Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 23, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction under sec. 10B - sale proceeds of the computer software has been brought by the assessee within the extended period of 12 months by the Reserve Bank of India and hence, is includible in the deduction allowable under sec. 10B - AT
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Provisions of section 194J do not apply to the franchisee fees paid - AT
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No tax is required to be deducted on service tax component - AT
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TDS u/s 192 OR 194J - payment made to the retainers is not subject to TDS u/s 192 of the act but u/s 194J - AT
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Set off of business loss against the income added by the AO u/s.69A allowed - AT
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Denial of exemption under section 80P on the mere ground of belated filing of return by the assessee concerned not justified - HC
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Addition on account of interest income - if assessee does not pay interest for a period of exceeding six months then interest income should not be recognized in its books of account - AT
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Speculation loss - purchase and sale of shares - provisions of Explanation to Sec. 73 will not be applied where the principal business of the assessee is that of granting loans and advances - AT
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Transfer of fund for subsequent distribution to the members before payment of tax is not a 'deductible expenditure' in computation of business income of the Assessee-Co- operative Society - HC
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TDS liability - no disallowance could be made u/s 40(a)(ia) for short deduction of tax at source - AT
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Export sales directly made to the consignee through the sister concern was the deemed export of the assessee - deduction u/s 10B allowed - AT
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Addition u/s 41 - Deferred sales tax liability being the difference between the payment of net present value against the future liability credited by the assessee under the capital reserve account in its books of account was a capital receipt and could not be termed as remission/cessation of liability - AT
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Jurisdiction of AO by computing income of the assessee - Assessing Officer has acted beyond the jurisdiction by computing income of the assessee on the basis of the income as per Section 143(3) where as the intimation was u/s 143(1)- AT
Customs
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Revocation of CHA licence is a harsh penalty for giving blank signed forms to third parties, if there is no other role played either in the substitution of goods or tampering with custom seal - HC
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No new conditions can be imposed by way of trade notice, in the absence of any amendment to Import-Export policy framed by Central Government by publishing a notification over and above the three stipulated in Chapter 12 of Exim Code for import of poppy seeds - HC
FEMA
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Assistant Director, who is also a complainant can file appeal before the Special Director under Section 17(2)of FEMA Act - HC
Wealth-tax
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Liabilities can be deducted on pro-rata basis under W.T. Act - AT
Service Tax
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Increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to the terms of the contract - SC
Central Excise
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Imposition of Central Excise duty on jewellery Constitution of sub-committee of the High Level Committee - Circular
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Compliance of sub-section (2) of Section 35B of the Central Excise Act, 1944 - Authorisation made in Annexure-3 of the affidavit filed by the appellant to prefer appeal without same being filed along with appeal is surely an incurable defect and the same cannot be rectified by filing an authorization letter - HC
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Interest under Section 11AA - After amendment with effect from 8.4.2011, Section 11AA itself is removed. Therefore, all types of cases where there is a determination under Section 11A(2) are treated alike irrespective of the presence or absence of fraud, collusion, etc. - HC
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When two mandatory conditions viz. goods received in the factory premises and the evidence of payment of duty are fulfilled, Modvat credit should be allowed - Rule 57-G is only procedural in nature - HC
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When the Tribunal pass the order on production of necessary documentary proof and confirmation of the same by both sides, the appeal filed to a higher forum is non-maintainable - HC
Case Laws:
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Income Tax
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2016 (4) TMI 827
Exemption u/s 11 denied - transfer of fund for subsequent distribution to the members before payment of tax - whether the respondent society is managing its activity on behalf of its members in the most beneficial way by selling the products manufactured by the members? - members of the Respondent-Society are 'Maliks' who are owners of land (Agar) on which salt is manufactured - Held that:- 'Income' is defined under Section 2(24) of the Act and it includes profits and gains. The above facts lead us an irresistible inference that the 'Agar' (the land) belonging to the 'Maliks' is used to manufacture salt and its by-product and the same is sold by the Assessee-Society itself. In the course of its business, Society earns 'profits' which falls within the definition of 'income' under Section 2(24) of the Act. Therefore, in our considered view, the Assessing Authority was right in holding that the transfer of fund for subsequent distribution to the members before payment of tax is not a 'deductible expenditure' in computation of business income of the Assessee-Co- operative Society and further that the income declared after disbursement of profits is not logical and has no relevance to determination of taxable profit under the Income Tax Act. Revenue collection augments State exchequer. A prosperous treasury is a means for development leading to good living of citizenry. Income Tax one of the tributaries which flows into State coffers. Therefore, we are of the view it is imperative for the Courts to opt strict interpretation while dealing with fiscal laws. Based on evidence and admission of appellant, we have held, that the Society has transferred funds to Distribution Pool before offering to Tax. On facts, we have held that, the Society has indulged in the enterprise of manufacture and sale of salt. Non-compliance of statutory provisions is sought to be justified by the Society on a plea that Society indulges in such enterprise on behalf of members of the society and tax demand on the entire income would run counter to cooperative movement. There can be perhaps no disagreement with the proposition that Co-operative movement is benevolent to its members. Nonetheless, an ideology however lofty does not ipso facto exempt such entity from the solemn duty and sacrosanct obligation of obeying the law of the land nor does it insulate the entity from the vigour of penal actions in case of default. Thus, assessee a co-operative entity which runs a business enterprise is duty bound to offer its profits to tax before diverting any funds to the Distributable Pool Fund Account. - Decided in favour of revenue
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2016 (4) TMI 826
Exemption under section 80P - assessee is a primary agricultural credit society - Held that:- Tribunal erred in law in deciding the issue regarding the entitlement of exemption under section 80P against the appellants. We hold that the primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption. Denial of claim on belated filing of return by the assessee - Held that:- Tribunal was not justified in denying exemption under section 80P of the IT Act on the mere ground of belated filing of return by the assessee concerned. A return filed by the assessee beyond the period stipulated under section 139(1) or 139(4) or under section 142(1) or section 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under section 80P of the IT Act. - Decided in favour of assessee.
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2016 (4) TMI 825
TDS u/s 194C OR 194I - disallowance u/s 40(a)(ia) - Held that:- There is nothing in the section which say that disallowance could be made u/s 40(a)(ia) of the Act for short deduction of tax at source. - Decided in favour of assessee Addition being liquidated damages paid on the breach of a contract - Held that:- CIT(A) has recorded his observation in detail in respect of deletion of the addition made by the ld. Assessing Officer by recording a clear finding that the amount paid by the assessee are in the nature of compensation paid to the parties for failure to deliver any or all the goods, or to perform the specified terms and conditions within the period specified under the contract. By no stretch of imagination can such expenses be hit by Explanation 1 to sec. 37(1) of the Act, as there was neither any breach of law nor any offence committed or the said expenditure was of the nature that was prohibited under law. - Decided in favour of assessee
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2016 (4) TMI 824
Deduction u/s 10B - Export sales made through the sister concern - Held that:- Export sales directly made to the consignee through the sister concern was the deemed export of the assessee and deduction u/s 10B of the Act was available. We direct the AO to allow the deduction u/s 10B of the Act to the assessee on the export sales made through the sister concern M/s Stone World and accordingly the disallowance made by the AO is deleted. - Decided in favour of assessee
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2016 (4) TMI 823
Adhoc disallowance made u/s. 14A of the Act for computing book profits u/s. 115JB of the Act - Held that:- As relying on GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] issue is Decided against assessee Disallowance u/s 14A - Held that:- Assessee had not used borrowed funds to earn exempt income, that the FAA discussed the issue at length and held that there was no evidence to prove that the assessee had not used its own funds for earning exempt income. In these circumstances, we are of the opinion that there is no legal infirmity in the order passed by the FAA as far as interest expenditure is concerned. We further find that FAA had restricted the administrative/managerial disallowance@ 1%. The AO had not given any reason for making the disallowance. Therefore, confirming the order of the FAA, we decide the effective GOA against the AO. Addition u/s 41 - difference between the sales tax liability and the net value paid under a scheme of Govt. of Maharashtra - Held that:- Deferred sales tax liability being the difference between the payment of net present value against the future liability credited by the assessee under the capital reserve account in its books of account was a capital receipt and could not be termed as remission/cessation of liability and, consequently, no benefit would arise to the assessee in terms of section 41(1)(a) - Decided against the AO.
