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TMI Tax Updates - e-Newsletter March 7, 2015 Case Laws in this Newsletter: Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Levy of service tax on Film Artistes & exempting artistes in theatre & drama is not in violation of Art 14 / 19 of constitution of India -HC Highlights / Catch Notes Income Tax Settlement Commission order - immunity to the assessee from prosecution and penalty - the said orders are patently illegal for the reason as the entire procedure as contemplated in Section 245-D(4) of Act, 1961 has been completely overlooked by Settlement Commission - HC Visit to Get Source Application for rectification u/s 254 - it does not mean that if the application is moved within the period allowed, i.e., four years, and remains pend ing before the Tribunal, after the expiry of four years the Tribunal can reject the application on the ground of limitation - HC Visit to Get Source The assessee’s income no doubt is derived from letting out the plant/ship which is used for prospecting for or extraction or production of mineral oil, therefore, the second limb of sec. 44BB is clearly attracted in the instant case. - AT Visit to Get Source Compulsory acquisition of agricultural land - Potential use of the land as nonagricultural land is totally immaterial. Entries in the record of rights are good prima facie evidence regarding land being agricultural and if the presumption raised either from actual user of the land or from entries in revenue records is to be rebutted, there must be material on the record to rebut the presumption - AT Visit to Get Source Deduction u/s 80P(a)(i) disallowed to the assessee - Principle of mutuality - These are involved in banking activity by obtaining necessary permissions. Only incomes of such banking societies are not made eligible to claim deduction under 80P - AT Visit to Get Source Income recognition - timing of the accrual of income - registration of sale deeds - AO has bifurcated the income from this project in two years - income of the assessee from this project is chargeable to tax in entirety in the assessment year 2005-06 - AT Visit to Get Source Sale proceeds of shares - there is no compulsion under any law that the shares should be held only in Demat account form only - since LTCG has been disclosed, the question of assessing 5% of the Gross sale receipts as unaccounted income of assessees does not arise - AT Visit to Get Source There remains no doubt that forex gain or loss from a trading transaction is not only an item of revenue nature, but is, in fact, a part of the price of import or value of export transaction - AT Visit to Get Source Customs Denial of refund claim - Unjust enrichment - refund claim has been made immediately and refund received within the financial year and therefore, question of showing it as expenditure would not arise at all. It cannot also be shown as receivable since the original adjudicating authority sanctioned the refund on 14/12/2012. - AT Visit to Get Source Service Tax Levy of service tax on Film Artistes while exempting artistes in theatre & drama - it is not amount to Discrimination and not in violation of Article 14 and 19(1)(g) of the Constitution of India - HC Visit to Get Source VAT Levy of penalty - by claiming exemption, the assessee had tried to evade payment of tax and had also failed to keep true and complete accounts, does not appeal to me as reasonable on the facts of the instant case - no penalty - HC Visit to Get Source Denial of benefit of set-off on the ground that DOC, a by-product, is not taxable- MP VAT - soya seeds in the manufacture of edible oil and DOC - petitioner is eligible to get set-off on entire raw material purchased by it - HC Visit to Get Source Case Laws: Income Tax 2015 (3) TMI 158 Entitlement to deduction u/s 80IA in respect of the windmill unit denied - Held that:- As all the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. In the decision reported in Velayudhaswamy Spinning Mills V. Asst. CIT (2010 (3) TMI 860 - Madras High Court) there appears to be no distinction on facts. Loss in the year earlier to the initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in section 80-IA(5). - Decided in favour of assessee. 2015 (3) TMI 157 Settlement Commission order - immunity to the assessee from prosecution and penalty under the Act and directing payment of tax alongwith interest within 35 days - CIT(A) challenging order on the ground that without any hearing, without looking to the record and giving opportunity to parties, the Settlement Commission, under the garb of compliance of this Court's order, has passed orders of settlement without following the procedure prescribed in the statute - Held that:- The mere fact that the orders impugned in these writ petitions have been complied with since there was no interim order, would not validate a patently illegal and bad order, which has been passed in flagrant violation of statutory provision. It is not a case, where things cannot be restored or where restitution is impossible. This Court while entertaining the writ petition did not grant any interim order to petitioner. For that reason alone petitioner cannot be made to suffer. It is well established that actus curae neminem gravabit. Therefore, the mere fact that impugned orders have been given effect to would make no difference as the said orders are patently illegal for the reason as the entire procedure as contemplated in Section 245-D(4) of Act, 1961 has been completely overlooked by Settlement Commission, as is evident from their own order and, therefore, the impugned orders are patently illegal and nullity in the eyes of law. The manner in which impugned orders have been passed by respondent no. 2 clearly show lack of complete sensibility on its part. It has forced an otherwise avoidable litigation. W.P. allowed. 2015 (3) TMI 156 Scope, power and jurisdiction of AO in block assessment proceedings and the term “undisclosed income - AO concluded a comparison between declared value and the value determined by the DVO disclosed serious discrepancy and added the difference and brought them to tax in the block assessment orders - ITAT concluded that the AO could not have brought to tax the amounts that he ultimately did merely based upon the DVO’s report in the absence of any material pointing to under valuation - Held that:- As decided on CIT Versus. Naveen Gera [2010 (8) TMI 194 - Delhi High Court] it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an understatement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO. As apparent from the factual narrative, the materials collected in the search operations impelled the AO to complete the block assessment in this case. Conspicuously, however, there was no material in the course of the search or collected during the proceedings post search, pointing to under valuation of the assessees’ properties which were ultimately held to have been the subject of under valuation. Again, significantly the assessees had at relevant time when the actual purchases were effected disclosed the transactional value of those assets; the AO has then unreservedly accepted them. Wealth Tax authorities too had accepted the valuation. - Decided in favour of assessee. 2015 (3) TMI 155 Disallowance u/s 14A read with Rule 8D - assessee volunteered sum attributable u/s 14A for the purpose of disallowance - AO on the basis of his own understanding of Rule 8D of the Income Tax Rules disallowed the sum - Held that:- In the present case, the AO has not firstly disclosed why the appellant/assessee s claim for attributing disallowance under Section 14A had to be rejected. In Taikisha [ 2014 (12) TMI 482 - DELHI HIGH COURT] says that the jurisdiction to proceed further and determine amounts is derived after examination of the accounts and rejection if any of the assessee s claim or explanation. Second aspect is there appears to have been no scrutiny of the accounts by the AO - an aspect which is completely unnoticed by the CIT (A) and the ITAT. Third, and in the opinion of this court, important anomaly which we cannot be unmindful is that whereas the entire tax exempt income is ₹ 48,90,000/-, the disallowance ultimately directed works out to nearly 110% of that sum, i.e., ₹ 52,56,197/-. By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Thus the impugned order of the ITAT is set aside. The question of law is answered in favour of the assessee. 2015 (3) TMI 154 Application for rectification under Section 254 - whether Tribunal was right in holding that the application for rectification under Section 254, filed well within time becomes infructuous if the Tribunal takes it up for hearing only after the lapse of four years from the date of the order sought to be rectified? - Held that:- As relying on Sree Ayyanar Spinning & Weaving Mills Ltd. Vs Commissioner of Income Tax [2008 (5) TMI 22 - SUPREME COURT] wherein held that section 254(2) can be viewed in two parts. Under the first part, the Appellate Tribunal may, at any time, within four years from the date of the order, rectify any mistake apparent from the record and amend any order passed by it under sub-section (1). Under the second part of section 254(2), the reference is to the amendment of the order passed by the Tribunal under sub-section (1) when the mistake is brought to its notice by the assessee or the Assessing Officer. Therefore, in short, the first part of section 254(2) refers to the suo motu exercise of the power of rectification by the Tribunal whereas the second part refers to rectification and amendment on an application being made by the Assessing Officer or the assessee pointing out the mistake apparent from the record. In this case, we are concerned with the second part of section 254(2). As stated above, the application for rectification was made within four years. The application was well within four years. It is the Tribunal which took its own time to dispose of the application. Therefore, in the circumstances, the High Court had erred in holding that the application could not have been entertained by the Tribunal beyond four years. - Decided in favour of the Revenue by way of remand. The matter is remanded back to the Tribunal to reconsider the issue 2015 (3) TMI 153 Unaccounted cash credit - contributions made by as many as 10 partners - Held that:- If there are cash credits in the books of a firm in the accounts of the individual partners and it is found as a fact that cash was received by the firm from its partners, then in the absence of any material to indicate that they are the profits of the firm, they cannot be assessed in the hands of the firm, though they may be assessed in the hands of the individual partners. Cash credits in the individual accounts of members of a joint family with third party cannot be assessed as the income of the family unless the Department discharges the burden of proof to the contrary.Therefore, the view taken by the Assessing Officer that the partnership firm must explain the source of income for the partners regarding the amount contributed by them towards capital of the firm, cannot be sustained in law. As regards the other amount i.e., unexplained credit entries, the Tribunal took the view that the amount represented the security deposits made by the retail dealers, and the source thereof was properly explained. Nowhere in the order of assessment, the Assessing Officer recorded any finding to the effect that he verified the matter from the respective retail dealers and that such dealers have denied of making deposits. In the field of Arrack business, it is not uncommon that the retail dealers are required to keep security deposits with the supplier. At any rate, it is a pure question of fact. - Decided against revenue. 