Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 3, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Salaries were not reflected in the profit and loss account - if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law, a deduction must be allowed by the Income Tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction - HC
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Transfer pricing adjustment - the unusual features which remained unexplained by the assessee, influenced the TPO and the AO to resort to transfer pricing adjustment and determine ALP by adopting the CUP method for the procurements from Sumitomo Japan. - HC
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Addition on account of suppressed/unaccounted turnover - AO never rejected the books of accounts maintained by the assessee. The A.O. simply quantified the difference between books of accounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation - No additions - AT
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Computation of profit earned by non-resident from Shipping business u/s 44B - service tax collected by the assessee would form part and parcel of the aggregate amount as specified in Sub-section (2) of section 44B of the Act for the purpose of determining the profits and gains of the assessee’s business under this section - AT
Customs
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Validity of Show cause notice issued to 3rd respondent - Period of limitation - Since only a show cause notice has been issued and final order in response thereto is yet to be passed, all the contentions raised herein can be effectively gone into by the 3rd respondent on consideration of the reply to the show-cause notice - HC
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Rejection of refund claim under Section 27 of the Customs Act, 1962 - Mercedes Benz Car imported and cleared on assessment and payment of duty - claiming fulfilment of notification and relying on Board’s circular not relevant as there was non-challenge of assessment order made under Bill of Entry - AT
Bill
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Amendment of Second Schedule - Central Excise Tariff Act, the Second Schedule shall be amended in the manner specified in the Ninth Schedule, with effect from the 1st day of January, 2017.
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Amendment of First Schedule of Central Excise Tariff Act, 1985 - Tariff - First scheduled to be amended w.e.f. 1.3.2016 and subsequently and substantially second time w.e.f. 1.1.2017
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Amendment of Third Schedule of Central Excise Act - Deemed Manufacturing - to be amended w.e.f. 1.3.2016 and subsequently second time w.e.f. 1.1.2017
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Amendment of section 37B of Central Excise Act, 1944 - to insert the words “or for the implementation of any other provision of this Act” in section 37B so as to empower the Board to issue orders, instructions and directions for the implementation of any other provision of the said Act.
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Amendment of section 11A of Central Excise Act, 1944 - Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded - the words “two years” for the words “one year” wherever they occur so as to increase the period of limitation in cases not involving fraud, suppression, etc. - Normal period of limitation for issuance of show cause notice to be increased from one year to two years.
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Amendment of section 5A of Central Excise Act, 1944 - to substitute sub-section (5) to provide that every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. - condition of offer to sale removed.
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Amendment of First Schedule Customs Tariff Act, 1975 - Tariff - First scheduled to be amended w.e.f. 1.3.2016 and subsequently and substantially second time w.e.f. 1.1.2017
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Omission of section 8C of Customs Tariff Act, 1975 - Power of Central Government to impose transitional product specific safeguard duty on imports from the People’s Republic of China - to omit section 8C of the Customs Tariff Act as the provision which was inserted for a period of ten years has lapsed.
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Amendment of notifications issued under section 25 of Customs act, 1962 - Amends various notification with retrospective effect. - The refund shall be made of all such safeguard duty which has been collected, but would not have been so collected, had the amendments made in sub-section (1) been in force at all material times and such refund shall be subject to the provisions of section 27 of the Customs Act, 1962.
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Amendment of section 156 of Customs Act, 1962 - to empower the Central Government to make rules to provide for the due date and the manner of making deferred payment of customs duties, taxes, cess or any other charges.
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Insertion of new section 73A of Customs Act, 1962 - Custody and removal of warehoused goods - to provide for the custody and removal of warehoused goods.
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Amendment of section 73 of Customs Act, 1962 - Cancellation and return of warehousing bond - to insert the word “transferred or” after the words “exported or”.
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Amendment of section 72 of Customs Act, 1962 - Goods improperly removed from warehouse, etc - substitute the word “exportation” with the word “export” - some other changes also there.
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Amendment of section 71 of Customs Act, 1962 - Goods not to be taken out of warehouse except as provided by this Act - to substitute the word “re-exportation” with the word “export”.
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Amendment of section 69 of Customs Act, 1962 - Clearance of warehoused goods for exportation - to provide that warehoused goods may be exported to a place outside India without payment of import duty if the export duty, fine and penalties payable in respect of such goods have been paid.
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Amendment of section 68 of Customs Act, 1962 - Clearance of warehoused goods for home consumption - any warehoused goods may be cleared from the warehouse for home consumption if the import duty, interest, fine and penalties payable in respect of such goods have been paid;
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Amendment of section 65 of Customs Act, 1962 - Manufacture and other operations in relation to goods in a warehouse - to substitute certain words therein.
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Substitution of new section for section 64 of Customs Act, 1962 - Owner’s right to deal with warehoused goods - to make provisions for owner’s right to deal with warehoused goods.
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Omission of sections 62 and 63 of Customs Act, 1962 - To omit the provisions regarding Control over warehoused goods and Payment of rent and warehouse charges
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Substitution of new section for section 61 of Customs Act, 1962 - Period for which goods may remain warehoused - to substitute a new section for section 61 of the Customs Act so as to specify the period for which goods may remain warehoused. - provision in case of 100% EOU and other importers
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Substitution of new section for section 60 of Customs Act, 1962 - Permission for removal of goods for deposit in warehouse - to provide for permission for removal of goods from a customs station for the purpose of deposit in a warehouse
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Substitution of new section for section 59 of Customs Act, 1962 - Warehousing bond - the importer of goods shall execute a bond and also furnish security in the manner specified therein.
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Substitution of new sections 58, 58A and 58B for section 58 of Customs Act, 1962 - Licensing of private warehouses- Licensing of special warehouses - Cancellation of Licence - The proposed section 58B seeks to vest with the Principal Commissioner of Customs or Commissioner of Customs the power to cancel a licence granted under section 57 or section 58 or section 58A, if the licensee has contravened any provision of the Act or the rules or regulations made thereunder or breached any of the conditions of the licence.
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Substitution of new sections 58, 58A and 58B for section 58 of Customs Act, 1962 - Licensing of private warehouses- Licensing of special warehouses - Cancellation of Licence - The proposed section 58A seeks to vest with the Principal Commissioner of Customs or Commissioner of Customs the power to license a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods therefrom without the permission of proper officer.
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Substitution of new sections 58, 58A and 58B for section 58 of Customs Act, 1962 - Licensing of private warehouses- Licensing of special warehouses - Cancellation of Licence - The proposed section 58 seeks to vest with the Principal Commissioner of Customs or Commissioner of Customs, the power to license a private warehouse. -
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Substitution of new section for section 57 of Customs Act, 1962 - Licensing of public warehouses - to vest with the Principal Commissioner of Customs or Commissioner of Customs the power to license a public warehouse.
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Substitution of new section for section 53 of Customs Act, 1962 - Transit of certain goods without payment of duty - to enable the proper officer to allow transit of certain goods and conveyance without payment of duty, subject to the conditions specified by the Board by regulations.
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Amendment of section 51 of Customs Act, 1962 - to empower the Board to permit certain class of exporters specified by notification to make deferred payment of duty or any charges in the manner provided by rules.
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Amendment of section 47 of Customs Act, 1962 - option for deferred payment of duty or other charges in the manner provided by the rules. - to empower the Central Government to fix the rate of interest not below ten per cent. and not exceeding thirty-six per cent. per annum where importer fails to pay import duty either in full or in part within two days from the date specified therein.
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Amendment of section 28 of Customs Act, 1962 - Recovery of duties not levied or short-levied or erroneously refunded - to extend the limitation period for investigation of cases not involving any collusion, wilful misstatement or suppression of facts from one year to two years. - Normal period of limitation will be 2 years instead of existing 1 year.
