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TMI Tax Updates - e-Newsletter
December 20, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
GST - States
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Va Kar/GST/07/2017- S.O. No. 134 - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. S.O 106-State Tax, dated the 20th October, 2017
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Va Kar/GST/07/2017- S.O. No. 133 - dated
14-11-2017
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Jharkhand SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores
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Va Kar/GST/07/2017- S.O. No. 132 - dated
14-11-2017
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Jharkhand SGST
Extension of time to file GSTR-1 quaterly
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Va Kar/GST/07/2017- S.O. No. 131 - dated
14-11-2017
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Jharkhand SGST
Notification regarding last date for filing of return in FORM GSTR-3B
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Va Kar/GST/07/2017- S.O. No. 130 - dated
14-11-2017
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Jharkhand SGST
Jharkhand Goods and Services Tax (Twelfth Amendment) Rules, 2017
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S.O. No. 129-42/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. 2/2017-State Tax (Rate), dated the 29th June, 2017
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S.O. No. 128-41/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. 1/2017-State Tax (Rate), dated the 29th June, 2017
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S.O. No. 127-47/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. 12/2017- State Tax (Rate), dated the 29th June, 2017
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S.O. No. 126-46/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. 11/2017- State Tax (Rate), dated the 29th June, 2017
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S.O. No. 125-45/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Notification regarding prescribing 2.5% concessional JGST rates on certain goods supplied to a specific public funded research institutes and subject to specified condition
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S.O. No. 124-44/2017 State Tax (Rate) - dated
14-11-2017
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Jharkhand SGST
Seeks to amend notification no. 5/2017-State Tax (Rate), dated the 29th June, 2017
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Va Kar/GST/07/2017- S.O. 122 - dated
7-11-2017
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Jharkhand SGST
Jharkhand Goods and Services Tax (Eleventh Amendment) Rules, 2017
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Va Kar/GST/04/2017- S.O. No. 121 - dated
7-11-2017
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Jharkhand SGST
Waiver the late fee payable FORM GSTR-3B for the months of August and September, 2017 by the due date
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S.O. No. 120-40/2017 State Tax (Rate) - dated
7-11-2017
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Jharkhand SGST
Exempts the intra-State supply of taxable goods
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NO.F.1-11(91-TAX/GST/2017(Part) - dated
22-11-2017
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Tripura SGST
Notification regarding time period for furnishing the details in Form GSTR-1 for person having aggregate turnover upto ₹ 1.5 crore
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NO.F.1-11(91)-TAX/GST/2017(Part-ix)-40/2017-State Tax (Rate) - dated
22-11-2017
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Tripura SGST
Notification No.40/2017-State Tax (Rate), dated 22.11.2017
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NO.F.1-11(91)-TAX/GST/2017(Part) - dated
22-11-2017
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Tripura SGST
Latest Notification regarding Return Provision for the taxpayers who has not opt for composition levy
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NO.F.1-11(91)-TAX/GST/2017(Part) - dated
22-11-2017
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Tripura SGST
Notification regarding revised amount of late fee payable by any registered person for failure to furnish the return in Form GSTR-3B
SEZ
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S.O. 3912(E) - dated
12-12-2017
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SEZ
Central Government notifies an additional area of 10.64 hectares, as a part of above Special Economic Zone, thereby making total area of the Special Economic Zone as 129.785 hectares at Vadakkukaracheri and Thimmarajapuram villages, Tuticorin District in the State of Tamil Nadu
VAT - Delhi
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No. F.2 (12)/Policy/2017/1219-25 - dated
15-12-2017
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DVAT
Notification regarding extension of last date w.r.t submission of closing stock by dealer
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Undisclosed income - assessee-company did not earn any undisclosed income on account of the speculation losses in block assessment under Chapter-XIVB of the I.T. Act, 1961. Therefore, the A.O. was not justified in making the additions. - AT
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TDS u/s 195 - assessee having not obtained the necessary Certificate u/s.197(2), the disallowance made by the AO on account of non-deduction of TDS is on a right footing and does not call for any interference. - AT
Customs
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Sale of goods and display of prices at duty free shops in Indian currency – amendment of circular 31/2016 - Customs dated 6th July 2016 – Reg - Circular
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Delay in adjudication of SCN - delay of 15 years - Merely because there are number of such cases in the call book does not mean that we should not grant any relief to the petitioner before us - the subject show cause notice cannot be adjudicated further - HC
Case Laws:
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Income Tax
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2017 (12) TMI 936
Disallowing the payment of Employees’ contribution to PF and ESIC with delay - paid on or before due date for filing of the Income tax returns u/s 139(1)- Held that:- As regards the allowability of deduction u/s 43B of the Act of Employer’s contribution to PF and ESIC, the Hon'ble Supreme Court in the case of CIT vs.Vinay Cement Ltd 2007 (3) TMI 346 - Supreme Court of India) has held that if it is paid on or before the due date of the filing of the return u/s 139(1) of the Act, it is allowable. As regards the applicability of such proviso to the disallowance made u/s 36(1)(va) of the Act, we find that decisions are both against and in favour of the assessee. We find that the Coordinate Bench of this Tribunal at Visakhapatnam in the case of DCIT vs. Eastern Power Distribution Company of A.P. Ltd (2016 (9) TMI 1040 - ITAT VISAKHAPATNAM ) has considered all the above decisions referred to by the assessee as well as the DR and has held that there is no distinction between the employees’ and employer’s contribution of PF and if the total contribution is deposited on or before the due date of furnishing the return u/s 139(1) of the Act, then no disallowance can be made of employees contribution to PF.Respectfully following the decision of the Coordinate Bench on similar set of facts, this appeal of the assessee is allowed.
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2017 (12) TMI 935
TDS u/s 194C or 194J - short deduction of tds - payment made for the services rendered in the nature of channel carriage fees, up-l inking charges and bandwidth charges - Held that:- This appeal of the Revenue is squarely covered in favour of the assessee by the decision of this Tribunal in assessee’s own case for the immediately preceding year, i .e. AY 2010-11 [2014 (8) TMI 1133 - ITAT KOLKATA] whereby the order passed by the ld. CIT(Appeals) cancelling the demand raised by the Assessing Officer against the assessee under sect ion 201(1)/201(1A) for the alleged short deduction of tax at source from the similar payments made by the assessee was upheld by the Tribunal We uphold the impugned order of the ld. CIT(Appeals) deleting the demand raised by the Assessing Officer for the alleged short deduction of tax at source by the assessee from the payments made towards channel carriage fees, up-l inking charges and Bandwidth charges and dismiss this appeal of the Revenue.
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2017 (12) TMI 934
ALP determination - Appellate Commissioner reduced the royalty rate to 2% taking the average of the two categories of transactions - Held that:- No infirmity can be found with the ITAT’s approach. If the assessee’s submissions were to be accepted arguendo, the omission by a party to indicate, an initial income, which was concededly being shown in the past as an international transaction, cannot be scrutinized at all. Such an absolute proposition is not possible to support. The assessee is only to explain why the Dabur brand has been permitted to an overseas entity – of which it is the present sole or principal shareholder. That it was not such a sole shareholder in the past is an admitted fact. Equally, with the same overseas entity, when the ownership was of a different pattern, royalty was charged for the use of the Dabur brand. Unless at the entity level there is a complete re-organization so as to result in a complete identity of the two concerns or royalty arising out of the use of the Dabur brand, had to be treated as an international transaction; it was for all previous years. In these circumstances, the conclusions and findings recorded by the Appellate Commissioner and the ITAT cannot be faulted. The assessee’s submission with respect to the applicability of second proviso to Section 92CA(2), i.e. that it is entitled to the benefit of the arithmetical mean – not exceeding 5%, is in our mind, insubstantial. The assessee, as a matter of fact, did not offer any adjustment claiming that there was indeed no international transaction. In these circumstances, the question of applicability of the said proviso does not arise. No substantial question of law arises
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2017 (12) TMI 933
Registration as a charitable institution under Section 12A denied - proof of charitable activities - Held that:- It was incumbent upon the appellant to show that it had utilized its income, in advancement of the objectives as stated in the Memorandum of Association. The objectives of the Memorandum of Association have been extracted both in the order of the Commissioner and also of the Tribunal. It does not in fact speak of a constitution, for the purposes of merely canalizing the funds made available by the Government. The charitable activities of the appellant was only in applying the government funds; which too was not spent to the extent made available. As noticed by the Tribunal and the Commissioner, the charitable activities carried out by the appellant, was only in so far as expending the fund provided by the Government, that too, not to its full extent. The appellant was found to have not applied any part of their net income to the objectives stated in the Memorandum of Association. Thus, the appellant was also found to have not carried out any charitable activity in the relevant years, from the income derived from various activities of facilitation of certification and other matters in respect of the Non-Resident Keralites. The Tribunal found that, though technically, the objects of the appellant comes within the ambit of advancement of an object of general public utility, as described in Section 2(15) as it existed prior to the assessment year 2009-2010, it has not carried out any such charitable activity. - Decided against assessee.
