Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 2, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others Palm Oil, Crude Palmolein, RBD Palmolein, Others Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Repayment of 6.07% Loan 2014 on May 15, 2014, Government of India Floating Rate Bonds 2014 on May 20, 2014 and 10.00% Government Stock 2014 on May 30, 2014
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Treatment of sale of equity shares under Portfolio management scheme Business income OR capital gains Tribunal had erred in holding the transactions to be income from business and profession - HC
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Application before settlmetn commission - Failure to pay additional tax and interest Permissibility to set off of brought forward losses or unabsorbed investment - Not permitted - HC
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Search u/s 132 is a person specific and not a premises specific - if the name of the assessee against whom the block assessment has been made, does not figure in the warrant of the authorization issued u/s 132, the block assessment would be unauthorized - HC
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Applicability of section 14A of the Act - there is no application of section 14A as far as the deduction under section 80A to 80U under Chapter VIA of the Act are concerned. - HC
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Penalty - Addition @ 2% as commission Accommodation entries penalty envisaged under sub-section (2) of Section 158 BFA, is entirely on different background as compared to one that can be imposed under Section 271(1)(c) - penalty confirmed - HC
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Order of the AO giving effect to the orders passed by the Settlement Commission are set aside to the extent order provides for charging interest from the respective petitioners u/s 234B and 234C of the Act beyond the stage of section 245D(1)- HC
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Penalty u/s 140A(3) Self assessment tax not paid assessee has satisfied that there was a good and sufficient reason for the default no penalty should be levied especially, when the assessee has later on deposited the entire amount - AT
Customs
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Period of Limitation - Claim of drawback by export - even though the petitioner asserts in this writ petition that an application for extension of time was made under proviso to section 74(1), nevertheless no copy of such application has been filed - claim rejected - HC
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Smuggling of goods the material on record discloses that the assessee is not the person who imported the goods - He is not the owner of the goods - He was only a dealer of the smuggled goods - demand set aside - HC
Central Excise
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Acquittal of the respondents for the charge under Sections 9(1)(b), 9(1)(bb), 1(1)(c) and 9AA punishable under Section 9(1)(i) of the Central Excise Act - Even if a second view is possible, the one accepted by the trial Court cannot be disturbed. - HC
VAT
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Priority of Charge u/s 16-C of A.P. General Sales Tax Act - whether the Revenue is entitled to have precedence over the secured debt created by co-respondent in favour of the Bank - Held yes - HC
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Procurement of goods in the course of export against Form-H - Purchase from unregistered dealers - Since sale made by the assessee was in the course of inter-State trade or commerce u/s 3 of the CST Act, the assessee in terms of the Notification was entitled to exemption from payment of purchase tax u/s 5A of the Act - HC
Case Laws:
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Income Tax
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2014 (5) TMI 19
Validity of re-assessment u/s 147 r.w. section 148 of the Act Sale of land - Failure to disclose material facts Mere change of opinion Bar of limitation - Held that:- The proceeding u/s 147 cannot be initiated on account of change of opinion - Change of opinion and review of the assessment is not permissible Relying upon Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - the duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts - Once he has done that his duty ends - It is for the Income-tax Officer to draw the correct inference from the primary facts - It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts - If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment - under Section 147, the assessing authority has no power to review and the proceeding cannot be taken on account of change of opinion. There is no failure on the part of the assessee to disclose fully and truly all material facts, in the assessment of the relevant assessment year, exception to proviso to Section 148 is not applicable - The limitation to take action is four years from the end of the relevant assessment year - The four years' period for the assessment year 2003-04 expired on 31st March, 2008, while notice u/s 148 has been issued on 8.7.2009, that is, after expiry of four years' period, which is barred by limitation Relying upon Anil Radhakrishna Wani Vs. Income-tax Officer and others [2010 (3) TMI 316 - BOMBAY HIGH COURT] - when a regular order of assessment is passed u/s 143 (3) of the Act, a presumption could be raised that such an assessment order has been passed with due application of mind - the proviso to section 147 of the Act will be applicable notice issued u/s 148 of the Act has been issued after expiry of four years from the end of the relevant assessment year thus, the notice issued u/s 148 of the Act is barred by limitation and also invalid - The proceeding in pursuance of the notice is also invalid Decided in favour of Assessee.
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2014 (5) TMI 18
Treatment of sale of equity shares under Portfolio management scheme Business income OR capital gains Held that:- The PMS Agreement was a mere agreement of agency and cannot be used to infer any intention to make profit - The intention of an assessee must be inferred holistically, from the conduct of the assessee, the circumstances of the transactions, and not just from the seeming motive at the time of depositing the money - Along with the intention of the assessee, other crucial factors like the substantial nature of the transactions, frequency, volume etc. must be taken into account to evaluate whether the transactions are adventure in the nature of trade - the block of transactions entered into by the portfolio manager must be tested against the principles laid down, in order to evaluate whether they are investments or adventures in the nature of trade. The source of funds of the assessee were its own surplus funds and not borrowed funds - about 71% of the total shares have been held for a period longer than 6 months, and have resulted in an accrual of about 81% of the total gains to the assessee - only 18% of the total shares are held for a period less than 90 days, resulting in the accrual of only 4% of the total profits - a large volume of the shares purchased were intended towards the end of investment the contention of the revenue that an average of 4-5 transactions were made daily, and that only eight transactions resulted in a holding period longer than one year cannot be accepted - the number of transactions per day, as determined by an average, cannot be an accurate reflection of the holding period/frequency of transactions - even if only a small number of transactions resulted in a holding for a period longer than a year, the number becomes irrelevant when it is clear that a significant volume of shares was sold/purchased in those transactions thus, the Tribunal had erred in holding the transactions to be income from business and profession Thus the order of the Tribunal is set aside Decided in favour of Assessee.
