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2017 (2) TMI 1567
Characterization of income - treating the receipts of compensation from developer to compensate for a nuisance / inconvenience due to extension of work untaken by the builder for building - income from other sources u/s 56 or capital receipt - HELD THAT:- Assessee stated that this issue is squarely covered in favour of assessee by the decision of Kushal K Bangla [2012 (2) TMI 29 - ITAT MUMBAI] wherein exactly on identical facts, Tribunal has held receipt by the assessee cannot be said to be of revenue nature, and, accordingly, the same is outside the ambit of income under section 2(24) of the Act. However, in our considered opinion and as learned counsel for the assessee fairly agrees, the impugned receipt ends up reducing the cost of acquisition of the asset, i.e. flat, and, therefore, the same will be taken into account as such, as and when occasion arises for computing capital gains in respect of the said asset - Appeal of assessee is allowed.
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2017 (2) TMI 1566
Compounding of certain offences - Contravened the mandate of Section 383-A of the Companies Act 1956 as per which the company should have a whole time Secretary - Held that:- From the report submitted by Registrar of the Companies, it appears that the 1st appellant company has ₹ 1,01,42,820/- paid up capital share as per Balance Sheet for the Financial Year ended on 31st March 2015. It has operating revenue of ₹ 549,246,895/- as per Profit and Loss Account of March 31st 2015. The company had not filed any Annual Return for the period from 1st November 2011 to 8th May 2013 - 1st November 2014 to 17th December 2015. The maximum penalty for default in complying with Section 383A was calculated at ₹ 10,89,500/- to be paid by each defaulter.
We find that the defaults have been made good and compliance certificate were filed in majority cases after about two years. There is no complaint against the company and there is no default earlier. In the present case, the learned Tribunal referring to provision of Section 383-A observed that the Bench deemed it sufficient to impose a fine of ₹ 2 lacs on each of the defaulting parties. That means less than 1/5th of the maximum penalty, as could have been imposed has been imposed, which is less than ₹ 100/- per day. As we find that no specific grounds have been shown to reduce the amount, no interference is called for against the impugned order.
Contravention of Section 166 of Act 1956 - Held that:- As we find that the appellants have only taken plea that the violation occurred due to inadvertence and without intention & not prejudicial to the interest of any member or creditors or others dealing with the company & nor did affect public interest, we are of the view that the Tribunal rightly brought down the penalty which is less than 1/5th of the maximum amount. In this background no interference is called for against the impugned order.
Contravened section(s) 220 of the Act, 1956 during the period 1st November, 2011 to 25th February, 2016 - Held that:- In the present case as admittedly, the default in filing the Annual Return is more than two years and continued during the subsequent financial years, therefore, we are not inclined to compound the amount to the extent of ₹ 25,000/- each, as ordered by Company Law Board in the other case. It is also noted that non-filing of Annual Returns for any continuous period of three Financial Years is also a disqualification for appointment as Director under Section 164(2)(a) of Companies Act 2013, thus making it a serious offence. However, to be consistent with the orders passed by Tribunal in analogous case, which is approximately 175th of the maximum fine, we modify the impugned order of Tribunal and to compound the offence on payment of ₹ 2 lacs by each of the appellants i.e. the Company and the two Directors, Mr. Sandeep Kapoor and Mr. Atul Prabhakar Kulkarni. That means total six lacs to be paid by them.The amount, as compounded be deposited with the Tribunal within three weeks, after adjusting the amount, if any already deposited by appellants
Contravened Section 210 of the Companies Act 1956 - failure to lay down annual accounts and balance sheet for the year ending 31st March 2011, 31st March 2012, 31st March 2013, 31st March 2014 and 31st March 2015 - Held that:- Tribunal failed to notice the minimum fine prescribed under sub-section (7) of Section 129 of Companies Act 2013 which is applicable for the year ending 31st March 2015, also failed to notice that a fine up to ₹ 10,000/- is payable by appellants under Sub Section (5) of Section 210 of Companies Act 1956 for each of the year ending 31st March 2011, 31st March 2012, 31st March 2013 and 31st March 2014.