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Amendment of section 28 of Customs Act, 1962 - Recovery of duties not levied or short-levied or erroneously refunded - to provide for recovery of duty in situations where the duty has been levied but not paid or has been short-paid also.
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Amendment of section 25 of Customs Act, 1962 - to substitute sub-section (4) thereof to provide that every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. - Condition of offer to sale omitted.
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Omission of section 9 of Customs Act 1962 - Power to declare places to be warehousing stations omitted.
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Amendment of Fourth Schedule - recognised provident fund. - It is proposed to amend the said rule so as to provide an upper ceiling of one lakh and fifty thousand rupees to such contribution by the employer.
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Amendment of section 288 - a person on whom a penalty has been imposed under clause (d) of sub-section (1) of section 272A of the Income-tax Act shall also not be barred to represent an assessee before any income-tax authority or the Appellate Tribunal.
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Insertion of new section 286 - Furnishing of report in respect of international group - The proposed section provides for furnishing of a report in respect of an international group, if the parent entity of the group is resident in India.
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Amendment of section 282A - authentication of notices and other documents. - notices and documents required to be issued by income-tax authority under the Act shall be issued by such authority either in paper form or in electronic form in accordance with such procedure as may be prescribed.
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Amendment of section 281B. - Attachment of property - If the assessee fails to renew the bank guarantee furnished under sub-section (3) or fails to furnish a fresh guarantee from a scheduled bank for an equal amount, fifteen days before the expiry of such guarantee, the Assessing Officer shall, if it is necessary to do so to protect the interest of the revenue, invoke the bank guarantee.
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Amendment of section 281B. - Attachment of property - It is also proposed that where a notice of demand specifying a sum payable is served upon the assessee and the assessee fails to pay such sum within the time specified in the notice, the Assessing Officer may invoke the bank guarantee, wholly or partly, to recover the said amount.
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Amendment of section 281B. - Attachment of property - Assessing Officer shall revoke attachment of property made under sub-section (1) in a case where the assessee furnishes a bank guarantee from a scheduled bank, for an amount not less than the fair market value of such provisionally attached property or for an amount lower than the fair market value of the property which is sufficient to protect the interests of the revenue.
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Amendment of section 279 - It is proposed to amend the said sub-section so as to provide that the prosecution proceeding shall not be proceeded against a person for offences under section 276C or section 277 in respect of whom penalty under section 270A has also been reduced or waived under section 273A.
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Amendment of section 273AA. - power of Principal Commissioner or Commissioner to grant immunity from penalty. - an order accepting or rejecting the application of an assessee shall be passed by the concerned Principal Commissioner or Commissioner within a period of twelve months from the end of the month in which such application is received.
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Amendment of section 273A. - power to reduce or waive penalty, etc., in certain cases. - It is proposed to make a reference of section 270A in clause (ii) and in the Explanation to sub-section (1) and in clause (b) of subsection (2) of section 273A, owing to insertion of a new section 270A which provides for levy of penalty for under-reporting or misreporting of income and ceasing of operation of section 271, for the assessment year commencing on or after 1st April, 2017.
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Amendment of section 272A. - penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. - to include levy of penalty of ten thousand rupees for each default or failure to comply with a notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 or failure to comply with a direction issued under sub-section (2A) of section 142.
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Insertion of new section 271GB- Penalty for failure to furnish report or for furnishing inaccurate report under section 286 - the prescribed authority may direct such entity to pay by way of penalty a sum of five thousand rupees for every day for which the failure continues if the period of failure does not exceed one month and fifteen thousand rupees for every day for which failure continues beyond the period of one month.
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Amendment of section 271AAB. - penalty where search has been initiated. - to provide for levy of penalty on such undisclosed income at a flat rate of sixty per cent. - no penalty shall be levied under section 270A also in respect of the undisclosed income referred to in sub-section (1) of section 271AAB.
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Amendment of section 271AA. - penalty for failure to keep and maintain information and document, etc., in respect of certain transactions - if any person being constituent entity of an international group referred to in the proposed new section 286 fails to furnish the information and document in accordance with provisions of section 92D, then, the prescribed authority referred to in the said section may direct that such person shall be liable to pay a penalty of five hundred thousand rupees.
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Amendment of section 271A. - penalty for failure to keep, maintain or retain books of account, documents, etc. - section 271A shall be applicable without prejudice to the provisions of section 270A.
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Amendment of section 271. - existing penalty provisions for concealment of particulars of income or furnishing inaccurate particulars of income, is leviable. - provisions of section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April, 2017.
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Insertion of new section 270AA - Immunity from imposition of penalty, etc. - an assessee may make an application to the Assessing Officer for grant of immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C, provided he pays the tax and interest payable as per the order of assessment or reassessment within the period specified in such notice of demand and does not prefer an appeal against such assessment order.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - failure to record any receipt in books of account having a bearing on total income will form misreporting of income and would attract 200% penalty.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - claim of expenditure not substantiated by any evidence will form misreporting of income and would attract 200% penalty
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - the penalty under the said section shall be imposed by an order in writing.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - no addition or disallowance of an amount shall form the basis for imposition of penalty, if such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other assessment year.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - tax payable on under-reported income shall be calculated as if such under-reported income was the total income in case of a company, firm or local authority, and at the rate of thirty per cent. of under-reported income in any other case based on the tax rate applicable in case of company, firm or local authority, and in other cases.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - the cases of under-reported income falling under misreporting of income shall be liable for penalty at the rate of two hundred per cent. of the tax payable on such misreported income.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - rate of penalty shall be fifty per cent. of the tax payable on under-reported income.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - Sub-section (6) of the proposed new section seeks to provide that under - reported income under this section shall not include certain cases mentioned therein.
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Insertion of new section 270A - Penalty for underreporting and misreporting of income. - Appropriate provisions to cover minimum alternate tax and alternate minimum tax cases
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Insertion of new section 270A - Levy of Penalty for under reporting and misreporting of income - Paradigm shift from the existing policy of levy of penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income
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Amendment of section 255. - Power of ITAT single member bench - a single member bench may dispose of a case where the total income as computed by the Assessing Officer does not exceed fifty lakh rupees. [Existing 15 lacs]
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Amendment of section 254. - Power of ITAT to rectify its order - ITAT may rectify any mistake apparent from the record in its order at any time within six months from the end of the month in which the order was passed. (Existing time limit is 4 years)
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Amendment of section 253. - appeals to ITAT - It is proposed to omit the said sub-sections (2A) and (3A) to do away with the filing of such appeal by the Assessing Officer. - Consequently non revenue appeal by AO before ITAT against the order of DRP u/s 144C
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Amendment of section 253. - appeals to ITAT - an assessee aggrieved by an order passed by the Commissioner (Appeals) or the Principal Commissioner or Commissioner under section 270A, may also appeal to the Appellate Tribunal against such order.
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Amendment of section 252. - appointment and powers of Senior Vice-President of the Appellate Tribunal. - It is proposed to omit the reference of “Senior Vice-President” in the aforesaid provisions.
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Amendment of section 249. - time limit for filing an appeal - where the assessee makes an application under section 270AA of the Income-tax Act seeking immunity from penalty and prosecution, then, the period beginning from the date on which such application is made to the date on which the order rejecting the application is served on the assessee shall be excluded for calculation of the aforesaid thirty days period.
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Amendment of section 244A. - additional interest on refund - where a refund arising out of appeal effect is delayed beyond the time prescribed under subsection (5) of section 153, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1) of section 244A, an additional interest on such refund amount calculated at the rate of three per cent. per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted.
