Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 18, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Initiation of proceedings u/s 158BD - unless the basic finding is held to be valid, the consequential order is bad in law - since there was no notice served under section 158 BC the assessee could not have been assessed under section 158BD - HC
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Addition u/s 145A - valuation of closing stock - Since CENVAT is not available to the assessee then the enhancing the value of semi finished and finished goods in the closing are not warranted. - AT
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When the same amount has been surrendered and taxed in the hands of donor then the source of the funds which were used for expenditure as to held as explained in the hands of donee assessee trust and provisions of section 69C cannot be invoked for making addition on account explained expenditure - AT
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Denial of claim of set off of loss from derivative u/s 73 - Loss incurred on derivative transaction was not a speculative loss and is allowed to be adjusted against business income. - AT
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The activity of purchase and sale of shares carried out with assessee for the purpose of section 73 is a speculation business activity and, accordingly, the loss suffered from the activity of purchase and sale of shares cannot be allowed to set off against the business income. - AT
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Assessment u/s 164(1) - whether the assessee trust cannot be assessed as on AOP? - Once the shares of the beneficiaries are found to be determinable, the income is to be taxed of that respective sharer or the beneficiaries in the hands of the beneficiary and not in the hands of the Trustees which has already been shown in the present case - HC
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Addition on income from unexplained sources u/s 68 - sham transaction - the nature of the income and source on the identical transaction have been accepted by the Department in preceding assessment year, authorities below were not justified in holding the income of the assessee from unexplained sources u/s 68 - AT
Customs
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SEZ units - Worn and used clothing - withdrawal of the exemption - public interest - entitlement of selling of un-mutilated worn clothing being export surplus and export rejects in DTA on payment of applicable duties - The authority has bye-passed the mandatory provisions and issued the impugned instructions against the prescribed law which was beyond their jurisdiction - HC
Service Tax
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Business Auxiliary Services - multi level marketing services - the service tax is not leviable on the commission earned by the distributor on the basis of the volume of the purchases made by the group of second level of distributors appointed by M/s. Forever Living Imports (India) Pvt. Ltd. on being sponsored by the distributor - AT
Central Excise
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Clandestine removal - mere payment of duty before issuance of show cause notice would not preclude the Department, from levying redemption fine, once the factum of evasion of duty is made out, be it mala fide or not - Levy of redemption fine confirmed - HC
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Area based exemption - whether the appellant is liable to pay NCCD, Education Cess and Secondary Higher Education Cess inspite of the exemption N/N. 50/2003? - Held Yes - Further they cannot avail cenvat credit facility - AT
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CENVAT credit - captive consumption - The main ground for denial is that the power plant does not belong to appellant (Hindalco) and services availed by subsidiary company (Renusagar Power Plant) cannot be given credit to appellant - once the units are merged / amalgamated, credit is to be allowed - AT
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Refund claim - excess duty paid - rejection on the ground of unjust enrichment - We are unhappy at the manner in which the Tribunal has dealt with the Appeals - the Tribunal committed serious errors of law apparent on the face of the record. The Tribunal did not elaborate as to how, in this case, the question of limitation can be said to be a pure legal issue. - HC
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Levy of duty - Kerosene meant for PDS - delay in issuing exemption notification - when the policy in vogue was known and the same also conveyed through a subsequent notification, that shall be read as clarificatory and shall have retrospective effect - AT
Case Laws:
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Income Tax
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2017 (2) TMI 744
Deduction u/s 10A vis-a-vis Disallowance u/s 14A - Held that:- As submitted by the Ld. A.R that now when any part of the expenditure claimed by the assessee was disallowed u/s 14A, then as a consequence thereto the profits of the assessee eligible for deduction u/s 10A would witness a corresponding increase, leading to a consequent increase in the claim of deduction of the assessee u/s 10A of the ‘Act’, pursuant whereto the net effect would remain at Rs. Nil. We find substantial force in the contention of the Ld. A.R and are persuaded to be in agreement with him that pursuant to disallowance u/s 14A, the business profits eligible for deduction u/s 10A, to the said extent would stand enhanced. - Decided in favour of assessee. ‘Income from House Property’ - computation of ALV - Held that:- The benefit of computing the ‘ALV’ u/s 23(1)(c) could not be extended to a case where the property was not let out at all, would however duly encompass and take within its sweep cases where the property had remained let out for two or more years, but had remained vacant for the whole of the previous year. Thus we are of the view that now when in the case of the present assessee the property under consideration had remained let out upto 04.12.2008, and thereafter though could not be let out and had remained vacant during whole of the year under consideration, but also had never remained under the self occupation of the assessee, the computation of the ‘ALV’ u/s 23(1)(c) of the ‘Act’, had rightly been carried out.- Decided in favour of assessee. Recasting of the ‘Book profit’ u/s 115JB - Held that:- We find that the A.O while computing the ‘Book profit’ u/s 115JB of the ‘Act’, being guided by the clear provision so contemplated in Sec. 115JB(2) – Explanation 1(f), had rightly made an addition of ₹ 3,10,868/- (supra), being the amount of expenditure relatable to the dividend income of ₹ 11,36,128/- (supra), which being exempt u/s 10(34) of the ‘Act’, had duly been excluded by the assessee while computing the ‘Book profit’, and accepted as such by the A.O. We thus finding no infirmity in the making of the addition of ₹ 3,10,868/- (supra) by the A.O, which thereafter had rightly been sustained by the CIT(A), therein uphold the order of the CIT(A) to the said extent. In the case of Bearing of ‘Dividend paid or proposed’ on computation of ‘Book profit’ though the working of ‘Book profit’ as per MAT provisions by the assessee company itself, as is found reproduced by the A.O in the body of the assessment order, therein prima facie reveals that the assessee company had adopted the same amount of ₹ 2,95,37,024/- as the starting point for computing the ‘Book profit’, followed by a separate addition of ₹ 41,69,100/- towards ‘dividend paid or proposed’, which if that be so, is in self contradiction of the claim raised by the assessee in appeal, however, as the said working is neither found to be in conformity with the settled position of law, nor free from doubts and mistakes, the same thus does not inspire much confidence. Thus in all fairness we herein restore the issue to the file of the A.O, who is directed to look into the mistake which appears to had crept in as regards the making of a separate addition of ₹ 41,69,100/- after adoption of the ‘Net profit’ of ₹ 2,95,37,024/- (supra) as the starting point for computing the ‘Book profit’, and therein rework out the ‘Book profit’ u/s 115JB of the ‘Act’, as per law. Claim of ‘Long term Capital Loss’ - Held that:- In view that as per the material placed on our record by the assessee vide Page 1-5 of the ‘APB’, which is stated to have also been filed with the A.O, the latter is entitled towards the claim of ‘Long term Capital Loss’, though subject to verification of the facts and figures furnished by the assessee. We thus in all fairness restore this matter to the file of the A.O, who after making necessary verifications shall determine the entitlement of the assessee towards C/forward of the ‘LTCL’ so claimed by it, as per law. Levy of interest for alleged late payment of ‘Dividend distribution tax’ - Held that:- e find that as per Sec.115-O(3) a statutory obligation is cast upon the principal officer of the domestic company to pay the tax on distributed profits to the credit of the Central Government within 14 days from the date of : (a) declaration of any dividend; or (b) distribution of any dividend; or (c) payment of any dividend, whichever is earliest. That failing such compliance within the stipulated time period, the assessee as per Sec. 115P is liable to be saddled with interest @ 1% for every month or part thereof, on the amount of such tax, for the period beginning on the date immediately after the last date on which tax was payable and ending with the date on which the tax is actually paid. We find that to the extent the facts had been brought to our notice by the Ld. A.R, and it remains as a matter of fact as claimed by the assessee, that the dividend was declared as on 25.09.2009, and the dividend distribution tax on the same was paid within the stipulated time period of 14 days, i.e. as on 06.10.2009, then if that be so, though subject to the verification of the said averments of the Ld. A.R before us, the assessee cannot be held to have defaulted as regards making of the payment within the stipulated time period of 14 days as required u/s 115-O(3) of the ‘Act’, as a result whereof no interest u/s 115P is liable to be imposed. We thus in light of and subject to our aforesaid observations, delete the interest of ₹ 99,190/- levied on the assessee.
