Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 14, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194A on Interest - Interest on FD crated by the NOIDA - The NOIDA has been constituted by the State Act and, therefore, entitled to exemption of payment of tax at source u/s 194-A(1) - HC
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Reopening of assessment - The reasons assigned by the AO to tentatively believe that taxable income has escaped assessment cannot be brushed aside at the threshold without a fact-finding procedure - HC
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When an application is made for the release of assets under first proviso to Section 132B(1)(i) of the Act explaining the nature and source of the seized assets and if no dispute was raised during the permissible time of 120 days by the Revenue Department, it had no authority to retain the seized assets - HC
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When one or more modes of assessment or remedies are available to the taxing Authority, the Authority must adopt that remedy which causes least prejudice to the assessee. - AT
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Deemed dividend - simply because there were transactions of cheques received and cheques paid in the mutual, open, current, running account with the sister concerns, the same cannot be considered as payment by way of loans or advances so as to attract provisions of section 2(22)(e) - AT
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Assessment of income on the non-resident in the name of the agent - view of the provisions of Section 165 of the Act, even though the assessment may be in the hands of a representative assessee u/s 163(3), there is no bar on direct recovery, of taxes so held to be leviable, from Carbijet Inc - AT
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Transfer pricing adjustment - There is no reason why the OECD guidelines should not be taken as a valid input in the present case in judging the action of the TPO - AT
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TDS - NCL has not carried out any work for assessee and since the payment is towards reimbursement of actual expenditure and hence the same cannot be presumed to be covered u/s 194C - Revision u/s 263 is not valid - AT
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The eligibility for the claim of depreciation should be considered from the date of the installation of the plant and machineries, and the word “acquired” has to be considered in the light of “ownership” of the asset. - AT
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Penalty levied u/s 271(1)(c) is liable to be cancelled on the ground that there was no proper recording of satisfaction in the order of assessment and that the show cause notice u/s 274 does not satisfy the specific charge against the assessee - AT
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Entitlement to exemption u/s. 11 - surplus funds generated from the running of community hall, kalyanamandapam and funeral ceremony hall - Assessee failed to prove the nexus between the profit earned and charitable activity - AT
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Disallowance of interest paid - When the building was demolished and new construction was started, at no stretch of imagination it can be said that the assessee used the building for its business - AT
Customs
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Valuation - Whether duty liability has to be determined on the basis of transaction value paid or payable for the supply of goods or the duty liability should be determined on the basis of the shore tank receipt quantity - Apex Court dismissed the revenue appeal - SC
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It is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. - AT
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Eligibility of drawback - there is no point of questioning the Cenvat Credit taken by manufacturers of fabrics as those are not registered with Central Excise, which means no Cenvat Credit on inputs has been taken - AT
FEMA
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Establishment of Branch Office (BO)/ Liaison Office (LO)/ Project Office (PO) in India by foreign entities - procedural guidelines - Circular
Corporate Law
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The expression “suit or other proceedings” in Section 446(1) under chapter II of Part VII of Companies Act, 1956, does not include criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881. - HC
Indian Laws
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Excavators belonging to the appellant fall within the meaning of the definition of 'motor vehicles' contained in Section 2(28) of the Act and would, therefore, be liable for registration, payment of taxes, etc. under the Motor Vehicles Act, 1988 - SC
Service Tax
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Maintainability - Territorial jurisdiction - Petitioner contended that since the demand for service tax is in relation to transactions in Delhi as well, a part of the cause of action arises within the territorial jurisdiction of this Court - present petition is maintainable in this Court - HC
Central Excise
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Levy of penalty for abetment - penalty cannot be imposed merely on the basis of assumption and presumption and without any basis - HC
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Recovery proceedings - Revenue cannot threaten coercive measures and directly seek to recover money from Petitioners without any prior adjudication. The sum has to be preascertained and prejudged. - HC
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Manufacture - assembly of different parts of decorative lamp shades and chandeliers - procuring the manufactured items and packing them with its own brand name by the assessee, does not amount to creation of a new product which may invite the duty. - HC
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Principle of natural justice - the petitioners may have been handicapped in their consultant not being able to present the arguments before the commissioner - matter remanded back - HC
VAT
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Validity detention order - Since the truck in question has been released during the pendency of the petition, the respondents are directed to forthwith release the goods seized from the truck together with the invoice and the lorry receipt. - HC
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The drink prepared from the said powders can not be excluded from the term `beverages', even assuming that the principle of common parlance were to apply. - HC
Case Laws:
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Income Tax
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2016 (5) TMI 570
TDS u/s 194A on Interest - interest credited/paid on the fixed deposit receipts purchased by the New Okhla Industrial Development Authority (NOIDA) - Whether NOIDA is a corporation established by U.P. Industrial Area Development Act, 1976 and not a body established under the aforesaid Act. - Held that:- NOIDA has been granted a status of a Municipality under Article 243-Q of the Constitution of India which deals with the constitution of a Municipality. The State Government has issued a notification dated 24 December 2001 in exercise of the powers conferred under the proviso to clause (1) of Article 243-Q of the Constitution. The said notification provides that having regard to the size of NOIDA which has been declared to be an Industrial Development Area by a notification dated 17 April 1976 and the municipal services being provided by NOIDA, the Governor is pleased to specify that NOIDA would be an "Industrial Township" with effect from the date of publication of the notification. This clearly means that instead of Municipal Corporation providing services, NOIDA would provide the said services and if that be so, then as observed by the Supreme Court in S.S. Dhanoa (1981 (5) TMI 124 - SUPREME COURT ), NOIDA will owe its existence to an Act of the State. The NOIDA has been constituted by the State Act and, therefore, entitled to exemption of payment of tax at source under section 194-A(1) of the Act. - Decided against the revenue.
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2016 (5) TMI 550
Retention of seized assets - Held that:- Section 132B was discussed and interpreted by a Division Bench of the Gujarat High Court in Mitaben R. Shah vs. Deputy Commissioner of Income Tax and another (2010 (2) TMI 684 - Gujarat High Court) like in the case at hand, no decision was taken by the Revenue Department within 120 days from the date on which the last authorization for search under Section 132 was executed despite filing of an application within 30 days for release of seized assets. And the Revenue Department later dismissed the application for release of assets after the expiry of 120 days on numerous grounds. The Court held that when an application is made for the release of assets under first proviso to Section 132B(1)(i) of the Act explaining the nature and source of the seized assets and if no dispute was raised during the permissible time of 120 days by the Revenue Department, it had no authority to retain the seized assets in view of the mandate contained in second proviso to Section 132B(1)(i) of the Act. This decision does not seem to have been challenged by the Revenue Department before the Supreme Court. For the reasons stated in the decision, we too find ourselves in complete agreement with the view taken by the Division Bench of Gujarat High Court. Thus direct the respondents to immediately release the seized assets of the petitioners.
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2016 (5) TMI 549
Reopening of assessment - ‘conversion charges’ were allowed as ‘Revenue expenditure’ in the hands of the firm that the relevant documents including the lease agreement were statedly perused, which led to have reasons to believe that taxable income in the hands of individual partners has escaped assessment - Held that:- The petitioners’ forceful contention that even if the conversion of land-use from ‘industrial’ to ‘commercial’ has increased its value manifold, such increase, at the best, amounts to accretion in the value of their capital asset and it shall get taxed at the time of transfer of their immovable property OR the equally appealing plea of the Revenue that the ‘conversion charges’ were paid by the lessee to the Chandigarh Administration, without such an obligation for and on behalf of the assessees and such payment is thus constructive receipt towards rent in their hands, are surely debatable and triable issues which deserve to be determined in accordance with the procedure contemplated under Section 143(3) of the Act. The reasons assigned by the Assessing Officer to tentatively believe that taxable income has escaped assessment cannot be brushed aside at the threshold without a fact-finding procedure, more-so when the petitioners are not remediless and have got equally efficacious recourses under the Act. A somewhat similar dictum is discernible from CIT vs. Chhabil Dass Agarwal (2013 (8) TMI 458 - SUPREME COURT) as it holds that the Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). Having held so, it is not expedient for this Court to express its opinion on the rival submissions as it may unwittingly cause prejudice to either party. Suffice it to say that no case to quash the notice(s) issued under Section 148 read with Section 147 of the Act or the order(s) rejecting the objections, is made out at this premature stage.
