Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 16, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Application for grant of approval under section 10 (23C) (via) rejected - concessional treatment as given by the petitioner for the above assessment years being meagre 3.56 %, 6.45% and 4.45% respectively, definitely does not speak of the existence of the petitioner for philanthropic purposes - HC
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Entitlement to the deduction under Section 80IB - surrendered amount - appellant was not entitled to the deduction under Section 80IB on the surrendered amount though utilized for the business of the appellant - HC
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Penalty under Section 271(1)(c) - ingenuineness of the gift -penalty confirmed after considering all relevant facts and recording satisfaction in terms of Section 271(1)(c) of the Act, do not call for interference - HC
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Disallowance of gratuity and compensation, payment made to common support staff and expenses in respect of processing unit which was permanently closed down - closure of processing unit which has not resulted into closure of the textile business of the assessee as a whole - expenses allowed - AT
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Charitable activity u/s 2(15) - Exemption u/s 80G - assessee involved in technical support, training, research and reserves material related to participatory development - the activity of the assessee society is certainly not for making profit and it is certainly not in the nature of any trade, business or commerce, so as to be headed by the first proviso to sec. 2(15) - AT
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Receipt on transfer of Goodwill - assessee Company (EOPL) transferred its entire business to GNRS - assessee had offered the said capital receipt under the head ‘Capital Gains’, and under no circumstances the said amount can be brought to tax under section 28(va) - AT
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Receipt on transfer of Goodwill - assessee had offered the said capital receipt under the head ‘Capital Gains’, and under no circumstances the said amount can be brought to tax under section 28(va) of the I.T. Act, 1961 - AT
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Disallowance u/s 14A - The AO has not shown any relation between the exempt income and expenditure incurred. Therefore, Ld. CIT(A) has rightly held that the AO has not followed the directions of the ITAT and the Hon. High Court of Court of Delhi - AT
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Estimation of gross profit rate - When the books of account of the assessee are upheld mere low yield or low GP cannot be ground for addition on account of trading results. - AT
Customs
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Valuation of goods - Related person - transaction value is influenced being related person - the adjudicating authority has rightly loaded the value 10% on the transaction value - AT
Indian Laws
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Arbitration clause - territorial criterion / principle - Scope of Arbitration Act, 1996 - Maintainability of appeal against the Foreign Awards - e courts in India will not have jurisdiction as there is implied exclusion. - SC
Central Excise
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Denial of interest on delayed refund of pre-deposit made - Dispute settled in 1997 but refund sanctioned in 2002 - claim of interest allowed - AT
VAT
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Constitutional validity of Section 29(7) of the Punjab Value Added Tax Act, 2005 - power to amend amend assessment - The dealer is provided with an opportunity of hearing at the time when the designated officer after getting approval from the Commissioner proceeds to amend the assessment order. Under the circumstances, the provision in question cannot be termed to be unreasonable - HC
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Benefit of input tax rebate - whether Xerox machines, office stationary, air conditioners, building equipments, security system for building qualify for the benefit of input tax rebate. -Benefit allowed - HC
Case Laws:
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Income Tax
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2015 (3) TMI 484
Computing capital gain on sale of 75.046 cents of land - determination of fair market value as on 01-04-1981 - Held that:- The land is admittedly situated few metres away from the bypass road which is part of NH 47. It is also an admitted fact that NH 47 and bypass road was formed even in the year 1981. The subject matter of land has proximity to the national highway. It has potential for future development because of its location. The land was sold for construction of a multi-storey building consisting of 80 apartments. By taking into consideration all these factors, this Tribunal is of the considered opinion that the land would definitely fetch nearly ₹ 45,000 per cent. Even though the approved valuer estimated the value of the land at 51,272 per cent, since the assessee claims the value of the land only at ₹ 45,000 per cent, this Tribunal is of the considered opinion that the lower authorities have not justified in restricting the same at ₹ 3,000 per cent. The land compared by the assessing officer is 2 kms away from the subject matter of land, therefore, the value of that 5 cents of land cannot be taken as a comparable case for estimating the fair market value of the subject matter of land. Therefore, the lower authorities may not be justified in taking the value of the land at ₹ 3,000 per cent. Accordingly, the orders of the lower authorities are set aside, and the assessing officer is directed to take ₹ 45,000 per cent as fair market value as on 01-04-1981. - Decided in favour of assessee. Valuation of the building - though the assessee claims the value of the old house at ₹ 12,54,327 the assessing officer restricted the same at ₹ 7 lakhs - Held that:- The assessee claims that the old house was nalukettu with teakwood and rose wood and it was well maintained by renovation from time to time. There is no reference about this house in the valuation report. There is no other material available on record to suggest that the house was built with teak wood and rose wood. In the absence of any material, this Tribunal is of the considered opinion that the assessing officer has rightly estimated the value at ₹ 7 lakhs. In respect of the other house, the assessee claims value at ₹ 16 lakhs. However, the assessing officer has taken the value at ₹ 15 lakhs. The approved valuer has not expressed any opinion about the value of this house. The remand report is also silent. No material is available on record to suggest the type of construction or otherwise to indicate the value of the land. In the absence of any material, this Tribunal is of the considered opinion that the assessing officer has rightly taken the value at ₹ 15 lakhs. - Decided against assessee.
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2015 (3) TMI 459
Application for grant of approval under section 10 (23C) (via) rejected - whether primary requirement of section 10 (23C) that the petitioner is established for philanthropic purposes is not fulfilled by the petitioner as found evident from the creation of capital assets from the surplus funds? - main object of the petitioner in its Memorandum and Articles of Association is to relieve persons suffering from disease or illhealth or requiring medical aid by establishing, constructing and maintaining or assisting Charitable Dispensaries, Hospitals, Convalescent Homes, Sanitoria and Maternity Homes etc. - Held that:- The fact that surplus was generated is not disputed by the petitioner. This surplus revenue was utilized for acquisition of assets which in the opinion of respondent no.1 was capable of generating more income. In the Assessment years 200607, 200708, 200809 and 200910, the percentage of transfer of gross surplus to the development fund was at 19.12 % 28.37 % 73.17 % and 12.12 % respectively. Accompanied with this, there was a huge increase in fixed assets from ₹ 63,75,577/in A.Y.200607 to ₹ 8,02,75,706/in Assessment year 200910 which was approximately an increase of ₹ 7.50 crores within four years. Petitioner's cash and bank balances also increased from ₹ 1,42,420/to ₹ 1,74,15,757/during the same period which was an increase of about ₹ 1.30 crores. The petitioner had purchased land admeasuring 8,350 sq.meters for an amount of ₹ 363.63 lacs. All these figures are borne out by the details as submitted by the petitioner before respondent no.1. The reasoning as given by respondent no.1 that all these figures go to show that there was a systematic generation of profits from the activities of the petitioner coupled with the increase in assets which would generate more income / profits cannot be said to be without any basis, arbitrary or perverse. Hence, it was not improper for the respondent no.1 to draw a reasonable inference that the petitioner is not existing solely for philanthropic purpose and for profits, in our opinion cannot be faulted. On the basis of the details as submitted by the petitioner the respondent no,.1 has rightly come to a conclusion that the concessional treatment as given by the petitioner for the above assessment years being meagre 3.56 %, 6.45% and 4.45% respectively, definitely does not speak of the existence of the petitioner for philanthropic purposes.If the petitioner was to solely exist for philanthropic purposes and was to conduct the hospital to achieve that object by providing treatment to the weaker sections of the society, it could not have been possible for the petitioner to achieve such a huge surplus and the consequent enabling of the petitioner to utilize such surplus funds to generate assets. In our opinion, the material as placed on record do not show that the application of the petitioner under section 10 (23C) (via) of the Act is inappropriately and arbitrarily rejected by the respondent no.1 so as to warrant our interference in exercise of jurisdiction under Article 226 of the Constitution of India. - Decided against assessee.
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2015 (3) TMI 458
Entitlement to claim deduction under section 80-IA - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. In the decision reported in Velayudhaswamy Spinning Mills V. Asst. CIT (2010 (3) TMI 860 - Madras High Court) there appears to be no distinction on facts. - Decided in favour of assessee.
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2015 (3) TMI 457
Entitlement to the deduction under Section 80IB - surrendered amount though utilized for the business of the appellant - Held that:- Adverting to the judgments relied upon by the counsel for the assessee, it may be noticed that in those cases, either the Tribunal had recorded the finding that the surrendered income was derived from the industrial undertaking or they were based on individual fact situation involved therein. Thus, the assessee cannot derive any benefit from those judgments. Though the income surrendered is assessed by the Assessing Officer as business income, however, its nexus with the industrial undertaking is left to be established. There is nothing on record relied upon by the assessee to show that in the course of survey, any evidence of unaccounted turnover, inflation of expenses etc., was discovered, so as to say that the surrenderfed income was directly linked to the business of the industrial undertaking. There is no positive evidence led by the assessee to establish direct nexus with the industrial undertaking and therefore in our considered opinion, the burden cast on the assessee has not been discharged. The findings recorded by the Tribunal that appellant was not entitled to the deduction under Section 80IB on the surrendered amount though utilized for the business of the appellant have not been shown to be illegal or perverse in any manner. - Decided against the assessee.
