Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 18, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Rate of depreciation to be applied on WDV of windmill installed by the assessee - Assessing Officer is not empowered to disturb the claim of depreciation on WDV of an asset, which was installed in the earlier years. - AT
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Bogus purchases - G.P. addition - if the AO finds that the GP disclosed in respect of purchases from these three parties is lower than the GP disclosed in respect of other undisputed purchase, addition should be made to that extent only - AT
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Addition u/s 68 - The existence of shares of 150000 in the hands of assessee was established by filing concerned demat account. Therefore, the conditions for making addition under section 68 were missing in the case of the assessee - AT
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Levying penalty u/s 271(1 )(c) - addition u/s 2(22)(e) - the conscious act of furnishing of inaccurate particulars of income or concealment of income cannot be attributed to the assessee, specially when the addition u/s 2(22)(e) was made under the deeming provision - AT
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Adding back transfer pricing adjustment to income assessed u/s 115JB (MAT) - AO erred in adding back the transfer pricing adjustment of the book profits u/s 115JB - AT
Customs
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Levy of CVD on MRP based or transaction value - import of LCD/LED Monitors and Television sets - goods were sold to industrial consumers - Once the goods are covered under LMA, as a packaged commodity, they are required to be cleared on retail sale price on the packages as per the provisions of Section 4A, the assessment shall be on MRP basis - AT
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Claim of Refund - Valuation - the refund claim cannot be claimed unless the legal remedy of challenging the respective assessment order by filing appeal is exhausted. - AT
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Levy of penalty on CHA for abetment - CHA appellant has onerous responsibility to discharge which in the present circumstances he has failed to discharge and his culpability in the facts and circumstances cannot be ruled out. - Penalty levied - AT
Service Tax
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Job Work - Hamali work at sugar warehouse for the sugar factory - Nature of services - services rendered by the appellant-assessees do not come under the purview of 'manpower recruitment or supply service' and hence the impugned service tax demands are not sustainable in law. - AT
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Job work - Nature of activity - Manufacturing activity or Mere supply of labour services - Since activity of the appellant amounting to manufacture of the goods, even it is not covered under Business Auxiliary Services - AT
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Condonation of delay of 352 days before the first appellate authority - It is apparently clear that under the garb of blaming someone else, the appellant is trying to invoke a sympathetic view of the Court to condone the delay. None of the active partner have the gumption to file a personal affidavit before this Court - Condonation denied - HC
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Valaution - Business Auxiliary services - the incentive received for achieving the targets is not excludible from the assessable value of the service which as per Section 67 is the gross amount received for the service rendered - AT
Central Excise
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Cenvat Credit - input service - maintenance and repair services of windmill farm - Rule does not say that input service received by a manufacturer must be received at the factory premises - AT
VAT
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Condonation of inordinate delay of 1298 days in filing the appeal - The State must ensure in future that the matter is expedited and the responsibility is fixed on the officer/official dealing with the filing of the appeals in case any delay occurs on their part. Since no sufficient cause has been shown in the present case, no ground for condonation of delay is made out. - HC
Case Laws:
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Income Tax
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2016 (1) TMI 618
Charging of interest u/s 201(1)/ 201(1A) - late depositing the TDS - Held that:- It emerges from the record that assessee presented the requisite challan and cheque in favour of I T Department with SBBJ on 31-5-2008. Assessee has control over presentation of cheque and not on the subsequent internal procedure of banks. The CBDT circular no. 261 dated 8-8-1979 which is binding on the lower IT Authorities is clearly applicable to assessee case. Beside the coordinate Delhi ITAT judgment in the case of Sandip Bhagat (2015 (9) TMI 904 - ITAT DELHI) is also applicable which deserves to be followed wherein held that interest u/s 234C of the Act should be computed from the date of presentation of the cheque of tax payment. We direct the Assessing Officer to compute the interest u/s 234C of the Act, accordingly - Decided in favour of assessee.
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2016 (1) TMI 617
TDS u/s 194J - non deduction of tds - whether the remuneration paid to the director Mr. K. S. Kalyansundaram is liable to be taxed in view of provision contended u/s. 192(1) or is liable to be taxed in view of the provision contended in section 194J ? - Held that:- In view of the terms and conditions of the contract of Mr. K. S. Kalyansundaram, it is apparent that he is not regular employee of the company. There is nothing on record to which it can be assumed that Mr. K. S. Kalyansundaram can be considered as permanent/regular employee of the company. No P.P.F/C.P.F. has been deducted. There is no regular increase of salary. There is no other benefits on record which was being paid to him as regular employee. No doubt, in the said circumstance when Mr. K. S. Kalyansundaram has been professionally being paid for his technical services therefore, provisions u/s. 194J would be quite applicable to his case, whereas the provision u/s 192(1) along with interest u/s. 201(1)/201(1A) are not applicable in the case of the assessee. - Decided in favour of assessee
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2016 (1) TMI 616
Unexplained cash deposits in the assessee's, a salaried person, bank account - Held that:- The assessee has not specified the cash required for house-hold and/or personal purposes, as well as toward investments, if any, made from f.y. 2005- 06 onwards, to have any purposeful assessment of the cash with him in June, 2007 and January, 2008, whereat excess cash of ₹ 3.50 lacs and ₹ 0.25 lacs is stated to be available. Further still, there is no explanation for cash received from friends and relatives when the assessee himself has surplus cash of ₹ 3.50 lacs. It is stated that the same is to cover the short-fall to honour a cheque of ₹ 5 lac, which though did not materialize. However, no details of this payment/investment are provided - to whom was the cheque issued/to be issued, and for what purpose. Then, again, why was the amount not refunded back when the transaction did not materialize? Why, for all we know, the amount is outstanding for payment even to date - so much for the temporary loans. As regards the cash deposit of ₹ 25,000/-, the same has been explained as sourced from the cash withdrawal during the current year. The same only implies a reduction in the cash withdrawal for the year by ₹ 25,000/-. The least that the assessee is therefore required to state is the cash withdrawal for the year, i.e., upto 27.1.2008. The cash withdrawal for the year has already been observed to be lower for the initial months, suggesting absorption of the surplus cash, if any, and in any case only to meet the day-to-day requirements. As already observed of no case being made out with reference to the date-wise withdrawal or by way of cash flow statement, specifying the cash requirement for maintenance purposes and/or investments, if any. - Decided against assessee.
