TMI Tax Updates - e-Newsletter
January 20, 2016

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• TDS on bank guarantee commission - While it is termed as guarantee commission, it is not in the nature of commission - No TDS u/s 194H - Tri

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Articles

1. EXEMPTIONS TO PRIVATE COMPANIES UNDER COMPANIES ACT 2013 – IMPACT ANALYSIS

   By: Bhavik Gala

2. SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 – HIGHLIGHTS AND ANALYSIS

   By: Bhavik Gala

News

1. Extension of time-line upto 31st March, 2016 for Government Co-contribution under the Atal Pension Yojana (APY)

2. Government approves proposal of M/s Firefly Networks Ltd and recommends the proposal of M/s HDFC Standard Life Insurance Company Ltd for the approval of CCEA, involving an FDI of ₹ 1705 crore

3. RBI Reference Rate for US $

4. Auction for Sale (Re-issue) of Government Stock

5. Roadmap drawn-up for implementation of Indian Accounting Standards (Ind AS) converged with International Financial Reporting Standards (IFRS) for Scheduled Commercial Banks (Excluding Rrbs), Insurers/Insurance Companies and Non-Banking Financial Companies (NBFC’s)

Notifications

VAT - Delhi

1. F.3(26)/Fin(Rev-I)/2015-16/DS-VI/22 - dated 18-1-2016 - DVAT

Amendments in the Fourth Schedule, for the existing rows pertaining to serial numbers 12 and 13, regarding Petrol & Diesel

Circulars / Instructions / Orders

DGFT

1. 14/2015 - dated 19-1-2016

Trade Facilitation Measures

Highlights / Catch Notes

Income Tax

• Compensation for Plot Delivery Delays Not Subject to TDS u/s 194A, Deemed Non-Interest Payment.

  Case-Laws - AT : Non deduction of TDS u/s 194A - compensation (damages) paid in the form of interest by the appellant to various allottees for delays occurred in delivering the respective plots - the amount in question cannot be characterised as interest within the meaning of section 194A - AT
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• No Penalty for Assessee: Reasonable Cause Found for Not Deducting Tax on Foreign Remittances u/ss 271C and 273B.

  Case-Laws - AT : Penalty u/s Sec. 271C - non deduction of tds on five foreign remittances u/s 195 - there was reasonable cause as envisaged u/s 273B for not deducting tax at source by the assessee on the aforesaid payments, and therefore, the assessee was not liable for levy of penalty u/s 271C - AT
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• Court Rules No TDS Deduction Needed for Bank Guarantee Commissions: Not a 'Commission' u/s 194H.

  Case-Laws - AT : TDS u/s 194H - non deduction on bank guarantee commission - While it is termed as ‘guarantee commission’, it is not in the nature of ‘commission’ as it is understood in common business parlance and in the context of the section 194H. - demands under section 201(1) and 201(1A) r.w.s. 194H quashed - AT
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• Court Upholds Disallowance of Film Business Loss; Transaction Deemed a Sham to Evade Taxes.

  Case-Laws - SC : Disallowance of loss shown by the assessee in Film business - Having regard to the facts and circumstances in which the “investment” was made and “loss” claimed, the entire transaction was a sham transaction and was a calculated device to avoid tax liability. - SC
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• High Court Reverses ITAT's Decision on Disallowance of Service Charges; Each Tax Year Must Be Assessed Independently.

  Case-Laws - SC : Disallowance of service charges paid under Section 40A(2) - High Court was perfectly justified in reversing the eventual conclusion of the learned ITAT on the basis that the findings and conclusions recorded in the course of the assessment proceedings of the previous year cannot foreclose the findings that are required to be arrived at for the Assessment Year in question - SC
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• Section 36(1)(viia) IT Act: Banks can claim 7.5% total income deduction plus 10% on average rural advances.

  Case-Laws - AT : Deduction u/s 36(1) (viia) - section 36(1) (viia) clearly provides for deduction of 7.5 % of the total income and a further deduction of 10 % of the aggregate of average rural advances of the specified banks. Thus assessee is entitled to further deduction of 7.5 % of total income of the assessee over and above 10 % of aggregate of average rural advances of the bank - AT
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• Development Charges for 99-Year Lease Not Subject to TDS u/s 194-I, Not Considered Rent Payments.

  Case-Laws - AT : TDS u/s 194-I - development charges paid by the assessee to RIICO towards allotment of land on lease of 99 years - whether payment of development charges paid was for acquisition of leasehold rights or for use of land? - development charges can not be considered as rent - No TDS - AT
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• Software Payment Ruled as Purchase, Not Subject to TDS u/s 194C; No Additional Tax for Non-Deduction.

  Case-Laws - AT : TDS u/s 194C - Addition on account of payment of software charges without making TDS - it is a pure transaction of purchase. Therefore, the provision of TDS will not be attracted. - AT
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• Registration Denied u/s 12A: Charging Nominal Fees Doesn't Make Assessee a Commercial Entity.

  Case-Laws - AT : Grant of registration u/s. 12A rejected - Charging of nominal fee/cess in course of performance of its duties would not make the assessee a commercial/business establishment. - AT
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• Loan of Rs. 8 Lakhs Not Taxable as Unexplained Cash Credit u/s 68.

  Case-Laws - AT : Addition u/s 69 - Even though the loan transaction of ₹ 8 lakhs has been kept outside the books of account by the assessee, it cannot be taxed as unexplained cash credit u/s. 68 - AT
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Customs

• Refund Claim for Special Additional Duty Rejected Due to Jurisdiction Error by Assistant/Deputy Commissioner of Customs at Airport Complex.

  Case-Laws - HC : Refund of SAD - jurisdiction to entertain the refund claim - it cannot be said that the main refund application was filed before the AC/DC of Customs, who did not have jurisdiction over the Airport and Air Cargo Complex - HC
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Corporate Law

• Private Companies Get Exemptions Under Companies Act 2013: Simplified Compliance, Fewer Board Meetings, and Cost Savings.

  Articles : EXEMPTIONS TO PRIVATE COMPANIES UNDER COMPANIES ACT 2013 – IMPACT ANALYSIS - Corporate Laws / Banking / SEBI / LLP
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• SEBI Regulations 2015: Ensuring Transparency and Protecting Investors with Mandatory Disclosures for Listed Companies.

  Articles : SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 – HIGHLIGHTS AND ANALYSIS - Corporate Laws / Banking / SEBI / LLP
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• Court Orders Company Winding Up for Unpaid Admitted Debt; Liquidator Officially Appointed by Court Decision.

  Case-Laws - HC : Winding up petition - failure to pay the admitted liability/debt - in view liability being admitted the company is ordered to be wound up and the Provisional Liquidator is now appointed as Liquidator of the company. - HC
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Service Tax

• Service Tax Demand Over Free Material Value in Construction Contracts Set Aside Under Works Contract Rule.

  Case-Laws - AT : Service tax demand under Construction Service (CS) / Commercial or Industrial Construction Service (CICS) / Works Contract (WC) - The demand relating to denial of abatement on the ground that the value of material supplied free of cost by the service recipient was not included in the assessable value set aside. - AT
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• Bank's Refusal to Accept Tax Payment Without PAN Led to Penalty; Dropped Due to Lack of Willful Misconduct.

  Case-Laws - AT : Levy of penalty for Delay of payment of service tax due to Bank refused to take deposit of tax in absence of PAN based registration number - no case of deliberate default or contumacious conduct, is made out against the Appellant - Penalty dropped - AT
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Central Excise

• SEZ Developer Supplies Classified as Exports; No Duty Required, Refunds Due for Previously Paid Duties.

