TMI Tax Updates - e-Newsletter
December 25, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Advances received against bank guarantee - services to be provided - It is more in the nature of a deposit - not liable to service tax - Tri

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Articles

1. Appels of revenue – tax effect limits for not filing as well as for withdrawing/ not pressing pending appeals of revenue is a very important decision to bring in result orientation and objectivity in litigation by revenue it must be followed at all forums.

   By: DEVKUMAR KOTHARI

2. Where purchase price fixed in first contract has been subsequently revised prior to importation of goods, then the Customs duty would be payable on revised price

   By: Bimal jain

News

1. Payment Revolution: Preparing for Participation (Shri R. Gandhi, Deputy Governor - December 22, 2015 - organized by National Payments Corporation of India (NPCi), Mumbai)

2. NBFCs: Medium Term Prospects (Shri R. Gandhi, Deputy Governor - December 21, 2015 - Summit organized by Confederation of Indian Industry, Mumbai)

3. Pre-2005 Banknotes can be exchanged upto June 30, 2016; in Identified Bank Branches and Issue Offices of RBI

4. Second Edition of the ‘Handbook of Statistics on Central Government Debt’released;One-Stop Source for all Central Government Debt Data

5. The Minister of State for Finance Shri Jayant Sinha Launches Guidance Material Forpost-Award Contract Management of PPP Concessions“Highways, Ports, And Schools”

Circulars / Instructions / Orders

Income Tax

1. 18/2015 - dated 23-12-2015

Applicability of Minimum Alternate Tax (MAT) on foreign companies for the period prior to 1.04.2015

Highlights / Catch Notes

Income Tax

• CIT Revises Assessment u/s 263 Due to AO's Inadequate Inquiry; Section 68 Proviso Applied Retrospectively.

  Case-Laws - AT : Revision u/s 263 - Addition u/s 68 - AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejudicial to the interest of the revenue - order of revision and additions confirmed - insertion of proviso to section 68 is retrospective. - AT
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• Early Payment of Deferred Sales Tax Discharges Liability; Section 41(1) Income Tax Act Not Applicable.

  Case-Laws - AT : Where the assessee, due to certain scheme, made premature payment of deferred sales-tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable - AT
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• AO Finds No Issues in Salary Payments; No Additions to Assessee's Income Despite Missing Individuals' Statements.

  Case-Laws - AT : Disallowance of salary payment - The AO had recoded the statement of six persons and no adverse inference had been drawn by him. The other four persons were not made available by the assessee as claimed by him that they left the job and are not traceable - No additions - AT
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• Unaccounted Purchases Justified by Profits from Unaccounted Sales Covering Initial Costs.

  Case-Laws - AT : Unaccounted purchase - Even if we consider the first purchase to have been made out of unaccounted income, the estimated profits from the unaccounted sales would be more than sufficient to justify the source. - AT
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• Shares Investment Account Treated as Long-Term Supports Deduction for Long-Term Capital Gains u/s 10(38.

  Case-Laws - AT : If the assessee has consistently treated the shares investment account as her investment for long-term purposes and has not shifted the stock in investment account to shares trading stock account or share derivatives account or vice versa deduction u/s 10(38) for long-term capital gains (LTCG) from sale of equity shares should be accepted - AT
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Customs

• High Court Dismisses Petition: Violation of Regulation 13(O) for Exporting on Behalf of Bogus Exporter.

  Case-Laws - HC : Violation of Regulation 13 (O) of Custom House Agents Licensing Regulations, 2004 - petitioner presented goods for export on behalf of fictitious/bogus exporter whom he cannot produce before the Customs Department though sufficient time was given - petition dismissed - HC
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• Authority Upholds Decision to Increase Import Value of Dyed Woven Fabrics from $0.70 to $1.05 Per Meter.

  Case-Laws - AT : Undervaluation of import of Dyed Woven Fabrics - rejection of declared price and enhancement of value from US$ 0.70 to US$ 1.05 per mtr. determined by the adjudicating authority is fully justified and liable to be upheld. - AT
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• Technical Knowhow Fee for "Instant Coffee" Plant Not Included in Import Value, Deemed Post-Importation Activity.

  Case-Laws - AT : Valuation - related parties - technical knowhow fee is for design, drawing and technical information provided to appellant by overseas supplier for setting up of "Instant Coffee" plant which is purely a post-importation activity - value cannot be enhanced - AT
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• Debate on Optical Fibre Cables Classification: Customs Tariff Heading 8544 vs. 9001. Exemption or 10% Duty? Larger Bench Review.

  Case-Laws - AT : Whether Optical Fibre Cables (OFC), to be used in Telecommunication, are classifiable under Customs Tariff Heading 8544 and eligible for exemption under Notification No. 20/2005 dt. 1.3.2005 or they would fall under Customs Tariff Heading 9001 leviable to basic Customs Duty at 10% under Notification No. 21/2002-Cus dt. 1.3.2002. - Matter referred to larger bench. - AT
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• CESTAT Rule 41 Lacks Provision for Stay on Revocation of Customs House Agent Licenses During Appeals Process.

  Case-Laws - AT : Revocation of CHA Licence - there is no provision for granting stay under Rule 41 of the CESTAT Procedure Rules, 1982 - AT
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• Appellants' Export Obligations Unmet Under EPCG License; No Extension Evidence After 10 Years, Demand Confirmed by Authorities.

  Case-Laws - AT : EPCG license - Non-fulfillment of export obligations - In fact till date there is nothing on record, even after a lapse of a period of about ten years, the appellants have not produced any evidence to show that the time for export was extended by JDFT authorities - demand confirmed - AT
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Wealth-tax

• Leasehold Interest Counts as Net Wealth: 95-Year Lease Deemed Ownership on Valuation Date Despite Legal Ownership by MIDC.

  Case-Laws - HC : Determination of net wealth - Inclusion of leasehold interest -Appellant certainly has an interest in the property for a period of 95 years. This is sufficient to hold that on the valuation date, this land belongs to the Appellant, notwithstanding the fact that the ownership in the land would belong to MIDC - HC
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Service Tax

• Service Tax on Advances for Unrendered Services Disputed; Deemed a Deposit, Not Taxable.

  Case-Laws - AT : Demand of service tax on advances received - services are yet to be provided - The advance is only an amount given as kind of earnest money and for which the appellant gives a bank guarantee to the customers of equal amount. It is more in the nature of a deposit - not liable to service tax - AT
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Central Excise

• Refund Granted: Duty Paid Under Protest Not Passed to Consumers, No Unjust Enrichment Found During Adjudication Proceedings.

  Case-Laws - SC : Refund - Unjust enrichment - duty was paid under protest during the pendency of the adjudication proceedings - there was no question of passing on this element of duty to consumers/buyers. - Refund cannot be denied - SC
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• 100% EOU can pay excise duty at debonding with Cenvat credit; must receive "No Due Certificate" for exit.

  Case-Laws - HC : 100% EOU - payment of duty at the time of debonding - petitioners are permitted to pay the excise duty foregone from the legally availed Cenvat credit account. Upon the excise duty being paid through the Cenvat credit account, the second respondent shall issue “No Due Certificate” to the petitioners for debonding out of 100% EOU Scheme. - HC
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• Court Rules Assessee Can't Demand Cross-Examination of Informers if Statements Aren't Used to Support Duty Demand.

  Case-Laws - HC : Duty demand - The assessee cannot insist upon cross-examination of all the informer, especially the statement of whom may not be relied upon by the Department for maintaining the demand. - HC
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VAT

• Refund Officer's Delay Breaches Law; Petitioner Wrongly Labeled Defaulter u/s 30(2), Causing Undue Hardship.

  Case-Laws - HC : By not making refund within time limit prescribed by law i.e. within three months, the Refund Officer has violated law and, therefore, when the department itself made the direct credit as late as on 28.03.2013, the present officer has treated him as defaulter within the meaning of section 30 (2) forgetting that the Refund Officer had himself violated the law. Thus, the Refund Officer as well the concerned Assistant Commissioner both have put the petitioner to a double whammy. - HC
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• High Court Upholds OHA Decision on Denied Input Tax Credit Under DVAT Section 9(1) for Bogus Transactions.

  Case-Laws - HC : Benefit under Section 9(1) of the DVAT for input tax credit - transactions involving the two firms were sham/bogus transactions - validity of order of the Objection Hearing Authority (OHA) to remand back the cast of AO - HC refused to interfere into the matter.
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Case Laws:

• Income Tax

• 2015 (12) TMI 1243
  TDS u/s 194H - Disallowance of sales promotion expenses - non-deduction of TDS by invoking the provisions of sec.40(a)(ia) - Held that:- The issue is to be decided by the Assessing Officer in the light of the Special Bench decision of the Tribunal in the case of Merilyn Shipping and Transports vs. Addl. CIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) wherein it was held that "provisions of section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during the previous year, without deduction of TDS. In view of the above, we remit this issue to the file of the AO for fresh consideration. At this stage, we refrain from deciding the issue of sec. 194-H of the Act, to these payments. TDS u/s 194A - Disallowance u/s.40(a)(ia) - non-deduction of TDS on discount/factoring charges paid to M/s. Canbank Factors Ltd. - Held that:- Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) and judgment of CIT vs. M/s. Vector Shipping Services (P) Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year in respect of these payment. However, the assessee has not brought on record, the details of outstanding expenses or schedule of sundry creditors showing whether the impugned amount is outstanding at the end of the close of the previous year relevant to the assessment year either in the name of the party or outstanding expenses. Hence, in the interest of justice, we are remitting the issue back to the file of the Assessing Officer with direction to verify the claim of the assessee and the assessee shall place necessary evidence in support of his claim. Depreciation on aluminium cans and crates at 50% - Held that:- As per Index 1 to item (4), containers made of glass, plastic as refills entitled for depreciation at 50%, where the assessee claimed depreciation at 50% on aluminium cans. Being so, it is not fit under that category as mentioned in Index I to item No.4 of I.T.Rules. As such, the lower authorities are justified in restricting depreciation at 15% on w.d.v. Accordingly, this ground is dismissed.