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Amendment of section 244A. - interest on refund - an assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever is later, to the date on which the refund is granted.
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Amendment of section 244A. - interest on refund - in cases where the return is filed after the due date, the period for grant of interest on refund shall begin from the date of filing of return.
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Amendment of section 234C - no interest shall be levied to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate income under the head “Profits and gains of business or profession” in cases where the income accrues or arises under the said head for the first time.
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Amendment of section 234C - levy of interest - It is proposed to make consequential amendments in sub-section (1) of section 234C, in view of the amendments made in section 211, so as to levy interest on deferment of advance tax, in the same manner as applicable to the company, to an assessee (other than company) also. Further, with regard to an eligible assessee referred to in section 44AD, it is proposed to provide that interest shall be levied, if the advance tax paid on or before the 15th day of March is less than the tax due on the returned income.
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Amendment of section 220. - when tax payable and when assessee is deemed in default - the order accepting or rejecting the application of the assessee under sub-section 2A, either in full or in part, shall be passed within a period of twelve months from the end of the month in which the application is received.
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Amendment of section 211. - It is further proposed that an eligible assessee in respect of eligible business referred to in section 44AD opting for computation of profits or gains of business on presumptive basis, shall be required to pay advance tax of the whole amount in one instalment on or before the 15th March of the financial year. - [But, it is not known that missing reference to new section 44ADA is relation to professional, is inadvertent or deliberate?]
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Amendment of section 211. - the advance tax payment schedule for assessees (other than companies) and bring it in consonance with the existing advance tax payment schedule applicable for a company.
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Amendment of section 206C. - TCS - Tax Collection at source - expansion - the seller shall collect the tax at the rate of one per cent. on the sale of motor vehicle of the value exceeding ten lakh rupees in cash or by the issue of a cheque or draft or by any other mode or for sale of any other goods (other than bullion and jewellery) or providing any service in cash exceeding two hundred thousand rupees. (amount on which TDS has been deducted or where certain conditions have been fulfilled shall be excluded) - w.e.f. 1.6.2016
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Amendment of section 206AA. - requirement to furnish Permanent Account Number - the provisions of the said section shall also not apply to a non-resident, not being a company, or to a foreign company, in respect of payment of interest on long-term bonds as referred to in section 194LC and any other payment subject to such conditions as may be prescribed.
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Amendment of section 197A. - no TDS to be made in certain cases. - It is proposed to amend the said sub-sections to give reference of section 194-I therein so as to provide that payments in the nature of rent may be allowed to be received without deduction of tax.
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Amendment of section 197. - Scope extended - where, in the case of any income of any person or sum payable to any person, the income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment under the provisions of section 194LBB and section 194LBC the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.
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Insertion of new section 194LBC - Income in respect of investment in securitisation trust. - New TDS - where any income is payable to an investor in respect of an investment in a securitisation trust specified in clause (d) of the Explanation to section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon - Separate provisions for Resident and non-residents.
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Amendment of section 194LBB. - TDS relating to income in respect of units of investment fund. - It is proposed to amend the said section so as to provide that the income-tax on such payment shall be deducted – (i) at the rate of ten per cent. in a case where the payee is a resident; (ii) at the rates in force in a case where the payee is a nonresident (not being a company) or a foreign company.
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Amendment of section 194LBA. - TDS relating to certain income from units of a business trust. - It is proposed to amend sub-sections (1) and (2) of the said section so as to give the reference of sub-clause (a) of clause (23FC) of section 10 in the said sub-sections. The said amendment is consequential in nature.
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Amendment of section 194LA. - TDS - no deduction shall be made in case where the amount of compensation or aggregate of such sum relating to acquisition of immovable property (other than agricultural land), credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed two hundred thousand rupees. - It is proposed to enhance the said threshold limit from two hundred thousand rupees to two lakh and fifty thousand rupees
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Omission of sections 194K and 194L. - TDS - Bill seeks to omit section 194K relating to income in respect of units and section 194L relating to payment of compensation on acquisition of capital asset, of the Income-tax Act with effect from 1st June, 2016.
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Amendment of section 194H. - TDS - deduction of income-tax at the rate of ten per cent. shall be made in a case where the amount of income, of the aggregate of the amounts of income relating to commission or brokerage, credited or paid or likely to be credited or paid during the financial year, to the account of, or to, the payee exceed five thousand rupees. - It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from five thousand rupees to fifteen thousand rupees.
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Amendment of section 194G. - TDS - deduction of income-tax at the rate of ten per cent. shall be made in a case where, the amount of income exceeding one thousand rupees relating to stocking, distribution, purchase or sale of lottery tickets, whether by way of commission or remuneration or prize is credited to the account of the payee or at the time of payment of such income in cash or by the issue of cheque or a draft or by any other mode, whichever is earlier during the financial year. - It is proposed to reduce the said rate of tax deduction from ten per cent. to five per cent. It is further proposed to increase the said threshold limit from one thousand rupees to fifteen thousand rupees.
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Amendment of section 194EE. - TDS - any payment in respect of deposits under National Savings Scheme, etc., shall be liable for tax deduction at the rate of twenty per cent. in case such amount exceeds two thousand five hundred rupees. - It is proposed to reduce the said rate of tax deduction from twenty per cent. to ten per cent.
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Amendment of section 194DA. - TDS - any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, which is not exempt under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax at the rate of two per cent., in case the aggregate amount of such payments exceeds one hundred thousand rupees during the financial year. - the said rate of tax deduction from two per cent. to one per cent.
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Amendment of section 194D. - TDS - where the amount of such income, or the aggregate of the amount of the income, relating to remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business, credited or paid during the financial year to the account of, or to, the payee - the threshold limit from twenty thousand rupees to fifteen thousand rupees.
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Amendment of section 194C. - TDS - the person responsible for paying the sums referred to in subsection (1) of the said section shall be liable to deduct income-tax, where the aggregate of the amounts of the sums credited or paid or likely to be credited or paid during the financial year exceeds seventy-five thousand rupees. - It is proposed to enhance the said threshold limit from seventyfive thousand rupees to one lakh rupees for the aggregate transactions during the financial year.
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Amendment of section 194BB. - TDS any person responsible for paying to any person any income by way of winning from horse race in excess of five thousand rupees shall deduct income-tax on such payment at the rates in force. - the said threshold limit from five thousand rupees to ten thousand rupees.
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Amendment of section 192A. - no deduction of income-tax shall be made where the amount of income relating to accumulated balance due to an employee credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee does not exceed thirty thousand rupees - this limit enhanced to fifty thousand rupees.
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Substitution of new section for section 153B- Time limit for completion of assessment under section 153A. - The limitation for completion of assessment in case of other person referred to in section 153C shall be changed from existing two years to twenty-one months
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Substitution of new section for section 153B- Time limit for completion of assessment under section 153A. - The limitation for completion of assessment under section 153A, in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A and in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A be changed from existing two years to twenty-one months
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Substitution of new section for section 153- Time limit for completion of assessment, reassessment and recomputation. - where an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, such assessment be made on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed.
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Substitution of new section for section 153- Time limit for completion of assessment, reassessment and recomputation. - the period for completion of fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment be changed from existing one year to nine months from the end of the financial year in which the order under section 254 is received
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Substitution of new section for section 153- Time limit for completion of assessment, reassessment and recomputation. - the period for completion of assessment under section 147 be changed from existing one year to nine months from the end of the financial year in which the notice under section 148 was served;
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Substitution of new section for section 153 - Time limit for completion of assessment, reassessment and recomputation. - the period, for completion of assessment under section 143 or section 144 be changed from existing two years to twentyone months from the end of the assessment year in which the income was first assessable;
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Amendment of section 147. - Reopening of an assessment - a case shall be deemed to be a case where income chargeable to tax has escaped assessment where on the basis of information or document received from the prescribed income-tax authority it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
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Amendment of section 143. - W.e.f. 1.4.2016, Any documents or evidences u/s 143(2) may be sought by the AO or any other prescribed Income Tax Authority for the purpose of Scrutiny Assessment u/s 143(3)
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Amendment of section 143. - prima facie adjustments to be made before making scrutiny assessment - before making an assessment under sub-section (3) of that section, a return shall be processed under sub-section (1) of section 143.
