Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 7, 2017
Case Laws in this Newsletter:
Income Tax
Benami Property
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Claim of deduction u/s 80-IC - when the assessee installs/erects the self-manufactured stone crushing plants and service them at the customer's site, the amount received from such service, is nothing but earnings from the business of manufacturing activity - HC
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Merely because the assessee was a common shareholder in BVCPL and BOPL, the loan given by the BVCPL to BOPL could not have been treated as deemed dividend u/s 2(22)(e) - HC
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Deduction u/s.80IB(4) in respect of Scrap Sales - whether Scrap Sales be treated as income derived from business activity of the industrial undertaking - . No claim of similar type of industry was compared. The explanation given by the assessee was verified. - Claim allowed - AT
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Rectification of mistake - AO should not take undue advantage of ignorance of the assessee and should follow a fair approach by allowing legitimate claims of the assessee so that only that amount of tax is recovered from the assessee which is due as per law - AT
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Bogus purchases - addition made u/s 69C - assessee is making local purchases without any transportation bills, delivery challans etc., the possibility of the Assessee making purchases in grey market on cash cannot be ruled out - AO directed to disallow 2% of the above purchases to meet the anomalies - AT
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It is only performed the work as a contractor and the assessee’s job is not included designing the project and selling of the project and the assessee would not get any share in the constructed area and in the undivided property and the assessee cannot be said to have invested its own money to carry on the project - Assessee cannot be held as developer u/s 80IB(10) - AT
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Reopening of assessment - Revenue has not been able to bring on record that how by following FIFO method of valuation of inventory based on cost, the profits of the assessee could not be computed correctly so as that it infringes on Section 145/145A - AT
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Seizure of Cash in transit - remedy under the “Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY)” - adjustment from cash account seized by the department, tax, charge and penalty - Revenue authorities directed to look into the matter - HC
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Taxability of technical services to other airlines - DTAA with Germany - the expanded meaning of operation of aircraft included those activities in Article 8(3) through the extended definition and no more - HC
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Deemed dividend u/s 2(22)(e) - one of the partners of the assessee firm was holding major share holding - Since the assessee firm was not shareholder in the lender company, viz. M/s Siroya FM Construction Pvt Ltd, the impugned amount of loan cannot be taxed in the hands of the assessee firm as deemed dividend - AT
Customs
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Valuation - misdecaration of value - absence of contemporaneous imports - the value which is declared by the appellant needs to be accepted as there is no valid reason for adopting or enhancing the valuation of the imports made by the appellant - AT
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Classification of imported goods - Thiourea - the appellants are also traders and the imported goods have been used for non-insecticidal purpose - appellants do not require any import permission - AT
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Jurisdiction - the Commissioner of Appeals and the Joint Secretary of the GOI, who exercised the power of the revisional authority, hold the same rank - GOI to pass fresh order - HC
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Concessional rate of duty - Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods - It may be reasonable that if the goods on importation are re-exported, as such then they should be treated as if were never imported. - AT
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Valuation - The sheer quantity advantage that appellant has on import of such chemicals could have also influenced the price as the quantity of 480 Kgs. imported by another importer being 25% of quantity imported the same supplier could have charged more - The declared price has to be accepted - AT
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Classification of Nigerian origin teak rough square logs - classified under heading 4403.4910 or under heading 4407 as "sawn teak wood"? - the classification of the imported goods under heading 4403 are well reasoned one - AT
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Undervaluation of the goods imported - Rule 5 & Rule 6 of the Valuation Rules needs to be applied which contemplates for the application of contemporaneous value; which adjudicating authority has done so - AT
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Confiscation of currency u/s 121 of the CA, 1962 - There is no bar on the imposition of separate penalty on the company and the director - the director has played significant role and therefore penalty has been rightly imposed. - AT
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Classification of imported goods - Omnical Calcium Nitrate Solution Grade Fertilizer for Agriculture use - the goods does not belong to "Strontium Nitrate (28342910) or Magnesium Nitrate (28342920) or Barium Nitrate (28342930) family. It is nitrates of 'other' kind falling under CTH 28342990 - AT
Indian Laws
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Prosecution against the partners - Offence punishable u/s 138 of the Negotiable Instruments Act - it is very difficult for the Court to take a view that a partnership firm for the purpose of Section 138 read with Section 141 is not a legal entity, and therefore, it need not be made an accused in the complaint. - HC
Service Tax
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The sub-broker who received commission from the main broker while main broker has paid the service tax on commission received by him cannot be once again subjected to service tax - AT
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Appellant has already paid entire tax liability along with interest hence the provisions of Section 73(3) of the Finance Act, 1994 gets attracted in this case - SCN was not required to impose penalties - AT
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Validity of SCN - an error in the invocation of provisions - Section 11A of Central Excise Act, 1944 has been invocated in the said show cause notice and said Section 11A does not authorize Central Excise office to demand Service Tax - SCN not sustainable - AT
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CENVAT credit - service tax paid by utilising the cenvat credit availed from a common pool - the utilisation of cenvat credit from common pool for payment of excise duty and/or service tax is permissible - AT
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The service tax liability for the amount as commission/consideration by appellant by operating multiple/chain marketing system is clearly taxable under Business Auxiliary Service - AT
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Closure of proceedings u/s 73(3) of the FA, 1994 - Service tax with interest was paid before SCN - Revenue authorities have misdirected themselves by wrongly issuing notice and not following the provisions of Section 73(3) in this case - AT
Central Excise
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Suo motu taking re-credit of the CENVAT credit reversed earlier - there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. - AT
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CENVAT credit - Rule 3(5) of CCR, 2004 - removal of base oil - The input were manufactured prior to imposition of education cess in the Budget of 2004, for this reason also demand of education cess on removal of input as such is not correct - AT
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Reversal of CENVAT credit - since the appellant had been reversing the credit at the time of clearance of the goods on pro rata basis no further demand under Rule 6 can be made - AT
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100% EOU - the allegation / contention of the Department that the raw materials bought by the Appellant from 14 suppliers was diverted and never brought to the Appellant's factory, cannot be sustained. - HC
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Credit of NCCD on POY - the utilization of credit of NCCD for the purpose of payment of NCCD on POY cannot be challenged - AT
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Valuation - goods cleared for export, and not exported - The appellant is required to discharge the duty on the price declared in the AR4 - AT
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Classification - chapter heading 8468 is meant for welding machine - welding transformer even though used for welding purpose it merit classification under Chapter 8504 - AT
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CENVAT credit - non-existent supplier - forged invoices - the ledger account as well as the statutory records establish the receipt of the goods - In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. - AT
VAT
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The jurisdiction to conduct VAT audit, which was authorised by the Joint Commissioner was not accepted by the petitioner and therefore, the assessment orders passed were also without jurisdiction. - HC
Case Laws:
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Income Tax
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2017 (2) TMI 231
Income from sale of land - treatment as business income or LTCG - claim of development expenses denied - ancestral land inherited by the assessee for the last more than 29 years and the assessee is not involved in any business activity of real estate business - Held that:- Payments for which necessarily were made to labourers and the material sourced was again local material sourced from the unorganised sector wherein necessarily the expenditure vouched would again be hand vouched. In the absence of any abnormal claim vis-à-vis the nature and extent of development done disallowance of the expenses claimed in an adhoc manner is not justified. The said claim it has been stated has been supported by the Report of an Architect/Engineer. These facts, evidences and arguments, it is seen have not been examined before arriving at a conclusion. Accordingly, the impugned order is set aside and the issue is restored to the AO directing him to examine the claim put forth on the basis of facts and evidences and not reject the claim purely on the grounds that it was hand vouched. Similarly, considering the claims not considered i.e. the land sold was ancestral land devolving upon the assessee by way of inheritance. Find no evidence in support of the same is available on record. The argument is available. Accordingly the impugned on this issue also is set aside and the issue is restored to the AO directing the assessee to demonstrate this fact before the Assessing Officer and support its claim by way of facts and evidences. The AO considering the facts is directed to decide the same by way of a speaking order, needless to say that the assessee shall be afforded a reasonable opportunity of being heard. - Decided in favour of assessee for statistical purposes.
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2017 (2) TMI 230
Disallowance of commission on sales made to Satyam Computer Services, invoking TP provisions and also CUP method - Held that:- TPO cannot disallow the amount paid to Venture as the agreement under which assessee is operating covers export and domestic sales, other than those made to Venture or Venture Group. Satyam is not the part of Venture Group. Therefore, there is no valid reason for disallowing on that ground. Moreover, the TPO has to consider the ALP only under one of the methods prescribed and as already discussed in earlier year, CUP method cannot be invoked as there are no uncontrolled comparable prices. In view of that, the methodology adopted by the AO/TPO in disallowing the amount or fixing the ALP at NIL itself is not correct. TPO cannot disallow the amounts u/s. 37(1) invoking transfer pricing provisions Addition under TP provisions - Held that:- Since the difference is within (+/-) 5% range as provided u/s. 92CA(2) proviso, there is no need to make the adjustment. Exclusion of foreign currency from the export turnover - Held that:- We direct the AO/TPO to exclude the same amount from the total turnover as well while computing the deduction u/s 10A. Exclusion of expenditure in foreign currency - whether the same amount may be excluded from the total turnover as well - Held that:- Following the principles on the subject as laid down by the Hon’ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd., [2010 (6) TMI 65 - BOMBAY HIGH COURT] and also Special Bench decision of the ITAT, Chennai in the case of ITO Vs. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] AO is directed to exclude the same from the total turnover as well. Direct the AO to exclude whatever communication expenses disallowed from the export turnover, the same amount was also be disallowed from the total turnover while computing the deduction u/s 10A Disallowance of commission paid to Venture Global on entire sales under the CUP method with out there being any comparable cases - Held that:- For the reasons stated above in the earlier assessment years, instead of disallowance of the commission attributable to sales made to Satyam Group, the entire commission paid was disallowed without assigning any reasons. For the reasons stated in earlier years, we are of the opinion that TPO is not correct in disallowing the amount by determining the ALP at NIL. As stated in earlier years, the commission paid to Venture is payable and accordingly, the ground is considered allowed.
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2017 (2) TMI 229
Revision u/s 263 set aside by Tribunal - Held that:- Tribunal has evidently failed to make a distinction between an inference and a presumption. Even in the case of a trial when the question arises as to whether a fact has been proved or not, the question has to be answered on the basis as to whether the evidence adduced probabilises the claim or contention of the plaintiff or the defendant, as the case may be. The learned Tribunal failed to notice the facts, which were not in dispute and have not also been disputed before us, which we have quoted above. It was only reasonable to infer that an attempt might have been made to reduce the income by booking fictitious loss. The Commissioner of Income-tax could not have recorded any definite finding in respect of a matter which he intended to refer to the Assessing Officer for further investigation. After recording a final opinion that the loss was in fact fictitious there would be no point in remanding the matter to the Assessing Officer. There can be no doubt that merely on the basis of presumption or surmise or suspicion, an order under section 263 cannot be passed. The learned Tribunal failed to appreciate that in this case the inference drawn by the Commissioner of Income-tax was not based either on presumptions or surmises or suspicion. It is true that the assessee has no hand nor has any say with regard to the notings to be made by the Assessing Officer in his order sheet. But that does not mean that an assertion that everything was looked into by the Assessing Officer has to be accepted even though such assertion is either opposed to the admitted facts and circumstances of the case or when the assessee fails to prove, by adducing circumstantial evidence, his assertion. For the aforesaid reasons, we are of the opinion that the learned Tribunal has not applied its mind to all the relevant materials and has not considered the same and therefore the conclusion drawn is perverse. - Decided in favour of revenue
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2017 (2) TMI 228
Calculation of interest accrued - point of time of accrual - Held that:- Tribunal was not justified in holding that interest accrued from day to day basis and not at the end of the year. Tribunal was not justified in holding that interest rate shall stand reduced only from March 17, 1989.