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2016 (4) TMI 822
Capital gain addition - jurisdiction of AO by computing income of the assessee on the basis of the income as per Section 143(3) - Held that:- The Assessing Officer has acted beyond the jurisdiction by computing income of the assessee on the basis of the income as per Section 143(3) where as the intimation was u/s 143(1). The CIT(A) acted beyond its power by directing the Assessing Officer to tax the capital gains in respect of sale of land at Gurgaon, though, there was no addition made by the Assessing Officer in the assessment order to that respect. Capital gain is an independent and different source of income and was not the subject matter of appeal before him nor was the issue considered by the Assessing Officer by framing an assessment order. Instead, the Assessing Officer termed the same as commission on the sale of land. CIT(A) cannot touch upon an issue which does not arise from the order of the assessment and was outside the scope of the order of the assessment - Decided in favour of assessee
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2016 (4) TMI 821
Set off of business loss against the income added by the AO u/s.69A - Held that:- when two views are possible on the same issue the view which is favourable to the assessee should be followed in view of the decision of Hon’ble Supreme Court in the case of Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ). In this view of the matter, we hold that the assessee is entitled to get set off of ₹ 13,86,925/- out of the addition of ₹ 28,94,581/- made by the AO u/s.69A of the I.T. Act. - Decided in favour of assessee
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2016 (4) TMI 820
Speculation loss by virtue of Explanation to Sec. 73 of the Act as “business loss” on account of holding principal business of assessee as granting loan and advance - Held that:- The provisions of Explanation to Sec. 73 of the Act will not be applied where the principal business of the assessee is that of granting loans and advances and such company is also in the business of purchase and sale of shares, then the activity of purchase and sale of shares would not attract the provisions of Explanation to Sec. 73 of the Act. We have already held that the fund deployed in lending activity exceeds the fund deployed in share trading activity on a consistent basis over a period of time. Hence the principal business of assessee is that of granting loans and advances and thereby outside the ambit of Explanation to Sec. 73 of the Act. Hence, the share trading loss of claimed by the assessee cannot be construed as speculation loss and accordingly we have no hesitation in upholding the order of the Learned CIT(A) - Decided in favour of assessee. Addition on account of interest income - Held that:- As per the guidelines of RBI if assessee does not pay interest for a period of exceeding six months then interest income should not be recognized in its books of account. The guideline of RBI is very much applicable to assessee as it is NBFC and governed by regulations of RBI. We also find that various courts has decided that real income should be brought to tax merely assessee has booked the income in its books of account. It does not mean that it has become the income of assessee.- Decided in favour of assessee. Accrued interest - Held that:- Assessee has given loan to M/s Shaw Wallace & Co. on interest but assessee did not account for the interest income due to the dispute which then was pending in the court of law. M/s Shaw Wallace & Co. paid the interest amount after deducting TDS in AY 2003-04 and accordingly assessee has booked the income in that year. However, AO disagreed the view of assessee on the ground that the income was accrued in the AY 2001- 02 so it was to be offered for tax in that year. Before us Ld. AR submitted that this issue is already covered in favour of assessee by this Tribunal in assessee’s own case - Decided in favour of assessee.
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2016 (4) TMI 819
TDS u/s 192 OR 194J - payment made to the retainers - Held that:- The contract of retainers are valid for one year from the date of effective commencement of the provision of services. The remuneration provided in the agreement is without any provision for provident fund, gratuity, etc. on cancellation of contract of retainer ship the lump-sum amount stands forfeited without any recourse even on a pro rata basis. If the assessee misses to cancel this contract. It will help to provide for 15 days’ notice period to the retainer. In case of absence in excess of specified number bay number of days in the month. A specified sum per day would be deducted from the payment to be made to the contract. There is no provision for change in the services by either party’s entered into by this agreement. Of course the contract of service of retainer ship also provide that the retainer would be required to meet the deliverables as required by the organization which would be subject to the rules and regulations of the organization is laid down in relation to conduct, discipline and other matters. Admittedly, there is such condition in the service contract. However, these conditions are necessary for the purpose of maintaining the standard of services of the organization to the outside customers. Therefore, this terms and conditions cannot say that it puts the retainer in the control of the assessee in the same manner as it puts on its employees. On reading of these 2 agreements, one of employment and another of retainer ship we are of the view that the retainer ship contracts are not employment contracts and employer, employee relationship does not subsist in case of retainer ship contracts. Therefore, we are of the view that payment made to the retainers is not subject to TDS u/s 192 of the act but u/s 194J of the Act. - Decided against revenue TDS on service tax component - Held that:- CBDT has issued a circular No. 1 2014 on 13/01/2014 wherein it has been provided that that wherever the service tax component comprising the amount payable to a resident is indicated separately the tag shall be deducted at source on the amount paid or payable without including such service tax component. The above circular has not laid down any condition, as per para No. 3 of that circular. In view of this, we hold that that no tax is required to be deducted on service tax component - Decided against revenue TDS u/s 194J - franchisee fees paid by the assessee - Held that:- The dominant object of the agreement is that the assessee’s trademark should be exploited for the mutual benefit of the parties and the technical know-how that is being owned by the assessee. The licensee are using it for their own benefit. Regarding the consideration also, it is flowing from franchisee to the assessing and not from assessee to the franchisee. Therefore, here. The provision of the services are dominantly provided by the assessee to the franchisee and for which the consideration is received. The provisions of section 194, J are applicable in case, when the assessee makes any payment to a resident assessee for the specified services. Here, in this case the payment is received by the assessee from franchisee owners. It is only in the modus operandi of the collection of the fees wherein assessee transfers the money to the franchisee. We confirm the finding of 1st appellate authority holding that provisions of section 194J do not apply to the franchisee fees paid by the assessee - Decided against revenue
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2016 (4) TMI 818
Disallowance of deduction under sec. 10B - Held that:- Departmental Representative could not point out any specific mistake in the order of the Commissioner of Income Tax (Appeals). Further, no material was brought on record by the Revenue to controvert the finding of the Commissioner of Income Tax (Appeals) that deduction under sec. 10B was all along allowed to the assessee since Assessment Year 2006-07 in an assessment completed under sec. 143(3) of the Act. We are alive to the fact that in income tax assessment, principles of res-judicata are not applicable, but in the income tax proceedings consistency maintained on any issue, which has been decided and the decision should not be altered without there being change in the facts requiring it to do so. Hence, we find no infirmity in the order of the Commissioner of Income Tax (Appeals), which is confirmed and the ground of appeal of the Revenue is dismissed. - Decided in favour of assessee Whether the assessee did not fulfill the conditions laid down in the provisions of sec. 10B(2)(i) & 10B(3) of the Act? - Held that:- Commissioner of Income Tax (Appeals) after considering the submissions of the assessee as well as remand report received from the Assessing Officer under sec. 250(4) of the Act wherein the Assessing Officer verified the date of receipts and opined that the sale proceeds of the computer software has been brought by the assessee within the extended period of 12 months by the Reserve Bank of India and hence, is includible in the deduction allowable under sec. 10B of the Act, allowed the appeal of the assessee. No error could be pointed out in the finding of the Commissioner of Income Tax (Appeals) by the Departmental Representative - Decided in favour of assessee
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2016 (4) TMI 817
Interest paid to the HO and interest received from Indian branches - Held that:- This issue appears to be covered against the Revenue by the decision of the Calcutta High Court dated 23rd December 2010 in ABN Amro Bank(2010 (12) TMI 340 - CALCUTTA HIGH COURT ). This Court declines to frame any question on this issue of interest paid to the HO as well as the interest received from the Indian branches. Deferred bank guarantee commission - Held that:- This issue appears to be covered in favour of the Assessee by the decision of the Calcutta High Court in CIT v. Bank of Tokyo Ltd. (1993 (5) TMI 172 - CALCUTTA HIGH COURT ). Accordingly, this Court declines to frame any question on this issue. Interest on ECB - Held that:- As regards the interest received on interest on ECB and deduction under Section 44C of the Act, the question related to this issue appears to have not been decided by the ITAT in favour of the Assessee, but remanded to the AO for a fresh decision since it held that the loan agreements filed as additional evidence has to be considered for arriving at the correct taxability of interest.In that view of the matter, no substantial question of law arises for consideration of this Court. Applicability of Section 115JB - Held that:- The ITAT has after an elaborate discussion had come to the conclusion that the Assessee's claim for lower tax will have to be accepted because Section 115JB is subject to Section 90(2) of the Act and the taxable income of the Assessee would have to be computed in terms of Article 7(3) of the DTAA. What is significant is that the profit and loss account of the Assessee has not been prepared in terms of Part II of Schedule VI of the Companies Act, 1956 and in fact could not have been prepared in terms thereof. Consequently, the question of applicability of Section 115JB did not arise. As rightly pointed out till the insertion of Section 115JB, banking companies were required to prepare their accounts in terms of special acts that they were governed by, and therefore there were no computation provisions as regards such banking companies. The change brought out by Section 115JB was therefore not retrospective.The reasoning and the conclusion of the ITAT on this issue appears to suffer from no legal infirmity. Consequently, the Court declines to frame any question on this issue as well.