This court is not inclined to decide the aforesaid issue, as there will be enhancement of fine, if the fine for the year ending 31st March 2011, 31st March 2012, 31st March 2013 and 31st March 2014 are taken together with minimum fine of ₹ 50,000/- to be imposed for year ending 31st March, 2015. In this background, we deemed it proper to remit the case back to the National Company Law Tribunal, New Delhi Bench to decide the question of compounding of offence afresh, after taking into consideration the Report submitted by the Registrar of the Companies, the grounds shown by the petitioner and the ratio laid down and discussed above. Tribunal will also take into consideration the punishment prescribed under sub-section (5) of Section 210 of the Companies Act 1956 and sub-section (7) of Section 129 of Companies Act 2013 which are applicable for different year ending.
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2017 (2) TMI 1565
Admission of additional evidence - objection to the DVO’s Report - sale of land - Held that:- The prayer of the assessee for admission of additional evidences in the peculiar facts and circumstances of the case, I find was fully justified. Not only the evidence is relevant and crucial for determining the issues even otherwise the explanation offered in support of admission of the same i.e. the acute financial need of the assessee prior to the sale on account of the assessee’s father suffering from cancer and finally succumbing to the disease where the financial needs for the treatment etc. was sourced from friends, relatives and the aforesaid uncle thus the relevant document remaining with the uncle is not a far-fetched story and is an acceptable explanation.
CIT(A) in the facts of the present case has not cared to ensure that compliance is made of the directions given by his predecessor CIT(A) dated 08.12.2014 communicated to the DVO through AO vide letter dated 28.08.2014. A perusal of the same shows that the said authority was directed that the assessee be provided an opportunity of being heard by the DVO before submitting the Final Report which issue is found addressed vide Ground No.1.4 of the present proceedings.
The sale instance relied upon by the assessee, it is found have also not been taken into consideration as found addressed in Ground No.2.2. Accordingly in view of these obvious and patent deficiencies, the impugned order is set aside and the issues are restored to the CIT(A) with the direction to admit the fresh evidences and confront the same to the AO by way of a Remand Report. In case the DVO’s Report is relied upon then an opportunity of being heard to the assessee by the DVO be provided before submitting a final Report which as per law is required to be confronted to the assessee before the passing of the order. Similarly, the sale instance of land in the vicinity relied upon by the assessee in support of his prayer are evidences which need to be addressed and the CIT(A) cannot avoid adjudication on the prayer made and the evidences filed. Accordingly, in view of the above reasoning, the impugned order is set aside and the issue is restored back to the CIT(A) with the direction to pass a speaking order in accordance with law. - Appeal of the assessee allowed for statistical purposes.
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2017 (2) TMI 1564
Extended period of limitation - service tax short paid - Held that: - No case of any contumacious conduct and/or suppression on the part of the respondent is made out. It is further held that the appellant have rightly paid Service Tax on receipt basis - the SCN is bad and the impugned demand Is not sustainable - appeal dismissed - decided against Revenue.
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2017 (2) TMI 1563
Leasing of capital goods - whether the transaction between the appellants and the joint venture company for leasing out the capital goods would fall under the category of supply of tangible goods for use service? - Held that: - the capital goods are in the possession of the lessee and is being used by him for the intended purpose without any interference or hurdle from the appellants. On going through the clauses of agreement, it is found that the appellants had handed over the capital goods possession to the lessee as also the right to use. These two important factors that determine the requirement as to whether the service is a taxable service or otherwise under supply of tangible goods for use services - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 1558
Eligibility of a respondent for a customs duty concession on imported fabrics - benefit of N/N. 30/2004-CE on 17.07.2015 - HELD THAT:- There is nothing in the present appeals by the Revenue to controvert the factual and legal finding recorded in the impugned orders. Whatever amendment carried out in the notification no. 30/2004-CE on 17.07.2015 has no relevance to decide the present disputed imports. It is noted that the Tribunal in respondent’s own case, on similar set of facts, held in favour of their eligibility to the benefit of the said notification no. 30/2004-CE.
The impugned orders are, in fact, categorical. The benefit has been extended to the respondent. Directions for re-assessments have been given by the ld. Commissioner - there is no merit in the appeals by Revenue - appeal dismissed.
