TMI Tax Updates - e-Newsletter
November 29, 2014

Case Laws in this Newsletter:

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

Articles

1. Department cannot adjust unconfirmed demand against refund payable to the Assessee

   By: Bimal jain

2. Good news for HOME / FLAT BUYERS in Delhi Area

   By: DEVKUMAR KOTHARI

News

1. Implementation of Goods and Service Tax (GST)

2. Electronic Mode of Payment

3. Asian Infrastucture Investment Bank

4. Printing Currencey Notes in Indigenous Papers

5. 1641 Companies Listed with National Stock Exchange: at Least One Women Director Required on Board Of Directors

6. Limit Free Transactions Through ATMs in Six Metro Centres Only

7. Varishta Pension Bima Yojana (VPBY) Launched; to Benefit Senior Citizens Aged 60 Years and Above

8. Overhauling of Companies Act

9. Violation of Company Act

10. Pending Cases with Company Law Board

11. Proposals for Foreign Direct Investment

12. Special Economic Zones

13. Facilitating Ease of Doing Business - Recent Initiatives Under Implementation for SEZs

14. India Signs Agreement with ADB for a Loan of Us $100 Million to Support Kerala’s Additional Skill Acquisition Program; 2,35,000 Needy Students in Kerala to be Benefited under the Program during 2014-2018

15. RBI Reference Rate for US $

16. Mangalore Service Tax Commissionerate Arrests A Builder for Evading Service Tax of Over One Crore

Circulars / Instructions / Orders

VAT - Delhi

1. 19/2014-15 - dated 27-11-2014

Filing of reconciliation return for the year 2013-14.

DGFT

2. 76/(RE-2013)/2009-2014 - dated 27-11-2014

Amendment in ANF 2A of Handbook of Procedure Vol. I (Appendices and Aayat Niryat Forms), 2009-2014.

Highlights / Catch Notes

Income Tax

• Tribunal Rules Interest Liability Unjustified for Assessee u/ss 139(8), 217, 234A, and 234B for 1988-1990.

  Case-Laws - HC : Tribunal was not justified in holding that the assessee was liable for interest u/s 139(8)/217 for the AY 1988-1989 and interest u/s 234A & 234B for the AY 1989-1990 up-to 26.3.91 - HC
  Visit to Get Source

  ---

• Taxpayer Loses Section 80P Deduction for Missing Return Deadlines; Section 80A(5) Enforced for Non-Compliance.

  Case-Laws - AT : Denial of deduction u/s 80P by invoking section 80A(5) – if the return was not filed either u/s 139(1) or 139(4) or in pursuance of notice issued u/s 142(1) or u/s 148, the taxpayer is not entitled for any deduction u/s 80P - AT
  Visit to Get Source

  ---

• Income from plants moved from soil to containers qualifies as agricultural income u/s 10(1) of the Income Tax Act.

  Case-Laws - HC : Exemption u/s 10(1) - When plants are established in the soil only then they are shifted in suitable containers or appropriate place in land, the same would constitute income from agriculture - HC
  Visit to Get Source

  ---

• Taxpayers Entitled to Interest on Refunds from Self-Assessment Payment Date to Refund Issuance u/s 244A(1)(b.

  Case-Laws - HC : Interest payable u/s 244A(1)(b) on refund of excess amount – interest is payable from the date of payment of the tax on self-assessment to the date of refund of the amounts u/s 244A - HC
  Visit to Get Source

  ---

• Arm's Length Price in Transfer Pricing Adjustments must involve chargeable income; capital receipts aren't included unless stated in Section 2(24).

  Case-Laws - HC : TPA - determination of ALP - income should be chargeable under the Act, before Chapter X can be applied - the definition of income does not include within its scope capital receipts arising out of capital account transaction unless so specified in Section 2(24) of the Act as income - HC
  Visit to Get Source

  ---

• High Court Rules Rental Income from Warehouses Isn't Business Income u/s 28; Exempt from Business Tax Assessment.

  Case-Laws - HC : Rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity and the income was not assessable u/s 28 as business income - HC
  Visit to Get Source

  ---

• President's Power to Form Special Bench Challenged: Avoid When Division Bench Active and Revenue Seeks Extension.

  Case-Laws - HC : Validity of constitution of Special bench - President does have the power to constitute a Special Bench but at what point and how is this power to be exercised is a debatable question - Prima facie this power cannot be exercised, when a Division Bench is siezed of the appeal and the Revenue has been seeking time before it - HC
  Visit to Get Source

  ---

• Trust Registration Valid if Engaged in Charitable Activities Despite Future Business Intentions u/s 12AA.

  Case-Laws - HC : Registration u/s 12AA – Once the material on record, shows that the Trust is carrying on charitable activities, merely because they proposed to carry on the business in future to augment the income to support charitable purposes, the registration cannot be declined - HC
  Visit to Get Source

  ---

• High Court Rules Against Disallowance of Finance Commission to Partner's Proprietary Concern u/s 40(b) of Income Tax Act.

  Case-Laws - HC : Disallowance u/s 40(b) - Whether the dis-allowance of the finance, commission paid to proprietary concern of the partner under provisions of Section 40(b) was justified - Held No - HC
  Visit to Get Source

  ---

• High Court Rules Section 263 Cannot Be Invoked Due to Retrospective Amendment to Section 115JB Explanation.

  Case-Laws - HC : Power of revision under section 263 – Amendment to Explanation to Section 115 JB - subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 - HC
  Visit to Get Source

  ---

• Court Validates Operating Profit Over Cost as Profit Level Indicator for Arm's Length Transactions.

  Case-Laws - AT : Determination of PLI - Whether RoCE is correct PLI under the facts and circumstances of the case – the calculation of PLI on the basis of OP/OC and by adopting that method the transaction of the assessee is found to be at arms length is approved - AT
  Visit to Get Source

  ---

• Exemption Denied: Profitable Entity's Activities Fail to Meet "Charitable Purpose" Definition Under Income Tax Act Section 2(15) & 11.

  Case-Laws - AT : Denial of exemption u/s 11 – Scope of term charitable purpose u/s 2(15) - If the activities of the assessee are analysed, it has turned into a huge profit-making agency for which it is taking money from the general public - no charity is involved - AT
  Visit to Get Source

  ---

Indian Laws

• Court Upholds Confidentiality of Taxpayer Information, Protects Personal Tax Details Under RTI Act Section 8(1)(j.

  Case-Laws - HC : Applicability of section 8(1)(e) of RTI Act – fiduciary relationship - Whether the information provided by an individual in his income tax returns is exempt from disclosure u/s 8(1)(j) - the information relating to individual assesse could not be disclosed. - HC
  Visit to Get Source

  ---

Service Tax

• High Court Denies Amendment Request in Service Tax Voluntary Compliance Scheme, 2013; Amendments Not Allowed Under Scheme Provisions.

  Case-Laws - HC : Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Request for rectification / amendment in the declaration - request denied - HC
  Visit to Get Source

  ---

• High Court Overturns Show Cause Notice on Assam Tea Plantation Security Force Services Classification as Business Support Service.

  Case-Laws - HC : Challenge to the Show Cause Notice - Business support service or not - security services provided by Assam Tea Plantation Security Force (ATPSF) to protect the planters and their property - show cause notice set aside - HC
  Visit to Get Source

  ---

• Tribunal Remands Cenvat Credit Case on Input Services for Non-Commencement of Production; Further Analysis Needed.

  Case-Laws - HC : Cenvat Credit - input services - Non commencement of production / manufacturing activity - The Tribunal has blindly followed its earlier decision in the case of M/s. Cadila Health Care Pvt. Limited - matter remanded back - HC
  Visit to Get Source

  ---

• Court Rules Interest Liability on Delayed Tax Payment Cannot Be Waived Despite Cenvat Credit Argument by Assessee.

  Case-Laws - HC : Goods Transport Agency service - Interest on delayed payment of tax - assessee contended that, they would have taken Cenvat credit and utilised the same for payment of Service Tax - interest liability cannot be waived - HC
  Visit to Get Source

  ---

Central Excise

• MRP-Based Valuation Upheld for Goods Supplied to State Corporation for Free Distribution to Women Beneficiaries.

  Case-Laws - AT : Valuation of goods - MRP based valuation or transaction value - goods supplied to TNCSC, which are intended for free distribution to the women beneficiaries belonging to families holding family cards eligible for drawal of rice - MRP based valuation upheld - AT
  Visit to Get Source

  ---

• CENVAT Credit Restored for Molasses from Another Mill Used in Rectified Spirit, ENA Production; Rule 6 Compliance Confirmed.

  Case-Laws - AT : Captive Consumption of Molasses - appellant discharged the obligations under Rule 6 of the CENVAT Credit Rules, 2004 - denial of CENVAT credit on the Molasses purchased from other sugar mill used in the manufacture of Rectified Spirit and ENA are also liable to be set aside. - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2014 (11) TMI 906
  Liability for interest u/s 139(8)/217 and 234A, 234B, 234C - Whether the Tribunal was justified in holding that the assessee was liable for interest u/s 139(8)/217 for the AY 1988-89 and interest u/s 234A & 234B for the AY 1989-90 upto 26.3.91 the due date when the return was filed without giving credit of the amount retained by the department u/s 132(5) for meeting future tax liability which was seized on 7.7.1989 – Held that:- The scheme of the Act clearly suggests that the money seized during the course of the search is retained by the Revenue for the liability of the assessee which may be determined finally by the assessment or re-assessment or by final order of assessment or re-assessment, the existing liability of a previous time is only quantified and not a creation of liability on the date of passing of the assessment order - the retained amount also required to be given adjustment against the then liability of the assessee, which has been quantified subsequently by the order of assessment and re-assessment - This fact finds support of sub-section (4) of Section 132B, which for excess amount retained by the revenue, the Central Government shall pay the interest – thus, the Tribunal was not justified in holding that the assessee was liable for interest u/s 139(8)/217 for the AY 1988-1989 and interest u/s 234A & 234B for the AY 1989-1990 up-to 26.3.91 – Decided in favour of assessee.

