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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter March 20, 2015 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles RATE AND CESS ON SERVICE TAX: BUDGET IMPACT NON CO-OPERATION WITH AUTHORITIES FOR THE PURPOSE OF AUDIT News Centre includes compensation in GST Constitutional Amendment Bill Impact of Lower Excise Duty on Industry RBI Reference Rate for US $ Amended Exchange Rates of Foreign Currency Notified Notifications Customs 31/2015 - dated 18-3-2015 - Cus (NT) Amends Notification No. 28/2015-Customs (N.T.), dated the 5th March, 2015 SEZ S.O. 677(E) - dated 2-3-2015 - SEZ To set up a sector specific Special Economic Zone 'for Electronics/Telecom Hardware and support services including trading and logistics activities at SIPCOT Industrial Area, Sriperumbudur in the State of Tamil Nadu. Highlights / Catch Notes Income Tax Exemption under Section 10(23C) (iiiad) - the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn - SC Visit to Get Source Set off of loss suffered in a unit entitled for exemption under Section 10B against income from any other unit not eligible for such exemption - not allowed - HC Visit to Get Source Tax deducted at source - remuneration paid to consultant Doctors employed by the hospital - doctors are not entitled to gratuity, PF, LTA and other terminal benefits - payment to them was in the nature of professional fees liable to deduction under Section 194J and Section 192 had no application - HC Visit to Get Source Assessing Officer directed to allow set off of current year's business loss as well as the brought forward business loss/unabsorbed depreciation against the income assessed under section 68 - AT Visit to Get Source Assessment of loan receipt as cash credit u/s 68 - the receipt of money through the banking channels may prove the genuineness of the transaction, but the assessee has failed to establish the identity of the creditor and also failed to prove the creditworthiness of the creditor - AT Visit to Get Source Estimation of net profit - rejection of books of accounts - Once the books of account of the assessee was produced before the lower authorities and if there is certain discrepancy the authorities were free to make addition to that extent of discrepancies noticed by the authorities and, authorities were precluded in rejecting the books of account of the assessee - AT Visit to Get Source The assessee has been granted interest under section 244A of the Income-tax Act as due to him and the calculation of the interest was not disputed by the assessee. The assessee cannot widen the scope of the provisions of section 154 by putting various debatable issues - AT Visit to Get Source Computation of Long term capital gain - dis-allowance of expenditure u/s 48 which was found as unexplained u/s 69C - unrecorded expenditure cannot be claimed by the assessee in any year by this overriding proviso - AT Visit to Get Source Unexplained share capital - The sole basis for making addition about these companies is the inspector report. No doubts have been raised by the Assessing Officer about the documents filed by the assessee-company. The inspector report as alleged above cannot be a basis for disbelieving the assessee's version. - AT Visit to Get Source Service Tax Whether the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal - the lis commenced in 2012 - petitioner would not be required to deposit the amount of 7.5% - tribunal to decide the matter as per the provisions stood prior to 16.08.2014 - HC Visit to Get Source Voluntary Compliance Encouragement Scheme (VCES) - petitioner pointed out that though ST 3 returns were filed earlier but they are eligible for the scheme as true liability was not disclosed at the time of filing of ST 3 returns - rejection of application of VCS is not valid - HC Visit to Get Source Central Excise Invocation of extended period of limitation - Suppression of facts - disclosure of fact in CT(3) certificate - no clearance could have taken place without the knowledge of the officer - extended period cannot be invoked - no demand - SC Visit to Get Source Refund of Terminal Excise Duty - The document declares that Cenvat Credit/Rebate under the Central Excise Rules has not been availed by NTPC Ltd. Therefore, this objection cannot stand in the way of the petitioner getting refund in the matter. - HC Visit to Get Source The mere order of summoning for giving evidence or to participate in enquiry issued by Central Excise authorities under Section 14 of Act, 1944, in our view, is not to be interfered only on the ground that it has submitted reply to earlier letters and therefore need not appear in person before the authorities concerned - HC Visit to Get Source Case Laws: Income Tax 2015 (3) TMI 619 Exemption under Section 10(23C) (iiiad) denied - Pine Grove International Charitable Trust v. Union of India - [2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] judgment challenged - AO observed that it ceases to exist solely for educational purposes and becomes a profit making enterprise - Held that:- We approve the judgments of the Punjab and Haryana in Pine Grove International Charitable Trust v. Union of India, St. Lawrence Educational Society (Regd.) v. Commissioner of Income Tax & Anr., (2011) [2011 (2) TMI 72 - DELHI HIGH COURT] and Tolani Education Society v. Deputy Director of Income Tax (Exemption) & Ors., (2013 (2) TMI 268 - BOMBAY HIGH COURT). The judgment of Uttrakhand High Court rendered in the case of Queens Educational Society (2007 -TMI - 75307 - UTTARAKHAND HIGH COURT) and the connected matters, is not applicable to cases fall within the provisions of Section 10(23C)(vi) of the Act. Since we have set aside the judgment of the Uttarakhand High Court Queens Educational Society (2007 - TMI - 75307 - UTTARAKHAND HIGH COURT) and since the Chief CIT’s orders cancelling exemption which were set aside by the Punjab and Haryana High Court were passed almost solely upon the law declared by the Uttarakhand High Court, it is clear that these orders cannot stand. Consequently, Revenue’s appeals from the Punjab and Haryana High Court’s judgment dated 29.1.2010 and the judgments following it are dismissed. We reiterate that the correct tests which have been culled out in the three Supreme Court judgments stated above, namely, Surat Art Silk Cloth[1979 (11) TMI 1 - SUPREME Court], Aditanar [1997 (2) TMI 3 - SUPREME Court], and American Hotel and Lodging [2008 (5) TMI 17 - SUPREME COURT OF INDIA], would all apply to determine whether an educational institution exists solely for educational purposes and not for purposes of profit. In addition, we hasten to add that the 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C) read with Section 11 of the Income Tax Act. - Decided in favour of assessee. 2015 (3) TMI 618 Set off of loss suffered in a unit entitled for exemption under Section 10B against income from any other unit not eligible for such exemption - ITAT allowed he claim - Held that:- This court is of the opinion that Tei Technologies (2012 (9) TMI 47 - DELHI HIGH COURT) applies wherein held held that even if Section 10A/ Section 10B are treated as exemption provisions, Section 80A (4) cannot defeat that interpretation. The object of Section 80-A (4) was explained as ensuring that “double benefit does not result to an assessee in respect of the same income, once under Section 10A or Section 10B or under any of the provisions of Chapter VIA and again under any other provision of the Act.” It was held that even if Section 10A or Section 10B is construed as exemption provisions, “it is still possible to invoke the sub-section and ensure that the assessee does not obtain a deduction in respect of the exempted income under any other provision of the Act. The only object of the sub-section is to ensure that there is no double benefit arising to the assessee in respect of the same income. The tax-exempt income of the assessee, eligible under Section 10-B could not have been set off against the losses from tax-liable income. - Decided in favour of revenue. 2015 (3) TMI 617 Tax deducted at source - remuneration paid to consultant Doctors employed by the assessee hospital - employer and employee relationship - TDS u/s. 192 OR u/s. 194J - ITAT deleted tds levy - Held that:- Mere providing of non-competition clause in the agreement shall not invalidate the nature of profession. It is common that the doctors are rendering their professional services as visiting doctors in different hospitals. Imposing a condition of bar to private practice is to make use of the expertise, skill of a doctor exclusively to the assessee-company i.e., to get the attention and focus of the professional skill and expertise only to the patients of the assessee-company and to discourage doctors from transferring patients to their own clinics or any other hospital. This condition imposed by the assessee-company would not alter the nature of professional service rendered by the doctors. Tribunal also held that none of the doctors are entitled to gratuity, PF, LTA and other terminal benefits. Considering all these aspects at length a detailed, well reasoned order is passed by the Tribunal on this issue which we may not find fault with. It is also pertinent to note that the doctors have filed their return of income for the relevant assessment years showing the income received from the assesseee-Company as professional income and the same is said to have been accepted by the department. As decided in CIT (TDS) vs APOLLO HOSPITALS INTERNATIONAL LTD. reported in (2012 (8) TMI 459 - GUJARAT HIGH COURT ) the consultant doctors were not getting salary, but the payment to them was in the nature of professional fees liable to deduction under Section 194J and Section 192 of the Act had no application.