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2017 (2) TMI 1557
Jurisdiction of the West Bengal State Micro Small Enterprises Facilitation Council in purporting to arbitrate in the disputes between the first petitioner and the third respondent - claim of the third respondent is live or not - existence of arbitration agreement between two parties or not.
Is the claim of the third respondent live? - HELD THAT:- In view of the fact that, the security deposit made by the third respondent is still lying with the first petitioner, it cannot be said that the claim of the third respondent is barred by the laws of limitation. The petitioners are not claiming forfeiture of the security deposit. In absence of such particulars, it is safe to infer that, the jural relationship between the first petitioner and the third respondent still exists. The final bill has not been settled. The security deposit is yet to be refunded. The first petitioner is, therefore, holding on to the security deposit of the third respondent as a trustee of the third respondent. Limitation is a mixed question of fact and law. On the conspectus of the facts narrated above it cannot be said that the claim made by the third respondent is barred even as on date. The claim of the third respondent is, therefore, live.
When there exists an arbitration agreement between two parties, and one of such parties to the arbitration agreement is an entity within the meaning of Micro, Small and Medium Enterprises Development Act, 2006, does the Council established under the provisions of the Act of 2006 have jurisdiction to arbitrate the disputes between such parties on a request being made for such purpose? - HELD THAT:- Section 18(4) of the Act of 2006 allows the Council to arbitrate in a dispute between a supplier located within its jurisdiction and a buyer located anywhere in India. The territorial jurisdiction of the first respondent has not been questioned. The third respondent is a supplier within the meaning of the Act of 2006. Therefore, in terms of Section 18(4) of the Act of 2006, the first respondent is the authority designated to arbitrate the disputes between the first petitioner and the third respondent. The existence of a live dispute between the first petitioner and the third respondent is established. On the other side of the spectrum is the arbitration agreement between the first petitioner and the third respondent. The arbitration agreement, however, has not been placed on record by the petitioners - The arbitrator designated by the agreement between the first petitioner and the third respondent is not the same as that designated by Section 18 of the Act of 2006. Therefore, there is an inconsistency between the forum for arbitration under the Act of 2006 and the one governed by the Act of 1996. In view of Section 2(4) of the Act of 1996 read with Sections 18(1), 18(4) and 24 of the Act of 2006, the provisions of the Act of 2006 will prevail. The Council established under the Act of 2006 or the institution or centre identified by it will arbitrate the disputes between the buyer and the supplier.
The petitioners had approached the Council for arbitration of the disputes. On such request being made the Council by a writing dated June 12, 2015 had called upon the first petitioner to attend the conciliation before the Council on June 30, 2015. The Council by a writing dated November 6, 2015 had made a further request for conciliation to the first petitioner. It is only thereafter that by a writing dated November 9, 2015 that the first petitioner claims to have appointed the sole arbitrator. Prior to the first petitioner appointing the arbitrator, the Council had assumed jurisdiction and had issued notices for conciliation.
Thus, when there exists an arbitration agreement between two parties and one of such parties to the arbitration agreement is an entity within the meaning of the Act of 2006, the Council established under the provisions of the Act of 2006 or any institution or centre identified by it has the jurisdiction to arbitrate such disputes on a request being received by such Council for such purpose.
The challenge of the petitioners to the writing dated March 17, 2016 issued by the Council fails. The petitioners are not entitled to any relief in the present writ petition.
Petition dismissed.
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2017 (2) TMI 1556
Maintainability of petition - availability of alternative remedy - Declaration of account as non-performing asset - HELD THAT:- The remedy of appeal provided by the Legislature under Section 17 of the Act is efficacious remedy. It would possible for the petitioners to lead evidence before the Tribunal to establish his case and the contentions. The Tribunal has power to restore back the possession if the aggrieved person succeeds before the Tribunal. The powers of the Tribunal has been widened in terms of the undertaking of examination of various issues by virtue of the amendment brought in, in Section 17 of the Act under the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016.
It is a cardinal principle that the High Court would be loath to exercise discretion in favour of entertaining a writ petition where the Legislature has provided alternative statutory remedy. In the present case, a special forum is available in form of Debts Recovery Tribunal where appeal would lie. In the matters involving commercial disputes, it is trite that rule of availing alternative remedy should be adhered to steadfast. The principle on this aspect is unequivocal.
