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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter May 10, 2016 Case Laws in this Newsletter: Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax Articles FREQUENTLY ASKED QUESTIONS ON GST (PART-5) PENALTIES UNDER CUSTOMS ACT, 1962 News Enterprises Facilitation Councils Money and Education (Dr. Raghuram Rajan, Governor - May 7, 2016 - at Shiv Nadar University, Delhi) RBI Reference Rate for US $ Steps to give relief to the small tax payers and to the small business and professionals Notifications Companies Law F. No. 01/16/2013 CL-V(Pt-I) - dated 6-5-2016 - Co. Law Companies (Registration Offices and Fees) Amendment Rules, 2016 S.O. 1647(E) - dated 2-5-2016 - Co. Law Central Government constitutes the Investor Education and Protection Fund Authority FEMA 14 (R)/2016-RB - dated 2-5-2016 - FEMA Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 Circulars / Instructions / Orders Income Tax 13/2016 - dated 9-5-2016 Verification of tax-returns for Assessment Years 2009-2010, 2010-2011, 2011-2012 2012-2013, 2013-2014 and 2014-2015 through EVC which are pending due to non-filing of ITR-V Form and processing of such returns Customs 16/2016 - dated 9-5-2016 Audit Report No.15/2011-2012, Section 2 - Duty Drawback Scheme: Re-export under section 74 of Customs Act 1962 Highlights / Catch Notes Income Tax Just because the transferee had not used the land for agricultural purposes, the land does not loose its character of being an agricultural land when the same is sold by the assessee - AT Visit to Get Source TPA - there is a vast functional difference between the manufacturing activity of the assessee and Lucas TVS. Lucas TVS has no segment wise details for manufacturing components for cars, two wheelers, etc. The TPO or DRP has not taken any effort for taking the segment wise details - Lucas TVS cannot be a comparable case at all. - AT Visit to Get Source Provisions of Section 292C are applicable in a case where a search was conducted or certain documents were requisitioned. The provisions were applicable only in the hands of the searched person - AT Visit to Get Source Since the warrant of search was not executed at the business premises of the assessee firm and from the place of search no material whatsoever relating to the firm was found nor any submission was recorded from the partners of the firm nor the search notice was served upon the partners of the firm - Assessment u/s 153A is not valid - AT Visit to Get Source The nearness of the land to highway also does not alter the character of the land and appreciation in the price of land cannot be seen in isolation and if agricultural operations were carried out by the assessee, the appreciation in the price of land alone would not lead to the conclusion that the land is not an agricultural land. - AT Visit to Get Source TPA - adjustment to be made on account of difference in the arm's length price u/s 92CA - order passed by the Assessing Officer without passing a draft assessment order is bad in law - AT Visit to Get Source Penalty u/s 271D - Penalty can be levied on the amounts of loan which exceeds the amount of ₹ 20,000/-. Therefore, the A.O. is directed to exclude ₹ 20,000/- as permissible u/s 269SS, while levying penalty u/s 271D - AT Visit to Get Source LTCG - Benefit of Indexation - period of holding u/s 49(1) - when the assessee sells his immovable property which is acquired under gift or will, while computing the capital gain the index cost of acquisition has to be computed with reference to the year in which previous owner first held the asset and not the year in which the assessee became the owner of the asset - AT Visit to Get Source Addition u/s 69C - writing off the goodwill has not resulted in the siphoning of funds of the company - Further addition made u/s 69C is also not correct as section 69C can only be invoked only when the source of any investment was not explained - AT Visit to Get Source Taxability of amount withdrawn by the partner from the firm - there was no transfer of assets on extinguishment of right of the assessee partner merely on introduction of new partner in the firm. Accordingly amount withdrawn by the assessee partner was not liable to tax as capital gain - AT Visit to Get Source Deduction u/s 80IB - percentage completion method - AO cannot take the benefit with regard to the inadvertent mistake committed by the assessee in filing the return of its income. The AO should not act against the principal of natural justice - deduction allowed - AT Visit to Get Source Addition on cash received - addition cannot be sustained in the hands of assessee only because certain documents stated to have been filed for the purpose of marketing the cinema and not the actual expenditure cannot be considered for making an addition in the hands of assessee - AT Visit to Get Source Penalty under section 271(1)(c) - assessee had declared the income in its return of income in response to notice issued under section 153A of the Act, it is income detected during the course of search and seizure operation - penalty confirmed - AT Visit to Get Source Addition on account of interest income - AO was not justified in placing reliance on financial statements which were not approved by shareholders. - AT Visit to Get Source Validity of assessment u/s 153 - When the order of the Tribunal nullifies the total income assessed or determined in the original order of an assessment, it definitely means the setting aside of the original order and a fresh assessment determining the total income - The fresh assessment framed by the Learned AO is barred by limitation - AT Visit to Get Source As because the assessee had not claimed any such expenditure in the relevant year, assessee cannot be subjected to the provisions of TDS - the appellant cannot be treated to be in default u/s 201 - AT Visit to Get Source Depreciation on V-SAT Line/Infrastructure - V-SAT network for the purposes of enabling screen based trading by the members is entitled to full depreciation - AT Visit to Get Source Customs Import of spectacle lense - Department treated them as semi-finished spectacles lenses and denied the exemption - This approach of the authorities below was clearly erroneous - SC Visit to Get Source Applicability of Ratio of decision of different High Courts - Being a central statute bearing tax implications, we would, even otherwise, be slow in taking different view from two reasoned judgments of other High Courts. Even if, therefore, another view was possible, for the sake of consistency, we would have respectfully followed the view of other High Courts. - HC Visit to Get Source Refund - unjust enrichment - The bank guarantees were undoubtedly securities to safeguard the interest of the Revenue but, once the High Court dismissed the petitions and vacated the interim relief, the duty became payable as on that date - at that stage, it was in the nature of duty and not a security - Refund not allowed - HC Visit to Get Source Waiver of demurrage/godown rent and container charges - there is no mala fides of the individual Customs officers in delaying the release of the goods - In such situation, no direction can be issued to waive the demurrage charges - HC Visit to Get Source It is to be noted that Section 132 of the Customs Act is a Bailable one. Further, the offence under Section 135 of the Act is a compoundable one, in terms of Section 137(3) of the Customs Act. - HC Visit to Get Source Service Tax Service rendered to overseas person - Service Tax liability arises on overseas manufacturer but under reverse charge mechanism appellant is made liable to pay - Services are consumed by a person not in India therefore, no Service Tax liabilities arises on appellant - AT Visit to Get Source Central Excise Cenvat Credit - Eligible input - Final products cleared along with the packing material - There is no dispute about the fact that the final products were cleared along with the packing material in this case - credit allowed - HC Visit to Get Source Includability - Whether amounts recovered by IIL in the form of debit notes towards bank charges, interest, etc. were includible in the assessable value of inputs iron ore pellets - Post manufacturing expenses not to be loaded in the value - SC Visit to Get Source VAT Merely, because the advertisements of the advertisers were displayed on the Sites would not necessarily lead to the conclusion that they had acquired the right to use the Sites - HC Visit to Get Source Case Laws: Income Tax 2016 (5) TMI 338 Immunity from prosecution and penalty granted by Income Tax Settlement Commission (ITSC) - whether full and true disclosure was made by the assessee - Held that:- The Court is unable to find, after reading the entire order carefully, any satisfaction recorded by the ITSC of the fulfilment of the above mandatory conditions under Section 254H (1) of the Act. While, the ITSC had noted the cooperation extended by the Respondent to it in the hearing, it has failed to record satisfaction that the Respondent has made a full and true disclosure of his income and the manner in which the said income has been derived. Further, the report submitted by the Department has not been discussed. It must be remembered that the ITSC is performing the important task of exercising its discretionary powers under the mandate of Section 245H(1) of the Act to grant immunity from prosecution and penalty. The legislature has in Section 245H(1) of Act mandated the recording of satisfaction by the ITSC of the fulfilment by the applicant of the aforementioned mandatory requirements. The very object and purpose of having an ITSC which is vested with such powers will be defeated if a lenient view is taken of the fulfilment of the requirements in Section 245H (1) of the Act. In the circumstances, without commenting on the merits of the submissions of either of the Department or the Respondent with regard to the disclosure already made before the SC and the report filed before it, the Court sets aside the impugned order and remands the matter to the ITSC for a fresh decision in accordance with law. 2016 (5) TMI 337 Reward claim by the informer - Held that:- In aggregate there are in all 112 cases of information provided by the petitioners. These claims would have to be investigated/examined in terms of the Guidelines and thereafter if found eligible, would the rewards be given. On instructions of Mr.Sandeep Goyal, Additional Director of Income- Tax (Investigation) states the petitioners' claim for reward in all the 112 cases in the aggregate would be disposed of within six months from today. Statement accepted. In view of the above statement, nothing survives in these petitions. Petitions are disposed of in above terms. 2016 (5) TMI 336 Short-term capital gain v/s income from business - sale & purchase of shares - Assessing Officer treated the company as a trading company - Held that:- The assessee has declared purchases/holding of shares as investment for the past several years and surplus has been claimed as capital gains before the assessing authority and said facts are evident from the reply of the assessee dated November 21, 2008 and the appellate authority also has mentioned about the claim of the assessee with reference to purchases/holding of shares being shown as investment in past, valuation being done at cost and the assessee has never treated such holdings in the past as stock-in-trade. It is also stated in the order that the claim of the Revenue that the assessee is doing stock-in-trade is without any basis and no material was brought on record to show that the assessee had been valuing the holding of shares as at the end of each year on first- in, first-out (FIFO) method and the assessee had valued investment at cost and declared the same as investment as per the balance-sheet as on March 31, 2006. It is also stated in the order that the shares have been held for more than 30 number of days which is evident from the holding period shown by the assessee in more than 92 per cent. of the transactions and the assessee retained the shares for appreciation in value and not with an intension of commercial motive. The assessee is not registered with any authority or body such as the Security Exchange Board of India (SEBI), etc., to do trading in shares. The entire investment has been made out of own funds and not out of borrowed funds and no contra material has been placed on record by the Revenue to come to a different conclusion. Thus, a factual finding has been given by the Tribunal stating that the Department cannot change the stand in subsequent years without any changing material. The said factual finding having been recorded based on appreciation of documents, which were not considered by the assessing authority as well as the appellate authority, the contention of the Revenue that the assessee is doing stock-in-trade and not investments cannot be accepted and no substantial question of law arises for determination in these Income-tax appeals. - Decided against revenue 2016 (5) TMI 335 Penalty proceedings u/s 271D - deposits in contravention of section 269SS - Held that:- In the present case on hand, it was proved beyond doubt that the assessee has accepted cash deposits of ₹ 20,000/- and more, in contravention of section 269SS. The assessee has failed to furnish any explanation for the violations referred to in section 269SS of the Act. Therefore, we are of the opinion that the A.O. has rightly levied penalty u/s 271D of the Act, in respect of cash deposits from relatives and fresh deposits. Penalty can be levied on the amounts of loan which exceeds the amount of ₹ 20,000/-. Therefore, the A.O. is directed to exclude ₹ 20,000/- as permissible u/s 269SS of the Act, while levying penalty u/s 271D of the Act. Accordingly, we direct the A.O. to recompute the penalty, after excluding ₹ 20,000/- in each cases as permissible u/s 269SS of the Act. - Decided partly in favour of assessee 2016 (5) TMI 334 Disallowance u/s 14A - investments made in the sister concerns - Held that:- In view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2006 (12) TMI 82 - SUPREME COURT) this Tribunal is of the considered opinion that the investments made by the assessee in the equity shares of the sister concerns, which were established by joint venture, have to be necessarily treated as for business purpose. Therefore, as rightly found by this Tribunal by majority decision in EIH Associated Hotels Ltd. (2013 (9) TMI 604 - ITAT CHENNAI ), the dividend income earned by the assessee, if any, from subsidiary companies, is incidental one, therefore, the investments made by the assessee in its subsidiary companies cannot be reckoned for disallowance under Section 14A of the Act. - Decided in favour of assessee Adjustment of Arm's Length Price - selection of comparable - Held that:- Admittedly, the comparable companies selected by the assessee-company are suffering persistent loss in their business activities. The assessee-company is also making losses. However, it is not a persistent loss making company as that of comparables. Except for the year under consideration, the assessee-company is also making positive profit. Therefore, this Tribunal is of the considered opinion that the assessee-company is not a persistent loss making company. The loss suffered by the assessee during one year might not be compared with that of the comparable companies. Since the comparables selected by the assessee-company are admittedly persistent loss making companies, the DRP has rightly rejected the comparables selected by the assessee. Lucas TVS is manufacturing components for every vehicle like cars, two wheelers, etc., whereas, the assessee-company is manufacturing DC micro motors and sub-assemblies only for the cars. Therefore, there is a vast functional difference between the manufacturing activity of the assessee and Lucas TVS. Lucas TVS has no segment wise details for manufacturing components for cars, two wheelers, etc. The TPO or DRP has not taken any effort for taking the segment wise details while preferring Lucas TVS for making adjustment in the assessee’s case. Taking the overall profit of Lucas TVS in the TVS group of companies manufacturing automobile products, this Tribunal is of the considered opinion that Lucas TVS cannot be a comparable case at all. Therefore, in the given facts and circumstances of the case, comparing the transaction of the assessee with non-associate enterprise would give the correct picture of the transaction. Therefore, this Tribunal is of the considered opinion that the Arm's Length Price has to be determined on the basis of the transaction made by the assessee with non-associate enterprise. Accordingly, we are unable to uphold the orders of the lower authorities. 