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2016 (1) TMI 615
Disallowance u/s 14A read with Rule 8D - Held that:- As decided in assessee's own case for previous AY there is no satisfaction recorded by the AO for invoking Rule 8D of the Rules despite the fact that the assessee has disclosed huge expenditure for earning of exempted income and the same was disallowed himself, the correctness of which is not in doubt. The assessee has enclosed details of investment made in group concerns and subsidiary companies and details of dividend income earned. In view of the above facts and circumstances, we are of the view that the AO has not recorded any satisfaction about the correctness or otherwise of the accounts of the assessee wherein the assessee himself has made disallowance of expenses relatable to earning of exempted income and secondly, we are also of the view that the primary object of investment of assessee is for holding controlling stake in group concerns and not for earning of income out of that investment. In both the eventualities, no disallowance can made u/s. 14A of the Act read with Rule 8D of the Rules - Decided in favour of assessee Proportionate disallowance of legal and professional fees and auditor's remuneration - Held that:- Legal and professional fee cannot be attributed to earning of management fee from Mena House Oberoi Hotel, Egypt, URA. Even otherwise, during this year, no legal service was provided to this concern for earning of management fees, hence, there is no nexus with the providing of legal services and that of earning of management fees. Same are the arguments for the expenses of auditor's remuneration. Hence, we agree with the argument of ld. Counsel and allow these expenses. As regards to other expenses no argument was advanced on behalf of assessee qua assessee's appeal. Even we could not find any contrary argument on the expenses allowed by CIT(A) from Ld. DR. Accordingly, the issue of revenue's appeal is dismissed and that of the assessee's appeal is partly allowed. Addition made u/s. 2(22)(e) for deemed dividend - Held that:- The issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 wherein held that the AO applied the provisions of section 2(22)(e) of the Act in case of loan taken by assessee from Oberoi Plaza Pvt. Ltd. and Bombay Plaza Pvt. Ltd. since Oberoi Plaza Pvt. Ltd. is a 100% subsidiary of the assessee and Bombay Plaza Pvt. Ltd. is a 100% subsidiary of Oberoi Plaza Pvt. Ltd. During the course of appellate proceedings, the assessee filed fresh evidence before CIT(A) in the shape of Memorandum of Association which establishes that the object ancillary to the main object includes money lending, thus, for both the companies the business includes lending of money/advance. These documents were not examined by the AO, hence, we are of the view that let it be examined by the AO and decide the issue afresh. - Decided in favour of assessee for statistical purposes. Allowance of ALV of the house property by rejecting the expected rent and accepting the actual rent received by the assessee by CIT(A) - Held that:- The issue is covered by the order of the Tribunal in assessee's own case for AY 2007-08 and 2008-09 as held even as per the deeming provision of Section 23(1)(a), in the case of let out property, only the actual rent received was required to be considered as annual value of property. The AO failed to appreciate such estimation of annual letable value as per provision of Section 23(1)(a) was called for only in case of vacant property and not where the property was actually let out since in the case of let out property, the assessee was not entitled to anything over and above the agreed rent. The said action of the AO has resulted in taxing notional income in the hands of the assessee, which never accrued and hence cannot be brought to tax. Accordingly, we are of the view that the CIT(A) has rightly deleted the addition and hence, we confirm the order of CIT(A) on this issue - Decided in favour of assessee
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2016 (1) TMI 614
TDS u/s 194C - non deduction of tds - payment of preservation charges - Held that:- It is an undisputed fact that Assessee has paid preservation charges to the cold storage, the aggregate of the payments/credit to the account. During the relevant time, subsection (5) and proviso of Section 194C provided that no deduction of TDS was required from the amounts paid or credited if the sum did not exceed ₹ 20,000/- or the aggregate of the amounts of sums credited or paid or likely to be credited or paid during the financial year did not exceed ₹ 50,000/-. In the present case, we are of the view that since the amount credited/paid during the year was ₹ 1,96,945/-, which was in excess of the monetary limit prescribed under subsection (5) and in proviso, the exemption from non-deduction of TDS would not be applicable. - Decided in favour of assessee. Deemed dividend u/s. 2(22)(e) - Held that:- We find that Hon’ble Delhi High Court in the case of CIT vs. Rajkumar (2009 (5) TMI 17 - DELHI HIGH COURT ) has held that trade advances which are in the nature of money transacted to give effect to a commercial transaction would not fall with the ambit of the provision of Section 2(22)(e) of the Act. Hon’ble Delhi High Court in the case of CIT vs. Creative Dyeing & Printing Pvt. Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT ) has also held that amount advanced for business transaction do not fall within the definition of Section 2(22)(e) of the Act. Before us, no material has been placed on record by the Revenue to demonstrate that the agreement entered by the Assessee with Vaibhav Corporation was not a genuine agreement. In view of these facts, we are of the view that in the present case no addition u/s.2(22)(e) could be made. We therefore set aside the addition made by A.O. and thus this ground of Assessee is allowed - Decided in favour of assessee.