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2015 (3) TMI 456
Entitlement to deduction under Section 80IB(10) - assessee had failed to fulfill the primary condition in relation to the size of area of 1 acre plot for each housing plot as laid down in the statute - ITAT allowed the claim - Held that:- On facts, we find that there is no dispute in the approval granted by the CMDA in respect of the composite housing scheme. When the Legislature introduced 100% deduction under the Income Tax Act, it was known that the local authorities could approve a housing project to the extent permitted under the Development Control Rules. When the project fulfils the criteria for being approved as a housing project, then, deductions cannot be denied under Section 80IB(10) of the Act, merely because the assessee had obtained separate plan permits for the six blocks. If the conditions specified under Section 80-IB are satisfied, then deduction is allowable on the entire project. Since the project was approved in accordance with Development Control Rules, the assessee would be entitled to 100% deduction on the entire project approved by the Local Authority. See (Commissioner of Income Tax V. Shantiniketan Property Foundation (P) Limited [2015 (3) TMI 452 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2015 (3) TMI 455
Deduction u/s 80 IA on profits of the new eligible industrial unit - Whether ITAT is correct in allowing deduction u/s 80 IA on profits of the new eligible industrial unit without setting off the losses of other unit against the profit of the new industrial undertaking in view of the specific provisions contained to the contrary in Section 80 AB and Section 80B(5) of the Income Tax Act, 1961? - Held that:- Assessee could not dispute that in view of the Apex Court's decision in Synco Industries Ltd. vs. Assessing Officer, Income Tax, Mumbai (1975 (2) TMI 86 - SUPREME COURT OF INDIA) and this Court's decision in Commissioner of Income Tax Vs. Arif Industries Ltd. (2010 (3) TMI 857 - Allahabad High Court ) wherein held Section 80A(2) and Section (5) are declaratory in nature. They apply to all the Sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non-obstante clause in Section 80-I(6) cannot restrict the operation of Sections 80A(2) and 80B(5) which operate in different spheres. As observed earlier Section 80-I(6) deals with actual computation of deduction whereas Section 80- I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and therefore while interpreting Section 80-I(1), which also refers to gross total income one has to read the expression 'gross total income' as defined in Section 80B(5). therefore, this Court is of the opinion that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was 'Nil' the assessee was not entitled to claim deduction under Chapter VI-A which includes Section 80-I also The non obstante clause in sub-section (6) of section 80-I refers to only the quantum of deduction, therefore, the gross total income referred to in section 80-I(1) is to be read with section 80B(5) and only then the computation is to be made in the manner provided under the Act - The mandate contained in sections 80A and 80B(5) requires that gross total income should be computed after setting off the brought forward business loss and unabsorbed depreciation, etc. for allowing of the deductions specified under sections 80C to 80U - Decided in favour of Revenue
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2015 (3) TMI 454
Protective assessment under Section 147 - ITAT drawing the conclusion that to avoid multiplicity of the proceedings on the same issue the order u/s 263 should be quashed - Held that:- The very premise that there was protective assessment under Section 147 of the Income Tax Act is incorrect. The very foundation on the basis of which the ITAT has applied mind is found lacking in the matter. It is therefore clear that in the present circumstances, the ITAT ought to have considered the issue on merits. Other three appeals considered together with the present appeal had no bearing on the controversy. Hence, even if after remand in those appeals, the assessment orders grant benefit to the concerned assessee, that by itself does not eliminate need of application of mind on merits by the ITAT. We are, therefore, not in a position to agree with the contention of Advocate Shri C.J. Thakkar that because of subsequent assessment orders in favour of the assessee, remanding back the present appeal to the ITAT would be an empty formality.- Decided in favour of the appellant department.
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2015 (3) TMI 453
Penalty under Section 271(1)(c) - ingenuineness of the gift - Held that:- An appraisal of the facts reveals that the appellant claimed that one Sh. Sunil Kumar Garg had gifted ₹ 2 lacs but when called upon to prove the genuineness of the transaction or the identity of the donor, could not prove the genuineness of the transaction or even the identity of the donor. Even the address of the donor supplied by the appellant was found to be false. It is, therefore, apparent that the appellant made an intentional attempt to evade tax by setting up a false gift. The impugned orders passed after considering all relevant facts and recording satisfaction in terms of Section 271(1)(c) of the Act, do not call for interference and as no substantial question of law arises for adjudication, the appeals are dismissed. - Decided against assessee.
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2015 (3) TMI 452
Entitlement for deduction under Section 80IB - ITAT allowed the claim - Held that:- As the assessee started one single housing project with different blocks and each building block was not separated by metes from the other blocks and the flat owners of the different blocks enjoy the common recreational facilities and amenities. In the circumstances, the Tribunal correctly agreed with the assessee. See CIT v VANDANA PROPERTIES [2012 (4) TMI 54 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2015 (3) TMI 451
Addition u/s.40(a)(ia) - disallowance of expenditure on hiring of tanker - non deduction of tds - whether expenditure, which is not payable at the year end, as the same has been paid during the year, cannot be disallowed u/s.40(a)(ia) of the Act? - Held that:- There is no ambiguity in the Section and term 'payable' cannot be ascribed narrow interpretation as contended by assessee. Had the intentions of the legislature were to disallow only items outstanding as on 31st March, then the term 'payable' would have been qualified by the phrase as outstanding on 31st March. However, no such qualification is there in the section and, therefore, the same cannot be read into the section as contended by the assessee. The terms “payable” and “paid” are not synonymous. Word “paid” has been defined in Section 43(2) of the Act to mean actually paid or incurred according to the method of accounting, upon the basis of which profits and gains are computed under the head “Profits and Gains of Business or Profession”. In contrast, term “payable” has not been defined. The word “payable” has been described in Webster’s Third New International Unabridged Dictionary as requiring to be paid: capable of being paid: specifying payment to a particular payee at a specified time or occasion or any specified manner. In the context of section 40(a)(ia), the word “payable” would not include “paid”. The provisions of section 40(a)(ia) are applicable not only to the amount which is shown as payable on the date of balance-sheet, but it is applicable to such expenditure, which become payable at any time during the relevant previous year and was actually paid within the previous year. In the result the question is decided in favour of revenue and against the assessee.the majority views expressed in the case of Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] are not acceptable as it does not concludes the correct law in stating that section 40(a)(ia) would be applicable only to expenditure which is payable as on March 31 of every year and can not be invoked to disallow amount which have already been paid during the previous year. See Commissioner of Income-tax, Kolkata - XI Versus Crescent Export Syndicate & Park International [2013 (5) TMI 510 - CALCUTTA HIGH COURT] and COMMISSIONER OF INCOME TAX-IV Versus SIKANDARKHAN N TUNVAR [2013 (5) TMI 457 - GUJARAT HIGH COURT] - Decided in favour of revenue.
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2015 (3) TMI 450
Addition on account of entries contained in handwritten sheet found during the course of search - Income from undisclosed sources - Held that:- No merit in the aforesaid addition made in the hands of the assessee on the basis of entries on handwritten sheet which did not belong to him. Once the assessee is not carrying on any construction work, then the natural corollary is that it would not make any payment for the purpose of construction and when handwritten sheet depicted construction payments, the same could not be treated as the document belonging to the assessee. Further the assessee clearly pointed out that the name of the person on the said sheet was Mr. Sajjan Jain, who was employee of M/s. Goel Construction Co. Pvt. Ltd. and the said facts could have been verified by the Assessing Officer, but the Assessing Officer had failed to discharge his onus and in the said circumstances there is no merit in the addition made in the hands of the assessee. Further the assessee has also filed affidavit to the effect that the said document was not in his handwriting or in the handwriting of his employees and also Shri Sajjan Jain was not in his employment and belonged to M/s. Goel Construction Co. Pvt. Ltd. In the entirety of the facts and circumstances, we delete the addition of ₹ 12,30,767. - Decided in favour of assessee. Income from undisclosed sources - Addition of ₹ 5 lakhs - document seized from the business premises of the assessee - Held that:- The plea of the assessee was that the customers had come to the office to reconcile their respective accounts but since cheques of RC were continuously returning unpaid and after discussion he offered ₹ 5 lakhs cash as mentioned on the said page but actually he again backed out. The assessee in the said reply further stated that this fact could be proved from the entries on the left side of the page where it is noted that he had been allotted flat for ₹ 15,36,100 and he had only made payment of ₹ 7,89,760 and balance payment due was ₹ 7,46,340 and he had paid another sum of ₹ 1,95,000. The assessee further claimed that as the cheques of ₹ 2 lakhs again bounced and the balance payment remained at ₹ 7,51,340. Though the assessee had tried to reconcile the entries but has failed to establish its case. The said document clearly reflects that there is cash of ₹ 5 lakhs and commission of nil. He also mentioned against the amounts received from RC totalling ₹ 7,89,760, on the right side of the document. We find no merit in the claim of the assessee in this regard and in the absence of the assessee having furnished any evidence to prove its case that sum of ₹ 5 lakhs was offered against cheques being dishonoured, does not establish the case of the assessee. In case the cheques were being dishonoured then how the total of ₹ 7,89,760 has been taken and it does not talk of any dishonour of cheques. In the absence of any evidence filed to prove its case we find no merit in the plea of the assessee and we uphold the addition of ₹ 5 lakhs in the hands of the assessee as income from undisclosed sources - Decided against assessee. Addition of ₹ 19,95,000 and ₹ 5,11,373 made in the hands of the assessee - assessee pleads that the said amounts have been considered by Shri J. C. Bansal in his computation filed before the hon'ble Settlement Commission - Held that:- where the applicant had also offered additional income before the Settlement Commission in the hands of Maa Saraswati Educational and Social Welfare Trust, we find no merit in the so called addition made in the hands of the assessee totalling ₹ 19,95,000. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 19,95,000. Further, addition of ₹ 5,11,373 was made in the hands of the assessee on protective basis. In view of the settlement petition having been filed by Shri J. C. Bansal before the Settlement Commission, the Settlement Commission has already decided the issue in the hands of Maa Saraswati Educational and Social Welfare Trust and which also incorporates the additional income offered by Shri J. C. Bansal and further being assessed in his hands. In view thereof, we find no merit in the said addition of ₹ 5,11,373 and the same is directed to be deleted. - Decided in favour of assessee. Disallowance of deduction under section 80-IB - amount declared during the course of survey as additional income amounting to ₹ 1.70 crores - Held that:- In view of the ratio being settled in National Legguard Works v. CIT (Appeals) [2006 (9) TMI 100 - PUNJAB AND HARYANA HIGH COURT], Tudor Knitting Works P. Ltd. v. CIT [2015 (3) TMI 457 - PUNJAB & HARYANA HIGH COURT], KIM Pharma P. Ltd. v. CIT [2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] we hold that the assessee is not entitled to the deduction under section 80-IB of the Act on the surrendered income of ₹ 1.70 crores as the surrendered income cannot form part of the business income and it is to be taxed as deemed income against which the business losses could not be set off - Decided against assessee. Undisclosed income - addition based on the seized document - Held that:- As per tabulated details the amount credited/paid totalled to ₹ 46,43,115 and the balance on each page was shown as receivable by Mr. Monga and his family members from the assessee vide letter dated August 10, 2008. Further sum of ₹ 13,00,000 is mentioned in the said letter as having been received by him. In totality thus, the total payments made by the assessee were of ₹ 46,43,115 + ₹ 13,00,000 and the addition is to be restricted to ₹ 59,43,115 as held by the Commissioner of Income-tax (Appeals). The balance being the amount payable by the assessee to Shri Monga and his family members is not includible as income of the assessee. Accordingly, we uphold the addition of ₹ 59,43,115 in the hands of the assessee and dismiss the grounds of appeal raised by both assessee - Decided against assessee. Determination of profit from the real estate business of the assessee - CIT (Appeals) in rejected the percentage completion method adopted by the Assessing Officer - Held that:- Where the assessee was following a particular method of accounting consistently, which has been accepted by the Department from year to year and in the absence of any defect being pointed out by the Assessing Officer that by following such method, income had escaped assessment, we find no merit in the order of the Assessing Officer in holding that percentage completion method should be applied to the assessee for the year under consideration. It is the prerogative of the assessee to arrange its affairs in such a manner and follow any recognised method of accounting to compute its profits. In view thereof, we find no merit in the order of the Assessing Officer in recomputing the income in the hands of the assessee. Upholding the order of the Commissioner of Income-tax (Appeals), we dismiss ground of appeal raised by the Revenue. - Decided against revenue.