- Decided in favour of assessee. Lease rent paid to Medical Relief Society of South Canara under the guise of repayment of loan taken by the lessor under a supplementary agreement - whether would not attract TDS u/s 194-I and tax at source need not be deducted when the said arrangement was external to deductions at source? - ITAT deleted tds levy - Held that:- Contention of the learned counsel appearing for the assessee that CIT had issued an order under Section 10(23- C)(via) of the Act, by virtue of which the assessee is not liable to deduct TDS under Section 194-I as the recipient itself is exempted from levy of tax, is not acceptable for the reasons that the said order was issued by the CIT, Panaji for the assessments year 2005-06 to 2007-08 subject to the compliance of conditions (i) to (vi) specified therein. The said conditional order shall not absolve the assessee from the deduction of TDS liability. The compliance/non-compliance of the exemption conditions by the recipient in advance cannot be foreseen in advance by the assessee-Company. Moreover, TDS liability under Section 194-I is not dependent on the tax liability/entitlement to exemption of the recipient. Irrespective of the tax exemption/tax liability of the recipient the assessee has to discharge the TDS liability under Section 194(I). No certificate under Section 197 of the Act is furnished by the assessee to establish that the recipient is exempted from the tax liability. Thus we hold that the payment made towards consideration is in the nature of 'rent' as provided under Section 194(I) of the Act. Section 194(I) of the Act shall be applicable for the assessment years 2006-2007 and 2007-2008 for the payment of consideration of ₹ 5,00,00,000/- (Rupees five crores only) and for the payment made towards loan liability for the assessment year 2006-2007. - Decided in favour of the revenue 2015 (3) TMI 616 Penalty u/s 271(1)(c) - assessee had claimed the Receipt of ₹ 1.11 crore as capital receipt in order to evade tax - Tribunal upholding the decision of the CIT(A) in deleting the penalty - Held that:- The respondent-assessee had originally paid an amount of ₹ 54 Lakhs as a consideration for the development agreement in 1995. In the previous year relevant to assessment year, the respondent-assessee received from the vendor an amount of ₹ 1.65 Crores which included an amount of ₹ 54 Lakhs which was originally paid in 1995 by the assessee to the vendor. Therefore, only an amount of ₹ 1.11 Crores which was received in excess of amount paid by the respondent-assessee to the original vendor could be a subject matter of taxation and we find that the disclosure of ₹ 1.11 Crores which was made by the petitioners as a part of its notes to accounts as well as letter dated 29 October 2005 alongwith its claim of not being taxable was filed along with the Return of Income. Thus there has been a complete disclosure of all facts as held by CIT(A) and the Tribunal. Besides the claim made by the respondentassessee of not being taxable was not found to be not bonafide. As held by the Supreme Court in Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) making of an incorrect claim would not tantamount to furnishing inaccurate particulars of income. In this case, the assessee bonafide believed that the difference of ₹ 1.65 Crores and ₹ 55 Lakhs is not chargeable to tax and had so stated before the Assessing Officer. The fact that the explanation of assessee is not accepted in quantum proceedings would not ipso facto visit the assessee with penalty in the absence of the claim being held to be not bonafide. - Decided in favour of assessee. 2015 (3) TMI 615 Reopening of assessment - source of ₹ 7.6 Crores remained unidentified - ITAT held the reopening invalid - Held that:- Tribunal has noticed the fact that during the regular assessment proceedings, detailed enquiries were made by the Assessing Officer leading to the order dated 27 February 2006 about the source of the capital introduced by various members of the respondent assessee. In fact the Assessing Officer has also prepared a note with regard to the same during the regular assessment proceeding. It was only on satisfaction with the explanation that the Assessing Officer passed the assessment order dated 22 February 2006 determining the appellant's income to ₹ 72.65 Lakhs. This would indicate that there is clear change of opinion on the part of the Assessing Officer in issuing the impugned notice. Moreover, the reasons recorded indicate that the material obtained from the Additional DIT, Jaipur was to the effect that the respondent assessee had not explained the source of its capital contribution to the extent of ₹ 6.20 Crores. This, the Tribunal found was factually incorrect as a report of the Additional DIT, Jaipur makes no mention of any explanation offered by the respondent assessee but the entire report is on the statement made by an individual and refers to his conduct. Consequently, the reasons recorded for issuing the impugned notice proceed on factually erroneous basis with the result that the live link necessary to be provided between the tangible material and the conclusion that income has escaped assessment is not found in the present case. In these circumstances, we find that the impugned order of the Tribunal is a well reasoned order and the view taken by the Tribunal is a possible and a reasonable view on the facts as existing before it. - Decided in favour of assessee. 2015 (3) TMI 614 Condonation of delay - delay of 1845 days in taking out the Notice of motion - Held that:- Mr.Gupta the learned counsel for the Revenue emphasized that there was a genuine mistake on the the part of the revenue in not having kept them abreast with the developments after filing of the appeal. It is accepted that the mistake should not have happened. We do find that there was an unintentional lapse on the part of the revenue as the lapse could have been corrected much earlier when the appeal for A.Y.2001-02, 20030-04, 2005-06, 2006-07 was filed in 2012. In fact, there was no earthly reason for the revenue not to pursue the present appeal when on the same issue appeals are filed from subsequent order of the Tribunal to this Court and the same are pending. We would expect the revenue to be more cautious henceforth and ensure that matters are properly attended to and proper followup is done with regard to the orders passed by this Court. It in view of revenue's mistake the delay of 1845 days in taking out the present motion be condoned and we also set aside the order dated 7.11.2009 and restore the Appeal to the file of this Court. However, a mistake on the part of the revenue would have been averted if appropriate care had been taken by them. Thus, the lack of care which led to a mistake of 1845 days cannot be without costs. Therefore, the delay is condoned subject to the Appellant-revenue paying a cost of ₹ 20,000/- to the respondent-assessee on or before 30.3.2015. Needless to state the appellant will also remove the office objections on or before 30.3.2015. 2015 (3) TMI 613 Correctness of the ITAT’s order - directing the AO/TPO for fresh determination of the addition originally made on account of Arm’s Length Price, which was specified in the course of the proceedings - Held that:- Question of law urged in both the appeals does not arise since it already stands settled in the previous order reported in [2014 (1) TMI 501 - DELHI HIGH COURT] - pertaining to the present assessee wherein held that there is no legal authority under the Income Tax Act, 1961 or the Rules to broaden the cost base in that manner. Consequently, the ITAT directed a remission of the matter to the AO for redetermination of the cost base. The TPO’s reasoning to enhance the assessee’s cost base by considering the cost of manufacture and export of finished goods, i.e., ready-made garments by the third party venders (which cost is certainly not the cost incurred by the assessee), is nowhere supported by the TNMM under Rule 10B(1)(e) of the Rules. Having determined that (TNMM) to be the most appropriate method, the only rules and norms prescribed in that regard could have been applied to determine whether the exercise indicated by the assessee yielded an ALP. The approach of the TPO and the tax authorities in essence imputes notional adjustment/income in the assessee’s hands on the basis of a fixed percentage of the free on board value of export made by unrelated party venders. Appeal dismissed. 2015 (3) TMI 612 Disallowance of higher rate of depreciation claimed on assets classified by the assessee as "pollution control equipment" - Held that:- It is a settled proposition of law that the Income-tax Act has to be construed in a strict manner. The depreciation rates are prescribed under the Act in table given in Appendix I of the Income tax Rules. Under the said Appendix I of the Income-tax Rules, the pollution control equipment, which are eligible for depreciation at 100 per cent. have been listed out. We notice that five items of equipment have been listed under the head "Air pollution control equipment" and 17 items of equipment have been listed under the head "Water pollution control equipment". We also notice that the following words have been used in the Appendix I, viz., "Air pollution control equipment, being :" "Water pollution control equipment, being". The presence of the word "being" signifies that the pollution control equipment should be falling in the nature or category of the list specified in the depreciation schedule. We notice that both tax authorities have given a finding that the assets, on which the higher rate of depreciation has been claimed by the assessee, do not fall in the category of assets listed out in the depreciation table given Appendix I of the Income- tax Rules. Before us, the assessee could not controvert the said finding of the tax authorities. Hence, we do not find any infirmity in the decision taken by the learned Commissioner of Income-tax (Appeals) on this issue and accordingly confirm his order on this issue - Decided against assessee. Assessment of loan receipt as cash credit under section 68 - Held that:- It is a well settled proposition of law that the initial burden of proof to prove the cash credits is placed upon the assessee under section 68 of the Act, i.e., the assessee is required to prove cumulatively the three main ingredients, viz., the identity of the creditors, the creditworthiness of the creditor and the genuineness of transactions. As held by the learned Commissioner of Income-tax (Appeals), the receipt of money through the banking channels may prove the genuineness of the transaction, but the assessee has failed to establish the identity of the creditor and also failed to prove the creditworthiness of the creditor. Hence, we are of the view that the decision taken by the learned Commissioner of Income-tax (Appeals) on this issue is in accordance with the law and accordingly confirm the same. - Decided against assessee. Disallowance of part of interest expenditure - portion of interest bearing funds has been diverted as interest-free advance in the form of "advance for purchase of materials" - Held that:- The assessee has furnished an analysis of balance- sheet to show that the advance for purchase of raw materials was out of own funds. We notice that the learned Commissioner of Income-tax (Appeals) has taken the view that the "interest-free sundry creditors" cannot be considered as "own funds" and accordingly rejected the analysis furnished by the assessee. The claim of the assessee appears to be that the interest bearing funds have been used for other purposes and the advance for purchase of raw material has been given out of "interest-free funds" (own funds + interest-free sundry creditors). However, in our view, the said claim cannot be substantiated by mere analysis of the balance-sheet as at March 31, 2010.We notice that the Assessing Officer has not brought out whether the advance was given to related parties or to outsiders, which is also a vital factor to be considered. Accordingly, we are of the view that the tax authorities have not properly examined this issue and the assessee has also failed to furnish proper details relating thereto. Accordingly, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Assessment of "profit from commodity trading" as cash credit under section 68 - Held that:- the assessee has not furnished any material to controvert the finding reached by the Assessing Officer that the profit from commodity trading declared by the assessee was a sham or bogus transaction. We notice that the Assessing Officer has given the above said finding after making necessary enquiries with the commodity exchange. Hence, we do not find any reason to interfere with his decision on this issue and accordingly hold that the claim of receipt of profit from commodity trading is a sham or bogus one. Further as per section 68 of the Act, it is the responsibility of the assessee to explain about the "nature and source" of any sum found credited in the books of account. In the instant case, the assessee has failed to prove about the "nature of credit". Hence we are of the view that the Assessing Officer has rightly assessed the same as cash credit under section 68 of the Act. - Decided against assessee. Assessment of cash credits and profit from commodity trading as income not falling under any of the heads and consequently rejection of claim of set off of business loss and carry forward business loss/depreciation against them - Held that:- In the instant case, the contention of the assessee is that it has no other source of income other than business income. The said contention was not controverted by the tax authorities. The assessee has credited the loan amount of ₹ 18 lakhs and the profit from commodity trading of ₹ 5.13 crores in its books of account. In fact the profit from commodity trading was credited in the profit and loss account and offered as business income. Since the assessee could not explain to the satisfaction of the Assessing Officer the nature and source of loan amount as well as the profit from commodity trading, the Assessing Officer has treated them as deemed income, i.e., as unexplained cash credits under section 68 of the Act. While dealing with the issue relating to the disallowance of interest, the Assessing Officer has pointed out that the assessee has a loan liability of ₹ 21.56 crores and claimed interest expenditure of ₹ 3.33 crores. The Assessing Officer has allowed depreciation of ₹ 2.63 crores. All these figures throw light on the magnitude of operations of the company. Under these set of facts, we are of the view that it may not be unreasonable to treat the loan receipts and profit from commodity trading assessed under section 68 of the Act as receipts from the business activity of the assessee. Accordingly, we direct Assessing Officer to allow set off of current year's business loss as well as the brought forward business loss/unabsorbed depreciation against the income assessed under section 68 of the Act in accordance with the provisions of the Act relating to set off. - Decided in favour of assessee. 2015 (3) TMI 611 Revision u/s 263 - CIT had observed that, firstly, the Tribunal has not accepted the computation of deduction u/s 80-I on the profits of CPP and has mainly directed to allow the deduction u/s 80- IA in accordance with law - Held that:- In the original assessment order, the AO did not allow the claim of deduction u/s 80-IA in respect of the CPP unit. Finally, the said deduction has been allowed by the Tribunal following the earlier year order of the Tribunal in assessee’s own case. How the computation of profit of CPP has to be worked out, has been discussed by him in detail. In our opinion, such an observation and the finding of the CIT is not tenable in law and on facts, because the assessee’s claim for deduction u/s 80-I on CPP has been specifically allowed by the Tribunal and secondly, the ratio and method of determination of profit of CPP unit has already been decided in the earlier years and it was also not a subject matter of dispute or difference by the department. Thus, the issue of claim of deduction u/s 80-I including the determination of ratio of CPP stands merged with the order of the Tribunal. The AO has mainly followed the direction of the Tribunal and allowed the deduction as per the profit determined. Such a variation of deduction u/s 80- I, now cannot be disturbed by examining the claim of deduction of expenses denovo as held by him. The ratio of asset of gross block of fixed assets has been worked out in the manner, which has been determined and upheld in the earlier years. The same now cannot be disturbed on an entirely different footing specially when the AO has simply carried out the computation to allow the deduction u/s 80-I as per the order of the Tribunal. Such an observation of the CIT with regard to the adjustment of expenses is neither borne out from the original assessment order nor from the first appellate order. If at all, some mistake has occurred on the ratio of determination of profit, then the same would relate to the original assessment order dated 30.11.2000 and not in the second order. Such an order, now cannot be revised u/s 263, as it is clearly barred by limitation. - Decided in favour of assessee. 2015 (3) TMI 610 Ingenuine sundry creditors - CIT(A) sustained part addition - Held that:- The assessee was not able to furnish the bank statement copy, however, the AO procured the bank statement from the bank and found certain discrepancies in the statement regarding payment to sundry creditors. Finally he made an addition of ₹ 35,13,739/- in respect of outstanding creditors treating as cessation liability. However, CIT(A) called for remand report from the AO in the course of first appellate proceedings and once again the AO called for details of sundry creditors and payment to them. The assessee failed to furnish the details in respect of sundry creditors amounting to ₹ 23,34,721/-. Admittedly, these credits continued to be carried forward year after year.In this case, the liability remains to be recovered year after year. For invoking provisions of section 68 of the Act, if any sum is to be found credited in the books of the assessee maintained during the previous year, only then it would be possible to make addition under section68 of the Income tax Act. In the case of carried forward credit, which is from earlier year, provisions of section 68 cannot be applied. In the present case, the liabilities outstanding in the books of account of the assessee for the assessment year under consideration and only the provisions of the section 41(1) of the Act could be applied. In the present case the assessee failed to establish the actual existence of the impugned disputed amount in the books of account of the assessee. The assessee has drawn its balance sheet based on its books of account, in which the above amount, were being claimed as liabilities due, to various parties, as at the end of the accounting year under dispute. However, the assessee failed to establish the genuineness of these liabilities by producing supporting evidence. Simply the liabilities being reflected against certain names in the books of account would not establish the genuineness of liabilities. - Decided against assessee. Estimation of net profit - rejection of books of accounts - out of total addition made ₹ 6,95,770/- addition to the extent of ₹ 4,87,038/- was confirmed and balance addition of ₹ 2,08,732/- was direct to be deleted by CIT(A) - Held that:- In the present case during the course of remand proceedings before AO the assessee produced the books of account. The AO also confirmed the examination of books of account and observed that the has not produced the bills in respect of conveyance expenses ₹ 75,710/-; general expense ₹ 69,361/-, motor car expenses ₹ 48,000/-, telephone expenses ₹ 20,052/-. Once the books of account of the assessee was produced before the lower authorities and if there is certain discrepancy the authorities were free to make addition to that extent of discrepancies noticed by the authorities and, authorities were precluded in rejecting the books of account of the assessee. In such circumstances in our opinion, in this case rejection of books of account of the assessee is not justified. However, there is certain discrepancy noticed by the authorities in the course of first appellate proceedings. Accordingly, in our opinion instead of adhoc estimation, we are inclined to sustain the disallowance in respect of expenses incurred in cash and no bills or vouchers were produced by the assessee for verification namely conveyance expenses, ₹ 75,710/-, general expenses ₹ 69,361/-, motor car expenses ₹ 48,000/-, telephone expenses ₹ 20,052/-. - Decided partly in favour of assessee. 