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TMI Tax Updates - e-Newsletter
March 18, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Interest under Section 234A, 234B & 234C - the interest for default in payment of tax / advance tax for the reason that assessee had already made a request for adjustment of the amount against the advance tax which was already in the custody of the department - HC
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Income accrued after the death of the deceased - income which accrued after the death of the deceased belongs to the executor of the will of the deceased and in that capacity an assessment has to be made. - HC
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Recourse to rectification proceedings u/s 154 by Settlement Commission - where there is no power to rectify, the levy interest cannot be imposed by rectifying a concluded order under Section 245D(4) of the Act. - HC
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Entitlement to deduction under Section 80IB - Given the fact that the dyes and the materials were given by the assessee to the job workers, who had merely bestowed their labours, no hesitation in accepting the case of the assessee that it qualify for relief under Section 80IA - HC
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Product Development Expenditure disallowed - there is no distinction as to whether the expenditure incurred is capital or revenue, because while the provisions of section 35(1) of the Act allows deduction of revenue expenditure, the provisions of section 35(1)(iv) of the Act allows deduction in respect of capital expenditure - AT
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Penalty u/s.271(1)(c) - If the assessee has claimed the deduction u/s 43B on the basis of actual payment, then it should be held that the assessee’s claim for deduction for the impugned assessment year is not bonafide or the assessee cannot be held liable for furnishing of inaccurate particulars. - AT
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Computation of capital gain - Disallowance of commission paid to brokers for selling the land - assessing officer is not justified in restricting the claim at 2% without making any further enquiry - AT
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Revision order u/s. 263 - examining the entire assessment records and details filed before the AO by the assessee, which clearly proves that the AO has applied his mind - revision set aside - AT
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Disallowance made on account of Cess payable on Green Leaf - When by fiction the income is computed as an income under the Act, all deductions as are available both for the agricultural component and for the business component of the income are to be allowed as a natural corollary - AT
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Rollback of an Advance Pricing Agreement - Income-tax (Third Amendment) Rules, 2015 - CBDT issues Notification
Service Tax
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Since the purchase and cancellation entries were made within the time limit for making payment, the asessee was not liable to make any payments against these defective softwares and the claim of the assessee in this regard is acceptable - demand of service tax is not sustainable - AT
VAT
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Assessment in absence of forms 'C' and 'F' that have been produced subsequently - Rejection of request of Re-opening of the assessment - revenue directed to consider the forms - HC
Case Laws:
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Income Tax
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2015 (3) TMI 545
Non deduction of TDS on usance charges paid on import - disallowance u/s 40(a)(i) - CIT(A) deleted addition - whether usance charges are in the nature of interest as defined in section 2(28A)? - Held that:- Hon'ble Supreme Court in Vijay Ship Breaking Corpn. & Ors. Versus Commnr. of Income Tax, Ahmedabad [2008 (10) TMI 6 - SUPREME COURT ]has reversed the decision of Hon'ble Gujarat High Court [2003 (3) TMI 91 - GUJARAT High Court] not on on merit but this decision has been reversed as the Assessee was engaged in ship breaking business and the Assessee had imported the ship for breaking in respect of which the Assessee had to incur the usance charges. The Hon'ble Gujarat High Court has taken the view that the usance charges are interest within the provisions of Sec. 2(28A) of the Income Tax Act and has accrued in India, therefore Sec. 195 was clearly applicable and Assessee has committed default by not deducting TDS. When the matter went before the Hon'ble Supreme Court, Explanation (2) was inserted u/s 10(15)(iv)(c) by the Taxation Laws (Amendment) Act, 2003 with retrospective effect from 1.4.1962 explaining that it is apparent that this Explanation is applicable only in a case where an undertaking is engaged in business of ship breaking and usance charges are payable outside India by that undertaking in respect of purchase of a ship from outside India. The decision of the Hon'ble Gujarat High Court has impliedly been approved by the Hon'ble Supreme Court in respect of Assessees who are engaged in the business of ship breaking. We, therefore, set aside the order of CIT(A) and allow the appeal of the Revenue. - Decided in favour of revenue.
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2015 (3) TMI 544
Addition pertaining to the profit - unaccounted sales - addition made on the basis of diary found found from the almirah of Shri Dinesh Kumar, disgruntled employee - A.O. estimated income by applying n.p. @12% restricted to @ 6.5% by ITAT - Held that:- key of the almirah was provided at the time of search by Sri Rakesh Goyal and the same was seized. Later, the almirah was opened and incriminating material was found therein. The entry made in the seized document was already reflected in the books of account. The said slip can be treated as 'Yaaddast Parcha' i.e. memory slip. There was no sale out side the books so, there was no occasion to estimate the turnover or n.p., hence, the Tribunal has rightly applied the n.p. rate @ 6.5% which was accepted by the Department in the earlier years and the same appears reasonable in the peculiar facts and circumstances of the case. Moreover, estimation of n.p. rate is a question of fact, which was rightly decided by the Tribunal, being a final fact finding authority. - Decided against revenue. Unexplained deposit on various dates in the current account No.4515 in the Oriental Bank of Commerce - Tribunal deleted the addition by observing that the said entry pertaining to the deposit were duly reflected in the books of account - Held that:- The books of account were seized during the course of search and entries were duly reflected at that time. The entries were also reflected in the excise record pertaining to the sale in-cash and the availability of cash with the assessee on the date of cash deposit in the bank. When it is so, then we find no reason to interfere with the impugned order passed by the Tribunal and the same is hereby sustained along-with the reasons mentioned therein. - Decided in favour of assessee. Unexplained deposit in the form of bid money - Held that:- addition of ₹ 4 lacs was made by the A.O. pertaining to the payment through Shri Umesh Gupta. The Tribunal has confirmed the addition of ₹ 4 lacs. When it is so, then there is no occasion for the department to have any grievance by taking this ground in the appeal. The ground was decided by the Tribunal in favour of the Department and it shows that the substantial questions of law have been framed in a casual manner by the department. Therefore, this question neither adjudicated nor any answer is provided. - Decided against assessee. Unexplained investment in Saharanpur Associates u/s 69 - Tribunal given the entire relief to the assessee - Held that:- Neither the copies of the documents on which basis the addition was made for ₹ 15,25,000/- confronted to the assessee nor any other material was brought on record, which will justify the addition. So, no adverse inference can be drawn with regard to entry of ₹ 15,25,000/- wrongly shown pertaining to the assessee. It is a finding of fact that no name of the assessee was mentioned in the documents on which basis the addition was made. Moreover, it is a question of fact and in the absence of material evidence, we find no reason to interfere with the impugned order and the same is hereby sustained along-with the reasons mentioned here - Decided against revenue. Capital gain on sale of share - Tribunal deleted the addition holding that the capital gain arising out of sale of share was duly shown during the year 1992-93, while filing regular return - Held that:- when the capital gain on sale of share was duly shown in the assessment year 1992-93, then there is no question to make addition, hence the order passed by the Tribunal is hereby sustained along-with the reasons mentioned herein. - Decided against revenue. Addition on bogus declaration in VDIS in the name of assessee's wife namely Smt. Parul Goyal - Held that:- wife of the assessee namely Smt. Parul Goyal had availed the benefit of VDIS Scheme, 1997 and disclosed jewellery of ₹ 18,57,384/-. The A.O. observed that the declaration of VDIS was not genuine. But the CIT(A) as well as the Tribunal held that the VDIS declared in the name of the wife of the assessee was duly accepted by the department. When it is so, then there is no question for making the addition again. When the amount was bogus in the VDIS then there is no occasion to make any addition, specially when declaration was accepted by the Department. - Decided against revenue. Investment and income from the money lending business - addition on the basis of loose papers marked as pages 22 and 25 found during the course of search - Tribunal upheld CIT(A)'s order to delete the addition by observing that the said papers were deaf and dumb documents as no details were mentioned except amount and also no name was mentioned - Held that:- As the Tribunal observed that these documents are simple deaf and dumb documents, which cannot be considered for making any addition, specially, when no incriminating evidence was produced. When it is so, then we find no reason to interfere with the order passed by the Tribunal and the same is hereby sustained along-with the reasons mentioned herein. - Decided against revenue. Addition on account of diversion of income in the name of wife of the assessee - grant of relief - Held that:- y considering the rival submission, we are of the opinion that the assessee and Smt. Payal Goyal are the husband and wife in the bedroom, but for the purpose of income tax they are separate and they have filed their separate return since long, which were accepted by the department. When it is so, then there is no justification to make addition. - Decided against revenue.