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2016 (4) TMI 816
Question for adjudication is whether the Authority failed to exercise its jurisdiction in making the intimation. Submissions are to be made and heard on that question along with on the further question as to what is an order under the Income-tax Act, 1961, whether an intimation under Section 245 proposing to take steps, which steps have been taken thereafter, does or does not amount to an order? List this writ petition on 18.04.2016
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2016 (4) TMI 815
Validity of reopening of assessment - reasons recorded - Held that:- The impugned notice under section 148 of the Act has been issued on 25.03.2015 for reopening the assessment for assessment year 2008-09, which is clearly beyond a period of four years from the end of the relevant assessment year. On a perusal of the reasons recorded it is amply clear that there is nothing stated therein to the effect that there was any failure on the part of the petitioner to disclose fully and truly all material facts. Thus, the second condition precedent for exercise of powers under section 147 of the Act is clearly not satisfied. Moreover, even as regards the first condition, namely, that the Assessing Officer should record satisfaction that income chargeable to tax should have escaped assessment, in the light of the reasons recorded by this court in the case of Shri Chalthan Vibhag Khand Udhyog Sahakari Mandali Ltd. v. Deputy Commissioner of Income Tax (2015 (7) TMI 297 - GUJARAT HIGH COURT ), it cannot be said that on the reasons recorded for reopening the assessment, the Assessing Officer could have formed the belief that income chargeable to tax has escaped assessment. Therefore, even the first condition precedent for exercise of powers under section 147 of the Act, is not satisfied. Under the circumstances, the impugned notice issued under section 148 of the Act cannot be sustained. - Decided in favour of assessee
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2016 (4) TMI 814
Determination of income from house property - Held that:- The assessee claimed that the said property was prematurely vacated by the tenant and remained vacant. However, nothing is brought on record to substantiate that the lease agreement was not in existence for the year under consideration and what were the reasons for vacating the premises. In the present case, it is noticed that the assessee claimed that the premise was vacated premature due to hanging sealing drive by MCD and later on the premise was sealed by MCD on 09.11.2006, the said fact has been mentioned by the ld. CIT(A) in para 5.3 of the order dated 14.03.2012 passed in the case of co-owner Smt. Amita Garg. However, these facts were not brought by the assessee before the AO and nothing is mentioned in the impugned order of the ld. CIT(A) that new evidences were admitted under Rule 46A of the Income Tax Rules, 1962. It is well settled that nobody should be condemned unheard as per maxim “audi alteram partem” but in the present case, it appears that opportunity was not given to the AO while admitting the fresh evidences, if any. In the instant case, it is also noticed that the assessee on the one hand claimed that the premise was sealed on the other hand it claimed that a portion of the property was given on rent to M/s Global Realty Ventures Ltd. @ ₹ 5,000/- per month and the said company was taking care of the rented property. From the said submissions, it is not clear that when M/s Global Realty Ventures Ltd. was taking care of the property then why the service charges were not paid to the said company, on the contrary, the rent was received. It is also not clear when the property in question was sealed on 09.11.2006 as mentioned in para 5.3 page no. 6 of the order dated 14.03.2012 by the ld. CIT(A) in the case of Co-owner of the property then how it was given on rent to M/s Global Realty Ventures Ltd. From the aforesaid discussion we are of the view that the facts of the present case were not appreciated by the ld. CIT(A) in right prospective. Therefore, we set aside the impugned order and remand the issue back to the file of the ld. CIT(A) for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Interest paid on the loans raised for making the investment in the partnership firm - Held that:- In the present case, it is noticed that the claim of the assessee was that the loans were raised for making the investment in the partnership firm and from the said firm, the assessee earned the interest income, therefore, the interest paid on the loans raised for making the investment in the partnership firm was allowable against the interest income earned. However, in the present case, it is not clear from the material available on the record as to whether the assessee made the investment in the partnership firm from the interest bearing loans on which the interest of ₹ 5,58,089/- was paid and that there was a direct nexus between the investment made in the partnership firm and interest bearing loans raised. We, therefore, in the absence of clear facts available on record, deem it appropriate to set aside this issue also to the fie of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2016 (4) TMI 813
Sale of shares - short term capital gain/long term capital gain or business income - Held that:- The assessee has not used borrowed funds. It has not claimed administrative expenditure. The only circumstances, which is against the assessee is number of transactions. But that is only one circumstance amongst others required to be appreciated by the adjudicating authority to collect the intention of the assessee while making investment. In our opinion, the ld.Revenue authorities have not appreciated the transactions in right perspective. We have also been appraised that even in subsequent years, the transactions of investment by the assessee have not been disturbed. In view of the above discussion, we allow the appeal of the assessee and direct the AO to treat the assessee as investor and the gain arisen to the assessee on transfer of shares is to be treated under the head “capital gain" - Decided in favour of assessee
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2016 (4) TMI 812
Reopening of assessment - Held that:- AO had not proved that the escapement of income was result of failure on part of the assessee to disclose fully and truly the material facts for making the assessment, we hold that the reopening was not valid. Effective ground of appeal (GOA-3)is decided in favour of the assessee. The other arguments like change of opinion or re-opening was based on an audit objection are not being decided, as there is basic legal flaw in re-opening. The AO has not mentioned that the assessee had failed to disclose material fact. Proving of the said fact is the next stage. Therefore, as stated earlier, we hold that notice issued u/s. 148 and consequent assessment was not valid.- Decided in favour of assessee
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2016 (4) TMI 811
TDS u/s 194J - Treatment of Roaming charges paid to various telecom operators to be in the nature of Fees for technical services and liable to Tax Deduction at source ('TDS') - 'assessee in default' u/s 201(1) - Held that:- If any person delivers any services through his skills, or experience, or make available any such services either through aid of any machines, equipment or any kind of technology, then rendering of such services can be reckoned as "technical services". There should be a constant human endeavor or involvement of the human interface during the process of rendering of technical services. On the contrary, if any technology or machine developed by human is put to operation automatically, wherein it operates without much human interface or human intervention, then usage of such technology or machine cannot per se be held as rendering of "technical services" by human skills. It is obvious that in such a situation some human involvement could be there but it is not a constant endeavour of the human in the process. Here in this case, post Bharati Cellular Ltd.,[2010 (8) TMI 332 - Supreme Court of India ], whereby, AO was required to examine the technical experts cannot be held to be conclusive at this stage qua the concept of human involvement in the process of roaming, because in such cross examinations, as incorporated by the AO in the impugned order, there is inherent contradiction and if we go by the latest principle laid down by the Hon'ble Supreme Court in the case of Kotak Securities Ltd (2016 (3) TMI 1026 - SUPREME COURT ), then the whole test of constant human intervention and human interface fails in the case of roaming charges. However, we are not entering into the semantics of the controversy whether human involvement / intervention is there qua the payment of roaming charges. We are keeping this issue open and our observations made above are not final conclusion on this matter, because in the case of Vodafone Essar Mobile Services Ltd., which order has been quoted by the AO extensively has not stood scrutiny or concluded by any appellate authorities or any court, especially in light of any rebuttal which may come from the side of assessee. Thus, we are refraining from deciding the first issue before us. Whether assessee can be treated as 'assessee-in-default' under section 201(1) - Held that:- we find that Ld. CIT(A) without perusing the finding of the AO as noted in the order, has recorded a wrong finding of fact that assessee has not filed any declaration of the deductees and the details of their income in their return of income, wherein, the said payments have been incorporated. From the perusal of the assessment order, especially, in the second last page, as noted above the AO himself has held that, the assessee could not be treated as 'assessee-in-default' in terms of section 201(1) in wake of assessee having furnished declaration from the payee in this regard. Once there is a categorical finding by the AO, then without any contrary material on record to rebut his finding or notice by the CIT(A), such a finding of the CIT(A) is wholly erroneous, which cannot be sustained. Thus, we hold that when the AO himself has held that assessee is not in default in terms of section 201(1) in wake of evidences filed before him, then without any defect or any material to rebut, there cannot be any deviation from the order of the AO and accordingly, observation and finding of the CIT(A) with regard to section 201(1) is set aside and is hereby reversed. - Decided in favour of assessee Liability of interest under section 201(1A) - Held that:- If deductees have themselves incurred huge losses and have shown these losses in their return of income on which no income-tax is payable then, there is no occasion to pay tax by the deductees and hence, in such a situation, neither the assessee can be held to be assessee-in- default for nor non-deduction of the tax for amount paid by the deductees would entail levy of interest under section 201(1A). However, this fact as stated by the assessee needs verification from the end of the AO, whether the deductees have incurred losses during the year and whether they were not required to pay any taxes on such payments. If contention of the assessee as raised before the CIT(A) is found to be correct then no interest under section 201(1A) should be charged and accordingly relief should be given.