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2017 (2) TMI 743
Initiation of proceedings u/s 158BD without jurisdiction - Held that:- From the record, it seems that the finding arrived at by the CIT (Appeals) was not challenged. Assuming but without admitting, even if the same was challenged, the same was not reversed by the Tribunal in its order. In that view of the matter, in our view, unless the finding of the CIT (Appeals) was held to be bad in law and reversed by the Tribunal in appeal, the consequential order is erroneous and the same could not have been done in appeal preferred by both the sides. The Tribunal has to quash and set aside the conclusion arrived at by the CIT (Appeals) holding that the proceedings under Section 158BD is bad in law which is never reversed by the Tribunal. In that view of the matter, unless the basic finding is held to be valid, the consequential order, in our opinion, is bad in law. Therefore, the issue no.2 is answered in favour of the assessee and against the department. Whether the Tribunal had material and was right in law in holding that the total income assessed in the hands of the society in the block return as well as regular return is to be assessed in the hands of Shri Khan and Shri Vijay at the ratio 51% and 49% respectively, since there was no notice served under section 158 BC, in that view of the matter also the assessee could not have been assessed under section 158BD of the Act. Decided in favour of the assessee and against the department.
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2017 (2) TMI 742
Addition u/s 40A(3) - Held that:- Since the assessee has not been able to substantiate that it falls under any of the circumstances specified under Rule 6DD of the Rules, we are of the considered opinion that the assessee cannot be allowed cash payment exceeding ₹ 20,000/- under section 40A of the Act. Accordingly, we uphold the finding of the learned Commissioner of Income-tax (Appeals) making disallowance - Decided against assessee Disallowance under section 14A r.w.r 8D of Rules - Held that:- We direct the Assessing Officer to restrict the disallowance under section 14A of the Act to the extent of exempt income earned by the assessee. Enhancement to book profit by way of adding provision for leave encashment and provision for gratuity - Held that:- Since in the instant case, the facts that how the provision for leave encashment and gratuity have been computed, are not before us and, therefore, we are unable to hold whether the provisions made by the assessee towards the leave encashment and gratuity are ascertained liabilities. In view of above, we feel it appropriate to restore the matter to the file of the Assessing Officer with the direction to examine the actuarial valuations made by the assessee in respect of provision for leave encashment and gratuity and then decide, whether these are ascertained liability or not, keeping in view of the ratio of the Hon’ble Supreme Court in the case of Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court ).
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2017 (2) TMI 741
Unexplained investment - borrowing from son-in-law - Proof of salary and possession of jewellery and the sale of it - Held that:- Assessee had not discharged the burden as regards the source from which the investment had been made. Unreliability of the claim made by the assessee as regards the receipt of money from her son-in-law. HC ref case [2013 (7) TMI 202 - MADRAS HIGH COURT] - Decided against assessee
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2017 (2) TMI 740
Domestic Customer Database and transfer of human skills should be treated as a revenue expenditure Foreign exchange fluctuation loss should be allowed HC ref case - 2014 (5) TMI 852 - KARNATAKA HIGH COURT
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2017 (2) TMI 739
Penalty u/s 271(1)(c) - concealment of income on account of bogus purchases shown to have been made by assessee from Agra suppliers - dominant contention of the assessee has been that penalty is not leviable against the assessee, being 100% export oriented unit covered under deduction u/s 80HHC due to which the taxable income returned and assessed is at NIL - Held that:- The provision of section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case, the details of purchases furnished by the assessee were found inaccurate resulting into concealment of income, as the sellers, from whom the alleged purchases were shown to have been made, were found bogus and nonexistent. It is an admitted fact that the assessee failed to furnish the purchase vouchers and confirmations of the alleged sellers. Thus it is clear that the explanation offered by the assessee with respect to payments alleged to have been made from suppliers of Agra against purchases, was found false and unacceptable. Authorities below appear to have rightly imposed penalty irrespective of the fact that the total income including the impugned disallowance was eligible for deduction u/s. 80HHC and 80IA as provisions of section 271(1)(c) read with Explanations appended thereto, in our considered opinion, the eligibility for 100% deductions u/s. 80HHC or 80IA, would not mitigate the rigors of penal provisions for the reason the provisions of section 80HHC and 80IA merely provide for tax holiday on the turnover of assessee, but cannot exonerate the assessee from penal consequences as per provisions of section 271(1)(c) of the Act. - Decided against assessee.
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2017 (2) TMI 738
Disallowance u/s 14A - Held that:- We observe that assessee had earned exempt dividend income of ₹ 65.33 lacs and also paid interest of ₹ 15.52 lacs on borrowed funds and assessee’s investment as on 31.03.2007 stood at ₹ 9.52 crores as against ₹ 10.38 crores as on 31.3.2006. Further amended Rule 8-D with respect to disallowance u/s 14A of the Act came in effect from Asst. Year 2008-09 whereas in this appeal we are dealing with Asst. Year 2007-08. We find force in the arguments of the ld. AR that ld. CIT(A) has failed to appreciate the fact that the assessee has already offered income as taxable income and hence ld. Assessing Officer erred in invoking provisions of section 14A of the Act since corresponding income has already been offered to tax. As regards balance disallowance of ₹ 97,314/- i.e. (Rs.5,76,925 – ₹ 4,79,611) we find that assessee’s investment as on 31.03.2007 stands at ₹ 9.52 crores whereas interest free funds which included share capital and reserves stood at ₹ 38.42 crores as on 31.3.2007 which means that assessee’s interest free funds is almost 4 times the investment made. CIT vs. Torrent Power Ltd. (2014 (6) TMI 185 - GUJARAT HIGH COURT) has held that if the assessee has sufficient interest free funds to cover up the investment then no disallowance of interest expenses is called for.As in the present case out of the total disallowance of ₹ 5,76,925/- PMS charges of ₹ 4,79,611/- has already been disallowed by adding it back to the business income and as far as remaining amount of ₹ 97,314/- is concerned, we find that assessee is having sufficient interest free funds to cover up the investments and in this case no disallowance on interest expenses is called for. We accordingly delete the disallowance u/s 14A and allow the appeal of assessee.