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2014 (5) TMI 16
Set off of unabsorbed depreciation from STCG or from other sources - Application before settlmetn commission - Failure to pay additional tax and interest Permissibility to set off of brought forward losses or unabsorbed investment - Interpretation of sub-sections (1A) to (1D) of section 245C of the Act Held that:- Sub section (1A) of Section 245C prescribes the manner in which the additional amount of income tax payable in terms of sub section (1) of Section 245C in respect of income disclosed in an application made under the sub section shall be computed by providing that the same shall be calculated in accordance with the provisions of sub sections (1B) to (1D) - the applicant had furnished return in respect of the total income of the assessment year under consideration, in such a case, the tax would be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income - In terms of Clause (ii) of said section (1B) therefore the tax would be calculated on the aggregate of the returned total income and the disclosed income, treating the aggregate thereof as the total income of the applicant - Sub section (1C) of Section 245C provides for the additional amount of income tax payable in respect of income disclosed - Clause (b) thereof which covers our situation provides that the amount of tax calculated under Section 245C(1B)(ii) shall be reduced by the amount of tax calculated in the total income returned for that year. The legislature has created a deeming fiction by providing that the tax of the applicant would be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income - This device is created for a special purpose and has a localized effect - It comes into existence only for the purpose of calculating the tax to be deposited by an applicant for settlement of a case - the aggregate of the total income returned and the income disclosed would be considered as total income - deeming fiction must be allowed its full effect - the very same clause uses the term "total income returned in a different context and the aggregate of the total income returned and the income disclosed which would partake the character of a total income for this limited purpose - deeming fiction cannot be discarded by bringing into consideration such term used elsewhere by the legislature - legislature provides for definition of various terms frequently used in the statutes. At a stage where the Settlement Commission is required to ascertain where an assessee applicant has paid the additional tax with interest thereon only upon which application can be allowed to proceed further, no complex exercise or verification is envisaged - If the concept of total income contained in the Act is imported at such a stage, it can give rise to multiple disputes and lengthy debates with respect to the total income of an assessee and whether full tax on such income has been paid or not - the legislature does not envisage the Commission to go into a complex exercise of ascertaining the total income of the assessee and further ascertaining his tax liability on such income - The legislature has provided for a simple formula possible of a simple arithmatical application - the assessee may be entitled to a refund once the Settlement Commission passes its final order. The assessee's returned total income was nil - the assessee had filed nil return - In terms of Clause (ii) of sub section (1B) of Section 245C, thus, Rs. 72 lacs which the assessee declared in the application for settlement would be his total income for the purpose of computing the additional tax liability - the assessee had not deposited the tax with interest thereon calculated on amount of Rs. 72 lacs - The Commission correctly did not allow application to be proceeded further - The reasons adopted by the Commissioner are somewhat different decided against Assessee.
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2014 (5) TMI 15
Search u/s 132 of the Act Validity of block assessment Jurisdiction of the AO to pass order u/s 143(3) r.w section 158BC of the Act Held that:- The Tribunal was of the view that the assessee was not searched - No warrant evidencing search was produced - mere presence of her name in the panchnama would not enable the revenue to undertake further exercise and as disclosed in the record - the search u/s 132 of the Act is a person specific and not a premises specific - if the name of the assessee against whom the block assessment has been made, does not figure in the warrant of the authorization issued u/s 132 of the Act, the block assessment would be unauthorized the findings does not raise any substantial question of law arises for consideration Decided against Revenue.
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2014 (5) TMI 14
Entitlement for deduction on gratuity u/s 40A(7) of the Act Held that:- The assessee is a limited company - By virtue of the Gratuity Act of 1972, gratuity was deductible in three cases only as to where it is paid or has become payable during the accounting year or where a contribution is made towards an approved gratuity fund or provision is made for such contribution and where a contribution is made towards an unapproved gratuity fund and under a trust - after considering Section 40A(7) when the assessee has complied with all the conditions laid down, the assessee was certainly entitled to the entire deduction of the gratuity paid/payable or provision made by the assessee. Under the Gratuity Act, 1972, the assessee company is liable to pay gratuity to its employees who have completed five years of service for the total length of their service as provided under the said Act - The assessee company would become liable to pay gratuity to its employees for their past services rendered in accordance with the provisions of the Payment of Gratuity Act - On coming into force of the Gratuity Act, the assessee company became liable to provide an amount of ₹ 48,17,760/- by way of gratuity to its employees which included current as well as past liability for which provision was made - the liability to pay the said amount arose in the previous year, relevant to the assessment year 1973-74 and all the conditions laid down in the sub-clause (ii) of clause (b) of Sec. 40A(7) have been fulfilled, the Tribunal has rightly upheld the claim Decided against Revenue.