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2017 (12) TMI 932
Revision u/s 263 - unexplained income of firm - amount of cash was brought to the partnership firm by two partners - guinity of gifts - Held that:- As assessee has given support of the gift or the amount received from the particular person with necessary documents, such as, copies of demand drafts and cheques etc., no addition could have been made by this appellant in respect of the amount received by the assessee. Under Section 68 of the Income Tax Act, the Assessing Officer while assessing a Partnership Firm, can go behind the source of income of the partnership firm, but he cannot go to “source of source”. The aforesaid aspect of the matter has been properly appreciated by the Income Tax Appellate Tribunal by allowing the appeal preferred by the respondent – assessee and no error has been committed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi. In view of all so far as the question raised by the appellant is concerned, no error has been committed by the Income Tax Appellate Tribunal in quashing and setting aside the order passed by the Commissioner of Income Tax under Section 263 - Decided in favour of assessee.
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2017 (12) TMI 931
Disallowance of the business promotion expenses - allowable business expenses - state of affairs in the Petitioner hospital - Ethics Committee of MCI during the proceedings initiated on complaint of one Mr. Sunil Manchanda against some of the doctors working in the petitioner hospital - Held that:- In view of the observations made by the AO where he has allowed the part expenses of the hospital, in that view of the matter, we are of the opinion that the CIT(A) observations which are made by the CIT are required to be accepted. The explanation cannot come into play on appeal which was filed at this stage. Even otherwise in income tax proceedings the medical ethics will not be taken into consideration. At the most even if it is a professional misconduct it is to be dealt with by Medical Council of India. The income tax authority cannot decide the medical ethics when the original authority has partly allowed the expenses. In view of the above, the order of the Tribunal is quashed and set aside. The matter is remitted back to the Tribunal to decide the same afresh.
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2017 (12) TMI 930
Interest charged under Section 234B - AO empowered to invoke the provisions of Section 154 - interest chargeable u/s 234B on tax liability arising on the assessee by virtue of retrospective amendment under Section 115JB - Held that:- It the issue relating to deduction of provisions of bad and doubtful debts was the matter which was considered and decided by the CIT(A). In view of Section 154(1A) of the Act, an authority can rectify/reappraise an order where there is a “mistake apparent from record” only on the issues which had not been the subject matter of appeal or revision before the appellate/revisional authority. The provision of Section 154 of the Act had been invoked by the Assessing Officer. In such circumstances, the rectification could be carried out by the appellate/revisional authority. Thus, the rectification in the present case was within the domain of the appellate authority, i.e. CIT(A) only and not by the Assessing Officer as the matter of allowability of provision of bad and doubtful debts while working out book profit tax under Section 115 JB of the Act had already been decided by CIT(A). It has been correctly recorded by the Tribunal that only CIT(A) was competent to assume jurisdiction under Section 154 of the Act. Interest charged under Section 234D and withdrawal of interest under Section 244A - Held that:- Firstly, once it is held that invoking of power of rectification under Section 154 of the Act was unjustified, the consequential conclusion would be that the chargeability of interest under Sections 234B and 234D of the Act would not arise. To put it differently, since the Assessing Officer is not empowered to invoke the provisions of Section 154 of the Act, on the matter already decided by CIT(A) under Section 154(1A) of the Act, therefore, interest under Sections 234B and 234D of the Act was consequential in nature. Viewing from another angle, Section 234B of the Act provides for recovery of interest for default in payment of advance tax. The assessee is liable to pay simple interest where he is unable to pay advance tax under Section 208 of the Act but has failed to pay such tax or where the advance tax paid is less than 90% of the assessed tax. Where the advance tax is based on the law prevailing on the date on which tax was due and payable, then in that eventuality any liability created by way of amended provisions subsequently incorporated would not attract payment of interest as there was no default on the date of payment of advance tax. Thus, it cannot be said that the approach of the Tribunal was erroneous or perverse in holding that interest under Section 234B of the Act was not chargeable. The Tribunal placing reliance on the decision of the Bombay High Court in The Commissioner of Income Tax, Mumbai Vs. JSW Energy Limited (2015 (5) TMI 823 - BOMBAY HIGH COURT) had correctly decided the issue relating to charging of interest under Section 234B.
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2017 (12) TMI 929
Disallowance under section 14A r.w.r 8D - assessee is engaged in the business of trading - Held that:- We find that the assessee is engaged in the business of trading in shares and derivatives of shares and commodities, sub-broking etc. We find from the orders of authorities below that the earning of the dividend by the assessee from the shares and securities held as stock-in-trade was only ancillary. In our opinion, since the assessee is doing the business of trading in shares and securities and was not making any investments in the securities as investor, therefore, section 14A r.w.r 8D cannot be applied to the case of the assessee. The case of the assessee is supported by the a number of decisions of the tribunal taking a view that no disallowance is attracted in case of traders of shares and securities. Since the assessee is doing the business of trading in shares and securities and was not making any investments in the securities as investor, therefore, section 14A r.w.r 8D cannot be applied to the case of the assessee. - Decided in favour of assessee.
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2017 (12) TMI 928
Bogus purchases - Held that:- We find that Hon’ble Gujarat High Court in the case of CIT vs. Smith P. Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) wherein it has applied the profit rate at the rate of 12.5% of the bogus purchases in similar circumstances. Accordingly, we also apply the profit rate of 12.5% of the bogus purchase and direct the AO to compute the income of all these AYrs. and not the entire bogus purchases are to be added. Accordingly, we allow these appeals of assessee partly. Addition u/s 14A - Held that:- Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Limited [2014 (8) TMI 119 - BOMBAY HIGH COURT] wherein, it is held that the presumption will go in favour of the assessee, that it has made investment out of its own funds which are sufficient to cover the value of investment, in that case, no disallowance of interest is required to be made under section 14A of the Act read with Rule 8D(2)(ii) of the Rules. When this was confronted to the learned Sr. Departmental Representative, he fairly conceded the position. As the issue is squarely covered in favour of the assessee we confirm the order of CIT(A) by deleting the disallowance of interest under Rule 8D(2)(ii) of the IT Rules made by the AO. Retention of disallowance under Rule 8D(2)(iii) i.e. administrative expenses the assessee has calculated the disallowance by calculating 5% of the salary of the CFO, 50 % of the salary of one accounts executive and 79.1% of bank charges paid to ABN Amro Bank through which the investment were routed. Further, the assessee suo moto has disallowed a sum of ₹ 2,26,732/-, the expenses relatable to exempt income. The learned counsel took us through the relevant expenditure booked in the profit and loss account and argued that there is no item which can be co-related with the investment giving exempt income. We find force in the arguments of the learned counsel, which is apparent from the records and hence, we delete the disallowance and allow this issue of assessee’s appeal. Disallowance of expenses relatable to exempt income under section 14A - Held that:- The assessee claimed that it has disallowed 5% of salary of CFO and 50% salary of Accounts executive and further disallowed 71% of bank charges at ₹ 34,609/- on the basis that the total transaction relating to investment are routed through current account. The learned counsel took us through the relevant expenditure booked in the profit and loss account and argued that there is no item which can be co-related with the investment giving exempt income. We find force in the arguments of the learned counsel, which is apparent from the records and hence, we delete the disallowance and allow this issue of assessee’s appeal.
