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TMI Tax Updates - e-Newsletter
May 27, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194H - discount allowed by the appellant to the distributors in respect of starter packs and recharge coupons for its prepaid service - since the relationship between the parties is that of an agent and principal, TDS u/s 194H is required to be made - HC
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Deduction of expenditure after actual payment u/s 43B - Provision of Section 43B of the Income Tax Act does not apply to the electricity duty collected by the licensee/assessee as per provisions of the Bengal Electricity Duty Act, 1935. - HC
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Condonation of delay - There is no allegation far less any proof of the fact that the appellant was prevented by any cause far less sufficient cause from preferring the appeal within the prescribed period of limitation - condonation denied - HC
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Disallowance of transmission charges paid to U.P. Power Corporation Limited - payment of transmission charges is not payment for fee for technical services, therefore, the provisions of section 194J of the Act are not attracted. - AT
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Once the specified forms 15J and 15-I have been collected under Rule 29D(4)(ii) by the assessee even if the same is not submitted to the CIT for one reason or another, the assessee is not required to deduct tax at source u/s 194C - AT
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Interest on refund - refund made in part - Whether refund should have been first adjusted with the interest due on date of grant of refund, instead of being adjusted with the principal refund due? - Held yes - AT
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Royalty - payments received on sale and marketing of software license to the customers - assessee was under obligation to deduct tax at source under section 195 of the Act form the amount paid to foreign software suppliers - AT
Customs
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Imports in violation of the Exim Policy - Deterrent penalty - Tribunal has not passed a speaking order justifying the reduction of fine and setting aside the penalty. - matter remanded back - HC
Corporate Law
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Winding up - When the company paid installments to a substantial extent and prayed for some respite the Division Bench, in our view, would be within its right to consider such prayer and examine as to whether the applicant would deserve such treatment and the Court would not be so powerless to entertain such application - HC
Service Tax
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When the entire demand covering the period October, 2002 to December, 2006 is a meagre ₹ 19,576/- the demand for a mere 3 months will be pittance or less making it ridiculous to remand the case for computation thereof - AT
VAT
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Levy of purchase tax u/s 4 - agriculture products - The contention that a farmer/agriculturist is indirectly being subjected to tax does not merit acceptance. - HC
Case Laws:
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Income Tax
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2015 (5) TMI 810
Disallowance u/s 14A - restoring back the issue to the file of AO for de novo adjudication in light of the provisions of Rule 8D - ITAT deleting the addition made by the AO u/s 14A for the purpose of computing book profit u/s 115JB(f) - Held that:- Tribunal had only reiterated in paragraph 8 of the order under challenge the finding on the expenditure as per rule 8D r/w section 14A of the Income Tax Act 1961. In relation to that, the Tribunal held that Rule 8D is not applicable to the A.Y. Under consideration. Hence, applying the provisions of Rule 8D is not justified. The further finding of the Tribunal is only to bring to the notice of the Assessing Officer that he has to abide by clause (f) of Explanation 115JB of the Income Tax Act. In such circumstances, what the Tribunal has done is to invite attention of the Assessing Officer to the orders passed by the Tribunal, Delhi Bench. Beyond this, we do not think that the Tribunal has adjudicated the claim or has accepted the contentions raised before it by either side. In these circumstances and when the Assessing Officer is expected to determine the claim afresh and in accordance with law, we do not see any basis for the apprehension and which is voiced by Mr Ahuja. With this additional clarification, the Appeal does not raise any substantial question of law. - Appeal dismissed.- Decided against revenue.
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2015 (5) TMI 809
Disallowance from the sale of carbon credit u/s 80lA - sale of carbon credit - Held that:- There is no dispute about the nature of receipts arising from sale of carbon credits as the decision of My Home Power Ltd vs DCIT (2012 (11) TMI 288 - ITAT HYDERABAD) has been upheld [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] holding therein that the same are not an offshoot of business but arise from environmental concerns. Their lordships have also observed that these carbon credits are not directly linked with power generation. It has been held as ‘capital’ and not a revenue receipt. It is to be seen that the CIT(A) applies ‘estoppel’ principle against the assessee. The assessee had declared the carbon credit sale receipts as income due to the fact that it is otherwise entitled for section 80IA deduction. In the lower appellate proceedings, it had sought to withdraw the said declaration. The CIT(A) has not quoted any specific provision barring such an alternative plea. In these facts only, we observe that as the substantial question of law has been settled against the Revenue about nature of the receipt, the assessee is entitled for acceptance of its alternative claim. So, we accept the relevant grounds and hold that carbon credit receipts have to be treated as ‘capital’ in nature.
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2015 (5) TMI 808
Disallowance of deduction under section 80IA - sale of carbon credit, TUF interest subsidy receipt and generation loss compensation receipt - Held that:- Co-ordinate bench of the 'tribunal' in P.K.Ganeshwr vs ACIT [2015 (5) TMI 809 - ITAT CHENNAI] has accepted a similar plea raised in lower appellate proceedings for treating sale of carbon credit receipts as ‘capital’ receipts instead of ‘revenue’ receipts already accounted. The Revenue fails to point out any distinction on facts TUF receipts is a capital receipt and not a revenue receipt and not entitled for deduction under section 80IA on such receipt. See CIT vs Shamlal Bansal [2011 (1) TMI 409 - PUNJAB AND HARYANA HIGH COURT] Generation loss compensation receipt is eligible for deduction under section 80IA of the Act Aas relyin on Magnum Power Generation Ltd. vs DCIT [2010 (5) TMI 605 - ITAT DELHI]. Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee
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2015 (5) TMI 797
Validity of transfer order - Held that:- From the records produced by the respondent, it appears that a notice dated 13.10.2014 was sent to the petitioner at the address recorded in the official register but came back undelivered with the remarks ‘not known’. It further appears from the postal envelope containing the said notice that a remark is made as ‘addressee moved’. The presumption under Section 27 of the West Bengal General Clauses Act can be raised for due service provided it is correctly addressed, prepaid and dispatched though a postal authorities. It is no doubt that such presumption is rebuttable one and the addressee is to prove before the Court of law that the postal article in fact did not reach to him and not tender by the postal authorities in due course of business. Mere denial does not rebut the presumption. If the stand of the respondent is taken to be true, the responsibility ceases the moment the postal article is despatched by speed post which is correctly addressed and the sufficient stamps required therefor, is paid, the authority losses the control of the said article and it would be presumed that the same has reached to the addressee. This Court can very well raise such presumption unless the materials produced before this Court speaks otherwise. If the order of transfer is passed on 15th November, 2014, there was no occasion to send further notice by jurisdictional Commissioner at Kolkata on 7th January, 2015 and 20th February, 2015. Even if this Court accepts the submission of the respondent authorities that there was no infraction and/or violation of the provisions contained under Section 127 as the notice was dispatched and/or sent to the addressee/ petitioner but the fact remains that the postal articles returned with the postal remarks ‘not known’ and subsequent letters issued on 7th January, 2015 and 20th February, 2015 gives an adverse indication as there was no reflection of the order of transfer therein. This Court, therefore, finds that a prima facie case has been made out which must be decided after the exchange of affidavits. The respondents are directed to file affidavit-in-opposition within a period of six weeks from date; reply, if any, be filed within one week thereafter.Let this matter appear after seven weeks as “For Orders” in the supplementary list.