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2015 (3) TMI 543
Interest under Section 234A, 234B & 234C - default in payment of advance tax - cash seized in the course of search - Adjustment to the cash lying in the P.D. account against the advance tax - Tribunal deleted interest observing that the cash belongs to the assessee was already in the government account so there is no question to charge the interest - Held that:- As during the search, a huge cash was recovered. The assessee, while making statement under Section-134 of the Income Tax Act, offered to pay the tax on an undisclosed income of ₹ 10 Crore for which the tax would come to approve ₹ 3 Crore but the cash amount of ₹ 4,31,36,00/- was already available with the department which was deposited in the P.D. account. The assessee made a number of request from time to time for the adjustment of the cash seized against the liability of the advance tax, but the department neither replied nor adjusted the said amount. No doubt that before the due date, the cash was available with the department. The same could have been adjusted against the advance tax. The return was filed on or before the due date so the interest for default in furnishing the return of income under Section-234A was not desirable. Similarly, the interest for default in payment of advance tax is also not leviable under Section-234B for the reason that assessee had already made a request for adjustment of the amount against the advance tax which was already in the custody of the department. Similarly, Section-234C is not attracted as there was no deferment. See CIT Versus Ashok Kumar [2010 (9) TMI 771 - Punjab and Haryana High Court] and CIT vs. Kesar Kimam Karyalaya [2005 (5) TMI 58 - DELHI High Court ] - Decided against revenue.
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2015 (3) TMI 542
Initiation of the proceeding under Section 153C - absence of satisfaction note - Held that:- When no satisfaction was recorded then the requirement of Section 153C was not satisfied. Therefore, we have no reason to interfere with the impugned order passed by the Tribunal, who has not sustained the proceedings under Section 153C of the Act, for the reason that there was no satisfaction at any stage. Needless to mention that in the case of Manish Maheshwari vs. Asst. CIT and Another [2007 (2) TMI 148 - SUPREME COURT OF INDIA], similar views were expressed. In the case of CIT vs. Anil Kumar Chadha, Income Tax [2015 (2) TMI 723 - ALLAHABAD HIGH COURT] the same was followed too. - Decided against revenue.
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2015 (3) TMI 541
Admissibility of relief under Section 80 HHC - whether recovery of cost of material by way of sale of scrap generated in its manufacturing process, could be treated as local sale - assessee's unit was a 100% Export Oriented Unit (EOU) - Held that:- From the record, it appears that the assessee's firm was 100% export unit, it had maintained the books of account subject to Audit under Section 44(A)(B) of the Income Tax Act. The cutting of the leather resulting into scrap which either will have to be thrown or sold in the local market. When such scrap is sold, the sale proceeds of the scrap cannot be included in the term of "turnover", therefore, the proceeds of sale of such scrap would not be included in "sales" in the profit and loss account of the assessee.The assessee was not primarily dealing in scrap but was a manufacturer of 'shoe uppers'. So, only the sale proceeds from sale of 'shoe uppers' would be treated as its turnover, as per the normal accounting practice profits. The income derived from the sale of scrap would not be included in the total turnover and the same will have to be reduced from the cost of the raw material.See Commissioner of Income Tax Vs. Punjab Stainless Steel industries (2014 (5) TMI 238 - SUPREME COURT) Reopening of assessment - Held that:- The proceedings under section 148/147 of the Act were not required as no fresh material was brought on record. This is a case of merely accounting principle. Therefore, we set aside the proceedings under Section 148/147 of the Act initiated by the A.O. for all the assessment years under consideration. All the impugned orders are hereby set aside. - Decided in favour of the assessee
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2015 (3) TMI 540
Computation of deduction u/s 80HHB - CIT (Appeals) allowed the appellant's appeal by holding that when each project is different and the deduction is per project, then it would not be justified in clubbing the income of all projects for the purposes of working out the deduction available under Section 80HHB - Held that:- It is not disputed by the revenue that the issue stands concluded by the decision in Hindustan Construction Co. Ltd. (2015 (2) TMI 718 - BOMBAY HIGH COURT) wherein holding that the assessee was entitled to the deduction under section 80HHB in respect of each project instead of netting up of profits from all the overseas projects. In such circumstances, the Tribunal was in no error in directing the Assessing Officer to allow the deduction as claimed by the assessee without setting off all the losses suffered in other foreign projects - Decided in the favour of the assessee. Entitlement to deduction for Retention Money - Held that:- Question (B) stands concluded in favour of the respondent-assessee and against the appellant-revenue by the decision of this Court in CIT Vs. Associated Cables P. Ltd. [2006 (8) TMI 135 - BOMBAY High Court] wherein held the payment of retention money in the case of contract is deferred and is contingent on satisfactory completion of contract work. The right to receive the retention money is accrued only after the obligations under the contract are fulfilled and, therefore, it would not amount to an income of the assessee in the year in which the amount is retained - Decided in favour of asseesse.
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2015 (3) TMI 539
Income accrued after the death of the deceased - I.T.A.T. restoring the matter to the file of the AO with the direction that he will analysis each item of income with a view to ascertain as to which part of it accrued and arose to the deceased during his life time and as to what is the income which accrued or arose after the death of the deceased not to him but to the executor and to bring to tax separately the two total incomes (1) u/s 159 and (2) u/s 168 - Held that:- From the record, it appears that the Tribunal has restored the matter back to the A.O. and, by now, the A.O. must have passed a fresh order as per the direction of the Tribunal. Further, the tax amount involved is a meager one in the instant case. On merit, we are of the view that the income which accrued after the death of the deceased belongs to the executor of the will of the deceased and in that capacity an assessment has to be made. The income which was earned by the deceased during his lifetime will have to be assessed separately, as deceased cannot earn any income after his death, nor such income could be assessed in his hands. In other words, the income which never belonged to the deceased and which never accrued to him could not be brought in his hands. It may be mentioned that Section-176 (IA) was inserted whereby the income earned by the deceased but received after his death, subsequent to the end of the previous year in which he died but also made assessable through his legal representative by the fiction created in Section-176(3A) of the Act. As soon as death takes place, the property/income in question is vested in the legal heirs. When it is so then we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained alongwith the reasons mentioned herein above. - Decided against revenue.