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2016 (5) TMI 548
Allowance of Royalty as business expenditure - transfer pricing adjustment - Held that:- In the present appeal, what we see is the TPO sitting on judgment on the business and commercial expediency of the assessee which is erroneous as per the provisions of the Act as laid down clearly by the Hon'ble Delhi High Court in EKL Appliances (2012 (4) TMI 346 - DELHI HIGH COURT). Furthermore, we are of the opinion that once TNMM has been applied to the assessee company’s transaction, it covers within its ambit the royalty transactions in question too and hence the Department’s contention for applying the CUP method is erroneous. Hence we hold that the addition made by the TPO and upheld by the DRP is unsustainable and is liable to be deleted. - Decided in favour of assessee
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2016 (5) TMI 547
Disallowance of interest paid - whether in the absence of any material to establish that the assessee was not using the building for business purpose, disallowance of interest is not justified? - Held that:- no material is available on record to suggest that the assessee has used the building for its business. The assessee being in the business of engineering contract, it has to necessarily obtain license /permission to use the building from the local Municipal Corporation. The assessee also needs to register itself with sales tax authorities for payment of sales tax. Apart from that, the assessee also needs to get clearance from other statutory authorities for carrying out its business in the premises, which was purchased by using the borrowed funds. In this case, no material is available on record to suggest that the building was used for business. In fact, the assessee demolished the building during the year under consideration. Therefore, the contention of the assessee that the building was used for its business in the year under consideration is farfetched one. When the building was demolished and new construction was started, at no stretch of imagination it can be said that the assessee used the building for its business - Decided against assessee Claim of depreciation on the building - Held that:- The assessee claims depreciation on the building purchased on 24.09.2007. The fact remains that the building purchased was never put to use for the business of the assessee and in fact, the building was demolished and new construction was started. When the building purchased on 24.09.2007 was demolished immediately after its purchase, this Tribunal is of the considered opinion that claiming depreciation on the very same asset is not justified. Disallowance under Section 40(a)(ia - Held that:- Hiring of generator, JCB and paying hire charges are liable for TDS under Section 194-I of the Act. Therefore, failure of the assessee to deduct tax would disentitle the assessee to claim the same as expenditure in view of Section 40(a)(ia) of the Act. Soil testing and concrete mixer testing are nothing but technical services. Therefore, the assessee is liable to deduct tax at the time of payment or giving credit. Hence, the assessee cannot claim the same as expenditure unless the TDS was made. The payment made for centring work is nothing but sub-contract. Therefore, the assessee is liable to deduct tax under Section 194C of the Act. In view of the above, this Tribunal is of the considered opinion that the assessee is liable to deduct tax in respect of all the payments made. Therefore, the Assessing Officer has rightly disallowed the claim under Section 40(a)(ia) of the Act. - Decided against assessee Addition towards sundry creditors - Held that:- Since the liability is not outstanding as on 31.03.2010, the same has to be added as income only for the assessment year 2010-11 and not for the assessment years 2011-12 and 2012-13. Merely because the assessee has offered the same as income for the assessment years 2011-12 and 2012-13 that cannot be a reason to shift the income which is otherwise assessable for taxation for the assessment year 2010-11. In view of the above, this Tribunal do not find any reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed - Decided against assessee
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2016 (5) TMI 546
Reopening of assessment - whether CIT(A) erred in holding that the proceeding u/s.147 as bad in law in spite of the fact that the set off of carried forward losses are not in existence as per section 72 of the Act for A.Y.1999-2000? - Held that:- The cojoint reading of all the documents goes to show that the assessee has disclosed fully and truly all material facts necessary for assessment, for that assessment year and as per the documents it is only the unabsorbed depreciation which has been adjusted out. Even otherwise as per settled position of law the reopening of an assessment u/s 147 has serious ramifications because the AO is empowered to reassess income even in respect of issues not set out in the notice. Therefore, if the power to rectify an order u/s 154(1) is adequate to meet a mistake or error in the order of assessment, the AO must take recourse to that power as opposed to the wider power to reopen the assessment. If the error can be rectified u/s 154, it would be arbitrary for the AO to reopen the entire assessment u/s 147. Further, the error in the order was not attributable to a fault or omission on the part of the assessee and the assessee cannot be penalized for a fault of the AO; Secondly when one or more modes of assessment or remedies are available to the taxing Authority, the Authority must adopt that remedy which causes least prejudice to the assessee. - Decides against revenue
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2016 (5) TMI 545
Entitlement to exemption u/s. 11 - AO held that the business of running community hall, marriage hall and funeral ceremonies hall cannot be treated as incidental business eligible for exemption u/s 11(4A) - Held that:- Merely carrying on business for and on behalf of the trust and applying the profits of the same for the object of the trust does not entitle for exemption u/s. 11(4) of the Act unless the business is incidental to the attainment of the objects of the trust. We fail to see any connection between the activities relating to running of community hall, kalyanamandapam and funeral ceremony hall were carried on and the attainment of the objects of the trust. The mere fact that whole or some part of the income from running of community hall, kalyanamandapam and funeral ceremony hall are used for charitable purposes would not render the business itself being considered as incidental to the attainment of the objects. We are in agreement with the Department that the application of income generated by the business is not relevant consideration and what is relevant is whether the activity is so inextricably connected or linked with the objects of the trust that it could be considered as incidental to those objectives.Thus the assessee is not entitled for any exemption u/s. 11 of the I.T. Act. - Decided against assessee Entitlement to depreciation - Held that:- The assessee is not entitled for depreciation on the opening balance of written down value of the assets in the asst. year under consideration, which were purchased in earlier years and the cost of those assets have already considered as application of income in earlier asst. year while granting exemption u/s.11 of the Act. As decided in case of M/s. Kongunadu Arts & Science College Council [2015 (11) TMI 1119 - ITAT CHENNAI ] if the assessee claims exemption u/s 11 under Chapter III of the Act, it cannot claim depreciation u/s 32 of the Act. - Decided against assessee
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2016 (5) TMI 544
Penalty u/s 271(1)(c) - Held that:- Penalty levied u/s 271(1)(c) of the Act is liable to be cancelled on the ground that there was no proper recording of satisfaction in the order of assessment and that the show cause notice u/s 274 of the Act does not satisfy the specific charge against the assessee. Consequently the orders imposing penalty for all the four assessment years are held to be invalid and illegal and are hereby cancelled. Since the order imposing penalty is cancelled, the reduction of the quantum of penalty from 300% to 100% of the tax sought to be evaded has become academic/infructuous and therefore the appeals filed by the revenue are dismissed. - Decided in favour of assessee
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2016 (5) TMI 543
Assessment of income on the non-resident in the name of the agent - whether the same income can be taxed in the hands of the assessee, in his own name, as also in the hands of his agent under section 163 in the representative capacity? - Held that:- In the present case, the assessment is on two different dates, and the date of assessment on the Air India in a representative capacity is a day earlier than the assessment on the Carbijet Inc directly. Therefore, the assessment in the hands of Air India, in the representative capacity, cannot be said to be legally unsustainable. It is only the assessment in the hands of Carbijet Inc which may not be sustainable in law but that aspect of the matter is wholly academic since, in view of the provisions of Section 165 of the Act, even though the assessment may be in the hands of a representative assessee under section 163(3), there is no bar on direct recovery, of taxes so held to be leviable, from Carbijet Inc. Thus conclude that the impugned income has been rightly assessed to tax in the hands of Air India Limited, as an agent under section 163 of the Act. - Decided in favour of revenue
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2016 (5) TMI 542
Deemed dividend addition u/s 2(22((e) - Held that:- The Assessing officer has invoked section 2(22)(e) only because the account contain transactions of payment and repayment between the said Company OIL and firms OC and OBA. Further, he has nowhere ascertained that the payment received and the payments made are towards payment by way of loans or advances. Therefore, simply because there were transactions of cheques received and cheques paid in the mutual, open, current, running account with the sister concerns, the same cannot be considered as payment by way of loans or advances so as to attract provisions of section 2(22)(e) as held in the case of Schutz Dishman Bio-tech Pvt Ltd (2016 (1) TMI 84 - GUJARAT HIGH COURT ). Similar transactions have been made in earlier year also but never in past the same has been considered to be transaction attracting section 2(22)(e). Therefore, in view of the binding decision in the case of Schutiz Dishman Bio-tech Pvt Ltd (supra), the transactions is required to be held in the nature of mutual current accommodation entries and therefore outside the purview of provisions of Section 2(22)(e) of the Act. - Decided against revenue
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2016 (5) TMI 541
Disallowance of additional depreciation on plant and machinery - Held that:- The assessee has acquired the plant and machineries before 31.03.2005 but the machineries were installed after 31.03.2005. If the revenue authorities’ view is accepted then the assessee cannot claim additional depreciation as per earlier provision since the machineries were neither acquired nor installed after 31.03.2002. At the same time, the assessee cannot claim the additional depreciation under the new provisions as machineries were acquired before 31.03.2005 but installed after 31.03.2005. Such interpretation would lead to a precarious situation and put the assessee in a vulnerable situation wherein even after making investments in new plant and machineries, the assessee is deprived of additional depreciation. The eligibility for the claim of depreciation should be considered from the date of the installation of the plant and machineries, and the word “acquired” has to be considered in the light of “ownership” of the asset. There remains no doubt that the assessee is very much entitled for the claim of additional depreciation. - Decided in favour of assessee.
