Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 16, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
-
Clarification of the term 'initial assessment year' in section 80IA (5) of the Income-tax Act, 1961 - Circular
-
Commission payment - deduction u/s 37 - assessee has failed to discharge the initial onus to prove that the expenditure incurred under the heads rendering of services by ALT. Mere payment of a sum by accounting paying cheque is not sufficient - AT
-
Reopening of assessment - assessee made purchases/sale which were not entered in the regular books of accounts, resulting into escapement of income - AO was justifiably within his jurisdiction under the parameter of the law to reopen the assessment - AT
-
Debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure - AT
-
Disallowance on account of commission paid - justification of payment with services rendered - mere deducting of TDS cannot be discharged onus cast on the assessee for claiming the expenses U/s 37 - AT
-
Depreciation on routers and switches - @15% OR @60% - CPU alone, cannot be considered as synonymous to the expression 'Computer'. - the computer has to necessarily include the input and output devices within its scope, subject to their exclusive user with the computer - AT
-
Entitlement to credit of the entire TDS offered - the claim of the assessee is allowed in as much as it is held that the assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income - AT
-
Rental income and service charges derived by the assessee from shopping mall/business centre - whether to be assessed as ‘Income from House Property’ or ‘Business Income’ - assessee is accordingly eligible to claim depreciation on the asset and other business expenditure - AT
Customs
-
Revokation of Licenced Customs Broker Licence - CHA cannot be held liable for the acts of employee - impugned orders revoking the CHA licence of the appellant is unsustainable and liable to be set aside - AT
DGFT
-
Amendment in export policy of Pulses - Notification
Service Tax
-
Refund - tax paid on input services utilized for export services - failure to submit the relevant documents and follow the procedures as prescribed - when it comes to substantial benefit the absence of specific embargo in the rules, the benefit should not be denied to an assessee. - AT
-
Taxability of repairing activity undertaken by the appellant of transformers manufactured by other manufacturers - the tender process through which the appellant got the contract for repairing the transformers is only a "work order" and contract for repair and it is not a "maintenance contract". - Service Tax was not leviable during the relevant period - AT
-
Cenvat Credit - duty paying documents - computer generated invoices were not signed by the service provider - the condition of Rule 9(2)were fulfilled. It is also noticed that on the identical situation, the Commissioner of Central Excise allowed the credit in respect of the other assessee - AT
Central Excise
-
Eligibility of CENVAT credit based on tribunal decision - In the absence of the Department challenging the findings of the Tribunal that there is no justification to deny CENVAT Credit, the Revenue has no case and the Department is not at liberty to demand either interest or penalty. - HC
VAT
-
Writ petition Challenging the order of default assessment of tax, interest u/s 32 of the DVAT Act and the other an order levying penalty under Section 33 of the DVAT Act) - computer/machine generated notices - it is a non-speaking order and it is impossible to discern what reasons weighed with the VATO while issuing such an order - matter remanded back - HC
-
Repayment schedule of deferred tax scheme after conversion of sales tax scheme to value added tax (VAT) scheme -The repayment schedule is 5 years from the expiry of eligibility period of deferment. The period of 5 years has to be so arranged that it does not go beyond 13 years from the date of deferment. - SC
Case Laws:
-
Income Tax
-
2016 (2) TMI 434
Valid compliance for claiming of deduction u/s.10A - Whether the report in Form No. 56F not filed with return and also not during the course of assessment proceedings can be said be valid compliance for claiming of deduction u/s.10A? - Held that:- The statutory language contained in subsection ( 5) of section 10A of the Act with subsection (4) of section 80HHC of the Act which also insists on the assessee furnishing the report of the accountant for claim of deduction under section 80HHC of the Act. The Tribunal referred to the decisions of this Court, particularly in case of Zenith Processing Mills v. CIT reported in [1995 (9) TMI 37 - GUJARAT High Court ] to come to the conclusion that when the assessee had eventually filed such returns, though at the appellate stage, the same must be seen as sufficient compliance. In our opinion, the Tribunal committed no error. As noted, the Revenue does not have any grievance or objection regarding the validity of the claim of assessee, except that the procedural requirement of filing of audition report in the prescribed format was not done. Undisputedly facts are that audit report was furnished even along with the return of the income, but in form No.3CB and 3CD and not in the prescribed format. This error was corrected before the appellate authority. No question of law arises. - Decided against revenue
-
2016 (2) TMI 433
Validity of reopening of assessment - Held that:- mere mentioning that sanctioning authority was satisfied is not sufficient to initiate re-assessment proceedings, where during the original assessment proceedings AO takes a particular view after considering the submission of the assessee. It is not the case where assessee had not filed details required by the AO. If the AO decided not to call for particular information the assessee cannot he held responsible for that omission/ commission. Therefore, we hold that there was no failure on part of the assessee to disclose material facts truly and fully. Considering all the facts cumulatively, we are of the opinion, that the order passed by the AO for both the AY. s were invalid. C. O. s filed by the assessee are decided in its favour.