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2017 (2) TMI 227
Claim u/s 80-IC denied - manufacturing activity - Held that:- The assessee, we are concerned with here, is involved only with manufacturing activity of stone crushing plants and it is not installing or servicing machinery manufactured by others. The expression "profits and gains" derived from the business as mentioned in section 80-IC may not cover activities unrelated to the manufacturing but when the manufactured machinery is installed by the manufacturer themselves at the site of the customer, the amount received on this count, should not in our understanding, be excluded from the expression derived from the business, referred to in section 80-IC of the Income-tax Act. Therefore, when the assessee installs/erects the self-manufactured stone crushing plants and service them at the customer's site, the amount received from such service, is nothing but earnings from the business of manufacturing activity. - Decided in favour of assessee
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2017 (2) TMI 226
Deemed dividend addition u/s 2(22)(e) - assessee held more than 90% shares of the lending company - Held that:- It is an admitted position that neither BVCPL was the shareholder in the BOPL nor the BOPL was shareholder in the BVCPL. Under the circumstances, merely because the assessee was a common shareholder in BVCPL and BOPL, the loan given by the BVCPL to BOPL could not have been treated as deemed dividend under Section 2(22)(e) of the Act in the hands of the assessee. Delhi High Court in the case of CIT vs. Ankitech Pvt Ltd (2011 (5) TMI 325 - DELHI HIGH COURT) confirmed the deletion made by the learned Tribunal by holding that from whom loan and advance was taken by the assessee must be shareholder in the assessee company. - Decided in favour of assessee
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2017 (2) TMI 225
Review petition against the order in Commissioner of Income-Tax Versus Preetam Singh Luthra [2016 (11) TMI 728 - SUPREME COURT OF INDIA ] - Addition of the licence fee paid - Held that:- No case for review of order is made out.
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2017 (2) TMI 224
Interest charged /earned from purchasers for the period of 90 days on the delayed payment of sale consideration - whether can be said to be income from other sources and /or it can be said to have nexus with its business activities for which the assessee is allowable the deduction under Section 80HHC? - Held that:- Identical question came to be considered by the Division Bench of this Court in the case of Nirma Industries Ltd. Vs. Deputy Commissioner of Income-tax reported in [2006 (2) TMI 92 - GUJARAT High Court] wherein specifically observed and held by the Division Bench of this Court that such amount of interest received on late payment of sale consideration can be said to have been derived from business and the same is included in profits for the purpose of Section 80-I of the Income Tax Act, 1961 We are in complete agreement with the view that the interest earned /charged by the assessee on the delayed payment of sale consideration (for 90 days) is not required to be excluded for the purpose of computation of deduction under Section 80HHC of the Act. No substantial question of law arises in the present Tax Appeal.
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2017 (2) TMI 223
Entitlement for the write-off of bad debts under section 36(1)(vii) r.w.s. 36(2)(i) - Held that:- In the present case, the total debt due from BRCL included a part relating to irrecoverable consultancy fee, which indeed has been offered for tax and has been taken into consideration while computing the income and, therefore, following the parity of reasoning laid down by the Hon'ble Bombay High Court in the case of Pudumjee Pulp & Paper Mills Ltd. (2015 (8) TMI 719 - BOMBAY HIGH COURT) the said fact satisfies the requirement of section 36(2)(i) of the Act even in the context of claim of write-off of the amount of ICD of ₹ 50,00,000/-. Also not disputed that interest on such ICD of ₹ 50,00,000/- advanced to BRCL has also been taken into account for computing the income of the assessee and, therefore, this aspect of the matter also fortifies the decision of the CIT(A) that the requirement of section 36(2)(i) of the Act stands satisfied. It is also notable that the amount due from the BRCL has been written-off as irrecoverable in the account books and, therefore, find no reason to interefere with the decision of the CIT(A) that the claim of the assessee for write off of ₹ 50,00,000/- advanced as ICD to BRCL is allowable as a deduction under section 36(1)(vii) r.w.s.36(2)(i) of the Act. - Decided against revenue
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2017 (2) TMI 222
Disallowance being the amount spent outside India as not an application of money in India in terms of provisions of section 11 - Held that:- We find that the alternative argument advanced by the ld. counsel of the assessee has got a direct bearing on the instant case and the assessee has relied inter-alia on the judgement of the Hon’ble Bombay High Court in Gem and Jewellery Export Promotion Council [2015 (4) TMI 1126 - BOMBAY HIGH COURT ] wherein held hat the grants-in-aid were made by the Government to provide certain institutions with sufficient funds to carry on their charitable activities. On reading the conditions on which those grants-in-aid were given, it was obvious that the institutions or associations to which the grant was made had no right to ask for the grant and it was solely within the discretion of the Government to make grants to institutions of a charitable nature. Again, the Government did not expect any return for the grants given by it to such institutions and there was nothing which was required to be done by these institutions for the Government, which could be considered as consideration for the grant. Therefore, none of the conditions attached to the grant affected the voluntary nature of the contribution. Hence, the impugned grant was exempt under section 12. Therefore, we admit under Rule 29 of the ITAT Rules, 1963 the alternative argument filed by the assessee on 21/10/2016 before the Tribunal. However, the above alternative argument was not there before the AO or the ld. CIT(A) . In view of the above, we set aside the order of the ld. CIT(A) and remit the case to the file of the AO (i) to consider the main as well as the alternative argument of the assessee - Decided in favour of assessee for statistical purpose.
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2017 (2) TMI 221
Disallowance of the interest paid on its borrowed funds in excess of 12 per cent. u/s 36(1) - assessee company had utilised its own funds to advance loans at a lower rate of interest to sister concern - Held that:- In the present case, financial condition of the sister concern was not good and to help those, for their smooth running, loan was advanced and a lesser rate of interest was charged. Both the sister companies are subsidiary of the assessee and there is nothing per se adverse. For the welfare and proper functioning of the sister companies, the assessee in its wisdom, if decided to advance loan so that ultimately the sister company may function properly, the assessee being holding company would also be benefitted. Thus, the loan advanced to sister companies was for commercial expediency and not for any charity, sentimental or personal reasons. We therefore, answer the question in favour of assessee and hold that assessee was entitled for deduction of interest under section 36(1)(iii) and the view taken by the Tribunal otherwise is not correct. - Decided in favour of assessee
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2017 (2) TMI 220
Deemed registration - Whether the non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA(2) would result in deemed grant of registration? - Held that:- Non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA (2) of the Income Tax Act 1961 would not result in a deemed grant of registration. The judgment of the Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment (2008 (4) TMI 700 - ALLAHABAD HIGH COURT ) does not lay down the correct position of law. See Commissioner of Income Tax Vs. Muzaffar Nagar Development Authority [2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB)]
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2017 (2) TMI 219
Penalty levied under section 271(1)(c) - non-recording of proper satisfaction by the Assessing Officer while completing assessment - Held that:- Assessing Officer while completing assessment and making disallowance on each account had stated that penalty under section 271(1)(c) of the Act needs to be initiated and the same was so initiated by issue of notice under section 274 r.w.s. 271(1)(c) of the Act. However, the Assessing Officer has failed to give satisfaction as to which limb of the said section has not been complied with by the assessee. In the absence of the same, proceedings initiated in the case by issue of notice in which inappropriate portion was not struck off are vitiated. Consequently, penalty order passed in the case is invalid and bad in law. Accordingly, we hold so. - Decided in favour of assessee.
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2017 (2) TMI 218
Estimation of Gross Profit on sale of Food - Held that:- The average gross profit on food sale is only 6.32% as per the impounded documents. The Assessing Officer on the other hand had estimated the G.P. at 13.68% to 12% for various AY’s. The CIT(Appeals) has not gone into the facts and has estimated gross profit rate of 12% on sale of food. The CIT(Appeals) compared with other group concerns on identical business but has not considered the place where these concerns are doing business. The place of business have major role in the food sales and cannot be compared with concerns in different places. Moreover as mentioned earlier, the impounded material clearly points out only G.P. of 6.32% on sale of food. It is also to be noted that liquor sales are the main sales and the food sales is only a secondary sale in all the AY’s. Therefore the percentage adopted at 12% for food sales is erroneous and addition on this count is deleted. Disallowances of expenses - assessee could not produce external evidences for the expenses disallowed - Held that:- Admittedly, the Assessing Officer has stated that the expenses are genuine and supported by vouchers. In such a case the Assessing Officer could not have disallowed the expenses. It is also noticed that the CIT(A) has also not correctly appreciated the facts of the present case. Considering the entire facts and circumstances of the present case, it is of the view, that there was no justification in making the disallowance of expenses. Therefore, delete the disallowance of expenses made by the Assessing Officer and confirmed by the CIT(A).
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2017 (2) TMI 217
Bogus purchases - Held that:- AO has not brought on record any material evidence to conclusively prove that the said purchases are bogus. Mere reliance by the AO on information obtained from the Sales Tax Department or the sworn statement of the parties before the Sales Tax Department, without affording the assessee any opportunity to cross examine those witnesses in this regard or the fact that these parties did not respond to notice under section 133(6) of the Act, would not in itself suffice to treat the purchases as bogus and make the addition. If the AO doubted the genuineness of this said purchases, it was incumbent upon him to cause further inquiries in the matter to ascertain the genuineness or otherwise of the transactions. Without causing any further enquires in respect of the said purchases, the AO cannot make the said addition on account of bogus purchases by merely relying on information obtained from the Sales Tax Department, the statement/affidavit of third parties without the assessee being afforded any opportunity of cross examination of that persons and for non-response to notices under section 133(6) of the Act. In the factual matrix of the case, where the AO failed to cause any enquiry to be made to establish his suspicions that the said purchases are bogus, the assessee has brought on record documentary evidences to establish the genuineness of the purchase transactions, the action of the AO in ignoring these evidences cannot be accepted - Decided against revenue
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2017 (2) TMI 216
Disallowance of 1/4th expenses, being repairs and maintenances of car on account of personal use - Held that:- The assessee itself had added back 1/4th of depreciation on car for personal use. Therefore, 1/4th of other expenses, relating to the car, has been rightly disallowed by the Assessing Officer and confirmed by the CIT(A). Therefore, see no reason to interfere with the order of the CIT(A). Hence, ground is dismissed. Disallowance being 1/4th of travelling and sundry expenses, which are not supported by proper vouchers - Held that:- This disallowance is an agreed disallowance by Chartered Accountant of the assessee and his signature is taken on the order sheet of the Assessing Officer to the above effect. Therefore, ground is without any substance and the same is dismissed. Addition as unexplained investment - contention of the assessee is that the finding of the Assessing Officer that it has withdrawn from the current account is wrong and in fact, it was withdrawn from the firm - Held that:- It is seen from the cash flow statement that the assessee had wrongly credited the net profit of ₹ 52,318/- to the cash flow statement. The net profit from the business is credited to assessee’s current account in the books of account of the business and has not been withdrawn from there. Therefore, this amount of ₹ 52,318/-, shown in the cash flow, is rightly brought to tax as unexplained expenses. Hence, ground is also rejected. Addition as unexplained expense - Held that:- In the cash flow statement, the assessee had credited an amount of ₹ 48,000/- being lorry income; but the amount of TDS i.e. 5,254/ was not excluded. This amount credited in the cash flow statement fall short of the amount of TDS and the same has been rightly treated as unexplained expense by the Assessing Officer which was confirmed by the CIT(A). Addition being unexplained investment - Held that:- On perusal of the order sheet of the Assessing Officer, noticed that this addition has been made on an agreed basis and therefore, questioning this addition at this stage without filing necessary affidavit, is devoid of merits. Therefore, the addition is upheld. Hence, ground is also rejected.