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2017 (12) TMI 927
Disallowance of claim u/s. 35D - assessee has claimed the expenditure incurred for increasing the authorized share capital u/s.35D - Held that:- The assessee has sought to make the claim u/s.35D which provides for allowance as preliminary expense fee paid for registering the company. In the present case, the company was registered on 20.03.2009. Hence, the fee paid for increase in capital in the current assessment year can by no stretch of imagination be said to be the fee paid for registering the company. Hence, the assessee’s claim in this case as preliminary expenditure is not at all sustainable. See Brooke Bond India Ltd vs. CIT [1997 (2) TMI 11 - SUPREME Court ] - Decided against assessee. Disallowance u/s. 40(a)(ia) - non deduction of tds on recruitment and training expenses - Held that- Commissioner of Income Tax (Appeals) has erred in not adjudicating the alternate contention of the assessee that when payee has offered the alleged amount as income in their return of income and paid the required tax thereon, the assessee should not be treated as “assessee” in default and no disallowance u/s.40(a)(ia) is required. Furthermore, the case laws referred in this regard also need to be taken into account. Moreover, this aspect needs reference to factual records. Hence, I remit this issue of the ld. Commissioner of Income Tax (Appeals) to consider this aspect and pass a speaking order after giving the assessee proper opportunity of being heard.
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2017 (12) TMI 926
Addition of trade creditors - Held that:- We find from the assessment order that assessee has disclosed Sundry Creditors in the name of M/s Jugial Cement of ₹ 1,43,780/- and M/s KB Timber Supply company of ₹ 1,67,632/- totaling of ₹ 3,11,412/-. As the assessee failed to file confirmation before the AO, he added back the same to the returned income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A). Before CIT(A) assessee filed additional evidences and CIT(A) asked for remand report from the AO, who vide the remand report dated 07-03-2014 has not considered the additional evidences. The assessee before CIT(A) filed confirmation from these parties, but none of the authorities below have considered the same. We restore this issue back to the file of the AO, who will consider these trade creditors qua the additional evidences and will decide accordingly after allowing reasonable opportunity of being heard to the assessee. This issue of assessee’s appeal is allowed for statistical purposes. Addition of Sundry Creditors for earth Filling expenses - Held that:- After going through the case records are of the view that these evidences should have considered by the AO and accordingly, decision should have been taken. In the entire facts and circumstances of the case and in the interest of natural justice, we set aside the orders of lower authorities on this issue and remand the matter back to the file of the AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee. This issue of Revenue’s appeal is allowed for statistical purposes.
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2017 (12) TMI 925
Denial of depreciation - treating the transaction of purchase of machinery from Primark Labels (P) Ltd and lease back the same to the said concern as the sham transaction - Held that:- The affair was designed for tax evasion and also providing interest-free fund to the sister concern. The assessee has claimed additional depreciation on the said machine even though it was well known that sister concern had already claimed the same. Thus, A.O. has regarded such arrangement as sham transaction and finally has disallowed depreciation of ₹ 98,29,345/-. We find that now before us, the learned counsel for the assessee could not controvert the above findings of CIT(A) and that also of the AO. Once the assessee has designed the transaction in such a way to reduce the tax and claimed the depreciation on the asset first by the sister concern and consequently, the assessee also, this is a Sham transaction. Accordingly, the AO and CIT(A) has rightly confirmed the disallowance of depreciation. We confirm the orders of the lower authorities - Decided against assessee Taxation of lease rentals - exclusion of lease rentals of the Gallus Machine leased to Primark Levels (P). Ltd - Held that:- Once, we have given finding that no depreciation is allowed on Gallus Machine leased to Primark Levels (P). Ltd. holding the same as Sham transaction, the consequence of the same will be that the lease rentals included by the assessee as income has to be excluded. Accordingly, we direct the AO to exclude the lease rental income of ₹ 12 lacks earned by the assessee from lease of Gallus Machine to Primark Levels (P). Ltd. The AO will examine the claim of assessee after verification of facts. This issue of assessee’s appeal is allowed.
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2017 (12) TMI 924
TPA - selection of comparable - Held that:- Assessee is into IT Enabled Back Office Medical Transcription services as part of its business operation, providing medical transcription services exclusively to HCR Information Corporation USA, the ultimate holding company of The taxpayer - HBTS, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparability Entitled to deduction under section 10A - Held that:- Since DRP has given categoric direction to the AO to allow deduction to the taxpayer u/s 10A, the AO was under judicial discipline to carry out the deductions. So, the AO is directed to comply with the directions issued by ld. DRP. Consequently, Ground No.2.1 is determined in favour of the taxpayer.
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2017 (12) TMI 923
Unexplained cash deposits - Held that:- AO did not cause necessary verification, even during the remand proceedings and the CIT(A) has deleted the addition after verification of the additional evidences furnished by the assessee during the appeal proceedings. During the appeal hearing also, the Ld.DR did not place any evidence to controvert the sources explained by the assessee before the Ld.CIT(A). It is settled position of law that the CIT(A) is vested with the powers of making independent verification at appeal stage and the Ld.CIT(A) has done the same. Therefore we do not find any reason to interfere with the order of the Ld.CIT(A), accordingly we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Addition of agricultural income - Held that:- All the evidences furnished before the Ld.CIT(A) were forwarded to the AO, but the AO was not inclined to make verification and investigation with regard to sources of income for cash deposits and agricultural income, instead opposed for admission of additional evidences by the CIT(A) under Rule 46A. The CIT(A) after considering the objections admitted the additional evidences and decided the appeal on the basis of the additional evidences produced by the assessee during the appeal hearing. Having declined to make verifications at the remand stage, the AO cannot agitate against the order of the Ld.CIT(A). Being failed to utilize the opportunity given by the Ld.CIT(A), the AO cannot make out a case for legal battle. CIT(A) has given a finding that the assessee has established the land holdings and receipt of agricultural income on sale of chillies, cotton etc. during the relevant period. After verification of the correctness of land holdings and the agricultural income. - Decided in favour of assessee.
