Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 13, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment - we are at a loss to understand why the notice was sought to be served at the erstwhile address of the petitioner when the Department was fully aware of the shifting of the registered office of the petitioner to Sunny Park and had the current Sunny Park address in its records - notice is invalid- HC
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Reference to DVO - The AO strongly disputes the correctness of the sale considerations reflected in the sale deeds. The assessment is yet to be made. The Assessing Officer must be allowed free hand, be allowed to complete the assessment in accordance with law - HC
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Deduction u/s 35D(2)(c)(iv) - the term for “public subscription” employed in Section 35D(2)(c)(iv) of the Income Tax Act would include subscription by a section of the public, i.e., the existing shareholders in a Company as well - HC
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Penalty u/s 271 (1)(c) - AO collected the accounts statements from the banks - nondisclosure would directly attract the provisions of Section 271 (1) (c) of the Act as it deals with concealment of income from different sources by the assessee. - HC
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TDS u/s 194J OR 194C - payment made to Chemtrol Engineers Ltd on account of AMC of mobile monitoring vans - section 194C is applicable in this case and not 194J - AT
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Transaction is approved by the RBI and Government is not sufficient and the assessee has to benchmark the royalty payment separately - Income Tax
Customs
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Procedure to be followed for obtaining permission for factory/warehouse Stuffing of export cargo by Manufacture Exporters, Merchant Exporters EOUs/SEZs- Reg. - Trade Notice
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Levy of Anti dumping duty - The DA will do well to remember not to treat any information as confidential unless a claim of confidentiality has been made by any of the parties supplying the information - SC
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Extension of validity period of DFIA licences - If such exporter has not availed of the Cenvat facility, then it cannot be deprived of the benefit of exemption from payment of additional customs duty just because the manufacturer of the export product has availed of the Cenvat facility. - HC
Service Tax
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Refund claim - period of limitation - the payments made by the appellant were on account of differential amount of service tax and was not mere deposit during the period of investigation, the provisions of section 11B would admittedly apply. - AT
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Classification of service - credit rating activity - the advisory service provided by the appellant does not fall under the category of Management Consultancy Service, however it is correctly classifiable under Banking and Other Financial Services - AT
Central Excise
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Area based exemption - Notification No. 50/2003-CE requires increase in installed capacity by not less than 25% to grant exemption - exemption denied merely on suspicion and doubts - appellant's claim of expanded capacity cannot be rejected on perusal of documents placed - AT
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Denial of area based exemption - if the exemption is extended to one unit, the change in its ownership would not jeopardize the admissibility of exemption for remaining part of the period - AT
VAT
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Input tax credit - whether the Hon'ble Tribunal was justified in rejecting the claim of the assessee for the Input Tax Credit, even though such purchases are not disqualified as per Schedule-'E' attached to the Haryana VAT Act, 2003 - Held NO - HC
Case Laws:
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Income Tax
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2016 (10) TMI 413
Allowability of share issue expenses incurred - whether expenses incurred are for raising capital for purchase of plant and machinery should be capitalized and depreciation be allowed on the same - Held that:- The issues raised herein stand concluded against the Revenue by order of this Court in The Commissioner of Income Tax VI Versus M/s. Glaxo India Ltd. [2013 (2) TMI 789 - BOMBAY HIGH COURT] Accrual of Income - Advance license receivable - whether to be taxed in the year in which the benefits actually accrue after the imports are effected and not in the year in which the licence is granted tot he licensee/assessee? - Held that:- The issue now stands concluded by the decision of the Apex Court in Commissioner of Income Tax Vs. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT ) wherein held income does not accrue in the year of export but in the year in which the imports are made.Even if it is assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement pass book, there was no corresponding liability on the customs authorities to pass on the benefit of duty free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is therefore not the income of the assessee. Disallowance of penalty paid to Central Excise Authorities- Held that:- The issue raised herein stands concluded against the revenue by the decision of this Court in International Fisheries Ltd. ( 2010 (3) TMI 291 - BOMBAY HIGH COURT ) wherein held as there was no breach of the provisions of the Sales Tax Act as such and it was justifiably held to be eligible for deduction..
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2016 (10) TMI 412
Addition on account of guarantee commission pursuant to the direction of the Dispute Resolution Panel (DRP) - Held that:- We find that there is no material difference between the facts of the earlier year and the facts for the year under consideration. Therefore, respectfully following the principle laid down by the Hon'ble High Court in assessee’s own case, we hold that DRP was not justified in confirming the addition made by the AO. Reversing the order of the AO, completed in pursuance of the direction of the DRP, we decide the second ground in favour of the assessee. Addition on account of interest charged to AE - LIBOR rate computation - Held that:- Following the earlier order of this Tribunal in assessee’s own case, we hold that the arm’s length rate in respect of loan provided to the AE should be LIBOR + 2%. Accordingly, the Assessing Officer is directed to recomputed the arm’s length rate in respect of the loan transaction to each AE of the assessee by clubbing all the loan transactions of each AE and then compare the interest charged by the assessee with arm’s length rate at LIBOR +2%. It appears that as regards the transactions of loan to its AE at China, the said transaction is at arm’s length as the as has charged the interest at 7%, therefore, only with respect to the transaction of loan to AE at Dubai are required to be re-computed for the purpose of TP adjustment
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2016 (10) TMI 411
Disallowance u/s.14A - Held that:- We find that interest free funds available to assessee were more than the investment made by assessee during the year, that borrowed funds were not used for earning exempt income, that FAA had given categorical finding of fact that assessee had sufficient own funds for making investment.
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2016 (10) TMI 410
Undisclosed income - Held that:- The assessee has duly explained the said cash of ₹ 20 lakhs which was found in his possession while travelling from Delhi to Mumbai via Jet airways flight on 28-11-2006. The assessee has duly rebutted the presumption u/s 132(4A) of the Act . The assessee has duly brought on record the audited books of accounts of Le Shark Exports Private Limited and other cogent material to prove that infact cash belonged to Le Shark Exports Private Limited who also owned up the cash . The revenue has also framed assessment in respect of Le Shark Exports Pvt. Ltd. and passed an assessment orders u/s 143(3) of the Act dated 3rd September, 2009 for the assessment year 2007-08 and no addition of ₹ 20 lacs w.r.t. cash found and seized of ₹ 20 lacs from the possession of the assessee has been made in the hands of the Le Shark Exports Private Limited. The Revenue while framing assessment in the hands of the Le Shark Exports Pvt. Ltd. has mentioned in the assessment order u/s 143(3) of the Act dated 03-09-2009 that the cash seized has been taxed in the hands of Mr. Ajay B. Sabharwal whereby the contention of M/s Le Shark Exports Pvt. Ltd to adjust the said cash of ₹ 20 lacs against advance tax was rejected by the Revenue. In our opinion, addition is not sustainable in the hands of the assessee as the assessee has duly discharged his burden and has duly rebutted the presumption which arose u/s 132(4A) of the Act with cogent evidences brought on record as set out above that the cash of ₹ 20 lacs which the assessee was carrying while flying from Delhi to Mumbai on 28-11-2006 in-fact belonged to Le Shark Exports Pvt. Ltd who also owned up the said cash of ₹ 20 lacs for which cogent material is brought on record. Addition of ₹ 20 lacs made by the Revenue in the hands of the assessee as undisclosed income is therefore ordered to be deleted. We order accordingly.