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2014 (5) TMI 13
Validity of order u/s 148 of the Act Disclosure of material facts - Held that:- Neither the notice u/s 148 nor the reasons contain even a whisper to the effect that the assessee had failed to disclose fully and truly all material facts necessary in the assessment of AY 2004-2005 also, the proposal to reopen is beyond the period of four years Decided in favour of Assessee.
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2014 (5) TMI 12
Applicability of section 14A of the Act - Whether section 14A would apply to provision of Chapter VIA Held that:- Following Commissioner of Income-tax Versus Kribhco [2012 (7) TMI 591 - DELHI HIGH COURT] Section 14A operates in respect of the income not forming part of the total income - Chapter VIA while computing the total income of the assessee from his gross total income in accordance with and subject to the provision of this chapter, the deductions specified are permissible - the taxable income of the assessee would surely get reduced and yet there is marked difference between the exempted income and the deduction provided under Chapter VIA - the investment in shares made by the assessee which earned him the dividend was from his own income - Section 14A would have no application in respect of the income not being taxable on account of deduction u/s 80P(2)(d) - Both the authorities have rightly held that there is no application of section 14A as far as the deduction under section 80A to 80U under Chapter VIA of the Act are concerned. The income which qualifies for deductions u/s 80C to 80U has to be first included in the total income of the assessee - deduction is to be allowed in accordance with and subject to the fulfillment of the conditions of the respective provisions - This is also subject to Section 80AB and 80A(1) and (2). Chapter VIA does not postulate or state that the incomes which qualify for the said deduction will be excluded and not form part of the total income - They form part of the total income but are allowed as a deduction and reduced Decided against Revenue.
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2014 (5) TMI 11
Penalty - Addition @ 2% as commission Accommodation entries Penalty u/s 158BFA(2) of the Act Held that:- It is purely a finding of fact by the ITAT and imposition of penalty is based on the order of the ITAT where the addition was sustained after elaborate discussion by the ITAT - Penalty under sub-section (2) of Sec. 158 BFA of the Act is provided where the AO computes income in excess of what is declared by the assessee for the block period the contention of the assessee that the penalty provisions contained in Sec. 271(1) (c) of the Act so also Sec. 158 BFA(2) are pari-materia, cannot be said to be correct as both are independent sections and in different situations - if the assessee fulfills the criteria, then no penalty is leviable but, there is a categorical finding by all the three authorities that the assessee was involved in undisclosed transactions and had huge credits in the bank account to the tune of more than Rs.2.5 crores and in case the search operation would not have taken place, would have gone unnoticed. Overwhelming evidence on record clearly proves that all these transactions were out of books and the Tribunal, after considering the connected case of Vora Group, where three percent commission was assessed, assessed only two percent it cannot be said to be merely on the basis of estimated/adhoc basis but after considering the overall facts and circumstances of various searches in the group and after appreciation of evidence on record - the penalty envisaged under sub-section (2) of Section 158 BFA, is entirely on different background as compared to one that can be imposed under Section 271(1)(c) of the Act - the AO has not committed any error in imposing such penalty or the Tribunal in confirming the same the order of the Tribunal is upheld as no substantial question of law arises for consideration Decided against Assessee.
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2014 (5) TMI 10
Addition on account of loss in sale of shares Off market transactions Genuineness of the transactions tax avoidance device, - Held that:- The Tribunal rightly upheld the view of the CIT(A) that the disallowance has been made without any justifiable basis - Tribunal rejected the Revenue's objection that the transactions were not carried out at the market rate observing that there was not a single instance brought on record by the AO saying that the purchase and sale were effected not at market rates it was not seriously argued that the transactions breached any of the statutory provisions and in particular section 19(1) of the Securities Contract (Regulation) Act - the Tribunal accepted that necessary entries were made and delivery slips were also passed. The additions made were in the hands of the company on substantive basis and in the hands of individuals on protective basis - the question was about the genuineness of the transaction - Revenue seems to be contending that the transactions were deliberately attempted to create loss/profit in order to transfer such corresponding loss/profit to the related parties to avoid legitimate tax liabilities - the allegation that the transactions were not at market rate has been dispelled by the Tribunal referring to the materials on record - necessary entries were made in the account books of both sides, i.e. purchaser and seller and delivery receipts were also passed demonstrating contemporaneous sale and purchase of the shares - off market transactions were permitted in law, that there was no evidence to suggest that artificially they were sold at rates lower than the prevailing market rate the question involved is not a substantial question of law Decided against Revenue.
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2014 (5) TMI 9
Validity of interest charged beyond the scope of section 245D - order of settlement commission Held that;- Assessee had all along kept its application to the interest being charged u/s 245D(1) alive - It may be that under mistaken bona fide belief that Settlement Commission has power of rectification, he filed such application before the Commission and such application came to be dismissed - application remained pending before the Commission for long number of years - the Commission has rejected the application on the ground that there was no error in the original order and also that it does not have the power of rectification the assessee cannot be precluded from questioning the AOs interpretation and implementation of the Commission's order. The Commission never required the AO to charge interest de-horse the statutory scheme - the assessee had no choice but to question the very base order of the AO misapplying the directions of the Settlement Commission - the assessee all along kept his challenge alive - He cannot be penalised for his application before the Settlement Commission remaining pending nearly for a decade thus, the order of the AO dated 4.2.2003 giving effect to the orders passed by the Settlement Commission are set aside to the extent order provides for charging interest from the respective petitioners u/s 234B and 234C of the Act beyond the stage of section 245D(1) Decided in favour of Assessee.