2015 (3) TMI 609 Non-granting of interest on interest on refund due - Assessing Officer sought to recover the excess interest granted to the assessee vide rectification order - CIT(A) allowed claim of the assessee with regard to the refund of the amount with interest is justified but the claim of the assessee with regard to interest on interest was not allowed - Held that:- Said judgment of the Supreme Court of CIT v. Narendra Doshi [2001 (7) TMI 10 - SUPREME Court] as relied upon by assessee not coming to the aid of the assessee and permit the assessee to claim interest on interest under the given situation. No doubt, when the tax paid is more than what is due, as a result of certain additions, etc., made by the Assessing Officer and in appeal when those are deleted by the appellate authority, the refund of the excess amount is to be made along with interest, as envisaged under section 243 of the Act. It is only when this interest is not refunded that the assessee would become entitled to the interest on the said interest as well. That was the factual position in Sandvik Asia Ltd. v. CIT [2006 (1) TMI 55 - SUPREME Court]. In contradistinction, where the interest is paid along with the amount payable as refund, the question of payment of interest on interest does not arise. Present cases fall under this category. In the present case, the order of the CIT (Appeals) would demonstrate that he had taken into consideration that the assessee is entitled to interest for a period from January 1, 1999 to March 19, 2010 and accordingly, he granted the same. Interest on interest is not at all the subject matter of the order passed by the Assessing Officer under section 154 of the Income-tax Act on June 2, 2011. Being so, in the present case, the assessee has been granted interest under section 244A of the Income-tax Act as due to him and the calculation of the interest was not disputed by the assessee. The assessee cannot widen the scope of the provisions of section 154 by putting various debatable issues. The various case law relied on by the learned authorised representative is of no relevance in view of the latest judgment of CIT v. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] wherein held that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. - Decided against assessee. 2015 (3) TMI 608 Unexplained investment - unexplained interest credited to the assessee - unexplained cash credit/debits held as income of the assessee - CIT(A) deleted the addition - Held that:- It does not stand established that the assessee has made the impugned investment. We say so for the reason that the burden to establish the existence of impugned investment was on the Revenue, which, in the present case has not been discharged. Firstly, assessee denied the impugned transaction. Secondly, the claim of the Assessing Officer is based on the alleged evidence found on Shrl Chetan Gupta, and quite clearly said witness has not been confronted to the assessee at any stage during the course of assessment, although the same was specifically pleaded by the assessee. The said person is the witness of the revenue because it is on the basis of his testimony, It has been held that the assessee made the impugned investment. Therefore, non-affording of cross-examination makes the use of such evidence by the Revenue, as untenable. See CIT Vs. Ashwani Gupta, (2010 (2) TMI 42 - DELHI HIGH COURT), which followed its earlier decision of SMC Share Brokers Ltd. (2008 -TMI - 3387 - DELHI HIGH COURT) to concluded that once there was violation of the principles of natural justice, in as much as seized material was not provided to an assessee nor was cross-examination of the person on whose statement the Assessing Officer relied upon granted, then such deficiencies would amount to denial of opportunity and would be fatal to the proceedings. Thirdly Shri Chetan Gupta has denied recovery of the pen-drive and also the impugned transactions in the statement recorded by the Assessing officer on 16.11.2009, so however, even if it is accepted that the pen-drive was recovered from shri Chetan Gupta, then, it only amounts to a third-party evidence and could not be straightaway relied upon without being tested in cross-examination or on the basis of any corroborative evidence. For the aforesaid proposition, we are fortified by the judgment of Hon’ble Delhi High court in SMC Share Brokers Ltd. (supra) and S.M. Aggarwal (supra) and also Chiranjil Lal Steel Rolling Mills (1970 (11) TMI 30 - PUNJAB AND HARYANA High Court). The information received by the Assessing officer from his investigation Wing, at best, be regarded as a prima-facie material, but could not be construed as conclusive for use against the assessee to fasten any tax liability, because the same was required to be corroborated by credible and independent evidence or was required to be tested in cross-examination by the assessee, quite clearly none of these aspects have done by the Revenue in this case. Therefore, it is under these circumstances, that we have observed earlier that the Revenue has not proved that the impugned investment has been made by the assessee. In the light of above, the essential pre-requisite of Section 69 of the Act is not satisfied in this case. - Decided in favour of assessee. 2015 (3) TMI 607 Validity of the initiation of proceedings u/s 153C - whether in absence of any incriminating seized document in the case of respondents, assessment framed u/s. 153C of the I.T Act for the year under consideration, is time barred, bad in law and deserve to be quashed? - Held that:- Since the facts of the present case are identical to the facts involved in the case of M/s Tanvir Collections Pvt. Ltd. Vs ACIT wherin [2015 (3) TMI 345 - ITAT DELHI] wherein held that the AO did not record any satisfaction that some money, bullion, jewellery or books of accounts or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, failed to confer any valid and lawful jurisdiction on the AO of the assessee to proceed with the matter of the assessment u/s 153C of the Act. - Decided in favour of assessee. 2015 (3) TMI 606 Computation of Long term capital gain - dis-allowance of expenditure u/s 48 which was found as unexplained u/s 69C - assessee contends that once section 50C is to be held applicable and the asset and sale thereof is held to be long term capital gains, the provision of section 48 will be automatically applicable - deduction of cost of improvements - Held that:- the assessee is blowing hot and cold, in 1992-93 he has not shown cost of acquisition/purchase value of the alleged property in other years no direct evidence has been given except relying on some mischievous entries sometimes in balance sheet or in capital gain. It is difficult to believe that this clever assessee will dare to show cost of improvement in books qua the property whose cost is not shown in the earlier books. Thus the assessee's contentions lack any type of sincerity or corroboration worth appealing to logic. We do not see any infirmity in the order of the ld. CIT(A) in invoking the overriding proviso to sec. 69C. As per assessee's own acceptance in A.Y. 1992-93, no cost of acquisition was disclosed in his books of accounts, therefore by deeming provisions of sec 69C the same is deemed to be unexplained expenditure of the assessee on which proviso to sec 69C of the Act has overriding effect. Assessee audacious claim may be right that nothing can be brought to tax as assessments for those years are now time barred, but the proviso expressly debars allowance of any benefit in this behalf. Having accepted this proposition, the ld. CIT(A)'s order deserves to be upheld as the benefits of such unrecorded expenditure cannot be claimed by the assessee in any year by this overriding proviso. As already mentioned apropos alternate contention of allowing the amount of ₹ 77,726/- and ₹ 39,400/-, we have already rejected the assessee's claim being without any basis and it digress from the issue. Sec. 4 of THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 was introduced as an overriding law as mentioned in sec. 3 to curb the pernicious practices of Benami Transaction and denying the benefits of enjoyment of Benami property to real owner. Sec. 4(1) clearly forbids any claim or action from real owner in respect of any Benami property. Thus assessee's claim for benefits u/s 48 are also denied by this specific and overriding law which is fully applicable to this case. Consequently the order of Ld. CIT(A) is upheld in toto. - Decided against assessee. 