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2016 (5) TMI 540
Revision u/s 263 - non deduction of tds on reimbursement of expenses - Held that:- We find that bank guarantee charges paid by assessee to NCL was neither payment for carrying out any work nor it is made towards broadcasting and telecasting services. From the agreement entered into by the assessee with NCL, it is clear that bank guarantee is to be provided to BCCI as joint and several liability of both the parties and therefore reimbursement of bank guarantee commission to NCL is with respect to the guarantee provided by the bank to BCCI for which payment is made by NCL and subsequently 80% is reimbursed by the assessee. We find that NCL has not carried out any work for assessee and since the payment is towards reimbursement of actual expenditure and hence the same cannot be presumed to be covered under section 194C of the Act. In view of the facts and the Board Circular No. 715 and payment made by the assessee to NCL by way of reimbursement of actual expenditure incurred by NCL on payment of bank guarantee commission is merely a reimbursement. In the light of the above, we are of the view that tax is not required to be deducted from bank guarantee commission in the absence of agent/principal relation. Consequently tax is not required to be deducted from reimbursement of actual expenses by assessee as incurred by NCL under any of the provisions of the Act. - Decided in favour of assessee Short deduction of TDS on the payment made to Noida Software Technology Park Ltd. for technical and professional services - assessee has deducted tax @2% instead of @ 10% to be deducted under section 194J - Held that:- We find that the payment made to Noida Software Technology Park Ltd. is as per the agreement entered into between the assessee and the said party, the assessee has obtained services only for uplinking of two channels owned by assessee on satellite involving no technical services and hence the same is covered under section 194C of the Act and there is no shortfall in tax to be deducted. In this regard the issue of the assessee is very clear on merits also that assessee has rightly deducted tax @ 2% u/s. 194C of the Act on payments made to Noida Software Technology Park Ltd. Even otherwise in view of the decision of the Hon'ble Calcutta High Court in the case of S.K. Tekriwal, [2012 (12) TMI 873 - CALCUTTA HIGH COURT] wherein it has been held that if there is any shortfall due to any difference of opinion as to taxability of an item or nature of payment falling under various provisions of TDS, the only solution left with this is that the assessee can be declared as assessee in default under the provisions of section 201 of the Act but no disallowance can be made by invoking provisions of section 40(a)(ia) of the Act. This clearly shows that it is a highly debatable issue. Once it is a debatable issue, provisions of section 263 of the Act, i.e. revision proceedings cannot be initiated. - Decided in favour of assessee
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2016 (5) TMI 539
Addition u/s 68 being share capital - Held that:- In this present case, regarding M/s. Ramsay International, any sanctity cannot be attached to the documents filed before the AO as on certified. The said Ramsay International Ltd. neither filed any valid documents before the 1st appellate authority nor before us in support of its contention. Therefore, we are of the view that the view expressed by the AO and CIT(A) about the creditworthiness and genuineness of transaction between assessee and M/s. Ramsay International Ltd. is justified. Thus, we hold that M/s. Ramsay International Ltd. has failed to prove its identity also as discussed above and we confirm the order of CIT(A) about creditworthiness and genuineness of transaction. In pursuance of the Section 68 of the Income Tax Act, It is for the assessee to establish the identity of the subscribers and prove their credit worthiness. In the present case, on the basis of the material available on record the identity of the Saroj Kumar Jhunjhunwala was established and identity of the M/s Ramsay International Ltd was not established. Regarding proving their creditworthiness or the genuineness of the transaction as they were not availed an opportunity given by the ITAT, Kolkata and pursuant to which, the proceedings under Section 131 of the Act. In enquiry by his inspector, AO found that one of the share applicants not existed at the given address. That both the share applicants did not choose to appear before the AO and The details could not be established. The valid details of the two concerns were not produced for examinations - Decided against assessee.
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2016 (5) TMI 538
Disallowance of finance charges - addition of interest - CIT(A) deleted the addition - Held that:- The Hon’ble Bombay High Court in the case of CIT Vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) has held that if there are funds available both interest free and overdrafts and or loans taken, then a presumption would arise that interest free advances would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments. Since in the instant case it is very clear from the details furnished that the interest free advances received from sister concerns during the year at ₹ 2.78 crores far exceeds the interest free amounts advanced to sister concerns at ₹ 1.97 crores, therefore, in view of the decision of Hon’ble Bombay High Court cited (Supra) and in view of various other decisions relied on by the Ld. Counsel for the assessee no disallowance of proportionate interest is called for - Decided against revenue Addition on account of difference in balance of creditors - CIT(A) deleted the addition - Held that:- So far as the amounts appearing in the name of Advance Metal Corporation Pvt. Ltd. amounting to ₹ 69,89,667/- is concerned we find the Ld.CIT(A)deleted this amount on the ground that the assessee has already offered the above amount in his application before the Settlement Commission and has paid due taxes on the same. Since the Ld.CIT(A) on the basis of perusal of the order of the Settlement Commission on this issue has given a finding that assessee has already declared this amount before the Settlement Commission and paid the taxes and interest thereon, therefore, in absence of any contrary material brought to our notice by the Ld. Departmental Representative the order of the CIT(A) on this issue is upheld So far as the balance amount of ₹ 41,90,433/- is concerned we find the Ld.CIT(A) deleted an amount of ₹ 40,65,107/- and sustained an amount of ₹ 1,25,326/-. The amount ₹ 40,65,107/-consists of 4 items as per the Table given at para 25 of this order. From the details furnished before the Ld.CIT(A) we find the assessee has given the difference on account of opening balance at ₹ 6,49,223 + ₹ 19,44,849 amounting to ₹ 25,94,072/- whereas the CIT(A) has deleted an amount of ₹ 19,15,371/- on account of opening balance difference. We are unable to understand as to how the CIT(A) has deleted an amount of ₹ 19,15,371/- on account of opening balance difference where the assessee had given the details of opening balance at ₹ 25,94,072/- . Therefore, to this extent the order of Ld.CIT(A) appears to be erroneous for which we deem it proper to restore this issue to the file of the AO with a direction to examine the issue of difference in the opening balance of ₹ 19,15,371/-. So far as other items are concerned we find the Ld.CIT(A) after proper appreciation of facts has deleted the amount of ₹ 9,28,855/-, ₹ 7,99,925/- and ₹ 4,20,956/- on account of the respective heads. In absence of any contrary material brought to our notice against the finding given by the CIT(A), we do not find any infirmity - Decided partly in favour of revenue for statistical purposes.
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2016 (5) TMI 537
Eligible for deduction u/s. 10A - Held that:- Commissioner of Income Tax (Appeals) has allowed deduction u/s. 10A to the assessee on the profits of Unit 1 for the subsequent assessment year. Assessee is eligible to claim deduction u/s. 10A, before adjusting losses of Nagpur Unit.
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2016 (5) TMI 536
Disallowance of Employees Stock Option Plan (ESOP) expenses - Held that:- The shares were allotted to the employees and the expenses were incurred by the assessee to motivate the employees, therefore, the expenses were incurred for business purposes - Decided in favour of assessee Disallowance u/s 14A - Held that:- It is true that Assessing Officer has made adhoc disallowance which is not justified. It is necessary to evolve a system or basis for making disallowance u/s 14A. We upheld the disallowance to 1.5% of the exempt income, thus, the Assessing Officer is directed accordingly. Disallowance on account of entertainment expenses - Held that:- Considering the material available on record, factual matrix, submission of the assessee, the observation made in the assessment order/impugned order, argument of ld. DR, we find that no evidence was produced by the assessee at any stage, therefore, mere claim is not enough. In principle, we affirm the stand of the Commissioner of Income Tax (Appeal) . However, by taking a lenient view, the disallowance of ₹ 2,50,887/- is reduced to ₹ 2 lakh, thus, this ground of the assessee is partly allowed. Difference between service tax payable and the service tax paid - disallowance u/s 43B - Held that:- We find that section 43(2) define certain terms relevant to income from profit & gains of business or profession and sub-section (2) speaks about the word “paid” which means actually paid or incurred according to method of accounting. Whereas, section 43B starts with non-obstante clause and permits the deduction of any sum payable by way of tax, duty, cess or fee, by whatever name called, in the year in which the sum is actually paid. Therefore, it can be said that adjustment, if any made, is as good as duty paid and it amounts to actual payment. If the payment has been made/adjusted before due date of filing of return u/s 139(1) of the Act. Identical ratio was laid down by Hon’ble High Court of Bombay in Lloyds Steels India Ltd. vs UOI [2001 (2) TMI 150 - HIGH COURT OF JUDICATURE AT BOMBAY ] holding that utilizing CENVAT credit to pay duty on clearance of final product is as good as making payment by debiting current account. Considering these decisions, the ld. Assessing Officer is directed to examine the factual matrix and decide in the light of the aforesaid decisions. This ground of the assessee is disposed off in terms indicated hereinabove.
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2016 (5) TMI 535
Deduction u/s 80IA(4) - Held that:- The assessee is engaged in the business of developing, operating and maintenance of container freight station (CFS) at Nhava Sheva, Mumbai, which is also approved by the concerned ministry of Government of India and duly entered into an agreement with CIDCO. As per the terms of the agreement, CIDCO allowed the assessee to set up and operate the CFS for a period of 60 years. Since, the issue has been discussed in detail after analyzing the facts and after placing reliance upon certain decisions like fro Hon’ble Apex Court in Bharat Sanchar Nigam Ltd. vs UOI (2006 (3) TMI 1 - Supreme court ) and CIT vs Paul Brothers (1992 (10) TMI 5 - BOMBAY High Court ), notification S.O. 744E, dated 01/09/1998, as amended by SO 391E dated 28/05/1999, decision in CIT vs Western Outdoor interactive Pvt. Ltd. [2012 (8) TMI 709 - BOMBAY HIGH COURT] and then affirmed the decision of the CIT(A), in favour of the assessee. Disallowance made u/s 14A - Held that:- Where no exempt income was earned by the assessee in the relevant assessment years and since the genuineness of expenditure is not in doubt, there is no question of disallowance u/s 14A of the Act - Decided in favour of the assessee.
