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TMI Tax Updates - e-Newsletter
April 8, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Revision orders u/s 263 - order passed against a dead person - If the Department had issued the notice addressed to the legal heir himself, by taking recourse to Section 159(3), the deeming fiction could have been taken advantage of by the Department. It is too late in the day for the Department to take advantage of the same - HC
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Eligibility for exemption u/s 10B - Tribunal did not commit any error in holding that the assessee was a 100% Export Oriented Undertaking and not an SEZ Unit and therefore, entitled to deduction under section 10B of the Act - HC
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Applicability of Explanation (c) to Section 115JB(1)(MAT) - Provisions made for Bad and Doubtful debts -even if amendment which is made retrospective the benefit given by the Tribunal and the appellate Commissioner to the assessee is in no way affected - HC
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Treatment of agricultural income - as seen from the documents placed in the paper-book, these are not lease rentals received from the agricultural lands, but sale proceeds, which are stated to have been transferred from the place of agricultural lands to the assessee through clerk - additions confirmed - AT
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Having lost the right to file revised return of income, the assessee could not have made good the same by filing revised computation of income and thus claim carry forward of loss. The said action of the assessee, in our view, defeats the statutory mandate prescribed in sec. 139(5) r.w.s 139(3) - AT
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Default u/s 206C(6A) - the moment assessee has received form no.27C from the buyers his liability to collect TCS @ 1% gets away and the assessee should not be deemed to be in default for any minor clerical mistakes in the forms submitted by the buyers - AT
DGFT
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Eligibility of Liquid Glucose under Focus Market Scheme of Foreign Trade Policy (FTP), 2009-14 - Trade Notice
Service Tax
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Dismissal of appeal for non compliance of order for making pre-deposit - Once a consequential order is passed, the appellant would have no cause of action as against the original order. Consequently, the order cannot be challenged in the absence of compliance with the original order. Hence, the appeals cannot be entertained - HC
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Cenvat Credit - Medicare Services Club for its employees - Appellant has produced a certificate from the Chartered Accountant to that effect that the expenses incurred on account of Medicare services have been included in the value of the output services being provided. - Credit allowed - AT
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CENVAT Credit sale promotion activities - Beneficial amendment to Rule 2(l) vide notification no. 2/2016 CE(NT) dated 3.2.2016 is retrospective or prospective - sales promotion includes services by way of dutiable goods on commission basis - credit allowed treating the amendment as retrospective - AT
Central Excise
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Cenvat Credit denied - duty paying document - the invoice issued by an importer is a valid Cenvatable document - merely by mentioning the wrong details of the document credit cannot be denied, particularly when the valid duty paying documents i.e. invoice was available with the respondent. - AT
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Disallowance of adjustment of excess duty paid - they have admitted that they have already availed cenvat credit on the duty paid on copper anodes at their unit at Silvasa and they have also admitted before LA that they will not claim any refund on this account. Therefore the appellant's claim for adjustment and claiming automatic set off excess duty paid does not arise. - AT
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Valuation of goods cleared to own sister units for captive consumption - Determination of the cost of production as per CAS-4 - The adjudicating authority has correctly determined the cost of production of copper anodes manufactured by the appellants - AT
VAT
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Refund claim for AY 2009-10 - Engaged in business of providing DTH broadcasting services - the sum deposited by the Respondent in this Court along with interest accrued thereon is directed to be released by the Registry to the Petitioner forthwith through an authorized representative - HC
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Reassessment of Return u/s 34 of DVAT - It is not understood how the Special Commissioner (Special Zone) could have delegated powers in terms of Section 67(2) of DVAT Act and in particular, the power of reopening the reassessment to the Assistant Commissioner (VAT Audit) - Notice quashed - HC
Case Laws:
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Income Tax
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2016 (4) TMI 265
Depreciation claimed on Windmill - Held that:- Both the CIT(A) as well as the Tribunal have recorded a finding of fact that the items listed at (a) to (d) in paragraph(3) [i.e (a) Power Evacuation Infrastructure, (b) Erection and commissioning charges,(c) Line work &(d) Electrical items] above form an integral part of the Windmill. Thus, entitled to 80% depreciation being a part of a Windmill. Depreciation on cost of civil foundation - Held that:- As is agreed position between the parties that the issue raised herein stands concluded against the Revenue by the decision of this Court in Cooper Foundary Pvt Ltd (2011 (6) TMI 837 - BOMBAY HIGH COURT) i.e. the cost of civil foundation is to be allowed depreciation @80%.
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2016 (4) TMI 264
Revision orders by CIT(A) - addition on account of the cash deposits - Held that:- In the impugned order proceeds on a factually erroneous basis that there was no response to the notice issued to M/s Enkay Electricals under Section 133(6) of the Act. Although in the impugned order the CIT-XII notes that a confirmation letter of M/s Enkay Electricals was produced, it is not discussed. The appropriate course for the CIT-XII to adopt would have been to provide an opportunity to the Assessee to produce the said party before the CIT-XII to clarify whether the confirmation letter was in fact issued by such party. Addition on account of unconfirmed creditors - Held that:- A reference was made in the impugned order of the CIT-XII to notices issued under Section 133(6) of the Act to the named creditors. The CIT-XII also noted that notices issued to four of the creditors were returned unserved. However, the dates on which the said notices were issued and the dates on which they were returned unserved are not clear. This attains significance since confirmation letters appear to have been issued in November 2011 by those very parties (copies of which have been enclosed with the rejoinder affidavit). Here, again the Court finds that the procedure adopted by the CIT-XII in dealing with the objections of the Assessee is not satisfactory. The CIT-XII appears to have simply repeated the findings of the AO. Thus the Court set asides the impugned order passed by the CIT-XII and restores the Petitioner Assessee's revision petition to the file of the CIT-XII for a fresh hearing uninfluenced by the previous decision of the CIT-XII or by any of the observations in the present order. The CIT-XII will provide the Assessee with a copy of the AO's remand report and also permit the Assessee to produce the parties who have issued confirmation letters in its favour. - Decided in favour of assessee by way of remand.
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2016 (4) TMI 263
Rectification of mistake - ITAT rejected ROM application - Held that:- It is clear from the facts recorded herein above that the Tribunal had no occasion to consider and/or deal with the pages 1 to 90 filed before the CIT(A), which the Petitioner states it a part of the Paperbook II. Therefore, no fault can be found with the impugned order of the Tribunal in refusing to consider those documents as they were never a part of the proceedings which lead to the order dated 12th October, 2012. The proceedings for rectification are not a proceeding to recall the order so as to have the matter reheard on merits by relying upon the evidence which were never produced before the Tribunal. In the above view, on merits, we find no fault with order of the Tribunal in rejecting the Petitioner's rectification application dated 12th October, 2012 and further taking into account the conduct of the Petitioner, we see no reason to entertain the Petition.
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2016 (4) TMI 262
Amendment to section 40(a)(ia) - retrospectivity or prospectivity - Held that:- The controversy involved in the present case stands concluded in favour of the assessee and against the revenue by the decision of this court in the case of Commissioner of Income Tax v. BMS Projects, (2014 (4) TMI 242 - GUJARAT HIGH COURT ) and Commissioner of Income Tax, Ahmedabad-IV v. Omprakash R Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] wherein it has been held that the amendment to section 40(a)(ia) of the Income Tax Act, 1961 by the Finance Act, 2010 has retrospective effect.
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2016 (4) TMI 261
Unabsorbed investment allowance - whether had to be deducted from profits for the purpose of computing and allowing deduction under Section 32-AB - whether Tribunal was right in not appreciating that deduction under Section 32-AB had to be allowed before set off under Section 72 and hence before deducting unabsorbed investment allowance from the earlier years ? - Held that:- On the first question it is seen from para 4 of the order of the Tribunal that the Tribunal was persuaded to take a view in favour of the Revenue, only on account of the fact that the assessee was left with no positive income for the purpose of grant of deduction under Section 32AB, once carried forward investment allowance was set off. But the grant of the benefit did not depend upon the question whether the assessee was left with a positive income or not. If the deductions to be made under various provisions from Section 30 onwards, lead only to a negative income that could be chargeable to tax under the head "Profits and gains of business" in terms of Section 28, the same cannot lead to a different interpretation to the plain language of the provisions. The Assessing Officer went purely by logic, on the basis of the decision of the Supreme Court in Cambay Electric Supply v. CIT [ 1978 (4) TMI 1 - SUPREME Court], to hold that unabsorbed depreciation etc., provided in earlier Sections have to be set off before making a deduction under the latter Sections. Since the carry forward of investment allowance is under Section 32A(3)(ii) and not under Section 72, he held that income from business has to be computed by allowing a deduction as per the benefit available under a prior Section namely Section 32A(3)(ii) before proceeding to give a deduction under the latter Section namely Section 32AB. But we do not find that such a logic has any application. While Section 32A deals with investment allowance, Section 32AB deals with investment deposits. We have already pointed out the object of the amendment made under Finance Act, 1987 to Section 32AB. - Decided in favour of assessee.