  ---

• 2014 (11) TMI 905
  Validity of reassessment proceedings made in absence of any notice issued u/s 143(2) - Whether the Tribunal was right in holding that the assessment proceedings passed u/s 143 (3) r/w 147 is time barred on the ground that the notice u/s 143(2) was issued beyond six months from the end of the financial year in which the return was furnished by relying on the proviso u/s 143(2)(ii) – Held that:- In Sapthagiri Finance & Investments Vs Income Tax Officer [2012 (8) TMI 523 - MADRAS HIGH COURT] it has been rightly held that the notice u/s 143 (2) is mandatory and it should have been served on the assessee before the expiry of six months - in completing the assessment u/s 148 of the Act, compliance of the procedure laid down u/s 142 and 143(2) is mandatory - beyond notice u/s 142(1), there was no notice issued u/s 143(2), and the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148 of the Act, there was total failure on the part of the Revenue from complying with the procedure laid down under Section 143(2) of the Act, which is mandatory one – thus, the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (11) TMI 904
  Selection of comparables - Goldiam Jewellery Limited – Whether the amount of loan taken can be construed as a related party transaction in determining the percentage of RPL to total sales - Held that:- The term `Related party transactions’ refers to any transaction between related parties - It will encompass only such transactions between the related profits which directly affect the overall profitability in one way or the other - the transaction of accepting or advancing loan per se has no effect on the profitability - the mere fact that no interest was, in fact, paid on this loan is sufficient enough for not inflating the amount of related party transactions with any hypothetical interest amount - the loan taken cannot be considered as part of related party transactions and no hypothetical interest can be calculated for the purposes of inclusion in the total RPTs - If, however, in a case some amount of actual interest is paid or received on the loans accepted or given, that would form part and parcel of the RPTs for the purposes of computing the percentage of RPTs to the Total revenue - there is no actual payment of interest on the loan taken - as such, no hypothetical interest can be included in the RPTs - if the amount of loan taken from GIL at Rs. 13.30 crore is reduced from total RPTs of Goldiam Jewellery Limited at Rs. 19.32 crore, the percentage of RPTs to the total revenue would obviously fall within 25% filter – the company is to be taken as comparable. Su- Raj Diamond Industries Limited – Held that:- Su-Raj Diamond Industries Limited cannot be taken as comparable to the assessee because it is operating in the retail segment, whereas the assessee is operating in wholesale business of diamond studded jewellery - There can be no comparison of the volume and profit rate in respect of whole sellers and retailers - Su-Raj Diamond Industries Limited is liable to be excluded from the final list of comparables. Forever Precious Jewellery & Diamonds Limited – Held that:- As the revenue has embarked upon PLI of RoCE and the details relating to segmental operating profit and segmental amount of capital employed of Forever Precious Jewellery & Diamonds Limited are not ascertainable - apart from dealing in diamond studded jewellery, is also dealing in other products such as silver jewellery etc. - The figure of sales as per quantitative details also does not match with the total sales as per Trading account - Since the segmental operating profit and segmental capital employed in respect of diamond jewellery of this case are not available, this case cannot be considered as comparable. Change of PLI from OP / TC or OP / Sales to RoCE – Whether the RoCE is a correct PLI - Held that:- When there is no identifiable capital employed and separate amount of profit in respect of transactions with the AEs in the situation like the one which is prevailing, then how the assessee’s RoCE can be precisely worked out, is anybody’s guess - computation of separate capital employed or profitability in respect of transactions with AEs is not practical due to commonality of both the sets of transactions with the AEs and non-AEs, the correctness of the applicability of RoCE as PLI under the TNMM cannot be countenanced - the adoption of RoCE cannot be approved. Transfer pricing adjustment of total transaction instead of international transaction – Held that:- It is only income arising from international transactions, being a transaction between associated enterprises, which is required to be computed having regard to arm’s length price - In other words, transfer pricing adjustment is warranted only qua the transactions with associated enterprises and not non-AEs - the transfer pricing adjustment has been made in relation to the total transactions of the assessee breaching the limit of transactions with the AEs - as the matter of computation of ALP in the present case has been restored to the file of AO / TPO for a fresh decision, the authorities are directed to restrict the TP adjustment in the fresh proceedings only to the transactions with the AEs – Decided in favour of assessee.

  ---

• 2014 (11) TMI 903
  Addition of undisclosed stock deleted – Held that:- The assessee’s own concern, M/s Chandra Kishore Ashok Kumar more so in the absence of sufficient staff - Having realized that the stock could not be valued or reconciled with the books of account, she made a voluntary surrender - She did not stop there, but she further issued a cheque to the Income-tax Department on the surrendered amount and allowed it to be encashed even after conclusion of the survey - addition was made on account of undisclosed stock with regard to which the assessee herself has made a statement that it cannot be valued on account of shortage of staff and the stock was spread over in five floors of the building and godowns - on the basis of the surrendered statement and issuance of cheque of income-tax, addition can be made on the basis of the surrendered statement, as the assessee has not made any effort to reconcile the stock available with the books of account – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO. Addition of Rs. 20 lakhs of less profit shown by the assessee – Held that:- The AO has noted that both the concerns are doing similar type of business with very slight variation in the case of M/s Devi & Company at the same address - the assessee was engaged in wholesale business and in the wholesale business the gross profit is always less compared to retail business - Moreover, while estimating the gross profit rate while making the addition in the hands of the assessee on account of less gross profit rate, the AO has not rejected the books of account - the gross profit rate declared by the sister concern which is engaged in different nature of business, cannot be accepted - the assessee herself has declared gross profit rate at 4.74% which is also higher than the gross profit rates declared in other years - the gross profit rate declared by the assessee should have been accepted by the AO – the order of the CIT(A) is upheld – Decided partly in favour of revenue.

  ---

• 2014 (11) TMI 902
  Denial of deduction u/s 80P by invoking section 80A(5) – Taxpayers have not filed the returns of income within the time limit provided u/s 139(1) or 139(4) or within the time specified in the notice u/s 142(1) - Whether such taxpayers are entitled for deduction u/s 80P - Held that:- Following the decision in Kadachira Service Co-op. Bank Ltd. Versus Income-tax Officer, Ward-1, Kannur [2013 (2) TMI 208 - ITAT COCHIN] - Section 139(1) make it mandatory for every taxpayer whose total income exceeds the maximum amount which is not chargeable to income-tax before grant of deductions u/s 10A, 10B and deduction under Chapter VIA of the Act to file the return of income - all the taxpayers' income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1). Whether filing of return of income and making a claim in respect of deduction u/s 80P is mandatory or discretionary – Held that:- If the contention of the assessee is accepted, then the person, who files the return of income and fails to make a claim of deduction in the return of income either by ignorance or otherwise may not get the benefit, but a person who has not filed the return of income may be in a better position to claim the benefit - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - the mandatory provisions contained in section 139(1) r.w.s. 80A(5) it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction in the return itself – Decided against assessee. Whether the return could be treated as return of income or not – Held that:-No loss which has not been determined in pursuance of a return filed within the time provided u/s 139(1) shall be carried forward and set off but before amendment of section 80 by Taxation Laws Amendment Act, 1984 with effect from 01-04-1985 there was no requirement for filing the return of income within the time limit provided u/s 139(1) - the legislature made it mandatory for filing the return of income within the due date prescribed in section 139(1) as far as carry forward of loss u/s 80 is concerned - the return of income filed within the time limit provided in section 139(1) or 139(4) or time specified in the notice u/s 142(1) or 148 can be considered as return of income - However, the belated return filed beyond the time limit provided u/s 139(1) or 139(4) or time specified in notice u/s 142(1) or 148 of the Act cannot be considered as return of income for deduction u/s 80P of the Act. Whether the taxpayer is entitled for deduction u/s 80P – Held that:- All the taxpayers’ income exceeded the maximum amount which is not chargeable to income-tax before grant of deduction under Chapter VIA of the Act - Therefore, it is not only mandatory but also statutory requirement that all the taxpayers have to file the return of income before the due date prescribed u/s 139(1) of the Act - in order to avail benefits under the beneficial provision, the conditions provided by the legislature has to be complied with - in view of the mandatory provisions contained in section 139(1) r.w.s. 80A(5) of the Act it is mandatory for every cooperative society for claiming deduction u/s 80P to file the return of income and to make a claim of deduction u/s 80P of the Act in the return itself - if the return was not filed either u/s 139(1) or 139(4) or in pursuance of notice issued u/s 142(1) or u/s 148, the taxpayer is not entitled for any deduction u/s 80P – decided against assessee.

  ---

• 2014 (11) TMI 901
  Exemption u/s 10(1) - Whether the income was agricultural income as defined in section 2(1A) and therefore exempt u/s 10(1) – Held that:- Sale proceeds of the land belonging to the assessee constitute income from agriculture, hence exempt from tax under the Income-tax Act - the language of section 2(1)(b)(ii) does not appear to justify the contention of the revenue that for claiming the benefit of section 2(1)(b)(ii) the process employed by the assessee must be of such character as just to make the produce marketable - The true test is what is the process ordinarily employed by the cultivators of any particular locality to render the produce raised by them fit for market - The process adopted in one locality may not necessarily be adopted in another locality – in Commissioner of Income-tax, Central Circle, Bangalore Versus Namdhari Seeds (P.) Ltd. [2011 (10) TMI 488 - KARNATAKA HIGH COURT] – it has been held that the assessee neither had derivative interest in the land nor did it actually cultivate the land and that the entire reading of the terms of agreement would only indicate that the assessee was interested only to have healthy foundation seeds grown for the process of converting them to certified seeds and the entire income amounted to business income of the assessee. Unless the assessee has carried out the basic operations upon the land i.e., tilling of the land, sowing of the seeds planting, etc. requiring the expenditure of human skill and labour upon the land, it cannot be said that the income earned by the assessee is agricultural income - subsequent operations would also be agricultural operations if taken in conjunction with basic operations - if any income is earned by carrying out the subsequent operations without carrying out the basic operations then such income would not be considered as agricultural income - the plants have been grown on land owned by the assessee - The assessee during the course of growing and nurturing the plants on the land carried out certain functions such as tilling the soil, weeding, watering, manuring etc. and finally the plants are made ready for sale - It goes without saying that all this involves human skill and effort - When plants are established in the soil only then they are shifted in suitable containers or appropriate place in land – thus, the sale proceeds from the business of nursery carried on by the assessee constitute income from agriculture – Decided in favour of assessee.