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2016 (1) TMI 613
Addition u/s 68 - Held that:- Issue in the present case is with respect to addition of cash deposits in the bank account. We find that ld. CIT(A) after considering the summary of the cash receipt has noted that the summary starts with opening cash balance of ₹ 3,03,095/- on 1st April, 2007 for which no evidence of it has been placed on record by the Assessee and the claim of having the opening cash balance is also not found acceptable in view of the fact that Assessee is not maintaining regular cash book, stated to have received salary of ₹ 17,820/- per month and had shown withdrawals of ₹ 18,000 to ₹ 19,000 per month for household expenses and that the opening cash balance was disproportionately high considering the returned income and the monthly household expenses. Before us, Assessee has also not placed any material on record to controvert the findings of ld. CIT(A) or pointed any fallacy in his findings. In view of these facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Assessee is dismissed. - Decided against assessee.
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2016 (1) TMI 612
Addition u/s. 69A - Held that:- The issue in the present case is with respect to addition of cash deposits made in the bank account. We find that ld. CIT(A) has not accepted the submission of the Assessee of cash deposits to be out of the advance money on sale of land because he has noted that the land was not sold till the time of appellate proceedings and there was nothing on record to demonstrate the registration of land or of money having returned back. With respect to the addition based on the peak theory, we find that ld. CIT(A) has upheld the addition in A.Y. 06-07 but has given the credit of the addition of peak credit in A.Y. 07-08 & 08-09. Before us, ld. A.R. has not pointed out any fallacy or error in the order of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) - Decided in favour of revenue
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2016 (1) TMI 611
Disallowance u/s 14A - CIT(A) computing interest pertaining to tax free income as per Rule 8D(2)(ii) of the IT Rules 1962 - Held that:- CIT(A)'s order upheld in relation to the working of interest under the provisions of section 14A of the Act concluding: i) The disallowance under Rule 8D will be calculated on the figure of investments only without taking stock in trade in the figure as investment ii) The amount of interest should be taken at an amount of ₹ 1,16,79,274/- after deducting ₹ 20,61,185/- and ₹ 53,62,859/- for the purposes of Rule 8D(2)(ii). iii) The disallowance is to be calculated by taking denominator of ₹ 37,02,71,649/- as total assets and not as ₹ 32,06,90,060/- of net assets. - Decided against revenue
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2016 (1) TMI 610
Unexplained cash receipts - Search action u/s.132(1) - assessment proceedings u/s.153A r.w.s 143(3) - addition on the basis of Red Executive Diary and a loose paper bundle - CIT(A) deleted the addition on the ground that the amount received from Mr. Gulab Maharu Badgujar & Mrs. Badgujar are the liability of the firm and it is not the income of the assessee - Held that:- Answer to the relevant queries raised by the AO establish the existence of a partnership firm called M/s. Suyojit Baug. Therefore, merely because M/s.Suyojit Baug has not filed any return of income or has not been registered in our opinion cannot be a ground for treating the advance received by the said firm as income in the hands of the assessee. As regards the contention of the Ld. Departmental Representative that the assessee has admitted in his statement recorded u/s.132(4) during the course of search regarding the additional income we find the same is also without any basis. There is no estoppel against statute. What is otherwise not taxable cannot become taxable because of admission of the assessee. Thus in view of the detailed reasoning given by the Ld.CIT(A) we find no infirmity in his order deleting the addition of ₹ 19 lakhs in the hands of the assessee - Decided in favour of assessee Addition on account of unexplained expenditure - as per AO there are certain payments as per the SMSs which were not recorded in the books of account - CIT(A) deleted the addition - Held that:- .CIT(A) deleted the addition on the ground that the assessee has demonstrated that the amount of ₹ 2 lakhs related to M/s. Suyojit Infrastructure Pvt. Ltd. and does not belong to the assessee and the addition was made by the AO on surmises. Further, the SMSs revealed the payment of the impugned amount to Shri Bhatt and the SMSs nowhere contain that the payment is made on 21-10-2010. There is no material before the AO to the proposition that the impugned payment is made on 21-10-2010 and that too by the assessee. 30. So far as the other amount of ₹ 3,37,500/- is concerned the CIT(A) deleted the same on the ground that the same has been claimed to be paid to Shri Dwarka Prasad Agarwal, an employee of Suyojit Infrastructure Pvt. Ltd. for making payment to departmental labour. Since the assessee was a director of Suyojit Infrastructure Pvt. Ltd. and such entries were already recorded in the books of account of the company, therefore, addition of the same in the hands of the assessee is not justified. The above factual findings given by the Ld.CIT(A) could not be controverted by the Ld. Departmental Representative. - Decided in favour of assessee
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2016 (1) TMI 609
Rate of depreciation to be applied on WDV of windmill installed by the assessee - assessee had claimed depreciation @ 80% on WDV of windmill, which was installed on 29.03.2006 - Held that:- Admittedly, such an asset was installed in earlier year, on which value of depreciation was claimed by the assessee, which in turn has been allowed by the Assessing Officer while completing assessment in the preceding year. The Assessing Officer is not empowered to disturb the WDV of an asset, which is the closing WDV of an asset of preceding year and re-calculate the depreciation in any manner, on the opening WDV of an asset.However, in the absence of any fresh evidence being brought on record by the Revenue authorities, the Assessing Officer cannot re-work the depreciation allowable on WDV of an asset. Thus, we hold that the Assessing Officer is not empowered to disturb the claim of depreciation on WDV of an asset, which was installed in the earlier years. We find no merit in the order of Assessing Officer in bifurcating the cost of windmill into cost of Wind Turbine, cost of erection and installation of windmills and civil construction work vis-à-vis Wind Turbine No.1, which was installed in assessment year 2006-07. Windmill installed by the assessee in the year under appeal - As per the Assessing Officer, cost of Wind Turbine entitles the assessee to the depreciation @ 80%. However, the cost of electrical installation would attract depreciation @ 15% and the cost of civil construction would attract depreciation @ 10% - Held that:- . The foundation work was an integral part of the machinery, since the machinery cannot function without foundation. In other words, even in cases where the assessee has incurred separate expenditures on the cost of foundation and installation of the machinery, then the same is to be considered as an integral part of cost of windmill, which in turn is entitled to higher rate of depreciation @ 80%. Similarly, various electrical items installed, which in turn ensures the functioning of windmill, forms part of windmill and is entitled to the depreciation @ 80%. Accordingly, we hold that the assessee is entitled to the claim of depreciation @ 80% on cost of windmill at ₹ 90 lakhs. - Decided in favour of assessee