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Amendment of section 143. - scope of adjustments u/s 143(1) known as prima facie adjustments expended to include disallowance of loss claimed, disallowance of expenditure indicated in the audit report, disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, addition of income appearing in Form 26AS or Form 16A or Form 16 in certain specified circumstances.
Case Laws:
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Income Tax
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2016 (3) TMI 59
Eligibility of deduction under section 80IA(5) - profits earned from generation and sale of electricity without setting-off the losses of other units engaged in the same business - Held that:- Every unit constitutes a separate undertaking engaged in the eligible business, losses of one unit need not be set-off against the profits of the another units although engaged in the same business for the purposes of deduction under section 80IA of the Act. Presence of positive ‘Gross Total Income’ after setting of brought forward losses etc. and profits from an eligible undertaking is sufficient to entitle the deduction to the assessee. We, accordingly, find that the CIT(A) has rightly reversed the action of the Assessing Officer in accordance with law. As such, we decline to interfere with the order of the CIT(A). - Decided in favour of assessee Depreciation claim - assessee company has claimed escalated depreciation @ 80% on the entire cost of windmill including civil work, expenses of erection and commissioning work, etc. - Held that:- The capital expenditure incidental to the windmill has to be tested on the touchstone of the functional test and the assessee will be entitled to higher rate of depreciation on such incidental expenditure, if it has no other use except for power generation done by the windmill. Accordingly, we hold that the Revenue is misdirected itself in law in making the impugned disallowance of depreciation. - Decided in favour of assessee Disallowance of foreign tour and travelling expenses - Held that:- As find that the CIT(A) has confirmed the estimation of disallowance on the ground that the reply is general and business purpose has not been substantiated in respect of certain visits noted above. In the absence of specific details, we decline to interfere with the orders of the CIT(A). - Decided against assessee
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2016 (3) TMI 58
Validity of assessment order passed u/s 143(3) - non serving the statutory notice u/s 143(2) - Held that:-Punjab & Haryana High Court in CIT Vs. Cebon India Ltd. (2009 (7) TMI 26 - PUNJAB AND HARYANA HIGH COURT ) has laid down similar proposition in respect of regular assessment completed under section 143(3) of the Act, without service of notice under section 143(2) of the Act. Relying on the aforesaid propositions, we hold that there is no merit in the assessment order passed in the present case and hence, the same is held to be without jurisdiction and bad in law and the same is set-aside. - Decided in favour of assessee.
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2016 (3) TMI 57
Revision u/s 263 - income from incentives undisclosed - Held that:- As far as the first issue is concerned, it is not the case of the Revenue that the assessee had income from incentives which were ultimately not offered. The assessee has explained to the AO that on account of procedural lapses, it could not claim the incentives, and therefore, no income has accrued to him. This stand of the assessee must have been examined by the AO. We could appreciate the stand of the ld.Commssioner, had she pointed out any fundamental change either in the nature of receipt or any development showing that this could be assessed in the hands of the assessee. As far as the second issue is concerned, the assessee has explained that its transaction does not fall within the meaning of speculative transactions provided under section 43(5) of the Income Tax Act. Now, how this could be a speculative transaction, nowhere discernible either from the show cause notice or from the findings of the ld.Commissioner. Ld. Commissioner has made an observation that there is an inadequate inquiry. As per the decision of the Hon'ble Gujarat High Court in the case of Amit Corporation (2012 (6) TMI 593 - GUJARAT HIGH COURT ) lack of inquiry would give jurisdiction to the Commissioner to take action under section 263. But the alleged inadequacy of inquiry would not empower the ld. Commissioner to take action under section 263 of the Act. In view of above discussion, we allow the appeal of the assessee and quash the order passed under section 263 of the Act by the ld.Commissioner - Decided in favour of assessee
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2016 (3) TMI 56
Disallowance u/s 40(a)(iii) - failure on the part of the Assessee to deduct and deposit Tax Deducted at Source (TDS) within the prescribed time - whether the provisions of Section 40(a)(iii) disentitles an assessee to claim a deduction on account of Salaries paid to its employees if the tax is not paid within the specified time but is paid subsequently - Held that:- At once seen that where the legislature wanted to make payment of tax within a specified time a necessary pre-condition, it had expressly indicated so. The Parliament has expressly enacted that deduction in respect of payments made under sub-clause (i) of clause (a) of Section 40 of the Act would not be available where such payments were made in India to a non-resident in respect of which tax had not been paid “before the expiry of time prescribed under sub Section (i) of Section 200”. However, no such condition for depositing the tax paid within a prescribed time was introduced in sub clause (iii) of clause (a) of Section 40 of the Act. The condition to deposit TDS within the prescribed time cannot be read into sub-clause (iii) of clause (a) of Section 40 of the Act as-unlike the language of item (B) of sub-clause (i) of clause (a) of Section 40-the same has not been specifically enacted. We are also unable to agree with Mr. Chaudhari‟s contention that no deduction can be claimed by the Assessee as the salaries were not reflected in the profit and loss account. The controversy whether an Assessee can claim deduction on an expense which is not reflected in its profit and loss account for the relevant period has been authoritatively settled by the Supreme Court in its decision in The Kedarnath Jute Mfg. Co. Ltd. v. The Commissioner of Income Tax, (Central), Calcutta: [1971 (8) TMI 10 - SUPREME Court] wherein held that it is wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law, a deduction must be allowed by the Income Tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter - Decided in favour of assessee
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2016 (3) TMI 55
Transfer pricing adjustment - determination ALP by adopting the CUP method for the procurements from Sumitomo Japan - Held that:- What the assessee banks upon in its appeal to this Court is the unbending and inflexible acceptance of its TP exercise; according to its logic, a "bundled" or aggregated series or chain of transactions used in the TP report should remain undisturbed. Now, there can be no dispute that the AO would normally accept the figures given, if they do not show features that call for his interference. However, his job also extends to critically evaluating materials and in cases which do require scrutiny, go ahead and do so. In the process, at least in this case, the unusual features which remained unexplained by the assessee, influenced the TPO and the AO to resort to transfer pricing adjustment and determine ALP by adopting the CUP method for the procurements from Sumitomo Japan. The "second test" spoken of in Sony Ericcson (2015 (3) TMI 580 - DELHI HIGH COURT) i.e "the form and substance of the transaction were the same but the arrangements made in relation to a transaction, when viewed in their totality, differ from those which would have been adopted by an independent enterprise behaving in a commercially rational manner.." was in effect adopted. This Court finds no infirmity in this approach. As a result, the first question framed is answered against the assessee and in favour of the revenue. As far as the second question, i.e the adoption of CUP method being contradictory with the ITAT's decision is concerned, there was no argument on behalf of the appellant. That apart, noticeably at the time of framing the question the Court recorded that it was framed at the insistence of the assessee's counsel. In view of the findings on the first question and in view of these facts, this question too is answered in favour of the revenue and against the assessee.