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2017 (2) TMI 737
Addition u/s 68 - CIT(A) allowed claim - Held that:- DR could not point out any infirmity in the order of the ld CIT(A), therefore in view of this we confirm the finding of the ld CIT(A) in deleting the addition u/s 68 after obtaining the proper details which proves the identity, creditworthiness and genuineness of the transactions. - Decided in favour of assessee. Disallowance of interest expenditure - Held that:- A.O. has taken the view that the appellant has not utilized the borrowed funds for the purpose of the business and the advance given was more than the borrowed funds. This cannot be a justified basis for disallowance of the interest claim in the light of the fresh advance received from the customers and the fresh unsecured loans. The total advance received and unsecured loans of ₹ 40323252/- in itself is sufficient evidence to established that the complete advance given of ₹ 40022398/- was financed through such advance and unsecured loan Accordingly the contentions and the submission of the counsel of appellant has strong a acceptance. The A.O. has not considered the advance from customer and unsecured loan received by the appellant during the year which financed the source of the advances given. Thus disallowance need to be rejected - Decided in favour of assessee.
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2017 (2) TMI 736
Levy of penalty u/s 271(1)(C) - Disallowance of claim of repairs and maintenance expenses - Held that:- As decided in the case of the assessee itself for AY 2006-07 the issue that whether Repairs and Maintenance in respect of leased buildings was revenue or capital in nature or whether the part of the Foreign Travelling Expenses were for the business purposes of the assessee is clearly debatable in nature. This is a case where the assessee has disclosed all the material facts necessary for assessment at the time of filing of the return itself. The conduct of the assessee in this case was bonafide. In these facts of the case, we are of the view that it is not a fit case for levy of penalty u/s 271(1)(c) of the Act - Decided in favour of assessee
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2017 (2) TMI 735
Disallowance made u/s. 40(a)(ia) - amount payable - Held that:- We direct the AO to delete the addition so made following the principles laid down by the Hon'ble Special Bench of ITAT in the case of Merilyn Shipping and Transport Ltd., Vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] wherein held section 40(a)(ia) is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at source – Decided in favor of assessee.
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2017 (2) TMI 734
Addition u/s 41 - Demand Drafts and Pay Orders payable as on the last date of the Financial Year, which were not so far encashed by the concerned customers - Held that:- Addition cannot be made under Section 41(1) of the Act, since the liability of the assessee Bank to pay back the amounts to the customers in respect of such stale Demand Drafts and Pay Orders does not cease in law. See The Commissioner of Income Tax, Asst. Commissioner of Income Tax Versus Karnataka Vikas Grameen Bank [2015 (12) TMI 1420 - KARNATAKA HIGH COURT - Decided in favour of assessee
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2017 (2) TMI 733
Onus of proving genuineness of the banakhat in question - income from other sources OR capital gains - Held that:- MOU stating the assessee to be in cultivating possession is neither supported by the banakhat in question dated 16.12.1986 nor the sale deed dated 10.09.2008. There is further no evidence in the case file in the nature of form 7/12 that the assessee ever remained in cultivating possession of the lands sold. We observe in these peculiar facts that the assessee has failed to prove veracity/genuineness of the banakhat in question dated 16.12.1986. We thus find force in Assessing Officer’s observations on the latter aspect of the issue that the assessee had failed in proving any advance payment of ₹ 5lacs in question by way of any supportive material; whatsoever. Assessee's contention that the CIT(A) has rightly held the assessee to have proved the above stated banakahat indicating advance payment of ₹ 5lacs fails to concur because of the fact that the very banakhat itself is in dispute between the parties. Once we have held the same to be not supported by any evidence, the relevant terms therein cannot be relied upon. We accordingly reject assessee’s contention. Assessee's next argument that AO ought to have summoned the vendors in question in case he had any doubt about the banakhat in question finds no merit in this plea as well as the said vendors had already paid the amount in question to the assessee. They hardly had any further explanation to make in view of their action making the payment in question to the assessee. We further make it clear that there is no dispute about the fact as to whether or not the assessee has received the payment or not but the issue herein is about genuineness of his claim of having executed the banakhat dated 16.12.1986. We thus reject instant argument as well. We are of the opinion in given facts of the case that it is not the sale deed which is in dispute but the issue herein is about genuineness of assessee’s claim to have entered into the above stated banakhat dated 16.12.1986. Assessee contention that AO had erred in rejecting assessee’s explanation on the ground that the above stated banakhat was not a registered document is rendered academic as we have already held on merits that he has failed in proving veracity of the banakhat in question dated 16.12.1986. We accordingly conclude that the Assessing Officer had rightly acted in treating the above sum received as income from other sources instead of capital gains in assessee’s computation. - Decided in favour of revenue
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2017 (2) TMI 732
Income from share transaction - business income or capital gain - Held that:- As decided in Hitesh Doshi (2011 (6) TMI 102 - ITAT, Mumbai ) held that when an assessee maintains similar number of companies and only number of shares therein increase or decrease, he is only a prudent investor. The assessee is an investor not engaged in the business of sale purchase of shares and mutual funds. The question is accordingly decided against the Revenue both assessment years. The A.O. is directed to treat her income from sale of shares and mutual funds in the two assessment years as short term capital gains and matter decided in favour of the assessee. Validity of reopening of assessment - Held that:- A.O. during the course of assessment proceedings u/s.143(3) of the Act, the AO was well within his right in re-opening the assessment on the ground. The A.O. has come to the conclusion that there was escapement of income from assessment. The notice has also been issued within the prescribed time. Therefore, we uphold the validity of reopening of the assessment u/s.147 and notice u/s.148 of the Act. These grounds of appeal challenging the validity of the reassessment are thus dismissed. - Decided against assessee.
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2017 (2) TMI 731
TDS under section 194C or 194-I - work over operations, transport expenses - Held that:- When this appeal came up for hearing before the Commissioner of Income Tax (Appeals), the Commissioner of Income Tax (Appeals) without adjudicating merits of the case, directed the Assessing Officer to follow the decision of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA ). We find that the Commissioner of Income Tax (Appeals) has not considered the ground No.2 raised by the assessee, he only considered the alternative plea and remanded the matter back to the file of the Assessing Officer. We, therefore, by considering the arguments of both the sides and also request made by both the counsel, set aside the order passed by the Commissioner of Income Tax (Appeals) and remand the matter back to the file of the Assessing Officer to examine all the details of the case and decide the issue afresh in accordance with law.