2015 (3) TMI 152 Reassessment proceedings - ITAT confirmed CIT(A) decision cancelling the reassessment proceedings - Held that:- It is evident that the self same reasons which were the basis for proceedings under Sections 147/148 of the Act, were also the foundation for an admitted rectification which, however, proved to be abortive. Not content with that move, the AO sought to issue reassessment proceedings. The basis for all these, in turn, was an audit report. Now, as to the status of audit reports, the law is clear. In CIT v. Simbhaoli Sugar Mills Limited ( 2011 (3) TMI 701 - DELHI HIGH COURT ) the Court, after applying the ratio in Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) also held that initiation of reassessment proceedings on the basis of audit report objections is impermissible. In this regard, the Court also notices the ruling in Transworld International Inc. v. JCIT (2004 (9) TMI 26 - DELHI High Court) and Indian and Eastern Newspaper Society v. CIT (1979 (8) TMI 1 - SUPREME Court) ITR 996. This was subsequently affirmed in CIT v. Lucas TVS Ltd. (2000 (12) TMI 102 - SUPREME Court). In the circumstances, therefore, we are of the opinion that no question of law arises; the ITAT acted within its rights in applying the ratio of previous binding decisions and affirming the CIT (Appeals)’s order. - Decided against revenue. 2015 (3) TMI 151 Deduction u/s.10B denied - the approval granted by the Software Technology Park of India (STPI) to the Bopodi unit of the Appellant is not ratified by the Board of Approval constituted u/s.14 of the Industrial Development Regulation Act - alternate claim of deduction u/s.10A rejected on the ground that the assessee has not claimed the deduction u/s.10A, through filing of return of income and has not furnished the prescribed report of the auditor at the time of filing of the return of income - Held that:- Since in the instant case although the assessee has not claimed the deduction u/s.10A of the Act in the return filed u/s.139(1), however, the assessee has claimed such an alternate deduction before the AO during the assessment proceedings itself by filing the requisite report of the accountant along with Form No.56G. Therefore, if the assessee is not eligible for deduction u/s.10B of the Act but eligible u/s.10A of the Act, we find no reason as to why such benefit should be denied to the assessee. After all these are incentive provisions and are to be liberally construed. If the assesses otherwise fulfils all the legal requirements for claiming the deduction u/s.10A of the Act but inadvertently claimed the same u/s.10B of the Act which was granted to it in the past, we find no reason as to why the alternate claim of the assessee should not be accepted.However, since the lower authorities have not thoroughly examined the allowability of deduction u/s.10A of the Act and merely rejected the claim on the ground that the same was not claimed in the original return filed, therefore, we in the interest of justice deem it proper to restore the issue to the file of the AO with a direction to give an opportunity to the assessee to substantiate its eligibility for deduction u/s.10A of the I.T. Act. We hold and direct accordingly. Since we are restoring the issue to the file of the AO for deciding the alternate claim of the assessee for deduction/s.10A, therefore, we refrain ourselves from adjudicating the allowability of deduction u/s.10B of the I.T. Act. - Decided in favour of assessee for statistical purposes. Transfer pricing adjustment - selection of comparable - CIT(A) directing AO to exclude KALS Information Systems Pvt. Ltd. from the list of comparable companies - Held that:- Since the Ld.CIT(A) following the decision of the Pune Bench of the Tribunal in the case of Bindview India Pvt. Ltd.[2013 (6) TMI 113 - ITAT PUNE] has rejected Kals information System Ltd. holding the same to be functionally different, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are accordingly dismissed. - Decided in favour of assessee. Incorrect calculation of OP/TC by treating foreign gain/loss as operating in nature - Held that:- Delhi Bench of the Tribunal in the case of Westfalia Separtator India Pvt. Ltd., (2015 (3) TMI 140 - ITAT DELHI) following various decisions has held that foreign exchange loss/gain is a part of the operating revenue/cost. Thus we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to consider foreign exchange fluctuation gain as part of the operating income of the assessee - Decided in favour of assessee. Unjust rejection of TP study filter - introduction of additional filters for selecting final set of comparables - Held that:- Merit in the argument of assessee that TPO has applied the filter of 75% export turnover without demonstrating the same on the basis of any study/analysis which resulted in inadequate number of companies for comparability. In our opinion, if sufficient number of 100% uncontrolled comparables are not found, then comparables having similar transactions should be considered. In our opinion when sufficient comparables are not available then the threshold should be relaxed and only gradually to the extent that sufficient comparables are found the limit should be relaxed. Since the threshold filter of 75% adopted by the Assessing Officer and upheld by the CIT(A) in our opinion is on the higher side, therefore, considering the totality of the facts of the case, we hold that under the facts and circumstances of the case, the export filter should be relaxed to 50% from 75%. - Decided partly in favour of assessee. Selection of certain new comparables and rejection of the comparables selected by the assessee in the TP study report - inclusion of Thirdware solutions Ltd. and exclusion of Vama Industries Ltd. as a comparable - Held that:- As relying on Maersk Global Centres (India) (P.) Ltd. Versus ACIT [2014 (3) TMI 891 - ITAT MUMBAI] and other decisions also Thirdware Solutions Ltd. has been rejected as a comparable on the ground that it is functionally dissimilar. We therefore find force in the submission of the Ld. Counsel for the assessee that Thirdware Solutions Ltd. should not be included as a comparable.So far as exclusion of Vama Industries Ltd., as find merit in the submission of the Ld. Counsel for the assessee that when segmental data is available and the export turnover of the software development services is 69% of the total turnover of the software division, therefore, the same should not have been rejected. We therefore direct the Assessing Officer to consider the same as a comparable. - Decided in favour of assessee. Non granting of opportunity of verification - Held that:- No infirmity in order of Ld.CIT(A) on this issue. Admittedly, during TP assessment proceedings, the assessee was given show cause notice. The matter was thoroughly discussed with the authorised representative. Therefore, it cannot be said that no opportunity was granted to the assessee. Therefore, this ground is dismissed. - Decided against assessee. Rejection of multiple year data - Held that:- Issue stands decided against the assessee by the decision of the Special Bench of the Tribunal in the case of Aztech Software and Technology Services Ltd., Vs. ACIT [2007 (7) TMI 50 - ITAT BANGALORE] - Decided against assessee. 2015 (3) TMI 149 Unaccounted purchases of gold bars and unexplained cash - AO formed the view from the excel sheets found during the course of search that the gold bars and cash shown in the blocks in the excel sheets, was the sale consideration received in exchange of jewellery sold and therefore, made additions - Held that:- Additions made by the AO and by the Ld. CIT(A) forming contradictory opinion from the entries on the excel sheets are on the basis of just their assumptions and presumptions whereas the assessee has discharged its burden to explain the relevant entries. As decided in Jitendra Kumar Jain v. DCIT [2014 (1) TMI 1181 - ITAT MUMBAI] such type of mere assumptions cannot be said to be having any value of evidence in the eyes of law and even the assessee cannot be called to disapprove such type of assumptions and presumptions based on mere suspicions. No doubt, in this case, the initial burden was upon the assessee to explain about the entries made in the excel sheets, however, once the assessee had explained the entries, the burden shifted upon the AO to prove that the explanation given by the assessee was wrong or that the entries made in the excel sheets were pertaining to sale transactions as alleged by the AO or the entries relating to gold bar was unaccounted purchase, as has been alleged by the Ld. CIT(A). Since both the authorities i.e. AO as well as the Ld. CIT(A) could not prove their case, hence, additions made by them on the basis of mere assumptions/presumptions and suspicions are not sustainable in the eyes of law and the same are accordingly ordered to be deleted. - Decided in favour of assessee. Deductions U/s 10A/10AA denied - CIT(A) allowed the claim - Held that:- Ld. CIT(A) directed the assessee to submit the complete details of imports and Exports made through these units and the approval of the Custom and Central Excise department and also to submit the documents relating to shipment, Import and Export Clearance, Invoices of import & Export and foreign remittances in the bank accounts. The assessee submitted that all the above stated documents had already been submitted before the AO, during the assessment proceedings. The Ld. CIT(A) after thorough examination of the said documents did not note any discrepancy in the same. He further noted that even the A.O. had also not mentioned any discrepancy in the Import and Export Clearance papers submitted during the course of assessment. He further observed that it was a fact that in the SEZ units, no Import or Export could be made without the approval of the Custom and Central Excise department. All the payments and receipts were made through banking channels and no discrepancy was pointed out by the A.O. It was established that raw material was imported and the final product was exported with due approval of the Custom and Central Excise department. All the papers relating to the shipment and foreign remittances were in order and moreover the assessee had submitted that there was no Import and Export activity taken place in the search year. He therefore rightly held that the assessee was eligible for claiming deduction u/s. 10A of the I.T. Act. - Decided in favour of assessee. Allocation of Expenses from non-SEZ unit to SEZ unit - CIT(A) decided to allocate the expenses of SEZ and Non SEZ units on the basis of total turnover - Held that:- The Ld. CIT(A) has allocated the expenditure of SEZ units and not SEZ units on the basis of total turnover regarding the assessment years for which he was not satisfied with the details of expenditure submitted by the assessee. However, for the assessment years for which the Ld. CIT(A) was satisfied regarding the details of expenditure submitted by the assessee he has not adopted any such criteria. We do not find any infirmity in the approach adopted by the Ld. CIT(A) in this respect. The order of the Ld. CIT(A) on this issue is therefore upheld. - Decided against assessee. Addition towards unexplained expenditure - ad hoc estimated addition of ₹ 28,00,000/- - Held that:- So far as the contention of the assessee that the transactions in question were genuine transactions is concerned, we do not find any force in the same. It was found during the survey that the office address given by the said entities was that of a chawl. All these persons shown as proprietors of these concerns were men of no means. No books of accounts or any valuable stock was found in their premises. In the statements recorded during the course of survey, all these persons had admitted that books of accounts or any gold stock had not been maintained in their room and all the transactions were paper transactions made in their names on behalf of the assessee company. The above evidences on the file are sufficient to hold that the said entities were only paper entities created by the assessee to inflate turnover. The