TMI Tax Updates - e-Newsletter
February 19, 2015

Case Laws in this Newsletter:

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

TMI SMS

• TDS u/s 194C - cinecasting / distribution of movies would be outside the purview of section 194C of the Income Tax Act, 1961 - No TDS - HC

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• Providing maintenance & repairs on behalf of M/s. Modi Xerox to the customers -taxable as business auxiliary service - demand set aside -Tri

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Articles

• Sum paid as a pure agent of service recipient is not includible in value of services
• Commodity Transaction Tax (CTT)
• ENERGY MANAGEMENT IN TELECOM INFRASTUCTURE INDUSTRY

News

• Commodity-Wise Freight Revenue Earnings of Railways goes up by 12.43 Per Cent During April 2014-January 2015

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• RBI Reference Rate for US $

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• India-Myanmar 5th Joint Trade Committee Meeting

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Highlights / Catch Notes

Income Tax

• Liability to deduct TDS u/s 194C - cinecasting/distribution of movies would be outside the purview of section 194C of the Income Tax Act, 1961 requiring tax deduction at source - HC
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• An admission is substantial evidence of a fact, within the special knowledge of an assessee and if not retracted immediately or within reasonable time is substantive evidence of a fact and may be read against an assessee. - HC
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• Difference of stock - amount of closing stock differ in the books and as per the statement given to the bankers - unaccounted fabrication work - additions confirmed - HC
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• TP adjustment on account corporate guarantee provided by the assessee to its AE - no transfer pricing adjustment could be made with regard to corporate guarantee issued by the assessee to its AEs and impugned additions are deleted - AT
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• There is not a single case law laying down a principle that books should compulsorily be rejected wherever a survey is conducted. Otherwise also, if this principle is accepted then there would not be any meaning attached to the concept of surrender because in any case books have to be rejected - AT
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• Taxability of amount received from LIC on maturity of key man insurance policies - Insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy - advantage drawn therefrom is taxable in the hands of assessee - AT
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• In the case of an assessee covered under section 49(1) of the Act, the capital gains liability has to be computed by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition - AT
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Customs

• Valuation of goods - Inclusion of lumpsum trademark fee and lumpsum royalty for technical knowhow - there is no stipulation or condition as to where from or from whom the appellant has to procure the raw materials for the manufacture of the goods - royalty not includible - AT
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• Classification of vessel - though the vessel has been modified to function as a casino, the appellant has not been able to secure any licence from the Govt. of Goa for running a casino. Therefore, the vessel has not been able to function as a casino as on date - prima facie case is in favor of assessee - AT
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Corporate Law

• Articles of Association- Restriction on the rights to transfer of shares - the failure of the first respondent company to amend its Articles of Association to give effect to clause (d) of Section 3(1)(iii) does not effect the operation of its Article 57. - SC
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Service Tax

• Intellectual Property service - The minimum guarantee of profit per month given or assured by the agent to the respondent have been misunderstood as 'Royalty' which is not the fact - demand set aside - AT
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• Refund - Bar of limitation - filing of refund application within one year from the end of the quarter in which export was made - in view of board circular, matter needs reconsideration - AT
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Central Excise

• Valuation of goods - Whether cylinder rental charges and cylinder repair/ testing charges would be includible in the assessable value of the gases being sold - Held No - AT
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• Disallowance of CENVAT Credit - the appellant cannot utilize credit of AED (T&TA) for payment of Basic Excise Duty. - AT
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• Since, in this case the wrong utilisation of the AED (GSI) credit pertaining to period prior to 01/04/2000 has taken place in 2003 immediately after amendment to Rule 3 (6) of the Cenvat Credit Rules, 2002, the interest liability under Section 11AB would start from 1st day of the month succeeding the month in which the wrong utilisation had taken place till the payment of wrongly utilised credit. - AT
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• Denial of CENVAT Credit - Both the suppliers being registered dealers with the Department were carrying on the business from their registered premises for a number of years and the identity and address of the suppliers/dealers were never in doubt and the finding of the lower authority that the respondent did not take reasonable step is contrary to the records and accordingly held unsustainable. - AT
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VAT

• Transfer of right to use trademark - The sales tax is leviable on the turnover of sales in respect of transfer of right to use any goods - HC
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Case Laws:

• Income Tax

• 2015 (2) TMI 640
  Reopening of assessment - assessment under section 153A read with section 143(3) of the Act was completed on the strength of seized record/impounded documents, thereby making various additions of Income-tax in the hands of Mukesh Modi, Diksha Jain and Bharat Das Vaishnav - reasons for reopening first respondent has not recorded cogent reasons - Held that:- Notices issued to the assessees by the Assessing Officer under section 147/148 of the Act are not satisfying the pre-requisites for the same. There is no whisper in the notice, or iota of proof that while issuing the same the Assessing Officer had reason to believe that any income chargeable to tax has escaped assessment for the assessment year. Thus, the notice has been issued by the Assessing Officer simply for his own verification and to clear his doubts and suspicions to re-examine the material which were already available on record at the time of passing of the earlier assessment orders. The Legislature under section 147 has not clothed the Assessing Officer with such jurisdiction, therefore, the action cannot be upheld in the background of the facts of the instant case. One more redeeming fact which has a direct nexus with the subsequent reassessment proceedings and ramification of the same has culminated into reassessment orders is the impugned order whereby the Assessing Officer has rejected the objections submitted by the assessees pursuant to the notice under section 147/148 of the Act. The order passed by the Assessing Officer in this behalf is not a speaking order which cannot be sustained. In view of the legal infirmity in the notice under section 147/148 of the Act and laconic order of the Assessing Officer while rejecting the objections of the assessees the consequential assessment orders are also liable to be annulled. - Decided in favour of assessee.

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• 2015 (2) TMI 639
  Addition u/s.69 - payment of “on money” to the builders for acquisition of bunglow - ITAT deleted addition - whether any ground or reason arises to interfere with the order of the Tribunal? - Held that:- The Tribunal gave elaborate reasonings to assail the order of the Commissioner of Income Tax (Appeals) and the Assessing Officer. Thus, the fact remains that the entire issue is based on factual aspects and the Tribunal by giving cogent reasons, came to the conclusion that addition of ‘on money’ in case of respondent - Assessee is unjustified and accordingly, directed the addition of ‘on money’ to be deleted. Tribunal did not find any material evidence to establish that the Assessee made investment over and above what was recorded in the return of income filed by the Asessee. In the background of the present case, under these circumstances, there does not exist any ground or reason to interfere with the order of the Tribunal as no question of law, much less any substantial question of law, arises for our consideration and no perversity in the conclusion arrived at which give rise to interfere with the impugned orders has been pointed out that any of the findings are perverse in its nature. Therefore, the findings of fact recorded by the Tribunal are based on appreciation of fact and the appeals deserve no further consideration, more particularly, in light of various case-laws cited at bar by learned advocate Mr.Shah for the respondent - Assessee on the scope of appeal under Section 260A of the Act. - Decided in favour of assessee.

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• 2015 (2) TMI 638
  Liability to deduct tds u/s 194C - cinecasting / distribution of movies - tribunal deleted disallowance - Held that:- Tribunal is justified in coming to the conclusion that the exhibition of film in the theatre has not been described in the Explanation, therefore, there is no case of the revenue, by which it can be held that the assessee was required to deduct tax at source from the payments made by it to the distributor of films. The Tribunal has rightly considered the agreement/arrangement between the parties and in detail discussed the same. We have considered the decision cited by learned Senior Counsel appearing for the revenue, however, the same shall not be applicable on the facts of the present case inasmuch as the distributor gets his share because he has acquired rights of the distribution of the films in the particular area and as no work is carried out by the distributor for which the payment is made. We concurr with the finding of facts by the Tribunal. The Appellate Tribunal was right in law in holding that cinecasting/distribution of movies would be outside the purview of section 194C of the Income Tax Act, 1961 requiring tax deduction at source. - Decided in favour of the assessee.

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• 2015 (2) TMI 637
  Disallowance of variable license fee - ITAT allowed the claim - Held that:- It is not disputed by counsel for the parties that the issue - as to whether such amounts are to be disallowed under Section 35ABB has now been answered against the Revenue by another Division Bench in CIT v. Bharti Hexacom Ltd.[2013 (12) TMI 1115 - DELHI HIGH COURT] - Decided in favour of assessee. Disallowance on account of interest on delayed payment to DoT (towards the license fee) - ITAT allowed the claim - Held that:- This Court notices that after recording as above in Bharti Hexacom [2013 (12) TMI 1115 - DELHI HIGH COURT], the matter was remitted to the Assessing Officer for working out the correct position. Accordingly, we direct the Assessing Officer to work out the correct position and determine whether the allowance claimed is to be capitalized or treated as revenue depending upon the payment period, i.e., before 31.7.1999 or subsequent to it. - Decided in favour of revenue for statistical purposes. Upfront fee and loans - initial determination of the AO was upset by the Tribunal which held that the fee is to be treated as revenue expenditure - Held that:- the issue is covered by the decision in Commissioner of Income Tax v. Gujarat Guardian Limited [2009 (1) TMI 13 - HIGH COURT DELHI]. This position was not disputed. Accordingly, the finding in the impugned order to this extent is upheld. - Decided against revenue. Pre-operative expenses - revenue v/s capital expenditure - Held that:- The very same issue stands covered by the decision of this Court in CIT v. Modi Industries Ltd.(1992 (10) TMI 74 - DELHI High Court). This has received further endorsement in judgments reported as CIT v. Monnet Industries (2008 (11) TMI 43 - HIGH COURT DELHI ) and CIT v. Relaxo Footwears (2007 (4) TMI 53 - HIGH COURT,DELHI ) thus to be held as revenue expenditure . - Decided in favour of assessee. Software expenditure - revenue v/s capital expenditure - Whether the ITAT was justified in the eyes of law in remitting the mater back to the file of the AO concerning the issue about the claim of the software expenses - Held that:- The question of law has to be answered in favour of the assessee treating the expenditure as revenue. See CIT v. Asahi India Safety Glass Ltd. [2011 (11) TMI 2 - DELHI HIGH COURT] . A direction remitting the matter for consideration, affirmed by the ITAT is accordingly set aside. - Decided in favour of assessee. Interest disallowance - AO disallow this amount as the assessee had borrowed amounts for the relevant assessment years, and was paying interest, but at the same time, had invested other amounts which were not yielding income - Held that:- In the present case, the CIT (A) and ITAT held that there was no nexus between the borrowing from the external sources/financial institutions - for which interest payments were made - and the investments made by the assessee in its subsidiaries. As relying on CIT, Delhi-I, New Delhi v. Bharti Televentures Ltd. [2011 (1) TMI 326 - DELHI HIGH COURT ] being the factual position reflected from the record of the assessee, the onus that laid on it stood discharged. - Decided in favour of assessee. Non adjudication of claim of expenditure made in the revised return - Held that:- The A.O. while finalizing the assessment u/s 143 (3) has incorrectly ignored/over looked the revised return filed by the appellant company within the stipulated period u/s 139 (5). In view of these facts the expenses of ₹ 14,05,886/- are held to be allowable as these were wrongly claimed by the appellant company in respect of A.Y. 2002-03 from where these expenses have been deleted and claimed in respect of A.Y. 2001-02 to which they pertain, by filing the revised return of income. Relief allowed ₹ 14,05,886/- - Decided in favour of assessee.

