Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 30, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deferred revenue expenditure - An assessee can adopt the two ways of giving different accounting treatment to an expenditure in its books and claim the entire sum as revenue expenditure in the relevant assessment year. - AT
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Service of notice u/s 148 by affixture - We fail to understand when the house was vacant in the month of January, 2008 how same person was residing at the same address in the month of December, 2008. This goes to prove that the appellant is determined to decline to accept the notice. - AT
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Bogus purchase expenses - CIT(A) granted relief for the assessee by passing a slip short and cryptic order by making only short deliberations on the issue of purchase and sales and without any conclusion on other two issues and therefore, orders of the authorities below suffers ambiguity, perversity and the same are not a sustainable. - AT
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Period of holding for determining whether the assessee has derived long-term capital gain or short-term capital gain - Giving possession of the movable property / shares as security does not mean the ownership of the assets will also get transferred in favour of the person from whom the assessee has taken the loan. - AT
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Computation of long term capital gains - HUF has ever shown the capital asset in question in its books or admitted impugned long term capital gains in its case. - assessee is not entitled to shift assessment of impugned capital gains in HUF’s hands - AT
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Estimation of income - sale outside the books was of the raw material and not of the electrical transformers. - the applicability of GP rate of 10% on the sale of raw material by the CIT(A) is fully justified. - AT
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Cessation of liability in respect to trade creditors - This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it - No addition - AT
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Disallowance of repairs and maintenance expenses - revenue v/s capital expenditure - It is evident that there is an apparent contradiction between the stand taken by the assessee before the AO on one hand and the ld. CIT(A) on the other. - matter remanded back to AO - AT
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Applicability of TDS provisions in respect of the advances held as deemed dividends by the AO u/s 2(22)(e) - Section 194 does not require TDS when payment is made to a non-shareholder - AT
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Addition on gifts received u/s 69 from mother-in-law and from father on the ground that there was no drawing during the five days prior to the date of gift and mere cash withdrawal by the donor long back i.e. 120 days - Once genuineness and creditworthiness of the transactions proved, no addition can be made - AT
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Disallowance of retention money retained from sub-brokerage - Accrual of expenditure - tax authorities are not justified in holding that the liability to the extent of amount retained as contingency fund did not accrue at all. - AT
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Revision u/s 263 - All facts were not examined by the Assessing Officer while completing the assessment in order to work out the excess production and sales out of the books of account - order of revision made by CIT upheld - AT
Customs
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Clandestine removal - Warehoused goods - in case of clandestine removal it is not always possible to establish exact date of clearance of goods but if the period during which clearances took place established, it would be sufficient to say goods have been removed within that period - HC
Service Tax
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Denial of CENVAT Credit - Invoice in the name of head office or units - When the Service Tax Registration is common and both the units are located adjacent to each other, insisting that the service tax also should be segregated may not be relevant. - AT
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Waiver of pre-deposit - Outdoor catering services - Service tax not paid on catering services in respect of the Mail/Express trains - this issue still remains debatable on facts and on law. - interim order of the tribunal modified - HC
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The total activities undertaken cannot be categorized under the Site Formation service. The nature of work is more akin to a comprehensive works contract. - demand set aside - AT
Central Excise
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CENVAT Credit - certain input services were availed for the purpose of setting up of business in Uttrakhand. But, for no feasibility of the unit there, that could not come up - credit allowed - AT
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Benefit of CENVAT credit - Outdoor Catering Service - Cenvat Credit on Outdoor Catering Service is not admissible to respondent on the part of service tax borne by the worker - AT
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CENVAT Credit - duty paying documents - debit note containing all the details as required under the rule 9(2) of Cenvat Credit Rules, 2004 is valid documents for the purpose of taking cenvat credit - AT
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CENVAT Credit - duty paid on Air-conditioner and furniture - According to the definition of 'input' as it existed during the relevant period, inputs used in the factory 'for any other purpose' the credit is admissible - credit allowed - AT
Case Laws:
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Income Tax
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2015 (6) TMI 901
Disallowance of building repair expenses - revenue v/s capital - Held that:- The assessee has only replastered, re-furnished and re-plumbered its factory building. This is not the Revenue’s case that the same has caused any increase in capacity of the building or otherwise. The Assessing Officer has been heavily swayed by the quantity of the material used (supra). We observe that this factor is not relevant in deciding such an issue of capital and revenue expenditure once it has not resulted in creation of a new asset giving enduring advantage. We quote hon’ble Bombay high court decision in CIT vs. DBS Corporate Services (P) Ltd., (2012 (9) TMI 478 - BOMBAY HIGH COURT) in support. Thus, we accept the assessee’s relevant ground and delete the impugned disallowance by treating these building repair expenses as revenue expenditure liable to be treated as current repair u/s.30 of the Act. - Decided in favour of assessee. Disallowance of commission expenditure u/s.40(a)(i) paid to foreign agents in lieu of procuring export order - Held that:- The assessee places on record agreement dated 8th December, 2005 highlighting its payees obligations, Revenue therein fails to point out involvement of any technical component therein. The assessee’s overseas agents have procured export orders and provided logistic support through adequate publicity etc. There is not even an iota of evidence to prove any technical service actually rendered to the assessee. Thus, the Revenue’s contention relating to Section 9(1)(vii) aplicability stands negated. We hold that the assessee has not availed any technical services from its overseas agents so as to deduct TDS on the impugned export commission payments. The Hon’ble Supreme Court in G.E. India Technology Centre P. Ltd., (2010 (9) TMI 7 - SUPREME COURT OF INDIA ) has held that Section 195 applies only when overseas payments are taxable in the recipients hands under the Act. Therefore, we delete the impugned disallowance. - Decided in favour of assessee.
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2015 (6) TMI 900
Reopening of assessment - disallowance on account of deferred revenue expenditure - CIT|(A) deleted the disallowance - Held that:- The hon’ble jurisdictional High Court in DCIT vs. Core Healthcare Ltd., (2008 (10) TMI 74 - GUJARAT HIGH COURT) holds that an expenditure incurred at the time of installation of machinery in existing line of business resulting in enduring benefits cannot be held to be capital expenditure merely because some direct or indirect benefits; immediate or a period of time, flow from the same. The Revenue does not quote any case law to the contrary. We take cue therefrom and treat the entire expenses as revenue expenditure. An assessee can adopt the two ways of giving different accounting treatment to an expenditure in its books and claim the entire sum as revenue expenditure in the relevant assessment year. Therefore, we uphold the CIT(A)’s order deleting the impugned disallowance/addition of deferred revenue expenditure. The Revenue’s ground fails. - Decided in favour of assessee.
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2015 (6) TMI 899
Transfer pricing adjustment - Information Technology enabled services (ITES) segment - selection of comparable - Held that:- Cosmic Global Ltd. be excluded from the list of comparables for the reason of its major activity, namely, Translation, with revenue of ₹ 6.99 crore (out of total revenue of ₹ 7.35 crore), being dissimilar with the assessee’s activities under this segment. The second reason for considering this company as incomparable on entity level is the business model adopted by it. It can be seen that this company has outsourced major activities in comparison with the assessee doing its business inhouse. It goes without saying that these two business models, namely, outsourcing services and providing in-house services, cannot be compared with each other because of their inherent differences. Accentia Technologies Ltd. directed to be excluded from the final list of comparables as a company cannot be considered as comparable because of exceptional financial results due to mergers/demergers. It can be noticed from page 31 of the Annual report that during the year under consideration this company completed the acquisition of 96% of M/s Oak Technologies Inc., a healthcare back-office processing company engaged in medical billing, coding and transcription activities and having substantial global work force. Microland Ltd. company was not originally selected by the assessee as comparable in its TP study. No contention was raised before the TPO for considering it as comparable. It was only for the first time that the assessee came up with the argument for the inclusion of Microland Ltd., in the list of comparables before the Dispute Resolution Panel (DRP). Since the authorities below have not pondered over the comparability of this company, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is restored to the file of AO/TPO for examining the comparability of this company. - Decided in favour of assessee for statistical purposes.
