TMI Tax Updates - e-Newsletter
February 27, 2016

Case Laws in this Newsletter:

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

News

• GST rollout to mark an unprecedented reforms measure in the modern global tax history

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• Fiscal Deficit target of 3.9% for 2015-16 seems Achievable, says the Economic Survey

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• Economic Survey 2015-16: Better off taking the benefit of subsidies; recommends interventions and rectification of anomalies

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• Economic Survey 2015-16: Services Sector remains the Key Driver of Economic Growth contributing almost 66.1% in 2015-16

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• Trade deficit declines to 106.8 billion US dollars in April-January 2015-16 from 119.6 billion US dollars in corresponding period 2014-15

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• Positive Changes Sweeping Power Sector

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• The Chakravyuha Challenge: Ease to enter, barriers to exit

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• Several Initiatives Taken Would Help Transforming Infrastructure Sector ; Results Achieving & Sustaining Higher Economic Growth

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• Indian Economy needs to create enough “good” Safe Productive well-paying Jobs

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• FTAs leading to increased Imports and Exports

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• 2015 - Landmark Year for India in Climate Change Initiatives: Economic Survey 2015-16;

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• Economic Survey 2015-16 highlights need for more investment in Human Capital, expresses concern at declining educational outcomes, emphasizes importance of improving efficiency in delivery of services in the health sector

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• Labour Force participation Rate higher in Rural Areas than Urban Areas, significantly lower for females than males: Economic Survey

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• India Ranks First in Milk Production, Accounting for 18.5 Per Cent of World Production

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• Economic Survey 2015-16 : Amidst Gloomy International Economic Landscape, India Stands as a haven of Stability;

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• In order to provide Food Security, in the current Agriculture Scenario, India has to Focus on Supplies which are timely and Uninterrupted and Affordable for the Poor

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• Economic Survey 2015-16: Percentage Share of Horticulture Output in Agriculture is more than 33 Per Cent

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• Finance Minister Shri Arun Jaitley Presents Economic Survey 2015-16 in the parliament today

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• Economy will continue to Weather Global Sluggishness with Resilience; Outlook of Multilateral Institutions positive for India

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• Impressive strides made in the power sector in the last two years: addition of record generation capacity, moves towards one market in power, reform of discoms and development of renewable energy

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• Agriculture Sector needs a Transformation to ensure Sustainable Livelihoods for the Farmers and Food Security

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• Making Investments in Maternal Nutrition and Sanitation and Changing Social Norms to Enhance their Effectiveness can help to Exploit India’s Demographic Dividend

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• Economy to clock more than 7 per cent growth this fiscal; Economic Survey 2015-16 predicts over 8 per cent growth in next couple of years

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• Reform Package of the Fertilizer Sector

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• Despite Difficult Global Environment, India is Likely to be the Fastest Growing Major Economy in the World in 2016, says Economic Survey 2015-16

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• Econmy Survey 2015-16: Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year;

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• Pan Card Mandatory for all Transactions

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• RBI Reference Rate for US $

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Circulars / Instructions / Orders

Income Tax

• ITBA-PAN INSTRUCTION NO.3 - dated 24-2-2016
  PAN - Identification of Duplicate Pans Allotted to A Person and Resolution by RCC

FEMA

• RBI/DBR/2015-16/18 - dated 25-2-2016
  Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on January 04, 2024)

Highlights / Catch Notes

Income Tax

• Disallowance u/s 40(a)(i) - TDS - commission payments to the nonresident agents are not taxable in India, as the agents are remaining outside, services are rendered abroad and payments are also made abroad.. When the transaction does not atract the provisions of Section 9 of the Act, then there is no question of applying Explanation 4 to Section 9 - HC
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• Validity of assessment - if a matter falls u/s. 153(2A) of the Act i.e. if the Tribunal has set aside or cancelled the assessment, then the fresh order by the AO of assessment shall be passed within the period as prescribed u/s. 153(2A) - AT
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• Addition on account of difference in debtors and creditors - AO to grant proper and adequate opportunity as per law, to the assessee to explain the differences in sale/debtors and purchase/creditors as appearing in the books of accounts of the assessee vis-à-vis balance as appearing in the books of accounts of the purchasing/selling parties in accordance with the principles of natural justice as enshrined in doctrine of audi alteram partem - AT
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• TDS u/s 194H - credit card commission to the banks are in the nature of normal bank charges and are not in the nature of commission within the meaning of Section 194H, and therefore no tax is required to be deducted at source on the same u/s 194H - AT
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Service Tax

• The costs claimed to be reimbursibles are not attributable to the 'business auxiliary service' rendered by the assessee but to the cost of the product itself. Not surprisingly, the bank reimburses these expenses - demand of service tax with penalty set aside - AT
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Central Excise

• Classification - valid and admitted classification of Aerated Water, Beverages in Bag (BIB) under 2106 90 50 in terms of Supplementary Notes 4 of Chapter 21 of 1st Schedule cannot be included under Tariff item 2106 90 19 of 2nd Schedule. - AT
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• Manufacture - whether the activity of modification of moulds and dies amount to manufacture therefore it is liable to excise duty ? - firstly the activity is not amount to manufacture, secondly the movement and activity of modification is squarely covered by Rule 4(5)(a) of CCR, 2002 therefore the demand is illegal and incorrect - AT
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• Valuation - cost of additional copies of drawings given to appellants customers on specific request cannot form a part of the assessable value as these cost are post manufacturing and clearance. - AT
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Case Laws:

• Income Tax

• 2016 (2) TMI 805
  Interpretation of term “Total turnover” – Purpose of enactment of section 80HHC of the Act – Scrap sale - Whether the sale proceeds from the scrap should have been included in the ‘total turnover’ as the assessee was also selling scrap and that was also part of the sale proceeds – Held that:- The controversy in hand has been adjudicated upon by this Court in Commr.of Income Tax-VII, New Delhi vs. Punjab Stainless Steel Industries [2014 (5) TMI 238 - SUPREME COURT] wherein held the intention behind enactment of Section 80HHC of the Act was to encourage export so as to earn more foreign exchange - If the purpose is to bring more foreign exchange and to encourage export, the legislature would surely like to give more benefit to persons who are making an effort to help our nation in the process of bringing more foreign exchange - once the Government decides to give some benefit to someone who is helping the nation in bringing foreign exchange, the Revenue should also make all possible efforts to encourage such traders or manufacturers by giving such business units more benefits as contemplated under the provisions of law – HC was coming to the conclusion that the proceeds generated from the sale of scrap would not be included in the ‘total turnover’ – Decided against Revenue.