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2016 (10) TMI 409
TDS liability w/o taking into consideration the service tax - Held that:- Having considered the facts of the case and system of accounting followed by the assessee we find that the assessee has rightly deduced TDS on payment basis without taking into consideration the service tax and the AO, in our opinion, was not correct in applying deemed service tax on the payment made. Similarly, the ld.CIT(A) has also erred in holding that the TDS was deductible on the service tax component if charged in the bills not otherwise. In our opinion, no TDS is required to be deducted as the assessee was following cash system of account and accordingly, grounds no.1,2 and 3 are allowed in favour of the assessee. T.D.S. u/s 194C - payment made to Urvi Communication for telecasting short film on Air pollution and Noise Pollution in the public interest on Doordarshan - Held that:- We find that in this case payment has been made to M/s Urvi Communication and Prop. Urvi Deshmukh for the purpose of telecasting short film on Doordarshan on Air Pollution and Noise Pollution on ETV and Sub-TV at the time of Deewali. The ld. AR submitted that the payment was made for telecasting short film on Doordarshan and no TDS was required to be deducted at all and prayed that the order of the ld.CIT(A) be set aside on this issue and the ground raised by the assessee be allowed by allowing the appeal of the assessee. On the contrary, the ld.DR heavily relied on the orders of authorities below. We find that the payment is made through intermediary for further making payment to Doordarshan and therefore we are in agreement with the findings recorded by the ld. CIT(A) that the payment made to these parties were of the nature of contractual and the TDS was to be deducted u/s 194C of the Act - Decided against assessee Charging Interest u/s 201 - Held that:- After going through the provisions of section 201(1A), we find some merit in the argument of the ld. AR that the interest was not to be charged from the beginning of the financial year the argument of the ld.AR that the same was to be charged from the date of assessment year is not convincing. It has been clearly provided in the section that interest has to be calculated from the date on which the TDS is deductible to the date of actual payment of such TDS. But in the instant case, the ld. CIT(A) has held that the interest be calculated up to the date of filing of return by the deductee. In our opinion, the interest should be calculated from the date on which such TDS was deductible to the date of filing of return of income by deductees. Accordingly, we direct the AO to charge interest from the date on which the TDS was deductible to the date of filing of return of income of the deductees. The order of the ld.CIT(A) is set aside and the AO is directed accordingly. The ground taken by the assessee is partly allowed. TDS u/s 194J OR 194C - payment made to Chemtrol Engineers Ltd on account of AMC of mobile monitoring vans - Held that:- We find that the said repair services rendered by M/s Chemtrol Engineers Ltd are not technical as it is a AMC contract for maintenance of machines.Therefore we are not in agreement with the view of the ld.CIT(A) on this issue that AMC is a technical service and liable to TDS u/s 194 of the Act . There is merit in the submissions of the ld.AR that the payment made to M/s Chemtrol Engineers Ltd are covered by the provision of section 194C which is applicable to general contract. In our opinion M/s Chemtrol Engineers Ltd providing services for installation of quality monitoring system and operation and maintenance and installation of machinery and maintenance of contracts are covered by the provision of section 194C of the Act. Accordingly, we set aside the order of ld. CIT(A) on this issue by holding that the section 194C is applicable in this case and not 194J. The AO is directed accordingly and this ground is allowed.
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2016 (10) TMI 408
Reopening of assessment - validity of notice - whether or not the notice under Sec. 148 of the Income Tax Act was duly served on the petitioner? - effect of non-service of notice on the proceedings or action taken in pursuance of such notice? - Held that:- From the report of the Inspector attached to the office of the IT Act, Ward-9(3), Calcutta, it is evident that the said Inspector attempted to contact the petitioner at its erstwhile address at Biplabi Anukul Chandra Street and not having found the petitioner there, affixed a copy of the notice under Sec. 148 of the IT Act at the said address. This report is dated 31 March, 2014. Although this report mentions that the said address was last known address of the petitioner, such statement is obviously incorrect. As stated above, starting from 2009-10 the Department has sent all correspondences and notices to the petitioner at its Sunny Park address. Further, the Department has disclosed no document to show that Sec. 148 notice was even sought to be served at the petitioner's Sunny Park address nor any such point was urged in the course of making oral submission by Learned Counsel for the respondents. Hence, it appears to be absolutely clear that the notice under Sec. 148 of the IT Act was never served on the petitioner at its Sunny Park address. Hon'ble Apex Court in the case of Commissioner of Income Tax-vs.- Thayaballi Mulla Jeevaji Kapasi [1967 (3) TMI 1 - SUPREME Court] wherein it was held that the mere fact that the serving officer did not find the party to be served with the notice at his address is not sufficient to establish that he cannot be found. It must be shown not only that the serving officer went to the place at a reasonable time when he would be expected to be present, but also that if he was not found, proper and reasonable attempts were made to find him either at that address or elsewhere. If after such reasonable attempts the position still was that the party is not found, then and then only can it be said that he cannot be found. In the instant case, it does not appear that any attempt was made by the serving officer to find the assessee at any other address. Indeed, we are at a loss to understand why the notice was sought to be served at the erstwhile address of the petitioner when the Department was fully aware of the shifting of the registered office of the petitioner to Sunny Park and had the current Sunny Park address in its records. Thus have to hold that notice under Sec. 148 of the IT Act was not duly served on the petitioner. Any proceeding initiated by the Department pursuant to the notice dated 31 March, 2014 issued under Sec. 148 of the IT Act or any order passed in such proceeding is bad in law and of no effect. Such proceeding and order passed therein, if any, are hereby quashed.- Decided in favour of assessee
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2016 (10) TMI 407
Reference to DVO - sale consideration does not reflect the correct rate - revenue authorities with the power to obtain valuation reports - Held that:- Reference to the DVO in terms of Section 55A of the Act if strictly seen, for the purpose of valuation in the context of the capital gain may not be competent. However, post the said decision in case of Smt.Amiya Bala Paul (2003 (7) TMI 4 - SUPREME Court ) Section 142A of the Act was inserted with retrospective effect substantially nullifying its effect and vesting the competent revenue authorities with the power to obtain valuation reports in the context of issues other than of capital gains computation also. In the present form, sub-section (2) of Section 142A of the Act provides that such valuation may be summoned even when the Assessing Officer may not have questioned the accounts of the assessee. This last issue is strictly not relevant for our purpose since the Assessing Officer has painstakingly and at length demonstrated why in his prima facie opinion the declaration of sale consideration does not reflect the correct rate. In short, he seriously disputed the veracity of the petitioner’s declaration of the prices at which said 3 properties were sold. Merely because from time to time the Assessing Officer referred to wrong provision for exercising powers which he otherwise had, would not vitiate his action. Had this been a case of lack of powers, the issue would certainly rest on different parameters. However, when we find that the Assessing Officer had the powers to call for the DVO’s report, the exercise cannot be struck down for a mere reference of a wrong statutory provision as has been consistently held by the Supreme Court in series of judgments. Merely because the Assessing Officer in one of the communications referred to the sale consideration as business income would not wash away the detailed analysis and materials he referred to in various letters indicating that the sale price shown was abysmally low compared to real market price. At a stage when the assessment is not yet complete, it would simply not be possible or proper in our part to intervene and interfere in the manner in which the assessment should be made. If ultimately the assessee is aggrieved by the order of assessment, he has remedy to file appeal. When the statute provides such remedies, as held by the Supreme Court in case of Commissioner of Income-tax and Ors. V/s. Chhabil Dass Agarwal, reported in [2013 (8) TMI 458 - SUPREME COURT ], interference at this stage would not be proper. The Assessing Officer strongly disputes the correctness of the sale considerations reflected in the sale deeds. The assessment is yet to be made. The Assessing Officer must be allowed free hand, be allowed to complete the assessment in accordance with law.