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2016 (3) TMI 54
Irrevocable bad debt - whether allowable as revenue expenditure - Held that:- The assessee has made efforts to recover the amount but could not recover the same for which necessary evidences are placed on record by the assessee in the paper book filed with the Tribunal. This amount has been considered to be bad debt by the assessee and has been written off in the books of account in the current assessment year under appeal. In the opinion of the assessee, the said amount has become irrecoverable and has been written off in the books of accounts maintained by the assessee. In our considered view , the assessee has fully satisfied the conditions laid down in section 36(1)(vii) of the Act read with Section 36(2) of the Act and the said amount written off by the assessee as irrevocable as bad debt is allowable as revenue expenditure. Hence, The addition made by the A.O. and as sustained by the CIT(A) is hereby ordered to be deleted. - Decided in favour of assessee Advance receipts - Held that:- In the instant case, the amount has been held by the assessee on behalf of Tips Industries Ltd. and is not being held by the assessee in his own right as the assessee can be deemed to hold the said amount in his own right on commencement of the film. No income is being generated or earned even under the cash system of accounting followed by the assessee as in the instant case the film has not commenced as per agreed terms and the amount has become refundable to Tips Industries Limited which is stated to be asking for refund of their advance. In our considered view, the addition made by the A.O. is not sustainable in law because the amount is being still held by the assessee on behalf of the Tips Industries Ltd and not on his own right as per the agreed terms of conditions as agreed vide mutual understanding dated 05-02-2008 as the assessee will be deemed to appropriate the said amount or hold the said amount in his own right only on the commencement of film and till then the assessee is holding the said amount on behalf of Tips Industries Limited which is refundable in case of non-starting of the film as per agreed terms as per mutual understanding dated 05-02-2008. The addition made by the A.O. as confirmed by the CIT(A) is hereby ordered to be deleted - Decided in favour of assessee Disallowance of depreciation on assets not used for the purposes of business - Held that:- We have observed that the A.O. is insisting on the commercial electricity use as evidence for allowing the claim of the business user of the premises of the assessee, which in our view, no-doubt is a vital document/evidence to claim that the premises are used for commercial / business purposes but it is not the only/sole evidence to prove that the afore-stated premises are used by the assessee for the purposes of his business rather the assessee can prove the same by bringing other cogent material / evidences to prove his contentions that these premises were used for business purposes of the assessee. The assessee is also directed to bring on record cogent material/evidences to prove his contentions of business user of the afore-stated premises. The A.O. is directed to admit evidences furnished by the assessee in de-novo proceedings in his defense and the AO should consider the necessary evidences submitted by the assessee before deciding the matter on merit.Needless to say that proper and adequate opportunity of hearing in accordance with law shall be granted to the assessee by the AO before deciding the issue on merits in denovo proceedings. Treating three properties namely ‘Evershine Greens’, ‘Saidwar’ and ‘Tranquil Treat’ as deemed to be let out properties - Held that:- The assessee’s claim is that all the three properties were being used for the personal use of profession hence it should not be treated as deemed let out properties. We find that the assessee also claimed depreciation on furniture and fixture and computers installed at these properties whereby we have set aside the matter of allowability of depreciation on furniture and fixtures and on computers to the file of A.O. and directed the assessee to produce cogent evidence/material to substantiate his claim of business user of the afore-stated properties and the A.O. shall examine the same for deciding the issue of claim of depreciation and we apply the same principle in this issue also, hence, we set aside this issue to the file of A.O. for de-novo determination of issue after considering the cogent material/evidences brought on record by the assessee in his defense in denovo proceedings . The A.O. is directed to admit evidences furnished by the assessee in de-novo proceedings
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2016 (3) TMI 53
Validity of the issue of notice u/s 153C - Held that:- The first and foremost step for initiation of proceedings u/s 153C i.e., the recording of the satisfaction by the Assessing Officer of the person searched is missing, the proceedings are invalid and, therefore, the other arguments of the assessee need not be examined in detail. We, therefore, respectfully following the decision of Hon'ble Jurisdictional High Court in the case of RRJ Securities Ltd. (2015 (11) TMI 19 - DELHI HIGH COURT ) and the Circular of CBDT No.24/2015 dated 31st December, 2015, hold the initiation of proceedings u/s 153C to be invalid and quash the same - Decided in favour of assessee
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2016 (3) TMI 52
Addition made under long term capital gain - claim u/s 54 denied - cost of acquisition considered by assessee rejected - determination of date of transfer - Held that:- The liberal interpretation of the term purchase as it appear in section 54 has to be given also to the term ‘constructs’ appearing therein, in conjunction to the former. Even the Hon’ble jurisdictional High Court in the case of CIT Vs Smt B.S.Shanthakumari [2015 (8) TMI 274 - KARNATAKA HIGH COURT ] held that completion of construction within three years period was not mandatory and what was necessary was that the construction should have commenced. There cannot be any dispute with the construction in the property for which agreement was entered by the assessee with Mrs Mary Susan had already began. In our view, the question whether the above agreement finally fructified is a different matter altogether. Assessee had in our opinion for all purposes satisfied the conditions u/s 54 of the IT Act, 1961, and earnestly demonstrated his intention to invest the capital gain in a residential house. We are therefore, of the considered opinion, that the assessee ought not have been denied the claim u/s 54 of the IT Act, 1961. The disallowance of such claim stands deleted. Since we have allowed the claim u/s 54 of the Act, the question of computation of cost of purchase of the property sold becomes academic. - Decided in favour of assessee
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2016 (3) TMI 51
Grant of registration u/s 12A denied - both the objects as well as the genuineness of the activities could not be established - Held that:- The Hon’ble Rajasthan High Court in case of CIT Vs. Digambar Jain Mandir [2008 (2) TMI 882 - RAJASTHAN HIGH COURT] held that in order to get registration u/s 12A of the Act, the institution need not first establish its claim to exemption u/s 11 and 12. The question of exemption under section 11 and 12 would only come at the time when the trust/institution is assessed to tax. Therefore, considering the facts of the present case in the light of the judicial precedents and also relevant statutory provisions, the only conclusion one can reach is that the DIT(E) was not correct in rejecting assessee’s application u/s 12A of the Act. In the aforesaid view of the matter, we direct the DIT(E) to grant registration u/s 12A of the Act to the assessee institution. - Decided in favour of assessee
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2016 (3) TMI 50
Disallowance u/s. 14A toward indirect administrative expenditure - Held that:- A meeting of the ‘assessee’ with his investment consultant or broker in relation to a IPO or any other emerging investment option is to be conducted (say). This would require visit by the consultant to the assessee’s premises or vice versa. This explains the appropriation of the expenditure claimed on telephone, electricity, conveyance, etc. The job may itself be assigned - wholly or partly, to some staff, even as a part of his duties, so that the staff cost may also be involved. Even ignoring staff and advertisement cost, leaves a balance expenditure at ₹ 184 lacs. It may be argued that the expenditure incurred and claimed is as per the books of the assessee’s business. The argument is to no moment. Firstly, the assessee holds investment (Rs.140.59 lacs) including tax-free investments, in its business. Two, and more importantly, the assessee is one entity, undertaking both, business – yielding taxable income, and investments – yielding both taxable and tax-free incomes. The manner or the account from which common expenditure, i.e., which could be ascribed to both sets of activities, is incurred or routed, is immaterial, being borne by and claimed by the assessee. Suo motu disallowance by the assessee or its’ claim of no expenditure having been incurred to earn tax exempt income is to be found non-satisfactory by the A.O. before resort to computation (of disallowance) under rule 8D(2) could be made. This, as afore-stated, is the statutory prescription, on which therefore there is no quarrel. Then, it is further stated that sufficiency of interest-free funds would operate to the non invocation of the disallowance u/s. 14A/rw Rule 8D(2). No disallowance on account of interest obtains in the instant case. In fact, the finding of sufficient funds could only be with regard to the assessee’s accounts, with reference to which, as explained, the satisfaction or dissatisfaction of the assessee’s claim is to be made.Under the circumstances and, in view of the foregoing, we find little merit in the assessee’s case and, accordingly, uphold that of the Revenue - Decided against assessee
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2016 (3) TMI 49
Interest on deposits with Indian Banks and others - disallowance of capitalization of interest - Treated as Income from other sources - Held that:- In view of the factual and legal positions in the instant AY 2010-11 since the work of construction of the power plant was under progress, interest incomes are also inextricably linked with the setting up of the power plant and such incomes have gone on to reduce the expenses for setting up of the plant and as there was no surplus funds available with the appellant company, therefore, such income is required to be capitalized to be set off against the pre operative expenses. As such the A.O. is not justified in adding the sum as income from other source u/s 56 - Decided in favour of assessee
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2016 (3) TMI 48