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2015 (3) TMI 449
Disallowance of loss on account of conversion of AFS securities to HTM securities - CIT(A) allowed 1/5th of the loss resulting from shifting of securities from AFS to HTM category - Held that:- Method adopted by the assessee for valuing the securities while changing the category i. e. from AFS to HTM is as per the RBI circular and hence this is the accepted method. At the same time, we find that as per RBI circular assessee is to amortize depreciation (loss) for the period of five years. In this case the assessee in the P & L A/c, debited l/5th of the depreciation (loss) but by filing revised return the entire depreciation (loss) has been claimed. In our opinion, that is not as per the RBI circular. We therefore, uphold the order of the Ld. CIT to the extent that entire depreciation (loss) claimed by the assessee on conversion at the time of changing category of the securities from AFS to HTM is not as per law but the assessee at the most can claim depreciation (loss) to the extent of 1/5th each year for the period of Five years. We accordingly direct the AO to allow the depreciation (loss) to the extent of 1/5th of the total depreciation - Decided partly in favour of assessee. Non-allowance of premium amortized on HTM securities - Held that:- The facts relating to the issue are that as per the guidelines of RBI, the banks are entitled to keep its investments under three categories i.e. Held To Maturity (HTM), Available For Sale (AFS) and Held For Trading (HFT). The HTM securities are in the nature of premium investment and are to be kept by the banks still the date of maturity. However, the AFS and HFT securities are in the nature of current investments and can be sold by the banks before the date of maturity. As per the guidelines of RBI with regard to current and permanent investments issued from time to time, the banks are permitted to change investments from one category to the other, subject to the condition that overall ratios of current to permanent investments are maintained as per the RBI requirements. The guidelines also prescribe that the investments classified as HTM securities are to be carried at acquisition cost. In the facts of the present case, the assessee had parked funds in HTM securities and during the year, the assessee had not shifted the securities to any other category. The premium paid on government securities were amortized in the books of account and the plea of the assessee was that the said premium was to be separated from the face value of the securities and booked as expenditure. Admittedly, the assessee was following the method of valuing its HTM securities at face value or cost. In view thereof, we find no merit in the ground of appeal No.3 raised by the assessee in this regard. The CIT(A) had dismissed the claim of the assessee in line with the order of Tribunal in appeal against the order of revision passed under section 263 of the Act on this count. - Decided against assessee. Rectification of mistake - CIT(A) cancelling the order passed u/s.154 by the Assessing Officer holding that the mistake sought to be rectified was not a patent mistake apparent from records - Held that:- Under the provisions of section 154 of the Act, an order of assessment or an intimation issued under section 143(1) of the Act or section 200A(1) of the Act or any other order passed by any income tax authority referred to in section 116 of the Act, can be amended with a view to rectify any mistake apparent from the record. The first step to be seen before invoking the provisions of section 154 of the Act is that there is a mistake apparent from the record which can be rectified by the income tax authority who had passed the said order under the provisions of the Act. It has been held by the courts time and again that the debatable issues are not open to rectification under section 154 of the Act. See Volkart Brothers Vs. ITO [1971 (8) TMI 3 - SUPREME Court] . The admissibility of amortization of premium on HTM securities as a deduction or not under the Income Tax Act is a debatable issue as is clear from the fact that the Pune Bench of the Tribunal in assessee’s own case vide order dated 31.05.2013 had directed the Assessing Officer to allow 1/5th of the said expenditure. Further, the Tribunal in another decision dated 05.08.2013 had allowed the said expenditure in totality. The assessee is also in appeal against the order passed by the Tribunal in order passed under section 263 of the Act and the matter is pending before the Hon’ble High Court and hence, the issue became debatable. - Decided against revenue. Depreciation in the value of 'Held to Maturity' securities claimed by the assessee bank disallowed - Held that:- The issue raised before us is identical to the issue before the Tribunal in ACIT Vs. Bank of Maharashtra (supra) and following the same parity of reasoning, we hold that the change in method of accounting adopted by the assessee for valuing its HTM securities at lower of cost or market price is a bonafide change and the assessee is entitled to the claim of depreciation on value of HTM securities. The loss arising on account of AFS and HFT securities have already been accepted by the Assessing Officer. Consequently, we direct the Assessing Officer to allow the claim arising on account of depreciation on value of HTM securities. However, the change in method of valuation in HTM securities and its effect on the computation of income would be verified by the Assessing Officer. Accordingly, we direct the Assessing Officer to consider the plea of the assessee and re-work the income - Decided in favour of assessee for statistical purposes. Revision u/s 263 - 1/5th of the amortized amount of loss incurred of ₹ 29,29,15,335/- in assessment year 2005- 06 on account of conversion of securities from AFS to HTM should be allowed in accordance with the decision of the Hon’ble Tribunal in assessment year 2005-06 - Held that:- Pursuant to the order of Tribunal in assessee’s own case against order passed under section 263 of the Act, where the Tribunal had directed that the expenditure claimed in assessment year 2005-06 is to be amortized and allowed for the years starting from assessment year 2005-06 to the extent of 1/5th in each year, we find merit in the plea of the assessee in this regard. Accordingly, we direct the Assessing Officer to allow 1/5th of the amortized amount of loss incurred in assessment year 2005-06 for the years under appeal, consequent to the order of Tribunal passed in appeal against order passed under section 263 of the Act relating to assessment year 2005-06. - Decided in favour of assessee. Addition in the hands of the assessee - non reconciliation of transactions reflected in international transactions of the assessee with the entries in the books of account - CIT(A) had directed the Assessing Officer to examine the claim of the assessee and delete the addition after verification - Held that:- No merit in the ground of appeal in this regard as the CIT(A) had directed the Assessing Officer to carry out the verification exercise and after reconciliation, the Assessing Officer may decide the issue. We uphold the directions of CIT(A) in this regard and direct the Assessing Officer to carry out the reconciliation exercise and after verification decide the issue. - Decided against assessee.
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2015 (3) TMI 448
Transfer pricing adjustment - determination of Arm’s Length Price - selection of comparable - improper application of the RPT filter by the CIT(A) - Held that:- It is not in dispute before us that this Tribunal, in the cases of 24/7 Customer Pvt. Ltd. (2013 (1) TMI 45 - ITAT BANGALORE ), and Sony India Private Ltd.(2008 (9) TMI 420 - ITAT DELHI-H) and various other cases has taken a view that comparables having RPT of upto 15% of total revenues can be considered. In view thereof, the Revenue’s on this ground has to be allowed. It is held that the CIT(A) ought to have adopted a threshold limit of 15% of the total revenue attributable to related party transaction as ground for rejecting comparable companies. Consequently it is held that comparable companies having RPT upto 15% of the total revenues alone can be included. The Revenue’s contention that comparables with RPT upto 25% can be considered is without any basis. As regards the standard deduction of 5% of the arm’s length price afforded to the Appellant by the CIT(A), it is not in dispute before us that in view of the substitution of the Second proviso to Section 92C(2) of the Income-tax Act by the Finance (No.2) Act, 2009, the second ground of appeal filed by the Revenue may have to be allowed. Consequently it is held that if the difference between the arithmetic mean of the profit margins comparable companies ultimately retained and the profit margin of the Assessee is more than 5% than no deduction under the proviso to Sec.92C(2) of the Act could be allowed to an Assessee. In the light of the decision of Trilogy EBusiness Software India Pvt. Ltd. [2013 (1) TMI 672 - ITAT BANGALORE] we hold that igate Global solutions Ltd., Flextronics Software Systems Ltd. And L & T Infotech Ltd would have to be excluded as comparable companies as these companies have turnover above ₹ 200 Crores. So also Tata Elxsi Ltd., would have to be excluded as not comparable in the light of the decision in the case of Logica Pvt. Ltd. (2015 (3) TMI 401 - ITAT BANGALORE). Sankhya Infotech Limited (‘Sankhya’) cannot be regarded as a comparable Sankhya is engaged in the business of development of software products & services and training. The company focuses on the development of niche products for the transport and aviation industry. However, segmental information in relation to the above mentioned activities is not available in public domain. Therefore, as Sankhya engages itself in products and services as well as software training, it cannot be considered as a comparable of the Appellant. Melstar Information Technologies Ltd. (Melstar) is functionally comparable to the assessee and clears all the filters applied by the TPO, the same should be considered as comparable with Net Cost Plus margin of 3.26%.The extraordinary item of expenditure, if removed, would render this company as a company revenues of which are not diminishing. Melstar therefore deserves to be included as a comparable company. Adjustment for depreciation - Held that:- It would be just and appropriate to remand the issue to the AO for fresh consideration in the light of the decision of Honeywell Technology Solutions Lab P. Ltd. [2013 (9) TMI 189 - ITAT BANGALORE]. We are also of the view that the Assessee should be directed to give the quantification of adjustment to be allowed, if found eligible, applying the ratio laid down in the case of 24/7 customercare.com [2013 (1) TMI 45 - ITAT BANGALORE]. We hold and direct accordingly. Arithmetic mean of the comparables retained would be within the range of +/- 5% of the Assessee’s Net Margin accepted.