  Case-Laws - AT : Supply made to the SEZ Developers - supply made to the SEZ Developers is an export and no duty is payable. Therefore, the duty paid by the appellant is required to be refunded by the department to the appellant. - AT
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Case Laws:

• Income Tax

• 2016 (1) TMI 684
  Rectification of mistake - Long Term Capital Gain on sales of shares was wrongly offered to tax and that the same was exempted u/s 10(38) as per assessee - as per CIT(A) claim was not supported by a revised return of income - Held that:- The CBDT Circular No.14 of 1955 dated 11.04.1955 has taken a view that the officers of the department must not take advantage of ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing reliefs. In my view therefore the revenue authorities ought not to have rejected the application u/s 154 of the Act on the ground that the assessee has not filed the revised return of income. The CIT(A) has placed reliance on the decision of the Hon’ble supreme Court in the case of Goetz (India) Ltd. (supra) for sustaining the order of the AO u/s 154 of the Act. The Hon’ble Supreme Court in it’s decision rendered in the case of Goetze (India) Ltd vs CIT [2006 (3) TMI 75 - SUPREME Court] has clarified that the appellate authorities under the Act have the power to consider the claim even if the business of the revised return of income. Therefore, the claim of the assessee that Long Term Capital Gain is exempt u/s 10(38) of the Act has to be examined by the AO. It is seen from the order of AO u/s 154 of the Act that the AO wanted details of acquisition and proof of payment of STT. Therefore set aside the order of CIT(A) and remand the question of exemption of Long Term Capital Gain u/s 10(38) of the Act to the AO for fresh consideration. The assessee is directed to file necessary evidences before the AO to substantiate his claim. - Decided in favour of assessee for statistical purposes.

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• 2016 (1) TMI 683
  Disallowance u/s.43B - excise demand - CIT(A) deleted the addition - Held that:- Once the company makes the payment, whether under protest or otherwise, by debting Profit & Loss account or by showing in the Balance Sheet or as contingent liability the same will be available as deduction u/s 43B on making payment. Further, in the case of Glaxo Smithline Consumer Healthcare Ltd. ITA [2007 (7) TMI 334 - ITAT CHANDIGARH] it has been held that the Section 43B is not restrictive of prohibiting section by the Revenue but it is equally an enabling provision under which deductions are allowed on the payment of duties and taxes. In other words, the provision of Section 43B overrides the method of accounting consistently followed and provides for the deduction of statutory liabilities in the year of payment irrespective of the year in which the liability is incurred. - Decided in favour of assessee Disallowance on account of Panchayat tax - CIT(A) deleted the addition - Held that:- We find that the expenses on account of panchayat tax was debited under the head 'prior period expenses' by the Auditor of the Company. We further note that the said expenses were crystallized during the year upon the assesee being served a notice of demand. Though, the some part of the demand pertained to earlier years, we are in full agreement with the conclusion drawn by the CIT(A) on this point that the expenses pertain to current year as the notice of demand was received during the current year which is consistent to the practice followed by the assessee - Decided in favour of assessee Disallowance on account of foreign commission - non deduction of tds - CIT(A) deleted the addition - Held that:- We find that the assessee has made payment of export commission which was directly remitted out of the country as the non resident agent based and operated outside the country and no part of the income on account of the export commission arose in India. In the Circular No.23 dated 23/07/1969 and Circular No.786 dated 07.02.2000 issued by CBDT, it has been provided that no TDS was required to be deducted from the export commission where the non resident agent operated from the outside of the country and the payment is remitted directly abroad. We also note that the similar issue cropped up in the A.Y. 2007-08 in the assessee's own case which was decided in favour of assessee

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• 2016 (1) TMI 682
  TDS u/s 194A - Disallowance u/s 40(a)(ia) - compensation paid in the form of interest by the appellant to various allottees for delays occurred in delivering the respective plots - non deduction of tds - Held that:- There was neither borrowing or debt incurred by the assessee. The arguments of the ld. DR that the expression “moneys borrowed or debt incurred” is further qualified by the word ”claim” or other similar right or obligation and the liability of the assessee in question arises out of the claim made by an allottee of plot is also not acceptable. The expression “including a deposit, claim or other similar right or obligation” has to be read ejusdem generis with the expression “moneys borrowed or debt incurred”. In other words the expression “interest” should be traceable to transactions in the form of borrowing of money. The decisions referred to by the ld. Counsel for the assessee clearly lay down the proposition that the nature of payment for delay in delivery of the plots is in the nature of damages and not in the nature of interest. We, therefore, are of the view that the amount in question cannot be characterised as interest within the meaning of section 194A of the Act. Consequently there was no obligation on the part of the assessee to deduct tax at source. Consequently no disallowance could be made u/s 40(a)(ia) of the Act. We therefore direct the disallowance made by the AO and sustained by the CIT(A) should be deleted. - Decided in favour of assessee Addition on interest income in relation to the deposit lying the Government of West Bengal - accrual of income - Held that:- The plea of the assessee for not recognising the interest income has been on the basis that the State Government had not issued orders for payment/credit of interest to the interest bearing treasury account of the assessee. There is no allegation that the State Government has refused to pay interest on the treasury account maintained by the assessee. It cannot also be said that the interest in question cannot be recognised owing to denial by the State Government of its obligation to pay interest or for the reason that the State Government is unable to pay interest. In such circumstances we are of the view that the revenue authorities were justified in bringing to tax interest on the premise that there was an accrual of income under the mercantile system of accounting. - Decided against assessee. Deduction u/s 80- IA - CIT(A) disallowed the claim - Held that:- the condition for grant of deduction u/s.80IA(4)(i) of the Act is that the assessee should start operating and maintain the infrastructure facility. As rightly contended by the ld. DR, the CIT(A) in deciding the appeal for A.Y.2008-09 has not considered any of the aforesaid requirements for allowing deduction u/s 80IA(4)(i) of the Act. In the impugned order, the CIT(A) has only refused deduction that the conditions mentioned u/s 80IA(4)(b)(i) of the Act has not been satisfied. In the given circumstances, we are of the view that it is just and appropriate to set aside the order of CIT(A) and remand the question of allowing deduction u/s 80IA(4)(i) of the Act to the AO for fresh consideration. The AO will examine all the requirements for allowing the aforesaid deduction. - Decided in favour of assessee for statistical purposes. Addition on account of Penal Interest - Held that:- The assessee submitted that the said item of the income has been considered in A.Y.2008-09 besides relying upon Accounting Standard-XVI of ICAI. The AO has thereafter observed that a sum of 26.17 crores being penal interest collected for period payment on sale value of the land during the year is required to be included in other income and since the sale of land was completed the credit of interest to the project cost of work in progress is not in order and has resulted in understatement of income. The AO has accordingly added a sum of 26.17 crore to the total income of the assessee. The assessee has accepted this addition and has not challenged the same before CIT(A) for A.Y.2007-08. In the light of the factual background on the aforesaid issue, we are of the view that a sum of 26.17 crore was income of A.Y.2007-08 and has been taxed in the said assessment year and therefore cannot be taxed again in A.Y.2008-09.- Decided in favour of assessee Addition on account of under statement of profit - CIT(A) deleted the addition - Held that:- We are of the view that the order of the CIT(A) does not call for any interference. It is not disputed by the revenue that there has been a method of accounting followed by the assessee was to recognise income only when registration of conveyance is completed in favour of the allottees. In fact the settled position in law is that a sale is complete only on registration of conveyance. The extended meaning of the definition “transfer” u/s 2(47) of the Act will not be applicable in the present case for the reason that sale of land by the assessee is sale of stock in trade and stock in trade is not a capital asset within the meaning of definition of the said term u/s 2(14) of the Act. The extended meaning of the definition “transfer” u/s 2(47) of the Act is applicable only to transfer of a capital asset. Besides the above we are of the view that the assessee has recognised this income from the sale of land in the subsequent year i.e. 2009-10. In the given facts and circumstances we are of the view that CIT(A) was fully justified in deleting the addition made by the AO - Decided in favour of assessee