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2015 (6) TMI 898
Disallowance of business expenses - CIT(A) allowed claim - Held that:- When the assessee company was neither dissolved nor was its business closed, the Revenue Authorities were unjustified to disallow the expenses claimed by the assessee. As per revenue record, the assessee company started its business in the year 1997 and has done its business but in the year 1999-00 and in the current year, it had suffered recession and the company could not procure export orders in the year under consideration, but the company claimed only those expenses which were necessary to maintain the business and assets of the company which were allowable under the Income-tax Act, 1961. Almost similar are the facts of the present case during the years under consideration as it is not the case of the Assessing Officer that the expenditure of the assessee were excessive or unreasonable vis-à-vis its legitimate business requirements but the claimed expenditure has been denied by the Assessing Officer on the basis that it had not manufactured any product and not traded in any item and it had only earned income from interest on FDR. Thus CIT(Appeals) was justified in allowing the claimed expenditure which were disallowed by the Assessing Officer based on a wrong view. We are thus not inclined to interfere with the findings of the Learned CIT(Appeals) in this regard. The same is upheld. - Decided against revenue.
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2015 (6) TMI 897
Service of notice u/s 148 by affixture - Held that:- The notice server of the department had affixed the notice u/s 148 of the Act on the address given in the return of income i.e. Jyoti Nagpal, Tagore Garden, New Delhi with the remarks that “Makan Khali Para Hai, ab yahan nahi rahti notice chipka diya gaya”. We also find from the Page No.13 of the Paper Book filed by the department that the notice u/s 142 sent by speed post on 1.12.2008 received by the appellant on 06.12.2008. We fail to understand when the house was vacant in the month of January, 2008 how same person was residing at the same address in the month of December, 2008. This goes to prove that the appellant is determined to decline to accept the notice. We are further strengthened in taking the view by the fact that the appellant never brought on record as to how he had come to know of the passing of the assessment order against which he had pursued the legal remedies available under the Act within the stipulated time. In other words there was due service of notice u/s 148 upon the appellant by refusal. As relying on Jagdish Singh Vs. Natthu Singh reported in [1991 (11) TMI 246 - SUPREME COURT] held that when a notice is sent by registered post and is returned with a postal endorsement ‘refused’ or ‘not available in the house’ or ‘house locked’ or ‘shop closed’ or addressee not in station’, due service has to be presumed. Similarly, when the notice server affixed notice on the last known address with the remark that not available in the house, on the same analogy, it has to be presumed that notice was served properly. The case laws cited by the Ld. AR are of not any help in the facts of the case. - Decided against assessee. Addition u/s 69 - rejection of accpting additional evidence by CIT(A) - Held that:- It was only during the course of the proceedings before the CIT(A) the appellant made attempt to file the confirmation letter from Mr. Satish Kumar as additional evidence without even filing an application for admission of such additional evidence as required under Rule 46A of the IT Rules. Therefore, the CIT(A) was justified in not taking cognizance of such additional evidence. No explanation on the record explaining the sources for the cash deposited in the Bank account of the assessee on 17.04.2012. The appellant miserably failed to discharge the onus that was lying upon him under the provisions of the Section 69 of the Act. Therefore, we hereby confirm the addition of ₹ 3,30,000/- made by the Assessing Officer. - Decided against assessee.
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2015 (6) TMI 896
Bogus purchase expenses, software development & support expense and printing and stationary expenses - CIT(A) deleetd addition - Held that:- The revenue authorities below has not properly considered submissions, details, explanation and other relevant documentary evidence and related bills and vouchers audited books of accounts of the assessee and the AO proceeded to make additions without bringing out any adverse material or facts against the assessee and without rejecting audited books of accounts of the assessee. At the same time, we also note that the CIT(A) granted relief for the assessee by passing a slip short and cryptic order by making only short deliberations on the issue of purchase and sales and without any conclusion on other two issues and therefore, orders of the authorities below suffers ambiguity, perversity and the same are not a sustainable. Under above noted facts and circumstances, we find a just and proper to restore the assessment to the file of Assessing Officer for framing a fresh assessment, after affording few opportunity of hearing for assessee and without being prejudiced from the earlier assessment order and impugned order. - Decided in favour of revenue for statistical purposes
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2015 (6) TMI 895
Period of holding for determining whether the assessee has derived long-term capital gain or short-term capital gain - shares were duly held by the assessee - Held that:- The assessee has taken the loans after pledging the shares to the loan creditors. The assessee has transferred the shares from his demat account to the loan creditors merely as a security as the assessee has taken loans on pledge of the shares. Whenever the loan is taken by pledging a immovable property, the property has to remain in the possession of the persons, who advanced the loans. Giving possession of the movable property as security does not mean the ownership of the assets will also get transferred in favour of the person from whom the assessee has taken the loan. This is an undisputed fact that the shares continued to be shown in the balance-sheet of the assessee. In view of this fact, in our opinion, the ld. CIT (Appeals) has rightly held that the period of pledge cannot be excluded for determining the period of holding of shares by the assessee. Ld. D.R. even though vehemently relied on the order of the Assessing Officer but could not adduce any decision in its favour which has taken a contrary view. It is not a case where the shares were sold by the assessee to the parties from whom the assessee has taken the loan. In view of this fact, we do not find any illegality or infirmity in the order of the ld. CIT(Appeals). We accordingly confirm the order of the ld. CIT(Appeals) directing the Assessing officer to take the capital gain earned by the assessee on sale of shares as long-term capital gain as the period of holding will be more than 12 months. - Decided against revenue. Disallowance made under section 40A(2)(b) - CIT(A) deleted addition - Held that:- The assessee had taken loans from 23 creditors out of which interest has been paid to two loan c reditors @ 9%. In the case of remaining 21 loan creditors, interest has been paid at the rates varying from 10% to 13%. It was also noted that in case of 19 loan creditors, the interest was paid at the rate exceeding 12%. In view of this fact, ld. CIT(Appeal's) took correct view that interest paid to the ‘Karta’ at the rate of 10% cannot be held to be excessive or unreasonable. - Decided against revenue. Disallowance under Rule 8D read with section 14A - Held that:- Rule 8D read with section 14A has been inserted by the Income Tax (5th Amendment) Rules, 2008 w.e.f. 24.03.2008. Hon’ble Mumbai High Court in the case of Godrej Boyce Mfg. Co. Limited -vs.- DCIT reported in [2010 (8) TMI 77 - BOMBAY HIGH COURT] has categorically held that Rule 8D is prospective and not retrospective in nature. No contrary decision was brought to our knowledge. In view of the decision of the Hon’ble Mumbai High Court, in our view the Assessing Officer was not correct in law in making the disallowance by applying Rule 8D. We accordingly delete the disallowance - Decided in favour of assessee.
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2015 (6) TMI 894
Penalty u/s. 272A (2)(k) - not filing the TDS returns in time for all the four quarters of F.Y. 2010-11 - Held that:- In the present case the assessee had deducted TDS from the payment and paid it to the Government treasury. The assessee was required to file return as per section 200(3) of the Act which the assessee failed to do. This had attracted levy of penalty u/s.272A(2)(k) of the Act. The assessee has explained the reason for failure to file return of TDS as required, that the work was handled by few staff who were changed on transfer. There is no finding by the lower authorities that the reason advanced by the assessee is not genuine. Further, from the default of the assessee, no loss was caused to the Department as the deduction of tax had already paid to the Government treasury and there is no grievance in any manner to the Revenue. The payee has also not raised any grievance before the Revenue authorities. Therefore, the default, if any, is technical and venial in nature, not justifying the levy of penalty in this case. The explanation offered by the assessee is bonafide and the default is only technical in nature. We are inclined to delete the penalty for the above assessment years. - Decided in favour of assessee.