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• 2016 (2) TMI 804
  Set off of loss from assets on which depreciation claimed - Capital gain arising from transfer of depreciable assets - whether was liable to be set off against brought forward Long Term Capital Loss - Held that:- We find that the issue stands concluded by the decision of this Court in ACE Builders (P) Ltd (2005 (3) TMI 36 - BOMBAY High Court) in favour of the Respondent-Assessee. Moreover, the impugned order relies upon the order of the Tribunal in Komac Investments and Finance Pvt Ltd (2011 (4) TMI 705 - ITAT MUMBAI ) to dismiss the Revenue's appeal before it. The deeming fiction under Section 50 is restricted only to the mode of computation of capital gains contained in Sections 48 and 49 of the Act. It does not change the character of the capital gain from that of being a long term capital gain into a short term capital gain for purpose other than Section 50 of the Act. Thus, the respondent - assessee was entitled to claim set off as the amount of ₹ 7.12 Crores arising out of sale of depreciable assets which are admittedly on sale of assets held for a period to which long term capital gain apply. Thus for purposes of Section 74 of the Act, the deemed short term capital gain continues to be long term capital gain. Moreover, it appears that the Revenue has accepted the decision the Tribunal in Komac Investments and Finance Pvt Ltd (supra), as our attention has not been drawn to any appeal being filed from that order. - Decided in favour of Respondent-assessee.

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• 2016 (2) TMI 803
  Eligibility of exemption under section 10(23C) (iiiad) - annual receipt of the society was less than the prescribed limit i.e., One Crore - Held that:- . In view of the said explanation offered by the appellant and considering the scope of an enquiry by the prescribed authority for grant of approval under Section 10(23C)(vi) of the Act as explained by the Apex Court in American Hotel & Lodging Assn. Educational Institute vs CBDT (2008 (5) TMI 17 - SUPREME COURT OF INDIA ), we are of the opinion that the matter requires reconsideration by the respondent.

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• 2016 (2) TMI 802
  Registration as a Charitable Trust under Section 12A cancelled - Whether the Tribunal was correct in holding that the assessee is entitled to continue registration under Section 12A? - Held that:- Subject matter involved in this appeal is directly covered by the judgment passed by the Division Bench in (The Director of Income Tax (Exemption) and another Vs. Karnataka Industrial Area Development Board [2015 (7) TMI 169 - KARNATAKA HIGH COURT ] wherein held that a registration granted earlier under Section 12A of the Act can be cancelled under two circumstances; ( a) If the activities of such trust or institution are not genuine, (b) The activities of trust or institution not being carried out in accordance with the object of the trust or institution. Only on those two conditions being satisfied, the registration granted under Section 12A of the Act could be cancelled by the authorities. It is not in dispute that there is no violation of the said two conditions by the assessee. The activities carried on by the assessee is a genuine one.The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. - Decided in favour of assessee.

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• 2016 (2) TMI 801
  Change of opinion - Validity of reopening of assessment - Held that:- Having regard to the audit objection having been addressed by the assessing officer, there would remain no basis for reassessment four years after the assessment order, when the audit objection has been met by the assessing officer as per the letter referred. Incidentally, it is pointed out that one other contention by the respondents is that the assessment order does not indicate that the assessing officer had dealt with the issue at length and hence it cannot be said that it was present to the mind of the as sessing officer. The learned Senior Advocate would point out that it is the settled law that if the assessee has brought the issue to the attention of the assessing officer and even though there may be no consideration in the course of the assessment order on the issue which is highlighted by the assessee, it is deemed to have been considered by the assessing officer. In this regard, reliance is placed on a full bench decision of the Delhi High Court in the case of Commissioner of Income-tax vs. Usha International Limited, (2012 (9) TMI 767 - DELHI HIGH COURT). - Decided in favor of assessee.

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• 2016 (2) TMI 800
  Rectification of mistake - adjustment of the business loss against long term capital gains - assessee contended that Section 71(2) uses the expression 'may' indicating that they have an option either to adjust or not to adjust the business loss against capital gains - Held that:- We do not think that the view taken by all the three Authorities is contrary to law. It is true that under Section 71(2), the assessee may set off, against other income assessable for the assessment year under the head 'capital gains', the loss, if any, arising out of computation of different heads of income. But, Section 71(2) does not operate on a stand alone basis. As rightly observed by the Tribunal, the provisions of Section 72(1) may have to be read together. Therefore, the questions of law are answered against the assessee and in favour of the Revenue.

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• 2016 (2) TMI 799
  Capital gain under Section 45(4) - transfer - whether the Tribunal was right in law in holding that there is a dissolution of the firm and not conversion of a firm into a company for the purpose of capital gains under Section 45(4) ? - Held that:- In the case on hand, the partners have taken equity shares in the private limited company that was inducted as the fifth partner. Therefore, whatever rights that they had in the capital assets of the firm by way of being its partners, continue to exist in the form of equity shares that they held in the private limited company. In other words, one form of ownership that they had as partners of the partnership firm, got converted into another form. Hence, this is not a case where there was either a transfer of a capital asset or the distribution of a capital asset. This aspect has been completely lost sight of by all the Authorities. - Decided in favour of assessee

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• 2016 (2) TMI 798
  Disallowance u/s 40(a)(i) - whether the assessee ought to have deducted tax at source as contemplated under Section 195 of the Act, when the assessee paid commission to foreign agent? - Held that:- In the instant case, it is seen, admittedly that the nonresident agents were only procuring orders abroad and following up payments with buyers. No other services are rendered other than the above. Sourcing orders abroad, for which payments have been made directly to the non-residents abroad, does not involve any technical knowledge or assistance in technical operations or other support in respect of any other technical matters. It also does not require any contribution of technical knowledge, experience, expertise, skill or technical know-how of the processes involved or consist in the development and transfer of a technical plan or design. The parties merely source the prospective buyers for effecting sales by the assessee, and is analogous to a land or a house / real estate agent / broker, who will be involved in merely identifying the right property for the prospective buyer / seller and once he completes the deal, he gets the commission. Thus, by no stretch of imagination, it cannot be said that the transaction partakes the character of “fees for technical services” as explained in the context of Section 9 (1) (vii) of the Act. As the non-residents were not providing any technical services to the assessee, as held above and as held by the Commissioner of Income Tax (Appeals), the commission payment made to them does not fall into the category of “fees of technical services” and therefore, explanation (2) to Section 9 (1) (vii) of the Act, as invoked by the Assessing Officer, has no application to the facts of the assessee's case. In this case, the commission payments to the nonresident agents are not taxable in India, as the agents are remaining outside, services are rendered abroad and payments are also made abroad.. When the transaction does not atract the provisions of Section 9 of the Act, then there is no question of applying Explanation 4 to Section 9 of the Act. Therefore, the Revenue has no case and the Tax Case Appeal is liable to be dismissed. - Decided in favour of assessee