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• 2016 (1) TMI 681
  Reopening of assessment - claim of exemption under section 10(23C)(vi)denied - eligibility for approval from the prescribed authority - Held that:- Upholding the order of CIT(A), we hold that the assessee is not entitled to the aforesaid deduction under section 10(23C)(vi) of the Act, in the absence of a approval being granted by the prescribed authority. We also uphold the order of Assessing Officer in treating the assessee as AOP instead of an institution solely existing for imparting education. Denial of deduction under section 10(23C)(vi is the taxability of receipts after adjustment of expenditure in the hands of the assessee - Held that:- The Assessing Officer referred to the provisions of section 11(1)(d) of the Act, under which only those receipts were excluded from the scope of income, which were in the nature of voluntary contribution and that too with specific direction to form part of corpus. Since both these conditions were missing, the said receipts were held to be revenue receipts and not capital receipts as claimed by the assessee in its books of account. Accordingly, capital outlay contribution was treated as revenue receipts of the assessee.In view of the factual findings of the Assessing Officer in this regard and in the absence of approval being granted to the assessee under section 10(23C)(vi) of the Act, the capital outlay contribution is to be treated as revenue receipt in the hands of assessee, against which the deficit claimed by the assessee is to be adjusted. Whether in case the receipts are held to be taxable in its hands then, the benefit of set off of brought forward losses should be given to the assessee? - Held that:- The perusal of the details furnished by the assessee does not clarify the objection raised by the CIT(A) whether the said returns of income were filed in time as the requirement of law is that the loss shall be allowed only if the return of income is filed within due date prescribed under section 139(1) of the Act. The second objection of the CIT(A) was that it was not clear whether the assessee has claimed exemption under section 10(23C)(vi) of the Act in the respective years. In case the capital outlay has not been brought to tax and only the deficit has been assessed as loss, then where the assessee has claimed the said capital outlay to be exempt under section 10(23C)(vi) of the Act, the losses arising therefrom cannot be set off against the income of the present assessment years. The Assessing Officer is directed to carry out the necessary verification and decide the issue in line with our direction after affording reasonable opportunity of hearing to the assessee.

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• 2016 (1) TMI 680
  Penalty u/s Sec. 271C - non deduction of tds on five foreign remittances u/s 195 - (i) Engineering and Draughting services provided by AEC. - (ii) Payments for purchase of shrink wrapped software (i.e. standard computer software) - Held that:- It is noted that there is huge controversy on this issue, and therefore, assessee placed reliance on the judgments which were in its favour including the judgment of Hon’ble Supreme court in the case of Tata consultancy services [ 2004 (11) TMI 11 - Supreme Court ]. It is noted by us that various High Courts and benches of the tribunal have taken contradictory stands on this issue. The assessee has furnished list of various cases ‘for’ and ‘against’ the assessee, on this issue. Apparently, assessee adopted one of the views available. Under these circumstances, we are unable to accept the stand of the AO that – “no controversy was involved on the obligation of the assessee for deduction of TDS on the impugned payments and that view taken by the assessee was not one of the possible view and was not bonafide view, and accordingly there could not have been any reasonable cause for non-deduction of TDS on the impugned payments”. In our considered opinion, the decision with regard to the obligation of the assessee for deduction of TDS on the aforesaid payments was highly debatable, in the given facts of the case and legal scenario discussed above. The view adopted by the assessee based upon the certificate of the C.A., was one of the possible views and can be said to be based upon bonafide belief of the assessee. Therefore, under these circumstances we can hold that there was reasonable cause as envisaged u/s 273B for not deducting tax at source by the assessee on the aforesaid payments, and therefore, the assessee was not liable for levy of penalty u/s 271C - Decided in favour of assessee

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• 2016 (1) TMI 679
  TDS U/S 194J and 194I - tds not deducted on dock fees and airport terminal charges and cargo handling charges - Held that:- The stand of the Assessing Officer is that since the total reserves exceeds the investment in securities, income from which is exempt, therefore, it can be presumed that investment were out of borrowed funds. However, the investments were made by the assessee over the years and the total reserves in the respective years were more than the total investments during the year. Thus, in view of the decision in Reliance Utilities in (2009 (1) TMI 4 - BOMBAY HIGH COURT), we find merit in the submissions of the assessee. It is also noted that the ld. Commissioner of Income Tax (Appeals) uphold the disallowance amounting to 3304. We affirm the stand of the ld. Commissioner of Income Tax (Appeals). So far as, disallowance of payments made in violation of the provisions u/s 40(a)(ia) r.w.s 194 I and 194J is concerned, we note that in para 4.1 of the impugned order, the brake up of the disallowance made by the Assessing Officer has been discussed. Since, we have held that the assessee is not covered u/s 194I/194J and the assessee cannot be treated in default, therefore, we affirm the stand of the ld. Commissioner of Income Tax (Appeals). Resultantly, this appeal of the Revenue is also having no merit. - Decided in favour of assessee.

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• 2016 (1) TMI 678
  TDS u/s 194H - non deduction on bank guarantee commission - Held that:- When bank issues the bank guarantee, on behalf of the assessee, all it does is to accept the commitment of making payment of a specified amount to, on demand, the beneficiary, and it is in consideration of this commitment, the bank charges a fees which is customarily termed as ‘bank guarantee commission’. While it is termed as ‘guarantee commission’, it is not in the nature of ‘commission’ as it is understood in common business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements under section 194H. We are, therefore, of the considered view that the CIT(A) indeed erred in holding that the assessee was indeed under an obligation to deduct tax at source under section 194H from payments made by the assessee to various banks. As we have held that the assessee was not required to deduct tax at source under section 194H, the question of levy of interest under section 201(1A) cannot arise. The scope and effect of section 194H (w.e.f. 01/06/2001), section 194H as also amendment of section 197 made by the Finance Act 2001 have been elaborated in departmental circular no.14 of 2001. Further, the scope and effect of the amendment made in opening portion of section 194H by the Finance Act, 2002 have been further elaborated in departmental circular no.8 of 2002 dated 27/08/2002. In view of the above discussions, we quash the impugned demands under section 201(1) and 201(1A) r.w.s. 194H. - Decided in favour of assessee.