  ---

• 2014 (11) TMI 900
  Amount received by Non-resident to be treated as Royalty or not u/s 9(i)(vi) - Drawing and designs and technical know-how – Transaction to be treated as outright sale of plant and profits to be treated business profit or not – Held that:- A comparison of the definitions or descriptions of the word royalty under Explanation 2 of Section 9(1)(vi) of the Income Tax Act, on the one hand, and the one, under Clause 13(3) of the DTA Convention, on the other hand, discloses that the amount, even if called as royalty, paid by the respondent, to the foreign company gets attracted by the DTA Convention - the know-how is intellectual property and excluded clauses referred to above pertained to the know-how of secret formula or process and the imparting of any information concerning the working thereof - the amount paid by the respondent to the foreign company is part of lump sum consideration for supply of technical know-how, machinery installation and erection and the same cannot be treated as royalty and even if the amount is to be treated as royalty, it stands covered by the DTA convention dated 16-04-1981 and thereby the amount is not liable to taxation in India – Decided against revenue. Liability to pay interest u/s 139(8) - Whether the Tribunal is justified in holding that the agent of non-resident is not responsible for discharge of statutory obligation anterior to grant of recognition of such agency – Held that:- It is only on 19.11.1990, that an order came to be passed under Section 163(2) of the Act treating the respondent as an agent of non- resident - The time for filing returns for assessment year 1988-89 was to expire by November, 1987 and for assessment year 1989-90, in November, 1989 - Since it is only after 19.11.1990, the respondent was treated as the agent of a non-resident, there was no obligation on the respondent to file a return for 1988-89 and 1989-90 for which the time for filing return had expired in November, 1987 and November, 1989 itself - there was no obligation on the part of the respondent to discharge the statutory obligation prior to 19.11.1990 - as there was no obligation on the part of the respondent to file a return prior to the date of its being treated as a representative of the foreign company, there was no obligation to file returns prior to that date - the liability to pay interest under Section 139(8) of the Act, cannot be fastened on the respondent - definition of tax does not include component of interest – Decided against revenue.

  ---

• 2014 (11) TMI 899
  Interest payable u/s 244A(1)(b) on refund of excess amount – Excess amount paid on self-assessment u/s 10A – Held that:- Amount paid by the petitioner as tax on self-assessment would not stand covered by Section 244A(1)(a) - the payment of tax made by resident/ depositor is in excess and the department chooses to refund the excess payment of tax to the depositor - the interest requires to be paid on such refunds - In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year - the requirement to pay interest arises whenever an amount is refunded to an assessee as it is a kind of compensation for use and retention of money collected by the revenue. The payment has not been made pursuant to any notice of demand but prior to the filing of the return of income in accordance with Section 140A of the Act - Secondly, the provisions of Section 244A(1) (b) very clearly mandate that the revenue would pay interest on the amount refunded for the period commencing from the date the payment of tax is made to the revenue upto the date when refund is granted to the revenue – relying upon Karnataka High Court in Commissioner of Income Tax v/s Vijaya Bank [2011 (7) TMI 582 - KARNATAKA HIGH COURT] - interest is payable from the date of payment of the tax on self-assessment to the date of refund of the amounts u/s 244A – thus, the order is set aside and the AO is directed to compute the interest payable from the date of payment on self-assessment tax i.e. 31 August 1994 till the date of refund i.e. 24 October 1998 – Decided in favour of assessee.

  ---

• 2014 (11) TMI 898
  Allowability of expenses u/s 37 - Amount paid to Municipal Corporation for legalizing the construction of building – Held that:- Following the decision in JAMNA AUTO INDUSTRIES Versus COMMISSONER OF INCOME -TAX [2008 (1) TMI 62 - PUNJAB & HARYANA HIGH COURT] and considering Explanation to Section 37(1) inserted retrospectively w.e.f 1.4.1962 it has been held that any payment made by an assessee on account of infraction of law would not be admissible deduction u/s 37 of the Act - However, any damages paid by the assessee for breach of contract on its part were deductible - the assessee had paid the compounding fee as compensation for condoning deviations from original sanctioned plan - In substance, the payment was in the nature of the amount paid on account of infraction of law as there was violation in the building plan of the assessee – Decided against assessee. Claim u/s 80G deleted – Donation made towards Prime Ministers Relief Fund for Gujarat Earth Quake Relief Fund – Held that:- The assessee was unable to show in the light of Explanation 5 to section 80G which was inserted by Finance Act 1976 effective from 1.4.1976 that the deduction was admissible - the assessee could not claim deduction u/s 80G of the Act in respect of donations by way of clothes sent to Prime Minister Relief Fund for Gujarat Earthquake relief the same being in kind and not in cash, cheque or draft - The Tribunal rightly declined the benefit u/s 80G - Decided against assessee. Eligibility for deduction u/s 37 - goods sent to the Prime Ministers Relief Fund for Gujarat Earth quake relief – Held that:- The Tribunal rightly observed that the contribution which was made by the assessee in kind to the Prime Minister's Relief Fund for Gujarat Earthquake relief was not on account of any business compulsion which could be termed to be falling within the expression “wholly and exclusively” - the expenditure incurred in the form of relief for earthquake victims although was for public good but would not have any impact on the business of the assessee - there being no commercial expediency in incurring such expenditure, it was not deductible u/s 37 - the assessee had given the donations in the form of clothes and claimed deduction u/s 37(1) by quantifying the same in monetary terms - it could not be said that it was essential for the assessee to have contributed towards the Prime Minister's Relief Fund for carrying on business activities – the order of the Tribunal is upheld – Decided against assessee.

  ---

• 2014 (11) TMI 897
  Jurisdiction of the revenue to bring to tax amounts received on capital account namely issue of equity shares to its non-resident Associated Enterprises – Held that:- Following the decision in Vodafone Services Pvt. Ltd. v. Union of India [2014 (11) TMI 881 - BOMBAY HIGH COURT] wherein it has been held that the sine-qua-non to apply Chapter X of the Act would be arising of Income under the Act out of an International Transaction -This income should be chargeable under the Act, before Chapter X can be applied - the definition of income does not include within its scope capital receipts arising out of capital account transaction unless so specified in Section 2(24) of the Act as income - there is no charge in the Act to tax amounts received and/or arising on account of issue of shares by an Indian entity to a nonresident entity in Sections 4,5,15,22,28,45 and 56 of the Act - This is as it arises out of Capital Accounts transaction and, therefore, is not income - Chapter X of the Act does not contain any charging provision but is a machinery provision to arrive at ALP of a transaction between Associated Enterprises; and Chapter X of the Act does not change the character of the receipts but only permits re-quantification of income uninfluenced by the relationship between the Associated Enterprises. Revenue does not dispute the fact that the issue with regard to chargeability to tax in respect of amounts not received on issue of shares to non-resident AE s being on capital account - the distinction sought to be made on the ground of alternative remedy is not such as to warrant not entertaining the petition - The fact that the assessee chose not to declare issue of shares to its non-resident AE s in Form 3CEB as in its understanding it fell outside the scope of Chapter X of the Act - If the assessee did not file a particular transaction in Form 3CEB when so required to be filed, the consequences of the same as provided in the Act would follow - the mere not filing of Form 3CEB on the part of the assessee would not give jurisdiction to the revenue to tax an amount which it does not have jurisdiction to tax. Even if it is assumed that it is an International Transaction, the jurisdictional requirement for Chapter X of the Act to be applicable is that Income must arise - the jurisdictional requirement for application of Chapter X of the Act is not satisfied – thus, the order of the TPO is set aside to the extent it holds that ALP of issue of equity shares is Rs. 183.44 per share as against Rs. 10 per share and deemed interest brought to tax on the amount not received when benchmarked to the ALP – Decided partly in favour of assessee.

  ---

• 2014 (11) TMI 896
  Computation of MAT - Additional depreciation debited – Retrospective effect in change in the method of providing depreciation - Whether the Tribunal was right in deleting the addition made by the AO to the book profit on account of additional depreciation debited in the accounts for the earlier years because of change in the method of providing depreciation retrospectively – Held that:- Following the decision in DCIT Versus Farmson Pharmaceuticals Guj Ltd. [2011 (4) TMI 1037 - Gujarat High Court] - the short fall in the depreciation, was charged to the Profit & Loss Account, which was computed in accordance with the provisions of the Companies Act – in Apollo Tyres Ltd. vs. Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court] it has been held that the AO, while computing the income u/s 115J, has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act - The AO has the limited power to make increases and reductions as provided for in the Explanation to the section - the AO does not have the jurisdiction to go behind the net profits shown in the Profit & Loss account except to the extent provided in the Explanation to section 115J - subsection (1A) of section 115J does not empower the AO to embark upon a fresh enquiry in regard to the entries made in the books of account of the company – the Tribunal was right in law in upholding the deletion of addition made by the AO to the book profit on account of additional depreciation debited in the books for the earlier years because of change in the method of providing depreciation retrospectively – Decided against revenue.