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2015 (3) TMI 447
Non-granting of deduction under section 80 IB - assessee could not produce the parties from whom the assessee had purchased these machinery, the Revenue is doubting about the newness of the impugned machinery - Held that:- Right from beginning, it is the case of the assessee that the machinery installed in its premises is new. The evidence furnished by the assessee to support its contention that machinery is new includes evidence from the agencies which cannot be said to be interested parties who will support the contention of the assessee. One of such evidence is in the shape of certificate given by the Department of Industries, vide their certificate dated 23/2/2007. It has clearly described that certificate of permanent SSI Registration to the assessee was granted after due verification of the required guideline and the machinery installed by assessee is new machinery. The second evidence is in the shape of certificate granted by the bank who after getting inspection report from its officials has given the certificate to the assessee that new machinery was installed. Thus we reverse the order passed by Ld. CIT(A) and hold that the machinery installed by the assessee was new and as no other condition for grant of deduction under section 80 IB has been held to be violated by the assessee, the assessee is entitled to get deduction under section 80 IB. - Decided in favour of assessee.
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2015 (3) TMI 446
Disallowance of gratuity and compensation, payment made to common support staff and expenses in respect of processing unit which was permanently closed down - whether the processing business was a separate business not related with the other business of the assessee? - CIT(A) deleted disallowance - Held that:- Assessee has not closed down his business as a whole but had stopped the processing division, which is only one of the division of the Textile business carried on by the assessee. The closure of the processing division was done on commercial expediency. A perusal of the various documents placed on record also makes it clear that there was interconnection, interlacing and unity of control and management, common decision making mechanism and use of common funds in respect of entire textile business of the assessee. The assessee has taken a decision on commercial expediency to downsize its operation and effected the closure of processing unit which has not resulted into closure of the textile business of the assessee as a whole. The detailed findings recorded by the CIT(A) have not been controverted by the department by brining any positive material on record. The case of Gemini Cashew Sales Corporation [1967 (4) TMI 4 - SUPREME Court] as applied by the AO is distinguishable on facts, insofar as business of the erstwhile partnership was dissolved by death of one of the two partners. The partnership firm was dissolved, it was held by the Hon'ble Court that retrenchment compensation was not allowable in the year of dissolution of partnership firm, whereas the facts in the instant case clearly distinguishable wherein textile business of assessee was continued. The findings recorded by CIT(A) are as per material on record, which have not been controverted by Ld DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A), which resulted into deletion of addition made by the AO. - Decided against revenue.
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2015 (3) TMI 445
Charitable activity u/s 2(15) - Exemption available u/s 11 and u/s 80G - assessee involved in technical support, training, research and reserves material related to participatory development since its inception - Assessing Officer opined that the assessee involves carrying on activities in the nature of running services in relation to trade, commerce or business as applicable in providing consultancy workshop training program, conducting research on behalf of other agency, hence, it does not deserve any relief - non-approval of continuance of exemption under section 80G(5)(vi)- Held that:- Activities of the assessee can in no way be covered in trade, commerce etc. as it is not charging any fee from the beneficiaries who are poor communities. It is also worth noting that the NGOs who have engaged the assessee are itself charitable institutions like WHO, UNICEF etc. and they ensure that the grant etc. given to the assessee are fully utilized only for the purpose of charitable activities and not for any business. The assessee did not have any receipt in excess of expenditure during the year. The books of account clearly show that no amount of current receipt or out of unutilized receipt of the past has been treated as profit in the sense it would be treated, had it been a business and that no amount has ever been given to any member of the board of the society or any member of the assessee society except the reimbursement of expenses incurred in connection with the board’s meeting. It is also not the case of the department that any part of profit or gain shown as receipt over expenditure has been transferred to any member of the society. Thus, the activity of the assessee society is certainly not for making profit and it is certainly not in the nature of any trade, business or commerce, so as to be headed by the first proviso to sec. 2(15) of the Act even if it is treated as advancement of any general public utility. The activities as discussed hereinabove of the present assessee cannot be held to be engaged in the activity of advancement of any other object of general public utility. The activities carried on by the assessee cannot be said to be beyond its main aims and objects and it is also an undisputed fact that the assessee society continued to enjoy registration under sec. 12A of the Act as a charitable trust and that the charitable purpose for which the assessee society was established remained unchanged. Under the circumstances, we while setting aside the first appellate order as well as order of the learned DIT(E) direct the Assessing Officer to allow the assessee the claimed exemption under sec. 11(12) of the Act and the ld. DIT(E) is directed to allow the application of the assessee for continuance of the approval granted under sec. 80G(5)(vi) of the Income-tax Act, 1961. - Decided in favour of assessee.
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2015 (3) TMI 444
Receipt on transfer of Goodwill - capital receipts v/s revenue receipts - assessee Company (EOPL) transferred its entire business to GNRS - As per terms of agreement assessee was to advertise, make publicity of the product. - assessee was entitled to fix resale price of the said product - A.O. opined that just because assessee has used the term goodwill, it doesn’t mean that amount in question would become goodwill. Accordingly the receipt on account of goodwill was assessed under the head ‘Profits and Gain from Business’. Held that:- From the combined reading of sections 55(2) and sec 28(va), it is crystal clear that if the assessee gives up right to carryon any activity in relation to business, the same would be revenue receipt. As against that if the assessee gives up the right to carryon any business the consideration received would be capital in nature. As submitted earlier that by virtue of the said agreement for transfer/ assignment of goodwill the assessee’s source of earning of income has been extinguished, thus there was sterlisation of assessee’s very profit making apparatus. Accordingly, the said receipt is a capital receipt in the hands of the assessee. The assessee had offered the said capital receipt under the head ‘Capital Gains’, and under no circumstances the said amount can be brought to tax under section 28(va) of the I.T. Act, 1961. - Decided in favour of assessee.
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2015 (3) TMI 443
Unexplained deposit - unaccounted loan receipts - Held that:- So far as Shri Ravindra Shamrao Tambolkar is concerned he has confirmed that he has given the loan to the assessee. He has also explained the source.He confirmed that he has given the personal loan to the assesse of ₹ 3,00,000/- and out of that he has received back ₹ 2,50,000/- during the period October/November, 2007. In the case of this person, he has not stated that he was having any agricultural income but at the same time as per the statement given by the said Shri Ravindra Shamrao Tambolkar on oath before the Assessing Officer, it is seen that he has sufficient funds with him to lend sum of ₹ 3,00,000/- to the assessee. Thus delete the addition in respect of Shri Ravindra Shamrao Tambolkar of ₹ 3,00,000/-. - Decided in favour of assessee. In respect of Shri Revansidheswar Swamiji he has also stated in the clear terms that he has given the loan to the assessee but there is no record. He produced the record of the agricultural activities. It is claimed by him that he has 45 Acres of agricultural land and 10 Acres of agricultural land is irrigated. He also produced the sample receipts of the sale of TUR only the name of mentioned as Basavlingeshwhar Math. He also produced the sample sale of bills of sale of sugarcane to the Sidhheswar S.S.K. Solapur. It is true that he has not assessed to tax but if a person having substantial agricultural income but he is not having the non-agricultural income or non-agricultural income is below the non-taxable limit inference can be drawn that he is not capable to giving any loan as claimed. Thus there is a creditworthiness in respect of amount of ₹ 5,00,000/- given to the assessee. - addition deleted. - Decided in favour of assessee. In respect of Shri Pandurang Babu Shinde it is true that he has not assessed to tax but he has appeared before the Assessing Officer and confirmed that he has given the hand loan to the assessee. He also explained that the source of the said hand loan is from the agricultural activities. He also produced 7/12 extract of the agricultural land to demonstrate that in fact he is owner of agriculture land. He also claimed that he is taking crops like sugarcane, maize, jowar, harbhara etc. He also stated that he sales agricultural produce. Merely because he is not assessed to tax but the data on record suggest that he is otherwise capable to give the loan to the assessee and then why he should be rejected on the reason of his creditworthiness. We, accordingly, delete the addition of ₹ 3,00,000/- - Decided in favour of assessee. In respect of Shri Irrappa Rajappa Konapure, the Assessing Officer has noted that he is also agriculturalist and owner of 4.5 Acre agricultural land which was irrigated. He also cultivated and takes the sunflower and jowar and sales his agricultural produce. He has also stated that he has 5 buffalos and two cows from which he sales the milk to villages. He also confirmed that he has given ₹ 3,00,000/- to the assessee from time to time during the period May 2006 to November 2006 in cash. He also filed the confirmation letter. As per the facts noted by the Assessing Officer in our opinion the identity and genuineness cannot be doubted. So far as the creditworthiness is concerned he has explained the source of his income, thus his source is sufficient to lend some of ₹ 3,00,000/- to the assessee. - Decided in favour of assessee. In respect of Shri Gurrappa Saibanna Iranar is concerned, he is old person and he is not assessed to tax. As noted by the AO as per his statement he is owner of 8 Acre agricultural land. He is also produced 7/12 extract of all his agricultural lands. The said person also explained where as he sales the agricultural produce. He also confirmed that he has given the loan to the assessee. It appears that there is some contradictions in his statement in respect of annual income but so far as the identity and genuineness are concerned that cannot be doubted the only aspect to be considered is to creditworthiness. It is clear that he has given ₹ 3,00,000/- to the assessee but in our opinion as per the statement recorded that may not support his claim of giving ₹ 3,00,000/- to the assessee. After considering the figures of the income, in the interest of justice, we hold that to the extent of ₹ 2,00,000/- he has established his creditworthiness. We, accordingly, sustain the addition to extend of ₹ 1,00,000/- - Decided partly in favour of assessee. In respect of Shri Basavraj Ambadas More, we find that he is the owner of 6.5 Acre agricultural land which is irrigated. He confirmed that he has given the loan to the assessee. As per the facts on record and statement of the said person identity and genuineness cannot be doubted. It is also stated by him that he takes the agricultural produce in the form of grapes. He also produced documentary evidence in the form of sales bills of the dry grapes. Giving our anxious consideration to statement of the said person as well as the documentary evidence, we hold that the assessee has established identity, genuineness and creditworthiness of the said person. -Decided in favour of assessee. In respect of Sou Taramati S. Jadhav. Admittedly, the said loan creditor did not appear before the Assessing Officer. Admittedly, the assessee had filed only 7/12 extract to demonstrate that she is owner of land. It is claimed that she has paid ₹ 3,00,000/- to the assessee. In our opinion in this case, the identity, genuineness and creditworthiness are not proved. We, accordingly, confirm the addition. Decided against assessee.