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2015 (6) TMI 893
Computation of long term capital gains - whether there is not cost of acquisition ascertained in this case u/s.49(1)(i) in the hands of previous owner for computing impugned capital gains? - two additional grounds that stamp duty valuation as stated on the partition deed has been wrongly adopted as fair market value as on the date of acquisition of the property And the impugned long term capital gains have been wrongly assessed in his hands instead of that in case of eponymous HUF - Held that:- We put up a specific query to the ld AR as to whether the said HUF has ever shown the capital asset in question in its books or admitted impugned long term capital gains in its case. He has replied in negative. Nor does he place on record HUF’s record showing his asset’s ownership in the past. The case file demonstrates that the said HUF holds a PAN (page no.78). Therefore, we observe that the assessee is not entitled to shift assessment of impugned capital gains in HUF’s hands. Therefore, the assessee’s arguments challenging assessment of capital gains in his hands rather than HUFs fail. Valuation of the property on the basis of partition deed dated 16.9.1975 - Held that:- As already narrated that this asset came from an earlier HUF after a registered partition. The value of the total assets was determined at ₹ 2,67,750/- and the impugned capital asset was valued at ₹ 55,050/-. We reiterate that that it’s a duly registered document enjoying presumption of correctness. The assessee also fails to rebut contents thereof that the valuation of the earlier HUF asset was not proper. We observe that in absence of other material on record or assessee’s evidence demonstrating any other value of the asset in question, the authorities below have rightly adopted the value of the asset sold at ₹ 55,050/- in accordance with the above stated registered partition deed. The assessee’s second substantive argument also fails. Fair market value of the property sold as on 1.4.1981 for the purpose of computation of capital gains - Held that:- The authorities below have not granted him the benefit of appreciation of the asset’s value for the period from 1975 to 1.4.1981 in computing long term capital gains. The Revenue fails to rebut this factual position. We deem it appropriate to observe that the impugned assessment year is 2008-09. Much water has flown down the stream. Thus, instead of remanding this issue back, we feel that larger interest justice would be met in case we ourself apply thumb rule on this subjective issue and direct the Assessing Officer to adopt fair market value of the asset sold as ₹ 1 lac as on 1.4.1981 and re-compute long term capital gains by passing a consequential order. We order accordingly. - Decided partly in favour of assessee.
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2015 (6) TMI 892
Income from undisclosed sources - CIT(A) deleted the addition - source of cash of ₹ 13.01 lac deposited by the assessee in his bank account, which was claimd to have been received from the estate of Smt. Saroj Gupta, his mother, who passed away on 14.8.2006 as per assessee - Held that:- All the circumstances in the case prove it beyond any shadow of doubt that there was no cash in hand available as ‘Istridhan’ on the death of Smt. Saroj Gupta that was bequeathed by the assessee to the tune of ₹ 13.01 lac. Except for a bald claim of finding cash of ₹ 15.06 lac on the sudden opening of the almirah on the death of Smt. Saroj Gupta, there is no evidence about the source of the availability of cash to such a huge extent in her hands. In our considered opinion, the assessee just concocted a story of inheriting cash from his mother after her death. We are reminded of the judgment of the Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More (1971 (8) TMI 17 - SUPREME Court). In this case, it has been held that self serving recitals cannot be accepted as true unless the assessee proves it. In this case, the assessee tendered an explanation that she got the amounts from horse races, which was not accepted by the ITO who came to hold that the winning tickets were purchased by the assessee after the event. Upholding the view taken by the AO, the Hon’ble Supreme Court held that for considering whether the apparent is real, the matter should be considered by applying the test of human probabilities. Viewed from that angle, the Hon’ble Summit court upheld the view canvassed by the AO that the explanation of the assessee was not genuine. In our considered opinion, the entirety of facts and circumstances prevailing in the instant case do lead to an irresistible conclusion that there was no cash available with Smt. Saroj Gupta at the time of her death and the assessee was not justified in claiming that a sum of ₹ 13.01 lac was bequeathed from his mother. We, therefore, overturn the impugned order on this score and restore the opinion of the AO. - Decided in favour of revenue.
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2015 (6) TMI 891
Penalty u/s 271(1)(c) - CIT(A) deleted the addition - Whether an in situation can be treated as an educational institution and benefit of section 1O(23C)(iiiad) of the Act be allowed thereto without affiliation to CBSE or any other Board? - Held that:- CIT(A) has considered the assessee's submission and perused the order of ITAT, Delhi granted the benefit of Section 10(23C)(iiiad) of the Income Tax Act to the assessee and after considering the entire facts and circumstances of the case he was agreed with the contention of the assessee that since the quantum appeal has been decided in favour of the assessee assessee, the very basis of A.O. passing penalty order u/s. 271(1)(c), also ceases to exist and therefore, the penalty order passed by the AO turns infructuous and thus deserves to be deleted, accordingly, the same rightly was deleted - Decided in favour of assessee.
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2015 (6) TMI 890
Appeal against order u/s 264 of the Income Tax Act, 1961 - Held that:- There is no right of appeal provided under the statute against the order passed u/s. 264 of the Act. In fact a party to litigation can move to an appropriate forum only when the statute provides for such a right. As can be noticed from section 253 of the Income-tax Act, 1961 an order passed by the Commissioner of Income Tax (‘CIT’) u/s. 264 of the Act is not appealable before the Appellate Tribunal. There is no statutory right to file an appeal against the order passed u/s. 264 of the Act. - Decided against the assessee.
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2015 (6) TMI 889
Addition of accrued interest - seized paper clearly indicates computation of accrued interest at per 12% at prevailing market rate on outstanding balance as on that particular date on investment made by the assessee -CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that the document found at the time of search is a third party document which is neither in the handwriting of the Assessee nor bears her signature and its inference has to be taken as stated by the person who possessed the document. He has further observed that if anything is to be inferred contrary to what is stated in the document it is Department’s onus to prove what it alleges. Before us, Revenue has not brought any material to controvert the findings of ld. CIT(A) or pointed to any fallacy in his observations. - Decided against revenue.
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2015 (6) TMI 888
Estimation of income - G.P. addition on account of unaccounted sale of stock - CIT(A) restricted addition - whether the GP rate of 10% is to be applied or the GP rate of 30.87% is to be applied on the sale of stock presumed to have been made outside the books? - Held that:- Considering the facts of the case and the arguments of both the sides, we do not find any justification to interfere with the order of the CIT(A). The shortage is of raw material and therefore, the normal presumption is that the raw material was sold outside the books by the assessee. If the Revenue claims that the assessee converted the raw material into finished goods, then the finished goods was sold outside books and the Revenue has to bring some corroborative evidence for such presumption. No corroborative evidence has been brought on record that the raw materials have been converted into finished goods and then the electrical transformers have been sold outside the books. In view of the above, we agree with the finding of the CIT(A) that the sale outside the books was of the raw material and not of the electrical transformers. Therefore, in our opinion, the applicability of GP rate of 10% on the sale of raw material by the CIT(A) is fully justified. - Decided against revenue.