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• 2015 (2) TMI 636
  Additional income declared by Director on behalf of company - survey under Section 133(A) - Whether admissions made during a survey can form the sole basis for making additions? - Whether retracted admissions can form the basis of an inference enabling an assessing officer to add income to the income of an assessee? - Held that:- Onus to prove concealment of income lies upon the revenue. Admissions are an integral part of assessments and as they are the best evidence of a fact, within the personal knowledge of an assessee may if the admission is voluntary and not extracted by coercion or force, be read against an assessee. The relevance of an admission admits to another exception namely if the admission is retracted within reasonable time and by assigning valid reasons. A perusal of the impugned orders reveals that the assessee made an admission, on 18.01.2006 and followed it up by a written admission on 19.01.2006 but while filing his return did not retract the admission. At no stage of the survey or assessment proceedings except at its fag end on 4.12.2008 i.e. almost two years after the admissions and a few weeks before finalisation of the assessment, did the assessee raise a plea that he was coerced and forced into making admissions. The belated retracting of the admissions on 04.12.2008, nearly two years after the admissions and then also without any facts to support the allegation of coercion or pressure, cannot enure to the benefit of the assessee. An admission is substantial evidence of a fact, within the special knowledge of an assessee and if not retracted immediately or within reasonable time is substantive evidence of a fact and may be read against an assessee. Answer the above questions against the assessee and find no reason to hold that the revenue has erred in relying upon admissions made by the assessee - Decided in favour of revenue.

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• 2015 (2) TMI 635
  Undisclosed income by way of unexplained investment in purchase of property - sale consideration different from the sale consideration recorded in the sale deed - non reflection of true market value of the transaction - Held that:- The revenue has in its attempt to discharge onus recorded the statements of the assessee's vendors, who were duly cross-examined by the assessee and maintained that the true value of the transaction was ₹ 38 lacs. The assessing officer has not only relied upon these statements but has also relied upon other sale deeds and a sale by the PUDA reflecting a sale consideration of ₹ 10,000/- per square yard. The statements are clear, categoric and as they do not suffer from any contradictions are sufficient when read alongwith the other sale deeds and the nature and location of the land to rightly infer that the revenue has discharged its onus. The situation would have been different if the statements by vendors did not inspire confidence being contradictory or vague or there was no other evidence or the assessee had produced evidence to rebut these statements. The assessee apart from his bald statement is unable to refer to any contradiction in the statements of his vendors or any evidence to rebut the material on record. The revenue has discharged its onus of proving that sale consideration reflected in the sale deed is incorrect and the true value of the transaction disclosed in the statements by the assessee's vendors, remain unrebutted. - Decided against assessee.

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• 2015 (2) TMI 634
  Disallowance of interest on money borrowed for purchase and installation of plant and machinery - ITAT deleted disallowance - Held that:- The question answered against the revenue, at the time of admission of the appeal by relying upon a judgment Deputy Commissioner of Income Tax, Ahmedabad Vs. Core Health Care Ltd. (2008 (2) TMI 8 - SUPREME COURT OF INDIA), therefore, does not require any further consideration. - Decided in favour of assessee. Addition on account of excise duty on closing stock - application of section 145 A - Assessing Officer included excise duty while computing opening and closing stock - ITAT deleted disallowance - Held that:- A perusal of Section 145(A) of the Act and the clarification relating to the method of accounting, contained in the circular issued by the Institute of Chartered Accountant, does not enable us to hold that the opinion recorded by the Tribunal is in any manner perverse or arbitrary. The fact that the judgment in M/s Indo Nippon Chemical Industries Limited's case (Supra) relates to modvat credit would make no difference as it is the method of accountancy and the principle affirmed in M/s Indo Nippon Chemical Industries Limited's case (2003 (1) TMI 8 - SUPREME Court) that is relevant. Decided against the revenue. Interest on interest free advances to directors and other parties - ITAT allowed the claim - Held that:- Decided in favour of the revenue and against the assessee by setting aside the order passed by the Income Tax Appellate Tribunal and restoring the matter to the Tribunal to adjudicate the matter afresh after taking into consideration the opinion recorded by the Hon'ble Supreme Court in M/s S.A. Builders Ltd's case (2006 (12) TMI 82 - SUPREME COURT ). - Decided against the assessee Interest on excess refund - whether Section 234D of the Act does not apply to the case of the assessee ? - Held that:- A bare perusal of Section 234D of the Act, leaves no ambiguity that the assessee is liable to pay interest on excess refund. The opinion recorded by the Tribunal that Section 234D of the Act does not apply to the case of the assessee is incorrect. The assessee does not deny receipt of excess refund and, therefore, is obliged under Section 234D of the Act to pay interest. However, as Section 234D came into force on 01.06.2003 and admittedly does not operate retrospectively, the assessee would be required to pay interest from the date of incorporation of Section 234D i.e. 1.6.2003. Question of law is answered in favour of the revenue by holding that the assessee is liable to pay interest on excess refund from 1.6.2003. - Decided against assessee.

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• 2015 (2) TMI 633
  Difference of stock - amount of closing stock differ in the books and as per the statement given to the bankers - unaccounted fabrication work - Held that:- The Assessing Officer and the Commissioner of Income-tax (Appeals) had discussed the material on record in detail and had come to the conclusion that there was difference of stock amounting to ₹ 28,73,640 as per the books of account of the assessee and as shown in the inflated stock statement given to the bank. The Tribunal affirmed the aforesaid findings. Similarly, the addition made by the Assessing Officer of ₹ 5,20,889 due to unaccounted fabrication work was affirmed by the Commissioner of Income-tax (Appeals) and the Tribunal. Learned counsel for the appellant has not been able to point out any illegality or perversity in the findings recorded by the Tribunal while affirming the findings recorded by the Assessing Officer and the Commissioner of Income-tax (Appeals). - Decided against assessee.

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• 2015 (2) TMI 632
  Monetary limit to prefer an appeal - Whether, this appeal of revenue, which is below the prescribed limit of tax effect in view of the Board’s Instruction No.5/2014 issued on 10.07.2014 revising the monetary limits for filing of appeals by the Department before ITAT is maintainable or not? - Held that:- On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account,or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge,or that Board’s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The learned Standing Counsel for the Revenue is not disputing the fact that the tax effect in the present case is less than ₹ 4 Lakhs and that the assessee's case does not fall within the exceptions specified in Instruction No.1979, dated 27.3.2000. Thus appeals are dismissed as not maintainable. - Decided against revenue.