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2016 (1) TMI 608
Computation of Long term capital gain - disallowance of amount paid by the assessee out of the sale proceeds of the flat to her son, Mr Ketan C Shah can be allowed as deduction u/s 48(i), being expenditure incurred wholly and exclusively in connection with the transfer of an asset? - Held that:- If the assessee himself has created a mortgage or encumbrance and then same consequence shall not follow. Thus, if the assessee acquires a property in inheritance fully or partially with any kind of encumbrance therein, then any obligation amount spent to remove that encumbrance has to be treated as an expenditure wholly connected with the transfer of the property. Here in this case, the encumbrance was in the form of a right and interest of one of her son Mr. Ketan C Shah and if such an encumbrance would not have been removed, that is, amount of share of his right had not been settled or given to him then the property itself would have gone in dispute which could have led to long-drawn–litigation within the family and the subsequent purchases would not have got the clear title. This dispute has been resolved through Arbitral Award which itself goes to show that the encumbrance has to be discharged by making the payment to her son from the sale proceed of the flat and this had been eventually done after the property was sold. Thus, in our opinion the payment made by the assessee to her son was purely on account of discharge of the encumbrance on the property which has to be reckoned and treated as expenditure in connection with the property, therefore, deduction of such cost has to be allowed as cost of acquisition while computing the long-termcapital- gain. Accordingly, disallowance of ₹ 40 lakhs as made by the AO and confirmed the CIT(A) is deleted. Disallowances of Indexed Cost of Improvement and Amount paid through the builder to BDP enterprise as reinvestment in flat - So far as other disallowances are concerned, we are in agreement with the finding and conclusion of the CIT(A), as the assessee has failed to furnish any concrete evidence with regard to any of the expenditure or payment made by the assessee which has been claimed towards cost of acquisition. Even before us, the position remains the same, therefore on these two disallowances of Indexed Cost of Improvement and Amount paid through the builder to BDP enterprise as reinvestment in flat the addition gets confirmed. - Decided partly in favour of assessee.
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2016 (1) TMI 607
Deduction under section 80IB(10) - Held that:- The assessee had completed all the buildings, for which sanction was received for parking + seven floors and further all the conditions laid down under section 80IB(10) of the Act were complied with, then the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. The Assessing Officer is directed to compute the said deduction under section 80IB(10) of the Act in line with the directions of Tribunal in assessment years 2007-08 to 2009-10. - Decided in favour of assessee.
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2016 (1) TMI 606
Bogus purchases - G.P. addition - Held that:- As there is no justification for adding the entire amount of purchases in assessee’s income. The CIT(A) has even though deleted the purchases but has made an adhoc addition of 10% of the purchase amount. The CIT(A) has also directed the AO to uphold the addition to the extent of difference between GP as per books of account on undisputed purchases and the GP on sales relating to purchases from these three parties. However, no justification has been given by the CIT(A) for upholding the adhoc addition of 10% of the purchase, insofar as quantitative tally of purchase and sales were not in dispute. Accordingly, we direct the AO to delete the adhoc addition of 10% made on the amount of bogus purchases. However, we upheld the addition to the extent of difference in GP as per books of account on undisputed purchase as compared to the GP on the sales relating to the purchases from three parties. Accordingly, we direct the AO to calculate the GP on the undisputed purchase vis-à-vis GP in respect of purchase made from these parties and, if the AO finds that the GP disclosed in respect of purchases from these three parties is lower than the GP disclosed in respect of other undisputed purchase, addition should be made to that extent only. We direct accordingly. - Decided partly in favour of assessee
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2016 (1) TMI 605
Assessment of Capital gain arising on sale of shares as “Business income" - Held that:- As it cannot be said that the assessee’s intention at the time of purchase of shares was to hold them as investments. In our view, the assessee’s conduct and surrounding circumstances discussed above would show that the assessee has actually intended to deal in shares as a trader only. Hence, in our view, the Ld CIT(A) was justified in confirming the assessment of profit arising on sale of shares as business income of the assessee. Valuation of the closing stock of shares - cost or market value - Held that:- Though the assessee valued the shares “At cost” in the books, it claimed before the assessing officer that the valuation should be done at lower of cost or market value of shares. The said claim was rejected by both the tax authorities. We notice that the assessing officer has observed that the assessee has chosen to value its closing stock of shares at cost in its books of account and further the “Profits and gains from business” has to be arrived at in accordance with the method regularly followed by the assessee. The AO has further pointed out that the closing stock of the first year becomes opening stock of the succeding year and hence the ultimate tax effect would be nil. In our view, there is merit in the stand taken by the assessing officer. As observed by him the Profits and gains of business has to be arrived at the method of accounting regularly followed by the assessee. Since the assessee has chosen to value its closing stock of shares at Cost price, we are of the view that the tax authorities are justified in rejecting the claim of the assessee to value the shares at lower of cost or market value.