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2015 (6) TMI 887
Penalty levied by AO u/s. 271(1)(c) - claim of set off of loss relating to Madras Elastomes Ltd. a company under BIFR, which was merged with the assessee company - CIT(A) deleted penalty levy - Held that:- In the instant case the audited profit & loss account, correctly disclosed the profit of the assessee which was set off against the loss incurred by the company under amalgamation. Therefore, the basic element necessary for initiation of proceeding u/sec 271(1)(c) of the Income Tax, 1961 that the assessee has furnished inaccurate particulars of income is conspicuously absent. The only point, in the instant case as per the argument of the Ld. counsel for the assessee was on which the impugned action has been conceived the AO. stated that income disclosed in the return which is based on an expert legal opinion, from the simple fact that the assessee was amalgamated with MEL, there was an error in this respect committed by the assessee, in aid of the legal expert, claiming the set off of loss of the amalgamated company. However, an error is never tantamount to penalty and accordingly the proceedings under section 271(1)(c) of the Act is misconceived in view of the fact that the mistake committed under an expert advice cannot expose the assessee to a charge of the "furnishing of inaccurate particulars of income". See CIT v. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] stating mere disallowance of claim for expenditure by itself would not tantamount to furnishing inaccurate particulars of income and accordingly, in such cases no concealment penalty can be levied on that basis. - Decided in favour of assessee.
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2015 (6) TMI 886
Addition on account of stock discrepancy - CIT(A) deleted the addition of ₹ 23,38,317/- on the ground that it was covered by disclosure of additional income of ₹ 35 lakhs made by the assessee - Held that:- DR could not cite any reason as to why the discrepancy of ₹ 23,38,317/- found by the AO on assessment could not be covered by the additional income of ₹ 35 lakhs, which was already offered by the assessee for taxation in the return of income. We find from the copy of computation of income filed with the return of income, copy of which is placed on record, that the assessee has separately offered for tax ₹ 35 lakhs as income apart from the income computed as per its books of accounts. In the absence of any material to show that any discrepancy of more than ₹ 35 lakhs was found in the books of accounts of the assessee, during the course of assessment, we do not find any error in the order of the CIT(A), which is hereby confirmed and the ground of appeal of the Revenue is dismissed. - Decided in favour of assessee.
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2015 (6) TMI 885
Cessation of liability in respect to trade creditors - CIT(A) deleted part addition - Held that:- Section 41 (1) would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during the previous year relevant to the assessment year under consideration. In the present case, both elements are missing. There was nothing on record to suggest there was remission or cessation of liability that too during the previous year 2007-08 relevant to the assessment year 2008-09 which was the year under consideration. It is undoubtedly a curious case. Even the liability itself seems under serious doubt. The AO undertook the exercise to verify the records of the so called creditors. Many of them were not found at all in the given address. Some of them stated that they had no dealing with the assessee. In one or two cases, the response was that they had no dealing with the assessee nor did they know him. Of course, these inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through bi-parte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that, therefore, the amount in question cannot be added back as a deemed income under section 41(1) of the Act. This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it. Hence, we have no alternative except to confirm the findings of CIT(A) in respect of deletion but reverse qua the confirmation of addition. - Decided in favour of assessee.
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2015 (6) TMI 884
Disallowance of commission expenses - CIT(A) deleted the addition - Assessee stated that the tax effect in this appeal is less than ₹ 4,00,000/-, therefore, the Department ought not to have filed this appeal - Held that:- Keeping in view the CBDT Instruction No. 5 of 2014 dated 10th July, 2014 and also the provisions of section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal. Thus, from the ratio laid down by CIT vs. Delhi Race Club Ltd. [2011 (3) TMI 1488 - High Court of Delhi] by following the earlier order of CIT Delhi-III vs. M/s P.S. Jain & Co. [2010 (8) TMI 702 - DELHI HIGH COURT] it is clear that the instructions issued in the circulars by CBDT are applicable for pending cases also. Therefore, we are of the considered view that Instruction No. 5 of 2014 dated 10th July, 2014 issued by the CBDT are applicable for the pending cases also and in the said instructions, monetary tax limit for not filing the appeal before the ITAT is ₹ 4,00,000/-. - Decided against revenue.
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2015 (6) TMI 883
Disallowance of repairs and maintenance expenses - revenue v/s capital expenditure - CIT(A) deleted addition - Though the assessee stated before the AO that the expenditure of ₹ 30.40 lac was of revenue nature, but it changed its stand before the ld. CIT(A) and contended that these machines were, in fact, capitalized by the assessee voluntarily and the observations of the AO in this regard were wrong. It is evident that there is an apparent contradiction between the stand taken by the assessee before the AO on one hand and the ld. CIT(A) on the other. The amount was, in fact, capitalised and not taken to revenue account. However, our attention was not invited towards any material to substantiate such explanation. In our considered opinion, the ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of AO.We order accordingly and direct the AO to verify the view canvassed by the assessee before the ld. CIT(A) in arguing that this amount was, in fact, capitalized for the purposes of claiming depreciation. - Decided in favour of assessee for statistical purposes. Addition u/s 43B - Held that:- There is an absence of details in this regard to demonstrate as to whether or not the sum of ₹ 18,207/-, in fact, remained payable as work contract tax. Under such circumstances, we set aside the impugned order and remit the matter to the file of AO for vetting the assessee’s contention in this regard. If it is found on such examination that work contract tax to that tune, in fact, remained unpaid before the filing of return of income, then, the disallowance should be sustained and in the otherwise situation the issue be decided as per law. - Decided in favour of assessee for statistical purposes. Disallowance of personal expenses - Held that:- The Hon’ble Gujarat High Court in Sayaji Iron and Engineering Company vs. CIT (2001 (7) TMI 70 - GUJARAT High Court) has held that there cannot be any disallowance of personal expenses for cars on account of personal use by the director. It has been further held that no disallowance can be made even by treating such expenditure as not having been incurred for the business purpose. Similar view has been taken in Dy. CIT vs. Haryana Oxygen Ltd. (1999 (12) TMI 107 - ITAT DELHI-D). In view of the above decisions, we hold that the ld. CIT(A) was not justified in sustaining the disallowance to this extent. - Decided in favour of assessee. Disallowance on account of repairs and maintenance expenses - Held that:- the nature of expenditure incurred by the assessee to the tune of ₹ 1.98 lac is not emanating either from the assessment order or the impugned order. Unless true nature of such expenditure is deduced, one cannot reach a positive conclusion about the same being a capital or revenue. Under such circumstances, we set aside the impugned order on this score and send the matter back to the file of AO for elaborately discussing the nature of such expenditure and then deciding the issue afresh as per law, after entertaining objections from the assessee. - Decided in favour of assessee for statistical purposes
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2015 (6) TMI 882
Reopening of assessment - unexplained cash credit u/s 68 - CIT(A) deleted addition quashing reopening assessment admitting additional evidence - Held that:- From the perusal of the CIT(A)'s order we do not find any thing as to the prayer made by the assessee company for admission of additional evidence. The reassessment was made u/s 144 of the Act. It implies that the assessment was made for non cooperation, non production evidence before the Assessing Officer. If the CIT(A) grant relief, obviously it means that the assessee had filed some additional evidence in rebuttal of the assessment order. But, it appears from the order of the CIT(A) that he had not given the Assessing Officer reasonable opportunity- (a) to examine the evidence or document or to cross-examine the witness produced by the assessee company (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the assessee. As per the mandate of Rule 46A of the Income Tax Rules, 1962. Therefore, we remit the matter back to the file of the CIT(A) with the direction that the appeal shall be reheard and the Assessing Officer shall be given reasonable opportunity as per provisions of Clause(3) of Rule 46A of the Rules, 1962 and dispose of the matter accordingly. - Decided partly in favour of revenue for statistical purposes.