-
2016 (2) TMI 431
Commission payment - whether the commission to be accepted to have been incurred for business purposes? - Held that:- Mere making a claim is not sufficient-it has to backed by documents and evidences. The assessee has failed in discharging the onus cast upon it by the provisions of the Act. Hon'ble jurisdictional High Court, in the matter of Ramanand Sagar (2002 (2) TMI 52 - BOMBAY High Court ), has held that Section 37 of the Act deals with the question relating to the allowability of the expenditure incurred for the purposes of business, that the onus of proof is upon the assessee to prove each of the following ingredients before the expenditure can be allowed as deduction: (a) the item of expenditure must not be of the nature described under sections 30 to 36 of the Act; (b) the item of expenditure must not be in the nature of capital or personal expenses of the assessee; (c) the expenditure must be laid out wholly and exclusively for the purpose of business or profession, that if the assessee fails to satisfy any of these tests, the expenditure claimed is not allowable. In our opinion, in the case under consideration the assessee has failed to discharge the initial onus to prove that the expenditure incurred under the heads rendering of services by ALT. Mere payment of a sum by accounting paying cheque is not sufficient. If we consider all the surrounding circumstances it becomes clear that the commission payment to ALT cannot be accepted to have been incurred for business purposes. Therefore, we are of the opinion that the order of the FAA has to be endorsed, as it is not suffering from any legal or factual infirmity. - Decided against the assessee.
-
2016 (2) TMI 430
Long term capital loss disallowed - Held that:- As the expression "full value of consideration" used in section 48 of the Income Tax Act, 1961 does not have any reference to market value, we are of the view that the Assessing Officer was having no power to replace the value of the consideration agreed between the parties with any fair market value or estimation. Only because the Pioneer Ltd. had shown the book value of shares at the rate of ₹ 40/- (50,000 shares) and ₹ 240/- (8,000 shares), the Assessing Officer was not justified to ignore the price agreed between the parties and to doubt the genuineness of the claimed loss, even ignoring the valuation report. - Decided against revenue
-
2016 (2) TMI 429
Revision u/s 263 - No levy of penalty under section 271(1)(c) on disallowance u/s under section 14A by AO - Held that:- The assessment was completed under section 143(3) of the Act, under which the disallowance was made by the Assessing Officer under section 14A of the Act read with Rule 8D of the Rules at ₹ 40,92,835/-, as against suo-moto disallowance made by the assessee of ₹ 4,35,012. In respect of the aforesaid addition, the Assessing Officer had issued a notice for levy of penalty under section 271(1)(c) of the Act. However, after considering the submissions filed by the assessee during penalty proceedings, the Assessing Officer dropped the said proceedings vide order dated 20.06.2012. The Assessing Officer thus, exercised a view of not levying the penalty under section 271(1)(c) of the Act on the issue of disallowance under section 14A of the Act read with Rule 8D of the Rules. This view expressed by the Assessing Officer cannot be disturbed by the Commissioner while exercising jurisdiction under section 263 of the Act. - Decided in favour of assessee
-
2016 (2) TMI 428
Disallowance u/s.40(a)(ia) - whether disallowance made u/s.40(a)(ia) to be considered as part of business profit of the assessee of the eligible projects so as to grant deduction u/s.80-IB(10)? - Held that:- An amount outstanding at the end of the close of the assessment year is not to be allowed as business expenditure in view of provisions 40(a)(ia) of the Act. Further, we make it clear that the AO should consider only payment which is not subject to TDS for disallowance and not short deduction of TDS. Since we have followed the order of the Special Bench in the case of Merilyn Shipping and Transporters vs. Addl.CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM ] and also CIT Vs. M/s.Vector Shipping Services (P) Ltd cited [2013 (7) TMI 622 - ALLAHABAD HIGH COURT], also the judgement Shri Thomas George Muhoot [2015 (7) TMI 810 - KERALA HIGH COURT] Further regarding the alternate submission of the Authorized Representative to consider the disallowance made u/s.40(a)(ia) of the Act, if any to be considered as part of the business profit in view of the judgement of Bombay High Court in the case of CIT Vs. GEM Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ], wherein it was held that the assessee is entitled to exemption u/s.10A with reference to addition of disallowance of PF/ESIC payments as the plain consequence of the disallowance and add back made by the A.O is an increase in the business profits of the assessee. In our opinion, this plea of the assessee’s counsel to be upheld in view of the judgement. - Decided in favour of assessee
-
2016 (2) TMI 427
Reopening of assessment - Held that:- There was linkage of the documents with the statement tendered by the assessee evidencing that income had escaped assessment. It is not the case in the present appeals that addition has been made merely on the basis of statement recorded by the Revenue, rather, there was enough material on record which could be unearthed on the basis of survey followed by the statement of the assessee to show that the assessee made purchases/sale which were not entered in the regular books of accounts, resulting into escapement of income, therefore, of the opinion that, so far as, initiation of proceedings u/s 147 r.w.s. 148 of the Act are concerned, the ld. Assessing Officer was justifiably within his jurisdiction under the parameter of the law to reopen the assessment, therefore, affirm the stand of the ld. First Appellate Authority. - Decided against assessee Trading addition - Held that:- Adding the respective amounts being 50% of the gross profit is concerned, find that ad-hoc addition has been made on the basis of trading account. There is no dispute to the fact that while tendering the statement, the assessee admitted to have carried out purchase and sale, which were not entered in regular books of accounts. The Assessing Officer has added 50% of the gross profit on ad-hoc basis. In the modern era of cut throat competition, 50% of the gross profit is not expected. Even, while coming to a particular conclusion, neither the Assessing Officer has cited any comparable case in a identical business nor has compared the same with any other assessment years, therefore, to meet the ends of justice, to cut short the litigation, feel the 20% of the gross profit will be sufficient to safeguard the interest of the Revenue in place of 50% sustained by the ld. Commissioner of Income Tax (Appeals), because, on the basis of evidence for a particular period, extrapolation of the income to the whole period of reassessment is not justified So far as, the contention of the ld. counsel for the assessee, that net profit rate should be adopted and not the gross profit is concerned, not agreeing with this proposition, because, in the present set off cases, the assessee has not declared anything and the whole profit was earned as the purchase and sales were not even entered in the books of accounts by the assessee. Thus, this ground of the assessee is not having any merit, therefore, dismissed. Even otherwise, the 20% has been reduced from 50% sustained by the ld. CIT(A) and that to on gross profit and not on net profit. - Decided partly in favour of assessee
-
2016 (2) TMI 426
Revision u/s 263 - deemed dividend addition u/s 2(22)(e) in assessments framed u/s 153C - Held that:- The addition towards deemed dividend u/s 2(22)(e) of the Act in the assessments framed u/s 153C of the Act for the Asst Years 2007-08 to 2010-11 without any incriminating materials found during the course of search with respect to those assessment years, is not warranted and held as not in accordance with law. We hold that the Learned CIT had just entertained a belief that order passed by the Learned AO u/s 153 C of the Act is erroneous , which otherwise does not emanate from the provisions of the Act. Hence in this scenario, invoking jurisdiction under section 263 proceedings is not permissible. - Decided in favour of assessee
-
2016 (2) TMI 425
Addition on account of long term capital gain on sale of 2 residential houses and agricultural land - Held that:- Both the sale deeds have been placed in the paper book. It is further seen that the sale deed dated 14.7.2008 was specifically in respect of sale of farms house including rain water harvesting systems in the instant year. The appellant has also furnished a valuation report dated 1.7.2008 valuing the cost incurred for development work in land/farmhouse at ₹ 1,55,27,000/-. Neither the Assessing Officer nor the CIT(A) or learned DR has pointed out any defect in the valuation report furnished by the appellant. In such circumstances, we feel that the CIT(A) was not justified to restrict deduction to the extent of ₹ 77.95 lacs out of the total sum of ₹ 1,23,50,000/- on the ground that sum was paid after 14.7.2005 which was the date of sale deed of the farm house. Thus in our considered opinion the entire cost of deduction of ₹ 1,23,50,000/- be allowed while computing long term capital gain on sale of the agricultural land/farm house by the appellant. Sum incurred towards repayment of the house sold in the instant year - CIT(A) holding denial of deduction has held that no evidence has been brought on record regarding investment of the said land and therefore, claim of deduction to this extent is disallowed - Held that:- The appellant in the course of hearing has only referred to statement of affairs which is not a sufficient basis to allow the claim of deduction towards cost of acquisition of the property. There is nothing to support that any expenditure was incurred towards cost of development of house at plot no. 1402, Sector-6, Bahadurgarh in the instant year. Having regard to above, we feel that action of the CIT(A) is in order and claim of the appellant is therefore, rejected. In the result, the grounds raised by the appellant are partly allowed and ground raised by the revenue is rejected. Addition representing agricultural income declared by the appellant and held to be income from undisclosed sources - Held that:- It is undisputed that the appellant has not produced documentary evidence in support of agricultural income declared by the appellant. It is further not disputed that the appellant is owner of agricultural land in the instant year. Further, it is also not disputed that in the preceding assessment years, agricultural income had been declared of ₹ 3,14,513/- and having regard to the said position, we find that the finding of the CIT(A) to accept agricultural income at ₹ 6,00,000/- is in order. The learned DR has also not been able to show in any manner how such an acceptance of the claim is excessive. In view of the above position, we uphold order of the CIT(A) and reject the grounds raised both by assessee and revenue. Denial of exemption under section 54B - Held that:- As the learned counsel submitted that no opportunity was given either by the Assessing Officer or CIT(A) to furnish such relevant evidence and therefore, prayed that the issue may kindly be set aside to the file of the Assessing Officer for re-adjudication. The learned DR did not fairly object to such a prayer made by the appellant, we therefore, feel it appropriate that the issue be restored to the file of Assessing Officer for reconsideration in accordance with law. Needless to state that the appellant would be entitled to lead all such evidence to support claim of exemption under section 54B of the Act and the Assessing Officer shall pass an order after granting necessary opportunity to the appellant.