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• 2016 (2) TMI 797
  Assessment reopened on the basis of search - accounts in Tally copied and seized at the time of search - addition to income - Held that:- If assessment is allowed to be reopened on the basis of search, in which no incriminating material had been found, and merely on the basis of further investigating the books of account which had been already submitted by the assessee and accepted by the Assessing Officer at the time of regular assessment, the same would amount to the Revenue getting a second opportunity to reopen the concluded assessment, which is not permissible under the law. Merely because a search is conducted in the premises of the assessee, would not entitle the Revenue to initiate the process of reassessment, for which there is a separate procedure prescribed in the statute. It is only when the conditions prescribed for reassessment are fulfilled that a concluded assessment can be reopened. The very same accounts which were submitted by the assessee, on the basis of which assessment had been concluded, cannot be reappreciated by the Assessing Officer merely because a search had been conducted in the premises of the assessee. - Decided in favour of assessee

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• 2016 (2) TMI 796
  Non-compliance with the legal requirements under Section 147 and the proviso to Section 151 (1) - ‘CIT’ has not recorded any satisfaction and has merely affixed his signature on the file without even putting a date or any other word in addition to such signature - Held that:- Factually the CIT had merely affixed his signature on the note of the ACIT forwarded to him. Certainly, this was not in conformity with the mandatory legal requirement explained by this Court in several decisions including United Electrical Co. (P) Ltd. v. CIT (2002 (10) TMI 86 - DELHI High Court) - Decided against the revenue.

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• 2016 (2) TMI 795
  Treatment of income from deposits - income from business OR income from other sources - Held that:- In this case, interest was in the nature of additional source of income to the assessee, which was not in any way linked to the business that the assessee was carrying on. The interest income that has been received by the assessee on its own fund kept in deposit with the bank did not have any direct link or nexus with the business that was being carried on. The deposit made with the bank was for the convenience and benefit of the assessee with a view to derive interest income. Thus, the true character of the income is not "business income" but "income from other sources" only. It is possible to have different sources of income each one of which will be chargeable to income-tax and the assessee can keep the surplus funds which are not immediately required for the purpose of business in deposits in order to earn interest and such interest will be chargeable under section 56. - Decided against assessee

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• 2016 (2) TMI 794
  Validity of assessment - rectification of mistake - barred by limitation u/s. 153(2A) - Held that:- No assessment is possible after the expiry of period of limitation, the provisions of section 153(2A) of the Act are absolute and they impose a fetter on income tax authorities to make a set-aside assessment after the expiry of periods mentioned in this sub-section. This is a statutory fetter which is not for the assessee to relax or waive or vice versa. The power to make assessment lapses completely upon the expiry of the periods mentioned in the section. The argument of Ld. DR that the assessee's case falls u/s. 153(3), which, inter alia, lays down that the provisions of sub-section 1 and 2 of section 153 shall not apply to assessments made on the assessee in order to give effect to any direction contained in an order u/s. 254 of the Act. But in the present case, the Tribunal has completely set aside the assessment on the abovementioned issue and directed the AO to reframe the assessment afresh. This provision of section 153(3), in the given facts of the case, is subject to the provisions of section 153(2A) of the Act. In other words, if a matter falls u/s. 153(2A) of the Act i.e. if the Tribunal has set aside or cancelled the assessment, then the fresh order by the AO of assessment shall be passed within the period as prescribed u/s. 153(2A) of the Act. Here, in the present case, assessee's case clearly falls under the 2 nd proviso to section 153(2A) of the Act. Therefore, in the present case, framing of order of assessment by the AO, of set aside assessment after expiry of limitation in terms of section 153(2A) of the Act is invalid. This ground of assessee's appeal on limitation is allowed. - Decided in favour of assessee.

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• 2016 (2) TMI 793
  Reopening of assessment - Addition u/s 2(22)(e) - Held that:- First is validity of initiation of re-assessment proceedings and the second, taxability on a sum of ₹ 6,79,956/- representing to 50% of the sum of ₹ 13,59,911/- in the hands of appellant. As to the validity of re assessment proceedings, we do not find any justification to disturb the conclusion arrived at by the ld. CIT(A) who has rightly held the action as valid laying his hands on the decision of Hon’ble Supreme Court in the case of Phool Chand Bajrang Lal Vs. ITO, [1993 (7) TMI 1 - SUPREME Court ]. In the present case, the Assessing Officer received information after appellate order in the case of PAN Portfolio (P) Ltd. wherein the CIT(A) has given the direction to take action in the case of the assessee. Therefore, initiation of proceedings u/s. 147 on this count cannot be said to be invalid. Besides, after receipt of reasons recorded, no such grievance/objection on initiation of proceedings u/s. 147 appears to have been raised at the initial stage before the Assessing Officer. Therefore, finding on validity of re-assessment proceedings stands confirmed. Once, the taxability of the impugned sum as deemed dividend in the hands of the common directors of the lender company, stood decided by the Tribunal and attained finality, we have no option except to respectfully follow the decision of co-ordinate bench of Tribunal in order to maintain the balance of justice. No such evidence is available on record that the order of the Tribunal has either been challenged or reversed by the higher courts. Furthermore, a perusal of the assessment order reveals, the assessee in reply dated 05.09.2013 filed before the AO submitted that the assessee did not derive any benefit from the loans obtained from M/s. PAN Portfolio Pvt. Ltd. and no such plea appears to have been made before the AO that the transaction between the two companies was not in the nature of loan but an inter corporate deposit, not attracting the provisions of section 2(22)(e) of the Act. In view of this discussion, we do not find any good ground to interfere with the impugned order on this count too. Accordingly, the appeal of the assessee is liable to be dismissed. - Decided against assessee.