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2015 (6) TMI 881
Applicability of TDS provisions in respect of the advances held as deemed dividends by the AO u/s 2(22)(e) - whether future adjustment of advances for trade and processing charges does not alter the character of the advances so as to treat the same as deemed dividend? - Held that:- As decided in assessee's own case [2012 (8) TMI 708 - ITAT, HYDERABAD] as far as trade advances are concerned, there is no question of applicability of the provisions of S.194, and consequently, applicability of provisions of S.201(1) and S.201(1)(1A) does not arises. As for the other advances as well, it is held that it is only where the payee in relation to the payments in question is a share-holder, such payments may attract the provisions of S.2(22)(e), and consequently liability to TDS u/s 194. Therefore, Section 194 does not require TDS when payment is made to a non-shareholder. See ANZ Reality Pvt. Ltd. V/s. ITO(2008 (10) TMI 268 - ITAT JAIPUR-B) – Decided in favor of assessee.
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2015 (6) TMI 880
Rejection of revised books of account u/s 145(3) - AO did not make an Ex-parte assessment or an estimated assessment but added amounts under section 69,69A,69B69C of the I.T.Act 1961 taking the figure from revised accounts - Held that:- The assesse has submitted the revised balance sheet and explanations to the differences and the balance sheet filed along with the return of income. But no defect has been pointed by the AO. Under such circumstances and facts of the case AO is not justified in invoking the provision of section 145(3) of the Act by simply calculating the differences between the revised balance sheet and the balance sheet in the audited accounts attached with the return of income and adding the same to the income of assessee. Therefore under such circumstances of the case this action of the AO for rejecting the books of account only on account of computation difference between the revised balance sheet and the audited balance sheet is no basis for invoking the provision of section 145(3) - Decided in favour of assessee. Addition on gifts received u/s 69 from mother-in-law and from father - Held that:- The finding of the AO and the ld. CIT(A) that there was no drawing during the five days prior to the date of gift and mere cash withdrawal by the donor long back i.e. 120 days cannot make the act probable. Such reasonings by both the authorities below cannot convert the facts of genuineness and creditworthiness of the transactions. In such circumstances and facts of the case we are of the view that the assessee has explained the identity, creditworthiness and genuineness of the transactions and the AO was not justified in treating the same as income of the assessee. Accordingly the order of the ld. CIT(A) is reversed. - Decided in favour of assessee. Undisclosed investment u/s 69 - difference in capital arising out of audit and revised balance sheet - Held that:- The ld. Counsel of the assesee before us tried to explain the difference and the reconciliation and prayed to examine the differences between the revised balance sheet and audited balance sheet by us. Prima facie as appears from the order of ld. CIT(A) the assessee has stated to have reconciled the differences but the same has neither been examined by the AO in the right perspective nor by the ld. CIT(A). It will be in the interest of justice if it is set aside the matter to the file of AO, who will examine the issue in the right perspective being the differences between the revised balance sheet and the audited balance sheet and if the explanation is found satisfactory the addition may be deleted. - Decided in favour of assessee for statistical purposes. Addition in respect of furniture and fixture for personal purposes - Held that:- The assessee having incurred the expenditure in cash for personal purposes and in the absence of any documents for the expenditure not filed before any of the authorities below or before us we do not find any infirmity in the order of ld. CIT(A), who has rightly confirmed the action of AO. - Decided against assessee. Additions in respect of entire chamber maintenance, printing and stationery, books and periodicals , electricity expenses and miscellaneous expenses - Held that:- As per the report of the AO which has not been rebutted by the ld. AR that assessee himself has admitted vide his submission dated 14.12.2010 which states that he has made a chamber at his ancestral home but rarely get the time to provide the consultation. Nothing has been substantiated before the authorities below or even before us to establish that the expenditures having been incurred wholly and exclusively for the purpose of profession and not allowable u/s 37(1) of the Act. We find no infirmity in the order of ld. CIT(A), who has rightly confirmed the action of AO - Decided against assessee.
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2015 (6) TMI 879
Disallowance made u/s 14A r.w.r 8D - Held that:- As relying on case of DCIT V/s Damani Estates and Finance Pvt. Ltd [2013 (8) TMI 457 - ITAT MUMBAI] we direct the assessing officer to restrict the disallowance to be made under Rule 8D(2)(ii) of the IT Rules to 20% of the amount computed under that Rule in respect of Shares held as ‘’stock in trade’’. The disallowance to be made under Rule 8D(2)(ii) in respect of Shares held as investment has to be computed in accordance with Rule 8D(2)(ii) only. In respect of the disallowance to be made under Rule 8D(2)(iii), the Co-ordinate bench has taken the view that the shares held as stock in trade should also be included in computing the Average value of investments. Hence, no interference is called for in the computation made by the AO under Rule 8D(2)(iii). In view of the above, the order of Ld CIT(A) shall stand modified - Decided partly in favour of assessee. Disallowance of irrecoverable amounts written off of - Held that:- From the perusal of the submissions made by the assessee, it appears that there was a dispute between the assessee and land lord with regard to the quantum of rent. When the quantum of rent was finally settled between the parties, the arrear rent was deducted by the Land lord against the Rent deposit. Accordingly, the assessee has transferred the amount so deducted from the Rent deposit account to Rent expenditure account. We notice that, the tax authorities, without appreciating these factual aspects, has held that the loss of rent deposit is a capital loss. However, according to the assessee, it was not loss of rent deposit as presumed by the tax authorities, but it was only adjustment of part of rent deposit towards arrear rent. However, the factual details relating to rent arrear, dispute and adjustment of rent deposit have not been examined by the tax authorities. Thus restore this issue to the file of the assessing officer with the direction to examine this issue afresh - Decided in favour of assessee for statistical purposes. Disallowance of retention money retained from sub-brokerage - Held that:- The liability is determined on the basis of contract between the assessee and the sub-brokers and accordingly, the assessee seems to have claimed the above said amount as expenditure. However, while making actual payment, the assessee has retained a part of liability as contingency fund in order to cover up possible bad debts. Thus, it is seen that the assessee has retained a part of liability that has already accrued to it. Hence, in our view, the tax authorities are not justified in holding that the liability to the extent of amount retained as contingency fund did not accrue at all. Accordingly, we set aside the order of Ld CIT(A) and direct the assessing officer to delete this addition. - Decided in favour of assessee. Disallowance of difference in brokerage income - AO noticed that there was a difference of ₹ 9,380/- between the Brokerage income shown in the books of account and that shown in the service tax return - Held that:- Difference is a matter of reconciliation. If the assessee is able to show the mistake that occurred in the service tax return vis-à-vis the books of account, this addition is not warranted. However, the assessee has failed to furnish any reconciliation statement or failed to show the mistake occurred in preparation of service tax return. Hence, we have no other option, but to confirm this addition.- Decided against assessee.
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2015 (6) TMI 878
Reopening of assessment - Addition on account of provision for doubtful debt - while calculating income u/s 115JB, total amount of provision for doubtful debt was not added back by the assessee for calculation of its book profit - CIT(A) deleted the addition - Held that:- In the reasons recorded, the AO merely stated that though assessee while computing the income under the normal provisions of the Act, added back the provision for bad and doubtful debts but while computing/ calculating income u/s 115JB did not add back the provisions for bad and doubtful debts and, therefore, the income had escaped assessment. Thus, there is no allegation that there was any default on the part of assessee in disclosing fully and truly all material facts. Admittedly, the AO had raised queries in course of original assessment proceedings which were duly replied by assessee vis a vis the provision of section 115JB and, therefore, this was clearly a case of change of opinion, which is impermissible for initiating proceedings u/s 148. We find that this issue is squarely covered by the decision of Sun Investment Pvt. Ltd. (2012 (2) TMI 193 - DELHI HIGH COURT ), wherein under identical facts the reassessments were held to be without jurisdiction. The Hon’ble Delhi High Court also considered the insertion by Finance (No. 2) Act, 2009 with retrospective effect from 1-4-2001 and after considering the merit of each amendment held that reassessment proceedings were not justified - Decided in favour of assessee.
