Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 21, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Validity of reopening of assessment - Absence of notice u/s 143(2) - non-issuance of notice shall not vitiate the assessment proceedings after due service of notice u/s 147 - HC
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TDS u/s 194J - Nature of an amount term as “success fee” paid to Non Resident Company (NRC) at the rate of 0.75% of the total debt financing - it is a ‘consultancy service’ - TDS liable to be deducted - SC
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Penalty under section 271(1)(c) - disallowance of depreciation - he explanation given by the assessee for the claim of depreciation is neither bona fide nor substantiated - levy of penalty sustained - HC
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Attachment of the property - in the absence of any notice to pay the arrears of tax as per rule 51 of the Second Schedule, Part III, of the Act, there cannot be any provisional attachment under section 281B of the Act. - HC
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Revision u/s 263 - AO who passed the order on September 30, 2008, had no jurisdiction to complete the assessment as the return of income for the assessment year 2007-08 was over rupees five lakhs - Assessee may not be aware of this situation - Revision is not valid - HC
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GP addition - once the provisions of section 145(3) are invoked then what should be a reasonable gross profit rate is required to be seen which is a finding of fact and on the basis of appreciation of evidence thus it is a pure finding of fact - HC
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Value of perquisite - Conveyance allowance/additional conveyance allowance to be included in salary or not in the hands of DO of the LIC - expenditures have to be incurred towards conveyance - Not to be included - HC
Customs
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Classification of imported Coal - Bituminous coal or Steam coal -The argument of the appellant since Inherent Moisture is calculated on dry air basis, the same should be considered as Residual Moisture, this argument does not stand to any reason - AT
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Classification of imported goods - Food supplement or Food preparation for infants it is a FOLLOW-UP FORMULA and infant food complementary to mother's milk. - classifiable under CTH 1901.10 and not under 21.06 - AT
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Classification of vessel- Seismographic research vessel or Light vessels, fire floats etc. - , CTH 8906 which covers scientific research vessels is the most appropriate classification in respect of a seismic research vessel. - AT
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The exemption from Safeguard Duty and Antidumping Duty is not available simply because the materials are imported against the authorization which has been made transferable on or after 18th April, 2013 by the Regional Authority. - HC
Corporate Law
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Revival of the Company - Petitioner Company has not filed its statutory documents since its incorporation - The petition is allowed subject to payment of costs of ₹ 75,000/- in addition to prescribed fee - HC
Service Tax
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The deposit of service tax along with interest, subsequent to the investigations made by the Revenue, cannot be said to be covered by the provisions of Section 73(3) - 25% penalty levied - AT
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Refund claim - receipt of donation from caterers - the tax which was collected was not payable in law and appellants were persuaded to pay the amount. Therefore, the appellant is entitled to refund along with appropriate interest payable under law - AT
Central Excise
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Benefit of SSI Exemption - User of brand name of others - assessee would not be entitled to get the benefit of SSI exemption irrespective of fact that the use is of different goods or same goods - AT
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Refund under rule 5 of Cenvat credit rules,2004 - Export of goods - Scrap cleared to DTA on payment of duty - cash refund can be disallowed only to the extent the cenvated inputs are contained in the scrap cleared for home consumption on payment of duty - AT
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Refund of excise duty - an application reminding them for the refund of this amount along with interest in pursuance of the Commissioner (Appeals)s order, cannot be treated as fresh refund application - interest on belated refund allowed - AT
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Penalty under Section 11AC - once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A - HC
VAT
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Classification of goods - Levy of tax on Image Runners @4% or @12% - Image Runners (Multi-function Network Printer) - Goods in question partake the character of "peripheral" of a computer and therefore, it is classifiable under Entry 18(i) of Part B of Schedule I of TNGST Act - HC
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Deferment of assessment proceedings - simultaneous levy of service tax and value added tax on supply of food and drinks - none of the authorities under the VAT Act can be said to have been empowered to defer assessment proceedings - HC
Case Laws:
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Income Tax
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2015 (2) TMI 734
Interest u/s 234A and s.234B - default in payment of advance tax on account of parking charges - Held that:- In the present facts, the Appellant had not originally filed its return of income and, therefore, there was no occasion for him to make any advance payment. This nonfiling of return of income was on the basis of the Appellant's stand that in view of project completion method followed by him, the income earned on parking charges would have to be returned when the project was completed. This was not accepted as the amount received on account of parking charges was not a part of any project. Thus parking charges was brought to tax in Assessment Year 2000-01. On facts in quantum proceedings, it has been held by the Tribunal that the amount received on parking charges has nothing to do with the appellant's project and was assessable to tax in Assessment Year 2000-01. This has been accepted by the Appellant. If this be so, the Appellant was obliged to pay Advance tax and nonpayment of the same would carry with it the further burden on interest under Section 234B of the Act. This is so in view of Anjum Ghaswala (2001 (10) TMI 4 - SUPREME Court) where it is held that payment of interest is mandatory and compensatory. - Decided against assessee.
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2015 (2) TMI 733
Validity of reopening of assessment - Held that:- The reasons to believe recorded by the AO and duly communicated to the assessee had noted that its name figures as one of the beneficiaries of alleged bogus transactions, which had cropped up during the investigation carried out by the Directorate of Investigation, Jhandewalan. The entries relating to the transactions and the sums of money were also included in tabular statement as part of the note. CIT v. M/s Kelvinator of India Ltd, (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) states that the reassessment can be resorted to if there is “tangible material” justifying such move. The receipt of the investigation report in the opinion of the Court, undoubtedly constituted such tangible material outside the record, which were received by the AO after the assessment was processed under Section 143 (1). - Decided against assessee. Absence of notice under Section 143 (2) - Held that:- In the present case, there is no doubt at all that the assessee cooperated and appeared both in the assessment as well as reassessment proceedings. Therefore, it had deemed notice of the re-assessment proceedings. Its contentions were taken into account. In such circumstances, issuance of notice is a mere empty formality. Thus, the non-issuance of notice, in the opinion of the Court, shall not vitiate the assessment proceedings after due service of notice under Section 147. - Decided against assessee. Addition u/s 68 - Held that:- Both the purchasers did not respond to notices issued by the income tax authorities. Furthermore, the AO’s enquiry reveal that these purchasers had insubstantial means and could not reasonably be said to possess the means to make the investments that they did, in purchasing the assessee’s shares for the amounts reported by it. Besides, as to whether the transaction was genuine or not is a pure finding of fact which has concurrently been rendered against the assessee. - Decided against assessee.
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2015 (2) TMI 732
Revision u/s 263 - AO erred in allowing the expenditure incurred as miscellaneous expenses for creation of brand "Nirvana" as revenue expenditure - tribunal quashed revision order u/s 263 - Held that:- Tribunal does record the fact that specific queries were made during the Assessment proceedings with regard to details of expenditure claimed under the head "miscellaneous expenses" aggregating to ₹ 2.94 crores. The respondent-assessee had responded to the same and on consideration of response of the respondent-assessee, the Assessing Officer held that of an amount of ₹ 17.98 lakhs incurred on account of repairs and maintenance out of ₹ 2.94 cores is capital expenditure. This itself would be indication of application of mind by the Assessing Officer while passing the impugned order. The fact that the assessment order itself does not contain any discussion with regard to the balance amount of expenditure of ₹ 1.76 crores i.e. ₹ 2.94 crores less ₹ 17.98 lakhs claimed as revenue expenditure would not by itself indicate non application of mind to this issue by the Assessing Officer in view of specific queries made during the assessment proceedings and the Respondent-assessee's response to it. In fact this Court in the case of Idea Cellular Ltd. Vs. Deputy Commissioner of Income Tax & Ors., [2008 (2) TMI 146 - BOMBAY HIGH COURT] has held that if a query is raised during assessment proceedings and responded to by the Assessee, the mere fact that it is not dealt with in the Assessment Order would not lead to a conclusion that no mind had been applied to it. Also from the nature of expenditure as explained by the petitioner the view that the same were in the realm of revenue expenditure, is a possible view. - Decided in favour of assessee.
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2015 (2) TMI 731
Deemed dividend - ITAT deleted the addition made by the A.O. under Section 2(22)(e) - Held that:- Revenue failed to adduce any evidence to prove that the transaction between the assessee and the company was a mere smoke screen to cover a surreptitious payment of money to a share holder. M/s Nexo Products (India) received certain export orders but was not in a position to execute the orders as its manufacturing facility was situated in a remote area and was beset with labour problems and erratic supply of electricity. The Company, therefore, entered into an agreement, dated 1.8.2007 with the assessee to install plant and machinery at his premises to enable the assessee to do job work for the company, at 10% below the prevailing market rate. The Assessing Officer did not doubt this agreement or these facts. The assessee having proved a tangible business expediency between the assessee and the company, the question of invoking Section 2(22)(e) of the Act does not arise. ITAT has after considering these facts rightly held that as the assessee has proved business expediency the advance is not covered by Section 2(22) (e) of the Act. We find no reason whether in law or in fact to interfere with these findings of facts, which are neither perverse nor arbitrary. - Decided against the revenue.