In Authorised Officer, Indian Overseas Bank v. Ashok Saw Mill [2009 (7) TMI 765 - SUPREME COURT], the Apex Court held that remedy by way of appeal under Section 17 is available not only upto the stage referable to Section 13(4), but even in respect of measures taken post- 13(4) stage. In the present case, the stage at which the petitioner is beset with, is such stage. The petitioner is aggrieved person for the purpose of Section 17 of the Act.
In Kanaiyalal Lalchand Sachdev v. State of Maharashtra [2011 (2) TMI 1277 - SUPREME COURT], the Supreme Court has stated that the measures under Section 14 constitutes the action taken after the stage of Section 13(4) and a remedy of appeal under Section 17 would be available. In that case, refusal by the High Court to entertain the writ petition was held to be fully justified.
Thus, only on the ground that the petitioners have got alternative efficacious remedy, this petition is not entertained and stands dismissed, leaving the petitioners at liberty to approach Debts Recovery Tribunal - petition dismissed.
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2017 (2) TMI 1555
Denial of Cenvat credit arising on the basis of the invoices raised on the new address - Revenue supports the adjudication and says that from the date of change of address recorded by the authority appellant was recognized, shall get benefit of law from that date but not from the date of application - HELD THAT:- When the application filed by the appellant is not in dispute, delay by the department to record the change of address shall not debar the appellant to Cenvat credit arose in terms of invoices issued to it after the date of application for amendment of registration showing the new address. Entertainment of the amendment application aforesaid in the month of Dec/12 proves that the basis of the consideration by the authority was Form ST-1.
Once the basis is not in dispute by the department, appellant cannot be denied benefit of Cenvat credit arose in terms of the invoices depicting new address of appellant.
In the result, appeal is allowed.
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2017 (2) TMI 1554
Condonation of delay of 589 days in preferring this appeal against the impugned award - primary reasons for this delay is the lack of diligence in taking steps to serve the respondents - Sufficient cause for delay or not - HELD THAT:- In the present case, the impugned award was made on 11 September 1995. As noted earlier, there is delay of about 589 days in instituting the appeal. The reasons stated are routine/official hassle and the time required to seek approval at different levels. This is not sufficient cause to condone the delay. Even the conduct of the State in not taking steps to effect service upon the landlosers or their legal representatives, though not strictly speaking relevant to consider the application for condonation of delay, cannot be easily pardoned. The State invariably, obtains adinterim reliefs, thereafter does not take steps to serve the respondents.
In this case, the appeal was instituted in the year 1997, but on account of negligence in taking steps to effect service upon the respondents, even the application seeking condonation of delay could not be disposed of till date. In the meanwhile, the landlosers were deprived of compensation awarded in their favour by the Reference Court.
There is no case made out for condonation of delay of 589 days in instituting the appeal - application seeking condonation of delay is dismissed.
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2017 (2) TMI 1553
Validity of assessment reference made for special audit and validity of assessment order - HELD THAT:- It is noted from the order of the ld. CIT (A) that assessee has not brought any positive material to show that the approval given by ld. CIT (Central, Jaipur is without application of mind and the ld. CIT (A) also noted that the opinion of the AO that the accounts of the assessee are complex and based on objective consideration. Therefore, the ld. CIT (A) rejected the contentions of the assessee are rejected and dismissed both the ground Nos 1 and 2 of the assessee. Looking into the present facts and circumstances of the case, we concur with the order of the ld. CIT (A) on this issue. Thus Ground No. 1 and 2 of the assessee are dismissed.
Addition by estimating the profit rate @ 24% on estimated sales [sales as worked out by Special auditor] - HELD THAT:- CIT (A) has estimated the higher gross profit @ 24% on estimated sales of Rs. 26 crores. The assessee had computed the gross turnover of Rs. 25,06,61,673/- on the basis of seized documents and books of account and has pointed out several mistakes and instances of double counting of sales computed by the Special Auditor in the estimates of gross turnover. The ld. CIT (A) as well as AO have not pointed out any defect in the calculation of gross turnover by the assessee on the basis of seized records. Therefore, It will be in the interest of equity and justice that weighted average gross profit rate of last four years i.e. 16.98% should be taken into consideration on turnover of Rs. 25,06,61,673/- which gives gross profit of Rs. 4,25,62,352/-. It is also noted that the assessee had declared the gross profit of Rs. 1,18,43,142/- in the trading account filed with the return and further the assessee had declared Rs. 2,46,00,000/- in the return filed u/s 153A on account of undisclosed income from unaccounted sales/purchase. Therefore, the trading addition of Rs. 61,19,120/- (Rs. 4,25,62,352/- minus (1,18,43,142+2,46,00,000) is sustained on the basis of weighted average gross profit rate on the basis of past history of the assessee. Decided in favour of assessee.