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• 2015 (12) TMI 1242
  Validity of reopening u/s.148 beyond 4 years - disallowance of royalty payment and recomputation u/s.80HHC - Held that:- Reopening is permitted only if the AO has the satisfaction that the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return u/s.139 or in response to a notice issued under sec.142(1) or sec.148 or to disclose fully and truly all material facts necessary for the purpose of assessment, as held by the Madras High Court in the case of CIT v. Eco Media (P) Ltd. (2012 (6) TMI 385 - MADRAS HIGH COURT ). Further, there was no finding by the AO to record anywhere his satisfaction to believe that income chargeable to tax had escaped assessment on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. Notice u/s.148 of the Act was issued beyond the period of 4 yeqrs from the end of the relevant assessment year is wholly unsustainable as held by the Jurisdictional High Court in the case of CIT v. Schwing Stetter India P. Ltd. (2015 (6) TMI 497 - MADRAS HIGH COURT ). The same view was fortified by the judgment of the Supreme Court in the case of CIT v. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). Being so, when the AO framed the original assessment u/s.143(3) of the Act after considering the materials on record and when there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in all the issues raised by the AO for the purpose of reopening of assessment, notice u/s.148 of the Act along with consequential proceedings are to be quashed. - Decided in favour of assessee.

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• 2015 (12) TMI 1241
  Revision u/s 263 - Addition u/s 68 - whether insertion of proviso to section 68 is retrospective - Held that:- When the AO chose not to make any addition by exercising his discretion as per the mandate of section 68, then the ld. CIT in the instant cases was not obliged to hold against the assessees. - But in the present case, AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejudicial to the interest of the revenue We are concerned with a case in which the AO did not discharge the burden cast on him as regards the framing of assessment. In such circumstances, the ld. CIT stepped in to check his action. All the aspects of the assessment are required to be examined by the AO alone and no other authority. But if such an examination has not been done which has rendered the assessment order erroneous and prejudicial to the interest of the Revenue, then it is not only the right but the duty of the CIT to revise such an erroneous assessment, which is prejudicial to the interest of the revenue. This is what has exactly happened in this case. If the contention of the ld. AR is accepted and taken to a logical conclusion, it will amount to rendering the provisions of section 263 otiose. We, therefore, refuse to accept this contention. After making an elaborate analysis of the nature of amendment, memorandum explaining the provisions of the Finance Bill, 2012, and legal position as emanating from various judgments from the Hon'ble Summit Court governing the retrospective or prospective effect of an amendment, it has been held that insertion of proviso to section 68 is retrospective. As such, this argument, being devoid of any merit, deserves to meet the fate of dismissal

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• 2015 (12) TMI 1240
  Penalty u/s. 271(1)(c) - Held that:- As considered by the Hon'ble Supreme Court in the case of Mak Data (P) Ltd., Vs. CIT [2013 (11) TMI 14 - SUPREME COURT], there cannot be any surrender of income with a view to avoid litigation by peace and to channelise energy and resources towards productive working and to make amicable settlement with the Income Tax Department. Statute does not recognize those types of defenses in Explanation-I, Section 271(1)(c) of the Act. It is trite law that voluntary disclosure does not release assessee from mischief of penal proceedings. Law does not provide that when assessee returns a voluntary disclosure of his concealed income, he has to be absolved from penalty. As already stated, the penalty is levied with reference to original return of income and not with reference to the assessment made consequent to the disclosure by assessee. In view of this, uphold the order of penalty for the above reasons. - Decided against assessee.

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• 2015 (12) TMI 1239
  Addition made on account of suppressed production and sale - Held that:- The addition in the hands of assessee was made on the basis of erratic consumption of electricity vis-à-vis production on the basis of Article written by Dr. N.K. Batra, Professor, IIT, Kanpur. No evidence was found against the assessee of having clandestinely removed the goods without payment of Excise duty in the instant assessment year, though in assessment years 2006-07 to 2008-09, the Commissioner of Central Excise and Customs, Aurangabad had passed an order on evasion of Excise duty by the steel manufacturers in Jalna District, in turn found by the DGCEI for the said year. However, the said addition was deleted by the Third Member of CESTAT. Further, in assessment year 2009-10, the Commissioner of Central Excise and Customs has passed an order on the basis of consumption of electricity, which in turn, was deleted by the Division Bench of CESTAT. The Tribunal in assessee’s own case had heard similar issue in cross appeals relating to assessment years 2006- 07 to 2008-09 had deleted the addition, in the absence of any evidence found by the Income–tax Department against the assessee for the alleged suppressed production and sales and held that there was no merit in the aforesaid addition worked out on the basis of monthly variation in consumption of electricity. Further, in assessment year 2009-10, the Tribunal had also deleted the addition, in view of the physical verification having been carried out by the Excise authorities, wherein it was found that there was in fact higher consumption of electricity than the report of Dr. Batra. In the instant assessment year i.e. 2010-11, there is no order of Commissioner of Central Excise and Customs and there is no evidence of any clandestine removal of goods without payment of Excise duty, found against the assessee. In the entirety of the above said facts and circumstances, there is no merit in any addition in the hands of assessee, in view of the finding of Tribunal in assessee’s own case - Decided in favour of assessee.

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• 2015 (12) TMI 1238
  Penalty u/s. 271(1)(c) - AO was of the firm belief that the stock of shares was nothing but investment and the investment was made out of borrowed funds, thus disallowed the entire claim of expenditure and the income from business was assessed at Rs. Nil. - CIT(A) deleted the penalty - Held that:- Applying the ratio of the Hon'ble Supreme Court in the case of Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT ] on the facts of the present case as mentioned elsewhere on the date of the filing of the return of income, the assessee had assessment order for A.Y. 2008-09 wherein business of trading in shares and securities was accepted by the Revenue authorities even if that order was made u/s. 143(1) of the Act. Till date neither the assessment of A.Y. 2008-09 has been reopened nor any revisionary action u/s. 263 of the Act have been taken by the Commissioner. Considering all these facts in totality, we do not find any reason to interfere with the findings of the Ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed. - Decided in favour of assessee.

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• 2015 (12) TMI 1237
  Treatment of income under the head income from house property - Held that:- This issue has been decided against the assessee and in favour of the Revenue by the Tribunal for assessment years 1999-2000, 2000-2001 and 2001-2002. Disallowance made u/s 14A of the Act read with rule 8D - Held that:- This issue is no more res integra as the applicability of Rule 8D has been held to be prospective from assessment year 2008-2009 by the decision of the Hon'ble High Court of Bombay in the case of Godrej & Boyce Ltd. Mfg. Co. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. We, therefore, restore this issue to the file of the A.O. to be decided afresh without applying Rule 8D after giving a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Treatment of premature repayment of sales tax loan at net present value as revenue receipt chargeable for tax - Held that:- Hon'ble High Court of Karnataka in the case of CIT v. McDowell & Co. Ltd. [2014 (11) TMI 272 - KARNATAKA HIGH COURT] has laid down the ratio that where the assessee, due to certain scheme, made premature payment of deferred sales-tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable. A similar view was taken by the Special Bench of the Tribunal in the case of Sulzer India Ltd. (2012 (8) TMI 203 - ITAT MUMBAI). - Decided in favour of assessee. Denial of deduction claimed u/s 35D - Held that:- The impugned assessment year, i.e., assessment year 2005-2006 is the last assessment year, i.e., the tenth year of claim of deduction, which has been denied since the Steel Unit has been sold by the assessee. On a perusal of section 35D shows that the Act is silent in the case when a unit is sold. Section 35D(5) of the Act refers to the transfer before the expiry of the period of 10 years to another Indian company in a scheme of amalgamation and section 35D(5A) refers to the transfer before the expiry of the period in a scheme of demerger. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for declining the claim of the assessee. - Decided in favour of assessee.

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• 2015 (12) TMI 1236
  Validity of assessment order u/s. 158BD r.w.s. 158BC r.w.s. 143(3) - as per CIT(A) satisfaction note is belated which would not confer jurisdiction of the assessing officer to initiate the proceedings u/s. 158BD - Held that:- The Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] has made a strong observation that the Revenue has to be vigilant in issuing notice to the third party u/s. 158BD immediately after the completion of assessment of the searched person. The facts of the case discussed hereinabove defy the observations of the Hon'ble Supreme Court mentioned hereinabove. As mentioned elsewhere, the block assessment in the case of searched person i.e. M/s. Tips Industries Ltd., was completed on 28.9.2001. The Hon'ble Supreme Court says that the notice u/s. 158BD should be immediately issued after the completion of the assessment of the searched person, but in this case the notice was issued and served on 5.9.2005, almost 4 years after the date of the completion of the assessment of the searched parties. In our considered opinion, this service of notice cannot be considered to be immediately after the completion of the assessment of the searched person and is contrary to the observations of the Hon'ble Supreme Court (supra). Also see BHARAT BHUSHAN JAIN AND OTHERS case [2015 (1) TMI 705 - DELHI HIGH COURT] wherein a delay ranging between 10 months to 1½ years was not accepted. Thus we decline to interfere with the findings of the Ld. CIT(A). The Ld. CIT(A) has rightly annulled the impugned assessment order. As the impugned assessment order has been annulled, we do not find it necessary to dwell into the merits of the case. - Decided against revenue