assessee has miserably failed to prove that the transactions done by the assessee with these entities were genuine transactions. So far as the addition of ₹ 28 lakh in each year on adhoc basis on account of expenditure incurred to create these paper entities is concerned, we find that there is no evidence that the assessee has incurred such an expenditure to create these entities warranting adhoc additions of ₹ 28 lakh each. It is also the case of the assessee that the net profits of these entities have also been taxed. Further, we have upheld the addition of gross profits of the said entities, hence further adhoc addition of ₹ 28 lakh for each year merely on assumptions is not warranted and the same is accordingly ordered to be deleted. - Decided partly in favour of assessee. Addition towards discrepancy in stock - Held that:- The most vital fact on this issue is that the assessee has not been provided the copies of the inventories made during search at different premises of the assessee except that of one at Laxmi Premises. Even during the course of hearing, the records in this respect were called upon, but the Revenue could not furnish the copy of any other inventory. When the Revenue itself has failed to provide the copies of inventories to the assessee, how can assessee be asked to reconcile the same. Assessee has pointed out various defects in the consolidated stock inventory prepared by the AO which are apparent on the record as has failed to correctly record the figures in relation to 18kt. jewellery. The assessee, otherwise has explained that in the excel sheet, combined figures of 18 kt. and 22kt. sent on approval were made. That the gold jewellery of 18 kt. was also sent on approval, is evident from the documents/vouchers found in the survey action of department on third parties such as Royal Chains to whom appellant issued 20,215.150gms of 18kt gold on 28/8/2007 &13/9/2007. Hence the explanation given by the assessee in this respect is quite plausible. If combined figures are taken, there is over all shortage of the gold jewellery, which at the most can be treated as unaccounted sales. The addition made by the AO in respect of excess jewellery is therefore, ordered to be deleted. The AO, however, is directed to compute the Gross profits on such shortage of jewellery and make the additions accordingly. - Decided partly in favour of assessee. Excess Gold Bars - Held that:- at the time of search action, the said stock of 500 gms of gold was not entered into the books of accounts of the assessee. The plea that the said gold stock was received for job work purpose or that the said P.V. Gold has given a confirmation in this respect seems to be an afterthought version of the assessee. We accordingly, reject this plea of the assessee. Therefore we direct the AO to make the addition in respect of excess stock found after considering the combined figure of 99.9 & 99.5 standard gold bars, taking the relevant standard rates of respective kinds of Gold Bars prevalent during the period concerned. - Decided against assessee. Purchase of property by cash - Held that:- A perusal of the seized documents relied upon by the lower authorities reveal that there is no mention that the assessee has made the cash payment of ₹ 2 crores. What is mentioned is that the agreement value of property is ₹ 6 crore, which is then reduced by token payment of ₹ 21 Lacs and the balance is shown at ₹ 5.79 crores. Further, it is mentioned that token amount of ₹ 21 Lacs is paid on 22.7.2008; ₹ 2 crore before 7.8.2008 as cheque, if in cash, then on 01.08.2008. The assessee has explained that the deal did not materialize and was cancelled hence there was no question of payment of ₹ 2 crore in cash. It is not disputed that the property latter on was purchased by the Group company of the assessee M/s Gia Exports. When the assessee neither has purchased the property in question, nor there is any mention in the seized documents, that the assessee in fact has made the payment of ₹ 2 Crores, then the addition, merely on the basis of assumption that the assessee might have made the payments, in our view, is not sustainable in the eyes of law. - Decided in favour of assessee. 2015 (3) TMI 148 Benefit of Article 22 of Indo-Swiss treaty.- taxability of the profits from the operation of ships in international traffic earned by the assessee in India - Only Article 22 is applicable for shipping business and no income of the assessee is taxable in India under Article 22(2) of the tax Treaty as held by CIT(A) - Held that:- In the present case, such endeavor was made by the competent authorities of Switzerland and India and the doubt arising as to the interpretation of Article 22 was resolved by mutual agreement whereby both the competent authorities agreed that international shipping profits of the assessee company are covered by Article 22. Having perused the relevant clauses of the agreement between assessee company and M/s MSC Agency India Pvt. Ltd. we find ourselves in agreement with the view of the AO and the learned CIT(Appeals) that M/s MSC Agency India Pvt. Ltd. was legally and economically dependent agent of the assessee company and since the assessee company was managing and controlling some of its business operations in India through the said dependant agent, it constituted the permanent establishment of the assessee company in India in terms of the Indo-Swiss treaty. Keeping in view the relevant portion of the OECD commentary on Model Tax Convention on Income and on Capital (condensed version) published in July, 2010 we are of the view that the right or property in respect of which the shipping income is earned by the assessee i.e. ships cannot be said to be effectively connected with the permanent establishment in India. Such income, therefore, will not fall under Article 22(2) but will fall under Article 22(1) and accordingly shall be taxable only in the State of residence of the assessee company i.e. Switzerland and not in India. In that view of the matter, we uphold the impugned order of the learned CIT(Appeals) holding that the international shipping profits of the assessee company are covered by Article 22 of the Indo-Swiss treaty and although the assessee company had a PE in India in the year under consideration, the ships i.e. the property in respect of which shipping income was paid to the assessee company being not effectively connected with that PE, the case of the assessee will be out of paragraph No. 2 of Article 22 and will fall in paragraph I of the said article. Consequently, the same will be taxable in the country of residence of the assessee company i.e. Switzerland and not in India. - Decided in favour of assessee As regards the alternative contention of assessee that no portion of the international shipping profits earned by the assessee in any case can be taxed in India as the commission paid to M/s MSC Agency India Pvt. Ltd. which constituted its PE is admittedly at an arm's length, it is observed that this alternative claim of the assessee has now become academic in view of our decision accepting the main contention of the assessee that the international shipping profits are chargeable to tax only in Switzerland as per Article 22(1) and not in India. - Decided against assessee. 2015 (3) TMI 147 Applicability of provisions of section 44BB - income arising to the appellant from rendering of marine logistic services - DRP/AO assessing the income earned by the appellant as fees for technical services/royalty as per the provisions of section 9(1)(vii) - Held that:- The judgment of the Hon’ble Madras High Court in Poompuhar Shipping Corporation Ltd. vs. ITO [2013 (10) TMI 936 - MADRAS HIGH COURT] relied by revenue is not applicable since the said decision does not deal with the applicability or otherwise of section 44BB. The revenue’s reliance on section 9(1)(vi) to categorize the assessee’s income for hire of vessels as ‘royalty’ is also not correct since clause (iva) of section 9(1)(vi) excludes amounts referred to in section 44BB. The other arguments, decisions relied on by the learned DR including the one on ‘Base erosion profit shifting’ are also not relevant in the factual matrix of the present case and considering what we have already held. In view of the above, we hold that the income of the assessee for the year under consideration is to be computed in accordance with section 44BB of the Act.- Decided in favour of assessee. TDS credit - Held that:- We direct the AO to verify this aspect and to decide about the allow-ability of the above TDS credit in accordance with law. - Decided in favour of assessee for statistical purposes. Levy of interest u/s 234B - Held that:- The proviso inserted into the provisions of section 209 enables the revenue to levy interest in a case where the payer has not deducted tax at source when he makes payment to a non- resident recipient. However, the proviso was introduced vide Finance Act, 2012 with effect from AY 2012-13 onwards and, thus not applicable in the present case. Consequently, interest cannot be levied under section 234B - Decided in fvaour of assessee. 2015 (3) TMI 146 Short term capital gain - compulsory acquisition of agricultural land - Held that:- Both the authorities below have misdirected themselves in reaching to the conclusion that the land acquired by the GIDC is a capital asset in view of the fact that the area in which the land situated is notified by the appropriate authority as a development area. Both the authorities below have failed to consider the nature of the land prior to acquisition and notification by the appropriate authority. It has to be borne in mind that the correct test that has to be applied is whether on the date of the sale the land was agricultural land or not. Because after the sale the purchaser was going to put the land to non-agricultural use, it does not mean that the land had ceased to be agricultural land at the date of sale. The crucial date for the purpose of finding out the character of the land is the date of sale and the question that has to be asked is whether on the date of sale the land was agricultural land or not. However, we find that what has weighed with the Tribunal, inter alia, is the fact that after the sale the purchaser was going to use the land for non- agricultural purposes and it is in the light of what was going to happen in future that the Tribunal held that the land was non- agricultural in character at the relevant time. It must be borne in mind, as was held by this Court in Chhotalal Prabhudas vs. CIT (1978 (10) TMI 35 - GUJARAT High Court), that if the land is actually used for agricultural purposes as indicated in Manilal Somnath's case (1976 (3) TMI 41 - GUJARAT High Court) or by the Supreme Court in Begumpet Palace's case (1976 (8) TMI 2 - SUPREME Court), at least, prima facie it can be said to be land which is either actually used or ordinarily used or meant to be used for agricultural purposes. If it is actually used at the relevant date for agricultural purposes and there are no special features, as for example, a building site being actually used as a stop-gap arrangement for agricultural purpose, it would be agricultural land. Potential use of the land as nonagricultural land is totally immaterial. Entries in the record of rights are good prima facie evidence regarding land being agricultural and if the presumption raised either from actual user of the land or from entries in revenue records is to be rebutted, there must be material on the record to rebut the presumption. The approach of the factfinding authorities, namely, the IT authorities and the Tribunal, should be to consider the question from the point of view of the presumption arising from entries in the record of rights or actual user of the land and then consider whether that presumption is dislodged by the presence of other factors in the case. The orders of the authorities below are set aside and the matter is restored back to the file of AO for de novo assessment. The AO is hereby directed to verify the documents as furnished by the assessee in support of its claim that the land was agricultural before acquisition and decide this issue in the light of the ratio laid down by the Hon’ble Jurisdictional High Court in the cases of CIT vs. Siddharth J.Desai (1981 (9) TMI 48 - GUJARAT High Court) and Gordhanbhai Kahandas Dalwadi vs. CIT (1980 (10) TMI 56 - GUJARAT High Court). - Decided in favour of assessee for statistical purposes. 