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2015 (3) TMI 538
Recourse to rectification proceedings u/s 154 by Settlement Commission - levy interest under Section 234A, 234B and 234C - Held that:- The Larger Bench of the Apex Court in Brijlal and Ors Vs. CIT reported in [2010 (10) TMI 8 - SUPREME COURT ] has now resolved the controversy and held that the Settlement Commission has no power to reopen a proceedings concluded by a final order under Section 245D(4) of the Act by invoking Section 154 of the Act. Thus where there is no power to rectify, the levy interest cannot be imposed by rectifying a concluded order under Section 245D(4) of the Act. - Decided in favour of assessee.
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2015 (3) TMI 537
Exemption u/s. 11 - main activity of the assessee is to organize trade fair - Tribunal confirming the order of the CIT(A) allowing exemption - Held that:- Two authorities have come to a concurrent findings of fact that the respondentassessee is not organizing trade fairs and therefore not engaged in business activity. We find that there is certainly a distinction/difference between organizing trade fairs and facilitating its members to participate in trade fairs. Consequently, once there are concurrent findings of fact that no trade fair is organized by the respondentassessee which would amount to carrying the business, there is no occasion to us to interfere with the same. The finding recorded by the authorities of respondentassessee not carrying on business is not shown to be perverse. Therefore there is no reason for us to entertain the proposed question of law as it does not give rise to any substantial question of law. - Decided against revenue.
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2015 (3) TMI 536
Entitlement to deduction under Section 80IB - assessee does not manufacture any goods by itself, but gets the same manufactured by others on job work basis - CIT(Appeals) following assessee's own case in respect of the earlier assessment year, partly allowed the appeals - Held that:- Revenue fairly stated that the issue involved in this case is squarely covered by a decision of this Court in the case of The Commissioner of Income Tax, Coimbatore vs. M/s. Elgi Ultra Industries Limited, Coimbatore [2012 (8) TMI 809 - MADRAS HIGH COURT] wherein held even though the assessee had not employed its own employees, yet, the fact is that at every stage the assessee had extracted control over the job work as though they were employees of the assessee. Given the fact that the dyes and the materials were given by the assessee to the job workers, who had merely bestowed their labours, no hesitation in accepting the case of the assessee that it qualify for relief under Section 80IA thus answering the question in favour of the assessee - Decided against revenue.
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2015 (3) TMI 535
Product Development Expenditure disallowed - CIT(A) sustained the disallowance as the expenditure resulted in the acquisition of rights in or arising out of scientific research - Held that:- The expenditure that is sought to be excluded u/s.43(4)(ii) of the Act is an expenditure which the assessee incurs in acquiring rights in or arising out of scientific research already done by somebody. It is possible that the assessee without carrying out any scientific research, acquires rights in scientific research, arising out of scientific research done by somebody else and claims cost of acquisition of such rights as expenditure on scientific research. It is this kind of expenditure that is sought to be excluded u/s. 43(4)(ii) of the Act in its exclusion clause as “ expenditure incurred in acquiring rights in, or arising out of scientific research.” It is such type of expenditure carried out by somebody else and such right is acquired by the assessee, that is sought to be disallowed. The objective behind the exclusion clause in section 43(4)(ii) of the Act appears to be that expenditure on scientific research should be on the research actually carried out by the assessee in-house and it should not merely spend money in acquiring rights in or arising out of scientific research carried out by some other person. If the interpretation sought to be placed by revenue / authorities below is to be accepted, then the benefit sought to be conferred by the provisions of section 35(1)(iv) of the Act would be virtually denied in all cases by invoking the exclusion clause in section 43(4)(ii) of the Act. Such a consequence would never have been intended by the Legislature. As already stated, the object behind the provisions of section 35 of the Act is to encourage scientific research so that the benefit of such research would be available to all. In the given facts and circumstances of the case as discussed above, we are of the view that the claim of deduction under section 35(1)(iv) of the Act is to be allowed. In any event, there is no distinction as to whether the expenditure incurred is capital or revenue, because while the provisions of section 35(1) of the Act allows deduction of revenue expenditure, the provisions of section 35(1)(iv) of the Act allows deduction in respect of capital expenditure. We, therefore, direct the Assessing Officer to allow the deduction claimed by the assessee. - Decided in favour of assessee. Disallowance of Brought forward losses as per section 79 - Whether unabsorbed scientific research expenditure should be treated on par with unabsorbed depreciation ? and Whether there has been a change in shareholding of more than 51% in the earlier years under consideration, as compared to the Assessment Year 2008-09 - Held that:- It is necessary that the scientific research expenditure should have been capitalised and deduction claimed under section 35(1)(iv) of the Act. If the expenditure has been claimed as revenue expenditure, as mentioned by the learned CIT(A), then the assessee cannot claim otherwise for the purposes of carry forward of the losses. If the assessee has treated the scientific research expenditure as revenue expenditure and claimed deduction as revenue expenditure, there is no case to claim that it is in the nature of unabsorbed depreciation, for the purpose of carry forward of losses. In such a case, it has to be treated as business losses and the provisions of section 79 of the Act will apply. If, on the other hand, the assessee has treated the scientific research expenditure as capital expenditure and claimed deduction under section 35(1)(iv) of the Act, then the decision of the ITAT, Mumbai Bench in the case of Mahyco Vegetable Seeds Ltd. (2008 (7) TMI 611 - ITAT MUMBAI.) shall apply to the facts of the case. This aspect requires to be examined by the Assessing Officer. As regards the issue of change in shareholding by deduction, the finding of the Assessing Officer that there has been a change in the shareholding of more than 51% for Assessment Years 2002-03 to 2004-05 is accepted by the assessee. In respect of the later two years, i.e. Assessment Years 2005-06 and 2006-07, it is the contention of the assessee that the change in the shareholding is not more than 51% and therefore the conditions stipulated in section 79 of the Act is satisfied. In support of this contention, the learned Authorised Representative has furnished the details of the grouping of shareholding, which is claimed to be the same details as filed before the Assessing Officer - Decided in favour of assessee for statistical purposes. Disallowance under section 14A - Held that:- The assessee's contention is that it has sufficient funds to make investments and that the interestbearing borrowed funds were not used for making the investments in MFs during the period under consideration. This aspect of the assessee's contention, in our considered view, requires verification. - Decided in favour of assessee for statistical purposes. Disallowance of “interest” - inclusion of finance charges like factoring and other charges, bill discounting charges, etc. as part of interest charges - contention of the assessee that the computation made by the Assessing Officer is erroneous, since such finance charges cannot be included as “interest” for the purposes of Rule 8D of the IT Rules, 1962 - Held that:- As find from the record that the learned CIT(A) has already directed the Assessing Officer to exclude these charges from the computation of interest and hence no adjudication is called for at this stage. - Decided in favour of assessee.