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2017 (2) TMI 215
Reduction of the amount of service tax while computing rent received - Held that:- The assessee filed the statement of service tax and challans of service tax paid. The statement of service tax and the challans of service tax paid nowhere discussed by the Assessing Officer as well as CIT(A) specifically in the circumstances when the assessee has undertook before us that the said documents were placed before the CIT(A). Any how the said statement of service tax and challans of service tax paid requires verification on the part of the Assessing Officer, hence we set aside the finding of the CIT(A) on this issue and restore the file to the Assessing Officer to verify the claim of the assessee in view of the above said documents by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. Disallowance of advertisement expenses, legal and professional fees and miscellaneous expenses - Held that:- The assessee has produced the details of the expenditure before the CIT(A) in view of the certificate dated 04.10.2016. Accordingly, the advertisement expenses has been shown at page 7 and 15 of the paper book which nowhere discussed in the said order. The expenses are in connection with the audit fees, advertisement fees and miscellaneous fees paid for the filing of appeal before the ITAT. The claim of the assessee nowhere examined and discussed by the CIT(A) in his order. No doubt the expenses has been incurred to maintain the establishment, therefore, the same is liable to allowable in view of the law settled in Rampur Timber and Turney Co. Ltd. (1981 (2) TMI 75 - ALLAHABAD High Court) and Ganga Properties Ltd. (1989 (5) TMI 10 - CALCUTTA High Court) and Chinai & Co. Pvt. Ltd. (1990 (8) TMI 7 - BOMBAY High Court ). Since the material produced before the CIT(A) has not been discussed or examined, therefore in the similar circumstances this issue is required to be examined at the end of the Assessing Officer in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. Disallowance u/s.14A - Held that:- A perusal of Balance sheet furnished by the assessee would show that the assessee has held shares in a company named Money Matter Advisory Ltd and units in two schemes of LIC Mutual Fund as its opening balance of investment. During the year under consideration the assessee has purchased shares of Pipavav Shipyard Ltd. and sold part of units held in LIC Mutual Fund. As stated earlier the assessee had received dividend income of ₹ 7,74,483/- during the year. Except these transactions, the assessee has not done anything in respect of investments held by it. Thus the disallowance of ₹ 60,000/- made by the assessee in its return of income appears to be reasonable in terms of section 14A of the Act. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to restrict the addition u/s.14A of the Act of ₹ 60,000/- made by the assessee. The same amount is required to be added to the book profit computed u/s.115JB of the Act, since the decision rendered by Hon’ble Delhi Bench of Tribunal in the case of Goetze (India) Ltd. Vs. CIT [2009 (5) TMI 615 - ITAT DELHI ] has been reversed by the Hon’ble Delhi High Court, the same case reported in [2013 (12) TMI 607 - DELHI HIGH COURT ].
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2017 (2) TMI 214
Unexplained cash credit addition u/s 68 - Held that:- CIT(A) called for remand report from the Assessing Officer and the Assessing Officer vide letter dated 15.02.13 submitted the remand report after examining the copy of agreement between the assessee and TEMPPL which was taken over by the assessee and he has not disputed the genuineness of the transaction entered into by the assessee. There was no adverse comments by the Assessing Officer regarding these transactions. No infirmity in the order passed by the Ld. CIT(A) in accepting the transactions as genuine. In the remand proceedings also the Assessing Officer has not given any adverse comments on the transaction. The observations of the Ld. CIT(A) were not rebutted. Thus we sustain the order of the Ld. CIT(A) on this issue. - Decided against revenue Disallowance made towards direct expenses - addition u/s.40(a)(ia) - Held that:- in the remand proceedings the Assessing Officer accepted that the assessee has filed the details in respect of the direct expenses of ₹ 53.21 crores and he has objected only to interest on loan of ₹ 39,75,165/- stating that it is an inadmissible amount under section 40(a)(ia) of the Act and the Ld. CIT(A) has restricted the disallowance to this amount. Thus, we do not find any infirmity in the order passed by the Ld. CIT(A) in restricting the disallowance to ₹ 39,75,165/- and deleting the balance disallowance.- Decided against revenue
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2017 (2) TMI 213
Deduction u/s.80IB(4) in respect of Scrap Sales - whether Scrap Sales be treated as income derived from business activity of the industrial undertaking - Held that:- Assessing Officer has been directed to verify this fact that the scrap has direct nexus with the industrial operations thereby implying that to the extent scrap is the nature of by productive industrial operation then the same would qualify for section 80IB of the Act. The appellant has explained his version by letter dated 18.03.2013 which has been mentioned in the order of the CIT(A), however, after furnishing of the details to the Assessing Officer, the Assessing Officer failed to do any exercise to discredit the claim of the assessee. No claim of similar type of industry was compared. The explanation given by the assessee was verified. He further asked the details without verifying the explanation tendered by the assessee. No doubt in the said circumstances the CIT(A) has allowed the claim of the assessee in accordance with law. In view of the said circumstances, we are of the view that the CIT(A) has passed the order judiciously and correctly which is not required to be interfere with at this appellate stage. - Decided against revenue
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2017 (2) TMI 212
Disallowance made u/s 14A - Held that:- We have noticed earlier that the investments held by the assessee included investments made in the subsidiaries, bonds, debentures, growth scheme of mutual funds. The interest from bonds and debentures are not exempt and the growth schemes of mutual funds do not yield any dividend. The investments made in subsidiary companies, according to the assessee, are strategic investments. Further the assessee has submitted that it has carried out few transactions during the year under consideration only in the mutual funds by way of withdrawing money from the brought forward balance. Accordingly it was submitted that the provisions of Rule 8D should not have been mechanically applied under the facts of the present case. We find merit in the above said submissions of the assessee. A.R also submitted that there is no estoppel against the law and hence the assessee could plead for rectification of disallowance wrongly made by the assessee. We agree with the said contentions of the assessee also. The purpose of assessment is to determine the correct total income of the assessee. Hence wrong application of provisions of the Act needs to be corrected in order to arrive at the correct total income. We have noticed that certain vital facts concerning the investments have not been properly dealt with both by the assessee as well as the tax authorities. Hence, we are of the view that the issue relating to disallowance u/s 14A of the Act requires fresh examination at the end of the AO. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining the same afresh.
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2017 (2) TMI 176
Unexplained cash deposits u/s 68 - Held that:- It is noted that Ld. CIT(A) has brought out various contradictions, gaps and loopholes in the confirmation and other evidences filed by the assessee to establish the source of cash received from the aforesaid persons. It was submitted by the Ld. DR that it is a clear case whether the assessee has introduced, its unaccounted income in the form of cash deposits into bank account. In absence of anything brought before us to negate the factual findings and analysis made by Ld. CIT(A), we do not find any reason to make any interference in the order of Ld. CIT(A). The findings recorded by the Ld. CIT(A) are based upon the proper analysis and detailed reasoning and no perversity could be noted by us in the order of the Ld. CIT(A). Under these circumstances, we uphold the order passed by the Ld. CIT(A) and dismiss the grounds raised by the assessee. - Decided against assessee.
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2017 (2) TMI 175
Exemption u/s 54F - addition towards consideration for unsold flats - penalty proceedings u/s 271(1)(c) initiated - Held that:- We find that the assessee had admitted income in respect of development agreement as soon as she came to know that she had to pay tax on development agreement which cannot be termed as concealment of particulars of income, more particularly when she is an illiterate lady not assessed to income tax in the earlier period. The matter would have been different if she had assessed to income tax regularly and filed her return of income for these assessment years under regular provisions of the Act and not admitted capital gains in respect of development agreement in the returns filed for those years. But, the fact is that the assessee is not assessed to income tax and also fact that she had admitted income and filed her return of income disclosing resultant capital gains in pursuance to development agreement and paid taxes, therefore, admission of assessee cannot be considered as concealment of particulars of income or furnishing inaccurate particulars of income. Though there is a slight difference in income admitted by the assessee and income determined by the A.O. for the assessment year 2007-08, this is because of disallowance of exemption claimed u/s 54F towards 4 flats retained by her, which was further supported by case of CIT Vs. K.G. Rukminiamma [2010 (8) TMI 482 - Karnataka High Court] which was followed by the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Syed Ali Adil (2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT). Therefore, we are of the view that there is neither concealment of income nor furnishing inaccurate particulars of income, which warrants levy of penalty u/s 271(1)(c) of the Act. Hence, penalty levied by the A.O. u/s 271(1)(c) of the Act for all the assessment years 2007-08 to 2009-10 is not sustainable, even on merits. - Decided in favour of assessee.
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2017 (2) TMI 174
Benefit of deduction u/s 80IB(10) entitlement - Held that:- Assessee has failed to fulfill the condition of filing of return u/s 139(1) and, therefore, the assessee was not eligible for the benefit of deduction u/s 80IB(10) in view of clear provisions of section 80AC of the Act. Thus, the action of the lower authorities on this issue is upheld. Since we have rejected the claim of the assessee on the preliminary ground, we are not going into the merits of the case at this stage. As a result, appeal of the assessee is dismissed. Deemed dividend u/s 2(22)(e) - advances received by the assessee from a concern in which one of the partners of the assessee firm was holding major share holding - Held that:- Deemed dividend could be assessed only in the hands of the person, who has shareholder in the lender company and not in the hands of the borrowing concern in which such shareholder was member or partner having substantial interest. Since the assessee firm was not shareholder in the lender company, viz. M/s Siroya FM Construction Pvt Ltd, the impugned amount of loan cannot be taxed in the hands of the assessee firm as deemed dividend. See CIT vs Universal Medicare Pvt Ltd [2010 (3) TMI 323 - BOMBAY HIGH COURT] - Decided in favour of assessee
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2017 (2) TMI 173
Disallowance of proportionate interest u/s 36(1)(iii) - non considering the “statement of interest free Fund against interest free Loans & Advances.” - Held that:- Assessee for the first time filed computation of net interest free funds available with it and interest free advances of related parties from no interest was charged. When this was confronted to learned senior DR, she stated that these were never verified by the lower authorities and at this stage it is not possible to verify the same. On this, the learned Counsel for the assessee fairly agreed that the issue can be remanded back to the file of the AO for examination of interest free funds vis-à-vis interest bearing loans on which assessee has claimed interest. In view of these facts, we feel that this issue needs re-consideration at the level of the AO afresh. Needless to say that the AO will not get influenced by earlier assessment order or the order of the CIT(A) because both are set aside. Hence, we direct the AO to examine the evidences afresh “denovo”. Addition invoking the provisions of Section 41(1) - Held that:- The assessee first of all argued that these amounts were outstanding as on the data in his name of Jupiter Shipping Agency and moreover these payments are cleared on 10-12-2010 vide cheque No.549288 issued towards previous year opening amount adjusted against advance payment by Jupiter Shipping Agency. To prove his point, he filed copy of account and payment made by cheque and argued that once the assessee admitted this liability and paid in the subsequent year, this liability cannot be said to have not in existence and ceased to exist. Accordingly, we are of the view that AO has wrongly invoked the provision of section 41(1) of the Act and hence we delete the addition. This issue of assessee’s appeal is allowed. Addition on account of cash payments made to creditor by invoking the provision of Section 40A (3) - Held that:- Assessee before us stated that factually this statement of the AO and CIT(A) is incorrect that assessee has made payment by way of cash exceeding ₹ 20,000/- or more than 20,000/-. The learned Counsel for the assessee stated that copy of Ledger A/c of Thakkar Popatlal Velji Sales Ltd. for the period of 01-04-2009 to 31-03-2010 was never confronted to the assessee. It was also argued by the learned Counsel for the assessee that, in case, opportunity is allowed to assessee and the copy of account is confronted to him, he will answer the queries of the AO. On query from the bench the learned Sr. DR has no objected setting aside the issue to the file of the AO. After hearing both the sides and going through the facts and circumstances of the case, we remand the matter back to the file of AO for fresh examination. Therefore, we set aside the orders of lower authorities and remand the matter back to the file of the AO for fresh adjudication on this issue.
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2017 (2) TMI 172
Validity of the additions made in the assessment order under section 143(3) r.w.s. 153A - LTCG treated as Bogus & Commission paid on bogus LTCG - Held that:- It is not disputed that the issue on which the AO made addition in the post search order of assessment passed under section 143(3) r.w.s 153A of the Act for A.Y. 2006-07, i.e. LTCG treated as bogus cash credit has already been accepted by the AO in the regular order of assessment for A.Y. 2006-07 under section 143(1) of the Act on 25.09.2007, prior to the search. The law mandates that only pending assessment proceedings abate and it is only those years in which proceedings have abated that are to be treated as normal assessment proceedings. For other years, where assessment proceedings have not abated the AO is empowered to make additions only on the basis of evidence, material, information or incriminating documents found in the course of search on an assessee. If as on the date of search, no proceedings are pending for any assessment year and the concerned transactions have been disclosed in the regular books of account prior to the search, additions in respect of such transactions are beyond the scope of assessments to be made under section 153A of the Act and the AO is not empowered to do so. Therefore, in our view, the AO in the case on hand was not empowered by law to make the additions of LTCG treated as bogus cash credit and consequent bogus commission, in the post search assessment as the same was already admittedly disclosed in the original return of income filed for A.Y. 2006-07 which was assessed under section 143(1) of the Act on 25.09.2007 before the search took place on 13.10.2010. Thus AO did not have the power to make the impugned additions of (i) LTCG treated as unexplained cash credits and (ii) Bogus commission expenditure in the absence of any incriminating evidence, documents or material found in this regard in the course of search of this assessee and that consequently, both the aforesaid additions are beyond the scope of the provisions of section 153A of the Act. - Decided in favour of assessee
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2017 (2) TMI 171
Rectification of mistake - eligibility for the benefit of exemption u/s 10(35) upon the dividend income received from mutual funds - whether claim can be denied to the assessee, if the claim of such benefit was not made in the original return, but made through petition u/s 154 only when its need arose as a result of re-computing of income by the AO? - Held that:- AO had himself granted the benefit of exemption and that too u/s 154. Thus, the AO was very much aware of this fact that dividend income of the assessee is eligible for the benefit of exemption u/s 10(35). In our considered view, not granting similar relief by the AO in the year before us, under these circumstances, constitutes a mistake apparent on records. Further, courts have time and again held that if technical considerations are pitted against the substantive justice, it is the latter which prevails. Moreover, article 265 of the Constitution of our country clearly stipulates that no tax can be collected except with the authority of law. Thus, main object of the income tax proceedings is to enable the AO to compute the taxable income and tax payable thereon in accordance with law. The role assigned to the AO by the legislature is quite onerous. Therefore, the AO should not take undue advantage of ignorance of the assessee and should follow a fair approach by allowing legitimate claims of the assessee so that only that amount of tax is recovered from the assessee which is due as per law. The impugned income has been received by the assessee from Kotak Mutual Fund which is duly eligible for the benefit of exemption u/s 10(35). No doubts were raised by the Ld. DR also in this regard before us. Under these circumstances, in our considered opinion, the AO should have granted benefit of exemption to the assessee. - Decided in favour of assessee.