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• 2015 (2) TMI 631
  Disallowance of interest claimed under section 36(1)(iii) - advances made to subsidiary of the assessee company namely Videocon Energy Holding Ltd. - Held that:- The addition is mainly based on the fact that assessee is entitled to receive interest as the money advanced was in the nature of share capital and since it was not refunded to the assessee within stipulated time, the assessee was entitled to get interest. This contention of Revenue does not have any force as if the assessee is entitled to get interest on this advance, then in absence of any actual receipt of the interest, the computation of interest will be notional. However, it is not even the case of Revenue that any notional interest income is assessable in the hands of the assessee. What is the case of the Revenue is that disallowance of interest claimed by the assessee on borrowed funds. In view of sufficient own funds available with the assessee, according to aforementioned decision of Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd.(2009 (1) TMI 4 - HIGH COURT BOMBAY) and HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT) no such disallowance under section 36(1)(iii) could be made. - Decided in favour of assessee. Disallowance u/s 14A r.w. rule 8D - Held that:- As per requirement of section 14A(2), the AO is under an obligation to determine the amount of expenditure incurred in relation to an income which is not included in the total income with the method prescribed under Rule 8D in a case where AO, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of the expenditure incurred by it in relation to income which does not form part of total income under the Act. Thus it would serve the interest of justice if the issue relating to these administrative expenses is restored back to the file of AO with a direction to readjudicate this issues as per provisions of law after giving the assessee a reasonable opportunity of placing all the material on record to support its contention and then after considering all the materials, if AO arrive at a conclusion that disallowance calculated by the assessee is incorrect then he will record such non-satisfaction and thereafter he will proceed to make disallowance with regard to component of expenses as per provisions of law. - Decided in favour of assessee for statistical purposes. Inclusion /exclusion of disallowance made under section 14A for the purpose of computing book profit under section 115JB - Held that:- Decide this ground in favour of Department subject to the condition that the AO will include the amount of disallowance for the purpose of computing book profit under section 115JB of the Act, as he will re-compute as per direction given in respect of Ground No.2 of assessee’s appeal in respect of all the impugned assessment years. - Decided in favour of revenue for statistical purposes. Transfer pricing adjustment - non inclusion of export incentive received by the assessee as part of the price - CIT(A) held the action of TPO in excluding export incentive received by the assessee on account of exports to the AE while doing the bench marking was not proper - Held that:- As relying on Arviva Industries P. Ltd. vs. ACIT (2011 (10) TMI 107 - ITAT MUMBAI) it has been held that there cannot indeed be any rational in comparing domestic invoice price of the goods with export invoice price of the goods without taking into account neither the export incentive which form part of the net realization on account of exports nor for the expenses, such as discount and domestic sales promotion expenses, which are incurred for the sole purpose of domestic sales and the TPO was clearly in error in not taking into account these facts while comparing the price in domestic uncontrolled transactions and international controlled transactions. No contrary decision was brought to our notice, therefore we decline to interfere in the relief granted by Ld. CIT(A) - Decided against revenue. TP adjustment made on account of loans/advances given by the assessee to its AE - Held that:- the basis adopted by Ld. CIT(A) to uphold the addition is incorrect. The Tribunal in all the decisions relied upon by Ld. AR has adopted the rule of consistency and has accepted the contentions of the assessee that bench marking of ALP of such type of transactions should be in accordance with LIBOR rates. Since assessee is charging interest from its AE at LIBOR standards, therefore, the impugned addition for both the years is liable to be deleted and the same is deleted - Decided in favour of assessee. TP adjustment in respect of share application money - Held that:- In respect of share application money advanced to Videocon Global Ltd. interest according to LIBOR standards should have been charged by the assessee and addition to that extent will be liable for upholding. Therefore, we direct the AO to re-compute the amount of interest applying LIBOR rates in respect of share application money advanced to M/s. Global Energy Inc. and TP adjustment should be made accordingly.So far as it relates to addition made in respect of share application money to Saffair Overseas Inc., it will serve the interest of justice if this issue to this extent is verified by the AO that whether or not the said concern is AE of the assessee. Therefore, the issue is restored back to the file of AO for re-examination in the manner aforesaid. This is being done in view of the fact that no such TP adjustment has been made in respect of A.Y 2010-11. - Decided in favour of assessee for statistical purposes. TP adjustment on account corporate guarantee provided by the assessee to its AE - Held that:- No material has been brought on record by the Revenue authorities to show that the corporate guarantee issued by the assessee to its AEs involved any cost or it was having bearing on profits, income, losses or assets of the AE. the corporate bank guarantee given to AEs which does not involve any cost and which does not have bearing on profits, income, losses or assets of the AE will be outside the purview of international transaction. Applying the ratio laid down by Co-ordinate Bench in the case of Bharati Airtel Ltd. vs. Addl. CIT (2014 (3) TMI 495 - ITAT DELHI) , we hold that no transfer pricing adjustment could be made with regard to corporate guarantee issued by the assessee to its AEs and impugned additions are deleted. - Decided in favour of assesse. Addition made on account of bogus purchases - Held that:- Found substance in such contention of the assessee that assessee is required to be provided with reasonable and sufficient opportunity to rebut the evidence in the possession of the Department on the basis of which it is the case of the Revenue that assessee did not make purchases from these parties. This in our opinion is necessary in view of the fact that according to the facts evidence filed by the assessee can be said to be sufficient to discharge the primary onus as assessee has produced invoices of purchases and payments have also been made through account payee cheques/RTGS. It is only on the basis of presumption, it is the case of AO that the said amount which is deposited in the bank account of the sellers have come back to the coffers of the assessee. - issue restored back to the file of AO with a direction to re-adjudicate this issue - Decided in favour of assessee for statistical purposes. Credit for TDS and levy of interest under section 234A, 234B and 234C - Held that:- We direct the A.O to give the assessee the appropriate credit for tax deducted at source as per provisions of law after giving the assessee a reasonable opportunity of hearing. Similarly, with regard to levy of interest under section 234A, 234B & 234C of the Act, we direct the AO to re-compute these interest as per law after giving the assessee a reasonable opportunity of hearing and after giving effect to this order of the Tribunal. - Decided in favour of assessee for statistical purposes.

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• 2015 (2) TMI 630
  Revision u/s 263 - assessee has not declared proper income because despite a surrender of ₹ 2.15 crores the income returned was only ₹ 1,35,52,050 - fall in GP rate - Held that:- As during the survey, inventory was found to be excessive to the extent of ₹ 66,22,665 against which the assessee surrendered a sum of ₹ 70 lakhs. Physical cash was found at ₹ 4,63,570 whereas as per the books the cash was ₹ 75,802 and the assessee surrendered a sum of ₹ 4 lakhs. Lastly, a slip was found according to which the assessee has invested a sum of ₹ 1,31,00,000 in the construction of building and this amount was also surrendered. Therefore, clearly no unrecorded purchases or sales or any other discrepancy was found. The assessee is maintaining proper quantitative details. Further, the reason for fall in gross profit rate was explained. Summary of variation of rates shows that rates of certain items have all of a sudden increased in assessment year 2007-08, i.e., why there was verification in the gross profit rate. Otherwise also from the gross profit chart for the last three years it becomes clear that gross profit was 11.76 per cent. in assessment year 2006-07 which increased in 2007-08 to 17.23 per cent. and again has gone back to 11.49 per cent. in the assessment year 2008-09. These factors have to be seen further in the light of the copy of the trading account which is available at page 151 which shows that this gross profit rate and copy of profit and loss accoun where the net result is loss and loss on February 28, 2008, was ₹ 71,25,651. Obviously, this means that there were some extra expenses during the year and the assessee has duly filed the details of expenses before the Assessing Officer as well as the Commissioner but neither the Assessing Officer nor the learned Commissioner has pointed out that such expenses have been inflated or are not correct. Therefore, in the light of these facts it cannot be said that assessment order is erroneous and prejudicial to the interests of the Revenue. The learned Commissioner has discussed many other case law in respect of rejection of books of account and we have perused the same but could not find even a single case law laying down a principle that books should compulsorily be rejected wherever a survey is conducted. Otherwise also, if this principle is accepted then there would not be any meaning attached to the concept of surrender because in any case books have to be rejected. - Decided in favour of assessee.

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• 2015 (2) TMI 629
  Eligibility for deduction u/s 80IC - assessee was engaged in manufacturing of plastic products - CIT(A) deleted the disallowance on the basis that the AO did not appreciate the material and evidence furnished by the assessee to differentiate between the raw material and the articles or things manufactured by the unit in an industrial area - Held that:- After going through the provisions laid down u/s 80IC of the I.T. Act, schedule 13 serial No. 20 of the I.T. Act as well as the stated notifications dated 18.5.95 and 10.6.2003 issued by Central Excise Department reproduced in the first appellate order, we do not find any reason to interfere with the above findings and observations of the Ld. CIT(A). As decided in assessee's own case reported in [2013 (3) TMI 36 - DELHI HIGH COURT] a reasonable interpretation of the provisions of section 80-IC(2) read with serial No. 20 of the 13th schedule of the said Act read with the first schedule to the Central Excise Tariff Act, 1985, it would be clear that the petitioner’s product does not fall within the negative list and therefore the petitioner had rightly claimed deduction under section 80-IC of the said Act which the assessing officer in the years in which the assessment had been completed under section 143(3) had allowed after examining the necessary evidence - Decided in favour of assessee.

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• 2015 (2) TMI 628
  Disallowance u/s 14A r.w. Rule 8D - CIT(A) has confirmed the disallowance - Held that:- The AO has not brought on record any fact or material to show that any expenditure has been incurred on the activity which has resulted into both taxable and non taxable income. Therefore, in our view when the assessee has prima facie brought out a case that no expenditure has been incurred for earning the income which does not form part of the total income then in the absence of any finding that expenditure has been incurred for earning the exempt income the provisions of section 14A cannot be applied. Accordingly we delete the addition/disallowance made by AO u/s 14A r.w. Rule 8D. - Decided in favour of assessee. Addition u/s 14A to the Book Profit u/s 115JB - Held that:- In view of finding in respect of disallowance u/s 14A in ground no. 1, the ground no. 2 of the assessee’s appeal is allowed being consequential. Accordingly delete the addition made while computing the book profit in respect of the disallowance made u/s 14A.- Decided in favour of assessee. Depreciation - CIT(A)directing AO to allow the depreciation after working out the WDV of the assets for earlier years - Held that:- Depreciation has to be allowed on written down value (WDV) after reducing the actual depreciation allowed in the earlier years. In view of the earlier years order of this Tribunal in assessment year 2007-08 as well as in assessment year 2008-09, we do not find any substance in the appeal of the revenue. - Decided against revenue.

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• 2015 (2) TMI 627
  Taxability of amount received from LIC on maturity of key man insurance policies - Held that:- The surrender value is taxable in the hands of the Key Man but in the case of present assessee he had paid the surrender value to the organizations which took out the said policies, and such surrender value has been taxed in the hands of Institute. Both the parties agree that this issue is covered by the decision of Hon’ble Delhi High Court in assessee’s own case [2011 (12) TMI 392 - DELHI HIGH COURT ] wherein held that once there is no assignment of company/employer in favour of the individual, the character of the insurance policy changes and it gets converted into an ordinary policy. Contracting parties also change inasmuch as after the assignment which is accepted by the insurance, the contract is now between the insurance company and the individual and not the company/employer no more remains the contracting parties. We have to bear in mind that law permits such an assignment even LIC accepted the assignment and the same is permissible. There is no prohibition as to the assignment or conversion under the Act. Once there is an assignment, it leads to conversion and the character of policy changes. The insurance company has itself clarified that on assignment, it does not remain a keyman policy and gets converted into an ordinary policy. In these circumstances, it is not open to the Revenue to still allege that the policy in question is Keyman policy and when it matures, the advantage drawn therefrom is taxable. Once has to keep inmind on maturity, it does not the company but who is an individual getting the matured value of the insurance. - Decided in favour of assesse

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• 2015 (2) TMI 626
  Penalty under section 271(1)(c) - disallowance of expenditure - bifurcation of expenditure one on account of interest payment of ₹ 40,76.035/- and second on account of misc. expenditure of ₹ 2,32,282/- - CIT(A) deleted the penalty levy - Held that:- This is the first year of the company operation. The company has only been set up in this year and the only activity performed by the company is purchase of lands. In this purchase the assessee has incurred interest expenditure. The assessee has also incurred routine administrative expenditure necessary to run the company. The company has also written off preliminary expenses. As regards the issue of debiting the routine and administrative expenses and preliminary expenses to the profit and loss account, we find that it cannot be said that it is a bogus or wrong claim. Hence, levy of penalty on disallowance of these expenses cannot be sustained. As regards the issue of charging off in the profit and loss account, the interest expenditure we note that same was incurred on the purchase of land. Assessee has not started any specific project. Hence, the interest expenditure incurred in this regard has been charged to the profit and loss account. The above charging of all the expenditure to the profit and loss account cannot be said to be ex-facie bogus claim. It is certainly a debatable issue. When the matter is debatable, the assessee cannot be visited with the levy of penalty u/s. 271(1)(c). - Decided in favour of assessee.