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• 2016 (1) TMI 677
  Unexplained cash paid for acquiring the right to dredge sand - CIT(A) deleted the addition on the ground that the assessee had explained the source of funds which is from agricultural income of the Chumble family which was kept in common family pool and it was introduced in the business as and when required - Held that:-Considering the family holding of 93 Acres of agricultural land, where different crops such as Grapes, Khurasana, Tomato, Masur, Groundnuts and Vegetables are produced and considering the quantum of agricultural produce on the basis of established norms published by various institutions and authors and the rate for such agricultural produce certified by Nashik Krishi Utpanna Bazar Samiti, the Ld.CIT(A) accepted the source of common funds for investing in the sand dredge business. We find no infirmity in the order of the CIT(A). Although the assessee in his paper book has certified his reply was filed before the AO along with the enclosures, during the course of assessment proceedings, we find the AO in a cryptic manner has merely mentioned that “moreover there appears to be a common source of fund”. Once the AO accepts that there appears to be a common source of fund and when the family of the assessee owns more than 93 acres of agricultural land on which various crops are grown, therefore, we find force in the submission of the Ld. Counsel for the assessee that the money available from such agricultural activity is sufficient to meet the auction money required for the sand business. - Decided against revenue Addition on income from sand business activity - CIT(A) deleted the addition - Held that:- Admittedly, the assessee has not declared any income from sand business activity. The additional income so declared in the return filed in response to notice u/s.153A is on account of writing off of certain sundry creditors. Therefore, once the income from sand business was not specifically declared in the return of income, the Ld.CIT(A), in our opinion, was not justified in deleting the same. We accordingly reverse the order of the CIT(A) on this issue and the addition of 2,10,000/- made by the AO is restored. - Decided against assessee Disallowance of expenses - CIT(A) deleted the addition - Held that:- From the assessment order, we find when the AO asked the assessee to produce the details of expenses incurred for truck hiring charges, diesel and petrol expenses, repairs and maintenance expenses, scrap sales, sale of bricks etc. the Authorised Representative of the assessee expressed his inability to furnish the requisite information. The assessee had not provided the various details as called for by the AO during assessment proceedings. Under these circumstances, the CIT(A) in our opinion was not justified in accepting the book results declared by the assessee. We therefore reverse the order of the CIT(A) on this issue and the ground raised by the Revenue is allowed. - Decided in favour of revenue Estimation of income from truck hiring business - Held that:- We find admittedly the assessee had declared Nil income in the return filed in response to notice u/s.153A despite declaration of additional income of 10,00,000/- and another 4,53,000/- on account of error and omission. Therefore, since the assessee has not maintained proper books of account from truck plying business, the income of the assessee has to be estimated as per provisions of section 44AE. Although the AO has computed such income at 1,33,000/-, however, the income declared by the assessee at 12,12,500/- which we are upholding in the subsequent paragraphs will take care of this issue. Therefore no separate addition is called for. - Decided against revenue. Set off of loss from the income offered to tax u/s.132(4) - CIT(A) allowed the set-off - Held that:- AO during the course of assessment proceedings observed that in the profit and loss account the assessee has debited petrol and diesel expenses of 13,84,767/- and repair expenses of 4,68,000/- against the lorry hiring charges of 12,71,515/-. The ratio of expenditure as compared to the preceding assessment year was very high. The AO, therefore, held that the assessee cannot incur loss from the truck business. Further, since the assessee was unable to produce bills and vouchers etc., the AO applied the provisions of section 44AE. Since we have upheld the above action of the AO, therefore, we hold that the CIT(A) was not justified in giving set off of loss of 2,78,533/- from the income offered to tax during the course of search proceedings as additional income. The loss should not have been allowed to be set off by the CIT(A). Therefore, we reverse the finding of the CIT(A) on this issue - Decided in favour of revenue Credit of additional income to the profit and loss account - whether 12,12,500/- declared by the assessee during the course of search should have been taxed over and above the income determined by the AO? - Held that:- We find the assessee in the instant case has not filed his return of income for the impugned assessment year before the search. Although he had declared additional of 12,12,500/-, however, the assessee has not honoured the same while filing return of income and has declared NIL income by filing profit and loss account in which the additional income has been credited to the profit and loss account and various expenses claimed which assessee could not substantiate. Under these circumstances, the total income of the assessee cannot be less than 12,12,500/-. We hold and direct accordingly. The ground by the revenue is decided accordingly. Addition on account of suppressed sale of scrap - CIT(A) deleted the addition - Held that:- Since during the course of assessment proceedings the assessee was unable to produce the monthly details regarding sales and expenses of scrap business, the AO estimated the scrap sale and determined the profit on reasonable basis. Under these circumstances, we uphold the order of the AO in bringing to tax the amount of 1,65,559/- on account of suppressed sale of scrap. Ground raised by the Revenue is accordingly allowed. However, since we are holding that the income of the assessee cannot be below 12,12,500/-, therefore, no separate addition of 1,65,559/- is required. Addition on account of profit on sale of bricks - Held that:- Since no details were produced before the AO during the course of assessment proceedings to substantiate the profit and loss account so prepared, therefore, we uphold the order of the AO on this issue and the order of the CIT(A) is reversed. The ground raised by the Revenue is accordingly allowed. However, since we have held that the income of the assessee cannot be less than 12,12,500/-, therefore, no separate addition is called for as the same will take care of 71,313/-.

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• 2016 (1) TMI 675
  Disallowance of service charges paid under Section 40A(2) - ITAT deleted the addition - HC confirmed disallowance [2007 (7) TMI 639 - KARNATAKA HIGH COURT] - Held that:- A reading of the order of the ITAT in favour of the assessee which has been reversed by the High Court would indicate that the learned ITAT did not address itself to a very fundamental issue that had arisen before it, namely, effect of the failure of the assessee to produce evidence in support of the services claimed to have been rendered by UTC during the Assessment Year in question i.e. 1984-1985. The answer given by the assessee in response to a specific query made by the Assessing Officer in this regard was that explanations in this regard had already been submitted for the previous Assessment Year i.e. 1983-1984. If service had been rendered to the assessee by UTC during the Assessment Year in question and service charges had been paid for such service rendered, naturally, it was incumbent on the part of the assessee to adduce proof of such service having been rendered during the period under assessment. There is no dispute on the issue that the assessee did not, in fact, offer any proof of the service rendered during the Assessment Year in question. In such circumstances, the High Court was perfectly justified in reversing the eventual conclusion of the learned ITAT on the basis that the findings and conclusions recorded in the course of the assessment proceedings of the previous year cannot foreclose the findings that are required to be arrived at for the Assessment Year in question i.e. 1984- 1985. We, therefore, can find no fault with the order of the High Court on the aforesaid score. - Decided against assessee Disallowance of loss shown by the assessee in Film business - Held that:- Having regard to the facts and circumstances in which the “investment” was made and “loss” claimed, we can find no fault in the view taken by the High Court that the entire transaction was a sham transaction and was a calculated device to avoid tax liability.- Decided against assessee Disallowance of donation to Aparna Ashram - Held that:- Assessee had failed to furnish any proof of service rendered by UTC in the course of the relevant Assessment Year i.e. 1984-1985. Alternatively, the High Court construed certain facts as, for example, compliance of the conditions subject to which registration was granted to the Aparna Ashram under Section 35(2A) of the Act to be of significance as against the contrary/different view of the learned Tribunal on this score. There was no departure from the basic facts found by the learned Tribunal in the two illustrative situations cited above, namely, that (i) the assessee had not adduced any proof of service rendered by UTC in the Assessment Year 1984-1985; (ii) that Aparna Ashram had not complied with the conditions subject to which registration had been granted to it under Section 35(2A) of the Act.- Decided against assessee

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• 2016 (1) TMI 667
  Deduction u/s 36(1) (viia) - whether assessee is eligible for deduction of 10 % of the amount of aggregate average rural advances of the bank and a further deduction of 7.5 % of the Income? - Held that:- Circular no 464 dated 18/7/1986 explaining the provision of The Income Tax (Amendment) Act 1986 has answered this issue as under:- “Income-tax (Amendment) Act, 1986 Modification in respect of deduction on provisions for bad and doubtful debts made by the banks 5. Under the existing provisions of clause (viia) of sub-section (1) of section 36 of the Income-tax Act inserted by the Finance Act, 1979, provision for bad and doubtful debts made by scheduled or a non-scheduled Indian bank is allowed as deduction within the prescribed limits. The limit prescribed is 10 per cent of the total income or 2 per cent of the aggregate average advances made by the rural branches of such banks, whichever is higher. It had been represented to the Government that the foreign banks were not entitled to any deduction under this provision and to that extent, they were being discriminated against. Further, it was felt that the existing ceiling in this regard, i.e., 10 per cent of the total income or 2 per cent of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under clause (viia) of sub-section (1) of section 36 of the Income-tax Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2 per cent of the aggregate average advances made to by rural branches of the banks concerned. It may be clarified that foreign banks do not have rural branches and hence this amendment will not be relevant in the case of the foreign banks. The other provisions secure that a further deduction shall be allowed in respect of the provision for bad and doubtful debts made by all banks, not just the banks incorporated in India, limited to 5 per cent of the total income (computed before making any deduction under this clause and Chapter VIA). This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction up to 2 per cent of the aggregate average advances made by such branches and a further deduction up to 5 per cent of their total income in respect of provision for bad and doubtful debts.” There is no change in law except the percentages subsequent to this circular. Therefore it is apparent that section 36(1) (viia) clearly provides for deduction of 7.5 % of the total income and a further deduction of 10 % of the aggregate of average rural advances of the specified banks. Thus assessee is entitled to further deduction of 7.5 % of total income of the assessee over and above 10 % of aggregate of average rural advances of the bank. - Decided in favour of assessee