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2015 (2) TMI 730
TDS u/s 194J - Nature of an amount term as “success fee” paid to Non Resident Company (NRC) at the rate of 0.75% of the total debt financing - consultancy service or not - whether chargeable under the provisions the Act? - Entitlement to ‘No Objection Certificate’ by assessee - HC opined that the business connection between the petitioner company and the NRC had not been established - Held that:- As the factual matrix in the case at hand, would exposit the NRC had acted as a consultant. It had the skill, acumen and knowledge in the specialized field i.e. preparation of a scheme for required finances and to tie-up required loans. The nature of activities undertaken by the NRC can be said with certainty would come within the ambit and sweep of the term ‘consultancy service’ and, therefore, it has been rightly held that the tax at source should have been deducted as the amount paid as fee could be taxable under the head ‘fee for technical service’. Once the tax is payable paid the grant of ‘No Objection Certificate’ was not legally permissible. Ergo, the judgment and order passed by the High Court are absolutely impregnable. - Decided against assessee.
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2015 (2) TMI 729
Applicability of block assessments as per section 158BB - return of income had been filed by the assessee beyond the date prescribed under section 139(1) - Held that:- It is clear that the income unearthed on the basis of evidence found as a result of search or requisition of the books of account or documents or such other materials or information available with the Assessing Officer and relatable to such evidence alone could be assessed so as to declare undisclosed income for all the six assessment years in the block period. The Tribunal has not examined the case in a proper perspective and in the light of the settled position of law. The income that has been disclosed by the assessee in the returns of income, other than the income unearthed as a result of search, cannot be treated as undisclosed income while assessing the income during the block period. Thus remand these appeals to the Tribunal to consider the appeals afresh in the light of the observations made in this judgment. - Decided in favour of revenue for statistical purposes. Agricultural income - Assessing Officer expressed doubt about the genuineness of this income from agriculture and having so observed did not accept the said claim and brought it to tax - appellate authority deleted the said addition as undisclosed income for the block period - Held that:- It appears from the record and so also the orders passed by the appellate authority and the Tribunal that the agricultural income for 1995-96 was accepted by the Assessing Officer. Further, the income of ₹ 3,50,000 for the assessment year 1996-97, was deleted being undisclosed income for the block period. We do not find any reason to interfere with the orders passed by the appellate authority and the Tribunal, more particularly, in view of the fact that the agricultural income from the very same agriculture lands for the assessment year 1995-96 was accepted by the Assessing Officer. Hence, we confirm the findings of fact recorded by the appellate authority and the Tribunal. - Decided in favour of assessee. Deduction under section 54 and section 54F - what the assessees had transferred was their undivided share in the land and not the land plus residential house/apart ments - Held that:- Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long-term capital gain. Under this provision, merely because, the words "residential house" are preceded by article "a" would not, in our opinion, exclude a house shared with any other person. Even if the residential house is shared by an assessee, his right and ownership in the house, to whatever extent, is exclusive and nobody can take away his right in the house without due process of law. In other words, co-owner is the owner of a house in which he has share and that his right, title and interest is exclusive to the extent of his share and that he is the owner of the entire undivided house till it is partitioned. The analogy applied by the Tribunal based on the judgment of Banarsi Dass Gupta [1987 (4) TMI 7 - SUPREME Court], wherein, the Supreme Court considered the provisions contained in section 32 of the Act, in our opinion, would not apply to the facts of the present case. The right of a person, may be one-half, in the residential house cannot be taken away without due process of law or it continues till there is a partition of such residential house. Thus, we are unable to agree with the view expressed by the Tribunal on this issue and we set aside the findings recorded on this question of law - Decided against assessee. Valuation of closing stock - Valuation of closing stock of immovable properties should be treated as nil, as claimed by the assessee in view of the fact that the said properties were involved in litigation as held by tribunal - Held that:- Though the reasons recorded by the Tribunal, in our opinion, are not happily worded, we are also of the view the question as regards the valuation of closing stock in respect of the land in litigation deserves to be considered afresh in the light of the settled position of law that the assessee, in such a situation, has a choice to value the stock at cost or market price, whichever is lower. None of the authorities have considered this question in a proper perspective. It was necessary to find out the value of the land at which it was purchased and the market price, at the relevant time, in the light of the fact that the property was in litigation, and then fix the liability. - Decided in favour of revenue for statistical purposes. Undisclosed income of the assessee during the block period - Tribunal held that the amounts standing to the credit of G. Anand having not been claimed as expenditure cannot be treated as undisclosed income of the assessee during the block period - Held that:- Find ourselves in agreement with the findings recorded by the Assessing Officer and the appellate authority, which observed that the amount of ₹ 10,00,000 remained unexplained and treating the same as undisclosed income. It is also pertinent to note that the assessee has not only not disclosed the said amount but failed to file the return of income for the assessment year 1998- 99 before the search. In other words, he did not file the return of income for this assessment year within the time stipulated under section 139(1) and (4) of the Act. He also failed to maintain the books of account for the said assessment year and in this backdrop, the said amount of ₹ 10,00,000 has rightly been brought to tax. The Tribunal did not consider the materials on record in a proper perspective and has simply by single sentence in the order set aside the concurrent findings of fact recorded by the authorities below. Observation/finding in view of the facts and circumstances of the case, recorded by the Tribunal, is perverse and deserve to be set aside. - Decided in favour of revenue. Undisclosed investment towards purchase of NSC - AO make the said addition in the regular assessment proceedings - Tribunal reversed the findings holding that the assessee did not claim deduction in respect of the investment in NSC it would be out of the purview of the undisclosed income - Held that:- Having regard to the quantum of amount and the findings recorded by the Tribunal, this substantial question of law was not seriously pressed. We are also not inclined to interfere with the order of the Tribunal in respect of the sum of ₹ 50,000 invested in NSC by the assessee. - Decided in favour of the assessee
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2015 (2) TMI 728
Penalty under section 271(1)(c) - disallowance of depreciation - ITAT confirmed penalty levy - Held that:- So long as the assessee has not concealed any material fact or the factual information given by him, has not been found to be incorrect, he will not be liable for imposition of penalty under section 271(1)(c) of the Act even if the claim made by him is unsustainable in law provided that he either substantiates the explanation offered by him or the explanation is found to be bona fide. A claim made by the assessee needs to be bona fide and if the claim, besides being incorrect in law, is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee. We have already observed hereinabove and the finding of the Income-tax Appellate Tribunal, which is a final fact finding authority that the assessee claimed depreciation which was never allowable and the assessee was aware of the true nature of the transaction despite which the claim for depreciation was made. Its claim was rejected by the Tribunal in the quantum proceedings and that order has attained finality. The explanation given by the assessee for the claim of depreciation is neither bona fide nor substantiated. All these are on the basis of appreciation of evidence on record found by the lower authorities and thus, the impugned order is based on appreciation of evidence and has been reached on a finding of fact. No perversity or illegality in the order of the Income-tax Appellate Tribunal. - Decided against assessee.
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2015 (2) TMI 727
Entitlement to benefit under section 11 - Tribunal held applicant not entitled to deduction u/s 11 on the ground that the applicant-corporation carried on the work of the applicant - whether salaried employees were not beneficiaries in the teeth of section 30 of the Road Transport Act, 1950 ? - Held that:- Tribunal was not right in law in holding that the salaried employees were not beneficiaries in the teeth of section 30 of the Road Transport Act, 1950 as relying on CIT, AP Versus Andhra Pradesh State Road Transport Corporation [1986 (3) TMI 1 - SUPREME Court] - Decided in favour of assessee. The beneficiaries of the corporation can be said to be the entire public. They use the facilities created by the corporation for travelling and other allied activities. If the provision is to be understood in such a way that the work in connection with the business must be carried out by the beneficiaries, it must result in a situation, where every passenger must have a say in the administration and business. It is not difficult to imagine chaotic condition that would emerge as a result of that. Obviously realising this, Parliament has chosen to employ the word "mainly". The ultimate test is to see as to whether the persons, who are in actual management of the institution, are the persons working for and on behalf of the beneficiaries or whether they have an independent and personal interest of their own. Viewed from that angle, the employees of the corporation ; in the ultimate analysis are none other than the public employees working for and on behalf of the beneficiaries. The role played by the Government is nothing but a systematic activity, through which the will of the public is transmitted or is translated. It hardly needs any mention that where two views are possible while interpreting a provision of taxation law, the one that helps the assessee or beneficiary must be chosen. In the instant case, the assessee is a corporation serving the needs of the travelling public in the State and was enjoying the benefit for the past several decades. Further, sub-section (4A) ceased to be in force on its being deleted in the year 1991. - Decided in favour of assessee.