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2017 (2) TMI 170
Bogus purchases - addition made under Section 69C - addition on basis of information gathered by the Sales Tax department - Held that:- There is no material on record to conclusively prove that the purchases made by the Assessee are bogus purchases and nothing is brought on record to suggest that the information gathered by the Sales Tax department conclusively proves that the dealers are providing only the accommodation entries to the Assessee before us, thus we hold that addition made under Section 69C cannot be sustained. At the same time, keeping in view the nature of business of the Assessee and the fact that the assessee is making local purchases without any transportation bills, delivery challans etc., the possibility of the Assessee making purchases in grey market on cash cannot be ruled out. Therefore, keeping in view the facts and circumstances of the case, we direct the Assessing Officer to disallow 2% of the above purchases to meet the anomalies. - Decided partly in favour of assessee
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2017 (2) TMI 169
Penalty u/s. 271(1)(c) - non-recording of proper satisfaction by the Assessing Officer while completing assessment - Held that:- Assessing Officer while completing assessment and making disallowance on each account had stated that penalty under section 271(1)(c) of the Act needs to be initiated and the same was so initiated by issue of notice under section 274 r.w.s. 271(1)(c) of the Act. However, the Assessing Officer has failed to give satisfaction as to which limb of the said section has not been complied with by the assessee. In the absence of the same, proceedings initiated in the case by issue of notice in which inappropriate portion was not struck off, are vitiated. Consequently, penalty order passed in the case is invalid and bad in law. - Decided in favour of assessee.
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2017 (2) TMI 168
Allowability of deduction u/s.80IB(10) - whether the assessee can be called as a “developer” within the meaning of sec.80IB(10) read with Explanation I herein above? - Held that:- The assessee is engaged in the construction work of buildings as a contractor and when the assessee’s job includes only controlling and directing the work of building construction as per plan and design by the land lord and hand over the constructed flats on behalf of the land lord to the eligible flat owners who have got registered undivided right in the property. It is only performed the work as a contractor and the assessee’s job is not included designing the project and selling of the project and the assessee would not get any share in the constructed area and in the undivided property and the assessee cannot be said to have invested its own money to carry on the project. Similar view has been taken by the Tribunal, Indore Bench in the case of M/s. Sky Builders & Developers vs. ITO [2011 (8) TMI 722 - ITAT INDORE ] for the assessment year 2006-07. The assessee is not eligible for deduction u/s.80IB(10) of the Act. The various case law relied on by the ld. AR is not applicable to the facts of the present case, as those judgments were delivered on its own facts - Decided against assessee.
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2017 (2) TMI 167
Disallowance of claim for interest expenditure under section 36(1)(iii) or 14A - Held that:- The borrowing is by way of unsecured loan, so that the same is without any stipulation with regard to the application of funds, and neither has any been stated by either the assessee or the Revenue. The assessee has a net excess of current liabilities over current assets at ₹ 3518.66 lacs as on 31/03/2006. It is this excess, no longer tied in current assets (working capital), so that it provides liquidity, that can be said to fund the investment in shares, besides the depletion in capital by way of debit balance in the profit and loss account. It is only the balance excess which, along with the share capital and the borrowed funds, finance the investment in fixed assets. For the following two years, which are the years under reference, there has been a decline in the borrowed funds, so that there has been in fact a net repayment of borrowings. It is the release of funds from fixed assets (principally through depreciation, a non-cash charge) and further accretion to current liabilities – upon realization of the spontaneous current assets, that provide the funds for investment in shares for the immediately following year, i.e., f.y. 2006-07. No part of the borrowed capital can thus be said as applied for or considered as financing the investment in shares so as to attract any disallowance, either u/s. 36(1)(iii) or u/s. 14A.
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2017 (2) TMI 166
Addition made u/s. 69C - estimation the cost of construction of the plant - adoption of report of DVO - Held that:- The AO had not rejected the books of account of the assessee and no defect has been pointed out as to how the amount capitalised under building account totaling to ₹ 9.06 crores as on 31.3.12 was not reliable. Para-C of page 8 of PB talks of value of the work for which consultancy was to be paid and the estimated cost is mentioned at ₹ 5 crores. Page 10 and 11 of the PB are bills of the architect. In both the bills the amount mentioned is ₹ 5 crores. Pg-17 and 18 is the letter of the architect dt.13.6.13 wherein it had clarified the position about the value of property.It has been specifically mentioned in that letter that total cost of building upto 31.3.10 was Re.3.67crores.Besides,the assessee had given year-wise break up of expenditure made for construction of building and had capitalised the same. The accounts of the assessee were audited. In our opinion,there was no justification after letter of consultant to take the value of the building at ₹ 8 crores. The assessee had obtained a valuation report from a chartered engineer who is also a registered valuer and same was submitted to the FAA. As per the report of the registered valuer the estimated total cost of investment is ₹ 8.79,36,912/-.Thus there is a minor difference of ₹ 36,106/- in the cost of investment shown by the assessee and cost estimated by the registered valuer. Thus restricting the addition to the figure mentioned in the report of the DVO,cannot be held be justifiable. We hold that order of the FAA cannot be endorsed - Decided in favour of the assessee.
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2017 (2) TMI 165
Validity of assessment u/s 153C - Addition based on certain notings on a loose paper found - Held that:- The information sent by the Assessing Officer of the searched person to the Assessing Officer of the assessee was based on certain notings on a loose paper found in the premises of Bharat Shah Group of cases. Quite clearly, even the Assessing Officer of the searched person, as manifested by the information sent to the instant Assessing Officer, which we have extracted above, does not conclude much less makes a charge that the loose papers “belong to” the assessee. There is no averment that loose papers do not belong to the searched person. In fact, even the satisfaction note canvassed by the Ld. Departmental Representative before us, which has been extracted above, does not say that the loose paper belong to a person other than the searched person. At best, the only charge made out is “ that the documents seized relate to theassesseeand that purchase consideration of the properties involve cash element………” At this stage, it would be pertinent to go back to the legal position explained by the Hon'ble Delhi High Court in the case of Pepsico India Holdings (P.) Ltd (2014 (8) TMI 898 - DELHI HIGH COURT) wherein it is held that the expression “relates to” cannot be equated to the expression “belongs to” which finds a mention in section 153C of the Act. Therefore, considering that Revenue has failed to establish that the documents in question do not belong to the searched person, the question of invoking of section 153C of the Act in the hands of the assessee company merely on the strength that the documents being related to it, cannot be justified. We uphold the ultimate conclusion of the CIT(A) annulling the assessment, albeit on the ground that above discussed ingredients of section 153C of the Act have not been satisfied in this case.
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2017 (2) TMI 164
Reopening of assessment - Disallowance of undervaluation of stock - assessee of following FIFO method for valuation of inventory - Held that:- We find that the assessee had submitted complete details showing summary of fabric purchased and sold specifically showing the quantity, rate and value of the opening stock, purchases and closing stock before the authorities below and as such no defect has been pointed out by Revenue accept that FIFO method of valuation of inventory is followed by the assessee on cost basis while the AO followed average method for valuation of inventory. The Revenue has accepted the method followed by the instant assessee consistently for past several years and also for succeeding year and per-se no such contrarian stand of the Revenue was brought on record except for the impugned assessment year by learned DR or authorities below to disprove this contention of the assessee , and also more-so the tax impact is revenue neutral as the closing stock/inventory of the relevant previous year is opening stock/inventory of the immediately succeeding financial year. The assessment order dated 30-11-2010 passed u/s 143(3) of the Act for assessment year 2008-09 in the case of instant assessee wherein no addition has been made by Revenue on account of method of valuation of inventory is placed on record in file. Revenue has not been able to bring on record that how by following FIFO method of valuation of inventory based on cost, the profits of the assessee could not be computed correctly so as that it infringes on Section 145/145A of the Act. Appeal filed by the assessee is allowed.
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2017 (2) TMI 163
Penalty under section 271(1)(c) - assessee was a sick company and under a scheme of revival by the BIFR, the management and shareholding pattern changed hands following which old directors resigned and new directors were inducted on the board of directors of the assessee - additions made by the AO on the basis of audited annual accounts filed by the assessee with the return of income by disallowing all the expenses charged to the profit and loss account - Held that:- After dismissal of quantum appeal by the FAA, the AO mechanically levied penalty without recording any findings that as to how the assessee has concealed the income or filed in accurate particulars of income. Mere making a claim of expenses in the profit and loss account in a case where the accounts of the assessee were audited and also accounts were prepared under professional guidance and advice would not automatically lead to inference that assessee is liable to the penal action u.s 271(1)(c) of the Act. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Therefore, in our opinion the ld.CIT(A) has rightly deleted the penalty imposed by the AO after taking into account the contentions put forth by the assessee vis-a-vis the provisions of the Act by relying on the ratio in the decision of the Reliance Petroproducts Pvt Ltd (2010 (3) TMI 80 - SUPREME COURT ) - Decided in favour of assessee.
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2017 (2) TMI 162
Jurisdiction u/s 153A - search u/s 132 - Held that:- Section 153A would be applicable in the case of the assessee where a search is initiated u/s 132 or books of account, other documents or any asset are requisitioned u/s 132A. The Revenue has not been able to point out that either the search has taken place at the premises of the assessee or books of account or document or any other asset are requisitioned u/s 132A in the case of the assessee. Merely because the search has taken place in the other group companies would not be a ground for taking action u/s 153A in the case of the assessee. For the purpose of taking recourse to Section 153A, search u/s 132 or requisition of document/asset u/s 132A in the case of the assessee is an essential condition. Since the same is not fulfilled, we quash the initiation of proceedings u/s 153A and consequentially, the resultant assessment orders are also quashed. - Decided in favour of assessee
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2017 (2) TMI 161
Commencement of business - construction of dam and canal - Held that:- The special leave petition is dismissed. It wrong to uphold the contention of Revenue that only on completion of work of entire Canal, the assessee’s business can be said to have been set up. In a Project like the “Sardar Sarovar”, there are bound to be different stages where different activities take place and those activities being integral part of business and when they are set up phase wise, the assessee cannot be deprived of the benefits of fiscal legislation in disregard of the well settled principles on the issue. See HC REF - [2016 (6) TMI 597 - GUJARAT HIGH COURT].
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2017 (2) TMI 160
Treatment to income from leasing of furniture, fixtures, plant , machinery and others - income from house property OR business income - Held that:- Respectfully following the ratio laid down in the case of Chennai Properties & Investments Ltd (2015 (5) TMI 46 - SUPREME COURT ) which squarely cover the instant case, we are, therefore, inclined to set aside the order of the ld CIT(A) and direct the AO to treat the income from amenities and infrastructure as business income and allow the consequential claims of depreciation to the assessee.