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2015 (3) TMI 534
Addition made by the Assessing Officer u/s 41(2) - computation of short term capital gain - CIT(A) deleted the addition - application of provisions of section 50 for the purpose of computation of capital gain and claim of deduction raised under section 54EC - Held that:- Though the assets were shown in the category of fixed assets, but no depreciation was claimed. Therefore, the provisions of section 41(2) and 50(2) of the Act cannot be invoked for the purpose of computation of short term capital gain. In that eventuality, the normal long term capital gain was accrued to the assessee and the assessee has claimed exemption under section 54EC of the Act by making investment in National Highway Bonds. Therefore, the assessee would be entitled for exemption under section 54EC of the Act. CIT(A) has appreciated the legal provisions in the light of various judicial pronouncements before concluding that the benefit of section 54EC of the Act are available to the assessee irrespective of the fact that computation of capital gain is done either under section 48 or 49 or 50 of the Act. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm the same. - Decided against revenue.
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2015 (3) TMI 533
Disallowance u/s. 14A r.w. Rule -8D - argument of assessee that no disallowance on account of interest is called for as the own funds of the assessee which include share capital and reserves and surplus is much more than the investment made by the assessee from where the assessee has earned tax free income - Held that:- The factual position regarding own funds of the assessee has not been disputed by the Revenue. Similarly, the factual position regarding investment made by the assessee in tax free securities is also not disputed. If it is so, then the investment of the assessee in the tax fee securities would be a meager sum of ₹ 9.60 crores, against own funds available with the assessee of ₹ 513.25 crores. Respectfully following the decision of Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. ( 2014 (8) TMI 119 - BOMBAY HIGH COURT), we hold that according to the facts of the present case no disallowance on account of interest factor is called for. - Decided in favour of assessee. Addition to closing stock - under valuation of closing stock - whether CIT(A) erred in computing the value of closing stock by taking into consideration excise duly on that portion of closing stock where no excise duty is actually payable in law (goods procured under advance license, exempted, etc.)? - Held that:- As relying on assessee's own case [ 2014 (7) TMI 426 - ITAT MUMBAI] assessee is following ‘inclusive method of accounting’ and the only actuals are entered in the books of accounts. There is no need for adjustment of inventories as they were already adjusted basing on the actuals in accordance with the provisions of section 145A of the Act. On hearing both the parties and on perusal of the material on record, we are of the opinion that this issue needs to revisit the file of the AC and the closing stock valuations have to be redone in the light of the provisions of section 145A of the Act. Accordingly, we remand the issue to the file of the AO for adjudicating the issue afresh - Decided in favour of assessee for statistical purposes. Expenditure in respect of guest houses and residential flats disallowed - appellants have failed to produce documentary evidence in respect of use of guest house and residential flats - Held that:- As relying on assessee's own case confirmation given by Shri Sharma is supported by the ‘guest house register’, also that the expenditure incurred on employees may be fully allowed as it is incurred for the business purposes. As such, it is not dear from the record that why the assessee has to incur on the residential flats allotted to the employees of the company. Considering the no objection from the Ld DR, we remand the matter to the file of the AO with a direction to decide the issue afresh after examining the details and contents made in the said affidavit and pass a speaking order after granting a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of exemption claimed in respect of dividend income earned from subsidiary based in Sri Lanka - Held that:- It will serve the interest of justice if the matter is restored back to the file of AO for the purpose of verification of claim of the assessee that dividend income received from subsidiary based at Sri Lanka has already been offered to tax, if after verification the AO found that the version of the assessee is correct, then disallowance to that extent is not called for. - Decided in favour of assessee for statistical purposes. Not giving effect to brought forward losses while recomputing total income - the issue being a subject matter of rectification requires action u/s. 154 of the I.T. Act, the AO is directed to take necessary action accordingly by CIT(A) - Held that:- We consider it just and proper to direct the AO to give effect to the directions given by Ld. CIT(A) to him, as the assessee is entitled to get benefit of the brought forward losses which are determined in the earlier years subject to fulfillment of other conditions laid down for valid claim for set off of brought forward losses. The AO will pass appropriate order after giving the assessee a reasonable opportunity of hearing.- Decided in favour of assessee for statistical purposes. Disallowance of club expenses - expenditure on account of payments made to clubs which includes annual subscription as well as cost of club services - CIT(A) deleted addition - Held that:- n the earlier years, the similar issue has been consistently decided by the Revenue in favour of the assessee by relying on the judgment of the Hon’ble High Court in the case of Otis Elevator vs. CT (1991 (4) TMI 53 - BOMBAY High Court). Considering the same, we are of the opinion that the CIT (A) has rightly adjudicated the issue. - Decided in favour of assessee.
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2015 (3) TMI 532
Penalty u/s.271(1)(c) - disallowance u/s 80-I for grant of claim on account of reallocation of administrative expense - Held that:- The difference in the claim of deduction u/s 80-IA is mainly on the basis of allocation of administrative expenses, which has been allocated in the ratio of turnover. The assessee’s case had been that it has adopted the basis of allocation based on the precedent of Tribunal order for assessment year 1983-84, which has been accepted by the department in subsequent assessment years. In this year, the basis of allocation of expenses has been changed. Under these facts it cannot lead to any inference that the assessee has furnished any inaccurate particulars, which warrants levying of penalty u/s. 271(1)(c) because change in the basis of allocation of expenses is matter of opinion. Thus, the penalty levied on this score is deleted. - Decided in favour of assessee. Disallowance u/s 40A(3) - Held that:- disallowance u/s 40A(3) was made on the ground that the assessee has failed to establish any extra ordinary situation or difficulty of the payee under Rule 6DD. Whereas, the assessee’s case has been that, the payments were made to the Government authorities and advance to the employees, genuineness of which have not been doubted. The disallowances have been made mainly on technical ground. In our opinion, such a disallowance does not warrant levy of penalty, because there is no furnishing of inaccurate particulars or concealment of income, because, it is not an absolute law that any payment made in cash excess of ₹ 10,000 is to be disallowed. Commercial expediency, business consideration and other factors are also required to be seen. Hence, we delete the penalty, which has been confirmed on such a disallowance.- Decided in favour of assessee. Disallowance on account of replacement of plant and machinery being held as capital expenditure - Held that:- It is an admitted fact that the assessee has debited certain the expenditure, which were incurred towards car, minibus, electronic typewriter etc., which are capital in nature. If such an expenditure has been claimed in the profit and loss account as revenue expenditure, then definitely it amounts to furnishing of inaccurate particulars of income. Thus, penalty confirmed by the CIT(A) on the expenditure of ₹ 9,23,000 is upheld, because admittedly there are capital expenditure. - Decided against assessee. Disallowance u/s 43B - Held that:- If the assessee has claimed the deduction u/s 43B on the basis of actual payment, then it should be held that the assessee’s claim for deduction for the impugned assessment year is not bonafide or the assessee cannot be held liable for furnishing of inaccurate particulars. So far as the proof of evidence of payment is concerned, it is seen that there is a huge lag of time, because the assessment proceedings for giving effect of CIT(A)’s order had started after a lapse of period of more than 14 years from the passing of the original assessment order. On the present facts the assessee’s bonafide is liable to be accepted for the reason that the accounting period for the assessment years 1988-89 and 1989-90 had overlapped and assessment year 1989-90 being the transition period (because the accounting period in most of the cases was for more than 12 months), such claim for deduction cannot be adversely viewed, whether it should be treated as allowable in the assessment year 1988-89 or in the A.Y. 1989-90. The ambiguity with regard to the year of allowability of expenses for such a transition period should not be adversely viewed for the purpose of levy of penalty and more over all the particulars of payment and claim has been reported in the Audit report filed along with the return of income. Thus, under the peculiar facts and circumstances of the case, we are unable to confirm the penalty on the ground that the assessee had furnished any inaccurate particulars of income. Accordingly, penalty u/s 271(1)(c) on such a disallowance is deleted. - Decided in favour of assessee.