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2017 (12) TMI 922
Expenditure incurred on ESOP - revenue or capital - Held that:- This issue is now covered in favor of the assessee by the decision of the Special Bench of the Tribubal at Bangaluru in the case of Biocon Ltd., Vs. DCIT reported in [2013 (8) TMI 629 - ITAT BANGALORE] wherein the expenditure incurred on ESOP has been held to be revenue in nature, and the CIT(A) has followed the said decision to grant relief to the assessee Delay in Employee’s contribution to PF - Held that:- We find that undisputedly, the employee’s contribution to PF has been paid with the delay of ten days only, but before the due date of filing of the return. In a number of cases, this Bench of the Tribunal has considered all the decisions relevant to the issue, both u/s 43B as well as 36(1)(va) r.w.s 2(24)(x) of the Act, including the decisions relied upon by the Ld. DR, and has held that both the contributions are allowable if they are paid before the due date of filing of the return of income u/s 139(1) of the Act ALP determination - TPA - Held that:- CIT(A) has called for a remand report from the A.O and on the basis of said remand report and subsequent reply of the assessee to the remand report, he has confirmed the TP study of the assessee. This approach of the CIT(A), in our opinion, is not correct. Since the assessee has filed the TP documentation before the CIT(A), he ought to have referred the matter to the file of the TPO for determination of the ALP. Since, it is also pointed out by the assessee that there are mistakes in the margins of the comparables, we deem it fit and proper to remand the issue to the file of the AO/TPO for fresh determination of the ALP in accordance with law. Deduction u/s 10A - certificate required u/s.10A(5) of the Act having not been filed along with the return – Held that:- We find that the Hon’ble Karnataka High Court, in the case of American Data Solutions India Pvt Ltd.[2014 (2) TMI 128 - KARNATAKA HIGH COURT ] was considering the case of an assessee, which had filed Form No. 56F before the CIT(A), who granted relief to the assessee after giving opportunity to the assessee. On an appeal by the Revenue, the Hon’ble High Court held that the proceedings before the First Appellate Authority is continuation of assessment process and the audit report though was not produced before the assessing authority, the lower appellate authority was duty bound to take note of the said audit report and grant benefit, if the assessee is entitled to. We find that in the case before us, the A.O has not held that the assessee has not fulfilled the other conditions prescribed u/s 10A of the IT Act. It is also not in dispute that the Form No. 56F has been filed before the A.O with a delay. The assessee has filed the additional evidence in support of the deduction u/s 10A of the Act. We are inclined to admit the same and remand to the file of the A.O with a direction to allow the deduction u/s 10A of the Act in accordance with law after verifying if the assessee satisfies all other conditions u/s 10A
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2017 (12) TMI 921
TPA - selection of comparable - Held that:- Assessee is a company engaged in the business of designing of semi conductor products, software and electronic systems and providing sales and technical support services. It is providing services to its Associated Enterprise and is wholly owned subsidiary of Freescale Semiconductor Inc. USA. It has a Software Technology Park Unit at Noida and Bangalore, thus companies functionally dissimilar with that of assessee need to be deselected from final list. Appeal filed by the assessee is partly allowed with respect to comparables in software development segment directing ld TPO /AO a. to exclude Infosys Limited and b. to examine the claim of the assessee with respect to exclusion of Bodhtree consulting Limited c. To reexamine the claim of the assessee of Sonata Sonata Software limited not passing the filter of related party transactions d. To not to compute the margins of Software development segments as well market support services as per safe harbor Rules but as per prevalent judicial precedents
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2017 (12) TMI 920
Undisclosed income on account of the speculation losses in block assessment - imagination of undisclosed income within the meaning of Section 158BB - articles shown to the department prior to the search - Held that:- Nothing is brought on record, whether the A.O. at the assessment stage has allowed cross-examination to such statements on behalf of the assessee-company. Therefore, such statements have otherwise been cannot be read in evidence against the assessee- company. It is also brought on record that ultimately the persons who made the statements after the search have retracted from their statements by filing affidavits and their statements have been recorded thereafter. But A.O. did not discuss anything on this aspect in the assessment order. Therefore, there were nothing on record to disallow the speculation losses suffered by assessee-company in block assessment because it was accepted by the Revenue Department in scrutiny assessments prior to the date of search. The decisions relied upon by Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case, it is clear that assessee-company did not earn any undisclosed income on account of the speculation losses in block assessment under Chapter-XIVB of the I.T. Act, 1961. Therefore, the A.O. was not justified in making the additions. As regards addition on account of difference in valuation as reported by the assessee-company and computed by the Valuation Officer, it is clear that no incriminating material or evidence was found during the course of search so as to indicate any unaccounted investment in the property. The reference to the DVO was made after the search which could not be construed as incriminating material or document found during the course of search. Therefore, such addition also could not be made in the block assessment. The addition of ₹ 65,609 is accordingly, deleted.
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2017 (12) TMI 919
TDS u/s 195 - tds liability on nature of services rendered by the non-resident agent - Held that:- In the present case, the assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, I am not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the nonresident agent and the payments made thereof. With these observations, the appeal of assessee is allowed for statistical purposes.
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2017 (12) TMI 918
Disallowance u/s 40(a)(ia) - non deduction of tds on interest payment from unsecured loans - main contention of the ld.A.R is that the recipient of the payments had offered the income for taxation, as such there is no necessity to deduct tax on payment of interest - Held that:- It is noticed that this issue is squarely covered by the judgement of Delhi High Court in the case of Ansal Landmark Township [2015 (9) TMI 79 - DELHI HIGH COURT] as long as the payee/resident (which in this case is APIL) has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. Thus remit this issue to the file of the Assessing Officer for fresh consideration in the light of above judgment. The ground raised by the assessee u/s.40(a)(ia) of the Act is partly allowed for statistical purposes.
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2017 (12) TMI 917
TDS u/s 195 - non deduction of tds in respect of the purchase of crude oil by invoking the provisions of Sec.40(a)(i) - Held that:- The claim of the assessee that the decision of the Hon’ble Supreme Court in the case of M/s.GE India Technology Cen.(P) Ltd. [2010 (9) TMI 7 - SUPREME COURT OF INDIA] would apply and TDS is liable to be made when the remittances is on sum chargeable under the Act would come into play. Now, M/s.HEPI having income chargeable under the Act in India and having been assessed to such tax under the Act in India and the assessee having not obtained the necessary Certificate u/s.197(2), we are of the view that the disallowance made by the AO on account of non-deduction of TDS in respect of the purchase of the crude oil from M/s.HEPI by the assessee, which has also been upheld by the Ld.CIT(A) is on a right footing and does not call for any interference. - Decided against assessee. Nature of expenses - software license fees and maintenance fees - revenue or capital - Held that:- The assessee had paid software license fees and maintenance fees to M/s.Aspen Tech for the systems which is used by the refinery for making decision support solutions for optimizing production. These payments are made on yearly basis and towards maintenance of the software. The expenditure is in nature of recurring one - Decided in favour of assessee.
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2017 (12) TMI 916
Validity of assessment made u/s. 153(c)/143(3) - proof of incrimination material found in search - Held that:- We find that the additions made by the AO are beyond the scope of section 153C of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. - Decided in favour of assessee.
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2017 (12) TMI 915
Eligible for exemption u/s 11 - proof of charitable activities - Held that:- We are of the considered view that Ld. CIT(A) has rightly dismissed the appeal of the assessee by holding that as on date the Assessee is not in possession of registration u/s. 12AA of the Act, which is mandatory for availing the exemption u/s. 11 to 13 of the I.T. Act, 1961. As perused the Appeal File and we are of the view that assessee has not filed any Certificate of Registration granted u/s. 12AA of the I.T. Act, 1961, which is mandatory for availing the exemption u/s. 11 to 13 of the Act, before the AO as well as Ld. CIT(A) and even before the Tribunal. Therefore, in the absence of the same, we are unable to accept the request of the Assessee for grant of exemption u/s. 11 to 13 of the I.T. Act. See case of Jammu Development Authority vs. UOI (2014 (7) TMI 1160 - SUPREME COURT OF INDIA), we uphold the impugned order passed by the Ld. CIT(A) and reject the grounds raised by the Assessee by dismissing the Appeal filed by the Assessee.