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2016 (4) TMI 260
Validity of Show cause notice - Appellate Commissioner power to alter the status of an assessee in the course of the appellate proceedings - whether a firm cannot be a partner in another firm and that only natural legal persons can be partners in a partnership firm? - Held that:- The show cause notice issued by the Appellate Commissioner was obviously wrong, it was liable to be set aside. The writ petition is allowed and the impugned order in the writ petition is set aside on the sole ground that the finding that a firm cannot be a partner in a partnership firm, is contrary to law.
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2016 (4) TMI 259
Claim deduction u/s 80IA - initial assessment year - whether the assessee is entitled to deduction under Section 80IA without setting off the losses/unabsorbed depreciation pertaining to the windmill, which were set off in the earlier year against other business income of the assessee following the decision of the jurisdictional High Court in the case of M/s.Velayudhaswamy Spinning Mills (2010 (3) TMI 860 - Madras High Court) - Held that:- Interestingly, on the basis of the decision in Velayudhaswamy Spinning Mills, the Central Board of Direct Taxes has issued Circular No.1/ 2016 dated 15.2.2016 stating that it is abundantly clear from Sub-Section (2) that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that Sub-Section. It is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 801A. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officers are, therefore, directed to allow deduction u/s 801A in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year' as mentioned in Sub-Section (5) of that section for which the Standing Counsel/DRs be suitably instructed.
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2016 (4) TMI 258
Revision orders u/s 263 - order passed against a dead person - Held that:- The contention of the Department loses sight of one important distinction between a case where the proceedings are initiated against a person, who is alive, but continued after his death and a case of proceedings initiated against a dead person himself. If the proceedings had been initiated against a person, who was alive, and they were continued after his death after putting his legal heirs on notice, those proceedings, under certain circumstances, may be saved. Such a situation is also contemplated in civil proceedings and a provision is made in the Civil Procedure Code itself under Order XXII Rule 4. Therefore, the cases where the very proceedings are initiated against a dead person stand apart from those proceedings where they are initiated against a live person, but continued after his death against the legal heirs. Hence, the first contention is rejected. In the case on hand, the assessee was dead. It was the assessee's son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. As we have pointed out earlier, the original order of assessment was a scrutiny assessment passed under Section 143(3) on 23.6.2011. After two years, the Commissioner sought to invoke Section 263. The assessee had died in the meantime on 13.6.2013. The show cause notice under Section 263 was issued on 6.9.2013.We can give the benefit to the Department that they were not aware of the death of the assessee on that date. But, this notice dated 6.9.2013, sent by post, returned with the endorsement that the addressee was dead. Thereafter, the Department served the very same notice on the legal heir through a messenger. Therefore, the Department cannot now take advantage of Sub-Section (3) of Section 159. If the Department had issued the notice addressed to the legal heir himself, by taking recourse to Section 159(3), the deeming fiction could have been taken advantage of by the Department. It is too late in the day for the Department to take advantage of the same. Thus the very initiation of the proceedings against the dead person and the continuation of the same despite having noticed the factum of death of the assessee, cannot be approved. - Decided in favour of assessee
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2016 (4) TMI 257
Reopening of assessment - reasons to believe - Held that:- Assessing Officer has come to a reasonable belief that the revenue expenses of ₹ 40 lakhs were non genuine resulting in income chargeable to tax escaping assessment. Thus the recorded reasons do indicate the Assessing Officer due application of mind to the information received from him to form a reasonable belief that income chargeable to tax has escaped assessment. Moreover, we do not find that reasons recorded proceed on mere suspicion. It is a settled position in law that the reasons recorded at the time of issuing the impugned notice are only reasons to believe that the income chargeable to tax has escaped assessment and not an irrefutable conclusion that it is so. The material which has been received by the Assessing Officer as mentioned in the reasons recorded in the context of the claim made by the Petitioner would indicate that a reasonable person is likely to have a reasonable belief that the income chargeable to tax has escaped assessment. At the stage of a challenge to a reopening notice issued under Section 148 of the Act, this Court is not concerned with the sufficiency of the reasons nor the correctness of the reasons (Raymond Woollen Mills V/s. ITO - 1997 (12) TMI 12 - SUPREME Court). However, we find that reasons do indicate a basis for the Assessing Officer to come to a reasonable belief on the basis of the information received that income chargeable to tax has escaped assessment. Thus we see no reason to exercise extra ordinary writ jurisdiction in the present facts. - Decided against assessee
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2016 (4) TMI 256
Notice under Section 245 - Held that:- Since the primary basis for adjustment is a notice under Section 245 of the Act and the Department cannot demonstrate that such notice was issued to the petitioner, the purported adjustment sought to be made stands set aside.
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2016 (4) TMI 255
Eligibility for exemption u/s 10B - whether assessee had established a new 100% Export Oriented Undertaking eligible for exemption u/s 10B of the Income Tax Act and not SEZ Unit as held by ITAT? - Held that:- From the facts as emerging from the record, it is evident that the assessee's Unit was granted approval as a 100% Export Oriented Undertaking by a letter of permission dated 02.02.2007, which was ratified in the second meeting of the Board for Approval held on 17.05.2007. The assessee being a 100% Export Oriented Undertaking, was therefore, entitled to claim deduction under section 10B of the Act. The Commissioner of Income Tax, on an erroneous reading of the facts on the record, has come to the conclusion that the assessee is a Unit under the SEZ and not a 100% Export Oriented Undertaking and has, accordingly, come to the conclusion that since the assessee's unit is not located within a defined SEZ it is not entitled to the benefit of deduction under section 10B of the Act. Evidently therefore, the conclusion arrived at by the Commissioner of Income Tax is based upon an erroneous finding of fact. The Tribunal, therefore, did not commit any error in holding that the assessee was a 100% Export Oriented Undertaking and not an SEZ Unit and therefore, entitled to deduction under section 10B of the Act. - Decided in favour of assessee
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2016 (4) TMI 254
Reopening of assessment - assessing officer seeking to treat the relevant amount as a gift and not as a loan - Held that:- . As to whether the relevant amount in this case should be regarded as a gift or as a loan, is not a jurisdictional fact; though it is a matter which may be covered in course of the reassessment. On a plain reading of the provision, if an assessing officer has reason to believe that some income has escaped assessment, appropriate steps may be taken for reassessment of the income for the relevant assessment year under Section 147 of the Act. The jurisdictional fact in such a case will not be how a particular amount or a particular transaction ought to be treated. That is the exercise that is reserved for the reassessment stage. Further, it is evident that a further disclosure had been made in the relevant return by the petitioner by referring to the transaction with Dalal and Shah. Whether or not the assessing officer would be justified in treating the relevant amount paid in the assessment year by the firm to the petitioner as a gift depends on how the additional disclosure ought to be regarded. The additional disclosure could not have been taken into account earlier and the apparent admission on the part of the petitioner that the transaction pertaining to Dalal and Shah should have been included in the original return can be seen as sufficient justification for the reassessment. That is also implied in the impugned order of August 6, 2015, though it may not have been expressed in so many words.
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2016 (4) TMI 253
Extension stay of demand in favour of the assessee beyond the period prescribed under the third proviso to subsection (2A) of section 254 - Held that:- Extension of stay of the demand beyond the total period of 365 days from the date of grant of initial stay would always be subject to subjective satisfaction of the Tribunal; on an application made by the petitioner to extend the stay; and on being satisfied that the delay in disposing of the appeal within a period of 365 days from the date of grant of initial stay is not attributable to the assessee. In the facts of the present case, the Tribunal while extending the stay beyond the period of 365 days from the date of initial stay, has recorded satisfaction as regards compliance of the conditions of payment of the disputed tax as stipulated under the stay order and has also recorded a finding that non-disposal of the appeal is not attributable to the assessee. The learned counsel for the respondent – assessee has produced copies of the record and proceedings of the Tribunal to further point out that the appeals have not yet been heard as the Departmental Representative had prayed for an adjournment because the necessary case papers were not available to submit that even further delay is not attributable to the assessee. Applying the decision of this court in the case of Deputy Commissioner of Income Tax v. Vodafone Essar Gujarat Ltd. (2015 (7) TMI 15 - GUJARAT HIGH COURT), to the facts of the present case, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity warranting interference.