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• 2015 (12) TMI 1235
  Disallowance of salary payment - Held that:- The assessee was asked to furnish details of employees on 07/12/2010, which was submitted with name, address and salary paid, to the Assessing Officer. He also explained the work done and duties assigned to them. It is undisputed fact that the payment of salary was made in cash. The business of the assessee as such that local people are required to make available the details of land available for sale, owners of the land, market rate of that area, other factual/title information to make agreement with support of the advocate etc. The assessee had disclosed more than Rs. one crore returned income on which he had claimed salary expenditure of Rs. More than 19 lacs, which is very nominal. The Assessing Officer up to 27/12/2010 had recoded the statement of six persons and no adverse inference had been drawn by him. The other four persons were not made available by the assessee as claimed by him that they left the job and are not traceable. The time given by the Assessing Officer is very short. The ld CIT(A) had not asked the assessee to produce the remaining employees for verification at the time of appellate proceedings. Therefore, we do not find any reason to confirm the addition to this head - Decided in favour of assessee. Disallowance of commission expenses on estimate basis - Held that:- The assessee furnished the details of brokerage vide letter dated 17/12/2010 before the Assessing Officer. However, he asked the assessee to produce the four brokers on 27/12/2010 for verification. It is a fact that time given by the ld Assessing Officer was not sufficient. However, the assessee produced two brokers for verification. The details of brokerage have been submitted alongwith letter dated 07/12/2010. The details furnished before the Assessing Officer showed that they are villagers of nearby area who provided the services to make available the land in that area. It is undisputed fact that payments were made in cash on self made vouchers, the ld Assessing Officer had not brought on record any adverse evidence that brokerage payment is not genuine. He simply disallowed the expenses on estimate basis. Therefore, we do not find any reason to confirm the disallowance out of brokerage expenses.- Decided in favour of assessee. Disallowance of various expenses on estimate basis - Held that:- The assessee’s business is as such that no pakka vouchers can be collected from the recipients of payments. The ld Assessing Officer also had not verified the details given by the assessee and also he sought the information on 27/12/2010 and completed the assessment on 31/12/2010 hurriedly. It is difficult to provide the full particulars of expenses. It is also a fact that non business purposes, the expenditure can be ruled out in absence of third party evidence. The addition confirmed by the ld CIT(A) appears to be higher side. Therefore, in the interest of justice, we consider reasonable disallowance out of travelling expenses, staff welfare expenses, telephone expenses, festival expenses, general expenses and guest house expenses @ 10% out of total expenses claimed. We do not require to be disallowed any expenses out of legal fees for registry, advertisement expenses, printing and stationary expenses, land maping and preparing expenses. Thus we confirm the addition of Rs. 14,000/- out of total disallowances made by the ld CIT(A) at Rs. 5,62,900/- - Decided partly in favour of assessee. Addition on sale of agricultural land as income from business as against agricultural income claimed by the assessee - Held that:- The intention of the assessee was to get capital appreciation on purchase and sale of agricultural land. The assessee had shown separately brokerage income earned on trading of land as business income. All the purchases and sales of the agricultural land beyond 8 km from the municipal area had been shown in the fixed assets as investment not in stock in trade. The assessee’s case has scrutinized continuously and in past also these additions were made by the Assessing Officer but the Coordinate Bench has set aside the issue to the Assessing Officer. It appears that the Coordinate Bench also not accepted the revenue’s plea. Further in A.Y. 2007-08, the assessee had shown exempted capital given of Rs. 83,11,740/-, which has been accepted by the Assessing Officer himself as the assessee has drawn attention on page No. 31 to 33 of paper book wherein copy of assessment order for A.Y. 2007-08 enclosed which shows that there is no addition made by the Assessing Officer under this head but during the year under consideration, the ld Assessing Officer held the same exempted income as business income. The rule of res judicata is not applicable in the case of income tax proceedings but the Hon'ble Supreme Court in the case of Radhaswami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME Court] has held that rule of consistency is to be followed to settle the repeated issue. The facts and circumstances of the case are identical to A.Y. 2007-08, therefore, we do not find any reason to hold exempted agricultural capital gain as adventure in nature of trade i.e. business income. The book entries are to be examined for deciding the nature of transaction. The assessee had shown these lands under the head fixed assets, therefore, the case law referred by the assessee are squarely applicable in the case of assessee. Accordingly, we reverse the order of the ld CIT(A) on this ground. - Decided in favour of assessee. Assessing the agricultural income as income from other sources - Held that:- The assessee regularly had declared the agricultural income not only in the preceding year but subsequent year, which has been accepted by the Assessing Officer. The assessee has filed the reply during the course of assessment proceedings vide letter dated 30/12/2010 and copy khasra girdawari vide letter dated 23/12/2010 to prove that the assessee had carried out agricultural activity on that land. The ld Assessing Officer in assessment year 2006-07, 2007-08 and 2009-10 has been accepted the assessee’s agricultural income. The ld Assessing Officer also had not brought out any evidence to substantiate the finding made by him that the assessee had not carried out any agricultural activity on it. Therefore, we allow the assessee’s ground of appeal and the Assessing Officer is directed to treat the agricultural income as such.- Decided in favour of assessee.

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• 2015 (12) TMI 1234
  Unaccounted purchase - CIT (A) directed the AO to adopt 6% as the profit arising out of the transactions reflected in the loose sheets, found at the time of survey of assessee’s premises, thereby deleting the balance addition made by the AO - Held that:- If we take a presumption that the items in the loose sheets reflected purchases made by the assessee which were not recorded in its books, then definitely on the date of survey there should have been a stock variation. Items which were purchased by the assessee or which were alleged to have been purchased by the assessee were the same items which the assessee was manufacturing and trading. Hence in the nature of the trade, we cannot presume that assessee held all the purchased stock with it without effecting any sales. Since there was no discrepancy in stock, obvious conclusion is that whatever was purchased was sold by the assessee. As to the argument of the Ld. DR that stock might have been kept elsewhere, there is nothing on record to suggest any place of business for the assessee other than the one which was surveyed. Thus to consider the whole of the purchases as unexplained investment was incorrect. Assessee was continuously purchasing and selling and therefore the preponderance of probability is that successive purchases would have been financed by the sales of the earlier purchases. In such situation at the most what we can consider as unexplained investment is the first purchase. All the purchases were in the month of October, 2006 and the first purchase was on 03.10.2006. Assessee would have sold these and used such funds for the next purchase. In such a situation, in our opinion, what the assessee could have earned is only the profits from such purchases. Even if we consider the first purchase to have been made out of unaccounted income, the estimated profits from the unaccounted sales would be more than sufficient to justify the source. Against the gross profit rate of 2 to 3% suggested by the assessee, based on a decision of Third Member bench of Ahmedabad Tribunal in the case of ITO v. Gurubachansingh J. Juneja [1995 (8) TMI 83 - ITAT AHMEDABAD-C ], CIT (A) had taken a higher rate of 6%. We find that in the circumstances of the case, directions of the CIT (A) were fair. We do not find any reason to interfere. - Decided against revenue

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• 2015 (12) TMI 1233
  Disallowance of commission payment under section 40(a)(i) to non-resident - whether there was no agreement to suggest the payment of sales commission? - Held that:- The assessee has not discharged the burden cast upon it to show the nature of services rendered by non-resident agent. If there are services rendered by non-residents, who have no permanent establishment in India or have any business connection in India, by virtue of which the payment of commission accrued or arose in India then, it is exempted, if the assessee is able to prove that the services were rendered by those non-residents abroad. In the present case, the assessee has not established the facts on record that the non- resident has rendered services abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or the correspondence took place between the parties. Without examining these details, we are 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 Assessing Officer with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad.

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• 2015 (12) TMI 1232
  Disallowance of commission - Held that:- In the absence of proof in support of the services rendered by the commission agent, no commission can be allowed as a deduction. Therefore, we dismiss the appeal filed by the assessee and allow the appeals filed by the Revenue. - Decided against assessee.

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• 2015 (12) TMI 1231
  Levy of penalty u/s. 271(1)(c) - Assessee was not entitled to adjust the dividend income against the business loss - CIT(A) deleting addition - Held that:- CIT(A) while deleting the penalty has given a finding that Assessee had disclosed all the relevant facts regarding the computation of income, the income from business and the dividend earned on shares in the return of income and none of the particulars furnished by the Assessee were found to be false or inaccurate. He has further noted that the issue is debatable as the matter had traveled up to ITAT, again set aside to the file of A.O and that the question of law being admitted by Hon'ble Gujarat High Court shows that the issue is debatable. These findings of ld. CIT(A) have not been controverted by Revenue. We further find that on merits, on identical issue as to whether the dividend income can be set off against the speculation loss, the Hon'ble Gujarat High Court in the case of CIT vs. Sphere Stock Holding Pvt. Ltd. (2011 (8) TMI 1124 - GUJARAT HIGH COURT) has upheld the view of ld. CIT(A) as well as Tribunal that the irrespective of provisions contained in Section 56 of the Act and Explanation to 73, loss should be adjusted against such business income. In view of the aforesaid facts and in the absence of any contrary binding decision brought to our notice by Revenue, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. - Decided in favour of assessee.