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2014 (5) TMI 8
Validity of Rectification order u/s 154 of the Act doctrine of merger - merger of an order with an order in appeal - Sundry expenses Disallowance out of welfare expenses Held that:- The addition was mentioned at 3 different places in the assessment order - against the order of CIT(A), Revenue had preferred appeal before ITAT but however Revenue did not raise the ground with respect to disallowance on account of sundry expenses before Tribunal - Section 154(1A) of the Act specifically provides that any matter which has not been considered and decided in any proceedings by way of appeal or revision filed against an order referred to in sub-section (1) of Section 154 of the Act may be amended by the authority passing such an order in exercise of its power under sub-section (1) of Section 154 of the Act - the authority passing an order may amend that part of the order which has not been considered and decided in any proceeding by way of appeal or revision against such order the matter of adhoc disallowance out of sundry expenses was considered and decided by CIT(A) in appellate proceedings thus, the AO had erred in framing revision order passed u/s 154 Decided in favour of Assessee.
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2014 (5) TMI 7
Survey u/s 133A of the Act - Confirmation of addition Disclosure made during the survey Amounts constitutes additional income or total income Held that:- During the course of survey, Assessee admitted to the income of Rs. 35 lacs but in the return of income filed by the Assessee the income of Rs. 32,49,328/- was offered to tax - the addition of Rs. 35 lacs has been made only on the basis of admission made by the Assessee during the course of survey - Revenue has not brought any material on record to demonstrate that the addition of Rs. 35 lacs made by the AO is backed by tangible material apart from the statement recorded during the course of survey when the assessee has admitted to confirmation of the addition of the differential amount, the addition to be restricted to Rs. 2,50,672/- being the shortfall in the amount admitted during the course of survey and as declared by the Assessee in the return of income Decided partly in favour of Assessee.
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2014 (5) TMI 6
Sale of land LTCG or Business income Held that:- The CIT(A) rightly was of the view that the transaction of sale of plots is an independent transaction of sale of capital asset and, is to be taxed as income from capital gains - the proceeds from sale of proportionate land, FSI being the same value as on the date of conversion is also to be taxed as capital gains - the income from sale of capital asset being invested in the bonds as per the provisions of section 54EC - CIT(A) after considering the submissions of the assessee has given a factual finding that the land was inherited by the Assessee and in 1987 the Assessee had subdivided the plots and obtained necessary permission from municipal authorities - The Assessee had thereafter retained the plots for many years and therefore the act of Assessee in selling the same cannot be treated as business income Revenue could not controvert the findings of CIT(A) nor has brought any material in its support thus, the order of the CIT(A) upheld Decided against Revenue.
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2014 (5) TMI 5
Deletion of addition on sale of residential property Withdrawal of exemption u/s 54 of the Act - Held that:- CIT(A) was of the view that Assessee had paid the cheques to the company where his father is director, for purchase of the new property and that the reason for disallowance of the transaction the entire transaction is a family affair and is not genuine by the AO - the assessee got married and staying separately in that house - Since the house is acquired in 1991 and investment is made in 2009, the long term capital gain arises in the case of exemption u/s 54 is allowed though the CIT(A) has considered the various aspects of the submissions and claim of the assessee which were not before the AO - CIT(A) has not asked for any remand report from the AO in this regard the matter is required to be remitted back to the AO for fresh consideration Decided in favour of Revenue. Deletion of undisclosed STCG Sale of shares - Held that:- CIT(A) was of the view that on a/c of Short Term Gain on sale of shares the AO had ignored the second letter issued by M/s ISF Securities dated 25.11.2011 regarding the transaction with the appellant revenue contended that the assessee has not submitted cogent reply before the AO - Assessee has submitted the second letter issued by M/s IFS Securities and confirmation of the statement of account of the brokers and copy of DMAT account etc. before the CIT(A) thus, the issue also needs to be remitted back to the AO for fresh consideration Decided in favour of Revenue.
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2014 (5) TMI 4
Order u/s 263 of the Act Deemed dividend u/s 2(22)(e) of the Act Advances made for purchase of FDR or Refund of share application money - Held that:- The company M/s Khanna Plantation Pvt. Ltd. had two shareholders being the assessee and her husband - a share application money of Rs. 20,39,000/- was lying with M/s Khanna Plantation Pvt. Ltd. in the name of assessees husband, Inderjeet Khanna against which shares could not allotted - a sum of Rs. 12 lacs being FDR made in the joint name of assessee and her husband was refund against the share application of Rs. 20,39,000 thus, the sum of Rs. 12 lacs cannot be treated as loans and advance in the hands of the assessee from the company - It was only refund of share application money received by the company from assessees husband Sh. Injderjeet Khanna, which was refunded in the joint name of the assessee and her husband thus, the order u/s 263 is not sustainable Decided in favour of Assessee. Penalty u/s 271(1)(c) of the Act Held that:- As the addition had already been set aside - as such there is no basis which remains for the purpose of the penalty thus, the order of the CIT(A) levying the penalty u/s 271(1)(c) is set aside Decided in favour of Assessee.