Disallowance u/s 40A(3) - profit was estimated by rejecting the books of account - HELD THAT:- AO has rejected the book of account of the assessee for all practical purpose. In the case of the assessee, the profit has been estimated therefore, further addition u/s 40A(3) cannot be made. Singhal Builders Contractor [2010 (9) TMI 723 - ITAT, JAIPUR] has held that once an income of the assessee is estimated by applying the gross profit rate or net profit rate then no disallowance can be made u/s 40A(3) or any other provision - Also see Shri Shankar Khandelwal [2011 (8) TMI 1301 - ITAT JAIPUR] - Decided against revenue.
Disallowance u/s 40(a)(ia) - HELD THAT:- When books of account of the assessee was not relied and it was rejected by the AO. Now based on the reliance on the same books disallowance u/s 40(a)(ia) is not proper. See M/s Teja Constructions [2009 (10) TMI 593 - ITAT HYDERABAD]
Treating the share capital received as non-genuine - HELD THAT:- AO made similar addition on same facts and ground in AY 2006-07 & 2008-09. The appeal of the assessee for AY 2006-07 had been decided by ld CIT (A) in favour of the assessee and addition was deleted. The department has not filed appeal in Tribunal against the appeal order for AY 2006-07. The addition in appeal for AY 2008-09 was confirmed by ld CIT (Appeal), Central Jaipur. The assessee filed appeal before Hon’ble ITAT, Jaipur Bench, Jaipur. The appeal of the assessee was decided by [2015 (12) TMI 1526 - ITAT JAIPUR] wherein the addition confirmed by ld CIT (A) was deleted - Decided in favour of assessee.
Disallowance form expenses named as Bill premium debited in books of accounts “Jadavji’’ - HELD THAT:- CIT (A) had deleted this addition correctly as observing chart Purchases from M/s Baheti Gems and Mr Girdhari are included. Further the assessee has given plausible explanation for the genuine purchase from these parties and justification of bill premium mentioned in the seized records. The AO has not controverted this explanation in his remand report. Therefore, addition made by AO on account of bill premium cannot be sustained and AO is directed to delete this addition.
Disallowing 15% of total expenses found recorded in the books of account named as “Jadavji’’ - HELD THAT:- We feel that the ld. CIT (A) has rightly deleted the addition in view of the decision of G.K. Contractor [2009 (1) TMI 840 - RAJASTHAN HIGH COURT] wherein held even if the assessee has failed to discharge his onus of proof in explaining the cash credits shown in the books of account as "market outstanding", the AO having estimated the higher profit rate on total contract receipts after rejection of the books of account invoking the provisions of s. 145(3), no separate additions can be made on account of unexplained cash credit u/s 68 - Hence, we find no reason to interfere with the order of the ld. CIT (A) on this issue. Thus Ground No. 6 of the Revenue is dismissed.
Non -Adjustment of the seized cash lying in PD account against the self assessment tax liability - HELD THAT:- It is noted that similar issue has also been decided in favour of the assessee in the case of DCIT vs. Late Smt. Sudha Patni [2016 (10) TMI 1399 - ITAT JAIPUR] - Hence, we concur with the findings of the ld. CIT (A) on this issue. Thus Ground No. 7 of the Revenue is dismissed.
Trading addition - estimating GP rate @ 20% on declared sales as against 14.01% declared by the assessee - HELD THAT:- It may be mentioned that in the case of the assessee for the assessment year 2010-11, we have adopted the method of weighted average applying the gross profit rate of 16.98%. Hence, there is no change in the facts and circumstances of the case, the gross profit rate of 16.01% should also be adopted in this case also taking into past history of the assessee by considering the gross profit, turnover for the 2006-07 to 2012-13.Accordingly, the ground no. 2 to 5 of the assessee's are partly allowed.