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• 2015 (2) TMI 625
  Eligibility of deduction u/s 80IC - Held that:- In the present case before us there is no dispute that assembling of different components / parts has resulted in formation of a commercially new and distinct products from the inputs used in its manufacture / production. In another words the parts used in isolation cannot purify the air which is object of the air purifier unless these parts are assembled to achieve the object. We thus fully concur with the finding of t he Ld. CIT(A) and the reasoning given by him which is fully supported by the decisions followed by him in this regard that the assessee was involved in the process of manufacturing of the air purifier and was thus eligible for claiming deduction u/s 80IC of the Act. Besides it is also worth to note that the local authorities like District Industries Centre, etc. have also recognized the assessee as a manufacturer. We are thus not inclined to interfere with the finding of the Ld. CIT(A) in this regard. - Decided in favour of assessee.

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• 2015 (2) TMI 624
  Disallowance under Section 54EC - whether investment of ₹ 50 lakh made in HHAI Bonds on 26-08-2008 can be considered to be made within six months period as per the proviso to sec. 54EC - Held that:- Since the wording of the proviso to section 54EC is clear, the benefits which are available to the assessee cannot be denied. In view of above, it is hereby held that the assessee is entitled for exemption of ₹ 1 crore as six months period for investment in eligible investments involved is two financial years. Language of Section 54EC is clear and unambiguous and it leads to the interpretation that the assessee can make the investment in two different financial years provided in a financial year the investment made did not exceed ₹ 50,00,000/-. Respectfully following the referred decision of the co-ordinate benches in Ram Aganval v. Jt. CIT [2001 (9) TMI 233 - ITAT BOMBAY-G ] and Ms. Rania Faleiro [2013 (11) TMI 518 - ITAT MUMBAI] , this issue is accordingly decided in favour of the assessee. Indexed cost of acquisition of the property - computation of LTCG - adopting the date of acquisition as date of inheritance of the property v/s date of acquisition by the person from whom the property has been inherited by the assessee - Held that:- As relying on CIT Vs. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] wherein held that the question of deducting the cost of improvement incurred by the previous owner in the case of an assessee covered under section 49(1) of the Act would arise only if the period for which the asset was held by the previous owner is included in determining the period for which the asset was held by the assessee. Therefore, it is reasonable to hold that in the case of an assessee covered under section 49(1) of the Act, the capital gains liability has to be computed by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition. - Decided in favour of the assessee.

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• 2015 (2) TMI 623
  Penalty u/s. 271(1)(c) - showing exaggerated claim of deduction u/s. 80IB - Held that:- Assessee has sufficient own funds available which can be stated to have been utilised towards the credit needs of Slivassa unit. We find that when the assessee has both interest free and interest bearing funds available it is the prerogative of the assessee to allocate the funds towards specific activities which suits him. In this view of the matter also it cannot be said that assessee has made any ex-facie bogus claim. Assessee can also not be stated to have furnished inaccurate particulars or made any concealment. In these circumstances, in our considered opinion, assessee should not be visited with the rigors of penalty u/s. 271(1)(c). In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. See CIT vs. Reliance Petroproducts Pvt. Ltd.[2010 (3) TMI 80 - SUPREME COURT ] and CIT vs Dharampal Prem Chand [2010 (9) TMI 155 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2015 (2) TMI 622
  Capital gain on sale of a shop - though the shops were shown in the balance-sheet but the same were not being used for the purpose of business - whether no gain or loss is taxable on an asset forming block of assets unless the block ceases to exist? - interpretation of Section 50(1), Section 50A of the IT Act read with Section 48 & 49 of the I.T Act - Held that:- Respectfully following the ratio laid down by the Hon’ble High Court on the applicability of the provisions laid down u/s 50(2) in the case of CIT Vs. Ansal Properties and Infrastructures Ltd (2012 (4) TMI 469 - DELHI HIGH COURT) hold that the assessee has rightly submitted that it should have reduced the sale consideration from the block of assets instead of treating it as a separate asset. The provisions of Section 50 of the Act are also not applicable in the present case because the shop sold was not a business asset and depreciation was not being claimed/allowed and in such a situation the sale of the shop can be taxed only under the head “Capital Gain.” Thus, the addition also deserves to be deleted because real sense there was no capital gain. Both the additions in question are accordingly deleted. Having taxed the gain of ₹ 1,97,008/-, the same was again taxed u/s 50 read with Section 50A of the Act for the reason that gain on sale of depreciable asset was taxable under the head capital gain. It is the second addition which has been questioned by the assessee on the basis that when provisions Section 50 of the Act are not applicable, there is no question of application of Section 50A of the Act. - Decided in favour of assessee.

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• 2015 (2) TMI 621
  Rectification of mistake - application to amend intimation on the point of limitations rejected - Held that:- The provision to rectify any mistake apparent from the record by an Income-tax authority is separately envisaged in Clause (b) and (c) of sub-section (1) of section 154, clause (a) talks about “order passed” whereas clause (b) of sub-section 1 of section 154 envisages amendment of any intimation/ deemed intimation under subsection 1 of section 143(1), whereas section 154(7) as reproduced in earlier part of this order stipulates time limit of four years from the end of the financial year in which the order to be amended was passed, since it talks about “order”, and intimation cannot be termed as order especially when separate provision for amendment of an order and amendment of intimation/deemed intimation is there, therefore, the action of Assessing Officer in rejecting the applications moved under section 154 to amend intimation on the point of limitations, in our considered view, is not just and proper. As such while accepting the appeal of the assessee we set aside the orders of both the authorities and restore the matter back to the file of the Assessing Officer with a direction that he shall consider and decide the application of the assessee on merits and pass order after giving due opportunity of hearing to the assessee. - Decided in favour of assessee

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• 2015 (2) TMI 620
  Assessment initiated u/s 153C - Held that:- Going through the satisfaction note recorded in the case of the appellant, in which reference to the various annexures which includes Balance Sheet, P & L Account and Audited Accounts of the appellant company has been made all these documents which partly belong to the appellant, are apparently reflecting it’s audited accounts based on which the returns of income have been filed by the appellant on earlier occasion. Thus there is nothing incriminating in these documents which can led to forming of the satisfaction on part of the AO to initiate proceedings u/s 153C of the IT Act. In the spirit of enactment of Section 153C it would be a implicit and inherent requirement that there must be existence of prima facie unrecorded/unaccounted transaction recorded in the documents belonging to the assessee before the said provision can be invoked in case of a third party, who has not been subjected to search u/s 132 of the IT Act. Any other interpretation any case the Audited Accounts/Balance Sheet/ P&L Account/acknowledgement of Return/copy of capital account of partners in appellant’s books cannot be such material which can be the basis of a valid and legal satisfaction as envisaged u/s 153C of the IT Act unless these are prima facie indicative of unaccounted/unrecorded transactions. Since there is no valid satisfaction u/s 153C in this case, therefore the assessment proceedings itself are liable to be quashed. See The Ld. AR, on the other hand [2014 (1) TMI 651 - ITAT DELHI ] - Decided in favour of assessee.

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• 2015 (2) TMI 619
  Deemed dividend - whether deemed dividend can be taxed only in the hands of the share holder and that the section did not apply to the assessee since it was not a share holder of APL? - Held that:- In the present case the assessee is admittedly not a shareholder of APL and the shareholders are Shri U. Kantha Rao and Smt. U. Rajani. Therefore, the CIT(A) was correct in holding that the advances cannot be taken as deemed dividend in the hands of the assessee who is not a shareholder of APL. Special Bench in the case of Bhaumik Colour Ltd. (2008 (11) TMI 273 - ITAT BOMBAY-E ) fortifies our view that the Assessing Officer is not correct in assessing the advances as deemed dividend in the hands of the assessee which is not a shareholder of APL. - Decided in favour of assessse.

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• 2015 (2) TMI 618
  Penalty u/s 271(1)(c) - failure of the assessee to compute the book profit and tax payable by it under Section 115JB of the Act - CIT(A) deleted the levy - Held that:- It is not on account of computational difference, but on account of failure of the assessee to report the book profit under Section 115JB, that the addition was made. Nevertheless, we do appreciate there could have been difference with regard to the carried forward loss claimed by the assessee for assessment year 2002-03 at ₹ 60,81,430/- and considered by the Assessing Officer at ₹ 21,47,324/-. For the levy of penalty, we are of the opinion that Assessing Officer had to consider the claim of carried forward loss for assessment year 2002-03 as ₹ 60,81,430/-. Vis-à-vis the claim of carried forward loss for assessment year 2003-04, there was no difference in the claim of the assessee and that considered by the Assessing Officer. For the limited purpose of correctly working out the amount of unabsorbed loss available for set-off, we remit the issue back to the file of the Assessing Officer. A.O. has to recompute the penalty accordingly. - Decided partly in favour of revenue.