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2017 (2) TMI 730
Addition u/s 145A - Assessee is valuing closing stock after excluding the tax, duty and cess etc. and thus violating the provisions of section 145A - Held that:- In the process of manufacturing assessee purchases goods from within the State and outside the State due to which VAT credit is available for VAT paid goods purchased from within the State and Central Sales Tax is paid from outside State goods which are included in the purchases itself. Assessee is also covered under the Excise Act and was enjoying concessional rate of excise duty to be leviable on the goods manufactured. Closing stocks of the assessee constitutes raw material, packing material, consumable stores purchased from within and outside the State, semi finished and finished goods. All these categories of closing stock out of which some are inclusive of taxes and some are exclusive of taxes and, therefore, assessee is consistently following the system of valuing the opening and closing stocks exclusive of taxes. Further assessee is applying the Accounting Standards framed by the Institute of Chartered Accountants of India which are required to be followed for preparing financial statements as per the Companies Act. It is not disputed that as per the provisions of section 145A of the Act opening and closing stocks should be inclusive of taxes but due to the type of business and variety of stocks, assessee is unable to do so. However, it is a fact that there is no negative impact on the revenue as both the opening and closing stocks are valued exclusive of taxes and, therefore, closing stock for the year under appeal which is excluding of taxes will become opening stock for next year. In the case of Voltamp Transformers Ltd. vs. CIT (2008 (4) TMI 518 - Gujarat High Court ) has held that Assessing Officer has got very limited powers to change valuation of closing stock which is part of accounting policy. He cannot change method of accounting regularly followed by the assessee without valid reasons. We also observe that during the course of assessment proceedings as well as appellate proceedings it was submitted by assessee that it was paying excise duty on concessional rate and was not taking any benefit of CENVAT which itself is a plausible explanation which remains uncontroverted. Since CENVAT is not available to the assessee then the enhancing the value of semi finished and finished goods in the closing are not warranted. - Decided in favour of assessee. Addition on account of late payment of employees contribution to the Provident Fund - Held that:- The issue raised in this ground by Revenue against ld. CIT(A)’s order deleting the addition of ₹ 9,728/- on account of late payment of employees contribution to the PF is now well settled in favour of Revenue by the judgment of Hon. Gujarat High Court in the case of CIT vs. GSRTC (2014 (1) TMI 502 - GUJARAT HIGH COURT ) wherein it has been held that if the amount of contribution fo PF is deposited after the due date then assessee will not be entitled to deduction against the income. Accordingly, this ground of the Revenue is allowed. Additional deduction claimed u/s.80lB - Held that:- Assessing Officer has not objected to the revised quantum of deduction claimed by assessee at ₹ 65.58,922/- which as per assessee was the correct and legitimate amount as per the provisions of section 80IB of the Act. Ld. Assessing Officer has merely disallowed the claim for not filing revised return of income. It is an established proposition of law that the correct income of the assessee has to be assessed by the Assessing Officer and if there is a rightful claim then the same should be allowed to the assessee. More particularly in this case of assessee claimed a deduction u/s 80IB of the Act in the return of income so there is no new claim made during the course of assessment proceedings but it is just a correct claim which has been put forward with due supporting before ld. Assessing Officer and the same should have been allowed to the assessee. CIT(A) has rightly allowed the revised claim of assessee u/s 80IB of the Act at ₹ 65,58,922/-. We therefore, find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is dismissed.- Decided in favour of assessee. Addition for alleged unreconciled credit differences - Held that:- As wherein regular books of accounts are maintained and the same are not rejected alleged difference is only on account of credit notes issued which have not been cross verified with the impugned parties and the genuineness of transactions recorded by the assessee, no addition was called for by the ld. Assessing Officer. We therefore, set aside the order of ld. CIT(A) and delete the addition - Decided in favour of assessee.
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2017 (2) TMI 729
Unexplained cash deposit in bank account - Held that:- The assessee had entered into in an agreement with one Sh. Rajesh S/o Sh. Rajender Singh for sale of his ancestral agricultural land for ₹ 60 lacs and advance of ₹ 30 lacs was received on different dates as mentioned in agreement to sell and copy of the same was filed before the AO in remand proceedings. The AO in his remand report Dt. 23.12.2015 has admitted this fact and affidavit of the purchaser was also obtained by the AO. An affidavit is a valid piece of evidence as has been held by the Hon'ble Supreme Court of India in the case of Parikh and Co vs CIT [1956 (5) TMI 4 - SUPREME Court ]. The AO has admitted to the fact of the affidavit, dated 8.9.2015, affecting the repayment. The AO has however merely stated that no evidence was produced regarding the repayment, but no efforts were made by him. Filing of the affidavit and the fact the AO has made no effort to prove that it is false, makes the addition contentious. Hence, the Ld. CIT(A) has rightly deleted the addition which does not need any interference on our part, hence, uphold the same. Addition of ₹ 10,09,837 is concerned AO has admitted to the fact of the affidavit, dated 8.9.2015, affecting the repayment. The AO has however merely stated that no evidence was produced regarding the repayment, but no efforts were made by him. Filing of the affidavit and the fact the AO has made no effort to prove that it is false, makes the addition contentious. The addition of ₹ 10,09,837/- received through cheques. During the year under appeal the assesse had sold part of his ancestral agricultural land along with his other family members for ₹ 32,55,000/- and the assessee had received two cheques of ₹ 945000/- (708750.00+236250.00) as his share. The other credit entry of ₹ 64837/- on 18.05.2005 is on Alc transfer from BC 334. The AO had not bothered to verify from bank. The credit entry in the bank were from the sale proceeds of agriculture land and transfer entries. The entries relate to cheque deposits made on account of receipt of sale of land. The AO has made no effort to disprove the assessee’s claim. There is no concrete evidence to disprove the assessee, hence, Ld. CIT(A) has rightly deleted the addition in dispute. - Decided against assessee
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2017 (2) TMI 728
Addition of the investment claimed on the renovation of the house property - Held that:- When the AO got satisfied regarding renovation of the house carried out by the assessee during the year under assessment to the tune of ₹ 13,00,000/- on the basis of bills and vouchers produced by the assessee, contention of the assessee that the amount of ₹ 1,88,820/- was spent by way of labour charges given to the daily wagers who have worked for a period of three months is sustainable. One cannot be expected to procure the vouchers for making payments to the daily wagers who even keeps on changing as per availability in the labour market. So, we find no illegality or perversity in the findings returned by the CIT (A). This ground is determined against the revenue. Entitlement to exemption u/s 54F - property purchased in the joint name - Held that:- Perusal of the findings returned by ld. CIT (A) goes to prove that he has thrashed the matter threadbare by perusing the bank account maintained with State Bank of India vide which the entire reinvestment in purchasing the house has been made by the assessee, though the house was purchased in the joint name of the assessee as well as her daughter-in-law, Smt. Purabi Devi. So, when the source of funds invested in the house have come from assessee herself which she has got by selling her property for a sale consideration of ₹ 5,81,19,521/-, she cannot be denied the benefit of section 54 merely because of the fact that the property was also purchased in the joint name of her daughter-in-law. Moreover, the entire sale consideration received by the assessee form the sale of property was received through bank and Smt. Purabi Devi has undisputedly not invested any amount towards making payment of sale proceeds of the new property. Ratio in both cases CIT vs. Ravinder Kumar Arora (2011 (9) TMI 343 - DELHI HIGH COURT ); and (ii) CIT vs. Kamal Wahal (2013 (1) TMI 401 - DELHI HIGH COURT) says that, “when new residential property has been purchased by the assessee in joint names of assessee and his close relative by investing the entire amount of long term capital gain, the assessee is entitled for full exemption u/s 54F of the Act.” - Decided against the revenue. Addition claimed u/s 54-EC on purchase of National Highway Authority of India (NHAI) Bonds - Held that:- Bare perusal of section 54-EC goes to prove that there is no mention that the long term investment in specified assets should be in the name of assessee only rather the core issue to be seen is as to what was the source of fund. No doubt, the bonds were purchased by way of cheques issued form joint account of the account holders but further perusal of the bank account goes to prove that the assessee has received ₹ 75,00,000/- as the sale consideration out of which the amount of purchase of long term specific assets were invested. So, following the ratio of the judgments in the cases of CIT vs. Ravinder Kumar Arora and CIT vs. Kamal Wahal (supra), we are of the considered view that the assessee has rightly claimed deduction of the entire amount of ₹ 50,00,000/- invested by her. - Decided against the revenue.