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2016 (5) TMI 534
Unexplained investment - assessment in the hands of AOP - purchase of the property - shares of individual co-purchasers of AOP - Held that:- The land was acquired by 16 members of the family who combined together for a common purpose and common action in their own volition with a view to commercially exploit the land acquired by resale thereof at profits. It is evident that soon after purchase deed was registered, the same was handed over to the builder for development and prior thereto also the members of Khatib family were negotiating various builders for the disposal of the land. Therefore, intention of acquisition of land was to sale the same with a clear motive to make business profit. In these circumstances, the conclusion of the CIT(A) that the members of Khatib family who came together to acquire the land with intention to make profit by sale thereof as a business deal is required to be taxed in the hands of the joint owners as an AOP can not be faulted. We thus find no infirmity in the action of the CIT(A) in upholding the action of the AO exerting jurisdiction over assessee in the status of AOP. Therefore, acquisition of land and sale thereof subsequently has been rightly assessed in the hands of the AOP. Therefore, the objection of the assessee in this regard fails. We also find that the claim of the assessee that AOP family members owned the land and received the benefit/income since 1985-86 is in contradiction to the information recorded in 7/12 extracts as reproduced in para 19 of the CIT(A) order. The 7/12 extracts demonstrates that the members of the AOP were in possession of land from 1994-95 and also a part of land remain vacant and office were constructed on it. It is also clear that they were no fruit garden at though on a part of land, some seasonal crop have grown up. The situs of the land is within the municipal limits of Nasik and an urban land at the time of its sale. Therefore, it is clear in the prevailing circumstances that all the members of the AOP had combined together to purchase land with a pre-conceived idea to commercially exploit the property and make profits by immediate sale thereof as a business adventure. In totality, the circumstances are weighed against the assessee when tested on the touchstone of preponderance of probabilities. Therefore, We see no error in the action of the revenue in treating the investment in purchase of land as unexplained investment under S. 69 for the relevant assessment year 1993-94 which is rightly assessed in the hands of the AOP. We also do not find any fault in treating the transaction of purchase and sale as a part of business deal.
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2016 (5) TMI 533
TDS u/s 194H - short deduction of TDS on provision for commission and brokerage made - disallowance u/s 40(a)(ia) - Held that:- Section 40(a) (ia) of the Act contents two wings i.e. non deduction and non deposit of TDS and it renders only the duty to deduct the tax and to pay to government account. And if there is any shortfall due to any difference of opinion as to taxable of any item or to the nature of payment falling under various TDS provisions, then the provisions of section 40(a) (ia) of the Act are not attracted no disallowance can be made u/s 40(a) (ia). See COMMISSIONER OF INCOME TAX, KOLKATA-XI Versus M/s SK. TEKRIWAL [2012 (12) TMI 873 - CALCUTTA HIGH COURT ] Thus in this case since there is dispute of short deposit and not a dispute of non deposit therefore, the provisions of section 40(a) (ia) are not applicable and the disallowance made by the AO and confirmed by the CIT(A) are not sustainable in the eyes of the law - Decided in favour of assessee
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2016 (5) TMI 532
Disallowance of business associate's Foreign Travelling Expenses - Held that:- We have noticed that although the ld. AR has argued at length in order to support this issue, but there is no documentary evidence which could support the claim of the assessee that his wife has actually assisted him throughout these trips in any of his business activity. The assessee has not placed on record any documentary evidence which can connect the wife of the assessee with the affairs of his business. Such trips appears to be enjoyment trips - Decided against assessee Addition u/s. 41(1) - Held that:- Merely because the accounts have become non operation for a period of three years it does not mean that outstanding liability of assessee has cease to exist more so when assessee had not written it off such liability in his P & L A/c. The provisions of section 41 of the I.T. Act are not applicable in the present case. Hence, we allowed this ground and direct the AO to delete the additions - Decided against revenue
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2016 (5) TMI 531
Disallowance u/s 14A - Held that:- Assessee has earned dividend income at ₹ 2,07,300/- and it is also undisputed fact that assessee is engaged in the business of trading of shares and securities. From going through the decision of the co-ordinate bench referred and relied on by ld. AR in the case of M/s K. Ratanchand & Co. vs. ITO [2015 (10) TMI 2171 - ITAT AHMEDABAD ] wherein held that in such cases disallowance u/s 14A should not exceed exempt income earned by the assessee. Respectfully following the above decision of the co-ordinate bench in the case of M/s K. Ratanchand & Co. vs. ITO (supra), we are of the view that on the given facts and circumstances of the case, disallowance u/s 14A of the Act should be restricted to the extent of exempt income earned by the assessee at ₹ 2,07,300/-. - Decided partly in favour of assessee
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2016 (5) TMI 530
Disallowance of depreciation made on non compete fees - Held that:- Since the claim of assessee was allowed in A.Y. 2007-08 and 2008-09, meaning thereby that Revenue has accepted the claim and in such situation, on the same non-compete fees without there being any change in facts, no disallowance on depreciation can be made in the year under consideration. - Decided against revenue Disallowance of claim of reduction from stock of packing material and finished goods - Held that:- CIT(A) while deleting the addition made by A.O. has given a finding that the list of packing material which were written off contains clear justification the goods that were considered to be not usable and it showed the material, quantity and description of the various items which were lying at different godowns and which were considered to be as damaged. With respect to the reduction from closing stock of finished goods, the ld. CIT(A) has given finding that assessee has followed due procedure for writing off of the stock and procedure has been verified by auditors and the procedure followed by the assessee was as per accounting practices followed by the assessee. Before us, Revenue has not brought any material on record to controvert the finding of ld. CIT(A). - Decided against revenue Disallowance of claim of foreign travel expenses - Held that:- CIT(A) while deleting the addition had given a finding that the assessee had furnished compete details of employees who had travelled abroad, duration of visit, countries visited, nature and amount of expenses and purpose of travel. He has also noted that the evidences placed on record include the correspondences made with the travel agents and the expenses were reasonable as compared to the total turnover of the company. Before us, Revenue has not brought any material on record to controvert the finding of ld. CIT(A).- Decided against revenue Disallowance of web designing charges - Held that:- CIT(A) while deleting the addition on account of web designing charges has given a finding that no asset has been created but web designing is only a tool for facilitating the business of the assessee as it provides the means for managing the information about the assessee. With respect to trade mark expenses, he has given a finding that the expenses did not create any asset or result into any advantage of enduring nature and the expenses were only incurred to avoid future litigation and therefore, expenses were revenue in nature. With respect to survey expenses, he has given a finding that the expenses have been incurred to improve efficiency of the business by finding out customers preferences for sugar substitute, market research for its product, evaluation of its product and the expenses are necessary in line of the business. Before us, Revenue has not brought any material on record to controvert the finding of ld. CIT(A). - Decided against revenue Disallowance made u/s.40(a)(ia) - non TDS on account of gift articles and promotional articles - Held that:- CIT(A) while deleting the addition had noted that the items that were purchased by the assessee were for sales promotion, were in the nature of ready goods and only logo of the company was printed on the items and the logo was added to promote the business. - Decided against revenue
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2016 (5) TMI 529
Reopening of assessment - Held that:- The original assessment proceedings, once the questionnaire/queries stood replied by assessee on each and every aspect of the case, reopening of assessment will amount to change of opinion, has also not been rebutted by the Revenue before us. Therefore, in view of several decisions relied on by the ld. CIT(A) in the impugned order, as well as by assessee before us, the re-assessment proceedings have rightly been held as invalid. We, therefore, are not inclined to interfere with the findings of the ld. CIT(A) given impugned order as reproduced above and the appeal of the Revenue is, thus, found to have no merits. - Decided in favour of assessee
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2016 (5) TMI 528
Unexplained investment u/s 69 - Held that:- The assessing officer is under an obligation to give reasons for not accepting the explanation so offered by the assessee in the present case the assessing officer has not come out with any corroborative evidence or cogent material to demonstrate that the assessee has actually expanded the amount towards the purchase of the land, more than what has been documented. Hence in our considered opinion the said transaction does not fall within the ambit of section 69 of the act. - Decided against revenue
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2016 (5) TMI 527