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2016 (1) TMI 604
Section 14A disallowance - suo moto disallowance - Held that:- We are of the view that purpose of scrutiny assessment is to determine correct taxable income as per law and not to rely on such technicalities. The same principle applies even in appellate proceedings being in the nature of continuity of original proceedings. Therefore, we follow consistency and hold that the impugned disallowance of ₹ 36.68 crores made in the course of assessment partly sustained in lower appellate proceedings; suo moto or the one computed by the lower authorities, is not liable to be sustained. The Revenue’s reliance placed on case law Goetze India Ltd vs. CIT (2006 (3) TMI 75 - SUPREME Court) that the assessee ought to have file a revised return for deleting this suo moto addition also stands decided in assessee’s favour by hon’ble jurisdictional high court in case of Mitesh Impex (2014 (4) TMI 484 - GUJARAT HIGH COURT ) for holding that if a claim though available in law is not made either inadvertently or on account of erroneous of belief of complex legal position, such claim cannot be shut out for all times to come merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing authority. We draw support from this decision for accepting the assessee’s additional ground leading to our adjudication in its favour on merits. The entire disallowance of ₹ 36.68 crores made by the Assessing Officer including that added suo moto at assessee’s behest of ₹ 6.23 crores is deleted by placing reliance on the hon’ble jurisdictional high court decision for succeeding assessment year. The assessee’s arguments on merits are accepted. - Decided in favour of assessee
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2016 (1) TMI 603
Addition u/s 68 - genuineness of transactions of purchase and sale of shares - book entries taken for long term capital gains. - Held that:- As per provisions of Section 68 of the Act assessee has to prove the nature of credit appearing in the books and also identity, creditworthiness and the genuineness of the credits appearing in his books of accounts. In the case of assessee, the credit of ₹ 16,15,188/- was received by the assessee from the broker through whom the shares were sold. Therefore, the nature of credit in the books was explained. The identity of the share broker was also established by the assessee by filing the contract note and other details of M/s. Sushil Finance Consultants Ltd., through whom the shares were sold. The creditworthiness of the share broker was not doubted by the Assessing Officer. Further, the genuineness of the transactions i.e. the credits in the books of assessee was also explained as received on account of sale of shares by the assessee. The existence of shares of 150000 in the hands of assessee was also established by filing concerned demat account. Therefore, the conditions for making addition under section 68 were missing in the case of the assessee. In view of the above the CIT(A) was justified in observing that the addition made under section 68 of the Act are not justified and the same were rightly deleted by him - Decided in favour of assessee
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2016 (1) TMI 602
Validity of revision u/s 263 - Held that:- Assessing Officer has appreciated the facts as per facts before him. Improper appreciation of facts by Assessing Officer cannot be held proper ground for holding the order of Assessing Officer erroneous as well as prejudicial to the interest of revenue under the provisions of Section 263. Provisions of 263 of Act can be invoked. In case of no enquiry on issue by Assessing Officer. The improper or less enquiry cannot be valid basis of invoking provisions 263 of Act. Inquiry on particular issue is subject outlook of concern Asessing Officer. Subject outlook may vary person to person. In view of above discussion, order of CIT cannot be sustained same is quashed. - Decided in favour of assessee.
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2016 (1) TMI 601
Penalty u/s 271(1)(c) - Held that:- The penalty in dispute is not sustainable in the eyes of law, because the AO has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice u/s. 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income, whereas the penalty in dispute has been levied by the AO on account of concealment of true particulars of income by the assessee. In my view the penalty is not sustainable - Decided in favour of assessee.