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2016 (4) TMI 810
Penalty u/s. 271(1)(c) - disallowance of capital loss, pertaining to receipt arising out of sale of research and development of capital assets - Held that:- On this issue the Hon'ble Bombay High Court, in quantum, has admitted the substantial question of law as noted above. In view of these facts, we find that the issue is squarely covered by the decision of the jurisdictional High Court in assessee's own case and also of Hon'ble Delhi High Court in the case of Liquid Investment and Trading Co. [2010 (10) TMI 1021 - DELHI HIGH COURT] wherein it is held that whenever the assessee had preferred appeal in Hon'ble High Court under section 260A of the Act, which has been admitted and substantial question of law frames, that itself shows that the issue is debatable and for that reason the penalty under section 271(1)(c) of the Act cannot be levied. We are of the view that Hon'ble Jurisdictional High Court has clearly laid down the principle that once Hon'ble High Court admits the substantial question of law in quantum appeal of the assessee, that itself shows that the issue is debatable and for that reason penalty u/s. 271(1)(c) of the Act cannot be levied. - Decided in favour of assessee.
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2016 (4) TMI 809
Refusal to admit additional evidence - Held that:- We notice that the assessee could collect various evidences only after passing of the assessment order. According to the assessee, these additional evidences are vital documents which are required to be considered in order to adjudicate the issue in a judicious manner. The principle "Audi alteram partem", i.e. no man should be condemned unheard is the basic canon principles of natural justice and accordingly we find merit in the contentions of the assessee that Rule 46A of the Income Tax Rules cannot be over ride the principles of natural justice. Hence we are of the view that the learned CIT(A) was not justified in refusing to admit the various additional evidences furnished by the assessee. Since the assessee was not given opportunity to contradict the findings given by the AO by not admitting the additional evidences, we are of the view that the Ld CIT(A) should re-adjudicate all the issues afresh by admitting the additional evidences. Accordingly, we set aside the order of learned CIT(A) and restore all the issues to the file of the learned CIT(A) with the direction to admit the additional evidences that may be furnished by the assessee. After admitting the same, the learned CIT(A) may call for the remand report from the Assessing Officer, if he found the same necessary. After confronting with the remand report, if any, that may be furnished by the AO with the assessee, the learned CIT(A) my take appropriate decision in accordance with law. - Decided in favour of assessee for statistical purpose.
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2016 (4) TMI 808
Disallowance of interest made u/s 36(1)(iii) - Held that:- In the present appeal, the accounts were mixed and the disallowance was made by the ld. Assessing Officer on the plea that the assessee could not prove that only surplus funds were given for acquisition of fixed asset. However, the claim of the assessee is that the own networth of the assessee is 124.54 crores and unsecured interest free loans from the promoter was ₹ 74.78 crores and even the current year net profit is much more than the investment in capital asset. The ratio laid down in CIT vs Reliance Utilities and Power Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT ), wherein, the assessee was having sufficient interest free funds of its own and apart from substantial share holder funds, it is presumed that investment in sister concern were made by the assessee out of interest free funds, thus, no part of interest on borrowings can be disallowed on the basis that investment were made out of interest bearing funds, supports the case of the assessee. Disallowance of interest made u/s 36(1)(iii) deleted - Decided in favour of assessee
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2016 (4) TMI 807
Penalty u/s 271(1)(c) - Held that:- In the present case on hand, the assessee right from the beginning contends that he has not maintained regular books of accounts, so as to say whether those 12 receipts which are the basis for estimation of income was accounted in the books of accounts or not. The assessee explained that he has fairly estimated his income based on the available information and arrived at annual gross receipts of ₹ 20 to 25 lakhs and after all expenses for maintenance of hospital, net income would be around ₹ 15 lakhs which is probable and estimated. However, he disclosed ₹ 20 lakhs which is over and above his estimated income with a request to immunity from the penalty proceedings. The assessee surrendered the income during the course of survey and also paid taxes before filing the return of income. Though, A.O. assessed slightly higher income over and above income declared by the assessee, which was on account of referral income from two hospitals amounting to ₹ 2,14,177/- which is subsumed in the extra income declared during the course of survey. The A.O. had his own apprehension that assessee would not have declared his true and correct income, if survey could not taken place. Whether survey is taken place or not, the fact remains that the due date for furnishing return for both the assessment years was not over as on the date of survey. Therefore, there is no scope for such suspicion and surmises in the penalty proceedings. This is not a fit case for levy of penalty under explanation 1 and 3 of section 271(1)(c) of the Act, as the conditions stipulated for levy of penalty is not fulfilled. The explanations offered by the assessee under explanation 1 of section 271(1)(c) of the Act appeared to be bonafide. The conditions stipulated under explanation 3 of 271(1)(c) of the Act are not fulfilled to hold that the assessee shall deemed to be concealed the income so as to levy penalty. Therefore, we direct the A.O. to delete the penalty of ₹ 10 lakhs levied u/s 271(1)(c) of the Act. - Decided in favour of assessee
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2016 (4) TMI 806
Addition on unexplained peak cash credit - Held that:- The peak credit submitted by the assessee before the AO had not been controverted by the lower authorities as such there was debit balance which means the assessee firm had advanced the money from the regular books of account. Therefore, we delete the addition confirmed by the ld. CIT (A) as fund advances from the regular cash book but the transactions of loan were recorded in diary on which assessee earned the interest & had not been shown in regular books of account. Thus we confirmed the addition on account of interest at ₹ 20,000/-. For A.Y. 1999-2000, the ld. AO had not given credit of investment in purchase of ₹ 20,90,604/- against unexplained peak cash credit of ₹ 19,60,000/- which is tantamount to double addition. Therefore, addition made on account of unexplained cash peak credit of ₹ 19,60,000/- is also deleted in A.Y. 1999- 2000. - Decided partly in favour of assessee
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2016 (4) TMI 805
Assessment u/s 153A - disallowance of interest U/s 36 - Held that:- The notices U/s 153A were issued on 15/1/2010 in all the years. Even for A.Y. 2007-08 in both the cases, no notice U/s 143(2) was issued on or before 31/8/2008. It is settled law when no assessment proceedings are abated on the date of search, no notice can be sent U/s 153A of the Act to the assessee in the case of no incriminating documents were found and seized during the course of search. Therefore, we have considered view that notice issued by the Assessing Officer U/s 153A for A.Y. 2004-05, 2005-06 and 2007-08 in the case of Damodar Das Agarwal and for A.Y. 2004-05 and 2007-08 in the case of Nirmal Kumar Agarwal are out of jurisdiction, accordingly we quash the order of the Assessing Officer and confirmed by the ld CIT(A). We do not find any reason to make disallowance of interest U/s 36 of the Act for A.Y. 2009-10 in the case of Damodar Das Agarwal as the assessee has capital ₹ 1.72 crores against the investment of ₹ 1.26 crores and loan and advances of ₹ 42.36 lacs. Capital is more than investment made and loan advance given. The decision of Hon’ble Bombay High court in the case of CIT Vs. Reliance Utilities & power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) is squarely applicable in the case of assessee. Further the ld Assessing Officer has not established the nexus between the interest bearing loan with interest free advances given, therefore, we also delete the addition made in the A.Y. 2009-10 in regular assessment. - Decided in favour of assessee
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2016 (4) TMI 804
Long term capital gain - Held that:- The assessee had no control over the said property. We further note that it conveyance deed was executed in favour of the purchasers of flats through the cooperative society to which the assessee was also confirming party and a sum of 2,47,60,250/- was paid by the flat owners to the builders M/S DCPL and the assessee did not get anything out of the sale consideration. The developer DC PL had paid the income tax on the income resulting from the consideration of ₹ 2,47,60,250/-. So far as the assessment by the AO of long term capital gain based on the sale consideration received by the M/S DCPL is concerned , the action of AO is totally wrong and unacceptable especially when the consideration flowed directly to the builder from the purchasers of the flats and nothing was received by the assessee. It is also an undisputed fact that the builder had paid the due taxes on the profits earned by it and income from the same transaction could not be taxed twice firstly in the hands of developers M/.S DCPL who received the consideration actually and second in the hands of the assessee who was just confirming party to the conveyance deed. In our opinion the assessee must be taxed only in respect of the long-term gain on the lump sum compensation received at the time of leasing of the land ₹ 6,25,000/- being 50% of total compensation received i.e ₹ 12,50,000/- in 1979. Thus, we do not find any infirmity in the order of CIT(A) and uphold the same. We therefore, direct the AO to take the sale consideration at ₹ 6,25,000/- in the hands of the assessee and tax the long term gain accordingly if any. - Decided against revenue.