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2015 (3) TMI 531
Disallowance u/s 14A r.w.r. 8D - CIT(A) sustained part addition - Held that:- On a specific query by the Bench, whether the Revenue has filed any appeal against the order of the ld.CIT(A), it was submitted by the ld.Sr.DR that no such appeal has been filed. The assessee has given a separate chart. Both the Representatives of the parties agreed that the issue be restored to the file of ld.CIT(A) for verification of the computation made by the assessee. Therefore, the matter is restored to the file of ld.CIT(A) to verify the correctness of the claim of the assessee as computed in the so-called chart enclosed along with the written synopsis by the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 530
Disallowance u/s 40(a)(ia) - payment to various truck owners towards freight charges of the trucks and had not deducted TDS u/s. 194C - Held that:- Amendment with effect from 01.06.2007 whereby an individual or HUF whose total sales exceeded the monetary limit prescribed u/s. 44AB was made liable to deduct TDS have also been included vide sub clause (K) in Section 194C (1) of the Act. As far as present case is concerned, the relevant assessment year is A.Y. 2007-08 and therefore the amendment made to Section 194C(1)(K) of the Act which has been introduced with effect from 01.06.2007 has no applicability. Similar view has been taken by the Co-ordinate Bench in the case of Prasant Shah vs. ACIT [2012 (6) TMI 535 - ITAT AHMEDABAD] upheld by Hon’ble Gujarat High Court [2013 (1) TMI 592 - GUJARAT HIGH COURT] - Decided in favor of assessee. Disallowance of depreciation on trucks - AO disallowed the depreciation on 5 trucks for the reason that the same were purchased in the month of March, 2007 and the Registration with the Motor Vehicle Authorities was completed in the month of April, 2007 and till the time the registration was completed, Assessee could not have been said to have put to use the trucks for the purpose of business - Held that:- A commercial vehicle like a truck can be said to be ready for us only after the body fitting has been done on the chassis of the truck and thereafter the vehicle is registered with the prescribed Motor Vehicle Authorities. Before us, ld. A.R. has not placed any material on record to demonstrate that all the trucks were ready for use in all. aspects or even had obtained temporary registration of the vehicles or used for the business of the Assessee. The reliance placed by the assessee on the decisions are distinguishable on facts and are therefore not applicable to the present case. We therefore find that A.O was justified in denying the depreciation of ₹ 10,53,800/- on the 5 trucks. With respect to Truck No. 5056 it is Assessee’s submission that it had purchased the second hand truck on 07.04.2006 and the evidence of transfer of ownership in favour of Assessee was also furnished to the A.O. On the other hand we find that that A.O while disallowing the claim of depreciation of ₹ 1,05,000/- on the aforesaid truck has noted that Assessee did not produce evidence about the ownership of the truck. In view of the contradictory submissions of the Assessee and the A.O., we are of the view that in the interest of justice one more opportunity be granted to the Assessee to demonstrate the ownership of the truck before the A.O. - Decided in favour of assessee for statistical purposes. Addition on account of difference as per the return and TDS certificates - Held that:- It is Assessee’s submission that the difference of ₹ 11,72,036/- between the amount shown in TDS certificates and reflected in the Profit and Loss Account is on account of the mistake of the persons who had issued the TDS certificate. It was further submitted before us that Assessee would be able to reconcile the difference. Considering the aforesaid submissions of the Assessee we are of the view that Assessee be granted an opportunity to reconcile the difference before the AO. We therefore remit the issue to the file of A.O to verify the contentions of the Assessee and thereafter if the Assessee’s contention are found correct, the addition made be deleted.- Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 529
Computation of capital gain - Determination of fair market value as on 01-04-1981 - Held that:- In view of the order of the Tribunal in the case of Shri Kurian Joseph [2015 (3) TMI 484 - ITAT COCHIN] the assessing officer has no other way except to accept the value as on 01-04-1981 by taking 10% of the sale consideration. Therefore, it would remain only as an academic issue and would not serve any purpose to both the parties. By taking into consideration of the interest of the parties, this Tribunal is of the considered opinion that since the assessee has claimed only ₹ 1 lakh per cent which is far below 10% of the sale price, the same needs to be accepted. Accordingly, the orders of the lower authorities are set aside and the assessing officer is directed to accept the market price as on 01- 04-1981 at ₹ 1 lakh per cent. - Decided in favour of assessee. Disallowance of commission paid to brokers for selling the land - Held that:- There is a practice of payment of commission for sale of land. The commission is ranging from 1% to 3% depending upon the area, terms agreed upon between the vendor and the broker. This Tribunal is of the considered opinion that by taking into consideration of the practice of payment of commission ranging from 1% to 3% on the sale price and the details furnished by the assessee with names and addresses before the assessing officer, copy of which is available at page 24, the assessing officer is not justified in restricting the claim at 2% without making any further enquiry.The very fact that the payment was made to six brokers shows that their whereabouts also could not be traced out in the efflux of time. By taking into consideration all the circumstances, this Tribunal is of the considered opinion that disallowance of ₹ 2,16,250 may not have justified. Accordingly, the orders of the lower authorities are set aside and the disallowance of ₹ 2,16,250 is deleted. - Decided in favour of assessee. Claim of the assessee u/s 54F in respect of investment made - capital gain arose on sale of land was used for construction of residential house as submitted by assessee - CIT(A) allowed the entire claim of ₹ 1,27,50,000 - Held that:- In this case, the assessee claims that a sum of ₹ 50 lakhs was spent before the due date for filing of the return of income and what was spent after filing the return of income is only ₹ 60 lakhs. This fact was not considered by both the authorities below. The assessee has also expressed difficulty for depositing the amount in the capital gain account when the construction was going on. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered in the light of the decision of this Tribunal in Smt. Rosamma Korah (2014 (3) TMI 765 - ITAT COCHIN) and the judgment of the Kerala High Court in Dr Xavier J Pulikkal (2014 (4) TMI 211 - KERALA HIGH COURT). Accordingly, the orders of the lower authorities are set aside on this issue and the issue of claim of the assessee u/s 54F is remitted back to the file of the assessing officer. It is open to the assessee to place all the material facts which are relevant before the assessing officer. - Decided in favour of revenue for statistical purpose.