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2017 (2) TMI 1552
Deduction u/s. 80IB - allocating managerial commission and salary, wages & bonus in the ratio of turnover to the Silvassa Unit II and thereby reducing the deduction - HELD THAT:- Tribunal in [2017 (1) TMI 1203 - ITAT AHMEDABAD] for A.Ys. 2008-09 & 2009-10 had considered similar issues and heldassessee has maintained separate books of accounts for Silvassa unit-I & II as evident from the two Audit Reports exhibited. A perusal of the orders of the authorities below shows that the allocation of expenses have been made more out of compulsion then out of necessity. In our considered opinion and the understanding of the facts, the A.O. has not pointed out any flaw or defect in the allocations statement exhibited elsewhere.
We find force in the contention of the ld. counsel that the Managerial Commission cannot be allotted to the Silvassa unit. We also agree that only expenses relating to the concerned undertaking should be deducted from the profits thereon. In the absence of any direct nexus brought on record by the revenue authorities for the impugned allocation of expenses, we do not find any merit in the said allocation. We, accordingly, direct the AO to delete the allocations re-drawn by him.
Also assessee has already included the managerial commission and remuneration while allocating common expenses to the Silvassa unit. The A.O. has once again included these expenses while computing the reallocation. We, accordingly, direct the A.O. to verify the computation once again and decide the issue afresh in the light of our findings given for ground no. 1.
Ground no. 1 is allowed and ground no. 2 is treated as allowed for statistical purpose.
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2017 (2) TMI 1551
Accrual of income - year of assessment - taxable in the year under consideration as accrued receipt - HELD THAT:- As assessee did not get the right to receive Rs. 20 crores in the year under consideration and therefore it cannot be considered as income for the year. Further it is assessee’s submission that the amount of Rs. 20 crores has been offered to tax in subsequent years. The aforesaid factual submission of the assessee has not been controverted by the Revenue. If that be the case, then the taxation of Rs. 20 crore in the year under consideration and in subsequent years would amount to double taxation of the same amount. Before us Revenue has also not placed any material on record to demonstrate that the M.O.U that has been entered into by the assessee is an afterthought for the purpose of avoidance / deferment of tax.
The amount of Rs. 20 crores which has not been received by or accrued to the assessee cannot be brought to tax in the year under consideration.
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2017 (2) TMI 1550
Excisability of goods u/s Central Excise Tariff Act prior to 10-5-2008 - mere manufacture does not make the goods excisable - requirement to satisfy twin test, that becomes “excisable” goods - HELD THAT:- It does not appeal to common sense how non-excisable goods shall be dutiable without meeting the twin tests as has been held by the Apex Court in the case of BOARD OF TRUSTEES VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2007 (8) TMI 350 - SUPREME COURT]. Added to that, show cause notice exhibits that Revenue has not discharged its burden of proof to bring the goods to be called as “marketable” and “traded commodity”.
Guidance also provided by the Apex Court in the case of CIPLA LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE [2008 (3) TMI 330 - SUPREME COURT] holding that manufacture does not ipso facto bring the goods to the fold of excisability without meeting the twin test.
The adjudication having no foundation in law is liable to be unsustainable for which appeal is allowed.
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2017 (2) TMI 1549
Validity of additions based on valuation report - Non rejection of books of account before referring to the D.V.O. u/s 142A - HELD THAT:- Question raised in these appeals Shri Udai Chand Chaurasia Shri Ram Road Lucknow [2017 (1) TMI 1832 - ALLAHABAD HIGH COURT] as relying on Sargam Cinema [2009 (10) TMI 569 - SC ORDER] wherein held matter could not refer to the Departmental Valuation Officer without the books of account being rejected. Decided in favour of assessee.