2016 (5) TMI 333 LTCG - Benefit of Indexation denied - period of holding of previous owner were the property devolved on the assessee and certain modes of acquisition as per section 49(1) - whether holding period of the assessee on whom the assets are devolved on the death of assessee’s father, the provisions of Sections 48 & 49(i) of the Act allow special mode of transfer in gift and succession? - Held that:- The action of the AO that the property was acquired by assessee’s father and not inherited as per the provisions of the Act cannot be acted upon were assessee became a rightful owner as per Explanation 1(i)(b) to section 2(42A) of the Act and in the present case, assessee deemed to hold the property as on 1981 and indexed cost of acquisition has to be calculated from 01.04.1981 with the base year as 100. The assessee’s father acquired property in 1965-66 along with his brothers and on partition in 1979, he became the absolute owner of entire asset and assessee has complied with the conditions of the previous owner as on 01.04.1981 and rightfully claimed the cost in inflation indexation from the base year i.e. 01.04.1981 and the arguments of the ld.A.R are supported by the decision of Co-ordinate Bench of this Tribunal in the case of ITO Vs. Shri Syed Ali Shirazhi [2014 (10) TMI 888 - ITAT CHENNAI] following the decision of Special Bench in the case of Manjula J Shah Vs. DCIT (2009 (10) TMI 646 - ITAT MUMBAI) which has been confirmed by the Hon’ble Bombay High Court reported in (2011 (10) TMI 406 - BOMBAY HIGH COURT) wherein held that when the assessee sells his immovable property which is acquired under gift or will, while computing the capital gain the index cost of acquisition has to be computed with reference to the year in which previous owner first held the asset and not the year in which the assessee became the owner of the asset. Therefore, the ratio of this decision is squarely applicable to the facts of the present case of the assessee. Thus we direct the AO to allow the cost inflation indexation to the assessee from 01.04.1981for computation of capital gains. - Decided in favour of assessee 2016 (5) TMI 332 Deduction under section 80IB - AO disallowed the same on technical ground i.e. non-filing of ITR within the due date as specified under section 139(1) - Held that:- CIT(A) rightly held that the profit declared in the assessment year 2008- 09 actually belongs to the assessment years 2005-06, 2006-07 and 2007-08 as the assessee for those years was following the percentage completion method in accordance with the accounting Standard 7 issued by the ICAI of India. The ld. AR before us submitted a chart showing the profit shown as per the wrong calculation of profit in terms of AS 7 and the correct profit that would been shown in terms of AS 7 which is part of the order as per annexure 1 of this order. We also understand that The AO cannot take the benefit with regard to the inadvertent mistake committed by the assessee in filing the return of its income. The AO should not act against the principal of natural justice. The assessee quoted and relied in the Departmental Circular No. 14(XL-35) dated 11-4-1955 regarding the administrative instructions issued for the guidance of the Income Tax Officers on the matters pertaining to the assessments. The law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi judicial functions and they are bound to observe principles of natural justice in reaching their conclusions, taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax, which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed to have exercised it in a proper and judicious manner. In view of above, we are not inclined to interfere in the order of the ld. CIT(A) in allowing the claim - Decided against revenue MAT applicability - Re-computing the profit under section 115JB - Held that:- The assessee is liable to pay the tax under MAT in spite of the fact that we have given relief to the assessee under the normal provisions of Act. Accordingly we find no infirmity in the order ld. CIT(A)directing for re-computing the profit under section 115JB - Decided against revenue 2016 (5) TMI 331 Addition on Cash received - addition made based on a document found at the premises of M/s. R.R. Movie Makers when there was a search at their premises - Held that:- Since the evidentiary value of the document was certainly examined it was held that in the absence of any corroborative evidence, the same will not have any evidentiary value. The Revenue did not establish that the said document was not prepared for distribution purposes. It is also on record that assessee in the statement recorded subsequent to the search also denied the document or receipt of the payments. Presumption u/s 292C - The reliance on Section 292C by the AO and CIT(A) is also not correct. Provisions of Section 292C are applicable in a case where a search was conducted or certain documents were requisitioned. The provisions were applicable only in the hands of the searched person. Assessee having been not covered by the provisions of Section 132 or 132A, the said provisions of 292C does not apply. Moreover, the assessment order was not passed even u/s. 153C. Therefore, the addition cannot be sustained in the hands of assessee only because certain documents stated to have been filed for the purpose of marketing the cinema and not the actual expenditure cannot be considered for making an addition in the hands of assessee. Accordingly, the grounds of assessee are allowed, the addition so made is deleted. - Decided in favour of assessee 2016 (5) TMI 330 Levy of penalty under section 271(1)(c) - additional income offered in response to notice issued under section 153A - Held that:- Assessee had offered additional income as its income while filing return of income in response to notice issued under section 153A of the Act. The additional income worked out in the hands of assessee was on the basis of seized documents found / impounded during the course of search and seizure proceedings. Even in the cases where the assessee had declared the said income in its return of income in response to notice issued under section 153A of the Act, it is income detected during the course of search and seizure operation. The case of the assessee is squarely covered under Explanation 5A to section 271(1)(c) of the Act and the assessee is liable to le vy of penalty under section 271(1)(c) of the Act. The second addition made in the hands of assessee is on account of disclosure not made by the assessee, but on the basis of documents found during the course of search. The assessee is also liable for levy of penalty on such addition in his hands. Accordingly, we reverse the order of CIT(A) and confirm the order of Assessing Officer in levying penalty under section 271(1)(c) - Decided against assessee 2016 (5) TMI 329 Addition u/s 69C - whether the writing off the goodwill has resulted in the siphoning of funds of the company and covered u/s 69C - Held that:- Our answer to the above question is negative. We are in agreement with the submissions of ld.AR that writing off the goodwill during the year has not resulted in any kind of tax evasion as it is undisputed tact the assessee has purchased the ongoing business for a consideration of ₹ 86.69 crores, and bought asset the worth ₹ 21.12 crores on slump sale and transferring the difference amount to goodwill account There is no colourable transaction and nothing has been brought on record that money has been siphoned to achieve any benefit or to give any benefit to the seller party. Further the payment of the said acquisition was made by cheque through the bank account of the assessee maintained with the CITY Bank, Mumbai . Even otherwise, the goodwill written off has been added back and the adjusted in the profit which was claimed as exempt u/s 10A of the Act, which the assessee was undisputedly entitled to. We are, therefore, of the considered opinion that the finding of the ld.CIT(A) and that of the AO are not correct on facts and are without any basis. Further addition made under the provisions of section 69C of the Act is also not correct as section 69C can only be invoked only when the source of any investment was not explained which is clear from the language used in the section 69C reproduced above. Thus, the order of ld.CIT(A) suffers from serious factual and legal infirmity and cannot be sustained. Accordingly, the AO is directed to delete the addition - Decided in favour of assessee 2016 (5) TMI 328 Disallowance u/s 40(a)(ia) - assessee in default under section 201 - suomoto disallowance by assessee - Held that:- In the case of Pfizer Ltd. Vs. ITO (2010 (6) TMI 433 - Bombay High Court) the assessee had suomoto disallowed the entire amount of the provision created under sections 40(a)(i)/40(a)(ia), on account of non-deduction of tax. In these circumstances, because the assessee had not claimed any such expenditure in the relevant year, assessee cannot be subjected to the provisions of TDS under section 201(1). The case of the appellant is identical on facts to the case of Pfizer Ltd. Hence, the appellant cannot be treated to be in default under section 201 for non-deduction of tax at source that the amount has been suo moto disallowed by the appellant under section 40(a)(ia) of the Act in the return of income. The demand raised by the AO is therefore not justified and the same is hereby deleted. - Decided in favour of assessee. 2016 (5) TMI 327 Disallowance u/s 14A - Held that:- It is noted that the assessee claimed that nil expenditure was incurred by the assessee in relation to earning of dividend income and ₹ 9,95,435/- was incurred by way of interest, which is not directly attributable to any source of income (Rs.97,21,446/-) Considering the totality of facts, argument of the assessee we are of the view, that at best, the disallowance may be restricted which cannot exceed the exempt income. We hold so. Depreciation on V-SAT Line/Infrastructure - at the rate of 15% OR 60% - Held that:- ACIT vs National Stock Exchange of India Ltd. (2011 (5) TMI 687 - ITAT MUMBAI) held that V-SAT network for the purposes of enabling screen based trading by the members is entitled to full depreciation. Higher rate of depreciation of 60% is allowable to the assessee. 2016 (5) TMI 326 Taxability of amount withdrawn by the partner from the firm - Applicability of section 2(47) - receipt on relinquishment of Right as Long Term Capital Gains - Held that:- On the reconstitution of firm, the profit share of assessee got reduced to 0.25%. The assessee (along with other two partners i.e. Smt. K Amin and Shri D Amin), on reconstitution, chose to withdraw the amount lying to his credit. The assessee continued as partner and had not retired from firm. As per MOU between parties a goodwill account was to be created. However, after partnership deed no goodwill was credited or paid was not done. As per the partnership deed the rights and duties of partners have been decided interse. The AO treated the revaluation of asset and introduction of new partners as estinguishment of assessee’s shares in the asst of the firm by treating the same as transfer within the meaning of Section 2(47) and tax the difference as capital gain in the hands of each of the partners. We found that even after introduction of the new partners and revaluation of the asset the partnership firm was continued and the assessee was continued as partner in the same firm and land remained the assets of the firm. Merely because the partners have withdrawn money from the firm does not constitute consideration for proportionate reduction in their share in firm. There was neither a transfer of assets of the firm to the partner nor the assets ceased to be owned by the firm. CIT(A) has dealt with the issue threadbare and after applying to provision of law laid down by various High Courts recorded a finding that there was no transfer of assets on extinguishment of right of the assessee partner merely on introduction of new partner in the firm. Accordingly amount withdrawn by the assessee partner was not liable to tax as capital gain. We do not find any infirmity in the order of CIT(A) for deleting the addition so made - Decided in favour of assessee 2016 (5) TMI 325 Addition on account of interest income - CIT(A) deleted addition - Held that:- We are of the considered view that the CIT(A) has decided the said issue after noticing that the final accounts filed by the assesee, was approved by Auditors, Board of Directors and Shareholders. The CIT(A) further took into consideration that the auditors have issued the separate certificate thereby confirming the stand taken by the ld. AR. Hence, we are of the view that the AO was not justified in placing reliance on financial statements which were not approved by shareholders. After appreciating the same the ld. CIT(A) has rightly held that AR of the assessee had established that the final accounts approved by the Auditors, Board of Directors and Shareholders of the Company as well as the final accounts filed before the Registrar of Companies did not contain the impugned note. - Decided against revenue Addition on account of unexplained cash credit - CIT(A) deleted addition - Held that:- CIT(A) has correctly held that the AO proceeded to make the additions only on the ground that no confirmation was submitted by the assessee, but during the appellate proceeding, assessee submitted the confirmation before the CIT(A)which was duly verified and examined by the AO in the remand proceeding. Therefore considering those facts the CIT(A) has rightly came to the conclusion that the additions made by the AO in the absence of confirmation are not sustainable. We are of the considered opinion that the findings recorded by the CIT(A) are well reasoned and no material evidence has been brought before us to controvert or rebut the findings recorded by CIT(A) and hence, we see no reason to interfere or deviate from the orders passed by the CIT(A) - Decided against revenue 2016 (5) TMI 324 Validity of assessment u/s 153 - Time limit for completion of assessments and reassessments - whether the