterprises - TPO has picked up only those transactions where the prices charged by the associated enterprises are higher in comparison to prices charged by the third parties, without considering the reasons for the same - the approach of the TPO is quite flawed and is not justified. In the tabulation, assessee has explained reasons which prevailed with it to make imports from the associated enterprises of the 5 products, though the prices charged by associated enterprises were higher than the prices charged by the non-associated enterprises - The circumstances canvassed by the assessee have not been found to be lacking in bonafides by the TPO the action of the TPO is set-aside and the matter is remitted back for re-computation of the arm's length price by taking into consideration the international transaction of import of raw materials from the associated enterprises in its entirety and not merely in relation to 5 products and leaving out the other 5 products which are also imported from the associated enterprises Decided in favour of Assessee.
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2014 (9) TMI 265
Audited profit margin - Arms length principle can be applied on domestic transactions or not Selection of comparables Functionally different unit Held that:- Assesses OP margin over sales earned by transaction of sale of goods purchased from associated enterprise, in accordance with the audited segment account, being within safe harbor range of +/- 5% of OP margin of the comparable companies considered by the TPO at 8.82%, the international transaction undertaken by the appellant should be considered at arm's length - since the business model of the BPC is different from the appellant in as much as the BPC enjoys a monopolistic economy and the appellant is established in a competitive market, the same shall not be considered as functionally similar to the appellant and excluded from the final set of comparable companies. TPO and DRP have not appreciated the facts that assessee has made out a strong prima facie case about Bharat Power Corpn., being not an appropriate comparable in terms of functionality and FAR - With the material on record both the authorities ought to have given objective findings on the submissions made by the assessee in this behalf - Besides DRP itself in preceding year has accepted the inclusion of assessee's comparable Spectra Industries Limited, in final list of comparable - TPO's order has not considered this aspect there was no justification on record to deviate from what DRP has adopted thus, the matter is to be remitted back to the Ao for fresh adjudication Decided in favour of Assessee.
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2014 (9) TMI 264
Receipts towards Area Development Fund (ADF) Money collected towards Area Development Activities used for business purposes or not Held that:- The assessee sugar factory has to get the approval of the members of the assessee society in the annual general meeting and then only the ADF can be utilized - The assessee has filed some of the resolution in the compilation from which it is seen that the ADF is used for giving incentive for primary school, incentive for wrestlers, help to persons affected by fire, incentive for wage, road developments, medical assistance, subsidiary for digging wells, assistance for group marriages etc. - the assessee has not kept the amount deducted from the bills payable to the members and non-members in separate Bank Account but separate account is maintained in the books - in respect of the nature of this fund it has been already held that purposes for which this fund is utilized i.e. ADF is unconnected with the growth of sugar factory and this fund is promoted for Socio-economic Development in the area of operation and this fund is distinct from the Cane Development Fund. Whether the collection made towards "ADF" by the assessee sugar factory is impressed with the specific obligation or assessee hold this money as a trustee Held that:- Even if initially it was by way of discretion the Sugar Co-operative factories were collecting the fund and spending the same on the different projects undertaken in the area of operation but subsequently the collection and use of fund was regulated by the intervention of the Govt. by issuing the order u/s. 79A of the Maharashtra Co-operative Society Act - The assessee has maintained the separate account in respect of this fund and as per the statement filed it is seen that the assessee sugar factory is utilizing the ADF on different projects as per the approval given in the annual general meeting (AGM) - Merely because the amount collected is not kept separately in the bank account, the character of the amount will not change as decided in Commissioner of Income-Tax (Central), New Delhi Versus Bijli Cotton Mills Pvt. Limited [1978 (11) TMI 1 - SUPREME Court] - the assessee is required to submit the Auditor's Report to the Director of Sugar, Govt. of Maharashtra each year showing the opening balance of the ADF, amount collected during the year and utilized during the year. The collection made by the assessee towards the ADF by way of deduction made from the sugarcane bills payable to the members and non-members is impressed with an obligation to spend the same for the specified purposes and the persons/Members paying contribution to ADF are aware before the deduction is made that for what purpose the assessee Co-operative Factory is collecting the said fund and where the fund will be utilized - the assessee's role is like a trustee of the "Area Development Fund" - the amount collected under the ADF is not a trading receipt in the hands of the assessee, the deduction given by the AO in the respective assessment years towards ADF is to be withdrawn - The AO is direct to exclude fully the amount included towards "Area Development Fund" in the income of the assessee and also to withdraw the amount allowed as a business expenditure towards ADF Decided in favour of Assessee.
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2014 (9) TMI 263
Grant of deduction u/s 80P(2)(a)(i) Failure to consider that as such no prohibition in the bye-laws Held that:- The provisions of Sec. 80P(4) mandates that the provisions of Sec. 80P will not apply to any co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank but as per the provisions of Sec. 80P(2)(a)(i), a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members is entitled for deduction - it cannot be said that a co-operative society cannot carry on business of banking facilities to its members even if it is not a co-operative bank - every co-operative society engaged in carrying on business of banking even for its members is regarded to be a co-operative bank, then, the provisions of Sec. 80P(2)(a)(i) will become redundant. Status of assessee - Co-operative society or not - Whether the Assessee is a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank Held that:- If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society, it will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilties to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of business relating to its members. Once the Assessee will not fall within the provisions of Sec. 80P(4), the Assessee, will be eligible to get deduction u/s 80P(2)(a)(i) in respect of whole of the income which the Assessee derives from carrying on the business of banking or providing credit facilities to its members - The Assessee did not file copy of its bye-laws before us; neither are the provisions of Sec. 17 of The Karnataka State Co-operative Societies Act, 1959 - In case the bye-laws permit for the admission of any other co-operative society as a member, the Assessee will not be not treated as a co-operative bank and the provisions of Sec. 80P(4) will not apply to the Assessee the matter is remitted back to the AO for determination of status of assessee and to decide as to whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) for ascertaining from the copy of the rules and bye-laws of the co-operative society whether the bye-laws of the assessee permit admission of any other co-operative society - In case the AO finds that the bye-laws do not permit the admission of any other co-operative society, the Assessee will be regarded as a primary co-operative bank and will not be entitled for deduction u/s 80P(2)(a)(i) Decided in favour of Assessee.
