TMI Tax Updates - e-Newsletter
June 5, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Rejection of the refund claim - where the service tax has been paid under protest, the question of time bar does not arise - Tri

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• TDS u/s 194C on Vehicle Hire Charges & Loading and Unloading Charges is required to be deducted even in case of oral contract also - HC

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• TDS on provisions - adhoc provision reversed in the next year & actual expenses booked after TDS compliance -Assessee is not in default -Tri

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Articles

1. NCLT & NCLAT – OK NATIONAL TAX TRIBUNAL – NOT OK WHY?

   By: DR.MARIAPPAN GOVINDARAJAN

2. Trading activity is an exempted activity as such included in the negative list. Is it a benefit to the business fraternity or additional liability?

   By: SAKTHIVEL PONNUSWAMY

News

1. RBI Reference Rate for US $

2. India Signs Legal Agreement with the World Bank for IBRD Loan of US$ 4oo Million for Tamilnadu Sustainable Urban Development Project

Notifications

Customs

1. 50/2015 - dated 3-6-2015 - Cus (NT)

Regarding Inauguration of border haat at Kamalasagar Tripura by the Hon'ble Prime Minister of India

DGFT

2. 09/2015-2020 - dated 4-6-2015 - FTP

Amendment in Para 3.24 (j) of Chapter-3 of FTP 2015-2020

3. 08/2015-2020 - dated 4-6-2015 - FTP

Amendement in Paragraph 2.06 regarding Mandatory documents.

Income Tax

4. 45/2015 - dated 22-5-2015 - IT

Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for avoidance of double taxation and prevention of fiscal evasion with foreign countries – Denmark

Circulars / Instructions / Orders

Service Tax

1. 184/3/2015-ST - dated 3-6-2015

Clarification on rate of service tax on restaurant service

DGFT

2. 16/2015-2020 (RE-2015) - dated 4-6-2015

Amendement in FTP 2015-20

3. 17/2015-2020 (RE-2015) - dated 4-6-2015

Amendments to Handbook of Procedures of FTP 2015-2020

4. 18/2015-2020 (RE-2015) - dated 4-6-2015

Amendment in Para 2.84 of Chapter 2 of HBP 2015-2020

Highlights / Catch Notes

Income Tax

• Court Rules TDS Must Be Deducted on Vehicle Hire and Loading Charges u/s 194C of Income Tax Act.

  Case-Laws - HC : TDS u/s 194C - Disallowance of 'Vehicle Hire Charges' and 'Loading and Unloading Charges' - Looking to the provisions of Section 194C of the Income Tax Act, 1961 if the amount is paid in pursuance of the contract – which may be oral also, Section 194C is applicable - TDS required to be deducted - HC
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• ITAT Rules: Section 35AB Cannot Limit Deductions for Technical Know-How Payments; Deductions Available Pre-35AB Introduction.

  Case-Laws - HC : Payment of technical know how - ITAT deleting the disallowance u/s 35AB - Deduction on such expenditure was available even before the introduction of section 35AB of the Act and such deduction cannot be curtailed or limited by applying section 35AB - HC
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• Court Rules Dry Docking Expenses as Operational, Not Capital, for Oil Exploration Vessels and Rigs Maintenance.

  Case-Laws - HC : Dry Docking Expenses - The maintenance of vessels and rigs is a sine-qua-non for carrying on its business of exploration and production of oil - the opinion that AO was not right in disallowing the expenditure as capital expenditure - HC
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• Court Rules Losses from Non-Eligible Unit Can't Offset Profits of Eligible Unit u/s 10A Tax Benefits.

  Case-Laws - HC : Set off of losses of the amorphous division against the profit of the other Units - the loss making unit claimed benefit under Section 10A whereas the Mumbai Unit was not an eligible unit - set off not allowed - HC
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• Court Rules No Default for Initial Non-Deduction of TDS on Year-End Provisions; Compliance Met with Actual Expenses.

  Case-Laws - AT : TDS on provisions made at the end of the year - adhoc provision so made was reversed in the succeeding year in which actual expenses were booked under specific heads and TDS compliance was also made - Assessee cannot be treated as in default - AT
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• Revision u/s 263 Invalid; Interest Deduction u/s 57(iii) for Fixed Deposits Upheld.