assessment is barred by limitation of time in terms of section 153(2A) and is a nullity? - Held that:- We find from the findings given by the tribunal in its order dated 28.9.2007 it had not given any direction or finding to the Learned AO to give effect to its order , but instead had set aside the entire assessment to make it afresh by following due process of law for the purpose of examination of some witnesses in line with the principles of natural justice. The Tribunal may indicate certain lines of enquiry or other exercises for conforming to natural justice or conducting the assessment on the right procedure. That does not mean that the Tribunal’s order is not for a fresh assessment. It had effectively asked the Learned AO to make fresh exercise of assessment determining the total income. The tribunal’s order indicated as a guideline for the proper manner in which the assessment in the case ought to have been made. There was no finding or direction given thereon. The tribunal remitted the assessment for determining afresh the issues raised by the Learned AO in the assessment appealed against. Since there were no other additions or issues in dispute except the two additions ( i.e addition on account of gross profit and bogus purchases) made in the earlier assessment, the order asking for deciding the issues afresh and recomputing the total income repeating the procedure of assessment correctly amounts to a fresh assessment. We hold that the assessment means in the context of the scheme of the Act the determination of the total income to be brought to the charge of tax. The total income is the sole object of the whole exercise commencing from assessee’s filing of return and ending with the completion of assessment. Now looking at the impugned issue from this perspective, when the tribunal asked the Learned AO to determine the total income by re-deciding the issues involved in the additions made therein, it implies indisputably a mandate for fresh determination of the total income. When the order of the Tribunal nullifies the total income assessed or determined in the original order of an assessment, it definitely means the setting aside of the original order and a fresh assessment determining the total income. In effect, the tribunal’s order annihilates the earlier assessment as the total income determined by it no more subsists. The fresh assessment framed by the Learned AO on 25.3.2009 is barred by limitation in terms of section 153(2A) of the Act. We hold that the fresh assessment dated 25.3.2009 is declared as a nullity. Accordingly , the cross objection of the assessee is allowed 2016 (5) TMI 323 Validity of final order passed by the Assessing Officer - Reference to Dispute Resolution Panel - Held that:- There is no doubt as to the fact that the Transfer Pricing Officer has proposed adjustment to be made on account of difference in the arm's length price in his order passed under section 92CA of the Act. Further, under section 144C(2) of the Act, such eligible assessee has the option either to accept the said addition or to file objection before the Dispute Resolution Panel and such option has to be exercised within 30 days of receipt of such draft assessment order. The procedure is if the assessee chooses to raise its objection before the Dispute Resolution Panel, it has to be done within 30 days and if it does not do so, the Assessing Officer has power to pass the final assessment order and then the straight route of the filing appeal before the Commissioner of Income-tax (Appeals) is open to the assessee. Nowhere in any of the provisions the Assessing Officer has been given any option to pass or not to pass the draft assessment order. Further, on a perusal of Circular No. 5 of 2010, dated June 3, 2010 issued by the Central Board of Direct Taxes being explanatory notes to the provision of the Finance (No. 2) Act, 2009, it has been very clearly stated that the provisions are applicable with effect from October 1, 2009. It is also an undisputed fact that the order of the Assessing Officer in the present case is dated December 26, 2011, the order of the Transfer Pricing Officer is dated October 21, 2011. In view of the above, the order passed by the Assessing Officer is without jurisdiction. Reliance placed by the learned counsel of the assessee on the judgment of High Court of Madras in the case of Vijay Television P. Ltd. v. DRP [2014 (6) TMI 540 - MADRAS HIGH COURT ] is not out of place wherein held that the final order passed by the Assessing Officer without passing a draft assessment order is bad in law. - Decided in favour of assessee. 2016 (5) TMI 322 Sale of capital asset within the meaning of section 2(14) - nature of land - sale of agricultural land - Held that:- The reliance placed by the Assessing officer on the report of the Inspector of Income Tax to come to the conclusion that the land was not an agricultural land is misplaced. The Inspection was done by the Inspector after the transferee had constructed the building on the land. Even in the report of the Inspector, it is observed that there were some coconut trees on the land. Just because the transferee had not used the land for agricultural purposes, the land does not loose its character of being an agricultural land when the same is sold by the assessee. Moreover, the said inspection was done behind the back of the assessee and the assessee was not given any opportunity to rebut the same. In any case, it is settled law that evidence collected behind the back of the assessee can be used as evidence against the assessee. The nearness of the land to highway also does not alter the character of the land and appreciation in the price of land cannot be seen in isolation and if agricultural operations were carried out by the assessee, the appreciation in the price of land alone would not lead to the conclusion that the land is not an agricultural land. The objection of the Revenue that coconut plantation could not have been carried out on the soil which was present on the said land and the reliance placed on the letter of the Gram. Panchayat Secretary cannot be accepted in view of the clear report of the Village Officer. Thus, in view of the aforesaid, we hold that the land in question cannot be treated as capital asset u/s. 2(14) of the Act and therefore, capital gains cannot be assessed on the sale of the land. - Decided against revenue 2016 (5) TMI 321 Assessment u/s 153A - Held that:- Revenue had conducted survey operation at the business premises of the assessee firm in which materials are seized. This survey does not entitle the Revenue to initiate proceedings u/s 153A. having searched the residence of partners of the assessee firm Revenue could have initiated action against the assessee firm only u/s 153C had any document pertaining to the firm were seized from the residential premises. Since no material was seized, the revenue could not have initiated proceedings against the assessee firm u/s 153C. in these circumstances in our considered opinion the revenue cannot take shelter of provisions of section 153A for initiating action against the assessee which we have found to be not a valid one qua the assessee firm. DR cannot be a reasoning to hold that by means of an invalid search Revenue can take recourse to provisions of section 153A. Hence we hold that since the warrant of search was not executed at the business premises of the assessee firm and from the place of search no material whatsoever relating to the firm was found nor any submission was recorded from the partners of the firm nor the search notice was served upon the partners of the firm, the search conducted qua the assessee firm was not a valid search. In such circumstances, proceedings initiated u/s 153a in the case of the assessee firm are invalid. Accordingly we do not find any infirmity in the order of the learned CIT (Appeals) accordingly we uphold the same. - Decided in favour of assessee. 2016 (5) TMI 320 Deduction u/s 80IA - whether initial assessment year referred to in section 80IA(1) of the Act, would mean the year of commencement of eligible business or the year in which the deduction is claimed? - Held that:- the circular issued by the CBDT vide circular no.1 of 2016, has settled the controversies of initial assessment year for the purpose of section 80IA of the Act. The initial assessment year would mean the first year opted by the assessee for claiming deduction u/s 80IA of the Act and not the year in which the eligible business was commenced. Therefore, we direct the A.O. to allow deduction u/s 80IA of the Act as claimed by the assessee. Hence, we set aside the order passed by the CIT(A) and direct the A.O. to allow deduction u/s 80IA of the Act. - Decided in favour of assessee 2016 (5) TMI 319 Disallowance of deduction u/s 80IB(10) - non filing of completion certificate for the claim - Held that:- The Hon’ble Delhi High Court in the case of CIT vs. Jansampark Advertising and Marketing P. Ltd. [2015 (3) TMI 410 - DELHI HIGH COURT] held that the Tribunal being the final fact finding authority, is under an obligation to direct the A.O. to make proper enquiries if the discrepancies and facts are brought to its notice. In view of the same, we deem it fit and proper to remand the issue to the file of the A.O. with a direction to examine and verify whether the total plinth declared by the individual owners includes the common area and if it is found that the built-up area of any of the flats is exceeding 1500 sq. feet, then the deduction under section 80IB(10) shall be computed proportionately. The issue with regard to filing of completion certificate for the claim of deduction under section 80IB(10), is covered in favour of the assessee by the decision of Hon’ble Karnataka High Court in the case of Ittina Properties P. Ltd., (2014 (8) TMI 388 - KARNATAKA HIGH COURT ) and therefore, the A.O. shall not insist upon the said certificate for allowing deduction under section 80IB(10) of the Act. - Decided in favour of assessee. 2016 (5) TMI 318 Relief u/s.80HHC - denial of claim on rental income received by the assessee from housing provided to its employees as well as the income from leasing activity - Held that:- The judgement of Supreme Court in the case of M/s.ACG Capsules Ltd.(2012 (2) TMI 101 - SUPREME COURT OF INDIA ) is directly covered on the issue in dispute before us. Accordingly, we direct the AO to exclude net income of rental income and lease income if it is assessed as business income while applying the clause (i) of Explanation (baa) to Sec.80HHC of the Act. If it is not assessed as business income, then there is no question of considering the same for deduction u/s.80HHC of the Act. Assessing Officer is within the jurisdiction in considering the issue relating to the lease income while computing the deduction u/s.80HHC of the Act. - Decided partly in favour of assessee 2016 (5) TMI 317 Addition on account of alleged unexplained cash credits - Held that:- Bank statement of Hina Maganlal Andharia has also been produced and speaks about some transactions which is required to be verified in the interest of justice also. However, it is also recorded that the statement of Hina Maganlal Andharia has also been recorded at the time of assessment of the case which is also required to be viewed in accordance with law. Anyhow these transactions have also not been discussed in the order passed by the learned CIT(A). So far as the loan received from D.S.Mehta is concerned the copy of bank pass book showing the withdrawals are also produced before us. These documents also nowhere found discussed in the order under challenged. Since the assertion of the assessee has been declined by the Assessing Officer as well as confirmed by the learned CIT(A) on the ground of non-creditworthiness of the creditors but the said documents were not discussed therefore, we are of the view that the matter of controversy in this regard is also required to be re-examined by taking into account the above mentioned documents to decide the claim of the assessee in the interest of the justice therefore we restore this issue upon the file of Assessing Officer again to decide the matter afresh after giving an opportunity of being heard to the assessee in accordance with law - Decided in favour of assessee Disallowance u/s. 14A - Held that:- As per the bank sanction letter, the appellant is required to maintain a minimum term deposit of 25% of this limit as margin money. The appellant has invested more money in fixed deposits in order to obtain additional letters of credit from the bank at short notice. The appellant submits that the borrowed money was utilized for the purpose of business and not for the purpose of investment in share. Further, all expenses pertaining to the exempt income like D’mat charges, bank charges, etc. are debited by the appellant to his personal capital account and not to the business accounts. Therefore it is quite clear that no expenditure of any kind was occurred to get the exempt income therefore in these said circumstances no disallowance of expenses is required u/s. 14A read with Rule 8D of the Act - Decided in favour of assessee Disallowance of office expenses - Held that:- Addition to the extent of 10% confirmed as relying on assessee’s own case for the A.Y.2010-11. 2016 (5) TMI 316 Disallowance u/s 14A - Held that:- The addition u/s 14A of the Act could not be made without recording satisfaction in terms of Rule 8D(1) of the IT Rules - Decided in favour of assessee. 2016 (5) TMI 315 Disallowance u/s 14A - Held that:- It is apparent that the assessee company and those companies in which the assessee has invested in shares are all Government undertakings vested with inter-related and ancillary objectives to promote the activities of port. In these circumstances, the assessee company has made strategic investments in its sister companies. Therefore, there would be no expenditure incurred for monitoring the investment activity of the assessee company in its sister companies or for making such decision. Further, it is evident that the assessee is having share capital and reserves & surplus to the extent of ₹ 5,38,04,75,152/- which is much more than the investment made by the assessee company in its sister companies amounting to ₹ 43.75 crores. Hence, it is apparent that the assessee is having interest free funds in order to make such investments. In such situation, this Bench of the Tribunal on the earlier occasion had held that when investments are made by the assessee company from its interest free funds in its sister/subsidiary companies, for strategic business reasons, then the provisions of section 14A will not be applicable. - Decided in favour of assessee MAT applicability - Held that:- While computing the tax under the provisions of section 115JB of the Act which is a provision with fiction, any disallowance made by virtue of another provision with fiction viz., section 14A of the Act, cannot be added to the book profit because a provision with fiction cannot be superimposed on another provision with fiction. 