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2017 (12) TMI 914
TDS u/s 194C or 194J - default in respect of payment by way of Channel carriage fees, up-linking charges and Bandwidth charges and Airtime Charges - Held that:- We hold that the issue is covered in favour of the assessee and hence the assessee is liable to deduct tax at source only u/s 194C of the Act in respect of aforesaid subject mentioned payments. Accordingly the grounds raised by the Revenue are dismissed. See assessee's own case [2017 (12) TMI 935 - ITAT KOLKATA]
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2017 (12) TMI 913
Enhancement of income on account of excessive interest claimed in the P & L account - Held that:- The assessee neither during remand proceedings nor during First Appellate Proceedings could reconcile or explain the difference in the interest expenditure claimed. Even before us the ld. AR has failed to explain the difference in interest expenditure as claimed in P & L account and the statement of interest furnished before the Commissioner of Income Tax (Appeals). In P & L account the assessee has claimed interest expenditure ₹ 31,20,483/- as against actual payment of interest ₹ 19,70,509/-. In the absence of any explanation, we find no reason to interfere with the findings of Commissioner of Income Tax (Appeals) qua the addition - Decided against assessee Disallowance u/s. 40(a)(ia) - AR has prayed for remitting the issue back to the file of Assessing Officer in the light of newly inserted second proviso to section 40(a)(ia) - Held that:- Remitting the issue to Assessing Officer for verification in the light of newly inserted proviso even respect of earlier assessment year has been approved by Hon’ble Delhi High Court in the case of Commissioner of Income Tax Vs. Ansal Land Mark Township P. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT ]. Therefore, in view of above we deem it appropriate to restore this issue back to the file of Assessing Officer with a direction to assessee to furnish all the relevant documents before the Assessing Officer evidencing that interest paid by assessee has been offered to tax by recipients in their respective return of income Disallowance u/s 14A - Held that:- The assessee has not demonstrated before the Tribunal that interest free funds of assessee are sufficient to cover the investments. However, It is made clear that while computing disallowance u/s. 14A r.w.r. 8D(2)(iii) only those investments should be taken into consideration on which the assessee has earned interest free income. Accordingly, ground No. 3 raised in the appeal by assessee is allowed for statistical purpose. Disallowance u/s. 40A(3) on account of cash payments made for purchase of land - Held that:- after perusal of the impugned order it is not evident whether the authorities below have examined the fact regarding claim of deduction by assessee during the period relevant to the assessment year under appeal. We deem it appropriate to restore this issue back to the file of Assessing Officer for verification. If the assessee has not claimed the amount of ₹ 5,50,000/- as deduction during assessment year under appeal, no disallowance u/s. 40A(3) is warranted. Accordingly, ground No. 4 raised in the appeal by assessee is allowed for statistical purpose. Disallowance u/s. 40(a)(ia) - contention of the assessee is that he has deducted tax at source while making the aforesaid payments as professional fees - Held that:- A perusal of the impugned order shows that there is no findings by the Commissioner of Income Tax (Appeals) on the aforesaid disallowance. Therefore, we deem it appropriate to remit this issue back to the file of Assessing Officer for verification. If the assessee has deducted tax at source on the payment of professional fees and has deposited the TDS to the Government exchequer, no disallowance u/s. 40(a)(ia) is to be made. The assessee is directed to furnish necessary evidence before Assessing Officer in support of his claim. Accordingly, ground No. 5 raised in the appeal is allowed for statistical purpose.
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2017 (12) TMI 912
Rejection of books of accounts - G.P. rate determination - Held that:- The validity of the rejection of books of account is not an issue now as the same is not pressed by the Ld. Counsel for the assessee before us. Further, the CIT(A) s decision to estimate the profits applying rate of 15% is also not approved as the same is not supported by any material or any case laws. AO is directed to examine the allowability of statutory deductions u/s.40(b) relating to the remuneration to the partners and u/s.32 relating to the depreciation out of the profits so estimated by the AO in the remand proceedings and pass a speaking order on this issue after considering the decisions relied upon by the Ld. Counsel for the assessee Shri Ram Jhanwar Lal Vs. ITO and Ors (2008 (7) TMI 505 - RAJASTHAN HIGH COURT. Assessee is also directed to discharge the onus from his side by furnishing the relevant comparable cases during the remand proceedings before the AO to help him taking best decision relating to profit percentage. Accordingly, Ground No.2 raised by the assessee is partly allowed for statistical purposes. Addition u/s.69 - we find the CIT(A) is not fair in directing the AO to assess the said amount of ₹ 20 lakhs of capital introduced by the partner of this firm. We find there are similar capital introduction by other partners and AO/CIT(A) did not consider need of taxing the same in the hands of the firm. In our view, considering the principle of consistency, this amount should also be examined for taxation in the hands of the partner involved. As such, there is no nexus established by the Revenue that the said amount of ₹ 20 lakhs has genesis in the firm s profits. Accordingly, Ground No.4 is allowed in favour of the assessee.
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2017 (12) TMI 911
TDS u/s 194J - non deduction tax on payment of transmission and wheeling charges - Held that:- The expression 'technical service' could have reference to only technical service rendered by a human and that it would not include my service provided by machines or robots. However as against above contention we find that the AO has completely failed to bring relevant materials, whatsoever, on record to prove the existence of human interface/element in the present case. In view of the above, we find that such transmission and wheeling charges paid by the assessee does not come within the purview of fees for technical service as defined under Explanation 2 to sec 9(1)(vii) of the Act and accordingly no tax is required to be deducted by the assessee u/s. 194J therefrom. Hence, the action of the AO in treating the assessee to be an assessee-in-default u/s. 201(1) of the Act and the order dated 27.3.2014 passed u/s. 201(1)/201(1A) of the I.T. Act were rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue.
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2017 (12) TMI 910
Addition on employee’s contribution to PF - sum deposited beyond the prescribed time limit - Held that:- As the amount has been deposited by the assessee before the due date of filing the return of income and therefore the matter is covered by the decision of Hon’ble Jurisdiction High Court in case of CIT vs. SBBJ [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] as well as in assessee’s own case for the A.Y. 2011-12 [2017 (11) TMI 573 - RAJASTHAN HIGH COURT] - Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D - Held that:- Neither the Revenue nor the assessee has filed any material on record before us to give a conclusive finding on the availability of the assessee’s own fund to meet the requirements of the fresh investment made by the assessee during the year as well as the expenditure claimed by the assessee which can be attributable to earning the exempt income. Since, there is fresh investment during the year to the tune of more than ₹ 14 crores, therefore, the decision for the earlier years cannot be applied without considering the relevant facts. Hence, in the interest of justice we set aside this issue to the record of the Assessing Officer for fresh adjudication in light of the above observation. Needless to say the assessee be given an opportunity of hearing before passing the fresh order.
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2017 (12) TMI 909
Registration granted u/s. 12A cancelled - assessee received donation in lieu of cash from M/s. Herbicure - sworn statement of Shri Swapan Ranjan Dasgupta recorded during survey relied upon - Held that:- As no material which is legally sustainable has been brought on record, therefore, the sole material which is sworn statement of Shri Swapan Ranjan Dasgupta recorded during survey cannot be the sole material as held by Hon’ble Supreme Court in Kader Khan, (2013 (6) TMI 305 - SUPREME COURT ) and moreover, we note that this statement of Shri Swapan Ranjan Dasgupta has not been tested by cross examination cannot be the basis for the impugned action of the Ld. CIT(E) and, therefore, the assessee society which is carrying out philanthropic activities is a charitable organization. So its registration granted u/s. 12A of the Act cannot be cancelled without infraction of law as contemplated u/s. 12AA(3) of the Act. As per the requirement of section 12AA(3) of the Act, the Ld. CIT(E) has to be satisfied that the activities of the trust or institution are ingenuine or are not being carried out in accordance with the object of the trust or institution. When the assessee is carrying out the object of the trust for which it was created and has applied the donation it received from M/s. Herbicure for the objects for which it has been created, the assessee society cannot be termed to be ingenuine or cannot be held to be not carrying out its activity in accordance with the object of the trust. Therefore, we set aside the order of the Ld. CIT(E) and allow the appeal of the assessee.