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2015 (6) TMI 877
Disallowance of Repair & maintenance of building - revenue v/s capital expenditure - CIT(A) deleted the addition - Held that:- We concur with the views of the ld. CIT(A) that ₹ 79,56,858/- included expenditure on security amounting to ₹ 42,32,673/- and on maintenance of garden amounting to ₹ 1,36,267/- and such expenditure cannot be treated towards repair. No evidence has been brought on record by the AO by increasing such expenditure which is stated to be repairs. The assesse has not acquired any new asset of enduring nature or there was no expansion or extension of assets. It was mentioned by the ld. CIT(A) that in the preceding year i.e. A.Y.2005-06 such addition was made but the same was deleted by ld. CIT(A) and accordingly we find no infirmityin the order of ld. CIT(A), who has rightly deleted the addition so made by the AO. - Decided against revenue. Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- The present year is A.Yr.07-08 on which rule 8D is not applicable. Therefore in view of the decision of Kolkata Bench of ITAT in the case of DCIT vs M/s.Varanasi Commercial Ltd., [2012 (3) TMI 401 - ITAT KOLKATA] for A.yr.2007-08 where the disallowance has been restricted to 1% of the exempted income. Following the same we find no infirmity in the order of ld. CIT(A) who has rightly restricted the disallowance to 1% of the exempted income at ₹ 2005/- - Decided against revenue. Disallowance u/s 40(a)(ia) - no tax had been deducted in respect of rent payment - CIT(A) deleted addition - Held that:- none of the person to whom such car hire charges were paid had any taxable income and hence the question of any deduction of tax does not arise. Copies of the IT returns of the respective persons were also filed before ld. CIT(A). This matter was duly brought to the notice of the AO as is evident from the assessment order. Since the payees did not have taxable income therefore no deduction of tax at source arise from the assessee. Therefore no disallowance u/s 40(a)(ia) can be made. In such circumstances and facts of the case we concur with the findings of ld. CIT(A) - Decided against revenue. Non reconciliation of ITS details - addition on difference deleted by CIT(A) - Held that:- AO has not made adequate enquiry as to why such difference arose. The contention of the assesee that the amount appearing in ITS details has been subsequently changed by the deductors as sanctity of such ITS cannot be relied upon until and unless complete details were made available to the assessee is found to be reasonable. We concur with the views of the ld. CIT(A) that AO is not justified in making the addition without making adequate enquiry. Thus we find no infirmity in the order of ld. CIT(A), who has rightly deleted the addition so made - Decided against revenue.
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2015 (6) TMI 876
Disallowance u/s 40(a)(ia) - TDS on the commission to the director paid after the closure of the financial year but before the due date of filing of return of income - CIT(A) deleted disallowance - Held that:- We concur with the view of the ld. CIT(A) that the assessee has paid the taxes at source before the statutory date of filing of the return of income which is not under dispute and in view of the decision of CIT vs Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT] in view of the similar facts of the case we find no infirmity in the order of the ld. CIT(A), who has rightly deleted the addition made by AO - Decided against revenue. Disallowance being 0.5% of average investment as per Rule 8D of IT Rules - CIT(A) deleted addition - Held that:- The present year is A.Yr.07-08 on which rule 8D is not applicable. Therefore in view of the decision of Kolkata Bench of ITAT in the case of DCIT vs M/s.Varanasi Commercial Ltd., [2012 (3) TMI 401 - ITAT KOLKATA] for A.yr.2007-08 where the disallowance has been restricted to 1% of the exempted income. Following the same we find no infirmity in the order of ld. CIT(A) who has rightly restricted the disallowance to 1% of the exempted income - Decided against revenue.
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2015 (6) TMI 875
Income shown under the head utility income - Income from house property OR income from Other Sources - CIT(A) allowed claim - Held that:- In the earlier years AO has accepted the factual aspects of the matter and had treated the utility income as part and parcel of the rentals and thus assessed as income from house property. In A.Yr. 2006-07 the assessee had received lease rent of ₹ 26,51,861/- and utility charges of ₹ 67,04,688/-. AO has accepted the aforesaid figures for determining the income from house property and after allowing necessary deductions u/s 22 of IT Act were allowed. Similarly in A.Yrs. 2007-08 and 2008-09 the assessee was having rental income and utility receipts which was declared as rental income and were accepted by AO and were assessed as income from house property. There is nothing on record that such utility receipts are not from the said tenants from whom the assessee derived rent. The ld. CIT(A) has rightly distinguished the decisions relied upon by the AO. The facts remaining the same over the past years as already mentioned herein above and there is no change and the doctrine of consistency has to be taken into consideration. - Decided against revenue. Disallowance of insurance premium - CIT(A) allowed claim - Held that:- As per section 24(i)(ii) the amount of premium paid to insure the property against risk of damage or destruction is allowable in the impugned year as per Income Tax Act, 1961. Therefore the said insurance premium paid to insure the property is an allowable deduction. Nothing has been brought on record by the revenue that the said premium has not been paid to insure the property against risk of damage or destruction. Accordingly we find no infirmity in the order of ld. CIT(A), who has rightly allowed the claim of assessee. - Decided against revenue. Disallowance of business advisory expenses - CIT(A) allowed claim - Held that:- The assesee had the income from such business centre in the following years i.e. A.Yr.2010-11 at ₹ 89,49,658/- and during A.Yr. 2011-12 at ₹ 13,00,90,880/-. It has been shown as business income and not income from house property as there is no element of rent involved in these activities. Accordingly we are of the view that such expenditure paid for an advisory capacity is a revenue expenditure and is allowable u/s 37(1) of the Act. We find no infirmity in the order of ld. CIT(A), who has rightly allowed the claim of assessee. - Decided against revenue. Disallowance of directors remuneration - CIT(A) allowed claim - Held that:- The undisputed facts are that remunerations have been paid to two directors, the details of which are placed on record and the directors are whole time directors looking after the business of the assessee as well as for development work. The assessee as a result entered into an agreement for new business venture as observed herein above and therefore such an expenditure which has been consistently allowed by the department and there is no dispute to the fact that the doctrine of consistency is to be taken into consideration and the said expenditure is allowable in the impugned year as well. Accordingly we find no infirmity in the order of ld. CIT(A), who has rightly allowed the claim of assessee. - Decided against revenue.
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2015 (6) TMI 874
Revision u/s 263 - as per CIT(A) excess production was made by the assessee - Held that:- No evidence in the form of paper book has been filed in support of the grounds raised by the assessee. We, however, have carefully perused the orders of the authorities below and we find that during the course of search, the search team conducted test run of Pouch Packaging Machine in order to ascertain the production of pouches of Pan Masala and arrived at a conclusion that excess production was made by the assessee i.e. M/s Durga Trading Company, proprietorship concern of Smt. Asha Chaurasia and the products were sold through other proprietorship concerns i.e. M/s Udai Traders and M/s R. P. Products, proprietorship concerns of Shri. Udai Chand Chaurasia and Shri. Raj Kumar Chaurasia respectively. It was also noticed by the search party that the assessee has made payment of excess excise duty. All these facts were not examined by the Assessing Officer while completing the assessment in order to work out the excess production and sales out of the books of account. Therefore, we are of the view that the ld. Commissioner of Income-tax has rightly held that the assessment orders are erroneous and prejudicial to the interest of the Revenue. - Decided against assessee.