2016 (5) TMI 314 Reduction of deduction u/s 80IB - whether CIT(A) has erred in law and on facts in not appreciating that where income from exempted unit in respect of eligible business was higher than the normal profit in case of existing units, a burden of proof of very high order was cast on assessee to prove correctness of such profit and assesee failed to discharge this onus? - Held that:- The facts of the year under consideration are identical to those of earlier years. By following findings of earlier years' assessment order, in the year under consideration also the AO has reallocated the expenses to all units and thereby recalculating the profits of all units by applying the net profit rate of 4.57% to all units. Such net profit rate of 4.57% was percentage of profits of business as a whole and not of individual division/unit. By applying this percentage of profit of 4.57% the AO has reworked profits of the eligible units u/ s 80-IB of the Actbby application of fixed net profit rate of 4.57% to all units by AO was on assumption basis only without pointing out any defect, error in the books of accounts of all units maintained separately. Without quoting any example, on assumption basis, the AO held that the transactions were not at arm's length between the associate enterprises. The AO has not explained as to how he was not satisfied about the correctness or completeness of the accounts of the appellant. The AO has also not given any finding that the method of accounting has not been regularly followed by the appellant. Since the AO did not point out any defect in the books of accounts, the AO was not justified in rejecting appellant's books of accounts by invoking provisions of section 145(3) of the Act. In my considered view, following the appeal orders of earlier years, there were no circumstances/facts attracting the application of provisions of section 145(3) of the Act. The AO's action of rejecting the books of accounts is therefore, disapproved. Considering the above facts and circumstances and also considering that the facts of the year under consideration are identical to those of earlier years, by following the appeal orders of earlier years, it is held that the AO was not justified in applying the net profit ratio of 4.57% to determine the profits of units eligible for deduction u / s 80-IB of the Act. The AO's action of reducing the appellant's claim of deduction u /s 80-18 is therefore, disapproved. - Decided in favour of assessee 2016 (5) TMI 313 Deduction under section 80IB(10) - Held that:- The project in respect of buildings ‘A’ and ‘B’ has been completed by 31.03.2009 and where non-completion of building ‘C' was beyond the control of assessee, since it had not received FSI within stipulated period, we find no merit in the orders of authorities below in denying deduction under section 80IB(10) of the Act to the assessee for prorata units completed by the assessee before stipulated date. The issue in this regard is settled by various decisions of the High Courts including the decision of Hon’ble Bombay High Court in CIT Vs. Vandana Properties reported in (2012 (4) TMI 54 - BOMBAY HIGH COURT ), wherein it has been held that the developer is entitled to prorata deduction under section 80IB(10) of the Act on the completed units. The assessee has completed the project and also applied for the completion certificate within stipulated date, then the assessee is entitled to the claim of deduction under section 80IB(10) of the Act. We reverse the order of CIT(A) in denying deduction under section 80IB(10) of the Act to the assessee on completed flats of the project. Accordingly, we direct the Assessing Officer to allow proprata claim of deduction under section 80IB(10) of the Act. - Decided in favour of assessee 2016 (5) TMI 312 Revision u/s 263 - disallow deduction under section 80IB(10) - Held that:- The project of the assessee was approved by the local authorities on 25.10.2002. This project was subsequently revised and approved on 3.1.2004. The assessee has claimed deduction under section 80IB(10) on this project for A.Y.2004-05 also [2012 (10) TMI 1093 - GUJARAT HIGH COURT]. This deduction was disallowed to the assessee on the ground that there was commercial construction in the housing project comprised of 9.38% of the built up area. The Hon’ble High Court has observed that prior to 1.4.2005, there was no ceiling prescribed for commercial construction. The assessee has also demonstrated that it has not claimed 80IB deduction qua the commercial space. Apart from above, this issue is now covered by the decision of the Hon’ble Supreme Court rendered in the case of CIT Vs. Sarkar Builders (2015 (5) TMI 555 - SUPREME COURT ) wherein held that projects which were sanctioned and commenced prior to 1.4.2005 and completed by the stipulated date, then, 80IB(10)(d) would not be applicable on those projects. Therefore, even if the action of the CIT taken under section 263 is justified, then also on merit, the disallowance cannot be made - Decided in favour of assessee 2016 (5) TMI 311 Non-refund of the advance amount - whether treated as a business loss? - Held that:- We hold that the assessee is at least very much entitled to claim deduction under section 28 of the Act regarding the above amount of ₹ 31 lakhs as business loss. We, thus, direct the Assessing Officer to allow the claimed deduction - Decided in favour of assessee Unaccounted payment for purchase of shares - It was contended that the assessee had already offered this amount of ₹ 2.56 crores to tax as a part of the total surrender of ₹ 5.50 crores - Held that:- We agree with this contention of the assessee as it is an established proposition of law that a statement either can be accepted or denied wholly and in its totality. When we consider the statement of these two persons, one represented the assessee and the other PRIL in its totality keeping in mind the documents seized indicating about the ongoing negotiation regarding the acquisition of the property/PRIL ultimately settled in the memorandum of understanding dated September 25, 2005, duly executed by the parties, there is no reason to doubt the claim of the assessee that ₹ 2.56 crores was returned back which was deposited back in the books and surrendered by the assessee as a part of the total surrender of ₹ 5.50 crores, especially when the abovenoted some material facts by the learned Commissioner of Income-tax (Appeals) mentioned above in paragraph 13.3 of the present order have not been disputed. In the background of the above discussion, we hold that the learned Commissioner of Income-tax (Appeals) was very much justified in deleting the addition of ₹ 9.63 crores which is upheld. He, however was not justified in sustaining the addition of ₹ 2.56 crores under section 68 of the Act for the reasons discussed above. The same is, accordingly, directed to be deleted.- Decided in favour of assessee Addition of amount paid for bribe for awarding of contract - Held that:- The entire addition made by the Assessing Officer was solely based upon suspicion and surmises. The Assessing Officer has quoted the report of the Vigilance Bureau at pages 50 and 60 of his order revealing the facts that the report of the Vigilance Bureau relied on the contents of accounts was extracted from the pen drive recovered from Shri Chetan Gupta, wherein there was no mention anywhere in the accounts forwarded by the Vigilance Bureau about the name of the assessee or its director. Even the accounts forwarded by the Vigilance Bureau did not contain any reference of Citi Centre, Ludhiana. Shri Chetan Gupta had denied the ownership of the pen drive before the ADIT (Inv.), Ludhiana, during his statement which has been reproduced in the assessment order. The statement recorded during the custody of Punjab Police was not available with the Assessing Officer as it has been confirmed by him, vide letter dated May 26, 2008. Besides, the above material were never provided to the assessee by the Assessing Officer before taking any action against the assessee despite the specific request by the assessee made on December 24, 2004. There was also no statement of confirmation from the alleged recipient or his son regarding the impugned amount. And above all in the case of the recipient, Shri Ravinder Singh, for the alleged bribe, the same has been deleted by the learned Commissioner of Income-tax (Appeals) which was upheld by the Income-tax Appellate Tribunal and ultimately approved by the honourable Delhi High Court - Decided in favour of assessee Addition account of disallowance of brokerage and commission paid for leasing of the mall space - Held that:- he properties are all held as business assets and not as house properties. The fixed assets schedule does not show any property as the fixed assets of the property. The plots of land are all shown as stock under schedule 7 to the account. If the expense is incurred for overall business advantage of the assessee then such expense is allowable under section 37 of the Act. We also concur with the findings of the learned Commissioner of Income-tax (Appeals) that merely because any income had not been earned during the year directly from any partner activity, it cannot be said that the related expense is not expense for the business of the assessee. Whether the income has been earned or not and whether the ultimate benefit has accrued immediately or not, the expenses incurred shall be allowable if these have been incurred for business or for commercial expediency. The ratios laid down in the abovecited decisions by the learned authorised representative also supports the above view. Further, that once the expenses have been found to be genuine and having been incurred for the purpose of the business, the quantum of the expenses cannot be examined by the Assessing Officer to adjudicate as to the aspect that how much of the expenses were justifiable and whether the expenses claimed are proportionate or disproportionate vis-a-vis the requirement of the business. Under these circumstances, we are of the view that the learned Commissioner of Income-tax (Appeals) has rightly deleted the addition in question. - Decided in favour of assessee 2016 (5) TMI 295 Validity of assessment u/s 153A - Held that:- In the assessment year 2002-03 return has been processed under sec. 143(1) accepting the claimed deduction. No new fact has been revealed during the assessment years under consideration during the course of search. In other words, no incriminating material was found on the date of the search to justify the initiation of proceedings under sec. 153A of the Act. We thus respectfully following the ratio laid down by the Hon'ble jurisdictional High Court of Delhi in the above cited case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) hold that the Assessing Officer was not justified in invoking the provisions of sec. 153A of the Act in the present case in the absence of incriminating material found during the course of search and in absence of pendency of assessment proceedings on the date of the search. The invocation of the provisions of section 153A of the Act is thus held as invalid and void-ab-initio. In consequence, the assessments for the assessment years under consideration framed in furtherance to the said initiation of proceedings under sec. 153A of the Act are held as void and the same are accordingly quashed. - Decided in favour of assessee Denial of deduction under sec. 80IB - activities not amounting to manufacturing - Held that:- There is no dispute that activities of the assessee on the films purchased by it from Jindal Polyester Ltd. go through different activities like anti-static/corona treatment/quoting; slitting/cutting/rebinding of treated films; packing of finished products, finished goods (corona treatment films) and then dispatch. Thus, the films used as raw-material is converted into entirely a new product useful for its customer for printing the same useable as wrappers for the products of its customers like uncle chips/lays. The packets containing the products of its customers are made of the same films produced by the assessee after putting its activities discussed above on the said raw-films purchased from Jindal Polyester Ltd. It has not been rebutted by the Revenue that the raw-material is of such quality that no printing can be done on the same and it is possible only after the output made by the assessee through the above discussed process of the films which become ready for the metallic quoting on which final printing takes place. Thus, we find that the end-product has different identity after the manufacturing process of the assessee. Besides, in the earlier assessment years 2001-02 and 2002-03, the Revenue itself has accepted the claimed deduction under sec. 80IB of the Act of the assessee on the same manufacturing process and when there is no change in those facts of the case, the Revenue is not justified in deviating from its stand. We thus do not find infirmity in the first appellate order holding the assessee eligible for the claimed deduction under sec. 80IB of the Act as the activities were amounting to manufacturing - Decided in favour of assessee. Addition made on account of sales treated as unexplained receipts - Held that:- CIT(Appeals) has accepted the submissions of the assessee with this finding that Mr. Yadav was acting as commission agent for purchasing and supplying the bank draft/pay orders to various parities against cash including the assessee and that there was no business of the assessee company other than trading and manufacturing of poly films and related products. Thus, it is not sustainable to hold that the entire receipts are taxable as unexplained deposits. The Learned CIT(Appeals) noted further that addition of bank credit, its peak and profit already having been taxed in the hands of Mr. Yadav cannot be sustained in the hands of the assessee company. - Decided in favour of assessee. 