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2015 (2) TMI 726
Attachment of the property - order passed by the second respondent under section 281B - Held that:- Even to make a provisional attachment of the property of the assessee, there should be a notice to pay the arrears as per rule 51 of the Second Schedule, Part III, of the Income-tax Act. Without any notice to the assessee, the provisional attachment cannot be made under section 281B of the Act. In fact, in the judgment reported in KDH Properties P. Ltd. v. Asst. CIT [2013 (4) TMI 451 - MADRAS HIGH COURT] relied upon by the respondent itself, it has been held that the provisional attachment made in terms of section 281B should stand the test of reasonableness and avoid arbitrariness. In the instant case, this court finds that without any notice of demand to pay arrears, the respondent has passed an order for provisional attachment in arbitrary manner. Thus in the absence of any notice of demand or notice under section 156 of the Act, the petitioner cannot be termed as "assessee in default" or "assessee deemed to be in default". Similarly, in the absence of any notice to pay the arrears of tax as per rule 51 of the Second Schedule, Part III, of the Act, there cannot be any provisional attachment under section 281B of the Act. - Decided in favour of assessee.
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2015 (2) TMI 725
Unaccounted services rendered by brokers - CIT(A) allowed the claim of assessee - ITAT reversing the said order of CIT(A) has held that the appellant has failed to discharge the burden cast upon him by law - Held that:- For Suvidha Realtors the Assessing Officer came to the conclusion that the bills are suspicious as the total bill raised including the service tax and education cess came to ₹ 11,20,385. However, the bank statement of M/s. Suvidha Realtors and Constructions Pvt. Ltd. indicated that the amount credited in the said bank account of M/s. Suvidha Realtors was subsequently transferred to the account of M/s. Suvidha Realtors, another entity. For M/s. Panjon Pharma AO noted as not in the business of providing any services in the past. This was the first order in which huge commission is shown to have been paid and received from the assessee-appellant before us. The Assessing Officer was surprised, therefore, and rightly as to how the company in the pharmaceutical business could render services in connection with sale of cement and procurement of order for supply of cement. M/s. Panjon Pharma had huge brought forward business loss which was set off against the commission income received from the assessee. The Assessing Officer also noticed that the commission amount was credited in the account of Panjon Pharma in the HDFC Bank and the next entry was to transfer this sum to another account, for the reasons which were disclosed to the Assessing Officer. Therefore, ITAT did not commit any error and rather applied the correct test in reversing the order of the CIT(Appeals). The appellant has not been able to discharge the burden and it is not impossible. It is a primary onus and which was to be discharged and which has been held as not discharged by providing the requisite details. We do not find that the reasons assigned by the Tribunal consistent with the material produced are vitiated by perversity or an error of law apparent on the face of the record which would enable us to exercise our powers under section 260A of the Act. - Decided against assessee.
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2015 (2) TMI 724
Revision u/s 263 - AO who passed the order on September 30, 2008, had no jurisdiction to complete the assessment as the return of income for the assessment year 2007-08 was over rupees five lakhs - Held that:- The Commissioner, in the present order under section 263 was not justified in re-initiating the proceedings under section 263 mainly on this premise about jurisdiction. There was no fault of the respondent-assessee. The respondent-assessee appeared before the Assessing Officer who issued valid notice and the Assessing Officer had the authority to issue notice under section 143(2) as aforesaid and complied with the requirements raised by him. The respondent-assessee may not be aware of such requirements and for this the respondent-assessee cannot be subjected to fresh innings at the hands of another Assessing Officer. There is no provision either under section 154 or under section 263(1) to inform the Commissioner of Income-tax to issue show-cause notice under section 263 by the lower authorities as the Commissioner only has the jurisdiction to issue show-cause notice under section 263 if he himself is satisfied after examining the records of the assessment order passed by the Assessing Officer which falls under his jurisdiction and the Commissioner of Income-tax also gets power of revision if the twin conditions are satisfied that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue.The practice adopted by the Commissioner of Income-tax is de hors and it amounts to unnecessary harassment to the assessee for no fault of his. - Decided in favour of assessee.
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2015 (2) TMI 723
Unaccounted money - addition being undisclosed income - Tribunal deleted the addition as no search warrant was issued u/s 132 in the name of the assessee, so no notice can be issued u/s 158BC - assessee prayed refund of the seized cash - Held that:- In the instant case ₹ 17,00,000/- were requisitioned from the S.H.O. Kotwali, Allahabad under Section 132A of the Act, which was seized from three persons. Therefore, the provision of Section 158BD is applicable in the instant case, but the same was not applied by the Department. The assessment was framed after issuing notice under Section 158BC which is not applicable in the instant case, since the assessee was neither searched nor assets were requisitioned from him under Section 132A of the Act. Further, there were no warrant of authorization in the name of the assessee. No reason to interfere with the impugned order passed by the Tribunal - Petitioner's application for refund directed to be decided within a period of four months from today . - Decided against revenue.
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2015 (2) TMI 722
Refund of fringe benefit tax (FBT) denied - Held that:- The second respondent shall be under obligation to refund the amount collected towards the fringe benefit tax along with accrued interest to the respective stevedores from whom it was collected duly identifying them, within two months from the date of receipt of a copy of this order. Also the second respondent shall not be under any obligation towards fringe benefit tax for the benefits paid to the employees supplied by it to the stevedores.If any doubt is entertained in this behalf as to the identity, it is open to the second respondent to seek necessary information or clarification from the petitioner, and if the second respondent paid any service tax on the amount collected by it towards service tax, it need not refund the same. - Decided in favour of assessee.
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2015 (2) TMI 721
GP addition - AO noticing the defects in the stock register rejected the book results by invoking the provisions of section 145(3) - Tribunal not only rejecting the books results but also upholding the gross profit rate of 11 per cent - Held that:- When the Assessing Officer found deficiencies as referred to by the Assessing Officer and approved by the two appellate authorities then the provisions of section 145(3) had to be invoked and have rightly been invoked and once the provisions of section 145(3) are invoked then what should be a reasonable gross profit rate is required to be seen which is a finding of fact and on the basis of appreciation of evidence thus it is a pure finding of fact. The assessee has failed to highlight, bring on record any perversity in the order of the Tribunal so as to hold that substantial question of law is involved. The hon'ble apex court and this court has consistently held that when the matter is decided on appreciation of evidence and facts then it is finding of fact. - Decided against assessee.
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2015 (2) TMI 720
Value of perquisite - Conveyance allowance/additional conveyance allowance to be included in salary or not - whether incurred wholly, necessarily and exclusively for official duties ? - whether fully exempt from tax ? - additional conveyance allowance are paid to the Development Officers for meeting actual expenditure - Held that:- The conveyance allowance and additional conveyance allowance are paid to the Development Officers for meeting actual expenditure incurred by them in discharge of their field duties and thus necessarily and exclusively for meeting of such expenditure, the allowance is thus being exempt as per the norms set out by the LIC. It appears that the LIC has worked out conveyance and additional conveyance allowance to the Development Officers considering the expenditure incurred for procuring the business and it is fixed by a general formula having reference to the parameters of the business and, thus, the payment of conveyance and additional conveyance allowance is nothing but a reimbursement of the actual expenditure incurred by the Development Officers on account of conveyance in relation to the performance of their duties and the said expenditure has a close nexus to the performance of the duties and development of the insurance business, inter alia, by way of meeting several persons, to enroll new life insurance agents, to meet the customers for encouraging them to take insurance policies, etc. Therefore, in such circumstances, expenditures have to be incurred towards conveyance. - Decided in favour of the assessee
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2015 (2) TMI 719
Re-opening of assessment u/s 147/148 - issue of commission paid having not been covered by the reasons recorded within the meaning of Section 148(2) as such the reopening is not valid under the law - Held that:- In the instant case, it is not the case of the assessing authority that during the course of proceedings under Section 147 it came across any material relating to the payment of commission suggesting escapement of income under any of the heads. On the other hand, the Ist Appellate Authority has given a categorical finding that the assessee had claimed as expenditure the commission of ₹ 58,59,913/- in his Trading and Profit and Loss Account and the same was available on the record. Consequently, in the absence of any information having been received by the assessing officer regarding escapement of commission income during the course of proceedings under Section 147 of the Act, he could not have formed an opinion on this issue that it has escaped assessment. Further, the reasons to believe does not record the factum of escapement of commission. See CIT vs. M/s Sun Engineering Works (P.) Ltd.[1992 (9) TMI 1 - SUPREME Court] and Vipin Khanna vs. Commissioner of Income-Tax [2000 (7) TMI 2 - PUNJAB AND HARYANA High Court]. Ist Appellate Authority was justified in deleting the addition of commission, on the ground, that it was not covered by the reasons recorded under Section 148(2) of the Act. - Decided in favour of assessee.