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2015 (3) TMI 442
Validity of assessment framed under sec. 153A read with sec. 143(3) - absence of any incriminating material belonging to the assessee being found during the course of search - Held that:- Decision of the Hon’ble Jurisdictional Delhi High Court in the case of Anil Kr. Bhatia (2012 (8) TMI 368 - DELHI HIGH COURT) supports the case of the assessee that in absence of incriminating material found during the course of search an addition u/s 153A of the Act cannot be made in the assessment framed thereunder. In absence of rebuttal of this material fact by the Revenue in the present case before us that no incriminating material was found during the course of search relating to the assessee for the assessment year under consideration to justify the additions made in these years by the Assessing Officer and assessment based on the original return of income filed under sec. 139 of the Act was pending as on the date of search, we following the cited decisions by the learned AR hold that the assessments framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 for the assessment years under consideration are not valid and the same are accordingly held as null and void. - Decided in favour of assessee.
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2015 (3) TMI 441
Disallowance u/s 14A - CIT(A) deleting the disallowance - Held that:- Ld. CIT(A) has rightly observed that that Rule 8D will not be applicable to the case of the assessee since it pertains to AY 06-07. We also find that Ld. CIT(A) has also observed that Rule 8D cannot be applied retrospectively, Section 14A however would be applicable for pre Rule 8D period, thus whenever the issue of 14A arises the AO should ascertain the correctness of the claim of the assessee in respect of expenditure incurred or not incurred in relation to income which does not form part of the total income under the Act. Ld. CIT(A) noted that the AO is satisfied with the claim of the assessee and he further noted that the AO should accept the claim of the assessee so far as the quantum of disallowance is concerned. Ld. CIT(A) has further observed that the AO after giving the assessee an opportunity of being heard, is not satisfied with the correctness of the claim of the assessee, he should reject the claim after giving reasons and then AO should determine the amount of expenditure incurred in relation to income which does not form part of the total income. Ld. CIT(A) further observed that the language of sub section 14A(1) is abundantly clear that relation has to be seen between the exempt income and expenditure incurred in relation to it. The AO has not shown any relation between the exempt income and expenditure incurred. Therefore, Ld. CIT(A) has rightly held that the AO has not followed the directions of the ITAT and the Hon. High Court of Court of Delhi in the assessee's case and the AO has to consider the two cases of Godrej Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] and Maxopp Investment Ltd [2011 (11) TMI 267 - Delhi High Court] while deciding the issue, but the AO did not consider the two judgments while finalizing the matter. We find that Ld. CIT(A), in view of the above, has rightly deleted the addition made by the AO of ₹ 1,OO,94,103/- which does not need any interference on our part. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue. - Decided in favour of assessee.
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2015 (3) TMI 440
Estimation of gross profit rate - CIT(A) restricted addition from ₹ 15,80,694/- made by the A.O. to ₹ 2,80,383/- - CIT(A) assuming that the G.P. rate of 1.75% - rejection of books of accounts - Held that:- Books of account of the assessee are maintained on the same policies and methods of accounts as in earlier and subsequent years when the assessee's books of account have been upheld.The assessee's business model consists of 80% of trading of i.e. purchase and sale oil and 20% of manufacturing of oil. These facts have not been disputed by the ld. DR. Being a single commodity manufacturer, the assessee cannot be expected to stop the plant as and when a new lot of mustard seed is subjected to crushing as the manufacturing of mustard oil as a continuous process, this is also not disputed by the department. In these circumstances, it is unreasonable to expect from the assessee to shut the plant for crushing of every lot of mustard seed, the yield and maintain impossible day to day, lot wise stock in this behalf. Thus, the corresponding compliance insisted by the learned Assessing Officer is beyond the business reality and not a prevalent trade practice. (iv) Otherwise, the assessee has maintained proper day to day stock register of the inward and outward day to day stock of mustard seed, and mustard oil; traded as well as manufactured. We are unable to see any infirmity in the record and book keeping of the assessee in both these years. In view thereof, we are inclined to hold that the assessee's books of accounts have been unjustifiably rejected. - Decided in favour of assessee. Low yield or GP - whether can be a factor to make the trading addition when the assessee otherwise maintains proper books of accounts and quantity wise details - Held that:- When the books of account of the assessee are upheld mere low yield or low GP cannot be ground for addition on account of trading results. This is more so as the edible oil business profitability is volatile and depends on various factors i.e. the abundance of crops, demand and supply ratio, market trends and import policy of edible mustard oil. It cannot be expected as a universal policy that the assessee will earn a fixed rate or increasing rates of GP year after year. Thus no justification in making any trading addition in the case of the assessee. The same is deleted. - Decided in favour of assessee. Employees contribution disallowed - Held that:- Contribution paid before filing of the return, therefore, the same is allowable. - Decided in favour of assessee. Disallowance of telephone expenses - Held that:- On the issue of telephone expenses, the ends of justice will be made if the disallowance in respect of the telephone expenses is restricted to 10% instead of 20% as retained by the learned CIT(A). - Decided partly in favour of assessee.
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Customs
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2015 (3) TMI 469
Valuation of goods - Related person - on the basis of the agreement between the parties the Adjudicating Authority arrived at the decision that 10% of valuation is required to be loaded in the declared transaction value - Held that:- As per Article 4(3) of the Agreement, it is stated that if there are third party imports, then the invoice valuation should be the price charges in the price list plus 10%. It is also accepted that the appellant are importing at the price declared in the price list. On examination of the condition of Article 4 (3) of the Distributorship Agreement it is clearly mentioned that in third party transaction, the valuation of the imported good shall be 100%. In other words, the appellants are importing the said goods being a related person as per price shown in the price list. Therefore, it is held that the transaction value is influenced being related person. Accordingly, we hold that the adjudicating authority has rightly loaded the value 10% on the transaction value. Therefore, we do not find any infirmity with the impugned order; the same is upheld. - Decided against assessee.
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2015 (3) TMI 468
Waiver of pre deposit - Imposition of penalty - Confiscation of sale proceeds of goods - Ban on manufacture of goods - Non given for export - whether the appellant is required to deposit penalties imposed - Held that:- appellant has a prima facie case, because subsequently, NOCs have been issued by the Drug Controller for exports and even if confiscation is sustainable, penalty may not be sustainable. Therefore, we consider that appellant has made out a prima facie case for waiver of predeposit of penalties and stay against recovery during the pendency of appeal. Accordingly, the requirement of predeposit of penalties is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (3) TMI 467
Imposition of penalty on CHA - whether the appellant had played an active role and abetted in misdeclaration of elastic tapes imported by a client of his which was found to have been misdeclared as non-woven fabrics - Held that:- There is no positive finding against the appellant. In fact even in the show-cause notice, in paragraph 33, where penalty proposal on the appellant is discussed but it is seen that after briefly explaining the facts, a conclusion has been reached in the middle of the paragraph that the appellant was well aware about the presence of elastic tapes in the consignments before importation of the same. Further on going through the paragraph, we find that no such evidence is forthcoming in the whole paragraph. There is no justification for imposition of penalty on the appellant and accordingly penalty is set aside - Decided in favour of assessee.
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2015 (3) TMI 466
Waiver of pre deposit - whether the appellant is liable to pay customs duty on such spare parts and components imported and used in the repair/overhaul of engines and exported. - Held that:- Prima facie, the appellants have fulfilled the conditions which are required to be fulfilled if they were to import the goods under Notification No. 134/94 and if they were to follow the procedure appropriately. The confusion seems to have arisen because of conflicting advises and appellants own contribution. In any case, the basic objective of the Notification that such parts/components imported are used for repair/overhaul of goods exported/re-exported has been fulfilled. Therefore, in our opinion, at this stage, appellant need not be put to any requirement of pre-deposit. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted.
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2015 (3) TMI 465
Under-valuation of the goods - non-availability of license for importation - Held that:- In respect of second hand parts of photocopiers, there is a requirement of license, we consider that the impugned order does not require any interference. Decision in the case of Atul Commodities Pvt. Ltd. Vs CC, Cochin [2009 (2) TMI 18 - SUPREME COURT] distinguished - Decided against assesse.