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• 2015 (2) TMI 617
  Additional depreciation disallowed - assessee-firm is engaged in the business of embroidery work on job work basis. - Held that:- In view of case of S.S.M. Brothers (P) Ltd. & Others v. CIT [1999 (1) TMI 2 - SUPREME Court] wherein it is directly applicable to facts of the instant case because Sec.32(1)(iia) also provides for additional depreciation in respect of new machinery and plant purchased by assessee who is engaged in the business of manufacture of production of any article or thing. In the above case the Hon'ble Supreme Court has already held that assessee was using machinery in production of processed textile i.e. embroidery work and thus, the fact embroidery work is regarded as production cannot be denied. Since the assessee being engaged in embroidery work is entitled for additional depreciation - Decided in favour of assessee. Disallowance of office expenses - CIT(Appeals) partly confirming the action of Assessing Officer by sustaining disallowance to the extent ₹ 5,981/- - Held that:- No interference is required in the estimation as adopted by the Learned CIT(Appeals) for the year under consideration - Decided against assessee.

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• Customs

• 2015 (2) TMI 648
  Denial of refund claim - Refund claim of SAD - Bar of limitation - Held that:- There is no dispute that the filing of the Bill of Entry and payment of Customs duty has taken place on 17/07/2008 and 18/07/2008 respectively. At that time there was no time-limit prescribed for filing of refund claims in the Notification 102/2007-Cus. The Notification No. 102/2007 is an exemption Notification from payment of customs duty by way of refund mechanism. The applicability of the Notification is at the time of filing of Bill of Entry and payment of customs duty. The limitation of one year cannot be made applicable in cases where customs duty payment and filing of Bill of Entry has taken place prior to the amendment which became effective on 01/08/2008. It is beyond the control of the appellant to file the refund claim within one year from the date of payment for the reason that the goods were detained by the department's Central Intelligence Unit and released on provisional basis after direction of the hon'ble High Court on 17/03/2010. It is also a settled legal position that, wherever any matter is subjudice before any Court any relief arising out of the order of the Court, the period of litigation is excluded for the purpose of computation of limitation. - where duty becomes refundable, as a consequence of any judgment by Court, the one year shall be computed from the date of such judgment. In the present case, the refund arise only after the order by the hon'ble High Court on 17/03/2010 and the refund claim was filed within one year from the date of the order of the High Court. For this reason also, the refund was filed within the time-limit - impugned order is set aside - Following decision of Sony India Pvt. Ltd. [2014 (4) TMI 870 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2015 (2) TMI 647
  Fraudulent clearance of bonded goods as ship stores - Lack of evidence - Burden of proof - Held that:- It is found from the impugned order in para 5.4.1 read with para 5.4.5, the goods have duly entered the Docks as evident from the endorsement of the BPT staff on the copies of shipping bills. Further, the goods have been received in Port and payment made, which were deposited with the authorized dealer for realization. In the absence of conclusive proof of use of impugned goods in any other manner or recovery or seizure of the said goods elsewhere, it was rightly held that the goods in question are not liable for confiscation. In case of one M.V. Theresa, the goods were entered in 'A' Division Register showing the berthing of ship at 12 ldk, while the ship was berthed at 20 ldk. The adjudicating authority found that in respect of other vessel M.V. Hua Yun - 5 was shifted from one berth to another one and there exists instructions on movements of store-list and EGMs along with vessel. It shows the vessels are shifted from one berth to another quite often in view of the geographical structure and limitation of the Indira docks, Mumbai. Further, the ship can be moved to berth no. 20 ldk only after it is first berthed at 12 ldk. Further, it can certainly be registered in A Division Register, wherein the ship has been re-berthed in B Division. For this, no mala fide can be alleged or adverse view made out for supply on the bonder of ship store Due to oversight for like and alike goods, in view of the quantum of work involved, mistakes are simple and clerical in nature. Further, as regards Nil currency declaration by the concerned officer, it is within the purview of the crew and the captain of the vessel to declare the currency. This being not in the knowledge of the Bonder, it is not the issue that can be probed into by the Bonder or the officers of the customs at the particular moment. The Bonder or others cannot be held responsible for payment received in foreign currency in spite of nil declaration in the IGM. What is important is that the ship officers have acknowledged the receipt of goods and made payment for the same, which have been duly authorized by the authorized dealer on behalf of the Bonder. In all cases, the goods have entered the port area, the entry is there in the Division Register, therefore, the receipts have been given by the concerned ship authority on receipt of goods and payment realized through proper channel. Further, there being no irregularity found in the records maintained in warehouse, such allegation do not stand. - in view of the detailed findings of fact recorded by the adjudicating authority, the same being just and proper, require no interference. Further, the grounds of appeal are general in nature and no perversity in findings of fact has been pointed out or raised in the grounds of appeal. - Decided against Revenue.

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• 2015 (2) TMI 646
  Valuation of goods - Inclusion of lumpsum trademark fee and lumpsum royalty for technical knowhow - Held that:- From the trade mark usage agreement, it is clear that the fee is paid for the use of trade mark on the goods/semi-finished goods manufactured in India. The payment of consideration is split into two modes; one by way of lumpsum payment of US $ 0.5 mn and another by way of running royalty as a percentage of sale value of the manufactured goods. Similarly, in the case of technical know-how agreement, the consideration is paid for supply of technical know-how and for training the personnel of the appellant in the manufacturing activity to be undertaken in India. The consideration is paid in two modes; one by way of lumpsum payment of US $ 1.5 mn and the balance by way of running royalty as a percentage of the sale value of the products manufactured. In these agreements, there is no stipulation or condition as to where from or from whom the appellant has to procure the raw materials for the manufacture of the goods. The agreements do not envisage or stipulate any condition with regard to the procurement of raw-materials for the manufacture to be undertaken in India. The appellant has entered into separate contracts for the procurement of raw-materials. Even in the contract entered into with the related foreign suppliers, it is clearly stipulated that the appellant has the freedom to procure the raw-materials from any persons, so long as the quality/standard is maintained. Thus, the agreement for the purchase of raw materials also does not impose any condition with regard to the source of procurement of raw materials. In these circumstances, it cannot be said that the relationship has influenced the supply price of the raw materials. - Following decision of Escorts Ltd. case [1995 (10) TMI 140 - CEGAT, NEW DELHI] and Mahindra & Mahindra Ltd. [1995 (3) TMI 88 - SUPREME COURT OF INDIA] - impugned orders are not sustainable in law. Accordingly, we set aside the same - Decided in favour of assessee.

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• 2015 (2) TMI 645
  Classification of vessel - benefit of notification No. 21/2002-Cus dated 1-3-2002 - Classification under CTH 89011010 or CTH 8903 99 90 - Rejection of transactional value - Held that:- In the Provisional Class Notation Certificate issued for the vessel San Domino by the Indian Register of Shipping vide certificate dated 26-4-2011, the vessel is described as a "Passenger Ship". Similarly in the Certificate dated 27-10-2011 of Indian Registry under Merchant Shipping Act, 1958 issued by the Registrar of Indian Ships, Mumbai, the vessel is classified as "Steel/Passenger Ship". In the certificate of class issued by RINA at Mumbai dated 3-8-2009, the vessel is described as a "Passenger ship". Similarly in the valuation cum condition survey report dated 19-11-2010 issued by M/s Ericson & Richards (Goa) who are well known ship and marine surveyors and valuers, the vessel is described as a "Passenger ship". Thus from the various certificates available on record issued by the competent/concerned persons, it is seen that the vessel is consistently described as a "passenger ship". If that be so, there is merit in the contention of the appellant that the correct classification of the vessel is CTH 8901 attracting 'nil' rate of customs duty at the relevant time. - though the vessel has been modified to function as a casino, the appellant has not been able to secure any licence from the Govt. of Goa for running a casino. Therefore, the vessel has not been able to function as a casino as on date. There are two contrary decisions of this Tribunal in respect of classification of a vessel used as casino. In the Waterways Shipyard case (2011 (12) TMI 127 - CESTAT, MUMBAI) relied upon by the Revenue, this Tribunal held that a passenger vessel which is used a casino merits classification under CTH 8903 as a 'pleasure vessel', while in the Ashok Khetrapal case relied upon by the appellant, a passenger vessel used as a casino was classified as a "passenger ship" falling under CTH 8901. Thus there are contrary decisions in respect of classification of the vessel. That itself will entitle the appellant to grant of stay as held by the hon'ble Madhya Pradesh High Court in the case of Pratap Steel Rolling Mills Ltd. case [1992 (11) TMI 109 - HIGH COURT OF MADHYA PRADESH AT INDORE]. - From the balance sheet of the appellant for the year ending 31-3-2014, it is seen that the loss during the year 2013-14 is to the tune of ₹ 4.62 crore and the accumulated loss is to the tune of ₹ 38.68 crore. Thus it is seen that the appellant is facing acute financial hardship - Stay granted.