2015 (3) TMI 605 Undisclosed income of the assessee on account of the value of seized precious stones - whether the impugned Assessment Order passed by the AO under sec. 143(3)/153A on 28th December 2006 is without jurisdiction, illegal and void an-initio? - when the AO assumed his jurisdiction, when the Income Tax department issued search warrant on 28-02-2001, which was communicated on 5-3-2001 or whether the AO has assumed jurisdiction on 9-9-04 when the seized materials were handed over to the Income Tax department? - Held that:- Thus on plain reading the provisions of section 132A, 153A, 158BI of the Act, it is clear that the assumption of jurisdiction depends on the date of requisition u/s. 132A. In the Act it has nowhere been provided that assumption of jurisdiction depends on supply of requisitioned materials. Pursuant to the requisition u/s. 132A on 28.2.2001 the jurisdiction could have been assumed only under Chapter XIVB i.e from the date on which the authorized officer has made the requisition and not the date when he received the records/assets pursuant thereto. It is evident that AO assumed jurisdiction on 28.2.2001 when requisition was issued. Section 153A also postulates that action should be initiated as per this section from the date on search u/s. 132 or section 132A by requisition. In the present case, since requisition was made prior to 31-05-2003 when section 153A was not in existence, the assumption of jurisdiction u/s. 153A of the Act by the AO is bad in law and the same is liable to be quashed.AO was not correct in assuming his jurisdiction u/s. 153A of the Act inasmuch as the requisition u/s. 132A was made in this case prior to 31-05-2003. Since we have already quashed the assumption of jurisdiction - Decided in favour of assessee. 2015 (3) TMI 604 Transfer pricing adjustment - selection of comparable - Held that:- Exensys Software Solutions Ltd.- there is an extra-ordinary event which resulted in high operating margin of that company and we, therefore, direct the AO to exclude this company from the list of comparables. In the above referred case of Intoto Sof tware India Pvt. Ltd., complete details were not placed on record, therefore, the matter was sent to AO for verif ication whereas in this case assessee has objected even before the AO/ CIT(A), therefore, there is no need to set aside the issue to the f ile of the AO for examination as was done in the case of Intoto Software (2013 (10) TMI 599 - ITAT HYDERABAD). We are, therefore, of the opinion that on the basis of facts placed on record, the case of Exensys Sof tware Solutions Ltd. cannot be taken as comparable. Similarly, the other cases, Bodhtree consulting Ltd, Four Soft Ltd, Infosys, Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) etc, are also to be excluded as they are considered and analysed in various cases relied on about functional ity and why the same are not comparable to the companies like assessee. Bodhtree consulting Ltd also fails RPT filter as contended. In view of this, we are not discussing above comparables in detail, but, suffice to say that assessee’s submissions are valid. The AO is directed to exclude the above comparables and re-work out the arm’s length margin accordingly. - Decided in favour of assessee. 2015 (3) TMI 603 Interest income on non-performing asset advances - Applicability of provisions of section 43D - assessee is a non-scheduled co-operative bank carrying on banking business in terms of a licence issued by the Reserve Bank of India (RBI) - as per the AO interest income on non-performing assets advances accrued to the assessee and accordingly, he brought to tax such interest income - CIT(A) deleted the addition - Held that:- As relying on Asst. CIT v. Omerga Janta Sahakari Bank Ltd. [2014 (12) TMI 355 - ITAT PUNE] who considered the judgment of CIT v. Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] as well as the judgment of CIT v. Sakthi Finance Ltd. [2013 (3) TMI 266 - MADRAS HIGH COURT] which had expressed divergent views with respect to the issue of accrual of interest income on non- performing assets advances ; and, following the proposition that in the absence of any judgment of the jurisdictional High Court, there being contrary judgments of the non-jurisdictional High Courts, a decision which was favourable to the assessee was to be followed in view of the reasoning laid down by the hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] and, thus the Tribunal decided the issue in favour of the assessee. Assessee is a Co-operative Bank carrying on banking business in terms of a license granted by RBI and is not a ‘scheduled bank’ included in second schedule of RBI so as to fall within the scope of section 43D of the Act - in Commissioner of Income tax Versus Vasisth Chay Vyapar Ltd. & others [2010 (11) TMI 88 - Delhi High Court] it was held that what to talk of interest, even the principle amount itself had become doubtful to recover - In this scenario it was legitimate move to infer that interest income thereupon has not “accrued”- thus, there was no infirmity with the decision of the CIT(A) in holding that the interest income relatable on NPA advances did not accrue to the assessee – Decided against revenue. 2015 (3) TMI 602 Unexplained share capital - CIT(A) deleted part addition - proceedings initiated under section 153A - Held that:- Out of this unexplained ₹ 30 lakhs, ₹ 20 lakhs has been received from the three companies A. C. Steels and Holdings P. Ltd., Grewal Steels and Holdings P. Ltd. and Sumit Credit Co. P. Ltd., address of these companies was Room No. 6/7 on 4th Floor, 6 Clive Road, Kolkata. In this regard the assessee has submitted necessary details which included copy of the Income-tax return, balance-sheet, bank statement, share application form, certificate of incorporation, memorandum and articles of association. Nothing adverse has been found or commented upon by the Assessing Officer about these documents submitted by the assessee-company. The Assessing Officer's doubt has arisen merely on the ground that these are Kolkata based companies, the addresses of these companies are common. For this he has carried out enquiry and obtained inspector report which has been quoted in the assessment order. On the basis of this report, the Assessing Officer has drawn an adverse inference holding that the companies are not in existence at the place stated. We note that the Assessing Officer is not correct in drawing such adverse inference on the basis of this report. As rightly pointed out by AR the inspector has visited this premises on the evening at 4.30 p.m. The inspector has confirmed that there was an office with a name plate, A. S. Grewal and Co. The inspector has further stated that the registered office of these companies belongs to a tax consultant. On the basis of these findings, the Assessing Officer has drawn adverse inference and made the addition. We are of the view that the Assessing Officer is not justified on the basis of this inspector report to hold that the identity of the shareholder company has not been established. On the contrary, as rightly pointed out, the common surname "Grewal" is good enough to indicate that the offices of these companies were at that premises. The inspector did not make any effort to make any further enquiry about these companies and also the Assessing Officer did not make any effort to carry the investigation further. The sole basis for making addition about these companies is the inspector report. No doubts have been raised by the Assessing Officer about the documents filed by the assessee-company. The inspector report as alleged above cannot be a basis for disbelieving the assessee's version. Further in the case of Sofed Comtrade Pvt. Ltd. we note that no enquiry whatsoever has been done by the Assessing Officer. The observations made by him are only raising a doubt without carrying out any investigation. Surprisingly we note that the Assessing Officer was having doubt in mind but he never issued any notice or summon to any of the directors. It is not a case where any confessional statement has been recorded by any entry provider of accommodation entry. It is a case of a doubt raised by the Assessing Officer but such doubt has not been converted into any evidence or material so as to substantiate the addition. We are of the view that the additions made by the Assessing Officer in respect of share capital received from these four companies are not justified and accordingly the same is directed to be deleted. As regards the fifth company, i.e., Prime Vyapar Pvt. Ltd. we note that the inspector has carried out the enquiry and in this report the inspector has pointed out that on local enquiry it is revealed that there is no company called by this name at the address and there is only a residential place at the said premise. The learned authorised representative during the course of the hearing could not rebut this finding of the inspector. As specific finding of the inspector which remains unrebutted, we are of the view that addition of ₹ 5 lakhs in respect of the share capital received from Prime Vyapar Pvt. Ltd. has rightly been made by the Assessing Officer and accordingly this addition is confirmed.- Decided partly in favour of assessee. Disallowance u/s 14A read with rule 8D - Held that:- In this regard we notice that the assessment year under consideration is 2005-06 and rule 8D is effective from the assessment year 2008-09. Accordingly the Assessing Officer was not justified in invoking the provisions of rule 8D for the assessment year under consideration. We further note that the assessee's investment is mainly in group companies. - Decideda in favour of assessee. 