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2016 (4) TMI 252
Applicability of Explanation (c) to Section 115JB(1)(MAT) - Provisions made for Bad and Doubtful debts - Held That:- The issue is already covered by the referred decision of this Court in the case of CIT v. Yokogawa India Ltd., [2011 (8) TMI 766 - KARNATAKA HIGH COURT] held that beside debiting Profit & Loss A/C and creating a provision assessee also reduces the amount from Loan & advances and at the end only net amount is shown in asset side - Therefore when bad or doubtful debts is reduced from the loan & Advances Explanation to Section 115JA or 115JB is not at all attracted. - In that context even if amendment which is made retrospective the benefit given by the Tribunal and the appellate Commissioner to the assessee is in no way affected. - Decided in favor of assessee.
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2016 (4) TMI 251
Unexplained cash credit - Held that:- There is no doubt about the identity, genuineness and creditworthiness of loan taken from M/s Pappillion Exports Ltd. of ₹ 60,85,000/-. From going through the paper book at pages 83 to 85 wherein bank statement of Sarvodaya Co-op. Bank Ltd. in the name of M/s Pappillion Exports Ltd. a/c no.4479 as well as bank statement of M/s Hiral Pharma Ltd. are placed, we observe that in January, 1997 a cheque No.133279 has been issued by M/s Pappillion Exports Ltd. and on the very same day this amount has been transferred to the account of assessee and the entry of the same is reflected in the bank statement of assessee. This clearly shows that there was bank transaction through cheque no.133279 for ₹ 60,85,000/- between M/s Pappillion Exports Ltd. and the assessee. Further as regards non-availability of other details from Sarvodaya Co-op. Bank Ltd. due to it being in liquidation we find that records have been placed by assessee showing extract of financial statement of Sarvodaya Co-op. Bank Ltd. which is having a schedule of a/c wherein name of M/s Pappillion Exports Ltd. is appearing which shows that M/s Pappillion Exports Ltd. was having its banking transactions through Sarvodaya Co-op. Bank Ltd. Thus there occurred a bank transaction between the assessee and M/s Pappillion Exports Ltd. and assessee has duly received loan of ₹ 60,85,000/- from M/s Pappillion Exports Ltd. through bank transfer. Therefore, ld. CIT(A) has made no error in deleting the addition made by the Assessing Officer. - Decided in favour of assessee.
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2016 (4) TMI 250
Revision u/s 263 - Held that:- The present case of assessee is squarely covered in its favour by the various decisions of Hon’ble Jurisdictional High Court including decision in the case of CIT Vs Joyti Foundations (2013 (7) TMI 483 - DELHI HIGH COURT) wherein it was held that only in the case of no enquiry provisions of section 263 of the Act can validly invoked otherwise in the case of proper enquiry the enquiry cannot be alleged as inadequate or insufficient and on this basis provisions of section 263 of the Act cannot be invoked and the ld. CIT(A) should conduct enquire himself to record finding that assessment order was erroneous and prejudicial to the interest of the Revenue specially when the conclusion of the AO is not contrary to the provisions of the Act and the same is according to the law and sustainable. Their Lordship held that the ld. CIT(A) should not have set aside the order and directed the AO to conduct the enquiry without any conclusion. From the vigilant reading of the impugned order we observe that the ld. CIT(E) without any conclusive findings and observation only on the basis of suspicion and doubts held that the assessment order is erroneous and prejudicial to the interest of the Revenue and directed the AO to examine the issue afresh setting aside the order which is not permissible - Decided in favour of assessee
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2016 (4) TMI 249
Estimation of watches - estimation of on average cost - search and seizure operation - Held that:- In the impugned order the withdrawals of the assessee is sufficient in the previous assessment years and assessee has also purchased some of the watches over a period of time from his personal drawings and also some watches were received by him on various occasions from his friends and relatives as gift. After going through the impugned order, we are of the considered view that the estimation made by the AO on the cost of 50 wrist watches found during the search and seizure operation is on the assumption and presumption basis and without supporting any evidence and hence, is not sustainable in the eyes of law. Secondly, the estimation made by the AO on average cost is also baseless and without any evidence and is not judicious. Subsequent to such estimation the AO has proceeded to estimate the 50 watches based on average cost of 25 watches which is essentially estimated over earlier estimation. Thus there is no basis of estimation of 50 watches of ₹ 1,00,64,000/- in spite of the fact that he himself accepted the withdrawal made by the assessee during the block period of around ₹ 3.5 Crores which is over and above the contribution made towards the LIC Premium etc. Keeping in view of the facts and circumstances explained above, we are of the considered view that Ld. CIT(A) has rightly deleted the addition in dispute by passing a well reasoned order, which does need any interference on our part, hence, we uphold the same by dismissing the Appeal filed by the Revenue. - Decided against revenue
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2016 (4) TMI 248
Computation of capital gains - authentication of documents - Held that:- The assessee has claimed only ₹ 1,70,00 as brokerage, which amount was increased to ₹ 2 lakhs. Had these receipts been genuinely paid and received at that point of time, the assessee would not have made any claim at incorrect amount of ₹ 1,70,000. Therefore, the authenticity of the receipt itself is doubtful. As already stated, no corroborative evidence is furnished, nor the receipt has any revenue stamp on it. Identity of the recipient is also not established. In view of this, we are not inclined to consider the assessee’s claim of the payment for brokerage. Coming the claim of improvements and development cost on the land when the Assessing Officer asked for evidence, nothing was placed on record, indicating that this could be an afterthought, once the assessee came to know that he has to offer higher capital gains because the assessee has taken sale consideration at a lesser amount in the original return. Even though there are certain claims made in the original computation itself, since they are not supported by any evidence, we are of the opinion that the Assessing Officer has rightly disallowed the same. When these were pointed out to the learned counsel, in the course of arguments, he has submitted that the Assessing Officer could have disallowed some amount and allowed the balance. This itself indicates that there is no genuineness in the claim. Therefore, we are not inclined to consider the assessee’s contention on the above two claims, As already stated, since the documents were not admitted by the CIT(A) as additional evidence, this forum also cannot admit the same as the documents, in the absence of any prayer for admission as additional evidence. In view of this, we uphold the orders of the first appellate authority - Decided against assessee Treatment of agricultural income - Held that:- The assessee has furnished certain evidence of transfer of money from Tuni and Vizag to the assessee, but it does not establish that these amounts are indicative of the agricultural operations by the assessee to that extent. Moreover, the learned CIT(A) finds that the Authorised Representative submitted that the agricultural land has been leased out to various parties and filed confirmation from the lessors. But, as seen from the documents placed in the paper-book, these are not lease rentals received from the agricultural lands, but sale proceeds, which are stated to have been transferred from the place of agricultural lands to the assessee through clerk. We are not sure whether the assessee is cultivating the lands or leased out the agricultural lands to some third parties. There is also no clarity from the assessee as to the actual activities. In the absence of any evidence to differ from the findings of the Assessing Officer and the CIT(A), we are not inclined to disturb their findings. We accordingly uphold their orders and reject the grounds of the assessee on this issue.- Decided against assessee
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2016 (4) TMI 247
TDS liability u/s 194J - payment made to the non-executive Directors of the assessee company - sitting fee payment - Held that:- As per the explanation to provisions of section 194J professional service means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board. We, therefore, find force in the submission of the learned counsel for the assessee that sitting fees paid to the directors does not amount to fees paid for any professional services as has been mentioned in the explanation to section 194J(1). We further find from the memorandum explaining to provisions of the Finance Bill 2012 that as per clause No.71 it was specifically mentioned that there was no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary. We find the provisions of section 194J(1)(ba) speaks of any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01- 07-2012. We, therefore, find force in the submission of the learned counsel for the assessee that no tax is required to be deducted u/s.194J out of such director’s sitting fees. See Bharat Forge Ltd. Vs. Additional Commissioner of Income Tax [2013 (11) TMI 1263 - ITAT PUNE]
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2016 (4) TMI 246
Entitled to set off and carry forward of losses incurred in the derivative transactions - assessee did not furnish return of income u/s 139(3) - Held that:- We have noticed that the assessee has omitted to disclose the loss arising on F & O transactions in the original return of income filed u/s 139(1) of the Act. Upon discovery of such omission, it was incumbent upon the assessee to file a revised return of income within the time limit prescribed u/s 139(5) of the Act. The effect of filing of revised return of income is that it shall substitute the original return of income and accordingly, the AO shall proceed to assess the total income on the basis of revised return of income. In the instant case, as noticed earlier, the assessee has not filed any revised return of income upon discovering his omission to disclose the loss incurred in F & O transactions. The assessee brought to the notice of the AO for the first time on 20-09-2011 through a revised computation of income. We have noticed earlier that the assessee was entitled to furnish a revised return of income on or before 31.03.2011, which the assessee has failed to do. There should not be any doubt that the assessee could not have filed any revised return of income after 31.3.2011, meaning thereby, the assessee has lost his right to file revised return of income for the year under consideration. Having lost the right so, in our view, the assessee could not have made good the same by filing revised computation of income and thus claim carry forward of loss. The said action of the assessee, in our view, defeats the statutory mandate prescribed in sec. 139(5) read with section 139(3) of the Act. The assessment order that the assessing officer has considered the revised computation of income and assessed the income declared therein, but refused to consider the loss occurred in F&O transactions. We have noticed that the revised computation of income has been filed beyond the time limit prescribed for filing revised return of income u/s 139(5) of the Act and we have held that the assessee is not entitled to make good his omission to file revised return of income by filing the revised computation of income, since the said action of the assessee would defeat the statutory mandate of the provisions of sec. 139(5) r.w.s. 139(3) of the Act. Accordingly, we are of the view that the assessing officer was justified in ignoring the loss occurred in F & O transactions and declared in the revised computation of income, since the said claim has been made beyond the time limit prescribed u/s 139(5) of the Act. - Decided against assessee.