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• 2016 (2) TMI 792
  Addition on account of excess depreciation claimed - asset put to use - Held that:- From the list of the machinery purchased by the assessee for the Baddi Unit, it reveals that the purchase of machinery was started from February, 2005 and production at Baddi unit was admittedly commenced from May, 2005 and therefore, no depreciation was claimed on the machinery installed at Baddi Unit for A.Y. 2005-06. It is also an admitted fact and evident that major part of machines at D-6 unit were shifted to Baddi Unit in the later part of the period. Therefore, without going into the question whether and which machines and for what value has been shifted from D-6 unit to Baddi unit during the year, the ld. CIT(A) has rightly observed that the assessee was entitled to claim full depreciation for the whole year, if the machinery has been used for more than 182 days. It is not the case of Revenue that the machines, on which depreciation was claimed by assessee were not put to use for more than 182 days or that the said machinery was not used for the purpose of business. In presence of these facts, we are inclined to sustain the findings of the ld. CIT(A) with respect to deletion of impugned addition. Addition on account of building improvement of 35 HPSIDC, Baddi and errection of machines - Held that:- It is notable that no material or evidence was seized in the search to demonstrate that the assessee had incurred expenses in excess to that shown in the books of account. Moreover, on reference, the DVO, Chandigarh has valued the cost of construction of property No. 35 HPSIDC Baddi at ₹ 23,79,000/- on account of building improvement for A.Yrs. 2005-06 to 2007-08, which stands in consonance with the declared expense of ₹ 22,37,694/- shown by assessee in its books of accounts. Moreover, this issue has been decided by ITAT, Delhi Bench in assessee’s own case for A.Y. 2006-07 to 2008-09 in favour of the assessee. Disallowance of 1/8th of the telephone expenses, vehicle depreciation & vehicle maintenance on adhoc basis - Held that:- No expenditure is pointed out of inadmissible nature. The disallowance on mere suspicion and estimate is not sustainable in view of the decisions of Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills [1954 (10) TMI 12 - SUPREME Court ] and Sayaji Iron & engineering Co. vs. CIT [2001 (7) TMI 70 - GUJARAT High Court ], wherein it has been held that no disallowance is called for on account of personnel use of vehicle/telephone by the directors/officials in the hands of a company. We, therefore, do not find any justification to interfere with the order of the ld. CIT(A) on this count.- Decided in favour of assessee Addition on account of sale of scrap on estimated basis - Held that:- The alleged notings, whatsoever, pertained to the years 2007-08 and 2008-09. Moreover, the Baddi Unit of assessee commenced production from May, 2005 and therefore, there is no reason to generate the scrap and sale thereof during the assessment year under consideration. We are, therefore, not inclined to interfere with the order of ld. CIT(A) deleting the impugned addition. - Decided in favour of assessee Disallowance u/s. 14A read with Rule 8D - Held that:- AO has failed to establish any correlation of expenditure with the exempted income. During the year under consideration, there was exempt income for ₹ 1,45,161/- and on this income no expenses have apparently been incurred as during the year the investment has decreased from ₹ 324.97 lacs to 210.77 lacs. We, therefore, do not find any reason to disturb the finding of CIT(A) that there being no applicability of Rule 8D for A.Y. 2005- 06 and no nexus having been found between the expenses incurred vis-à-vis the exempt income, the disallowance of ₹ 7,35,818/- is liable to be deleted. - Decided in favour of assessee

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• 2016 (2) TMI 791
  Addition on account of difference in debtors and creditors - information called by the AO u/s 133(6) of the Act directly from the selling/purchasing parties with respect to the account of the assessee appearing in their books of accounts - CIT(A) deleted the addition - Held that:- The CIT(A) has allowed the appeal on the ground that the AO should have summoned these parties as well the assessee and recorded their statement on oath and allowed the cross-examination to the assessee before drawing adverse inference against the assessee but as per the facts as emerging from the orders of the authorities below, the assessee has not asked for the cross examination before the AO and the CIT(A) and rather the assessee has submitted before the AO that its accounts are correct.No such evidence has been brought on record by the assessee before us to substantiate that the assessee asked for the cross examination of these four purchasing/selling parties. In our considered view the interest of justice will be best served , if the matter is restored to the file of the AO to denovo determination of the issue with respect to differences in the books of accounts of the assessee with respect to sale/debtors and purchases/creditors vis-à-vis balances as appearing in the books of the purchasing/selling parties , with the direction to AO to grant proper and adequate opportunity as per law , to the assessee to explain the differences in sale/debtors and purchase/creditors as appearing in the books of accounts of the assessee vis-à-vis balance as appearing in the books of accounts of the purchasing/selling parties in accordance with the principles of natural justice as enshrined in doctrine of audi alteram partem. - Decided in favour of revenue for statistical purposes. Disallowance u/s. 194H r.w.s 40(a)(ia) on account of brokerage amount - CIT(A) allowed the claim - Held that:- As observed from the orders of the CIT(A) that these expenses of brokerage expenses amounting to ₹ 1,19,089/- were incurred by the assessee in the preceding year and expenses were booked by the assessee in its books of accounts in the preceding year while due taxes has been deducted at source in the relevant assessment years and paid to the credit of the Revenue and the balances are appearing in Schedule G to the audited accounts as creditors as opening balance as at 01-04-2008 and the AO has merely taken the figure from schedule G that has been a schedule of Sundry Creditors . In our considered view, these brokerage expenses amounting to ₹ 1,19,089/- has already been booked as expenses in the preceding years and due TDS has been deducted by the assessee for the previous year as per the facts emerging from the orders of authorities below and hence there is no liability for deduction of TDS on these brokerage expenses of ₹ 1,19,089/- during the current year as it has already suffered due TDS in the earlier years when the same was booked as expenses in those years and in the current assessment year, the amounts are taken by the AO from the opening balance of sundry creditors as on 01-04-2008 as per schedule G to the audited accounts and hence in our considered view no disallowance is called for u/s. 40(a)(ia) of the Act read with Section 194H of the Act as these brokerage expenses of ₹ 1,19,089/- pertains to the brokerage expenses of the earlier years. We, therefore, uphold and sustain the orders of the CIT(A) in which we do not find any infirmity and order the deletion of addition of ₹ 1,19,089/- made by the AO to the income of the assessee - Decided in favour of assessee

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• 2016 (2) TMI 790
  Reopening of assessment - Eligibility for deduction u/s 10A - Held that:- The proceedings u/s. 147 and 148 of the Act initiated against the assessee company need to be dropped as the same was not validly initiated and is merely a change of opinion by the AO based upon the audit objections and AO has not independently applied his mind before re-opening the proceedings u/s 147/148 of the Act against the assessee company while there is no failure on the part of the assessee company in truly and fully disclosing all material and relevant facts concerning the Mumbai unit, as the proceedings have been initiated after four years from the end of the relevant assessment year and the proviso to Section 147 of the Act is applicable, the original assessment having being processed u/s. 143(3) of the Act culminating into an assessment order dated 28-11-2008. The assessee company is not hit by the Section 10A(2) of the Act as it could not be said that it is formed by splitting up or reconstruction of business already in existence nor it is brought on records that there is transfer to a new business of machineries or plant previously used for any purpose. The circular no 1 of 2005 issued in context of Section 10B of the Act which is reproduced below supports the stand of the assessee company. Thus, we hold that assessee company is duly entitled for exemption u/s. 10A of the Act and in our considered view, the assessee company has rightly claimed deduction of ₹ 47,13,192/- u/s. 10A of the Act w.e.f. 1st October , 2005 which the assessee company is duly entitled for the said deduction of ₹ 47,13,192/- u/s 10 A of the Act. Hence, we set aside the orders of the CIT(A) and hold that the assessee company is entitled for the deduction of ₹ 47,13,192/- u/s.10A of the Act w.e.f. 1st October, 2005 which has been rightly claimed by the assessee company in the return of income filed with the Revenue - Decided in favour of assessee

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• 2016 (2) TMI 789
  Disallowance u/s 14A - Held that:- In the absence of any tax free income the corresponding expenditure could not be worked out for disallowance. In the instant case also, the admitted fact is that assessee has not earned any tax free income, therefore, Circular No. 5 of 2014 dated 11.2.2014 issued by CBDT is contrary to the law laid down by the different High Courts directly on the issue in hand. In view of the above discussion, and the decision of the jurisdictional High Court in the case of Cheminvest Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT ) and Maxopp Investment Ltd. (2011 (11) TMI 267 - Delhi High Court ), we hold that disallowance made u/s 14A has deserves to be deleted, as the assessee has not earned/received exempt income during the previous year relevant to the assessment year under appeal. - Decided in favour of assessee