2015 (3) TMI 145 Deduction u/s 80P(a)(i) disallowed to the assessee - as per AO assessee was mobilizing funds for deposits and doing normal banking business and therefore deduction under section 80P(a)(i) should not be allowed to the assessee - Held that:- A.O. misdirected herself by analysing the issue in a tangential way ignoring the basic facts of the case. As briefly stated in A.Y. 2007-08, in this year 2008-09 also assessee has not claimed any deduction under section 80P(a)(i) either on the incomes arrived from associate or nominal-Members or on the transactions of miscellaneous nature. What assessee has claimed deduction is proportionately on the net receipts eligible for deduction out of the gross receipts, after arriving at the profits of the society. This basic fact was ignored by the A.O. Moreover, as considered in earlier year, assessee being a Cooperative Society registered under APMECSA, 1995 analysis of the Society under A.P. Cooperative Societies Act does not arise at all. Not only that assessee has neither involved in Banking activity nor obtained any license for doing the banking activity. Therefore, the entire discussion of the A.O. on the so-called violation of Banking Regulation Act and guidelines of the RBI is superfluous. Even the principles of mutuality analysed by the A.O. does not pertain to the assessee at all. Even though assessee is registered as Mutually Aided Cooperative Society, assessee never claimed any exemption of income on the principle of mutuality. The deduction claimed is limited to the proportionate income on the credit facilities provided to its Members as a Cooperative Society. Balance of the income was offered to tax and there is no dispute to the fact that assessee declared income of ₹ 84,87,660. In view of these facts, we are unable to understand why the A.O. has to do lot of research in analysing the principles of mutuality and coming to a conclusion that assessee is not a Mutual Society, that too ‘lifting corporate veil’ when there is no claim at all. - Decided in favaour of assessee. Whether CIT(A) is misplaced with regard to deduction u/s.80P(2)(i)(a) is even otherwise given to the assessee even if it accepts deposits from non members.? - Held that:- As far as assessee’s activities are concerned, since assessee has claimed deduction under section 80P(2)(a)(i) only on the income of credit facilities provided to its Members, A.O. was correctly directed by the Ld. CIT(A) to allow the deduction. Ld.CIT(A) also analysed other miscellaneous income and directed the A.O. to exclude the same. Therefore, we do not find any reason to interfere with the orders of the Ld. CIT(A) in directing the A.O. to allow deduction under section 80P(2)(a)(i). However, A.O. is directed to examine the quantum of income earned and allow the deduction accordingly. We also find no reason to interfere with the directions of the Ld. CIT(A) in granting deduction under section 80P(2)(d). The Ld. CIT(A) direction is with reference to the incomes earned from the Cooperative Societies/Cooperative Banks as covered by section 80P(2)(d). - Decided against revenue. Principle of mutuality relied on by the A.O. emanate to distinguish that assessee - Held that:- Assessee has not claimed any benefit of mutuality. So contention on principle of mutuality itself is misplaced, so raising ground on that is misconceived. Not only that, Ld. CIT(A) direction is to allow deduction under section 80P(2)(d) and this direction was similar to the direction given in A.Y. 2007-08. Surprisingly, Revenue has not preferred any ground on that issue in that year as the assessee is eligible for such deduction. Why they preferred the ground in this assessment year is not understandable at all. This indicates that neither the A.O. nor the Ld. CIT, who authorised the second appeal has not applied their mind to the issue. Moreover, it is surprising that Revenue states in the ground that Having established on the record that the assessee has deposited money in RRBs/Cooperative Banks, status of which is not recognized under the Income Tax Act as cooperative bank, can the interest arising out of the deposit of this RRBs/Co-op Banks would quality for deduction u/s.80P(2)(d). We fail to comprehend this contention. Cooperative banks are basically registered as cooperative societies. These are involved in banking activity by obtaining necessary permissions. Only incomes of such banking societies are not made eligible to claim deduction under 80P, consequent to amendments made to the Act. We are of the opinion that Revenue did not understand the issues and simply raised ground for the sake of objection on the Ld. CIT(A) order. - Decided against revenue. Insurance amounts disallowed by the A.O. under section 37(1) - Held that:- Since this expenditure is for the benefit of members as per objects of society, there is direct nexus with the income earned from members. For the reasons stated therein, we direct the A.O. to allow expenses while working out the profit of assessee from the activity of credit facilities to members and then allow deduction under section 80P(2)(a)(i). - Decided in favour of assessee. Disallowance of doctor’s salary - Non deduction of TDS - Held that:- Since the issue pertains to deduction of TDS on doctor’s salary to the tune of ₹ 1,40,910, in the absence of relevant details before us, whether the payment falls under TDS provisions or not has to be examined by the A.O. and therefore, we set aside this issue to the file of A.O. for fresh adjudication, after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. 2015 (3) TMI 144 Disallowance of claim of deduction u/s 80IB(10) - deduction declined by the A.O. on the plea that housing project of assessee was approved by the Local Authority as “residential as well as commercial project” and not as “Housing Project”, also assessee has not completed the project within the specified time i.e. 31-08-2008 and Completion Certificate has not been granted by the Competent Authority - A.O. also observed that the commercial area exceeded the prescribed limit of 5%. The A.O. also found that built up area of three residential row houses exceeded 1500 sq. ft.- Held that:- Assessee has claimed deduction only with respect to UK Residential Project and not with respect to UK Commercial Project. The project was approved on 8-4-2003 i.e. before introduction of limit of commercial area. Commercial area was constructed as per D.C. Rules. The issue with respect to claim u/s 80IB(10) having commercial area has been considered by the Hon”ble Bombay High Court in the case of CIT vs. Happy Home Enterprises [2014 (9) TMI 707 - BOMBAY HIGH COURT) and CIT vs. Kanakia Spaces Pvt. Ltd. [ 2014 (9) TMI 707 - BOMBAY HIGH COURT] wherein it was held that there was no restriction on the quantum of commercial area that could be included in the said housing project and the same was to be determined by the local authority in accordance with its own rules and regulations. In respect of project which has been approved before 31-3-2005, the condition imposed by Finance (No.2) Act 2004 w.e.f. 1-4-2005 regarding the quantum of commercial area is not applicable. In view of the above, we modify the order of ld. CIT(A) and direct the A.O. to allow the full claim of deduction u/s 80IB(10) of the Act with respect to the entire project without restricting the same to residential area. Thus, the grounds taken by the assessee in all he years for allowing full claim of deduction u/s.80IB(10) are allowed. - Decided against revenue. With regard to the completion certificate, the ld. CIT(A) after careful consideration of the facts of the case correctly held that in respect of project approved prior to 1-4-2005, no completion certificate was required. The view of the ld. CIT(A) is also supported by the decision of Hon”ble Madras High Court in the case of CIT vs. Jain Housing & Construction Ltd. (2012 (11) TMI 588 - MADRAS HIGH COURT). - Decided against revenue. In respect of A.O.'s objection in respect of three raw houses, the ld. CIT(A) correctly held that open terrace area cannot be included in built up area in respect of project approved prior to 1-4-2005. The built up area has to be considered as per DC rules according to which the area worked out to be 1471 sq. ft. ie. below the prescribed limit. - Decided against revenue. With regard to the A.O.'s allegation regarding UK Commercial and UK residential are part of one approval, therefore, assessee is not eligible for deduction in respect of UK residential project also, the ld. CIT (A)correctly held that these are two different projects on the same piece of land of 17.67 acres. Since the assessee has not claimed any deduction in respect of UK Commercial project, the assessee’s claim for deduction u/s 80IB(10) cannot be declined in respect of UK residential project having land of more than one acre. Thus we direct the A.O. to allow full claim of the deduction u/s 80IB(10) of the Act in respect of entire residential project in all the relevant assessment years under consideration. - Decided against revenue. 2015 (3) TMI 143 Income recognition - timing of the accrual of income - assessee claimed that the income is chargeable to tax at the time of registration of sale deeds to the buyers, the AO held such income to be taxable during the progress of contract itself, that is, on the basis of Percentage completion method - Held that:- Assessee categorically stated before the AO during the course of assessment proceeding for the A.Y. 2005-06 that the construction stood completed in the year in question and the AO has recorded the same on page 3 of the assessment order. Similar position about the completion of the construction during the year can be seen from para 2.1 of the impugned order for this year, which has not been controverted by the ld. AR. Further, it is apparent from the agreements to sell between the assessee and buyers that risks and rewards of ownership were initially transferred, which is manifest from the terms and get corroboration from the fact that some of the buyers actually transferred their rights in construction to the third parties during the currency of construction. In such a situation and going by the afore-discussed jurisprudence, the assessee has an option to choose between the Percentage completion and the Project completion method. Since the assessee did not offer income under the Percentage completion method, and giving the benefit of choice to the assessee, we hold that the assessee ought to have shown income from the project ‘Paras Down Town Centre’ in its return for the A.Y. 2005-06. As the AO has bifurcated the income from this project in two years, namely, the A.Y.s 2005-06 and 2004-05, we hold that the addition made by the AO in respect of income from this project for the A.Y. 2004-05 be deleted. It appears that the ld. CIT(A), while disposing of the appeal for the A.Y. 2004-05, lost sight of the fact that the AO determined total income for such year at ₹ 5.23 crore. The deletion of addition of ₹ 5.23 crore has resulted into the obliteration of even the returned income at ₹ 3,13,414, which is not correct and cannot be sustained. The components of the returned income need verification. If it is unrelated with the project, then it should be charged to tax. Further, the direction given by the ld. CIT(A) for including income from this project in the later years, at the time of execution of registered sale deeds, is also vacated because once income has been directed to be chargeable to tax in one year, then it cannot be charged to tax in a later or earlier years as well. The AO should also ensure that no income from this project, whether included by the assessee voluntarily or added by him, should form subject matter of assessment for any year other than the A.Y. 2005-06. If it is so included, then the same should be eliminated. The end result is that the income of the assessee from this project is chargeable to tax in entirety in the assessment year 2005-06. Appeal of the Revenue for the A.Y. 2006-07 is also tagged with the present set of appeals, which, we are disposing by a separate order. Ex consequenti, the impugned orders are set aside and the matter is sent back to the AO for framing the assessments afresh in conformity with our above directions. - Decided in favour of assessee for statistical purposes. 