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2016 (4) TMI 803
MAM for determining ALP in respect of the trading section - Held that:- It is observed that the primary objective of the assessee is of manufacturing/trading/assembling of Telecom Power Equipment, visual display products, industrial automation and magnetic components, etc. The assessee had used TNMM as MAM for arriving at the ALP in respect of purchase of raw materials, export of finished goods and in respect of Transaction relating to import of industrial automation products and sales commission it had used RPM as MAM. It is observed that the ld.CIT(A) has dealt with the issues relating to the timing difference and sufficient data not being available to reconcile the change in the market, change in rate of exchange, change in cost etc. at length in paragraph 3.1.at pages 3 to 9. The ld.CIT(A) has reproduced in paragraph G, the relevant extract of the accepted position for A.Y: 2009-10, wherein the TPO has accepted the RPM as the most appropriate method for calculating the ALP in respect of trading segment. We do not find any infirmity in the findings of the ld.CIT(A). As in the subsequent year the TPO himself has accepted RPM to the MAM for determining the ALP for the trading segment, on the similar facts and circumstances, as recorded by the ld.CIT(A). We therefore uphold the findings of ld.CIT(A) - Decided against revenue.
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2016 (3) TMI 1073
Unexplained share application money - Held that:- In the light of the factual position which is not disputed by the revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. Non production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of CIT(A) and dismiss the appeal of the revenue. - Decided in favour of assessee
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Customs
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2016 (4) TMI 790
Whether the fourth respondent is empowered to issue the public notice by imposing certain conditions over and above the three conditions stipulated in Chapter 12 of Exim Code 1207 91 00 relating to import of poppy seeds from China into India - Held that:- the petitioner company has obtained Certificate of Importer-Exporter Code (IEC) issued by the Additional Director General of Foreign Trade for the purpose of commencing import of spices, poppy seeds and other items. It is clearly stated that during the course of his business, sought to import poppy seeds from China. However, the petitioner could not submit the necessary application for registration of the import contract in view of the multiple conditions imposed by the fourth respondent in the impugned public notice. In such view of the matter, the petitioner has a genuine grievance to be ventilated as against the impugned public notice issued by the fourth respondent inasmuch as it prohibits and restricts him to carry on his import business. Therefore, the petitioner has a right to question the impugned public notice issued by the fourth respondent especially when it violates the fundamental rights guaranteed to the petitioner as enshrined under Article 14 and 19 (1) (g) of The Constitution of India to carry on his legitimate business of import of poppy seeds and other goods. In the absence of any amendment to Import-Export policy framed by Central Government by publishing a notification in the official gazzette, it has to be held that the fourth respondent is not empowered to impose the conditions in the impugned public notice. Also, Article 39 (2) of the Constitution of India will not in any way be a source of power or provides a spring board to the fourth respondent to impose the conditions in the impugned public notice. - Decided in favour of petitioner
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2016 (4) TMI 789
Seeking grant and sanction of interest in respect of refund claim - Respondents have clarified that once the Order-in-Original has been implemented and the refund amount has been paid to the Petitioner within the stipulated period, then, the question of payment of any interest for delayed refund does not arise. Held that:- the Authorities are not going to reopen the issue of refund but are only raising plea that the Petitioner is not entitled to any interest on the refund amount for there is no delay in granting refund. It is not that issue which will be examined and we do not permit that to be examined by the Authorities upon remand. Thus, the remand order and this affidavit, if read together, the jurisdiction of the Authorities now is extremely limited. They will hear the Petitioner on the request of quantum of interest on the refund sanctioned and only that issue will be decided. That will be decided by the Authorities unmindful of and irrespective of the stand taken in the affidavit-in-reply. They shall deal with the said issue on its own merits and pass a reasoned order as expeditiously as possible. If the interest is payable as held in the order-in-appeal, then, the calculation thereof is the limited issue which the Authority must now examine. Once the statutory provisions are clear and there is delay in grant of refund, then, the interest must follow. It is only the quantum thereof which would be determined by the Authority. - Petition disposed of
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2016 (4) TMI 788
Seeking permission for clearance of goods - Import of insecticide viz., Ethephon from china - Petitioner contended that they have obtained a necessary registration certificate under Section 9(4) of the Act in the year 1991 and also in 1992 - Held that:- it could be seen that the certificate dated 01.07.1991 was issued for indigenous manufacture only and not meant for import of Ethephon. When it was not issued for the purpose of import of Ethephon and it was issued only for the purpose of indigenous manufacture, the petitioner cannot rely upon this document to say that they are entitled for import of Ethephon from China. Similarly, the registration certificate dated 10.02.1992 was also issued only for indigenous manufacture. When both the documents relied upon by the petitioner pertain to the indigenous manufacture only, the same cannot be pressed into service by the petitioner for importing Ethephon from China. The petitioner's contention that it has been importing Ethephon since 1991 cannot be accepted as a ground for permitting them to import Ethephon insecticides, without following the mandatory provisions of the Act. It can only be said that the petitioner Company have managed to import Ethephon all these years. As stated above, that cannot be a ground for directing the respondents to release the consignment. In the absence of the mandatory registration, the consignment cannot be released. - Decided against the petitioner
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2016 (4) TMI 787
Revocation of CHA licence and forfeiture of security deposit - Misdeclaration of goods - Consignment of Red Sanders logs seized - Signed blank custom documents were handed over to M/s.Aruthura Logistics, which were used for clearance of exported goods - Petitioner contended that goods were stuffed in the containers in the presence of the Customs Officials, so substitution of the goods and for tampering of the custom seal of the container, cannot be fastened on the Custom House Agent. Held that:- even though the appellant herein is guilty of handing over blank signed forms to third parties, that would not attract the punishment of cancellation of licence, since no other grave charges could be fastened on the appellant, as there was no role played by him either in the substitution of goods or tampering with custom seal, as it happened outside the custom yard after the sealing was made by the Custom Officials. The custom house licence agent cannot be held liable as the alleged offence took place after his role was over namely, dealing of the container. Once the role of the CHA licence came to over, he cannot be responsible for subsequent events. In any event, for giving signed blank forms to third parties, the revocation of licence is harsh penalty and the punishment should commensurate for guilty of offence. Therefore, the order of the Commissioner of Customs revoking the CHA licence as confirmed by the CESTAT is set aside. This Court is only restoring the CHA licence. Where forfeiture of the security deposit is concerned, there is a violation of CHA regulation by the appellant, therefore interest of justice would be met by restoring the CHA licence and confirming the order of forfeiture of security deposit. Imposition of penalty - Held that:- a perusal of the order passed by the Collector, Custom Commissioner as well as the order impugned herein would reveal no connivance on the part of the appellant either in mis-declaration or substitution of the goods by tampering with the Custom seal. Therefore, the extreme penalty of cancellation of CHA licence is not warranted in this case. - Decided partly in favour of appellant
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2016 (4) TMI 786
Seeking direction to draw fresh samples from the consignment and to send them for lab test - Import of wet dates - Petitioner contended that packing lapse is only curable defect, the crops are very fresh and new crops, the wet Dates will be fit for human consumption for about 1-1/2 years and due to scarcity of PP bags, the foreign supplier might have packed them in old bags and it is only an agricultural produce - Held that:- the petitioner is directed to submit a fresh representation to the second respondent, for the above claim, along with a copy of this order and shall produce all the relevant documents, including the Origin Certificate to the authorities for consideration, within a period of one week from the date of receipt of a copy of this order. On receipt of such a representation, the second respondent is directed to draw the samples from the Consignment(s) /goods / Containers in question and forward the same to the Notified Laboratory for their report, within a period of one week thereafter. The Notified Laboratory is directed to submit a report to the concerned authority within a period of one week thereafter. After receipt of the report to be given by the Laboratory Authorities, the respondents are directed to consider the above claim of the petitioner and pass appropriate orders. - Petition disposed of