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• 2016 (1) TMI 666
  Penalty u/s 271(1)(c) - capital gains on the sale of the said 'user data' - CIT(A) deleted the penalty - Held that:- As the assessee was under bonafide belief regarding the non taxability of the amount received as consideration on sale of 'user data'. Even the AO in the original assessment proceedings had also agreed to the claim of the assessee. This fact itself shows that the issue was debatable. As all the particulars of the sale and the non taxability of the capital gains were fully and duly disclosed in the return of income and also during the assessment proceedings. Hence, it was not a case of furnishing of inaccurate particulars of income or concealment of income. - Decided in favour of assessee

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• 2016 (1) TMI 665
  Penalty under section 271AAA - CIT(A) deleted the penalty holding that the cash seized from the assessee is deemed to be adjusted against the tax due from the assessee - Held that:- The basis for penalty levied by AO was that the assessee has not paid full tax alongwith interest on the undisclosed income which is required under section 271AAA(2)(iii) of the Act whereas in the present case the entire amount has already been deposited. Therefore it was rightly held by the CIT(A) that it is not a fit case for penalty under section 271AAA for the reasons that the request for adjustment of seized cash has been made and it is evident from the computation of income filed alongwith the return of income and more particularly when AO has finally made adjustment. Therefore the conditions as stipulated in sub-section (iii) to section 271AAA(2) is also deemed to have been satisfied. Therefore we are of the considered view that the order of the CIT(A) need no interference from our part. - Decided in favour of assessee.

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• 2016 (1) TMI 664
  TDS u/s 194-I - development charges paid by the assessee to Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) towards allotment of land on lease of 99 years - whether payment of development charges paid was for acquisition of leasehold rights or for use of land? - Held that:- Lease document has used the "Development charges" and "Economic rent" to be payable by the assessee. As the document has used two different phrases to connote different obligation therefore in our view development charges can not be read as rent within the purview of the section 194-I. further lease document has provided the consequences of non-payment of the development charges by the assessee, if the assessee failed to pay the development charges, as mentioned in the agreement, the possession was liable to be taken over by the RIICO, therefore the development charges can not be considered as rent.- Decided in favour of assessee

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• 2016 (1) TMI 663
  Entitlement for claim of depreciation - assessee claimed deprecation at 15% as per the provisions of Section 32(1) as well as additional depreciation at 20% as per the provisions of Section 32(1) (iia) on the electric installations - Held that:- It is pertinent to note that the assessee company has submitted all the details related to the electrical installation and its co-relation with the business activities of the assessee. The said installation was within the premises of the assessee. The assessee company has installed induction furnace and the same was reflected in the details of addition of fixed assets from 1/4/2005 to 31/3/2006 the same was annexed to the written submission by the assessee and the date of induction furnace was installed on 25/4/2005.Though, the security deposit was paid on 8/11/2004, the assessee has not claimed any depreciation in the earlier year. Therefore, the assessee has rightly claimed the depreciation in the year under consideration. The CIT (A) has given a detailed finding to this aspect. Therefore, the CIT (A) has rightly set aside the findings of the Assessing Officer and allowed the deprecation to the assessee. - Decided in favour of assessee

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• 2016 (1) TMI 662
  TDS u/s 194C - Addition on account of payment of software charges without making TDS - CIT(A) deleted the addition - Held that:- All the relevant details were available before AO but he has not exercised his power to verify the purchase bills. The AO has just only treated the purchase transaction as software development charges on premise and on the basis of nomenclature shown in financial statement of assessee. It is pertinent to note that merely nomenclature of the expense will not change the nature of the expense per se and he relied on the order of Ld. CIT(A). From the aforesaid discussion, we find that AO has disallowed the expense claimed by assessee on account of violation of provision of Sec. 194-C of the Act and AO inferred from the classification of the expense under head "software development charges" was liable for TDS. However, we find force from the submission made by Ld. AR before us that it is a pure transaction of purchase. Therefore, the provision of TDS will not be attracted. In view of this, we are inclined not to interfere with the order of Ld. CIT(A) - Decided in favour of assessee Addition on account of payment of training charges to M/s Leggiadro Consultancy Pvt. Ltd. without making TDS - CIT(A) deleted the addition - Held that:- Assessee has incurred this expense for upgrading the knowledge of the personnel of the company. As and when there is a query about the technical matter the employees used to avail the services by accessing the website of the party online. Ld. AR drew our attention on agreement between assessee and M/s Leggiadro Consultancy Pvt. Ltd. which is placed. We find that said expenses incurred by assessee does not attract the provision of TDS as this expense relates to up-gradation of the knowledge of its employees and for this purpose the assessee has availed certain online facility. Therefore, we are not inclined to interfere into the order of Ld. CIT(A). Hence, this ground raised by Revenue is dismissed.- Decided in favour of assessee Addition on account of reimbursement of expenses without making TDS - CIT(A) deleted the addition - Held that:- AO has disallowed the expense on account of violation of TDS provision. However, as per the submission of assessee this transaction of reimbursement was out of purview of TDS provision besides this, we further find from the order of AO that expense incurred by assessee were in the nature of salary, wages, electricity charges, travelling & administrative charges and AO has not doubted the genuineness of the expense but disallowed those expenses on account of violation of TDS provision. We understand this transaction was out of purview of the TDS provision because it was the reimbursement of cost to the concern party. In view of above, we are inclined not to interfere into the order of Ld. CIT(A).- Decided in favour of assessee

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• 2016 (1) TMI 661
  Grant of registration u/s. 12A rejected - Held that:- The assessee has been established under the provisions of section 11 of The Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963. Thus, it is a creation of statute, the assessee derives its power to levy fee/cess from section 31 of the Act of 1963. The assessee levy and collect fees/penalty in the prescribed manner at the rates within the rate band fixed by the State Government. Thus, the assessee does not have unfettered power to charge fee/cess. Further, the assessee has power of entry, inspection, search and seizure u/s. 32A of the Act, 1963. The assessee can ask any person carrying business in the market area to produce the accounts and other documents and to furnish information relating to the stock of such agricultural produce and also relating to the payment of market fee and payment to the seller The assessee draws it’s power from the statute and has regulatory functions to perform. The assessee has law enforcing powers to conduct its duties and to accomplish the objects for which it has been established. Charging of nominal fee/cess in course of performance of its duties would not make the assessee a commercial/business establishment. The activities of the assessee are undoubtedly charitable in nature falling in last limb of section 2(15) i.e. ‘advancement of any object of general public utility’ and at the same time is not adversely hit by proviso to section 2(15) of the Act. Thus the assessee is entitled for registration u/s. 12A of the Act. - Decided in favour of assessee

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• 2016 (1) TMI 660
  Addition on unexplained expenditure - Held that:- First Appellate Authority has observed that there is no evidence that this represent outstanding dues or peak debits. The department has not filed copies of any seized material which can indicate that the amount worked out by the AO at 1,23,26,300/- is a gross sales not accounted by the assessee, rather, it is the peak debit/credit balance. The profit embedded in these sales can only be assessed as income of the assessee. The ld.CIT(A) after considering the result shown by the assessee estimated the gross profit of 10% on these unaccounted sales. However, on noticing that the assessee has debited unaccounted expenditure also, then, those expenditure cannot be allowed to the assessee unless it explains the source of expenditure. Once the unexplained expenditure were found to be higher than the alleged estimated gross profit, then the addition would be of the higher amount i.e. unexplained expenditure of 20,75,500/-. - Decided against revenue.