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2017 (2) TMI 159
Computing long term capital gain - adoption of value of property - reference to DVO - Held that:- The Hon’ble Delhi High Court in the case of CIT V/s. Sadna Gupta [2013 (3) TMI 418 - DELHI HIGH COURT] held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition. Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximately little over 2 per cent of the actual sale consideration, we find no reason for rejecting actual sale consideration mentioned in the Sale Deed for determining long term capital gain. Accordingly, the ground No.1 raised in appeal by the assessee is allowed. The Assessing Officer is directed to adopt actual sale consideration as mentioned in the Sale Deed as a fair market value for determining the long term capital gain. Addition of Part of sale consideration alleged to have been directly paid by purchaser - Held that:- A perusal of the orders of the Authorities below reveal that the Authorities below without verifying the fact whether the amount of ₹ 23 Lacs have actually been paid by the purchaser to the Mr. Mansoor Abdul Gani Aaga and Smt. Shagufta M. Aaga, has out rightly rejected the contentions of assessee. We deem it appropriate to remit the issue back to the file of Assessing Officer for the limited purpose to ascertain whether the amount of ₹ 8 Lacs and ₹ 15 Lacs have been actually received by Mr. Mansoor Abdul Gani Aaga and Smt. Shagufta M. Aaga, as has been mentioned in the Sale Deed. If the said amount has been received by the aforesaid persons, the same is to be allowed as expenditure u/s 48 of the Act in the hands of assessee from total sales consideration. Accordingly, ground No. 2 raised in the appeal by the assessee is allowed for statistical purposes.
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2017 (2) TMI 157
Providing technical services to other airlines - covered by Articles 8(1) and 8(4) of the Double Taxation Avoidance Agreement between India and Germany and by Articles 8(1) and 8(3) of the Double Taxation Avoidance Agreement between India and Netherlands - Held that:- This Court is of opinion that the amplification of the term “operation of aircraft” in Article 8 (1) through Article 8 (3), i.e. “3. For the purposes of this article the term "operation of aircraft" shall include transportation by air of persons, live-stock, goods or mail, carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprise, the incidental lease of aircraft on a charter basis and any other activity directly connected with such transportation.” had the effect of limiting the nature of activities that could be comprehended in the pool envisioned in Article 8 (2): in other words, the expanded meaning of operation of aircraft included those activities in Article 8(3) through the extended definition and no more. On the other hand, there is no such limitation in the DTAAs in question, in these cases. This constituted the most significant difference between the two sets of cases on the one hand, and British Airways (2001 (9) TMI 242 - ITAT DELHI-A ) on the other. For these reasons, this Court rejects the Revenue’s contentions. For the foregoing reasons, this Court answers the questions of law, framed in both sets of appeals, against the Revenue and in favour of the assessees; there is no infirmity in the impugned orders of the ITAT, which are affirmed. The appeals fail and are dismissed.
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Benami Property
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2017 (2) TMI 158
Seizure of Cash in transit - remedy under the Pradhan Mantri Garib Kalyan Yojana, 2016 - adjustment from cash account seized by the department, tax, charge and penalty - Held that:- Writ petition can be disposed of with a direction to respondents not to take any coercive action against the petitioner and he may be granted a permission to take the assistance of a lawyer to be present at visible but not audible distance during his interrogation and recording of statement in connection with said seizure in the instant case or any proceedings consequential thereto. However, prayer of the petitioner for directing unconditional return of the seize amount is hereby rejected. In case, the petitioner submits any application to the Income Tax Department, the authorities can look into matter for the purpose of declaration of undisclosed income by availing the remedy under the PMGKY Scheme. They shall consider the same and pass an appropriate order thereon as it enables the Government to earn straightway 50% of the amount, 25% for depositing of the bonds and 25% to be deposited in the account which shall be released only after 04 years. While releasing the amount after 04 years, the Income Tax Authorities can release the same only when there is no outstanding amount due towards them from the petitioner.
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Customs
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2017 (2) TMI 188
Valuation - Rejection of declared/export value - rejection placing reliance on the market enquiry. Held that: - market enquiry has been done without any involvement of the exporter or CHA. The description taken for exploring the price of the goods is also without any specifics. The difference in value is not so significant. The value of garments depends on the kind of fabric, the nature/ count/ denierage of yarn, the print/colour and size etc. Any comparison without all these factors is not a fair comparison - the said market enquiry cannot be given any credence. These market enquiry reports cannot be relied to discard the export value - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 187
Valuation - misdecaration of value - 15 KVA Fixed Ground Power Unit - contemporaneous import of the identical goods by Indian Air Force - Held that: - It can be seen from the reproduced certificate of the supplier that it categorically states that the supply of goods which are imported is only US $ 3000 and the list price which is enclosed to the said letter also indicates the same - though the adjudicating authority had reasons to reject the declared price due to the documents found in the package, he should not have jumped the gun and adopted as value without going through the Rules sequentially i.e. 4,5,6,7 and 8. If Customs Valuation Rules are applied, the absence of contemporaneous imports with certificate and invoice of the supplier not being controverted, the value which is declared by the appellant needs to be accepted as there is no valid reason for adopting or enhancing the valuation of the imports made by the appellant - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 186
Imposition of redemption fine - misuse of Advance License Scheme - whether the redemption fine is liable to be set aside on the ground that goods liable for confiscation, not available? - Held that: - reliance was placed in the case of National Leather Cloth Manufacturing Company [2015 (8) TMI 1224 - BOMBAY HIGH COURT], where it was held that redemption fine is concept which arises in event goods are available and are to be redeemed. If goods are not available there is no question of redemption of goods - redemption fine set aside, as no goods available for confiscation - appeal dismissed - decided against Revenue.
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2017 (2) TMI 185
Classification of imported goods - Thiourea - confiscation on the ground that the same were insecticide and required import permit issued by the Registration Committee - Held that: - the Registration Committee was held in the Krishi Bhawan in chairmanship of Agricultural Commissioner where the concerned Ministry is of the opinion that if boric acid is used for non-insecticidal purpose, no registration is required under the Insecticide Act, 1968. In other case, however, it may necessary to obtain registration - the appellants are also traders and the imported goods have been used for non-insecticidal purpose - appellants do not require any import permission - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 184
Imposition of penalty u/s 114A of Customs Act, 1962 - failure to specify the name of the firm or individual on whom the penalty u/s 114A of CA, 1962 was fastened - Held that: - penalty u/s 114A is liable to be imposed on the person liable to pay duty as determined in proceedings under section 28 - The importer in the present matter has been identified in the impugned order as ‘noticee’ and has been fastened with differential duty on the enhanced value. Doubtlessly, it is the same entity that is liable to be penalised. There is no requirement for a specific mention of the importer to validate the penalty under section 114A of Customs Act, 1962. The order is not invalidated on that count - imposition of penalty justified. Penalty u/s 112 of CA, 1962 - Held that: - While one penalty has been imposed u/s 114A, the penalty of ₹ 23,70,000/- is without reference to any provision, let alone section 112 as presumed by the appellant. Even if such penalty was imposed u/s 112 of Customs Act, 1962, this is a consequence of holding the goods liable for confiscation u/s 111(m) and the adjudicating Commissioner has rendered a finding for doing so - imposition of penalty presumed to be u/s 112, cannot also be faulted. Imposition of penalty both u/s 114A and u/s 112 of Customs Act, 1962 is not improper - revenue dismissed - decided against revenue.
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2017 (2) TMI 183
Interest on delayed refund of redemption fine - Section 27 Customs Act, 1962 - Held that: - there is only one provision for refund of duty which is incorporated in Section 27 of the said Act - the ld. Assistant Commissioner has allowed the refund of ₹ 10,00,000/-, which was appropriated as Redemption Fine through his order dated 23/12/2003. We understand that such order was issued under the powers vested under ld. Deputy Commissioner under Section 27 of Customs Act, 1962. That being so the argument of the Revenue that provisions of Section 27A of Customs Act, 1962 are not applicable for delayed refund of Redemption Fine is contradictory to the order already passed by the ld. Deputy Commissioner, which was not challenged by Revenue - appeal dismissed - decided against Revenue.
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2017 (2) TMI 182
Jurisdiction - whether the Commissioner of Appeals holds the same rank as the Joint Secretary to GOI? - Held that: - the Commissioner of Appeals and the Joint Secretary of the GOI, who exercised the power of the revisional authority, hold the same rank - the impugned order is set aside, with liberty to the GOI to pass a fresh order within a period of 8 weeks from the date of receipt of a copy of the order, after corrective measures are taken - petition disposed off.
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2017 (2) TMI 181
Maintainability of appeal - The ld.Advocate for the appellants strongly challenged the impugned order passed by the ld.Commissioner (Appeals), wherein she has deleted the last paragraph of the Order-in-Original, which was very aptly mentioned by the adjudicating authority by passing the order, since the matter is pending before the Hon’ble High Court of Patna, he vehemently argued that the impugned order needs to be set aside - Held that: - The Revenue instead of pursuing the case before the Hon’ble High Court, proceeded to pass a review order and thereby filed appeal before the lower appellate authority, which is disrespect to the judicial process - appeal dismissed as infructuous
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2017 (2) TMI 140
Concessional rate of duty - Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods - the appellant exported 8,254 Nos. of LCD Panels on which the exemption under the said Notification was allowed at the time of importation wherein duty forgone under the claim of said Notification was ₹ 78,53,643/-. It appeared to Revenue that under Rule 8 of said Rule 8,254 Nos. of LCD Panels were not accounted for by the appellant and therefore ₹ 78,53,643/- was recoverable from appellant u/r 8 of the said Rules. Held that: - for the period subsequent to the period of SCN the said Rules were amended wherein it was provided that the imported goods which could not be utilized can be re-exported. Though the said provision was not applicable to the period for which the SCN was issued, the principle involved in the said provision should be applicable for all the material periods. It may be reasonable that if the goods on importation are re-exported, as such then they should be treated as if were never imported. In that event, Rule 8 of the said Rules will not be applicable - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 139
Confiscation - Import of prohibited item - 6 articles made of “Crocodylus Porosus leather” - “Crocodylus Porosus” is listed in Schedule-I of Wild Life (Protection) Act, 1972 and as per the provisions of import policy, import of wild animal and its parts/products are prohibited - Held that: - reliance placed in the case of Entrack International Trading (P) Ltd. [2005 (5) TMI 226 - CESTAT, NEW DELH], where it was seen that the crocodiles of variety at S.No.2 & 3 are not covered by wildlife Act. However, Sl.No.1 of the list is covered - In the instant case goods made from crocodiles of variety at Sl.No.1 are covered by Wildlife Act and are prohibited. The order-in-original permitted re-export of these items. No confiscation was ordered in order-in-original. The Revenue had not challenged the said order before the Commissioner (Appeals). Thus, the Revenue cannot now seek confiscation of these goods. Appeal rejected - decided against Revenue.
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2017 (2) TMI 138
Valuation - rejection of declared value on the ground that there being contemporaneous imports of the same products from the same supplier during the relevant period - whether the lower authorities were correct in enhancing the value of EUDRAGIT-l 30d-55 (Methacynic Acid Co-Polymer) from EURO 5.65 per Kg. (CIF) to EURO 8.95 per Kg? - Held that: - there is definitely substantial difference in the quantity imported by the appellant and another importer. The sheer quantity advantage that appellant has on import of such chemicals could have also influenced the price as the quantity of 480 Kgs. imported by another importer being 25% of quantity imported the same supplier could have charged more. The adjudicating authority has not brought on record the correct facts of the contemporaneous imports, hence in our view, rejection of declaration price herein needs to be set aside. The declared price has to be accepted - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 137
Project import - denial of benefit of Project Import Regulation 1986 on the ground that the respondent have not submitted the required documents - Held that: - it is not the case where the respondent has not submitted the documents. They have submitted reconciliation statement along with invoice and other documents. Therefore Ld. Commissioner (Appeals) has rightly observed that whatsoever document submitted by the respondent are sufficient and in compliance to the Rule 7 of the Project Import Regulation 1986 - benefit allowed - appeal dismissed - decided against Revenue.
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2017 (2) TMI 136
Classification of imported goods - Nigerian origin teak rough square logs - classified under heading 4403.4910 or under heading 4407 as "sawn teak wood"? - Held that: - heading 4403 is for rough wood and it only states that rough wood, whether or not stripped of bark or sapwood, or roughly squared, while heading 4407 states wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or end-jointed, of a thickness exceeding 6 mm. The examination report states that some of the samples which were examined by the Committee indicates that the dimensions as mentioned in the report and not the physical condition, whether any bark was apparent on any logs or otherwise - It is also seen from the records of the examination report that the report also talks about presence of bark on one side in few of the logs which are imported - the classification of the imported goods under heading 4403 are well reasoned one - appeal rejected - decided against Revenue.