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2016 (1) TMI 600
Benefit of exemption u/s.11 denied - non submission of Form No.10 along with return of income - Held that:- As decided in CIT Vs. Mayur Foundation [2004 (12) TMI 48 - GUJARAT High Court] audit report in Form 10CCB can be filed during appeal proceedings as the same are continuation of assessment proceedings. Since the assessee in the instant case has filed Form 10 before CIT(A) which is continuation of assessment proceedings, i.e. in other words has filed the FormNo.10 before completion of assessment proceedings, therefore, we are of the considered opinion that the assessee is entitled to claim the benefit of section 11 of the I.T. Act. We accordingly set aside the order of the CIT(A) and direct the AO to allow benefit of deduction u/s.11 as per law. - Decided in favour of assessee
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2016 (1) TMI 599
Levying penalty u/s 271(1 )(c) - addition u/s 2(22)(e) - Held that:- In the present case, the alleged amount was given from M/s Beacon Logicwares Pvt. Ltd. to SRVR Software Solutions Pvt. Ltd. and the assessee was neither the recipient nor the payer of the money and since there was no receipt of payment of the money by the assessee, the conscious act of furnishing of inaccurate particulars of income or concealment of income cannot be attributed to the assessee, specially when the addition u/s 2(22)(e) was made under the deeming provision. The case of the assessee is squarely covered by the judgment of West Coast Industries vs ACIT [2009 (4) TMI 937 - ITAT MUMBAIA] and CIT vs Hrishikesh Kundu (2014 (7) TMI 1164 - ITAT KOLKATA). Thus, we have no hesitation to hold that the Assessing Officer imposed penalty against the well-settled proposition on this issue and the assessee cannot be held responsible for furnishing of inaccurate particulars of income or concealment of particulars of her income which attracts penalty u/s 271(1)(c) of the Act. Accordingly, main ground of the assessee is allowed and the Assessing Officer is directed to delete the penalty. - Decided in favour of assessee
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2016 (1) TMI 598
Treatment of foreign exchange fluctuation gain/loss as operating item - Held that:- We direct the AO/TPO to treat the foreign exchange gain/loss as an operating item. Adding back transfer pricing adjustment to income assessed under Section 115JB (MAT) - Held that:- In the present case there is no allegation in the assessment order much less any finding that either that profit and loss account has not been drawn up in accordance with Part II and Part III of Schedule VI of the Companies Act, or that any incorrect accounting policies, accounting standards has been adopted for preparing such accounts or that the method/rate of depreciation has been incorrectly adopted for preparation of profit and loss account.In view of aforesaid, we hold that the AO erred in adding back the transfer pricing adjustment of the book profits under Section 115JB of the Act. Accordingly, this ground of the appeal raised by the assessee is allowed and the AO is directed to exclude the transfer pricing adjustment, if such adjustment survives, from the book profits computed under Section 115JB of the Act.
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Customs
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2016 (1) TMI 591
Condonation of delay of 947 days - revenue appeal - Held that:- The Revenue seeking to condone the delay of 947 days for the reasons of two Review Committee orders dt. 21.12.2012 and 24.4.2015 is not justified and we are of the considered view that Section 129A (2) or Section 129D of Customs Act does not empower the Committee of Commissioners to review their own order again and take different view. There is also a time limit to review any order and the section does not empower the Committee to review the order beyond the specified period. In view of the above facts, the reason for condoning the delay of 947 days is devoid of merit. Accordingly, MA (COD) is rejected. Consequently, the Revenue Appeal along with Miscellaneous Application for stay of the impugned order is also rejected. We bring it to the notice of the CBEC [Board] and Chief Commissioner of Customs, Chennai to take necessary steps on the powers of Committee to review the orders under Section 129D and 129A (2) of Customs Act and issue necessary guidelines to the field formations as deem fit. Registry is directed to forward the copy of this order to Chairman, CBEC, New Delhi and Chief Commissioner of Customs, Chennai. Decided against the revenue.
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2016 (1) TMI 590
Levy of CVD on MRP based or transaction value - import of LCD/LED Monitors and Television sets - demand of differential duty on the ground that the said goods were sold to industrial consumers and therefore, assessment under MRP is not applicable - Held that:- It is pertinent to state that, on imported goods, and at the time of clearance, the appellants are required to affix MRP as the goods are covered under the packaged commodity and therefore in the case of branded goods, the RSP was correctly affixed by the appellant as provided by the brand owners Wipro/HCL etc. The appellant being a dealer not a manufacturer of monitors, the RSP supplied by the brand owners was affixed and there is no dispute on the fact that the monitors are packaged commodity squarely covered under the LM Act. As far as the importers concerned, the transaction is complete. It is not the case that how the brand owner is going to clear the said goods in retail sale or for personal consumption. Once the goods are covered under LMA, as a packaged commodity, they are required to be cleared on retail sale price on the packages as per the provisions of Section 4A, the assessment shall be on MRP basis. - Decision of Apex Court in Jeyanthi Food Processing Pvt. Ltd. [2007 (8) TMI 3 - Supreme Court] followed. In the present case, the appellants have been clearing the goods when the MRP assessment came into existence from 2008 onwards. Therefore, the department suddenly choose to change the assessment from MRP based to transaction value from 10.05.2012 only to the goods sales made to the brand owners is not justified and particularly when the revenue itself accepted the assessment based on MRP under Notification No. 49/2008 from 24.12.2008, on the same transaction to the actual users. - demand set aside - Decided in favor of assessee.
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2016 (1) TMI 589
Condonation of delay of 583 days in filing the appeal - in the RTI he was informed that the order dated 2.1.2013 passed by the Commissioner (Appeals) in the applicant's case was dispatched by Speed Post on 3.1.2013, but the same was returned by Postal authority on 6.1.2013 with the remarks “not known” and he also submitted that thereafter when it came to the knowledge of the applicant, he wrote a letter to the office of the Commissioner (Appeals) on 19.8.2014 and thereafter the office of the Commissioner (Appeals) supplied the copy of the impugned order which was received by the applicant on 25.8.2014. He submitted that the fact of the matter is that the applicant is not at fault in filing the appeal as the order was not supplied to them in time. Held that:- Therefore, keeping in view all the facts and circumstances, we condone the delay of 583 days in filing the appeal. COD allowed.