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• 2016 (1) TMI 659
  Disallowance u/s 14A - CIT(A) deleted the disallowance - Held that:- As relying on CIT vs. Hero Cycles Limited [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] and CIT vs. Winsome Textile Industries Ltd. [2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT ] to hold that Section 14A cannot be invoked when no exempt income was earned. Thus note that the Ld. CIT(A) has rightly observed that in the assessee’s case there was no exempt income earning during the year. Respectfully following the decision of CIT vs. Holcim Pvt. Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT ), Ld. CIT(A) has rightly held that the AO was not justified in making the disallowance and therefore, the same was rightly deleted. - Decided against revenue Addition on account of unverifiable purchases - CIT(A) deleted the addition - Held that:- in the assessment year 2009-10, the Bench has held that the Revenue Authority below has not properly considered the submissions, details, explanation and other relevant documentary evidence and related bills and vouchers, audited books of accounts of the assesse and the AO has made the addition without making any adverse material or facts against the assessee and without rejecting the audited books of account of the assessee. In the present case all the details and submissions of the assessee has been considered by the AO and AO has made the addition only on the basis of similar addition made in the assessment year 2009-10. Therefore, in the present case the AO is directed to decide the issue on the basis of already documentary evidence filed and verified by him at the time of completion of assessment. - Decided in favour of revenue for statistical purposes.

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• 2016 (1) TMI 658
  Addition u/s 69 - addition made in the in sum of 8 lakhs on protective basis on account of loan advanced - Held that:- We find that the factual transactions have not been properly understood by the ld.AO and the ld.CIT(A). We hold that the assessee only received a sum of 8 lakhs as loan from his brother and had repaid the same to his brother with interest. Hence, in these facts and circumstances the relevant section, if at all, that could be applied would be section 68 and not section 69. Even though the loan transaction of 8 lakhs has been kept outside the books of account by the assessee, it cannot be taxed as unexplained cash credit u/s. 68 in the facts of the case as essential three ingredients has been duly proved by the ld.AO himself and contents of the seized documents. We hold that though the loan transaction of 8 lakhs has been kept outside the books by the assessee. It has been proved beyond doubt based on the findings given hereinabove, that the essential three ingredients of section 68 has been duly proved. Hence, the character of a receipt would not change as admittedly the loan transaction is only capital receipt in the hands of the assessee. Protective assessment - the circumstances under which a protective assessment could be made has not been properly considered by the revenue. There is absolutely no doubt with regard to the fact that the sum of 8 lakhs has already been added in the hands of the assessee’s brother for the assessment year 1991-92 u/s. 143(3) vide assessment order dated 25-02-1994 by the very same ld.AO.We hold that if an addition has been sustained for the assessment year 1991-92 in the hands of the assessee, it will amount to double addition as substantively it has already been taxed in the hands of the assessee’s brother by the very same ld.AO by giving cogent reasons and based on the seized documents found and seized by the search party in the premises of the assessee’s brother. Hence, there is no justification to make any addition in the hands of the assessee for the very sum of 8 lakhs as cash credit either on substantive or protective basis in the facts and circumstances of the case - Decided in favour of assessee.

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• 2016 (1) TMI 657
  Disallowance of interest - amounts diverted to subsidiary company - Held that:- As the entire money in a business entity comes in a common kitty Monies are received as share capital or as term loan or working capital loan or as internal accruals do not have different colour. Whatever the receipts in the business, have the colours of business receipts and have no separate identification. The only thing sufficient is to disallow the interest paid on the borrowing to the extent of amount lend to subsidiary company without carrying any interest would be that the assessee has some loans or interest bearing debts to be repaid. In case, the assessee had a surplus which according to it could not be immediately, it would either be required to be circulated and utilized for the purpose of business or to be invested in a manner in which it generates income and not diverted towards subsidiary free of interest. Otherwise it amounts to not presenting the true and correct income of the assessee and the subsidiary company would be enjoying the benefit at the cost of assessee. In our opinion, interest incurred by the assessee to the extent amounts are diverted to subsidiary company on interest free basis on whatever reason may be are to be disallowed. If there is any chance of recoverability, then there is a provision in the Act to claim the same as bad debt. Various case law relied by the assessee's counsel is of no relevance to the facts of the present case. In view of this, we are of the opinion that CIT(A) not justified in deleting the disallowance proportionate interest on the loan advanced to the sister concern. - Decided in favour of revenue

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• 2016 (1) TMI 656
  Entitlement to deduction u/s 54F - as per AO assessee has not deposited the sale proceeds into capital gains account scheme before the due date for filing of return of income - CIT(A) restricted the deduction to the extent of amount paid within the due date for filing of return of income under section 139(4) - Held that:- deduction under section 54 / 54F cannot be denied simply because sale proceeds were not deposited into capital gains account scheme in the bank when in fact the said sale proceeds were utilized for purchase or construction of residential property. In the case on hand, the Assessing Officer as well as Commissioner of Income Tax (Appeals) partially denied the exemption under section 54F of the Act on the ground that assessee has not deposited the sale proceeds into capital gain account scheme which is not justified in view of the various decisions mentioned above. Thus, we direct the Assessing Officer to allow the claim of the assessee and recompute the capital gains in accordance with law, after providing adequate opportunity to the assessee. Cost of improvement disallowed - Held that:- This has to be examined by the Assessing Officer with reference to the bills produced by the assessee and decide the issue in accordance with law. Thus, we restore the issues back to the file of the Assessing Officer to decide the same afresh in accordance with law.

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• Customs

• 2016 (1) TMI 693
  Refund of SAD - jurisdiction to entertain the refund claim - period of limitation - Notification No.102/2007 as amended - the second respondent, for want of jurisdiction and on the ground of limitation, partly rejected the claim of the petitioner, by the impugned order dated 07.05.2015 - Held that:- In the case of Commissioner of Customs, Chennai v. Drive India Enterprise Solutions Ltd. [2013 (5) TMI 436 - CESTAT, CHENNAI] it was observed that, it cannot be said that the main refund application was filed before the AC/DC of Customs, who did not have jurisdiction over the Airport and Air Cargo Complex Second respondent is directed to send the original refund application submitted by the petitioner to the Assistant Commissioner of Customs (Airport and Air Cargo). The petitioner is also permitted to submit the copy of the refund application to the Assistant Commissioner of Customs (Airport and Air Cargo) along with the copy of this order, within a period of two weeks from the date of receipt of a copy of this order and on receipt of the same - matter remanded back - Decided in favor of assessee.

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• 2016 (1) TMI 692
  Levy of penalty on the petitioner carrying gold in the form of two gold bars and gold coins - they were passing through Green Channel with his hand bag - the petitioner preferred an appeal before the CESTAT in C/40694/2015 and the same is pending consideration. In the meantime, the petitioner has filed an application in No.C/EH/40307/2015, which was allowed and the appeal was posted for hearing on 10.09.2015. It is the contention of the learned counsel for the petitioner, seeking cross examination of certain witnesses is pending consideration before the Commissioner of Appeals, the same may be directed to be disposed of within a time frame. Held that:- Admittedly, the Commissioner of Appeals dismissed the appeal filed by the petitioner and as against the same, further appeal before the CESTAT has been filed. Hence, the impugned order cannot be questioned in the writ petition. Any further relief to be sought for is to be placed only before the CESTAT only. Since the appeal itself is rejected by the Commissioner of Appeals, the question of cross-examination to be considered by the Commissioner of Appeal at this stage cannot be countenanced. - Petition dismissed.

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• Corporate Laws

• 2016 (1) TMI 672
  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 Transferor Company shall stand vested in the Transferee Company. The Transferor Company shall be dissolved without being wound up. The Transferee Company shall be required to comply with the procedural requirements with regard to all conditions stipulated under the Income Tax Act, Accounting Standards issued by the Institute of Chartered Accountants of India. The Scheme shall be binding on the Transferor and Transferee 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 of receipt thereof. A notice of the order be published in the 'Indian Express' (English) and 'Des Sewak' (Punjabi) and in the official Gazette of Government of Punjab. 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 states that the petitioner – Transferee Company would voluntarily deposit a sum of 30,000/- in the Common Pool Fund Account of the Official Liquidator within one month.