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2016 (4) TMI 245
Deduction u/s.80HHC - Held that:- The issue is covered by the decision of the Hon’ble Supreme Court in the case of CIT Vs. Avani Export [2015 (4) TMI 193 - SUPREME COURT] as well as in the case of Topman export (2012 (2) TMI 100 - SUPREME COURT OF INDIA ). The ld.AO is directed to grant deduction under section 80HHC of the Act. - Decided in favour of assessee
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2016 (4) TMI 244
Default u/s 206C(6A) - Tax Collection at Source (TCS) - whether ld. CIT(A) was correct in denying the benefit referred in section 206C(1C) for the sales of ₹ 1,57,60,687/- even when assessee has submitted form no.27C from respective buyers - Held that:- Assessee has duly obtained form 27C for the sales of ₹ 1,57,60,687/- and there is a list of 24 parties shown in the order of ld. CIT(A) at para 5.3 and out of 24 parties in 19 cases column of date shown in part-I is not filled and in the remaining six cases either there is a minor overwriting in the form or wrong date is mentioned. But the fact remains that all the declarations are duly signed, all the necessary details of purchase made by the buyers are correctly entered, details mentioned by the buyers have been duly verified by the assessee and most importantly the figures shown by the buyers in the declaration are duly reflected in the sales account of the assessee which is part and parcel of the audited financial statements and not a single mistake in the above facts have been noticed by the lower authorities. Accordingly, in view of the above discussion and relying on the decision of the co-ordinate bench in the case of Karnataka Forest Dev. Corpn. Ltd. vs. ITO (2015 (7) TMI 908 - ITAT BANGALORE ), we are of the view that the moment assessee has received form no.27C from the buyers his liability to collect TCS @ 1% gets away and the assessee should not be deemed to be in default for any minor clerical mistakes in the forms submitted by the buyers in the given circumstances when there is no variation in the purchase figures shown by the buyers with the sales figure shown by the assessee in its books of account. - Decided in favour of assessee
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2016 (4) TMI 243
Addition on account of living and life style expenses - Held that:- The TIs dated 16/7/2000 and 23/7/2000 on UBS AG, Zurich have been issued from Dubai; from Hotel Intercontinental, Dubai, stated as his camp office. Then, the assessee has issued a notarized statement on 30.06.2003 at London, wherein he admits to have visited Switzerland in February, 2001. The same would entail, apart from travel expenditure, boarding and lodging costs, far in excess of that inures while staying at one’s residence in India. The assessee is also suffering health problems and undergoing treatment from leading hospitals and clinics at Pune/ Mumbai, as evidenced by the medical reports filed by him and his wife, RHAK, in appellate proceedings, also entailing expenditure in tidy sums. We, accordingly, consider the assessment of living and life style expenditure at ₹ 30 lacs p.a. as reasonable. The assessee is, without doubt, entitled to credit for the withdrawal for such expenditure booked in accounts Non-grant of telescoping benefit - Held that:- The plea could in fact be available only where the assessee accepts the addition, claiming a double addition, leading to a double jeopardy. Be that as it may, we have already restored the assessment on some grounds, while confirming some additions. The principles of telescoping are well laid out by the Hon’ble Apex Court, as in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980 (4) TMI 2 - SUPREME Court ]. The AO shall, in the set aside proceedings, consider the assessee’s case in this respect, where one is made out, in accordance with law. This disposes the assessee’s said ground, as well as similar ground/s for other years as well, where we observe the assessee contends of an addition as having been already returned, i.e., forming part of his returned income. The AO shall allow credit on the basis of verifiable cash flows, assuming annualized income/expenditure on a uniform basis, while taking others on the basis of actual date (of investment, expenditure, etc.), also accounting for the payment of tax, again, on defined dates Addition as undisclosed income - Held that:- As payment (USD 20 million) (200 lacs) was made, which would require being verified, it implies that the down payment of CHF 2.5 lacs to be made by 03.8.2001, stood also made, at least in all probability. It is in fact difficult to believe that such a deal/agreement was finalised and, further, in subsistence, at least for some time, without any money being exchanged, i.e., even as clearly it was not carried out fully and fell through. The assessee, who has not denied signing the document (on behalf of self), or of being not in Switzerland where the document seems to have been executed (and which could be proved on the basis of entries in his passport), has not helped matters at all by not issuing any explanation what-so-ever in the matter. No definite findings – the issue being primarily factual – could under the circumstances be issued at this stage, and the matter clearly requires being remanded back for the purpose. The matter shall, accordingly, stand to be set aside to the file of the A.O., who shall re-adjudicate afresh. Addition on account of alleged undisclosed expenditure - Held that:- Incurring expenditure of the like stated in the invoice, viz. hotel, telephone, travel, etc., besides being only understandable, is thus corroborative. That the amounts should be accumulated for so long; the period of expenditure covered by the bill extending beyond six months, is itself surprising. Why the payments would not be made, being for expenditure which ought to be financed by the assessee in the first place, belies comprehension. The assessee’s case is sans any explanation. We, accordingly, confirm the addition to the extent of CHF 216,169, applying the same conversion rate, which is not in dispute. Addition qua three transfer instructions (TIs) - Held that:-Materials, apart from that found from the seized laptop, were also seized, which are corroborative, independently establishing their veracity. That is, the truth of the documents gets established even independent of the provision of s. 292-C of the Act. The statement/s by PA, made on oath, would be admissible in evidence u/s.132(4) or, as the case may be, s. 131 of the Act. The assessee in fact has not denied or rebutted the statement/s; rather, further presses on PA’s statement/s before the ED in proceedings under PMLA, without of course making them a part of the record. The plea that the laptop did not belong to the assessee, but to PA, which may well be true, would thus be of no moment, both in law as well as in the facts and circumstances of the case. Undisclosed income by way of alleged unexplained balance in account with UBS - Held that:- All that has been retained – by both the parties, or survives, is the Agreement dated 07/8/2001! Even if therefore it is shown by the assessee that the TIs for USD 200M are in pursuance of the Agreement dated 07/8/2001, the source thereof as being profits earned – to that or whatever extent, in the past, shall require being shown or reasonably proved, for it to be accepted. The payment as listed at Sr. No. 6 of the table, being in relation to an Agreement dated 18.7.2001, due to be paid, has been also noted by us for A.Y. 2002-03 (vide para 22(b) of this order). Without doubt, the same being in respect of a single payment, could, even assuming so, be brought to tax for either year. The A.O., who has added the purchase amount as well as qua payment in its respect, shall have regard to this aspect. We decide accordingly, and the assessee’s ground is partly allowed and partly allowed for statistical purposes Addition toward gift/s to son, Syed Mohammad Sameer Uddin Ali Khan, Hyderabad - Held that:- The assessee’s written submissions are silent on this aspect of the matter. We find no reason, in view of the undisputed facts stated above, not to confirm the addition. We decide accordingly. Investment in a Mercedes car - Held that:- As regards the payment per EMIs, registration and insurance charges, falling during the year, the assessee has produced a cash statement, which has been disregarded for want of both, authenticity and adequacy. When separate addition is being made by the Revenue for household expenses, being part of the living expenses, which should also include that toward running of vehicle, denial of credit for the income applied toward the payment of EMIs for the year cannot be appreciated. The ld. CIT(A) could have definitely proposed, and where unexplained, made an enhancement toward unexplained payment of EMIs falling in other years, which surely cannot be considered for the current year, so that reference thereto is misplaced. Further, even assuming to be unexplained, how we wonder the addition for the current year could exceed the EMIs paid, of course, as increased by the registration and insurance cost, if any, paid during the year. Under the circumstances, we only consider it fit and proper to restore the matter back to the file of the assessing authority to adjudicate afresh. Addition on saving account balance - Held that:- Apart from merely stating that the ld. CIT(A) had erred, no definite case has been made out before us. The same, even otherwise; the matter being factual, would be of little consequence in the absence of any material on record to establish the assessee’s case, which has been held as an after-thought by the ld. CIT(A) before whom the books of account were not produced. We, accordingly, have no reason to interfere with his order, except for deleting ₹ 3 lacs, being in relation to the cash deposit on 31.3.2004, which is apparent from the date-wise statement of cash deposit, listed in the assessment and the impugned order itself. Further, the A.O. shall, while giving effect to her order, take into account the said cash deposits, including ₹ 3 lacs on 31.3.2004, while reckoning the availability of finance for other purposes with the assessee. We decide accordingly. Unexplained deposit/investment by way of repayment of bank loan - Held that:- The loan under reference is a housing loan in the name of RHAK, advanced on 13.3.2004. The repayment during the year has been confirmed by the ld. CIT(A) at ₹ 1.35 lacs, as against ₹ 1.20 lacs, as contended by the assessee before him. We, accordingly, find no ground for interference. Addition toward transfer instructions - Held that:- We are acutely conscious that the amount under reference is astronomical. At the same time, however, we cannot disregard the clear evidences found in or as a result of search. The additions made, it may be