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2015 (5) TMI 796
TDS 194H - commission or discount - discount allowed by the appellant to the distributors in respect of starter packs and recharge coupons for its prepaid service - whether amounted to payment by the appellant of commission or brokerage within the meaning of section 194H ? - Held that:- The agreement between the assessee, who has been referred to therein as ‘HTEL’ and Poddar Communications, who has been referred to in the agreement as the ‘Service Provider’ provides that the service provider has been appointed by HTEL on the terms and conditions contained therein which include (a) that the service provider shall keep the premises open for the purpose of rendering and performing services during the office hours; (b) he shall maintain at least one telephone line and email connectivity; (c) he shall maintain minimum support staff; (d) he shall not correct, amend or remove any signets from the products of the assessee; (e) he shall keep the assessee informed as regards any infringement or violation of the intellectual property rights of the assessee; (f) he shall maintain the branch image of HTEL and shall not do anything which may tarnish or spoil or reduce the value of the assessee; (g) he shall keep the assessee informed as regards feed back received from the customers and shall also keep the assessee informed as regards the purchases and inventory; (h) he shall pay the service tax to the assessee as may be assessed and levied from time to time;(i) he shall not enter into any agreement with any third party which may be considered to be in competition of the business of the assessee; (j) he shall comply with all instructions and directions of the assessee; and (k) he shall not transfer or assign or sub-licence any of its rights and obligations. In consideration of the service to be rendered by him, he shall get a commission at the rates as per the policy to be adopted by the assessee from time to time. The terms and conditions noticed above leave no manner of doubt that the relationship between Poddar Communications and the assessee appearing from the agreement relied upon by Mr. Khaitan is that of an agent and principal. Poddar Communications appears to have been employed to act on behalf of the assessee for the purpose of feeding the retailers and through them to sell the services to the consumers. Thus the appellant was a person responsible for paying commission and, therefore, the provisions of Section 194H were attracted and the Tribunal was justified in taking the view as they did. - Decided against assesse.
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2015 (5) TMI 795
Applicability of Section 43B - electricity duty collected by the assessee-company as licensee, on behalf of the State Government - Held that:- The electricity duty, not being a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee, Section 43B is not attracted to the licensee/assessee in respect of electricity duty collected by it for being passed on the State Government. On this point we are in respectful disagreement with the decision of Commissioner of Income Tax-vs.-Ahmedabad Electricity Co. Ltd. (2003 (1) TMI 43 - GUJARAT High Court) and we are in agreement with the decision Kerala State Electricity Board-vs.-Deputy Commissioner of Income Tax (2010 (11) TMI 127 - Kerala High Court). We are of the opinion that Section 43B of the Income Tax Act is attracted to a case where payment is to be made to the State Government in the capacity of the State as a sovereign and not to a case where payment is to be made to the State Government in its capacity as a principal by an agent. In the instant case, the relationship between the State and the licensee is of a principal and agent/fiduciary and not that of a sovereign and a subject. It is not a business receipt of the licensee which the licensee collects on its own behalf in connection with its business of generating and supplying electricity. The licensee does not collect the electricity duty for its own consumption or utilization. If the licensee collects the duty but does not pay the same to the Government, the statute provides mechanism for the Government to recover the same from the licensee. Even in a case where the licensee is unable to recover the duty but recovers the energy charges, the statutes still provides a procedure for the Government to recover the duty either from the consumer or from the licensee. This view of ours finds support from the decision of Commissioner of Income Tax-vs.-Devatha Chandraiah (1983 (4) TMI 6 - ANDHRA PRADESH High Court). Though the said case deals with sales tax, the principle laid down in that case supports our view. The mischief that Section 43B of the Income Tax Act intended to present, is taken care of by the provisions of the Bengal Electricity Duty Act itself. Thus We clarify that the provision of Section 43B of the Income Tax Act does not apply to the electricity duty collected by the licensee/assessee as per provisions of the Bengal Electricity Duty Act, 1935. - Decided in favour of assesse.
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2015 (5) TMI 794
Short term capital gain v/s business income - Whether Tribunal below committed substantial error of law by not analyzing the facts of the instant case to determine whether the income of the assessee was required to be treated as income from business and not short-term capital gain since the main motive of the assessee was to earn profit by trading on shares rather than to earn dividend by investing the same? - Held that:- The benefit of short-term capital gain can be availed for any period of retention upto 12 months. Although a ceiling has been provided but there is no indication as regards the floor, which can be as little as one day. When that is the position in law and the investor has adduced proof to show that some transactions were intended to be business transaction, some transactions were intended to be by way of investment and some transactions were by way of speculation and the revenue has not been able to find fault from the evidence adduced then the mere fact that there were 1000 transactions in a year or the mere fact that the majority of the income was from the share dealing or that the Managing Director of the assessee is also a Managing Director of a firm of share brokers cannot have any decisive value. The question essentially is a question of fact. The CIT Appeal and the learned Tribunal have concurrently held against the views of the Assessing Officer. On the basis of the submissions made by the learned Advocate for the appellant, it is not possible to say that the views entertained by the CIT Appeal or the learned Tribunal were not a possible view. Therefore, the judgment cannot be said to be perverse. - Decided against revenue.
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2015 (5) TMI 793
Condonation of delay - Held that:- In the case before us a final opinion on the question is not essential because the appeal, in this case filed in the year 2010, was a still born appeal because it was barred by limitation. The appellant did not even serve a copy of the application under Section 5 of the Limitation Act for condonation of delay. The matter appeared before us as indicated earlier on 9th April, 2015. Till then no steps were taken. The appellant as a matter of fact woke up after Mr. Mazumder was requested by this Court on 9th April, 2015 to give a notice to the learned Advocate for the appellant. Thereafter, copy of the application for condonation has been served upon him. We have considered the grounds for condonation. The ground in substance is that the appellant did not pursue the matter seriously. There is no allegation far less any proof of the fact that the appellant was prevented by any cause far less sufficient cause from preferring the appeal within the prescribed period of limitation. There is as such no reason why the delay should be condoned. The application for condonation of delay is therefore dismissed. - Decided against assesse.
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2015 (5) TMI 792
Interest added under Section 245D(2C) cancelled by ITAT - Held that:- Question of levying any additional interest over and above what is permissible under Chapter XIX-A would not arise in the given circumstances of the case. Concededly at the time when the application was filed before the settlement commission, the assessee deposited the admitted tax liability. Soon thereafter, when the application was admitted, the amount required was deposited within the time stipulated under Section 245D(6A). The further tax liability determined was payable after the final decision. The records and materials examined by the CIT(A) and upheld by the ITAT disclose that even the tax liability finally determined was satisfied. In these circumstances, the addition of interest for the period during the pendency of the application before the settlement commission was entirely unwarranted. We do not see any reason to disturb the concurrent findings of fact. - Decided against revenue..