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2017 (2) TMI 135
Classification of imported goods - Omnical Calcium Nitrate Solution Grade Fertilizer for Agriculture use - classified under CTH 31059090 or under CTH 31026000? - the goods mainly composed of calcium nitrate with small amount of Ammonium Nitrate and that may find use as 'fertilizer'. That creates doubt on the classification sought by appellant for which Revenue's claim was examined - Held that: - The goods called to be 'fertilizer' that should have nitrogen content. But imported goods had predominant composition of calcium nitrate which shall neither subscribe to CTH 31059090 nor to 31026000. The goods imported fall under this head and more particularly classifiable and under "residuary" head i.e. CTH 283429 90 since the goods does not belong to "Strontium Nitrate (28342910) or Magnesium Nitrate (28342920) or Barium Nitrate (28342930) family. It is nitrates of 'other' kind falling under CTH 28342990 - classification sought by Revenue is appropriate - appeal dismissed - decided in favor of Revenue.
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2017 (2) TMI 134
Undervaluation of the goods imported - ICs, transistors etc. - Held that: - the respondents have produced documentary evidence of contemporaneous imports by other importer, which was verified by him and he noticed the value declared by the respondent were consistent with value declared by others; adjudicating authority correctly records that statements lacks credibility due to contemporaneous evidence, we agree this findings - even if assuming that the statements are to be relied, and there was undervaluation, the provisions of Customs Valuation Rules needs to be followed which would mean that Rule 5 & Rule 6 of the Valuation Rules needs to be applied which contemplates for the application of contemporaneous value; which adjudicating authority has done so, we have no hesitation in upholding the findings of the adjudicating authority. The impugned order is correct, legal and does not suffer from any infirmity - appeal rejected - decided against revenue.
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2017 (2) TMI 133
Confiscation of currency u/s 121 of the CA, 1962 - imposition of penalty - export under DEEC - misdeclaration of description goods - more currencies found in the premises - Held that: - It is difficult to believe that anybody in the dock would put currency in such large amounts in the pallet belonging to the appellant without his knowledge. Anybody putting such money would be interested in getting the same back when the container reaches its destination. It cannot be done without the connivance and the help of the exporter and the consignee. Moreover, the currency has been found on more than one occasions in the export consignments. Imposition of separate penalties on the company and the director - Held that: - There is no bar on the imposition of separate penalty on the company and the director - the director has played significant role and therefore penalty has been rightly imposed. Appeal rejected - decided against appellant.
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2017 (2) TMI 132
Imposition of penalty u/s 112 and 114A of the CA, 1962 - whether the penalties are sustainable on co-noticees, when the penalty on main appellant is set aside? - Held that: - the case of the main appellant Smt. Sunetra Ajit Pawar has been settled by the settlement commissioner vide Final order No.115/Final-Order/Cus/RKT/2012 dated 19-10-2012. Therefore other co-noticee in the same case should not be charged with any penalty. By the settling the case of the main person, case of other co-noticee also stand settled - penalty set aside - appeal allowed - decided in favor of appellants.
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2017 (2) TMI 127
Imposition of penalties u/s 112 of the CA, 1962 - no steps shall be taken for realisation of the aforesaid penalties from the two petitioners without obtaining leave of this Court till 31st March, 2017 or until further orders, whichever is earlier - Let affidavit-in-opposition be filed by three weeks after vacation; reply, if any, thereto may be filed by a week thereafter - petition put up for hearing.
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Corporate Laws
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2017 (2) TMI 129
Scheme of amalgamation - Held that:- In view of the approval accorded by the shareholders and creditors of the Petitioner Companies and the representation/affidavit filed by the Regional Director, and the report of the OL, raising no objections to the proposed Scheme; there appears to be no impediment to grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme the provisions of section 391 to 394 of the Act. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the proposed scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioner Companies. It is made clear, that this order shall not be construed as an order granting exemption, inter alia, from, payment of stamp duty or, taxes or, any other charges, if, payable, as per the relevant provisions of law or, from any applicable permissions that may have to be obtained or, even compliances that may have to be made, as per the mandate of law.
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2017 (2) TMI 128
Scheme of Amalgamation - Held that:- Considering the approval accorded by the shareholders and creditors of the Petitioner Companies to the proposed scheme; the affidavit filed by the Regional Director, Northern Region and the report filed by the Official Liquidator, not raising any objection to the proposed scheme, there appears to be no impediment to the grant of sanction to the proposed scheme. Consequently, sanction is hereby granted to the proposed scheme. The Petitioner Companies will comply with all the statutory requirements in accordance with law. Upon the sanction becoming effective from the appointed date of the proposed scheme i.e. 1st April, 2015, the Transferor Company Nos.1 to 5 shall stand dissolved without undergoing the process of winding up. A certified copy of the order, sanctioning the proposed scheme, be filed with the Registrar of Companies, within 30 days of its receipt. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the proposed scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioner Companies.
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Service Tax
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2017 (2) TMI 211
Levy of tax - the respondent is not involved in designing, visualizing, conceptualizing of the advertisements, and that the respondent was just engaged in printing the advertising materials provided to him by his client and was also performing additional work of installing same at the places already decided by his clients - whether the respondent is liable to pay service tax? Held that: - for the period earlier than the period of present SCN the same respondent was issued with a SCN on the same grounds and ultimately the matter reached before this Tribunal and this Tribunal in the case of M/s Avon Awning Versus Commissioner of Central Excise & S. Tax, Ghaziabad [2016 (10) TMI 683 - CESTAT ALLAHABAD], has held that for the activities stated in the said show-cause-notice the respondent was not liable for levy of Service Tax - the activity covered by the present appeal is not liable for levy of Service Tax - appeal dismissed - decided against Revenue.
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2017 (2) TMI 210
Commission received as sub-broker - whether the activity of sub-broker in relation of sale or purchase of security comes under Business Auxiliary Service? - Held that: - reliance placed in the case of Commissioner of Central Excise, Kanpur Vs P.K. Khandelwal & Company and others [2016 (1) TMI 391 - CESTAT ALLAHABAD], where it was held that when the main broker has paid service tax then the commission received by the sub-broker shall not be subjected to levy of Service Tax. The sub-broker who received commission from the main broker while main broker has paid the service tax on commission received by him cannot be once again subjected to service tax - appeal dismissed - decided against Appellant-Revenue.
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2017 (2) TMI 209
CENVAT credit - courier agency service - various input services - catering service - refreshment expense - event/facilitation/conference room expenses - membership charges - hotel expenses/hotel services/travel accommodation - entertainment service - life insurance charges - parking services - banquet hall charges - conduct services - denial on the ground that the services are not input services u/r 2(l) of CCR, 2004 - Held that: - all these services on which CENVAT credit has been denied fall in the definition of input service prior to its amendment on 1.4.2011 - Reliance placed in the case of Coca Cola India Pvt. Ltd. vs. CCE [2009 (8) TMI 50 - BOMBAY HIGH COURT]. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 208
Imposition of penalties u/s 76, 77 and 78 of the Finance Act - the appellant has discharged the entire service tax liability for the period 18.04.2006 to 31.07.2010 along with interest thereof during the course of investigation itself - whether imposition of penalty justified? - Held that: - appellant has already paid entire tax liability along with interest hence the provisions of Section 73(3) of the FA, 1994 gets attracted in this case - SCN for penalties should not have been issued. The appellant could have availed the CENVAT credit of the service tax paid under reverse charge mechanism, which would mean that there may be no intention on the part of the appellant not to discharge the service tax liability on the amount paid as royalty and technical know-how fees. Revenue neutrality is a defence that could be claimed for non-imposition of penalty. The authorities need not have issued any SCN u/s 73(i) of the FA, 1994 to the appellant for imposition of penalties - penalties set aside - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 156
Validity of SCN - an error in the invocation of provisions - Section 11A of Central Excise Act, 1944 invoked to raise demand under service tax - Held that: - Revenue cannot enjoy the benefit of mistake committed in invocation of provisions of law. In the show cause notice there has been an error in invocation of proper provisions for demand of service tax. Section 11A of Central Excise Act, 1944 has been invocated in the said show cause notice and said Section 11A does not authorize Central Excise office to demand Service Tax - SCN not sustainable - appeal allowed - decided in favor of assessee.
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2017 (2) TMI 155
Reversal of CENVAT credit - service tax paid by utilising the cenvat credit availed from a common pool - whether an assessee is a manufacturer as well as service provider can maintain a consolidated cenvat account in respect of input and input services used for both the activities and pay the excise duty and service tax from such consolidated account? - Held that: - the credit of either excise duty paid on input or service tax paid on the input services have been termed as cenvat credit and the said cenvat credit is allowed to be utilised either for payment of excise duty or for payment of service tax. In the said provisions, there is no explicit condition that for manufacture and services separate account has to be maintained. Therefore in the absence of any such restriction or prohibition, the assessee is free to maintain a consolidated cenvat account and discharge the excise duty as well as the service tax liability from such common pool. The Board in the letter F.No. 381/23/2010/862 dated 30.03.2010 states that the utilisation of cenvat credit from common pool for payment of excise duty and/or service tax is permissible. The respondent has rightly paid the service tax from a common pool of cenvat credit - appeal dismissed - decided against Revenue-appellant.
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2017 (2) TMI 154
Levy of tax - commission received from the multiple/chain marketing of products - time limitation - Held that: - the service tax liability for the amount as commission/consideration by appellant by operating multiple/chain marketing system is clearly taxable under Business Auxiliary Service as held by the Tribunal in the case of Charanjeet Singh Khanuja [2015 (6) TMI 585 - CESTAT NEW DELHI] - demand of tax confirmed. Time limitation - the SCN is issued on 18.08.2009 demanding service tax for the period May 2006 to October 2008 - Held that: - extended period cannot be invoked for the demand of service tax liability on the amount received as commission from multiple/chain marketing system - the service tax liability within the period of limitation from the date of issuance of SCN is liable to be paid along with interest. Levy of tax - amount of profit in trading activity - Held that: - being trading activity during the relevant period was not taxable under the Business Auxiliary Service as the appellant was undertaking the purchase and sale of goods of M/s. Amway - no levy of tax. Imposition of penalties - Held that: - the appellant had justified the case for non-discharging of tax liability. Accordingly, the penalties imposed on the appellant are set aside. Appeal disposed off - decided partly in favor of assessee.
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2017 (2) TMI 153
Closure of proceedings u/s 73(3) of the FA, 1994 - imposition of penalty u/s 77 and 78 - the amount of Service Tax liability under the reverse charge mechanism along with interest, on being pointed out by the audit party, has been paid by the appellants - whether the provisions of Section 73(3) would directly apply the case in hand? Held that: - The provisions of Section 73(3) are very clear, provides for non-issue of show-cause notice if Service Tax liability along with interest is discharged by the assessee on being pointed out by the Officer - Revenue authorities have misdirected themselves by wrongly issuing notice and not following the provisions of Section 73(3) in this case. Reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX Versus M/s ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [2011 (9) TMI 114 - KARNATAKA HIGH COURT]. Penalty set aside - appeal allowed - decided in favor of assessee.
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2017 (2) TMI 152
Refund claim - CENVAT credit on exported services - denial on account of lack of nexus - Held that: - the clarification issued by the CBE&C vide Circular dated 19.1.2010 states that if availment of credit of the Service Tax has not been challenged, the nexus between input services and the export services cannot be challenged - refund allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (2) TMI 207
Cenvat credit - input or capital goods - Held that: - I find that the details were submitted by the appellants before the Original Authority in the form of Annexure - D & Annexure - G to the reply dated 27/03/2008 to the said Show Cause Notice - I therefore remand the matter to the Original Authority with a direction to him to examine the submissions in form of Annexure - D & Annexure - G annexed to reply dated 27/03/2008 to the said Show Cause Notice and also take into consideration the submission before him that the credit of ₹ 8,63,764/- was already reversed and decide the issue afresh after giving opportunity of hearing to the appellant - Appeal allowed by way of remand.
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2017 (2) TMI 206
Refund - Unutilized cenvat credit - Outward transportation - Rule 5 of Cenvat Credit Rules, 2004 - Held that: - It was held in number of cases, in case of exports the place of removal stands extended to the port of export as the ownership of the export goods remains with the exporter till the goods is shipped and sailed to foreign country from the port. Therefore, the port being a place of removal the cenvat credit in respect of GTA from factory to the port of export is clearly admissible - Appeal allowed.