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• 2016 (1) TMI 671
  Winding up of the respondent company sought on the ground that liquidated damages - Held that:- In Manju Bagai vs. Magpie Retail Ltd., [2010 (11) TMI 845 - DELHI HIGH COURT] inter-alia held that whether a particular clause about predetermined liquidated damages represents genuine covenanted pre-estimate of damages or it is in the nature of penalty has to be judged in the facts of each case and in the background of relevant factors which are case specific. The party claiming it may have to prove actual damages suffered. After applying the aforesaid enunciation of law, Delhi High Court dismissed all the petitions. If the principles of law as laid down by Delhi High Court are considered in the facts of the present case, it is evident that winding up of the respondent company is being sought on the ground that liquidated damages as mentioned in the business agreement have not been paid. The petitioner company has not been able to show that the same is on account of pre-estimated genuine damages, rather the amount as has been mentioned establishes that it is a kind of penalty and a penal stipulation cannot be enforced in the absence of any proof of actual loss, which a party to the contract is bound to make good to the other party. For the reasons mentioned above, the amount of damages claimed cannot be said to be admitted debt on account of which the respondent company can be directed to be wound up. The present petition is accordingly dismissed.

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• 2016 (1) TMI 670
  Winding up petition - failure to pay the admitted liability/debt - Held that:- As the respondent company was not in a position to discharge its admitted liability, vide order dated 21.4.2015, the petition was admitted. The official liquidator was appointed as Provisional Liquidator vide order dated 25.5.2015. He was asked to take over the movable and immovable assets of the company. No purpose would be served in keeping the matter pending and therefore, in view liability being admitted the company is ordered to be wound up and the Provisional Liquidator is now appointed as Liquidator of the company. Let the factum of winding up of the respondent company be published in the newspapers namely 'The Indian Express (English) and 'Jansatta' (Hindi) and in the Official Gazette of Government of Haryana.

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• 2016 (1) TMI 669
  Scheme of Amalgamation - Held that:- In view the procedural requirements under Section 391 to 394 of the Companies Act, 1956 and as well as relevant affidavit and rules and due consideration of the reports of the Regional Director, Ministry of Corporate Affairs, Noida, and the Official Liquidator, the Scheme of Amalgamation of Petitioner Company-1/Amalgamating Company, Petitioner company-2/ Amalgamating Company and Petitioner Company-3/ Amalgamated Company is hereby sanctioned and both the Amalgamating Companies shall be dissolved without being wound up. The Scheme shall be binding on Petitioner Company-1/Amalgamating Company, Petitioner Company-2/ Amalgamating Company and Petitioner Company-3/Amalgamated Company their respective Shareholders and creditors, and all concerned. Let the formal order of sanction of Scheme of Amalgamation be drawn in accordance with law and certified copy of the same be filed with the Registrar of Companies within 30 days from the receipt of the same. Copy of this order be published in 'Indian Express' (English), 'Jansatta' (Hindi) both Delhi/NCR editions and Official Gazette of Haryana. Any interested person shall be at liberty to apply to this Court for any directions as per law. It is made clear that in case any demand in future is made by the Income Tax from the Petitioner/Amalgamating Company-1 & 2, the Amalgamated Company shall make the payment.

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• 2016 (1) TMI 652
  Oppression and mismanagement - Held that:- The Company Petition was filed by the Petitioners based on the allegations of acts of oppression and mismanagement on the part of the Respondents and this implies that the Petitioners were not having control over the affairs of the Company. This is further confirmed by the fact that in any annual return, the Petitioners were not shown as Promoters. As admitted by the Applicant Advocate as well as the Advocate for the Respondent Nos.2 & 3, there has been restraint Order dated 15.12.2010, whereby interim injunction has been imposed from holding the general meetings of the Company. Consequently, the financial statements for the years 2010-11, 2011-12 & 2012-13 have not yet been filed. In this regard, there is nothing on record to show as to whether either of the rival parties has approached the Court seeking direction/modification of the aforesaid restraint Order so as to facilitate the filing of the annual returns and financial statements by holding AGM to meet the statutory compliances. On the contrary, the Applicant (Petitioner No.2) and Petitioner No. 1, without making some Company Application in the pending legal proceedings since 2010 before this Hon'ble Board seeking directions/reliefs as to filing of the financial statements and invocation of Sections 164 and 167 of the Companies Act, 2013, have claimed to be Promoters and new Directors have been appointed. As a matter of fact, there are controversial arguments as to whether there is Promoter in the Company, especially due to the claims of both the rival parties of having control over the state of affairs of the Respondent No. 1 Company. In addition, the provisions of Sections 164 and 167 of the Companies Act, 2013 have been notified w.e.f. 01.04.2014 and hence, consequential action under Section 167(3) accrues on non-filing of financial statements for three years commencing from 01.04.2014. In view of this legal position, the erstwhile Directors continue to be validly and legally appointed directors and hence, the said Board of Directors is competent to appoint the Advocate by following the provisions of law. As such, in the interest of justice, the prayers made in the instant Company Application are hereby disallowed.

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• Service Tax

• 2016 (1) TMI 676
  Rectification of Mistake - Revenue is of the view that the said Notification No. 45/2010-ST dated 20.07.2010 would apply only to the services provided in relation to "transmission and distribution of electricity" and not to those relating to "power generation and supply of electricity" - Held that:- The application for Rectification of Mistake is devoid of merits as we find that by Notification No. 45/2010-S.T, Central Government had retrospectively exempted all the services rendered to the transmission and distribution of electricity provided for the period 26.02.2010 upto 21.06.2010. The words used in the Notification are "for the services relating to transmission and distribution of electricity" and undisputed facts are that NTPS Nashik are engaged in "power generation and supply of electricity". The supply of electricity cannot take place except by way of transmission and distribution. In view of this, we find that there is no error in order. Accordingly the application for Rectification of Mistake is dismissed. - Decided against revenue

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• 2016 (1) TMI 674
  Condonation of delay in appeal before First appellate authority - Levy of penalty where service tax and interest has been paid earlier - bonafide belief - Held that:- With regard to service tax liability as well as levy of penalty, an order had been passed which was questioned by the petitioner before the Appellate Authority with the delay of 128 days. Since there was no power vested, the Appellate Authority refused to condone the delay in filing the appeal and dismissed the same. Hence, the order of the Appellate Authority does not suffer from any legal infirmity. At the same time, considering the specific circumstances and also the fact that the tax as well as interest had already been paid, and the petitioner confined his prayer to penalty alone, this Court is inclined to direct the Appellate Authority to look into the issue afresh and pass appropriate order on merits after hearing the petitioner. Such an exercise shall be completed, within a period of 4 weeks, from the date of receipt of a copy of this order. - Matter remanded back.

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• 2016 (1) TMI 668
  Penalty imposed under Section 78, and also under Section 76 and 70 - service tax was paid before issuance of SCN - Held that:- Considering that the appellant is a proprietorship concern and the services were rendered to a Private Limited Company in organised sector and the services were duly recorded in the books of accounts, and also considering the financial difficulties of the proprietorship concern and the fact that they have paid the amount of 7,43,141/- before issuance of show cause notice, we consider that imposition of penalties under Section 76 and Section 70 are not warranted in the present case, especially so since equivalent penalty has been imposed under Section 78 of the Finance Act, 1994. We find that the original adjudicating had already offered the appellant the option to pay 25% of the equivalent penalty imposed under Section 78, subject to the conditions prescribed under the provisions of Section 78 of the Finance Act, 1994. Therefore, we uphold the impugned order-in-original with regard to imposition of penalty under Section 78. However, we set-aside the penalties imposed under Sections 76 and 70 of the Finance Act, 1994. - Decided partly in favour of assessee.