  ---

• 2014 (11) TMI 895
  Rental income from letting out of warehouses – Business income or income from house property - Whether the Tribunal was justified in holding that the rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity of the appellant - Held that:- The Tribunal was rightly of the view that the income derived by the assessee by way of rent of such godowns from M/s. IPL is therefore cleraly liable to be taxed as “income from property” and not as “income from business” - the company had rendered certain incidental services for earning such rental income would not alter the nature of such income as being assessable under the head “income from house property” - whether any income falls under one head or the other has to be decided according to the common notions of practical and reasonable man for the act does not provide any guidance in the matter and that no general principle could be laid down which is applicable to all cases and each case has to be decided on its own facts and circumstances - assessee has not let out the constructed building but is providing complex service oriented activities - The return received by the assessee is not the income derived from the exercise of property rights only but is derived from carrying on an adventure in the nature of trade - If the entire conduct and series of activities undertaken by the assessee firm is examined right from the inception of firm, it is borne out that the assessee carried out the activities with a view to earn profit or gain rather than to earn income as an owner of the asset – thus, the Tribunal was justified in holding that the rental income from letting out of warehouses/godowns together with various services rendered to the occupant did not constitute a business activity and the income was not assessable u/s 28 as business income – Decided against assessee.

  ---

• 2014 (11) TMI 894
  Maintainability of petition – Violation of order issued by CBDT by petitioner – Remedy as provided in the law to be availed first before reaching the HC - Held that:- In L. Chandra Kumar Versus Union Of India And Others [1997 (3) TMI 90 - SUPREME Court] it has been held that in the first instance, their remedy lies before the Tribunal, since respondent/CBDT, being a part of the Central Government, comes under its jurisdiction - when inherent jurisdiction is lacking in a court, mere issuance of a notice to show cause in the writ petition, cannot be treated as a waiver - no decision has been taken either on merits or on the issue of maintainability of the present petition on the ground of lack of jurisdiction. The petitioners are working on different posts with the respondent/CBDT and they have raised a grievance with regard to their promotions - they cannot be permitted to bypass the forum of the Tribunal and approach a Single Judge of the High Court directly for relief. It is for the petitioners to follow the route charted out by the Supreme Court in the case of L. Chandra Kumar Versus Union Of India And Others [1997 (3) TMI 90 - SUPREME Court] - only after they exhaust their remedy before the Tribunal, can the petitioners approach the High Court in appeal, and in that eventuality, their petition would have to be placed before the Division Bench for appropriate orders – thus, the petition is not maintainable before the HC – Decided against petitioner.

  ---

• 2014 (11) TMI 893
  Validity of notice for reopening of assessment u/s 148 – Proper examination made by AO – Change of opinion - Held that:- The notice was issued beyond the period of 4 years from the end of the relevant AY i.e. A.Y. 2000-01 - in the computation of income the petitioner had specifically put in a note that the claim of exemption u/s 10(33) of the Act on the dividend income of Rs. 2.28 crores is made – assessee had fully and truly disclosed all the facts relevant to assessment viz. that it was in business of trading in shares and securities as well as the fact that the dividend received by them is claimed as exempted u/s 10(33) – there was no reason which indicates any failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment - there was a clear examination done by the AO of the nature of the dividend being claimed to be exempt u/s 10(33) of the Act. Therefore, the impugned notice is bad as it proceeds on a clear change of opinion - non disposal of rectification application u/s 154 of the Act is inexplicable for over 10 years and no explanation is forth coming – thus, the Revenue has given up/withdrawn its claim for rectification in view of the proceedings for reopening of assessment – thus, the notice uis set aside – Decided in favour of assessee.

  ---

• 2014 (11) TMI 892
  Validity of notice for reopening of assessment u/s 148 – Notice issued beyond the period of 4 years – Failure on the part of assessee to fully and truly disclose all material facts necessary for assessment - Held that:- Even according to the AO the assessee had furnished the details in support of its claim u/s 80IA of the Act and the same were subject of examination before passing assessment order dated 31 January 2003 u/s 143(3) of the Act - according to the AO himself there was due application of mind on the part of the AO while passing an order u/s 143(3) of the Act and seeking to reopen the assessment on the same facts would amount to change of opinion - the other condition precedent as found in the first proviso to Section 147 of the Act viz. failure to disclose truly and fully all material facts necessary for assessment is not satisfied as it is clear by virtue of letter dated 6 August 2007 in which the reasons which were communicated specifically refer to the material having been furnished and examined by the AO while passing the assessment order in regular proceedings – it could not be understood as to on what basis the AO states that whenever a notice beyond the period of 4 years from the end of the relevant AY is issued, it is implicit in such a notice that there was failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment - it requires application of mind by the AO before he issues notice for reopening the assessment which is done after recording his reasons. It is the reasons which indicate not only the application of mind but also the basis for issuing the notice - It is on the basis of recorded reasons that the objections to the same are filed and in the absence of it being recorded it would be impossible for the assessee to object to it - Besides not furnishing explicit reasons would enable addition to reasons recorded on the ground that it is implicit in the reasons recorded - Revenue officers would do well to always remember that reopening of an assessment cannot be done in such casual manner - A reopening notice carries grave consequence for the assessee of subjecting him to reassessment proceeding and also leading to uncertainty in respect of the completed assessments – thus, the notice issued u/s 148 is to be set aside – Decided in favour of assessee.

  ---

• 2014 (11) TMI 891
  Validity of constitution of Special bench - Power of president of ITAT – Procedure of Appellate Tribunal - Held that:- The entire proceeding has been conducted for the purposes of the constitution of the Special Bench of the Tribunal appears to have been unfair to the petitioner - In the petitioner's appeal which was siezed of by the Division Bench of the Tribunal at Hyderabad, the CBDT chooses not to file an application to the Division Bench to refer the appeal to the President for constitution of a Larger Bench of the Tribunal but adopts a back door method of approaching the President of the Tribunal to constitute the Special Bench and that too in the interest of the Revenue - the President does have the power to constitute a Special Bench but at what point and how is this power to be exercised is a debatable question - Prima facie this power cannot be exercised, when a Division Bench is siezed of the appeal and the Revenue has been seeking time before it. The practice of the President entertaining and acting upon letters of CBDT and the Vice President entertaining the Counsel ( likely to appear for Revenue) exparte in respect of an appeal already siezed of by a Division Bench of the Tribunal to be wanting in propriety - the recommendations made by the Vice President are not in consonance with the recommendations made by the Division Bench to the extent that the Vice President in his communication to the President indicates that the matter involves complex questions and therefore a Special Bench needs to be constituted, while the Division Bench has specifically negatived the constitution of Special Bench on account of complexity of issues - all these are matters which would require consideration at the stage of final hearing - as the petitioner has made out a strong prima facie case, interim relief in terms of prayer clause 'E' must follow - Decided in favour of assessee.

  ---

• 2014 (11) TMI 890
  Validity to grant registration u/s 12AA – Whether the assessee who is carrying on business activity or indulging in developing the properties is entitled for registration u/s 12AA - Held that:- CIT(A) rightly held that there is no doubt that the objectives are charitable in nature and are covered u/s 2(15) - The tribunal also held that the trust is engaged in various charitable activities like feeding poor children in schools etc. and about 5,00,000 children are provided midday meals and food by the trust - They are also running Ayurveda Wellness Center and similar institutions affording treatment, cure, rest, recuperation and other medical relief to the public and therefore, there is no doubt that the trust is charitable in nature and covered by Section 2(15) of the Act and the activities of the trust are genuine - The trust is already engaged in various charitable activities for attainment of various objectives - There is no material to show that the income from business as provided in Clause 10 of the original deed dated 17.05.2004 would not be utilised by the trust for the purpose of achieving objectives of the trust. As held in Sanjeevamma Hanumanthe Gowda Charitable Trust Versus Director Of Income-Tax (Exemption) [2006 (3) TMI 91 - KARNATAKA High Court] - what the Commissioner has to look into is not the source of income of the Trust but whether such income is applied for charitable or religious purpose - The satisfaction of the Commissioner should be regarding the application of the income of the trust for the aforesaid purposes which only entitles the assessee to claim exemption - Once the trust deed shows the objectives of the Trust is charitable and the material on record, shows that the Trust is carrying on charitable activities, merely because they proposed to carry on the business in future to augment the income to support charitable purposes, the registration cannot be declined - the tribunal was justified in passing the order and directing the Commissioner to grant the certificate – Decided against revenue.

  ---

• 2014 (11) TMI 889
  Interpretation of section 15(6) Gift Tax Act r.w. Rule 11A of income tax Rules – treatment of difference in sales transaction as Gift - Bonafide transaction - Reference to Valuation officer - Whether the Tribunal is right in deleting gift tax levied by invoking the provisions of section 4(1) of the Gift Tax Ac and in doing so, erred in interpreting section 15(6) read with Rule 11A of the Income Tax Act and the Rules – Held that:- Provisions of sec. 4(1)(a) of the G.T. Act cannot be invoked in case of transactions which are bonafide and no attempt of evasion of tax is discernible – in Commissioner Of Gift-Tax, Tamil Nadu-I Versus Indo Traders And Agencies (Madras) Pvt. Limited [1979 (6) TMI 8 - MADRAS High Court] it has been held that unless the price realised for transfer was such as to shock the conscious of the Court, if would not be possible to hold that the transaction is otherwise than for adequate consideration. Rule 11A of the GT Rules as well as rule 3B of the WT Rules fairly bring out the legislative intention for accepting the declared value of an asset for the purposes of wealth tax and gift assessments if the difference between the declared value and the fair market value is less than 33 1/3% or Rs. 50,000 - the market value as determined by the DVO under the W T Act as on 31.3.84 is Rs. 178.49 lakhs whereas the realised value shown by the assessee is Rs. 143.50 lakhs - The difference being merely Rs. 35 lakhs which is much less than the percentage prescribed in Gift tax Rules or Wealth-tax Rules - the transaction involving sale of Kashmir House by the assessee to its 100% subsidiary is a bonafide transaction and does not reflect any attempt of tax evasion on the part of the assessee company - provisions of sec. 4(1)(a) of the GT Act cannot be invoked for treating the sale transaction as a deemed gift – thus, the order of the Tribunal is upheld – Decided against revenue.