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2016 (10) TMI 406
Deduction u/s 35D(2)(c)(iv) - whether the expenditure incurred by the Appellant in connection with the issue of Right Shares to the public is not covered under Section 35D(2) (c ) (iv) ? - Held that:- A reading of the provision shows that any reference in the Companies Act or in the Articles of a Company offering shares to the public shall, subject to the provisions of the Companies Act, be construed as including a reference to offering the shares to any section of the public also. In other words, insofar as the Companies Act is concerned, the section of the public holding shares in a company would be treated as public, for the purposes mentioned in Section 67. It is also clear from Section 67, that the purposes of the Section would include rights issue of shares under Section 81 of the Companies Act also. Therefore, when the scope and purport of Section 35D(2)(c)(iv) of the Income Tax Act is examined, this Court is entitled to refer to the provisions of Section 67 of the Companies Act and if so done, the inevitable conclusion is that the term for “public subscription” employed in Section 35D(2)(c)(iv) of the Income Tax Act would include subscription by a section of the public, i.e., the existing shareholders in a Company as well. Any interpretation to the contrary would lead to a situation where the benefit of amortization would be available to public issue of shares and the same benefit would be denied when shares are issued by Companies on rights basis. Sum and substance of the above discussions that the findings of the Assessing Officer confirmed by the First Appellate Authority and the Tribunal is unsustainable. Therefore, answering the questions of law in favour of the assessee and against the revenue
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2016 (10) TMI 405
Penalty u/s 271 (1)(c) - appellant/assessee being the sales tax practitioner - non disclosure of income - Held that:- As from the material on record that the appellant/ assessee failed to disclose the income or concealed the income from different sources, filed the return and the same was accepted. However, during search and seizure operation under Section 132 of the Act conducted at Rajiv Gandhi International Airport, Hyderabad, the appellant/assessee was found in possession of ₹ 12,65,900/- and the authorities seized ₹ 12,00,000/-. The authorities also collected the accounts statements from the banks pertaining to the appellant/assessee and found that there are deposits and withdrawals at regular intervals, but those amounts are not reflected in the returns filed by the appellant/assessee for the reasons best known to him. Such nondisclosure would directly attract the provisions of Section 271 (1) (c) of the Act as it deals with concealment of income from different sources by the assessee. The Assessing Officer imposed penalty by exercising power under Section 271 (1) (c) of the Act, which was confirmed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. Even otherwise, bonafides pleaded by assessee is a question of fact and that would not give raise to substantial question of law before this Court as the appeal under Section 260-A of the Act can be admitted only if substantial question of law is made out by the appellant. The ground urged before this Court that the appellant/assessee bonafidely did not disclose the income is a question of fact, which cannot be enquired into by this Court in view of our aforesaid discussions. The facts on record did not give rise to any substantial question of law, which is essential to admit the appeal. Hence, we find no ground to interfere with the impugned order passed by the Income Tax Appellate Tribunal. Therefore, the appeal fails. Accordingly, the point is answered in favour of the respondents and against the appellant/assessee.
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2016 (10) TMI 404
Reopening of assessment - claim of deduction under section 80IB(10) - Held that:- The action initiated by the authority is beyond the period of four years from the end of relevant assessment year. It is also emerging from record that there is no allegation of any nature that the petitioner has not truly or fully disclosed all material facts related to deduction section 80IB(10) of the Act and in absence of any such element, we feel it necessary not to allow the respondent authority to reopen the assessment. we notice that this very claim of deduction under section 80IB(10) was at threadbare examined during a scrutiny assessment and a specific claim has been allowed. Even further pursuant to a query which has been raised at the relevant point of time also, a cogent explanation has also been given and from the reasons which have been recorded, there is no element of nondisclosure on the part of the petitioner in any manner, and therefore, considering this overall set of circumstance and keeping in mind the ratio laid down by consistently three different decisions reproduced herein above, it appears that the reopening of assessment is not justified beyond a period of four years from the end of relevant assessment year. Hence, we are of the opinion that action on the part of the respondent authority is impermissible and we accordingly quashed and set aside the impugned notice as well as order dated 16.12.2010 for rejecting the objection. - Decided in favour of assessee.
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2016 (10) TMI 403
Condonation of delay - whether the Commissioner was justified in denying an application to condone the delay in accepting the returns? - Held that:- There are some materials to indicate that the assessee was under severe financial crises. He had to close down his business, his registration under the Kerala Value Added Tax Act has been cancelled, he was involved in cases for dishonour of cheques. These are all materials which ought to have been considered for the purpose of arriving at a conclusion as to whether the delay is condonable or not. As fairly submitted by the petitioner that as per the circulars issued by the Board, the Commissioner gets jurisdiction to condone delay, only if the application for condonation of delay is filed within the six years from the last date of the end of the assessment year. Having regard to the aforesaid factual situation, it is apparent that the application for condoning the delay in respect of assessment year 2008-09, is alone within the six years period. Under such circumstances, it will only be appropriate to condone delay for filing return as far as the assessment year 2008-09 are concerned. Therefore, taking into account the over all factual circumstances involved in the matter, this writ petition is disposed of as under. (i) Ext.P10 order to the extent that the delay is not condoned for the assessment year 2008-09 is set aside. (ii) The delay in filing the return for the year 2008-09 is condoned. (iii) The assessing officer shall consider the return filed by the petitioner for the assessment year 2008-09 and finalise the assessment, as expeditiously as possible and not later than three months from the date of receipt of a copy of this judgment.
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2016 (10) TMI 402
Expenditure on free distribution of exercise note books - whether was in the nature of advertisement, publicity and sales promotion within the meaning of subsection (3A) read with subsection (3B) of section 37? - Held that:- The issue stands concluded against the applicant assessee by the decision of Andhra Pradesh High Court in Commissioner of Income Tax Vs. Ampro Food Products [ 1995 (2) TMI 54 - ANDHRA PRADESH High Court ]on identical facts, namely, distribution of note books, the Andhra Pradesh High Court held that the same was in the nature of sales promotion / advertisement. - Decided against assessee. Invoking the provisions of Sec.37(3A) r.w.s. 37(3B) in respect of the expenditure on account of advertisement, particularly in view of the fact that the said expenditure was never claimed by way of deduction - Held that:- Gujarat High Court in Vadilal Industries Ltd. (2008 (4) TMI 765 - GUJARAT HIGH COURT) has held that only the net amount of expenditure on advertisement / sales promotion i.e. gross expenditure less amount recovered by the applicant / assessee from its dealer can be considered for disallowance under Section 37(3A) of the Act. It also observed that where no claim for expenditure under Section 37 of the Act is made then no disallowance under sub-Section (3A) of Section 37 of the Act can be made. The question as posed for our opinion itself records as a fact, that no expenditure was claimed by the applicant assessee in respect of the advertisement expenses sought to be disallowed under Section 37(3A) of the Act.- Decided against revenue
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2016 (10) TMI 401
Settlement commission procedure - Settlement of tax payable - Can the Settlement Commission proceed with the petitioner's application made under Section 245C(1) of the Act, after issuance of certificate under Section 90(2) of the KVSS,1998, which had till then only reached the stage of being admitted for further hearing in terms of Section 245D(1) of the Act ? - Held that:- Whatever doubt one may have, would disappear when we look at the relevant portion of Section 95 of the KVSS,1998. To make the matters abundantly clear, this section provides that the provision of the section would not apply in case where an order was passed by the Settlement Commission under sub-section (4) of Section 245D of the Act or similar such provision for settlement under the Wealth Tax Act to any tax arrear in respect of such assessment year. In plain terms therefore, the provisions of the KVSS,1998 would be ousted in a case where the Settlement Commission has passed an order under sub-section (4) of Section 245D, to any tax arrear in respect of such assessment year. This provision would have two purposes; first, it makes it abundantly clear that if other conditions are satisfied, a person can make a declaration in terms of Section 88 of the KVSS,1998 so long as the order has not been passed by the Settlement Commission under sub-section (4) of Section 245D of the Act and secondly, this provision also puts the controversy beyond any debate, whether if a tax assessed by the Commissioner had remained unpaid, for the purpose of KVSS,1998 could it take a shape of the tax arrear and in respect of which an offer for settlement could be made under the KVSS,1998. Once therefore the Settlement Commission passes an order under sub-section (4) of Section 245D of the Act, it would not be open for an assessee to then approach the designated authority under the KVSS,1998 and seek any adjustment in the tax arrear. Till then, however, the issue would be wide open and the assessee, as in the present case, could approach the designated authority under the KVSS,1998. The Settlement Commission therefore, committed a serious error in holding to the contrary. The Supreme Court in case of Smt. Sushila Rani (2002 (2) TMI 7 - SUPREME Court ) observed that the certificate issued under Section 90(1) of the KVSS,1998 making a determination as to the sum payable under KVSS,1998 is conclusive as to the matters stated therein and cannot be reopened in any proceedings under law for the time being in force, except on the ground that false declaration by a declarant. In the result, the impugned order dated 25.6.1999 passed by the Settlement Commission under Section 245D(4) of the Act is set aside
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2016 (10) TMI 400
Relief under Section 80-HHC allowable while arriving at the book profits as per Clause (vii) of Explanation to Section 115-JA(1) - assessee itself had not claimed the deduction under Section 80-HHC in the normal computation - Held that:- For the purpose of providing the incentive contemplated under Section 80-HHC, the profits earned from the export business, which might include, in a given case, exports carried out of the goods manufactured by the assessee as well as by trading the goods manufactured by others, and the lossess sustained in any one of these branches of exports business, are liable to be adjusted against the profits earned by the other branch of export business. A reading of the principles enunciated by the Supreme Court in the cases of Ajanta Pharma Ltd. (2010 (9) TMI 8 - SUPREME COURT ) and Jeyar Consultant and Investment Pvt. Ltd. (2015 (4) TMI 195 - SUPREME COURT), it becomes crystal clear that the Tribunal has arrived at an incorrect comprehension of the spheres assigned respectively by Section 80-HHC and Section 115-JA of the Income Tax Act. Therefore, the impugned order passed by the Tribunal is not sustainable. Since the assessee-Company has not been provided with an opportunity to demonstrate that they did Return the profits from their export business for the assessment year concerned, which profits of export business, are set-off against the carry forward lossess sustained in the business, as a whole for the previous year, resulting in taxable income being Returned as "Nil" and also for the purpose of computation of book profits under Section 115-JA, the extent of profits made by the assessee from the export business, has got to be looked into and taken into consideration and since that aspect of the matter has not been dealt with by the Tribunal, we set aside the impugned order passed by the Tribunal and remit the matter back to the Tribunal for consideration afresh by it in accordance with law.