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2015 (2) TMI 718
Entitlement to deduction under section 80HHB - Tribunal held that the assessee was entitled to deduction in respect of each project instead of netting up of profits from all the overseas projects and thus directing AO to allow the deduction without setting off the loss suffered in other foreign projects - Held that:- The Tribunal has decided the matter essentially in the light of the facts and material placed before it. In such circumstances, and considering the provision in question and the order of the Tribunal, we do not think that the Appellate Tribunal was in error in holding that the assessee was entitled to the deduction under section 80HHB in respect of each project instead of netting up of profits from all the overseas projects. In such circumstances, the Tribunal was in no error in directing the Assessing Officer to allow the deduction as claimed by the assessee without setting off all the losses suffered in other foreign projects. See CIT v. Canara Workshops P. Ltd. [1986 (7) TMI 5 - SUPREME Court] - Decided in favour of assessee.
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2015 (2) TMI 717
Reopening of assessment - as per revenue the assessee though had enjoyed taxable income and had huge unaccounted deposits in bank account but had not chosen to file return of income so also did not place on record any material before the AO despite of several opportunities having been granted - Tribunal remitted the matter back to the Assessing Officer granting the assessee one more inning - Held that:- The Tribunal, while setting aside the order of the Assessing Officer, has chosen not to decide any issue. It may be a different aspect that on the material available with the Commissioner of Income-tax (Appeals) whether the Tribunal ought to have restored the matter back to the Assessing Officer to grant an opportunity afresh ; nevertheless the Tribunal in its view in the interest of justice has restored the matter back to the Assessing Officer and we need not comment on the finding of the Tribunal but, in our view, no substantial question of law can be said to arise out of the order of the Tribunal as the final fact finding authority has not decided any issue. The assessee may have chosen not to file return/details before the Assessing Officer earlier but nevertheless gets a chance again to place all material on which he wishes to rely upon consequent to the order passed by the Tribunal. Both the sides get another opportunity and if the assessee fails again after adequate opportunity is being granted by the Assessing Officer then the Assessing Officer has again an opportunity to pass an order in accordance with law, which he deems appropriate. - Decided in favour of assessee by way or remand.
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2015 (2) TMI 716
Disallowance of interest - loan given to subsidiary company - Held that:- In the instant case, as find that the assessee had deep business interest in the existence of its subsidiary company and discharge its legal obligation by repaying the instalments of loan to the financial institutions. Such loans were given for the purpose of business. It is not even the Department's case that the amount given by the assessee was not for business purposes or that the capital borrowed was not utilised for the purpose of business. The assessee was entitled to deduction of interest amounting to ₹ 9,54,000 on the loan given to its subsidiary company. The Tribunal was not justified in disallowing the interest. - Decided in favour of assessee. Disallowance of expenses claimed towards guarantee commission - Held that:- The expenditure incurred by the assessee in obtaining an asset on deferred payment basis is a revenue expenditure and that the Tribunal committed an error in holding such expenditure to be a capital expenditure.- Decided in favour of assessee.
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2015 (2) TMI 715
Revision u/s 263 - computation of capital gains arising on transfer of a capital asset acquired succession - benefit of indexation from April 1, 1981 as per AO or from April 23, 2000 as per CIT(A) - assessees are the legal heirs of one Mr. C. B. Devaiah who owned the property which had been acquired by him prior to April 1, 1981 - Held that:- When an asset is acquired by way of inheritance, the cost of acquisition of the asset should be calculated on the basis of the cost of acquisition by the previous owner and the said cost of acquisition of the previous owner has to be calculated on the basis of the indexed cost of acquisition as provided in Explanation (iii) to section 48. Though in the definition of "indexed cost of acquisition", the words used are, "in which the asset was held by the assessee", a harmonious reading of sections 48 and 49 makes it clear for the purpose of "indexed cost of acquisition", it has to be understood as the first year in which the previous owner held the said property. Otherwise, if the date of inheritance is taken into consideration, then the cost of acquisition of the asset on that date corresponding to the market value is to be taken into consideration. Otherwise, take the cost of acquisition on the day the previous owner acquired it and apply the "indexed cost of acquisition" and then calculate the capital gains and the tax payable. Tribunal was correct concluding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee through succession, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee actually became the owner of the asset through succession. See CIT v. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2015 (2) TMI 714
Claim of deduction under section 80-IB denied - return had not been filed within the stipulated period as provided under section 80AC read with section 139 of the Act - rejection of condonation of delay - Held that:- The Board, vide order dated July 27, 2009 rejecting the application seeking condonation of delay does not satisfy the test of being a reasoned and speaking order. The Board had rejected the application on the ground that appeal was pending before Commissioner of Income-tax (Appeals) which is legally unsustainable. See Kranti Associates P. Ltd. v. Masood Ahmed Khan [2010 (9) TMI 886 - SUPREME COURT OF INDIA]. Accordingly matter remanded to the Central Board of Direct Taxes to decide afresh after affording an opportunity of hearing to the parties in accordance with law by passing a speaking and reasoned order. - Decided in favour of assessee by way of remand.
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2015 (2) TMI 713
Undisclosed income of any other person - notice under section 158BC - petitioner is a co-operative society - Held that:- In the present case, the Revenue has not produced any evidence to show that the Assessing Officer of the searched person had arrived at a satisfaction during the course of such proceedings that the undisclosed income belong to the present petitioner. In the affidavit-in-reply also, all that is stated is that during the search against the Piyush Shroff HUF, certain incriminating documents were seized, on the basis of which the deponent of the affidavit-in-reply is satisfied that based on the material seized from the office of the "Karta" of HUF, undisclosed income belong to the present petitioner Co-operative Credit Society. Even in the affidavit-in-reply, it is nowhere stated that such satisfaction was arrived at during the course of proceedings under section 158BC of the Act and that such satisfaction was recorded by the Assessing Officer. Neither in the affidavit-in-reply nor through the documents this vital aspect emerges. The important precondition for action under section 158BD of the Act, therefore, having not been satisfied, the action must fail. On this ground, the impugned notice dated October 3, 2005 is quashed. - Decided in favour of assessee.
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2015 (2) TMI 711
Unaccounted withdrawal and deposit of in the savings bank account - ITAT deleted the addition - whether nature and source of receipt proved? - Held that:- Tribunal order deleting the addition does not satisfy the requirements of being a reasoned order as enunciated by the apex court noticed in Kranti Associates P. Ltd. v. Masood Ahmed Khan [2010 (9) TMI 886 - SUPREME COURT OF INDIA]. Consequently, the matter is remanded to the Tribunal to decide afresh after affording an opportunity of hearing to the parties in accordance with law. - Decided in favour of revenue.
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Customs
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2015 (2) TMI 741
Classification of imported Coal - Bituminous coal or Steam coal - Extended period of limitation - Identical issue already decided by the co-ordinate bench of tribunal - Held that:- It is a settled position in law as held by the hon'ble apex court in the case of Indo-International Industries [1981 (3) TMI 77 - SUPREME COURT OF INDIA] that- "if any term or expression has been defined in the enactment, then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in common parlance or commercial parlance has to be adopted." In the present case, the Customs Tariff defines 'bituminous coal' by means of certain specification and if those specifications are satisfied in the case of imported coal, they will have to be classified as "bituminous coal' notwithstanding the fact that in commercial parlance they might be known otherwise. The argument of the appellant since Inherent Moisture is calculated on dry air basis, the same should be considered as Residual Moisture, this argument does not stand to any reason. The test certificate clearly defines the parameter as "Inherent Moisture" and not as residual moisture. The said test reports have been accepted by the appellants and they have never disputed the same. From the records, it is seen that the customs authorities had referred the matter to the Central Revenue Control Laboratory who had confirmed that the values of Ash content, sulphur content and Btu are to be applied on Air Dry Basis (ADB). There is nothing on record nor any evidence to the contrary led by the appellant to rebut the correctness of the calculation done by the Revenue. In this factual scenario, we do not find any merit in the contention that there is an error in the computation made by the Revenue. We further observe that a co-ordinate bench of this Tribunal at Bangalore had considered an identical issue involving the same goods imported by some other importers, at length and had passed a final order classifying the goods as "bituminous coal" under CTH 2701.12 and rejecting the contention of the importers that the goods are classifiable as "steam coal". In the absence of any evidence to the contrary, judicial discipline mandates that the said decision be followed by other benches of the Tribunal. Therefore, we do not find any reason to adopt a different view, at the interim stage of stay. As regards the issue of time bar raised by the appellant, it is both a question of fact as well as law. Nevertheless, considering the fact the appellants have been importing these goods since a long time and the test reports at the load port were available, it is surprising that the customs authorities had not examined the matter earlier. Therefore, there is some merit in the contention of the appellants in this regard. As regards the contention that since the goods originated from ASEAN countries, they would be eligible for the benefit of exemption under notification 46/2011-Cus, this contention is also quite valid. The appellants have not pleaded financial hardship in spite of a query from the bench in this regard. Therefore, the balance of convenience lies in favour of revenue in the absence of a prima facie case in favour of the appellant.The decision of the hon'ble apex court in the case of Dunlop India ltd. [1984 (11) TMI 63 - SUPREME Court] and Benara Valves Ltd. [2006 (11) TMI 6 - SUPREME COURT OF INDIA] refer. Accordingly we are of the view the appellants should be directed to make pre-deposit of the duty demand for the normal period of limitation. Partly allowed in favour of appellant.