  ---

• 2014 (11) TMI 888
  Disallowance u/s 40(b) - Whether the dis-allowance of the finance, commission paid to proprietary concern of the partner under provisions of Section 40(b) was justified – Held that:- Section 40(b) deals with the commission or interest etc. made to a partner and not to an individual, where amounts were advanced by such individual from his personal fund - Shri. Doshi was the sole proprietor of Saurashtra Metal Supplying Co. and Jayant Trading Company, which provided financial assistance to the assessee - the Tribunal held that what was paid to Mr. Doshi, whether, it is ‘Commission’ or ‘interest’, is liable to be disallowed u/s 40(b) - the advances made by Mr. Doshi to the assessee firm were from his personal fund and the commission or interest paid by the assessee to Shri. Doshi was in his individual capacity and not as a partner – it was not liable to be disallowed in view of the clear provisions of Section 40(b). In the case of Trust also, which provided financial assistance to the assessee, Shri. Doshi was one of the trustees and on the basis of the same, the AO hold that the amount was paid by the assessee to one of the partners, i.e. Shri. Desai, which is also quite contrary – relying upon Chhotalal And Co. Versus Commissioner Of Income-Tax, Gujarat [1984 (4) TMI 40 - GUJARAT High Court] - the AO could not have disallowed the amounts paid by the assessee to Shri. Doshi – Decided in favour of assesee.

  ---

• 2014 (11) TMI 887
  Interest on investment in shares deleted - Notional interest attributable to investment in shares - Whether the Tribunal was right in confirming the order passed by the CIT(A) deleting the interest attributable to investment in shares – Held that:- Following the decision in ACIT Versus EMTICI ENGG. LTD. [2014 (11) TMI 858 - GUJARAT HIGH COURT] – the Tribunal was justified in granting benefit of the earlier years’ orders to the assessee, which are final - the issue involved was never carried in appeal before the Court and therefore, the earlier years’ orders, on which the Appellate Tribunal placed reliance, had become final – Decided against revenue.

  ---

• 2014 (11) TMI 886
  Relief u/s 80HH and 80I - Whether the Tribunal is right in directing to allow separate relief under sec. 80HH and 80I – Held that:- As decided in DY. CIT Versus Versus MOTI POLYMERS PVT. LTD. [2011 (6) TMI 725 - GUJARAT HIGH COURT] – the Tribunal had rightly placed reliance on JP. Tobacco Products (Pvt.) Limited Versus Commissioner Of Income-Tax [1996 (8) TMI 29 - MADHYA PRADESH High Court] - The Appellate Tribunal is right in law in directing to allow separate relief u/s 80HHA and 80I – Decided against revenue.

  ---

• 2014 (11) TMI 885
  Matter remitted by Tribunal to AO for fresh consideration – Whether the assessee's statement that the purchase of raw materials for construction of the building complex was made from genuine parties – Held that:- Since the Tribunal has made an open remand for de novo consideration of the materials that may be placed by the assessee, the original authority as well as the appellate authority was rightly of the view that no material was produced by the assessee at the first instance - Therefore, on remand, it is incumbent on the part of the officer to verify the genuineness of any document that may be produced by the assessee, in the light of what has been recorded earlier by the original authority and the appellate authority - The de novo proceedings should not be taken as a ruse by the assessee to fill up the lacuna and create records to supplement for what was missing earlier - The original authority, on remand, should go into the explanation submitted by the assessee on merits and the genuineness of the purchases alleged to have been made and thereafter decide the issue for the relevant assessment years – thus, there was no reason to entertain the appeal – Decided against revenue.

  ---

• 2014 (11) TMI 884
  Power to invoke section 263 – Direction made by the Tribunal to CIT for adding back the provision for bad and doubtful debts – Whether the Tribunal was right in holding that the jurisdiction exercised u/s 263 of the Act to treat the provision declared as diminution in the value of shares/assets to be added back under Clause (c) of the Explanation to Section 115 JB of the Act - Held that:- In COMMISSIONER OF INCOME-TAX Versus MAX INDIA LTD. [2007 (11) TMI 12 - Supreme Court of India] it has been held that while dealing with the retrospective operation of amendments and the exercise of powers under Section 263 of the Act, the phrase "prejudicial to the interests of the revenue" u/s 263 has to be read in conjunction with the expression "erroneous" order passed by the AO - Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the revenue - the mechanics of the section have become so complicated over the years that two views were inherently possible - Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 - though the amendment is retrospective, in this case, the Revenue cannot have the benefit of the same while proceeding u/s 263 – Decided against revenue.

  ---

• 2014 (11) TMI 883
  Determination of Profit Level Indicator (PLI) - Whether Return on Capital Employed (RoCE) is correct PLI under the facts and circumstances of the case – Held that:- There is commonality of the transaction with AE and Non-AEs and due to such commonality it is not practical to compute separate capital employed or profitability in respect of transactions with AEs - Following the decision in Gold Star Jewellery Design Pvt. Ltd. vs. ITO [2014 (11) TMI 904 - ITAT MUMBAI] - as per computation made by the assessee which is based on the figures given in TPOs order, the arithmetical margin of comparable will be 8.60% and assessee’s margin on the basis of OP/TC will be 10.63% and as the PLI of the assessee is higher than the arithmetical margin of the comparables no TP adjustment can be made in respect of international transactions on account of application of TNMM - OP/TC has been accepted by the TPO and to support such contention TPO’s order for A.Y 2009-10 and 2010-11 are enclosed in the paper book - in view of principle of consistency also different method cannot be adopted for the year under consideration to compare PLI particularly in absence of distinguishable facts and circumstances existing for justification of the same - the calculation of PLI on the basis of OP/OC and by adopting that method the transaction of the assessee is found to be at arms length is approved – Decided in favour of assessee. Transfer pricing adjustment – Non-charging of interest from AE – Held that:- The observation of CIT(A) is incorrect as the approach of the assessee in non-charging the interest from its AE and non-AEs is uniform except there being some more delay in receiving the payment from AE - The uniform approach is depicted in the fact that either the assessee is charging interest from AE and non-AE and not charging any interest from them - The approach of the assessee is uniform so as it relates to non-charging of interest from AEs as well as non-AEs – relying upon DCIT vs. Indo American Jewellery Ltd. [2012 (2) TMI 366 - ITAT MUMBAI] wherein it has been held that there being complete uniformity in the act of assessee in not charging interest from both the AE and Non-AE debtors for almost equal delay in realization, no such adjustment can be made as assessee is not avoiding any tax by intentionally not charging any interest from the AEs - if there is a complete uniformity in the act of the assessee in not charging interest from both the AE and non-AEs debtors and the delay in realization of the export proceeds in both the cases is same then the Tribunal was right in deleting the notional interest on outstanding amount of export proceeds which were realized belatedly - no notional interest can be added to determine the ALP to the extent of delay of 173 days from AE transaction as to that extent, in any case, (even according to CUP method), no adjustment can be made. What would be the interest rate applicable for remaining 20 days – Held that:- The calculations of the assessee have not been disputed by the Revenue at any stage of the proceedings - addition, if any, can be made only to the extent of Rs. 9.70 lacs as calculated above and this amount will also fall within the +/-5% range, therefore, no addition can be made as transfer pricing adjustment even on account of non-charging of interest for belated payment received from AEs - no addition on account of TP adjustment in the present case is called for and the addition confirmed by CIT(A) is set aside – Decided in favour of assessee. Computation of book profits u/s 115JB – Inclusion of profits u/s 10A – Held that:- CIT(A) has rightly granted relief to the assessee on the basis of Genesys International Corpn. Ltd. vs. ACIT [2012 (12) TMI 491 - ITAT MUMBAI] the benefits which are to be provided to the newly established unit in SEZ as per section 10AA of the Act will also be available to the existing units in SEZ - sub-section (6) to section 115JB was also inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be. Hence, income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act – Decided against revenue. Claim of assortment charges – Held that:- CIT(A) rightly was of the view that the AO also in his order did not mention the exact circumstances under which he applied section 40A(2)(b) as requirement of the section is that AO has to form an opinion that expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accrued to him there from so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction - before AO certain details were submitted and it was shown that during the year under consideration quantum of small diamonds were in large numbers - CIT(A) rightly granted relief only to the extent of 50% - Decided against revenue.

  ---

• 2014 (11) TMI 882
  Denial of exemption u/s 11 – Scope of term charitable purpose u/s 2(15) - Assessee was constituted under the Act of the Government for making better planning and regulating development and use of land in planning areas delineated for the purpose, preparation of regional plans/master plans and implementation thereof and also for guiding and directing the planning and development process in the State - Held that:- No activity can be carried on efficiently, properly unless and until it is carried out on business principle but it does not mean that the provision is misused in any manner under the garb of charity and any institution be allowed to become richer and richer under the garb of charity by making it a non-tax payable organization – in Additional Commissioner of Income-Tax, Gujarat Versus Surat Art Silk Cloth Manufacturers Association (And Other References) [1979 (11) TMI 1 - SUPREME Court] it was held that what is predominant object of the activity- whether, it is to carry out a charitable purpose and not to earn profit-the purpose should be that it should not lose its charitable character - the similar activities are performed by big colonizers/developers who are earning a huge profit - If this income is exempted u/s. 11, then we will open a pandora box and anybody will claim the exemption from tax - If the activities of the assessee are analysed, it has turned into a huge profit-making agency for which it is taking money from the general public - no charity is involved and if any institution of public importance like schools, community centers are created/developed, the assessee is charging the cost of it from the public at large and the money is coming from the coffer of the Government - at best, the assessee can be said to be an authority created to help it to achieve certain objects. The assessee acquires land at nominal rates and after developing the same, the same land (is sold) on high profit which cannot be said to be a charitable activity - even just for argument sake, if registration is granted, then every private colonizer will claim charity - The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the commercial developers/builders and if certain facilities like parks, community center, school are provided is not only basic requirement, rather a tool of attracting the investors wherein the hidden cost of these facilities is already included - In the absence of these facilities, normally the purchaser may not invest and the prices may be less - the claim of the assessee has been rightly rejected by the CIT(A) – the order of the CIT(A) is upheld – Decided against assessee.