-
2016 (2) TMI 424
Addition being processing and consortium fee paid to PNB - CIT(A) has deleted the disallowance - Held that:- There is no basis for the revenue to contend that any expenditure incurred towards loan is not an eligible business expenditure. Such an expenditure is revenue expenditure as has also been held by the Apex Court in the case of India Cements Ltd. vs. CIT (1965 (12) TMI 22 - SUPREME Court ) - Decided against revenue Addition on account of stamp duty charges paid for issue of debenture certificates - CIT(A) has deleted the disallowance - Held that:- The debentures are loans raised by the assessee, therefore, any expenditure including stamp duty for such debentures is eligible for deduction for computing income of the appellant. A Coordinate Bench of Tribunal in the case of DCIT vs. UAG Builders (P) Ltd.(2012 (9) TMI 764 - ITAT DELHI ) while considering the issue of fully convertible debentures has deleted the addition concluding there was no contingency involved in the accrual of liability with reference to the interest on the debentures. Also rightly observed that debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure - Decided against revenue
-
2016 (2) TMI 423
Disallowance on account of commission paid - justification of payment with services rendered - Held that:- The assessee was specifically asked to justify the service rendered by the group of these nine persons and to submit the evidence in respect of rendering service before the Assessing Officer as well as ld CIT(A) but no details or evidence were submitted before them. Even before us, the assessee was not able to justify the payment in form of commission with reference to service rendered. The MOU is also not found authenticated as no address of receipt were given, which was also not witnessed and mere deducting of TDS cannot be discharged onus cast on the assessee for claiming the expenses U/s 37 of the Act. The rate of commission was not comparable with the line of business of rate of commission paid. Therefore, we uphold the order of the ld CIT(A). - Decided against assessee
-
2016 (2) TMI 422
Disallowance u/s. 14A read with Rule 8D - Held that:- It is undisputed fact that the assessee has reserved and surplus share capital to the extent of ₹ 5888.76 lacs. The assessee has mixed fund, the presumption for interest free fund is also applicable in the case of assessee but following the various decisions on this issue, Section 14A read with Rule 8D becomes redundant. It is also a fact that the management as well as staff and other office facilities available with the assessee are used for making investment in shares, therefore, it cannot be ruled out that no income can be generated without any expenditure. The quantum may be variance and depend on investment made by the assessee. Therefore, we , in the interest of justice, uphold the disallowance U/s 14A at ₹ 5 lacs against the disallowance confirmed by the ld CIT(A) at ₹ 23,84,269/- - Decided partly in favour of assessee
-
2016 (2) TMI 421
Depreciation on routers and switches - at the rate of 15% OR 60% - Held that:- No doubt the function of the computer, as one composite unit, is to perform logical, arithmetical or memory functions etc., but it is not only the equipment which performs such functions that can be called as computer; All the input and output devices, as discussed which support in the receipt of input and outflow of the output are also part of computer. CPU alone, cannot be considered as synonymous to the expression 'Computer'. The function of CPU is akin to the brain playing a pivotal role in the conduct of the body. As do not call the brain alone as the body, similarly the CPU alone cannot be described as computer. Thus the computer has to necessarily include the input and output devices within its scope, subject to their exclusive user with the computer, as discussed above. If construct the definition of computer only to processing unit, as has been held in the case of Routermania Technologies (P.) Ltd. (2007 (4) TMI 389 - ITAT MUMBAI ), then even the keyboard and mouse etc., will not qualify to be called as computer because these equipments also do not perform logical, arithmetical or memory functions. In the light of the meaning of 'computer' discussed in earlier paras, we are inclined to agree with the view taken by the Kolkata Bench in Samiran Majumdar's case (2005 (8) TMI 293 - ITAT CALCUTTA-B ). Therefore, hold that the routers and switches in the circumstances of the case, are integral part of Computer, entitled to depreciation at the rate of 60 per cent. - Decided in favour of assessee
-
2016 (2) TMI 420