appreciated, are only on the basis of objective materials – totally unexplained and, further, in agreement with the other materials found and in possession of the Revenue. Why, the notarized statement dated 30.06.2003 supra (Ann. C), itself contains details of the assessee’s relationship with UBS, with account opened as far back as in 1982, with USD 5M, as also details of transfer of huge funds. The assessee’s stand of complete denial is only toward stalling the process of law, which continues even before us. The same is clearly aimed at providing no clue whatsoever to the Revenue as to how he, at best only a horse trainer in India, had access to such sums, visiting and staying at Switzerland, Dubai, London, Hongkong, etc. on a regular basis, in fact since 1980s. The matter is accordingly restored to the file of the A.O. for adjudication afresh in accordance with the law by issuing definite findings of fact, and after allowing the assessee reasonable opportunity to present his case. We decide accordingly. Unexplained investment in race horses - Held that:- We find little merit in the assessee’s case. The assessee per his written submissions (WS-5) challenges the valuation, without bringing any material on record. So, however, the detail of the nine horses purchased, reveals one horse ‘Bu Attifel’ to be purchased on 19.8.2005. The said date falls outside the relevant previous year. Accordingly, the addition is confirmed at ₹ 8 lacs Disallowance of loss on horse betting - Held that:- The Revenue has denied the claim of the impugned loss in view of it being unevidenced. The assessee’s alluding to section 74A is thus of no moment. In fact, even section 74A refers to the activity of owning and maintaining race horses, while the loss under reference is on horse betting, which is a different activity altogether. The assessee’s claim is thus not maintainable of all fours Unexplained expenditure on air ticket - Held that:- The document has been found during search from the assessee’s residence. The fact of travel is not denied. It is for the assessee under the circumstances to prove that, despite so, expenditure was incurred by someone else, which he now claims as by KT. Merely stating so is of no consequence. We find no reason not to confirm the addition. Addition on cancellation deed - Held that:- The cancellation deed is in respect of lease deed dated 11.4.2005. However, the question is of time. It cannot, on the basis of the material on record, be said that it was during the current year. The Revenue has also not questioned the assessee on this aspect, for us to draw any adverse inference on nonfurnishing of proper explanation by the assessee. The only impact that we discern is that the assessee’s cash flow would witness an inflow and outflow for that sum on 11.4.2005 and 29.4.2005 respectively. The addition is deleted. Disallowance of loss - Held that:- If the loss is disallowed, on which penalty is also initiated, it only implies that there is availability of cash at ₹ 24.11 lacs. This causes a double jeopardy for ₹ 8.42 lacs. We have further clarified that the deemed income on account of said expenses can be set off only against amount shown or taken as utilised, in accounts or otherwise, toward such expenses. The set off of loss is accordingly allowed. We may, before parting, clarify that the income from horse betting, assessable u/s. 56, is a separate and distinct activity, so that our decision shall not in any manner, impact our decision qua Ground 11 for A.Y. 2005-06. Undisclosed jewellery - Held that:- Firstly, that the jewellery stated as gifted to the assessee on the occasion of his marriage by his sister, Amia Khan (at ₹ 2.22 lacs) can only be regarded as reasonable, and is thus accepted. Secondly, even if the jewellery stated to be purchased in December, 2006 (at ₹ 13.16 lacs) cannot be accepted in absence of any bill or other evidence, its’ being accounted, assuming so, implies absorption of cash to that extent, so that non-acceptance of the explanation would release cash to that extent, for being considered toward other applications. This is further subject to the cash availability being properly explained. The AO shall verify the same, clearly recording his findings, upon allowing the assessee an opportunity to state his case in the matter. Subject to foregoing, we confirm the assessment, and decide accordingly. Unexplained payment - Held that:- As apparent from the document, to which s. 292-C applies, the same is in respect of an investment for ₹ 12.07 lacs, partly financed by loan from ICICI Lombard, and partly by cash, with the loan being (or to be) repaid per EMIs, payable on 5th of every month, at ₹ 14,625/-, to ICICI Lombard, through one, Nilesh V. Padhye. The difference of ₹ 38,000/-, as it appears, is the excess repayment in-as-much as the loan would also carry interest, which gets included in the EMIs. Further, the same is clearly unaccounted. The addition under the circumstances could be for the cash component of ₹ 6.07 lacs, plus the EMIs falling due for payment and/or paid during the year. The assessee furnishing no details, it is reasonable to presume 12 EMIs during the year, i.e., ₹ 1,75,500/-. The addition is accordingly restricted to ₹ 7,82,500 (i.e., 6,07,000 + 1,75,500), and the assessee gets part relief. Unexplained investment by way of payment of membership fee of RWITC - Held that:- Surely, if cash payment has also been accounted for in books, as claimed, even this sum may not stand to be included in the assessment. The stand of the ld. CIT(A) that the cash payment is reflected in the books on 10/05/2006, while cash receipt is dated 9/05/2006, may not be material where cash is also available in books on 9/05/2006. The basic issue is of the source of cash in the books as well as the balance in the ABN Amro Bank, which cannot be considered as explained merely because the payment is by cheque. The matter needs proper verification of the assessee’s claim of the entire sum being duly accounted for and, thus, explained, and, is accordingly restored to the file of the AO for fresh determination in accordance with law, issuing definite findings. We decide accordingly. Addition toward unexplained cash deposits with ABN Amro Bank - Held that:- Cash deposits for a total of ₹ 52.74 lacs in the assessee’s savings bank account (# 949548) therewith, which had a balance of ₹ 52 lacs as on 05.1.2007, were found (from f.y. 2004-05 to 2006-07) and, accordingly, addition made for each of these three years. The facts and circumstances, as well as the case of both the parties, being the same, we confirm the addition, as for the preceding two years, for which reference may be made to paras 44 and 61of this order. We may, however, add that there can be no double addition for the same amount, as where the cash deposited is utilised, as by issue of bearer cheque for ₹ 3.50 lacs for payment of car (refer paras 82,83). In other words, the addition is confirmed in principle, though the assessee can show that it results in a double addition, which aspect, where so claimed, the A.O. is obliged to verify, and satisfy himself that there is no double addition. Payment of membership fee of ‘Le Royale Residency Club’ - Held that:- We find little merit in the assessee’s case. The explanation, now furnished, firstly confirms the transaction. Two, there is nothing on record to establish the stated source (loans), in terms of identity, capacity or genuineness. We are aware that the payment of ₹ 25 lacs is from ABN Ambro Bank, cash deposits in which have been separately brought to tax (Gd. # 11). However, the cash deposits, assessed as income, total to ₹ 52.74 lacs, as against a balance of ₹ 52 lacs in the said account on 05.1.2007, the date of search. The impugned amount of ₹ 25 lacs, though routed through the said bank account, cannot therefore be ascribed to the said cash deposits; the assessee himself claiming the source as loans raised by him. Clearly, therefore, there is no case for double addition/telescoping nor any stand in its respect taken or case made out, either before the Revenue or before us. The assessee fails. Unexplained expenditure on clothing - Held that:- We, accordingly, only consider it proper that the matter is restored back to the file of the A.O. We may clarify that where the inference of purchase or payment toward the subject property is manifest from the document, the onus to exhibit that the purchase – which could be in the name of a close relative as well, did not materialise, or no payments were made, would be on the assessee. Unexplained payment - Held that:- Only payments up to 28.12.2006, as recorded, could be considered as paid during the relevant year. The impugned sum of ₹ 20.88 lacs may represent the amount for which the payment is to be made. That would, by itself, will not imply that the payment to that extent stands made during the relevant year. The addition, thus, is directed to be restricted to the extent afore-stated. Unexplained expenditure toward cost of one canon camera and speaker - Held that:- The assessee’s case is general, stating of the evidence with the Revenue as being not conclusive. We find the argument untenable. The document is speaking, in respect of purchase of electronic items of common day use. It is nobody’s case that the camera cannot or had not been purchased. Further, what explains the document at the assessee’s residence? The amount is nowhere even contended to be disclosed. The addition is, accordingly, confirmed. Unexplained investment in branded, luxury watches - Held that:- Firstly, it is the balance in account as on 05/01/2007, and not on 31/03/2007, that is relevant. Two, the assessee’s claim/s qua valuation is unsupported by any material on record, even as the reflection in accounts only implies an admission. Watches, to the extent of ₹ 11 lacs have however already been brought to tax for A.Y. 2000-01, and confirmed by us. We observe no valuation difference qua those watches, stated separately in the reconciliation statement. We, accordingly, confirm the addition for the balance ₹ 8.97 lacs (19.97-11.00), and the assessee gets part relief. Addition toward the cost of air travel by the assessee during the year to different foreign locations - Held that:- All that was required in that case was for the assessee to exhibit this on the basis of the accounts of M/s. Travel Hub, which would bear the payments in respect of the assessee’s travel by KT or his companies. The cost of travel, being based on information from his regular travel agent, has not been contested for most part, with that qua travel to Canada being, again, unsubstantiated. Subject to the AO’s verification supra, we confirm the addition u/s. 69C. Further, we also agree that the addition on account of stay abroad is, on the basis of the travel dates and visa period, listed in the assessment order, is reasonable. We decide accordingly.