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2014 (9) TMI 262
Non-deduction of TDS Payment made to Czech Republic for services in connection with purchase of 4000 tons forging press - Assessee in default Held that:- Considering the magnitude of erection and commissioning activity undertaken in the present appeal, it could not be considered as a 'project' - it does not fall within the exclusion clause of the Explanation 2 - the charges are paid for erection' and commissioning are not excluded from the definition of 'fees for technical services' - payments made for 'supervision of erection' and for 'service work' were clearly out of the exclusion of Explanation 2 and are taxed as 'fees for technical services' - the CIT(A) held that payments made by the assessee are covered and are taxable under 'fees for technical services' u/s 9(l)(vii). The assessee company wanted to set up a forging industry at Pune - The assessee bought forge and similar machines from various parties - The assessee intended that these heavy machinery needs to be properly erected, considering technical aspects of installation - The assessee agreed for separate consideration for transport/travel of the machines - assessee also ordered the parties to supervise erection/installation of the heavy machines - The assessee also agreed to separate consideration for Air-fare (economy class) for the technicians assigned by supplier for the purpose - the payments for C & F charges relates to functions and activities performed in foreign country - The payments for such transportation do not accrue in India since there is no aspect involved which creates a charge for Income-tax in India - The payment terms for these C & F charges indicate the nexus to the transaction of sale of machinery - payment cannot be said to be accrued in India since there is no aspect involved which created charge for under the provisions of I.T. Act, because this took place only outside Indian Territory. Travelling expenses of technicians Supervision of installation/erection - Held that:- The technicians' travel expenses were negotiated and paid separately on economy airfare basis. Such expenses were for cross border travel and hence, do not arise in India and does not attract provisions of Indian Income-tax Act - the machinery is complex equipment, hence could not be installed by any ordinary person that is why only machinery seller nonresident was given contract of erection and installation and services thereof. Such erection/installation of highly complex machinery was not comparable to ordinary installation just because two separate agreements were reached, one for sale transaction and other for installation/erection and other related services - The principle of "inextricable nexus" does not change - the part payment for purchase of sale of machinery transaction was linked to successful erection of machinery at Chakan, Pune in all the contracts - it was not obligatory on the part of assessee to deduct the tax at source on entire payment even if it does not offer u/s. 195(2) for deduction at a lower or nil rate - Decided in favour of assessee. Payment made for acquiring the designs and drawings of Bolster & Cassette Held that:- The designs and drawings were acquired by assessee for ensuring smooth performance of purchased plant and machinery - assessee neither used the drawings in manufacturing of the machinery nor did exploit it for any other commercial purpose - the acquisition of the drawings along with purchase of machinery was necessary for its maintenance - CIT(A) was justified in holding that it was purchase transaction as no technology know how relating to machinery was made available to assessee - the assessee was not liable to deduct tax on payment made to Manyo Company Ltd., Japan Decided against Revenue.
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2014 (9) TMI 261
Claim of deduction u/s 80IC disallowed Cutting and polishing amounts to manufacture/production or not Held that:- In Aspin Wall & Co. Ltd. v/s CIT [2001 (9) TMI 3 - SUPREME Court] it has been held that in the absence of a definition of the word manufacture it has to be given a meaning as it is understood in common parlance - the production of article for use from raw material or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines - If the change made in the article results in a new and different articles, then it would amount to manufacturing activities - going by the new definition of manufacture as envisaged in section 2(29BA), the process of transformation of rough diamond into polished diamond, results into a new and distinct or article having different name and use - the entire process of transformation in this case can be held as manufacturing within the ambit of section 80IC. what is required to be examined is the process undertaken for conversion of raw / rough diamonds into superior or polished diamond - the assessee has duly placed on record the entire process and the stages through which the rough diamond undergoes for becoming the polished diamond, which is a separate and distinct product and has a different usage - Such a process has neither been rebutted by the Revenue nor any other counter opinion have been sought to contradict the assessees version of the process - once the entire process of cutting and polishing of diamond have not been rebutted and also the fact that the rough and polished diamond are two distinct commodity having different usage, not only in the common parlance but also in real sense, then it has to be understood that the cutting and polishing of diamond amounts to manufacturing or production of article or thing as envisaged for the purpose of claiming deduction u/s 80IC - the order of the CIT(A) is set aside and assessees claim for deduction u/s 80IC is allowed Decided in favour of assessee.
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2014 (9) TMI 260
Amount mentioned in seized diary, part of consideration or not - Assessment u/s 153C - Whether the amount represented, as per the entry in the seized diary, by a pronote, forms part of the consideration for the sale of the property Held that:- The pronote itself was not found or seized by the search party - the entry with regard to the amount represented by the pronote finds place among other entries made with regard to the amounts of payments, forming part of the consideration, and the same which have been made duly assigning the serial numbers like Ist, IInd, etc. - on a comparison of the payments so recorded with the payment recorded with the registered sale deed, it is found that the payments to the tune of ₹ 65 lakhs were matching, and the only amount not accepted is the amount of ₹ 25 lakhs represented by the entry 'pronote' pages of the diary cannot be termed as a sheet of paper and the entries in question cannot be said to be abstract ones without any significance - once all the entries in the relevant page of the diary could be linked up to the sale transaction, only with regard to the pronote, correctness of the entry cannot be challenged - A pronote, being a valuable document, must have been preserved till the realization of money in respect thereof - Mention of the amount represented by the pronote in the relevant page of the seized diary indicates the factum of the same forming part of the consideration - The fact that the pronote was not found at the time of search makes it clear that the amount represented by it must have been received by the assessee, because only upon realization of money, a pronote is either returned to the promissor or destroyed relying upon CIT V/s. Sonal Constructions and Anr. [2012 (11) TMI 11 - DELHI HIGH COURT] - the action of the Revenue authorities in treating the amount represented by the pronote as well, as part of the consideration on the sale of the property is upheld Decided against assessee. Claim of exemption u/s 54 denied assessee purchased only plot of land and not residential property No evidence for making evidence on construction of residential house - Held that:- Revenue authorities have denied the claim for exemption, going by the schedule of property and map appended to sale deed through which the assessee purchased the property - Merely because it is titled as 'provisional receipt', its evidentiary value cannot be mitigated, because it is issued by a statutory authority, viz. a local body, and contains details like door no. and assessee's name, date and amount of tax collected, etc. - All the details are capable of being verified from the records of the local civic body, and as such, one cannot create such a evidence just to make believe the version of the assessee - in the absence of any material to the contrary brought on record by the Revenue, the contention of the assessee is accepted that the property purchased by her was not merely a plot of land, but with some residential structure thereon in a semi-finished condition. The version of the assessee of having invested an amount for the completion of residential structure on the plot purchased, was disbelieved on the ground of the smallness of the investment claimed - the assessee purchased the plot of land with a structure existing thereon in semi-finished condition, it cannot be said that the amount claimed to have been spent by the assessee for competing the structure, so as to make it habitable one, is too small - since the plot purchased was claimed to be containing two houses, one constructed by the assessee in 2002 and the other being found under construction at the time of search, which was claimed by the assessee to have been taken up by her husband the order of the CIT(A) is set aside and the AO is directed to accept the claim of the assessee for exemption u/s 54F of the Act Decided in favour of assessee.