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2017 (2) TMI 1548
Doctrine of separation of powers - Seeking amendment in the provisions of Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 within a period of ninety days - State Government is aggrieved by the mandamus which has been issued by the High Court to amend the provisions of law - HELD THAT:- The grievance has a sound constitutional foundation. The High Court has while issuing the above directions acted in a manner contrary to settled limitations on the power of judicial review under Article 226 of the Constitution. A direction, it is well settled, cannot be issued to the legislature to enact a law. The power to enact legislation is a plenary constitutional power which is vested in Parliament and the state legislatures under Articles 245 and 246 of the Constitution. The legislature as the repository of the sovereign legislative power is vested with the authority to determine whether a law should be enacted. The doctrine of separation of powers entrusts to the court the constitutional function of deciding upon the validity of a law enacted by the legislature, where a challenge is brought before the High Court under Article 226 (or this Court under Article 32) on the ground that the law lacks in legislative competence or has been enacted in violation of a constitutional provision. But judicial review cannot encroach upon the basic constitutional function which is entrusted to the legislature to determine whether a law should be enacted.
For the Court to mandate an amendment of a law – as did the Himachal Pradesh High Court – is a plain usurpation of a power entrusted to another arm of the state. There can be no manner of doubt that the High Court has transgressed the limitations imposed upon the power of judicial review under Article 226 by issuing the above directions to the state legislature to amend the law. The government owes a collective responsibility to the state legislature. The state legislature is comprised of elected representatives. The law enacting body is entrusted with the power to enact such legislation as it considers necessary to deal with the problems faced by society and to resolve issues of concern. The courts do not sit in judgment over legislative expediency or upon legislative policy. This position is well settled.
In MALLIKARJUNA RAO AND ORS. VERSUS STATE OF ANDHRA PRADESH AND ORS. [1990 (4) TMI 307 - SUPREME COURT], this Court held that the court under Article 226, has no power to direct the executive to exercise its law-making power.
The judiciary is one amongst three branches of the State; the other two being the executive and the legislature. Each of the three branches is co-equal. Each has specified and enumerated constitutional powers. The judiciary is assigned with the function of ensuring that executive actions accord with the law and that laws and executive decisions accord with the Constitution. The courts do not frame policy or mandate that a particular policy should be followed. The duty to formulate policies is entrusted to the executive whose accountability is to the legislature and, through it, to the people. The peril of adopting an incorrect policy lies in democratic accountability to the people. This is the basis and rationale for holding that the court does not have the power or function to direct the executive to adopt a particular policy or the legislature to convert it into enacted law. It is wise to remind these limits and wiser still to enforce them without exception.
The directions issued by the High Court for amending the provisions of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 and the Rules were manifestly unsustainable - appeal filed by the State shall stand allowed.
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2017 (2) TMI 1547
Depreciation on toll road - HELD THAT:- It is noted that since in the appeal filed against the original assessment order, Hon'ble High Court has held vide its judgement [2016 (4) TMI 1184 - BOMBAY HIGH COURT] that claim of depreciation is not allowable to the assessee, the same decision would be applicable upon the issue raised by the Revenue before us. Once Hon'ble High Court has taken a view that depreciation is not allowable, the issue before us stands covered against the assessee.
Cross objection - appellant prays that the entire cost incurred for construction of "Project Road" may be allowed as deduction treating the same as revenue expenditure while computing the total income - As noted that the claims raised before us are alternative to the main claim made by the assessee. Since the main claim of the assessee has been rejected, in all fairness, justice demands that assessee should be given an opportunity to make his alternative claim in accordance with law. Thus, taking into account the totality of facts and circumstances of the case, as have been brought before us, we find it appropriate to send these issues back to the file of the AO. The assessee shall be at liberty to raise all the legal and factual issue before the AO. The AO shall examine all the issues raised in the Cross Objection and decide them after taking into account all the submissions and evidences, as may be placed on record by the assessee. With these directions, the grounds raised in the Cross Objection are restored to the file of the AO for their appropriate adjudication and these may be treated as allowed, for statistical purposes.