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2016 (4) TMI 242
Reopening of assessment - Held that:- Reopening is bad in law for the reason that there are no tangible materials to form reason to believe that income has escaped assessment and the reopening is bad in law for the reason that the assessment cannot be reopened based on the same set of facts which were already on record. Thus, we hold that the reopening is bad in law. - Decided in favour of assessee.
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Customs
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2016 (4) TMI 231
Seeking alternate remedy - against order of the Commissioner granting provisional release of goods - Onerous conditions imposed by the respondents - Held that:- as was noticed in Spirotech Heat Exchangers Pvt. Ltd. v. Union of India [2016 (3) TMI 37 - DELHI HIGH COURT], since the Respondent does not appear to be inclined to follow the aforementioned orders and the binding order of the Supreme Court, and are compelling exporters and importers to approach this Court every time for relaxation of the conditions imposed for the provisional release of goods, relegating the Petitioner to a statutory remedy would not be efficacious. Consequently, the conditions imposed in the order dated 11th March, 2016 passed by the Commissioner of Customs (Export) are modified and the Court directs the provisional release of the goods in favour of the Petitioner subject to the Petitioner executing a bond in the sum equivalent to 100% of the re-determined value of the goods and furnishing security in the form of bank guarantee for a sum equivalent to 30% of the differential duty, with an auto renewal clause and as per RBI guidelines. - Petition disposed of
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2016 (4) TMI 230
Imposition of penalty - Revocation of CHA Licence - relying upon the alleged report of the enquiry submitted after the lapse of more than four years of the initiation of the enquiry - Banned goods exported as misdeclared - Contravention of Regulation 13(a) of CHALR, 2004 - Non-obtainance of proper authorization from the exporter - Held that:- there is no advertence in the Tribunal's argument that a period from June to November, 2008 for conduct of the enquiry and submission of the report in June, 2013, has not been explained. There is absolutely no discussion in the Tribunal's order as to why this delay occurred and whether that could be said to be fatal to the proceedings. The Tribunal also does not consider the fact that during this period the licence of the appellant was renewed when it expired by efflux of time. Thus, the Tribunal should have noted that if the penalty is imposed on 28th March, 2013, from 29th November, 2008 to 28th March, 2013, the petitioner was merrily carrying on the business as a Customs House Agent and was also obtaining renewal of the licence which expired by efflux of time. Thus when the licence was suspended on 29th February, 2008, it was still in force. If the enquiry was continuing and the period of the licence expired allegedly by efflux of time during such enquiry, then, there is no explanation forthcoming as to why the licence came to be renewed. Once the facts are so glaring, the lapse on the part of the appellant was serious and it actively associated itself with smuggling of the red sanders, then, all the more the Tribunal should have considered this aspect a little more carefully. By perusal of enquiry report it is found that besides reproduction of the charge and version of the Presenting Officer and some statements of witnesses, the Enquiry Officer has not come to any independent conclusion as to how the charge stands proved. Therefore, the charge of appellant is accepted at best that he could be held to be guilty of this charge and for the same the penalty that he has suffered of loss of licence as a Customs House Agent from 28th March, 2013, till today should be sufficient. Further, the forfeiture of security deposit in addition can also be ordered. - Decided partly in favour of appellant
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2016 (4) TMI 229
Conversion of free shipping bills into draw back shipping bills - Goods cleared under free shipping bills during the period from 5.4.2013 to 16.7.2013 - Availed rebate of the excise duty paid and they were not aware that they could claim drawback for the duty paid on the imported goods used in the manufacture of chemicals exported - Appellant submitted that Board's Circular No.36/2010-Cus., dt. 23.9.2010 prescribes a time limit of three months from the date of the Let Export Order for filing the request for conversion of shipping bill but there is no such limitation provided as per Section 149 of the Customs Act - Held that:- the appellant being manufacturer-exporter is entitled to avail draw back and the entire export documents are available on record for verification. In the absence of time bar provision in law, it is open to the authorities to examine the merit of the case since there is no material on record to suggest that the issue is not considerable. - Appeal remanded back
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2016 (4) TMI 228
Validity of order - Non-adherence of time line - Import of Synthetic Diamond Powder - Failure to comply with the obligations under Regulation 13 of CHALR 2004 [Regulations 11 and 17 of CBLR, 2013] - Held that:- Show cause notice issued much after the time limit prescribed under Regulation 20 (1) of CBLR 2013. Also, the Enquiry Officer submitted his report on 07/01/2015, Regulation 20 (5) stipulates that the Enquiry Officer shall prepare a report of the enquiry and submit the same within a period of 90 days from the date of issue of show cause notice under sub-Regulation (1). We find enquiry report has been submitted well beyond the period prescribed under the Regulation. Therefore, by considering the decision of Hon'ble Madras High Court in the case of A.M. Ahamed & Co. vs. CC (Imports), Chennai [2014 (9) TMI 237 - MADRAS HIGH COURT], decision of Tribunal in the case of M/s Atharva Global Logistics vs. CC, New Delhi [2016 (2) TMI 10 - CESTAT NEW DELHI] and in the case of ZEN Cargo Movers Pvt. Ltd. vs. CC, New Delhi [2016 (2) TMI 139 - CESTAT NEW DELHI], a time period prescribed under the Customs Brokers Licencing Regulation 2013 are to be adhered to and failure to follow the time limit statutorily prescribed will result in setting aside the order arising out of such proceedings. Therefore, the impugned order is liable to set aside on the ground of non-adherence of time line prescribed under the statutory regulations. - Decided in favour of appellant
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Corporate Laws
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2016 (4) TMI 223
Validity of public tender - Held that:- Given the nature of the equipment to be installed at such crucial places, and going by the nature of work and the prior experience condition that is reproduced by us hereinabove, we cannot accept the stand taken in para 8 that the tender does not require any previous experience of three years, or the denial that a previous requirement experience of 3 years was mentioned in earlier tender notice but was deleted from the present tender notice. The requirement of experience is very much mentioned in that column of even the present tender. We do not think that the mandate of Article 14 of the Constitution of India has been adhered to by the State. Respondent no. 3 has also stated that as regards the earlier tender being relied upon by the petitioner company, they had bid at par with the aforesaid estimated cost of respondent no. 2, while the present respondent had submitted a bid of 8.1% below the estimated cost i.e. ₹ 3,38,67,804/-. It blames the petitioner for indulging in litigation, but we are not concerned here with the conduct of the petitioner, but the conduct of the State in a matter of public tender. We are aware of the principles laid down in the case of Michigan Rubber (India) Limited (2012 (3) TMI 512 - SUPREME COURT). We are also aware that we cannot interfere with the tender conditions. We are interfering in this case simply because the respondent nos. 1 and 2 represent that the terms and conditions of the tender are those which have been notified for the benefit of all bidders and participants and then makes a marked departure therefrom without producing any material justifying such deviation. We have found that the work experience is a vital and important eligibility criteria. That could not have been compromised or given up by the State in the manner done. We have found that the State itself and particularly the Department of Public Works, its Executive Engineer (Electrical) are not serious in adhering to the terms and conditions of the tender. Given the nature of the work and the maintenance that is required, the State ought to choose the best and the most experienced in the field. Once the tender process does not meet the requirements of fairness and reasonableness, then there is no alternative for this Court but to interfere. If the State, or its instrumentality, acts reasonably and in public interest in awarding contracts, then the Court's interference is not justified or permissible. However, no person can claim a fundamental right to carry on business with the Government. When the decision of awarding contract is not in accordance with the terms and conditions of the tender notified and the larger public interest is affected adversely, then this Court can, in its writ jurisdiction, interfere with the decision of the State. As a result of the above discussion, the writ petition succeeds. Rule is made absolute in terms of prayer clause (b) to the extent that the work order in favour of 3rd respondent being vitiated as above, is quashed and set aside.