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• Corporate Laws

• 2015 (2) TMI 644
  Articles of Association- Restriction on the rights to transfer of shares- whether any preemption clause/article restraining transferability of shares in public company is valid. Whether on and after the bringing into force of the Companies (Amendment) Act, 2000, the status and character of Gharda Chemicals Ltd. (R-1) continued to be as that of a “hybrid company” (Section 43A company) and whether this company and its members are bound by the terms of a preemption clause contained in Article 57 of the Articles of Association? Held that- The case of the appellants all through has been that notwithstanding the amendment of the Act by the Amendment Act 53 of 2000, Article 57 of the Articles of Association still governs the rights of the members of the first respondent Company. On the other hand, the case of the respondents has always been and is that the first respondent company is a public company having had become so by the operation of law i.e., Section 43A(1) and it cannot now become a private company. There is nothing in the Amendment Act 53 of 2000 which automatically renders a public company created under Section 43A to become a private company. It is also the case of the respondents that the failure to amend the Articles of Association to give effect to Section 3(1)(iii)(d) ipso facto make the first respondent a public company thereby rendering Article 57 inoperable. it can be seen that by the date of amendment of Section 43A by the Act 53 of 2000, there are four classes of private companies which are declared by the said section to become public companies on the happening of an event mentioned in each of the sub-sections.It is also necessary to note that each of the abovementioned four sub-sections contained a proviso. The tenor of all the four provisos is identical. Proviso- “Provided that even after the private company has so become a public company, its articles of association may include provisions relating to the matters specified in clause (iii) of sub-section (1) of section 3 and the number of its members may be, or may at any time be reduced, below seven.” The High Court held that It is clear from the factual position that the attempt to amend the Memorandum and Articles of Association of the first respondent was unsuccessful. The said resolution proposed in the meeting held on 5th May 2001 was not carried but in fact defeated. Once it was defeated, then, the first respondent which had become a public company on 17th August 1988 continued with that status. It would be of relevance to note that the resolution was moved in the meeting held on 5th May 2001. That resolution was defeated on that day. However, the Companies Amendment Act 2000 had come into effect already and to be precise from 13th December 2000. On 13th December 2000, GCL was not a deemed public company but a public company. Once it was a public company, then, the argument of the appellants that it continued to retain its fundamental and basic character as a private company cannot be accepted. The status is conferred by law. The status was sought to be changed or amended by moving an amendment to insert an additional clause (d) was defeated, then, there is no scope to alter the status of the respondent No.1 company by either terming it as a deemed public company or a public company retaining the fundamental and basic character of a private company. Both these concepts are unknown to law. The REAL question is not whether the failure to amend the Articles of Association by the first respondent company rendered the first respondent company (which is otherwise a private company) a public company, but whether such a failure destroyed the collective right of the members of the first respondent company to have shares whose transferability is subject to limitations and restrictions contained in Article 57 of its Articles of Association. In our opinion, the failure of the first respondent company to amend its Articles of Association to give effect to clause (d) of Section 3(1)(iii) does not effect the operation of its Article 57. The question whether the first respondent Company is a public company or a HYBRID company or a private company was never directly and substantially in issue in Company Petition No.77 of 1990. The parties to the said company petition proceeded on the basis that in view of the fact that an amendment to the Articles of Association to give effect to the newly inserted clause (d) of Section 3(1)(iii) could not be carried on, the first respondent company became a public company. Therefore, the Court never examined that question of law. Hence, it cannot be said that the appellants are precluded from raising such a question of law in the instant appeal. Appeal allowed.

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• Service Tax

• 2015 (2) TMI 661
  Intellectual Property service - Demand of service tax - Agreement for marketing country liqour - Held that:- For the packing material and essence supplied by M/s Talreja Trade to respondent, proper sale invoices have been issued charging Sales Tax/VAT as applicable. Respondents have also directly purchased packing material and essence from others. - For sale of 'country of liquor' by respondent, proper sale invoices have been issued. In the said sale invoices the name of M/s Talreja Trade (HUF)' is shown as 'selling agent'. - The sale of 'country liquor' have been declared in the returns filed with the Sales Tax Department by the respondent. On appreciation of the clauses of agreement with the evidence on record, it is evident that no 'Intellectual Property Service' have been given by the respondent. The arrangement/agreement between the respondent and M/s Talreja Trade are for ensuring maximum production and sale of C.L. so as to maximise profits for both the parties. The minimum guarantee of profit per month given or assured by the agent to the respondent have been misunderstood as 'Royalty' which is not the fact. The ground of limitation is also upheld in favour of the respondent. - Decided against Revenue.

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• 2015 (2) TMI 660
  Security Agency Services - Manpower Recruitment or Supply Agency - Interest u/s 75 - Penalty u/s 76, 77 & 78 - Appellant are Cooperative Society registered under Rajasthan Societies Act for welfare of ex-servicemen by providing employment to them - during the period of dispute they were providing the services of security agency taxable under Section 65 (105) (w) readwith Section 65 (94) of the Finance Act, 1994 and the service of manpower or recruitment of supply service under Section 65 (105) (k) readwith Section 65 (68) of the Finance Act, 1994 - appellant's contention is that various Cooperative Societies registered under the Cooperative Societies Act of the respective States for welfare of ex-servicemen by providing employment to them are not commercial concern and hence during period prior to 01/05/06 their activity would not attract service tax - Held that:- During the entire period of dispute including the period prior to 01/05/06, the activity of the appellant was taxable under Section 65 (105) (k) readwith Section 65 (68) and Section 65 (105) (w) readwith Section 65 (94) of the Finance Act, 1994. - Following decision of Punjab Ex-Service Corporation vs. Union of India [2010 (9) TMI 871 - PUNJAB & HARYANA HIGH COURT] Since there was no malafide or intention to evade on the part of the appellant, it has to be held that non-payment of service tax was due to bonafide reason and, hence, invoking Section 80 of the Finance Act, 1994 penalty under Section 76, 77 and 78 have to be waived. - Decided partly in favour of assessee

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• 2015 (2) TMI 659
  CENVAT Credit - Garden Maintenance service - Nexus with manufacturing activity - Held that:- As credit has been allowed to the appellant in their own case [2012 (4) TMI 499 - CESTAT, MUMBAI], [2011 (11) TMI 56 - CESTAT, MUMBAI] and [2009 (12) TMI 196 - CESTAT, MUMBAI] for earlier period by different Benches of this Tribunal, as a matter of judicial discipline. I have no hesitation in allowing the credit. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (2) TMI 658
  Rejection of refund claim - Bar of limitation - filing of refund application within one year from the end of the quarter in which export was made - Held that:- First appellate authority has dismissed the appeals of the appellant on the grounds of time bar only. Appellant has now brought out CBEC Circular dated 06.7.2009 to argue that one year period will start form the quarter ending as per exemption notification. These aspects were not raised before the first appellate authority. As the arguments taken by the appellant during hearing and as per their written submission received on 24.7.2014 were not argued before the first appellate authority, therefore, the case is required to be remanded back to the first appellate authority. Appellant should raise all the issues before the first appellate authority and Commissioner (Appeals) should dispose of the appeals considering all the issues raised by the appellant during the course of the hearing. Needless to say that first appellate authority will extend an opportunity of personal hearing to the appellant before deciding the matter in remand proceedings. - Decided in favour of assessee.

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• 2015 (2) TMI 657
  Payment of commission to overseas agents - Wether covered under Business Auxiliary service - reverse charge mechanism - Held that:- Commission paid to overseas commission agents for promoting sale of their goods is clearly covered under the Business Auxiliary Service and so the appellants are liable to pay service tax under the reverse charge mechanism with effect from 18.4.2006 in terms of Section 66A of the Finance Act, 1994. There are no pleadings to contest this aspect and therefore no further elaborate discussion on this point is required. As regards the plea that only one penalty either under Sections 76 or under Section 78 should be imposed, we notice that, as has been conceded by the ld. AR, the adjudicating authority has imposed only one penalty under Sections 78 and 76 together. Thus in effect, there is only one penalty which is equal to the adjudicated service tax liability which therefore is to be treated to have been imposed under Section 78 ibid. As regards the contention of the appellants that the benefit of reduced (25% of the mandatory equal penalty) under Section 78 ibid should be extended to them as the same has not been extended by the lower authorities. Following decision of Ratnamani Metal Tubes Ltd. [2013 (12) TMI 1397 - GUJARAT HIGH COURT] - penalty under Section 78 will be reduced to 25% of the adjudicated service tax liability provided the adjudicated service tax liability (along with interest) and the reduced penalty (i.e. 25% of the mandatory equal penalty) are paid within 30 days of the receipt of this order. - Decided partly in favour of assessee.

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• Central Excise

• 2015 (2) TMI 655
  Waiver of pre deposit - discrepancy in ER-2 returns and RG-1 register - Debonding of unit - Conversion to DTA unit - Held that:- The duty demand of ₹ 32,83,532/- has been confirmed on the stock of the material valued at ₹ 92 lakhs alleged to be the stock as on 1.4.2009 when the unit was 100% EOU. These stock of material shown in trial balance sheet for the period from 1.4.2009 to 31.7.2009 has been assumed by the Department to be the stock of finished goods. Accordingly the duty has been demanded on this stock on the ground that at the time of de-bonding, duty on the entire stock of finished goods was payable. However, it is seen that as per Superintendent s verification report submitted to the jurisdictional Assistant Commissioner, there was no stock of finished goods in the factory as on 31.3.2009 and also there was no stock of raw materials procured without payment of duty as on 31.3.2009.The trial balance sheet placed on record simply mentions the stock of material valued at ₹ 92 lakhs as on 1.4.2009. Thus, from this entry in the trial balance sheet, it cannot be presumed that this stock entry was of finished goods, as the same could be duty paid raw materials or packing materials etc. The appellant s plea is that prior to de-bonding, they had started procuring packing material adhesives from domestic services etc. and had stopped procuring duty free raw materials. We are , therefore, of the view that pre-deposit of 25% of the duty demand was not justified. Matter remanded back - Decided in favour of assessee.

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• 2015 (2) TMI 654
  Valuation of goods - Whether cylinder rental charges and cylinder repair/ testing charges would be includible in the assessable value of the gases being sold - Held that:- Goods are marketable as such without being packed in any special container, as the same can be sold even in the cylinders brought by the customers, following the judgment of this Tribunal in the case of CCE, Indore vs. Grasim Industries Ltd. (2014 (4) TMI 650 - CESTAT NEW DELHI), cylinder rental charges and cylinder testing and repair charges would not be includible in the assessable value of the goods. As regards the Revenue s reliance on the judgment of the Tribunal in the case of Kota Oxygen (P) Ltd. vs. CCE, Jaipur (2000 (8) TMI 316 - CEGAT, NEW DELHI) which has been upheld by the Apex Court, in that case the assessee was charging fixed amount towards rental and cylinder maintenance charges even from the customers who purchased oxygen gas manufactured by the assessee in their own cylinders and there was also allegation that the amounts charged as cylinder rental and cylinder maintenance were several times higher than the actual cost incurred in this regard and on that basis the Revenue had alleged that part of the value of the oxygen gas was being recovered as cylinder rental/maintenance charges and this allegation of the Revenue have been upheld by the Tribunal. In the present case, there is no such allegation. - No merit in appeal - Decided against the Revenue.