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• 2016 (1) TMI 655
  Service tax demand under Construction Service (CS) / Commercial or Industrial Construction Service (CICS) / Works Contract (WC) - abatement option seeked - interest and penalties confirmed - Held that:- The demand relating to denial of abatement on the ground that the value of material supplied free of cost by the service recipient was not included in the assessable value is set aside. The demand relating to DMRC IT Park contract is also set aside.As regards the demand relating to service tax on mobilisation advance and on account of denial of composition scheme, the appeal is allowed by way of remand for de novo adjudication and re- computation of demand on the basis of the principles laid down. Before de novo adjudication, the adjudicating authority shall give an opportunity to the appellant to be heard. Needless to say that the penalties will have to be re-adjusted in accordance with the demand so recomputed.

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• 2016 (1) TMI 654
  Levy of penalty for Delay of payment of service tax due to Bank refused to take deposit of tax in absence of PAN based registration number - delay of one week due to obtaining PAN based registration number - Held that:- Appellant had paid the amount of tax within a week, on being so pointed out by the Revenue much before issuance of SCN, which was issued on 19.05.2011, months after the amount was paid. - no case of deliberate default or contumacious conduct, is made out against the Appellant - Penalty dropped - Decided in favor of assessee.

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• 2016 (1) TMI 653
  Service tax liability under the category of ‘Commercial and Industrial Construction' services - penalties imposed - Held that:- It is seen from the records that appellant has been constantly disputed the service tax liability without providing any details to the lower authorities is an indicator that the appellant's intention to evade service tax liability. Accordingly, we hold that the penalty imposed by the first appellate authority under Section 78 of the Finance Act, 1994 is correct. However, we find that the first appellate authority has not extended the benefit of paying 25% of the penalty imposed under Section 78 as per the provisions. Reproducing the provisions of Section 78, the first appellate authority should have extended the benefit of payment of reduced penalty to the appellant herein, as it is undisputed that the appellant had already discharged the service tax and interest thereof. In view of this we find that the appellant needs to be extended the benefit of discharge of penalty of an amount of equivalent to 25% of the service tax liability ascertained in this case. We do so. Appellant shall discharge the penalty under Section 78 as imposed by the first appellate authority within 30 days of the receipt of certified copy of this order and report the same to the adjudicating authority and the first appellate authority; failing which, appellant shall be required to discharge the entire penalty as imposed by the first appellate authority.

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• Central Excise

• 2016 (1) TMI 691
  Penalty u/s 11AC - suppression or mis-declaration as alleged by revenue - whether there was intention to evade duty? - Held that:- As find that the show-cause notice does not highlight any grounds indicating suppression or mis-declaration. The statement of the Chief Executive Officer of the company also does not indicate any reasons for invoking suppression/mis-declaration. The Chief Executive Officer has stated that it was an error on their part. On the same being pointed out they have paid duty and interest. There was no evidence of any suppression or mis-declaration brought out in the proceedings. In the instant case, the appellant could not have gained monetarily as it is not in dispute that credit was available to the sister unit in respect of the duty paid by the appellant. There is no intention to evade duty apparent in the facts and circumstances of this case. Thus, no penalty can be imposed invoking Section 11AC of the Central Excise Act - Decided in favour of assessee

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• 2016 (1) TMI 690
  Cenvat credit - welding electrodes used in repair and maintenance of plant and machinery installed in the factory of the appellant, which is used in the manufacture of final product - Held that:- It is undisputed fact of the case that the appellant has used welding electrodes for repair and maintenance of plant and machinery. On going through the judgments cited by both sides, it is observed that cenvat credit on welding electrodes if used for repair and maintenance of plant and machinery, is admissible. - Decided in favour of assessee.

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• 2016 (1) TMI 689
  Waiver of pre-deposit of 7.5% of the duty demanded seeked - Held that:- In terms of Section 35F, any appeal filed before the Tribunal must be accompanied by pre-deposit of 7.5% of the duty or penalty as the case may be. This being mandatory requirement under Central Excise Law, there is no provision for waiver of pre-deposit. Accordingly, the Miscellaneous Application is dismissed and appeal is non-maintainable.

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• 2016 (1) TMI 688
  Classification - whether "Castor Compound" is nothing but Castor Oil falling under Tariff Item 15180019 and exempted under Notification no. 3/2006-CE at sr. no. 11? - Held that:- We find that neither the classification nor the availability of exemption on this compound is disputed from the adjudication order dt. 27.12.2011. We find that the appellant had submitted before the authorities that the Castor Oil compound is exempted from excise duty under the said notification. From the adjudication order as well as the order of Commissioner (Appeals) it is seen that this point was ignored by the authorities. It is also brought to our notice that the demands for the different periods were set aside under Order-in-Appeals dt. 14.10.2013, 26.02.2014 and 22.12.2014.

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• 2016 (1) TMI 687
  Factory gate sale - Transaction value - whether the sale of goods was completed at the factory gate in order to consider the transaction value as per invoices? - demand on account of the transportation and insurance charges which were not shown separately in the invoice in term of Rule 5 of the Central Excise Valuation Rules, 2000 - Held that:- As find from the purchase order that the freight charges are to the buyer's account. Merely because these are not mentioned separately is no reason to conclude that sale is not complete at the factory gate. In this case the goods were to be delivered at the place of the buyer and it is only at that place that the acceptance of supplies was to be affected. In the present case, circumstances are different. Revenue has not been able to show that the sale did not take place at the factory gate. - Decided in favour of assessee

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• 2016 (1) TMI 686
  Supply made to the SEZ Developers - whether is an export and no duty is payable? - lower authority has rejected the claim only on the ground that Notification No. 50/2008 -CE (NT) dated 31-12-2008 is not retrospective, therefore supply made to the SEZ Developers cannot be export - Held that:- The very same issue has been settled in various judgments cited by the Ld. counsel in particular, Hon'ble Andhra Pradesh High Court also passed the judgment in the case of Sujana Metal Products Ltd. (2015 (3) TMI 781 - ANDHRA PRADESH HIGH COURT ). Thus it is of the considered view that supply made to the SEZ Developers is an export and no duty is payable. Therefore, the duty paid by the appellant is required to be refunded by the department to the appellant. - Decided in favour of assessee.

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• 2016 (1) TMI 685
  Liability to pay the amount of 10% in terms of Rule 6(3)(b) of Cenvat Credit Rules, 2004 on the goods supplied to the SEZ Developer - Held that:- There is no dispute that the issue involved in the present case squarely covered by various judgments cited by the Ld. Counsel. In view of this legal position, it is settled that supplies made to SEZ Developer is treated as export, accordingly demand of 10% of value of goods supplied to SEZ Developer in terms of Rule 6(3)(b) of Cenvat Credit Rules, 2004, is not sustainable. Therefore, set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2016 (1) TMI 673
  Non production of 'C' Form / 'F' Form or discrepancies therein - disallowance of concessional rate for non-filing of the relevant statutory forms with regard to Interstate Sale, branch transfer and consignment sale - Held that:- While passing orders on the said application, with regard to 'C' form as well as the eligibility of the petitioner under sales return, the respondent without adducing appropriate reasons has stated that the judgment cited in the case is not applicable to the case, since the facts in that case and the case of the petitioner are not similar. Further the defects pointed out by the respondent in the impugned proceedings are nothing, but ineligibility of concessional rate of tax on certain turnover due to defective forms which are to be corrected and counter signed by the authority who issued and the same was done subsequently. So there cannot be any justifiable reason to reject the application under section 84 of TNVAT Act, that too, without any opportunity. Matter is remitted back to the assessing authority/respondent for passing orders afresh.

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