Addition on account of suppressed/unaccounted turnover - Held that:- The assessee has accounted all the receipts and reconciled the TDS certificate to the books of accounts and explained the reasons for the difference in turnover. The assessee further contended that the difference was accounted in the subsequent years and to this effect, filed necessary reconciliation statement. On verification of the paper book filed by the assessee, we find that the assessee has submitted accounts copies of each parties with a reconciliation statement which is available in paper book. On further verification of the reconciliation statement filed by the assessee, we find that the difference quantified by the A.O. is based on form 26AS. The assessee contended that she is following mercantile system of accounting and recognized the income on accrual basis. The A.O. has not pointed out any mistakes in the method of accounting followed by the assessee. He never rejected the books of accounts maintained by the assessee. The A.O. simply quantified the difference between books of accounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation. Therefore, we are of the opinion that the A.O. was not correct in making additions, towards difference in turnover without pointing out any mistakes in books of accounts, that too based on form 26AS. Therefore, we direct the A.O. to delete the additions towards difference in turnover. - Decided in favour of assessee Disallowance u/s 40(a)(ia) - advertisement charges and finance charges for non deduction of tax at source - Held that:- The revenue did not dispute the fact with regard to paid and payable. The CIT(A) has recorded finding of the fact that the expenditure incurred under these heads have been already paid during the financial year. Therefore, considering the facts and circumstances of the case we are of the opinion that no disallowance can be made on the payments which has been paid during the financial year. Therefore, we direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act - Decided in favour of assessee
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2016 (3) TMI 47
Undisclosed Investment - ₹ 7 lakhs representing loan amount from Sundaram Home Finance as the source of investment in the purchase of land by the assessee; and ₹ 10,75,000 representing the amount invested by Shri Viswanath in the purchase of land jointly with the assessee - Held that:- We find that except for stating that ₹ 7 lakhs which has been advanced to the assessee’s wife by Sundaram Home Finance, the assessee has not filed any document before us to demonstrate that these funds were withdrawn for payment of the same to the vendor before the date of agreement. The assessee has not filed copy of the bank statement of the assessee’s wife to prove this fact. In view of the same, we deem it fit and proper to remand this issue to the file of the Assessing Officer for reconsideration and verification of bank statement of the assessee’s wife, and if it is found that the said amount of ₹ 7 lakhs has not been utilised for the purpose of construction of house of Smt.Vasumathi and if it is found that the said amount has been withdrawn very much before the date of entering into the agreement of sale for purchase of land, then the same shall be accepted as proved source for investment in the land. However, as regards the investment made by Shri Viswanath, we find that Shri Viswanath has reflected in his bank statement, the advance paid for the purchase of the land through the assessee herein. Copies of the returns of income filed by Shri Viswanath are also filed before us and there is no adverse finding that the copies of these returns filed by Srhi Viswanath are not correct. Therefore, in our opinion, the assessee has filed the details before the authorities below. In this view of the matter, we are of the opinion that since he has reflected the said transaction in his Balance Sheets as well as in the returns of income, it has to be taken as proved source for investment of amount. - Decided in favour of assessee for statistical purposes.
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2016 (3) TMI 46
Taxing Agricultural lands - Land-in-question treated as ‘asset’ under the Wealth Tax Act - Held that:- So long as the lands are agricultural in nature, the same cannot be treated as ‘capital asset’ in view of the provisions of Wealth Tax Act. Section 2(ea) of Wealth Tax Act defines ‘asset’ in relation to assessment year commencing on 1st April, 1993 in which urban land is included as an asset. Explanation 1(b) defines urban land means, land situated in any area which is comprised within the jurisdiction of a municipality etc within a distance of not being more than 08 KMs from the local limits of a municipality etc. However, proviso has been amended by the Finance Act, 2013 w.e.f. 01-04-1993 so as to state “but does not include land described as agricultural land in the records of the Government and used for agricultural purposes’. This indicates that even if a land is situated within 08 KMs of a town or municipality as specified, if such land is classified as ‘agricultural land’ in the records of the Government and used for agricultural purposes, it cannot be treated as an ‘asset’ for the purpose of WT Act. In fact the ground raised by the Revenue is not maintainable in the sense, that linking of agricultural income to agricultural land is not required and therefore, Ld. CIT(A) is not bound to do that exercise which is not prescribed by the Act. It is the AO who should have examined these matters at the time of assessment and should have verified whether the land is classified as ‘agricultural land’ or not? Then, the question of agricultural operations comes into picture. As seen from the assessment order, AO has not even discussed, why he is treating the agricultural land as ‘asset’, and how the provisions of the Act apply. As can be seen from the above, the land is classified as agricultural land and agricultural operations were also being carried on. Since the land-in-question cannot be treated as ‘asset’ under the Wealth Tax Act, we do not see any reason to interfere with the order of the CIT(A) - Decided against revenue Addition on the valuation of buildings other than self occupied buildings - whether CIT(A) deleted the addition without linking the income from house property? - Held that:- When assessee is offering the rental income from the buildings and those properties which are not to be included as assets were included without any discussion by the AO, we are of the opinion that Ld. CIT(A) has correctly examined and deleted the addition, which cannot be made at the first instance. Since the issue is examined in detail by the Ld. CIT(A), we do not see any reason to disturb the findings. - Decided against revenue
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2016 (3) TMI 45
Revision order u/s.263 - Exemption under 12A denied - Held that:- Definition of Sec.2(15) of the Charitable purpose Act and also submitted that surplus is incidental to the main object. We observed that there is no dispute about the genuineness of the trust and activities and compliance of legal provisions of the various laws and the activities are not against any public objective but in favour of the society. The trust being registered under the state laws and the Director of Income Tax (Exemption) granted Registration exemption under 12A and 80G and the accounts are Audited and accepted by the Income Tax Department for earlier years. The surplus generated is only incidental. It is apparent from the facts and evidence produced the assessee’s main object is only waste solid management and other objects are incorporated for future prospects. Therefore, the contention of the CIT(E) on the ground of non-charitable purpose cannot be accepted. Further, procedure for applying tender is based on the contributor terms and such activities if considered a commercial activity there will not be any trust working in commercial atmosphere. Since the Assessing Officer has not verified on the grounds of commercial expediency, we are of the opinion that the matter has to be examined. So considering the facts and circumstances we set aside the Revision order u/s.263 of CIT(E) for limited purpose to the file of the Assessing Officer to verify the process of tender and applications and whether actions of the trust are in the nature of profit motive and the assessee should be provided adequate opportunity of being heard and file documents to support their contentions and the Assessing Officer shall pass the order on merits. - Decided partly in favour of assessee for statistical purpose
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2016 (3) TMI 44
Addition made under section 68 - CIT(A) deleted the addition - Held that:- In the instant case, the ld. CIT(A) has observed that the names and the addresses of the persons from whom the amounts have come into the assessee’s bank accounts are made available to the Assessing Officer. Further, the amounts were received by way of cheques/ bank transfers etc. and therefore, the identity and genuineness of the transactions have been established by the assessee and moreover, in the assessment order the Assessing Officer has not doubted the creditworthiness of the creditors. In the instant case, the names and addresses of the persons from whom the amounts have come into the assessee’s bank accounts are furnished before the Assessing Officer and the Assessing Officer has not doubted the identity of the creditors. Further, whatever details furnished before the Assessing Officer were only furnished before the ld. CIT(A) and no new evidences have been furnished before the ld. CIT(A) for which, the ld. CIT(A) is required to obtain remand report from the Assessing Officer under Rule 46A of the Income Tax Rules. - Decided against revenue
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2016 (3) TMI 43
Reopening of assessment - eligibility of deduction u/s 54F - Held that:- As held by the Supreme Court in the case of Sun Engineering Works P. Ltd (1992 (9) TMI 1 - SUPREME Court ), the re-assessment proceedings is for bringing to tax item which are escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view of the object and purpose of the proceedings u/s 147 of the Act which is for the benefit of the Revenue not an assessee, an assessee cannot be permitted to convert the re-assessment proceedings as ‘revision’ or ‘review’. Claims which have been disallowed in the original assessment proceedings cannot be permitted to be re-agitated on the re-assessment proceedings. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the re-assessment proceedings unless relatable to the item sought to be taxed has escaped assessment. Even in cases, where the claims of the assessee during the course of re-assessment proceedings relating to the escaped assessment are accepted, still the allowance has to be limited to the extent to which they reduce the income to that originally assessed. The income for the purpose of re-assessment cannot be reduced from the income originally assessed. Being so, in our opinion, the claim of the assessee with regard to the cost of improvement and deduction u/s 54F are relating to the capital asset which is subject to tax in the reassessment proceedings is justified. Accordingly, we direct the Assessing Officer to consider the plea of the assessee in the light of the judgment of the Supreme Court in the case of Sun Engineering Works P. Ltd. (1992 (9) TMI 1 - SUPREME Court ) and decide afresh. - Decided partly in favour of assessee for statistical purposes.