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Corporate Laws
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2016 (4) TMI 783
Winding-up petition - Held that:- From the exchange of notices between both parties, it is clear that there is no dispute regarding the amounts demanded by the respondent-Company and the amounts due to the respondent-Company had been clearly proved. Hence, the argument of the learned counsel for the appellant-Companies that the demand is neither admitted nor proved, is not at all sustainable. The appellant-Companies have not paid the amounts as per the notices within the stipulated time as per the provisions of the Companies Act. It is pertinent to note that the Company Petitions were presented by the respondent- Company before the Company Court on 05.10.2010 for winding-up of the appellant-Companies, after complying with the provisions of the Companies Act, i.e. after expiry of time for payment allowed as per the provisions of the Companies Act. Hence, the Company Petitions filed before the Company Court are maintainable as per the provisions of the Companies Act. It is admitted by both parties that the Official Liquidator of this Court, appointed by the learned single Judge, has taken charge and further proceedings are initiated by him in respect of the winding-up of the appellant- Companies and the same are pending progress. Thus, from the above facts and circumstances of the case and on a perusal of the above provisions of law, it is clear that inspite of issuance of such notices, the appellant-Companies failed to pay the amounts due to the respondent-Company within the stipulated time as per the provisions of the Companies Act. Thus, it has to be held that the appellant-Companies have been wilfully evading the payments due to the respondent-Company. Therefore, as per the above provisions of the Companies Act, the respondent-Company has every right to file the Company Petitions seeking for winding-up of the appellant-Companies before the Company Court.
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FEMA
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2016 (4) TMI 782
Aggrieved person - Whether the 4th respondent, Assistant Director, Directorate of Enforcement can be said to be an “aggrieved person” from the order dated 3.7.2013 of the Adjudicating Authority, the Assistant Director, Directorate of Enforcement so as to file an appeal under Section 17(2) of 1999 FEMA Act - Held that:- Section 19 of the 1999 Act provides appeal to the Appellate Tribunal against an order; (i) passed by the Adjudicating Authority other than those referred to in Section 17(1); and (ii) an order of the Special Director of Appeals. Under Section 17, appeal is provided to Special Director only against the Adjudicating Authority (Assistant Director or Deputy Director of Enforcement). Thus appeal under Section 19 shall lie to the Appellate Tribunal when adjudication is made by an authority other than the Assistant Director and Deputy Director. In event it is held that a person aggrieved within the meaning of Sec.17(2) cannot include the Assistant Director who is the complainant or Director of Enforcement who is empowered to enforce the provisions of the Act, there will be no remedy available against an order of the Adjudicating Authority, viz., Assistant Director and Deputy Director in the event of they passing illegal adjudication order. For eg., in the event the Assistant Director passes an order finding contravention of the provisions of Section 13 but rejects the application on technical ground whether there shall be no remedy against such an order. The right of appeal given to the person aggrieved has to be given meaning and purpose which may advance the object of the Act. Denying right of appeal against any order passed by the adjudicating authority shall be defeating the purpose and object of the Act. Hence we are inclined to take the view that the Assistant Director, who is also a complainant can file appeal before the Special Director under Section 17(2). When Officer of the rank of Assistant Director and above in the Directorate of Ministry of Finance has been empowered to file appeal under Section 35 of the 1999 Act in the High Court, we are not persuaded to accept the submission that Assistant Director was incompetent to file an appeal before the Special Director. More so, both in the memorandum of appeal as well as the counter affidavit it has been categorically stated that the appellant is authorised to file appeal. Thus submission raised by the learned counsel for the appellant that the 4th respondent was not competent to file the appeal and the appeal was not maintainabale has to be rejected. Violation of the principles of natural justice - Held that:- It is relevant to note that the Adjudicating Authority has recorded the findings of contravention and imposed penalty however refused to confiscate the amount seized. No appeal was filed by the appellants against the order of the Adjudicating Authority imposing penalty. Thus the appellants were not allowed to raise submissions regarding finding of contravention. Scope of the appeal filed was as to whether the Adjudicating Authority has rightly refused to confiscate the amount seized or the amount deserves to be confiscated. We do not find any violation of principles of natural justice as contended by the learned counsel for the appellant. In the result, we find no merit in the appeal. Writ Appeal is dismissed. As no such substantial question of law is involved as to the interpretation of this Constituition so as to enable us to grant the certificate under Article 134A of the Constitution of India
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Service Tax
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2016 (4) TMI 801
Whether increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to terms of the contract and performance under the Contract is certainly a possible view. Appellant submitted that only those claims which were constructional inputs alone would be eligible to be covered under Clause 70 of COPA. Also the service tax on bank guarantee could have been avoided by the claimant, if the bank guarantee was replaced by tendering cash and that the facility of bank guarantee was optional and at the discretion of the claimant. Similarly, money advances were given for the benefit of the claimant and any cost associated with such benefit would not come within the scope of Clause 70.8. However, respondent submitted that the bank guarantees were required to be given under the contract itself and such requirement was stipulated by the appellant primarily to reduce its financial risk and to bind the claimant for its performance or protecting the money advanced to the respondents. In his submission, furnishing a performance bank guarantee @ 10% of the contract price was a mandatory condition of the contract under Clauses 10.1 and 10.2 of COPA. Though at some stage the option of performance bond was mentioned in COPA, such option was withdrawn making performance security to be compulsorily in the form of an unconditional bank guarantee. Such requirement being directly referable to essential conditions and arising out of the terms of the Contract, according to him the matter was definitely within the ambit of Clause 70.8 of COPA. Held that:- the assessment made by the Arbitral Tribunal as affirmed by the High Court was definitely within its jurisdiction. It has consistently been laid down by this Court that construction of the terms of a Contract is primarily for an Arbitrator or Arbitral Tribunal to decide and unless the Arbitrator or Arbitral Tribunal construes the contract in such a way that no fair minded or reasonable person could do, no interference by Court is called for. Viewed thus, we do not see any reason or justification to interfere in the matter. The view that the increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to terms of the contract and performance under the Contract is certainly a possible view. - Decided against the appellant
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2016 (4) TMI 800
Seeking extension of time to carry out and conclude the auction/sale - Aircraft is grounded and parked at the site - Held that:- after the date and the time, which is mentioned as last flight in the petition, filed by the Petitioner, this Aircraft has not taken off but continues to be parked and lying in the subject place and from where its removal is sought by the Petitioner. Thus, the records and in relation to any maintenance carried out before the Aircraft took off in March, 2013, if available with the Petitioner or any other Authorities stationed at the Airport, then, the Service Tax Commissioner can very well obtain it, but that by itself and without anything more, should be no reason go on seeking extension of time. The deponent of the Affidavit as also the Chief Commissioner would be personally responsible for compliance of the orders and directions of this Court and for all statements that are made in the affidavits till date. It is depending upon their compliance that we considered the request of extension of time. - Petition disposed of
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2016 (4) TMI 799
Denial of refund claim - Non-registration - Held that:- Tribunal has not committed any error since the issue is no more res integra and is covered by a decision of this Court in the case of mPortal India Wireless Solutions (P.) Ltd. v. CST [2011 (9) TMI 450 - KARNATAKA HIGH COURT]. Denial of Refund claim - Non-production of sufficient proof for the input services used for the purpose of output services - Held that:- the conclusion recorded by the original authority as well as by the first appellate authority and further by the Tribunal on the point of verification of the record of input services and output services and the relation thereto, there is no appropriate consideration. Hence, it would be just and proper to direct the original authority to verify the records produced by the respondent and if ultimately, it is found that the input services for which CENVAT Credit is claimed by way of refund is relatable to the output services, the refund should be allowed and if not proved, the further consequential order may be passed. As the matter is pertaining to the refund of the claim of 2009, it would be just and proper to direct the original authority to undertake the aforesaid exercise within stipulated time limit. - Decided in favour of petitioner by way of remand