Entitlement to credit of the entire TDS offered - in the opinion of the revenue, the assessee would not be entitled to credit of the entire TDS of ₹ 10/- but would be entitled to proportionate credit only - Held that:- Auppose as assessee who is following cash system of accounting raises an invoice of ₹ 100/- in respect of which deductor deducts TDS of ₹ 10/- and deposits to the account of the Central Government. Accordingly, the assessee would offer an income of ₹ 10/- and claim TDS of ₹ 10/-. However in the opinion of the revenue, the assessee would not be entitled to credit of the entire TDS of ₹ 10/- but would be entitled to proportionate credit only. Now let us assume that ₹ 90/- is never paid to the assessee by the deductor. In such circumstances, ₹ 9/- which was deducted as TDS by the deductor would never be available for credit to the assessee though the said sums stand duly deposited to the account of the Central Government. Rule. 37BA(3) of the Act cannot be interpreted so as to say that TDS deducted at source and deposited to the account of the Central Government is though income of the assessee but is not eligible for credit of tax in the year when such TDS was offered as income. This view is otherwise also not in accordance with the provisions contained in section 198 and 199 of the Act. The proposition as laid out by the CIT(A) and learned DR before us therefore cannot be countenanced. Thus the claim of the assessee is allowed in as much as it is held that the assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. - Decided in favour of assessee. Restriction of credit of TDS - Held that:- Having regard to the submission of assessee TDS certificates were furnished by the assessee and such credit was also reflected in 26AS statement prepared by the revenue except to the sum of ₹ 4,10,870/- for which, confirmations have been furnished by the assessee, we feel it appropriate that the issue be restored to the file of the Assessing Officer with a direction that the credit be allowed to the assessee of the entire TDS in respect of which, TDS certificate has been furnished by the assessee in accordance with section 198 read with section 199 of the Act. - Decided in favour of assessee. for statistical purposes.
-
2016 (2) TMI 419
Rental income and service charges derived by the assessee from shopping mall/business centre - whether to be assessed as ‘Income from House Property’ or ‘Business Income’ - Held that:- The activitivities of the assessee of renting the premises and offering various services was the composite commercial activity and income derived by the assessee from shopping mall/business centre was assessable as business income and not as income from house property. The assessee is accordingly eligible to claim depreciation on the asset and other business expenditure. - Decided in favour of assessee Allocation of cost of amenities - Held that:- AO, though noted that out of the total area of 12100 sq. feet, the assessee had completed only 8,298 sq. feet as on 31.03.04. He, however, allocated the entire cost of amenities to the total area of the project and thereafter calculated the average cost per sq. feet and thereafter attributed the said average cost per sq. feet to 8,298 sq. feet of area. We do not find justification in the above method adopted by the AO. Since the constructed area up to 31.03.04 was only 8,298 sq. feet, hence the cost of amenities for the year under consideration was to be allocated to the actual area constructed and not to the total area of 12100 sq. feet. There is no justification on the part of the AO to allocate the cost of amenities even to the area which was not constructed/in existence during the year. We, therefore, direct the AO to allocate the cost of amenities of ₹ 1,31,98,017/- directly to the constructed area of 8,298 sq. feet and not to the total area of 12100 sq. feet. Disallowance u/s 14A - Held that:- It is not a case where no exempt income was received by the assessee despite making investments for earning exempt income. It is also not the case of the Revenue that the exempt income earned by the assessee was very less or not in proportion to the investments made by the assessee for this purpose. Under such circumstances the different coordinate benches of this Tribunal have observed that in such cases certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09. Hence, considering the overall facts and circumstances of the case we restrict the disallowance u/s 14A in the case of the assessee @ 5% of the tax exempt income earned by the assessee during the year. Computation of income of long term capital gains from the sale of M/s. Movie Times - Held that:- he said income cannot be assessed in the year under consideration. However, we agree with the contention of the Ld. D.R. that since it has been contended by the assessee itself that the transfer has taken place in A.Y. 2003-04 and which contention of the assessee has been accepted by the Ld. CIT(A) also hence, in the circumstances, we direct that the proceeds of the sale transaction are to be reduced from the WDV of the block of the assets in A.Y. 2003-04 itself and the assessee will not be entitled to claim of depreciation on the sold part of the asset from the date of sale of the property in A.Y. 2003-04. The deeming fiction of section 50C is not applicable to the transaction in question in the case of the assessee Claim of interest expenditure allowed as revenue expenditure. Treatment of income from car parking charges, compensation and other miscellaneous income - whether the business income or income from other sources - Held that:- In view of our discussion made all these activities were relating to the business activity of the assessee. The Ld. CIT(A) has rightly held that the income earned from the above activities was business income of the assessee. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) in this respect.