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2017 (2) TMI 727
Validity of reopening of assessment - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. The reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Inv.), New Delhi. - Decided in favour of assessee.
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2017 (2) TMI 726
Penalty u/s.271(1)(c) - addition u/s 50 - Held that:- The assessee has highlighted all blocks of assets with specific plea to have never included the factory building in question therein. Needless to say, the same has also gone unrebutted except the fact that both the lower authorities have drawn their respective conclusions only on presumptive basis. We thus conclude that the Assessing Officer as well as CIT(A) have erred in invoking Section 50C of the Act qua assessee’s factory building sold giving rise to the long term capital loss in question without proving that the same ever found part of a block of assets so as to be granted depreciation relief thereupon. It is now clear in view of our findings on merits that the impugned Section 271(1)(c) penalty has no legs to stand since the quantum disallowance/addition arising from re-computation of long term capital gains/loss by applying Section 50 of the Act itself stands deleted. - Decided in favour of assessee
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2017 (2) TMI 725
Addition u/s 69C - assessee had actually admitted undisclosed income at the time of search and has also made surrender to that extent on the based on the seized documents - CIT(A) deleted addition - assessee trust got registration under section 12A - receipt of corpus donations - Held that:- As from notes of accounts forming part of balance sheet as on 31.03.2009 mentions that the assessee trust receive voluntarily contributions and corpus donations represents acquisitions of assets i.e. land building etc. on behalf of the trust by the trustee’s. Page 199 of the (APB) further manifest that the assessee trust also received corpus fund from Shri Devi Chand, Vinod Goel, Vijay Goel, Krisnhan Goel, Raj Bala, Rajni Goel, Seema Goel, with specific directions as per notes to accounts (Supra), In the notes to accounts it has also been mentioned that the corpus donations which are represented by acquisitions of assets such as land building etc. by the trust then it cannot be held that voluntarily contributions received by the assessee with specific directions does not form part of corpus donations. Hence, first allegation of the AO is not sustainable. As find from the copy of the assessment order (for AY 2009-10 placed at pages 235 to 257 of APB) it is clear that the assessing officer has not made any addition pertaining to voluntary contributions to the assessee trust and thus it is presumed that the same AO has accepted fact of voluntary contributions by the said company to the assessee trust and this amount was given by the donor to the assessee trust with specific directions that the same should be used for construction of building therefore it formed part of corpus donations and thus source of impugned amounts is clearly discernable from the above noted facts and documents. When the donor M/s Goel International Pvt. Ltd. is surrendering huge amounts including the amounts which were voluntarily contributed and donated to the assessee trust for the purpose of construction of building then the amount which has been surrendered in the case of M/s Goel International Pvt. Ltd. and all due taxes and interest etc. has been paid by the said company then the source of expenditure incurred by the assessee trust on construction of building has to be held as explained and the same amount which was surrendered and taxed in the hands of M/s Goel International Pvt. Ltd. cannot be taxed again in the hands of assessee trust under section 69C of the Act, and obviously it would amount to double taxation on the same amount which is not permissible as per well accepted principle of the tax jurisprudence. So far as allegation of the AO that the assessee never took the plea that the amount of peak has been incurred on expenditure made on behalf of M/s Galaxy Global Educational Trust by M/s Goel International Private Limited is concerned we are of the view that this plea was not relevant to be taken by the assessee trust because when it is explaining the source of expenditure incurred in the construction of building that the amount was received from M/s Goel International Pvt. Ltd. with specific directions as corpus fund then plea of then the plea of amount of peak may be relevant for M/s Goel International Pvt. Ltd. but not in the case of present assessee therefore this allegation of the AO does not have lags to stand on the justified basis. When the assessee has explained source of the funds incurred as expenditure on construction of building that the corpus funds was received from M/s Goel International Pvt. Ltd. which was also search then the amounts which were recorded in the seized material pertaining to M/s Goel International Pvt. Ltd. and the same amount which was recorded in the seized material found from the assessee trust premises does not attract provisions of section 69C of the Act as when the same amount has been surrendered and taxed in the hands of donor then the source of the funds which were used for expenditure as to held as explained in the hands of donee assessee trust and provisions of section 69C of the Act cannot be invoked for making addition on account explained expenditure - Decided in favour of assessee
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2017 (2) TMI 724
Addition made under Section 153 A - validity of assessment - Held that:- The search conducted was on 10.02.2006. The assessment for AY 200405 was framed on the basis of material already on record much prior to the search conducted on 10.02.2006. It was a scrutiny assessment under Section 153 A of the Act and on the basis of the material on record, the assessment was framed for AY 200405. On the basis of some incriminating material found / detected during the search on 10.02.2006, which was for the period of !Y 200405 onwards and in absence of any specific incriminating material detected for the AY 200405, the AO was not justified in making any addition - Decided in favour of assessee
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2017 (2) TMI 723
Denial of claim of set off of loss from shares and derivatives - whether loss from the purchase and sale of shares can be set of against the business income in terms of section 73? - Held that:- Loss incurred on derivative transaction was not a speculative loss and is allowed to be adjusted against business income. See Asian Financial Services Ltd. Vs. Commissioner of Income Tax-3, Kolkata [2016 (3) TMI 685 - CALCUTTA HIGH COURT ] Whether the loss from the activity of trading in shares, i.e., purchase and sale of shares is a speculation loss in terms of explanation to section 73(4) ? - Held that:- Respectfully following the decision of the Tribunal in the case of SRJ Securities Ltd. (2003 (1) TMI 260 - ITAT DELHI-B ), we hold that the activity of purchase and sale of shares carried out with assessee for the purpose of section 73 of the Act is a speculation business activity and, accordingly, the loss of ₹ 10,10,75,192/- suffered from the activity of purchase and sale of shares cannot be allowed to set off against the business income.