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2015 (2) TMI 740
Classification of imported goods- Food supplement or Food preparation for infants- Held that:- From the reading of tariff entry 1901 it is clear that Food preparations of goods of heading 0401 to 0404 is classifiable under 1901 and in particular 'preparations for infant use' falls under 1901.10. From the heading 2106 it can be seen that it covers 'Food preparations not elsewhere specified or included'. On analysis of both the above tariff entries, it is clear that if any food preparation is specifically covered and included in any other tariff heading other than 21.06, the same will not fall under Custom Tariff Head 21.06. The product in question i.e. SIMILAC-2 is admittedly preparation predominantly of milk powder and it is for consumption by an infant. The milk powder is goods falling under 04.02. Thus the product SIMILAC-2 is a food preparation of goods of heading 04.02 and exclusively meant for consumption of infant babies. From the above undisputed facts, it is clearly established that the products SIMILAC-2 is specifically covered under the CTH 19011090. Since SIMILAC-2 is covered under 19011090, the same can not, by any stretch of imagination, be covered under CTH 21.06 for a simple reason that the tariff entry of 21.06 is a residuary entry and only those products, which do not find any place in any specific entry, will get classified under the residuary tariff entry. The submission of the revenue that since there is mention on the product that the same should be used on the advise of the health worker, it is not a food but it is medicine, is not at all acceptable for the reason that in terms of the Section 6(b) of the Infant Food Act, the Respondent made a statement on the product - "Infant milk substitute or infant food should be used only on the advice of a health worker as to the need for its use and the proper method of its use." This statement is statutory requirement to ensure that premature babies and infants are not affected by any adverse reaction to infant food and not because it is a medicinal product as assumed by the revenue. As per Note 2A of the General Notes Regarding Import Policy to ITC-HS goods imported into India have to comply with the mandatory Indian Standards which are applicable to goods manufacture in India Sl. No. 12 of Appendix III to ITC-HS covers goods covered by IS 15757:2007 titled "Follow up formula-Complementary Foods-Specification". On the package of SIMILAC-2, the said IS specification is mentioned. The description of the goods amongst others, mentioned on the product is "FOLLOW -UP FORMULA - COMPLEMENTARY FOOD, … Similac-2 is spray dried stage 2 follow-up formula designed for infants from 6 months onward as part of a healthy diet during and after waning". From this fact, it is clear that the clear that the certification given under IS 15757:2007 itself endorses the nature of the product that it is a FOLLOW-UP FORMULA and infant food complementary to mother's milk. Therefore there is no doubt in our mind that the product SIMILAC-2 is an infant food and correctly classifiable under CTH 1901.10 and not under 21.06. Decided against the appellant.
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2015 (2) TMI 739
Benefit of Notification No.21 of 2002 dated 1st March,2002- Machines Used in road project - Sent for testing purpose to other project - Held that:- The Tribunal found on a reading of the statements recorded under section 108 of the Customs Act, 1963, that the equipments and the machines were used by the assessee in a road project. For a brief period, they were sent to the Delhi Metro Rail Corporation and at the Metro rail site for testing only. There was no use for that project and which would disentitle the assessee from availing of any benefits under the subject Notification. That Notification envisaging usage in a road project and finding that the machines and equipments were indeed used in the road project and merely sent for testing purpose to the site of Delhi Metro Rail Corporation, that the Tribunal held in favour of the assessee. The findings of fact are consistent with the materials placed on record. They cannot be termed as perverse or vitiated by any error of law apparent on the face of the record either. The appeals are devoid of merit as they do not raise any substantial question of law. Decided against the appellant.
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2015 (2) TMI 738
Classification of vessel- Seismographic research vessel or Light vessels, fire floats etc. - NOSITUR A SOCIIS - Held that:- According to HSN Explanatory Notes, heading 8905 covers vessel which perform their main function in a stationary position. The vessels covered by the said entry include light vessels, fire-floats, dredgers, floating cranes, floating docks; floating or submersible drilling or production platforms and all other vessels which perform their main function in a stationary position. On the contrary the vessel under import undertakes seismic survey of the sea bed and its subterranean surface in large area running into hundreds of square kilometres. Such survey vessels can not obviously perform the function if it remains in a stationary position. This is a material and significant difference in the nature of the function undertaken by 'Geo Hind Sagar' when compared with the vessels of CTH 8905. Further from the contracts entered into with ONGC and NACOR, it is seen that the vessel should possess significant navigational capability to undertake and perform the tasks assigned and there are specific standards laid down in this regard. If the vessel has to undertake the survey at constant speed and depth, its navigability can not be said to be subsidiary to its main function and both are equally important. Further as per HSN Explanatory Note, vessels falling under CTH 8906 include scientific research vessels; laboratory ships, etc. within its ambit. It is a settled position in law as held by the hon'ble apex court in the case of Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT OF INDIA] that for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. Revenue has placed reliance on the principle of NOSITUR A SOCIIS. As per this principle, entries in the schedule of sales tax and excise statute list some articles separately and some articles are grouped together; when they are grouped together, each word in the entry draws colour from the other words, therein. If we apply above principle to the fact of the present case, heading 8905 refers to light vessels, fire-floats, dredgers, floating cranes, floating docks; floating or submersible drilling or production platforms and other vessel navigability of which is subsidiary to the main function. IN other words what can come under CTH 8905 are only such vessels whose navigability is subsidiary to its main function. As observed in the preceding para, this condition is not satisfied in the present case and therefore, this principle has no application whatsoever to the facts obtaining herein. In our considered view, CTH 8906 which covers scientific research vessels is the most appropriate classification in respect of a seismic research vessel. Since there is no duty liability on the vessels falling under CTH 8906, the entire custom duty demand confirmed in the impugned order completely fails. Decided in favour of appellant.
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2015 (2) TMI 737
Transferability of license - Duty Free Import Authorization (DFIA) - Exemption of Anti dumping duty- Benefit of duty to transferee of license - Held that:- We are unable to agree because para 2A [para 2A. With effect from 17th September, 2013, the exemption from safeguard duty and antidumping duty shall not be available in case materials are imported against an authorization that has been made transferable on or after 18th April, 2013 by the Regional Authority.] is specific. It is states that with effect from 17th September, 2013 the exemption from Safeguard Duty and Antidumping Duty shall not be available in case the materials are imported against the authorization that has been made transferable on or after 18th April, 2013 by the Regional Authority. Admittedly, the Petitioners have effected the imports after the licence was transferred in September 2013, vide a Bill of Entry No.3504275 dated 10th October, 2013. If the imports have been effected post transferability in favour of the Petitioners which is dated 13th September, 2013, then, para 2A cannot be read down and in the manner suggested by Mr. Sridharan. That would be doing violence to its plain language. That course is not permissible in law. The exemption from Safeguard Duty and Antidumping Duty is not available simply because the materials are imported against the authorization which has been made transferable on or after 18th April, 2013 by the Regional Authority. In these circumstances, the alternate condition also fails. Decided against appellant.
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Corporate Laws
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2015 (2) TMI 757
Revival of the Company - Petitioner Company has not filed its statutory documents since its incorporation - When the documents i.e., Annual Returns and Balance Sheet, etc., were sought to be filed on website of the Ministry of Corporate Affairs, the Directors came to know that name of the Petitioner Company has been struck of for the failure to file requite statutory documents. - Held that:- The Petitioner Company has filed its affidavit that the non-filing of the aforesaid Annual Return and the Balance Sheets was because the part time Accountant of the Petitioner Company, who was dealing with the aforesaid work, left the employment of the Petitioner Company. In view of the Affidavit filed by the Petitioner Company, the Registrar of Companies does not have any objection with the restoration of the name of the company subject to the filing of all statutory documents i.e., Annual Returns from the years 1999 to 2013 and Balance Sheets as on 2000, 2003 to 2013 and also the other documents with the requisite fee as well as additional fee as applicable on the date of actual filing of the documents. The petition is allowed subject to payment of costs of ₹ 75,000/-, the name of the Petitioner Company is restored on the Register of the Registrar of Companies subject to the Company filling all the statutory documents and returns for the outstanding period along with the prescribed fees in accordance with the law. - On receipt of the cost, the Registrar of Companies shall change the status of the company as “Active”. - Decided in favor of appellants.