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• 2015 (2) TMI 653
  CENVAT Credit - duty on the PSF and VSF which had been procured duty free under Rule 19 (2) in cash - Held that:- First point as to whether the duty on subject quantity of PSF & VSF procured duty free which could not be used for manufacture of the finished goods exported out of India, could be paid through Cenvat Credit is not stands decided by the Tribunal judgment in the case of Ginger Clothing Pvt. Ltd. Vs. CCE, Thane reported in [2014 (2) TMI 868 - CESTAT MUMBAI] in favour of the appellant and similarly the second issue as to whether cenvat credit of the duty paid on the above mentioned PSF & VSF would be admissible also stands decided on appellants favour by the Tribunal judgement in the case of Karpagambal Mills Ltd. Vs. CCE, Tirunelveli reported in [2007 (6) TMI 363 - CESTAT, CHENNAI]. In view of this, the impugned order is not sustainable. - Decided in favour of assessee.

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• 2015 (2) TMI 652
  Denial of benefit of exemption notification in respect of the raw material and finished goods in respect of clearance of the goods to the other three EOUs - Entire case was made out on the basis that the word knitted was not mentioned in the invoices - Held that:- The Adjudicating Authority observed that the Superintendent Adjudication (Commissioners Office) was present in the office in the whole week including Saturday and Sunday. We find that the appellant categorically mentioned name of the officers in their letter, which was not considered in the adjudication order. In any event, by letter dtd 24.3.2014 the appellant was directed to collect the relied upon documents and to appear hearing on 31.3.2014. The essence of justice requires that a person who is to decide must give the parties a fair hearing before him enabling them to state their case and view. To put in other words, justice demands that the parties should have an opportunity of submitting to the person by whose decision they are to be bound such considerations as in their judgement ought to be brought before him. So, it is difficult to file the reply after taking copies within the period, as specified in the Notice dtd 24.3.2014. - Matter remanded back - Decided in favour of assessee.

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• 2015 (2) TMI 651
  Disallowance of CENVAT Credit - Eligibility to utilize the AED (T&TA) for payment of Basic Excise Duty - Rule 3(6)(b) of CENVAT Credit Rules, 2002 - Penalty u/s 11AC - Held that:- On plain reading of Rule 3(6)(b) of the said Rules, it is clear that the CENVAT Credit in respect of AED (T&TA) shall be utilized only towards payment of duty of Excise leviable under AED(T&TA) Act. It is noted that with effect from 09.07.2004, AED(T&TA) was exempted in respect of clearance of the final product. Therefore, the appellant cannot utilize credit of AED(T&TA) in respect of payment of basic duty for clearance of final product. Ld.Advocate heavily relied upon the Board s circular. Board s circular dt.16.04.2003 was issued in respect of utilization of CENVAT Credit of Basic Excise Duty towards payment of Additional Duties of Excise (GSI) Act, 1957. The Board s circular clarified respect of utilization of credit of Basic Excise Duty for payment of AED (T&TA). But, in the present case, the appellant utilized the AED (T&TA) for payment of Basic Excise Duty which is not covered by the Board s circular. I find that the CENVAT Credit Rules, 2002 has clearly imposed restriction of utilization of AED(T&TA) in respect of other duties. So, the appellant cannot utilize credit of AED (T&TA) for payment of Basic Excise Duty. The Tribunal in the case of Raymond Ltd (2014 (3) TMI 45 - CESTAT MUMBAI) held that the accumulated credit of AED (T&TA) cannot be utilized for payment of duty relating to AED (GSI) and for payment of Basic Excise Duty. Appellant cannot be allowed to utilize AED(T&TA), they can take a refund, if permitted under the law. Regarding imposition of penalty under Section 11AC, it is seen from the show cause notice that while examining the records, the officers detected utilization of AED(T&TA) for payment of Basic Excise Duty. There is no allegation of suppression of facts with intent to evade payment of duty. It is a case of interpretation of provisions of law. There is no material available on records to invoke the ingredients as mentioned in Section 11AC of the Central Excise Act 1944. Hence, imposition of penalty under Section 11AC cannot be warranted. - Decided partly in favour of assessee.

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• 2015 (2) TMI 650
  Levy of interest on wrong utilisation of Additional Excise duty(AED)- Held that:-The Appellant immediately after amendment to Rule 3 (6) of Cenvat Credit Rules, 2002 had utilised the AED (GSI) credit of ₹ 8,71,12,812/- pertaining to the period prior to 01/04/2000 for payment of Basic Excise Duty and Special Excise Duty on tyres. However, Section 88 of the Finance Act, 2004 retrospectively amended Rule 3 (6) of the Cenvat Credit Rules, 2002 to provide that the AED (GSI) credit accrued prior to 01/04/2000 could not be used for payment of Basic Excise Duty and Special Excise Duty and sub-Section (4) of this section provided for recovery of the pre 01/4/2000 AED (GSI) credit wrongly utilised for payment of BED and SED. Thus in terms of Section 88 (4) of the Finance Act, 2004 in the cases of utilisation of AED (GSI) credit pertaining to the period prior to 01/04/2000 for payment of Basic Excise Duty and Special Excise Duty, its recovery could be made in terms Rule 12 of Cenvat Credit Rules, 2002 readwith Section 11A and interest on the same would be leviable under Section 11AB and for this purpose, the relevant date would be 10/09/04. This relevant date is obviously for the purpose of counting limitation period for the issue of show cause notice for recovery under Section 11A (1) not for counting the period for levy of interest. The interest under Rule 12 of Cenvat Credit Rules, 2002 would be leviable under Section 11AB and would start from 1st day of the month succeeding the month in which the credit was wrongly utilised for payment of BED and SED. The provisions of Section 88 of Finance Act, 2004 were amended by adding sub-Section (5) and sub-Section (6) by Section 124 of the Finance Act, 2005. Sub-Section (5) of the Finance Act, 2005 starts with the words notwithstanding anything contained in sub-Section (4) of Section 88 and prescribes a procedure for payment of the wrongly utilised AED (GSI) credit pertaining to period prior to 01/04/2000 in 36 instalments starting from July, 2005. Clause (V) of sub-Section (5) provides that the amount of interest on the amount of credit utilised for paying Cenvat duty shall be @ 13% per annum for the period beginning on and from the day when each time the amount of credit was so utilised and ending on the 10th day of September, 2004. Though, sub-Section (5) added to Section 88 of the Finance Act, 2004 by Section 124 of the Finance Act, 2005 is a non-obstinate provision and would override the provisions of sub-Section (4) of Section 88 of the Finance Act, 2004, this would be applicable only in those cases, where the wrongly utilised AED (GSI) credit had not been paid as on the date of the enactment of Finance Act, 2005, as it is not a retrospective provision and does not replace the sub-Section (4) of Section 88 with retrospective effect. In this case, the appellant had paid the entire amount of wrongly utilised AED (GSI) in December 2004 and, therefore, in our view, the provisions of Section 124 of the Finance Act, 2005 would not be applicable and as such their interest liability would be governed by sub-Section (4) of Section 88 of the Finance Act, 2004. Since, in this case the wrong utilisation of the AED (GSI) credit pertaining to period prior to 01/04/2000 has taken place in 2003 immediately after amendment to Rule 3 (6) of the Cenvat Credit Rules, 2002, the interest liability under Section 11AB would start from 1st day of the month succeeding the month in which the wrong utilisation had taken place till the payment of wrongly utilised credit. - Decided against the assessee.