2015 (3) TMI 142 Revision u/s 263 - AO has accepted the income from house property to be Nil without any application of mind or making any enquiry, therefore, his order is also erroneous and prejudicial to the interest of the Revenue - CIT observed that three properties owned by assessee should have been computed as per provisions of section 22 read with section 23 of the Act - Held that:- issue of income from house property is concerned, we find that the Assessing Officer has made a general enquiry with regard to the details of moveable and immoveable properties and investment made therein, but we do not find any proper reply with regard to the immoveable properties and A.L.V. worked out thereon. Therefore, it cannot be said that the Assessing Officer has made an enquiry on this issue. Since the Assessing Officer has accepted the claim of the assessee on this issue without making any enquiry, we are of the view that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and we accordingly confirm the order of the ld. Commissioner of Incometax in this regard. - Decided in favour of revenue. Debit entry of ₹ 27,75,722/- in the trading account for the year ending on 31.3.2008 under the head “provisions to be made for expenses in current year and credit card payments - Held that: - Assessing Officer has made a proper enquiry with regard to the debit entry of ₹ 27,75,722/- in trading account for the year ending on 31.3.2008 under the head “provisions to be made for expenses in current year” and credit card payments. Therefore, on these two issues, the assessment order cannot called to be erroneous and prejudicial to the interest of the Revenue. We accordingly set aside the order of the ld. Commissioner of Income-tax on these two issues. - Decided in favour of assessee. 2015 (3) TMI 141 Sale proceeds of shares - Income from Other Sources or Long term Capital gains - Held that:- As per the CBDT circular, referred earlier, the date of purchase of shares should be recognized as the date on which the broker has issued the contract notes. Hence, we are unable to agree with the view taken by the AO that the date of purchase should be considered as the date on which the shares were credited to Demat account. The undisputed fact remains that the assessees have opened the Demat account only subsequent to the date of purchase of shares. Hence, in the absence of a Demat account, one could have purchased the shares in physical form only. Though the assessee has furnished the details of purchases of shares, we notice that the AO has rejected them without examining them. This approach of the assessing officer, in our view, was not appreciable at all. When the assessees are furnishing the necessary details available with them and if the AO feels that they are not reliable then he should have conducted further investigation and brought any other material on record to disprove the claims put forth by the assessees. However, the AO has taken adverse inferences against the assessees without causing further examination of the materials furnished by the assessees. Further, we are aware that there is no compulsion under any law that the shares should be held only in Demat account form only. As per the trade practice, in our knowledge, the broker is liable to deliver the shares which were purchased on behalf of the clients and in this connection only the broker contract notes are issued. We further notice that the submissions of the assessees that the shares were in the possession of the broker were also rejected without making further examination. There was no credible material with the department to disprove the claim of Long term Capital gains made by these assessees in their respective returns of income. Accordingly we set aside the orders of Ld CIT(A) passed in the respective hands of the assessees herein on this issue and direct the assessing officer to delete the assessment of gross sale receipts as income from other sources in all the years under consideration and accordingly direct the AO to accept the LTCG declared by these assessees in all the years under consideration. Since we have upheld the disclosure of LTCG, the question of assessing 5% of the Gross sale receipts as unaccounted income of assessees does not arise. Accordingly, we set aside the orders of ld CIT(A) on this issue and direct the assessing officer to delete this addition in the hands of all the assessees in all the assessment years under consideration. - Decided in favour of assessee. 2015 (3) TMI 140 Treatment of foreign exchange fluctuation loss as operating cost - Held that:- The forex gain or loss is the difference between the price at which an import or export transaction was recorded in the books of account on the basis of rate of foreign exchange then prevailing and the amount actually paid or received at the rate of foreign exchange prevailing at the time of actual payment or receipt. Since such forex loss or gain is a direct outcome of the purchase or sale transaction, it partakes of the same character as that of the transaction to which it relates. When we read the ratio of the case of Sutlej Cotton (SC)(1978 (9) TMI 1 - SUPREME Court) in juxtaposition to that of the Special Bench in case of Prakash I Shah (2008 (8) TMI 387 - ITAT BOMBAY-K ), there remains no doubt that forex gain or loss from a trading transaction is not only an item of revenue nature, but is, in fact, a part of the price of import or value of export transaction, as the case may be. - Decided in favour of assessee. Assessee claiming that difference in the foreign exchange rate of Euro beyond a particular point is abnormal and hence the same be not considered as recurring expense - Held that:- This contention is devoid of any merits because of the obvious reason that fluctuation in the foreign currency is across the board and is applicable not only to the assessee but to the comparables as well. It was fairly admitted that in some of the comparable cases, there is a figure of forex gain/loss. This shows that such change in the foreign exchange rate is not assessee-specific so as to warrant any adjustment. As it is applicable to one and all, there can be no case for treating some part of the forex loss as normal and the other as abnormal so as to warrant exclusion of the second part from operating cost by treating it as an abnormal loss. It is further relevant to note that the assessee earned forex gain of around `18.40 lac under the ‘Trading segment’. As such, the contention of the assessee claiming exclusion of some part of the forex loss from the ambit of operating expenses on the basis of the abnormal loss theory, is not sustainable. CIT(A) has taken an unimpeachable view by considering the forex loss of ₹ 50.04 lac as a part of operating cost. - Decided against assessee. Denial of working capital adjustment - Held that:- The assessee cannot be deprived of the working capital adjustment, if it is rightly due. The claim of the assessee for working capital adjustment cannot be rejected at the outset. The impugned order on this issue is set aside and the matter is sent back to the AO/TPO for verifying the calculation so made by the assessee in support of its working capital adjustment, and then allow it as per law, if available, after allowing a reasonable opportunity of being heard to the assessee. - decided in favour of assessee for statistical purposes. Addition on account of forex loss - CIT(A) delted the addition - Held that:- No infirmity in the impugned order on this score because such a claim is permissible as per the judgment of the Hon’ble Supreme Court in the case of Sutlej Cotton Mills Ltd. (1978 (9) TMI 1 - SUPREME Court) ) and the Special Bench order in the case of Oil and Natural Gas Corpn. Ltd. vs. DCIT [2002 (8) TMI 802 - ITAT DELHI] - Decided against revenue Addition u/s 68 - CIT(A) deleted the addition - Held that:- Assessee furnished additional evidence before the ld. CIT(A) in support of the deletion of the addition. Such additional evidence was sent to the AO for comments. The AO simply objected to the admission of additional evidence without controverting the position stated in such evidence. It is noticed that a sum of ₹ 9,25,430/- was received as advance from Pioneer Agro Exports Ltd. during financial years 2000-01 and 2001-02. Since the credit in respect of this amount did not generate during the year, there can be no question of the applicability of section 68 of the Act to such a credit. As regards the second amount of ₹ 6,50,000/- from M/s Spic Pharmaceutical Division, it is seen that the assessee received it as an advance which was adjusted against the invoice raised in August, 2003. In view of these circumstances, we are of the considered opinion that the ld. CIT (A) was fully justified in deleting this addition. - Decided against revenue 2015 (3) TMI 139 Disallowance of deduction as bad debts - CIT(A) deleted addition - Held that:- CIT(A) vide deleting the addition has noted that Assessee has fulfilled all the requirements u/s. 36(1)(vii) for claiming the amount as bad debts. He further relying on the decision Hon’ble Apex Court in the case of TRF Ltd. Vs. CIT reported in [2010 (2) TMI 211 - SUPREME COURT ] allowed the claim of Assessee. Before us Revenue has not brought any material on record to controvert the findings of ld. CIT(A). We further find that the decision relied upon by ld. D.R. are distinguishable on facts and do not apply to the present case. In view of these facts we find no reason to interfere with the order of ld. CIT(A) Thus this ground of Revenue is dismissed - Decided in favour of assessee. Disallowance u/s 14A - CIT(A) deleted addition - Held that:- Assessee was having shareholders funds comprising of Capital, reserves and surplus which were far in excess of the investment. In the case of Reliance Utilities (2009 (1) TMI 4 - HIGH COURT BOMBAY) the Hon’ble Bombay High Court held that that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interestfree funds were sufficient to meet the investments and therefore, interest was deductible. Further CIT(A) has also given a finding about availability of sufficient interest free funds. We further find that Revenue has not brought any material on record to controvert the findings of ld. CIT(A). In view of these facts, we find no reason to interfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed. - Decided in favour of assessee. Customs 2015 (3) TMI 165 Denial of refund claim - Unjust enrichment - Held that:- This is a matter which should not have travelled to this Tribunal at all. The original adjudicating authority had acted correctly. It has to be noted that refund claim has been made immediately and refund received within the financial year and therefore, question of showing it as expenditure would not arise at all. It cannot also be shown as receivable since the original adjudicating authority sanctioned the refund on 14/12/2012. The importation took place on 7/9/2012. The second payment was made on the advice of department and because of the helplessness of the department to connect payment earlier made to the Bill of entry and make the computer system facilitate clearance of goods. In such a situation, requiring the appellant to prove unjust enrichment is against the spirit of law. Learned Commissioner (Appeals) observed that the assessee has to prove that there was no unjust enrichment beyond any doubt. - Here the Commissioner is requiring an importer to prove beyond any doubt that there is no unjust enrichment when there is a clear case of double payment and the problem that has arisen in the computerized system of the department and inability of the department to help an importer not to make second payment. No importer would be happy to make the second payment and claim refund. For three months, more than ₹ 80 lakhs have been with the Government for which no interest is payable. We find absolutely no justification to uphold the impugned order. - Decided in favour of assessee. 