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2015 (5) TMI 791
Deemed accrual of interest - Tribunal held that the interest had accrued to the assessee and hence was assessable to tax in the hands of the Appellant - Held that:- The judgment Shoorji Vallabhdas & Co. (1962 (3) TMI 6 - SUPREME Court) has been recently follows in CIT V. Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] where it was reiterated that income tax is levied on real income and not hypothetical income. Therefore, entries inspired by realistic prospects of their realisation cannot per se constitute the basis of a valid levy. This view finds support in the Division Bench ruling of this Court in CIT V. Goyal M G Gases (2007 (7) TMI 241 - DELHI HIGH COURT). Furthermore, this Court is of the opinion that having once accepted the assessee’s explanation, with respect to the income not in fact accruing and therefore not liable to be taxed for the previous period 1998-99, the Revenue could not have in the absence of any compelling reason, treated an identical subject matter for succeeding years as it did. In view of the foregoing discussions the impugned order of the ITAT is set aside. - Decided in favour of assesse.
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2015 (5) TMI 790
Extension of stay - Held that:- The learned counsel for the petitioner has placed before us several orders passed by this court, whereby this Court has extended the stay initially granted by the Tribunal till the disposal of the appeal by the Tribunal in exercise of its jurisdiction under Article 226 of the Constitution. In fact, it is settled law that there is no bar for grant of such a relief if the Court is of the opinion that the circumstances and the ends of justice so warrant. This has also been stated clearly in Maruti Suzuki (2014 (2) TMI 1037 - DELHI HIGH COURT). We feel that since the petitioner had already been granted conditional stay by the Tribunal in respect of the said appeal and that the Tribunal is in the midst of hearing the appeal, it would be in the interest of justice that the stay order granted by the Tribunal is continued till the disposal of the appeal by the Tribunal. It is ordered accordingly.
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2015 (5) TMI 789
Deduction under Section 33AB - income from tea purchased by the appellant and blended with the tea, manufactured by it - whether AO's order applying claim as erroneous and prejudicial to the interest of Revenue - revision u/s 263 - Held that:- As decided in Goodricke Group Ltd. v. Commissioner of Income-tax (No.1) reported in [2011 (4) TMI 863 - CALCUTTA HIGH COURT] the assessee has utilized his entire tea grown by it in its garden and by blending the same with some other amount of tea purchased from outside has manufactured the final product and, thus, the entire profit arising out of such manufacture will get the benefit of section 33AB notwithstanding the fact that for the purpose of blending, some small amount was purchased from outside. It appears that the purchased amount is very trifling in comparison to the amount grown by the assessee and thus, it is not a case where it can be alleged that the purpose of maintenance of the garden by growing insignificant amount of tea in comparison to the final product is only a device to get the benefit of the section. In the case before us, assesse submitted that the quantity purchased from outside is 11%. By using the expression ‘trifling’ what did the Division Bench mean is not very clear to us but 11% is also in a sense nominal compared to balance 89% which was admittedly grown and manufactured by the assessee himself. - Decided in favour of assesse.
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2015 (5) TMI 788
Disallowance of transmission charges paid to U.P. Power Corporation Limited - non-deduction of TDS under section 194J - Held that:- Assessee-company is making payment of transmission charges to the transmission company in consideration of availing the benefits of the standard technical facility i.e. transmission System Network of transmission company for the purpose of Transmission of Electricity from the Generation Point to the Distribution Point and as such by merely making available the benefits of its sophisticated Transmission System Network to the applicant company, the transmission company is not rendering any "Technical Services" within the meaning of Explanation 2 to section 9(1)(vii) of the Act. The important factor which was not appreciated by the A.A.R. in the case of Ajmer Vidyut Vitran Nigam Limited [2012 (8) TMI 742 - AUTHORITY FOR ADVANCE RULINGS] is that the technical staff of Transmission Company by operating and maintaining its grid station and transmission lines, are simply discharging their own statutory functions and all are on the payrolls of the transmission company. Therefore, they do not render any technical service to the assessee-company. We have carefully examined the order of the A.A.R. and orders of the Tribunal on the issue and we find that the Tribunal has taken a consistent view that the payment of transmission charges is not payment for fee for technical services, therefore, the provisions of section 194J of the Act are not attracted. The Tribunal has also taken a view in all those cases that it is not a payment, it is only a reimbursement of the cost incurred on transmission charges. Therefore, provisions of section 40(a)(ia) of the Act is not applicable. - Decided in favour of assesse.
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2015 (5) TMI 787
Disallowance of cash expenditure u/s. 40A(3) - Held that:- The disallowance is attracted with reference to the mode of payment, and not for the expenditure per se. In the instant case, however, the assessee claims to have paid directly to the staff on the occasion of the birth date of the water park. There is, therefore, no question of production of any purchase vouchers. The assessee, who has booked the expenditure by way of a single entry in its books of account, ought to have, in our view, led evidence to substantiate its claim of the expenditure being by way of cash paid to staff in sums ranging from ₹ 100 to ₹ 1000/-, so that each payment, constituting an independent expenditure, is less than ₹ 20,000/-, which we observe to be its consistent stand throughout. The matter is, accordingly, restored back to the file of the A.O. to allow the assessee an opportunity to exhibit its claim - Decided in favour of assesse for statistical purposes. Treatment to business promotion expense as donation - further, allow deduction, where and to the extent exigible - Held that:- The ld. CIT(A) found the business purpose of advertisement, or business advantage in general, as missing. However, we observe no opportunity by him to exhibit so to the assessee, who pleaded its case before him toward the sums as being not exigible to deduction of tax at source. It could, for example, well be that the T-shirts given to the participants of the marathon run bear the assessee’s name or insignia or the like, for it to have advertisement value, and which also defines its business purpose. Similarly, payment to IAAPI, which, besides ₹ 73,315/-, also includes two other payments of ₹ 26,292/- and ₹ 25,000/-, as sponsorship, would need to be explained and, therefore, their business purpose shown. Coming to the second limb of the matter, i.e., of the same being exigible for deduction of tax at source, so that the deduction would only follow the same, in our view, our consideration of the same could only follow an adjudication by the first appellate authority, and which could only be after his definite findings as to the allowability or otherwise of the same on the anvil of section 37(1) after allowance of due opportunity to state its case to the assessee. The matter