2016 (5) TMI 294 TDS u/s 194H - Disallowance u/s 40(a)(ia) - non TDS on commission expenditure - Held that:- Set aside this issue to the file of the Learned AO, to verify as to whether the payees have duly recorded the subject mentioned commission receipt in their returns and if so, in the light of second proviso to section 40(a)(ia) of the Act and in the light of the decision of the Hon’ble Delhi High Court in the case of CIT vs Ansal Land Mark Township (P) Ltd (2015 (9) TMI 79 - DELHI HIGH COURT ), the assessee herein should not be treated as assessee in default and hence no disallowance u/s 40(a)(ia) of the Act could be invoked in the hands of the payer (assessee herein). The assessee is directed to file the necessary documents and evidences before the Learned AO in this regard. - Decided in favour of assessee for statistical purposes. Disallowance of commission expenditure - Held that:- From the detailed order passed by the Learned CIT(A) and examination carried out by him, in the facts and circumstances, the assessee had not proved the genuineness of the transactions of commission expenditure together with the nature of services rendered by those 3 parties except self serving letter of engagement given by him to them. Even no evidence was furnished to prove as to whether such letter of engagement was indeed acknowledged by those three parties. The academic qualifications to prove the competency level of those three parties could also not be proved by the assessee. In these facts and circumstances, we find that the assessee had merely tried to use the names of his relatives and others to divert his taxable receipts and hence we find no infirmity in the order of the Learned CIT(A) - Decided against assessee. Disallowance of salary expenditure - Held that:- taking into account, the nature of activities of the assessee, it is highly improbable and impractical to conclude that the assessee could have carried on all the activities on its own to earn the consultancy charges / commission income. Definitely he requires the assistance of certain employees for carrying out certain secretarial activities and taking in view the totality of the facts and circumstances and more especially in view of the fact that no adverse remarks were made by the Learned AO in respect of ₹ 14,39,550/- (11089550-9650000) being the salaries actually paid before the end of the previous year by the assessee, we deem it fit and appropriate, to meet the ends of justice, to allow the salaries & wages claim to the extent of ₹ 14,39,550/-. We hold that the Learned AR was not able to controvert the findings of the Learned CIT(A) with any documentary evidences except placing reliance on the affidavits of wife and son which has been rejected by logical reasons. Hence on the balance sum of ₹ 96,50,000/- ( 11089550-1439550), we find no infirmity in the order of the Learned CIT(A). - Decided partly in favour of assessee 2016 (5) TMI 293 Summons - Evasion of tax on the earnings of the Petitioner in India as a result of the agreements signed by Mr. Ricky Martin with Sony Corporation of America (“SCA”) - Held that:- There is nothing brought on record by the ITD to show that there was a contract between the Petitioner and Mr. Ricky Martin in regard to his concert in Delhi on 6th December 1998. The ITD has also not denied that DNPL, the organiser of the concert, had no contract with the Petitioner. This writ petition has been pending since 1999 and there was a sufficient time for the ITD to have placed on record the outcome of the investigation which it was supposed to undertake pursuant to the impugned notices issued to the Petitioner. The counter affidavit was filed way back on 17th February 1999 at a stage when the investigation was still incomplete. Nothing has been placed on record in these seventeen years by the ITD to inform the Court of the consequent result of said investigation. In the circumstances, the Court is constrained to conclude that the case of the Petitioner as has been made out in the petition remains un-rebutted by the ITD. In particular the case of the Petitioner that it has no contract as such with Ricky Martin as it was not the organiser of his concert held on 6th December 1998 and therefore no part of the proceeds of the said concert came to the share of the Petitioner, has not been disputed by the Department. In the circumstances the Court quashes the impugned summons, notices, and letters and orders. The guarantee furnished by the Petitioner to the Department on 7th December 1998 shall stand discharged. 2016 (5) TMI 292 Assessment u/s 153A - whether the ITAT was correct in concluding that there had to be incriminating material recovered during the search qua the Assessee in each of the years for the purposes of framing an assessment under Section 153A? - Held that:- It is not in dispute that in respect of the Respondent Assessee for the AYs in question the initial assessment proceedings took place under Section 143(3) of the Act. Thereafter they were sought to be reopened by issuing notice under Section 147 of the Act and re-assessment orders were passed under Section 147 read with Section 143(3) of the Act. During both the aforementioned proceedings the question whether the gold and silver utensils were the capital assets or personal effects of the Assessee was examined. They were held not to be the personal effects. It has been noticed by the ITAT in the impugned order that for the AYs in question no incriminating material qua the Assessee was found. In that view of the matter, and in light of the decision of this Court in CIT v. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] the Court is of the view that the impugned order of the ITAT suffers from no legal infirmity and no substantial question of law arises for determination. 2016 (5) TMI 291 Settlement Commission - non consideration of petitioner's objections - Held that:- Bearing in mind that the application for Settlement would abate if the same is not decided by the Settlement Commission before September, 2016, relegating the Respondent-Applicant to the adjudication proceedings under the Act it may result in Respondent-Applicant's application for settlement becoming fatal. This is particularly so as the application for settlement is ready for final hearing under Section 245D(4) of the Act and listed on to 11th May, 2016 before the Settlement Commission. Therefore, if on hearing the parties completely, we come to a view that the impugned order needs to be set aside and restored to the Settlement Commission, it would take up much time, resulting in abatement of the settlement application. This delay in moving the Petition is entirely due to the lackadaisical attitude of the Revenue in not moving this Petition expeditiously, challenging the interim order under Section 245D(2C) of the Act. Almost eleven months out of the eighteen months were lost in the Petitioner not moving this Court i.e. from May, 2015 to April, 2016. This coupled with the fact that before the Settlement Commission, the Revenue has after the impugned order proceeded with filing of its report under Section 245D(3) of the Act. Therefore, we are not inclined to consider the challenge in this Petition in detail in view of the peculiar facts and circumstances of this case. In these facts, it would meet the interest of justice if the Settlement Commission will deal with all the issues of full and true disclosure of income in its order under Section 245D(4) of the Act being raised by the Revenue not only in the Commissioner's Report under Section 245D(2B) of the Act but also under Section 245D(3) of the Act. This is so as it is the Revenue's case that all issues raised by them have not been adequately dealt with in the impugned order passed at the stage of Section 245D(2C) of the Act. In the above view, in the peculiar facts of this case, we are not disturbing the impugned order dated 21st May, 2015 of the Settlement Commission. However, we direct the Settlement Commission to consider the petitioner's objections as recorded in the Commissioner's report under 245D(2B) of the Act at the time of passing an order under Section 245D(4) of the Act. 2016 (5) TMI 290 Power of CIT(A) to dismiss the appeal of the assessee for non-prosecution of the appeal - Held that:- CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. 2016 (5) TMI 289 Reopening of assessment - addition of peak credit as per the loose sheet - Held that:- The loose sheet marked KS-19 is the information on the basis of which the Assessing Officer has framed an opinion that income of the assessee has escaped assessment. Such information formed a reasonable basis for the authorities to believe that income chargeable has escaped assessment. Thus, the order as affirmed by the Tribunal is based upon correct appreciation of law and facts. In view of the findings that the income of the assessee has escaped assessment, therefore, the aforestated substantial questions of law are not involved in the appeal and further we find no merit in the appeal. - Decided against assessee 2016 (5) TMI 288 Application of Section 254(2) - Whether he Tribunal has erred in dismissing the M.As filed by the Department? - Held that:- Inapplicability of Section 254(2) of the Act to the application for recall and the applicability of Rule 12 of ITAT Rules to such an application was not an issue urged by the Revenue before the Tribunal, thus not considered by the Tribunal. We specifically asked Mr. Tejveer Singh, whether the issue being urged before us was raised before the Tribunal and he answered in the negative. Therefore, the question as framed does not arise from the impugned order of the Tribunal. Thus as held by this Court in Commissioner of Income Tax vs. Tata Chemicals Ltd. [2002 (4) TMI 42 - BOMBAY High Court] an appeal on an issue not urged before the Tribunal is not maintainable. However, we have expressed our view as it is a pure question of law and identical issues are likely to arise before the Tribunal. 2016 (5) TMI 287 Disallowance under section 40A(3)(a) - Held that:- The case of the assessee can be said to cover in the exception of rule 6DD(k), as the payment is made by any person (assessee) to his agent who is required to make payment in cash for goods or services on behalf of such person (in the instant case, the assessee). The assessee has made the payment to the bank account of the agent which is a finding recorded by the Tribunal who was required to make payment in cash for buying petrol or diesel at different locations. The Assessing Officer on the facts noticed has been unable to make out a case of involvement of unaccounted money. It is also a finding of fact recorded by the Commissioner of Income-tax (Appeals) that copies of the ledger accounts were produced before the Assessing Officer who has not found any discrepancy in such books of account and no unaccounted transaction has been reported/noticed by the Assessing Officer. - Decided in favour of assessee. 2016 (5) TMI 286 Eligibility of deduction under Section 80IA - Held that:- Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee. 2016 (5) TMI 285 Reopening of assessment - whether the interest payments were to be on the revenue account or the capital account? - Held that:- The petitioner had claimed it as a revenue expense and that had been allowed in the original assessment proceedings. The extent of the claim was ₹ 25,07,124. As can be seen from paragraph 2 of the reasons, the Assessing Officer has done nothing but to re-examine the records which were already available and has arrived at a different conclusion in stating that the interest expenses ought to have been capitalised. This, by itself, to our mind does not amount to any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. It has not been indicated as to what particulars were not disclosed by the assessee. All the relevant accounts and records were available for consideration and the Assessing Officer had considered the entire material and he gave a detailed assessment order running into five pages. It cannot be inferred from these facts that the petitioner had not made a full and true disclosure of the material particulars necessary for assessment. Valuation of the jobs in progress - With regard to the second point raised in the purported reasons, we find that the Assessing Officer has not even indicated the extent of the alleged escapement of income. Furthermore, the Assessing Officer has once again stated that on "perusal" of the notes to the accounts of the assessee and particularly the note at serial number 9 of the auditor's report, it is seen that the assessee has booked the professional fees less than the job in progress brought forward from the last year on the ultimate completion by an amount of ₹ 3,21,21,550. Nothing further has been indicated apart from this fact which was there on record even in the original assessment. Therefore, once again we are of the view that the allegations of the Assessing Officer in the purported reasons that the assessee had failed to disclose full and true particulars of his income, is without any basis. Consequently, in view of the provisions of the first proviso to section 147 of the said Act, the Revenue cannot be permitted to reopen the assessment as the necessary pre-condition for doing so in a case which is beyond four years from the end of the relevant assessment year has not been fulfilled. - Decided in favour of assessee 2016 (5) TMI 284 Disallowance of expenditure including depreciation incurred and claimed by the appellant company - case of temporary suspension of business - finding of the learned Commissioner of Income Tax (Appeals) that on plot of land was leased overlooks the buildings constructed by the assessee and forming part of fixed assets declared in financial statement furnished alongwith return of income - Held that:- Apart from requiring the lessee to pay rent the lessee is furthered required to make payments towards electricity charges as per the meter reading and make any permanent construction and alterations. In the said plot as per its requirements the assessee as a lessor further expresses that it has no objections for inspection/verification of the bonded premises by the Central Excise and Customs officer at any time. Not only the fact that both the lessor and the lessee in regard to its Registered office function from the very same location. The lessor assessee being a Private Limited company and the lessee being a partnership firm also function from the very same premises as per the lease deed. In the peculiar facts and circumstances of the present case it is necessary to first address the facts which admittedly have not been properly addressed. Principally if the assessee is able to show that the expenditure claimed qua Ground no.1 pertains to it alone and not to the related concern and is incurred to keep its existence alive the expenditure on verification has to be allowed. However, if the assessee’s expenditure also includes the expenditure of the related concern then to that existent it has to be disallowed. Further the nature of work by related concern may also be an area for consideration as if the very same nature of work is done then it cannot be said to be a case of recession or lull in the business as then by conscious acts the assessee itself is parting with work in favour of a related concern. Nothing has been placed before us to show what is the nature of work entered into by the related concern i.e. the partnership firm to whom a plot of land has been leased. Thus the issues arising in Ground No.1, we deem it appropriate to restore to the AO giving liberty to the assessee to lead evidence if any in support of its claim. Qua Ground No.2, we find in the absence of any evidence to the contrary the clear recitals in the lease deed relied upon consistently by the tax authorities do not call for any variation in the conclusion arrived at. 2016 (5) TMI 283 Computation of income of the PE - Held that:- On going through the orders of the Co-ordinate Bench of this Tribunal in assessee’s own case for the A.Yrs 1995-96 to 2000- 01 [2012 (7) TMI 703 - ITAT MUMBAI ], we find that the issue is decided in favour of the assessee holding that income of the PE of the assessee should be computed as business income after allowing all the expenses attributable to its business in India including the head office expenses. Respectfully following the said decision, we allow the ground raised by the assessee. We do not find much substance in the alternative contention raised by the Revenue in so far as the applicability of provisions of Sec. 41(1) of the Act - Decided in favour of assessee Disallowance of claim of the assessee on tax rate applicable to its business income is 35% and not 40% - Held that:- This ground is decided against the assessee in assesee’s own case for assessment years 2001-02 and 2004-05 reported in (2013 (9) TMI 603 - ITAT MUMBAI). - Decided against assessee Disallowance u/s 14A - Held that:- In view of the decision of Godrej & Boyce Co. Ltd., (2010 (8) TMI 77 - BOMBAY HIGH COURT ) Rule 8D has no application for the assessment year 2004-05. However, reasonable disallowance should be made towards expenditure attributable for earning exempt income. It is the submission of the Ld. Counsel that in the case of DDIT Vs Development Bank of Singapore (2013 (8) TMI 175 - ITAT MUMBAI), 2% of dividend income is held to be reasonable for earning exempt income. Respectfully following the above decision, we hold that 2% of dividend income will be reasonable expenditure for earning exempt income - Decided in favour of assessee partly TDS u/s 195 - Disallowance u/s 40(a)(i) - Non deduction of tds on interest paid by the assessee to its Head Office/overseas branch - Held that:- The said interest, however, cannot be taxed in India in the hands of assessee bank, a foreign enterprise being payment to self which cannot give rise to income that is taxable in India as per the domestic law. Even otherwise, there is no express provision contained in the relevant tax treaty which is contrary to the domestic law in India on this issue. This position applicable in the case of interest paid by Indian branch of a foreign bank to its Head Office equally holds good for the payment of interest made by the Indian branch of a foreign bank to its branch offices abroad as the same stands on the same footing as the payment of interest made to the Head Office. At the time of hearing before us, the learned representatives of both the sides have also not made any separate submissions on this aspect of the matter specifically. Having held that the interest paid by the Indian branch of the assessee Bank to its head office and other branches outside India is not chargeable to tax in India, it follows that the provisions of section 195 would not be attracted and there being no failure to deduct tax at source from the said payment of interest made by the PE, the question of disallowance of the said interest by invoking the provisions of section 40(a)(i) does not arise.