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• 2016 (2) TMI 788
  Disallowance u/s 14A - Held that:- The third limb of Rule 8D (2), deals with disallowance an amount equal to 1 ½ of the average of the value of investment, income from which does not or shall not form part of the total income as appearing in the balance sheet of the assessee on the first day and the last day of the previous year. The language of this sub-section is very clear to hold that only those investments should be considered under this limb from which exempt income has been earned during the year under consideration by the assessee. The argument raised by the assessee that since there has been no direct or indirect interest expenditure, that could be attributable to the earning of exempt income and therefore, no disallowance could be made u/s 14A r/w 8D of the Act, cannot be accepted. Rule 8D (2)(iii) would be applicable and the disallowance u/s 14A r/w Rule 8D has to be made in accordance to sub section (iii) of section (2) of Rule 8D. We, accordingly, on the basis of the above discussion and findings, set aside this issue to the file of the Assessing Officer for re-computing the disallowance u/s 14A r/w Rule 8D(iii), with a specific direction to consider only those investments from which the assessee has earned tax free income for the year under consideration. It is specifically mentioned that the disallowance has to be made in accordance with law under Rule 8D (2)(iii) for the year under consideration.

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• 2016 (2) TMI 787
  Disallowance u/s 14A - Held that:- To the facts of the present case the assessee has not set out whether the interest expenditure was attributable to the earning of exempt income, to be considered for disallowance under Rule 8D(2)(ii). Strategic investment has to be excluded for the purpose of arriving at disallowance under Rule 8D (iii).The assessee has also failed to prove that the investment made in the other companies are strategic in nature. TheLd.CIT(A) has recorded a finding that the assessee has not submitted any evidence to establish that borrowed funds are for specific purpose. Further administrative expenses that could be attributable to earning of exempt income cannot be excluded. However as held in the case of Sarabhai Holdings Pvt. Ltd. v. ACIT, (2014 (4) TMI 1081 - ITAT AHMEDABAD ), only average of value of investment from which exempt income has been earned is to be considered and not total investment at beginning of year and at end of year, in disallowing administrative expenses. We accordingly set aside this issue for computing the disallowance by giving proper opportunity to the assessee. - Decided in favour of assessee statistically

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• 2016 (2) TMI 786
  TDS u/s 194H - non deduction of the tax at source on payment of discount/commission charges - Held that:- We find that the issue is squarely covered in favour of the assessee by the decision of co-ordinate Bench of this Tribunal in the case of Jet Airways India Ltd. (2013 (8) TMI 586 - ITAT MUMBAI) whereby it was held that the credit card commission to the banks are in the nature of normal bank charges and are not in the nature of commission within the meaning of Section 194H of the Act, and therefore no tax is required to be deducted at source on the same u/s 194H of the Act. - Decided in favour of assessee.

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• Corporate Laws

• 2016 (2) TMI 777
  Locus standi to make the application - prayer for impleadment - sanction of Scheme of Compromise under companies act - the effect is that all the secured creditors have been paid, though the substantial dues of the workmen, who have first priority as per Section529A of the Companies Act, and who are to be given overriding preferential payment, are still pending - whether Representative Union is authorized to represent the workmen and no other recognized union or individual can do so - whether the applicant cannot claim to be the representative of the workmen? - Held that:- The applicant has no right to appear or act in the proceedings under the GIR Act, where the Representative Union has entered appearance and has acted as a representative of the employees. The allegations of malafide and loss of confidence in the Representative Union, therefore, have no relevance in view of the dictum of the Supreme Court in the case of Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills [2008 (7) TMI 994 - SUPREME COURT]. A submission has been advanced on behalf of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment. The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary. Mr.S.I.Nanavati, learned Senior Advocate has clarified that the secured creditors have been paid by the Sponsor of the Scheme and not through the funds of the Company. This aspect further reduces the relevance of the submissions made on behalf of the applicant. For the aforestated reasons, this Court is of the considered view that the applicant, not being the Representative Union, has no locus standi to pray for impleadment as a partyrespondent in the Company Petition, especially as the Representative Union is already there. The application, being devoid of merit, deserves to be rejected.

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• Service Tax

• 2016 (2) TMI 812
  Claim of refund of interest on service tax demand paid earlier - period of limitation to claim interest - Held that:- since the appellant for the first time had filed the application, claiming refund of interest paid vide its letter dated 15.09.2010, paid during the period 18.12.2008 to 29.04.2009, in my opinion, the same is barred by limitation of time, being filed beyond the period of one year from the relevant date. Further there is no document available on record to prove that the interest amount was paid by the appellant under protest. - Decided against the assessee.

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• 2016 (2) TMI 811
  Reverse change - the matter in issue was as to whether royalty paid/received as consideration for transfer of technology know how can form part of taxable value and whether the said issue would come within the province of rate of duty or to the value of the goods for the purpose of assessment as envisaged U/Sec. 35G is required to be considered. - Constitutional validity of sosecond proviso to Rule 6 and Rule 2(1)(d)(iv) of Service Tax Rules, 1994 - Held that:- whether the royalty paid would come within the ambit and purview of service tax is a question required to be determined. Considering the judgments as referred above, so also sub section 2 of Section 35L of the Central Excise Act as introduced recently, it would be clear that the said issue will come within the scope of the terminology "rate of duty for the purpose of assessment". In the light of that, the appeal U/Sec. 35G would not be maintainable. - Decided against the assessee.

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• 2016 (2) TMI 810
  Reverse charge - GTA services - it was contended that the FCI has wrongly deducted the service tax from the contractual amount and the same should be ordered to be refunded to the petitioners. - scope of the contract / agreement - Held that:- the note as incorporated clearly indicates the intention of the parties that the rate to be quoted by the contractor should be inclusive of all taxes, levies, cesses etc. which would obviously include service tax. The contractor cannot be heard to urge that service tax is not part of the taxes which arises out of the contract. The liability to pay the tax may have been on the FCI under law but while quoting the rate a contractor can very clearly state what is the rate being quoted by him. This Court can take notice of the fact that in many such tenders or contracts where sales tax etc. are to be taken into consideration, the contractors are asked to quote rates either inclusive of tax or exclusive of tax. If they are inclusive of tax then the contractor is liable to pay all the taxes therein. - No merit in the writ petition of the appellant - Decided against the appellant.

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• 2016 (2) TMI 809
  Jurisdiction to raise service tax demand - the appeal was entertained in which the challenge was raised against the same assessment order which is under challenged in this writ petition. - The petitioner has again come up before this Court raising a direct challenge to the assessment order which has been subject matter of appeal. - Held that:- The issue of jurisdiction to impose service tax can also be raised and decided in the appeal itself. The petitioner did avail the remedy of appeal to avoid the pre deposit amount, but the Supreme Court turn down the said prayer. - Writ petition dismissed - Decided against the assessee.