is, accordingly, restored back to the file of the ld. CIT(A) to determine the nature of the sums paid and, accordingly, decide the issue of allowability in accordance with the law - Decided in favour of assesse for statistical purposes. Income from operations - Held that:- The assessee’s explanation of the same being an advance is, firstly, in contradiction to its treatment of the same as a receipt (income). When, if so, was the balance payment of ₹ 19,656/-; the rate of ₹ 200/- per person being admitted, received, even as observed by the ld. CIT(A)? In fact, there would be similar instances as well, and which would reflect and exhibit both the validity of the assessee’s claims as well as the modus operandi being followed by the assessee in such cases. For which date was the booking? Did it materialize? Were tickets issued and in what number? Such like questions arise as a concomitant to the assessee’s explanation, and which we find as totally unanswered/not met. Further, an advance would not be received in an odd, but only in a, round figure. The same in fact works to a sum calculated for 18 persons. The assessee has also not disputed that the booking was for 108 persons. It also does not contend of any discount, which would though work to a huge, incomprehensible rate of 83.33%. The assessee’s case is sans any details/evidence. We, accordingly, find no infirmity in the inclusion of the sum of ₹ 19,656/- as the assessee’s income - Decided against assessee. Disallowance of repair and maintenance expenditure - Held that:- The matter should go back to the file of the A.O. for necessary verification and adjudication in accordance with the law. True, the impugned expenditure is abnormally large in relation to the monthly average, which works to ₹ 2.92 lacs, i.e., upon excluding the impugned sum from the total claim of ₹ 45.84 lacs for the year. However, it is not the case that the assessee has not furnished any explanation, or one which is not plausible. Non furnishing of the relevant evidence, thus, should not prove fatal to its case – the sole purpose of procedural law being to promote justice. - Decided in favour of assesse for statistical purposes. Disallowance of director’s remuneration - CIT(A) restricted the disallowance to ₹ 3 lacs, i.e., allowing the salary as paid to her for the immediately preceding year - Held that:- disallowance by the A.O. stood made in the absence of any evidence being led by the assessee towards its claim, and which position continues even before us. The Revenue, however, is not in appeal. The allowance for the immediately preceding year, as it appears to us, in-as-much as there is no claim for assessment u/s.143(3) for that year, is per the summary procedure under the Act, and which cannot be said to be either an assessment or an ‘acceptance’ thereof by the Revenue. The ld. CIT(A) has allowed the assessee’s claim to that extent in view of the explanation of she being an educated lady attending to the business activities, even as no evidence toward the same has been furnished at any stage, so that there is no proof of the services rendered by her. We, accordingly, have no hesitation in confirming his order. - Decided against assessee Disallowance u/s.14A - Held that:- Investment decisions are complex in nature, requiring time and effort, i.e., in terms of market research and continuing analysis of the developments, so as to enable decision making with regard to the acquisition or retention or sale. The assessee’s claim, therefore, that it had not incurred any administrative expenditure, could not be accepted. Section 14A includes within its sweep both direct and indirect expenditureRule 8D has to be resorted to where the assessee cannot substantiate its claim with reference to its accounts, as in the present case, of having not incurred any expenditure in relation to the exempt income. Its claim for expenditure would thus stand to be disallowed, i.e., in part, irrespective of whether the income not forming part of the total income has actually ensued or not - Decided against assesse. Disallowance of electricity expenditure - Held that:- As evident from the fore-going, no case for allowance of the impugned claim stands made before the authorities below, with, rather, the first appellate authority observing the assessee to have committed a volte face, contradicting itself. The position continues as such, so that no improvement in its case has been made by the assessee, whose case remains wholly unsubstantiated even before us. We, accordingly, have no hesitation in confirming the disallowance - Decided against assesse. Disallowance of miscellaneous expenditure - Held that:- restoring the matter back to the file of the A.O. for consideration of the assessee’s case on merits, and a decision as per law, after allowing the assessee an opportunity for being heard - Decided in favour of assesse for statistical purposes.
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2015 (5) TMI 786
Disallowance of entrance fee for membership of ‘business club’ - revenue v/s capital exoenditure - Held that:- When two divergent views are available on the same issue, the view favourable to the assessee has to be followed in view of the decision of the Hon’ble Supreme Court in the case of Vegetable Products Ltd. reported in [1973 (1) TMI 1 - SUPREME Court]. In view of the above, we are of considered opinion that entrance fee for membership of business club is revenue expenditure. The order of the Ld. CIT(A) is, therefore, set-aside and the ground of appeal raised by the assessee is allowed. - Decided in favour of assesse.
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2015 (5) TMI 785
Undisclosed Short Term Capital Gain from sale of shares - Held that:- The arguments of the learned Authorized Representative that the appellant had not sold the property cannot be accepted since it is judicially well known that in the case of a company the entire property held in the name of Company can be transferred through the mode of transfer of shares as held in Sanjay Parwal Versus ACIT, Circle, New Delhi [2015 (5) TMI 723 - ITAT DELHI ] thus we confirmed the basis of addition. However, there was no evidence on record to show that the appellant was paid her share of on money by her husband. Moreover, the appellant in her statement before the Investigating Wing had categorically stated that the entire control over her financial affair vested with her husband i.e. Mr. Sanjay Parwal. In view of the above statement, we confirmed the addition attributable to the appellant’s share in the hands of her husband Mr. Sanjay parwal.money attributable to shareholding of Mrs. Ritu Parwal is taxable in the hands of the appellant. Mrs. Ritu Parwal was holding 58,000/- shares. The share of on money comes to ₹ 1,71,10,000/-. Therefore, the total addition in the hands of the appellant comes to ₹ 3,48,10,000/-. Hence, we confirm the addition in the hands of the appellant only to the extent of ₹ 3,48,10,000/-. Hence, there is no warrant for a separate addition in hands of appellant. - Decided partly in favour of assesse.
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2015 (5) TMI 784
Disallowance u/s 40(a)(ia) - non deduction of tds on payment against freight charges against form 15-I - Held that:- Once the specified forms have been collected under Rule 29D(4)(ii) by the assessee even if the same is not submitted to the CIT for one reason or another, the assessee is not required to deduct tax at source u/s 194C of the Act and therefore provisions of section 40(a)(ia) cannot be made applicable. SEE Rajesh Kr.Garg [2011 (8) TMI 632 - ITAT Kolkata], Valibhai Khanbhai Mankad, Ahmedabad [2011 (4) TMI 887 - ITAT, AHMEDABAD], ITO vs M/s. S.S.Impex [2011 (9) TMI 927 - ITAT KOLKATA] and case of Vipin P.Mehta [2011 (5) TMI 503 - ITAT MUMBAI] - Decided in favour of assesse.