  Case-Laws - AT : Revision u/s 263 - assessee borrowed funds on interests, the same was kept in fixed deposit. Out of the interest received from FD’s, assessee paid interests on borrowed funds, which was allowable u/s 57(iii) - revision to disallow the same is not valid - AT
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• DRP's Findings on AO's Transfer Pricing Adjustment Deemed Insufficient and Unsustainable in ALP Case.

  Case-Laws - AT : Transfer pricing adjustment - ALP - The Ld. DRP has simply mentioned that the AO has given cogent and detailed reasons for the same. In our considered opinion, the finding given by the Ld. DRP is not a speaking one and is not sustainable in the eyes of law - AT
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Customs

• Lower Appellate Authority Must Follow Natural Justice in Valuation Increase of Imported Goods in Related Party Transaction.

  Case-Laws - AT : Valuation of imported goods - related party transaction - differential customs duty - Lower Appellate Authority (LAA) should follow principles of natural justice before proposing for enhancement of value from 39% to 65.125% - matter remanded back - AT
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Service Tax

• Advisory Services Rendered from India to Australia Confirmed as Export, Eligible for Refund u/s 2(6.

  Case-Laws - AT : Denial of refund claim - Export of services or not - providing advisory services to M/s. AMP Capital (Australia) - appellant has provided the services from India and the same was used outside India. Accordingly it qualifies as 'export of services' and refund is admissible - AT
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• Appellate Authority Oversteps by Rejecting Service Tax Refund; Time Bar Inapplicable for Taxes Paid Under Protest.

  Case-Laws - AT : Rejection of the refund claim - service tax was paid under protest - appellate authority has gone beyond the adjudication order and SCN and taken relevant date as the date of re-submission of the refund claim - where the service tax has been paid under protest, the question of time bar does not arise - AT
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• Stay Granted on Holiday Voucher Accommodation Classification; Not Business Auxiliary Service per Service Tax Rules.

  Case-Laws - AT : Activity of providing accommodation on the basis of holiday voucher issued by their corporate clients - prima facie activity undertaken by the applicant does not qualify under the category of Business Auxiliary Service - stay granted - AT
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Central Excise

• Zn-Dross Deemed Excisable: High Zinc Content Makes It a Marketable Good in Galvanized Tube Manufacturing.

  Case-Laws - HC : Whether "Zn-dross" is excisable goods or not - Held Yes - Zinc content is more than 96% in a "Zn-dross" which is a byproduct of main manufacturing process of galvanized tubes and this by-product viz. "Zn-dross" is a commercially another item, which is saleable and purchasable in a market - HC
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• Appellants Qualify for Concessional Duty on DTA Goods as 100% EOU Without Imported Materials under Notification No. 23/03-C.E.

  Case-Laws - AT : 100% EOU - DTA clearance - appellants did not use any imported raw material in the manufacture of polished granite slabs during the material period and hence were eligible for the benefit of concessional rate of duty under Notification No. 23/03-C.E - AT
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• Permission Denied to Store Excisable Goods Outside Factory Without Duty u/r 4(4) of Central Excise Rules 2002.

  Case-Laws - AT : Warehousing - Rejection of request for permission under Rule 4(4) of Central Excise Rules, 2002 to store excisable goods out side the factory premises without payment of duty - goods were not notified - permission denied - AT
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Case Laws:

• Income Tax

• 2015 (6) TMI 124
  Loss incurred on trading in futures & options on MCX - speculation loss OR business loss - Benefit of Section 43 - Held that:- For the transactions, which were under consideration in that case, were held to be not of speculative nature under the provisions of clause (d) of the proviso to Section 43(5) of the Act and the said case relates to assessment year 2007-08. The transactions entered into by the assessee after insertion of clause (d) of the proviso to Section 43(5), were held to be of non-speculative nature as there was a provision on the statute. However, in the present case, when the assessee carried out these transactions, there was no existing provision in the statute in the shape of clause (e) of the proviso to Section 43(5). In the case of CIT Vs. Nasa Finelease Pvt. Ltd. (2013 (9) TMI 733 - DELHI HIGH COURT), the case relates to proviso (d) to sub-section 5 of Section 43 of the Act and the said insertion was made by the Finance Act, 2005 and the National Stock Exchange and Bombay Stock Exchange, through which the assessee in that case had carried out the transaction were notified on 25th January, 2006. It was the case of the assessee that the transaction conducted by it from July 2005 to September, 2005, cannot be rejected for the benefit of proviso (d) to sub-section 5 of Section 43(5) as there was a provision on the statute in the shape of clause (d). The lapse in the issue of notification etc. was only on account of delay by CBDT. It is in these circumstances, the Hon’ble High Court has upheld the order of the Tribunal vide which the relief was given to the assessee. Thus, in that case, there was a provision on the statute under which the assessee sought the benefit. However, in the present case, as mentioned earlier, provisions of clause (e) of the proviso to Section 43(5) did not exist during the period when the assessee carried out the transactions. Thus the assessee is not entitled to claim the benefit of clause (e) of the proviso to Section 43(5) of the Act - Decided against assessee.

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• 2015 (6) TMI 123
  Disallowance of interest for non-deduction of TDS u/s. 194A invoking the provision of section 40(a)(ia) - Held that:- In order to provide clarity regarding discharge of tax liability by the resident payee on payment of any sum received by him without deduction of tax, it proposed to amend section 201 to provide that the payer who fails to deduct the whole or any part of the tax on the payment made to a resident payee shall not be deemed to be an assessee in dealt in respect of such tax if such resident payee. (i) Has furnished his return of income under section 139 ; (ii) Has taken into account such sum for computing income in such return of income ; and (iii) Has paid the tax due on the income declared by him in such return of income, and the payer furnishes a certificate to this effect from an accountant in such form as may e prescribed. The date of payment of taxes by the resident payee shall be deemed to be the date on which return has been furnished by the payer.It is also proposed to provide that where the payer fails to deduct the whole or any part of the tax on the payment made to a resident and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the such resident, the interest under section 201(1A)(i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident payee.These amendments will take effect from 1st July, 2012. In order to rationalize the provisions of disallowance on account of non-deduction of tax from the payments made to a resident payee, it is proposed to amend section 40(a)(ia) to provide that where an assessee makes payment of the nature specified in the said section to a resident payee without deduction of tax and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the payee, the, for the purpose of allowing deduction of such sum, it shall be deemed that the assessee had deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. These amendments will take effect from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-14 and subsequent assessment years. The insertion of second proviso to sec. 40(a)(ia) of the Act is curative and it has retrospective effect w.e.f. 1st April, 2005, being a date from which Sec. 40(a)(ia) of the Act was inserted by the Finance (No. 2) Act, 2004. Thus that matter needs fresh adjudication in the light of the fact that the AO will carry out necessary verification in regard to related payments having been taken into account by the recipient in computation of its income and verification of payment of taxes in respect of such income and also filing of income tax return by the recipient. In term of the above, the second aspect argued by Ld. counsel is restored back to the file of the AO and assessee will provide all the details in terms of second proviso to sec. 40(a)(ia) of the Act. - Decided in favour of assesse for statistical purposes. Disallowance of expenses - Held that:- The disallowances were made by the AO and confirmed by CIT(A) on the above disallowances @ 20% is excessive, thus the disallowances be restricted @ 10% of the expenses.