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• 2016 (2) TMI 808
  Waiver of pre-deposit - According to the Assessee the service component was between 25% and 44% of the turnover during the period in question. It is stated that in real terms the highest service tax demand worked out ₹ 26.8 lakhs whereas the CESTAT had asked the Assessee to deposit ₹ 17.5 lakhs (along with proportionate interest) which was about 65% of the highest possible service tax demand. - taxabiltiy of works contract including civil work primarily for the Airports Authority of India (AAI). - Held that:- the Court modifies the impugned order of the CESTAT and directs that subject to the Appellant depositing a sum of ₹ 5 lakhs before the CESTAT - stay order modified partially.

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• 2016 (2) TMI 807
  Waiver of pre-deposit - Demand of service tax on the activity of providing labour for harvesting sugarcane - for the later period it was found the no service tax is payable - whether in the light of later order, if the nature of service remains same, the appellant can be held amenable to service tax arises for consideration? - Held that:- We, in this situation, as in later period the services rendered by appellant are held not amenable to service tax, grant the prayer for waiver of pre-deposit. The appeal is restored for a fresh adjudication on merits. - stay granted.

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• 2016 (2) TMI 806
  Demand of service tax - valuation - reduction of reimbursement of expenses - seeking benefit of 'cum-tax' valuation and dropping of penalty under section 76 of Finance Act, 1994 - business auxiliary service being provided by the Bank - wrongful classification of service - Held that:- An existing service provider may, additionally, be required to operate a 'front office' of the client to reinforce the credibility of the financial products. These may be mandates of the client for which the client may have to make a separate payment - whether these are for actual or on lumpsum is a matter of commercial agreement. To the extent that compliance with these mandates are liable to classified only within services that are 'as yet' not taxable, it would be contrary to legislative sanction to determine tax liability on such receipts. The confirmation of demand, and approval thereof, by the lower authorities, thus, exceed limits envisaged by the legislature. We notice that the bulk of the expenses have been incurred on salaries, telephones, office space and advertisements, all of which may be considered to be essential to bringing the banking institution to the doorstep of the customer and is, thereby, inextricably enmeshed with the financial product offered by the bank. The costs claimed to be reimbursibles are, therefore, not attributable to the 'business auxiliary service' rendered by the assessee but to the cost of the product itself. Not surprisingly, the bank reimburses these expenses. Therefore, these fall outside the scope of inclusion within the meaning of 'gross amount charged' in section 67 of Finance Act, 1994 in the context of the identified taxable service. The assessee's claim of reimbursable expenses having been evidenced except for ₹ 52,96,730/- and the tax having been paid on the unevidenced portion of receipts, further demand of tax envisaged in the show cause notice fails to survive. It would appear that the adjudicating authority was itself not unambiguously certain about the taxability and its scope; the assessee cannot be placed on a higher pedestal of more exacting standards of comprehension and compliance. Invoking of section 73(4) of Finance Act, 1994 is, therefore, not warranted. The first appellate authority has dropped the penalty under section 76 of Finance Act, 1994.There is no justification for having continued with, the adjudication after the tax liability had been discharged. - Decided against the revenue and in favor of assessee.

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• Central Excise

• 2016 (2) TMI 785
  Denial of cenvat credit - denial based on the investigations conducted at seller’s site - Held that:- In the absence of clear evidence to the effect that the appellant is one of the persons listed and as confirmed in the statement, the main basis of the case stands un-substantiated. Regarding the investigation conducted by the Department with certain transporters, it is seen that the appellants have submitted invoice-wise receipts along with transport’s details to substantiate their claim of actual receipt of goods. These are not examined and categorically refuted with contra evidence by the Revenue. We find that the main basis and the starting point of investigation is the statement dated 26.05.2006 of Shri Naresh Gularia, Director of KPIL. As already noted, he was shown a list of buyers to whom he was to have sold the PVC compounds. The said list was not made available to the appellant to ascertain whether his name is figuring as one of the buyers. This was not examined for a definitive finding by the lower authorities. No verification has been made in the appellants premises regarding the due accounting or receipt of goods. In the face of these serious lacunae, we find that the denial of credit, as upheld in the impugned order, is not sustainable. Accordingly, we allow the appeal.

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• 2016 (2) TMI 784
  Classification - whether or not the appellants are liable to pay SED on Aerated Water, Beverages in Bag (BIB) as a compound preparation intended for use in the automatic vending machine - whether preparations for lemonades and other beverages intended for use in the manufacture of aerated water are classifiable under Tariff item 2106 90 50 of the 1st Schedule and under Tariff item 2106 90 19 in the 2nd Schedule to the Central Excise Tariff Act 1985 w.e.f. 28/02/2005 - The case of the appellant is that their product is a compound preparation for making non-alcoholic beverages and this automatically does not imply soft drink concentrate - Held that:- We find Notes 1 and 2 of the 2nd Schedule, extracted (supra) will make it clear that the Chapter Notes and Supplementary Notes of the 1st Schedule shall apply to the interpretation of the 2nd Schedule. As such, we find that valid and admitted classification of BIB under 2106 90 50 in terms of Supplementary Notes 4 of Chapter 21 of 1st Schedule cannot be included under Tariff item 2106 90 19 of 2nd Schedule. We find that impugned order simply quoted the Boards above-mentioned clarification without any analysis of its application. Provisions of General Clauses Act were quoted by lower Authority. We find no possible application for the same in the present case. The impugned order has not analyzed the appellant's contention with reference to the Chapter Notes of Chapter 21, Notes 1, 2 and 3 of 2nd Schedule to arrive at the proper finding. We find the impugned order as unsustainable in view of the above discussion. Decided in favour of assessee

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• 2016 (2) TMI 783
  Condonation of delay - whether appeal should be filed within 90 days? - appellant submitted that admittedly the appeal was filed after 97 days from the date of receipt of the order - Held that:- Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT OF INDIA ] wherein the Supreme Court has held that the proviso to sub-section (1) of Section 35 makes the position clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning the delay of 30 days after expiry of 60 days which is the normal period of filing appeal. Therefore, keeping in view the above it is of the considered view that there is no force in the appeal of the appellant and consequently dismiss the appeal. Stay application is accordingly disposed of.