2015 (3) TMI 601 Deduction under section 11 - CIT(A) allowed the claim - assessee-trust runs a school - Held that:- Exemption under section 11 of the Act was disallowed by the Assessing Officer, inter alia, on the ground that the assessee-trust gave contract for constructing the school building to Niche Realty Pvt. Ltd in which one of the trustees was having substantial interest. The learned Commissioner of Income-tax (Appeals) placing reliance on the photocopy of annual report filed with the Registrar of Companies held that Mr. Desai only holding 4 per cent of the equity shares of M/s. Niche Realty Pvt. Ltd and therefore it cannot be said that he was holding a substantial interest in that company. During the appellate proceedings before us neither this document nor any evidence to the effect that this was before the Assessing Officer was found in the paper book of the assessee. Though later on photocopy of annual report with the Registrar of Companies was submitted but no evidence in respect of this document being filed before the Assessing Officer was filed. We further find that in its submission before the Assessing Officer it was claimed by the assessee-trust that Sri Ashish J. Desai was not having substantial interest in M/s. Niche Realty Pvt. Ltd. but even in these submissions of the assessee which have been reproduced by the Assessing Officer in his order there is any mention about the copy of annual report with the Registrar of Companies being filed, though in the submission before the learned Commissioner of Income-tax (Appeals), it was mentioned by the assessee-trust that copy of annual report with Registrar of Companies was being filed. In view of these undisputed facts of this case, we are inclined to agree with the contention of the learned Departmental representative that the learned Commissioner of Income-tax (Appeals) has given relief to the assessee by admitting and relying on the additional evidence which was not before the Assessing Officer, therefore in the interest of natural justice and fair play we are of the considered opinion that matter be restored back to the file of the Assessing Officer for fresh adjudication as per law. - Decided in favour of revenue for statistical purposes. Cancellation of registration of the assessee granted under section 12AA and disallowing exemption in respect of corpus donation - Held that:- Both the denials as based on assessee's non eligibility to exemption under section 11. Since the point of eligibility is remanded back for reconsideration, these matters should also go back to the file of the Director of Income-tax (Exemption) and Joint Director of Income-tax (Exemption) respectively for fresh adjudication after the matter is decided by the Assessing Officer in respect of eligibility to exemption under section 11 - Decided in favour of assessee for staitistical purposes. 2015 (3) TMI 600 Reopening of assessment - assessee failed to deduct TDS under the provisions of section 194C of the Act and consequently disallowance as per section 40(a)(ia) - Held that:- As relying on Sita World Travels (India) Ltd. v. CIT [2004 (5) TMI 23 - DELHI High Court ] from the original assessment orders as well as order made by the appellate authority, it was very clear that the Assessing Officer was well aware about the primary facts, namely, the claim made by the assessee, the circumstances under which the claim was made and the provisions of law which could be applied while granting the benefits. A decision may be wrong or right is none of the concern of the sub sequent officer. If the primary facts were not available or there was concealment or there was no application of mind at all, then a case for reopening the assessment could be made out. But, when all the facts were placed before the Assessing Officer and the Assessing Officer consciously considered the facts and arrived at a decision, then it cannot be reopened merely because subsequently he changes his opinion or some other officer takes a different view. The relevant facts were taken into consideration by the Assessing Officer while making the assessment and, therefore, there was no question of any escapement of income chargeable to Income-tax. Therefore, it was a case of wrongful assumption of jurisdiction and as such the notices, the speaking orders and the assessment orders made in pursuance to the notices were required to be quashed and set aside and were, accordingly, set aside. We uphold the order of the Commissioner of Income-tax (Appeals) in holding the reassessment proceedings to be invalid and consequently assessment framed thereunder in pursuance thereto to be void ab initio. - Decided in favour of assessee. Deletion of addition made under section 40(a)(ia) - Held that:- The assessee was making payment for carriage of goods and there was admittedly no oral or written agreement between the assessee and transporters and in the absence of the same, there is no merit in the order of the Assessing Officer in holding that the provisions of section 194C of the Act had been violated. In the absence of the same no disallowance is warranted under section 40(a)(ia) of the Act. - Decided in favour of assessee. Customs 2015 (3) TMI 624 Penalties under Section 112(a) and 114AA - Held that:- As the matter has been settled by the Settlement Commission against the importer who is the main party in the case therefore, relying on the decision of S.K. Colombowala (2007 (7) TMI 514 - CESTAT, MUMBAI) wherein it has been held that cases against all co-noticees comes to an end once order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission. Therefore, as in this matter also the case against the main party i.e. the importer has been settled by the Settlement Commission vide Order No. 124/2010 therefore the proceedings initiated against all the four noticees comes to an end. In these circumstances, the impugned order is set aside - Decided in favour of assessee. Corporate Laws 2015 (3) TMI 623 Proceedings under Section 397 and 398 of Companies Act, 1956 - it has been specifically stated that the MPJ Group should have been given the option to purchase the shares as it is the majority group. - Held that:- By the order dated 3rd July, 1996 BPJ Group was given the 1st option to purchase the shares of the MPJ Group and if such option was not exercised then the MPJ Group could have exercised the option and purchased the shares. In appeal the order was modified and the MPJ Group was directed to purchase the shares of the BPJ Group. The said order was passed on the premise that the MPJ Group was the majority share-holder. There is no default clause in the order dated 18th September, 1998 and on a reading of the order the reason for modifying the order of the Trial Court dated 3rd July, 1996 is that the MPJ Group held 52.2% shares while the BPJ Group held 47.50% shares and the discretion exercised by the Trial Court was on a wrong legal principle in not directing the majority, to purchase the shares of the minority and although the relief granted in the order dated 3rd July, 1996 is not unknown in law but an exceptional case ought to have been made out for granting such relief. In the instant case too the MPJ Group which was in management was to purchase the shares of the BPJ Group as will appear from the decree dated 18th September, 1998, and there was no scope for exercise of option by the BPJ Group. This will be evident from the modified decree itself which mandates sale of the shares by the BPJ Group to the MPJ Group by user of the phrase “shall sell”. It was on the basis of the aforesaid that the appeal of MPJ Group was allowed. By virtue of the aforesaid the requirement of exercise of option was rendered otiose. The aforesaid will, therefore, entitle the decree-holder to execute the decree dated 18th September, 1998, accordingly, there will be an order in terms of prayer (g) of Column 10 of the Tabular Statement, after advertisement in leading newspapers for which purpose Ms. Ipsita Banerjee Advocate is appointed Special Officer at an initial remuneration of 300 Gms. Let such advertisement be published within six weeks from the date of receipt of the order. The sale will be subject to confirmation by this Court. 2015 (3) TMI 622 Appeal against order of Debt Recovery Appellate Tribunal(DRAT) - Confirmation of the highest bid - Interest on refund - Held that:- The above paragraph is a complete answer to the contention of the petitioner that the confirmation of sale had already taken place or the DRT had directed the bank to confirm the petitioner’s bid. The said paragraph lucidly and in clear terms records that the bank was at liberty to precede with regard to confirmation of sale as per law. No affirmative or specific direction was made on the application filed by the petitioner that the bid should be confirmed. This establishes and proves that till the said date i.e. 29.1.2013, there was no confirmation of the bid. Thereafter also, the bank did not confirm or accept the bid of the petitioner. There could be some merit in the contention of the petitioner that the letter dated 19th February, 2013 rejecting and not confirming their bid was sent/dispatched on 22nd February, 2013 i.e. after the sale certificate was issued on 20th February, 2013 in favour of the fourth respondent, but this reason or ground is not sufficient and a good cause to reject or negate the sale certificate and to issue a direction for confirming the bid given by the petitioner. The stand of the bank that they had not confirmed or accepted the bid of the petitioner is correct. Thus no concluded and binding contract existed, compelling the bank to execute the sale certificate or deed in favour of the petitioner. The bank could not have rejected the petitioner’s bid without receiving payment from the fourth respondent. It was natural for them to await payment from the fourth respondent, before rejecting the petitioner’s bid and inform them. The highest bidder cannot have any vested right to claim confirmation of his bid or quotation. Of course, if the bid is wrongly rejected in a capricious and arbitrary manner, the allegation can be examined but this is not the position in the present case. These decisions of the High Court of Delhi have to be read in light and terms of the decision of the Supreme Court in Mathew Varghese [2015 (1) TMI 461 - SUPREME COURT], which specifically interprets section 13 of the Act and the applicable Rules. The difference in price between the bid of the petitioner and the price paid by the fourth respondent is too startling and staggering. As already noted, the petitioner refused to participate in inter-se bidding. The entire submission of the petitioner is that their bid should be accepted as the transaction was concluded and had become binding, is without merit and has to be rejected. It has been urged before us that the plea with regard to interest was raised before the DRAT, but has not been dealt with in the impugned order dated 10th October, 2014. We do not find any discussion on the said aspect in the impugned order. An order of remit is accordingly passed on the question “whether the petitioner is entitled to interest, and if so, at what rate and for which period.To cut short delay parties are directed to appear before the DRAT on 22nd December, 2014, when a date of hearing will be fixed.