- Decided in favour of assessee Penalty levied u/s. 271(1)(c) - assessee has claimed head office expenses and also the claim made by the assessee that interest paid to head office is not taxable - Held that:- Assessee has made claim in the return of income and it is a full disclosure of the assessee in respect of the expenses as well as the claim towards interest paid to head office. We do not see concealment of income or furnishing of inaccurate particulars in respect of these two disallowances/additions made by the Assessing Officer. It is only a difference of opinion as to whether these claims can be allowable or not and the issues are debatable.Alongwith the computation of income, assessee has referred to the relevant article of the treaty with UAE and the complete details of expenses are given in the annexure. In the circumstances, we are of the considered view that there is neither concealment of income nor furnishing of inaccurate particulars of income by the assessee so as to levy penalty u/s. 271(1)(c) - Decided in favour of assessee 2016 (5) TMI 282 Disallowance u/s 14A r.w.r.8D - Held that:- Ratio of the judgment in case of Joint Investment Pvt. Ltd. (2015 (3) TMI 155 - DELHI HIGH COURT ) is applicable to the facts and circumstances of the case because, in the instant case also, the AO by computing the disallowance exceeded the amount of income earned by the assessee; that no objective satisfaction has been recorded to reject the computation made by the assessee who has voluntarily made the disallowance u/s 14A to the tune of ₹ 54,217/-; that the assessee has sufficient funds to invest in the tax free investment which was part of its business activities; that the ld. CIT (A) has taken hypothetical figure of ₹ 22,05,762/- as voluntary disallowance made by the assessee u/s 14A as against the actual disallowance made by the assessee u/s 14A to the tune of ₹ 54,217/- and this fact goes to prove that the CIT (A) has proceeded to affirm the disallowance made by the AO without going into the merit. We, therefore, restrict the disallowance of ₹ 7,01,194/-, particularly when the assessee has not proved on record as to how his figure of ₹ 54,217/- was worked out. - Decided in favour of assessee partly 2016 (5) TMI 281 Penalty under section 271AAA - voluntary disclosure - Held that:- The offer of undisclosed income of ₹ 2 crores was made voluntarily by the assessee without any detection by the Department and, accordingly, the argument of the learned Departmental representative that but for the search, this income would not have been offered does not hold any water and deserves to be dismissed. It is already well settled that though the income is not disclosed in the return filed under section 139(1) of the Act but duly disclosed in the petition filed under section 132(4) of the Act followed by the filing of return in response to section 153A of the Act and taxes paid thereon, then the assessee would not be invited with the levy of penalty. We find that if the argument of the learned Departmental representative that since the asses see had not offered the said income in the return filed under section 139(1) of the Act thereby levy of penalty is in order is to be accepted, then it would make the immunity provisions contemplated under section 271AAA(2) of the Act redundant. The Legislature in its wisdom had given a thoughtful consideration on the facts and circumstances under which the assessee would not be invited with the levy of penalty pursuant to the search subject to fulfilment of certain conditions stipulated in the said section. Hence, in view of the above, we hold that the levy of penalty is not automatic and the assessee is clearly entitled for immunity from levy of penalty. - Decided in favour of assessee 2016 (5) TMI 280 Disallowance of the payment of professional fees to Preroy AG ('PAG') - Appellant has claimed income earned by PAG as exempt from tax in India - Held that:- The agreement merely states, at clause E 1, that “for the services rendered by PAG under this agreement, STPL shall pay fees to PAG at rates to be agreed by the parties on a case to case basis” and that “the fees in respect of any assignment will be agreed upon by the parties before PAG commence work on the said assignment”. There is, however, no evidence lead before us which suggests that the fees for any assignment was agreed to before any assignment commenced. There is hardly any basis for the billing work done. There seems to a charge of US $ 10,000 on every billing point. There is no evidence for any work done by a person other than SKP and the SKP has done this work, during his visits abroad, in the capacity of director in the STPL (i.e. the assessee)- as is clearly discernible from the details of foreign travelling expenses on record. The justification for the impugned payment does not, in our considered view, does not exists, as there are no independent services rendered by the assessee. Learned counsel for the assessee has laid lot of emphasis on the contention that the assessee was in the business of making investments and, therefore, even expenses incurred in connection with the business of his subsidiary, OKS India , will also be eligible for deduction as these expenses are to protect his investment. There does not seem to be any issue with the legal principles embedded in this proposition but this proposition will be relevant only when we come to a conclusion that legitimate and genuine business expenses are so incurred for the services rendered by Preroy AG. We are yet to reach this stage. As there are no independent services rendered by Preroy AG, in our opinion, it is wholly irrelevant whether the services, for which billing is done by Preroy AG, are for the purposes of business of the assessee. As regards learned counsel’s contention that the income in question, in the hands of Preroy AG, has been brought to tax in India, and, therefore, it cannot be said that no services are rendered, we are of the view that merely because an income has been taxed in the hands of recipient of an income, does not mean that it’s a deductible expenditure in the hands of the person making the payment. The deduction is required to be examined and adjudicated upon in accordance with the law, and, when we do so, we donot find legally sustainable merits in the claim of the assessee. As regards the observations made by the CIT(A), which have been challenged in this appeal, we are not inclined to deal with the same individually. What matters is that the disallowance in question, for the detailed reasons set out in this order, is confirmed and even if the CIT(A) made some extraneous observations, that does not affect the outcome of this appeal. All the specific issues have been dealt with in this order anyway. - Decided against assessee Disallowance in respect of the travelling expenses - Held that:- As no evidence has been lead before us to demonstrate and establish that the travel by director’s wife was “wholly and exclusively for the purposes of business of the assessee”, and in the light of Hon’ble Kerala High Court’s full bench decision in the case of Ram Bahadur Thakur Ltd Vs CIT [2003 (1) TMI 66 - KERALA High Court ], the action of the authorities below deserves to be confirmed.- Decided against assessee 2016 (5) TMI 279 Addition on account of upward adjustment by imputing Notional Interest on delayed debts - Held that:- It is uncontroverted stand of the assessee that he has not charged interest on delay in realization of debts in non AE situations as well. Once it is not in dispute, as is the case before us, that no interest is charged from the non AEs, i.e. independent transactions, as well, there cannot be any occasion to make an ALP adjustment, for notional interest, on delay in realization of trade debts from the AEs. The very purpose of the arm’s length price adjustments is to neutralize the impact of intra AE relationship on commercial transaction, but, given the above facts, there is no impact of intra AE relationship in the above case. As regards, the rechracterization of transaction as an unsecured loan, we find that CIT Vs EKL Appliances Limited [2012 (4) TMI 346 - DELHI HIGH COURT ] has held that recharacterization of a transaction is possible in only two situations – i.e. (i) where the economic substance of a transaction differs from its form and (ii) where the form and substance of the transaction are the same but arrangements made in relation to the transaction, viewed in their totality, differ from those which would have been adopted by independent enterprises behaving in a commercially rational manner. None of these conditions is satisfied in the present case. The form and substance of the transactions are the same. The Transfer Pricing Officer has not brought on record any material to demonstrate and establish that the form and substance of transactions are different. It is not, and it cannot be, the case of the Transfer Pricing Officer that the export transaction was a sham transaction to finance the AE. The assessee has also behaved in a commercially rational manner inasmuch as whatever are the terms of realization of his exports proceeds, the same are the terms of realization of exports from the non AEs. Recharcaterization of this transaction, therefore, is not permissible. The very foundation of the Transfer Pricing Officer is thus wholly unsustainable in law. - Decided in favour of assessee 2016 (5) TMI 278 Validity of assessment u/s 153C - Held that:- Assessing Officer of the searched person has failed to record his satisfaction that the seized documents belonged to the assessee i.e. other than the searched person. The recording of such a satisfaction is sine qua non for commencing any proceedings u/s 153C of the Act. Hence, no action could have been initiated against the assessee in absence of recording of satisfaction by the Assessing Officer of the searched person. Sans such satisfaction, the Assessing Officer has invalidly taken recourse to the initiation of proceedings u/s 153C of the Act. Hence, the action u/s 153C is not justified. The lack of jurisdiction by the Assessing Officer cannot be brushed aside under the guise of a technical defect. No assessment can be lawfully taken up and completed unless the concerned authority has the jurisdiction to do so. Lack of jurisdiction cannot be cured. Since the very first step prior to the issuance of notice u/s 153C of the Act has not been fulfilled and inasmuch as the condition precedent has not been met, the proceedings u/s 153C are liable to be quashed - Decided in favour of assessee 2016 (5) TMI 277 Transfer pricing adjustment - payments for technical fees and alleged reimbursement of group IT expenditure to the AEs - Held that:- No doubt that assessee has to establish receipt of benefits on account of services rendered by its AEs and these were compensated on a level comparable to payments that would have been made if similar services were received from unrelated parties or in an uncontrolled transaction. At the same time, it is not open for the TPO to consider that there was no benefit whatever received by the assessee without verifying the documentation submitted by the assessee. As per the assessee, it had evidence to show that there was considerable correspondence between the AE and itself which could amply prove rendering of services by the AEs to the assessee . The facts and circumstances of the case as described above show that the question of bench-marking the value of such services requires a fresh look by the AO / TPO. We therefore set aside the orders of the AO / TPO and remit the issues relating to alleged payments for technical fees and alleged reimbursement of group IT expenditure to the AEs back to the file of the AO / TPO for consideration afresh in accordance with law. Assessee is free to produce any evidence to show that services were indeed received by it from the AE. Assessee is also duty bound to bench-mark such services by comparing it with uncontrolled transactions by independent enterprises where similar services are received. - Decided in favour of assessee TDS u/s 195 - disallowance of reimbursement of IT expenditure to SKF Data Services, Sweden for nondeduction of tax at source, applying Section 40(a)(ia) of the Act - Held that:- AO had in the draft assessment order noted that assessee had not deducted tax at source on payments effected to SKF Data Services, Sweden. As per the AO no supporting evidence was filed by the assessee to show that these were reimbursement of expenditure. AO also noted that assessee was selling its entire product line in India and there could not be any services rendered by M/s. SKF Data Services in Sweden, for such business operations. According to him, payments were unrelated to business of assessee in India. What we find is that none of the lower authorities had carefully looked into the “make available” clause in Article 12(4) of the DTAA between India and Canada which was called into operation by the assessee. Lower authorities did not look into the applicability of the DTAA in relation to the alleged cost sharing passed on by M/s. SKF Data Services, Sweden, to the assessee for the IT related services. Question whether any technical services were rendered by M/s. SKF Data Services, Sweden, to the assessee and how far the “make available” clause was or was not satisfied were never verified either by the TPO or the DRP. In our opinion, this aspect also requires a fresh look by the AO. We set aside the orders of the authorities on the aspect of disallowance u/s.40(a)(ia) of the Act also and remit it back to the file of the AO for consideration in accordance with law. - Decided in favour of assessee for statistical purpose. Disallowance of expenditure towards group IT services were considered twice, once u/s.40(a)(ia) of the Act and again u/s.92CA - Held that:- What we find is that bench marking of the international transactions u/s.92CA of the Act, is entirely different from allowance of disallowance of an expenditure u/s.37 of the Act. We have already set aside the issue regarding bench marking of group IT services rendered by SKF Data Services, Sweden, to the assessee, back to the file of the AO / TPO for consideration afresh. Irrespective of any addition made, under ALP pricing provisions, application of Section 40(a)(ia) of the Act can definitely be done by the AO. Since these two provisions apply in altogether different independent spheres, we do not find any merit in this ground taken by the assessee. 