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• 2016 (2) TMI 782
  Leviability of interest in respect of credit which was reversed before utilization of the same - Held that:- There is no liability under Section 11A(2B) for payment of interest under the facts of the case. The impugned order is set aside and the appeal is accordingly allowed. See COMMISSIONER OF C. EX., GHAZIABAD Versus ASHOKA METAL DECOR (P) LTD. [2010 (4) TMI 738 - ALLAHABAD HIGH COURT ]

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• 2016 (2) TMI 781
  CENVAT Credit taken on inputs used in respect of job-work cleared under full exemption, invoking Rule 6 of the Cenvat Credit Rules, 2004 - demands of duty were confirmed by both the lower authorities - revenue argued that the decision in case of Sterlite Industries was given while interpreting the MODVAT Rules, whereas the present dispute pertains to Cenvat Credit Rules - Held that:- The issue has been finally decided by Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. vs. Commissioner of Central Excise, Pune 2004 (12) TMI 108 - CESTAT, MUMBAI) upheld by Hon'ble Bombay High Court reported (2008 (8) TMI 783 - BOMBAY HIGH COURT ) While the decision in case of Sterlite Industries Ltd. has been given in respect of disputes which had arisen during the MODVAT regime, the same argument are equally applicable to the Cenvat Credit Rules, 2004. It is seen that the decision of the Tribunal in the case of Sterlite Industries Ltd. (supra) relies on the spirit of the MODVAT Rules and no specific rules. The ratio of the said judgment is equally applicable to Cenvat Credit Rules, 2004.

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• 2016 (2) TMI 780
  Manufacture - whether the activity of modification of moulds and dies amount to manufacture therefore it is liable to excise duty ? - applicability of provision of Rule 4(5)(a) - exemption under Notification No. 214/86-CE dated 25/3/1986 - Held that:- Rule permits to send the capital goods to job worker for further processing, testing, repair, re-conditioning or manufacture of intermediate goods necessary for manufacturing of final product or any other purpose. In view of this clear provisions, the appellant has correctly followed the procedure laid down under Rule 4(5)(a). Even if it presumed that the activity is manufacture it will remain exempted under Notification No. 214/86-CE dated 25/3/1986 according to which if any goods manufactured on job work basis on material supplied by the principal manufacturer and said manufactured goods is used in the factory of the principal manufacturer, the said goods are exempted from the payment of whole of duty. In the present case the moulds supplied by Bhoisar unit to the appellant and appellant after carried out the activity returned back the moulds to the Bhoisar unit where it was used for the manufacture of other final product i.e. plastic parts on which excise duty is undisputedly paid. In this position even if by any stretch of imagination the activity held to be manufacture though not accepted by us, the moulds will remain exempted under the notification No. 214/86-CE. Facts in the judgments cited by the Ld. A.R. are not relevant to the facts of the present case therefore not help the case of the Revenue. In view of the above discussion, we are of the considered view, firstly the activity is not amount to manufacture, secondly the movement and activity of modification is squarely covered by Rule 4(5)(a) of CCR, 2002 therefore the demand is illegal and incorrect - Decided in favour of assessee

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• 2016 (2) TMI 779
  Assessable value - whether cost of additional testing conducted on the request of the customer of the appellant and documentation charges collected by appellants needs to be included in the assessable value or otherwise? - Held that:- The statement of Deputy General Manager indicates that the tests which are required to be conducted on the Transformers, the statement also records that the appellant conducts all the tests and which are required for their own quality control tests to market the final products. We do not find anything in the statement which states that the appellant has recovered the cost of this mandated testing from the customers. The appellant has been stating before the lower authorities that that additional testing which is carried out by the appellant is at the behest of their customers; the revenue is unable to bring on record that these tests were not carried out on request of the appellant's customers. Revenue has not produced any evidence to negate the claim of the appellant. As regards the inclusion of documentation charges, we do find strong force in the contentions raised by the learned Counsel, as the specimen purchase order indicates that the documentation charges which are collected by the appellants during the material period is in respect of additional copies of drawings of the Transformers given to their customers on specific request of the customer. Learned Counsel categorically states that one set of drawing given along with the transformer to the customer free of cost. In our considered view, cost of additional copies of drawings given to appellants customers on specific request cannot form a part of the assessable value as these cost are post manufacturing and clearance.

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• 2016 (2) TMI 778
  Refund claim of amounts remained unutilized in the CENVAT Credit account - refund claim on the ground that they had exported the fabrics processed by them - Held that:- In this case, the appellant had stock of grey fabrics lying in his factory premises filed declaration with the authorities and the said stock has been verified and found to be correct. The appellant had availed the CENVAT Credit of this stock, as provided under Rule 9A(3) of the Cenvat Credit Rules, 2002 and it is not disputed. It is also not disputed that the appellant has exported the entire fabrics manufactured by them, hence they are not in a possession to utilize the CENVAT Credit availed as there is no home clearances. Thus rejection of refund claim by the authorities is not in consonance with the law. Also the learned Counsel was correct in stating that the issue of availment of CENVAT Credit under Rule 9A of the Cenvat Credit Rules, 2002 on the goods lying in stock has been settled by this Bench in the case of P.K. International . [2014 (10) TMI 126 - CESTAT MUMBAI ] The interest claim by the appellant on amount of ₹ 79,177/- is required to be allowed as the appellant has contested the issue on which interest is to be paid. As regards the claim of the learned Counsel for interest of the balance amount of refund which was sanctioned by the adjudicating authority. As find that the adjudicating authority and there are no findings by the adjudicating authority. At the same time, there cannot be second opinion that if the refund is delayed by the department, the interest liability arises in order to meet end of justice. I hold that the interest liability arises in order to meet end of justice. The interest liability on the amount which has been sanctioned to the appellant needs to be granted from the date when the matter was remanded back by this Bench by order dated 15.6.2007.

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• CST, VAT & Sales Tax

• 2016 (2) TMI 815
  Rate of VAT @14.5% or 20% - Classification of Appy Fizz as 'Fruit Juice Based Drink', as similar other products not mentioned or aerated branded soft drinks excluding soda - Held that:- Going by common parlance that the product is a soft drink is beyond dispute. Aeration being the process of adding a gas especially carbon dioxide to a liquid under pressure or “charging with air or carbon dioxide or other gas”. It is clear from the material produced by the assessee itself that the product is an aerated drink. That it is branded is also beyond dispute. The question whether the product would be a 'Fruit Juice Based Drink' under the Central Excise and Salt Act would be wholly irrelevant in view of the fact that it comes squarely within the specific entry, aerated branded soft drink as contained in Section 6 (1)(a) which has been specifically made liable to tax at the rate of 20%. A reading of Entry 71 of the notified list as amended would go to show that aerated water and soda water are the aerated products included in the entry. Sub entries 2 to 4 refer to soft drinks which are not aerated or branded and to health drinks. This is clearly because aerated branded soft drinks have already been included in the tax net with a higher rate of tax. The product answers to the description of aerated branded soft drink which would fall specifically within the confines of Section 6(1)(a) - Decided against the assessee.