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2016 (3) TMI 42
Penalty under section 271(1)(c) - assessee has not disclosed the Capital Gain from sale of property - assessee not claimed relief u/s. 54/54F - Held that:- The facts of the present case suggest that it is a peculiar case where the assessee was not aware about the taxation provisions. The assessee had not disclosed the Capital Gains arising from sale of property in his return of income and at the same time had not claimed relief u/s. 54/54F of the Act for which he was eligible. The assessee accepted the addition made in assessment proceedings without any protest. In such circumstances the addition in assessment proceedings can be sustained. However, in our considered opinion it is not a fit case for levy of penalty under the provisions of section 271(1)(c) of the Act. The application of penal provisions is not automatic and the levy itself depends upon the facts and circumstances of each case. In the present case, the assessee has already suffered by paying tax on the amount on which he was otherwise eligible to claim deduction u/s. 54/54F of the Act. In view of the peculiar facts of the case we delete the penalty levied u/s. 271(1)(c) and allow the appeal of the assessee. - Decided in favour of assessee
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2016 (3) TMI 41
Reopening of assessment - additions solely on the basis of such retracted statements - disallowance of sub-commission paid to M/s. Airwings Travel and Cargo Pvt. Ltd. and Airtrac Agents (India) Pvt. Ltd - Held that:- Even the AO was of the view that there was no direct incriminating evidence found against the assessee during the search action. We further find that even the Ld. CIT (A) in the impugned order has discussed that Airtrac had derived commission and incentives from other Air Lines also. The ld. CIT(A) has given a categorical finding that the AO had not brought any material on record in support of his conclusions that either these incomes relate to the same business in respect of which Assessee paid commission to Airtrac or to the effect that Assessee had diverted these incomes to Airtrac. The basis for coming to such conclusion by the AO does not find mention in the assessment order. Moreover, the above stated two companies have been regularly filing their returns of income with Income Tax Department. The income returned was duly accepted in various assessment proceedings for different years as detailed in the chart. Under such circumstances, adding the same income at the hands of assessee would amount to double taxation on the same income. Considering the above submissions and evidences on file and in the absence of any incriminating evidence against the assessee, the additions solely on the basis of retracted statements, which have duly been explained by the respective persons that the same were obtained under duress and further that the same were not correct and the correct position being explained with sufficient corroborative evidences on the file, in our view, the additions solely on the basis of such retracted statements without any corroborative evidence are not sustainable in the eyes of law especially when the assessee has proved with sufficient evidence on the file that various sub agents were offering business to the assessee for which the assessee was paying the commission to them including the concerns about which the AO has doubted the transactions. The another interesting fact is that assessment of the assessee for the assessment year 1996-97 which was originally completed were reopened under Section 148 on the basis of the information gathered during the search and seizure proceedings and the statements recorded as explained above under Section 132(4). During the reopened assessment proceedings, the AO accepted the explanation offered by the assessee regarding the retraction and the factual position with regard to the functioning of M/s Airtrac and M/s Airwings. The AO had completed the assessment accepting the assessee's stand vide assessment order dated 30th March, 2004. Under such circumstances, no justification has been offered for deviating from the earlier stand on the same set of facts and circumstances during the present block assessment. In view of our discussion made above, we do not find any justification on the part of lower authorities in making the impugned additions and the same are accordingly set aside. - Decided in favour of assessee
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2016 (3) TMI 40
Reopening of assessment u/s 115WG - change of opinion - reason to believe that value of fringe benefits had escaped assessment - Held that:- We find from the records, orders of authorities below that the issue of contribution to superannuation fund was duly considered by the AO at the time of framing the assessment u/s 115WE(3) of the Act by raising specific query which was replied vide letter dated 25-09-2008 AO has reopened already completed assessment qua fringe benefit on the basis of old material which was before him at the time of framing original assessment. We, therefore, of the considered view that such reopening based on the material which was considered by the AO at the time of passing the original assessment is bad in law and we, therefore, find no infirmity or see any reason to interfere in the order of the CIT(A) which is passed after following ratio laid down in the case of CIT vs. Kelvinator of India Limited (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) - Decided against revenue
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2016 (3) TMI 39
Computation of profit earned by non-resident from Shipping business u/s 44B - Inclusion of service tax in the gross receipts of the assessee for determination of the assessee’s taxable income as per the provisions of section 44B - Held that:- Following the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for assessment year 2007-08 [2013 (10) TMI 743 - ITAT MUMBAI ] we hold that service tax collected by the assessee would form part and parcel of the aggregate amount as specified in Sub-section (2) of section 44B of the Act for the purpose of determining the profits and gains of the assessee’s business under this section. In this view of the matter, we uphold the orders of the authorities below - Decided against assessee
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Customs
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2016 (3) TMI 38
Validity of Show cause notice issued to 3rd respondent - Period of limitation - Recovery of Duty drawback for the period from October 1999 to December, 2002 - Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 read with Section 75A(2) of the Customs Act, 1962 - Show cause notice is based upon an alleged intelligence received by the Directorate of Revenue Intelligence, that prior to the year 2004, the noticee had indulged in misuse of brand rate of duty drawback scheme by availing higher rate of duty drawback, which was fixed for bicycles of various sizes/ weights but had actually exported bicycles of smaller sizes/ weights and had thus availed inadmissible drawback- Issue of limitation raised by the petitioner for the same. Held that: Since only a show cause notice has been issued and final order in response thereto is yet to be passed, we are of the considered view that all the contentions raised herein can be effectively gone into by the 3rd respondent on consideration of the reply to the show-cause notice which may further be supplemented by the petitioner alongwith the decisions in Spectra Fashions versus Union of India [2015 (1) TMI 1261 - CALCUTTA HIGH COURT] Rashmi Metaliks Ltd. vs. Union of India [2015 (6) TMI 332 - CALCUTTA HIGH COURT], Indsur Global Limited versus Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT], Padmini Exports versus Union of India [2013 (1) TMI 282 - GUJARAT HIGH COURT] Also, it is Needless to say that the issue of limitation raised by the petitioner would surely require consideration at the hands of 3rd respondent who shall be obligated to deal with the same by passing a reasoned order. Therefore, writ petition is disposed of at this stage with liberty to the petitioner to submit a supplementary reply to the show-cause notice, whereupon the 3rd respondent shall pass a reasoned order after hearing the petitioner's representative and respondent No.3 shall be obligated to deal with the question of limitation in addition to the merits of the matter. - Decided in favour of petitioner
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2016 (3) TMI 37
Provisional release of seized goods- Entitlement of the Petitioner to avail of the benefit under the Status Holders Incentive Scrips (SHIS) in respect of exports made in the year 2011-12 notwithstanding that it has utilized the Zero Duty EPCG authorizations for a subsequent period- Held that: the provisional release of the seized goods would be allowed in favour of the Petitioner subject to the Petitioner executing a bond in a sum equal to 100% of the value of the goods and further furnishing security in the form of a bank guarantee for a sum equivalent to 30% of the differential duty, with an auto renewal clause and as per RBI guidelines.