- Writ petition dismissed. Service Tax 2015 (3) TMI 634 Waiver of pre-deposit - whether the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal - Business auxiliary services - business of lending money to customers, against gold that was pledged by the said customers with the petitioner - Held that:- the institution of a suit carries with it an implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit and, further, that the right of appeal that is vested is to be governed by the law prevailing at the date of institution of the suit or proceeding, and not by the law that prevails at the date of its decision or at the date of filing of the appeal. The petitioner, in whose case also the lis commenced in 2012, would not be required to deposit the amount of 7.5%, as required pursuant to the 2014 amendment, and in that respect, he would have an efficacious alternate remedy before the Tribunal where he can file an appeal, together with an application for waiver of pre-deposit and stay of recovery of the amounts confirmed against him. If the petitioner prefers a duly constituted appeal under the provisions of the Finance Act, 1994, as they stood prior to 16.08.2014, then the Appellate Tribunal shall number the Appeal, and consider the application filed by the petitioner for waiver of pre-deposit and stay of recovery of the amounts confirmed against him by Ext.P8 order, on merits, and thereafter, proceed to hear the appeal itself in due course. - till 31.03.2015, no steps for recovery of the amounts - The writ petition is disposed as above 2015 (3) TMI 633 Entitlement for availing the scheme of Voluntary Compliance Encouragement Scheme (VCES) - rejection of declaration - petitioner pointed out that though ST 3 returns were filed earlier but they are eligible for the scheme as true liability was not disclosed at the time of filing of ST 3 returns. - Held that:- the authority undertakes the task of bifurcating or computing the liability by showing some disparity or difference in the figures of the service tax returns, and the disclosures or the declarations filed in a prescribed form pursuant to this scheme. We have no provision therefore before us which would enable us to sustain the exercise and which is carried out by the respondent no.3 The declaration which has been made by a person against whom an inquiry or investigation in respect of service tax not levied or not paid or short levied or short paid and in terms of clause 106(2) is a situation which is not before us and equally not before the Designated Authority also. We do not see how therefore the clauses of the scheme would enable the authority to come to this conclusion. The further stipulation in the scheme and particularly the Service Tax Voluntary Compliance Encouragement Rules, 2013, indicate as to how the Designated Authority ought to have dealt with the declaration in terms of the scheme. It may be that the eventual order or direction would uphold the declaration or while upholding it issue such other orders and directions, as are permissible in the scheme. However, to reject the scheme outright by the exercise undertaken was not permissible. Writ petition allowed - The declaration now shall be dealt with and scrutinized in terms of the Service Tax Voluntary Compliance Encouragement Scheme, 2013 and the Service Tax Voluntary Compliance Encouragement Rules, 2013 - Decided in favor of assessee. 2015 (3) TMI 632 Benefit of Cenvat credit - outdoor catering services and rent-a-cab services - Services provided in the factory for employees of the factory - According to the Department, outdoor catering services and rent-a-cab services could not be treated as 'input service' as defined under the Cenvat Credit Rules - whether the assessee can utilise the cenvat credit facilities in respect of outdoor catering services and rent-a-cab services, provided in the factory for its employees, as input service - Held that:- assessee carrying on the business of manufacturing cement by employing more than 250 workers is mandatorily required under the provisions of the Factories Act, 1948 to provide canteen facilities to the workers. Failure to do so entails penal consequences under the Factories Act, 1948. To comply with the above statutory provision, the assessee had engaged the services of a outdoor caterer. Thus, in the facts of the present case, use of the services of an outdoor caterer has nexus or integral connection with the business of manufacturing the final product namely, cement. Hence, in our opinion, the Tribunal was justified in following the Larger Bench decision of the Tribunal in the case of GTC Industries Ltd. (2008 (9) TMI 56 - CESTAT MUMBAI) and holding that the assessee is entitled to the credit of service tax paid on outdoor catering service. Definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is integrally connected with the business of manufacturing cement and therefore, credit of service tax paid on outdoor catering services would be allowable. - The issue raised in respect of rent-a-cab services has been considered by the Karnataka High Court in the case of CCe V. Stanzen Toyetetsu India (P) Ltd. reported in [2011 (4) TMI 201 - KARNATAKA HIGH COURT] - Cenvat Credit has been properly availed in respect of outdoor catering services and rent-a-cab services - Decided against Revenue. Central Excise 2015 (3) TMI 629 Rectification of mistake - Held that:- CEGAT has dismissed the application with the observations that the issue raised in the rectification application was not argued at the time of hearing of the main case. This aspect could not be disputed by the learned senior counsel appearing for the Department. - No error in impugned order - Rectification denied. 2015 (3) TMI 628 Non payment of excise duty - Invocation of extended period of limitation - Suppression of facts - Held that:- The Tribunal has noted that there was in fact a disclosure of the aforesaid fact in CT(3) certificate which was submitted by the respondent to the Department. It is noted that no clearance could have taken place without the knowledge of the officer as to the ultimate destination of the goods and the fact that they were cleared without payment of duty in terms of the exemption notification which was specified in the application. On that basis, the Tribunal has held that proviso to Section 11(A)(1) of the Act will not get attracted and thus, the show cause notice was beyond the period limitation as specified under Section 11(A)(1) of the Act. Going through the material on record, we find that the Tribunal is justified in taking the aforesaid view. Thus, there is no merit in this appeal - Decided against Revenue. 2015 (3) TMI 627 Power of Commissioner (A) to condone the delay - Wrong availment of CENVAT credit - credit on "Rough Forged" and 'Rail' - Bar of limitation - Commissioner held hat appeal was filed not only beyond period of limitation but also beyond period permissible to be condoned under statute and therefore, it had no power to condone delay beyond maximum period prescribed - Whether dismissal of appeal by Commissioner (A) on the ground of limitation was justified or not - Held that:- Section 5 of Limitation Act is completely excluded in its application to Section 35 of Act, 1944. There the Court proceeded to consider argument that in writ jurisdiction, delay beyond 90 days, could have been condoned by High Court. Firstly, the Court considered explanation and found unacceptable. Having said so, Court also held that judgment in I.T.C.'s Case (1990 (8) TMI 173 - SUPREME COURT OF INDIA) has not rendered any law that even where statute presecibe a particular period of limitation, High Court or Supreme Court can direct for condonation. Court categorically said that all such Courts would render statutory provisions providing for limitation rather otiose. - since admittedly the appellant has not come in a writ petition, an appeal under Section 35G of Act, 1944 has come up before this Court. Even Uttrakhand High Court dismissed appeal, preferred by party [2014 (3) TMI 419 - UTTARAKHAND HIGH COURT], holding that delay was not condonable. So far as indulgence granted by Nainital High Court against recovery was in the writ petition, which has come up before this Court on the ground that recovery was patently illegal and without jurisdiction and nonest, but, no indulgence was granted in appeal preferred by assessee. - Decided against the assessee. 2015 (3) TMI 626 Refund of Terminal Excise Duty - Held that:- Petitioner has not availed of exemption from TED. Therefore, quite logically, the refund of TED, cannot be denied - other objection taken in the impugned order, is that, there is a deficiency in the application, in as much as, the declaration made by NTPC Ltd. was not on its letterhead; an objection which is completely untenable. The document, which is appended at pages 49-50 of the paper book, clearly shows that the said document bears the stamp of the NTPC Ltd. The document declares that Cenvat Credit/Rebate under the Central Excise Rules has not been availed by NTPC Ltd. Therefore, this objection cannot stand in the way of the petitioner getting refund in the matter. - impugned order is set aside. The respondents are directed to refund the TED to the petitioner. - Decided in favour of assessee. 