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Central Excise
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2016 (4) TMI 798
Maintainability of appeal - Held that:- The first reason as to why the appeals ought not to have been filed by the Department is that the order of the Tribunal was passed upon production of necessary documentary proof and confirmation of the same by both sides. Also admittedly, there was a huge excess amount, available with the Department and what was sought to be done on 30.6.2006 was only an adjustment out of the same. Under Section 11 of the Central Excise Act, the Department itself could have adjusted the excess amount, even if there was any even at that time. When credit was available to the account of the assessee, the Department cannot act like Shylock demanding a pound of flesh. Therefore, the Department, after having confirmed the facts as borne out by documents produced before the Tribunal, could not have come up with the above appeals. - Decided against the revenue
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2016 (4) TMI 797
Availment of Modvat credit - Whether the applicant had adhered to the provision of Rule 57-T of the Rules in seeking a declaration for availing Modvat credit - Held that:- it is not disputed that the goods were received in the factory premises and was consumed for the purpose of erection of shades for boiler houses, etc. It is also not disputed that the goods so received showed evidence of payment of duty on such goods. When these two conditions are existing which are the mandatory requirement, in such case, Modvat credit should be allowed and could not be denied on the ground that there was a procedural lapse in not applying for a declaration within a stipulated period. Sub-rule (3) of Rule 57-T of the Rules clearly indicates that if the declaration is not filed within the specified period, the same can be considered after the expiry of period on sufficient cause being shown. In the instant case, the applicant clearly stated that they were not aware of such procedure for claiming Modvat credit and the moment they came to know applied for Modvat credit. The fact, that the applicant applied for Modvat credit has not been disputed. Once this is not disputed, it is not open to the respondents to deny Modvat credit on the ground that permission was not granted by the competent authority. There is no evidence that the application of the applicant was rejected. So, even if there is a procedural lapse, it does not mean that Modvat credit could not be availed. By applying the decision of this court in the case of Commissioner of Central Excise, Allahabad vs. Hindalco Industries Pvt. Ltd [2012 (4) TMI 254 - ALLAHABAD HIGH COURT], Rule 57-G of the Rules is only procedural in nature. Therefore, Modvat credit cannot be denied on a technical ground that the procedure for availing Modvat credit was not followed at the material moment of time. Also the Tribunal was not justified in interpreting Rule 57-T(3) of the Rules in a technical manner holding it to be a mandatory provision. - Decided in favour of appellant
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2016 (4) TMI 796
Compliance of sub-section (2) of Section 35B of the Central Excise Act, 1944 - Held that:- The word “may”, appearing in sub-section (2) of section 35B of the Act should not be misconceived as submitted by learned counsel for the appellant. The proviso to sub-section (2) of section 35B of the Act also postulates that in the case of difference of opinion between the Commissioner of Central Excise, they will make reference to the Chief Commissioner of Central Excise who after considering the facts, if found that the order of the Commissioner of Central Excise (Appeals) is not legal and proper, direct the Central Excise Officer to appeal before the Tribunal of such order. On the other hand, the Central Excise Officer will be always authorized either on concurrent view of Committee of Commissioners of Central Excise or difference of opinion is given to file appeal, but the fact remains, authorization is a must under sub-section (2) of Section 35B of the Act to prefer appeal. It is needless to say that application of judicial mind to the facts and law of the case by the concerned Committee of Commissioners of Central Excise is a condition precedent for filing appeal. Any non-application of mind in rendering opinion to file appeal may cause serious impact on the public exchequer or on the economic growth of the country. Since the authorization would be to one of the Central Excise Officers, the word “may” as appearing in sub-section (2) of Section 35B of the Act cannot be said to be discretionary or directory but it is a mandatory provision and should be read as “shall”. We do not find force with the submission of learned counsel for the appellant-Department to the effect that such word “may” is a directory one and as such the contention is jettissioned. Since it is a fiscal statute, it requires strict interpretation, no word can be construed otherwise and purposive interpretation is the call of the day. Adverting to the facts of the case and points of law as discussed by us, we are of the view that the authorisation made in Annexure-3 of the affidavit filed by the appellant to prefer appeal without same being filed along with appeal is surely an incurable defect and the same cannot be rectified by filing an authorization letter as stated by the learned counsel for the appellant. Similarly as the authorization by the Committee of Commissioners of Central Excise is not found in the impugned order, it must be observed that the impugned order passed by the CESTAT is correct, legal and proper. Hence we are of the considered view that the impugned order passed by the learned CESTAT being valid, legal and proper, cannot be interfered with.
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2016 (4) TMI 795
Interest under Section 11AA - effect of amendment - Held that:- A careful look at the tabulation would show that the distinction between the two categories of cases that was maintained upto 11.5.2001 disappeared to some extent by the amendment inserted from 11.5.2001. Though a small distinction was still retained, the liability to pay interest became common for both categories of cases and a distinction was retained only in respect of the minimum ratio of interest and the date of commencement of liability post 11.5.2001. In cases where the payment was made voluntarily after determination of the amount of duty under Section 11A, the amendment stipulated a minimum rate of interest at 10% per annum and a maximum rate of interest at 36% per annum. But, in other cases, the minimum rate of interest was maintained at 18% per annum. Except this, the distinction between the two categories of cases was diluted. After amendment with effect from 8.4.2011, Section 11AA itself is removed. Therefore, all types of cases where there is a determination under Section 11A(2) are treated alike irrespective of the presence or absence of fraud, collusion, etc. Getting back to the cases on hand, it could be seen that the periods, in respect of which, the show cause notices were issued, were all from 1997 to 2000. The show cause notices covered by the Order in Original bearing Nos.18/2000 and 54/2000 were dated 2.4.1998, 1.7.1998, 18.11.1998, 1.4.1999, 30.7.1999 and 1.12.1999 as well as 5.4.2000 and 25.4.2000 respectively. The show cause notices covered by the Orders in Original bearing Nos.42/2001 and 43/2001 were exactly dated 11.5.2001. Hence, out of the four cases on hand, two relate to the show cause notices issued on the date, on which, the amendment to Sections 11AB and 11AA came into force. In respect of the remaining two cases, they cannot be covered by the amendment introduced with effect from 11.5.2001. In so far as the cases where show cause notices were issued before 11.5.2001, it is seen from all the show cause notices, the Orders in Original and the orders of the Appellate Authority that there was no allegation of fraud, collusion, misrepresentation, etc. Even the communication of the Superintendent dated 12.11.2013 does not categorise the case of the assessee as one where there was fraud, collusion, etc. But, the communication of the Superintendent dated 12.11.2013 refers to Section 11AB. Therefore, it is obvious that the amendment dated 11.5.2001 is what is sought to be taken advantage of. This cannot be done at least in respect of two cases that arise out of the Orders in Original bearing Nos.18/2000 and 54/2000 respectively dated 29.2.2000 and 30.10.2000. Hence, the questions of law in respect of the appeals arising out of these orders in relation to the interest claim, should be answered in favour of the assessee. There is a difficulty. In so far as the Order in Original bearing No.54/2000 is concerned, the demand for payment of interest was made at 24% per annum under Section 11AA. This demand, without any discussion, was upheld by the Appellate Authority as well as the Tribunal. The Appellate Authority as well as the Tribunal ought to have at least considered as to why a rate of interest at 24% was chosen between the minimum of 10% and the maximum of 30%. The case of the assessee was that there was a claim for refund, which could have been adjusted by the Department. While passing an order in appeal No.178/2003, the Appellate Commissioner found that at least in respect of the claim under Order in Original bearing No.18/2000, it was adjustable. Therefore, that portion of the order of the Tribunal as well as the order in appeal is without any application of mind to the quantum of interest under Section 11AA.