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2017 (2) TMI 722
Applicability of provisions of Sec.164(1) - whether the assessee trust cannot be assessed as on AOP? - ITAT held that the assessee trust cannot be assessed as on AOP even though the requirements of section 164(1) were not met - Held that:- By no interpretative process the explanation to Section 164 of the Act, which is pressed in service can be read for determinability of the shares of the beneficiary with the quantum on the date when the Trust deed is executed and the second reason is that the real test is the determinability of the shares of the beneficiary and is not dependent upon the date on which the trust deed was executed if one is to connect the same with the quantum. The real test is whether shares are determinable even when even or after the Trust is formed or may be in future when the Trust is in existence. In the facts of the present case, even the assessing authority found that the beneficiaries are to share the benefit as per their investment made or to say in other words, in proportion to the investment made. Once the benefits are to be shared by the beneficiaries in proportion to the investment made, any person with reasonable prudence would reach to the conclusion that the shares are determinable. Once the shares are determinable amongst the beneficiaries, it would meet with the requirement of the law, to come out from the applicability of Section 164 of the Act. Under the circumstances, we cannot accept the contention of the Revenue that the shares were non-determinable or the view taken by the Tribunal is perverse. On the contrary, we do find that the view taken by the Tribunal is correct and would not call for interference so far as determinability of the shares of the beneficiaries are concerned. Once the shares of the beneficiaries are found to be determinable, the income is to be taxed of that respective sharer or the beneficiaries in the hands of the beneficiary and not in the hands of the Trustees which has already been shown in the present case. - Decided in favour of the assessee.
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2017 (2) TMI 721
Addition on income from unexplained sources u/s 68 - sham transaction - Held that:- Assessing officer without making proper enquiries and without any basis considered the transaction of sale and purchase of commodities as sham transaction. The authorities below were not justified in holding that no credible evidence has been filed on record to prove genuineness of the transactions in the matter. The authorities below are also not justified in holding that no known or boanfide source of the transaction have been proved. Considering the totality of facts and circumstances and the fact that the nature of the income and source on the identical transaction have been accepted by the Department in preceding assessment year, authorities below were not justified in holding the income of the assessee from unexplained sources u/s 68 of the I.T. Act. We accordingly set aside the orders of the authorities below and delete the addition - Decided in favour of assessee
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Customs
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2017 (2) TMI 711
SEZ units - Worn and used clothing - withdrawal of the exemption - public interest - Effect of change in the policy dated 17.9.2013 - retrospective or prospective - entitlement of selling of un-mutilated worn clothing being export surplus and export rejects in DTA on payment of applicable duties - whether the petitioners should be allowed to sell in DTA their past accrued entitlement of un-mutilated clothing up to 15% of the imports made till 18.5.2010? Held that: - Even in the policy dated 17.9.2013, the respondents have provided that the petitioners will be allowed to sell unmutilated worn clothes, being export surplus and export rejects on payment of applicable duty to the extent of 15% of FOB value of their exports. The unilateral withdrawal of 15% from retrospective effect may not be justified. This industry is providing large employment to unskilled workers in the local area and phasing them out will result in loss of employment of about 12,000 workers. One of the key motive of establishment of SEZ is to generate maximum employment, which would be defeated if their LOAs are not renewed. The worn clothing units of SEZ provide large employment, they fulfilled their NFEE requirement by way of exporting same products to the various countries outside India. The worn clothing imported is non-hazardous in nature, further import is fumigated at the origin to ensure that imported worn clothing is free from germs and they earn valuable foreign exchange for our country, thus there is no reason to impose extra conditions to regulate the functioning of the worn clothing units in SEZ that are over and above the provisions already provided in SEZ Act/ Rules. The authority has bye-passed the mandatory provisions and issued the impugned instructions against the prescribed law which was beyond their jurisdiction. Respondents are directed to allow the petitioners to clear their past accrued entitlement of DTA sales of un-mutilated worn clothing to the extent of 15% of their CIF value of imports made prior to 19.5.2010 and for unutilized DTA entitlement of un-mutilated worn clothing as on 19.5.2010, DTA entitlement quantity of un-mutilated worn clothing to be calculated as per the valuation norms as prevalent on 19.5.2010 on payment of applicable duties and taxes. Petition allowed - decided in favor of petitioner.
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2017 (2) TMI 710
Release of impounded passport - smuggling - export of sanders wood - whether the withholding of passport without the issuance of SCN as per sub-section 5 of Section 10 is valid? - Held that: - provisions of the Passport Act have not been complied with, decision of impounding the passport by relying upon the letters of the Customs Authorities is wholly misplaced. The zimni orders would reveal that even notice in the complaint had not been issued, much less, penalty has already been imposed and the matter is subjudice before the Appellate Authority - If at all the Customs Authority would have apprehension regarding the travel of the petitioner, they can take up all possible pleas before the Court/concerned authority as and when any application is moved seeking permission to travel abroad but they cannot give incorrect/wrong information and particulars to the Passport Authority misguiding them to withhold/impound the passport. The impugned action of the Passport Authority based upon information provided by the Customs Authority is wholly misplaced and untenable, much less, suffers from illegality and fallacy, hence set aside - The Passport Authority is directed is release/re-issue the passport No.H-7164937 - petition allowed - decided in favor of petitioner.
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2017 (2) TMI 709
Legality and validity of SCN - petitioner relies upon sub-section-2 of Section 110 to submit that if any goods are seized under sub-section (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized - Held that: - when the show cause notice was given within six months, “if given” is to mean “to be issued and served”, that has also taken place within six months, then, we do not think that we should entertain this Writ Petition - the show cause notice is valid - petition dismissed - decided against petitioner.