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Service Tax
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2016 (4) TMI 241
Passing of burden of service tax as per Mutual Contract - PUNGRAIN directed the appellant to deposit the service tax on the income received from renting/lending of immovable property and withheld the godown rent - Seeking direction to release the storage charges of godown - Petitioners moved a representation to the Managing Director, PUNGRAIN, Chandigarh for releasing the storage charges of the godowns, but no action has so far been taken thereon , so, praying the liberty to file a detailed and comprehensive representation - Held that:- the liberty is granted to the petitioner to file a detailed and comprehensive representation against the notices raising all the pleas as raised in the present writ petition before respondent No.3 within a period of 15 days from the date of receipt of the certified copy of the order. The petitioners shall be entitled to lead any evidence to substantiate their claim before respondent No.3. - Petition disposed of
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2016 (4) TMI 240
Entitlement for balance reward as per reward circulars - On information of petitioner department came to know about the defaulter of service tax who then, voluntarily deposited his service tax dues for which petitioner needs to be rewarded claimed by petitioner - Petitioner's role has not been discussed and a quantum of reward has been determined unilaterally much below the prescribed limit of 50%, therefore, balance amount of the reward be directed to be paid - Held that:- the reward disbursed to the petitioner till date is only an advance amount and not the final sum. The respondents are misleading this court and they ought to faithfully disclose that the petitioner is entitled to a sum of ₹ 51.87 lacs. The petitioner disputes the computation and submits that because of the nature of services offered by the assessee that he learnt about the service tax evasion. The assessee evaded service tax. The petitioner's information led to recovery of tax along with interest worth ₹ 2.5935 crores. The evaded tax was paid by the assessee voluntarily under the self assessment scheme and investigators had very little role in the recovery, which alone was enough to qualify and consider the petitioner eligible for full reward at the rate of 20%. Thus, how the reward amount is to be computed and whether the amount as computed by the respondents is in tune with the reward scheme or the circular in that behalf itself is a disputed question. Once the petitioner now and in the rejoinder affidavit seeks more details of the information already forwarded and tries to elaborate it with figures, particularly after enlisting the services provided by the assessee, then, all the more such a factual dispute can not be resolved. an elaborate exercise of arriving at the figures of the reward cannot be undertaken as it is not just on affidavits that the figures can be determined and correctly but the affidavit sets out versions of both sides. Which version is the correct one would have to be determined in appropriate proceedings. If the petitioner claims the sum under the head "balance reward”, then, whether that balance, as computed by the petitioner, is accurate or that there is no balance are matters which must be resolved by a competent Civil Court. It is not as if the petitioner is remedyless. Decided against the petitioner
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2016 (4) TMI 239
Dismissal of appeal for non compliance of order for making pre-deposit - Held that:- the original order directing the appellant to make a pre-deposit was passed on 12.12.2014. The time for compliance was fixed as six weeks. The appellant ought to have either complied with the conditional order or filed an application for extension of time or at least filed an appeal against the said order. Neither within the time stipulated by the Tribunal nor after the time fixed, the appellant filed any appeal. As a consequence, the order dismissing the appeal came to be passed long after on 30.6.2015. Once a consequential order is passed, the appellant would have no cause of action as against the original order. Consequently, the order cannot be challenged in the absence of compliance with the original order. Hence, the appeals cannot be entertained. - Decided against the appellant
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2016 (4) TMI 238
Admissibility of Cenvat Credit - Medicare Services Club for its employees - Whether expenditure incurred on account of Medicare services is included in the cost of services as per CAS-4 or not - Held that:- the First Appellate Authority while rejecting Appeal of the Appellant, only gave one reason for denying the Cenvat Credit that there was no evidence produced by the Appellant whether expenses on account of Medicare Services have been included in the value of the services being provided by the Appellant. The Appellant has now produced a certificate from the Chartered Accountant to that effect that the expenses incurred on account of Medicare services have been included in the value of the output services being provided. Therefore, Cenvat credit has to be allowed. - Decided in favour of appellant
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2016 (4) TMI 232
CENVAT Credit sale promotion activities - Beneficial amendment to Rule 2(l) vide notification no. 2/2016 CE(NT) dated 3.2.2016 is retrospective or prospective - sales promotion includes services by way of dutiable goods on commission basis - denial of claim as the services were received and utilized by the Appellant for selling of the goods and not in relation to the manufacture of the goods and clearance of the final product from the place of removal, which could not be considered as “input service” as defined under Rule 2(l) of the Rules, 2004. Held that:- The definition of the 'input services' includes services used in relation to 'sales promotion' and these activities can rightly be described as sales promotion activities. Sales promotion activities undertaken at given point of time also aims at sales of goods which are to be manufactured and cleared on future. Any advertisement given as a long term impact cannot be treated as post- clearance activities and, therefore, sales promotion has been specifically included in the definition of input services. As regards the other contention that the documents on which the respondent has taken the credit is not the prescribed document, it is to be noted that the respondent is not a service provider per se. They are basically the service recipients. They are required to pay service tax as a deemed service provider. Revenue was unable to justify that the claim of cenvat credit by the assessee was erroneous in any manner. Hon'ble Supreme Court in the case of CIT Vs Podar Cement (P) Ltd - [1997 (5) TMI 2 - SUPREME Court] observed that the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so. In the present case, the Explanation inserted in Rule 2(l) of Rules 2004, is in conformity with the Board Circular dt.29.04.2011, and extended the benefit to the Assessee The Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT], in the identical situation, held that if a legislation confers a benefit on some other person or on the public generally, and where to confer such benefit appears to have been the legislature’s object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. Cenvat Credit allowed - Decided in favour of assessee
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Central Excise
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2016 (4) TMI 237
Monetary limits for filing the appeals - Amount involved is less than ₹ 15 lacs - Held that:- the limits specified may not apply to certain exceptions, at the same time, the Circular dt.01/01/2016 which is in furtherance of the circular dt.17/12/2015, clearly envisages that the present instructions will apply retrospectively to all the pending appeals and appeals to be filed henceforth in High Courts/Tribunals, subject to exceptions where the monetary limits if is less than ₹ 15 lacs, can be preferred in High Courts. Taking note of the CBEC Circular dt. 17/12/2015 & 01/01/2016, the monetary limits in these appeals is less than ₹ 15 lacs, which is much less than what has been prescribed for filing appeal before the High Courts and deserve to be dismissed as not pressed. - Decided against the revenue
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2016 (4) TMI 236
Validity of order - Set aside on the basis of earlier decision in case of Sujana Metal Products Ltd. Vs. CCE Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE] - Held that:- since the issue is covered by the above referred decision. Hence, the present appeal shall stand disposed of on the same line as per the observation made by this Court. - Appeal disposed of
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2016 (4) TMI 235
Imposition of penalty - Rule 15 (1) of CCR 2004 - Availed Cenvat credit on inputs and service tax paid on input service for the liability of excisable goods - Disallowance of Cenvat credit availed and duty demanded alongwith interest - Appellant submitted that keeping in view the smallness of the disputed duty amount, the penalty of ₹ 10,000/- is too harsh and there is no justification for the same - Held that:- since the dispute involves interpretation of legal provisions and the amount of duty sustained not being significant and in view of the submissions of the learned counsel that they are no more pressing against the demand and have also reversed the Cenvat credit availed, there is no justification for imposition of penalty. Accordingly, penalty under rule 15 (1) of CCR 2004 is set aside. - Decided in favour of appellant
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2016 (4) TMI 234
Cenvat Credit denied - valid Cenvatable document - Held that:- As find that the respondent have initially availed Cenvat Credit mentioning the details of the Bill of Entry. Subsequently on pointing out by the audit, they produced the invoices issued by M/s. Tata Motors Ltd. the invoice issued by an importer is a valid Cenvatable document. Therefore, merely by mentioning the wrong details of the document credit cannot be denied, particularly when the valid duty paying documents i.e. invoice was available with the respondent. Ld. Commissioner (Appeals) after calling the report from the Jurisdictional Officer confirmed that the receipt, issue, use of the imported goods on which credit was taken and production out of the said input is not under dispute. In this fact, do not see any reason why the Cenvat Credit should be denied. - Decided in favour of assessee