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2015 (3) TMI 528
Revision order u/s. 263 - ingenuine Long Term Capital Gains - Held that:- rom this finding, it is clear that all the information are available before the AO during the course of assessment proceedings and he has formed an opinion on the issue of Long Term Capital Gains and held to be genuine. From the facts narrated above by Ld. counsel, it is clear that the share premium cannot be questioned under the provisions of the Act in the relevant assessment year but the amendment in section 56(2) of the Act in acquisition of shares and securities at below the fair market value is brought in w.e.f. 01.10.2009 by the Finance (No.2) Act, 2009. The transaction of the assessee is prior to 01.10.2009 and there is no scope for the AO to go into FMV of sale of shares. As regards the acquisition of shares of SBT Consultants Pvt. Ltd., these were acquired in FY 2004-05 relevant to AY 2005-06 and for that the enquiry is to be conducted in AY 2005-06, which is beyond the scope of revision proceedings under consideration. Even the very basis of selection for scrutiny under CASS was to enquire into investment in REC Bonds as demonstrated by the Ld. counsel before us from the very first notice issued for scrutiny assessment the source of investment of ₹ 25,00,000/- in REC Bonds u/s. 54EC of the Act by the assessee is out of the sale proceeds of shares of SBT Consultants Pvt. Ltd. at entire long term capital gains of ₹ 24,68,655/- was invested. The AO has examined the sale value of the above shares with reference to the bank statement produced before him and the transactions are through account payee cheques to prove the genuineness of the transactions. AO has not examined the loan taken from M/s. Daymark & Sons (HUF) - Held that:- In respect to second issue of loan received by assessee from M/s. Daymark & Sons (HUF) is a carried forward loan and this cannot be questioned in this AY i.e. 2009-10. AO has not examined the squared up transaction of loan of ₹ 2 lacs from Shri Vikash Choudhury - Held that:- In respect to the third issue of loan from Bikash Chowdhury of ₹ 2 lacs through an account payee cheque on 05.05.2008, the same was refunded on 27.06.2008 and both the transactions are recorded in assessee’s Canara Bank A/c. and which was examined by the AO during the course of assessment proceedings. Even the investment of Rs./70000/- being deposit in PPF A/c. is withdrawal out of the saving bank account maintained with Canara Bank. All these information were made available to the AO during the course of assessment proceedings and he has examined all the aspects of the case and the same is evident from the order sheet entries of the assessment proceedings. Thus examining the entire assessment records and details filed before the AO by the assessee, which clearly proves that the AO has applied his mind. The records of the assessment including the order sheet entries show that the AO has made appropriate enquiry after hearing the assessee from time to time. Thus the revision order passed by the CIT is without any legal and factual basis and hence, the same is quashed. - Decided in favour of assessee.
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2015 (3) TMI 527
Disallowance of belated deposit of employees' contribution to P.F. - CIT(A) deleted disallowance - Held that:- In the present case, it is an admitted fact that the assessee has deposited the PF well before the due date of filing of the return. We find that it is allowable as per decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusion Ltd reported in (2009 (11) TMI 27 - SUPREME COURT) - Decided against revenue. Disallowance made on account of Cess payable on Green Leaf - CIT(A) deleted disallowance - Held that:- Similar issue has been adjudicated in the case of CIT Vs. AFT Industries Ltd [2004 (7) TMI 81 - CALCUTTA High Court] wherein held as in respect of computation of income of tea grown and manufactured, a fiction has been created under which both the agricultural component and the business component of the income would be assessed together for the purpose of computing the income under the Act and only after the computation of the total income, the apportionment is to be made determining 60 per cent, as agricultural income. When by fiction the income is computed as an income under the Act, all deductions as are available both for the agricultural component and for the business component of the income are to be allowed as a natural corollary. Therefore, the entire amount paid as cess under the Agricultural Income-tax Act is eligible for deduction - Decided in favour of assessee. Disallowance on account of exchange fluctuation on the foreign loan - Held that:- In the present case it is clear as to whether the term loan was capital in nature related to the purchase of assets or it was revenue in nature. We, therefore, restore this issue to the file of the AO, who will decide the same afresh in accordance with law after considering the ratio laid down by the Hon'ble Delhi High Court in the case of CIT Vs. Woodward Governor India P.Ltd [2007 (4) TMI 118 - HIGH COURT , DELHI] - Decided in favour of assessee for statistical purposes. Disallowance u/s. 40A(3) - Held that:- As it is not clear as to whether the AO has considered the payment of individual item or total items while making the disallowance u/s. 40A(3) of the Act. We, therefore, deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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Customs
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2015 (3) TMI 554
Valuation of goods - whether the value declared in respect of the mis-declared goods shall be reduced to the extent of value of actual goods in the consignment - Held that:- no court has power to legalise an illegality reducing mis-declared value to the actual market value of goods in the container attempted to be exported. Without touching the value, we only look into the quantum of redemption fine and penalty. Considering the mis-declared value, it appears that the redemption fine of ₹ 15 lakhs imposed in adjudication is on a higher side. Therefore, considering the nature of the goods involved normal profits attributable to the goods and the life of such goods, we reduce the redemption fine to ₹ 10 lakhs. So far as penalty is concerned, as a preventive dose and also a curative dose, that should be imposed to desist unlawful practices. Keeping in view the quantum of goods attempted to be exported and value thereof, the penalty is reduced to ₹ 5 lakhs from ₹ 8 lakhs - Decided partly in favour of assesse.
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2015 (3) TMI 553
Waiver of pre deposit - Imposition of penalty on CHA - Held that:- On perusal of the record, I find that the importer Nitco Tiles has settled their case before the Settlement Commission, therefore relying on the decision of S.K.Columbowala(2007 (7) TMI 514 - CESTAT, MUMBAI), wherein this Tribunal held that when the case against the main notice has been settled by the Settlement Commission, in that case penalty against the other co-noticees have also got settled. Therefore, I hold that in this case penalty is not imposable on the appellant. - Decided in favour of appellant.
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2015 (3) TMI 552
Denial of the refund of SAD - in terms of Section 28C of the Customs Act, 1962, the duty component has not been mentioned in the invoice - Held that:- As per Section 28C of the Customs Act, 1962, if the assessee is paying duty then same should be reflected in the sale invoice. Admittedly, in this case the appellant has not paid any duty on their clearances except VAT/CST which has been shown separately in the invoice. Further, refund of SAD is applicable where the assessee cleared the goods on payment of VAT/CST - I have examined the invoice also, wherein the endorsement regarding that no credit of additional duty of customs is available to the buyer, is clearly mentioned in the invoice. The finding of the Commissioner (Appeals) after extracting the copy of the invoice in the impugned order that invoice does not have endorsement that no credit of additional duty of customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 shall be available. This finding is factually incorrect. As there is a clear endorsement made on the invoice, therefore the impugned order deserves no merits; hence set aside. Appeal is allowed with consequential relief. The Adjudicating Authority is directed to implement this order within 30 days of the receipt of the same. - Decided in favour of assesse.
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2015 (3) TMI 551
Misdeclaration of goods - Confiscation of seized goods - held that:- It is the admission of the appellant themselves that the goods are non-basmati rice. They are sought to be taken back to the town. In these circumstances, the order of Commissioner (Appeals) is appropriate. As in this case it is an admission by the appellant themselves that the impugned goods are non-basmati rice, therefore, I uphold the order of confiscation of impugned goods. As these goods have been taken back to the town, therefore considering the factual matrix of the case, I further reduce the Redemption Fine from ₹ 5,00,000/- to ₹ 2.50,000 and reduce the penalty to ₹ 50,000 - Decided partly in favour of assessee.