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• 2015 (12) TMI 1230
  Addition on account of excess depreciation - CIT(A) deleted the addition - Held that:- We find that the assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee's case as decided by the ITAT. Respectfully following the order of the Tribunal in assessee's own case, we are inclined not to interfere with the order of Ld. CIT(A). - Decided against revenue Addition made on account of payment of gratuity - CIT(A) deleted the addition - Held that:- Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account, it can be inferred that the expenditure has actually been incurred by assessee. Hence, we confirm the order of Ld. CIT(A). - Decided against revenue

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• 2015 (12) TMI 1229
  Addition made on account of excess depreciation claimed by assessee - AO has disallowed the depreciation of assessee by treating the transaction as sale of building and plant & machinery inbuilt therein - CIT(A) deleted the addition - Held that:- The assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee’s case as decided by the ITAT to held DR could not produce any evidence in support of the contention that the space sold by the assessee was inclusive of plant and machinery. Respectfully following the order of the Tribunal in assessee’s own case, we are inclined not to interfere with the order of Ld. CIT(A) - Decided against revenue Addition on account of payment of gratuity - CIT(A) deleted the addition - Held that:- Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account, it can be inferred that the expenditure has actually been incurred by assessee. Hence, we confirm the order of Ld. CIT(A).- Decided against revenue

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• 2015 (12) TMI 1228
  Revision u/s 263 - unverified purchases - Held that:- A.O., while completing the assessment under section 143(3), has not verified the details of purchases adopted by the assessee and to that extent, the Ld. CIT's order under section 263 holding assessment order to be erroneous and prejudicial to the interests of the Revenue also has been upheld by the ITAT. Further, in the final paragraph of its order, this Tribunal has held that the Ld. CIT was right in directing the A.O. to re-do the assessment as the A.O. in the original assessment had not made any enquiries as to the genuineness of the purchase figure or to the validity of the assessee's separate debit of transport expenditure under the Head "Direct Expenses" i.e., Schedule-11 to the P & L account and further that the A.O. has not applied his mind by verifying from the Sales Tax authorities and failed to ascertain correct figures and hence, the order of the assessment passed by the A.O. without making necessary enquiries on such important points connected with assessment would be erroneous and prejudicial to the interests of the Revenue. From these observations of the Tribunal, it is evident that this Tribunal has held assessment order to be erroneous and prejudicial to the interests of the Revenue and has upheld the order of the Ld. CIT under section 263 in directing the A.O. to re-do the assessment. Though, there is a finding by the Ld. CIT in his order that the A.O. has not made proper enquiries on the issue of inflated purchases, in the penultimate para 4, he has directed the A.O. to re-do the assessment in accordance with his directions which is clearly in contradiction to his earlier finding. The Tribunal has not given any finding on this part of the order of the Ld. CIT. This, in our opinion, is a mistake apparent from record. In view of the same, we modify the order of this Tribunal by adding the following sentences to the end of paragraph-19. "However, the direction of the Ld. CIT in paras 4 and 5 are set aside and the A.O. is directed to re-do the assessment after verification of the details relating to the issue and after affording reasonable opportunity of hearing to the assessee."

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• 2015 (12) TMI 1227
  Profit earned on sale of share - long-term capital gains OR business income - Held that:- There has been some deviation to the contentions placed by learned authorised representative in relation to consistent treatment of transactions of purchase/sale of shares under the head "shares investment account". There is no dispute that the books of account are audited under section 44AB of the Act duly certified by the chartered accountant and showing the total stock of equity shares held by the assessee in trading and profit and loss account and has been treated as closing stock and no information is placed on record that whether such stock has been converted into capital account or vice versa. In these circumstances in order to verify the submissions/claim of the assessee of capital gains from shares held in shares investment account in the light of our working as well as questions raised, it will be just and proper to remit this issue back to the file of the Assessing Officer before whom the assessee will place all records. If the Assessing Officer is satisfied that the assessee has consistently treated the shares investment account as her investment for long-term purposes and has not shifted the stock in investment account to shares trading stock account or share derivatives account or vice versa then the Assessing Officer will accept the claim of the assessee of claiming deduction under section 10(38) of the Act for long-term capital gains from sale of equity shares and if contrary results are discovered by the Assessing Officer from the records made available by the assessee then such total income from the transaction of purchase/sale of shares in all the three sub-groups account shall be treated as business income - Decided in favour of assessee for statistical purposes.

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• 2015 (12) TMI 1226
  Unexplained capital gain ans sale proceeds - Held that:- Once Smt. Shardaben R. Patel has recognised the sale consideration by computing capital gain on transfer of the two flats and the return was filed before the search, then it has been demonstrated that source of the funds in purchasing two fixed deposits is the transfer of the two flats by Smt. Shardaben R. Patel. The assessee has discharged the onus before us also, and therefore, no addition can be made in purchase of fixed deposits. We allow this ground of appeal. Addition of Rs. 9,80,000 which is 50 per cent. of the sale proceeds along with interest considered in the hands of the assessee is deleted.

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• 2015 (12) TMI 1225
  Cognizance of section 153C - no satisfaction was recorded by the AO of the searched persons authorizing the AO of the assessee to issue notice under section 153C - Held that:- The satisfaction note in other cases as well as recorded in the case of assessee are verbatim same except the assessment years. A perusal of the satisfaction note would indicate that it is totally vague. It does not disclose what is the material found during the course of search, which belonged to the assessee. There is no reference to any such documentary evidence. - Decided in favour of assessee.

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• 2015 (12) TMI 1224
  Addition under section 36(1)(iii) - interest paid on loan borrowed during the year under consideration - CIT(A) deleted the addition - Held that:- The proviso to sec.36(1)(iii) specifically deals with two situations first there should be acquisition of an asset and secondly such acquisition is for extension of existing business. In the instant case expenditure have been incurred for some repairs and replacement works which included replacement of flooring and lift and such replacements are for the smooth conduct of the existing business and not for the extension thereof and even otherwise that can not be construed as Extension of building because it is admitted fact that the Assessee has not constructed or added some new rooms or restaurants or some other new facility and even otherwise the Ld. A.O. has not disputed the nature of work undertaken or has made any case that any new facility has been constructed, there fore the work carried by the Assesses can not be treated as extension of existing business. Contention of Ld D.R that the work carried out by the Assessee was certainly in the nature of extension of business because the value of business and property would be increased and it amounts to capital expenditure having no essence and not tenable under the facts and circumstances as demonstrated and evident. There fore, taking all facts and circumstances into consideration, We are of the opinion that the work undertaken by the appellant does not include acquisition of an asset for the purpose of extension of its business therefore, proviso to sec.36 (1)(iii) is not applicable in this case and the addition is not justified. - Decided in favour of assessee.

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• Customs

• 2015 (12) TMI 1203
  Violation of Regulation 13 (O) of Custom House Agents Licensing Regulations, 2004 - petitioner failed to produce the exporter as per terms of Regulation 13 (o) of CHALR, 2004 - petitioner presented goods for export on behalf of fictitious/bogus exporter whom he cannot produce before the Customs Department though sufficient time was given for same time and again - Held that:- It is a case of clear violation of Clause 6 of Regulation No.13 of CHALR, 2004. The petitioner will not get any help from clause 6 of Circular No.09/10 of the Board. The respondent had not committed any mistake in passing the impugned order with holding the license of the petitioner and petitioner had admitted in ground 6.10 that exporter is involved in bogus and illegal activies and he was not aware of the previous or future transactions of the exporter. The petitioner had further admitted that original exporter had vanished and is absconding and it cannot be said that powers under Regulation 21 could not be exercised. - Decided against Appellant.

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• 2015 (12) TMI 1202
  Undervaluation of import of Dyed Woven Fabrics - denial of availment of DFIA licence for clearance of the goods - confiscation and imposition of fine and penalty - Held that:- appellant is engaged in trading of imported fabrics and imported “Polyester Dyed Woven Fabrics” from China. Appellant’s contention is that contemporaneous imports relied by Revenue in the case of Bill of Entry No.6800547 dt. 11.5.2012 of M/s.ICON Fibers and Fabrics P. Ltd., Mumbai is not comparable. In this regard, we find that the impugned goods and the comparable goods were originated from China and shipment made from M/s.Shaoxing Mina Textile Co. Ltd., China in and around the same time and the date of shipment of both consignments are dt. 29.10.2011 and 11.11.2011 respectively. The appellant is also a trader and purchased the goods from supplier who is also a trader which is similar to evidence relied by Revenue. We find that appellant failed to produce any evidence of purchase order and terms and conditions of sale and manufacturer s invoice before the Commissioner of Customs. Appellants had relied various Bills of Entry and invoices in the form of additional evidence submitted before the Tribunal of import of Polyester Fabrics. In this regard, we find that appellant submitted written submissions to SCN before the adjudicating authority and also appeared for the personal hearing and failed to substantiate their claim during the adjudication proceedings. Therefore, we do not find any force in appellant relying these documents at this juncture. On the valuation of the goods based on contemporaneous imports, we rely Hon'ble Supreme Court judgement in the case of CC Mumbai Vs ShiBani Engg. System (1996 (8) TMI 106 - SUPREME COURT OF INDIA). - In the case of CC Vs Prodeline India Pvt. Ltd. [2006 (8) TMI 186 - SUPREME COURT OF INDIA] wherein the Court has clearly held that Revenue is bound to prove the declared price is not true value and should bring on record any evidence of identical goods/similar goods imported at higher price. In the absence of any valid documents by the appellant it is evident that declared price of US$ 0.70 per mtr. is not a normal price and the same cannot be considered as transaction value. We find that adjudicating authority correctly determined the value under Rule 4(3) of CVR 2007 and taken the lowest contemporaneous price of US$ 1.05 per mtr. instead of US$ 2.36/mtr of contemporaneous import was available. Therefore, respectfully following the ratio of above two decisions, we find that rejection of declared price and enhancement of value from US$ 0.70 to US$ 1.05 per mtr. determined by the adjudicating authority is fully justified and liable to be upheld. Consequently, the confiscation of the seized goods under Section 111 (m) and demand of differential duty of Rs. 69,61,352/- on the re-determined value under Section 28 of Customs Act is upheld There was no allegation made in the SCN for the denial of benefit of DFIA Licence or any misuse of DFIA licene for clearance of the goods. Therefore, we hold that appellants are entitled to utilize DFIA licence for clearance of the said goods. Accordingly, we allow DFIA benefit for clearance of the said goods. - impugned order is upheld but for the reduction in RF and penalty and allowing DFIA benefit - Decided partly in favour of assessee.