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2014 (9) TMI 259
Expenses u/s 14A disallowed Tax free income - Held that:- Assessee has earned tax free income during the year and the AO has worked out disallowance u/s 14A following the method prescribed under Rule 8D of the Rules relying upon GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D is applicable from AY 08-09 - prior to assessment 08-09, the A.O has to work out the disallowance on a reasonable basis - some of the investments have been acquired in earlier years thus, the matter is remitted back to the AO for verification and also about the availability of the tax free funds in the year of investments Decided in favour of assessee. Depreciation on vehicles given on lease Held that:- As decided in assessees own case for the earlier assessment year, it has been held that sale and lease back is a continuing transaction addition admitted by both the sides decided in favour of assessee. Reversal of provision for diminution in the value of investment Held that:- Before AO, the Assessees submission was that the provisions for diminution in the value of investment was not claimed as deduction in earlier years and therefore its reversal need not be taxed in the year under review the chart was not before AO and CIT(A) - the factual aspect of the chart needs verification thus, the matter is remitted back to the AO Decided in favour of revenue.
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2014 (9) TMI 258
Selection of comparables High and low profit margin companies Held that:- Following the decision in Deputy Commissioner of Income-tax, Circle-2(2) Versus Hellosoft India (P.) Ltd. [2013 (10) TMI 747 - ITAT HYDERABAD ] - companies having extraordinarily high profit/loss cannot be considered as comparables - the companies having extraordinarily high profit or loss are to be excluded as comparables - the AO is directed to re-calculate the ALP Decided partly in favour of Assessee. Determination of ALP - Data of company not available from last 12 months Held that:- The financial data of Maple e-Solution is not available for full financial year, it is available only for four months during the FY 2004-05 - the part period data cannot be considered as a comparable to determine the ALP - The AO considered the financial data of partial period of operation of Maple e-Solutions - the financial data of Maple e-Solutions cannot be considered as comparable to determine the ALP since it is part period data Decided in favour of Assessee. Functionally different company Salary cost as percentage of the total cost is very abnormal Held that:- M/s. Vishal Information Technologies cannot be considered as a comparable case as this company was rejected in Brigade Global Services (P.) Ltd v. ITO [2014 (9) TMI 143 - ITAT HYDERABAD] - the employee's cost to total cost ratio is worked out at 2% as compared to the industry average of 30 to 40% - The assessee's employee's cost to total cost ratio is worked out at 47% - Since the employee's cost form major cost base in ITES service industries, the low ratio of comparables implies that it would not be providing services by employing its own sources - the assessee is not alike to M/s. Vishal Information Technologies Ltd. - M/s. Vishal Information Technologies Ltd., cannot be considered as comparables and it is to be excluded from comparables - Decided in favour of Assesse. Adjustment for the difference in rate of depreciation charged not granted - Profit before Depreciation and Tax to total cost as Profit Level Indicator not considered Held that:- Assessee rightly contended that the TPO did not consider the fact that the margin of the Assessee Company falls within the ± 5% range of the arithmetic mean of the comparables relying upon Market Tools Research Pvt. Ltd. Versus Asst. Commissioner of Income-tax [2013 (12) TMI 414 - ITAT HYDERABAD] - the rates of depreciation adopted by the assessee are significantly different from straight line as compared with WTP, higher rate than that prescribed in schedule VI those adopted by the comparable companies suitable adjustment for the different has to be made or the profit before depreciation may be considered - the depreciation has impact on the profit margin of the assessee - depreciation adjustment is to be made - the AO is directed to use the PLI as PBDIT Decided in favour of Assessee.
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2014 (9) TMI 257
Admission of additional evidence - Held that:- The suspicion so addressed for discarding the evidences relied upon can be addressed only by the evidences as such they go to the root of the matter and deserves to be admitted - These evidences directly throw light on the suspicion of the department as they address why Sh. Rakesh Talwar did not respond to the telephone and e-mails, the fresh evidence sought to be admitted towards this fact as such are relevant and cogent material as the transaction has been held to be not genuine, solely on account of the fact that the said party did not respond - the evidence and material available on record before the CIT(A) has not been discredited by the AO for all the three parties and whereas for the two parties the CIT(A) has found the evidence sufficient and cogent namely for Chunyu and Alem Desta and for Rakesh Talwar of R.T. Associates he has decided the issue against the assessee as the concerned party did not confirm the rendering of services. The assessee having no control over the parties cannot be held accountable for the delay in bringing on record the material at the end of the proceedings which had arisen due to paucity of time during the assessment proceedings - for reason beyond the control of the assessee the evidences could not be filed in the course of the assessment proceedings due to paucity of time granted by the AO specially as the assessee had no interaction with the said parties and was not in a position to control the parties to direct immediate compliance by confirming Decided against revenue. commission expenses disallowed - Held that:- Sh. Rakesh Talwar was pre-occupied with his medical treatment due to which confirmation reply could not be obtained - Associates support the plea of the assessee accordingly the finding of the CIT(A) is set asdie wherein he has not cared to address the evidences relied upon qua the rendering of services by the party and restore the issue back to the AO to consider the evidence and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard Decided in favour of assessee. TDS not deducted on several payments - Whether any expense is claimed under the head freight and cartage to these persons for the services rendered in India or the services were rendered by these companies outside India, on which provisions of section 194C are not applicable Held that:- CIT(A) rightly was of the view that as per Circular No. 786 dated 7.2.2000, no tax was to be deducted where the non-resident agent operates outside the country, and no part of his income arises in India - the payment is usually remitted directly abroad it cannot be held to have been received by or on behalf of the agent in India - Such payments were held to be not taxable in India - company has submitted copies of all the invoices of the freight paid which is in respect of ocean freight paid to M/s. APM Global Logistics Egypt Ltd., for Alexandria to Jakarta, and none of the payment is made for any freight which can be said to have incurred for freight paid in India. Appellant has also placed on record the evidences that it has wrongly debited Inspection charges by Freight amount - neither the freight nor the inspection charges are paid by the appellant company for any services rendered by these company in India, and nor the payments are made to these parties in India, and therefore, by no imagination either the provisions of section 194 C or section 195 are applicable on any of these payments made to these parties by the appellant company - the addition made on these findings when no amount of freight is paid in India, the addition made on account of freight and inspection charges is deleted - there was no cogent evidence nor the evidence taken into consideration by the CIT(A) and the judgements relied upon were assailed - assessee in the absence of any serious arguments on behalf of the Revenue placed reliance upon the order the order of the CIT(A) is upheld Decided against revenue.