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Corporate Laws
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2015 (3) TMI 550
Aggrieved by order of Company Law Board (CLB) - Violation of principles of natural justice - Invocation of powers of the CLB under section 247(1A) of the Companies Act - Held that:- Section 247(1A) would not empower the CLB to direct investigation into the affairs of a company which is merely party to the proceedings but is not the company in respect of which there is any allegation of oppression and mismanagement.The use of the expression “the company” implies further that it refers to the company in respect of which the proceedings are pending before the CLB. The use of the expression “in the course of any proceeding before it” cannot be read liberally so as to empower the CLB to direct investigation into the affairs of any company connected or unconnected with the proceedings or which is merely a party to the proceedings. The same principles have laid down in the case of Uniworth Textiles limited [2013 (3) TMI 323 - CALCUTTA HIGH COURT]. In the case at hand, the CLB has passed the order in the nature of an interim order in an application seeking impleadment. There is clearly no formation of opinion by the CLB that the „true persons‟ who are or have been financially interested in the success or failure of the company, are different from the persons who appear to be the members of the company or the „true persons‟ who are or have been able to control or materially influence the policy of the company, are different from the persons who appear to be in the control of the company and a probe into the company's affairs is desirable in the interest of the company itself, and/or in public interest and that such an investigation was required into the affairs of WIPL. There was admittedly no request or prayer made by the respondent for the same. Parties have not even been put to notice that such an order was contemplated. Parties have admittedly not been heard on this issue. There is clearly a violation of the principles of natural justice. Furthermore, the proceedings in which directions have been issued in suo moto exercise of powers under section 247(1A), in respect of WIPL, are not proceedings in respect of WIPL. WIPL is not even a party to the said proceedings. Though an application seeking impleadment of WIPL is pending but it is yet to be decided by the CLB. Even if the said application were to be allowed and WIPL was impleaded as a party, it would make no difference as the proceedings do not relate to the affairs of the company WIPL. Merely because WIPL is impleaded as a party to the proceedings would not empower CLB to direct an investigation into its affairs as permitting so would render the very words “in the course of the proceedings before it” otiose. The proceedings pending before the CLB are not proceedings in respect of WIPL. In view of the above, the appeals are allowed. The impugned order dated 09.05.2014 is set aside. The CLB is directed to decide the pending applications in accordance with law and the principles as elucidated here in above. - Decided in favour of appellants.
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2015 (3) TMI 549
Company in liquidation - Application by secured creditors to get dues on pro rata basis - Whether Contractual labours will be covered in Workmen under the companies act & will have preferential claim in liquidation - Held that:- The official liquidator has simply quoted the definition of the workmen assigned in Industrial Disputes Act and under the Companies Act and have suddenly jumped to the conclusion that those contract labourers are the workmen within the definition engrafted under Section 528 of the Companies Act. The official liquidator has no occasion to consider the agreement between the contractors and the principal employer nor have recorded any finding whether such an agreement is sham, unreal and mere camouflage to disassociate the linkage between the contract labourers and the principal employer. The ultimate conclusion deducible from the case of Steel Authority of India Ltd. [2001 (8) TMI 1334 - SUPREME COURT] is that neither Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 nor any provision of the Act either expressly or necessary implication suggest the automatic absorption of contract labour on issuance of the notification by the appropriate government under Section 10(1) of the Act. Lifting the veil is required to be adopted in such case and a definite finding is to be arrived whether those contract labourers are in fact a workman under the establishment of principal employer who is having a submersive control over them. Even the Constitution Bench in case of Steel Authority of India have recognized three classes of the contract labourers. Since all the materials are not available before this Court and by an earlier order the official liquidator was directed to adjudicate the claim of the contract labourers whether they can be brought within the purview of workmen as defined under Section 528 of the Companies Act, this Court feels that the official liquidator should adjudicate afresh after inviting all the interest parties to produce the relevant contracts and thereafter shall arrive at the finding whether the contract is of such nature which after piercing the veil would suggest that there was a direct relationship of employer and an employee between the contract labourers and the principal employer. This Court, therefore, does not intend to pass letter of direction as sought by the official liquidator in terms of the report filed before this Court and also do not intend to pass any further direction for release of the payment as sought by the banks in their respective applications as well as the release of the amount to the contract labourers.- Directions issued to official liquidator to make an adjudication in the light of the observations made herein above.
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2015 (3) TMI 548
Relief abandoned in Company Law Board proceedings voluntarily can not be filed again in a fresh suit - Abuse of process of law - Held that:- On a meaningful reading of the plaint filed in the instant suit of the plaint it would appear that the reliefs claimed in the plaint against the applicants are substantially similar to the reliefs that the plaintiffs had claimed against the applicant in the Company Law Board proceeding. For whatever reason, the plaintiffs herein who are the petitioners in the Company Law Board proceedings, applied to the Company Law Board for withdrawing such reliefs with leave to file fresh proceedings against the applicants herein. Such prayer was refused by the Company Law Board. The petitioners in the Company Law Board proceeding appealed to this court against such refusal. This court permitted the petitioners to withdraw such reliefs but recorded that the further prayer of the appellants (petitioners in the Company Law Board proceedings) cannot be acceded to since the Company Law Board did not have jurisdiction to grant leave to the appellants to institute a fresh suit. However, this court recorded that nothing in the said order would prevent the appellants from filing a suit, but the maintainability of such suit on account of the pendency and partial abandonment of the Company Law Board proceedings may be gone into by the forum which receives the action. I am inclined to accept the contention of the Ld. Counsel for the applicants. The plaintiffs having claimed and having subsequently abandoned certain reliefs against the applicants in the Company Law Board proceedings without being granted unconditional leave to file fresh proceedings for the self-same reliefs, in my opinion the plaintiffs’ suit is barred against the applicants under Order 23 of the CPC. Further, exposing the applicants in the present suit substantially to the same claims which were withdrawn/abandoned against them in the Company Law Board proceedings, would, in my opinion, amount to abuse of process of law. The withdrawal and/or abandonment of the concerned reliefs against the applicants by the plaintiffs in the Company Law Board proceedings was voluntary and it would not be fair to expose the applicants to the same claims again in the present suit which would amount to putting the applicants in doubled jeopardy. - Decided in favour of applicant.
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Service Tax
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2015 (3) TMI 560
Disallowance of CENVAT Credit - Outdoor Catering service - Held that:- It has not been held by the Hon'ble Bombay High Court in the case of Ultra Tech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] that outdoor catering service is allowable only in the case of more than 250 workers, as it was mandatorily required under the provisions of the Factories Act, 1948 for providing canteen services. It shows that the legislation appreciates the need of canteen service for the workers at the place of work. Only to avoid the hardship for an essential need, the legislation have provided, that atleast in factories having employees more than 250, should provide, that does not mean that the service was not required for any industrial service or organization having less than 250 workers. Even the employees of a smaller organization having less than 250 workers will also be hungry and required to be provided with canteen facility for the employees. Therefore, I hold that the ruling in the case of IFB Factories Ltd. (2013 (1) TMI 503 - CESTAT BANGALORE) per incuriam, as the provisions of Factories Act, have been wrongly interpreted, with respect to the provisions of input service. In view of my findings, I hold that the Respondent-assessee is entitled to Cenvat Credit in respect of outdoor catering service - Decided against Revenue.