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• 2015 (12) TMI 1201
  Valuation - related parties - Import of goods at concessional rate of duty against EPCG Licence - Inclusion of Technical Knowhow fee - Invocation of extended period of limitation - Held that:- technical knowhow fee is for design, drawing and technical information provided to appellant by overseas supplier for setting up of "Instant Coffee" plant which is purely a post-importation activity and not related to imported goods. As held by Hon'ble Supreme Court in the above case, the import components procured from the supplier only 22% on the total value. As regards Revenue's relying the Hon'ble Supreme Court judgement in the case of CC Ahmedabad Vs Essar Gujarat Ltd. (1996 (11) TMI 426 - SUPREME COURT OF INDIA), we find that said apex court judgement is distinguishable on facts for the reason that in the said case, licensing fee stipulates a condition for supply of plant and machinery which is not the case in the present appeal. Following the Hon'ble Supreme Court judgment (supra) and the final order of Tribunal in the case of Godrej Agrovet Ltd. (2015 (11) TMI 1025-CESTAT Chennai), we hold that technical knowhow of US$ 1,30,000 is not addable to the value of imported goods. We set aside the demand on merits. Correspondingly, the imposition of redemption fine and penalty is also set aside. - Decided in favour of assessee.

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• 2015 (12) TMI 1200
  Classification of Optical Fibre Cables used in Telecommunication - exemption under Notification No. 20/2005 dt. 1.3.2005 - Held that:- Since there are judgments of differing opinions, Our differing view is based to a significant extent on the Technical books/Literature, the benefit of which was not available to the bench in the case of Reliance Communications Infra Ltd case or in Optel Telecommunication Ltd. Therefore in our opinion, the matter needs to be referred to a Larger Bench of the CESTAT for resolving the dispute. At this stage we find that other issues such as confiscability and penalties would depend on the decision regarding classification. Therefore we do not propose to take a view on these issues till the larger question of classification is decided. - Registry is directed to place the matter before the Hon ble President CESTAT for constitution of a Larger Bench to decide the following Question of Law which arises in the present case:- Whether Optical Fibre Cables (OFC in short) imported by Vodafone Group of Companies and used in Telecommunication are classifiable under Customs Tariff Heading 8544 and eligible for exemption under Notification No. 20/2005 dt. 1.3.2005 or they would fall under Customs Tariff Heading 9001 leviable to basic Customs Duty at 10% under Notification No. 21/2002-Cus dt. 1.3.2002. Matter referred to larger bench.

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• 2015 (12) TMI 1199
  Demand of CVD - Detention of goods - Held that:- On a perusal of the appeal book, the appellants have enclosed the Customs receipt dt. 13.8.2015 of predeposit of Rs. 6,34,162/- for both the appeals. Therefore, appellants have duly complied with amended provisions of Section 129E of the Customs Act in so far as these two appeals are concerned. Therefore, we do not find any valid reason for detaining live consignments of 2418 monitors for realizing arrears of revenue pertaining to these appeals. Accordingly, we direct the Revenue to release the goods detained under detention order dt. 1.12.2014 subject to payment of customs duty on the 2418 monitors if not paid already. - disputed CVD amount involved in all the three appeals is more than Rs. 1 crore and has recurring effect as regular imports are being done, accordingly early hearing allowed - Decided in favour of assessee.

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• 2015 (12) TMI 1198
  Revocation of CHA Licence - Held that:- under Rule 41, this Tribunal has limited power to exercise and pass any order to give effect in relation to its order or to prevent abuse of its process order to secure end of justice. It provides that the Tribunal can only pass miscellaneous order in respect of all the order which have already been passed or to prevent abuse of its process to secure the ends of justice. In case of revocation of CHA Licence of CHA, passing stay order does not fall within the four corners of Rule 41. Therefore it is beyond the jurisdiction of the Tribunal to pass stay order in a case wherein CHA Licence was revoked by the Adjudicating Authority. Moreover passing stay order from operation of impugned order will be as good as allowing the appeal and CHA Licence will get restored. This Tribunal in case ofM.P. Agro Vs. CC [2014 (12) TMI 859 - CESTAT MUMBAI] has held that there is no provision for granting stay under Rule 41 of the CESTAT Procedure Rules, 1982. We are therefore of the view that stay order of this Tribunal could not be passed under Rule 41 particularly in case of revocation of CHA licence - Stay denied.

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• 2015 (12) TMI 1189
  EPCG license - Non-fulfillment of export obligations for the second block period - extension of time from the JDFT - Held that:- In spite of the efforts made by the appellant, the period does not stand extended by the JDFT authorities. They have also observed that they failed to note the EPCG licence No. on export documents and failed to furnish details of exports done during the block period within 30 days of completion of the block period. They did file a statement of exports to JDFT showing details of the shipping bills without EPCG licence No. The Commissioner (Appeals) has observed that though the lapse of non-mentioning of EPCG is a condonable lapse but the same is required to be condoned after submission of certain documents and verification of the same. As the appellants have not produced any evidence for following the procedure in the case, he has not accepted the appellant’s stand and has held that they have failed to fulfill the export obligations and also did not get any extension from the licencing authorities - In fact till date there is nothing on record, even after a lapse of a period of about ten years, the appellants have not produced any evidence to show that the time for export was extended by JDFT authorities. As such we find no reasons to interfere with the impugned order of Commissioner (Appeals) - Decided against assessee.

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• Corporate Laws

• 2015 (12) TMI 1193
  Oppression and mismanagement - transmission of shares - Petitioner has sought a declaration to the effect that he is owner and title holder of 7083.8 shares being the successor of the Estate of Mrs. Jayshree Soni who passed away intestate on 31/12/2012 - increasing the authorized share capital of the Respondent No.1 Company - Held that:- It is declared that the petitioner is entitled to l/5th share i.e. 7083 shares from the shares left by late Smt. Jayshree Soni. The Company is, therefore, directed to transmit the shares to the Petitioner. The Company is further directed to rectify its Register of Member by entering the name of the Petitioner to the extent of aforesaid 7083 shares of the Respondent No.1 Company. It is declared that the impugned special resolution dated 9/9/2013 passed by the Company thereby increasing the authorized share capital of the Respondent No.1 Company is bad in law, non-est and void and deserves to be set aside. It is set aside accordingly. Consequently, the allotment of further shares made on 23/10/2013 or any time thereafter is also void, bad in law and is accordingly set aside. Appropriate Forms in this regard shall be filed by the Company with the ROC, Gwalior. It is, however, clarified that the company is not precluded from increasing its authorized share capital in accordance with the law and pursuant thereto the Company may allot further shares to all the shareholders including legal heirs of Late Smt. Jayshree Soni as per law. M/s Pathak Anup 9425354043) is hereby appointed as a special auditor to conduct audit of the company for the years 2011-12, 2012-13, 2013-14 and 2014-15. In case, it is found that the Respondent Nos. 2 to 5 have diverted/misappropriated the funds of the Company's funds, and the company has suffered any loss the same shall be recovered from their personal resources and be paid back to the Company. The parties are directed to extend their co-operation to the said Auditors. The fees of the said Auditors shall be paid by the Company. The Special Auditors shall submit their report to the Company after completion of the audit within six weeks with effect from the date of receipt of the copy of this order. In future, all the notices to the Petitioner shall be served through R.P.A.D by the Company. The Petitioner shall inform the Company his address on which the notice is to be served within 15 days hereof.Other reliefs sought for by the Petitioner are hereby declined.

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• FEMA

• 2015 (12) TMI 1192
  Validity of detention order - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) - Held that:- Since the Detaining Authority was represented by the officers at the time of hearing of the petitioner's case before the Advisory Board, the petitioner too was entitled to be represented through legal practitioner. Since no such opportunity was afforded to the petitioner though claimed by him, he was denied an opportunity of a fair hearing before the Advisory Board, which eventually resulted in passing an adverse order. - as would be clear from Para 3 of the counter affidavit, that the officers had appeared in the case before the Advisory Board and participated in the proceedings against the petitioner whereas the petitioner was denied such facility. This infirmity, being fatal, renders the impugned order legally unsustainable. If the petitioner is a habitual offender and has past criminal record, as alleged by the respondents, it was all the more necessary for the respondents to have followed in letter and spirit the procedure laid down in A.K. Roy’s case before passing the impugned order of detention. It was, however, not done. - impugned order of detention is quashed - Decided in favour of appellant.