Levy penalty u/s 271(1)(c) - disallowance of software expense - Held that:- In order to attract the provision of section 271(1)(c) of the Income Tax Act, there has to be “concealment of particulars” of the income of the assessee” secondly, the assessee must have furnish “inaccurate particulars” of his income, in the present case both the elements are missing as no information given by the assessee in the return was found to be incorrect or inaccurate. It is submitted that mere making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. As per the facts of the present case the disallowance made by CIT(A) is on account of difference of opinion between the assessee and the revenue as to the category in which the concerned expenses fall which certainly is a debatable in nature . It is settled law that when the disallowance made by AO/ CIT(A) itself is debateable in nature, no penalty of concealment for such debatable issue can be levied. - Decided in favour of assessee
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2016 (5) TMI 526
Addition on unaccounted profit - Held that:- Assessing Officer has relied on the provisional P&L A/c. for a part of the year to make such large addition. He has not brought any materials on record to prove that why the contention of the assessee was not acceptable. He has accepted the year ending P&L a/c and not doubted any expenditures whatsoever claimed by the assessee, but made such huge addition. It does not appeal to the common sense about such huge net profit at 46.43%, especially for the type of assessee’s business. The Assessing Officer should have drawn the P&L a/c as on the survey date after considering all income and expenditures. In this case no such attempt was made by the Assessing Officer before making such addition. Therefore, looking to the nature of the business of the assessee, which is spread over different geographical area, it requires time to record accounting entries and the assessee could not record all the transactions as on 13.09.2008. Considering these facts and circumstances of the case, CIT(A) has rightly deleted the addition in question - Decided against revenue Unexplained investment in land - Held that:- CIT(A) observed that the land was acquired by a different entity other than the assessee-firm. Also the statement of the Partner was not categorical that the assessee-firm had paid on behalf of the purchaser from unaccounted source; however, the statement recorded under section 131(1) of the Act referred to a figure of ₹ 70 lacs as affirmed by the Partner of the assessee-firm as the consideration and the books of account recorded a sum of ₹ 60.62 lacs. This was the basis for addition to the differential amount in the appropriate hand. Thus, CIT(A) correctly observed that the addition made in the hands of the assessee-firm was not justifiable and, if at all any addition should be made, it could be to the extent of the unexplained and not beyond. Further, he rightly held that the addition made in the A.Y.2009-10 was not the relevant year considering the transactions which pertained to the A.Y. 2006- 07. It was found possible such overlapping in case where the Managing Partners manages affairs of various entities and in such eases the Assessing Officer was duty bound to take appropriate action so that such unexplained transactions do not escape the rigor of taxation. The CIT(A) in the concluding lines rightly observed that the Assessing Officer may take corrective measures legally to assess the admitted amount of ₹ 21 lacs paid from outside the books of account in the appropriate hand and in the relevant assessment year. These reasoned and factual findings of the CIT(A) need no interference - Decided against revenue Cash payment made for purchase of second-hand crane through a proprietary concern of the Managing Partner - Held that:- Although the Assessing Officer had ample time to verify and to reconcile the purchases of crane and source thereof, it was not done by him. It is also pertinent to note that the care has not taken by the Assessing Officer regarding the assessment year, i.e., in which year such unaccounted money should be added. The so called transactions related to A.Y. 2007-08 and the addition made in the A.Y. 2009-10. Under these facts and circumstances, the CIT(A) rightly held that there were no documentary evidence on the basis of which the addition can sustain. Considering these peculiar facts of the case, we are also of the opinion that this addition cannot sustain as there was no addition of cranes in the hands of the assessee during the relevant assessment year. - Decided against revenue Unaccounted investment in stock - Held that:- AO was not justified in neglecting the transactions in between the period and he even did not consider the difference between the stock found and opening stock as. unexplained investment in stock. The CIT(A) rightly observed that when the audited accounts were available, the right thing was to consider the figures as per audited records instead of impounded materials. However, as per the reconciliation of stock statement, the stock difference arrived at ₹ 63,597/- which was admitted by ld. Authorized Representative on behalf of the assessee. Hence, the CIT(A) has rightly directed the Assessing Officer to restrict the addition to the extent of differential amount, i.e., ₹ 63,597/- and rest was deleted. These reasoned and factual findings of the ld. CIT(A) do not require any interference - Decided against revenue Unexplained salary and wages - Held that:- Theoretically, the assessee can derive benefit when the corresponding sales are suppressed. The Assessing Officer has not indicated anywhere in the assessment order that the assessee had suppressed sales thereby in the assessee gained benefit. The survey was conducted in the month of September 2008 and how can the Assessing Officer assume that after September 2008 the assessee would pay salary & wages from outside the books of account. The Assessing Officer obviously has not rightly appreciated the submissions made by the assessee in this regard. As rightly observed by the CIT(A), the Assessing Officer completely ignored the basic records and audited books of accounts of the assessee submitted before him. His reliance on the statement has been the sole basis for such addition. In this circumstances, the Assessing Officer was not justified in making such addition and the same has been rightly deleted by the CIT(A). - Decided against revenue Unexplained expenditure - Held that:- The assessee has furnished the ledger account of TDS while crediting to these parties and also furnished proof of filing of TDS return incorporating these credits. On perusal of the same, the CIT(A) inferred that there was no reason to believe that the said transactions appeared in trial balance and the ledger accounts were not inclusive of these amount. Unlike in the manual system, in a computerized environment, if it is appearing in the tally accounting package in trial balance, invariably it will appear in the ledger accounts also. The assessee established that such credits are supported by deducting and paying tax at source on those credits/payments. The ledger account placed on record also substantiated the assessee’s stand. The assessee also furnished a list of parties in whose case the credit balances were written off at ₹ 36,56,109/- which was entirely different from these three parties. Therefore, under these facts and circumstances of the case, the Assessing Officer was not justified in making this addition in question and the same has rightly been deleted by the CIT(A) - Decided against revenue
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2016 (5) TMI 525
Addition on account of non-genuine/bogus/unexplained expenditure u/s 69C - Held that:- There is complete mismatch in between the claim made by the assessee towards sub-contract expenditure and the revenue shown by the sub contractor in their respective income-tax returns or from the statement on oath. The act of assessee looks to be suspicious in relation to various cash payments of ₹ 15,50,000/- during the year to both the sub-contractors wherein each transaction has been shown at ₹ 20,000/- even when assessee and both the sub-contractors were having account with the same bank and branch and no justification has been given by the assessee for doing so. Assessee has taken a plea that if the amount of ₹ 23,04,740/- is added to its income then the gross profit will be calculated at 54.54% which is not at all justifiable in the type of contract he has undertaken wherein the accrued G.P. element was 9.53% and 17.95% for contract work for block no.9C-1 and block 9A6/11 given by SSNNL for the total cost of contract at ₹ 83,14,999/- and ₹ 74,98,000/- respectively. In our view GP percentage which is just an estimation and the real profits of the assessee can be much higher depending upon the cost efficiency but certainly it cannot go to the extent of 54.54% as rightly submitted by the assessee but looking to the undisputed facts that the cash payments of ₹ 15,20,000/- and outstanding amount of 8,54,073/- total ₹ 23,74,073/- has not been shown as income/revenue by the two sub-contractors and work was completed. We, in order to meet the ends of justice, are of the view that 20% of ₹ 23,74,073/- working out at ₹ 4,74,815/- to be sustained as nongenuine expenses at the place of ₹ 23,74,073/- made by the Assessing Officer. - Decided partly in favour of assessee
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2016 (5) TMI 524
Addition of undervaluation in closing stock of work-in-progress - Held that:- Assessee’s books of account have not been rejected u/s 145 of the Act, no specific defect has been pointed out in the quantitative records maintained by the assessee and above all ld. Assessing Officer has made addition just on the estimate basis and also due to the fact that in the next Asst. Year 2010-11 no addition has been called for by the same Assessing Officer on this ground on valuation of work in progress, we are of the view that addition needs to be deleted and, we, therefore, set aside the order of ld. CIT(A) - Decided in favour of assessee.
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2016 (5) TMI 523
Allowability of payment to ROC as charges of Registrar of Companies - Held that:- Issue of allowability of the expenditure depends upon the nature of the expenditure as well as the time when the expenditure was incurred. The Revenue authorities have not specifically placed on record that whether the entire expenditure was in the nature of payment to ROC as charges of Registrar of Companies. We, therefore, deem it proper to restore this issue back to the file of the AO so that he can first determine whether the expenditure in question were preoperative expenditure before the commencement of the business or not.