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2015 (5) TMI 783
Penalty levied u/s 271(1)(c) - CIT(A) deleted penalty levy - short term capital gain treated as income from other sources - Held that:- There is no dispute that after the search, additional income was offered at ₹ 1,50,000/- and long term capital gain has been shown as short term capital gain. It is also not in dispute that the entire sale consideration has been treated as income from other sources. The offer of additional income was made u/s 132(4) of the Act. The share transactions, purchase and sale of shares were duly reflected in the books of account of the assessee. The assessee has suo moto offered capital gain in its return of income. The assessment has been completed merely by changing the head of income i.e capital gain was treated as income from other sources. The facts relating to the share transactions were very much there in the return of income, therefore, it cannot be said that the assessee has filed any in-accurate particulars or has concealed the particulars of income. The decision of the Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) squarely apply in this case. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). - Decided against revenue. Penalty u/s 271(1)(c) - addition made on account of jewellery found at the time of search - Held that:- There is no dispute that in this group case, substantial additional income has been offered for taxation, therefore, possession of diamond jewellery at ₹ 7,41,320/- cannot be ruled out. However, we are not in appeal against the quantum addition but against the levy of penalty. Since the assessee group has already offered substantial amount, the benefit of telescoping cannot be denied. The diamond jewellery can be considered as having purchased out of the additional income, therefore, it cannot be said that it is a fit case for levy of penalty for concealment of particulars of income - Decided in favour of assesse. Penalty u/s 271(1)(c) - unaccounted cash found - Held that:- It is not a case where the assessee has not offered any explanation during the course of assessment proceedings. Not only the assessee offered the explanation but had also substantiated by cogent material evidence. Merely because of the addition of ₹ 5 lacs was accepted in the assessment proceedings would not ipso facto lead to levy of penalty u/s 271(1)(c) of the Act. Considering the facts that the cash in hand was duly reflected in the books of M/s Courtyard Bar & Restaurant and we do not find any reason for levy of penalty u/s 271(1)(c) of the Act - Decided in favour of assesse. Penalty u/s 271AAA - assessee has not explained the manner in which such income has been derived - Held that:- In the case of Pramod Kumar Jain (2012 (12) TMI 629 - ITAT CUTTACK) held that no definition could be given to the “specified manner” insofar as the very statement on oath u/s 132(4) certifies the manner on which the assessee is preferred to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance of notice u/s 153A accounting the assets. Therefore the penalty is not automatic if one of the purported conditions is not fulfilled although all the conditions have been agreed to of having fulfilled by the A.O. insofar as the tax and interest have been recovered, thus to delete the penalty so levied. - Decided in favour of assesse. Penalty u/s 271(1)(c) - disclosure of income in survey treated as the amount of income sought to be evaded - Held that:- The survey operation was conducted at the premises of the assessee on 26th July,2007. The return for the assessment year 2007-08 was not due on this date. The assessee offered the income for A.Y. 2007-08 and included the same in its return. The returned income was ₹ 52,60,033/-. The assessed income was ₹ 52,60,033/-. Thus the assessed income and the returned income are the same. No addition has been made in the assessment proceedings. We therefore do not find any reason for the levy of penalty u/s 271(1)(c) of the Act when no concealment of income has been detected as per the return of income of the assessee. - Decided
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2015 (5) TMI 782
Trading addition - estimating income from business of contracting by applying a net profit rate of 10% - CIT(A) allowed part relief - Held that:- The relevant bills/vouchers to support and substantiate his claim for various expenses could not be produced by the assessee before the A.O. for verification and since in the absence of such vouchers, it was not possible for the A.O. to verify the various expenses claimed by the assessee, we are of the view that the A.O. was fully justified in resorting to estimation of the income of the assessee from contracting business by applying the net profit rate. As regards the net profit rate of 10% applied by the A.O. for estimating the business income, it is observed that in assessee’s own case for A.Y. 2007-2008, a net profit rate of 8% was applied by the A.O. to estimate the business income of the assessee and all the relevant facts including the nature of the business of the assessee remaining the same in the year under consideration, we are of the view that the Ld. CIT(A) was fully justified in directing the A.O. to estimate the income of the assessee by applying net profit rate of 8%. Thus no infirmity in the impugned order of the Ld. CIT(A) giving part relief to the assessee - Decided against revenue. Determination of income of the assessee from long term capital gain including his claim for exemption under section 54EC - Held that:- It is observed that the case made out by the assessee before the Ld. CIT(A) on this issue was entirely different from the case putforth before the A.O. A perusal of relevant portion of the respective orders of the A.O. and Ld. CIT(A) shows that altogether new facts and figures were furnished by the assessee before the Ld. CIT(A) and the issue was decided by him taking into consideration the said facts and figures without giving any opportunity of being heard to the assessee. We therefore, find it fair and reasonable and in the interest of justice to set aside the order of the Ld. CIT(A) on this issue and restore the matter to the file of the A.O. for deciding the same afresh after giving the assessee a proper and sufficient opportunity of being heard. - Decided in favour of assesse for statistical purposes.
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2015 (5) TMI 781
Refund granted by the department - Interest due to part refund - Interest on Interest - Held that:- As admitted by the leaned counsel and also that, similar ground have been raised in A.Y. 1996-97, wherein this issue has been decided against the assessee, following ITAT order for the earlier year in assessee’s own case. Thus, respectfully following the same, we dismiss the grounds raised by the assessee. Whether refund should have been first adjusted with the interest due on date of grant of refund, instead of being adjusted with the principal refund due? - Held that:- As it is seen in the case of India Trade Promotion Organization Vs. CIT reported in [2013 (9) TMI 451 - DELHI HIGH COURT ] after detail analysis and discussion has held that, when the revenue does not pay full amount of refund, but part of amount is paid, they will be liable to pay interest on the balance outstanding amount, which consist, of tax paid on the interest, which is payable till the payment of the part amount and interest payable on the principal amount, which remained outstanding thereafter. . Accordingly this ground is set aside to the file of the AO with similar direction. Decided partly in fvaour of assessee for statistical purpose.
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2015 (5) TMI 780
Transfer pricing adjustment - wrong selection of comparable - Held that:- Since we have excluded Excel Infoways Ltd from the final list of comparables as having low employees ratio to sales, the average of the comparables of the remaining companies as per TPO being at 20.97% as compared to that of the assessee at 17.11% is within ±5% range as per the provisions of law. The international transactions made by the assessee is directed to be treated as at ALP. As we have decided this issue only by excluding Excel Infoways Ltd from the final list of comparables, we do not find it necessary to decide the other issues in this regard raised by the assessee - Decided in favour of assessee. Non-grant of exemption u/s 10(35) - Held that:- DRP has given clear direction that a deduction of ₹ 5,98,957/- must be allowed while determining the taxable income of the assessee. We find that the AO has not followed the direction given by the DRP. We direct the AO to follow the direction of the DRP. - Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D - Held that:- A perusal of the assessment order shows that the AO grossly erred by wrongly taking the quantity of units purchased and sold as the value of mutual funds. We find that there is no opening and closing balance. What the AO has taken is the quantity of units purchased and units sold for the purpose of making disallowance u/s 14A of the Act. Since, the disallowance is based on factual errors, we direct the AO to delete the addition of ₹ 19,326/- - Decided in favour of assessee. Levy of interest u/s 234B and 234C - Held that:- The levy of interest is mandatory though consequential. We accordingly direct the AO to charge interest u/s 243C and 234B of the Act. - Decided against assessee.
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2015 (5) TMI 779
Treatment of receipts from Indian customers as Royalty - payments received on sale and marketing of software license to the customers - DTAA between India and Ireland - Held that:- As decided in the case of Samsung Electronics Co. Ltd. & Others ( 2011 (10) TMI 195 - KARNATAKA HIGH COURT) and its decision therein, that payments to non-resident software supplies for purchase of shrink-wrapped software was in the nature of royalty, was followed by the coordinate bench of this Tribunal in the assessee’s own case for A.Y 2006-07 [2012 (10) TMI 980 - ITAT BANGALORE]. Consequently, the assessee was under obligation to deduct tax at source under section 195 of the Act form the amount paid to foreign software suppliers. - Decided against assessee. Interest under section 234B - Held that:- No doubt, if the person (payer) who had to make payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is not absolved from payment of taxes thereupon. However, in such a case, the non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of s. 191 along with s. 209(1)(d). For this reason, it would not be permissible for the Revenue to charge any interest under s. 234BLevy of interest u/s. 234B of the Act cannot be sustained. Ground raised by the assessee is accordingly allowed. The aforesaid decision of the co-ordinate bench was followed by another co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 - Decided in favour of assessee.