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2017 (2) TMI 205
Refund - equalized freight - Held that: - The lower authorities have examined the facts at length before arriving at the decision to reject the claim for refund. No evidence has been submitted that the ‘equalized freight’ now clamed as excludible is not the equalized freight claimed as deduction for transfer from factory to depot which, in the light of the amendment supra, is liable to be included in assessable value - Appeal dismissed.
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2017 (2) TMI 204
Reversal of cenvat credit - Suo motu credit of the CENVAT credit - Loss of stock due to fire - Interest - Penalty - Hon'ble High Court of Karnataka in the case of Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] on the issue of availment of suo motu credit held as under The Tribunal, after noticing the material facts has chosen to allow the claim on the basis that the amount paid by mistake cannot be termed as duty in the case on hand. Hon'ble High Court of Madras in the case of ICMC Corporation Ltd. [2014 (1) TMI 1473 - MADRAS HIGH COURT] on the issue of availing of suo motu credit held as under Held that:- assessee originally availed the Cenvat Credit on service tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. Appeal allowed.
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2017 (2) TMI 203
Application of remission - Wastage of molasses of 10710.50 qtls. due to natural loss/evaporation was less than 2% of the total quantity of molasses 6,15,913.50 qtls - circular letter no. 261/15/82-CD-8 dated 18.7.1983 and Rule 8(4) of U.P. Sheera Niyantran Niyamawali 1974 - Held that: - In absence of any such allegation as also any statutory provision providing that the period of "a year" will not include part of year, if loss is less than two per cent, which has caused due to natural reasons, in our view remission could not have been disallowed allowed to assess - In absence of any law otherwise taking a different view, we are clearly of the view that plain and simple interpretation should be given to Rule 8(4) of Rules, 1974 which permits remission in case loss is less than 2 per cent within the period of a year which includes ''part of a year' also - Decided in favor of the assessee.
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2017 (2) TMI 202
Assessable value - Quantification of average freight - Held that: - We find from the Chartered Accountant certificate that Chartered Accountant taken actual annual turnover and total insurance freight during the year and accordingly arrived at the percentage of freight i.e. 1.95%. We find that the Chartered Accountant certificate is absolutely correct and we have no hesitation in discarding the method adopted by the Revenue by taking the lowest freight and insurance - Appeal allowed.
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2017 (2) TMI 201
Whether the Tribunal rightly dismissed the appeals on the ground of limitation? - Held that: - The appellant’s case however is that there was in fact no delay for the period of limitation commences not from the date of order but from the date of the receipt of the decision or order. The petitioner contends that the order was received only on 07.01.2013. If that is so, the appeal will be within time. The order was admittedly sent by RPAD. It is reasonable to presume that the same would not have been received by the assessee on the same date - It is reasonable to presume that in the ordinary course of post, a letter sent RPAD would have been delivered three days later. The next issue which arises only in CEA No.41 of 2016 is whether the appeal ought to have been filed under the Finance Act or under the Central Excise Act? The appellant is at liberty to agitate that issue also afresh before the Commissioner (Appeals) who is the appellate authority under both the Acts - Appeal dosposed of.
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2017 (2) TMI 200
Application of rectification - time limitation - Held that: - the decision of the Hon’ble Supreme Court in the case of D. Saibaba Vs. Bar Council of India reported in [2003 (5) TMI 508 - SUPREME COURT], it is observed and held that the period of limitation shall commence from the date of dispatch of the order and not from the date of actual passing of the order - The matter is remanded to the learned CESTAT to decide the rectification application afresh in accordance with law and on its own merits treating the same to have been filed within the period of limitation - Decided in favor of the assessee.
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2017 (2) TMI 199
Reversal of CENVAT credit - Rule 6 of Cenvat Credit Rules, 2002 - appellant cleared various consignments, availing exemption under N/N. 6/2002-CE dated 1-3-2002, At the time of clearance of the goods they have reversed the Cenvat credit attributed to the input used in the manufacture of exempted goods - whether the demand on the ground that appellant was suppose to pay 8% of the value of the exempted goods in terms of Rule 6 of CCR, 2002, justified? Held that: - demand is barred by limitation as the show cause notice was issued after one year. I also observed that since the appellant had been reversing the credit at the time of clearance of the goods on pro rata basis no further demand under Rule 6 can be made - Hon’ble Supreme Court in case of Commissioner of C. Ex. Mumbai-I Bombay Dying and Manufacturing Co. Ltd [2007 (8) TMI 2 - Supreme Court] held that in case of reversal of credit even if made after clearance of the goods before utilization of the credit i.e. sufficient requirement. The appellant was not required to pay 8% of the value of the exempted goods - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 198
Manufacture - cutting of jumbo rolls whether amounts to manufacture or not - CENVAT credit denied on the ground that the process does not amount to manufacture - Held that: - the Tribunal in the case of Fine Packaging Pvt. Ltd [2016 (3) TMI 801 - CESTAT MUMBAI] in the identical case, has held that Cenvat credit on the inputs used in the process which does not amount to manufacture, is admissible - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 197
Unjust enrichment - refund claim - denial on the ground that the appellant could not show that he has not transferred the burden upon Consumers or third parties - Held that: - reliance was placed in the case of UOI Vs. A.K. Spintex [2008 (11) TMI 89 - RAJASTHAN HIGH COURT ], where it was held that the presumption under Section 12-B is a rebuttable presumption and once the assessee produces evidence in support of his claim of having not passed on the incidence of duty whose refund is claimed to the customers, the burden of proof would shift to the Department to prove that the claim of the assessee is false - rejection of refund claim on the ground of doctrine of unjust enrichment is not legal and proper. Appeal dismissed - decided against appellant.
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2017 (2) TMI 196
CENVAT credit - Rule 3(5) of CCR, 2004 - removal of base oil - Held that: - it is clear that it was required to pay duty on the removal of input as such equivalent to the Cenvat credit availed by them therefore, when no education cess was paid on input at the time of procurement, no further education cess required to be paid at the time of removal of same input. Moreover, even in case of manufactured of goods, if the goods are manufactured prior to enactment of the imposition of education cess, on such manufactured goods, even if cleared after enactment, will not attract education cess. The input were manufactured prior to imposition of education cess in the Budget of 2004, for this reason also demand of education cess on removal of input as such is not correct - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 194
Clandestine clearance - Penalty - Rule 25 of the CER - Held that: - It is apparent that no notice was given to the appellants before changing the method adopted for estimating the value of clearances. We find that while appellants were contesting the calculation, the method adopted in order-in-original was not suggested by appellants. In these circumstances, We find that the impugned order cannot be sustained as it is not only provides a new method of estimation but also discards the method suggested in the notice. While there is a reasonable evidence of clandestine clearances, still the impugned order cannot be sustained as it travels well beyond the notice in the manner of estimation - Appeal allowed.
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2017 (2) TMI 193
Cenvat credit - Penalty - Rule 26 of Central Excise Rules, 2002 - Held that: - I find that in respect of recovery of Cenvat credit of ₹ 1,87,056/- & ₹ 1,48,431/-, I accept the arguments putforth by counsel for M/s Manohar Lal Hira Lal Ltd. that there were no allegations in the said Show Cause Notice that the inputs were non-duty paid that the inputs were not received in the factory that the inputs were not issued for production. It is settled law that if there are no allegations about duty paid nature of inputs, inputs having received in factory and issued for production, Cenvat credit cannot be denied. I also accept the arguments putforth by counsel for M/s Manohar Lal Hira Lal Ltd. that demand of Central Excise duty of ₹ 3,47,575/- was worked out on the goods which had not reached RG-1 stage. Therefore, I set aside that part of the order of Commissioner (Appeals) through which confirmation of demand of ₹ 3,47,575/- was upheld - decided in favor of the assessee.
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2017 (2) TMI 192
Jurisdisction of CESTAT - Reduction of penalty - 209A of Central Excise Act - 100% EOU - it is the case of the Revenue that no raw material (i.e. yarn of different qualities purchased by the Appellant from 14 suppliers) came into the Appellant's EOU for manufacture of fabrics during the period 1995-1998 - We find considerable force in the argument of Mr Shroff that the Revenue and the Tribunal have totally ignored and/or brushed aside all the documentary evidence that was produced by the Appellant to negate the aforesaid contention. On carefully going through the documentary evidence, we find that all the statutory registers which were maintained by the Appellant, were countersigned by the Excise Inspectors. Further, when a detailed panchanama was drawn up at the time of stock verification (during the raid conducted), the same indicates that there was no real discrepancy between the stock and the statutory register. Looking at all this evidence that has been recorded of the Excise Inspectors themselves, what is clear is that the same is in tune with the documentary evidence - We find that no person has given any statement under section 14 of the Act that the goods were diverted nor any such duty free goods were seized by the Revenue outside the factory of the Appellant - the allegation of diversion was not based on any concrete material but rather only on suspicion and without any real basis. In light of this oral and documentary evidence, we find that the allegation / contention of the Department that the raw materials bought by the Appellant from 14 suppliers was diverted and never brought to the Appellant's factory, cannot be sustained. None of these decisions lay down any law which would enable the CESTAT or the authorities below to ignore documentary evidence and only rely upon the oral statements made by the transporters of the 14 suppliers as well as the estranged brother of one of the Directors of the Appellant - Appeal disposed off.
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2017 (2) TMI 191
Credit of NCCD on POY - Held that: - I find that show-cause notice has been issued for wrong availment and utilization of the credit taken of NCCD. So far as the availment of credit is concerned, the issue is covered by the decision of the Tribunal in the case of Silvassa Industries Pvt. Ltd. [2005 (12) TMI 136 - CESTAT, MUMBAI] wherein it was held that Firstly, PTY cannot be considered as exempted goods as other duties are imposable on the same. Secondly, if PTY is exported, the appellants would be entitled to use NCCD credit or get a refund of the same. NCCD credit can and has also been utilized on clearance of POY itself - Appeal dismissed - decided in favor of the assessee.
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2017 (2) TMI 190
Deanial of SSI exemption - Notification No. 9/2003-CE dt. 1.3.2003 - Held that: - we find that the lower authority denied the small scale exemption to the appellant only on the ground that the condition of filing the option letter provided in the notification was not complied with by the appellant - In our view non-filing of option letter is procedural requirement and for the same substantial benefit of SSI exemption cannot be denied to the appellant. The option letter is only intimation to the department and no further action either from the appellant or from the department is required as the said option letter is merely procedural requirement - Appeal allowed.
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2017 (2) TMI 189
Under-valuation - Penalty - Rule 173 C (11) of erstwhile CER, 1944 - The demand was confirmed by taking the highest price of one of the buyer and that price was applied in all the cases - Held that: - On going through the sample invoices shown by the learned Counsel, we observed that every machine has different specifications and there are clear variation in all the machines supplied by the appellant. It is also observed that there is no case of the Revenue that by undervaluing the goods, the appellants have recovered some extra consideration towards the sale of the various sub-assembly of the injection moulding machine - Appeal allowed - decided in favor of the assessee.
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2017 (2) TMI 151
SSI exemption - Leather manufactured by appellant was attracting nil rate of duty. During the period from 01.04.2003 to 20.08.2003 value of clearance at nil rate of duty happened to be ₹ 12,34,763.98/-. Therefore, it appears to revenue that the appellant was not entitled to said exemption under N/N. 08/2003 with effect from 01.04.2003 - demand of duty with penalty u/r 25 - Held that: - the confirmation of demand in the said Original Order is as per law - However, the duty was deposited much before the issuance of SCN. Therefore, intentions to evade duty do not get establish. In view of that the penalty imposed through the Order-in-Original under Rule 25 of Central Excise Rules, 2002 set aside - appeal disposed off - decided partly in favor of assessee.
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2017 (2) TMI 150
Application for stay of recovery - CENVAT credit - vacuum circuit breakers - forged invoices - Held that: - the goods in question are highly specialized material, viz., 'vacuum circuit breakers' which are utilised by a limited number of manufacturers of switch gear panels. There is no doubt that the appellant is part of a corporate group who are one of the few manufacturers of 'switch gear panels' and that such switch gear panels are rarely of a standard design that are amenable to multiple uses. There is also no allegation that the 'vacuum circuit breakers' have not been manufactured by the appellant - investigation and the impugned order have not ventured to ascertain if any of the 'vacuum circuit breakers' allegedly diverted could be utilised elsewhere and thus furnish a motive for the alleged misdemeanour. The recovery of duty, interest and penalties in the impugned order stayed.