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2016 (10) TMI 399
Imposition of interest under Sections 234B and 234C - liability to deduct tds - Held that:- The primary liability of deducting tax for the period concerned since the law has undergone a change after Finance Act, 2012 is that of the payer. The payer will be an assessee in default, on failure to discharge the obligation to deduct tax, under Section 201 of the Income Tax Act, 1961. Following GE Packaged Power Inc. (2015 (1) TMI 1168 - DELHI HIGH COURT ) it must be said that since the primary liability of deducting tax for the concerned period is that of the payer, the assessee is not liable to pay interest as charged by the settlement commission under Sections 234B and 234C of the Income Tax Act, 1961 and to such extent such demand is, therefore, set aside. - Decided in favour of assessee
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2016 (10) TMI 398
Interest on refunds - whether the Chief commissioner was justified in rejecting interest for the period of delay? - Unexplained inordinate delay in payment of interest within the statutory period by the department - Held that:- A certificate to the effect that tax has been deducted and specifying the amount so deducted, rate of tax and such other particulars, as may be prescribed. Therefore, there cannot be any dispute about the fact that the obligation to provide a certificate for deducting tax is on the deductor. The question is, if there is any defect in such certificate, and the petitioner fails to get it cured before filing of the return, petitioner can be termed as a person who had caused the delay. No doubt, as rightly held by the respondent, if the defect is noticeable on receipt of the certificate, it is for the deductee who makes a claim on the basis of the certificate to get the defects cured. This is an instance where substantial time had elapsed for curing the defects, which according to the Department, is attributable to the assessee. When such a view is possible and the claim for interest is denied on that specific period, do not think that this Court will be justified in taking a different view. No doubt, as rightly contended by the learned counsel for the petitioner, once the defect is cured, the parties have to go back to their original position, but the question is whether there is an obligation on the part of the Department to pay interest on the amount to be refunded. When a statute in the form of Section 244A(2) clearly specifies that interest need not be paid if the proceedings of refund is delayed for reasons attributable to the assessee, in that event, the respondents having refused interest on the basis of factual finding relying upon the statutory provision, do not think that this Court will be justified in interfering with the said orders. Coming to the judgment in Sandvik Asia Ltd. (2006 (1) TMI 55 - SUPREME Court), that was a case in which the question that had arisen was whether the assessee was entitled to interest on the amounts of interest paid under Section 214 or 244 of the IT Act. Question considered was whether an assessee was entitled to be compensated by the Department for the delay in paying to the assessee all amounts admittedly due to it, the delay ranging from 12 to 17 years. Thus do not think that the factual issues arising in the present case and the judgment in Sandvik Asia Ltd. (supra) has any resemblance. Even otherwise, this is an instance where interest has been paid but denied only for certain period for reasons stated in the impugned orders, since the delay has been attributed to the assessee.
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2016 (10) TMI 397
Procedure for block assessment - time limit entitled to file the return - unexplained income - Held that:- Section 158BC mandates that the Assessing Officer is to serve a notice to such person requiring him to furnish a return in the prescribed form and verified in the manner stipulated. The Assessing Officer must, therefore, serve such a notice, without which an assessee would not be liable to file a return in respect of a block assessment. The assessee is also entitled, as a matter of right, to a period not less than 15 days to file such a return. The Assessing Officer does not have the power to curtail this period. Thus, even if a notice under Section 158BC(a) specifies a period less than 15 days, it would not affect an assessee's right to file a return after a period of 15 days. The present case falls under Section 158BC(a)(ii). In such a case, an assessee would be entitled to file the return within the outer limit prescribed in Section 158BC(a)(ii) namely 45 days. Thus, while it is mandatory for the Assessing Officer to serve a notice requiring the assessee to file a return under Section 158BC and the assessee is entitled to not less than 15 days to file the return, the section does not indicate that if the notice inadvertently prescribes a period less than 15 days, it is void. Much less does the section indicate that the entire block proceedings relating to the block assessment would be void on account thereof. Validity of notice - Though the notice under Section 158 BC is mandatory errors such as those in the present case which do not cause the assessee any prejudice do not render either the notice or the block assessment proceedings void. Document found during the search - Held that:- It is important to note that the Assessing Officer exercised power under Section 142(2A) directing the assessee to get the accounts audited by an accountant, as defined in the explanation to Section 288(2). The special auditor analyzed this balance sheet and the other documents, that were seized, as well. Based on the same and based on the independent analysis, the three Authorities had come to the conclusion that the said amount of ₹ 40 lacs was unexplained. The Assessing Officer added the same to the appellant's income. The assessee also disowned the documents. He stated that he had nothing to do with the documents and was unaware how they were found at his place and at his residence. The fact is that the document were admittedly found at his residence Apart from the statement that he was unaware of the documents, there is no explanation for the same. The reliance of the Authorities under Section 132 (4A) is well-founded. The Authorities, therefore, rightly drew the presumption, in these circumstances, that the documents pertained to the assessee and the contents thereof are true. In any event, this is a finding of fact which does not raise a substantial question of law.The nature of the entries in documents have been sufficiently analyzed by the Authorities. They have, in fact, given the assessee credit for the amounts found in the regular books of accounts assessed the unexplained income only thereafter.
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2016 (10) TMI 396
Entitlement to deduction under Section 80IC on Transport subsidy received - whether subsidies goes to reduce the expenditure actually incurred and hence they ought to be regarded as operational profits? - Held that:- It is not the case of Revenue that in the present case, the referred transport subsidy has no bearing on the cost of production of the industrial undertaking of the respondent assessee. In this view of the matter and for the law declared by the Hon’ble Supreme Court in Commissioner of Income Tax v. Meghalaya Steels Limited [2016 (3) TMI 375 - SUPREME COURT] the decision by the Assessing Officer as approved by the Appellate Commissioner to the effect that the transport subsidy cannot be said to be derived from industrial undertaking and would not fall in the category of profits and gains derived from industrial activities could only be disapproved. In view of above, the answers to the basic questions involved in the matter are required to be in the affirmative. We may observe that in question No.(i) as formulated, only Section 80-IC has been mentioned, probably with reference to the question as formulated in the memo of appeal, whereas essentially the claim had been with reference to Section 80-IB (4) of the Act of 1961. With this clarification, answers to the questions involved in this matter are in the affirmative, that is to say that the Tribunal was legally justified in regarding the transport subsidy as part of operational profits; and was justified in holding the assessee entitled to deduction under Section 80-IB of the Act of 1961 on the transport subsidy.