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Corporate Laws
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2015 (3) TMI 464
Application for Winding up of company - Breach of mutual trust and confidence - Provisions of the Act would override anything to the contrary in the Articles of Association - Held that:- Having regard to the allegations by the petitioner and the equally strong counter-allegations against the petitioner by the contesting respondents, this court would have to be satisfied that there is material produced before the Court to demonstrate that the management and conduct of the company ought not to be continued, while exercising discretion under Clause (f) of Section 433 of the Companies Act, 1956. It cannot be said that there is any such clinching material made available by the petitioner. The allegations on both the sides would require a detailed enquiry, which is not contemplated in these proceedings. The allegations by the petitioner as a minority shareholder, are primarily of oppression and mismanagement. The petitioner is provided with a remedy by recourse to Sections 397 & 398 of the Act. The powers of the Court under Sections 397 to 403 have been conferred on the Company Law Board by the Company (Amendment) Act, 1988 (with effect from 31-5-1991). Therefore, in the circumstances of the case the petition is not maintainable and ought to be rejected. But the peculiar circumstance that has been created by the parties of their volition, is in inviting this court to dispose of the application in CA 1886/2013, where by mutual consent - an Extraordinary General Meeting of the company was convened under the Chairmanship of an independent member of the Bar, in whom both the sides had reposed confidence. The contesting respondents having found that the tables were turned on them at the said meeting, whether they would be in a position to refuse to abide by the result of the meeting, dehors the merits of the petition, is a question that looms up for consideration. The contesting respondent shareholders have sought to place reliance on Article 12 (iii) of the Articles of Association in holding that the result of the Extraordinary General Meeting was inconclusive and was not binding on them. Section 284 of the Act provides for the manner of removal of a Director of the company, and notwithstanding anything to the contrary in its Articles, would be removable by an ordinary resolution of which special notice has been given. The Section is general and applies to all Directors and includes all those not retiring by rotation. It applies to permanent Directors or Life Directors and Directors appointed for a fixed term even though they may have been appointed with reference to the Articles or otherwise. here fore, the contesting respondents are held bound by the result of the said meeting. The petitioner is at liberty to enforce the result of the meeting in terms of the report of the Chairman of the Extraordinary General Meeting referred to here in above in the manner known to law.
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2015 (3) TMI 463
Winding up application on the recommendation made by BIFR - Bonafide purchase of permises - Disposing power exercised prior to the commencement of winding up - Held that:- It is clear that the date of winding up by a court is the date of presentation of the petition. Given that the present two petitions were not maintainable and that the Vysya Bank petition was subsequently dismissed, the only petition whose presentation date could be reckoned for the purposes of Section 441, was, therefore, the petition on the BIFR recommendation, i.e., Company Petition No. 154 of 2007. The presentation date of that petition was 8th February 2007. By that time, the sales in favour of Pavlova had already been completed. In fact, they had been completed two years earlier. At this stage, it must be noted that the order of admission on the present two petitions filed by IFGL Refractories and MSTC was set aside on 14th December 2000. Those two petitions then lay dormant and they were only again taken up along with the BIFR suo-motu Company Petition No. 154 of 2007. The order dated 16th January 2008 allowing the present two petitions and ordering the winding up of Shri Ishar Alloy Steels Limited, could not, in my view, have been made. Those petitions, as I have noted, were clearly not maintainable and did not lie. That order ought to have been made, and made only, in the suo-motu BIFR Company Petition No. 154 of 2007. Mr. Chinoy points out that before the BIFR too, it was clear that a sale of these very office premises was very much in contemplation. This is evident inter alia from the minutes or summary record of the proceedings held on 30th March 1999 before the BIFR and also from paragraph 11 of the summary record or proceedings of the hearing held on 22nd May 2000. Indeed, the latter record indicates that it was specifically stated that the promoters of Shri Ishar Alloys would bring in ₹ 18 crores by way of their contribution, of which ₹ 2 crores would be through the sale of the office premises. There was, therefore, Mr. Chinoy submits, and in my view rightly, no injunction per se or any restraining order in respect of the sale of these premises at that time from Shri Ishar Alloys to Neco Tech or its nominees. Consequently, the further sale by Neco Tech to Pavlova could not be invalidated, in as much as Neco Tech not only paid a fair market value for the premises, but also acquired a good, clear and marketable title. The principle laid down in the case of Monark Enterprises [1991 (10) TMI 208 - HIGH COURT OF BOMBAY] is equally applicable in the current case. The disposing power was exercised and the sale to Pavlova was completed before the presentation of the suo-motu BIFR-recommended Company Petition No.154 of 2007. - Decided in favour of appellant.
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2015 (3) TMI 462
Default in repayment of debts - Winding up application - Decree from foreign court - Held that:- However, as indicated in the foregoing discussion, step down subsidiary of Videocon in Italy had admittedly taken a loan of 38 Million Euros from the Bank in Italy. Admittedly, Videocon had given a guarantee in the form of Patronage letter of 5 June 2007 for the aforesaid loan but it kept its liability limited to 38 Million Euros. As noted by the learned Company Judge and as was the case before us, there is no denial of the aforesaid basic facts. In fact Videocon had admitted its liability before issuance of the statutory notice by the Bank. For instance, in the letter dated 19 January 2010, the Subsidiary not only admitted the liability, but requested the Bank not to enforce the guarantees backing the loan stating that Videocon is one of the oldest and well known companies in Indian stock market giving the figures of its turnover and net worth. It also stated that Videocon has a distribution channel with around 45,000 distributors spread all over India and counts more than 160 million satisfied clients. The Subsidiary which is a step down subsidiary of Videocon requested for installments to grant a very short moratorium in order to reschedule the loan in question according to parameters. The Subsidiary enclosed financial statements of Videocon of 30 September 2009. Even thereafter Videocon itself addressed a letter dated 9 December 2010 admitting that the Bank had granted to its subsidiary loan of 35 Million Euros under the Facility Agreement which was secured by Patronage Letter granted by Videocon itself on 5 June 2007 in favour of the Bank for the benefit of its subsidiary. In the said letter, the Videocon further admitted that the Subsidiary was not able to comply with the financial covenants of the Facility Agreement. Videocon further indicated that it was ready to discuss the term sheet containing proposed reconstructing. All these letters leave no room for doubt that Videocon admitted its liability to honour the guarantee given in the form of Patronage letter dated 5 June 2007. It cannot, therefore, be said that Videocon has even a tittle of defence on merits. All that it has been contending after receiving the statutory notice and filing of the winding up petition is not merely a technical but a hyper technical defence that the Bank cannot enforce the liability arising from the Patronage Letter because the Bank has already obtained a decree from a Court in Turin. Learned Company Judge has rightly observed that a creditor who obtains a decree from a foreign court cannot be at a disadvantage in the matter of filing of a winding up petition. We fully concur with the view of the learned Company Judge. Since we have already granted time upto 30 September 2014 to Videocon to pay the amount to the respondent Bank (petitioning creditor), it is not necessary to grant any stay as prayed for, but the respondent Bank shall not take any further steps on the basis of this judgment till 30 September 2014. - Appeal dismissed.
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2015 (3) TMI 461
Period of limitation - Violation of Regulation 6(d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Related to Securities Market) Regulations, 1995 and Section 11(3), Section 24 & 27 of the SEBI Act, 1992 - Validity of summon - Held that:- The Supreme Court in Udai Shanker Awasthi [2015 (3) TMI 21 - SUPREME COURT] while reiterating the proposition that a criminal offence is considered as a wrong against the State and the society as a whole, even though it is committed against an individual, inter alia in the context of delay in launching of a criminal prosecution noted herein that The question of delay in launching a criminal prosecution may be a circumstance to be taken into consideration while arriving at a final decision, however, the same may not itself be a ground for dismissing the complaint at the threshold. Moreover, the issue of limitation must be examined in light of the gravity of the charge in question. The second submission of the learned counsel for the petitioner that there is no specific role attributed to the present petitioners is also negatived. Petitioner no.1 is the company of whom admittedly petitioner nos.3 and 4 are directors. Para 5 specifically states that accused no.1 is a company incorporated under the Indian Companies Act of whom the three petitioners before this Court are the persons in-charge and responsible for the conduct of its affairs. They, admittedly, are the working directors of the company. It is also not the case of the petitioners that they were not the directors of the company during the period when the alleged offence was committed. Here is no merit in the revision petition - Decided against the appellants.
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Service Tax
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2015 (3) TMI 483
Classification of service - Manpower Recruitment or Supply Agency Services - agreement between two parties was in essence to harvest the sugarcane of the members of the Karkhana from their fields, load them in various vehicles and deliver them at factory site - Held that:- The package deal which is involved in this case was not subjected to service tax in the year 2005 and so, the Revenue was really not able to demand service tax to the respondent. The provisions of Finance Act did not give them sufficient leeway. So the notice and demand was uncalled for. After the notice was issued and the demand was made, it became a difficult endeavour for the Revenue to bring the service provided by the respondent within the definition of Manpower Recruitment and Supply Agency. In our view, it was not possible for them to do so then. - Decided against Revenue.
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2015 (3) TMI 482
Waiver of pre deposit - Works contract service - Held that:- CESTAT, after examining the nature of the activity done by the appellant, exercised discretion and directed pre-deposit of ₹ 40,00,000, which is less than 40°x, of the total demand. Thus, the CESTA f has considered the three parameters required to be considered viz., prima facie case, hardship and interest of the Revenue and passed the order. Thus, in the absence of any error in the discretion exercised by the CESTAT, we find no ground to interfere with such order. The time for compliance of the direction of the CESTAT viz., the payment, of pre-deposit of ₹ 40,00,000/- is extended by six weeks - Decided partly in favour of assessee.
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2015 (3) TMI 481
Waiver of pre deposit - Attachment of bank account - Held that:- in view of the undertaking being given by learned counsel for the petitioner that the amount will be paid as soon as the attachment on the bank account of the petitioner will be released, we direct respondents authorities to release the petitioner's bank account from attachment, subject to the condition that immediately upon release of the bank account from attachment, the petitioner shall deposit with the respondent authorities a further sum of ₹ 26 lacs over and above ₹ 34 lacs already deposited by the petitioner. - Conditional stay granted.