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2015 (2) TMI 735
Change in sec.15Z of the SEBI Act- whether an order passed by the Securities Appellate Tribunal before 29.10.2002 would be appealable under the unamended provision of Section 15Z of the SEBI Act before the High Court, or alternatively, whether the same would be appealable under the amended provision of Section 15Z of the SEBI Act before the Supreme Court. And also, whether the date on which the Board had preferred the appeals, was a relevant consideration, in the facts and circumstances of the present case. Held that:- it is inevitable to conclude, that the appellate remedy available to the respondent prior to the amendment of Section 15Z of the SEBI Act, must continue to be available to the respondent, despite the amendment. We accordingly hold, that all the appeals preferred by the Board, before the High Court, were maintainable in law. it is apparent, that insofar as the vesting of the second appellate remedy is concerned, neither the date of filing of the second appeal, nor the date of hearing thereof, is of any relevance. Legal pursuit of a remedy, suit, appeal and second appeal, are steps in a singular proceeding. All these steps are deemingly connected by an intrinsic unity, which are treated as one singular proceeding. Therefore, the relevant date when the appellate remedy (including the second appellate remedy) becomes vested in the parties to the lis, is the date when the dispute/lis is initiated. Insofar as the present controversy is concerned, it is not a matter of dispute, that the Securities Appellate Tribunal had passed the impugned order (which was assailed by the Board), well before 29.10.2002. This singular fact itself, would lead to the conclusion, that the lis between the parties, out of which the second appellate remedy was availed of by the Board before the High Court, came to be initiated well before the amendment to Section 15Z by the Securities and Exchange Board of India (Amendment) Act, 2002. Undisputedly, the unamended Section 15Z of the SEBI Act, constituted the appellate package and the forum of appeal, for the parties herein. It is, therefore, not possible for us to accept, the contention advanced at the hands of the learned counsel for the appellant, premised on the date of filing or hearing of the appeal, preferred by the Board, before the High Court. We accordingly reiterate the position expressed above, that all the appeals preferred by the Board, before the High Court, were maintainable in law. It was also the contention of the learned counsel for the appellant, that in the absence of a saving clause, the pending proceedings (and the jurisdiction of the High Court), cannot be deemed to have been saved. It is not possible for us to accept the instant contention. In the judgment rendered by this Court in Ambalal Sarabhai Enterprises Limited case [2001 (8) TMI 1368 - SUPREME COURT], it was held, that the general principle was, that a law which brought about a change in the forum, would not affect pending actions, unless the intention to the contrary was clearly shown. Since the amending provision herein, does not so envisage, it has to be concluded, that the pending appeals (before the amendment of Section 15Z) would not be affected in any manner. Accordingly, for the same reasons as have been expressed in the above judgment. More importantly to the judgment rendered in Commissioner of Income Tax, Orissa case [1992 (11) TMI 2 - SUPREME Court], wherein it has been explained, that an amendment of forum would not necessarily be an issue of procedure. It was concluded in the above judgment, that where the question is of change of forum, it ceased to be a question of procedure, and becomes substantive and vested, if proceedings stand initiated before the earlier prescribed forum (prior to the amendment having taken effect). This Court clearly declared in the above judgment, that if the appellate remedy had been availed of (before the forum expressed in the unamended provision) before the amendment, the same would constitute a vested right. However, if the same has not been availed of, and the forum of the appellate remedy is altered by an amendment, the change in the forum, would constitute a procedural amendment, as contended by the learned counsel for the appellant. Consequently even in the facts and circumstances of the present case, all such appeals as had been filed by the Board, prior to 29.10.2002, would have to be accepted as vested, and must be adjudicated accordingly. Decided against appellant.
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Service Tax
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2015 (2) TMI 755
Payment of service tax by utilising Cenvat credit- Commission paid to the foreign commission agent- Held that:- I find that to determine eligibility to pay duty from the CENVAT Credit account, the Rules namely Rule 2(r), (2)(p) and 2(q) of Cenvat Credit Rules, 2004 need to be considered read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. Rule 2(1)(d)(iv) states that in relation to any taxable service provided from any country other than India and received by any person in India under Section 66A of the Act, the recipient of the service is liable to pay service tax. Rule 2 (p) states that the output service is a taxable service provided by the provider of taxable service. The provider of taxable service is defined under Rule 2(r) to include a person who is liable to pay service tax. The person liable for paying service tax has the meaning assigned to defined in Rule 2(1)(d) of the Service Tax Rules. In the present case the person liable to pay tax is the recipient. A harmonious reading of the above provisions of law indicate that the recipient of the service in this case is a provider and therefore the plea of the Revenue that the appellant is not a output service provider is not correct. The same views were taken in the case of Tata AIG Life Insureance Co. Ltd. [2014 (4) TMI 637 - CESTAT MUMBAI] and Kansara Modler Ltd. [2014 (1) TMI 1095 - CESTAT NEW DELHI]. Decided in favour of appellant.
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2015 (2) TMI 754
Waiver of predeposit- Manpower Recruitment or Supply Agency Service- Reimbursement of salary- Held that:- Prima facie, we find that the present case is covered by the decision of the Tribunal in the case of Neelav Jaiswal & Brothers [2013 (8) TMI 147 - CESTAT NEW DELHI], which is in favour of the Revenue. We also note that the Tribunal considered the decision of the Hon'ble Delhi High Court in the case Interncontinental Consultants and Technocrats Pvt. Ltd. [2012 (12) TMI 150 - DELHI HIGH COURT]. In view of that the applicant failed to make out a strong prima facie case for waiver of predeposit of the entire dues. Accordingly, we direct the applicant to predeposit an amount of ₹ 35,00,000/- (Rupees thirty five lakhs only) within a period of eight weeks and report compliance on 13.2.2015. Decided partly in favour of assessee.
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2015 (2) TMI 753
Denial of refund claim - Bar of limitation - Non receipt of OIO - Held that:- no acknowledgment from the appellant has been produced by the department to indicate that OIO dated 12.01.2011 was received. Under similar facts, this bench is taking a view that an appealable order cannot be considered to have been delivered. In view of the case laws relied upon by the appellant the order passed by the first appellate authority is required to be set-aside. Accordingly, the OIA dated 20.12.2012 passed by Commissioner (Appeals) is set-aside and the matter is remanded back to him for passing the order on merits after giving an opportunity of personal hearing to the appellant to argue his case. - Decided in favour of assessee.
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2015 (2) TMI 752
Denial of refund claim - receipt of donation from caterers - Bar of limitation - Held that:- As regards the refund of ₹ 47,029/- already sanctioned under Section 11B it is quite clear that interest has to be paid under Section 11BB of the Central Excise Act as made applicable to Service Tax - In the case of refund which was rejected, I note that the appellant requested for an assessment order in respect of the tax which they were persuaded to pay. This request was made within three months of the date of payment of Service Tax. Had they received the assessment order/adjudication order under the Finance Act confirming the tax payment, they would have applied for refund under Section 11B as made applicable to Finance Act, 1994. Notwithstanding this aspect, it has been held in various judgements pursuant to the Hon'ble Apex Court judgement in the case of M/s Mafatlal Industries [1996 (12) TMI 50 - SUPREME COURT OF INDIA] and as held in the judgement of KVR Construction (2012 (7) TMI 22 - KARNATAKA HIGH COURT), that the time bar under 11B will apply only if the demand has been made or paid as duty under the law. In the present case no such demand was made under law by a demand or order. Rather the tax which was collected was not payable in law and appellants were persuaded to pay the amount. Therefore, the appellant is entitled to refund along with appropriate interest payable under law. - Decided in favour of assessee.
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Central Excise
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2015 (2) TMI 749
Benefit of SSI Exemption - User of brand name of others / logo of other company - Notification No.1/93-CE, dated 28.02.1993 - Held that:- respondent were using the brand name of other person for their chemicals in textile industry, whereas, the brand name owner was producing chemicals for leather industry. The Commissioner (Appeals) following various Tribunal decisions observed that the brand name belonging to other is used on different goods that was produced by the brand name owner, and SSI exemption cannot be denied. - Supreme Court, while dealing with the SSI Exemption Notification No.1/93-CE, as applicable in the present case had observed that the assessee would not be entitled to get the benefit of SSI exemption irrespective of fact that the use is of different goods or same goods - Decision in the case of COMMISSIONER OF C. EX., TRICHY Versus RUKMANI PAKKWELL TRADERS [2004 (2) TMI 69 - SUPREME COURT OF INDIA] followed. Hence, the order of the Commissioner (Appeals) cannot be maintained. At this stage, the learned Counsel for the respondent submits that they pleaded before the Commissioner (Appeals) that the demand is barred by limitation. The learned Counsel drew the attention of the Bench to the relevant grounds of appeal on limitation before the Commissioner (Appeals). We find that the Commissioner (Appeals) had decided the matter on merit without considering the limitation aspect. It is noticed that the Adjudicating authority also did not consider the submissions of the respondent as demand is barred by limitation. - Impugned order is set aside - Order of Adjudicating authority restored subject to that the Adjudicating authority would examine the demand of duty on the limitation aspect on the basis of the facts and case law as submitted by the department as well as the party - Decided in favour of Revenue.