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2014 (5) TMI 3
Addition made u/s 40(a)(ia) of the Act Held that:- The matter should go back to CIT(A) because one of the vital fact was not brought on record that whether the entire amount pertained to the period in which the assessee-firm came into existence, or part of the amount pertained to the period which was under the proprietorship of one Sri Dineshbhai Chunawala - the CIT(A) is required to first ascertain whether the entire expenditure was claimed by the firm in its books of account or part of the expenditure was claimed by the said proprietor - the provisions of Section 40(a)(ia) are to be applied only in a situation when an expenditure is claimed of the amount on which TDS was required to be deposited - CIT(A) is directed to apply the correct position of law as on date as per the interpretation of the amended provisions of IT Act in respect of Section 40(a)(ia) thus, the matter is remitted back to the CIT(A) for fresh adjudication Decided in favour of Assessee. Non-deduction of TDS Held that:- CIT(A) has not dealt with the explanation of the assessee - CIT(A) has only dealt with the legal aspect but remained silent on the factual aspect of the matter thus, the matter is required to be remitted back to the CIT(A) for adjudication Decided in favour of Assessee.
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2014 (5) TMI 2
Deletion of addition made by the AO Document found during the search Burden to prove Held that:- The document is titled as Statement of Assets & Liabilities and it contains the details of Immovable and Movable Properties - Under the heading Immovable Properties, the details of five properties have been furnished - The AO has accepted that the property listed as (a) and having a value of Rs.52.00 lakhs has already been disclosed by the assessee, even though there was a difference in the door number - In respect of the remaining four properties, the assessing officer has conducted enquiries during the course of remand proceedings - the AO has accepted that all the four properties have not been acquired by the assessee during the year - the CIT(A) has deleted the addition relating to the properties thus, there was no infirmity in the decision taken by the first appellate authority in respect of the immovable properties. CIT(A) has deleted the addition with the simple observation that No evidence whatsoever is adduced in support of movable properties - revenue contended that CIT(A) has placed the burden of proof upon the AO, which is against the established principles, i.e., the burden lies upon the assessee to disprove the items disclosed in the Statement of Assets and Liabilities thus, the issue relating to the movable properties needs to be adjudicated by the CIT(A) thus, the matter is remitted back to the CIT(A) for adjudication Decided partly in favour of Revenue.
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2014 (5) TMI 1
Deletion of penalty u/s 140A(3) of the Act Self assessment tax not paid Assessee took a contention that due to losses, no funds was available to make the payment - Held that:- As per the order/intimation made u/s 143(1) the due date of filing of return for A.Y. 2006-07 was 31.12.2006 - the return was filed on 29th of March, 2007 - assessee has furnished a balance sheet drawn as on 31st of December, 2006 and demonstrated that there was heavy losses incurred in share trading - There was heavy current liabilities against the investment in shares Relying upon Safari Mercantile (P) Ltd. Vs. ACIT [2008 (3) TMI 510 - ITAT MUMBAI] - the assessee has satisfied that there was a good and sufficient reason for the default thus, no penalty should be levied especially, when the assessee has later on deposited the entire amount thus, the order of the CIT(A) upheld Decided against Revenue.
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Customs
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2014 (5) TMI 23
Period of Limitation - Claim of drawback by export - Importation of seamless steel casing pipes Non-filing of copy of application for Extension - Section 16, 74 & 51 of the Customs Act Held that:- The entry of the goods in the present case was on 9.12.1986 - Assessee sought to export the goods through a shipping bill presented on 30.11.1988 - However, the order u/s 51 permitting the re-export which was essential in this case and could be made after verification and inspection of the documents (this is also clear from the reference of section 51 u/s 74) was given on 22.12.1988, which is beyond two years from 9.12.1986 - This Court is of the opinion that the petitioner's contentions are not substantial - The court notices that even though the petitioner asserts in this writ petition that an application for extension of time was made under proviso to section 74(1), nevertheless no copy of such application has been filed; such assertion was not apparently made before the revisional authority - In any case, there is no order extending the time beyond two years - The Court finds no infirmity with the order of the revisional authority Decided against assesse.
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2014 (5) TMI 22
100% EOU - Violation of LOP Importation of plastic waste and scraps - Direction of re-export - Whether the goods imported by the respondent falls under the category prohibited goods - Held that:- The entire exercise of original authority rested on the inspection report - Beyond that, there is nothing on record to show that what was imported was in contravention of LOP - The reading of the report of the Pollution Control Board points out that the materials contained all sorts of plastic waste soaked with oil, dirt and other grit matters - The Pollution Control Board pointed out that open plastic materials need proper cleaning - The observation made by the Pollution Control Board showed that what was imported were all sorts of plastic wastes and that the conclusion reached directing re-export was based on the fact that the importer did not have the facility of washing imported goods inside its premises - Apart from that, no other material to justify the conclusion of the Revenue that the petitioner had imported hazardous material or prohibited items - On facts found by Tribunal and Commissioner, this Court do not have any hesitation in holding that the Revenue is not justified in contending that the importer has committed violation to the LOP given Therefore, questions of law raised in Civil Miscellaneous Appeal are rejected Decided against Revenue.