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2017 (12) TMI 908
Disallowance u/s. 40(a)(ia) - non deduction of tds - Held that:- As discernible from the documents on records clearly shows that the Private Limited Company i.e. M/s. BCRCPL existed from 04.07.2002 and it was existing for the main purpose of taking over the assessee’s proprietary concern M/s. Basu & Co. and vide the Governor’s approval the Govt. of West Bengal has permitted the assessee’s business to be run through the Private Limited Co. w.e.f. 31.03.2008. In such a scenario, the AO’s conclusion that this was a cooked up story to get rid of the clutches of disallowance u/s. 40(a)(ia) cannot be accepted and the AO erred in making such a conclusion and the Ld. CIT(A) has rightly appreciated the facts and has found that the entire contract work has been executed by M/s. BCRCPL and w.e.f. 31.03.2008, the proprietary concern has been taken over by the Private Limited Company with all its assets and liabilities, so the question of deducting TDS does not arise. Not only that M/s. BCRCPL has filed its return of income for the relevant assessment year and has also remitted tax on the amount of which the contract was executed and for that the payment was received on which the AO has made disallowance and, therefore, the disallowance u/s. 40(a)(ia) was not warranted and, therefore, rightly the Ld. CIT(A) has deleted the addition and we confirm the same. Undisclosed investment on account of shares claimed to have been allotted by M/s. BCRCPL - Held that:- The shares were allotted by the Private Limited Company to the assessee after valuation of the assets and liabilities taken over by the Private Limited Company which was valued at their book value and the shares were allotted to the assessee in his individual capacity as a proprietor of the erstwhile proprietary concern. Since no shares were issued in the name of the proprietary concern M/s. Basu & Co. which did not exist after the takeover by Private Limited Company, no investment in shares were reflected in the Balance sheet of the proprietary concern M/s. Basu & Co. We take note that the takeover account was settled through mere book entry by debiting or crediting the amount of either person in their books. This is a mere book entry and no real monetary transaction has taken place. It should be noted that nothing changed on ground i.e. the assets and liabilities of the proprietary concern was taken over by the Private Limited Company along with its assets and liabilities, and the shares allotted on the book value of the assets, so nothing changed except that the business will be run by the Private Limited Company from 31.03.2008 and no money changed hands or any new investment made by the assessee in the form of share application amount in the company. The AO has not understood this aspect and, therefore, has erroneously made the addition which has been rightly deleted by the Ld. CIT(A) and warrants no interference and, therefore, we confirm the action of the Ld. CIT(A) and dismiss the appeal of the revenue.
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2017 (12) TMI 907
Addition on account of labour charges as bogus expenses - genuineness of the payment - Held that:- As the ld. Counsel for the assessee has pointed out that the liability to deduct TDS was on the principal of M/s Nilkanth Ferro Ltd. and the assessee was merely a sub-contractor and, therefore, do not require to observe the provisions of ESI and PF and TDS, we agree on this principle but we have observed that assessee has not proved the genuineness of the payment either before the AO or before the ld CIT(A). Apart from this, it is not an ad hoc disallowance made by the AO therefore the arguments of the ld counsel that without rejecting books of accounts, the AO cannot make addition, is not tenable. That is, there is no need to reject the books of account. The overtime register was not authenticated by M/s Nilkanth Ferro Ltd. The director of M/s Nilkanth Ferro Ltd has stated that no overtime wages was paid. Therefore, based on the above discussion, we are of the view that the addition made by the AO and confirmed by the CIT(A), is justified. - Decided against assessee.
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2017 (12) TMI 883
Penalty u/s 271(1)(c) - defective notice - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided in favour of assessee.
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Customs
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2017 (12) TMI 906
Delay in adjudication of SCN - delay of 15 years - call book - whether there is no deliberate or malafide attempt on the part of the respondents in not adjudicating the show cause notice? Held that: - Unless and until the Revenue establishes that there is a law mandating taking cognizance of these procedural requirements or these procedural requirements have been engrafted into the applicable legislation so as to enable the Revenue/Department to seek extension of time, in writ jurisdiction, we are not obliged to take notice of these procedural delays at the end of the Revenue/Department. Accepting that case would defeat the rule of law itself - We have not found from any of these averments and statements in the affidavit that there was a bar or embargo, much less in law for adjudicating the show cause notice. This Court indulged the Revenue enough and by giving them an opportunity to file an additional affidavit. The additional affidavit as well, does not indicate as to why the Revenue took all these years, and after conclusion of the personal hearing in the year 2004, to pass the final order. The Revenue/Department has not been able to justify its lapse in not adjudicating the show cause notice issued on 28th March, 2002 for more than 15 years. There may be reasons enough for the Revenue to retain some matters like this in the call book, but those reasons do not find any support in law insofar as the present petitioner's case is concerned. Merely because there are number of such cases in the call book does not mean that we should not grant any relief to the petitioner before us - petition allowed.
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2017 (12) TMI 905
CENVAT credit of CVD availed by debiting and adjusting in DEPB account - denial on the ground that in terms of EXIM policy 20022007 and in particular para 4.3.5 thereof where additional customs duty was adjusted from DEPB, no benefit of CENVAT or draw back would be available - Held that: - as per the SCN, the petitioner had wrongly availed the CENVAT credit. This provision was made in the earlier Foreign Trade Policy of 200207. However later in the new policy, by virtue of amendment in the policy, such benefit was made available again. Circular dated 21.10.2004, of course, provided that such benefit would be available with respect to licenses issued under the new policy - whether in case of the petitioner, all the licenses were issued under the new policy or not is a question of fact, which requires examination - matter placed on remand for re-examination - petition allowed by way of remand.
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2017 (12) TMI 904
Importer of goods - unclaimed consignment - SCN’s issued in this regard, were adjudicated vide order dated 27.02.2014, holding that Sh. Loveleen Sawhney is the importer of impugned goods and by his acts of omission and commission, has rendered such goods liable to confiscation under Section 111(f), (l) and (m) of the CA, 1962 - penalty - Held that: - Since Sh. Loveleen Sawhney has not filed any documents in respect of clearance of the imported consignments. Thus, he cannot be termed as ‘importer’ under Section 2(26) of the Customs Act, 1962 - Department has not adduced any concrete evidence that the appellants have active participation or role in illegal importation of the subject goods in question. Penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 903
Mis-declaration of description of goods - undervaluation - main ground agitated is that no confiscation can be ordered of the goods without seizing the same - Held that: - the imported goods are in the custody of customs till such time the goods are allowed to be cleared. In the present case such clearance has been allowed only after the execution of bonds and bank guaranty, pending adjudication of offence - confiscation for misdeclaration upheld - redemption fine and penalty also upheld - appeal dismissed - decided against appellant.
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Service Tax
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2017 (12) TMI 902
CENVAT credit - input services used to provide taxable as well as exempt services - non-maintenance of separate records - Held that: - in view of the provisions of sub-rule (5) of Rule 6 of the rules the appellant will be entitled for the Cenvat credit on such input services, irrespective of the fact that such services were used for providing both taxable as well as exempted services - the authorities below have not specifically observed with regard to the nature of services used/utilised by the appellant for providing both categories of services - the matter should go back to the original authority for verification of the specific services which were used by the appellant for providing both category of services - appeal allowed by way of remand.
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2017 (12) TMI 901
Commercial training and coaching centre services - levy of service tax - Held that: - an identical issue has came up before the Tribunal in assessees own case in Hyderabad University Vs. CCE, Hyderabad [2017 (11) TMI 349 - CESTAT HYDERABAD], where it was held that the explanation as to what is vocational training institute indicates that the said exemption can be extended to any vocational training institute which imparts skills to enable the trainee to seek employment or undertake self-employment directly after such training or coaching - service tax not leviable - appeal dismissed - decided against Revenue.
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Central Excise
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2017 (12) TMI 900
Coercive Recovery of penalty - petitioner vehemently contended that the appeal of the petitioner is still pending before the Tribunal. Stay has not been vacated. Recovery pending appeal, therefore, initiated by the Department is improper and impermissible - Held that: - The company had to deposit ₹ 2 crores within the stipulated time. When the company failed to deposit such amount, there would be no stay in favour of the company or appellants. The petitioner, having enjoyed the benefit of the order, cannot argue that even if the company failed to deposit the amount, other appellants should continue to enjoy benefits of the stay - petitioner, having enjoyed the benefit of the order, cannot take a contradictory stand. If the petitioner was aggrieved by the formula provided by the Tribunal in the said order, the petitioner should have challenged the same - petition dismissed - decvided against petitioner.