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• Service Tax

• 2015 (12) TMI 1222
  Demand of service tax on advances received - whether advances received by the appellant from their customers for contracts executed for customers are leviable to Service Tax - Held that:- Account books of the appellant indicate that the advance received is shown as current liability and not as income towards sale/provision of service. Therefore it is not towards value of services provided. The advance is proportionately transferred to sale/confiscation of service in the books as and when the appellant raised invoices on the customers. We find that the order of Commissioner is silent in this respect. The advance is only an amount given as kind of earnest money and for which the appellant gives a bank guarantee to the customers of equal amount. It is more in the nature of a deposit - advance is like earnest money for which a Bank Guarantee is given by the appellant. It is a fact that the customer can invoke the Bank Guarantee at any time and take back the advance. Hence the appellant does not show the advance as an income, not having complete dominion over the amount and therefore the same cannot be treated as a consideration for any service provided. Therefore the findings lack appreciation of the complete facts and evidences. - advance is not received towards taxable service. The advance is the customer's obligation as his part of the mutual commitment between the two parties to honour the terms of the contract. In respect of some customers, the invoices are not issued for periods ranging upto two years after receipt of advances. The defence of the appellant is that these amounts are shown as current liability in their books of accounts and no services have been provided as yet by them. The Commissioner neither refers to these details nor gives any findings on this issue. Therefore we find no reason to disbelieve the statement of the appellant and take it that the Commissioner too does not dispute this fact. In any case it is on record now that the appellant have paid service tax on the unadjusted advances in July 2011. - impugned order has no merits and is liable to be set aside - Commissioner, in the adjudication order, did not dispute the fact that the service tax was paid periodically on invoice value and that the advance was adjusted in each invoice reducing the outstanding amount correspondingly. The Commissioner only determined that service tax is payable on the advances. We have already expressed our view that the service tax was not required to be paid on the advances and further when the amounts of advance were adjusted proportionately in the invoices and service tax was paid on the invoice value. - impugned Order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1221
  Demand of service tax - Export of Business Auxiliary Service - Held that:- Order of the Commissioner wherein after analyzing the services provided, he has came to the conclusion that both conditions of Export of Services are satisfied. He has also relied on clarification issued by the Ministry vide Circular No. 111/5/2009-ST dated 24/2/2009. The said circular clarifies at Sr. No. (iii) that taxable services shall be treated as Export of Services if “Indian agents who undertake marketing in India of goods of a foreign seller. In this case, the agent undertakes all activities within India and received commission for his services from foreign seller in convertible foreign exchange”. - issue stands decided by the Tribunal in their own case reported in [2008 (3) TMI 32 - CESTAT BANGALORE] - Decided against Revenue.

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• 2015 (12) TMI 1220
  Waiver of pre deposit - CENVAT Credit - reverse charge mechanism - technical consultancy service received from abroad - Held that:- Examining the taxability and non-taxability, it transpires that the advance returned not being taxable, for the time being the interest demand may not be enforceable. Similarly, utility service charges received being payable to the respective authorities providing such service, there may not be enforceable demand for the time being. So far as reverse charge mechanism applicable in respect of demand of Rs. 34,292/- is concerned, that is good demand for recovery at present. Similarly, the CENVAT credit wrongly availed appears to be a credible ground for Revenue for recovery at this stage. Thirdly, the interest paid for default period for payment of service tax to the extent of Rs. 23,31,736/- is also a good demand for recovery at present. - Partial stay granted.

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• 2015 (12) TMI 1219
  Waiver of pre deposit - Exemption under Notification No.14/2004, dated 10.09.2004 - Held that:- there shall be waiver of pre-deposit during pendency of the appeal - No doubt, the notification above grants benefit in respect of services listed in section 65 (19) of the Finance Act, 1994, but with the rider that service of the nature appearing therein should be provided in relation to agriculture, printing, textile processing or education to claim service tax exemption. It appears to the commonsense that printing industry is envisaged to enjoy tax exemption when if that is labour intensive without being highly sophisticated or mechanized. However, we do not express any opinion on merit at this stage. - Stay granted.

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• 2015 (12) TMI 1218
  Supply of tangible goods service - whether without any effective control and transfer of ownership which are essential ingredient of section 65 (105)(zzzz) of Finance Act, 1994, there shall be taxability under the shelter of provision of services in relation to supply of tangible goods - Held that:- Prima facie, interpretation of law is involved in this case with the bundle of facts including contract documents touching the same. In respect of similar nature of transactions Tribunal in the case of Petronet LNG Ltd. Vs Commissioner of Service Tax, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI], has held no taxability. However, without prejudice to the contentions of both sides at this stage there shall be waiver of pre-deposit during pendency of the appeal. - stay granted.

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• 2015 (12) TMI 1217
  Waiver of pre deposit - Erection, Commissioning and installation service - doubt was whether the abatement were genuinely claimed - Held that:- Prima facie, there were four contracts executed by the appellant. But contract-wise discussion is absent in the Adjudication order to appreciate the quantum of goods if any used in each contract. Learned Adjudicating authority in para 12.1 of the order has recorded that there was a claim of abatement. But his only doubt was whether the abatement were genuinely claimed and benefit of the notification by the appellant was appropriate. Appellant failed to satisfy the authority on this aspect. However, prima facie making overall assessment of the fact situation and denial of abatement not being on sound reasoning, there shall be waiver of pre-deposit during pendency of the appeal. - Stay granted.

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• 2015 (12) TMI 1216
  Waiver of pre deposit - import of services - Revenues contention is that the party abroad being an agent of the appellant the service provided by that agent was compensated by way of payment from India. The compensation for service being provided that shall be taxed and liable on reverse charge mechanism. - Held that:- Perusal of the MOU between the parties, prima facie, throws light there is absence of the principal and agent relationship. The shipping document also showed that there was a sale of the goods from India which was in the course of export. No such document came to our notice to appreciate the Revenues contention at this stage. - Prima facie, looking to the factual aspects and nature of the transaction and also understanding of the parties in MOU, there shall be waiver of predeposit in all the stay applications during pendency of the appeals. - Stay granted.

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• Central Excise

• 2015 (12) TMI 1215
  Denial of SSI Exemption - assignment of brand name - Benefit of Exemption Notification No. 1/93 dated 28.02.1993 - Use of other's brand name - Held that:- Tribunal, found that this was not factually correct and the responsible officer of M/s. Dai Ichi Karkaria Ltd. itself had filed an affidavit stating that they were not using the said trade marks and had no objection if those trade names/ marks are used by the assessee. - Decided against Revenue.

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• 2015 (12) TMI 1214
  Denial of refund claim - Unjust enrichment - duty was paid under protest during the pendency of the adjudication proceedings - Held that:- there was no question of passing on this element of duty to consumers/buyers. We, thus, do not find any merit in this appeal - Decided against Revenue.

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• 2015 (12) TMI 1213
  Refund claim - Provisional refund - Since the commencement of the Act, due to deduction of tax at source and input tax, credit tax available on the purchases made by the petitioner within the State of Punjab, the petitioner gets refund every quarter - petitioner submitted that for the relief claimed in the writ petition, the petitioner has submitted an application dated 24.8.2015 followed by another application-cum-reminder dated 19.10.2015 to respondent No. 4, but no action has so far been taken thereon. - Held that:- Perusing the present petition and without expressing any opinion on the merits of the case, we dispose of the present petition by directing respondent No.3 to decide the applications dated 24.8.2015 (Annexure P-5) and dated 19.10.2015 (Annexure P-9), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one month from the date of receipt of certified copy of the order. It is further directed that in case any amount is found payable to the petitioner, the same be released to it within next one month - Appeal disposed of.

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• 2015 (12) TMI 1212
  Jurisdiction of Court - Bombay High Court or Gujarat High Court - Held that:- mere fact that the situs of the adjudicating authority is situated at Vapi within the territorial jurisdiction of this High Court or that part of the investigation has been carried out at Vapi would not be a determinative factor for compelling this court to decide the matter on merits. As noted earlier, against the order passed by the adjudicating authority, appeal lies to the Tribunal and against the order of the Tribunal, appeal lies to the Bombay High Court. Therefore, the statutory forum to adjudicate the dispute raised in the petition at the level of the High Court is the Bombay High Court and not this High Court. Had the petitioner availed of the remedy of appeal, instead of invoking the provisions of Article 226 of the Constitution of India, the dispute would have travelled to the Bombay High Court and not this High Court. The Bombay High Court being the jurisdictional High Court insofar as the adjudicating authority, the lower appellate authority, as well as the Tribunal in relation to matters arising from the Union Territory of Dadra and Nagar Haveli, it is the decisions of that High Court which are binding on those authorities. Under the circumstances, it is the Bombay High Court before which the action can be most appropriately brought - Decided against Appellant.

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• 2015 (12) TMI 1211
  100% EOU - payment of duty at the time of debonding - Revenue directs Assessee to pay duty in cash whereas assessee wants to pay through CENVAT Credit - Held that:- In case of similarly situated persons, namely, M/s Alps Chemicals Pvt. Ltd. and others, as stated in paragraph-9 of the memorandum of petition, the respondent authorities have permitted them to discharge the excise duty foregone from the Cenvat credit account instead of the cash payment. The petitioners have produced on record a copy of a communication dated 21.11.2014 of the Assistant Commissioner, Central Excise, Division-II, Ahmedabad addressed to the Deputy Development Commissioner in connection with the request for “No Due Certificate” for debonding of Exit out of 100% EOU Scheme by one M/s Alps Chemicals Pvt. Ltd., which clearly shows that the said unit has been permitted to discharge excise duty for indigenously procured duty paid raw materials lying in stock in their factory from the Cenvat credit account. In paragraphs 9 and 14 of the memorandum of petition, the petitioners have clearly stated the names of various parties in whose cases the Ahmedabad Commissionerate has permitted payment of excise duty from the Cenvat credit account. - Besides, the petitioner company is a reputed well established Pharmaceutical Company and hence, the interest of the revenue is in no manner jeopardized if the interim relief, as prayed for, is granted, whereas the petitioner company would have to face a cash crunch if called upon to pay the excise duty foregone in cash, whereas its Cenvat credit account would remain unutilized. Besides, as pointed out by the learned counsel for the petitioners, ultimately the excise duty foregone which is to be paid in cash, is going to be added back to the amount of Cenvat credit lying in the account of the petitioners, under the circumstances, the petitioners have clearly made out a prima facie case in their favour. When different companies situated in different regions of the country, are granted a particular benefit, the petitioner therein which was situated in Gujarat, was also entitled to the similar treatment. As noted hereinabove, various assessees, including the assessees situated within the jurisdiction of Ahmedabad Commissionerate have been given benefit of paying the excise duty foregone from the Cenvat credit account. Under the circumstances, prima facie, there appears to be no reason to deny such benefit to the petitioners. - petitioners are permitted to pay the excise duty foregone from the legally availed Cenvat credit account. Upon the excise duty being paid through the Cenvat credit account, the second respondent shall issue “No Due Certificate” to the petitioners for debonding out of 100% EOU Scheme. - Decided in favour of assessee.