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2015 (3) TMI 480
Erection, Commissioning or Installation Services - Penalty u/s 76, 77 & 78 - Lack of knowledge - Held that:- In view of the categorical stipulations in the respective Work Orders, there is no room for the Respondent to plead that they were not aware of the applicability of service tax to the services rendered by them. In this scenario, the setting aside of the penalty by the ld. Commissioner (Appeals) without recording reasons and analyzing the facts, in my opinion, is unsustainable. Consequently, the impugned Order is set aside. Penalties under Sections 77 and 78 would suffice the present purpose; and therefore, the penalty imposed under Section 76 of the Finance Act, 1994, was not warranted. Consequently, the penalties imposed under Sections 77 and 78, are upheld and the penalty imposed under Section 76, is set aside. - case is remanded to the Adjudicating Authority to afford an opportunity to the Respondent-Assessee to pay 25% of the penalty imposed under Section 78 of the Finance Act, 1994, on fulfillment of the conditions laid down therein - Following decision of Commissioner vs. Krishnaram Dyeing & Finishing Works [2013 (8) TMI 539 - GUJARAT HIGH COURT] - Decided partly in favour of Revenue..
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Central Excise
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2015 (3) TMI 474
Valuation of goods - Section 4A - Whether the appellant is required to pay duty on cement bags of 50Kg supplied to construction industry on Retail Sale Price (RSP) basis or on transaction value basis - Held that:- Issue came up before this Tribunal in the case of Mysore Cement Ltd. Vs. Commissioner of Central Excise, Bangalore - II - [2009 (5) TMI 445 - CESTAT, BANGALORE] and Chettinad Cement Corporation Ltd. Vs. Commissioner of Central Excise, Trichy - [2008 (12) TMI 684 - CESTAT CHENNAI] it was held that construction industry is a service industry and, therefore, supply of cement to construction industry is exempted from declaration of Retail Sale Price (RSP) on the packages, and therefore, the assessment of such cement would not be covered by Section 4A of the Central Excise Act, 1944. Subsequently, the Hon'ble High Court of Karnataka in Commissioner of Central Excise, Bangalore-II Vs. Mysore Cements Ltd. - [2010 (8) TMI 246 - KARNATAKA HIGH COURT] dismissed the appeal filed by the Revenue and holding that assessment on RSP basis is not attracted. In the light of this decision, the learned Counsel for the appellant pleads for grant of stay and early hearing of the appeal. - appellant has made out a strong case in their favour for grant of stay. Accordingly, we grant waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.
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2015 (3) TMI 473
CENVAT Credit - Credit of excess duty paid - held that:- As per the Cenvat Credit Rules, 2004, an assessee is entitled to take credit on actual duty paid at the time of procurement of inputs. In this case, it is not in dispute that the respondent has taken credit of duty paid. Therefore, whether the excess duty paid or not is the issue between the Revenue and the supplier of the inputs. The respondent has taken the credit of actual duty paid. In these circumstances, I do not find any infirmity with the impugned order and hold that the respondent has taken CENVAT Credit correctly. Therefore, the Revenue's appeal deserves no merits hence the same is dismissed -Decided against Revenue.
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2015 (3) TMI 472
Denial of interest on delayed refund of pre-deposit made - Dispute settled in 1997 but refund sanctioned in 2002 - Held that:- The decision in the case of Orient Enterprises (1998 (3) TMI 137 - SUPREME COURT OF INDIA) is not applicable to the facts of this case as in this case, the appellant is claiming interest for the period March 1998 to February 2002, for the refund claim filed in December 1997. In the year 1997, the provisions of Section 11BB of the Central Excise Act, 1944 were in force. Therefore, the case law relied upon by the ld. AR is not relevant. Further, I find that in the case of Galaxy Entertainment Corpn. Ltd. [2010 (5) TMI 429 - CESTAT, MUMBAI] this Tribunal has held that interest is payable on delayed refund. Following the precedent decision of the tribunal, the appellant is entitled for interest on delayed refund. - Decided in favour of assessee.
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2015 (3) TMI 471
Waiver of pre deposit - Penalty under Rule 26 of the Central Excise Rules, 2002 - Assessee did not get themselves registered with the Central Excise Department under the Central Excise Law nor did they discharge any excise duty liability - Held that:- Rule 26 states that "Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater." Therefore, primary requirement of the said rule is that the goods should be held liable to confiscation and the person should be aware that the goods are liable to confiscation. - there is no finding given by the adjudicating authority in respect of liability of confiscation of the goods. In the absence of such a finding, imposition of penalty under Rule 26 cannot be sustained. Accordingly, the appellant has made out a strong case for grant of stay. Therefore, we grant waiver from pre-deposit of the penalty imposed against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.
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2015 (3) TMI 470
Waiver of pre deposit - CENVAT Credit - Modification of stay order - whether the appellant is required to pay 5% of the total value of the exempted product, ‘Slice' manufactured by them in terms of provisions of Rule 6(3) of CENVAT Credit Rules 2004 since they did not maintain separate accounts in respect of inputs used by them - Held that:- decision of the Tribunal in the case of Josts Engineering Co. Ltd [2013 (8) TMI 463 - CESTAT MUMBAI]. As submitted by the learned counsel, in that case the period involved was subsequent to the amendment carried out in Rule 6(3A) which requires the appellant to exercise an option and follow the procedure prescribed therein if the appellant does not maintain separate accounts. In Josts Engineering Co. Ltd. case, the appellants had maintained separate accounts in respect of inputs but by mistake they did not maintain separate accounts in respect of input services. When it was pointed out to them, they reversed the entire credit attributable to dutiable as well as exempted products taken by them in respect of input services. Taking this into consideration and taking the fact that appellant had maintained separate accounts in respect of inputs, the Tribunal came to the conclusion that the reversal of entire credit would be sufficient and it amounts to non-availment of credit and when credit is not availed in respect of input services at all, the provisions of Rule 6(3)(i) is not attracted. We find that the decision would be applicable to the facts of this case also. However since the Tribunal took the view in view of the fact that appellant had reversed the entire credit taken by the appellant therein and the credit was reversed where separate accounts was not maintained i.e. mainly input services, we consider that in this case also the appellant would be required to reverse the entire amount of CENVAT credit taken in respect of common input. Needless to say if an amount has already been paid, that can be deducted from the amount payable. Accordingly, the appellant is directed to reverse that credit within 8 weeks - Partial stay granted.
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CST, VAT & Sales Tax
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2015 (3) TMI 479
Constitutional validity of Section 29(7) of the Punjab Value Added Tax Act, 2005 - power to amend amend assessment - no opportunity of hearing is provided to the assessee before grant of approval by the Commissioner - Violation of Article 19(1)(g) of the Constitution of India - Violation of principle of natural justice - Held that:- A plain reading of Section 29 (7) of the PVAT Act shows that the designated officer within a period of three years from the date of assessment is authorised to amend assessment order made under Sub section 2 or 3 of Section 29 of the PVAT Act if he discovers that there has been under-assessment of tax payable by a person as a result of fraud or willful neglect or misrepresentation of facts on the part of such person or part of the turnover has escaped assessment. However, the amendment of an assessment order is subject to seeking prior permission from the Commissioner and after affording an opportunity of hearing to the affected person by the designated officer. Section 29(7) of the PVAT Act nowhere envisages personal hearing to be provided to the dealer before granting of prior permission by the Commissioner. The grant of permission is an administrative function and cannot be termed to be quasi judicial in nature. The prior permission of the Commissioner has been incorporated to safeguard the interest of the dealer so that the designated officer, where he is of the opinion that action is required to be taken, seeks approval of the higher officer of the rank of Excise and Taxation Commissioner. The dealer is provided with an opportunity of hearing at the time when the designated officer after getting approval from the Commissioner proceeds to amend the assessment order. Under the circumstances, the provision in question cannot be termed to be unreasonable, unconstitutional and ultravires. - approval given by the Commissioner and the notices issued by the concerned authority for amending the assessment order cannot be faulted. - Decided against assessee.
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2015 (3) TMI 478
Benefit of input tax rebate - whether Xerox machines, office stationary, air conditioners, building equipments, security system for building qualify for the benefit of input tax rebate. - Held that:- In view of clause (b) of sub-Section (6) of Section 2 of the KVAT Act, any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture adventure or concerned falls within the definition of 'business' and as such the machinery is used in the course of business the assessee is entitled to the input tax rebate. The appellate Tribunal has not looked into this statutory provision before arriving by such conclusion and therefore, it is not sustainable. Similarly, the findings of the Tribunal that there is no requirement that a particular temperature alone is essential for software development, the air conditioner makes the atmosphere good and increases the comforts, but they are not directly connected with the software activity, are concerned, in view of the reasons set out above, while considering the meaning of the word 'business', it is not necessary that there should be a direct nexus between the machinery and the activity that is carried on. Any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture adventure or concern, is sufficient to bring it within the word 'business' and therefore, when Air conditioner is used by the assessee in the course of his business, it falls within the definition of 'capital goods'. In view of Section 12 of the Act, the assessee is entitled to benefit of input tax rebate. For the very same reasons, the security systems for building where business is carried on is also eligible for tax rebate. In that view of the matter, the order of the Tribunal to that extent requires to be interfered with and accordingly, the said findings are set aside. - assessee is entitled to input tax rebate in respect of work stations as they do not fall under the definition of 'wood furniture'. - assessee is entitled to the benefit of input tax rebate on xerox machines, air conditioners and security systems for building - Decided in favour of assessee.