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2016 (1) TMI 588
Claim of Refund - Valuation - import of completely pre-mutilated mis-coloured woolen rags - goods were assessed by the department by enhancing the declared price from Euro 0.15 per kg. to US$ 0.37 per kg. and the appellant claimed the consignment on payment of enhanced rate of duty under protest. - Held that:- the bill of entry has been assessed by the proper officer and the duty is paid on the basis of assessment and in view of this, the refund claim cannot be claimed unless the legal remedy of challenging the respective assessment order by filing appeal is exhausted. In view of the Hon'ble Supreme Court judgment in the case of Priya Blue Industries Ltd. vs. CC (P) [2004 (9) TMI 105 - SUPREME COURT OF INDIA], the appeal of the appellant is not maintainable and the same is dismissed. - Decided against the assessee.
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2016 (1) TMI 587
Levy of penalty on CHA for abetment - duty evasion on import of Toyota Altezza car - Held that:- In the present case the person in whose name the car was imported was having a labour visa and did not have much balance either to buy a car or to pay the duty thereon. He admitted in his statement that he is an illiterate person without any first hand knowledge of the rules and regulations under the Customs Act. In such circumstances, the responsibility of CHA is much more to be cautious and vigilant. During the investigation it was found that the importer is not a real owner and is merely a carrier. In these circumstances, the CHA appellant has onerous responsibility to discharge which in the present circumstances he has failed to discharge and his culpability in the facts and circumstances cannot be ruled out. The learned Counsel for the appellant submits that the penalty imposed on the appellant is double the amount of penalty imposed on the main offender, i.e., Shri Shabeer Shareef and the same is illegal as per the law. At the most he is liable for the same penalty as that of the main offender. This argument of the learned Counsel has force and therefore, we reduce the penalty to the extent of ₹ 50,000/- as has been imposed on the main offender. - Decided partly in favor of appellant.
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Corporate Laws
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2016 (1) TMI 585
Sanction of Amalgamation and Arrangement - Scheme of Amalgamation and Arrangement is hereby sanctioned with the direction to follow all the procedural formalities.
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2016 (1) TMI 584
Scheme of Amalgamation - Held that:- Compliance of procedural requirements contemplated under the Act and the relevant Rules, on due consideration of the reports of Regional Director, Northern Region, Ministry of Corporate Affairs, and the Official Liquidator, the Scheme of Amalgamation is hereby sanctioned. The assets and liabilities of the Amalgamating Companies No. 1 and 2 shall stand vested in the Amalgamated Company. The Amalgamating Companies shall be dissolved without being wound up. The Amalgamated Company shall be required to comply with the procedural requirements with regard to all conditions stipulated under the Income Tax Act. The Scheme shall be binding on the Amalgamating and Amalgamated Companies, their respective Shareholders, Creditors and all concerned. Let formal order of sanction of the Scheme of Amalgamation be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date, other requisite permissions are received by the petitioner company. Notice of the order be published in the 'Indian Express' (English) and and 'Jansatta' (Hindi), both Delhi/ NCR Editions, and in the official Gazette of Government of Haryana. Any person interested shall be at liberty to apply to the Court for any direction(s) as per law. Learned counsel for the petitioner companies stated that the petitioner – Amalgamated Company would voluntarily deposit a sum of ₹ 1,00,000/- in the Common Pool Fund Account of the Official Liquidator within one month.
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Service Tax
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2016 (1) TMI 621
Job Work - Hamali work at sugar warehouse for the sugar factory - Nature of services - Manpower Recruitment and Supply Agency Services or Not - Consideration which has to be paid to the appellant is based upon the quantum of work completed and does not indicate any supply of labourers to the sugar factory. - The contract also talks about stitching of sugar bags after transferring the sugar from torn bags of sugar. - Held that:- services rendered by the appellant-assessees do not come under the purview of 'manpower recruitment or supply service' and hence the impugned service tax demands are not sustainable in law. Similarly in the case of other jobs undertaken such as handling of sugarcane or sugar or cleaning or removal of boiler ash, stitching of sugar bags, etc., undertaken by the appellants, these activities also do not come within the purview of 'Manpower Recruitment or Supply Agency service' - Decision in the cases of SATARA SAHAKARI SHETU AUDYOGIK OOS TODANI VAHTOOK SOCIETY [2014 (12) TMI 42 - CESTAT MUMBAI] Ritesh Enterprises [2009 (10) TMI 182 - CESTAT, BANGALORE] followed - Demand set aside - Decided in favor of assessee
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2016 (1) TMI 620
Job work - Nature of activity - Manufacturing activity or Mere supply of labour services - Converting Aluminum Ingots to Aluminum casting - The charges for the job work are based on the quantum of production and not against supply of manpower. - Held that:- The activity remains as production on behalf of the client in the factory of the client. In this fact though the appellant was deputing the manpower but services which carried out were job work in the client's factory, the said activity amounts to manufacture, hence, does not fall under category of Manpower Recruitment Services. Since activity of the appellant amounting to manufacture of the goods, even it is not covered under Business Auxiliary Services, as Manufacturing activity stands excluded in the definition to Business Auxiliary Services. Even if it is considered as taxable activity, the same is exempted under Notification No. 8/2005-ST dated 1/3/2005. - Demand set aside - Decided in favor of assessee.