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• 2016 (2) TMI 814
  Challenge to the orders passed by the Disciplinary Authority - failure to discharge official duties in relation to granting Registration Certificate under Section 30 of the Gujarat Sales Tax Act, 1969 - Held that:- due to the lack of tentative reasons being communicated to the petitioner, he is unable to make a representation addressing those specific reasons. The opportunity of hearing granted to the petitioner can hardly be called effective or adequate. It is more in the nature of an empty formality to show an outward compliance with the Rules and law. In effect, the principles of natural justice have clearly been violated and the petitioner has suffered prejudice and injustice due to such violation. In the present case, the petitioner retired from service on 13.10.2013, on attaining the age of superannuation. Nineteen years have passed since the Chargesheet was issued. The penalty order was passed on 05.11.2001. Over fourteen years have elapsed since then. It may be possible that the entire record may not be available either with the authorities or the petitioner. In the view of this Court, no fruitful purpose would be served by remanding the case to the Disciplinary Authority to open up another innings. - this Court does not consider it appropriate to remand the matter to the Disciplinary Authority. The impugned order dated 05.11.2001, passed by the Disciplinary Authority, is hereby quashed and set aside. - Decided in favor of petitioner.

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• 2016 (2) TMI 813
  Claim of refund of VAT paid on purchases and export of tractors - VAT was not deposited by the seller - Section 38 (3) (a) (i) of the DVAT Act - (VATO) disallowed the input tax credit (ITC) claimed on certain purchases - Held that:- a feeble attempt has been made to justify the initiation of fresh proceedings under Section 59 of the DVAT Act, while offering no satisfactory explanation for allowing the time period for completion of the original default assessment proceedings under Section 32 of the DVAT Act to lapse. Instead of processing the claims for refund in terms of Section 38 of the DVAT Act, the VATO proceeded to pass two fresh default assessment orders under Section 32 of the DVAT Act for the aforementioned periods - At the outset, it requires to be noticed that in the fresh orders of default assessment of tax passed on 28th August 2014, the VATO makes no reference to the orders passed by the OHA on 11th August and 21st October 2010 setting aside the original assessment orders dated 6th October, 2009 and remanding the matters to the VATO for deciding afresh. Apart from the obvious error committed by the VATO in purporting to review a non-existent order, even the requirements of Section 74 B of the DVAT Act were not satisfied and therefore the powers thereunder could not have been invoked. - Further, the jurisdictional requirement for invoking the extended period of limitation under Section 34 of the DVAT Act is not satisfied. Revenue directed to refund the amount with simple interest @6% - Decided in favor of asessee.

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• Indian Laws

• 2016 (2) TMI 776
  Fixation of price - whether the impugned G.O.Ms. fixing price of Oil Palm FFBs is violative of Art.14 of the Constitution - Held that:- Relevant considerations of OER of Oil Palm Processing Unit in the State of Andhra Pradesh for fixing price of FFBs of Oil Palm in the said State which is indicated by Section 11(2) and Section 12 of the Act, were not taken into account while issuing the impugned G.O. Also the advice of the Union of India contained in the letter F.No.12-22/2010 (TMOP) dt.13.08.2013 of the Under Secretary, Ministry of Agriculture, Department of Agriculture and Cooperation that the OER as per actual Oil Content extracted in the past by the Processing Industry established by the State Government concerned, was clearly ignored. It is of the opinion that the non-bifurcation of the APOILFED by the date G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015 was issued cannot be the reason for taking the OER of the Aswarraopet Unit in Telangana State as basis for price fixation of Oil Palm FFBs in State of Andhra Pradesh after the two states of Telangana and residuary State of Andhra Pradesh came into existence from 2.6.2014 with well defined boundaries. This is an irrelevant consideration and ought to have been eschewed by 1st respondent from consideration. Thus, the price fixation of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 based on the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana vide G.O.Ms No.2 Agriculture and Cooperation (Horti.& Seri) Department dt.18.2.2015 is based on the irrelevant considerations and is clearly arbitrary and violative of Article 14 of the Constitution of India. Therefore the contention of 1st respondent that petitioners are estopped by their alleged accpetance in the meeting of 6.1.2015 to adopt the OER of Aswarraopet Oil Palm Processing Unit and so they cannot challenge the G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015, cannot be countenanced. The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this is not the reason assigned in the impugned G.O. or in the counter-affidavit filed by the 1st respondent. In this view of the matter, the Writ Petition is allowed and a Writ of Mandamus is issued declaring G.O.Ms.No.2, Agricultural & Cooperation (Horti & Seri.) Department, dt.18.02.2015 issued by the 1st respondent fixing the formula for the pricing of Oil Palm Fresh Fruit Bunches (FFBs) as arbitrary, illegal and violative of Art.14 of the Constitution of India. Consequently the 1st respondent is directed to fix the price of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 in accordance with the Act and keeping in mind the observations made in this Order within eight (08) weeks from the date of receipt of a copy of this order.

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• 2016 (2) TMI 775
  Entitlement to proceed against the secured assets - SARFAESI Act - Held that:- In the present case, SBI has registered its charge under Section 125 of the Companies Act before ROC over the secured assets of company, the applicant is an assignee and, therefore, if the applicant has not registered its charge over the secured assets before the Registrar of Companies, it cannot be said that the applicant is not entitled to proceed against the secured assets. Account of the company in liquidation was declared NPA in the year 2001 by SBI - whether the applicant-bank cannot now initiate the proceedings under the SARFAESI Act against the company in liquidation after a period of five years - Held that:- The aforesaid contention is misconceived. It is true that the account of the company in liquidation was declared NPA in the year 2001. However, at the request of the company in liquidation, the SBI has restructured the credit facilities. However, so far as that facility is concerned, also, the company in liquidation has not complied with the terms. SBI has, therefore, issued the notice on 7.9.2005 to the company in liquidation and called upon the borrower to make the payment. However, the borrower-company in liquidation has not made the payment as per the notice. Thereafter, the SBI assigned its debts in favour of the applicant-bank by Deed of Assignment dated 23.3.2006. Thereafter, the applicant-bank has issued the notice under SARFAESI Act on 15.11.2006. Thus, there is no delay in initiation of the proceedings nor it can be said that SBI had waived its right to initiate action against the company in liquidation. It is further required to be noted that the Official Liquidator filed Appeal No.27 of 2007 before the DRT against the applicant-bank. However, learned advocate Mr. Pahwa has placed on record the order dated 17.7.2014 passed by DRT below Exh.23 whereby the said appeal was disposed off as dismissed for default due to want of prosecution. The Official Liquidator or the intervenor has not placed any other material on record to show that the said appeal has been restored. Thus, the fact remains that the Liquidator did file an appeal before the DRT. It is clarified that if the said appeal is restored on file of DRT, it is open for the Official Liquidator to take all available contentions before the learned Tribunal. Thus, the relief prayed for in this Judges' summons is required to be allowed. The respondent no.1 herein is hereby directed to hand over the possession of the secured assets particularly described in schedule annexed at Annexure 'A' to the applicant who has already initiated measures under the provisions of the SARFAESI Act. The applicant is also permitted to proceed further in relation to the secured assets subject to compliance of provisions of proviso to Section 13(9) of the Act. However, it is clarified that the applicant-bank has to inform the Official Liquidator about the steps which it will take against the secured assets.

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