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2016 (4) TMI 233
Valuation of goods cleared to own sister units for captive consumption - Determination of the cost of production as per CAS-4 - differential duty demand and interest - Enhancement of value as per the cost audit submitted by Dy. Director (Cost) - Held that:- The adjudicating authority has correctly determined the cost of production of copper anodes manufactured by the appellants. We find that the adjudicating authority has not merely or plainly adopted the DD (Cost) report for addition of the cost elements under CAS-4 and the very fact that the adjudicating authority has over ruled on six items for disallowing the addition proposed by the DD (Cost) and allowed the addition clearly shows that he has applied his mind and the direction of this Tribunal orders and correctly determined the cost as per CAS-4 for copper anodes as ₹ 94,446/- and ₹ 94,594 per MT as against the DD (Cost) proposal of ₹ 1,30,802.38 and ₹ 1,32,738.80 per MT. We also find that during the proceedings the appellant's cost auditor was also represented and submitted cost certificate. Considering the period of dispute and taking into the original demands as proposed in the four SCNs the demand amount of ₹ 251 Crores has been scaled down on account of the directions by this Tribunal’s Two Final orders, and the original demand reduced to ₹ 13.98 Crores. Therefore, we hold that the appellant's contention for remanding the case to the adjudicating authority is not justifiable except to delay the proceedings without any valid grounds. The appellants pleading for Revenue neutrality is also not justified and we find all along they never claimed this aspect in the initial proceedings when the demand was confirmed by the Commissioner and when the case was before this Tribunal twice. Therefore, we hold that there is no justification for their claim on Revenue neutrality. Therefore, taking into account all the above facts, we uphold the impugned order in determining the cost of copper anodes for the period July 2001 to March 2002 as ₹ 94,446/- per MT and ₹ 94,594/- per MT for the period April 2002 to October 2002. Consequently, the demand of ₹ 13,98,95,514/- and interest thereof is liable to be upheld. Disallowance of adjustment of excess duty paid - as contended that since the assessment is provisional while finalizing provisional assessment, the LA ought to have taken into account the excess duty paid on copper anodes and adjust the same against the total duty payment before arriving the differential duty - Held that:- We find that the adjustment was denied by the LAA and held that the appellants had passed on the duty element to their other unit at Silvasa, who in turn availed the Cenvat credit for the central excise duty paid by the appellant. Further, we find that since the facts have already been admitted before the adjudicating authority and LAA, they have admitted that they have already availed cenvat credit on the duty paid on copper anodes at their unit at Silvasa and they have also admitted before LA that they will not claim any refund on this account. Therefore the appellant's claim for adjustment and claiming automatic set off excess duty paid does not arise. Determining the cost of copper anodes - Commissioner (Appeals) order to that extent allowing deductions on 5 items is liable to be set aside and the OIO passed by the adjudicating authority is liable to be upheld. Consequently, the determination of value is restored to ₹ 99,742 per MT as per OIO and the original demand confirmed of ₹ 6,20,14,457 in OIO is upheld. The impugned order is set aside and the Revenue appeal is allowed to that extent. Penalty of ₹ 25 lakhs imposed under Rule 25 - Held that:- As we find that the adjudicating authority has already dropped Section 11AC penalty and taking into overall facts and circumstances of the case and taking into consideration that the issue is being debated from 1997 onwards, and also considering the Tribunal’s two remand orders, the penalty under Rule 25 is not imposable. Accordingly, we waive penalty of ₹ 25 lakhs imposed under Rule 25 of CER.
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CST, VAT & Sales Tax
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2016 (4) TMI 227
Refund claim for AY 2009-10 - Engaged in business of providing DTH broadcasting services - Default assessment, hence invokation of powers under Section 32 of DVAT Act - Held that:- the Court finds no justification for the refund due to the Assessee being withheld by the DT&T any longer. The repeated attempts at re-opening the assessments for each of the months of AY 2009-10, notwithstanding the Assessee's claim for refund being accepted, appears to be an abuse of the process of law by the Respondents. There is no justification for the VATO to have issued notices of default assessment for AY 2009-10 when the objections against the order dated 19th September 2013 are admittedly pending before the OHA and in view of the clear bar under Rule 36 B (7) of the DVAT Rules read with Section 74-B of the DVAT Act. Therefore, the sum deposited by the Respondent in this Court along with interest accrued thereon is directed to be released by the Registry to the Petitioner forthwith through an authorized representative. - Decided in favour of petitioner
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2016 (4) TMI 226
Re-opening of assessment under DVAT - validity of powers of delegations - Supply of fresh reasons to believe - Default notices under Sections 32 and 33 of the DVAT time barred - Reassessment of returns done under Section 32 of the DVAT Act after the expiry of 4 years from the end of the year for which the person furnished a return - No mention made of any concealment, omission or failure by the Petitioner in furnishing any material particulars - Held that:- it is not legally permissible for the DT&T at this stage to supply fresh reasons to believe, other than what is recorded in the file. While the reasons recorded in the file speak of the concealment by the Petitioner of “substantial part of his turnover”, the real reason as transpired during the course of hearing is regarding excessive claim of exemption made by Petitioner. There is, therefore, certainly no failure/omission on the part of the Petitioner to furnish material particulars which forms the basis of re-assessment in terms of the proviso to Section 34 of the DVAT Act. The proviso is very clear that there has to be “concealment, omission or failure to disclose fully material particulars” by the Petitioner. In relation to the claim for exemption there is nothing in the “reasons to believe” as recorded by the Respondent to show that there was any concealment or omission or failure by the Petitioner to disclose material particulars. The materials gathered by the DT&T, if any, ought to have a live nexus to the formation of the belief that there is escapement of turnover from assessment. The reasons to believe as recorded make no reference to any such material. Power and jurisdiction of the Assistant Commissioner (VAT Audit) - Issuance of notice of reopening the reassessment made by the orderSpecial Commissioner (Special Zone) under Section 67(2) of the DVAT Act - Held that:- Under Section 67(2) of DVAT Act there is no power of delegation as such but the power to issue orders “for the due and proper administration” of the DVAT Act and “all such persons engaged in the administration of this Act shall observe and follow such orders, instructions and directions of the Commissioners.” It is not understood how the Special Commissioner (Special Zone) could have delegated powers in terms of Section 67(2) of DVAT Act and in particular, the power of reopening the reassessment to the Assistant Commissioner (VAT Audit). Interestingly, the impugned notice is issued by the Assistant Commissioner (VAT Audit) and not by the Assessing Officer who has been duly empowered to issue it. Re-opening of assessment - in exercise of the powers under Section 34 of the DVAT Act, - Held that:- the VATO concerned is expected to act independently and not under the dictates of any superior officer. Here, the Additional Commissioner (VAT Audit) prepared a note proposing the re-opening of assessment which was approved by several of the superior officers up to the level of the Commissioner, VAT. - Decided in afvour of petitioner
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2016 (4) TMI 225
Imposition of onerous condition - Furnishing of bank guarantee for balance tax amount and penalty - in fulfilment of conditions stipulated in Rule 14(15) read with the proviso to section 52(4) of the Tamil Nadu Value Added Tax Act 2006 - Held that:- in catena of decisions, the assessee is directed to execute a personal bond in lieu of furnishing bank guarantee. - Petition disposed of
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2016 (4) TMI 224
Validity of impugned order - Violation of principles of natural justice - No pre-assessment notice was issued - Held that:- there was no reference about the issuance of notice and service of the same on the petitioner in the impugned order dated 19.08.2015, which would clearly demonstrate that no pre-assessment notice was served on the petitioner before passing the assessment order for the year in question. Therefore, in my considered view, the impugned order is in violation of the principles of natural justice. Therefore, the impugned order is liable to be set aside. - Petition disposed of
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Indian Laws
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2016 (4) TMI 222
Notice under SARFAESI Act - Held that:- At the stage of measures under Section 13(4) and/or the stage post-Section 13(4) of the SARFAESI Act, the remedy of appeal before the Debts Recovery Tribunal under Section 17 of the Act is available to the borrower. Since the statutory alternative remedy is available with the petitioners, this Court is not inclined to entertain this petition. It is trite that in the commercial matters, alternative remedy has to exhausted steadfast rather than invoking writ jurisdiction of High Court straightway. Accordingly, this petition is dismissed. The petitioners are relegated to pursue their remedy in appeal under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal.
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