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Customs
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2016 (5) TMI 558
Eligibility of drawback and imposition of penalty - Section 114AA of the Customs Act, 1962 - Export of fabrics to Bangladesh to perform the job of CMT (Cutting/Making/Trimming) to make finished garments exported directly to Europe from Bangladesh - Sale proceeds are received by the appellant from third country from the buyer of the garments - Drawback disallowed as export of fabrics to Bangladesh does not involve sales and no foreign exchange remittances have come to the Appellant from its job workers in Bangladesh. Held that:- Rule 16A of DBK Rules, 1995 does refer to recovery of amount of DBK where sale proceeds are not realized. At the same time Rule 12(1)(b) and Rule 13(2)(i) also indicate that export of goods need not always be on a sale invoice or a Letter of Credit (LC). The above provisions convey that goods could be exported without a sale. The sale proceeds of the finished garments are received from the third country buyer and is received by the appellant directly from the garment purchaser which is more than the value of fabrics at which drawback is claimed. In the present case the products meant to realize foreign exchange are the 'garments' which are manufactured through job-workers in Bangladesh. The pattern of sale has been made clear by the exporter at the time of exports. Under the existing factual matrix of the case it can not be said that proceeds of the fabrics exported have not been realized and accordingly it is held that provisions of Rule 16A of the DBK Rules are not attracted. Drawback disallowed because as per the reports of the jurisdictional Central Excise officers the supporting manufactures of fabrics do not exist - Held that:- appellant has produced certificates from the jurisdictional Central Excise officers to the effect that supporting manufacturers of exported fabrics are not registered in their jurisdiction. If a manufacturing unit is exempted then it may not be registered with the jurisdictional Central Excise authorities. However, non-registration of units do not necessarily mean that such non-registered units are not existing. On this issue exporters were facing difficulty and CBEC vide Circular No.16/2009-Customs dated 25.05.2009 gave the clarification. Here, there is no point of questioning the Cenvat Credit taken by manufacturers of fabrics as those are not registered with Central Excise, which means no Cenvat Credit on inputs has been taken. Therefore, the Order-in-Original is set aside. - Decided in favour of appellant with consequential relief
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2016 (5) TMI 557
Entitlement of benefit under Notification No. 07/2002-2007 dated 05.06.2002 - DEPB benefit in lieu of drawback claimed - Supplies from DTA to SEZ units - Held that:- by reproducing the language of Notification dated 05.06.2002, it uses the expression that the Central Government hereby amends/corrects the Export and Import Policy 2002-2007. Thus it is, clear that insofar as the amendment is concerned, that was made effective by the issuance of this notification. Further, as is clear from the said notification, it was issued in exercise of the powers conferred upon the Central Government by Section 5 of the Act. It is, thus, a statutory notification whereby the EXIM Policy 2002-2007 was amended. With the issuance of such a notification, amendment came into effect from the date of issuance of the notification, i.e., 05.06.2002 and this notification, inter alia, made the exporters who make supplies from DTA to SEZ eligible to claim benefit of DEPB in lieu of drawback for supplies made to SEZ or unit in SEZ. Insofar as the Circular No. 25/2003 dated 01.04.2003 is concerned, it is only administrative in nature. It prescribed the procedure/requirements that were to be fulfilled for claiming the benefit of DEPB in lieu of drawback. By administrative circular, notification dated 05.06.2002 which was passed under Section 5 of the Act, could not be altered as that would amount to amendment of the notification and it was not within the powers of the Customs Authorities to alter the said date. Moreover, this is only a procedural circular which stipulates the conditions/ procedure that had to be followed for claiming the benefit of DEPB. Therefore, the impugned order is set aside and the appellant shall be entitled to the benefit of DEPB benefit in lieu of drawback as claimed by him. - Decided in favour of appellant
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2016 (5) TMI 556
Seeking direction for quashing of detention order - Indulged in repeated smuggling activities of similar nature on earlier occasions also within a short span of time and smuggled huge quantities of gold from Dubai to India - Seizure of gold bars - Petitioner contended that he would be entitled to get copy of the order of detention and the grounds of detention before he is arrested and detained so that the order of detention could be challenged at its pre-execution stage effectively and with full knowledge of the facts and circumstances - 8, 11, 18, 27, 37 Held that:- the contention of the appellant is unsustainable. In the light of the decision of the Constitution Bench in Haradhan Shah v. The State of W.B. and others [1974 (8) TMI 104 - SUPREME COURT], the contention put forward by the petitioners that whether the detenues have complied with the conditions on which bail was granted should have been considered before executing the order of detention, is without any substance. The grounds of detention mentions about the arrest of the detenues, the fact that bail applications were moved by the detenues and they were released on bail on conditions. That the detenues surrendered their passports and that they were restrained from moving out of the State was also considered by the detaining authority, as evident from the grounds of detention. The fact that the detenues complied with the conditions of bail or the orders passed in the Writ Petitions is not a matter to be considered by the detaining authority after passing the order of detention and before executing the order of detention, and that too when the detenues tried their best to avoid execution of the orders of detention. We are not inclined to accept the contentions put forward by the petitioners in this regard. When the persons involved in the smuggling activities were arrested and they were granted bail, they were bound to comply with the conditions of bail. That they complied with the conditions of bail is not a virtue on their part which is to be favourably taken note of by the detaining authority while passing the order of detention or while executing the order of detention. If they violate the conditions of bail, the consequences would follow. That the detenues complied with the conditions of bail and also the conditions imposed in the interim orders passed in the Writ Petitions, would not in any way deter the authorities from executing the order of detention. It is not necessary to revoke the order of detention on that ground before the order of detention is executed. In the present case, the orders passed in the Writ Petitions were stayed by the Supreme Court. Therefore, those orders could be ignored while executing the orders of detention. In the counter affidavits filed by the first respondent, the details of the various trips made by Rahila and Hiromasa to Dubai and from there to India for the period from 8.1.2013 to 8.11.2013 have been given. At the time when they were arrested, they were not having sufficient money to pay duty. They were not employed abroad. They did not stay abroad for the required period to enable them to bring gold to India. Rahila and Hiromasa did not produce any document to show that the gold brought by them was by lawful means. The inference possible from these circumstances is that it is likely that they are part of a smuggling racket. Of course, at this stage, the Court is not expected to arrive at any conclusive finding as to whether the detenues are guilty. But, at the same time, the Court is not entitled to shut its eyes to certain hard realities. The sharp increase in the smuggling activities in the State of Kerala is also a relevant factor to be taken note of. The propriety and legality of the subjective satisfaction arrived at by the detaining authority is to be tested taking into account these factors as well. Therefore, we do not find any ground to hold that the orders of detention against Rahila and Hiromasa are illegal or their continued detention is illegal. - Decided against the petitioner
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2016 (5) TMI 555
Import of old & used photocopiers - Confiscation in lieu of redemption fine and imposition of penalty - Enhancement of declared value at the time of assessment - Held that:- Revenue has correctly pointed out that multifunctional machines have copying facility are classifiable under CTH 84433100. In view of the observations from the appellant's own case decided by Punjab & Haryana High Court reported as BE Office Automation Products Ltd Vs CCE Gurgaon [2013 (11) TMI 1032 - PUNJAB & HARYANA HIGH COURT] and the settled position of law, we are of the considered opinion that in this case redemptpion fine & penalty imposed are excessive & are respectively reduced to 10% & 5% of the value assessed by the department. - Decided partly in favour of appellant.
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2016 (5) TMI 554
Imposition of redemption fine and penalty - Confiscation of seized 2.5 kgs of gold of foreign markings - Appellant's statement recorded under coercion and undue influence - Appellant submitted that making false allegation Customs discarded the duty paid receipt produced by appellant. No enquiry was done by the Customs on this receipt but was simply ignored on baseless pleas. Held that:- In the present case, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India could not be ruled out for no substantial evidence adduced to prove legal import of the offending goods. He got fullest opportunity to rebut against the alleged acquisition of the offending gold. But, he failed. The effect of the material facts being exclusively or especially within the knowledge of the smuggler, Customs proved its case very successfully. It is a proved case of Customs that the appellant travelled using ticket of another person from Calcutta. A prima facie case is proved against him. If his possession was innocent and lacked the requisite incriminating knowledge, then it was for him to explain or establish those facts within his peculiar knowledge, failing which Customs was entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof. Department is accordingly held to have proved its case. Therefore, it is held that the seized gold were smuggled goods. Absolute confiscation thereof is sine qua non and no redemption thereof is at all permissible on payment of redemption fine. Learned Commissioner (Appeals) committed grave error in granting option to redeem the offending gold under section 125 of the Customs Act, 1962 on payment of redemption fine of ₹ 15,00,000/-. His order is patently illegal. Therefore, that order on this count is set aside. When offence of smuggling of gold is established in the present case, there shall be no immunity from penalty. Accordingly, the penalty imposed is confirmed. Thus absolute confiscation of gold ordered and penalty imposed on the appellant by learned Adjudicating Authority sustain and that is maintained. - Decided against the appellant
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2016 (5) TMI 553
Imposition of redemption fine and penalty - Appellant not a license holder under drug and Cosmetics Act, 1940 - Neither absolute confiscation of goods nor goods were contraband - Tranexamic Acid drug imported and after found nothing questionable in the test report, allowed to re-export - Appellant contended that the exemption granted under Rule 45 ibid requires no license for import of drug of the nature imported. Held that:- penalty of confiscation is a penalty in rem which is enforced against the goods. In such case, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough, if the Department furnishes prima facie proof of the offending goods being smuggled one. The second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In such case, the Department has to prove further that the person proceeded against was concerned in the smuggling. Evidence gathered by Revenue unambiguously proved that both the appellant were contributory to the fraud committed against Customs and they made an organised bid to be enriched at the cost of the nation. It is established principle of law that fraud and justice are sworn enemies. When the collusion and fraudulent design of the exporter, importer-appellant, K. Ramlal Jain and M/s. DHL Logistics Pvt. Ltd., surfaced, the impugned goods that came to India, became no mans property and confiscation being an action in rem, the dubious claim of ownership of the goods at different point of time calls for absolute confiscation thereof without any leniency for redemption and re-export of the same. Accordingly, the order of the adjudicating authority requires to be set aside on such count and absolute confiscation of the impugned goods is hereby ordered. In the course of hearing, Revenue informed that the impugned goods have already left India on payment of redemption fine. Therefore it is left to the Chairman of the CBE&C to deal this matter as the Board may consider appropriate in the fitness of the circumstances of the case to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice. - Decided against the appellant
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2016 (5) TMI 552
Valuation - Determination of transactional value - Provisional assessmet - Unjust enrichment - Whether duty liability has to be determined on the basis of transaction value paid or payable for the supply of goods or the duty liability should be determined on the basis of the shore tank receipt quantity - Tribunal held that when the rate of duty is ad valorem and payment is made for the bill of lading quantity without any adjustment in value for the various losses, it is on the transaction value that the duty liability has to be discharged and not on the basis of the quantity of bulk liquid cargo which is actually received reported in [2015 (2) TMI 127 - CESTAT MUMBAI] - Apex Court dismissed the appeal filed by revenue
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2016 (5) TMI 551
Entitlement for bail - Recovery of gold - Clubbing as regards to recovery in the past - High Court held that the clubbing of total quantity of gold is permitted to find out whether the offence is bailable or non-bailable. If the total value, after clubbing, comes to more than ₹ 1 crore, it does not remain the bailable offence reported in [2015 (7) TMI 1093 - RAJASTHAN HIGH COURT] - Customs - Apex Court dismissed the special leave petition
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Corporate Laws
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2016 (5) TMI 520
Inclusion criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881 to the expression 'suit or other proceedings' in Section 446(1) and the expression 'suit or proceedings' in Section 442, under Chapter II of Part VII of the Companies Act,1956 - Held that:- In consonance with the spirit, purpose and object of the provisions of Section 446(1) of the Companies Act and Section 138 of the Negotiable Instruments Act, we uphold the view taken by the Single Judge in the matter of Firth (India) (1998 (9) TMI 588 - HIGH COURT OF BOMBAY) and accordingly proceed to answer the Reference placed for our consideration, as follows :- The expression “suit or other proceedings” in Section 446(1) under chapter II of Part VII of Companies Act, 1956, does not include criminal complaints filed under Section 138 of the Negotiable Instruments Act, 1881.