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2017 (2) TMI 149
Use of waste material - Isobutyl Benzene, by-product in the form of spent water and propylene - whether these used propylene falls under chapter sub heading 2711.19 and attracts excise duty? - Held that: - merely because waste material is put to some use, the same cannot be held to be excisable unless a requisite market for the same is shown by the revenue - appeal dismissed - decided against Revenue.
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2017 (2) TMI 148
Valuation - goods cleared for export, and not exported - appellant have discharged duty on the lower price than the price declared in the AR4 - Held that: - value of the goods which was meant for export was declared in AR4. The appellant have cleared the goods for export under bond and as per the terms of the bond duty confirmed is required to be recovered if the goods are not exported, therefore applying the terms of the bond the only duty which is payable on the price declared on the AR4 is recoverable. The price at which the goods were actually sold by the appellant cannot be considered as correct price for the purpose of discharging the excise duty - the adjudicating authority have applied the price of ₹ 6000 PMT however no basis of price was given. The said price is arbitrary and cannot be accepted. The appellant is required to discharge the duty on the price declared in the AR4 and not on the value as applied by the department in the adjudication order i.e. ₹ 6000 PMT - the demand is required to be re-quantified - appeal disposed off - decided partly in favor of appellant.
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2017 (2) TMI 147
Classification of welding transformers and welding rectifiers - Held that: - chapter heading 8468 is meant for welding machine. With regard to transformer, there is a specific entry provided under Chapter 8504. It is settled law that when the specific entry in the tariff is provided that will be given preference therefore welding transformer even though used for welding purpose it merit classification under Chapter 8504 - Appeal allowed.
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2017 (2) TMI 146
Reversal of Cenvat credit - M.S. Angles, M.S. Channels etc - Input or capital goods - Held that: - I find that during the material period there was no intention to take inadmissible Cenvat credit because provision prohibiting such credit was not on the Statute before 06/07/2009. Therefore, there was no intention to avail inadmissible Cenvat credit and since intention could not be established proviso to Sub-section 1 of Section 11A of Central Excise Act, 1944 was not invokable in the present case - Appeal allowed.
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2017 (2) TMI 145
CENVAT credit - Rule 3 (5) of CCR - supplier initially received the duty paid inputs and taken the credit and subsequently supply the same to the appellant and duty was debited in the RG 23 Part II register - denial on the ground that entry was not recorded in RG 23 Register of the supplier - Held that: - no evidence was produced by the appellant to the effect that the same input was received by the supplier and credit was availed thereof and in their RG 23 Part II register. Without this evidence it is difficult to accept that the removal of input by the supplier is u/r 3(5) of CCR - Ld. Counsel in his argument submitted that appellant will approach the supplier and try to get the proof of taking the credit and receipt of the input by the supplier. In the interest of justice one opportunity can be given to the appellant to submit the documents as discussed above to prove that input supplied by the supplier and duty passed thereon is against input initially received by them and credit thereof was taken - appeal allowed by way of remand.
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2017 (2) TMI 144
CENVAT credit - non-existent supplier - forged invoices - Held that: - The scheme of Cenvat Credit is that buyer of inputs/capital goods receives the excisable items along with invoices evidencing payment of duty and immediately thereafter is allowed to take Cenvat Credit of the excise duty so paid. It is not expected that the buyer will carry out verification of the Accounts of the supplier to find out whether the Central Excise duty has actually been paid on the inputs / capital goods. Cenvat Credit has been availed on the basis of invoices issued by the supplier. No evidence found on record establishing that excise duty has not been paid by the supplier on the capital goods. There is nothing on record to show that the goods have not been received in the factory of the appellant - denial of credit not justified. Whether the allegation against the supplier that no goods were manufactured at their factory is correct? - Held that: - reliance placed in the decision of the case of CCE Vs. Juhi Alloys Ltd. [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT], where The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. Appeal allowed - decided in favor of appellant.
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2017 (2) TMI 143
Refund of balance of MODVAT credit - rule 5 of CCR - rejection on the ground that the said rule 5 is applicable only in relation to inputs procured for manufacture of goods that were exported - Time limitation - Held that: - this proceeding is limited to determining whether the furnishing of stock register mandated by statute is sufficient evidence of credit having been properly availed - the stock register should suffice as proof of eligibility to avail credit is accepted. Reliance placed in the case of Punjab Beverages (P) Ltd v, Collector o Central Excise, Chandigarh [2000 (2) TMI 134 - CEGAT, COURT NO. I, NEW DELHI], where it was held that non-production of documents by the appellants will not come in their way of getting the refund of the duty. The original authority is directed to ascertain and process the claim accordingly - appeal allowed - decided in favor of appellant.
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2017 (2) TMI 142
Maintainability of appeal - Second proviso to Section 35B of Central Excise Act, 1944 - monetary limit for filing appeal - Held that: - In view of Second proviso to Section 35B (1), this Tribunal has discretion to refuse of to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/- (before 6/8/2014) and ₹ 2 Lakhs (on or after 6/8/2014) - appeal is dismissed only on the ground that amount is below threshold limit of ₹ 2 lacs without going into merit of the case.
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2017 (2) TMI 141
Validity of SCN - imposition of penalty u/r 27 - reduction in litigation u/s 11 (2B) of the Central Excise Act, 1944 - differential duty liability arose on account of increase in duty rates on Tapioca Sago. A part of duty liability along with interest has been discharged before issue of SCN and remaining part thereon has been discharged within one month from SCN - whether issuance of SCN valid? Held that: - it would have been most appropriate if the SCN had not been issued in these cases. Instead, these Appellants perforce have been required to come before this forum for relief. In the circumstances, while there should be no controversy with regard to the differential duty which has been discharged by the appellant on being pointed out, along with interest amounts thereon, issue of SCNs for imposition of penalties under Section 11AC is an overkill. When in the first place there was no requirement of issue of SCN itself, penalty will not survive particularly as there was some confusion on the duty rates and the continued eligibility of SSI concessions for these appellants - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (2) TMI 180
Whether the assessment orders, which are based on a VAT Audit triggered by a Joint Commissioner, could be sustained, in view of the provisions of Section 64(4) of the 2006 Act? Held that: - after the audit was conducted and the statement of the petitioner was recorded, it was placed before him and the petitioner appears not to have signed the statement. There is, in that sense, no acquiescence on the part of the petitioners, though, based on the VAT audit report, respondent No.3, proceeded to pass the assessment orders. The jurisdiction to conduct VAT audit, which was authorised by the Joint Commissioner was not accepted by the petitioner and therefore, the assessment orders passed were also without jurisdiction. The assessment orders and the VAT Audit reports are set aside - petition allowed - decided in favor of petitioner.
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2017 (2) TMI 179
Release of detained goods and truck - detention on the ground that the goods being carried were excess and undeclared and different goods - furnishing of bank guarantee - Held that: - In view of the nature of allegations, interest of both the parties for the present will have to be balanced and therefore, ends of justice would meet if the respondents are directed to release the goods along with truck of the petitioner on his furnishing bank guarantee for 50% of the value of the goods along with two solvent sureties of local registered traders for remaining 50% acceptable to the authorised officer, as per provisions of Rule 77 of the RVAT Rules forthwith - matter on remand.
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2017 (2) TMI 131
Presumptive taxation u/s 76(6) & 76(7) of the Assam Value Added Tax Act, 2003 - the transporter failed to rebut the legal presumption, through appropriate evidence - Held that: - when a transporter brings goods inside a State, he would be treated to be a dealer for the purpose of levy of tax, when he fails to establish that the goods are transported out of the State, through the exit check gate. In such event, a presumption can be recorded that the goods were sold inside the State with the help of legal presumption. In that situation tax becomes payable by the transporter unless he rebuts the legal presumption, with cogent material - all the documents available for the gunny bags carried by the truck No.AP-16/U 6287 should be furnished to the petitioner to enable them to rebut the legal presumption drawn against them and if satisfactory proof is produced to show that the transporter had no connection with the gunny bags and the truck No.AP-16/U 6287, which entered the Churaibari Check Gate of Assam on 5.8.2005, it will not be logical to hold that the presumption is conclusive against the petitioner. In so far as the two missing trucks are concerned, if in fact, the driver or the in-charge of the vehicles were responsible for misappropriating the loaded sheet rubber, carried in the two missing trucks, to burden the transporter with tax liability in such situation will be an unwarranted exercise - on account of the misdeeds of the driver and his cronies, the transporter may be wrongly subjected to tax, whereas the target of the authority should be the persons, who are actually responsible - the Assessing Officer is at liberty to re-do the exercise in respect of the sheet rubber, carried by the two trucks. Petition allowed.
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2017 (2) TMI 130
Validity of re-assessment of tax u/s 18 of the Assam General Sales Tax Act, 1993 - Time limitation - Held that: - equitable considerations have no place in deciding a tax liability and before a person is brought within the ambit of tax, it must be shown that the charging section applies to that person without any ambiguity and in clear terms. It is also provided that if two interpretations are possible, the judicial interpretation can’t lean in favor of the Revenue. When the Revenue feels that assessment was erroneous, the recovery of tax may be permissible through re-assessment u/s 18 of the AGST Act and here it is clear enough that the process of re-assessment was started beyond the limitation period of eight years of the original assessments. Therefore the re-assessment exercise is legally impermissible even for a situation of wrongful assessment at a lower rate - we find merit in the challenge of the assessee to the order of re-assessment and accordingly the impugned exercise and the orders for recovery of additional tax plus interest are found to be unsustainable in law - petition disposed off - decided in favor of assessee.
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Indian Laws
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2017 (2) TMI 178
Prosecution against the partners - Offence punishable under Section 138 of the Negotiable Instruments Act - Held that:- Once the company is held to be an essential party and that arraigning of a company as an accused is imperative for prosecution under Section 141 of the Negotiable Instruments Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under Section 141 of the Negotiable Instruments Act. The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable. In view of the specific provisions of the Act itself, it is very difficult for the Court to take a view that a partnership firm for the purpose of Section 138 read with Section 141 of the Act is not a legal entity, and therefore, it need not be made an accused in the complaint. The decisions relied upon by the learned counsel appearing for the petitioner are of no avail in any manner. Thus, the first question is answered accordingly.
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2017 (2) TMI 177
Offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Held that:- In the present facts of the case, the offence allegedly committed by the petitioner/accused is punishable under Section 138 of the Act and in Section 33 sub-section (2), proviso (a) is an exception to impound such document since the proceedings are criminal trial, where the Court is empowered to impose sentence against the accused. In those circumstances, the Magistrate is bound to exercise his discretion to hold that the mandate of sub- sections 1 and 2 of Section 33 are required to be applied in respect of any instrument in question insufficiently stamped instrument in question and non-exercise of discretion so vested in the Magistrate would result in great hardship and prejudice to the complainant and therefore when the Magistrate exercised his discretion not to impound the document by exercising the discretionary power vested on it by virtue of Section 33 (2) proviso and Section 35 proviso (d), such orders cannot be enquired, while exercising jurisdiction under Section 138 of the Act. When the Special Magistrate and the Revisional Courts have exercised their discretion under Sections 33(2) proviso (a) and 35 proviso (d), this Court cannot interfere with such orders while exercising inherent power under Section 482 Cr.P.C. Section 482 Cr.P.C. confers inherent power on the High Court being the highest Court of the State only for limited purpose of enforcing the orders passed under the Code, to prevent abuse of process of the Court and to meet the ends of justice in view of the limited power conferred on it, unless the order passed by the trial Court and confirmed by the revisional Court is prima-facie erroneous and the court cannot interfere by exercising inherent power under Section 482 Cr.P.C. Therefore, find no illegality in the order passed by the trial Court in exercising discretion that conferred on the Courts below to set aside the same, consequently, persuaded by the law laid down by Calcutta High Court in as early as in 1950 and in the latter judgment of the Karnataka and Madhya Pradesh High Courts and interpreting the provisions under Sections 33 and 35 of the Stamp Act. It is of the view that the orders passed by the Special Magistrate confirmed by the IV Additional Metropolitan Sessions Judge at Hyderabad, by exercising jurisdiction under Section 397 Cr.P.C., are free from any illegality and legal infirmity calling for interference of this Court, while exercising power under Section 482 Cr.P.C. Hence, petition is devoid of merits and liable to be dismissed.
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