-
2016 (2) TMI 418
Disallowance of deduction claimed under S.35(2AB) - disallowance on the ground as approval granted is by a Scientist of DSIR and not the Secretary - Held that:- It is observed that for claiming deduction under S.35(2AB), assessee has relied on two letters issued by Scientist G, referred to hereinabove. It is seen that one letter, as placed at page 13 of the paper-book, relates to Certificate of Registration for availing customs duty exemption. Second letter, placed at page 14 of the paper-book, is in respect of renewal of recognition granted to the Inhouse R & D facility till 31.3.2015. The assessee neither before the departmental authorities nor before us has produced any approval in Form 3CM, even from a Scientist of DSIR. Therefore, in our view, only on the basis of either the letter issued for renewal of recognition of In-House R&D unit or certificate granted for customs duty exemption, assessee would not be entitled to claim deduction under S.35(2AB). therefore, we are inclined to remit the matter back to the Assessing Officer for giving an opportunity to the assessee to furnish the report in prescribed form, of the prescribed authority, i.e. either Scientist G of DSIR or any other authority from DSIR, as required in S.35(2AB) of the Act, and redecide the matter in accordance with law, and after giving reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes. Disallowance made under S.36(1)(iii) out of bank interest and financial charges - Held that:- Hon'ble Bombay High Court in the case of C.I.T. vs. Reliance Utilities & Power Ltd., (2009 (1) TMI 4 - BOMBAY HIGH COURT ) has held that when the assessee has mixed funds, i.e. both interest free and interest bearing funds, presumption would be interest free advances are from interest free funds available with the assessee. Applying the same principle, it has to be held that the investment in equity shares were made from out of surplus interest free funds available with the assessee. Further, it is a fact on record that investments in equity shares have been made during the period from 8.10.2005 to 21.1.2007 and not in the previous year relevant to the assessment year under dispute. The Department also has not controverted the contention of the assessee that no disallowance out of interest expenditure was made during the assessment year in which the investment was actually made. In view of the aforesaid factual position, we hold that the disallowance of interest expenditure is not sustainable. - Decided in favour of assessee. Disallowance of interest on Foreign Currency Convertible Bonds(FCCB) - Held that:- It is well settled principle of law that if the payments on which tax is sought to be deducted is not chargeable to tax in India, provisions of S.195 would not apply. In the present case, it is not controverted by the Learned Departmental Representative with cogent evidence that not only the bonds were raised outside India, but the interest payments were also made to non-resident Indians outside India from a bank account held by the assessee outside India. Therefore, since no part of the transaction relating to payment of interest has taken place in India, it cannot be said that interest payment made to non-residents has accrued or arisen in India in terms of S.9 of the Act. In our view, therefore, the provisions of S.195 would not apply to such payments, thereby requiring the assessee to deduct tax at source. We are supported in our view by the decisions cited by the learned counsel for the assessee. Accordingly, we direct the Assessing Officer to delete the disallowance made in this behalf - Decided in favour of assessee Levy of interest under S.234B and S.234C - Held that:- On a perusal of the material available on record, it is seen that in the computation of income filed alongwith the return of income, assessee itself has calculated interest under S.234B and S.234C, which is more than the interest computed by the Assessing Officer. - Decided against assessee
-
Customs
-
2016 (2) TMI 440
Adjudicating orders - non supply of relied upon documents- Levy of safeguard duty - import of Aluminum Fin Strip - Notification No. 71/2009 Cus - percentage of alloying elements need not be more the 1% - A personal hearing was granted for 24/01/2013 by the adjudicating authority which was attended by the appellant but a written reply was submitted to be filed by 28/1/13. It is further observed that instead of filing reply appellant vide letter dt 28/01/13 requested the adjudicating authority to provide them all the relied upon test reports. Appellant should have asked for copies of such reports immediately on receipt of the show cause notice dt 28/8/12 instead of asking it after a period of five months. Accordingly we are of the view that appellant should be put to some conditions so that they co-operate with the adjudication proceedings. It is directed that appellant should pre-deposit an amount of ₹ 8 lakh within eight weeks & report compliance directly to the adjudicating authority. - Matter remanded back.