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2014 (5) TMI 21
Smuggling of goods Confiscation of goods - Notice of demand of duty - Section 28 or 125 - Whether noticee is not a person chargeable with duty u/s 28 of the Customs Act, 1962 though it had been proved that the noticee was actually dealing with such smuggled goods - Held that:- Section 28 applies to a case where the goods are imported by an importer and pays duty in accordance with law - If such duty is not paid, then a notice of demand of duty u/s 28 on the person chargeable to duty lies - Section 125(2) also authorizes such competent authority to demand any duty payable on such goods which is payable in respect of such goods under the Act - Therefore, the notice to be issued for payment of duty u/s 28 and u/s 125(2) is not identical - They fall into completely different areas - In the case of a notice demanding duty u/s 125(2) firstly the goods should have been confiscated and the duty demandable is in addition to the fine payable u/s 125(1) in respect of confiscated goods - Therefore, the material on record discloses that the assessee is not the person who imported the goods - He is not the owner of the goods - He was only a dealer of the smuggled goods and therefore, there is no obligation cast on him to pay duty and therefore, the notice issued u/s 28 to the assessee is unsustainable as he is not the person who is chargeable to duty under the Act. Insofar as application of Section 125(2) is concerned, admittedly, no goods are seized - Once the goods are not seized, consequently, there is no confiscation and in the absence of a confiscation, payment of duty chargeable from the person who is the owner or from whose possession does not arise - Hence, Tribunal was justified in upholding the order passed by the Adjudicating Authority who has held that no duty is leviable against the assessee as he is neither the importer nor the owner of the goods or was in possession of any goods - Accordingly, Decided against the revenue.
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Corporate Laws
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2014 (5) TMI 20
Winding up of the respondent company - Inability to pay debts - respondent company has failed and neglected to pay the amounts due and payable to the petitioner - whether the amount calculated by the respondent is admittedly due and payable to the petitioner - Held that:- Admittedly, the respondent had received the sum of Rs. 3,75,000/- towards booking of a residential flat. The said payment was made to the respondent in terms of a construction linked plan as advertised and agreed by the respondent - The respondent demanded a sum of Rs. 2,25,000/- (12% of the consideration) by its letter dated 21.12.2006. The said letter further put the petitioner to notice that if the payment as demanded was not made within a period of 30 days, the petitioner would be liable to pay penal interest at the rate of 20% P.A. Respondent has failed to fulfill its obligation and is not in a position to handover the possession of the flat in respect of which the amount of Rs. 3,75,000/- had been accepted. Admittedly, the petitioner was only obliged to pay 20% of the consideration till the commencement of construction as per the construction linked plan. The amount of booking and the first installment was also demanded and accepted by the respondent as being 20% of the consideration (computed for a flat of 1500 Sq. ft. at the rate of Rs. 1250 per Sq ft.) for a flat measuring 1500 sq ft. It is thus, not open for the respondent to contend that it was not obliged to hand over a flat measuring 1500 Sq ft. A allotment letter for such flat was issued to the petitioner on 22.11.2007 and there has been no further communication by the respondent whereby the said allotment has been sought to be altered in any manner. On the contrary, respondent called upon the petitioner to pay the balance sum due immediately, by its letter dated 09.01.2012 - defence raised by the respondent that he is not liable to repay the amount of Rs. 3,75,000/- to the petitioner is not credible - contention canvassed on behalf of the respondent is clearly without any merit and is ex-facie a sham defence raised only to avoid the obligation to refund the amount collected by the respondent - The petitioner would also be entitled to a reasonable interest as the sums paid by the petitioner have been utilised by the respondent - Decided partly in favour of appellant.
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Service Tax
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2014 (5) TMI 34
Waiver of pre deposit - GTA Service - Held that:- prima facie, it appears that the impugned activity did not constitute service of GTA. Therefore, we waive the requirement of pre-deposit for admission of the appeal and there shall be stay on collection of its dues during the pendency of the appeal. - Stay granted.
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2014 (5) TMI 33
Waiver of pre-deposit - Whether the Cenvat credit could be availed in respect of inputs received prior to registration - Held that:- We are prima facie not persuaded with the petitioner's claim for immunity under Section 73 (3) of the Act - Conditional stay granted.