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2015 (2) TMI 748
Waiver of pre deposit - Denial of benefit of exemption Notification No.4/2006 (S.No.1C) - appellants had been exporting cement in 50 kg. bags to Nepal on payment of duty leviable as per S.No.1C of Notification No.4/2006-CE dated 1.3.2006 - Held that:- In terms of third proviso to Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., where the retail sale price of the goods are not required to be declared under SWM Rules, 1977 and are not declared, the duty shall be determined as in the case of goods cleared in other than packaged form. Since, in this case the goods had been cleared for export to Nepal and as such there was no requirement to declare the MRP on the bags of the cement in accordance with the provisions of SWM Rules, 1977, the cement would have to be treated as "other than packaged form" even though the MRP had been printed and accordingly, we are of the prima facie view that the same would be covered by Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., where the duty is 14% adv. or ₹ 400/- per M.T. whichever is higher. There is no dispute that if the duty is charged at the rate prescribed in Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., there would be no short payment. - Stay granted.
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2015 (2) TMI 747
Refund under rule 5 of Cenvat credit rules,2004 - Goods cleared for export under bond/LUT - The only dispute is as to whether the duty payable on the scrap cleared for home consumption during the quarter to which the refund claim pertains and also whether the amount recovered from the customers as duty on the sale of waste and scrap during the period from January 2003 to 30th June 2004 can be deducted from the refund. Held that:- In our view for these deductions there is absolutely no authority. The appellant would be eligible for cash refund of the accumulated Cenvat credit taken in respect of inputs which have been used in the manufacture of goods which has been exported under bond/LUT and in this case, cash refund can be disallowed only to the extent the cenvated inputs are contained in the scrap cleared for home consumption on payment of duty. Matter remanded back for re-determining the quantum of cash refund. Decided partly in favour of appellant.
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2015 (2) TMI 746
Refund of excise duty - Period of limitation - Unjust enrichment - Interest on delay in Refund- Held that:- The appellant on 01.09.2006 had paid an amount of ₹ 1,92,95,372/- towards their duty liability and penalty under TR-6 challan. When in pursuance of the Tribunal’s Final Order dated 2.5.2008, the matter was adjudicated de novo by the Commissioner vide order-in-original dated 17.10.2008, the appellant company’s duty liability was determined as ₹ 11,89,303/- with equal amount of penalty under Rule 173 Q (1). The appellant filed a refund application under Section 11 B of the Central Excise Act, 1944 on 21.10.2008 before the Asstt. Commissioner and the Asstt. Commissioner vide order-in-original dated 13.01.2009, after appropriating the duty demand of ₹ 11,89,303/- and penalty of same amount and also the penalty of ₹ 2 Lakh each on Shri T.K. Diwan and Shri D.N. Gupta , held that balance amount is refundable. However, on appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dated 17.03.2009 held that the duty refund of ₹ 88,72,686/- is not hit by bar of unjust enrichment and ordered its refund along with interest payable under the law. No appeal has been filed by the Department against the Commissioner (Appeals) order dated 17.03.2009. In our view, the letter dated 30.03.2009 of the appellant company addressed to the Asstt. Commissioner reminding them for the refund of this amount along with interest in pursuance of the Commissioner (Appeals)s order dated 17.03.2009, cannot be treated as fresh refund application and, therefore, the Asstt. Commissioners order refusing the interest and order of the Commissioner (Appeals) dated 6.11.2009 upholding the Asstt. Commissioners Order are totally wrong and not sustainable. We are of the view that since refund application had been filed on 21.10.2008, the interest on the amount of ₹ 88,72,686/- would be payable for the period of delay starting from the date immediately after the date on which the period of 3 months expired.Decided in favour of appellant.
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2015 (2) TMI 745
Waive of predeposit- Denail of area based exemption- Condition of predepost is meant to secure the interest of revenue and not to punish assessee- Held that:- The Commissioner (Appeals) is empowered, as a pre condition to the hearing of the appeal to call upon an appellant to pre deposit such an amount as may be deemed appropriate. The Commissioner (Appeals) has directed the appellant to deposit ₹ 26.00 lacs as duty i.e. the entire amount of duty claimed by the department and ₹ 10.00 lacs as penalty out of the total penalty of ₹ 26.00 lacs, while staying interest. The Tribunal has affirmed this order by primarily recording that the appellant was not able to commence production by 31.3.2010 and, therefore, the order passed by the Commissioner(Appeals) does not call for interference. We shall not record any final opinion on merits but would reiterate that the appellant did raise arguable points relating to commencement of production on or before 31.3.2010. It would also be necessary to reiterate that once an appeal is admitted for adjudication the application for stay should not be decided by imposing such conditions as are onerous or penal or tend to negate the statutory right of an appeal. The condition of pre deposit is meant to secure the interest of the revenue and not to punish an assessee. The appellant has admittedly deposited ₹ 10.00 lacs as directed vide order dated 10.12.2014. We are satisfied that the interest of the reveune would be suitably saved if the appellant is directed to deposit another sum of ₹ 5.00 lacs. Decided partly in favour of appellant.
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2015 (2) TMI 744
Condonation of delay in appeal- Sufficient reason for delay- Held that:- The application seeking condonation of delay mentions that there was a vacancy in the office of the concerned legal officer and that is why the delay occurred. Before the Tribunal, it appears that the argument proceeded on the vacancy in the department of Finance and Accounts and particularly of the level of Manager. That Government departments and particularly on account of outsourcing of several functions are working with depleted staff strength. Similar is the position of the Maharashtra State Electricity Distribution Company Limited. Though the original Board has been divided and on functional lines, limited company has been established, yet, full staff strength has not been achieved. Similarly, in matters of taxation and particularly in Service Tax, there was somebody who could have applied his mind jointly with the legal department. The Finance and Accounts Manager is a crucial post. Its vacancy during the relevant period was, in the given facts and circumstances, a vital element and factor. It is not as if the reason was found to be false or the Appellant was totally negligent and callous or has ignored the legal proceedings completely. In such circumstances, by imposition of costs, the discretion could have been exercised in favour of a statutory entity and authority like the Appellant before us. In the light of the above discussion, we proceed to condone the delay in filing of the statutory Appeals on condition that the Appellant/original Applicant in both Appeals before us shall deposit costs quantified at ₹ 25 ,000 /-. The costs quantified in both Appeals shall be paid to the Respondent within a period of 4 weeks from today.On the proof of the costs deposited being produced, the Tribunal shall restore the Appeals and the stay applications to its file. Decided conditionally in favour of appellant.
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2015 (2) TMI 743
Penalty under Section 11AC - Removal of credit availed Inputs as such - Demand of duty under Section 11A(1), interest under Section 11AB - Held that:- As is evident from the facts of the case, here is a case of adjudication invoking the extended period proviso to Section 11A(1) of the Central Excise Act. In such circumstances, the decision of the Larger Bench of the Supreme Court in case of Dharamendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] makes it very clear that penalty under Section 11AC is imposable. The above-said decision was followed by the Supreme Court in the case of Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA], in which supreme court held that the decision in Dharamendra Textile must, therefore be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. In view of the categorical statement of law and taking note of the specific provision of Section 11AC of the Central Excise Act, we are of the view that the Tribunal is not justified in confirming the order of the Commissioner (Appeals), who reduced the penalty imposed under Section 11AC of the Central Excise Act. Such a mandate under the Statute cannot be given a go-by by the Tribunal. We therefore, answer the questions of law in favour of the Revenue.Decided in favour of appellant/revenue.
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2015 (2) TMI 742
Condonation of delay- As directed by the high court in case [2014 (9) TMI 613 - JHARKHAND HIGH COURT] that Tribunal has rightly considered the facts and rightly reached to the conclusion that the cause shown by the petitioner appears to be only afterthought and there is no sufficient cause for condonation of delay- Held that:- Looking at the peculiar facts of the case, in the interests of justice, we direct that upon payment of ₹ 25,000/- by way of costs to the sole respondent within two months from today, the impugned Judgment shall be set aside and Tax Appeal No. 3 of 2013 shall be restored to its original number and shall be heard on merits by the High Court. Decided conditionally in favour of appellant.