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2015 (3) TMI 477
Detention of transit - notice was issued for reason of an earlier transit pass not surrendered at the exit check post - Held that:- though a notice under Section 47(2) was not issued, effectively the vehicle was detained at the check post, for reason of an earlier transit-transport having not been properly registered at the exit check post. On failure to surrender a transit pass at the exit check post, necessarily, the department is entitled to take proceedings under Section 48(3) of the Act deeming, an owner or cosignor of the goods or owner or driver or the person in charge of the vehicle or goods, to be an assessee in default, presuming the sale to have been made within the State itself. The statute does not permit prevention of further transport in the same vehicle or detention of goods on that count. Admittedly the present consignment does not suffer any defect in transport and no notice on that count was issued. But for all practical purposes the goods and vehicle were detained, at the check post. If such detention is made, especially without notice under Section 47(2), that would fall foul of the statutory prescriptions, and violate Article 301 of the Constitution of India. The elaborate provisions dealing with transport of goods, and the prescription of documents to accompany such transport, intra-State and inter-State, is definitely to ensure revenue collection. It should also further trade and commerce and facilitate smooth movement of goods within and between the States. It is clear that Ext.P1 notice has been issued against the driver of the vehicle, who was in charge of the subsequent transport and 48 (3) deems; only a driver or owner or person, who was in control of the vehicle or the goods, at the time when the delinquency is noticed, to be an assessee in default. However, since, the registered owner of the vehicle, whose vehicle was used in the earlier transportation also, is before this Court, it is directed that the registered owner shall appear before the Commercial Tax Officer, Kasargod on 25.07.2014 when the registered owner shall be issued with a proper notice by the officer, under Section 48(3) and proceedings shall be carried on, against the petitioner or any other person who are held to be jointly and severally liable, as per the provisions. Ext.P1 cannot be given effect to if the driver of the subsequent consignment was not the one who carried the earlier one and proceedings shall be proceeded with against the petitioner herein, if he appears or otherwise the proceedings shall be on notice. The Department would be reserved the liberty to initiate proceedings simultaneously against the owner of the goods also; since the liability is joint and several. - Petition disposed of.
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2015 (3) TMI 476
Exemption in terms of the Industrial Policy, 1989 - Denial of exemption certificate - business carried on by it was in the negative list - Held that:- Whereas the petitioner has claimed the impugned order to be wrong and not binding and praying for quashing of the said order had sought mandate against respondents No.1 and 3 for granting sales tax exemption, the respondents have asserted validity and legality of the impugned order urging that the petition was frivolous. It is claimed that neither doctrine of equitable estoppel nor of legitimate expectations come to the rescue of the petitioner. - Merely because 'expelling and crushing' units were not in the negative list of the Industries Department, is not a fact which could entitle the petitioner for issuance of exemption certificate by the Department of Excise and Taxation as the matter was governed by the Punjab General Sales Tax Act, 1948. The Excise and Taxation Department was not to automatically follow decision taken by the Industries Department. Petitioner could claim exemption from the payment of sales tax only on the basis of exemption certificate to be issued by the Excise and Taxation Department which was then to be attached along with e-return under Rule 3(2) of the 1991 Rules. When the unit of the petitioner was on the negative list in terms of the 1991 Rules and was not eligible for the grant of sales tax exemption, claim of the petitioner that it had satisfied all the requirements, is misleading. Perusal of paper book reveals that the application of the petitioner for grant of exemption from sales tax was not lying pending but had remained actively under consideration of the respondents all through but the petitioner itself had rather been postponing such proceedings as it had not been producing account books despite having been asked to do so and had all through making endeavour for bringing the unit within the provisions of the 1991 Rules. Even the case of the petitioner was not considered favourably in the meetings held on 10.12.1993 (Annexure R-6) and on 31.3.1995 (Annexure R-7). In the meeting of 31.3.1995, the Department of Excise and Taxation had declined to accept the claim of the petitioner for sales tax exemption noticing that even the notification of 23.5.1991 of the Industries Department had already been withdrawn by the said department itself on 21.3.1994. It is, thus, noticed that at no stage, there was any representation made by the respondents acting upon which the petitioner could have been taken in for installing its unit. Rather, it is clear that unit of the petitioner was continuing on the negative list and was not entitled for grant of exemption certificate under the 1991 Rules. In this backdrop of facts and circumstances, even the doctrine of legitimate expectations does not enure for the petitioner. Consequently, the respondents were right in rejecting claim of the petitioner for sales tax exemption under the 1991 Rules vide order dated 3.7.1998 - impugned order of 3.7.1998 (Annexure P-35) is also appealable one under Section 20 of the Punjab General Sales Tax Act, 1948, whereas in the writ petition, the petitioner has specifically mentioned that no efficacious remedy of appeal is available against the impugned order - petition, being without any merit - Decided against assessee.
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2015 (3) TMI 475
Levy of sales tax on vend fee, levy of purchase tax under section 7A of the Tamil Nadu General Sales Tax Act - Imposition of penalties - Held that:- As regards the liability under section 7A, which is a subject-matter in all the four tax cases, as fairly submitted by the learned senior counsel appear ing for the assessee, the same has to be answered against the assessee by following the decision of this court reported in [2004 (9) TMI 617 - MADRAS HIGH COURT] (Mohan Breweries and Distilleries Limited v. Commercial Tax Officer, Porur Assessment Circle, Chennai). In the circumstances, the order of the Tribunal stands confirmed on this issue. As far as levy of penalty on this turnover is concerned, as rightly pointed out by the learned senior counsel appearing for the assessee the decision on the liability under section 7A was considered in the decision reported in [2004 (9) TMI 617 - MADRAS HIGH COURT] (Mohan Breweries and Distilleries Limited v. Commercial Tax Officer, Porur Assessment Circle, Chennai) on September 10, 2004 on the dispute raised based on the Commissioner's clarification, we do not find any justifiable ground to accept the plea of the Revenue that the facts of the case calls for imposition of penalty. Hence, applying the ratio of the decision reported in [2001 (9) TMI 1101 - MADRAS HIGH COURT] (Appollo Saline Pharmaceuticals (P) Limited v. Deputy Commercial Tax Officer) and taking note of the decision reported in [2004 (9) TMI 617 - MADRAS HIGH COURT] (Mohan Breweries and Distilleries Limited v. Commercial Tax Officer, Porur Assess ment Circle, Chennai), we have no hesitation in accepting the plea of the assessee; consequently, penalty levied on the turnover relating to section 7A Since reported in Mohan Breweries and Distilleries Ltd. v. State of Tamil Nadu [2014 (1) TMI 99 - MADRAS HIGH COURT]. stands deleted. Thus, the question raised in T.C. (R) Nos. 1669, 1857, 1667 of 2008 and 13 of 2009 on the levy of penalty on purchase tax stands cancelled. As far as the penalty levied on account of the non-inclusion of excise duty in the turnover is concerned, we again accept the argument of the learned senior counsel appearing for the assessee that till the decision was rendered by this court in [1989 (4) TMI 308 - MADRAS HIGH COURT] (Mohan Breweries and Distilleries Ltd. v. Commercial Tax Officer), the assessee acted on the basis of the various amendments that had come to the provisions of the Prohibition Act as well as the liquor vending rules and manufacturing rules and the arrangements made between the assessee, Tasmac and the Government as regards the liability of the assessee and with the bona fide dispute thus raised by the assessee as to the includability of the excise duty, we do not find any justifiable ground to accept the plea of the Revenue as to the absence of bona fides of its claim. - Decided partly in favour of assessee.
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Indian Laws
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2015 (3) TMI 460
Arbitration clause - territorial criterion / principle - Scope of Arbitration Act, 1996 - Performance of the agreement - English Arbitration Law was made applicable - Maintainability of appeal against the Foreign Awards - Part I of the Arbitration and Conciliation Act, 1996 Act is applicable to arbitrations held outside India unless the parties have either expressly or impliedly excluded the provisions of the Act- Implied Exclusion - Held that:- In the present case, the agreement stipulates that the contract is to be governed and construed according to the English law. This occurs in the arbitration clause. Mr. Vishwanathan, learned senior counsel, would submit that this part has to be interpreted as a part of “curial law” and not as a “proper law” or “substantive law”. It is his submission that it cannot be equated with the seat of arbitration. As we perceive, it forms as a part of the arbitration clause. There is ample indication through various phrases like “arbitration in London to apply”, arbitrators are to be the members of the “London Arbitration Association” and the contract “to be governed and construed according to English Law”. It is worth noting that there is no other stipulation relating to the applicability of any law to the agreement. There is no other clause anywhere in the contract. That apart, it is also postulated that if the dispute is for an amount less that US $ 50000 then, the arbitration should be conducted in accordance with small claims procedure of the London Maritime Arbitration Association. When the aforesaid stipulations are read and appreciated in the contextual perspective, “the presumed intention” of the parties is clear as crystal that the juridical seat of arbitration would be London. On the basis of principles lay down in case of Cargill International [1997 (11) TMI 515 - ROYAL COURTS OF JUSTICE],it is vivid that the intended effect is to have the seat of arbitration at London. The commercial background, the context of the contract and the circumstances of the parties and in the background in which the contract was entered into, irresistibly lead in that direction. We are not impressed by the submission that by such interpretation it will put the respondent in an advantageous position. Therefore, we think it would be appropriate to interpret the clause that it is a proper clause or substantial clause and not a curial or a procedural one by which the arbitration proceedings are to be conducted and hence, we are disposed to think that the seat of arbitration will be at London. Having said that the implied exclusion principle stated in Bhatia International [2002 (3) TMI 824 - SUPREME COURT OF INDIA] would be applicable, regard being had to the clause in the agreement, there is no need to dwell upon the contention raised pertaining to the addendum, for any interpretation placed on the said document would not make any difference to the ultimate conclusion that we have already arrived at. Before parting with the case, it is obligatory on our part to state that the Division Bench of the High Court has allowed the petition on the foundation that the Bharat Aluminium Co. [2012 (9) TMI 912 - SUPREME COURT] case would govern the field and, therefore, the court below had no jurisdiction is not correct. But as has been analysed and discussed by us, even applying the principles laid down in Bhatia International [2002 (3) TMI 824 - SUPREME COURT OF INDIA] and scanning the anatomy of the arbitration clause, we have arrived at the conclusion that the courts in India will not have jurisdiction as there is implied exclusion. Consequently, for different reasons, we concur with the conclusion arrived at by the High Court and accordingly, the appeal, being sans merit, stands dismissed. - Decided against the appellant.
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