2015 (3) TMI 164 Denial of benefit of Board's Circular No. 20/2011-Cus. dated 15.11.2011 - Enhancement in declared value - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- On plain reading of the Board’s Circular, it is seen that the cutting waste or fabric trims would continuous length with maximum width restriction upto ten inches. In the present case, there is no dispute that the cutting waste is not in a continuous length. The learned counsel for appellant mainly thrust upon her argument that the width is below 10 inches. She has not made any submission that the goods are in running length. On perusal of the impugned order, we find that the goods do not have any continuous length. It is also seen that the appellant have not declared the width in their invoice or in the Bill of Entry. In the invoice it is only mentioned ‘Fabric Waste (cutting waste)’. The DRI officers upon examination of the goods found that it is a cut and waste to small pieces of cuts and bits. Hence, in our considered view the appellant is not eligible to get the benefit of the Boards Circular dated 15.4.2011. - Decided in favour of assessee. 2015 (3) TMI 163 Refund claim - Reassement of Bill of entry after giving benefit of discount as per Tribunal's earlier order [2008 (10) TMI 527 - CESTAT, MUMBAI] - Bar of limitation - held that:- In view of the direction of the Tribunal, there is clear direction to the Revenue to give the benefit (Refund) without any formal application. I further hold that, in case of such directions to grant refund by the Appellate Authority, refund has to be allowed by Revenue, by giving effect of the order. An application by the appellant/assessee is only by way of reminder and not a fresh claim. - It is further directed that the concerned Customs Authority shall grant refund with interest as per Rules within four weeks from the receipt of a copy of the order. - Decided in favour of assessee. 2015 (3) TMI 162 Refund of SAD - goods assessed under RSP without availing the benefit of exemption under Notification No. 29/2010 dated 27.02.2010 - Held that:- Tribunal in the respondents own case [2013 (11) TMI 994 - CESTAT CHENNAI], dismissed the appeals filed by the Revenue. Further, the Tribunal in [2014 (5) TMI 243 - CESTAT CHENNAI], dismissed a batch of appeals filed by the Revenue (Commissioner of Customs (Airport & Cargo), Chennai Vs. M/s. Redington India Ltd. and others - Following these previous orders - Decided against Revenue. 2015 (3) TMI 161 Denial of refund claim - Notification No.102/2007-Cus. dated 14.09.2007 as amended by Notification No.93/2008, dated 01.08.2008 read with Boards Circular No.6/2008-Cus. dated 28.04.2008 and 16/2008-Cus. dated 13.10.2008 - Held that:- Tribunal in the case of Shri Ram Impex India (P) Ltd. (2013 (11) TMI 1354 - CESTAT CHENNAI) rejected the appeal filed by the Revenue - Authorised Representative for the Revenue disputed the payment of VAT, which was not disclosed in the agreement. We find that the Commissioner (Appeals) proceeded on the basis of Chartered Accountant’s Certificate that the incidence of duty was borne by the respondent. Revenue has not disputed the authenticity of the Chartered Accountant’s Certificate in their appeal. It is noted that the Commissioner (Appeals) has already directed the lower authority to verify the evidences submitted by the appellant. In view of that, we do not find any reason to interfere with the order passed by the Commissioner (Appeals) - Decided against Revenue. Service Tax 2015 (3) TMI 183 Levy of service tax on Film Artistes - Discrimination between artistes in theatre & drama and artistes in Film - violation of Article 14 and 19(1)(g) of the Constitution of India - Notification No.25/2012 dated 20.06.2012 - Service tax exemption only to performing artistes in theatre & drama, and not artistes in Film - Film actors performs similar skills as artists performs in theatre or drama - Intent to support native art and cultural - Held that:- From the Judgment [2007 (5) TMI 325 - SUPREME COURT OF INDIA], it is clearly establish, in our view, that taxation statutes have to be dealt with on a different plank with due deference to the legislative intent. Much latitude is allowed to the State for classification upon a reasonable basis, and what is reasonable is a question of practical details and variety of factors which the Court would be reluctant and ill-equipped to investigate. It is in the aforesaid context of a taxing statute that the principles of Article 14 of Constitution of India are sought to be applied to claim relief by the writ petitioner, while, in our view, the two categories are clearly different and distinguishable and cannot be treated at parity. The mere fact that there is an element of drama or acting both in case of theatre and in case of films does not mean that the two activities are identical, taking into consideration the circumstances in which films are made and theatre is performed. In fact we asked the learned counsel for the petitioner as to whether the petitioner would perform at the rates at which theatre artistes perform. It is towards the object of Article 229 of the Constitution of India that a salutory endeavour has been made to give support to native art and culture and encourage them as they suffer from financial constraints. This is not the position of films. - Decided against the assessee. 2015 (3) TMI 182 Denial of refund claim u/s 11B - SEZ - assessee claimed refund of service tax paid thereon under Notification No.9/2009-ST dated 3rd March, 2009, as amended by Notification No.15/2009-ST dated 20th May, 2009 - Department was of the view that the services consumed within the SEZ are exempt from tax. Hence, no refund can be claimed on such exempt input services under the Notifications - Held that:- Following decision of Tata Consultancy Services [2012 (8) TMI 500 - CESTAT, MUMBAI] and Wardha Power Company [2012 (5) TMI 289 - CESTAT, MUMBAI] - Thus the appellant is eligible for refund of service tax paid on input services wholly consumed within SEZ under the provisions of section 11B of the Central Excise Act, 1944, read with section 83 of the Finance Act, 1994, subject of course to the satisfaction of conditions stipulated therein - Decided in favour of assessee. 2015 (3) TMI 181 Waiver of pre deposit - Business Auxiliary service - Revenue contends that appellant undertaken the service of market survey which falls under the purview of business auxiliary service in India - Held that:- Revenue is relying upon the un-amended Rule of Export of Service Rules, 2005. The Rule is amended from 27.2.2010 and the demand is after Feb.2010. In view of this, the demand is not sustainable. In these circumstances, we find that the applicant has made out of a case for total waiver of the dues. Therefore, pre-deposit of the dues is waived and recovery thereof is stayed during the pendency of the appeal - Matter remanded back - Decided in favour of assessee. 2015 (3) TMI 180 Waiver of pre deposit - CENVAT Credit - Management Consultancy Service - Held that:- There is no proposal to classify the service received as 'Business Support Service' at all. Secondly, the Commissioner's decision that the service received can be considered as 'Business Auxiliary Service', in our opinion, prima facie, is not sustainable. Whether it can be correctly classified under 'Management Consultancy Service' or not is an issue which, in our opinion, does not require any consideration when we are considering the issue whether Cenvat credit is admissible or not. If we consider, it amounts to reclassification of service in the hands of receiver who has taken the credit. The assessment of tax payable on service received and the Cenvat credit to be paid is not the responsibility of the service receiver but the service provider. If we take a decision that service receiver should have examined the correctness of the classification, it amounts to reassessment which is also not permissible in law. Therefore, prima facie, we find that the impugned order is not sustainable. Accordingly, requirement of pre-deposit of the adjudged dues is waived and stay against recovery is granted during pendency of the appeals. - Stay granted. 2015 (3) TMI 179 Quantification of assessee's liability - Determination on the basis of date of receipt of services or date of payment for service - Held that:- date of receipt of the services by the appellant, is crucial for the determination of exigibility of Service Tax and not the date of payment for the receipt of service. This position is settled by the Hon'ble High Court of Delhi in the case of Consulting Engineering Services (2013 (1) TMI 434 - DELHI HIGH COURT) and Vistar Construction Ltd. (2013 (2) TMI 52 - DELHI HIGH COURT). Therefore, the matter has to go back to the adjudicating authority for ascertaining the date of receipt of services by the appellant for which they had made payments to the service provider abroad. The appellant is directed to furnish documentary evidence in this regard i.e. the date of receipt of services, so that the adjudicating authority can consider the evidence and thereafter, determine the appellant's liability to Service Tax, if any - Decided in favour of assessee. Central Excise 2015 (3) TMI 174 Reversal of CENVAT Credit - Credit mistakenly taken by head office - Held that:- Goods were received by the appellant directly whereas the credit was wrongly availed by the Head office and the said mistake was subsequently rectified by issuance of reverse invoices on the basis of which the present appellant took credit, I also note that the credit was availed in March 97 and was duly reflected by the appellant in their Return filed for the said period. The Show Cause Notice stands issued on 04.02.2002 i.e. beyond the normal period of limitation. The appellant has also filed the reconciliation statement on record and the Revenue is not disputing the fact of the goods having reached the Gurgaon Factory directly. In such a scenario, the non-following of the procedure by itself cannot be held to be a ground for denial of credit. Accordingly, I set aside the impugned order on merits as also on limitation - Decided in favour of assesse. 2015 (3) TMI 173 Demand of differential duty - Classification of goods - Held that:- Court in previous order has held that the classification of the product manufactured by the appellant would fall under Chapter 54 of Central Excise Tariff Act, 1985 and rejected the claim of the appellant that it would fall under Chapter 56 of Central Excise Tariff Act, 1985. We do not find any merit in the appeal filed by the appellant as regards the issue of classification and following our order dt.29.05.2009 uphold the impugned order which classify the product manufactured by the appellant under Chapter 54. Penalty of ₹ 1 lakh imposed by the adjudicating authority on the appellant under Rule 25 of Central Excise Rules 1944 is unwarranted and the same is accordingly set aside for the reason that appellant is still disputing the classification before Apex Court - appeal filed by the appellant is rejected on the point of classification and allowed on the point of penalty imposed - Decided partly in favour of assessee. 