-
2016 (2) TMI 439
Restoration of appeal - appeals were dismissed for non-prosecution - Advocate submits that there was representation for adjournment on 16.12.2014. On that day Junior counsel attached to their office seek adjournment on the ground that the counsel on record had on a pilgrimage to Sabarimala. He further submits that the non-appearance on that date was neither wilful nor wanton and pleads for restoration of their appeals - Held that:- Apex Court has said that CESTAT could not dismiss the appeal for absence of the appellant but to decide the appeal on merits by relying on Rule 20 of CESTAT (Procedure) Rules, 1982. - the appeals are restored to its original number.
-
2016 (2) TMI 438
Revokation of Licenced Customs Broker Licence - one of their employees forged the document of export shipment of polished granite slabs. - It submitted that SCN was not issued within 90 days from the date of suspension as per CHALR and also submits that no specific allegation was made for any contravention in the CHALR clause against the appellant. - Held that:- , it is evident that no proceedings initiated against the exporter or appellant under Customs Act as there is no violation but proceeded action under CHALR. This fact is confirmed by the adjudicating authority in the findings at para 22 of order and also expressed in clear terms that there is no involvement of the management i.e. Appellant in the act committed by the employee. In several Tribunal's decisions consistently held that the CHA cannot be held liable for the acts of employee and set aside the revocation of Licence. - impugned orders revoking the CHA licence of the appellant is unsustainable and liable to be set aside. - Decided in favor of appellant.
-
Corporate Laws
-
2016 (2) TMI 435
Application for winding up of the respondent Company-Sumatex Limited - Failure to pay salary - The petitioner requested the Respondent Company to release his salary since February, 2013 by way of numerous e-mails, but to no avail. - whether unpaid salary of an employee would constitute debt. Held that:- Indisputably, the petitioner had resigned from service on 7.8.12. According to the Respondent Company, the resignation tendered by the petitioner was accepted on the same day, but he continued to attend the office of the Company intermittently uptil January, 2013, for completing the pending work and he has been paid the salary upto the month of January, 2013. As per the stand of the Respondent Company, the petitioner deliberately did not file Form 32 and thus, failed to comply with legal and statutory obligation for a period of 4 months and therefore, the Company had no option but to file Form 32 on its own showing the cessation of the petitioner on 6.3.13 and on that account, suffered penalty for late filing. Looking to the dispute sought to be raised by the Respondent Company regarding the petitioner's entitlement for various reason, it cannot be concluded that the liability regarding payment of salary as claimed by the petitioner stands proved/admitted by the Respondent Company and therefore, this Court is not inclined to direct winding up of the Respondent Company in terms of provisions of Section 433(e) of the Act. Merely because a company has suffered loss in a particular financial year, it does not lead to conclusion that the position is irreversible and the financial condition of the company is deteriorated to such an extent that there is no possibility of revival. On the facts and the circumstances of the case, this Court is of the considered opinion that no just and equitable grounds exist for winding up of the company in terms of provisions of Section 433(f) of the Act either. Petition dismissed - Decided against the appellant.
-
Service Tax
-
2016 (2) TMI 446
Refund - tax paid on input services utilized for export services - failure to submit the relevant documents and follow the procedures as prescribed - Rule of the Export of Service Rules, 2005 - Held that:- A plain reading of the notification indicates that taxable services has to be exported in terms of Rule 3 and payment of export of such taxable services has to be received in India in convertible foreign exchange and the duty/tax has been paid on input or input services. All these contentions are satisfied in this appeal filed by the appellant. - when it comes to substantial benefit the absence of specific embargo in the rules, the benefit should not be denied to an assessee.
-
2016 (2) TMI 445
Taxability of repairing activity undertaken by the appellant of transformers manufactured by other manufacturers - maintenance or repair services - Held that:- the requirement of statute prior to 15.06.2005 for taxability of the services rendered is very clear i.e. that the maintenance of repairs has to be provided by any person under "maintenance contract" or agreement. Undisputedly in the case in hand for the entire period, there was no maintenance contract entered by the appellant with the State Electricity Board for repairs of their transformers. - The tender process through which the appellant got the contract for repairing the transformers is only a "work order" and contract for repair and it is not a "maintenance contract". - Service Tax was not leviable during the relevant period - Decided in favor of assessee.
-
2016 (2) TMI 444
Cenvat Credit - duty paying documents - computer generated invoices were not signed by the service provider - Revenue contended that Rule 4A of the Service Tax Rules 1994 categorically prescribed that the invoices/challans should be signed by service provider. - Held that:- the condition of Rule 9(2)were fulfilled. It is also noticed that on the identical situation, the Commissioner of Central Excise allowed the credit in respect of the other assessee - However, it is required to examine the documents and therefore the matter is sent back to the Adjudicating Authority to decide afresh after considering the documents and other facts in so far as lose of original invoices due to flood. - matter remanded back - Decided partly in favor of assessee.