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• 2015 (12) TMI 1210
  Waiver of pre deposit - Appeal dismissed for non compliance - Clandestine removal of goods - Held that:- Once the conditional order of stay has attained finality, the dismissal of the appeal for non-compliance with the pre-deposit condition cannot be independently challenged. A period of more than eight years has also passed. Therefore, the writ petition challenging the dismissal of the appeal by CESTAT for failure to comply with the pre-deposit condition, cannot be sustained. - The order of the Tribunal shows that the appellant had admitted, at least in respect of one month, the clandestine removal of goods. - Decided against assessee.

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• 2015 (12) TMI 1209
  Denial of MODVAT Credit - Whether Tribunal committed error in allowing the Modvat Credit of Goods which were received prior to 16.03.1995 by the Assessee and which were not covered under the definition of Capital Goods prior to 16.03.1995 and whether the said goods were eligible for Modvat Credit under Capital Goods vide Notification No.11/95- CE(NT) dated 16.03,1995 - Held that:- there is no legal error in the impugned order passed by the Tribunal in confirming the order passed by the Commissioner (Appeals), who has correctly interpreted the provisions of rule 57Q of the rules. The facts as emerging from the record reveal that even prior to 16th March, 1995, the goods on which the assessee had availed Modvat credit were capital goods as envisaged under rule 57Q of the rules. The subsequent notification dated 16th March, 1995 merely specifies the Chapter Headings and the capital goods. The amended sub-rule (2) of rule 57Q provides that notwithstanding anything contained in sub-rule (1), no credit of the specified duty paid on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 16th day of March, 1995) shall be allowable if such capital goods were received in the factory before the 16th day of March, 1995. On a plain reading of sub-rule (2) of rule 57Q of the rules, it is evident that credit of duty would be allowable on the capital goods in respect of which the credit of duty was allowable under any other rule or notification prior to 16th March, 1995. Under the circumstances, when the capital goods on which the assessee had claimed credit were capital goods in respect of which credit of duty was allowable under rule 57Q prior to its amendment under 16th March, 1995, such capital goods were entitled to Modvat credit and the amendment of the said rule would not take such goods out of the ambit of the excluded categories even in terms of sub-rule (2) of rule 57Q. - it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law much less, a substantial question of law so as to warrant interference - Decided against Revenue.

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• 2015 (12) TMI 1208
  Waiver of pre deposit - Section 35F - Held that:- One after the other three successive writ petitions were preferred by petitioner before the High Court of Delhi assailing the orders passed by the CESTAT and this fact cannot be ruled out that petitioner-company remained sick for a long time and became viable and started commercial production in February, 2015 and so also the fact that right of appeal which has been provided under the statute, ordinarily is not to be frustrated and in the present facts & circumstances, if the petitioner is not permitted to deposit, as prayed for by him in terms of order passed by the ld.Tribunal dt.27.04.2006, he will remain remediless and taking note of the long litigation, we are of the view that the petitioner deserves indulgence to be afforded an opportunity to comply with the order of pre-deposit passed by the CESTAT dt.27.04.2006 on his application filed u/Sec.35-F of the Act within a period of thirty days from today, the appeal which was filed before the CESTAT deserves to be restored and heard on merits. - petition is disposed of with the direction that if the petitioner now complies with the condition of pre-deposit in terms of the order of CESTAT dt.27.04.2006 on his application filed u/Sec.35F of the Act, be restored and the same be heard on merits. - Decided in favor of assessee.

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• 2015 (12) TMI 1207
  Refund claim - fixation of Special Rate in respect of its product, namely, Ferro Silicon for the year 2011-12 representing the actual value addition - notification No. 17/2008 CE dated 27.3.2008 (as amended vide Notification No. 31/2008 CE dated 10.06.2008) - reduction of entitlement from 100% to 39% - Non production of relevant documents - Held that:- Union of India, could not point out anything further except what is provided in the affidavit-in-opposition whereas the petitioner company has asserted that it had supplied all documents, even though they were not required under the rules, which are also admitted by the respondents in the affidavit. We thus think it appropriate to dispose of the writ petition with a direction to the respondents to consider the applications of the petitioner afresh on merit which were disposed of vide the order dated 24.12.2014 only for non-supply of certain documents. A detailed reason would thus be required to be given by the quasi judicial authority within a period of 4 (four) weeks from the date of receipt of a copy of this order - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1206
  Duty demand - Request restraining the respondent no.2 from proceeding any further with reference to the show cause notice, without calling for the witnesses, who have been requested for cross-examination - Held that:- requirement is only of affording an opportunity for that purposes and nothing beyond it. We are also of the opinion that if the Department has recorded statement of fifteen informants before issuance of show cause notice, it is not necessary that the evidence of all the fifteen witnesses may be relied upon for the purposes of maintaining the demand. It is always open to the Department to rely upon the evidence of such number of informers, as may be necessary in the facts of the case. The assessee cannot insist upon cross-examination of all the informer, especially the statement of whom may not be relied upon by the Department for maintaining the demand. - Appeal disposed of.

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• 2015 (12) TMI 1205
  Penalty u/s 11AC - Denial of CENVAT Credit - Nexus with manufacturing activity - Held that:- Imposition of mandatory penalty under Section 11 AC, when duty and interest is paid within thirty days, the amount of penalty shall be 25% of the duty. As the duty along with interest has already been paid by the respondent assessee, the Commissioner (Appeals) has rightly reduced the penalty (50% of duty) imposed under Rules 15(2) and 15(3) to 25% - Decided against Revenue.

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• 2015 (12) TMI 1204
  Denial of refund claim - Unutilized CENVAT Credit - Notification No. 6/2002 - Held that:- Appellants were eligible to avail deemed credit on the inputs procured by them for manufacture of textile and textile articles, during the period Sept, 2002 to Jan, 2003. It is also undisputed that during the relevant period, the appellant had manufactured and exported the goods on payment of duty. - there is no doubt that unutilized CENVAT Credit lying in the balance of the Books of the respondent is liable to be refund to him. No provisions were brought to our notice which indicate that such deemed credit would lapse after rescinding of Notification No. 6/2002 - concurrent findings of both the lower authorities that the appellant are eligible to avail CENVAT Credit has not been controverted by the Revenue in the grounds of appeal. The grievance of the Revenue seems to be that the respondent had filed the refund claim before the expiry of the quarter ending 31.3.2003 is a non-starter and the assessee can plan his business and can file the refund claim even before the quarter comes to an end. The other grievance of the Revenue that non-filing the return correctly is a procedural lapse as also and non-starter as when there is no dispute as to the fact that the assessee respondent in this case has utilized the inputs in manufacturing and exported the goods, the denial of credit will not be in consonance of the law. - impugned order is correct and legal and does not suffer from any infirmity - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2015 (12) TMI 1197
  Liability to tax - Taxability under DVAT or CST Act - no notice of reassessment under Section 32 of the DVAT Act was issued - Whether a transaction can be taxed twice, once under the Delhi VAT Act as intra-State sale in the State of Delhi and again as interstate sale under the CST Act - Held that:- It requires the Assessee to appear before the VATO on 19th September 2011 for recording his statement, produce his book of accounts and evidence being relied upon by him. It requires him to produce a host of documents including the “record of interstate sales and transfer of goods along with statutory declaration form, supporting documents regarding export sales...", "GR/RRs, Form-4 and Form-7 and copy of returns and balance sheet with audit report.” A second document in this compilation is a notice dated 19th October 2011 issued by the VATO to the Assessee noting that the Assessee had appeared and sought time from the VATO till 23rd September 2011 for filing the documents and given the Assessee a final opportunity of submitting the requisite documents by 31st October 2011. In light of the documents that have been emerged during the course of the present hearing and which the Appellant claims not to have received earlier, and since these documents have a vital bearing on the validity of the assessments initially made and the reassessment made subsequently, the Court considered it appropriate to remand the matter to the VATO for a de novo re-assessment proceeding after giving the Appellant a proper opportunity to explain the materials now placed on record. - if it is able to be established by the Department that an audit did take place in accordance with Section 58 of the DVAT Act and the audit report showed that the Appellant was not entitled to avail of the benefit of the C-Forms and H-Forms produced by him in support of the claim of interstate and export sales, that would go to the very root of the matter and render the initial assessment made under Section 9(2) of the CST Act unsustainable in law. Appellant has been given all the documents, which the counsel for the Respondent assures form part of the record, there should be no difficulty in the VATO proceeding further in the matter on the basis of the said documents. Nevertheless, to allay the concerns expressed by counsel for the Appellant, the Court directs that the VATO will ascertain whether the documents that have been produced before this Court do form part of the record of the assessment and re-assessment. The VATO will give the Assessee an inspection of the original files of the Department containing the said documents. - Impugned order is set aside - matter remanded back.