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2015 (5) TMI 778
Unaccounted cash credit - as per assessee the amount reflects advances received from the customers in respect of supply made to them - CIT(A) confirmed addition - Held that:- Assessee could not place any evidence on record to justify the sales after three years from the receipt of advances. No one can give advance against purchases to be effected after three years. If that be the case, there would have been certain correspondence between the assessee and the purchaser. But neither confirmation nor any evidence was filed to prove the genuineness of the claim. In the absence of any confirmation and other relevant evidence, we find no infirmity in the order of the ld. CIT(A) on this issue and we accordingly confirm the same. - Decided against assessee. Unexplained investments - CIT(A) confirmed addition - Held that:- Since the assessee has not placed any evidence on record to explain the source of these assets, we find no infirmity in the order of the ld. CIT(A). Copy of the surrender statement of Shri Kailash Nath Singh Patel is also available on record, wherefrom it is observed that he has made a surrender item-wise under different heads for different assessment years. Since there is no reference with regard to the investment in the assessee’s proprietary concern, no benefit can be given. Accordingly, we find no merit in the assessee’s contentions. - Decided against assessee. Unexplained investment in stock of goods - CIT(A) confirmed the addition - Held that:- Similar is the position before us, as no confirmation was filed to establish that the stock was purchased on credit basis. Therefore, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the addition.- Decided against assessee.
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Customs
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2015 (5) TMI 803
Duty demand - Invocation of extended period of limitation - Held that:- The limitation, at the relevant time, for issuance of show cause notice was six months. It is therefore clear that in terms of Section 28 of the Customs Act, 1962, the show cause notice issued to the respondents before the limitation period. However, the Department sought to invoke the aforesaid proviso on the ground that there was willful misstatement and miss-declaration of the imports in the Bills of Entries which were filed by the respondents in clearing the goods. The misstatement/miss-declaration which is attributed is that though the imports were not meant for repairs, it was so stated in the Bills of Entries. This stand to invoke the proviso found to be incorrect by the Tribunal and it has recorded that there was no misstatement of fact. No doubt the respondents claimed that the goods were meant for ship repair. However, for this purpose the complete statement of fact and the manner in which the imported goods were to be utilized was stated in the communication. After going through the same it was for the authorities to come to the conclusion whether goods could be treated for the purpose of ship repair or not. In no case it can be termed as willful misstatement/wrong declaration. On this ground alone the respondent is to succeed in these cases. - Decided against Revenue.
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2015 (5) TMI 802
Suspension of license - Lending of license to other person - Smuggling of cigarettes in the name of import of dining sets - Held that:- The power under Article 226 of the Constitution of India is an extraordinary power and should be exercised by the High Courts only in those cases where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice causing prejudice to the petitioner (please see Union of India-vs.-Guwahati Carbon Ltd. (2012 (11) TMI 885 - SUPREME COURT OF INDIA)). Prima facie, I do not find any patent illegality on the face of the order impugned or that principles of natural justice have been violated in any manner. However, these observations of mine are only tentative in nature since I am minded to dispose of the writ petition on the grounds stated hereinafter. The Customs law is a complete code by itself. The Customs Act and the rules and bye-laws framed thereunder constitute a comprehensive and exhaustive code. The impugned order in the instant case has been passed by the Commissioner of Customs in exercise of his power under the Customs Brokers Licensing Regulations, 2013 which are framed under Article 146 (2) of the Customs Act, 1962. Regulation 21 provides that a Customs Broker who is aggrieved by any order passed by the Commissioner of Customs under the said regulations may prefer an appeal under Section 129A of the Customs Act to the Customs, Central Excise and Service Tax Appellate Tribunal. The appeal as provided for, in my opinion, is an efficacious alternative remedy available to an aggrieved broker like the writ petitioner. - court ought not to exercise its extraordinary power under Article 226 of thse Constitution of India. Accordingly, this writ application fails and is dismissed. - Decided against appellant.
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2015 (5) TMI 801
Imposition of penalty u/s 112 - Confiscation of goods - Jurisdiction of Commissioner - Held that:- After adjudication had taken place on the show cause notice dated 15.01.2013; which, called upon the petitioner to, inter alia, render explanation vis-a-vis the tentative view of the respondent as to why its registration should not be revoked in terms of the 2010 Regulations. Since, it is a question of lack of jurisdiction, this court under Article 226 of the Constitution can entertain the petition, notwithstanding the alternate remedy of an appeal under the aforementioned regulation The Commissioner of Customs became functus officio upon passing the order of adjudication dated 18.11.2013. It is not disputed by the learned counsel for respondent no.2 that the said respondent could have filed an appeal against the adjudication order, if it was dissatisfied or aggrieved by the order passed by the Commissioner of Customs. It appears that, respondent no.2, has not preferred an appeal - impugned order is set aside - Decided in favour of assessee.
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2015 (5) TMI 800
Imports in violation of the Exim Policy - Deterrent penalty - Tribunal set aside penalty - Non speaking order - Held that:- Goods were contracted and shipped on 01.08.2004, i.e., when the import of second-hand machinery was not permitted. However, the bill of entry was filed on 09.09.2004. The importer taking advantage of the new Foreign Trade Policy, 2004-09, submitted that at the time of filing bill of entry, new policy had come into force permitting importation of second-hand machinery, the importer is entitled to import the second-hand machinery without any specific licence. - Tribunal, having upheld the contravention of Section 111(d) of the Customs Act, had merely referred to the decision in the case of Soni Ispat Ltd. Vs. Commissioner of Customs (Import) [2007 (2) TMI 125 - CESTAT, MUMBAI] and reduced the redemption fine from ₹ 3.00 lakhs to ₹ 50,000/- and set aside the entire penalty. There is no reason why the Tribunal had reduced the fine and set aside the entire penalty. - Tribunal has not passed a speaking order justifying the reduction of fine and setting aside the penalty. Hence, we have no other option except to remand the matter back to the Tribunal to reconsider the issue afresh - Decided in favour of Revenue.