2016 (5) TMI 276 Disallowance of purchases - Held that:- The assessee filed confirmations from both the concerns with their PAN and changed address. The assessee produced certificate from bank that the assessee made payments to those parties through account payee cheque, however could not produce the parties as the assessee was not having any business dealings during the assessment period, but the assessee requested the AO to enforce their attendance through section 133(6)/131 of the Act. The assessee also produced bills bearing the inward stamp of the proprietary concern, goods received note, fabric inspection reports in respect of purchases from those two parties. Thus, in our opinion, the assessee has demonstrated sufficient proof of genuineness of the purchases, and therefore the findings of the learned Commissioner of Income-tax( Appeals) on the issue in dispute are well reasoned and no interference on our part is required. - Decided against revenue Disallowance of expenditure incurred on foreign travel by the employees of the assessee concern - Held that:- From the observation of the learned Commissioner of Income-tax (Appeals), we find that he has examined the expenses incurred under the head foreign travel expenses and sustained the disallowance, where the expenses were not found to be wholly and exclusively related to the business of the assessee in terms of section 37 (1) of the Act. In our view the finding of the learned Commissioner of Income-tax (Appeals) are well reasoned. Accordingly, we uphold his finding on the issue in dispute, hence the ground of the appeal is dismissed.- Decided against revenue Disallowance of the salary/incentives under section 40A(2)(b) - Held that:- We find that the assessee submitted the qualification, experience and the services rendered by both the relatives of the assessee and demonstrated that the salary and incentive paid was not excessive or unreasonable having regard to the market value of the services and no finding were given by the Assessing Officer whether the payment was excessive or unreasonable having regard to the fair market value. We don’t find any infirmity in the finding of the learned Commissioner of Income-tax(Appeals), on the issue is dispute, and thus, we uphold his finding on the issue in dispute - Decided against revenue Disallowance on electricity and water expenses - Held that:- The fact of the tripartite agreement among the parties was not disputed by the ld DR and the Ledger account of the M/s Ess Aar essence confirmed that the party acted as contractor for fabrication of goods and washing and finishing of goods of the assessee and the assessee also deducted tax at source on the payments made to the party. In our view, the findings of the learned Commissioner of Income-tax( Appeals) on the issue in dispute are well reasoned and no interference on our part is required.- Decided against revenue Addition on account of estimation of gross profit by the AO after rejecting books of accounts of the assessee - Held that:- The assessee has demonstrated the reasons for fall in gross profit rate and explained that there was no inconsistency in the inventory and also explained for non-maintenance of consumption of raw material as the assessee was engaged in production of garments for foreign buyers involving number of raw materials and multiple stages of production. The defects in respect of disallowance of unverifiable purchases, disallowances of electricity and water charges etc have already been rejected by us, and therefore in our considered opinion the rejection of books of accounts by the AO was not justified. The findings of the learned Commissioner of Income-tax (Appeals) on the issue in dispute are well reasoned and no interference on our part is required. - Decided against revenue Customs 2016 (5) TMI 303 Import of spectacle lense - Department treated them as semi-finished spectacles lenses classifying under the CTH 9001.90.90 but appellant classified it under CTH 9001.40.90 & 9001.50.00 - Entitlement for benefit of Notification No.06/06 CE dated 1st March, 2006 - Held that:- there is no change in the tariff rate or in the nomenclature of various entries in the earlier notifications which were of tariff heading of 8 digits. As a consequence, when the spectacle lenses imported by the appellant were given the benefit of exemption as per the exemption notification No.6/6 dated 1st March, 2006, the said position continued even thereafter and therefore the appellant was entitled to the benefit of this notification even for the period in question. The adjudicating authority as well as the CESTAT have been influenced by the fact that the goods in question were re-classified as “semi-finished spectacle lenses” and on that basis it is held that since these were semi-finished spectacle lenses and not finished one, the benefit of exemption notification which is available only in the case of spectacle lenses, i.e., that is finished spectacle lenses, would not be available to the appellant herein. This approach of the authorities below was clearly erroneous. It is the power lenses which were imported by the appellant herein. They were treated as semi-finished only because of the reason that while fitting these lenses for a particular customer, i.e., before customizing according to the prescription, they were to be finished lenses. Therefore, the goods could not be treated as “semi-finished” and it could be appropriately described as “to be finished spectacle lenses” and are entitled to exemption as per notification No.6/06 CE dated 1st March, 2006. - Decided in favour of assessee. 2016 (5) TMI 302 Smuggling racket - Search and seizure - Illegally imported – Penalty on Revenue officers - High Court held to impose the penalty on the assessee as there was clear evidence of their culpability reported in [2015 (3) TMI 820 - DELHI HIGH COURT] - Apex Court disposed of the petition as withdrawn with liberty to the petitioner to approach the High Court, if he so desires as is seeked by the petitioner 2016 (5) TMI 301 Release of goods - Waiver of demurrage/godown rent and container charges - Import and selling of scrap - Confiscation of consignment under Section 111 of the Customs Act 1962 - Held that:- it is not possible to examine the mala fides of the individual Customs officers in delaying the release of the goods in favour of the Petitioner. In the absence of any clear determination of such allegations it would not be possible to even direct the waiver of the demurrage charges. In a given case, however, where it is able to be established that the officers acted mala fide and entirely without the authority of law, directions could be issued to the central government to direct the warehousing and/or shipping companies to waive the demurrage/detention and container charges as the case may be. Therefore, the Court is unable to issue any direction to the customs authorities to direct the CWC or Respondent No.4 to waive the demurrage charges, detention and/or container charges. As far as appellant M/s. S.K. Metal is concerned, as already noticed, pursuant to the interim orders passed by the Court, the goods have already been de-stuffed from the containers and auctioned and some amount realised. Similarly, in the case of M/s. Modern Overseas as already noticed, the goods had been directed to be released on fulfilling specified conditions. - Decided against the appellant 2016 (5) TMI 300 Refund - unjust enrichment - Department encashed the bank guarantee of the petitioner and recovered sum of ₹ 9,19,801/ - Since the Supreme Court allowed the appeal of the petitioner, amount already recovered by the department became refundable - Unjust enrichment - Held that:- The bank guarantees were undoubtedly securities to safeguard the interest of the Revenue but, once the High Court dismissed the petitions and vacated the interim relief, the duty became payable as on that date. Encashment of the bank guarantees by the department was thus a step in furtherance of recovery of the duties. In the hands of the department, thus at that stage, it was in the nature of duty and not a security. When subsequently the Supreme Court reversed the judgment of the High Court, this duty became refundable. Any refund application would therefore, necessarily be governed by section 27 of the Act. Cases laws relief upon by the Appellant distinguished on the following grounds:- When the Court observed that the amount of disputed tax or duty that is secured by a bank guarantee, cannot be held to be “paid” to the Revenue, we are in respectful agreement. However, these observations were made in the background of the facts where the High Court had directed the assessee to furnish bank guarantee for the differential duty. The writ petition was ultimately dismissed on the ground of alternative remedy. While doing so, the Court directed the assessee to keep the bank guarantee alive till the matter was decided by the Commissioner, (Appeals). After the Commissioner, (Appeals), dismissed the appeal, the department encashed the bank guarantee. In this background, the CEGAT held that the encashment of the bank guarantee would not amount to payment of duty. This judgment, the High Court upheld holding that no question of law arises. Therefore, the contention of the petitioner cannot be upheld. The petitioner failed to pass the test of unjust enrichment - refund not allowed - Decided against the assessee. 2016 (5) TMI 299 Settlement Commission - Jurisdiction of settlement Commission to entertain the application - 3rd proviso to sub-section (1) of Section 127B - Import of 50 kg of gold bars - Seizure of 25 kg, sent outside SEZ area without documentation and proper authority - Petitioners pending proceedings applied to Settlement Commission but it passed the order holding that it had no jurisdiction to entertain the petitioners application - Petitioner contended that only if the conditions envisaged in sub-section (1) of Section 123 of the Act are fulfilled, in terms of 3rd proviso to Section 127B of the Act, the jurisdiction of the Settlement Commission would be ousted and not otherwise. Held that:- 3rd proviso to sub-section (1) of Section 127B incorporates by reference the applicability clause of Section 123. Incorporation by reference is a well known legislative technique to avoid repetition of the same set of words in different sections of the same statute or some times even in different statutes. In essence, therefore, 3rd proviso to sub-section (1) of Section 127B incorporates the applicability clause of Section 123 for the ouster of the jurisdiction of the Settlement commission. It has nothing to do with the eventuality of shifting of burden of proof. It is perhaps because of this reason that the Settlement Commission in the Special Bench judgment in case of Idris Y.Porbunderwala (supra) used the expression “invocability of the provisions of Section 123”. There is nothing in the 3rd proviso to subsection (1) to Section 127B which would indicate that it envisaged satisfaction of the conditions for invoking sub-section (1) of Section 123 before the jurisdiction of the Settlement Commission can be ousted. It only refers to the goods to which Section 123 applies. Applicability of Section 123 to the goods and the invocability of the principle of shifting of burden of proof are two independent and distinct issues. Applicability of Ratio of decision of different High Courts - Being a central statute bearing tax implications, we would, even otherwise, be slow in taking different view from two reasoned judgments of other High Courts. Even if, therefore, another view was possible, for the sake of consistency, we would have respectfully followed the view of other High Courts. In the decision of Supreme Court in the case of J.K.Bardolia Mills Vs. M.L.Khunger, Deputy Collector [1994 (7) TMI 90 - SUPREME COURT OF INDIA], relied upon by the petitioner, question of 3rd proviso to sub-section (1) of Section 127B was nowhere under consideration. Even the observations of the Supreme Court, are significant, when it is stated that “conditions to be satisfied for application of the provisions of Section 123 of the Act are (a) the goods must be one to which Section 123 applies. Thus, clearly even in these observations, distinction between applicability of the provisions of Section 123 and the goods to which Section 123 applies have been recognized. Therefore, the Settlement Commission has correctly applied 3rd proviso to sub-section (1) of Section 127B of the Act. - Decided against the petitioner 2016 (5) TMI 298 Offence under Section 132 & 135 of the Customs Act, 1962 - illegal import of electronic goods - Circular No.27 of 2015-Customs dated 23.10.2015 - Appellant submitted that trial Court had committed an error in not appreciating the vital fact that the Learned Metropolitan Magistrate can very well drop the proceedings at the instance of the Accused. Also failed to take into consideration the Circular No.27 of 2015 with retrospective effect issued by the Union Ministry of Finance dated 23.10.2015. Also failed to take into account that the 'Criminal Prosecution' and 'Adjudication Proceedings' are independent in nature and the finding rendered in the ' Adjudication Proceedings 'does not bind the parties facing Criminal Prosecution. Held that:- the Petitioner had not preferred any 'Appeal' as against the Adjudication Order dated 17.04.2010, wherein the penalty of ₹ 1,50,000/- was imposed on him. The said order has become final, conclusive and binding between the parties. Also that, the Circular No.27 of 2015-Customs, dated 23.10.2015 of the Ministry of Finance, Government of India, does not point out expressly that payment of penalty imposed upon a person in Adjudication Proceeding is a condition precedent for 'withdrawal of prosecution' by the Respondent/complainant. In the present case, for nearly six years, the Respondent/complainant had not filed any complaint before the Competent Court, not withstanding the fact that in terms of Customs Act, 1962, the prosecution must not be imposed any one in respect of offences covered under Sections viz., 132, 133, 134, 135A or 1136 of the Customs Act, 1962. It is for the 'Appropriate Authority' to take into consideration of the nature of the offence, the role of the individual concerned and evidence available on record to substantiate the guilty mind of the person for launching prosecution. It is to be noted that Section 132 of the Customs Act is a Bailable one. Further, the offence under Section 135 of the Act is a compoundable one, in terms of Section 137(3) of the Customs Act. The spirit and tenor of the guidelines issued for launching the prosecution, procedure for withdrawal of prosecution, procedure for withdrawal of sanction