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2017 (2) TMI 708
Classification of imported goods - Brass Honey Scrap - Held that: - in view of the divergent reports of different Chartered Engineers, the position with regard to classification of impugned goods was not free from doubt. Thus, in such a case, the Department should have extended the benefit of favorable report submitted earlier to support the classification declared by the appellant. The appellant had specifically requested the Id. Commissioner (Appeals) for cross examination of Shri M.N. Mathur, but the request was turned down on the ground that cross examination cannot be claimed as a matter of right under Section 124 of the Customs Act, 1962. Since, the appellant has been denied with its rights to cross-examine the expert, his report cannot be relied on for assessment of the Bill of Entry, which is contrary to the claim of the appellant. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 707
Validity of SCN - whether SCN valid on the ground that the DGFT itself had formed an opinion that the petitioner had complied with the Export Obligation? - Held that: - True that the DGFT had formed an opinion that the petitioner had complied with the Export Obligation. But still it is a matter for the Commissioner of Customs to decide on the question as to whether the licence conditions had been fully complied with or not. When a competent authority had issued a SCN, it for the said authority to finalise the proceedings and therefore, I do not think that there is any illegality in the Commissioner of Customs issuing SCN - petition dismissed.
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Corporate Laws
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2017 (2) TMI 703
Winding up - whether the IDBI Bank Limited, a Consortium Leader representing the consortium of 21 banks who have lent and advanced huge amounts to the respondent company can be allowed to intervene in this company petition at the stage of admission of the company petition or can be allowed to intervene only after the company petition is admitted and notice is issued for final hearing of the company petition? - Held that:- A perusal of the company application filed by the intervenor indicates that the working capital consortium and term loan dues of the term lenders outstanding is ₹ 8593.00 crore and ₹ 945.00 crore respectively. It is thus clear that insofar as the petitioner is concerned, the alleged liability of the petitioner recoverable from the respondent company is hardly 2% of the total debts of the other lenders and is at 1% of the debts of the total creditors. In my view, the intervenors are thus entitled to oppose this petition and are entitled to be heard at the admission stage of this petition. Any order of admission of this petition will seriously hamper the interest of large number of lenders which are participating in the process of restructuring of the respondent company. I am thus inclined to allow the intervention application filed by the IDBI Bank Limited and permit them to intervene in the present proceedings at the admission stage. Scope of revival - rectification and restructuring actions - Held that:- When 98% of the creditors in value of the total debts of the respondent have agreed to oppose this petition for winding up and have been participating in the JLF's meetings to take steps for rectification and restructuring of the respondent and some decisions taken by the said JLF are under implementation, in view, the petition at the instance of the petitioner who claims about 1% of the total debts of the respondent cannot be entertained. An order of winding up in favour of the petitioner would not benefit the petitioner or the creditors of the respondent generally. Even if there are any chances of revival of the respondent-company which are attempted by the creditors of more than 98% in value, any adverse order passed in this petition at this stage would hamper the chances of revival of the respondent. Powers of the Company Court under Section 539 of the Companies Act, 1956 are discretionary and have to be exercised cautiously and judiciously. In the facts of this case, we are satisfied that the respondent-company which has a temporary set back and is making a sincere attempt of its revival with the assistance of large number of the creditors, it would not be desirable and in the interest of all the creditors including the petitioner to pass any order of winding up against the respondent-company at this stage.
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Service Tax
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2017 (2) TMI 720
Refund claim - specified services used for export of goods - Banking Other services - rejection on account of lack of proof of payment of service tax - Sale of Goods by Foreign Commission Agent - rejection on account of non-payment of service tax - Held that: - bank statements clearly indicate not only the commission charges of the bank but also service tax amounts debited to the account of appellant. It has further been mentioned that the bank charges and service tax payment are with reference to the export carried out by the appellant. The statement has also been attested by the bank - rejection of refund unjustified. Sale of Goods by Foreign Commission Agent - Held that: - the issue is no more res integra and it is decided that payment of service tax is allowable when paid from Cenvat credit account. There can be no case for rejection of such refund claim made under N/N. 41/2007 - refund allowable. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 719
Appeal to the CESTAT - petitioner seeks liberty to withdraw the writ petition and to urge all issues on merits - Held that: - Liberty granted. It is open to the petitioner to urge the grounds with respect to the initiation of show cause notice proceedings as well as merits of the adjudication order in the appeal - petition dismissed.
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2017 (2) TMI 718
Business Auxiliary Services - multi level marketing services - Held that: - service tax will be chargeable on the commission received by the distributor on the products purchased by his sales group. However, the service tax is not leviable on the commission earned by the distributor on the basis of the volume of the purchases made by the group of second level of distributors appointed by M/s. Forever Living Imports (India) Pvt. Ltd. on being sponsored by the distributor Extended period of limitation cannot be invoked in the present case - matter remanded to to the lower authorities for re-quantification of the demand falling within the limitation period after examining the applicability of the small scale industry - there was bonafide belief in the industry itself, imposition of penalty u/s 78 would not be justified - appeal partly allowed - part matter on remand.
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Central Excise
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2017 (2) TMI 717
Clandestine removal - levy of redemption fine in lieu of confiscation - M.S. Ingots - removal of goods without issuance of invoice - imposition of penalty u/r 25 of CEA - Held that: - the appellant cannot wriggle out from under in the guise of trying to assert that there was no intention to evade duty. Though confiscation of the material was not made at the premises of M/s.Sri Krishna Alloys, but made at the premises of the appellant, the appellant being a person holding safe custody of the materials, without there being any valid invoice for receipt of the same as raw material, if wishes to retain the confiscated materials, could redeem the same on payment of fine, as has been ordered. The the appellant having received the materials and stored the same within its factory premises without valid invoice, can be said to be holding the materials in safe custody and, therefore, as held by the Tribunal, would not fall within the four corners of Rule 25 of the CEA read with Section 11AC of the CER - the finding arrived by the Tribunal that penalty is not imposable in view of the fact that the appellant would not fall within any of the four categories enumerated u/r 25 of the CER cannot be said to be erroneous. The factum of non-raising of invoice had come to light only due to the surprise inspection conducted by the Department - There was no revenue loss to the exchequer. However, mere payment of duty before issuance of show cause notice would not preclude the Department, from levying redemption fine, once the factum of evasion of duty is made out, be it mala fide or not. Levy of redemption fine on the goods manufactured by M/s.Sri Krishna Alloys for being used as raw materials at the hands of the appellant, could not be termed as erroneous or an unjustified act. Appeal dismissed - decided against appellant.
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2017 (2) TMI 716
Area based exemption - whether the appellant is liable to pay NCCD, Education Cess and Secondary Higher Education Cess inspite of the exemption N/N. 50/2003? - reliance placed in the case of CCE, Dibrugarh Vs. Prag Bosimi Synthetics Ltd. [2013 (11) TMI 487 - GAUHATI HIGH COURT] - Held that: - NCCD, Education Cess, Secondary Higher Education Cess which are levied under separate statutory enactments cannot be granted exemption under the notification. - appellant will not be entitled to exemption for the above three types of duties inspite of enjoying the benefit of exemption under Notification No. 50/2003. - Decided in favor of revenue. Utilization of accumulated cenvat credit to pay NCCD and Education cess - Held that:- Once the final products manufactured are exempted goods, then there is a bar in availing cenvat credit on the inputs/ input services in terms of Rule 6 of the CCR, 2004. The appellant will not be entitled to avail the cenvat credit of duties paid on the inputs. Consequently, there is no question of set-off of such credits towards the liability for NCCD Education Cess and Secondary Higher Education Cess - appeal dismissed - decided against appellant.