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CST, VAT & Sales Tax
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2015 (2) TMI 751
Classification of goods - Rate of tax applicable - Levy of tax on Image Runners @4% or @12% - Whether the Image Runners (Multi-function Network Printers) sold by the assessee are to be classified under Schedule I, Part B, Entry 18(i) as claimed by the assessee or under Schedule I, Part C, Entry 13(i) as held by the Tribunal - Held that:- Goods in question are "peripherals" to a computer working in conjunction with the computer. There is no question of classifying the goods under residual entry or under Entry 14(iv) of Part D or Entry 40 of Part D of Schedule I of the TNGST Act. - The importer therein primarily contended that the predominant function of the machine is printing documents along with scanner, which is an input and output device and therefore the classification sought for by the importer was correct. After discussing various heads under which the classification was contested and placing reliance on Note 5 of Chapter 84 and Rules relating to General Rules of interpretation of the first schedule, the Supreme Court came to hold that the goods imported, namely, multi-functional machines, serve as input and output device of ADPM (computer) and therefore, classifiable under Heading 8471.60 of the Act. The Authority for Clarification and Advance Ruling placing reliance on the notification issued by the Government of India, Information Technology Department in G.O.No.3, CT & R (B1) Department, dated 1st January, 2007, interpreted Entry 68 Part B item No.22 and came to hold that multi-function device is an office machine connected to a computer and it acts as a combination of one or more devices, namely, fax, photocopier (xerox), printer and scanner. - The fact that the goods in question work in conjunction with a computer, personal, mini, mainframes and laptops of analog and digital varieties is not in dispute. It is also not in dispute that this equipment is an input and output device. The printer and the scanner of different kinds fall within the definition of "peripheral". If it is a standalone photocopier machine or fax machine, then the Department would have a case and counter. Photocopying is not the primary function of the equipment in question, as it works in conjunction with the computer. The distinction is evident from the reading of Entry 18(i) of Part B of Schedule I and Entry 14(iv) of Part D of Schedule I of the TNGST Act. Peripherals in relation to computer personal, mini, mainframes and laptops of analog and digital varieties would fall under Entry 18(i) of Part B of Schedule I, whereas Electronic instruments including cash registers, tabulating and calculating machines, electronic duplicating machines, reprographic copiers including duplicators, xerox and photo copying machines and any other electronic apparatus for obtaining duplicate copies fall under Entry 14(iv) of Part D of Schedule I. On considering the functions of the Image Runner in the light of the decisions, referred supra, we are of the firm view that the goods in question are "peripherals" and the function of printing of documents based on a command given by the computer in the form of digital signals transmitted through networking device, namely, Local Area Network (LAN), makes it ample clear that it serves as an input and output device and therefore, it would partake the character of the "peripheral , which includes printer and scanner. - goods in question are "peripherals" to a computer working in conjunction with the computer. There is no question of classifying the goods under residual entry or under Entry 14(iv) of Part D or Entry 40 of Part D of Schedule I of the TNGST Act. Nature of the equipment and its predominant use. In this case, the Image Runner is an equipment, which is an input and output device that works in conjunction with the computer and also has got scanning facility for the very same function of input and output device and therefore, it is clearly a "peripheral". - Image Runner is an equipment, which is an input and output device that works in conjunction with the computer and also has got scanning facility for the very same function of input and output device and therefore, it is clearly a "peripheral". 'Router' is a device falling outside the main part, namely, computer and it is partially or completely dependent on the host and expands the capabilities of the computer and it does not form part of the core architecture. What are all computer peripherals have not been defined in Serial No.22 of Entry 68 of Part B of I Schedule to TNVAT Act, 2006. Therefore, whatever goods, which are falling within the definition of 'peripheral' would be entitled to such a benefit. We find that 'router', from the nature of its use in conjunction with the computer as has been defined by the Appellate Deputy Commissioner and the Tribunal based on relevant computer related dictionary and data, is a peripheral of a computer. It is also held by the Tribunal that 'router' is a computer network device that transmits data from one area to another and expands the capabilities of the computer, hence, it does not form part of core computer architecture. Therefore, we find that the Appellate Deputy Commissioner as well as the Tribunal are justified in holding that the goods sold by the assessee, namely, router, is a computer peripheral, falls under Serial No.22, Entry 68 of Part B of I Schedule of TNVAT Act, 2006. Goods in question partake the character of "peripheral" of a computer and therefore, it is classifiable under Entry 18(i) of Part B of Schedule I of TNGST Act. - Decided in favour of assessee.
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2015 (2) TMI 750
Deferment of assessment proceedings - Power of authorities to defer proceedings - Assessee contends that levy of VAT on the turnover on which service tax was levied as hire charges, and levy of VAT on supply of food and drinks on which also service tax was levied, was the subject matter of other writ petition which was admitted, and was pending on the file of the High Court - Held that:- Where an assessment has been deferred by the Commissioner under sub-section (5) of Section 32 or as the case may be, by the Appellate Tribunal under the proviso to sub- section (4) of Section 33 on account of any stay granted by the Appellate Tribunal, or as the case may be the Andhra Pradesh High Court or Supreme Court respectively, or whereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or the Supreme Court involving a question of law having a direct bearing on the assessment in question, the period during which the stay order was in force or such appeal or proceedings was pending shall be excluded in computing the period of four years or six years as the case may be for the purpose of making the assessment. Section 31(4A) - Where any proceeding under this section has been deferred on account of any stay orders granted by the High Court or Supreme Court in any case or by reason of the fact that an appeal or other proceedings is pending before the High Court or the Supreme Court involving a question of law having a direct bearing on the order or proceeding in question, the period during which the stay order is in force or the period during which such appeal or proceeding is pending, shall be excluded, while computing the period of two years specified in sub-section (4) for the purpose of passing appeal orders under this section. The Legislature, having retained a provision similar to Section 14(5) of the APGST Act in Section 21(7) of the VAT Act, has consciously chosen not to make a provision similar to Section 14(6) of the APGST Act which conferred on the Commissioner the power, in certain circumstances, to direct the assessing authority to defer assessment proceedings. The Commissioner has not been conferred the power to defer assessment proceedings under the VAT Act, and his power is now limited only to defer revision proceedings under Section 32 thereof, that too only in the circumstances referred to, and subject to the limitations prescribed, in sub-section (5) thereof. The Legislature has consciously chosen not to confer on the Commissioner the power to defer assessment proceedings under the VAT Act evidently because, unlike the APGST Act, Sections 20(2) & (4) of the VAT Act provide for self-assessment and, except in the circumstances referred to in sub-sections (3) to (5) of Section 21, no assessment order need be passed under the VAT Act. The Legislative intent is to remedy the mischief which, under Section 14(6) of the APGST Act, enabled the Commissioner to defer assessment proceedings, and thereby ensure that assessment proceedings, under the VAT Act, are not interdicted before its completion, and are completed without hindrance. In the absence of a provision in the VAT Act, similar to Section 14(6) of the APGST Act, none of the authorities under the VAT Act can be said to have been empowered to defer assessment proceedings. It matters little that the Commissioner had rejected the petitioners request for deferment, as he lacks jurisdiction, in the first place, to entertain such an application for deferment of assessment proceedings under Section 21 of the VAT Act. The Writ Petition is devoid of merits.It is made clear that the assessing authority may proceed, pursuant to the show-cause notice issued by him earlier, and pass an assessment order in accordance with law - Decided against assessee.
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Indian Laws
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2015 (2) TMI 758
Modification of Judgement dated 27.1.2015 [2015 (1) TMI 1127 - DELHI HIGH COURT] to include the names of counsels whose appearance did not get incorporated, albeit inadvertently - Modification application allowed.
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2015 (2) TMI 736
Denial of information sought under RTI Act - Officer against whom information is sought appointed as officer incharge - Violation of principle of natural justice - Held that:- When there was a separate CPIO for Administration Division, viz : Shri Rakesh Kumar, SO (Admn.), the decision regarding providing appropriate response to the applicant should have been taken by the concerned CPIO to whom the RTI application should have been transferred by the Nodal CPIO in the first instance. Merely because the information sought for pertains to the personal file of Nodal CPIO while it has been created and was under the custody of the Administration Division does not empower the Nodal CPIO to deal with the case himself and give a reply to the appellant without transferring the matter to the concerned CPIO in Administration Division. The jurisdiction of the Nodal CPIO as mentioned on the website does not relate to matters relating to Administration and Establishment. Under the circumstances, I find force in the submissions of the appellant that the nodal CPIO should not have handled the RTI requests. Regarding the exemption claimed by the Nodal CPIO on note sheets Nos. 18, 19 & 23 and the correspondence pages mentioned in his letter dated 20-11-2013, I have gone through the file. In my opinion, note sheets pages 18 & 19 regarding sanction of leave to Shri Shreyaskar and leave with LTC and sending a copy of NOC conveyed to Shri Shreyaskar by MoS(PI) for pursuing Ph.D on part time basis to Shri Shreyaskar for compliance of the conditions mentioned therein are not ‘information’ which can be exempted under Section 8(1)(j) of RTI Act as this information is related to routine matters of Administration in the functioning of the Government including the Commission. Pages 45 to 57 of the correspondence portion is the APAR of Shri Shreyaskar and protected from disclosure under Section 8(1)(j) being personal information, disclosure of which has no public interest. Correspondence at pages 28 & 29 relates to property return of Shri Shreyaskar which is also protected under Section 8(1)(j). However, as mentioned by the Nodal CPIO in his letter dated 20-11-2013, the information is already available on the website of the MoSPI. Note sheet at page 23 is regarding intimation of property transaction of Shri Shreyaskar which is again protected under section 8(1)(j) of RTI Act. - In the light of the above position, Shri S.K. Rabbani, CPIO, CIC, is directed to provide the Information as mentioned within 10 working days from date of receipt of this order - Decided in favour of appellant.
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