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2014 (9) TMI 256
Non deduction of tax u/s 40(a)(ia) payment to non residents - managerial service - Fees for technical services - Whether the payment made by the assessee company to USA company for the services rendered would be taxed in India or not - Held that:- The assessee, a resident company, entered into management service agreement with a company, viz. US Technology Resources LLC, a company incorporated in USA and a tax resident in USA - the USA company agreed to provide assistance, advice and support to assessee company in management decision making, sales and business development, financial decision making, legal matters and public relation activities, treasury service, risk management service and any other management support as may be mutually agreed between the parties - the USA company provided its assistance, advice and support and the assessee company paid a sum in consideration of the services rendered by the USA company - the term "managerial service" as found in Explanation 2 to section 9(1)(vii) of the Indian Income-tax Act, 1961 is not found in clause 4 of Article 12 of the DTAA between India and USA - in view of section 90(2) of the Income-tax Act, 1961, the assessee is entitled to take the benefit out of the DTAA between India and USA. Article 12 Indo-US DTAA - Which are the services included in clause 4 of Article 12 of the DTAA between India and USA Held that:- The assessee has received the above services from the USA company in terms of management service agreement between the assessee and the USA company - the USA company provides highly technical services which are used by the assessee for taking managerial decision, financial decision, risk management decision, etc. - Therefore, it is obvious that the USA company provides highly technical services which are used by the assessee for taking managerial decision, financial decision, risk management decision, etc. Nature of services - Fees for technical services u/s 9(1)(vii) - Whether the services provided by the USA company are technical in nature or not Held that:- The USA company facilitated the assessee company for making decision in the managerial, financial and risk management system by providing their knowledge, expertise, experimentation to the assessee company - The entire experiment, knowledge, expertise was made available to the assessee and the assessee was facilitated to take a decision on the knowledge, expertise, experimentation which were made available by the USA company - rendering of service and making use of the service are two sides of the same coin - after considering the word "which" the Authority for Advance Ruling found that rendering technical or consultancy service is followed by relative pronoun "which" and it has the effect of qualifying the services- The service offered may be the product of intense technological effort and lot of technical knowledge and the experience of the service provider would have gone into it - The Authority for Advance Ruling found that the technical knowledge and the experience of the service provider should be imparted to and absorbed by the receiver, so that the receiver can deploy similar technology or techniques in future without depending on the provider - the information, expertise and training provided by the USA company was absorbed by the assessee company in their decision making process and it was utilized for the purpose of business - The USA company made available all the technical data, information, expertise to the assessee company which was absorbed and made use of by the assessee company in their managerial and financial decision making process and other decision in the development of the business - the expertise and technology which was made available by the USA company is technical service within the meaning of Article 12(4)(b) of the DTAA between India and USA the order of the lower authority is upheld Decided against Assessee.
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2014 (9) TMI 255
Collection of Entertainment tax is a trading receipt or not - exemption of multiplexes Subsidy received after completion of cinema house and commencement of operation - Capital or revenue in nature Held that:- In respect of Pune multiplex the subsidy was granted by an amendment of section-3 of Bombay Entertainment Duty Act 1923 vide Maharashtra Ordinance No.XXIV of 2001 dated 17/08/2001 in respect of Bombay Entertainments Duty (Amendment) Ordinance, 2001 - In respect of Vadodara Multiplex, the subsidy was granted by Government of Gujarat through New tourism policy 1995 as spelt out by Resolution No.NTP-1095/1983-C dated 20/12/1995 - Both the schemes were identically worded as explained to us and the very purpose was to promote the Cinema Industry relying upon M/s.Chaphalkar Brothers vs. ITO [2013 (6) TMI 73 - BOMBAY HIGH COURT] - it was a benevolent scheme for the benefit to the exhibitors/ multiplex owners - The subsidy was meant to grant economic assistance to set up a multiplex - The subsidy was collected as entertainment duty on sale of tickets - collection was not a trade receipt of the assessee because the entertainment duty was collected on behalf of the Government. It was collected under a specific direction and it was also utilized under those directions - The collection of duty had no nexus with the day-to-day function or running of the multiplex - The collection of the duty was not with an objective to supplement the trade receipt - The subsidy was meant for the recoupment of a capital expenditure already incurred by the assessee - the subsidy was for the promotion of the construction of multiplex theatres, hence it was granted on capital account - the subsidy was not meant for repaying any loan taken for construction of multiplexes - it was to promote cinema houses to construct multiplex theatres - irrespective of the fact that the multiplexes have been constructed out of own funds or borrowed funds the receipt of subsidy would be on capital account Decided against Revenue. Expenses on professional fees for registration of trade mark - Stamp duty on documentation for loans taken from banks Capital expenses or not Held that:- Following the decision in Commissioner of Income-Tax, Bombay City I Versus Ciba of India Limited [1967 (12) TMI 3 - SUPREME Court] - the professional fees, etc. paid for trade-mark is an expenditure of Revenue nature following the decision in Orissa Cement Ltd. vs. CIT [1968 (10) TMI 18 - DELHI High Court] - the amount spent on obtaining loan is an expenditure laid out wholly and exclusively for the purpose of the business - the object for which a loan is taken is an irrelevant consideration Decided against Revenue. Enhancement of book profit u/s 115JB cancelled - Provision for gratuity Held that:- Following the order in Commissioner of Income Tax. Versus Echjay Forgings (P) Ltd.[2001 (2) TMI 56 - BOMBAY High Court] it has been held that the provisions for gratuity and leave encashment were made on actuarial basis - If a provision is made on the basis of an actuarial valuation, then the liability is nothing but an ascertained liability, therefore, should not be added in the computation of book profit for the purpose of the provisions of section 115JB of the Act Decided against Revenue. Loss from cross currency swap transaction treated as speculative loss Held that:- It was not an independent transaction of swapping in foreign currency but the transaction was connected with the bank loan - The purpose of loan from UTI Bank as per sanction of loan term dated 22/04/2002, it was for setting up multiplex project at Baroda following the decision in CIT vs. Wood Ward Governor India [2007 (4) TMI 118 - HIGH COURT , DELHI] the judgement were not available before AO thus, this ground is required to be reconsidered at the stage of investigation, so that the purpose and nature of loan is first to be ascertained and then accordingly to treat the admissibility of loss as claimed by the assessee Decided in favour of Assessee. Abandoned project at Gurgaon Held that:- For both the years, the assessee has not claimed the expenditure in its computation of income but made a claim through notes annexed to the computation of income - the assessee wanted to pursue the like nature business already in existence, i.e. running of a multiplex and exhibition of cinematic films - the expenditure was towards technical reports and financial feasibility of the project and those project reports were obtained from the experts - the assessee is running a multiplex cinema theatre and the expenditure was in respect of a new project for the same line of business of running of multiplex and cinema theatre relying upon CIT vs. Priya Village Roadshows Ltd. [2009 (8) TMI 765 - Delhi High Court] - the assessee was also involved in the business of running cinemas - the revenue authorities is directed to allow the claim Decided in favour of Assessee.