  ---

• Customs

• 2014 (11) TMI 911
  Application for stay - Suspension of CHA License - Tribunal declined to stay order stating that the entire issue should be considered at the time of hearing of the appeal - Held that:- A perusal of the order of the Tribunal shows that none of the plea with reference to prima facie case has been considered by the Tribunal. All that the Tribunal held is that the challenge to the impugned order on perversity will be decided after examining the evidence in detail at the time of hearing of the appeal and therefore, the stay application was disposed of and the early hearing application was dismissed as infructuous. We also find that the Tribunal has not considered the prima facie case for considering the interlocutary application sought for by the applicant. To that extent, the prejudice and hardship pleaded by the appellant justifies the filing of the present Civil Miscellaneous Appeal before this Court - matter remanded back - Decided in favour of appellant.

  ---

• 2014 (11) TMI 910
  Benefit of exemption under Notification No.12/2012-Cus. (Sl. No.359) - Confiscation of goods - Redemption fine - Smuggling of goods - Held that:- Prima facie when the ship and tug and rig were brought and rig was handed over for repair an into bond bill of entry must have been filed. Similarly in the case of tug, before utilizing the same in Indian waters, a bill of entry must have been filed. Therefore in both cases, it can be said that the goods have acquired the characteristics of smuggled goods even though it cannot be said that appellants have intentionally and deliberately resorted to evasion of duty and violation of procedure in view of the fact that there were entries in IGM even though not in appropriate column. At the time of importation, non-filing of bill of entry can be said to be a procedural error and for this reason, when the appellant is eligible for the exemption available otherwise which is a substantial benefit, it may not be correct to deny the entire benefit when we know that appellants are eligible for the same. Needless to say since the rig and the tug have acquired the characteristics of smuggled goods, they are liable for confiscation and penalty is imposable on the concerned importer thereof, but duty demand is a different proposition. The bank guarantee for Rs. 3.5 crores executed by the appellants if kept alive during the pendency of appeal, would be sufficient for hearing the appeal. - Learned counsel agrees to keep the bank guarantee alive during the pendency of appeal. - Stay granted.

  ---

• 2014 (11) TMI 909
  Suspension of the CHA licence - Regulation 20 of the Customs Brokers Licensing Regulations, 2013 - Held that:- Last time when the case was listed, we had specifically directed Revenue to submit status report on the progress of inquiry. It is unfortunate that in spite of such direction, Revenue is unable to submit any progress report on the mater. It shows the callous and irresponsible approach on the part of the Customs department in dealing with the inquiry proceedings under the CBLR. Time-limits have been laid down statutorily so that the inquiry progresses in a time bound manner and the proceedings completed within the stipulated period. The Customs department does not seem to have any regard or respect for these time-limits. In these circumstances, we are constrained to set aside the order of suspension and direct the Commissioner of Customs (General) to allow the appellant to function as a CHA forthwith. - Decided in favour of appellant.

  ---

• 2014 (11) TMI 908
  Confiscation of goods - Redemption fine and penalty - RITC Code and the drawback serial number indicated is not correct - Held that:- Description of the goods was found to be correct and it is only the drawback serial number which was found to be incorrect and on being pointed by the Revenue during examination of the goods, the appellant accepted the new drawback serial number. Keeping in view of the above facts, we do not consider it to be a fit case for imposition of redemption fine and penalty. Accordingly, the redemption fine and penalty are set aside - Decided in favour of assessee.

  ---

• Service Tax

• 2014 (11) TMI 932
  Maintainability of appeal - Export services - Held that:- Court does not agree with the submission of the counsel for the appellant-Revenue that the issue raised in the order-in-original and in the appellate orders did not relate to the question of levy of duty or rate of duty/tax. The precise issue, which had arisen was whether the assessee was engaged in export of services and, therefore, whether service tax was payable. In these circumstances, we do not think this appeal is maintainable before the High Court and the same is accordingly directed to be returned. - Decided against Revenue.

  ---

• 2014 (11) TMI 931
  Service Tax on GTA under reverse charge - Cenvat credit - payment of service tax through cenvat credit - assessee was engaged in manufacture of yarn of different kinds - Held that:- in respect of nature of manufacturing done by the respondent, imposition of Service Tax does not arise and respondent is entitled to use Cenvat credit. - Following decision of The Commissioner of Central Excise Versus M/s. Cheran Spinners Limited [2013 (8) TMI 215 - MADRAS HIGH COURT] - Decided against Revenue.

  ---

• 2014 (11) TMI 930
  Waiver of pre deposit - Man Power Recruitment Agency and business support service - Contravention of the provisions of Rule 6 of the Service Tax Rules, 1994 read with Section 68 of the Finance Act - Held that:- Prima facie there is a finding by the Original Authority that the appellant had admitted that service tax has been collected and not paid over to the credit of the Government. In another matter, the appellant is claiming Cenvat Credit and that issue, as already pointed out by the Tribunal, should be gone into at the time of final hearing. For the purpose of pre-deposit, prima facie case as well as the balance of convenience should be considered. In this case except stating that certain amount is due from the bank investments from USA, the appellant has not chosen to file any document in support of his submission. The mere statement or affidavit without any supporting document will be no avail. The order of the Tribunal requires no modification. However, taking note of the plea of the appellant seeking further time for making payment, we are inclined to grant extension of time. - Decided partly in favour of assessee.

  ---

• 2014 (11) TMI 929
  Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Request for rectification / amendment in the declaration - It is contended that the petitioner in the declaration filed before the Service Tax Authorities sought to declare the amount of Rs. 3.87 crores. In terms of its understanding, it claimed credit for the sum of Rs. 81,35,729/- deposited by it earlier, i.e., prior to March, 2013. It also sought to seek credit for the sum of Rs. 1,18,00,000/- paid between 18th March, 2013 and 10th July, 2013, in compliance of Section 107(3). The Service Tax Authorities however refused to accept the declaration, taking the position that the credit claimed in respect of the earlier sum paid up to 18-3-2013 was based upon a wrong understanding of the provisions relating to the scheme. The tax authorities also held, consequently, that in the absence of 50% deposit under Section 107(3) the application could not be entertained and proceeded with. Held that:- The authorities have not been given any discretion in the matter of grant of extension of time to make initial pre-deposit of 50% of the declared amount. In fact, the consequences are spelt out for failure to pay the tax dues under Section 110. In these circumstances the claim in the petition for a direction to extend the period or alternatively for deleting the sum of Rs. 81 lakhs from the declaration already filed cannot be granted. - Decided against assessee.

  ---

• 2014 (11) TMI 928
  Clim of reimbursement of service tax from the service recipient of services by the service provider / contractor - Maintainability of petition - Denial of refund claim - whether the petition is maintainable for the purpose of a dispute between the petitioners and the Jabalpur Development Authority in the matter of refund of service tax - Held that:- question with regard to entitlement of the petitioners to recover the amount of service tax from the Jabalpur Development Authority either under the common law or under the Resolution No. 12 is a matter which is disputed between the contractor and the Jabalpur Development Authority and it was held that for the said dispute, the matter will have to be decided by a court of competent jurisdiction which can receive evidence, hear the parties and decide the matter in accordance with the terms of the agreement. Once, this court has held that the question of refund of the amount and the tenability of the same based on Resolution No. 12 is to be decided by a court of law after recording of evidence, i.e. after conducting an inquiry, we are of the considered view that this petition is not maintainable. - Decided against assessee.

  ---

• 2014 (11) TMI 927
  Challenge to the Show Cause Notice - Business support service or not - security services provided by Assam Tea Plantation Security Force (ATPSF) to protect the planters and their property. - sovereign function or not - Held that:- The value of sovereign functions of a state is not taxable in the hands of the citizens. Support services rendered by the government are taxable. According to the government this kind of service received by the writ petitioner is classifiable as a “support service”. The department has the jurisdiction and obligation to determine whether the writ petitioner is receiving support services from the government. Therefore, before it could demand or even show cause under Section 73 of the Finance Act, 1995, for Service Tax, it was incumbent upon the department to make the determination whether the subject service could be classified as a support service and the writ petitioner exigible to service tax. If the department’s answer was in the affirmative, only then, a show cause notice and thereafter a demand for service tax could have been issued. - the notice dated 20th November, 2013 is quashed and set aside. - Decided in favour of assessee.

  ---

• 2014 (11) TMI 926
  Cenvat Credit - input services - Non commencement of production / manufacturing activity - Whether the CESTAT was right in considering the services namely Technical Testing and Analysis Service, Technical Testing and Certification Service, and Intellectual Property Rights Services, availed by the assessee, as eligible services for availing input service credit as defined under Rule 2(l) of the CCR, 2004 - Held that:- Tribunal has merely followed its earlier decision in the case of M/s. Cadila Healthcare Pvt. Limited [2009 (8) TMI 172 - CESTAT, AHMEDABAD] and has allowed the appeal. - It is an accepted position that the above decision of the Tribunal in the case of M/s. Cadila Healthcare Pvt. Limited came to challenged before this court [2013 (1) TMI 304 - GUJARAT HIGH COURT] and the same had been answered in favour of the assessee and against the Revenue From the findings recorded by the Commissioner (Appeals) it appears that though the nature of services involved are more or less similar, the facts of the present case are different from that of M/s. Cadila Healthcare Pvt. Limited inasmuch as the services availed by the assessee are in respect of products which are not put to manufacture even after availment of the services in question. The assessee has not commenced manufacture of the final product in view of the fact that if the product is manufactured during the patent period there would be violation of Intellectual Property Rights which would have huge financial implications. Hence, the assessee is waiting till the time the product becomes generic before commencing manufacture of the final product. The Commissioner (Appeals) has, therefore, held that as and when the assessee is able to co-relate the use of the above services as input service used in its final product it would be eligible for credit of such taxes. The Tribunal, in the impugned order has without delving into the facts of the present case and noticing the distinguishing features, has blindly followed its earlier decision in the case of M/s. Cadila Health Care Pvt. Limited. However, the Tribunal being the final fact finding authority having not examined the facts of the case in proper perspective, in the absence of proper facts being placed before it, it is not possible for this court to answer the question formulated hereinabove. Under the circumstances, the matter is required to be remitted back to the Tribunal - Matter remanded back - Decided in favour of Revenue.