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2017 (2) TMI 715
CENVAT credit - captive consumption - merger of the units - whether the appellant is entitled to the Cenvat credit of duty paid on the inputs and input services utilized at their Captive Power Plant, which is located at Renusagar, almost 50 KM away from the factory? - The main ground for denial is that the power plant does not belong to appellant (Hindalco) and services availed by subsidiary company (Renusagar Power Plant) cannot be given credit to appellant. Held that: - The Hon'ble Delhi High Court approved the scheme of amalgamation which resulted in the merger of Hindalco Industries Limited and Renusagar Power Company Limited. As such there can be no dispute about the fact that power plant at Renusagar belonging to the appellant. Hence, the basis of Member (Technical)finding that the power plant belongs to subsidiary unit is factually incorrect. Hence, the reasoning followed is untenable. Credits of duty paid on services availed with reference to Renusagar Power Plant are rightly eligible to the appellant - Decision in the case of 1988 (7) TMI 367 - SUPREME COURT OF INDIA [1988 (7) TMI 367 - SUPREME COURT OF INDIA] followed. - decided in favor of appellant.
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2017 (2) TMI 714
Refund claim - excess duty paid - rejection on the ground of unjust enrichment - Held that:- The Tribunal concluded that the doctrine of unjust enrichment can be invoked but that aspect was not elaborated further. Midway the Tribunal holds that there is substance in the Department's objection on the point of limitation and therefore concentrated its entire attention towards that point. In dealing with that also, in subparas (ii) to (d) of para 5, the Tribunal committed serious errors of law apparent on the face of the record. The Tribunal did not elaborate as to how, in this case, the question of limitation can be said to be a pure legal issue. Such a plea raises a mixed question of law and facts and it is only after the applicable facts attract a bar and those facts are admitted, but the issue raised is whether the interpretation of the legal provision bars the remedy, then, it could be, in a given case, said to be a pure legal issue. Ordinarily, however, it is a mixed question - We are unhappy at the manner in which the Tribunal has dealt with the Appeals. We do not think that we should conclude the issue on both points, namely, whether there is a period of limitation prescribed and at the relevant time which is attracted and that the doctrine of unjust enrichment can be invoked. Appeals restored to the file of the Tribunal for a decision afresh on merits - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 713
Levy of duty - Kerosene meant for PDS - delay in issuing exemption notification - whether taxable prior to issuance of N/N. 4/2005-C.E on 1.3.2005 - Held that: - Law is well settled that a curative notification which seeks to mitigate the hardships is always read in a manner to advance public welfare and construed liberally as well as retrospectively. The Notification dt.1.3.2005 having conveyed the policy of the Government to exempt PDS kerosene from levy of excise duty, as that was the intention conveyed through the above circular, there shall not be confusion to levy excise duty on PDS kerosene because issuance of notification was delayed by nearly 6 months - such notification shall have retrospective effect - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 712
CENVAT credit - common inputs used in the manufacture of excisable and exempted final products - delay in filing application - Held that: - when the quantum of inadmissible credits for the period of dispute has been reversed within 6 months from the date on which the Finance Bill, 2010 received the assent of the Hon’ble President of India and also has satisfied the terms of the Trade Notice No.25/2010 dt. 16-09-2010, substantive benefit of the beneficial provisions of Section 69 and 73 of the Finance Act,2010 cannot be denied to the appellant only on the grounds that there was delay in filing the application and also that interest payable on the amounts reversed was paid only on 23-2-2010. Interest on the said amount of will definitely also be payable under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. No penalty can be imposed on the appellants especially considering that the amount of ₹ 23,06,207/- was paid by the appellants for resolution of the dispute as per the trade notice along with interest liability of ₹ 18,69,311/- also paid, albeit belatedly on 23.12.2010. Matter remanded for verifying calculation of credits reversed - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (2) TMI 706
Imposition of penalty u/s 22(5) of the 2006 Act - Held that: - the amount demanded towards penalty, as indicated in the impugned order, is not in consonance with the provisions of Section 22(5) of the 2006 Act - impugned order set aside - respondent will re-assess the amount payable by the petitioner towards penalty - petition allowed by way of remand.
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2017 (2) TMI 705
Natural justice - valuation - no physical verification of the stock was done, and therefore, no reconciliation was carried out, as between what was reflected in the books of accounts - Held that: - The respondent is directed to re-hear the petitioner on this aspect of the matter, but before he does that, he would furnish the material/information available with him, which forms the basis for the enhancement - matter on remand.
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2017 (2) TMI 704
Detention of goods - non-submission of Form JJ - Held that: - the captioned writ petition is disposed of with a direction to the respondent to release, forthwith, the detained goods, upon payment of one time tax equivalent to a sum of ₹ 90,211/- - decided partly in favor of petitioner.
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Indian Laws
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2017 (2) TMI 702
Recovery proceedings initiated by the respondent Bank - non repayment of the loan - Held that:- In totality of the circumstances as noticed this Court is of the opinion that the respondent Bank cannot proceed on the basis of the publication made under Section 13(4) of the SARFAESI Act, only for the reason of the respondent Bank having not considered the objections filed before it, pursuant to the notice under Section 13(2), which was before it; before a decision was taken to proceed under section 13(4); though filed by the defaulter after the 60 days period as prescribed under the SARFAESI Act. It is hence declared that the respondent bank cannot proceed for sale of the properties as per the publication impugned before this Court in the above writ petition and the writ petition would stand allowed leaving open the remedy of the respondent bank to proceed against the defaulter/petitioner in accordance with the provisions of the SARFAESI Act or any other law in force. If the further proceedings are taken under the SARFAESI Act,then it would have to commence from the consideration of objections and a reply given on that count.
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2017 (2) TMI 701
Extension of time for payment of fine - dishonor of cheque - petitioner submitted that though he could not deposit the fine amount within the time stipulated he intends to make the deposit but that the Court below is not accepting the said amount on the ground that the time granted by this Court had already expired - Held that:- Considering the pleas made by the petitioner, this Court is of the view that the time for payment of the fine amount could be extended suitably in the interest of justice. Accordingly it is ordered that the time for payment of the fine amount of ₹ 1,00,000/- (Rupees One lakh only) will stand extended by a further period of 2 months from today. It is for the petitioner to appear before the Trial Court on any day on or before 15.03.2017 and to suffer the imprisonment till the rising of the Court and pay the fine amount of ₹ 1,00,000/- (Rupees One lakh only). Until the expiry of the said extended time limit all further coercive steps including issuance of warrant if any, in pursuance of the execution of the sentence in this case will stand under suspension. The learned Public Prosecutor will convey these directions the competent police authorities for necessary compliance.
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