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2016 (3) TMI 36
Validity of order of the Commissioner reversed by Commissioner (Appeals)- Principle of natural justice- Dropping of the show cause notice proceedings qua the noticees other than Krishna Clearing since the Departmental appeal was confined only to the Krishna Clearing- Held that: Facts are not serious in dispute with respect to the petitioners other than Krishna Clearing. The Commissioner having dropped the show cause notice proceedings qua other petitioners, the Department had not appealed against such order in their cases. The Departmental appeal was confined only to Krishna Clearing. The Commissioner (Appeals) in absence of other noticees could not have disturbed the order of Commissioner. Firstly, without any appeal being filed by the Department, it is questionable whether the Commissioner could have taken such a step. Secondly, in any case, without any notice, the other noticees had earned the verdict of dropping the proceedings. The appellate Commissioner could not have disturbed such order which would be plainly opposed to the principles of natural justice. Therefore, order against petitioners other than Krishna Clearing is quashed. Also, merely on the grounds of non-hearing of the concerned petitioners and on the appellate Commissioner having passed an order against the parties who were not respondents before him is not on merit of the issue involved. Decided in favour of petitioner
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2016 (3) TMI 35
Seeking direction to draw fresh samples from the consignment- Import of wet Dates- Cleared by the first respondent but denied by the second on mere visual inspection, without sending goods for laboratory examination- Held that: Without laboratory test, goods cannot be stated as unfit for human consumption- Therefore, directions to second respondent were given to draw samples from consignment and forwarded to Notified Laboratory. Petitioner permitted to produce all the relevant documents, including the Origin Certificate to the authorities for consideration. Also, respondents are directed to consider the claim of the petitioner on the basis of report of Laboratory Authorities, for earlier release, by taking note of the recommendations of the Government of India by the certificate. Decided in favour of petitioner
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2016 (3) TMI 34
Rejection of refund claim under Section 27 of the Customs Act, 1962 - Difference of duty paid at the time of clearance in terms of Notification No. 21/02 Sl. No. 344 - Mercedes Benz Car imported and cleared on assessment and payment of duty- Rejected as inadmissible since the assessment order or payment of duty, which became final did not challenged/protested- Held that: It is evident that the appellant has not challenged the assessment made under the said Bill of Entry before Commissioner (Appeals). Therefore, their claim was rejected by the AC/DC (refunds) on the ground of non-challenge of assessment order. Both the lower authorities had relied on the Hon’ble Supreme Court decisions in the case of CCE Vs. M/s. Flock India Pvt. Ltd. (2000 (8) TMI 88 SUPREME COURT OF INDIA) and M/s. Priya Blue Industries Ltd. Vs. CC (Preventive) (2004 (9) TMI 105 - SUPREME COURT OF INDIA). Further, the Hon’ble Supreme Court in the case of Airport Authority of India 2015 (8) TMI 673 - SUPREME COURT dismissed the civil appeal and upheld the Tribunal’s order on the identical issue where the Tribunal by relying M/s. Priya Blue Industries case (supra) rejected the appeal on identical issue, where the Airport Authority of India has not challenged the assessment order and claimed refund. The ratio of the above Apex Court decision in the case of Airport Authority of India (supra) squarely applies to the facts of the present case. Therefore, claiming fulfilment of notification and relying on Board’s circular not relevant as there was non-challenge of assessment order made under Bill of Entry. - Decided against appellant
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Corporate Laws
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2016 (3) TMI 33
Restoration of directorship - jurisdiction of this court conferred under sections 397 & 398 read with section 402 of the Companies Act, 1956 (for brevity 1956 Act) and section 59 of Companies Act, 2013 - prayer for issuance of an order restoring their directorship alongwith their rights to sign all the bank accounts of Respondent No. l-Company - Held that:- In the present case the petitioners have asserted in their pleadings that no notice of the EGM was given. In the reply filed by the respondents on 12.5.2014 or in the rejoinder the aforesaid assertion made by the petitioners has not been controverted specifically. Only a bald statement has been made without substantiating any fact or by placing on record a copy of the notice of meeting sent to the petitioner. Respondents have failed to show the service of notice and the mode adopted to serve the same on Petitioner No. l. During the course of arguments a faint attempt was made by making a reference to a notice dated 5.6.2013. However, such an attempt is meaningless because in the absence of any specific averment in that regard in the pleadings no notice could be taken of such a document. Thus the document has not been made a part of the pleadings authenticated and duly signed by the respondent No. 2. It is elementary proposition of law that in the absence of pleadings no evidence could be adduced to prove a fact because the other side would be deprived of an opportunity to meet the case of Respondent. Moreover the mode of service adopted for sending notice has remained a mystery. Therefore, it is of the considered view that removal of petitioner No. l as a director of respondent No. l company is patently illegal and the resolution passed in the EGM held on 27.6.2013 is null and void. As a sequel to the above discussion the E form No,32 uploaded on 4.7.2014 on the website of ROC, Kanpur is declared as illegal and the resolution passed on 27.6.2013 is declared null and void. Petitioner No. 1 is reinstated as director but he would not be entitled to sign any cheque because he has already withdrawn his bank guarantee. Validity of transfer of share and its registration without a proper instrument of transfer - Whether the case of the respondent is covered by unnumbered proviso 1 of section 108 of the Act or that proviso is inapplicable? - Held that:- There is nothing on record first to establish that share transfer deed was ever executed by the petitioner. The theory of lost documents in bag and lodging of police complaint fail to inspire any confidence. Therefore the shareholding of the petitioners in Respondent No. 1-company is restored. The annual return for the year 2013 showing transfer of petitioners' share is declared null and void. A direction is issued to respondent No. 1. Company to rectify its register of members by re-entering the names of the petitioners as existed in the register of 2012. A new e-form 32 be uploaded on the website of ROC, Kanpur within two weeks. The petitioners shall refund to respondent No.2 a sum of ₹ 13,52,500/- which is amount paid by respondent No. 2 for purchasing of shares within two weeks from the date of receipt of a copy of this order.
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