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Corporate Laws
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2015 (5) TMI 799
Challenge of Award passed in arbitration proceeding by a third party - It is settled law that what cannot be done directly cannot be permitted to be done indirectly - It is submitted that Arbitration is a creation of statute and not a Common Law right and therefore, the remedy must be as per statute only. A suit in relation to arbitration proceedings and for challenge to an Award may, if at all, be maintainable only in cases where there is a doubt as to the execution and existence of the arbitration agreed. In the instant case, the existence and validity of the arbitration agreement is an admitted fact and is not under challenge - Held that:- There is a clear distinction between individual and corporate membership rights of shareholders. A member can always sue for wrongs done to himself in his capacity as a member. The individual rights of a member arise in part from the general law. Under the contract emanating from his memberships, he is entitled to have his name entered and kept on the register of members, to vote at meetings of members, to receive dividends which have been duly declared, to exercise pre-emption rights conferred by the articles, and to have his capital returned in proper order of priority on a winding up or on a properly authorized reduction of capital. Under the general law he is entitled to restrain the company from doing acts which are ultra vires, to have a reasonable opportunity to speak at meetings of members and to move amendments to resolutions proposed at such meetings to transfer his shares; not to have his financial obligations to the company increased without his consent; and to exercise the many rights conferred on him by the Companies Act, such as his right to inspect various documents and registers kept by the Company. The dividing line between personal and corporate rights is not always very easy to draw. The Courts, however, incline to treat a provision in the memorandum or articles as conferring a personal right on a member, if he has a special interest in its observance distinct from the general interest which every member has in the company adhering to the terms of its constitution. In an action for violation of personal rights a single shareholder suing alone and not even on behalf of other shareholders may make the company a defendant and obtain his reliefs. Where a wrong has been done to the company and an action is brought to restrain its continuance or to recover the company’s property or damages or compensation due to it, it is a derivative action. Here the company is the only true plaintiff. The dispute is not an internal one between those who constitute the membership of the company but one between the company on the one hand and third parties on the other. It makes no difference in principle that the third parties may accidentally happen to be the directors or controlling shareholders of the company. In a derivative action, the company would be the only party entitled to sue for redressal of any wrong done to it. However, since a company is an artificial person, it must act through its directors. Where the wrong is being done to the company by the directors in control, the company obviously cannot take action on its own behalf. It is in these circumstances that the derivative action by some shareholders (even if they are in a minority) becomes necessary to protect the interest of the company. The minority shareholders sue on behalf of themselves and all other shareholders except those who are defendants, and may join the company as a defendant. The directors are usually defendants. This action is brought instead of an action in the name of the company. The form of the action is always: ‘A.B. (a minority shareholder) on behalf of himself and all other shareholders of the company against the wrongdoing directors and the company . It is a “procedural device for enabling the Court to do justice to a company controlled by miscreant directors or shareholders. A company is a mere abstraction of law. By registration under the Companies Act, a company is vested with corporate personality, which is independent of and distinct from its members. It is a legal person with perpetual succession and common seal. It is a body corporate having a separate identity and distinct from the directors and shareholders. The property of the company is not the property of the shareholders. In the eye of law, even a member holding majority shares or a managing director of a company is held liable for criminal misappropriation of the funds or property of the company, if he unauthorisedly takes it away and uses it for his personal purpose. As a juristic legal person, a company can sue in its name and be sued by others. The pleadings in the suit if taken, as a whole, would clearly indicate that the plaintiffs are seeking to enforce their personal cause of action as opposed to derivative action. The same would be further clear from Paragraph 41 of the Plaint where the plaintiffs have specifically stated that the defendants in collusion and conspiracy with each other have perpetrated fraud on the plaintiffs through the proforma defendant. This sentence clearly indicates that it is a wrong done to the plaintiffs. It makes it very clear that the plaintiffs are espousing their personal cause of action. A party to a contract with the company is no way concerned with the inter se disputes between the directors. In case of a dispute with regard to the internal management of the Company and as to who would represent the company and/or authorize to represent the company, the proper course is to file a suit for declaration and injunction and to seek appropriate remedy against the miscreant directors and for persons asserting their right as directors. In the instant case, it appears that there are disputes with regard to the internal management of the proforma defendant company. The orders disclosed in this proceeding would not show that the defendant Nos.3 to 5 were not authorized to represent the said company in the arbitration proceeding. This observation, however, is not an expression of opinion with regard to the claim of the plaintiffs against the said defendant Nos.3 to 5, that the said defendants have ceased to become directors. The said defendant No.1 is no way concerned with the inter se disputes between the plaintiffs and the defendant Nos.3 to 5. Although, the plaintiffs have asserted that the said defendants for long years have ceased to become directors and since 2009 the said defendants were not entitled to hold themselves as directors but the plaintiffs did not take recourse to any legal proceeding to prevent the said defendants from asserting their rights as directors since even thereafter the said defendants continued to assert their right as directors that had resulted in various litigation. Even if it is assumed that the defendant No.1 is aware of the inter se disputes between the plaintiffs and the defendant Nos.3 to 5, the defendant No.1 is under no obligation to disclose such dispute before the arbitrator since the claim of the defendant No.1 is against the proforma defendant. The defendant No.1 appears to have been roped in by clever drafting, in order to avoid the award passed against the proforma defendant. The reliefs claimed in the plaint so far as it seeks a declaration that the award against the defendant No.1 is nonest, illegal and not enforceable and the said award is required to be set aside, in my view, having regard to the frame of the suit is not maintainable and barred by law. The challenge to the award has now become barred by limitation. It is settled law that what cannot be done directly cannot be permitted to be done indirectly. It is not been alleged that the proforma defendant was prevented by the said defendants Nos. 3 to 5 to challenge the award. In so far as other reliefs are concerned, in my view, they are required to be adjudicated at the trial and the suit cannot be dismissed as against the other defendants. Since the prayer for setting aside of the award is barred by law, I hold that the suit so far as it relates to setting aside of the award against the defendant No.1 is concerned is not maintainable. - The application is allowed in part.
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2015 (5) TMI 798
Default in repayment of financial assistance - Winding up application filed - Company praying for modification of the order of disposal - Court said that the Order of admission of winding up is hanging as a sword on their shoulder. Little respite, they would seek, should, in our view, be acceded to that would meet the ends of justice - Held that:- Ordinarily we would have disposed of the application of the like nature upon re-scheduling the payment that would meet the substantial justice. However, because of the vociferous objection raised by Tata, the high mighty multi-national, questioning the competence of the Court in entertaining the present application, we felt it necessary to reserve our judgment so that we could deal with all the contentions that Tata raised before us including the question of law. The Division Bench was approached with the principal issue as to whether the appellant was entitled to upset the order of admission of winding up. We did not accept the contention of the appellant and rejected the same. However, we re-scheduled the payment that was within the power of the Company Court and the Division Bench being an extension of the Company Court under Section 483, was competent to give such direction in a petition for winding up that would meet the substantial justice as recognized by Section 443 of the Companies Act, 1956. Accordingly, the Division Bench granted installments. When the company paid installments to a substantial extent and prayed for some respite the Division Bench, in our view, would be within its right to consider such prayer and examine as to whether the applicant would deserve such treatment and the Court would not be so powerless to entertain such application. Even if we entertain such application and grant relief that would not in any way hit the provisions of Order XX Rule 11(2) of the Civil Procedure Code as it would not affect the ultimate decision. Company (Court) Rules 1959 is having a statutory force. These rules of 1959 would take care of the procedural part of the company proceedings before the Company Court. Rule 6 would inter-alia provide, while the said rule is silent, the provisions of Civil Procedure Code would apply. Rule 9 would extend inherent power to the Company Court to pass any Order to do substantial Justice in the matter. If we read these two provisions we would find, Rule 6 might make the code applicable in Company proceedings however, Rule 9 would have a dominant role and cannot be set at not by virtue of direct application of any of the provisions of the Code. In short, the principles relating to the statutory provisions of the Code might apply in Company proceeding where there was no conflict however, any of the provisions of the Code, if comes in conflict with any of the provisions of the said rules of 1959, the provision of the said rules of 1959 would be applicable and rule 9 is no exception thereof. With deepest regard, we have for Mr. Bose, and with all humility, may we say, his argument on the issue was totally without any basis. Neither of the decisions cited at the bar would support his contention in the present scenario. We reject the same. With this mind set, let us now deal with the case on merits. Out of ₹ 4.12 crores the applicant paid ₹ 2.95 crores, the balance is due. If we reject the application and the company would not be in a position to pay and clear off the installments the Order of winding up would come into effect taking away the means of livelihood of hundreds or thousands. Moreover, interest of share-holders and creditors would be in jeopardy. The respondent would carry on business of extending financial support that would have a tremendous risk. Keeping it in view, they advanced money to the applicant. The applicant already paid a substantial part of it. The Order of admission of winding up is hanging as a sword on their shoulder. Little respite, they would seek, should, in our view, be acceded to that would meet the ends of justice. We however, do not agree with the schedule that Maheswari would suggest. We would consider their prayer for re-scheduling after six months. In the mean-time, they should continue to make payment at the rate ₹ 10 lacs per month. In case they do so they would be at liberty to approach the learned Company Judge for re-scheduling the installment and the learned Company Judge would be free to deal with such application in accordance of law. We make it clear, in case of a single default during the six months this Order would stand recalled and Tata would be at liberty to approach the learned Company Judge to proceed for winding up of Maheswari, the applicant above named. - Decided partly in favour of appellant.