  ---

• 2014 (11) TMI 925
  Goods Transport Agency service - Interest on delayed payment of tax - assessee contended that, they would have taken Cenvat credit and utilised the same for payment of Service Tax. - Accordingly, the assessee contended that the levy of interest was not sustainable. - Held that:- Assessee had remitted the tax belatedly and under the advice of their Internal Audit, interest on belated payment being automatic, rightly the Revenue invoked Section 75 of the Finance Act in this case. In the circumstances, we do not find any ground to accept the plea of the assessee herein that interest cannot be demanded on the facts of the case. - in the light of the decision of the Apex Court in the case of Commissioner of Trade Tax (UP) v. Kanhai Ram Thekedar reported in [2005 (4) TMI 75 - SUPREME COURT OF INDIA], we hold that the action taken by the Revenue could not be faulted with. - Decided in favor of revenue. Whether the service from the individual truck operator did not fall within the definition of “Goods Transport Agency” as per Section 65(50b) of the Finance Act, 1994. - Held that:- The expression “any person” is not defined under the Act. Section 3(42) of the General Clauses Act defines “person”, as including any company or association or body of individual whether incorporated or not. The thrust of the definition is that it includes every person engaged in an activity providing service of transport of goods by road. Thus, any commercial or a proprietary concern carrying on the business of Goods Transport would fall under the definition of “Goods Transport, Agency” in Section 65(50b) of the Finance Act. In the absence of any words of restriction, the definition ‘any person’ thus would have application to any concern providing the service. - Decided in favor of revenue.

  ---

• Central Excise

• 2014 (11) TMI 921
  Waiver of pre deposit - Difference between running bills and consolidated bills - Government is coming to the conclusion that the difference amount between Rs. 112 crore and 124 crore is actually excise duty collected. - Held that:- We are unable to find basis for this conclusion at all. When we compared it was submitted based on the statement given by the Additional Vice President of PSL that the treatment for the purpose of working out the amount by L&T is the system of piece rate bill whereas the appellant’s billing system is based on quantity. Nevertheless when we see, both the statements referred to by us and reproduced as in the show cause notice, according to L&T, the gross amount is Rs. 158.95 crore and deductions/recoveries is Rs. 124.41 crore. When we look at the categories of deductions/recoveries, we see that these are the amounts which are actually paid by L&T in some other form to the appellant and not in the form of cash. Similarly in the case of bills raised by the appellant also the amount of Rs. 154 crore is the payment received from L&T in the form of HR coil and other items. In the statement of the appellant, excise duty is not reflected because the excise duty is not paid by the appellant. In the case of L&T these are figuring because probably this was taken into account at the time of agreement for calculating the bill amount payable but in fact it was not paid or was paid. However when we summed up the figures, according to L&T record the net amount payable is Rs. 34.53 crore whereas according to the appellants net amount receivable is Rs. 35.03 crore. The above analysis would show that according to the bills preferred by both the sides, the amount payable to which both sides agree is only about Rs. 34.53 crore which is actually less than what they have already received. Whereas it is the department’s claim that they have received more than Rs. 11.26 crore as excise duty and this figure is nowhere getting reflected in both. The above analysis would show that prima facie we are not in a position to appreciate the fact that the appellants have received the amount as excise duty and is recoverable as per the provisions of Central Excise law. Therefore appellants have made a prima facie case in their favour for complete waiver for this amount also. - Stay granted.

  ---

• 2014 (11) TMI 920
  Valuation of goods - MRP based valuation or transaction value - Whether the impugned goods supplied to TNCSC, which are intended for free distribution to the women beneficiaries belonging to families holding family cards eligible for drawal of rice as per the T.N. Government scheme are to be assessed under the provisions of Section 4 or Section 4A of the Central Excise Act, 1944 - Held that:- M/s. Butterfly Gandhimati Appliances Ltd. and M/s. LLM Appliances Ltd. are manufacturing Mixies, Table Top Wet Grinders falling under heading 85094010 and Electric Fans and Electric Rice Cookers falling under Chapter Heading 84145190 and 85166000 respectively and clearing the goods on payment of appropriate Central Excise duty on Retail Sale Price (R.S.P.) as per Section 4A of the Central Excise Act. The period of dispute in these appeals is September 2011 to September 2013. There is no dispute on the fact that the impugned goods are covered under Section 4A and also listed in the Notification No.49/2008 as amended for availing the abatement. TNCSC carried out procurement of Mixies, Table Top Wet Grinders, Electric Table Fans and Electric Rice Cookers for free distribution to the women beneficiaries, who are holding family cards eligible for drawal of rice on behalf of Tamil Nadu Government. The TNCSC is an undertaking of the Government of Tamil Nadu similar to M/s.ELCOT. M/s.ELCOT had been entrusted by Govt. of Tamil Nadu for procurement of colour T.V sets and in the present case, TNCSC has been entrusted to procure Mixes, Table Top Wet Grinders, Electric Fans & Electric Rice Cookers. - goods were sold by the appellant to TNCSC and there is consideration of sale and the goods are covered under Section 4A of the Central Excise Act. The appellants have rightly cleared the said goods on payment of Central Excise duty as per RSP in terms of Section 4A read with Notification No.49/08. - appellants correctly discharged the duty under Section 4A based on RSP basis. Accordingly, we set aside the impugned orders passed by the Adjudicating Authority in respect of both the appellants - Following decision of PG Electroplast Ltd. [2014 (7) TMI 575 - CESTAT NEW DELHI] and Jayanti Food Processing Private Ltd. Vs CCE Rajasthan [2007 (8) TMI 3 - Supreme Court] - Decided in favour of assessee.

  ---

• 2014 (11) TMI 919
  Captive Consumption of Molasses - Manufacturing of Rectified Spirit and ENA - According to Revenue, Rectified Spirit and ENA are non-excisable goods with effect from 1.3.2005 and therefore, the appellants are not eligible to avail benefit of exemption Notification No. 67/95-CE on Molasses captively used in the manufacture of Rectified Spirit and ENA. - Held that:- Prior to 28.2.2005, Rectified Spirit and ENA manufactured by the appellant were covered under sub-heading No. 2204.90, NIL rate of duty. After amendment of Tariff (8 Digit Classification Code), Heading 22.04 would correspond to Heading No. 22.07. In the above Board Circular, it has been clarified that Notification No. 3/2005-CE dated 24.2.2005 was issued to preserve the existing duty rate. So, it is clearly evident that the Rectified Spirit existing NIL rate of duty under Sub-heading No. 2204.90 has been covered under Serial No. 14 of the Table appended to Notification 3/2005-CE. In view of the above Board Circular, we find merit in the submission of the learned Advocate that with effect from 28.2.2005, Rectified Spirit and ENA are exempted goods, covered under Notification No.3/2005-CE. After re-structuring of Central Excise Tariff from 6 Digit to 8 Digit with effect from 1.3.2005, Rectified Spirit and ENA are exempted by Notification No. 3/2005-CE (supra) and the appellant discharged the obligations under Rule 6 of the CENVAT Credit Rules, 2004 in respect of clearance of Rectified Spirit and ENA and therefore denial of exemption Notification No. 67/95-CE (supra) on Molasses captively consumed in Rectified Spirit and ENA cannot be sustained. Accordingly, denial of CENVAT credit on the Molasses purchased from other sugar mill used in the manufacture of Rectified Spirit and ENA are also liable to be set aside. We have also noted that inputs and input service are not exclusively used for generation of electricity and therefore CENVAT credit cannot be denied. - Decided in favour of assessee.

  ---

• 2014 (11) TMI 918
  Condonation of delay - Section 5 of the Indian Limitation Act, 1963 - Inordinate Delay of 5 years and 113 days - financial status of the company was not good - Held that:- On due consideration and in view of the law laid down Commissioner of Central Excise (2009 (3) TMI 31 - SUPREME COURT) the provision of Indian limitation Act, 1963 will not be applicable and as per Section 35G(2) (a) of Central Excise Act, 1944 the appeal was filed after the period prescribed therein and, thus, the same is liable to be dismissed as barred by time - Condonation denied.

  ---

• 2014 (11) TMI 917
  CENVAT Credit - Andhra Pradesh High Court after relying upon the decision of the Supreme Court in case of Vikram Cement v. Commissioner of Central Excise, Indore [2006 (1) TMI 130 - SUPREME COURT OF INDIA] admiited appeal of assessee against the decision of Tribunal on the following substantial questions of law : Whether the decision of Tribunal in holding that the mines do not form part of the factory inspite of the mines and the place of production being contiguous in nature is valid. Whether the decision of the Tribunal in holding that the appellants are not eligible to the Modvat Credit of duty paid on capital goods used in mines as well of the duty paid on goods used outside the factory is valid?