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2016 (5) TMI 519
Scheme of Amalgamation - Held that:- Sanction to the present Scheme of Arrangement approved by a majority of statutory requirement.
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FEMA
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2016 (5) TMI 518
Preventive detention passed against the detenue [husband of the appellant herein] as well as few other persons - Held that:- It has come on record and noted in the order of detention that large sums of money were received in the said bank account which was opened in the name of the detenue and the money which was disbursed from this account amounted to ₹ 40.52 crores. It was further found by the detaining authority that the detenue was also one of the persons involved in Hawala transactions which were carried out. In such circumstances, satisfaction of the detaining authority to detain the detenue cannot be faulted with.
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Service Tax
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2016 (5) TMI 568
Maintainability - Territorial jurisdiction - Petitioner contended that since the demand for service tax is in relation to transactions in Delhi as well, a part of the cause of action arises within the territorial jurisdiction of this Court - Held that:- the Court notes that prayer (a) of the petition is for a declaration that the transactions sought to be subject to service tax are not in fact amenable to service tax as they are “deemed sales” in terms of Section 65(105) of the Finance Act, 1994 (upto 30th June, 2012) and Section 65B (44) of the Finance Act, 1994 (with effect from 1st July, 2012). This declaration will cover the Petitioner’s transactions throughout India and would not be limited to any particular jurisdiction. Prayer (b) seeks the quashing of the Order-in-Original passed by Respondent No.3, the Commissioner of Service Tax in Mumbai. An appeal against the said order is maintainable before the CESTAT, Mumbai Bench. However, the fact of the matter is that the four Show Cause Notices (SCNs) which preceded the said order covered transactions relating to the lease of vehicles in Delhi as well. In other words, the transactions covered by the SCNs were not limited to the territory of Mumbai. Therefore, in the light of law explained by the decisions of the Supreme Court in various cases and the principles crystallized in the judgment of the Five-Judge Bench of this Court in Sterling Agro Industries v. UOI [2012 (6) TMI 76 - DELHI HIGH COURT - LB], the Court is of the view that it would not be justified in declining to exercise jurisdiction on the doctrine of forum conveniens. Consequently, the Court is satisfied that the present petition is maintainable in this Court. - Application disposed of
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2016 (5) TMI 567
Condonation of delay - Whether there was sufficient cause for condonation of delay in filing the appeal - Demand of Service tax alongwith interest and penalty - Authorized Service Station and Business Auxiliary Service - Held that:- the explanation furnished by it cannot be held to be plausible. It cannot be said that there was sufficient cause for condonation of delay. The Tribunal had decided the appeal on 6.12.2013. However, the appeal before this Court was required to be filed on or before 5.3.2014, i.e. within the stipulated period of limitation of three months. But the appellant filed the appeal before this Court on 28.3.2016, after a long and inordinate delay of 638 days. According to the version of the appellant, it was informed by the counsel that the appeal of the revenue was dismissed in 2015 but still the appellant never bothered to obtain certified copy of the order. Nothing had been produced to substantiate the said plea either in the form of an affidavit of the counsel or by producing other material on record. Further, this version does not appear to be natural and cannot be said to be reasonable and logical as a litigant would always like to keep his record complete in case the lis had been decided either in his favour or against him by obtaining certified copy of the order and other relevant papers from its counsel which had not been done here. The story put forth by the appellant is a camouflage to cover the inordinate and unexplained delay in filing the present appeal. Since no sufficient cause has been shown in the present case, no ground for condonation of delay is made out. Therefore, the application for condonation of delay and the same is hereby dismissed. Consequently, the appeal is also dismissed as barred by time. - Decided against the appellant
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Central Excise
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2016 (5) TMI 566
Waiver of pre-deposit - Classification - Whether the product manufactured and sold by the petitioner company was liable to be regarded as a textile or merely as a plastic product - Principle of natural justice - Held that:- It appears from the order impugned that the petitioners may have been handicapped in their consultant not being able to present the arguments before the commissioner. It must be appreciated that for whatever written pages are worth, there can scarcely be a substitute for oral submission in course of a hearing. It would be in the best interest of justice to set aside the order impugned, subject to the petitioner company being required to make a pre-deposit of ₹ 5 lakh before the concerned commissioner for the concerned commissioner to revisit the matter within four weeks of the receipt of a copy of this order upon affording the petitioners a chance to be represented at a hearing. In the event the substance of the order is maintained after the matter is heard afresh, the deposit to be made pursuant to this order will stand forfeited. In the event the commissioner passes a different order and accepts the petitioner company’s claim for the product to be regarded under Chapter 56 of the Schedule, the deposit will be refunded without interest. - Petition disposed of
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2016 (5) TMI 565
Whether assembly of different parts of decorative lamp shades and chandeliers amounts to manufacturing - Appellant was engaged in fitting of various lamp shades and chandeliers procured from different sources which are re-assembled and thereafter sealed with its own logo and code number. Held that:- Tribunal held that procuring the manufacturing items and packing them with its own brand name by the assessee, does not amount to creation of a new product which may invite the duty. The question involved is no longer res integra and stands answered in favour of the assessee and against the revenue by the authoritative pronouncement of the Apex Court in the case of TI. Diamond Chain Ltd. Versus Commissioner [2000 (3) TMI 1041 - SUPREME COURT OF INDIA], which has been earlier followed by different High Courts and the Tribunal in the instant case. The Tribunal has further held that the demand raised by the Revenue was otherwise also barred by limitation and that the appellant cannot take shelter behind proviso to Section 11-A(1) of the Central Excise Act, 1944, for it was fully aware of the existence of the assessee's unit and its activities. - Decided against the revenue
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2016 (5) TMI 564
Recovery proceedings - Invokation of Section 11(2) of the Central Excise Act, 1944 - Purchase of excisable goods from the shipping broker and cleared during the period from 2 April 2015 to 30 April 2015 - Petitioners claimed that they have made full payment towards value of scrap and central excise duty involved in the purchases from the second Respondent and made payment. Held that:- if the Revenue has some material in its possession, which enables it to proceed against both the Petitioners and Respondent No.2, particularly in the light of the above reproduced communication, then, the Revenue must adopt appropriate proceedings. It cannot threaten coercive measures and directly seek to recover money from Petitioners without any prior adjudication. The sum has to be preascertained and prejudged. In the present case, reliance on the order passed by this Court and which is also an interim order in arbitration proceedings, as between the Petitioners and Respondent No.2, will not enable the Revenue to issue such notice to recover the amount straightway. What are the sums due to the Government would have to be ascertained and thereafter subsection (2) of section 11 will come into play. Therefore, we can not assist the Revenue and the impugned notice is quashed and set aside. - Decided in favour of appellant
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2016 (5) TMI 563
Validity of Tribunal's order remanding the matter back for re-adjudication - CENVAT credit on common inputs and input services - Appellant contended that the Tribunal was in complete error in remanding the matter and the submission that the Commissioner has become functus officio is based on a communication, copy of which has been placed on file. Held that:- We do not think that the Tribunal has concluded the arguments raised before us of the Commissioner being functus officio in the light of the retrospective amendment. In such circumstances and when all opportunities are available to the assessee while pressing the application and the issue raised therein, all the more we do not entertain this appeal. It raises no substantial question of law. The Tribunal's order is not perverse or vitiated by any error of law apparent on the face of the record when it refuses to straight-away accept the stand of the assessee, but directs the officer in the department to examine the contentions on the same. - Decided against the appellant
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2016 (5) TMI 562
Levy of penalty for abetment - allegation of diverting and illicitly clearing the raw materials procured duty free and their finished product in DTA by resorting to under-valuation - Tribunal observed that, it was evident from record that goods were received by the main noticee and there was no material on record on the involvement of the present respondent for the alleged diversion of finished goods. Also, as per well-settled law, penalty cannot be imposed merely on the basis of assumption and presumption and without any basis reported in [2015 (9) TMI 623 - CESTAT AHMEDABAD] - Apex Court dismissed the appeal on the basis that entire issue being factual in nature and no question of law arises.
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2016 (5) TMI 561
Valuation - Abatement of equalized/averaged sales tax - Whether the appellants are eligible for abatement of equalized / averaged sales tax from transaction value under Section 4 of the Central Excise Act - Tribunal held that the deduction towards additional sales tax and octroi can be allowed on equalised basis. Therefore, appellants are entitled to claim the abatement of equalized sales tax from the transaction value reported in [2014 (10) TMI 190 - CESTAT CHENNAI] and [2015 (1) TMI 174 - CESTAT CHENNAI] - Apex Court dismissed the department's appeal as being devoid of any merit.