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Customs
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2015 (6) TMI 907
Penalty u/s 114 - Aiding and abetting - Held that:- The exchange of e-mail messages between Shri Selvam and Shri Bhaskar Naidu clearly indicates their earlier transaction and business dealings even before the present consignment. This clearly establishes that Shri Bhaskar Naidu, CEO of M/s. Archana Exports and the overseas buyer knew each other very well. Both carefully hatched a fraud creating a web of intermediaries to smuggle prohibited Red Sanders under the garb of Granite Cobble Stones. He himself being the main conspirator tried to mislead the Department by way of engaging a number of intermediaries and by furnishing the wrong and fictitious telephone numbers and addresses, so that investigations are lost in the trail. In such facts the exporter was held liable for aiding and abetting. Further, in the case of P. Bhaskar Naidu, the payment for goods was received in cash, wherein in the case of present appellant the payment is received through Banking Channel. Further in the Bhaskar Naidu's case, the goods were factory stuffed and it moved from the factory to the Port, whereas in the appellant's case the goods have been taken to ICD premises for inspection. - allegation of aiding and abetting does not stand. - Decided in favour of assessee.
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2015 (6) TMI 906
Clandestine removal - Warehoused goods, date of clearance thereof - Evidence - High court dismissed the appeal of the assessee for non prosecution which was filed against the decision of Tribunal [2004 (7) TMI 217 - CESTAT, BANGALORE], wherein Tribunal held that in case of clandestine removal it is not always possible to establish exact date of clearance of goods but if the period during which clearances took place established, it would be sufficient to say goods have been removed within that period. Once from records, clandestine clearance of goods from warehouse during period July to Oct. established, clearance of same goods under Ex-bond Bill of Entry at a later date on 22-11-1996 becomes manipulated.
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2015 (6) TMI 905
Exemption availed under conditional notification no. 64/88 – Notification was withdrawn later – violation of post import conditions - In this, matter was remanded back to tribunal by high court to decide the case on merit basis and consequently penalty was reduced ₹ 5 lacs to ₹ 1 lac by judgment [2008 (10) TMI 218 - CESTAT, NEW DELHI] dated 22-10-2008 . Now supreme court dismissed the appeal and held that there is no warrant to reduce the penalty regard being had to the amount. - Appeal dismissed. Eligibility criteria as per Notification 65/88, dated 1-3-1988 & Notification No. 118/86, dated 7-2-1986 - Seeking direction to Commissioner to do needful within a stipulated time - Held that:- Present appeal is squarely covered by the judgment passed by this court in M/s. Grant Medical Foundation v. Commissioner of Customs, Mumbai [2015 (6) TMI 221 - SUPREME COURT] dated September 17, 2014. - Appeal accordingly disposed of.
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Corporate Laws
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2015 (6) TMI 904
Validity of consent circulars issued by SEBI - whether SEBI is justified in rejecting the consent application filed by the appellant as not consentable under paragraph 1(ii) of consent circular dated May 25, 2012 - Section 15JB read with Section 30A inserted to SEBI Act with retrospective effect, whether appeal against the impugned order dated January 2, 2013 is maintainable before this Tribunal. Held that:- In the present case, since consent application of appellant dated April 26, 2011 was disposed of on January 2, 2013 without giving an opportunity to the appellant to present consent proposal before the IC after perusing documents which were furnished by SEBI partly in the last week of November 2012 and partly in December 2013 (after disposal of consent application), appellant was entitled to file appeal under Section 15T(1) of SEBI Act alleging that the impugned order has been passed even before giving full inspection of documents referred to and relied upon in show cause notice dated December 16, 2010 and without giving an opportunity to submit consent proposal after perusing documents furnished to the appellant. Since Section 15T(2) is deleted and Section 15JB(4) is inserted to SEBI Act with retrospective effect from April 20, 2007 by Ordinance No. 2 of 2014 which bars appeal against any order passed in consent proceedings. - Appeal dismissed.
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2015 (6) TMI 903
Illegal and wrongful occupation of company's flat - Refusal to handover the vacant possession of flats - Offence punishable u/s 630 of the Companies Act, 1956 - Held that:- In the case of Dharampal v. Smt. Ramshri [1993 (1) TMI 291 - SUPREME COURT OF INDIA] the Hon'ble Supreme Court was pleased to hold that Learned Session Judge's powers under Section 397(3) Cr.P.C. while hearing the revision, are equivalent to that of High Court and any one cannot avail of two opportunities of filing revision under the garb of Section 482 Cr.P.C. When once his revision was found unsubstantial by the Learned Sessions Judge under Section 397(1) Cr.P.C., then the remedy under Section 482 Cr.P.C. is barred and he cannot file this petition. The facts of the present case do not warrant any interference under Section 482 Cr.P.C. being a second revision under the garb of Section 482 Cr.P.C. The present petition is neither maintainable nor is there any merit in the same. Accordingly, the present petition is dismissed on both counts, i.e., on the question of maintainability as well as on merits. - Keeping in view the age of the case and also the nature of the offence, the Learned Metropolitan Magistrate, 17th Court, Calcutta is directed to dispose of this case finally as expeditiously as possible without giving any unnecessary adjournment.
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2015 (6) TMI 902
Application for winding up - Non refund of non interest Bearing Maintenance Security (IBMS) - Direction to deposit the entire amount as a pre-condition to deal with its movable and immovable assets in the ordinary course of business - Held that:- On a consideration of the entirety of the matter as well as the documents filed by the parties which have been placed before us, it was the responsibility of the appellant to place the amounts collected towards (IBMS) from the apartment owners in a separate account. Even before us, the appellant does not dispute receipt of this amount from the apartment owners. A reading of the affidavit filed by the appellant would show that the entire amount collected towards IBMS has been utilised by it. The nature of the utilisation, however, is not disclosed. It is also not known whether the amount has been utilised for the purpose or in the manner required in the flat buyers agreement. The respondent has also absolutely refuted the liability of any dues at all. - Calling upon the appellant to secure the amount is clearly justified and cannot be assailed on any legally tenable grounds. However the appellant pleads financial difficulty in making a lump sum deposit. The amount can be secured by other conditions as well to mitigate this expressed difficulty.
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Service Tax
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2015 (6) TMI 919
Denial of CENVAT Credit - Whether the appellant could have taken the credit of service tax either of the units belonging to them without considering whether the invoice was addressed to the Head Office or to the units - Held that:- When the Service Tax Registration is common and both the units are located adjacent to each other, insisting that the service tax also should be segregated may not be relevant. The decision of the Hon’ble High court of Karnataka relied upon by this Tribunal in the case of CCE & ST, Bangalore Vs. Biocon Ltd. [2014 (9) TMI 716-Karnataka High Court] in my opinion applies to the present case also. - Decided in favour of assessee.
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2015 (6) TMI 918
Waiver of pre deposit - Export service - Held that:- issue is squarely covered by the decision of CESAT Larger Bench in the case of M/s.Paul Merchants Ltd. & Others. Vs. CCE, Chandigarh- [2012 (12) TMI 424 - CESTAT Delhi (LB)] in terms of which, such services are held to be export of service not liable to service tax. Ld. AR concedes that the issue no longer res integra having been decided in favour of the appellant in terms of the said judgment of the CESTAT in the case of M/s.Paul Merchant Ltd. - Decided in favour of assessee.
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2015 (6) TMI 917
Waiver of pre-deposit - Outdoor catering services - Service tax not paid on catering services in respect of the Mail/Express trains - Notification No.2/2006-ST dated 1.3.2006 - Held that:- In view of the different views taken by two Courts i.e. Delhi high court in the case of INDIAN RAILWAYS CATERING & TOURISM CORPORATION LTD Versus GOVT OF NCT OF DELHI & ORS [2010 (7) TMI 174 - HIGH COURT OF DELHI] , Kerala high court in the case of SAJ Flight Services Pvt. Ltd. V. Superintendent of Central Excise reported in [2005 (8) TMI 20 - HIGH COURT (KERALA)] and going by the nature of the services provided by the appellant as alleged by the Department in the adjudication order, we find that this issue still remains debatable on facts and on law. We, therefore, not inclined to go into the merits of the case. However, taking note of the financial hardship pleaded and in view of the uncertainty on the levy of service tax, which we find is still a debatable issue, we are inclined to modify the brief and non-speaking order of the Tribunal. - amount of pre-deposit reduced to 50% - Decided partly in favour of assessee.