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2017 (12) TMI 899
Refund claim of excess duty paid - entitlement to interest - finalization of assessment - denial on the ground of unjust enrichment - whether the assessee is entitled to the refund of excess export duty paid against the three shipping bills? - Held that: - the authority has examined the test result in detail and considered the eligibility of refund on merit and then transferred it to the Consumer Welfare Fund. Therefore, in my opinion, there is no non-compliance of the remand order of Ld. the commissioner (Appeals) in the denovo order. On this aspect, Revenue's Appeal has no merit. Unjust enrichment - Held that: - Revenue has not brought any contrary evidence on record to show that the burden of duty claimed as refund has not been absorbed by the assessee-Appellant - appeal of Revenue dismissed. Whether interest is payable to the assessee after expiry of three months from the date of filing the refund claim till the receipt of refund amount by the Appellant? - Held that: - undisputedly the assessee-appellant has filed the refund claims on 05.01.2009 and 09.01.2009 and it was sanctioned to them after three months. Thus, they are entitled to interest after expiry of three months from the date of filing the refund claim till the refund amount was given to them - reliance placed in the case of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. [2011 (10) TMI 16 - Supreme Court of India] - interest allowed. Appeal allowed - decided in favor of appellant-assessee.
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2017 (12) TMI 898
Penalty u/r 26 - clandestine removal - Held that: - Since adequate evidence regarding the job work activity and payment of duty on the final product were produced by the appellant No. 1, the same cannot be discarded and adjudged demands cannot be confirmed against it - Since there is no clandestine removal of goods from the factory of the appellant No. 1, personal penalty imposed on the appellant No. 2 u/r 26 of the CER, 2002 cannot be sustained. Penalty on appellant No. 3 - Section 28 (2B) of the Customs Act, 1962 - Held that: - Since the appellant No. 1, who was the job worker for the appellant No. 3 has confirmed that it had received the goods and used for slitting purpose, it cannot be said that non-fulfilment of the conditions of N/N. 52/2003-CUS., dated 31/03/2003 is attributable to fraud, collusion, separation of facts, with intent to evade payments of duty - since the appellant No. 3 had deposited the duty foregone on account of import of the goods and also deposited the appropriate interest, the benefit of Section 28 (2B) ibid should be available, for non-imposition of penalty. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 897
Penalty - whether Rule 25 ibid read with Section 11AC ibid can be invoked in the circumstances of the present case for imposition of penalties against the appellants? Held that: - In this case, though the finished goods, at times, were removed by means of cycle rickshaws, auto rickshaws etc., but the invoices were issued at the end of the day, by furnishing the quantity and duty with regard to the goods actually removed from the factory - The only lacunae in this case was that the vehicle number in invoice was wrongly mentioned. The reason for issuance of a consolidated invoice on the end of the day was to avoid issuing several invoices in respect of each small quantity of the goods. The modus operandi adopted by the appellant cannot be termed as fraudulent in nature, with intention to defraud the government revenue - in absence of any suppression, fraud, collusion etc., with intention to evade payment of Central Excise duty, penalties cannot be imposed on the appellant. Under the identical situation and circumstances of the case, the Gujarat High Court in the case of CCE & C Vs. Saurashtra Cement Ltd. [2010 (9) TMI 422 - GUJARAT HIGH COURT] has set aside the penalty imposed on the appellant. Penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 896
CENVAT credit - Removal of goods - It is the allegation of the department that the appellant after receipt of the said goods from the buyer, removed the same as such and accordingly, the appellant was liable to reverse the equivalent amount of Cenvat credit taken by it at the time of receipt of the finished goods from the buyers - Held that: - Since the onus lies on the appellant to show that the finished goods received from the buyers were in fact subjected to certain processes carried out in its factory, I am of the view that the plea raised by the appellant that goods were removed as such, cannot be accepted. Considering the submission of the ld. Advocate that the appellant is in possession of adequate material to demonstrate that the goods received from the buyer were further processed in its factory and thereafter, were sold to the buyers, the matter can be remanded to the original authority for verification of the documents to be produced by the appellant - appeal allowed by way of remand.
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2017 (12) TMI 895
Penalty u/r 26 - benefit of reduced penalty u/s 11AC - interest - Clandestine manufacture and removal - Held that: - Since the appellant had deposited the duty attributable to the goods manufactured in the same month, the interest demand cannot be fastened against the appellant since, there no delay in payment of the duty amount - Since, the entire amount of duty was deposited by the appellant before issuance of the SCN, the option for payment of reduced amount of penalty in terms of Section 11AC ibid should be available to it - benefit of reduced penalty allowed. Penalty u/r 26 - Held that: - Since the appellant M/s Ganpati Ispat Pvt. Ltd. has accepted clandestine manufacture and removal of goods, the penalty imposed by the authorities below under Rule 26 is sustainable for the reason that without his active role and participation, the company cannot indulge with the fraudulent activity of removing the goods in clandestine manner - penalty justified but quantum reduced. Appeal allowed in part.
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2017 (12) TMI 894
CENVAT credit - input services - rent-a-cab - outdoor catering services - Held that: - the identical issue has come up before the Tribunal in the case of Marvel Vinyls Ltd. Vs. CCE [2016 (11) TMI 1126 - CESTAT NEW DELHI], where Cenvat credit on motor vehicle was allowed which were used for bringing the employees to the company - credit allowed on rent-a-cab service. CENVAT credit - outdoor catering services - Held that: - the issue has come up in the case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CCE [2014 (12) TMI 596 - CESTAT MUMBAI], where it was held that the cost of such services, are admittedly borne by the company and not by the employee. Therefore, I hold that the Appellant has correctly claimed the cenvat credit on outdoor catering services - credit allowed. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 893
N/N. 67/1995-CE, dated 16.03.1995 - clearance of intermediate products, tapes / strips of plastics - It appeared to the department that the said tapes / strips of plastics captively consumed in manufacture of fabrics / sacks are liable to duty - appellant cleared fabrics / sacks (finished goods) claiming SSI exemption under N/N. 8/2003-CE dt. 01.03.2003 as amended - Held that: - similar issue decided in the case of Priyal Hosieries, Priya Garments, The Carnataka Knitting Co., M.V. Exports, PVS Knittings, Ajay Vijay Industries, Bhairav Overseas, Anbu Garments, K.N. Tex and Popular Hosiery Factory Versus CCE Coimbatore [2017 (11) TMI 1248 - CESTAT CHENNAI], where it was held that The final products may be made out of the same product or out of different products. Clause (vi) does not contemplate that the manufacturer should manufacture only ‘one final product’ or that if he manufactures only one product that product itself should be both dutiable and exempted. The intermediate products are eligible for benefit of N/N. 67/95-CE as amended - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 892
Classification of goods - various construction chemicals - whether classified under CETH 3816 as miscellaneous chemicals or under CETH 3214? - Held that: - The appellant, before the lower Authorities has agitated the alternation classification under 3824 for their products. On perusal of Order-in-Original, it is found that such claim has been dealt with and denied only in respect of two or three products. In respect of the other products this alternate claim has not been discussed at all - the matter is required to be remanded to the Ld. Commissioner with a direction to carefully examine the alternate claim of the appellant for classification under CETH 3824 in respect of all the goods manufactured by the appellant - appeal allowed by way of remand.