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2016 (5) TMI 560
Differential duty - Car removed from the factory for placing in the Show Room and subsequently brought back into the factory - Tribunal held that since, the appellants had taken credit under Rule 16(1) of the Central Excise Rules, 2002 in respect of duty paid at prevalent price on new model cars which were removed for placing in the Show Room and subsequently brought back into the factory, they were liable to pay differential duty under Rule 16(2) ibid while finally clearing those cars at the reduced price reported in [2007 (8) TMI 274 - CESTAT Bangalore] - Apex Court dismissed the appeal for negligible tax amount involved.
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2016 (5) TMI 559
Penalty u/s 11AC - High Court do not find any reason to recall its order dated 24-9-2013. Therefore, dismissed the recall order application by providing the applicant a liberty to seek his remedy in accordance with law reported in [2014 (12) TMI 1233 - PUNJAB & HARYANA HIGH COURT] - Apex Court dismissed the appellant's appeal
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CST, VAT & Sales Tax
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2016 (5) TMI 522
Classification and applicable rate of tax - period involved is 15-01-2011 to 31-03-2013 - Whether the non-alcoholic beverage concentrate in powder form are to be classified under Schedule Entry C-107 (11)(g), which is exigible to tax @ 5% OR whether the under Residuary Schedule Entry E-1, which is exigible to tax @ 12.5%. Held that:- there is no dispute that the said products of the Respondent-Dealers are `powders' from which ‘nonalcoholic’ drinks are prepared for the purpose of consumption by mixing the said powders with liquids like water, milk, juice, etc. In our view, there is no warrant for restricting the meaning of term “beverages” in the Schedule Entry C-107 (11)(g) as sought to be contended by the learned Counsel for the Appellant. The Entry is clear and unambiguous and is couched with the non-technical word “beverages”, which has to be understood in its ordinary meaning. The meaning of “beverage” as stated in the Concise Oxford English Dictionary is “drink other than water”. The question is, while construing the Entry as it stands, would the drinks made from the said powders be any less of “beverages” because they are “health drinks”? We think not! Merely because a drink has more nutritive value in the form of proteins and meant for a certain class of consumers, it would not cease to be a “beverage”. even if the potable drink made from the said powders are perceived as health drink, it does not fall out of the purview of the Entry. It has been held by the Supreme Court in State of Maharashtra v/s. Bradma of India Ltd. (2005) 2 SCC 669 that the residuary entry could be resorted to only when by a liberal construction the specific entry cannot cover the goods in question. In the present case, in view of the specific Entry 107-C (11)(g) to the Statute, it would override the general Entry. Even otherwise, we do not think that the drink prepared from the said powders can be excluded from the term `beverages', even assuming that the principle of common parlance were to apply. Therefore, the Tribunal has rightly concluded that the `powders' of the Respondent is covered under Schedule Entry C-107 11(g) and no interference is warranted with the impugned order of the Tribunal. - Decided against the revenue
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2016 (5) TMI 521
Validity of notice issued in Form 401 as well as the impugned detention order - All the requisite documents were produced except the transit pass in Form 405 as the driver forget to take it at the check post - Goods loaded in the truck detained - Petitioner submitted that provisions of section 70A of the GVAT Act are not applicable to goods which are in transit in a vehicle as all the requisite documents had been produced before the respondent authorities and hence, the entire action of the second respondent is without jurisdiction. High handedness of the action on the part of the respondent authorities is evident from the fact that the notice was issued to the driver at 02:45 p.m. and the driver was expected to respond to the same by 03:40 p.m. on the same day. Moreover, there was no notice issued to any of the petitioners and hence, the detention order is ex-facie violative of the principles of natural justice. Held that:- the impugned detention order here contains several blanks. It is stated therein that the vehicle was stopped at Changodar Road, Ahmedabad under section 67(6) of the GVAT Act, whereas the learned Assistant Government Pleader, under instructions, has stated that no action was taken under sub-section (6) of section 67 of the GVAT Act, as a search warrant is required to be obtained for the purpose of carrying out search under sub-section (6) of section 67 of the GVAT Act. The impugned detention order also states that a notice was issued and served upon the transporter; however, there is a blank thereafter. Evidently therefore, no notice was issued to or served upon the transporter. In the entire detention order, there is nothing whatsoever to indicate as to what is the nature of the documents which were not produced by the driver. The impugned detention order is in a cyclostyled form and contains several blanks and nothing is stated as to what is the nature of non-compliance on the part of the petitioners. Moreover, as is evident, the notice under section 70A of the GVAT Act came to be issued at 02:45 p.m. to the driver of the vehicle calling upon him to respond to the same at 03:40 p.m. Evidently therefore, no reasonable opportunity of hearing has been given to the petitioners prior to passing of the detention order. Under the circumstances, the impugned detention order also suffers from the vice of breach of the principles of natural justice. Moreover, on a plain reading of the detention order, it is evident that the same suffers from total lack of application of mind on the part of the concerned officer. Thus, the impugned detention order stands vitiated on two counts: firstly on the ground of breach of the principles of natural justice; and secondly, on the ground of lack of application of mind on the part of the concerned officer who passed the impugned order and therefore, the same cannot be sustained. Having regard to the fact that the impugned order is even otherwise not sustainable, the court is not inclined to enter into the larger controversy as regards the applicability or otherwise of the provisions of section 70A to the facts of the present case, leaving it open to the petitioner to agitate the same in an appropriate case. Hence, the impugned detention order is hereby quashed and set aside. Since the truck in question has been released during the pendency of the petition, the respondents are directed to forthwith release the goods seized from the truck together with the invoice and the lorry receipt.
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Wealth tax
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2016 (5) TMI 569
Net wealth computation - exclusion of property @ Delhi taken on lease - that:- The case made out before us is that the above stated Delhi house is on rent with the assessee and the same cannot be treated to be belonging to him. The Revenue fails to quote any statutory provision or a judicial precedent before us which could repel assessee’s contention that a residential house taken on rent could be assessed as net wealth in the hands of a tenant. We reiterate that the assessee has already placed on record sufficient evidence proving regular rent payments already allowed as expenditure in income tax assessments. We do not find any reason to interfere with the lower appellate finding under challenge. We accordingly conclude that the CWT(A) has rightly taken assessee’s Delhi rented property to be out of the purview of the Wealth Tax provisions thereby directing the Assessing Officer to claim section 5(vi) relief qua Baroda property.
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Indian Laws
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2016 (5) TMI 517
Classification - Whether the excavators of the description available is a 'motor vehicle' within the meaning of Section 2(28) of the Motor Vehicles Act, 1988 so as to make the same liable for registration and payment of taxes under the Act - Held that:- by referring the decision of two judges Bench of Supreme Court in the case of Natwar Parikh & Co. Ltd. Versus State of Karnataka and others [2005 (9) TMI 644 - SUPREME COURT], the excavators belonging to the appellant fall within the meaning of the definition of 'motor vehicles' contained in Section 2(28) of the Act and would, therefore, be liable for registration, payment of taxes, etc. as envisaged under the provisions of the Act. - Decided against the appellant
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2016 (5) TMI 516
Grant of an interim injunction restraining encashing of the Bank Guarantee refused - Held that:- On perusal of the record of the case, we find that firstly, arbitration proceedings in relation to the contract dated 22.08.2005 are still pending. Secondly, the sum claimed by the respondents from the appellant does not relate to the contract for which the Bank Guarantee had been furnished but it relates to another contract dated 22.08.2005 for which no bank guarantee had been furnished. Thirdly, the sum claimed by the respondents from the appellant is in the nature of damages, which is not yet adjudicated upon in arbitration proceedings. Fourthly, the sum claimed is neither a sum due in praesenti nor a sum payable. In other words, the sum claimed by the respondents is neither an admitted sum and nor a sum which stood adjudicated by any Court of law in any judicial proceedings but it is a disputed sum and lastly, the Bank Guarantee in question being in the nature of a performance guarantee furnished for execution work of contract dated 14.07.2006 (Anand Vihar works) and the work having been completed to the satisfaction of the respondents, they had no right to encash the Bank Guarantee. We have, therefore, no hesitation in holding that both the courts below erred in dismissing the appellant's application for grant of injunction. We are also of the view that the District Judge having decided the injunction application in the first instance in appellant's favour vide order dated 04.01.2012 erred in rejecting the application made by the appellant second time vide order dated 12.07.2012. It is not in dispute that the respondents despite having suffered the injunction order dated 04.01.2012 did not file any appeal against this order. Such order thus attained finality and was, therefore, binding on the parties. Thus we hold that the appellants have made out a prima facie case in their favour for grant of injunction against the respondents so also they have made out a case of balance of convenience and irreparable loss in their favour as was held by this Court in the case of Union of India (DGS D) (1974 (3) TMI 105 - SUPREME COURT ). Allow injunction application made by the appellant under Section 9 of the Act in Arbitration Suit no. 411/2011 in District Court, Allahabad and grant injunction in appellant's favour by restraining the respondents jointly and severally from encashing Bank Guarantee no. 12/2006 dated 04.08.2006 furnished by the appellant in connection with Anand Vihar Works
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