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Service Tax
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2015 (5) TMI 807
Manpower Recruitment and Supply service - principle of mutuality - Invocation of extended period of limitation - Held that:- issue is prima facie covered by the Gujarat High Court [2013 (7) TMI 510 - GUJARAT HIGH COURT] and Jharkhand High Court [2012 (6) TMI 636 - Jharkhand High Court] decisions as also by the Tribunal decision in the case of Federation of Indian Chambers of Commerce and Industry [2014 (5) TMI 183 - CESTAT NEW DELHI]. Apart from that we also prima facie find favour in the appellant's contention that demand is barred by limitation. On this ground we are of the view that appellant has a good prima facie case in its favour - Stay granted.
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2015 (5) TMI 806
Demand of service tax - Invocation of extended period of limitation - Held that:- Revenue has not filed any appeal against the impugned Order-in-Appeal for dropping the penalty under Section 78 ibid. The period involved in this case is October, 2002 to December, 2006 while the Show Cause Notice was issued on 23.02.2008. It is thus obvious that the entire demand is beyond normal period of one year (except for a period of mere three months i.e. October, 2006 to December, 2006 and that too only if the Show Cause Notice dated 23.02.2008 was actually received by the appellants on or before 25.02.2008) and therefore is hit by time bar in view of the analysis above. When the entire demand covering the period October, 2002 to December, 2006 is a meagre ₹ 19,576/- the demand for a mere 3 months will be pittance or less making it ridiculous to remand the case for computation thereof in view of the paper and effort involved as a consequence of so doing particularly when it does not involve any question of law or interpretation thereof. - Decided in favour of assessee.
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2015 (5) TMI 805
Waiver of pre deposit - Online Information and Database Access and/or Retrieval Services - Held that:- Inter-connection charges paid by one ISP to another ISP are not liable to service tax - on 01.05.2006, appellant on their own, to avoid any further litigation, took registration certificate under the category of "Business Support Services" and discharged service tax liability on such amount received from ISP and in 2008 took registration under the category of "Internet Telecommunication Services". - appellant has made out a case for waiver of pre-deposit of the amount involved as the adjudicating authority could not have argued against the Board's Circular and the clarification as is reproduced here-in-above. In view of the foregoing, we allow the application for waiver of pre-deposit of the amount involved and stay recovery thereof till the disposal of the appeal. - Stay granted.
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CST, VAT & Sales Tax
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2015 (5) TMI 804
Levy of purchase tax u/s 4 - agriculture product processors i.e. (1) rice millers, or (2) dhal millers, or (3) soyabean oil millers, or (4) cotton millers - whether in the nature of levy on farmers - Held that:- Notwithstanding the goods being "taxable goods", there may be circumstances by reason of which the particular sale transaction does not attract tax under the Act. Section 4(4) provides for such a situation and makes the purchase of such goods taxable in the hands of the purchasing VAT dealer, on his purchase turnover, in any of the circumstances referred to clauses (i) to (iii). For instance, branch transfer or stock transfer of goods by a VAT dealer to his consignee/agent is not taxable under the Act. Such transactions attract the ingredients of clause (ii) of Section 4(4). Therefore the input of such goods are subjected to tax under Section 4(4) of the Act. The tax levied under Section 4(4) is not on the sale of goods by a farmer/agriculturist, but on the VAT dealer who purchases goods (agricultural produce) from the farmer. The contention that a farmer or an agriculturist is being subjected to tax is not tenable, as tax is levied not on him but on the VAT dealer who purchases goods from him. It is not every purchase of taxable goods from an agriculturist/farmer, but only such goods which fall within the ambit of clauses (i) to (iii) of Section 4(4), and its proviso, which attracts levy of tax at the stage of its purchase. The contention that a farmer/agriculturist is indirectly being subjected to tax does not, therefore, merit acceptance. When taxable goods are sold by a person, who is not a dealer under the Act, then VAT is not payable on the sale of such goods. Where a farmer grows raw cotton, paddy, raw dhal and soyabean seed in his land, and sells these agricultural produce to others, he is not liable to pay tax, on the sale of such goods, as he is not a dealer under Section 2(10) of the Act. Purchase of such agricultural produce by a VAT dealer is in circumstances in which no tax is payable by the seller. In such circumstances tax, at 4%/5% of the purchase price of such goods, is liable to be paid by the VAT dealer who purchases the aforesaid goods i.e., agricultural produce. This liability of a VAT dealer to pay purchase tax would, however, arise only if any one of the conditions, mentioned in clauses (i) to (iii) of Section 4(4), are satisfied. If the allegations in the show-cause notice, accepted as true, show that the dealer had committed wilful evasion of tax, and the findings recorded in the assessment order establish that the assessee had wilfully evaded tax, it would suffice to extend the period of limitation in terms of Section 21(5) of the Act notwithstanding that the show-cause notice does not explicitly refer to Section 21(5) and does not specifically use the words wilful evasion of tax. Purchase tax is levied on goods which are used as inputs for other goods which are exempt from tax, or for goods which have been transferred on consignment or to branches of the VAT dealer outside the State otherwise than by way of sale. While the provisions of the Act must, in view of Article 286(3) of the Constitution of India, be complaint with Sections 14 and 15 of the CST Act, it is not clear as to how denial of input-tax credit, or computation of input-tax credit in accordance with Rule 20 of the Rules, in the present cases is contrary to the mandate of Sections 14 and 15 of the CST Act. - In any event the question, whether computation of input-tax credit in terms of Rule 20 is in violation of Sections 14 and 15 of the CST Act, must be answered on the facts and circumstances of each case. It is for the assessee to satisfy the assessing authority that computation of the eligible input-tax credit, in terms of Rule 20, is in violation of Sections 14 and 15 of the CST Act. - Matter remanded back - Decided in favour of assessee.
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