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2017 (2) TMI 1546
Granting payment of revised rates to take care of escalated cost of work executed by the claimant and the work executed beyond the originally stipulated time - whether the quantification of the escalation costs/damages by the arbitrator is arbitrary and contrary to the evidence? - HELD THAT:- Waiting for handing over of site to construct the residential quarters, not putting up with the excavation of work to lay down the foundation for the office building also resulted in delay of completion of the work. Hence, the department cannot be accused for the delay caused. Allowing the claim of escalation of cost sans the satisfactory material evidence placed on record by the claimant is perverse and contrary to the public policy. No cogent evidence was placed before the Arbitrator to justify the claim for damages to the extent of 100%. Awarding of 70% on the balance work of Rs. 5.69 lakhs executed by the claimant beyond the original stipulated time by the Arbitrator is not supported by any material evidence. It is based only on the guess work. Though a stray observation was made by the Arbitrator that schedule of rates of PWD during the year 1992-94 was considered, no material was referred to arrive at a conclusion. The Arbitrator’s finding that the delay caused was only due to the default on the part of the Department in not complying with the terms and conditions of the work order cannot be countenanced. Quantification of damages is unreasonable. It would be a case of misconduct on the part of the Arbitrator amenable to Section 34 of the Act.
The Arbitrator, after having held that there has been a short increase in prices of materials, the Department cannot compel the contractor to carry out the work on the same rates on which he had agreed to the same within the stipulated period, cannot evaluate the ‘short increase’ equal to that of tender amount. Escalation cannot be granted on assumptions and presumptions. Awarding escalation charges/damages of Rs. 14,68,239/- equal to tender amount is not fit to be sustained.
If the entire award is satisfied, the respondents 1 and 2 would have to pay a huge sum of money by way of interest. Considering the totality of the circumstances of the case, interest awarded by the Arbitrator at 18% per annum is excessive, awarding of interest by the court below at 9% per annum on the 25% of tender amount i.e., Rs. 3,71,564/- determined towards the damages is justifiable. No infirmity or irregularity is found in the impugned Judgment and order.
Appeal dismissed.
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2017 (2) TMI 1545
Payment against the 8 supplementary invoices raised by the Kolkata Port Trust towards reimbursement of service tax - HELD THAT:- The Service Tax Department will be making available to the Kolkata Port Trust the necessary Cenvat Credit for the said sum of Rs. 3,94,34,035/- paid towards service tax on the basis of the supplementary invoices and the original discharge certificate as aforesaid issued by the Service Tax Department as per the statement made in paragraph 3(e) and 3(f) of the affidavit in opposition affirmed on 22nd day of January, 2017 by and on behalf of the Service Tax authority, and thus shall not demand the original discharge certificate from the writ petitioner No.1 for any related or other purpose whatsoever.
Since no affidavit in opposition has been filed the allegations are deemed to have been denied.
Petition disposed off.
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2017 (2) TMI 1544
Commutation of death sentence of Sheikh Shamsul and Sheikh Gheyas, to imprisonment for life - conviction confirmed - interpretation of Section 172 of Code of Criminal Procedure, 1973 - veracity of the evidence adduced - relevance of overt act in conviction Under Section 149 of the Penal Code - rarest of the rare cases theory for confirming death sentence.
HELD THAT:- While upholding the judgment and order of conviction passed by the Trial Court, the High Court has primarily relied upon the evidence of eye-witnesses, PW14, PW4, PW5 and PW9 who were found to be trustworthy and reliable. The High Court held that the Accused were sharing the common object of doing away the deceased. However, from a perusal of the cross examinations of PW4 and PW5, it appears that there was personal enmity and PW3, PW4, PW14 were made Accused in a case of murder of Asfak, son of Sheikh Samsul, Appellant herein. PW14 had also filed a case Under Section 307 of Indian Penal Code against the Appellants two years prior to the date of the incident which was still pending.
It is seen in the instant case that the witnesses have vividly deposed about the genesis of the occurrence, the participation and involvement of the Accused persons in the crime. The non-examination of the witnesses, who might have been there on the way to hospital or the hospital itself when deceased narrated the incident, would not make the prosecution case unacceptable - prosecution case has been proved by the testimony of the eye-witness since corroborated by the other witnesses of the occurrence.
In the instant case, the witnesses, as the High Court has found and there are no reason to differ, are reliable and have stood embedded in their version and remained unshaken. They have vividly deposed about the genesis of occurrence, the participation and involvement of the Accused persons in the crime and the injuries inflicted on the deceased, and on each of them.
The present appeals are devoid of merits and the judgment passed by the High Court does not warrant interference - Appeal dismissed.
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