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Customs
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2014 (9) TMI 237
Revokation of CHA license - allegation that the petitioner misdeclared the country of origin and under-valued the goods so as to evade payment of higher Customs Duty - Regulation 22 - period of limitation of 90 days - the main importer has gone before the settlement commission and got favorable order - Held that:- it is not the contention of the respondents that the time limit prescribed in Regulation 22(1) is only directory and not mandatory. It is not even the contention of the respondents that the time limit prescribed in Regulation 22(1) need not be strictly adhered to. On the question that the first respondent is duty bound to initiate proceedings within 90 days from the date of receipt of offence report, there are no two opinions, at least before me. Therefore, the decision of the Division Bench of the Delhi High Court is of no assistance to the respondents. - Decided in favor of CHA. The first respondent has rejected the Second contention on the ground that the Settlement Commission settled the case upon confirmation of additional amount of Customs Duty, interest and nominal fine and penalty based upon the true and the full disclosure. Therefore the first respondent has concluded that the importer was guilty of undervaluation and that consequently, the petitioner cannot escape liability. But, what the first respondent has failed to take note of, is the fact that the revocation of licence now ordered by the first respondent, throws the petitioner out of business once and for all and deprives them of their very livelihood. Once the importer has escaped with a nominal fine on the ground that a true and full disclosure had been made, it would be unfair to impose the extreme penalty upon the petitioner. - petitioner is entitled to succeed on both grounds. - impugned order set aside - Decided in favor of CHA.
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2014 (9) TMI 236
Validity of order passed after inordinate delay of 2 years in passing the order - last hearing was held before the adjudicating authority on 23.08.2003 - order was passed only on 31.01.2006. - Held that:- in the case of Bhagsons Paint Industry [2003 (10) TMI 49 - SUPREME COURT OF INDIA] the Hon'ble Supreme Court has set aside the decision of the Hon'ble Madras High Court on the ground of long delay in delivery of judgment and also observed that however, it is correct to this extent that a long delay in delivery of judgement gives rise to unnecessary speculations in the minds of parties to a case. Further, in the case of Saheli Leasing & Industries Ltd., [2010 (5) TMI 9 - SUPREME COURT OF INDIA] the Hon'ble Supreme Court observed that after arguments are concluded, an endeavour should be made to pronounce the judgement at the earliest and in any case not beyond a period of 3 months. Keeping it pending for long time, sends a wrong signal to the litigants and the society. Further, the learned Counsel through his written submission brought certain facts to our notice that the adjudicating authority has not considered certain issues in the impugned order. Therefore, we find it would be in the interest of natural justice to remand the matter back to the adjudicating authority for denovo adjudication. - impugned order is set aside - matter remanded back for fresh decision.
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2014 (9) TMI 235
Refund of redemption fine deposited earlier - Confiscation of goods - non release of goods despite deposit of redemption fine - goods were not released on the ground that the appellant has to pay the customs duty. - appellant is not in a position to pay the customs duty and, therefore, he is not desirous of redeeming the goods. - Held that:- revenue shall refund the amount of ₹ 9.50 lacs to the appellant within eight weeks from today. Needless to say that the goods shall remain confiscated under Section 111(d) of the Act and the authority shall be free to take appropriate action in accordance with law in this regard. - Decided in favor of assessee.
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2014 (9) TMI 234
Payment of interest to the petitioner - Held that:- It is an admitted fact that a sum of ₹ 85 Lakhs had been paid to the respondent-State when Bank Guarantee was invoked. It is also an admitted fact that the said amount was repaid to the petitioner on 23-7-2011. Thus, the aforesaid amount of ₹ 85 Lakhs was retained by the State for more than 8 years without any justifiable reason. - Looking to the peculiar facts of the case, especially when the respondent-State had retained such a substantial amount belonging to the petitioner with it for more than 8 years, in our opinion, it would be just and appropriate to compensate the petitioner and therefore, we direct that the respondent-State shall pay an amount of ₹ 10,00,000/- (Rupees Ten Lakhs), by way of compensation to the petitioner within three months from today. - Decided in favor of assessee.
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2014 (9) TMI 233
Maintainability of appeal before Supreme court - question of law - Held that:- At the outset, the learned Solicitor General concedes that, although important questions of law do arise from the order of the Tribunal, particularly, in view of insertion of sub-section (11) in Section 28 of the Act, yet these appeals against the order of the Tribunal would not be maintainable, as the issues raised neither involve a question relating to rate of duty nor valuation of goods. He, therefore, prays that the revenue may be permitted to withdraw these appeals with liberty to file appeals before the High Court under Section 130 of the Act. He also prays that the High Court may be requested to deal with the appeals, without raising the question of limitation. Revenue allowed files appeals in the High Court within ten weeks from the date of receipt of a copy of this order, the High Court shall examine the appeals on merits.
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2014 (9) TMI 232
Confiscation of goods - re-validation of licence - Held that:- it is agreed that the respondent would not seek release of the subject licences till the said petition is finally disposed of by the High Court. It is however, clarified that if the issue before the High Court is decided in favour of the respondent, it will be open to them to seek revalidation of the licences, which may have expired in the meanwhile. The prayer for revalidation shall be considered by the concerned authority as per the prescribed procedure.
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Service Tax
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2014 (9) TMI 254
Levy of Service tax on lottery tickets - Writ petition against letters issued from the Mumbai Office - territorial jurisdiction of the SIKKIM HIGH COURT - Held that:- In Writ Petition in the case of . Future Gaming Solutions India Private Limited [2013 (11) TMI 1003 - SIKKIM HIGH COURT], a Division Bench of this Court has made a declaration that the transaction in the lottery tickets are not liable to service tax under the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012 and the three communications issued in the said matter were quashed. It is not disputed that in the instant case the agreement had taken place in the State of Sikkim and the other events to run the lottery business had also taken place in the State of Sikkim as in the matter of M/s. Future Gaming. - the present writ petition is squarely covered by the judgment of this Court in Writ Petition No.32 of 2012 and it can be allowed on the same terms. - Decided in favor of assessee.
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2014 (9) TMI 253
Levy of penalty for belated payment of service tax - penalty u/s 76 - appellant has discharged the service tax liability along with interest albeit belatedly and was done on his own - Held that:- having discharged the service tax liability which is not modified by the lower authorities, the provisions of Section 73 (3) of the Finance Act, 1994 will come into play as there is no allegation in the show cause notice that there is an intention to evade payment of service tax liability. Reliance is placed on decision of the Karnataka High Court in Adecco Flexione Workforce Solution Limited [2011 (9) TMI 114 - KARNATAKA HIGH COURT] Karnataka and in CST, Banglore vs. Ahead Info Technologies India Pvt. Limited - [2014 (8) TMI 785 - KARNATAKA HIGH COURT]. In these pronouncements, the Karnataka High Court enunciated the principle that where an assessee has paid both the service tax and interest before issuance of a show cause notice under the Act, subsection 3 of section 73 of the Act, prohibits initiation of proceedings for recovery of penalty. When there is a finding of fact that this was not a case of non-payment of Service Tax with intent to evade the payment of the same, question of applying Subsection (4) of Section 73 of the Finance Act, 1994 and resultantly exclusion of application of Subsection (3) thereof, would not arise. - no penalty - decided in favor of assessee.