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2016 (10) TMI 395
Reopening of assessment - Held that:- In an instance where the Department comes to a conclusion that the tax has escaped assessment for any assessment year, it is well within the powers of the Department to issue notice under Section 148 within the specified time. Insofar as the petitioners are concerned, notices had been issued within the specified time on the basis that there is reason to believe that the tax has escaped assessment. Under such circumstances, there is no jurisdictional error on the part of the Department in issuing notice under Section 147 r/w. Section 148 of the Act. Entitlement for any exemption as provided under Section 88 for the entire amount of arrears of salary received and deposited with the Provident Fund - Held that:- Apparently, the petitioners could have preferred an appeal against the impugned orders. But they have not chosen to do so and had approached this Court. The law is now well settled as held by this Court in Kerala Electricity Officers Federation and Others v. Central Board of Direct Taxes and Others [2005 (7) TMI 87 - KERALA High Court ], which squarely applies to the facts of the present case in which this Court after considering the question of exemption under Section 88 of the Act in similar situations held that the amount received as arrears of salary, even if deposited in the PF account, is not entitled for full exemption whereas exemption will be available for the arrears of salary received in respect of the particular year for which the assessment is being made.
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2016 (10) TMI 394
Transfer pricing adjustment - determining Arm’s Length Price (ALP) of the Imports made by the assessee - Held that:- It is not disputed that the assessee is enjoying larger credit than printed in the invoice; it ranges 120 days to 240 days. In view of this, the price charged by AE to the assessee more than price charged to third parties. Hence, it is appropriate to be considered the extra credit period enjoyed by the assessee so as to determine the ALP. Further, it is also on record that for assessment year 2009-10, the TPO/AO had not made any adjustment towards this issue as there should be consistency in proceedings. Hence, in our opinion, the argument of ld.A.R to be upheld. Accordingly, we allow the ground taken by the assessee. Determining an ALP interest rate on the assessee’s External Commercial Borrowing - Held that:- There is a force in the argument of the Id. AR. The Assessing Officer cannot apply the implicit interest rate on India’s External Debt, which is unadjusted industrial average. As held by the Special Bench of the Bangalore Bench in the case of Aztec Software & Technology Services Ltd. v. ACIT (2007 (7) TMI 50 - ITAT BANGALORE), we are of the opinion that the unadjusted interest rate in respect of India’s External Debt cannot be applied in assessee’s case. Since the assessee charged interest to its AE at LEBORE ±2% which is appropriate the same is to be considered by TPO/AO and we are of the opinion that there is no adjustment required towards interest payment to its AE to determine ALP.
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2016 (10) TMI 393
Disallowance of expenses u/s 14A - Held that:- We find that the ld. CIT(A) has passed the order after taking into account the complete matter and reduced the disallowance to ₹ 759,39,128/-. We are in agreement with the ld.CIT(A) that the rule 8D is not applicable in the current assessment year as the same is effective from the assessment year 2008-09 and reasonable basis has to be followed in order to work out the disallowance u/s 14A of the Act. Thus, finding no infirmity in the order of ld. CIT(A) on this issue of disallowance of expenses u/s 14A. We find that the appeal filed by the department on this issue cannot be allowed and accordingly this ground of appeal is dismissed. Disallowance made under section 14A while computing the book profit under the provisions of section 115JB deleted MAT computation - interest u/s 234B - Held that:- AO is directed to recomputed interest u/s 234B by excluding MAT liability arising due to retrospective amendment in the provisions of section 115JB
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Customs
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2016 (10) TMI 380
Levy of Anti dumping duty - Interpretation of rule 7 - confidentiality of information - Whether the interpretation placed upon Rule 7 of the Rules is correct insofar as it diminishes the rule of confidentiality statutorily provided for under Rule 7? - the decision in the case of Reliance Industries Ltd. v. Designated Authority & Others [2006 (9) TMI 180 - SUPREME COURT OF INDIA] referred to - Held that: - Reliance Industries case did not go into the details of the relevant Rules including Rule 7 but the observations made therein in respect of rule of confidentiality as spelt out in Rule 7 of the Rules does not diminish the scope of Rule 7 as provided. The reasons or findings cannot be equated with the information supplied by a party claiming confidentiality in respect thereto. Hence, Rule 7 does not empower the DA to claim any confidentiality in respect of reasons for its finding given against a party. While dealing with objections or the case of the concerned parties, the DA must not disclose the information which are already held by him to be confidential by duly accepting such a claim of any of the parties providing the information. While taking precautions not to disclose the sensitive confidential informations, the DA can, by adopting a sensible approach indicate reasons on major issues so that parties may in general terms have the knowledge as to why their case or objection has not been accepted in preference to a rival claim. But in the garb of unclaimed confidentiality, the DA cannot shirk from its responsibility to act fairly in its quasi-judicial role and refuse to indicate reasons for its findings. The DA will do well to remember not to treat any information as confidential unless a claim of confidentiality has been made by any of the parties supplying the information. In cases where it is not possible to accept a claim of confidentiality, Rule 7 hardly leaves any option with the DA but to ignore such confidential information if it is of the view that the information is really not confidential and still the concerned party does not agree to its being made public. In such a situation the information cannot be made public but has to be simply ignored and treated as non est. Petition disposed off.
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2016 (10) TMI 379
FTP 2009-14 - Sec. 5 of the Foreign Trade (Development Regulation) Act, 1992 - denial of exemption of additional customs duty - extension of validity period of DFIA licences - transferibility of DFIA licences on fulfillment of export obligation - whether DGFT was justified in withdrawing the benefit of exemption from payment of additional customs duty in respect of 13 DFIAs? - inordinate delay in endorsing transferability - principles of natural justice - availability of cenvat credit - eligibility of benefit of exemption when the manufacturers avail the cenvat credit and not the assessee - interpretation of statute which provides benefit of exemption and CENVAT credit. Held that: - It is trite law that in interpreting a taxing provision of law, if two interpretations are possible, the one that favours the assessee must be preferred. If on the basis of a provision of law, an authority imposes a liability on a citizen or proposes to withdraw a benefit already granted, that provision of law must be strictly interpreted against the authority and so far as possible in favour of a party who would be affected by the imposition of liability or withdrawal of benefit. Authorities for this proposition are legion. The idea of such exemption is to give an incentive to exporters to boost exports which in turn enhances the foreign exchange reserve of the country. If such exporter has not availed of the Cenvat facility, then it cannot be deprived of the benefit of exemption from payment of additional customs duty just because the manufacturer of the export product has availed of the Cenvat facility. That would, in my opinion, be contrary to the spirit and intent of the Policy. It is not disputed that SESA has purchased the export goods upon full payment of excise duty and in any event, the question of double benefit can arise only if the same entity avails of the same benefit twice. Such is not the case here. The manufacturer of the export products and SESA are two distinct entities and any Cenvat facility availed of by the manufacturer cannot be said to be a benefit reaped by SESA. The direction of DGFT Authorities on the Customs Authorities not to allow exemption of additional customs duty to SESA or to the transferees of the licenses in question is erroneous and not sustainable. Before depriving or divesting a citizen of valuable property, the State or a statutory authority must give an adequate and meaningful opportunity of hearing to that party. It is settled law that any order passed or action taken by any party in breach of an order of court is illegal. Such order or action can neither impose a liability on a party nor withdraw a benefit which had been extended to the party earlier. The respondent authorities directed to suitably extend the validity of the DFIA licences in question. Such extension should be for a reasonable period, for a period of not less than 3 months from the date of extension - petition disposed off - decided in favor of petitioner.
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2016 (10) TMI 378
Offence under Section 135 (1)(b) - socio-economic offence - Whether Plea of guilty is voluntary - Petitioner filed an application seeking to avail the benefit of plea bargaining under Section 265(E) Cr.P.C. wherein he admitted his guilt which is a pre-condition for availing the benefit which was not allowed due to the offence being socio-economic and then again filed an application for reviving the application of plea bargaining which was also dismissed and then filed a third application pleading guilty - Held that: - considering the special circumstances that the petitioner had faced trial for 20 years, was aged 57 years, suffering from acute financial crisis and his son was hospitalized suffering from Hepatitis ‘C’ awarded simple imprisonment for a period of six months with the benefit of Section 428 Cr.P.C. which was less than the minimum sentence of one year imprisonment prescribed. Since the petitioner had already undergone more than six months imprisonment he had not to undergo any further sentence - Decided in the favor of the appellant.