2015 (3) TMI 625 Validity of summons issued - Powers under Section 14 - Wrong utilization of CENVAT Credit - STL Company is operating on papers only and has no physical existence, therefore no services could be provided by the said company to petitioner-Company - petitioner received various summons/ notice asking petitioner's Directors to appear before Excise Authorities in enquiry under Section 14 of Act, 1944 - Held that:- The custom authorities, have statutory right to examine persons and to summon them to give evidence and produce documents in connection with enquiry relating to any goods or services. In absence of any material on record, i.e., pleading with due support of the documents that the summoning for examination of persons etc. is on account of any malice, coercion, duress or undue pressure, the statutory power exercised by authorities is not to be lightly interfered in writ jurisdiction under Article 226 of the Constitution. This provision is not confined to the persons or documents within the territorial jurisdiction of concerned Officer. The purpose of summoning involves multifarious reasons which includes the inquiry into the truth of transactions in which the persons who are summoned are or may be involved or otherwise have some information etc. The mere fact that the letters sent by the Excise authorities requiring certain documents have been replied or the documents have been supplied would not entitle individuals not to be summoned for the purpose of giving evidence or otherwise examination by the Central Excise Officer. The mere order of summoning for giving evidence or to participate in enquiry issued by Central Excise authorities under Section 14 of Act, 1944, in our view, is not to be interfered only on the ground that it has submitted reply to earlier letters and therefore need not appear in person before the authorities concerned. When there is a specific power contained in the Act and there is nothing on record to show that it has been exercised with male fide etc., no interference at this stage is called for. - Decided against assessee. CST, VAT & Sales Tax 2015 (3) TMI 631 Request for quashing of criminal proceedings against appellant - Evasion of tax - Interception of truck - Discrepancy in bills of the goods - Held that:- Admittedly, on 20.5.2010, vehicle bearing No. PB 11-AP- 3969 was intercepted by Ominder Singh, Excise and Taxation Officer during general checking under Section 51 of the Act. On checking, the driver of the vehicle produced two bills and stated that the same had been prepared to avoid payment of entry tax. A show cause notice was issued to the owner of the goods through driver of the vehicle on 21.5.2010. The goods were detained under Section 51(6) (b) of the Act for verification. On 21.5.2010, son of petitioner No.3 appeared before the Detaining Officer. Vide order dated 21.5.2010 (Annexure P2), penalty to the tune of ₹ 20,790/- was imposed under Section 51(7)(C) of the Act. Admittedly, the penalty amount was deposited and the goods in question were released to the owner. The said fact is also evident from the cancellation report - Thus, in the present case, proceedings under Section 51 (7)(C) of the Act were carried out and penalty was imposed qua the attempt to evade tax on the taxable goods worth ₹ 41,580/-. The penalty imposed under the Act has been duly deposited by the owner of the goods. Consequently, the goods were released to the owner. In thesse circumstances, continuation of criminal proceedings against the petitioners would be nothing but an abuse of process of law. - Decided in favour of appellant. 2015 (3) TMI 630 Exparte assessment order - No notice served - No sale of goods, only Stock transfer - Violation of fundamental right - Relaxation in period of limitation - Applicable in order of reassessment passed by court in a writ petition - Held that:- It ought to be kept in mind by the State that when the State is imposing such a huge liability of tax of approximately ₹ 90 Lakhs, more care should have been taken by the State to the notice upon the petitioner or upon the assessee. Not only orthodox methods of service of notice should have been followed, but, over and above the orthodox methods, the State should have served the notice upon assessee by sending any employee of the State. The State has several vehicles and persons with them. When such a huge liability of tax is imposed or is going to be imposed, the State should have served the notice upon the assessee by sending any responsible employee instead of passing exparte order. When there is more liability of amount of tax, more care should have been taken by the State, at least in following the procedure. It is rightly submitted by learned counsel for both the sides that if this Court will wait for affidavit to be filed by the State and, thereafter to be decided, it will take at least four weeks' time and, therefore, without wasting the time, we hereby quash and set aside the exparte order of assessment passed as well as quash and set aside the demand notice. Matter remanded back for a fresh decision after giving adequate opportunity of being heard. As a cumulative effect of the aforesaid facts and reasons, we hereby remand the matter to the Commercial Taxes Officer, Koderma Circle, Koderma to decide afresh the tax liability, if any, of the petitioner. The relaxation of the time limit as mentioned in Subsection 2 of Section 42 which is applicable in the case of appellate order or revisional order, is also applicable whenever any order is passed in the writ petition under Article 226 of the Constitution of India. - Decided in favour of appellant. Indian Laws 2015 (3) TMI 621 Stay granted by DRT - Action taken under 13(4) of SARFAESI Act - Abatement of proceedings before BIFR - Held that:- In the opinion of this Court, mere direction to maintain status quo vis-a-vis a particular property would not mean that the legal effect of the notice has been effaced – at least that is the essential purport or intent of third proviso to Section 15(1) of SICA. The Court notices that the intention of the Parliament while enacting the third proviso to Section 15(1) of SICA was to avoid possible conflict between the provisions of SICA and SARFAESI given that both could potentially be construed as special enactments and that there was a degree of overlap, especially in the case of sick industrial debtors. To obviate this conflict, an express provision, making abatement conditional rather than universal was provided for. In the present case, this objective factor alone – apart from the measures to be taken under Section 13(4) was the subject matter of enquiry before the BIFR. As is evident from the extract of the BIFR’s order, all the secured creditors unanimously consented to the abatement of the proceedings. In these circumstances, the submission of the borrower that the petitioner did not represent the views of the 3/4th or more of such secured creditors has no force. In the absence of any special form or proceeding to record such consent, it has to be held that if such consent is expressed in the course of proceedings, especially before the BIFR or any other authority under the SICA, such consent is deemed valid. As far as the main contention – which apparently found favour with the AAIFR – with respect to the status quo order which operated in respect of Section 13(4) notice is concerned, this Court is of the opinion that the reasoning is meritless. The validity of Section 13(4) or for that matter any statutory matter cannot be judged on the basis of what an interim order states or purports to state. An interim order is only an aid or an arrangement which entitles the parties to the main proceedings, to work-out the modalities till final adjudication. Till the measures themselves are set-aside under Section 13(4), it cannot be said to be invalid or illegal. It goes without saying that a statutory order, till declared to be so in a legally constituted proceedings, would have to be accepted and given effect to.Refer case law is [1991 (8) TMI 328 - SUPREME COURT]. For the foregoing reasons, the impugned order is set aside. It is held that the proceedings before BIFR stood abated upon the service of the notice under Section 13(4). - Decided in favour of appellant. 2015 (3) TMI 620 Public Interest Litigation (PIL) to refrain proposed de-recognition of Regional Stock exchanges - No protection to the shareholders of companies listed on such exchanges - No holding by the petitioner - Circular shows the mandatorily listed on other stock exchange or to provide exit option to the shareholders , before de-recognition Held that:- The investors in the companies listed on the stock exchanges which are being de-recognized can neither be said to be socially or economically backward nor can it be said that the impugned actions are such as affecting the general public without affecting anyone in particular. The petitioner has been unable to satisfy us as to how he is entitled to file the petition in public interest. The Supreme Court, in Holicow Pictures (P.) Ltd. [2007 (12) TMI 445 - SUPREME COURT] has also held that the Court has to act ruthlessly while dealing with such busybodies or meddlesome interlopers impersonating as public spirited persons and masquerading as crusaders of justice. Similarly, in Dr. B. Singh [2004 (3) TMI 740 - SUPREME COURT] , it was held that Courts should not waste valuable judicial time which can be otherwise utilized for disposal of genuine cases, in deciding petitions which cannot legitimately be called PILs. -Dismiss the PIL.
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