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2015 (6) TMI 916
Site formation and clearance, excavation & earthmoving & demolition - Whether the respondent, while executing a work order awarded to them by Goa State urban Development Agency (GSUDA) for a project name "Construction of Market-Cum Community Hall and Park, Phase-I Land Development" had provided the taxable service of "Site formation and clearance, excavation and earth moving and demolition" under Section 65(97a) of the Chapter V of the Finance Act, 1994 - Held that:- Site formation basically refers to earth work or activities related to earthwork or, at the most, drilling for the passage of cables or drain pipes. Whereas the activities undertaken by the respondent indicate a comprehensive works contract which includes appreciable RCC work for foundations, columns and walls apart from construction of walls, laying of pipes. The definition includes creation of passages for pipes. It does not include laying of pipes itself. There is merit in the finding of the Commissioner (Appeals) that if such works are held to be taxable under the site formation service, then every such project would involve the activity of site formation. Revenue could at most tax only that part of the contract which involves site formation and related earthwork and not the entire works. But that has not been done by Revenue. Be that as it may, the total activities undertaken cannot be categorized under the Site Formation service. The nature of work is more akin to a comprehensive works contract. - Therefore, we hold that the work undertaken by the respondent cannot be termed as an activity of "Site formation and clearance, excavation & earthmoving & demolition". - Decided against Revenue.
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2015 (6) TMI 915
Waiver of pre deposit - Market Research Agency service - Held that:- prima facie the classification of the services rendered has been done on the basis of the service rendered under only one of the eleven agreements under which the services were rendered. - service held to be Market Research Agency service would amount to export of service. Consequently, the appellant has been able to make out a good case for granting waiver of pre-deposit as far as the demand under the said service (Rs.6,57,10,433/-) is concerned. As regards the remaining amount of demand, the appellant has not pressed for stay. - Decision in the case of SGS India Pvt. Ltd. (2014 (5) TMI 105 - BOMBAY HIGH COURT) followed - Partial stay granted.
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2015 (6) TMI 914
Waiver of pre deposit - 'Management, Maintenance or Repair service on the Annual Maintenance Charges - Held that:- Amount received as AMC is not deposited in the Govt. treasury. Further there is no constitutional basis to hold that services rendered as a statutory function are ipso facto immune from liability to service tax. Thus, the decision of CESTAT in the case of Maharashtra Industrial Development Corporation (2014 (11) TMI 311 - CESTAT MUMBAI) may be per incuriam of the Constitution of India. - prima facie it had added the maintenance charges in the lease rent while computing the taxable amount and paid the service tax thereon and if that is taken into account, the short payment would come in the range of ₹ 5 lakhs. Accordingly, we order pre-deposit of ₹ 5 lakhs along with proportionate interest within four weeks - Partial stay granted.
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Central Excise
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2015 (6) TMI 913
Denial of CENVAT Credit - Held that:- certain input services were availed for the purpose of setting up of business in Uttrakhand. But, for no feasibility of the unit there, that could not come up. This shall not disentitle the appellant to cenvat credit of the services availed - input services definition in Rule 2(l) would permit cenvat credit for such services which has nexus with business - Decided in favour of assessee.
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2015 (6) TMI 912
Benefit of CENVAT credit - Outdoor Catering Service - Held that:- Both the authority below allowed the credit following various decisions of the Tribunal. Revenue in their grounds of appeal stated that the Commissioner (Appeals) followed by the decision of the Tribunal in the case of CCE, Mumbai V. M/s. GTC Industries Ltd. - [2015 (6) TMI 83 - CESTAT CHENNAI]. It is contended that the decision of the Larger Bench in the case of GTC Industries (supra) does not appear to correct. In my considered view, the Single Member Bench of the Tribunal cannot make any observation on the correctness of the decision of Larger Bench of the Tribunal. In any event, I find force in the submission of the Learned Authorised Representative of the Revenue in respect of denial Cenvat Credit on Outdoor Catering Service, as per decision in the case of Commissioner Of Central Excise Nagpur V/s. Ultratech Cement Ltd. [2015 (6) TMI 83 - CESTAT CHENNAI]. In that case, it has been held that the assessee is not eligible to avail the credit on the Outdoor Catering Service on the employees Share. - impugned order is modified to the extent the Cenvat Credit on Outdoor Catering Service is not admissible to respondent on the part of service tax borne by the worker. - Decided in favour of Revenue.
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2015 (6) TMI 911
CENVAT Credit - duty paying documents - whether the appellant is entitled for the Cenvat credit on the strength of debit note issued by the service provider - Held that:- All the particulars as required under Rule 9(2) of Cenvat Credit Rules are undisputedly appearing on the debit note. Therefore the debit note is at par with the documents prescribed under Rule 9(1) of Cenvat Credit Rules, 2004. On going through various judgments relied upon by the Ld. Counsel for the appellant, I find that the ratio of those judgments are squarely applicable in the present case. There is no dispute raised by the department that the service were received and same was accounted for in the books of account of the appellant, therefore, I am of the view that debit note containing all the details as required under the rule 9(2) of Cenvat Credit Rules, 2004 is valid documents for the purpose of taking cenvat credit. - impugned order is set aside - Decided in favour of assessee.
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2015 (6) TMI 910
Denial of CENVAT Credit - whether the appellant is eligible for Cenvat credit of duty paid on Air-conditioner and furniture - Held that:- air-conditioner has been used within the factory in the control panel room to keep the temperature down. There is no dispute that it has been installed in the factory. As regards furniture, the learned counsel relied upon the Board's circular issued by the Board vide Circular No. 943/4/2011-CX. dated 29.04.2011. In the circular it was mentioned that 'goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing business and hence the credit of same is allowed.' This circular was issued after the amendment of Cenvat Credit Rules specifically denying benefit of Cenvat credit on certain activities which are not at all related to manufacture. - According to the definition of 'input' as it existed during the relevant period, inputs used in the factory 'for any other purpose' the credit is admissible. In this case there is no denial of the fact that furniture had been used within the factory. - Decided in favor of Assessee.
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2015 (6) TMI 909
Dispute in Transaction Value - Demo cars vs Normal cars sold by dealers - Held that:- Earlier tribunal vide judgment [2011 (7) TMI 1044 - CESTAT CHENNAI] dated 8-11-2011 held that the assessees have not been able to demonstrate any difference between the ‘demo cars’/’normal cars’ sold through dealers. The ‘demo cars’ are put to test and usage as desired by prospective buyers and the assessees also permit such usage to enhance the marketability of their cars. In these circumstances, the transaction value cannot be accepted and comparable price adopted for other cars (other than ‘demo cars’) has correctly been adopted and differential duty charged thereon. We, therefore, uphold the duty demands together with interest but set aside the penalties imposed on the ground that the penalty is not warranted as the assessees received and paid the duty on the transaction value and the demands are also within the normal period of limitation. - SC dismissed the appeal on the ground of delay of 245 days.
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2015 (6) TMI 908
Classification of product part of illuminated signs - Chapter sub-heading 9405.90 or under heading No. 49.01 - Held that:- We respectfully agree with the view expressed by this Court in the decision of Commissioner of Central Excise, Mumbai v. Tanzeem Screen Arts [2008 (12) TMI 473 - CESTAT, MUMBAI]. Therefore, we allow this appeal and remand the matter to the Tribunal for fresh disposal in accordance with law as expeditiously as possible, at any rate, within six months from the date of receipt of copy of the order of this Court. All the contentions of both the parties are left open.
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