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2014 (9) TMI 252
Classification of service - administrative support agreement with various Tata companies - Management Consultancy Service or not - appellant started discharging service tax liability on these various services under the category of "Business Auxiliary Services" (BAS) with effect from 01/07/2003. - dispute for the period prior to 01/07/2003 - Held that:- it is seen that the appellant is rendering administrative support services. They do not give any advice or consultancy as to how to run an organization. The services rendered by them mainly relates to support services to run the business of their clients by way of assistance in marketing assistance, in obtaining loans from financial institutions, liaisoning with the government agencies for getting various permissions, training of their personnel and so on. These services which are support services for the business do not fall within the category of "Consultancy Service" let alone "Management Consultancy Service". - prior to 01/07/2003, the services rendered by the appellant do not merit classification under "Management Consultancy Service". - demand set aside - decided in favor of assessee.
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2014 (9) TMI 251
Outdoor catering service - appellants are preparing food from its own material at the place given by KHPL. KHPL is providing service which is covered under 'restaurant service' and is paying appropriate service tax on introduction of service tax on restaurant service with effect from 1.5.2011. - Held that:- The reading of the provisions shows that outdoor caterer means any person who is undertaking any activity in connection with catering at a place other than his own. The crucial point to be decided in the present case is whether the appellants are serving the food at the place of KHPL or not. The contention of the appellants is that the food is not being served by them rather the same has been served by KHPL. The plea of the appellants that the food is not served by them is not taken into consideration by the adjudicating authority. The contention of the appellants that the food is not served by them requires verification. - matter remitted back for verification of facts and decision afresh. - Decided in favor of assessee.
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2014 (9) TMI 250
Availing benefit of abatement on Management, maintenance & repair services - Applicability of Notification No.1/2006-ST, dt.1.3.2006 - nature of activity - Held that:- Whether the services provided by the appellant could also be classified as works contract service was also not agitated before the lower authorities. The issues involved in these appeals is required to be remanded back to the adjudicating authority as the issue of Service Tax on Railway work Electrification under Railway Ministry already stands remanded to the adjudicating authority by Commissioner (Appeals). Appellant is required to clearly spell out all their view points before the adjudicating authority for clearly bringing out the issues for deliberations and whether the services provided by them also satisfy the definition of works contract services for non-levy of Service Tax - matter remanded back for fresh decision - Decided in favor of assessee.
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Central Excise
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2014 (9) TMI 244
Restoration of appeal - Non compliance with pre deposit order - Held that:- Appellant has deposited ₹ 9 lakhs. Learned counsel for the appellant has filed additional documents. He has filed a Certificate dated 1-10-2012 issued by the Superintendent, Office of the Superintendent, Central Excise, Customs & Service Tax, Range - GONDIA. This certificate states that the appellant has deposited an amount of ₹ 9 lakhs on 1-10-2012. In view of this, it is clear that the appellant has deposited an additional amount of ₹ 9 lakhs. Thus, a total amount of ₹ 18 lakhs has been deposited by the appellant. - appeal restored before the tribunal - Decided in favour of assessee.
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2014 (9) TMI 243
Clandestine removal of goods - Illegal sale of portland cement - Penalty u/s 11AC - first appellate authority deleted the addition and cancelled the penalties - Tribunal restored addition and penalties - Held thta:- No investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s Singhal Cement Agency, M/s Praveen Cement Agency; and M/s Taj Traders are based on memory alone and their statements were not supported by any documentary evidence/proof. The mischievous role of Shri Anil Kumar erstwhile Director with the assistance of Accountant Sri Vasts cannot be ruled out - when there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved. no case is made out for extra so called clandestine sale of the Portland Cement to the said parties - Decided in favour of assessee.
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2014 (9) TMI 242
Waiver of pre-deposit - principle of natural justice - valuation of goods transferred to another unit - revenue neutrality - extended period of limitation - basis for calculation of overhead percentages - Imposition of penalty - Held that:- Tribunal was required to consider the issues raised in the Appeal in depth and render a complete finding. If a particular issue was pressed or was given up that should be indicated in the order of the Tribunal. We would expect the Tribunal, which is manned by both judicial and technical experts, to be aware of the seriousness of the adjudication and not take up the assignment lightly and casually. There is no specific target which has to be achieved nor could the Tribunal be expected to decide particular number of appeals during a calender year. Therefore, undue haste is not at all called for. That results in miscarriage of justice and in a given case would result in vital issues of both sides being concluded in most unsatisfactory manner. We would expect the Tribunal to guide the Adjudicating Authorities so that they would properly adjudicate the cases with reasoned orders and after considering the evidence on record. It is this duty of the Tribunal which has been repeatedly emphasized and to be performed to the best of its ability. - Matter remanded back to tribunal - Decided in favour of assessee.
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2014 (9) TMI 241
Availment of CENVAT Credit - Fraudulent passing of credit by Iron & Steel registered dealers - Held that:- It is not denied by assessee what was supplied to them and what was noted in the source document was of different description. The contention of the assessee that they had no knowledge about the non-duty suffered scrap cannot be taken as a good defence in this case, particularly, when the assessee had no explanation as to its failure to advert due attention to the description of the goods in the invoice given to them and what had been infect supplied to them. - CESTAT rightly viewed that there are inherent contradictions seen in the document with regard to price and also the mismatch of the description of goods received by the assesses, thus, we do not find any good ground to take different view as that of the CESTAT. Thus with the Commissioner of Customs, Central Excise and Service Tax (Appeals), the Customs, Excise and Service Tax Appellate Tribunal, Chennai, thus, concurring on the finding of the Officer viz., Deputy Commissioner, Central Excise, Service Tax and Customs, we do not find any substantial question of law arise to admit the Civil Miscellaneous Appeal. - Decided against assessee.
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2014 (9) TMI 240
Interest u/s 11AA - delayed payment of duty - Held that:- liability for payment of interest on delayed payment of duty has been imposed where a person chargeable with duty determined under sub-section (2) of Section 11A, fails to pay such duty within three months from the date of such determination. The proviso, however, makes such provision in case of those, who are chargeable with duty determined under sub-section (2) of Section 11A before the date on which Finance Bill, 1995, receives the assent of the President, failed to pay such duty within three months from such date. The Explanation 1, however, stipulates that where the duty determined to be payable is reduced by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, the court, the date of such determination shall be the date on which an amount of duty is first determined to be payable. If that be so, proviso to sub-section (1) of Section 11AA of the Act of 1944 on its application shows that the petitioner failed to pay duty within three months from the date of determination by the Tribunal. The order of the Tribunal passed on 22-5-1998. The petitioner was, therefore, under an obligation to pay the amount of duty within a period of three months thereof. However, the petitioner admittedly paid the remaining amount of duty only on 24-10-1998 whereas period of three months expired on 22-8-1998. Thus, there was a delay in payment of duty by a period of a little less than two months. For this period i.e. from 22-8-1998 to 24-10-1998, the petitioner is liable to make payment of interest on delayed payment of duty as required under Section 11AA of the Act of 1944. impugned demand notice dated 22-12-2003 is held illegal and set aside - Decided partly in favour of assessee.