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2016 (4) TMI 794
Whether the charges of containers provided by assessee for transportation of gases are liable to be taken into account for determination of value for the purpose of levy of duty in terms of Section 4 of the Central Excise Act, 1944 as amended with effect from 1.7.2000. Held that:- Section 4(1)(a) [prior to the substitution] was considered by a Three Judges Bench of this Court in Union of India & Ors. Vs. Bombay Tyre International Ltd. & Ors. [1983 (10) TMI 51 - SUPREME COURT OF INDIA]. While considering the interplay between Section 3 and 4. In Commissioner of Central Excise Vs. Acer Ltd. [2004 (9) TMI 106 - SUPREME COURT OF INDIA], the scope and purport of Section 3 of the Act, Section 4(1)(a) as substituted with effect from 1.7.2000 and Section 4(3)(d) defining “transaction value” came up for consideration before another Three Judges Bench of this Court. Though in the backdrop of different factual scenarios, two Coordinate Benches (Three Judges) have taken what would appear to be contrary views with regard to purport and effect and the interconnection between Section 3 and 4 ibid. Therefore, we are of the view that another Coordinate Bench should not venture into the issues raised and even attempt to express any opinion on the merits of either of the views expressed in Union of India & Ors. Vs. Bombay Tyre International Ltd. & Ors. and Commissioner of Central Excise Vs. Acer Ltd. Rather, the questions referred should receive consideration of a Larger Bench for which purpose the connected papers may now be placed before the Hon’ble the Chief Justice of India for appropriate directions. - Appeal disposed of
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2016 (4) TMI 793
Seeking modification in sentence order - Conviction under Section 55(a) of the Abkari Act - Recovery of 450 litres of spirit which on analysis found to be 80.70% by volume of Ethyl Alcohol - Held that:- considering the mitigating factor that the High Court interfered and reduced the period of imprisonment after noticing that the appellant has no criminal antecedents and also the fact that occurrence in question is of the year 2000 and the appellant has suffered agony of criminal trial and pendency of appeal for more than 15 years, the period of imprisonment is reduced from three years to rigorous imprisonment for two years. - Apex court disposed of the appeal
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2016 (4) TMI 792
Revision under Section 35EE of the Central Excise Act - drugs exported by the petitioner in bulk quantities were exempted from duty and the petitioner ought not to have been paid any duty thereon to claim rebate thereof - whether clause (A) or clause (B) under the column of description of excisable goods pertaining to the relevant entry would be applicable in this case? - Held that:- If the goods exported by the petitioner were covered by the description under clause (A) of the relevant entry, such goods were absolutely exempted from any duty of excise leviable thereon. As a consequence, there was no occasion for the petitioner to pay any duty for removing the goods from the petitioner’s manufacturing facility for the export thereof. The matter may have been considered liberally if there was no possibility of mischief being involved. If it was possible for the petitioner to have made a mistake and claim a refund, the payment of the excise duty at the time of exports in this case could have been regarded as a mistake with a subsequent application for undoing the same. However, as it appears, the payment of the duty was not made in cash, whereas the rebate is payable in cash. The payment was made by using the Cenvat credit built up by the petitioner; which becomes relevant and whether there may have been some mischief afoot, cannot be answered merely on the basis of the adjudication conducted in course of the proceedings under Rule 18 of the said Rules of 2002. It appears that both the appellate and the revisional authorities have taken a view possible on the set of facts. In exercise of the limited superintendence under judicial review at this level, the Court will not supplant its view for that of the administrative authority that is challenged in this jurisdiction. As long as the decision-making exercise is found to be reasonable and fair and the opinion expressed appears to be plausible, the Court will refrain from interfering with the order. In the present case, the view taken by the appellate and the revisional authorities appear to be eminently justified on the basis of notification no. 4/2006 and there is no occasion for the petitioner to feel aggrieved thereby.
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2016 (4) TMI 791
Condonation of delay of 65 days - belated beyond the maximum condonable period - Commissioner rejected the appeal on the ground that he had no power to condone such delay - Petitioner submitted that they had offered a sound explanation for delay preventing the petitioner from filing appeal within the extendable period of limitation - Held that:- explanation is general and lacks the requirement of being otherwise well explained. We may recall the period of limitation statutorily prescribed is 60 days for filing the appeal. The Commissioner has discretion to accept appeal filed beyond such period as long as the period is not beyond 30 days. The petitioner did not prefer appeal within this extendable period of 90 days, but consumed further 35 days in filing the appeal. The petitioner's explanation must be viewed in the background of the legislative intent of not permitting appeals which are delayed beyond 30 days without any power of the Commissioner to condone such delay. In other words, the statute requires that the appeals must be filed within a fixed period beyond which it would not be open for the Commissioner to condone the delay. - Decided against the petitioner
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CST, VAT & Sales Tax
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2016 (4) TMI 785
Tax liability - Section 16 of the Bihar Finance Act, 1981 - Ex-parte order passed - Sale of confiscated goods imported in contravention of Customs laws - Petitioner neither filed return nor produced books of accounts as required under Section 16(1) and 17(2) ibid in spite of notice - Held that:- in view of various Hon'ble Supreme Court judgments, the petitioner is a dealer within the meaning of Section 2(e) of the Bihar Finance Act, 1981 read with IInd Explanation and, thus, it is exigible to the sales tax. Whether the petitioner is liable to penalty or interest on account of non-filing of return etc. needs to be re-decided by the Assessing Authority keeping in view the fact that the petitioner is Custom Department of the Government of India and there could be ambiguity in understanding the provisions of the Bihar Finance Act, 1981. Therefore, the tax is levied and matter remitted for determining question of penalty and interest. - Petition disposed of
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2016 (4) TMI 784
Seeking direction to issue "C" Forms - Payment made by purchasers for certain goods ordered but failed to supply the "C" Forms - Recovery of differential amount under assessment order - in lieu of nonissuance of "C" Forms for the year 2008-2009 and 2009-2010 - Held that:- a writ petition could be entertained, still we do not find that on the one sided version of the petitioners we can direct the respondent No.5 to issue any such "C" Form and in relation to a transaction concluded as far back as in 2010. It is found from the entire petition and its annexures that the petitioners having met the tax liability and also obtained the benefit of an adjustment for future, do not deserve any discretionary and equitable relief in our writ jurisdiction. It may be that there is an obligation to issue the Form, but having found that such a request is made belatedly and is barred by delay and laches, and secondly, it is only on the version of the petitioners that we decline to exercise our writ jurisdiction. - Decided against the petitioner
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Wealth tax
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2016 (4) TMI 802
Deduction of liabilities on pro rata basis - Held that:- Following the ratio of the judgment in the case of CIT vs. Vaidyanathan (1982 (11) TMI 1 - MADRAS High Court) we hold that liabilities can be deducted on pro-rata basis. In identical circumstances, it has been held by the ITAT, Mumbai Bench in the case of Lloyds Realty Ltd. vs. DCIT (2003 (7) TMI 264 - ITAT BOMBAY-WT ) that the debts owed by the assessee have to be allowed on pro-rata basis. The AO is accordingly directed to allow appropriate deduction in this regard in all the three years under appeal.
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