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2016 (10) TMI 377
Finality of assessments violating the principles of natural justice - opportunity of being heard - provisional assessment of bills of entry u/s 18 of the Customs Act, 1962 for want of test reports - samples drawn and sent for testing - test reports not communicated and final assessment made - whether the final assessment made without communicating the test report to petitioner and without affording the opportunity of personal hearing was justified? - Held that: - It may be a special drive initiated to clear all arrears or old files. It may be that the bills of entry which were assessed provisionally were not thereafter taken up for finalization or no final assessment orders were passed for a long period of time, resulting in either revenue loss or leakage. However, that is no justification for proceeding in the manner deprecated by various Division Benches. It is not as if such finalization can be done suddenly and without compliance with the principles of natural justice. Once the Revenue concedes the position, that they have issued a Show Cause Notice, called for certain documents and equally taken on record a written explanation and reply to the charges or allegations in the Show Cause Notice, then, it was incumbent upon it have given a complete opportunity to a party like the petitioner of making oral submissions by relying on the record. This was possible only at a personal hearing - final assessment made not sustainable - opportunity to be afforder and then assessment to be finalized. The issue stands covered in the decision taken in the case of Balaji Impex Versus Union of India & Others [2011 (7) TMI 291 - Bombay High Court]. Petition disposed off - decided in favor of petitioner.
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2016 (10) TMI 376
Refund claim - excess custom duty paid - revenue deposit to the Government of India - provisional assessment - classification of imported machinery - entry 8207.19 or entry 8431.43 - doctrine of unjust enrichment - whether the refund be allowed keeping in mind the principles of unjust enrichment w.e.f. 13/7/2006? - Held that: - provisional assessments are governed by the provisions of Section 18 of the Customs Act, 1962 and during the relevant period, the section specifically mandated for recovery of short paid and refund of excess paid on finalization of the provisionally assessed bill of entry. The said section did not have a clause of unjust enrichment has to be satisfied before the refund is sanctioned. On 13.7.2006, an amendment was carried out, by which it mandated in Section 18(3) & (4) that any refund that arises due to finalization of provisional assessment has to also satisfy the doctrine of unjust enrichment. The bar of unjust enrichment in the case of refund arising out of finalization of provisional assessment will apply only from 13.7.2006. Also a certificate issued by a Chartered Accountant in July 2005, who, after verifying the books of accounts and records and other relevant records of the appellant, had certified that the amount for which refund has been claimed is not charged to profit and loss account as an expense, the said amount is shown as a revenue deposit and was not recovered from the Municipal Corporation of Greater Mumbai or any other customer. Refund to be allowed - appeal allowed - decided in favor of assessee.
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2016 (10) TMI 375
100% EOU - clandestine removal of inputs - demand of customs duty, excise duty - imposition of penalty - cross examination of witnesses - principles of natural justice - Held that: - decision in the case of Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II [2015 (10) TMI 442 - SUPREME COURT] relied upon where it was held that, not allowing the assessee to cross-examine the witnesses by the adjudicating authority, though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. The appellant are allowed for cross examination of the witnesses requested for except the investigating officers, in the interest of justice - appeal allowed - matter remanded - decided in favor of appellant.
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Corporate Laws
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2016 (10) TMI 371
Deposit of amount towards the liquidation of the outstanding liability - Held that:- There is some confusion about the total amount payable by Saharas and the amount actually deposited by them so far. The figures being cited at the Bar need reconciliation. We direct that Saharas shall reconcile the figures with SEBI and file a joint statement as to the amount already deposited. SEBI may also after giving credit of the amount so deposited indicate the balance amount towards principal and interest due on the same before the next date of hearing. We have in the past while extending the interim arrangement directed deposit of a certain amount towards the liquidation of the outstanding liability. Saharas have complied with the said direction regarding deposit. In the circumstances and keeping in view the fact that even SEBI and Amicus agree to a road map being examined by this Court for liquidation of the balance liability, we extend the interim arrangement already made till 24th October, 2016 on the condition that the Saharas/contemnors shall deposit with SEBI a further sum of ₹ 200/- crores (Rupees Two hundred Crores only) during the intervening period. We make it clear that in case the deposit is not made, the Saharas shall stand committed to jail on 24th October, 2016, the date fixed for the next hearing.
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2016 (10) TMI 370
Ownership of lost / transferred share - Reference to the appellant to obtain the order from the Competent Court - Held that:- In the instant case, the transferors, the original owners of the shares have not at all come forward to challenge the ownership of the appellant over these shares. They have also not approached the Registrar of respondent company to stake their ownership over the said shares. In such a situation, there does not appear to be any dispute of ownership of the appellant over those shares. Hence, even otherwise also the issue relating to declaration of ownership, as sought by the appellant is again of merely of an academic nature and academic interest, if no one is coming forward to dispute the same. In such situation, one really fails to understand as to why respondent No.1 company is contesting the limited relief made by the appellant, of giving liberty to the appellant to approach the Registrar. Needless to state that before issuance of duplicate certificate to the appellant, the Registrar is bound to make requisite inquiry under the provisions of Section 84(4) of the Companies Act and he is not precluded in any way from considering the title of the appellant over the said shares. As stated above, the Registrar can even investigate the matter in accordance with rules and collect the evidence. Once, it is held that, the Registrar has to issue the duplicate share certificates after necessary inquiry, it follows that the inquiry will not be limited but it will cover even the aspect of ownership and title of the appellant over the said shares. In the light of the discussion above, as find that this is a fit case where the appeal needs to be disposed of, by setting aside the impugned Judgment and order passed by the Trial Court and grant the liberty to the appellant to make an application before the current RTA of respondent No.1-Company, Karvy Computershare Pvt. Ltd. for issuance of duplicate share certificates.
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Service Tax
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2016 (10) TMI 392
Failure on the part of appellants to take fresh steps in the respect of the sole respondent despite opportunities given - matters processed for listing before the Hon'ble Judge in Chambers for further directions - Four weeks time as last chance is given to appellant to comply with the terms of the order dated 18.07.2016 of the Court in respect of the respondents - the appellant to file the deficit court fee within four weeks as last chance.
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2016 (10) TMI 391
Rejection of refund claim - period of limitation - nature of differential duty paid by the assessee on issuance of SCN - The appellants kept quiet for a period of three years and it is only after the Supreme Court's decision in other assessee's case laying down that the value of the materials is not required to be added in the value of the services, was passed, the appellant approached the Revenue for refund of the excess amount deposited by them. Held that: - the payments made by the appellant were on account of differential amount of service tax and was not mere deposit during the period of investigation, the provisions of section 11B would admittedly apply. As per the said provisions, the refund can be staked only within the period of one year from the relevant date. The authorities working under the said act are bound by the provisions of the act, and cannot travel beyond section 11B - the refund claim having filed after a period of one year from the date of payment of the same, stands rightly rejected on the ground of limitation - appeal rejected - decided against appellant.