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2014 (9) TMI 239
Maintainability of appeal - Non compliance of provision of Section 35F - Held that:- Section 35B provides for appellate fora against orders passed under the Act but Section 35F of the Act places an obligation upon an appellant, desirous of appealing against tax or penalty to deposit the amount demanded. The proviso to Section 35F, however, empowers the Commissioner (Appeals) and Tribunal to dispense with the precondition of deposit, subject to such terms and conditions as they may deem appropriate. The use of the words Where in any appeal under this Chapter... in section 35F of the Act cannot be construed to raise an inference that the appeal cannot be dismissed for failure to comply with an order of pre-deposit. The words and expressions used in Section 35F and the proviso thereto have to be read together. The expressions the person desirous of appealing and where in any appeal under this Chapter.... have to be read in conjunction, with the former expression requiring a person desirous of filing an appeal to pre-deposit the amount of duty subject, however, to any order passed reducing the duty etc. An appeal may, therefore, be filed under Section 35B of the Act but can only be entertained and said to be properly constituted for adjudication on merits, if the person desirous of filing an appeal, has deposited the amount of duty demanded or penalty levied, subject, however, to any relief that may be granted by the Tribunal, in terms of the proviso to Section 35F of the Act. Failure to comply with an order of pre-deposit, passed under Section 35F of the Act would entail dismissal of the appeal. - Decided against assessee.
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2014 (9) TMI 238
Denial of rebate claim - Revenue contends that goods were not cleared from the factory premises for the purpose of export; form AR-4 was not prepared; clearances for export had not been supervised by the jurisdictional Central Excise Office and that the claim was time-barred - Held that:- The requirement of proof that goods have actually been exported to the satisfaction of the rebate sanctioning authority and where goods are clearly indentifiable and corelatable with the goods cleared from factory on payment of duty only the condition of exports being made directly from the factory/warehouse should be deemed to have been waived. As noticed hereinbefore, the three authorities below have concurrently held against the petitioner on the said issue, which finding is essentially a finding of fact, which cannot be ordinarily interfered while exercising extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India. The petitioner has failed to point out any perversity in the findings recorded by the three authorities below so as to require any interference by this Court. Decided against assessee.
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CST, VAT & Sales Tax
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2014 (9) TMI 249
Partial grant of stay order - Exparte orders - Held that:- It is clear that the assessment order was passed exparte. Prima-facie, the observations made by the Assessing Officer, that several opportunities were afforded to the applicant, appears to be incorrect, inasmuch as on the first page of the assessment order, it is mentioned that first and last date of hearing is mentioned as 28.1.2014 and 30.1.2014. The assessment order was passed on 31.1.2014. Thus, it is evident on record that the observations made by the Assessing Officer, that several opportunities were afforded to the applicant, is apparently incorrect. The Tribunal has also noted the fact with regard to the submission of list of purchases against the invoices, list of Form-C, Form-D and Form-H. However, the Tribunal was of the view that its verification/examination is required by the authorities below. Entire disputed amount of tax involved in First Appeal No.225 of 2014 (Central ) (Assessment Year 2011-12-U.P.) and First Appeal No.200 of 2014 (Assessment Year 2011-12- U.P. Entry tax) pending before the Additional Commissioner Grade-II, (Appeal) Commercial Tax, Noida are stayed till the disposal of the first appeal by the first appellate authority subject to the condition that the applicant furnishes security in the form of other than cash or bank guarantee to the satisfaction of the Assessing Officer within 30 days - Decided in favour of assessee.
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2014 (9) TMI 248
Taxability of goods - Possession of goods by lessor - situs of sales - Held that:- Tribunal has not recorded any findings of fact with regard to the existence of the goods although the agreements entered into between the revisionist on one hand and the lessee were before the Tribunal and therefore, if the finding had been recorded by the Tribunal to that effect, the law laid down by the Supreme Court in the case of 20th Century Finance Corporation Ltd. (2000 (5) TMI 980 - SUPREME COURT OF INDIA) would have squarely applied to the facts of the present case and the only inference which could have been drawn by the Tribunal would be that the first two agreements between the lessor on one hand and Rajinder Steels and others and the revisionist-lessor on the one hand and M/s. Sakura Seimitsu India Ltd. At Delhi on the other hand had been executed at Bombay and Delhi respectively and in both the cases the Schedule in no unmistakable terms demonstrated that the goods existed at Kanpur and NOIDA respectively and therefore the situs of sale would be outside the State of U.P. and no Trade Tax could have been levied on the goods merely because the goods were in the State of U.P. Even otherwise so far as the existence of the goods within the State of U.P. at Kanpur or at NOIDA is concerned it may be stated that the Tribunal has not recorded any finding of fact although it has noticed the existence of the two agreements entered into between the revisionist and the lessee. - Decided in favour of assessee.
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2014 (9) TMI 247
Validity of section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 - Held that:- A bare perusal of the provisions for the Trade Development Fund created by the notification dated March 29, 2008 under the Act of 2005, amended in the year 2008, and the Trade Development Fund under the Act of 2011, clearly demonstrates that the provision is similar without there being any change and therefore, the State's submission in the counteraffidavit that the new Act is entirely different is liable to be rejected Even such projection would have saved the validity of the Act of 2011 in view of the fact that in the Act of 2011 itself, the State has provided financial utilization exclusively for the development of trade, commerce and industries in the State of Jharkhand by making provisions of construction, development and maintenance of the roads and bridges for linking the market and industrial area to their hinterlands, for providing finance, aids, grants and subsidies to financial, industrial and commercial units; creating infrastructure for supply of electrical energy and water supply to industries, marketing and other commercial complexes and creation, development and maintenance of other infrastructure for the furtherance of trade, commerce in general, which services and facilities have already declared to be not only for the benefit of the tax-payer. Therefore, basic purposes for utilization have been shown in the clauses (a) to (d) of sub-section (3) of section 4 of the Act of 2011. Works cannot be said to be benefits and services to tax-payer community from whom tax is sought to be recovered under the Act of 2011. The above benefits are required to be borne from the general revenue of the State so far as it relates to the construction of roads and bridge and finance, aid, grant and subsidies to financial or industrial or commercial units are provided by the State Financial Corporation as well as by the other financial institutions and neither in the Act nor in the notification issued under the Act, any provision has been made so as to provide any scheme to give finance, aid, grants and subsidies to financial, industrial and commercial units. The State should have first collected the quantifiable data to find out the need of the benefit and the requirements of its meeting with the levy of compensatory tax. The State Government enacted the law in wilderness in hope that the State may collect the tax and thereafter it may appropriate the tax for the benefit and services of the tax-payers and that too, without there being any data base or project report and then if it fails to justify the imposition of tax, then tax may not be refunded to the tax-payers with the plea of traders' unlawful enrichment. The statute cannot be enacted so as to create liability of the tax-payers and ultimately of the public by taking chance of it being constitutionally valid, with all probabilities of being violative of the provisions of the Constitution of India. Act of 2011 is admittedly a levy of compensatory tax but without furthering the principle of equivalence and is not providing quantifiable and measurable benefits to the tax-payers and is even not broadly proportional to the benefit. The State further failed to discharge its burden by placing material or even calculation or data before this court that payment of compensatory tax is reimbursement for the quantifiable or measurable benefits provided or to be provided to its tax-payers. The creation of the fund under clause (a) to (d) of section 4(3) in the name of the Jharkhand State Trade Development fund and utilization of the tax amount for the purposes as given in clauses (a) to (d) under sub-section (3) of section 4 do not indicate and prove reimbursement/recompense of the tax amount to the tax-payers. The purposes shown in clauses (a) to (d) of sub-section (3) of section 4 of the Act of 2011 are of general nature and not specific benefits to the tax-payers. It is declared that section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 is ultra vires and unconstitutional as being not saved by article 304 of the Constitution of India and is in conflict with article 301 of the Constitution of India. Since the charging section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 has been held to be ultra vires, the respondent-State cannot enforce any of the provisions of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011. - Decided in favour of assessee.