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Central Excise
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2014 (5) TMI 28
Demand of differential duty - Valuation of goods / transformers - Mis declaration of goods - Suppression of facts - Extended period of limitation - Held that:- The appellants when they received the order for implementation of turn key projects had intimated the department and submitted the cost structure to the department. The assessable value of the transformers was determined as per CAS-4 by a qualified Chartered Accountant and this was submitted on 31.7.2004 to the officer in respect of his letter dated 22.4.2004. Nevertheless, show-cause notice was issued on 12.8.2005 invoking suppression and mis-declaration and proposing to revise the assessable value and demand of differential duty with interest and imposition of penalty as above. We find that what the department has done is to add the freight element from the factory gate to the sites in respect of transformers by invoking Rule 7 read with Rule 11 of the Central Excise Valuation Rules and also calculate the assessable value on the basis of transformer oil requirement indicated in the contract and adopt the one whichever is higher. There is no finding or evidence to show that actual quantum of oil used was higher than what was indicated in the CAS-4 and why the Chartered Accountants certificate cannot be accepted. In the absence of any evidence of actual use of excess transformer oil and in the absence of any finding as to why Chartered Accountants certificate cannot be accepted, stand taken by the Revenue to arrive at the assessable value by including the quantum of oil indicated as required in the contract cannot be sustained - important statutory aspects regarding limitation as well as reasons for inclusion of elements of cost have not been given and hence cannot be sustained. In these circumstances, we find that the Revenue has not made out a case for increasing the assessable value on the ground of suppression, mis-declaration or on merits - Decided in favour of assessee.
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2014 (5) TMI 27
Waiver of pre-deposit - SSI exemption - remote area - both the appellants use the same trademark - MOU not presented to assessing officer - Financial incability - Held that:- Tribunal has held to the contrary by holding that failure of the appellant to produce the MOU before the Tribunal and before the Assessing Officer, does not entitle the appellants to similar relief. As there is no denial that the trade mark is being used in common by both appellants, the learned Tribunal should have considered this aspect - Following decision of C.C.E., Chandigarh v. Bhalla Enterprises [2004 (9) TMI 109 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2014 (5) TMI 26
Delay in filing declaration - whether filing of the Notification in the instant case was only a procedural matter or the same gave a substantial right under the Notification dated 10th June, 2003 - Held that:- Claim in the instant case is of Rs. 1 crore 30 lacs, whereas even now goods are being cleared by taking advantage of the Notification dated 10th June, 2003, it would be appropriate on the part of the Tribunal to permit the appeal to be heard on deposit of Rs. 20 lacs. We, accordingly, modify the order of the Tribunal to that effect - Decided partly in favour of assessee.
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2014 (5) TMI 25
Acquittal of the respondents for the charge under Sections 9(1)(b), 9(1)(bb), 1(1)(c) and 9AA punishable under Section 9(1)(i) of the Central Excise Act - Non payment of excise duty - Held that:- In the absence of proof of contents of Ex. P14, the mere fact that the order of fine was confirmed by this Court, will not be a good ground for conviction of the respondents for the aforesaid charges. Viewed from any angle, the judgment and order of acquittal cannot be interfered with - The trial Court has not drawn adverse inference for producing the Xerox copies. On this aspect of the matter, the counsel has placed reliance on the decision reported in [1990 (10) TMI 362 - SUPREME COURT] in the case of Bhoolchand And Another v. Kay Pee Cee Investments and Another. The principle aforesaid relies to non-production of the document and not in respect of the photocopy of the document. Therefore, the principle is not applicable - This is an appeal against the judgment and order of acquittal. The Appellate Court will be slow in interfering with such orders. Even if a second view is possible, the one accepted by the trial Court cannot be disturbed. Perusal of the material placed on record in the context of the principle referred to supra, I am of the opinion that the appellant has not made out any grounds to warrant interference in the acquittal order passed by the trial Court - Decided against Revenue.
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2014 (5) TMI 24
Alternative remedy - whether Section 35(1)(b) of the Central Excise Act, 1944 (hereinafter referred to as the Act) confers an alternative remedy of appeal, against an order passed by the Commissioner (Appeals), under Section 35F of the Act. - Held that:- An assessee aggrieved by an order, passed by an Assessing authority, may file an appeal under Section 35 of the Act. Section 35A of the Act enumerates the procedure for filing and deciding an appeal. The power to entertain and decide an appeal and as a consequence to pass final and interim orders flows from Section 35 and Section 35A of the Act. Section 35F of the Act, which requires an assessee to pre-deposit the amount demanded by the revenue and empowers the Commissioner (Appeals) to waive the amount so demanded, is integral to the scheme of appellate powers conferred by Section 35 and Section 35A of the Act. Section 35F of the Act commences with the words, ... where in any appeal under this Chapter ... thereby leaving no ambiguity that power under Section 35F can only be exercised when an appeal has already been filed under Chapter VIA. Section 35F of the Act thus can only be invoked if an appeal has already been filed. We, therefore, hold that an order passed by the Commissioner (Appeals) exercising power under Section 35F, is an order passed in an appeal filed under Section 35 read with Section 35A of the Act and shall be appealable to the CESTAT as an order appealable under Section 35B(1)(b) of the Act. A perusal of the judgment in Hindustan Lever Ltd.s case (supra) reveals that significance of the opening words of, namely, ... where in any appeal under this Chapter ... were not noticed or considered. Petitioners are relegated to their alternative remedy of filing an appeal before the CESTAT. In case such appeal is filed within two months from today, the delay, if any, on account of pendency of this writ petition shall be considered sympathetically.
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2014 (5) TMI 17
Claim of refund along with interest u/s 11BB of the Act Held that:- Relying upon circular no.670/61/2002-CX, dated 01.10.2002 and Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (10) TMI 16 - Supreme Court of India] - Section 11BB of the Act comes into play only after an order for refund is being made - interest u/s 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded - the only interpretation of Section 11BB that can be arrived at is that interest under the section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable - The assessee is entitled for the interest u/s 11BB of the Act on the refunded amount, if the amount has been refunded after three months from the date of receipt of the application, but is not entitled for interest on interest the Authority is directed to calculate interest u/s 11BB of the Act Decided partly in favour of Assessee.