2015 (3) TMI 172 Condonation of delay - Last day of filing appeal was public holiday - Held that:- expiry of prescribed period for filing appeal on a day, when the court is closed, the next working day would be treated as the last date of the limitation. In the present case, the appeal should have been filed before Commissioner (Appeals) on 15.11.2013 which was a holiday and the appellant on the next working day i.e. on 18.11.2013 filed the appeal. In our considered view, the appellant filed the appeal before Commissioner (Appeals) within the condonable period of extended period of limitation under Section 35 (1) of the Central Excise Act, 1944. Hence the Commissioner (Appeals) is empowered to condone the period of limitation with his discretionary powers. Accordingly, we set aside the impugned order and the matter is remanded back to the Commissioner (Appeals) to decide application of the condonation of delay in filing the appeals on merit in accordance with law - Delay condoned. 2015 (3) TMI 171 Waiver of pre deposit - Classification of goods - Classification of Backhoe under Chapter Heading 84322990 or under 84.31 - Held that:- The picture of Backhoe given by the appellants conforms to the claims made on their website regarding its use. As per the appellants website, Backhoe can be very efficiently used in the excavation of soil, foundation for building, trenches for pipeline and cable laying, to handle garbage, widening of rural roads. Indeed in the website agricultural, horticultural or allied activities do not even find a mention in the list of areas where Backhoe can be efficiently used. Tariff heading (84.32) covers agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports ground rollers On the other hand, we find that the order-in-original as well as the order-in-appeal have discussed as to why the impugned goods do not merit classification under Tariff heading 84.32. - this much is prima facie evident that impugned goods do not merit classification under 84.32 and hence are not eligible for the nil rate of duty. Accordingly, we are of the view that the appellants have not made out a case for waiver of pre-deposit - Partial stay granted. 2015 (3) TMI 170 SSI exemption under Notification No. 8/2003-CE (NT) dated 1.3.2003 - Use of other person's brand name - Held that:- Brand name 'Elac' was registered in the name of M/s. K.N. Industries. The applicant filed an application to the Trademark Authority for registration of the brand name 'Elac Excel'. The learned counsel submitted that the brand name 'Elac' and 'Elac Excel' referred are different and therefore demand of duty is not justifiable. He relied upon the decision of the Hon'ble Madras High Court. The adjudicating authority observed that the brand name 'Elac Excel' is akin to 'Elac' belonging to M/s. K.N. Industries and therefore they are not eligible to avail SSI exemption. Dispute relates to brand name 'Elac Excel' which is similar to 'Elac' which will be decided at the time of hearing the appeals at length. However, there is some force in the submission of the learned counsel for the applicant that there is a difference between the two brand names 'Elac' and 'Elac Excel'. Hence, the applicant failed to make out a strong prima facie case for waiver of predeposit of entire dues. At this stage, the learned counsel submits that the applicants are eligible for CENVAT credit of ₹ 30,93,454/- and undertakes not to utilize the CENVAT credit till the disposal of the appeals. In view of that, we direct the applicant to file an undertaking within one month from the date of the receipt of the order to the jurisdictional Deputy Commissioner of Central Excise that the CENVAT credit amount of ₹ 30,93,454/- will not be utilized till the disposal of the appeals. Upon such undertaking, predeposit of the balance dues stands waived and recovery thereof stayed during the pendency of the appeals. - Stay granted. 2015 (3) TMI 169 Denial of CENVAT Credit - Trading activity - Held that:- Appellant had availed credit of service tax paid on the services which are used for trading activity. As per the Cenvat Credit Rules, the credit of service tax is available to the manufacturer or provider of output service if such services are used for manufacture or providing output service. In the present case, the appellants are undertaking the trading activity which is neither a manufacturing activity not output service. The Tribunal in the case of Mercedes Benz India Pvt. Ltd. (2014 (4) TMI 12 - CESTAT MUMBAI) upheld the confirmation of demand and imposition of penalties which were made on the same grounds. In these circumstances, I find no infirmity in the impugned order - Decided against assesse. 2015 (3) TMI 168 Penalty u/s 11AC - Suppression of value of goods - Intention to evade duty - Held that:- appellant has not disclosed the fact regarding consideration amount received in respect of cleaning of raw material. As this expenditure is on the cleaning of raw material which is further used in the manufacture of goods hence it will become part of the assessable value of the goods cleared on payment of appropriate duty. As this fact was not brought to the notice of the Revenue we therefore find no infirmity in the impugned order. - Decided against assessee. 2015 (3) TMI 167 Application for modification of stay order - Undervaluation of the goods - applicant sold the goods to their two dealers, who are related persons, much lower than the price of the unrelated persons on the same day - Held that:- The documents placed by the applicants with the Miscellaneous Application cannot be a basis for modification of the stay order. The balance sheet submitted by the applicant would show huge profit. It is pleaded in the instant application that there is outstanding trade creditors of over ₹ 2.90 Crores whereas the receivables amount to over ₹ 34 Crores. It is also pleaded that the applicant has outstanding loans of over ₹ 49.65 Crores. It is seen from the Balance Sheet that the applicant earned net profit of ₹ 27627962.52. The Ld. Advocate relied upon the decision of the Tribunal in the case of Reliable Poly FIB (I) Ltd. Vs. CCE, Surat [2004 (4) TMI 397 - CESTAT, MUMBAI]. He has also placed the decision of the Tribunal in the case of Indotex Machinery Works Vs. Asst. Collector of CE & Others [1986 (1) TMI 114 - HIGH COURT OF JUDICATURE AT MADRAS], whereby it has been held that stay refused once does not operate as res judicata if party renew request for stay by placing necessary material for justification of the interim relief earlier refused. In the present case, we find that the documents placed by the applicant are new evidences, which were not placed before the Commissioner during the adjudication proceedings at any point of time. So, such evidences cannot be accepted in the Application for Modification of the stay order. - However, time period of making pre deposit is extended - Decided partly in favour of assessee. 2015 (3) TMI 166 Duty demand - Levy of 4% SAD on clearance of goods from 100% EOU to sister concern in DTA - Audit party took an objection to non-payment of SAD on the ground that clearance made to their sister concern would fall under the category of ‘exempted from payment of sales tax’ hence they are liable to pay SAD - Interpretation of benefits of Notification No. 23/2003-cus - Held that:- Following decision of Micro Inks Vs. CCE & ST, Daman [2014 (2) TMI 207 - CESTAT AHMEDABAD] - demand of SAD on such inter unit transfers is set aside - Decided in favour of assessee. CST, VAT & Sales Tax 2015 (3) TMI 178 Whether in the facts and circumstances of the case where the contention of the appellant/assessee that the goods had been returned by the dealer i.e. the present applicant/appellant to M/s Escorts Ltd. Faridabad, on cancellation of the agency and the bills had been duly verified with books of accounts by the assessing authority at the time of assessment, then penalty under Section 14-B(7)(ii) of PGST Act on the ground that the goods were not accompanied by proper and genuine documents shall be sustainable - Held that:- A perusal of the paper book (order of the VAT Tribunal, Punjab dated 21.08.2008) reveals that the appellant was an agent of M/s Escorts Ltd. Faridabad and that its agency was cancelled vide letter dated 18.07.2000. The goods being carried were not for sale and were being carried for being returned to M/s Escorts Ltd. Faridabad. Information regarding this fact was duly generated at the ICC and even a written statement was filed before the AETC explaining the factual and legal position. Assessment for the year 2001-02 had been completed by the assessing authority and all books and documents had been produced and the assessing authority, after duly verifying the documents relating to return of goods of the value of ₹ 5,58, 557/- against bill Nos. 1655 and 1656 to 1681 had accepted the position as taken by the appellant and framed assessment vide order dated 05.05.2008. Once the agency stood cancelled and M/s Escorts Ltd., Faridabad had given a credit note for the goods (facts that have gone unchallenged by the revenue), besides assessment having been framed, bill books and the stand of the appellant having been accepted by the assessing authority that the goods of the value of ₹ 5,58,557/- against bill Nos. 1655 and 1656 to 1681, had been returned by the appellant to M/s Escorts Ltd., Faridabad, on cancellation of the agency, there was no question of there being any attempt to evade tax. A perusal of Section 14(B)7 (ii) of the Act reveals that the sine qua non for imposing penalty is a conclusion on the basis of an enquiry by the concerned officer that there has been an attempt to avoid or evade tax under the Act. The bill Nos. 1655, 1656 to 1681 were produced before the AETC, ICC, (Export), Mehmoodpur, alongwith bill books. However, the same was disbelieved on the ground that the bill book did not find place in the current account books. Once the assessing authority has finalized the assessment proceedings vide order dated 05.05.2008 by accepting the stand of the assessee that the appellant had returned the goods to M/s Escorts Ltd., Faridabad, through bill Nos. 1655, 1656 to 1681 dated 05.05.2001 to M/s Escorts Ltd., Faridabad on cancellation of its agency/dealership and the bills were duly cross verified with the books of accounts and finding was recorded that goods returned as per bill given were only on account of termination of dealership, there was no liability to pay tax on such goods. Therefore, there is no further scope to doubt the stand of the appellant or to impose penalty particularly when the documents produced by the assessee have not been proved to be incorrect. Penalty imposed on the appellant u/s 14- B(7)(ii) of PGST Act on the ground that the goods were not accompanied by proper and genuine documents despite the stand of the appellant/assessee that the goods had been returned by it to M/s Escorts Ltd. Faridabad, on cancellation of the agency and despite the bills having been duly verified with the books of accounts by the assessing authority at the time of assessment vide order dated 05.05.2008 is held to be legally unsustainable. - Assistant Excise & Taxation Commissioner, Information Collection Centre (Export), Mehmoodpur would take steps to refund the sum of ₹ 1,65,000/- imposed by way of penalty to the appellant along with interest @ 12% p.a. w.e.f. the date of deposit of penalty amount by the appellant till date of refund, within a period of 3 months from the date of receipt of certified copy of this order. - Decided in favour of assessee. 