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2014 (9) TMI 246
Issue of declaration form C under the Central Sales Tax Act, 1956 - withholding of issue of C form - liability of the respondent NEEPCO to issue the declaration form C to the petitioner for the supply made in execution of works contract allotted - Held that:- A perusal of the provisions of the Arbitration and Conciliation Act, 1996 and of the above quoted section 2(3) makes it clear that all or certain disputes arising in respect of defined relationship, whether contractual or not, can be referred to arbitration subject, however, to sub-section (3) of section 2 which provides that Part I shall not affect any other law for the time being in force by virtue of which certain disputes may not be referred to arbitration. Disputes which are capable of reference to arbitration must necessarily arise between the parties "in respect of a defined legal relationship, whether contractual or not". A claim reference whereof to arbitration is specifically barred by agreement between the parties or by any law for the time being in force, does not constitute "dispute" between the parties for reference thereof to arbitration and the Arbitral Tribunal shall have no jurisdiction in such matters. Question was not merely of performance and non-performance of contractual obligations affecting the civil/contractual rights of the parties but also of liability to pay tax which was statutory exaction and therefore, the writ court, cannot shut its eyes and refuse to interfere only on the ground that the question raised was only one of enforcement of contractual obligation particularly when the enforcement of contractual obligation involves rights and liabilities of the parties under statutory provisions. - In a sale of goods involve offer, acceptance and consideration. All these relates to goods which are the corpus and transfer of goods cannot be segregated from the total cause of action of the transaction of sale. The goods against which declaration form C is being sought by the petitioner, as per various apex court rulings, are deemed to have been transferred to the respondent-NEEPCO in the State of Arunachal Pradesh in execution of the works contract by the petitioner. Delivery of goods being an integral part of the cause of action, the cause of action can also be said to have arisen in the State of Arunachal Pradesh giving jurisdiction to this court to entertain the petition. Consideration of section 8 of the Central Sales Tax Act, 1956 as quoted above makes it abundantly clear that if, in the course of inter-State trade or commerce, any sale is effected by a registered dealer, of the goods described in sub-section (3) of section 8, the tax shall be only two per cent (with effect from June 1, 2008) of the turnover or such other rate as shall be applicable to the sale of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. However, the Legislature intended the seller and the purchaser to furnish a declaration, and made a provision in sub-section (4) of section 8 requiring the registered dealer to whom the goods are sold, to file a declaration as prescribed by the Rules. Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957, is the rule which prescribes the declaration forms stated in sub-section (4) of section 8. Rule 12 specifically lay down that the purchaser of the goods shall issue C form to the seller and that obligation is a statutory exaction of the Central Sales Tax Act, 1956, and the other specific provisions made in this behalf in regard to obtaining of the declaration form C, issue of duplicate in case of loss of such declaration and furnishing of indemnity bond, signing of the declaration and the right of the seller to demand a duplicate of the declaration form C in case of loss of the original. There is no scope of defeating the intention of the Legislature stated in its provision at the sweet will and pleasure of the purchaser of the goods. There is also no scope for denying the benefit available to a selling dealer as intended by the Legislature upon the refusal of the purchaser to issue C forms and it is made clear by providing under sub-rule (3) of rule 12 that in case the original form issued by the purchasing dealer is lost, the selling dealer can demand the purchasing dealer to issue a duplicate form. This necessarily implies that there exists an obligation to issue C forms by the purchasing dealer. Respondent-NEEPCO, through its correspondences to the petitioner, even prior to awarding the contract work, requested to avail of concessional rates of taxes, gave assurances to the petitioner time and again to issue C forms and even communicated to the Commissioner of Commercial Taxes, West Bengal in connection with issue of C form in order to avoid any disruption of the supply of the contract materials. In the aforesaid facts and circumstances, it cannot be allowed to deny the same and reject the claim of the petitioner on the pretext of absence of any provision in the contract agreement to issue C form. The impugned letter dated October 29, 2010 refusing to issue form C is impermissible and unacceptable under the provisions of law and the same is liable to be quashed and set aside. It is accordingly, quashed and set aside. - Decided in favour of assessee.
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2014 (9) TMI 245
Validity of two circulars issued on August 6, 2012 and September 26, 2012, by the Commissioner of Sales Tax - benefit of a composition scheme notified under section 42(3A) of the Maharashtra Value Added Tax Act, 2002 - Held that:- A notification was issued by the State Government on July 9, 2010 under section 42(3A) to provide for a scheme of composition for registered dealers who undertake the construction of flats, dwellings, buildings or premises and transfer them in pursuance of an agreement along with land or interest underlying the land. The composition amount is one per cent of the amount specified in the agreement or of the value specified for the purpose of stamp duty in respect to the agreement under the Bombay Stamp Act, 1958 which is higher. Among the conditions attaching to the composition scheme is a condition which stipulates that all agreements which are registered on or after April 1, 2010 shall be covered under the scheme. What the scheme of composition has done is to make it applicable to agreements which were registered after April 1, 2010. It would not be proper for this court to strike down the provision by which the option of composition has been given to agreements which were registered after April 1, 2010. Nor for that matter, would the court be justified in directing that the same option of composition should be allowed to agreements which were registered prior to April 1, 2010. By issuing such a direction the court in the exercise of its jurisdiction under article 226 would be legislating by directing the delegate of the Legislature to extend the ambit of the composition of scheme beyond what was provided in the scheme. That is impermissible. There is no merit in the challenges which have been addressed by the petitioners before this court. We hold in consequence that the circulars dated August 6, 2012 and September 26, 2012 are not ultra vires. We have also come to the conclusion that the composition scheme is not ultra vires in imposing a condition to the effect that it shall cover all agreements registered after April 1, 2010. During the course of the hearing we have been informed by counsel appearing on behalf of the petitioners that representations have been submitted to the State Government for extending the benefit of the composition scheme to agreements which were registered between June 20, 2006 and March 31, 2010. We clarify by way of abundant caution that this judgment would not stand in the way of the State Government taking an appropriate decision on the representations that have been submitted in that regard. Decided against assessee.
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