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CST, VAT & Sales Tax
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2014 (5) TMI 32
Priority of Charge u/s 16-C of A.P. General Sales Tax Act in re tax, penalty, interest and any other sum payable - whether the Revenue is entitled to have precedence over the secured debt created by co- respondent in favour of the Bank - whether Section 17-A operates as an exception to Section 16 - Held that:- Decision in State Bank Of Bikaner And Jaipur Versus National Iron And Steel Rolling Corporation And Others [1994 (12) TMI 72 - SUPREME Court] and State of Madhya Pradesh and another Versus State Bank of Indore and others [2001 (3) TMI 872 - SUPREME COURT OF INDIA] followed - The statutory first charge held by the State has been consistently upheld by the Courts - The policy justification for the impugned provision is the well entrenched common law doctrine of priority of Crown debts - The common law doctrine postulates that the State is entitled to claim, for the recovery of the amount of tax due to it from a citizen precedence and priority over unsecured debts due from the said citizen to his other private creditors - The basic justification for such claim of priority rests on the well recognized principle that the State is entitled to raise money by taxation, otherwise it will not be able to function as a sovereign Government at all - This consideration emphasizes the necessity and wisdom of conceding to the State the right to claim priority in respect of its tax dues. The object of insertion of Section 16-C as explained in the Statement of Objects and Reasons of Act 9 of 1999 - the property attached under Revenue Recovery Act could not be disposed of as it was hypothecated to either financial institutions or to others - In order to have a definite claim on the property, it is now proposed that the liability under the Sales Tax Act shall be the first charge on the property - Similar provision is available in the Rajasthan Sales Tax Act and it was upheld by the Court - It is no doubt true that Section 17-A appears to have diluted the absolute precedence given to the arrears of tax under Section 16-C - the principles of statutory interpretation require that the Court in such circumstances must have regard to consequences and has to reject a construction that results in hardship, absurdity or anomaly or which leads to inconsistency in the system which the Statute purports to regulate. - Decided against the petitioner bank.
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2014 (5) TMI 31
Permission to shift A-4 Liquor shop Implementation of Department order - After issuance of the proceedings - Held that:- Under Rule 28(3) AP Excise Rules, 2012., the jurisdiction to permit shifting of the shops is exclusively vested in respondent No.1 - This Court is only concerned with the non-implementation of the order passed by respondent No.1 - The main reason for respondent No.1 for not ensuring implementation of his own order is that ward No.14 is included in the list of wards, where location of A4 shops is prohibited - There are two proceedings whereby respondent No.1 has opined that ward No.14 is not a prohibited ward - No justification found for the respondents in not permitting the petitioner to shift the shop to ward No.14 - Having issued the proceedings, it is the bounden duty and obligation of respondent No.1 to ensure that his subordinates carry out his orders in letter and sprit - Respondent No.3 has indeed meddled with the issue over which he has neither authority nor jurisdiction whatsoever by purporting to reject the petitioner's application by passing an order - Respondent No.3 is directed to permit the petitioner to shift the A-4 shop in terms of the proceedings of respondent No.1 - Writ Petition is allowed - Other W.P. for interim relief shall stand disposed of as infructuous Decided in favour of assessee.
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2014 (5) TMI 30
Procurement of goods in the course of export against Form-H - Purchase from unregistered dealers - Exemption from payment of purchase tax Whether the assessee was entitled to exemption under the Notifications as held by the DC (A) u/s 3 or u/s 5(3) of the CST Act Held that:- The assessee was entitled to benefit of Notification S.O.181 dated 07.03.1994 as amended by S.O.430 dated 27.03.1995, whereby, purchase of all goods made upto 31.03.1995 by a registered dealer liable to pay tax under Section 5A of the Act was exempted from tax - Since sale made by the assessee was in the course of inter-State trade or commerce u/s 3 of the CST Act, the assessee in terms of the Notification was entitled to exemption from payment of purchase tax u/s 5A of the Act - The reason given by the Board cannot be upheld, the reasoning given by the DC (A) is justified and the revision petition dismissed - Decided in favour of assessee.
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2014 (5) TMI 29
Includability in the taxable turnover Value of damaged goods in absence of actual sale value - No documentary evidence available - Held that:- The assessee had placed the materials in the form of correspondence between the petitioner and the Principal - In the absence of any evidence to show the actual sale consideration and in the absence of any material to substantiate that the assessee had to be treated as purchaser of the goods - No justifiable grounds to accept the plea of the revenue that there was a sale omission to the tune of Rs.2,87,493/- - Admittedly the assessee, being the consignment agent of the principal, was entitled to get commission or any monetary benefits from the principal - Going by the facts that the sales of the damaged goods were finalised by the Principal and that apart from the commission, the assessee received expenses for taking the damaged goods into its possession, it is difficult to conclude that there was a sale omission to the tune of Rs.2,87,493/-- Thus no justifiable reason to accept the plea raised by the revenue - Revision is allowed Decided against Revenue.
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