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2017 (12) TMI 891
CENVAT credit - input service - selling commission paid to commission agents - Held that: - identical issue has came up before the Tribunal in the assessee’s own case as Ultratech Cement Ltd. Vs. CCE, Jaipur [2017 (12) TMI 882 - CESTAT NEW DELHI], where reliance was placed in the case of M/s Mangalam Cement Ltd., M/s J.K. Lakshmi Cement Ltd, M/s K.E.I. Industries Ltd Versus CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that the CBEC vide Circular No. 943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 890
Concessional rate of duty - cement - capacity based production - Board circular dt. 28.2.2002 - It appeared to the department that assessee was not eligible for benefit of exemption notification as their installed capacity was not reduced - Department also held a view that assessee could not avail benefit under Notification 4/2006 for cement manufactured and cleared under the brand ARASU; that being a non-mini cement plant. Held that: - Both in the assessee's appeals and department's appeals, grievances have been put forth concerning the eligibility of concessional rates of duty to various clearances effected by the assessee and also manner of calculation of the net duty liability - The assessee in particular, is aggrieved that adjudicating authority while calculating the duty liability has taken the cumulative total of duty liability calculated at ₹ 400/- per MT and also had calculated at 14% advalorem - The department has also put forth its grievance that the impugned order has wrongly extended concessional rate of duty notwithstanding clear guidelines of the Board vide circular dt. 28.2.2002; that duty concession has been wrongly extended in respect of clearances of cement in package form to industrial / institutional buyers and in respect of cement packed only in 50 kg bags. Ends of justice would be best served by remanding the matter to the adjudicating authority to cause fresh de novo adjudication - In such de novo proceedings, adjudicating authority will take into account the contentions of the both assessee as well as department - appeal allowed by way of remand.
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2017 (12) TMI 889
CENVAT credit - cement (used as inputs for the manufacture of capital goods) - structural items - Held that: - in the case of CCE Vs. India Cements Ltd. [2011 (8) TMI 399 - MADRAS HIGH COURT], the cenvat credit was allowed on the cement when it was used for the capital goods - The cement was used as raw material in the instant case. So, the item used is not for civil construction but for the construction of clinker silos which are absolutely necessary for establishing a manufacturing unit for cement, which was the subject matter where the cenvat credit was availed - credit allowed. CENVAT credit - structural items - Held that: - the issue has came up before the Tribunal in assessee’s own case M/s Lafarge India Pvt. Limited Versus CCE, Raipur [2016 (10) TMI 615 - CESTAT NEW DELHI] where the cenvat credit on steel structures (including pipes and accessories), rectangular bar, expansion joint, non standard part and various specific items were allowed - credit allowed. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 888
N/N. 10/10-CE dated 17.2.2010 - appellant has paid duty on their own and took self-credit - Whether in case N/N. 56/02-CE dated 14.11.2002 and N/N. 10/10-CE dated 17.2.2010 are in force during the relevant period whether the appellant can be forced to follow N/N. 10/10-CE dated 17.2.2010? - Whether in terms of N/N. 10/10-CE dated 17.2.2010, the appellant is not required to pay duty and he has paid duty whether the provisions of section 11A of CEA, 1944 are applicable or not? - Difference of opinion. Held that: - In view of the difference of opinion, the matter be placed before the Hon ble President to refer the matter to the third member to resolve the aforesaid issues - matter on remand.
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CST, VAT & Sales Tax
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2017 (12) TMI 887
Jurisdiction - power of Joint Commissioner (Executive) - whether the said Joint Commissioner (Executive) was not empowered or authorised to exercise the revisional powers as comprised in Section 10-B? - Held that: - A careful reading of Section 10-B would clearly establish that initially the provision empowered the Commissioner or such other officer not below the rank of Deputy Commissioner to exercise powers of revision. The words "Deputy Commissioner" was later on amended and substituted by the words "Joint Commissioner" - Essentially therefore, it recognised two classes of officers who could possibly exercise the powers of revision. The first class of course was the Commissioner while the second class was to comprise of such other officers not below the rank of Deputy Commissioner /Joint Commissioner as may have been authorised in this behalf by the State Government by notification. The recognition of a revisional power vesting in the Commissioner is not an issue on which there can possibly be any doubt. The fact that the Commissioner did not require a separate authorisation by the State Government or a notification of such authorization is evident from a plain construct of Section 10-B. Prior to the amendment of Section 2(b), the only difference in position was that the words employed were "Joint Commissioner or a Deputy Commissioner". Once Section 2(b) mandates the recognition and inclusion of a Joint Commissioner in the expression "Commissioner", there is, in the opinion and considered view of this Court, no requirement of a separate authorisation or notification of conferment of such authority. Since section 10-B always recognized and conferred powers upon a "Commissioner" all classes of officers and authorities who fell within the ambit of the expression "Commissioner" would have to necessarily be recognized as being statutorily empowered and clothed with the jurisdiction to exercise the powers of revision - Undisputedly, a Joint Commissioner stood included in the expression "Commissioner" as per section 2 (b). The challenge to the authority of the Joint Commissioner to exercise powers conferred by Section 10-B is misconceived and is liable to be negatived. - revision dismissed.
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2017 (12) TMI 886
Rate of tax - sale of construction machinery, treating them as capital goods - inter-state sale - vires of Section 2 (11) of the TNVAT Act, 2006 - principles of Natural Justice - Held that: - the first respondent was bound to consider the objections filed by the petitioner, and pass a speaking order. It would be incorrect on that part of the first respondent to state that, merely because, vires of Section 2 (11) has been upheld, the petitioner will not heard on merits and are required to remit the differential rate of tax. If this is the interpretation given by the first respondent, it would run contrary to the decision of the Division Bench, dated 05.04.2016, wherein, liberty was granted to file objections to revision notices. This liberty is not an empty formality. Therefore, the Assessing Officer, the first respondent is bound to consider the objections. In the instant cases, the petitioner specifically sought for an opportunity of personal hearing, which has not been afforded - The Division Bench, in several decisions has observed that, in the absence of specific prohibition under the statute, for affording an opportunity of personal hearing, the Assessing Officer could afford such personal hearing, as it would help the Assessing Officer to complete the assessment in a proper manner. The impugned orders have been passed in violation of the principles of natural justice - petition allowed - decided in favor of petitioner.
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2017 (12) TMI 885
Rectification of assessment order - whether the subject issue is an error, which could be rectified by the assessing officer invoking Section 55 of the TNGST Act and as to how the taxable turnover has to be computed? - Held that: - it cannot be stated that the power under Section 55 of the TNGST Act can be exercised only for the purpose of rectifying clerical mistakes or typographical mistakes. In the instant case, the mistake sought to be rectified is as to how the taxable turnover has to be computed. This undoubtedly is well within the jurisdiction of the power exercisable by the assessing officer under Section 55 of the TNGST Act. Thus, the respondent was justified in examining his power under Section 55 of the TNGST Act. Computation of taxable turnover - Held that: - the respondent has rightly held that the turnover has to be fixed for the whole of the year and the year means the financial year as defined under Section 2(t) of the TNGST Act. Petition dismissed - decided against petitioner.
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2017 (12) TMI 884
Condonation of delay of 1541 days in representation - reasons given for delay is that the returned papers were mixed up - Held that: - the Hon'ble Supreme Court, in Esha Bhattacharjee v. Raghunathpur Nafar Academy, [2015 (1) TMI 1053 - SUPREME COURT], has broadly culled out the principles of law to be considered in the matter of condonation and held that The persons chosen to act on behalf of the Managing Committee cannot take recourse to fancy and rise like a phoenix and move the court. Neither leisure nor pleasure has any room while one moves an application seeking condonation of delay of almost seven years on the ground of lack of knowledge or failure of justice. Plea of lack of knowledge in the present case really lacks bona fide. Following the guiding principles of Law, in the matter of condonation of delay, we find absolutely no sufficient cause, to condone the delay. That apart, it is also informed that the appeal has been filed beyond the statutory period, as provided for in the proviso to Section 38 of the then Tamilnadu General Sales Tax Act, 1959. Reference made to decision in the case of Commissioner of Customs & Central Excise v. Hongo India (P) Ltd., [2009 (3) TMI 31 - SUPREME COURT], where the Hon'ble Apex Court considered a question, as to whether, High Court has power to condone the delay, in presentation of a reference application, under unamended Section 35H(1) of the Central Excise Act, 1944, beyond the prescribed period, by applying Section 5 of the Limitation Act, 1963 and it was held that time limit prescribed u/s 35H(1) is absolute and unextendable u/s 5 Limitation Act. Since court has to respect the legislative intent, limitation cannot be extended u/s 5 of Limitation Act Delay cannot be condoned - appeal dismissed.
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