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2016 (10) TMI 390
Classification of service - credit rating activity - financial advisory services in respect of energy, banking, development, finance, transport and urban infrastructure, disinvestment and risk management classified under the head of Banking and Other Financial Services or Management Consultancy Service? - tax paid by the appellant under the head of Banking and Other Financial Services, which came into effect from 16.08.2002, prior to which no tax was payable under this head - whether the authorities are correct in demanding duty prior to the period 16.08.2002 under the head Management Consultancy Service? - Held that: - on the services in question the appellant has been paying Service Tax under the head of Banking and Other Financial Services w.e.f. 16.08.2002 and the Department had accepted the same. That being so, the Department cannot demand Service Tax on the very same activity under the category of Management Consultancy Service. The decision in the case of HSBC SECURITIES & CAPITAL MARKETS (I) PVT. LTD. Versus COMMR. OF ST., MUMBAI [2008 (6) TMI 159 - CESTAT MUMBAI] relied upon where it was held that advisory and due diligence services on acquisition of shares in listed companies rendered to an existing organisation cannot be considered to be Management Consultancy Service. The Board Circular dated 07.10.1998 referred to wherein it was categorically clarified that information and advisory services, if any, rendered by credit rating services would not attract the Service Tax. As per the above discussion, the advisory service provided by the appellant does not fall under the category of Management Consultancy Service, however it is correctly classifiable under Banking and Other Financial Services. Therefore, the same was not taxable prior to 16.08.2002. The demand of Service Tax under the head of Management Consultancy Service is not legal and correct - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (10) TMI 389
Condonation of delay - Section 35G of the Central Excise Act, 1944 - assessee instead of complying with the pre-deposit requirement, preferred to file appeal further after huge delay - Held that: - Stricto sensu, no substantial question of law would arise in cases of this nature. But, the statutory right of appeal cannot become redundant, by the dismissal of an application for condonation of delay, on technical grounds. All that one has to see is whether the interest of the Revenue will stand protected, even while recognizing the right of the assessee to exercise the statutory remedies available to them. It was due to the financial hardship that assessee did not to comply with the demand, but filed a further appeal after huge delay. The appellant is prepared to comply with the pre-deposit condition imposed by the appellate Commissioner. Thus, by granting one opportunity to the appellant to comply with the pre-deposit condition imposed by the Commissioner, the interest of both the parties would be balanced. While this will ensure some revenue to the respondent, it would restore the right of appeal to the appellant/assessee. The appellant granted time till 15.10.2016, to make a deposit of 50% of the duty of excise of ₹ 32,29,153/-, together with 50% of the interest upon the said amount, at the applicable rates, from the date of the order in original up to the date of making the deposit before the Commissioner (Appeals) - delay condoned - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 388
Restoration of the possession of premises - Continued occupation of the two premises of the petitioner by the Commissioner of Central Excise - confiscation of goods with an option to pay redemption fine - appellant chose the confiscation of goods - in the course of seizure proceedings custody of several coolers taken by the Commissioner of Central Excise - Held that: - It is not disputed that the petitioners did not deposit the redemption fine amount. As a consequence, the goods have been vested with the respondent-Commissioner of Central Excise and the order-in-original having been made on 30.11.2015, the respondent should have ensured that the premises i.e. two immovable properties were restored to the petitioners at the earliest time feasible. The continued occupation of the said two premises is palpably unreasonable - a direction is issued to the respondent to ensure that the vacant and peaceful possession of both the premises, which are the subject matter of the present writ petitions, are handed over to the petitioners on or before 15.10.2016. - petition allowed - decided in favor of petitioner.
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2016 (10) TMI 387
Condonation of delay - jurisdiction of the CESTAT against the order passed by the Commissioner (Appeals) - failure to file the appeal within time was because of the illness of their Managing Director - Held that: - The medical certificate, as produced, was issued by Ms.Uma Rani whose qualification, as recorded in the certificate itself, is M.B.B.S, D.G.O. The Managing Director of the appellant did not suffer from any gynaelogical disorder. It is difficult to believe that the Managing Director of appellant-Company would undergo treatment for Hypertension Heart Disease from a gynaecologist, and not a cardiologist for a heart disease. In any event, the medical certificate dated 23.02.2014 appears to have been obtained just before, and for the purpose of, filing the appeal before the Tribunal. No details as to the nature of treatment, which the Managing Director of the appellant-Company is said to have undergone from 01.07.2013 till 23.02.2014, are even referred to in the said certificate. - no reason found to exercise jurisdiction under Section 35G of the Act to interfere with the order under appeal. Delay not condoned - appeal rejected - decided against appellant.
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2016 (10) TMI 386
Condonation of delay - Section 35G of the Central Excise Act, 1944 - delay of 171 days in filing appeal due to father's ill health and the appellant being a small contractor had no support staff to look after the day to day affairs of the unit - Held that: - It is evident from the order passed by the Tribunal that the petitioner’s father was not hospitalised even for a single day in the months of January, March, April and June 2014. Even in the months of February, May and July, 2014 the appellant’s father was hospitalised only for 4, 8 and 6 days respectively. In all, the hospitalisation was only for 18 days. It is not even the appellant’s case before the Tribunal that, because of his father’s ailment, he did not execute any work or that he did not attend office during this period of more than six months. The finding recorded by the Tribunal, that no sufficient cause was shown, and the belated filing of the appeal showed negligence and carelessness on the part of the appellant, does not suffer from any infirmity, much less one which gives rise to a substantial question of law necessitating interference in an appeal filed under Section 35G of the Act - delay not condonable - appeal rejected - decided in favor of Revenue.
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2016 (10) TMI 385
Area based exemption - Notification No. 50/2003-CE requires increase in installed capacity by not less than 25% to grant exemption - various documents like certificate of Chartered Engineer, Capacity Certificate by the General Manager, DIC Kotdwar, details of procurement of capital goods etc. deposited by appellant in support of their claim - whether denial of exemption justified? - Held that: - the appellants are in regular communication with the department regarding their claim for exemption under the said Notification. As could be seen from the findings of the original authority, various doubts and suspicion have been raised against some of the documents and certificate submitted by the appellant. It is noted that the appellants have explained their position vis-a-vis these doubts. The appellant originally had capacity of 3 MT which was increased to 4 MT in the second stage of upgradation and overhauling. The appellants claimed to have changed the rating of solid state generator from 2000 KW to 2500 KW various other changes were made to increase the cooling of the assess generator. The furnace crucible capacity was increased 4 MT to 5 MT. The changes were carried out only in one crucible. These things have been explained by M/s Electrotherm (India) Limited who carried out the said upgradation work. The department did make reference to M/s Electrotherm, who confirmed the said expansion and supplied the supporting invoice for the same. The Chartered Engineer appointed by the department appeared before the Tribunal who confirmed that the revised capacity of the appellant as 5.8 MT. The proceedings by the department and the impugned orders heavily relied on certain suspicion and doubts raised against the claims by the appellant without due counter verification to categorically establish the correct expanded capacity by the Revenue - the denial of exemption is not justified - appellant's claim of expanded capacity cannot be rejected on perusal of documents placed - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 384
Eligibility of benefit of exemption Notification No. 3/2004-CEX dated 8.1.2004 - Plastic Polythene Film/Sheets - Plastic Polythene Film/Sheets supplied for setting up water supply plant; and a certificate to this effect was issued by Distt. Collector, Bikaner - Held that: - The contents of the Notification No. 3/2004-CEX dated 8.1.2004 are very clear that “all items of machinery, including instruments, apparatus and appliances, auxiliary equipment and their components/parts required for setting up of water supply plants” and “pipes needed for delivery of water from its source to the plant and from there to the storage facility”, would be eligible for exemption under the Notification No. 3/2004-CEX subject to the certificate issued by Collector/D.C./D.M. of District that such goods were cleared for intended use specified in the Notification No. 3/2004-CEX. The subject goods – “HDPE Geomembranc Film 1.00 MM Thick cleared and supplied by the appellant is neither an item of machinery mentioned in the notification nor a component/part of the said machinery nor a pipe needed for delivery of water, appearing in the notification. Therefore, the certificate issued by the Distt. Collector, Bikaner and produced by the appellant cannot provide required assistance to the appellant to support their stand - exemption benefit not allowed - appeal rejected - decided against appellant.
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2016 (10) TMI 383
Valuation - glass bottles - Central Excise Duty discharged on assessable value - whether packing material to be included in the assesssable value? - Held that: - the issue is no more res integra as the Apex Court in the case of HINDUSTAN POLYMERS Versus COLLECTOR OF C. EX. [1989 (8) TMI 77 - SUPREME COURT OF INDIA] has settled the law that packing materials supplied by customer/buyer, cost thereof is not includable in assessable value - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 382
Denial of area based exemption - non-fulfillment of conditions mentioned in the notification - N/N. 50/03-CE dated 1.10.2003 - acquisition of M/s.Stanley Controls a manufacturing unit located at Solan district in Himachal Pradesh - whether the denial of area based exemption to appellant is justified? Held that: - The capital goods available with the earlier unit are listed and transferred to the new premises. The nature of capital goods and the fact that they were installed in the new premises have been certified by the chartered engineer in performa Part I and Part II. In terms of Board's circular dated 22.12.2010, it is clear that the provision of the said notification do not place any bar or restriction on any addition/alteration in the plant or machinery or on the production of new product by an eligible unit after cutoff date during exemption period of 10 years as per notification. It is noted that if the exemption is extended to one unit, the change in its ownership would not jeopardize the admissibility of exemption for remaining part of the period. The guidelines have been issued with regard to the shifting of eligible unit to new location. No merit in the impugned order - appeal allowed - area based exemption granted to appellant - decided in favor of appellant.