-
2016 (2) TMI 443
Cenvat Credit - eligibility of input services, inputs and capital goods availed for the purpose of construction of immovable property - output service of renting of immovable property - Held that:- applicant has made out a strong case for full waiver of pre-deposit of the confirmed demand alongwith penalties. - Stay granted.
-
Central Excise
-
2016 (2) TMI 442
Eligibility of CENVAT credit - based on tribunal decision - whether the assessees are not even entitled to file an Appeal (before the CESTAT), based on a mere communication and therefore, the finding given by the CESTAT stating that the assessees ought to have been given CENVAT Credit, cannot be taken advantage of, by the assessees? - Held that:- When the input duty credit is allowed, the duty is deemed to have been paid on the original date of payment of duty. When input duty credit is allowed, then there is no question of any liability to pay further duty. In the absence of the Department challenging the findings of the Tribunal that there is no justification to deny CENVAT Credit, the Revenue has no case and the Department is not at liberty to demand either interest or penalty. When the Central Excise Act, 1944 and the Rules framed thereunder, permit the adjustment of CENVAT Credit, and when the CENVAT Credit is granted, there is no outstanding duty payable and therefore, the question of payment of interest and penalty do not arise. - Decided in favour of assessee
-
2016 (2) TMI 441
Penalty levy - reliefs sought for by revenue is that the Commissioner's demand is under section 11AA whereas it should be under section 11AB - Held that:- On perusal of the said order, we find that the demand involved from the very same impugned order has been set aside by this Tribunal, therefore, the Revenue's appeal is not survive. Hence, the Revenue's appeal is dismissed as infructuous.
-
CST, VAT & Sales Tax
-
2016 (2) TMI 437
Writ petition Challenging the order of default assessment of tax, interest u/s 32 of the DVAT Act and the other an order levying penalty under Section 33 of the DVAT Act) for the third quarter of 2013-14 as well as two penalty notices - computer/machine generated notices - Held that:- The above order in Form DVAT-24 is in a pre-printed format and is unsigned. Therefore, it is not possible to make out which of the above alternatives provided in the captioned preamble paragraph applies to the case on hand. It fails to spell out the reasons for the VATO concluding that the purchases in question were made from suspicious/bogus dealers. In effect, it is a non-speaking order and it is impossible to discern what reasons weighed with the VATO while issuing such an order. Orders set aside - The proceedings emanating from the notice dated 29th December, 2014 issued under Section 59 (2) of the DVAT Act revived before the VATO concerned. - Matter remanded back.
-
2016 (2) TMI 436
Repayment schedule of deferred tax scheme after conversion of sales tax scheme to value added tax (VAT) scheme - Exemption (deferment of sales tax) scheme was not available after the Jharkhand Value Added Tax Act, 2005 (JVAT Act) came into force - Principle of promissory estoppel - Held that:- The concept of exemption is distinct from the concept of deferment of tax. After the JVAT Act came into force, under the statutory provisions, there was no exemption and beneficiaries were entitled to convert to the scheme of deferment. The period remains intact, that is, 8 years. The repayment has to be done in equal six monthly instalments and that period is 5 years. The repayment commences after completion of eligibility period of deferment or the prescribed percentage limit of fixed capital investment, whichever is earlier. The prescribed authority can grant an eligibility certificate but he has to keep in view the terms and conditions stipulated in the notification. The said authority cannot travel beyond the stipulations of the notification. The language employed in the notification conveys that the grant of certificate has to be such that after expiration of the eligibility period, the amount has to be paid back within a span of 5 years but the gap cannot exceed 13 years from the date of start of deferment. In the case at hand, the claim of the assessee that the repayment schedule has to continue for a period of 13 years from 2006, for the deferment commenced only in 2006. Such an interpretation not only causes serious violence to the language employed in the notification but if it is allowed to be understood in such a manner, it shall lead to an absurd situation. That apart, the intention can be gathered from the notification that it has to relate back to the date of eligibility with a maximum limit of 13 years. It cannot be construed to mean 13 years from the date of completion of the eligibility period. The repayment schedule is 5 years from the expiry of eligibility period of deferment. The period of 5 years has to be so arranged that it does not go beyond 13 years from the date of deferment. Thus analysed, the irresistible conclusion is that the repayment schedule has to end on 31.08.2013 within a span of 5 years from the expiration of the eligibility period. Imposition of interest and penalty under the JVAT Act. Rule 66 - the question of levy of penalty as envisaged under Rule 66 of the Rules should not be made applicable to the case at hand. - assessee shall pay 12% interest per annum (and not 2.5% per month) - Decided partly in favor of Revenue.
|
9911796707