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2016 (1) TMI 619
Condonation of delay of 352 days before the first appellate authority - appellant submitted that the earlier counsel, namely, their Chartered Accountant, Amit Garg was not conversant with the service tax provisions and that he handed over the original order to his peon, who kept the same in the file and forgot to file the appeal within time. - Held that:- Inconsistent stand has been taken by the appellant at every stage of the appeal. Three different stands have been taken; first before the First Appellate Authority, then before the Tribunal and now before this Court. It is apparently clear that under the garb of blaming someone else, the appellant is trying to invoke a sympathetic view of the Court to condone the delay. None of the active partner have the gumption to file a personal affidavit before this Court - Condonation denied - Decided against the assessee.
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2016 (1) TMI 597
Demand of service tax on Business Auxiliary services - small scale benefit under Notification No. 6/2005-ST - use of brand name of others i.e Tata Teleservices - Held that:- service has been provided by the appellant to Tata Teleservices and therefore it cannot be said that it provided service to Tata Teleservices in the latter's brand name. Thus the denial of small scale exemption benefit to the appellant is unsustainable. As regards the incentive received for achieving the targets, it is; not excludible from the assessable value of the service which as per Section 67 is the gross amount received for the service rendered and it cannot be sustainably argued that such incentive would not constitute part of the gross amount recovered as the incentive was with regard to achieving the target for rendering BAS only. While granted SSI exemption, the issue of valuation decided against the assessee, penalty reduced - Decided partly in favor of assessee.
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Central Excise
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2016 (1) TMI 596
Availment of fraudulent credit on the basis of fake invoices - Held that:- By the impugned order passed by the High Court of Gujarat [2006 (1) TMI 38 - GUJARAT HIGH COURT], the Department/Appellant is directed to refund a sum of ₹ 2 lakhs only. Having regard to this meagre amount that is involved, we dismiss the appeal.
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2016 (1) TMI 595
Classification - distinction between ‘Newsprint in rolls’ and ‘Newsprint in reels’ - Held that:- The issue of classification or the issue whether roll or reel are same items does not call for consideration as all are tax neutral.The appeals are, accordingly, dismissed.
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2016 (1) TMI 594
Extended period of limitation - validity of show cause notice - Held that:- Not only the show cause notices issued are held to be time barred by the Customs, Excise and Service Tax Appellate Tribunal [2006 (1) TMI 599 - CESTAT MUMBAI] and rightly so, but we also find that the order was passed on the basis of test reports and in spite of specific request of the assessee for giving them an opportunity to cross-examine the witnesses, the opportunity was denied to the assessee thereby infringing the principles of natural justice.
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2016 (1) TMI 593
Cenvat Credit - input service - maintenance and repair services of windmill farm - The electricity generated in this windmill farm are fed into grid of Maharastra State, electricity board for supply and distribution, in return appellant were allowed draw equivalent units for consumption of electricity, at their manufacturing plant, where excisable goods are manufactured and cleared on payment of duty. - Held that:- Hon’ble High Court of Bombay had considered self same issue in the case of Endurance Technology Pvt. Ltd. [2015 (6) TMI 82 - BOMBAY HIGH COURT] - the management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "l" of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. Credit allowed - Decided in favor of assessee.
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2016 (1) TMI 592
Cenvat Credit - duty paid on its inputs namely CC copper rod - allegation that goods were not actually received by the appellant and that the transactions were bogus - demand based on statement of trader / supplier - Held that:- After taking the statement of Shri R.K.Gupta, department has not conducted any investigations with regard to the tempo number shown, in these invoices. Instead, the department has just shifted the burden on the appellant stating that appellant has to correlate the cheque with the transactions made. It is the department who alleges fraud. Shri R.K.Gupta has specifically stated that all the transactions were not bogus. It was stated by him that with regard to the cheque of the appellant the goods were actually supplied. In case of supply of less than 6 tons (i.e. capacity of a tempo vehicle) the transactions are genuine; and that though he had no godown, he used to dispatch goods directly from the sellers godown. In such a scenario, when the documents and registers of the appellant are proper, it is for the department who alleges fraud to establish that the invoices issued to the appellant by Shri R.K.Gupta were not genuine. Department has not succeeded in establishing guilt on the part of appellants. The statement of Shri R.K.Gupta does not contain incriminating evidence against the appellants so as to deny the credit. - Credit allowed - Decided in favor of assessee.
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CST, VAT & Sales Tax
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2016 (1) TMI 586
Condonation of inordinate delay of 1298 days in filing the appeal - revenue appeal - Power of the Checking Officer to decide the nature of transactions at hand - Haryana Value Added Tax Act, 2003 - Held that:- The narration of cause for claiming condonation of delay in filing the present appeal does not satisfy the test of “sufficient cause” so as to entitle the State for condonation of inordinate delay of 1298 days in filing the appeal. Narration of above facts shows that the State was not serious in pursuing the litigation. The State should be more vigilant and serious in pursuing the litigation. It is very surprising and astonishing that it has taken such a long time for the decision making process for filing the appeal. The State must ensure in future that the matter is expedited and the responsibility is fixed on the officer/official dealing with the filing of the appeals in case any delay occurs on their part. Since no sufficient cause has been shown in the present case, no ground for condonation of delay is made out. - Decided against the revenue.
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