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2016 (10) TMI 381
Availability of sufficient credit in the statutory record - levy of interest - Held that: - the procedure of filling application as per 2010 Budget proposal was not complied with. It is needless to state that the approach of the appellant of reversing the proportionate credit being the object of the 2010 Budget provision, asking the appellant to go through the application procedure is redundant. Therefore, the authority is only to satisfy themselves whether proportionate credit has been reversed or not without burdening the appellant to go through the technical procedures of the law. What that is required is that authority is to look into the substance of the transaction without appreciation of the format. If there is sufficient credit available on statutory record, the appellant shall not suffer penalty. It is needless to state that when sufficient credit is available on record, upon verification, there shall no demand of any duty liability - matter on remand to the adjudicating authority for finding out the credit availability on the statutory record - appeal disposed off.
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CST, VAT & Sales Tax
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2016 (10) TMI 374
Input tax credit - whether the Hon'ble Tribunal was justified in rejecting the claim of the assessee for the Input Tax Credit, even though such purchases are not disqualified as per Schedule-'E' attached to the Haryana VAT Act, 2003? - Held that: - The kind of goods purchased by the appellant, input tax credit on which has been declined, is “cooper wire, Taflon Tape, Gasket, Union, Socket etc. Fire Bricks or Boiler, G. I. Pipe, M.S. Angle, Flat, T. Iron, M.S. Flange, Drill, Shaft sleeve, Industrial Fan, M.S. Channel, Angle, Fire Bricks, Rubber Ring, Electric Cable, Wire Cold Rolled Strips, Tape Cutter, etc.”. A perusal of the aforesaid goods shows that none of them can be said to be of the category, which are used for construction of building, rather these are parts of machinery. In fact, none of the authorities were very clear on the issue as vague findings were recorded. The goods purchased by the appellant do not fall in the categories described at Sr. Nos. 1 and 2 of SCHEDULE - E. Entry 5 in Schedule-'E' is general in nature. All goods which are not forming part of the goods mentioned at Sr. Nos. 1 and 2 will form part of this entry. If the goods purchased by the appellant were not in the category of capital goods, the same will fall in the goods mentioned at Sr. No. 5. Considering the conditions as provided in column no.3, the appellant is not in the business of telecommunication, mining or generation and distribution of electricity, hence, the goods could not possibly be used for that purpose. The goods have not been exported out of State or disposed of otherwise than by way of sale. Clause (iii) in the circumstances mentioned in Column 5 provides that if the goods have been used in manufacture or packing of exempted goods then the benefit of input tax credit is not available. Conditions laid down in Clauses (iv) and (v), are also not applicable in the case in hand as neither the goods are in stock nor those have been sold to Canteen Store Department. First proviso to Section 8(1) of the Act provides that if the goods so purchased in the State are used or disposed of partly in the circumstance mentioned in Schedule “E' and partly otherwise the input tax credit in respect of such goods shall be computed on pro-rata basis. The appellant entitled to input tax credit on the goods purchased by him. However, while calculating input tax credit conditions in Schedule 'E' and provisos to Section 8(1) of the Act have to be kept in view - appeal disposed off - decided partly in favor of appellant.
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2016 (10) TMI 373
Demand of tax - assessment by the Excise and Taxation Officer-cum-Designated Officer, Ludhiana-II under the Central Sales Tax Act, 1956 - the stock transfer to the tune of ₹ 11,54,54,462/- treated as interstate sale - business of manufacture and sale of iron and steel goods including galvanized steel pipes - material was transferred from the manufacturing unit of the petitioner located in the State of Punjab to its branch office at Patna and thereafter local sale was made in the State of Bihar - Held that: - a specific plea was raised by the petitioner before the Appellate Authority that the transaction, which has been held to be interstate sale from the State of Punjab and tax paid thereon, was treated to be local sale in the State of Bihar and tax was paid on the same, however, that aspect was not considered by the Appellate Authority with reference to the alternative claim made by the petitioner in terms of the provisions of Section 22 (1B) of the Act, regarding refund or transfer of the tax from the State of Bihar to the State of Punjab. As the Appellate Authority failed to exercise its jurisdiction on the plea raised by the petitioner, without even disturbing the findings recorded by the Appellate Authority regarding transaction being in the course of inter-state sale from the State of Punjab, the matter deserves to be remitted back to the Appellate Authority for dealing with the alternative prayer made by the petitioner - petition disposed off - matter remitted back to the Appellate Authority to consider and decide the leftout issue - date of hearing shall be fixed by the Appellate Authority with prior intimation to the parties concerned.
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2016 (10) TMI 372
Levy of penalty under Section 27(3) - revision of assessment - TNVAT Act, 2006 - CST Act, 1956 - branded bakery products - Held that: - these revision of assessment under Section 27(1)(b) of the TNVAT has been done by the respondent to increase the rate of tax on the ground that the petitioner has been selling branded bakery products. The revision of the assessment is done under Section 27(2) of the Act, therefore levy of penalty under section 27(4) of the TNVAT Act and under ection 27(3) of the TNVAT Act is not correct. The petitioner has withdrawn the application filed before the Trade Marks Registry and has got sufficient proof to show that the same has been withdrawn as early as on 03.10.2013, - one more opportunity given to the petitioner to produce proof of withdrawal of application. Matter remanded for fresh consideration and the respondent directed to issue a fresh notice and after affording an opportunity of personal hearing to the petitioner, shall re-do the assessment in accordance with law - petition allowed - decided in favor of petitioner.
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Indian Laws
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2016 (10) TMI 369
Settlement of arrears under the 'Samadhan Scheme' - delay in refund - prayer for grant of interest - Held that:- The amount was deposited by the appellant way back in the year 2008 who had purchased the property in auction. This auction has been held to be illegal as proper procedure was not followed. That was not the fault of the appellant. The appellant's money got stuck for all these years. When he was denied the benefit of the auction purchase despite being the highest bidder on the procedural grounds which resulted in refund of the money deposited by him, he should have been granted interest thereupon. In the interest of justice, we deem it proper that Simple Interest at the rate of 9 per cent be awarded to the appellant from the date of deposit till the date of release of this amount which shall be payable by the Respondent No.2 viz., the Joint Commissioner, Commercial Tax (FAC), Madurai. The interest shall be calculated and paid within a period of three months. We make it clear that, in case, the property is to be ultimately sold for realising the dues payable to respondent No.2, the respondent No.2 shall be entitled to recover the aforesaid interest as well which would be paid to the appellant.
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2016 (10) TMI 368
Guilty for committing offence under Section 138 Negotiable Instruments Act - Held that:- There is controversy as to the ‘date’ when it was so executed; the word “Liya or Diya” mentioned in it are also disputed. The complainant did not examine any attesting witness to corroborate his version. Admittedly, the revenue stamp was affixed on the receipt subsequently; there are certain alterations in receipt (Ex.CW-1/3). It further records that the cheques in question were given to the complainant as security (“Bator Amanat Diye”). The complainant alleged that these words were incorporated subsequently by DW-2 (Ramesh Chandra) in connivance of the respondent. This receipt records that ornaments worth ₹ 2.30 lacs and ₹ 1.70 lac were given. It is, however, unclear whether the gold ornaments were given by the complainant to the respondent or vice versa. In the complaint, the complainant did not disclose if ornaments worth ₹ 2.30 lacs and ₹ 1.70 lacs were given by him to the respondent. The respondent examined DW-2 (Ramesh Chandra) and DW-3 (Ashok Kumar) attesting witnesses to the receipt (Ex.CW-1/3). They have supported the respondent’s version. It was specifically denied that the words in Ex.CW-1/3 were manipulated or fraudulently inserted. At no stage, the complainant lodged any complaint for fabrication of the receipt (Ex.CWCrl. 1/3) though it continued to be in his possession. Contents of the receipt can’t be permitted to be denied under Sections 91 and 92 of the Indian Evidence Act. It is amply clear from the evidence referred above that at the time of issuance of the cheques there was no outstanding liability on the respondent’s part. The complainant has not established if any jewellery purportedly pledged by the respondent with him was ever returned to him. The appellant cannot be permitted to enjoy the alleged pledged jewellery as well as to ask for cheque amount given as security / entrustment. In the light of above discussion, impugned judgment suffers from no illegality.
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