order, procedure for withdrawal of complaint already filed for prosecution, etc., were not evaluated/appreciated and looked into in a proper and real perspective by the trial Court which has resulted in dismissal of the said Miscellaneous Petition. Therefore, this Court, to secure the ends of justice and in furtherance of substantial cause of justice, at this stage without expressing any opinion on merits of the case, sets aside the impugned order. Consequently, the Revision succeeds. - Revision petition allowed Service Tax 2016 (5) TMI 310 Disallowance of Cenvat credit and recovery of interest - Authorized Service Station, Business Auxiliary Services and Servicing of Motor Vehicles on which the service tax is paid - engaged in trading activity of passenger cars purchased from the manufacturer supplier on which no service tax is paid - availing Cenvat Credit on various common input service - Revenue contended that appellant were availing Cenvat Credit in respect of common services which are used for taxable services as well as for trading activity. Held that:- the very identical issue has been considered by this Tribunal in the case of Badrika Motors Pvt. Ltd. Vs. Commissioner of C.Ex. & S. T., Bhopal [2014 (1) TMI 316 - CESTAT NEW DELHI] and Commissioner of Central Excise, Thrupathi Vs. Shariff Motors [2009 (3) TMI 155 - CESTAT, Bangalore]. In the case of Badrika Motors Pvt. Ltd., the Cenvat credit was denied on the GTA service on the ground that the GTA service has no nexus with the taxable service such as Authorized Service Station and Business Auxiliary Service. This Tribunal has held that no arithmetical correlation is required between the input and output services and accordingly the credit was allowed. In the case of Shariff Motors similar facts was involved that the assessee had availed the Cenvat credit in respect of GTA service which is used for transportation of motor cycles from factory to show room which were sold as such and credit was utilized for payment of service tax under authorized service station. The Division Bench has allowed the credit on GTA service. This decision has been upheld by the Hon'ble Andhra Pradesh High Court. Therefore, in view of the above judgments, and since the identical facts are involved the appellant is not required to reverse the Cenvat Credit attributed to the trading activity of passenger cars. Period of limitation - Penalty under Section 78 - Held that:- the Commissioner (Appeals) has conclusively held that in the absence of ingredients such as fraud, collusion, suppression of fact etc. with intent to evade payment of duty, the penalty is not imposable under Section 78. Considering this finding which equally applicable in case of invocation of extended period in terms of proviso to Section 73, the demand is not sustainable on the ground of time bar also. Therefore, the impugned order is not sustainable on merit as well as on limitation and the same is modified. - Decided in favour of appellant 2016 (5) TMI 309 Disallowance of Cenvat credit on rental services - Two different premises - there was old name of the assessee company in the invoice and also for address of Patna, Bihar - different premises having two different registration numbers and thus two different assessee - Held that:- matter is remanded back to the adjudicating authority with a direction to verify the details and the fact of deposit of service tax by the service provider. The appellant is also directed to produce the clarification certificate from the service provider, clarifying clerical error in the invoices meant for rental premises mentioning their registration number etc and certifying that they have deposited the service tax. It is further held that the substantial benefit of Cenvat credit can not be denied for clerical error, which is evident on the face of record. - Decided in favour of appellant by way of remand 2016 (5) TMI 308 Condonation of delay - delay of 48 days in filing the appeal - Appellant contended that delay was occured due to misplacement of the copy of O-I-O - Commissioner (Appeals) rejected the appeal observing that he has no power to condone the delay beyond the period of 30 days - Held that:- it does not appear to be a deliberate lapse on the part of the appellants. It is further found that the delay has been adequately explained. Therefore, there is a good case on merit in favour of the appellant. Accordingly, the delay is condoned and the COD application is allowed for extending consionable justice to the appellant. Disallowance of abatement claim and imposition of service tax - Held that:- it is relevant to notice the findings of the ld.Commissioner as given in Order-in-Original, under similar facts and circumstances, dropped the proposed demand, for the material components and allowed the abatement. Accordingly, agreeing with the findings of the ld.Commissioner (Appeals), the impugned order is set aside. Imposition of penalty - Rule 7(C) of Service Tax Rules, 1994 read with Section 70 of the Act - Held that:- the penalty is reduced to ₹ 10,000/-. Penalties imposed under Sections 76 & 78 of the Act, are set aside. Also the appellant is required to deposit the amount of ₹ 20,000/- to the Prime Minister’s Relief Fund within a period four weeks from the date of receipt a copy of this Order and file compliance report. - Decided in favour of appellant with consequential relief 2016 (5) TMI 307 Liability of Service tax - Reverse Charge Mechanism - Business Auxiliary Services - Section 65(19) of the Finance Act, 1994 - Appellant engaged in the business of promoting, marketing, canvassing, procuring orders from various customers in India for the medical equipments manufactured by M/s Viasys International Corporation and also carrying after sales service - Amount received as commission in convertible foreign exchange. Held that:- the issue is no more res integra as the service is rendered by the appellant on the goods which was manufactured by overseas manufacturer. It would mean the services rendered by the appellant is to an overseas manufacturer on whom Service Tax liability does not arise. The service rendered to such a person situated based at overseas Service Tax liability arises on him but under reverse charge mechanism appellant is made liable to pay, however in this services are consumed by a person not in India, no Service Tax liabilities arises on appellant is the law settled which is supported by judgement of Hon'ble Bombay High Court in the case of CST Vs. SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT]. Therefore, the impugned order is unsustainable and liable to be set aside. - Decided in favour of appellant Central Excise 2016 (5) TMI 306 Includability - Whether amounts recovered by IIL in the form of debit notes towards bank charges, interest, etc. were includible in the assessable value of inputs iron ore pellets - Transfer of iron ore pellets by IIL to IMIL, sister concern is a sale or transfer - Held that:- as per circular dated 1.7.2002, a distinction is made between inputs on which credit has been taken which are removed on sale, and those which are removed on transfer. If removed on sale, “transaction value” on the application of Section 4(1)(a) of the valuation rules is to be looked at. However, where the goods are entirely transferred to a sister unit, it is reasonable to adopt the value shown in the invoice on the basis of which Cenvat Credit was taken by the assessee i.e. the invoice of the supplier of the pellets to the assessee. As it is clear that the present is a case of transfer and not sale of pellets, no infirmity can be found with the Tribunal’s judgment, which only follows the circular dated 1.7.2001. In addition, the Tribunal was also correct in holding that post manufacturing expenses cannot be loaded on to the amount equal to the duty of excise leviable on such goods as this amount would, then, cease to be an amount equal to the duty of excise but would be something more. Therefore, on both these counts it is found that the Tribunal is justified in its finding on law, which is based on its finding of fact that the present is a case of transfer and not sale. This being the case, it is unnecessary to consider any of the other submissions made by the learned counsel including the point of limitation. - Decided against the revenue 2016 (5) TMI 305 Cenvat Credit - Eligible input - Final products cleared along with the packing material - Held that:- Tribunal allowed the appeal of the Revenue on the ground that if the packing material had not been used for the purpose of packing the finished products, the credit taken by the assessee for the duty paid on packing materials had to be reversed. But unfortunately it has not taken into account the definition of the word 'input' appearing in Rule 2(g) of the CENVAT Credit Rules 2002. The object of granting CENVAT credit is to ensure a single incidence of tax of the final product. The very purpose of the value added tax system is only to ensure this and to avoid incidence of tax more than once. The Tribunal has found that there is a mention about the packing material in fine print in the invoices. But, merely because it was found in a small print, the Tribunal interfered with a finding of fact recorded by the Commissioner of Appeals. There is no dispute about the fact that the final products were cleared along with the packing material in this case. - The surprise inspection did not reveal that the packing materials were recalled and again made use of as sought to be contended by the respondent. An invention of this nature across the bar cannot improve the case of the Revenue. Therefore, the order of the Tribunal is set aside. - decided in favour of appellant 2016 (5) TMI 304 Whether the Tribunal was justified in making proper determination of the annual production capacity of the Respondent/Assessee plant in conformity with relevant rules applicable for such re-determination and whether impugned re-determination made by the Tribunal can be said to be in conformity with the law laid down by the Supreme Court in the case of Commissioner of Central Excise v. Doaba Steel Rolling Mills [2011 (7) TMI 10 - SUPREME COURT OF INDIA] - Held that:- Section 3A(2) of the Act empowers the Central Government to charge excise duty on the annual production capacity to be determined in the manner prescribed under Rule 3. If a manufacturer proposes to make any changes in installed machinery which would affect the annual production capacity, Rule 4(2) required it to be intimated one month in advance, written approval obtained before making the change from the Commissioner Central Excise who would then determine the date from which the changed installed capacity shall be deemed effective. By deeming fiction, subject to compliance with Rule 4(2), the actual production, if less in the subsequent year, was to be determined for Excise duty on basis of actual production for the year 1996-1997. Any changes made in the annual production capacity on 30-7-1997, according to the respondent itself was communicated to the department after insertion of the amended Rule 5. The annual production capacity for chargeable excise duty in the present case relates to the period 1997-98. The Tribunal held that the actual production figures for the year 1996-97 was not relevant without noticing or taking into consideration Rule 5 brought into effect from 1-9-1997 by notification dated 30-8-1997. The finding was therefore completely perverse. Therefore, the order of the Tribunal is held to be not sustainable and is set aside. - Decided in favour of revenue CST, VAT & Sales Tax 2016 (5) TMI 297 Liability of VAT - advertisement display sites - Petitioner submitted that Sites are being used by itself for rendering services and there is no transfer of any right to use those sites as alleged by the Revenue but the revenue contended that the Sites for display of advertisements are “goods” and the petitioner has transferred the right to use those goods to various advertising agencies/advertisers, who use the Sites for display of their advertisement and/or advertisements of their clients. Held that:- it would be necessary for the authorities to examine the transactions entered into by the petitioner from the stand point whether there has been any transfer of the right to use the Sites under the agreement entered into by the petitioner with the advertisers. On a plain reading of the Licence Agreement entered into between DIAL and the petitioner, it is difficult to accept that the petitioner acquired any right to transfer any right to use the Sites in question. It is also important to examine the petitioner's contention that the Sites were being used by the petitioner for rendering services and no right to use the Sites had in fact been transferred by the petitioner. Merely, because the advertisements of the advertisers were displayed on the Sites would not necessarily lead to the conclusion that they had acquired the right to use the Sites. In the present case, it is not disputed that the Sites in question are located in a restricted area and none of the advertisers have an unmitigated access to those Sites; the petitioner affirms that possession of the Sites is retained by DIAL. Therefore, it would be difficult to accept the view that the transactions entered into by the petitioner with the advertisers constituted transfer of the right to use the Sites in question. Also the order dated 7th February, 2014 (as rectified by the order dated 13th February, 2014) is modified and the Special Commissioner is directed to consider the objections filed by the petitioner in light of the observations made in this order without insisting on pre-deposit of any amount. With regard to the impugned notices under Section 59 of the DVAT Act dated 8th May 2013 and 21st October 2013 requiring the Petitioner to produce documents stated therein for the period of 2012-13, the court directs the assessment be completed keeping in view the observations made in this order. - Petition disposed of 2016 (5) TMI 296 Imposition of penalty - Section 53(12) of the KVAT Act, 2003 - e-sugam number has not been generated by the consignee when the documents were produced for verification before the entry into the State of Karnataka and no proper reasons were mentioned for the same - Petitioner submitted that non-generation of e-sugam number before entering into the state of Karnataka was a bonafide error and a lapse of clerical nature. Revenue contended that petitioner had an effective and efficacious remedy available to him by way of filing an appeal against the impugned penalty order. Held that:- the petitioner can still be permitted to file appropriate appeal against the impugned penalty order before the Joint Commissioner of Commercial taxes (Appeals) under section 62 ibid. It is further directed that if such appeal is filed by the petitioner within 30 (thirty) days from today, the said Appellate Authority shall decide the same on merits in accordance with law without raising objection as to the bar of limitation. The Petitioner will be entitled to raise all his objections and furnish the requisite explanation before the said Appellate Authority, whose powers undoubtedly are co-extensive with those of the Assessing Authority. The deposit of penalty under the impugned order will remain subject to the final order to be passed by such Appellate Authority. - Petition disposed of
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