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• 2015 (12) TMI 1196
  Demand of interest u/s 32 - Refund of excess tax - Delay in sanction of refund claim - Held that:- Petitioner had raised a claim for refund for the year 20082009, in respect of which the return was filed on 30.04.2010, which is not in dispute. Having filed return for the year 200809, he filed an application for refund on 11.06.2010 i.e. after almost 1 ½ months. - Once the application was filed on 11.06.2010, the provision of Section 51 of the Act before amendment, stood attracted - by amendment to Section 51 by Maharashtra Act No. 15 of 2011 w.e.f. 01.05.2011, words “within one month of the receipt of the application” have been substituted. - present case, was made on 11.06.2010 for refund and the Commissioner, within one month of receipt of the application, could have called for such additional information from the dealer as he may think fit. In the present case, admittedly, additional information was called by the Commissioner after 9 months of the receipt of the application, which could not have been done after the expiry of one month. Order of refund was made on 16.12.2012 i.e. after more than three years, for which there is absolutely no explanation and for which the dealer cannot be held guilty for non payment. - concerned Commissioner was at fault in not adhering to the limitation provided by law. It is because of the late making of the order by the concerned Commissioner, the litigation has arisen and, therefore, it would be appropriate for the Government to find out the concerned officer/ Commissioner who has failed in his legal/statutory duty to act according to the provisions of law and proceed against him in accordance with law. By not making refund within time limit prescribed by law i.e. within three months, the Refund Officer has violated law and, therefore, when the department itself made the direct credit as late as on 28.03.2013, the present officer has treated him as defaulter within the meaning of section 30 (2) forgetting that the Refund Officer had himself violated the law. Thus, the Refund Officer as well the concerned Assistant Commissioner both have put the petitioner to a double whammy. It is preposterous, in our opinion, and a retrograde step. In our opinion, section 30 (2), therefore, will have no application in the present case. The petitioner cannot be blamed for not making payment and it is the concerned officer, who did not pass order within three months and created the entire chaos. Thus we hold that the respondent-concerned Assistant Commissioner, Sales Tax, who has issued demand notice is deemed to be aware of this factual and legal position since the order of refund was communicated to him and the petitioner is not at fault since the refund officer himself did not act according to law. Without thinking so, the Assistant Commissioner, issued the demand notice which, in our opinion, is a reckless act. - Decided in favour of assessee.

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• 2015 (12) TMI 1195
  Challenge to assessment order - When there are certain legal issues which the 1st appellate authority had failed to consider - Escapement of turnover under Section 27(1)(a) of the TNVAT Act - Best Judgment assessment - Held that:- Petitioner is permitted to challenge the assessment orders dated 15.11.2012 before the 2nd respondent, within a period of four weeks from the date of receipt of a copy of this order. The petitioner shall comply payment of 50% of the disputed tax within a period of four weeks from the date of receipt of a copy of this order and also furnishing bank guarantee for the balance 50% of the disputed tax as volunteered by them, and on such payment and furnishing of bank guarantee, the appellate authority shall entertain the appeals and pass orders on merits and in accordance with law, after affording due opportunity to the petitioner. The said exercise shall be completed by the appellate authority within a period of six weeks thereafter. Further making it clear that till the disposal of the appeals, there shall not be any recovery. - Petition disposed of.

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• 2015 (12) TMI 1194
  Benefit under Section 9(1) of the DVAT for input tax credit - transactions involving the two firms were sham/bogus transactions - validity of order of the Objection Hearing Authority (OHA) to remand back the cast of AO - Held that:- Whatever may be the grievance with the Assessee as against the order dated 10th November, 2015, it would have to be agitated before the appropriate authority before whom an appellate remedy is available to the Assessee. In other words as and when the Assessee challenges the Assessing Authority's order dated 10th November 2015 before the OHA, on all grounds that are available to him in accordance with law, the said grounds would be examined on merits by the OHA. It is beyond the scope of the present appeal for this Court to examine the correctness of the said order. Any opinion expressed at this stage on any of the above contentions of the Assessee might prejudice the proceedings before the OHA and, therefore, the Court leaves open all the grounds that the Assessee has urged to be taken up before the OHA as and when the appeal is filed before it by the Assessee. - Decided against Assessee.

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• Wealth tax

• 2015 (12) TMI 1223
  Determination of net wealth - Inclusion of leasehold interest - whether the open land admeasuring 2175 sq.mtr of the said plot taken on lease by the Appellant is an asset under Section 40(3) of the Act - whether it is belonging to the Appellant for the purposes of determining its net asset chargeable to Wealth Tax under the Act - Held that:- The absence of the words 'property of every description' movable or immovable in Section 40(3) of the Act by itself would not lead to the conclusion that only a property owned by an assessee would be covered and not property of any other kind. Be that as it may, so far as Section 40(3)(v) of the Act, which is the applicable provision, there is a proviso thereto which excludes unused land held by the assessee for an industrial purposes for a period in excess of two years from the date of its acquisition from the definition of asset. The Parliament has used the word held and not owned by the assessee in the proviso to cover a case of open land other than the agricultural land as an asset if the same is held for industrial purposes in excess of over two years. There is no need to compare and contrast the provisions of the Act with the provisions of the Wealth Tax Act, 1957, when there is sufficient indication in the Act itself to include the property in land to be an asset even if it is not owned. Under Section 2(m) of the Wealth Tax Act, 1957, net wealth as defined does not only mean asset belonging to the assessee but by an inclusive definition includes all assets which are set out in Section 4 of the Wealth Tax Act, 1957 which invokes a lessee in excess of one year the deemed owner. There is no such inclusive provision found in Section 40(2) of the Act nor any deeming provision of ownership. Therefore, the net wealth under the Act, has to be restricted in terms of the definition of assets as provided under the Act and cannot artificially include assets not includable under the Act. Section 40(5) of the Act may apply in cases where an issue has not specifically provided for under the Act; - leasehold interest in open land will for purposes of Section 40 of the Act would be an asset as on the valuation date for A. Y. 1998-99. Various clauses of the terms of lease deed relied upon by the Appellant such as – obligation of the Appellant to pay rent to the MIDC; a prohibition from extracting any part of the said demised land, the prohibition to make any alternations to the building without a previous approval of the MIDC; the right of MIDC to enter and inspect the demised premises; after giving one week's previous notice to the Appellant. Further, user of the premises is only for the purposes of a particular type of factory. There is a prohibition on the Appellant to assign or part with the possession of the demised premises without the previous written consent of the MIDC. All this according to the Appellant, would indicate that it is not the owner of the premises and the interest, if any, are very limited. This, however, does not in any way detract and/or negate from the fact that the lease deed dated 29th September, 1978 is a lease of the plot of land. Various clauses of the agreement does not in any manner detract from the agreement being a lease. In fact, the terms of the lease deed establishes that the Appellant has a right to use the property provided the terms and conditions of the lease, are adhered to by the Appellant. Much was said on behalf of the Appellant that lease is only for 95 years with rights of a single renewal. This according to us, would have no impact in holding. Appellant certainly has an interest in the property for a period of 95 years. This is sufficient to hold that on the valuation date, this land belongs to the Appellant, notwithstanding the fact that the ownership in the land would belong to MIDC. For this purpose, the valuation of the leasehold land is as computed in terms of Section 7 read with Schedule III – part (b) of the Wealth Tax Act, 1957. Thus, the value of the leasehold interest in land has to be included for in determining the net wealth under the Act. - Decided against the assessee.

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• Indian Laws

• 2015 (12) TMI 1191
  Posting of service outside Home District - Challenge to Appellant's transfer from CHC Juan, Sonepat to CHC Taraori, Karnal - for a period of about 29 years, the petitioner has remained posted outside her Home District and was never posted in her Home District i.e. Sonepat - Held that:- Since 06.07.2011 till 17.03.2015, the petitioner has been serving at CHC Juan, Sonepat (on deputation). This fact was admitted by learned counsel appearing for the petitioner. - law is settled that any person, who does not come to the Court with clean hands, does not deserve any relief. The petitioner too, having not come to this Court with clean hands, has disentitled herself to be granted any relief. - Decided against the petitioner.

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• 2015 (12) TMI 1190
  Bail matters arising out of FIRs registered under NDPS Act - enlargement on bail - How to determine that the accused is not likely to commit any offence while on bail? - The Scope of ‘Liberty’ - Held that:- The legislative intent to make an exception to the principle of ‘bail the rule and jail the exception’ is further fortified by sub-section (2) of Section 37 which says that the limitation on granting of bail as specified in clause (b) of sub-section (1) are in addition to the limitations prescribed under CrPC or any other law on granting of bail. A person accused of committing offence falling under clause (b) of sub-section (1) of Section 37 of the NDPS Act is obviously on the wrong side of law and he cannot complain that notwithstanding the deterrent legislative policy of such Act, he is entitled to enjoy ‘liberty’ under Article 21 of the Constitution. One learned Single Judge has granted bail in wholesome without noticing the allegations of organized operations of drug racketeers or the legislative scheme of the NDPS Act including the stringent conditions on bail imposed under its Section 37. The other learned Judge has declined bail applying Section 37 even in those cases where it was admittedly not attracted. With utmost humility and respect at our command, both the views are erroneous in law and cannot withstand the settled legal proposition. None of these orders can be treated as persuasive or binding precedents. In the light of the above discussion and on consideration of the facts and circumstances of the case in hand, it emerges that (i) though no recovery was effected from the petitioner in the case FIR No.56 dated 15.05.2013 but the said case pertains to an offence involving ‘commercial quantity’ hence Section 37 would be attracted; (ii) it is difficult and premature to believe that the petitioner is not guilty of the offence, for he is alleged to be an active member of drug-mafia; (iii) Owing to his past conduct, namely, involvement in NDPS cases in the States of Maharashtra and Rajasthan, it is not possible for this Court to be satisfied that he is not likely to commit any offence while on bail; (iv) the chargesheet has since been filed and the case is ripe for prosecution evidence; (v) this Court is inclined to issue comprehensive directions for speedier disposal of all drug trafficking cases which are inter-connected, in a time-bound manner

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