2015 (3) TMI 177 Imposition of penalty under Kerala General Sales Tax Act, 1963 - Suppression of turnover - Intention to evade tax - Held that:- Returns filed for the assessment years 2003-04, the petitioner had declared the entire turnover relating to sales of moulded plastic furniture effected by it and had only claimed exemption of the said turnover in the return by stating it to be second sales effected within the State. In other words, this is not a case where the petitioner had chosen to suppress any part of the sales turnover in the returns filed by it for the purposes of attracting the penal provisions under the KGST Act. It is also relevant to note that the issue as to who, among two dealers permitted to use the brand name, is to be the brand name holder for the purposes of Section 5(2) of the KGST Act, and on whom the liability to pay tax on the goods sold under the brand name will rest, has been the subject matter of litigation ever since the introduction of Section 5(2) in the KGST Act with effect from 1998. Petitioner was justified in harbouring a bona fide belief that he would not be treated as the brand name holder in a transaction where he had purchased branded goods from another person, who could also have claimed to be a brand name holder for the purposes of Section 5(2) of the KGST Act. That apart, it is not in dispute that in the returns filed by the petitioner for the assessment year in question, he had declared the entire sales turnover in respect of the sales of moulded plastic furniture effected by him and had also claimed exemption by treating the entire sales as second sales for the purposes of the KGST Act. A mere claim for exemption by an assessee, cannot, in my opinion, be treated at par with a suppression of turnover, for the purposes of attracting the penal provisions under the KGST Act. Neither will the mere claim for exemption make the return an incorrect or untrue return for the purposes of attracting the penal provisions under the KGST Act. In an assessment proceedings that has to follow the filing of a return by an assessee, it is always open to the Assessing authority to consider the claim for exemption made by an assessee and either accept it or reject it for valid reasons. While the petitioner had disclosed the entire turnover of sales of moulded plastic furniture in its returns, he was also justified in claiming an exemption taking into account the position in law which, at the time of filing of the return, was in a state of flux. The findings of the respondent in Ext.P6 order that, by claiming exemption, the assessee had tried to evade payment of tax and had also failed to keep true and complete accounts, does not appeal to me as reasonable on the facts of the instant case. - petitioner is not liable to any amount by way of penalty under Section 45A of the KGST Act for the assessment year 2003-04. - Decided in favour of assessee. 2015 (3) TMI 176 Denial of benefit of set-off as provided under the provisions of sections 14(1)(a), (2) and 26A(7) of the M.P. VAT Act - petitioner used soya seeds in the manufacture of edible oil and DOC - Denial of benefit on the ground that DOC, a by-product, is not taxable, hence, the petitioner is not entitled the benefit of set-off as provided under sections 14(1)(a), (2) and 26A(7) of the VAT Act and the petitioner is liable to pay tax at four per cent in accordance with the provisions of section 26A(5) of the VAT Act - whether in such circumstances, the petitioner is entitled to the benefit of set-off as provided under sections 14(1)(a), (2) and 26A(7) of the VAT Act on entire purchase of soya seeds. Held that:- It is an admitted fact that soya oil and other by-products; sludge are taxable, however, there is no tax on DOC. - Section 14 of the VAT Act prescribes rebate on input tax subject to the provisions of sub-section (5). A rebate of tax shall be claimed or to be allowed to a registered dealer under certain circumstances subject to restrictions prescribed under sub-section (5). Sub-section (5) says that if it is consumed or used for/in the manufacture or processing or packaging of goods declared tax-free under section 16. Refinery would be entitled to set-off to the entire tax paid by it on the purchase of raw material. - manufacturer is eligible the benefit of set-off on the entire amount of tax paid on purchase of raw material and principle of apportionment could not be invoked. In the facts and circumstances of the present case, the judgment of the honourable Supreme Court is applicable because the DOC, a by-product is tax-free and another by-product sludge and main product oil are taxable. Hence, the authority cannot apportion the tax liability after deducting the percentage of proportionate manufacture of DOC, which has been done in the present case. - petitioner is eligible to get set-off on entire raw material purchased by it. - Following decision of COMMISSIONER OF SALES TAX, BOMBAY Versus BHARAT PETROLEUM CORPN. LTD. [1992 (2) TMI 250 - SUPREME COURT OF INDIA] - Matter remanded back - Decided in favour of assessee. 2015 (3) TMI 175 Benefit for unavailed tax at the shifted premises - Notification dated March 24, 2005 - eligibility certificate under the New Incentive Scheme, 1989 for sales tax exemption - Rajasthan Sales Tax Act, 1994 - Held that:- Since incentive was granted to the new industrial unit, for a period of seven years, therefore, the benefits ought to have been allowed to the petitioner till the intervening period. Since, many units which were established in such remote area or district head quarter or otherwise were facing problems relating to irregular/defective supply of power, non-availability of skilled labourers and also lack of infrastructure facility which was not envisaged by the petitioner and others therefore, on account of several representations, from different corners the Government of Rajasthan issued a notification bearing No. 394 dated March 24, 2005 - The honourable apex court in the case of R.B. Jodha Mal Kuthiala v. Commissioner of Income-tax, Punjab, Jammu & Kashmir and Himachal Pradesh [1971 (9) TMI 2 - SUPREME Court], the Allahabad High Court in the case of Anand Gramodyog Samiti v. Commissioner of Trade Tax [2005 (5) TMI 613 - ALLAHABAD HIGH COURT] and the Kerala High Court in the case of Commissioner of Income-tax v. Peermade Tea Co. Ltd. [1994 (10) TMI 23 - KERALA High Court] also came to the conclusion. Considering the facts and circumstances of the case in the light of the above judgments, looking to the purpose, objective and intention of the Notification No. 394 dated March 24, 2005 it is held that the notification is retrospective in operation and applicable to all matters pending and it is clear that the petitioner is entitled to claim benefits of the notification. It was submitted by the learned counsel for the petitioner that the petitioner fulfils all the criteria laid down in this notification. Since, the subsequent notification dated March 24, 2005 bearing SO No. 394, was not available before the Tax Board, therefore, the matter is being remitted back to the Tax Board, who will consider the same afresh in the light of the aforesaid notification in accordance with law. If the terms and conditions specified in the notification stand complied with by the petitioner, the claim deserves to be allowed. - Decided partly in favour of assessee. Indian Laws 2015 (3) TMI 160 Police assistance to secured creditor to enforce a security interest under the SARFAESI Act, 2002 - Section 14 of the SARFAESI Act, 2002 - Section 13(9) of the SARFAESI Act, 2002 - Proceedings before BIFR - Held that:- On the first issue, I have perused the order of the District Magistrate which is at page 51 of the writ petition. The order is dated September 24, 2014. The District Magistrate records perusal of the papers and documents submitted by the respondent nos. 1 and 2. The District Magistrate in his finding observed that reasonable opportunity was afforded to the borrower in accordance with the provisions of the SARFAESI Act, 2002 and that the borrower had failed to repay the loan amount with interest. Considering such aspect, the District Magistrate was of the view that police assistance as required by the respondent nos. 1 and 2 were required to be provided and as such allowed such prayer. No material was placed before me to suggest that the District Magistrate was not apprised of the material facts relating to an application under Section 14 of the SARFAESI Act, 2002.I find no infirmity in the order passed by the District Magistrate dated September 24, 2014. In the facts of the instant case, five creditors of the respondent no. 3 are secured creditors within the meaning of Companies Act, 1956. In respect of the respondent no.3, four secured creditors are “secured creditors” within the meaning of the SARFAESI Act, 2002 also. Three of the four secured creditors within the meaning of the SARFAESI Act, 2002 have proceeded to invoke the provision of the SARFAESI Act, 2002 in respect of the respondent no.3. The aggregate value of the three secured creditors who have invoked the provision of the SARFAESI Act, 2002 being entitled to do so is more than 60% which is above the prescribed limit under Section 13(9) of the SARFAESI Act, 2002. In the instant case, all the secured creditors of the respondent no.3 governed by the provisions of the SARFAESI Act, 2002, excepting one, have taken measures under Section 13 of the SARFAESI Act, 2002. The collective value of the amount outstanding against the respondent no.3 in respect of three secured creditors, governed by the SARFAESI Act, 2002, is in excess of three-fourth of the value of the amount outstanding against the respondent no.3. The reference before the BIFR, therefore, has abated. All and any order of the abatement passed by the BIFR in such reference is a nullity. The writ petition is devoid of any merit. - Decided against the appellant. 2015 (3) TMI 159 Need of a New Policy to regulate the manner of Credit Rating Agencies to assign rating to the borrowers - Direct impact on the ability of the borrowing company to raise loans - Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 exists - Held that:- It is submitted that the general superintendence and regulation of credit rating agencies are carried out by SEBI under Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999. The regulations issued by SEBI cover various aspects viz., registration of rating agencies, fit and proper criteria for rating agencies, rating process and methodology and its records, transparency and disclosures avoidance of conflict of interest, code of conduct, etc. The Reserve Bank accredits CRAs for the limited purpose of Bank Loan Ratings to enable banks to use their ratings for capital adequacy purposes under Basel III Capital Adequacy Framework. Also there is an annual review of accreditation of these Credit Rating Agencies by the RBI itself as a measure of check and balance. It is further pointed out that there has to be a play insofar as the exact methodology adopted by any Credit Rating Agency is concerned and that six such agencies were accredited by the RBI. A borrower has the option, in fact, to approach any one or more than one of the agencies for obtaining its credit rating. The aforesaid, thus, shows that it is not as if the matter has been left unattended, but has received the attention of the RBI, which has accredited the agencies and has made the Regulations applicable ipso facto, since that task had already been carried out under the Regulations of how a rating has to be arrived at.Thus, what is good for securities has also been found good for the loans to be availed from banks and financial institutions. It is trite to say that it is not the function of this Court to get into the economic policy and regulation framework and once the matter has received the attention of the concerned authorities, who have made applicable certain regulations to the matter in issue, nothing more is required. We are, thus, of the view that no directions are required to be passed in the present petition, which stands closed.
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