  ---

• 2014 (11) TMI 916
  Applicability of enhanced rate of duty as amended in the manner specified in the Seventh Schedule of the Finance Act, 2008 coming into force with immediate effect after passing of the Bill on 29.04.2008 or on date of enactment as on 10.05.08 - appellant engaged in the manufacture of Portland Pozzolana Cement falling under sub-heading 25232930 of the First Schedule to the Central Excise Tariff Act, 1985 - demand raised arising out of the substitution of tariff rate of Rs. 900/- per ton in place of Rs. 600/- per ton for the intervening period from 29.04.2008 to 09.05.2008 - Calcutta High Court admitted the appeal of Revenue against the decision of CESTAT, Kolkata on the following questions of law:- Whether power under Section 3 of the Provisional Collection of Taxes Act, 1931 to give immediate effect to a Bill before its passage by a declaration of expediency in public interest extends to amendments as well? If amendment is proposed after a declaration under Section 3 of the Provisional Collection of Taxes Act, 1931, but before the introduction or passage of the bill, or before expiry of 75 days from the date of declaration, would a fresh declaration be necessary for giving immediate effect to the amendment?

  ---

• 2014 (11) TMI 915
  Waiver of pre deposit - Held that:- twenty six year old appellant is on the threshold of taking over the Establishment following the demise of his father, who was the proprietor; succumbing to carcinoma. We are persuaded to think that the appellant is entitled to be heard by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) without insisting on any condition as to pre-deposit, having regard to the peculiar facts and circumstances, including the contentions on merits; particularly because the plea is on jurisdictional issue as to coverage. We are of the view that this course would pave way to secure ends of justice and would give a reasonable opportunity to the appellant to place his case. - Decided in favour of assessee.

  ---

• 2014 (11) TMI 914
  Restoration of appeal - Non compliance of pre deposit order - Appellant has deposited the amount of pre-deposit now - Karnataka High Court restored the appeal of the assessee against the decision of Tribunal [2014 (11) TMI 758 - CESTAT BANGALORE] of dismissing the appeal on the ground of non-compliance under Section 35F of the Central Excise Act.

  ---

• 2014 (11) TMI 913
  Challenge to recovery proceedings - Coercive measures of recovery - Held that:- At the outset, it needs to be stated that we have not gone into merits of the case of either side and our indulgence is restricted only in respect of the request of the petitioner seeking to recover the amount confirmed by the Commissioner (Appeals) pending the revision when revisional authority is yet to examine its request of stay of order sought to be executed. When admittedly, revisional authority is already approached by the petitioner challenging the order of Commissioner (Appeals) raising various grounds and when the said authority is unable to take up the request of stay of recovery pursuant to appellate orders in absence of any attempt on the part of the petitioner to thwart hearing of such application of stay as also proceeding with hearing of revision on merit, actions of respondent Nos. 2 and 3 warrant interference at this stage - Decided in favour of assessee.

  ---

• 2014 (11) TMI 912
  Review application - Previous order passed in [2013 (4) TMI 303 - GUJARAT HIGH COURT] - Held that:- Court has decided Tax Appeal [2013 (4) TMI 303 - GUJARAT HIGH COURT] finally on merits. The orders passed in other two Tax Appeals are of admission. This cannot be a ground for review of our order. - Decided against Revenue.

  ---

• CST, VAT & Sales Tax

• 2014 (11) TMI 924
  Release of trucks - Maintainability of appeal before tribunal - Uttarakhand Value Added Tax Act, 2005 - truck was not possessing relevant documents and failed to comply with the procedures - Held that:- under Section 43(8), there is a clear discretion vested with the authority to exercise the power to order release, as provided by it. We are fortified in the said view when we notice that the lawgiver mandates that, whenever power is exercised by giving a direction, it must be for reasons to be recorded. The provision containing the limitation on the exercise of power that there must be reasons recorded, itself, shows that the Legislature was anxious to protect the interest of the revenue. The power was, no doubt, lodged with the superior officer; but, the Legislature has taken great care to see that the power is not exercised in a routine manner. It unerringly points out that the power under Section 43(8) is a purely discretionary power. No doubt, any discretion vested with any public officer must be exercised bona fide and according to well established principles relating to exercise of discretion by statutory authorities. The Legislature has used the word "may" in Section 43(8) and that, again, goes a long way to persuade us to hold that the power is discretionary. The legislative intent was that an appeal will lie against a direction for release ordered under Section 43(8) and, when it is refused, no appeal will lie under Section 53. It may not be out of place to record that, subsequently in the year 2012, Section 56(b), itself, was amended by the Legislature and, after the amendment in 2012, Section 56(b) does not contain the prohibition against an appeal or revision against action under Section 43(8). Therefore, it would appear to be an error, which was probably noticed by the Legislature as Section 53 and Section 56(b) were completely inconsistent with each other. Incidentally, we may notice in the Explanation to Section 53 that the person, who could file the appeal, includes the Commissioner. But, again, we notice curiously that it is in relation to an order and not in relation to a direction. But, nonetheless, we would think that, in view of the word "direction" under Section 43(8), the Legislative intent is clear that it is only a direction under Section 43(8) ordering release of the goods, which would be appealable. The Revision is to be allowed and the same is allowed. We answer the question of law in regard to the maintainability of the appeal in favour of the revisionist. The impugned order, therefore, cannot be sustained on the ground that the appeal was not maintainable. Therefore, the impugned order is set aside. - Decided in favor of revenue.

  ---

• 2014 (11) TMI 923
  Interest on refund - state is contesting payment of interest at 12 per cent per annum to the assessees on the amounts refunded - refund was issued in compliance of order of the Supreme Court in Shri Krishna Enterprises' case [1988 (3) TMI 407 - SUPREME COURT OF INDIA] - Held that:- grant of interest on refund of tax by the Appellate Deputy Commissioners was valid in view of section 33B read with section 33F of the Act, but such interest should have been granted only from the date immediately following the expiry of the period of six months from the date of order of Appellate Deputy Commissioners granting refund to the date on which the refund is granted as mandated in section 33F. The principles of res judicata or estoppel do not apply in these cases and the mere fact that the assessees have not claimed interest either originally or subsequently in appellate proceedings would not preclude them from claiming it as section 33F gives them a right to get interest on the refund. - Decided partly against the revenue.

  ---

• 2014 (11) TMI 922
  Validity of coercive proceedings of Punishment - sales tax evasion - petitioner having already been mulcted with the penalty of "thrice the tax amount" sought to be evaded under section 17(5A) of the KGST Act - Held that:- Admittedly, the liability under section 17(5A) has become final as per exhibit P11 order and it has been satisfied by the petitioner as well. This being the position, the said assessee is not liable to be punished for the same offence by referring to the general provision of section 45A, as to the failure to maintain proper accounts and non-response to the summons/ notice, which stands on a much lower pedestal. Even though sections 17(5A) and 45A are distinct and different, governing separate situations, the offence involved is measured in greater scales, imposing punishment in a mandatory manner, that too by "three times" of the tax effect in respect of the years 1998-99 and 1999-2000, while leaving the rest in respect of 2000-01 as the turnover did not touch the limit. It is relevant to note that, as observed by the Supreme Court in Maharashtra State Board of Secondary and Higher Secondary Education v. Paritosh Bhupeshkumar Sheth [1984 (7) TMI 355 - SUPREME COURT], when a "special provision" is there, the "general provision" has to be excluded, so as to give way to the former. In the instant case, section 17(5A) is the special provision and section 45A is the general provision, which in turn has to yield to the former. Above all, in fiscal statutes, interpretation has to be given, taking the choice of construction which is favourable to the assessee, as held by the apex court in Commissioner of Income-tax, West Bengal v. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] It is declared that, when punishment under section 17(5A) is imposed, further punishment under section 45A in respect of the same offence/ingredients is not correct or proper. - Decided in favor of assessee.

  ---

• Indian Laws

• 2014 (11) TMI 907
  Applicability of section 8(1)(e) of RTI Act – fiduciary relationship - Whether the information provided by an individual in his income tax returns is exempt from disclosure u/s 8(1)(j) - Held that:- The contention cannot be accepted that a fiduciary relationship within the meaning of Section 8(1)(e) of the Act can be attributed to a relationship between an assessee and the income tax authority - the information provided by an assessee in its income tax return is in compliance of the provisions of the Income Tax Act, 1961 and thus, could not be stated to be information provided in course of a fiduciary relationship. Whether the information provided by an individual in his income tax returns is exempt from disclosure u/s 8(1)(j) – Held that:- Following the decision in of the Act is no longer res integra in view of the decision of the Supreme Court in Girish Ramchandra Deshpande v. Central Information Commr. [2012 (10) TMI 218 - SUPREME COURT] - the details called for by the petitioner i.e. copies of all memos issued to the third respondent, show-cause notices and orders of censure/punishment, etc. are qualified to be personal information as defined in clause (j) of Section 8(1) of the RTI Act - the act of filing returns with the department cannot be construed as public activity - The expression “public activity” would mean activities of a public nature and not necessarily act done in compliance of a statute - The expression “public activity” would denote activity done for the public and/or in some manner available for participation by public or some section of public - There is no public activity involved in filing a return or an individual pursuing his assessment with the income tax authorities - the information relating to individual assesse could not be disclosed. Validity of order passed by CIC to provided inspection of records - RTI filed by PIO seeking information and all the records available with the Income tax department in respect of nine assessees - Whether income tax returns and the information provided to the income tax authorities during the course of assessment and proceedings thereafter, are exempt under the provision Section 8(1) of the Act and further whether the CIC was correct in holding that such information was required to be disclosed in public interest – Held that:- The CIC has misdirected itself in concluding that this was in larger public interest - there was no material to indicate that there was any corruption on the part of the income tax authorities which led to a justifiable apprehension that the said authorities were not performing their function diligently - In any event, the CIC has not found that the proceedings relating to assessment were not being conducted in accordance with law and/or required the intervention of the respondent – relying upon Bihar Public Service Commission v. Saiyed Hussain Abbas Rizwi [2012 (12) TMI 577 - SUPREME COURT] - disclosure of information as directed has no discernable element of larger public interest – Decided in favour of petitioner.

  ---