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• 2015 (2) TMI 649
  Denial of CENVAT Credit - Parallel and bogus invoices - Issue of invoices without supply of goods - Invocation of extended period of limitation - Held that:- it is evident that out of 129 invoices relating to JCPL for the purchases in question, 66 invoices bearing same serial no. (parallel Nos.) had been issued by the supplier SSMPL. Further, summons were issued to all transporters whose vehicle nos. Were appearing in the invoices, but only one appeared and denied having transported the scrap, whereas two other transporters informed by letters that on the said date, their vehicle had been engaged for some other work. Other transporters either did not respond or were not served the summons. Respondents had nothing to do with the transportation of scrap from Bhavnagar etc. to the dealer's premises and further to their premises there from. In view of the ground that the transportation of scrap from the supplying dealers premises/godown to their factory was arranged for and paid by the supplying dealers, have not been controverted by the adjudicating authority in the Order-in-Original. Further, there are 146 invoices in question in case of Jay Iron-respondent and only on account of denial of the facts of transportation by 5-6 vehicle owners/drivers, adverse inference has been drawn by the Adjudicating authority. Similarly, in the case of respondent JCPL wherein 129 invoices are in question and only one vehicle owner/driver appeared and denied and two vehicle owners respondent by mail, who were examined in the adjudication proceedings and never produced for cross-examination and it is not clear as to on what grounds the statements or communications of a few can be made applicable to all the supplies received against the remaining majority of the invoices. Further, the statements have been found to be recorded after prolonged time (more than two years) from the date of transaction and the statements were given on the basis of memory without reference of any record. Investigating officers did not obtain any confirmation from the record of the supplying dealers that these were the same vehicle(s) to whom the payment was shown to have been made by them for transportation. It is further observed that in case of large no. of invoices, possibility of clerical error in a few, cannot be completely ruled out and it could have been the case of mistaken identity. Further, the adjudicating authority have failed in exercising the jurisdiction vested in him as he has not tried to ensure appearance and collection of evidence from the majority almost 97% of the vehicle owners, who did not appear on receipt of summons and/or summons could not be served. It is settled law that substantial benefit granted by the Cenvat Credit Rules cannot be denied on technical/clerical mistake occurred in few invoices after incomplete investigation. Further, one of the reason for disallowance in the adjudication order of Jay Iron, the adjudicating authority relied upon statement of Mr. Kishan Daga, Purchase Officer, who has stated that neither the order was placed for purchase of ship-breaking scrap nor the material was received. The conclusion is incorrect and it is further observed that in reply to question no. 4 and 5, Mr. Daga stated that they have been purchasing scrap from M/s SSMPL for last two years, and they specify the quality of scrap ordered as "not above 3 feet in size and not rusted material”. In view of this background the purport of reply given to question no. 16 and 17 was that they had not ordered scrap as ship-breaking scrap or had not ordered specifically for ship braking scarp and the same was not received as ship breaking scrap. RG-23D numbers given in the invoices received by the assessee are not tallying with the figures in the RG-23D register of the said dealer, the show-cause notice only indicated that the RG-23D (page no.) appearing on the invoices issued to the respondent and the parallel invoices issued to other parties/buyers were different. Thus, it is found that the adjudicating authority have travelled further beyond the allegation in the show-cause notice without any tangible evidence on record. It was further noted that there is no similarity between the two set of invoices. The quantity, value and duty appearing on the two parallel invoices is completely different. The allegation also contradicts the other allegation that in the first place, the dealers themselves had not brought any material and secondly had not dispatched any material (scrap) to other parties including the respondents. It is further found that the investigation have not come to any definite conclusion. Merely raising doubt and that too are self contradictory in nature, demolishes the case of Revenue. Benefit of CENVAT Credit, being substantial benefit granted by law, it cannot be denied on flimsy ground like, suspicion or presumption, as the same cannot take the place of proof. It is further seen that the adjudicating authority have drawn erroneous conclusion in concluding that the respondent have not received the inputs in their factory, in question, and have therefore taken wrong credit. It is further found that the respondents on receipt of the inputs in question, under the normal course of business, had prepared ‘goods received note' and made entries in the statutory records maintained by them. Further, the stock of scrap/physically present in the factory of respondents could have been easily verified with the records which was not done and receipt of the inputs is erroneously being disputed on the basis of the investigation against the supplying dealers, which is found to be wrong and untenable. Further, the investigation is silent as to how the respondent-manufactures, manufactured finished material without receiving the inputs. The law is settled that as long as duty payment is accepted on outputs, the benefit of credit available in law cannot be denied. Respondent had made full payment of duty indicated in the invoices by cheque, which have been rejected on the ground that it is not established that the payments made to the supplying dealers pertain to the purchase transaction in the question. It is further noted that the respondent - Jay Iron has made payment of more than ₹ 2 crores (approx) over nearly three years to the supplying dealers and the respondent JCPL had also made payment of more than ₹ 2 crores over nearly 6 months period. Further, the transaction and payments etc. are properly recorded in the Books of Account. Ledger etc. Thus it is established that the payments were made against supply of scrap. It is further noted that it is not the case of Revenue that part of the payment was returned to the respondent as a notice or reward for connivance, and accordingly, it is held upholding the finding by the appellate authority that the extended period is not attracted in absence of any fraud, collusion or connivance on part of the respondents. Both the suppliers being registered dealers with the Department were carrying on the business from their registered premises for a number of years and the identity and address of the suppliers/dealers were never in doubt and the finding of the lower authority that the respondent did not take reasonable step is contrary to the records and accordingly held unsustainable. - Decided against Revenue.

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• 2015 (2) TMI 641
  Levy of cess - Whether education cess and secondary and higher education cess is leviable on the oil cess being collected from the appellant in terms of the provisions of Section 15 of the Oil Industries Development Act, 1974 - Held that:- In terms of the provisions of Section 91 read with Section 93 of the Finance Act, 2004 and Section 136 read with Section 138 of the Finance Act, 2007, for the purpose of charging education cess and secondary and higher education cess, the excise duty would include only those cess levied as duty of excise, which are levied by the Ministry of Finance, Department of Revenue. Since the oil cess is levied by the Ministry of Petroleum, even though it is collected by the Ministry of Finance as excise duty, the same cannot be included in the duty of excise for the purpose of education cess. Same view has been taken by the Gujarat High Court in the case of Sahakari Khand Udyog Mandli Ltd. (2010 (3) TMI 718 - GUJARAT HIGH COURT). In view of this, the impugned order is not sustainable . The same is set aside. - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (2) TMI 656
  Transfer of right to use trademark - Levy of VAT on such transfer - Held that:- agreement that is relied upon is entitled "TATA Brand Equity & Business Promotion Agreement". By clause1 which contains "interpretation and definition", the term "Marketing Indicia" has been defined to mean certain trading names, logos, advertising slogans and images, colour schemes, styles of labelling, emblems and other manifestations characteristic of the TATA brand to be developed by the Proprietor for use by the Subscribers to this and similar Agreements. The term "Protect/Protection" has been understood by parties to include the creation and development of a mark or a symbol (which may or may not incorporate the word TATA) by the Proprietor in pursuance of this Agreement to project the group image and further includes the registration of such mark either as a trade mark under the Trade and Merchandise Mark Act, 1958 or as a 'work' under the Copyright Act, 1957. The expression also includes certain steps with a view to prosecute, defend and enter into legal proceedings. By Clause (2) Obligations and responsibilities of the proprietor are set out and by Clause (3) the "grant" in terms of the agreement is set out. So long as the agreement transfers the right to use intangible goods which are the trade marks in this case, then, there is no question of the petitioners escaping the consequences of the enactment. The enactment and the definitions which we have referred together with the substantive provisions does not envisage exclusive and unconditional transfer of the above right. The Act has been brought in and with a specific object. The definition of the term "goods" means all kinds of property (not being newspapers, or actionable claims or money, or stocks, shares or securities). Therefore in terms of this definition and the schedule entry No.7, intangible / incorporeal goods and particularly trade marks are brought within the purview of the enactment. Even the definition of the term "dealer" in section 2(4) would indicate that it means any person who whether for commission, remuneration or otherwise transfers right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration and includes State Government or Central Government which so transfers the right to use such goods and also any society, club or association of persons which transfers the right to use such goods to its members. The tax is therefore leviable on the turnover of sales in respect of transfer of right to use any goods and in the present case according to assessee after the appointed day. Levy is on the turn over of sales in respect of transfer of the right to use the goods specified in the schedule. The schedule entry itself reflects as to how on 18th March, 1988 by a Government notification of the Finance Department the transfer of right to use the goods of incorporeal or intangible character i.e. to say patents, trademarks and import licenses have been brought in under the Act. Tribunal did not act perversely or committed an error apparent on the face of record in rejecting the petitioner’s appeals. May be the Tribunal could have rendered a detailed finding and conclusion. However, upon perusal of the order passed by the Tribunal we find that it referred to the facts. It has also adverted to the contentions of the parties. It also referred to its own conclusions rendered in the case of M/s. Smokin Joe etc. However, it concludes that the facts and circumstances in the present case are not identical to the cases dealt with by it and of the above franchisees. Once such conclusion is reached by us, then, strictly it is not necessary to deal with the judgments on the rule of precedents and propriety of disregarding coordinate bench decisions. This rule is reiterated by this Court and equally by the Hon’ble Supreme Court. In fact, this Court has followed several such judgments of the Hon’ble Supreme Court. There cannot be any dispute or quarrel about this principle but its application would depend on the given facts and circumstances. When a coordinate Bench decision can be distinguished and such distinction is founded on facts and circumstances which are peculiar to the other case, that course is equally permissible in law. We do not see how the tribunal can be faulted for not applying and following the rule of consistency or judicial discipline. In our view, reliance therefore placed on the judgments laying down and reiterating the above principle is entirely misplaced. - No merit in petition - Decided against appellant.

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• Indian Laws

• 2015 (2) TMI 643
  Denial of information sought in RTI Act - Information sought regarding Agenda Points and the Minutes of the Meeting dated 20-12-2012 regarding implementation of IS9001 - Denial on the ground that that a meeting of Secretary (PM) and Shri H.K. Sharan had taken place on 20-12-2012, though no formal agenda for the meeting was issued - Held that:- On perusal of records the Commission does not see any case of furnishing of incorrect information to the Complainant. The CPIO’s reply is factual and correct based on the records. Therefore no penal action is warranted in the present complaint. However, the concerns expressed by Shri R.K. Jain, the Complainant, mentioned hereinabove may be brought to the notice of Dr. Prajapati Trivedi, Secretary Performance Management Division, Cabinet Secretariat, New Delhi. A copy of this order may therefore also be sent to Dr. Prajapati Trivedi for his information. - Decided against Appellant.

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• 2015 (2) TMI 642
  Coal Mines (Special Provisions) Second Ordinance, 2014 (No. 7 of 2014)-Stay of Auction - Compensation for end user plants installed in partly coal block and partly outside- Schedule-I coal mines are those mines whose allocation (made earlier in favour of the various parties like the first respondent herein) were cancelled by the orders of this Court referred to earlier. Under Section 16 of the Ordinance, compensation is required to be paid with reference to “land” and “mine infrastructure” of the Schedule-I coal mines. The expression “mine infrastructure” is defined under Section 3(j) of the Ordinance. The learned Attorney General appearing for the Union of India submitted that the Union of India does not propose to acquire the end user plant of the respondent, as apprehended by the respondent. He further submitted that since the basic concern of the respondent is only to ensure that he is not deprived of his property without adequate compensation, the Union of India gives an undertaking to earmark that portion of the land occupied by the end user plant falling within the coal block area and exclude the same from the process of auction and vesting contemplated under the Ordinance so that the rights of property of the respondent remain intact. In view of the fact that the Writ Petition is pending in the High Court, we do not propose to examine the submissions made by the learned counsel for the respondent, but we are satisfied that the interest of justice demands that the impugned order be set aside recording the undertaking of the learned Attorney General mentioned above. Appeal allowed.

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