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2015 (3) TMI 559
Waiver of pre deposit - Denial of CENVAT Credit - rent-a-cab service - input service credit cannot be taken onservices which were used for providing non-taxable services - Held that:- In view of the decision in the case of Apotex Research Pvt. Ltd. [2015 (3) TMI 346 - CESTAT BANGALORE], I am of the prima facie view that the issue decided therein squarely applies to the facts and circumstances of the case of the present appellant. Accordingly, I am of the considered view that the appellant has made out a case for complete waiver of pre-deposit of the adjudged dues. Therefore, 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 558
Information Technology, Software Services - whether non-payment of service tax on the importation of service which was later returned as defective to the foreign service provider is correct and permissible under the provisions of Finance Act, 1994 and Rules framed thereunder - Held that:- Since the purchase and cancellation entries were made within the time limit for making payment, the asessee was not liable to make any payments against these defective softwares and the claim of the assessee in this regard is acceptable - demand of tax is not sustainable. Accordingly, we set aside the impugned order to the extent of demand of tax along with interest and penalty - Decided in favour of assessee.
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2015 (3) TMI 557
Rectification of mistake - refund claim of service tax - Rverse charge mechanism - adjudicating authority rejected the claim as time-barred and the Commissioner (Appeals) allowed the appeal filed by the appellant - Tribunal denied refund claim - Held that:- In the case of Indian National Ship Owners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] and [2009 (12) TMI 850 - SUPREME COURT OF INDIA], the Hon. Bombay High Court and Apex Court did not consider the levy to be unconstitutional in the sense it was not a levy beyond the powers given by Constitution. This position is clear because after insertion of section 66A of the Act, now such tax is being collected without any successful challenge to the said section. Prior to 18-04-2006 when 66A was introduced the only issue was that the Rule under which the tax was collected was considered to be not authorized by provisions in Finance Act, 1994. So the levy has to considered only as "without authority of law” and not as "unconstitutional”. - there appears to be no error apparent on the face of record. The appellants upon contending the findings of the Tribunal and not an any omission or error apparent on record. This amounts to review of its own order which is not permissible under Section 35C. - Rectification denied.
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CST, VAT & Sales Tax
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2015 (3) TMI 556
Refund claim - Benefit of provisions governing set off contained in Section 48(6) of the Maharashtra Value Added Tax Act, 2002 - Held that:- The provisions of Section 48 deals with set off, refund etc. Section 49 is on refund of tax on declared goods sold in the course of interstate trade or commerce and, therefore, not relevant here. Section 50 deals with refund of excess payment. Subsection (2) thereof enables dealer to adjust such refund against the amount due as per any return for any period contained in the said year. However, it is not necessary for us to consider the question of refund of excess payment in present facts. Subsection (6) of Section 48 states that where any dealer becomes entitled to refund after the appointed date, whether under any earlier law or under this Act, i.e. under 2002 Act mentioned supra, then such refund must be first applied against the amount payable under any earlier law or 2002 Act. If any balance amount is left, that amount can only be refunded to dealer. Thus, Section 48(6) of the 2002 Act, casts obligation upon the respondents to appropriate the excess amount paid by the dealer in any previous year towards its demand in subsequent year. This obligation imposed by Section 48(6) is being violated in present matters. It is apparent from the facts that though assessment for the year 2008-09 has been finalized and demand has been made, assessment for the earlier year i.e. 2007-08 is still pending. There is no obvious reason for keeping it pending. This conduct defeats legislative intent behind incorporating Section 48(6) in statute and denies advantage of a beneficial provision meant for assessee to it. - The amount found refundable to the petitioners shall then be appropriately dealt with in accordance with law under Section 48(6) noted supra. The consequences of such appropriation can be examined in appeals which are preferred by the petitioners challenging subsequent levy of tax, interest and penalty for the year 2008-09. - Decided in favour of assessee.
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2015 (3) TMI 555
Assessment in absence of forms 'C' and 'F' that have been produced subsequently - Rejection of request of Re-opening of the assessment - Held that:- The assessing officer cannot deny the request to re-open the case of the petitioner that higher rate of tax, than that has been prescribed under section 8(1), has been levied in the absence of forms 'C' and 'F' that have been produced subsequently. The authority shall not deny the request of the petitioner for re-opening the final assessment and only thing he has to consider is as to whether sufficient cause for re-opening the assessment or not. That apart, there is no proposal for levying penalty and the authority has proceeded to impose the penalty and notice informing the same was also. - The petitioner is also supported by the decision of this court in VISPRO FOUNDRY ENGINEERS LIMITED v. COMMERCIAL TAX OFFICER, ADYAR ASSESSMENT CIRCLE, MADRAS. (1990 (12) TMI 302 - MADRAS HIGH COURT). Therefore, the petitioner's request that the respondent shall consider the declaration under forms 'C' and 'F' covering the transactions to the extent of ₹ 18,22,54,687/- may be looked into by the authorities concerned. Since the authority has not taken into consideration the forms and that there was no proposal to levy penalty which has been done without giving opportunity to be petitioner and that the provisions mentioned supra clearly contemplate that an opportunity should be given to the petitioner. - Decided in favour of assessee.
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Indian Laws
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2015 (3) TMI 547
Appeal against order passed by Competition Commission of India (CCI) - Order passed without issuing notice and without hearing appellant - Held that:- The reasons given by the Supreme Court for holding that no notice or hearing is required to be given, to the person/enterprise informed/referred against, by the CCI before forming a prima facie opinion and directing investigation under Section 26(1) of the Act, apply also to the stage under Section 26(7) of the Act. The stage of Section 26(7) is also an "initial stage" which is not determinative in nature and substance; "further investigation" is also a pre-cognizance stage; issuance of notice to the person/enterprise informed/referred against, at that stage cannot be implied. Secondly, just like Section 26(1) does not contemplate any adjudicatory function and the function of the CCI thereunder has been held to be of a preliminary/departmental/administrative nature with no person being condemned at that stage, similarly the function of the CCI under Section 26(7) insofar as of directing further investigation is concerned is also not adjudicatory and of a preliminary/department/administrative nature only, with the person/enterprise informed/referred against being not condemned at that stage also. We have already noticed above that ordering investigation against anyone does not amount to condemning that person/enterprise. We therefore hold that the challenge by the appellant to the order dated 1st July, 2013 of the CCI on the ground of the same having been passed without giving any opportunity of hearing to the appellant, which is the enterprise informed against, has no merit. Resultantly, the appeal is dismissed. - Decided against the appellant.
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2015 (3) TMI 546
Company in Liquidation - Allotment and registration of company residential quarter to Individual employee - Held that:- The prayer made in the application seeking that the quarters be allotted to the applicant and sale deed be executed in his favour cannot be accepted at this juncture notwithstanding the earlier benefit that had been granted to the applicant. The appropriate course therefore is that the Official Liquidator shall take possession of the quarters bearing No.99/B which is the subject matter of this application and treat the same as the property of the company in liquidation and take further steps in that regard as would be taken in respect of the other assets of the company.- Decided against the applicant.
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