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• 2015 (6) TMI 106
  TDS u/s 194C - Disallowance of 'Vehicle Hire Charges' and 'Loading and Unloading Charges' - there was no contract - Tribunal deleted the entire addition - Held that:- The respondent-assessee is a transporter and engaged in transporting of goods mainly through hired vehicles. Heavy vehicles have been hired by the respondent. It further appears that the respondent-assessee is not only paying vehicles hire charges, but, he is paying entire vehicles running expenses such as cost of diesel and lubricants, labour charges, repair and maintenance charges which mainly comprising replacement of spare parts, tyres and tubes, batteries, engines, motors auto body, leaf spring and other general repairs and maintenance and also towards loading and unloading charges. These are the payments made under the different major heads by the respondents during the financial year 2008-2009. Thus, it appears that he is not a broker at all who is earning Rs. 150-200 per truck as argued out by the respondent-assessee. Huge amount has been paid in cash for vehicle hire charges.All the aforesaid payments are exceeding the limits of Rs. 20,000/- per day and Rs. 50,000/- during the financial year 2008-2009. This payment is also in breach of section 40(A)(3) of the Income Tax Act, 1961. The assessee is seeking deduction of this amount from taxable Income u/s 37 of the Income Tax Act, which is not permissible, looking to Section 194C of the Act, 1961 to be read with Section 40(a)(ia) of the Act , 1961. The respondent-assessee looking to the books of accounts have made the payment towards labour charges, repair and maintenance as well as towards the loading and unloading. Thus, the assessee is not a broker at all, but, is more than a broker. Broker will never pay the repair and maintenance as happened in this case. Payments have been made for spare parts, tyres and tubes, batteries, for engine, for motors auto body, for leaf spring etc. during the financial year 2008-09. Looking to this aspect of the matter, no error was committed by the Income Tax Commissioner, while dismissing the appeal preferred by the respondent-assessee. Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi has failed to appreciate the cumulative effect of the evidences on record. The respondent-assessee has paid loading and unloading charges of Rs. 17,60,600/- to various parties on different dates. The aforesaid amount of Rs. 12,76,700/- out of Rs. 17,60,600/- cannot be allowed to be deducted from the income of the respondent-assessee as TDS has not been deducted under Section 194C to be read with Section 40(a) (ia). Looking to the provisions of Section 194C of the Income Tax Act, 1961 if the amount is paid in pursuance of the contract – which may be oral also, Section 194C is applicable. In the facts of the present case when aforesaid huge amount is paid towards vehicle hire charges in one year and also towards loading and unloading charges huge amounts is paid in cash. TDS ought to have been deducted before making such payments by the respondent to his sub contractors and as this TDS has not been deducted, the amount paid towards vehicle hire charges and amount paid towards loading and unloading charges which are at Rs. 98,76,419/- and at Rs. 12, 76,700/- is not deductable from the taxable amount u/s 40(a)(ia) of the Income Tax Act. Tribunal was not justified in deleting the entire addition made on account of 'Vehicle Hire Charges' & 'Loading and Unloading Charges' ignoring the categorical finding of the CIT(A) that there was a contract between the parties and Assessee was liable to deduct TDS - Decided in favour of revenue.

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• 2015 (6) TMI 105
  Payment of technical know how - ITAT deleting the disallowance u/s 35AB - whether provisions contained in section 35AB would cover also revenue expenditure? - Held that:- As Apex Court in Commissioner of Income Tax v. Swaraj Engines Ltd. [2008 (5) TMI 257 - SUPREME COURT] decision would suggest that for determining whether certain expenditure would fall within section 35AB or not, it would be important to examine the nature of the expenditure. If it is found that the same is revenue in nature, the question of applicability of section 35AB of the Act would not arise. On the other hand, if it is found to be capital in nature, then the question of amortization and spreading over, as contemplated under section 35AB of the Act would come into play. The provisions of section 35AB of the Act can apply only in case of capital expenditure and of course, provided the conditions set out therein are fulfilled. In such a case, during the period when section 35AB remained in operation, the assessee could claim benefit thereof. However, such provision would not apply to a revenue expenditure even if the same was incurred for acquisition of technical knowhow. Deduction on such expenditure was available even before the introduction of section 35AB of the Act and such deduction cannot be curtailed or limited by applying section 35AB. In that view of the matter, taking such an expenditure out of section 37(1) of the Act, would not arise.Before closing, we may clarify that in the present case, the Assessing Officer himself proceeded on the basis that the expenditure was revenue in nature. In that view of the matter, the interpretation that we have adopted would apply and the case of the assessee would not fall under section 35AB of the Act. - Decided in favour of the assesse.

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• 2015 (6) TMI 104
  Dry Docking Expenses - revenue v/s capital - Held that:- According to the accepted principles, capital expenditure is something which is spent once for all, while revenue expenditure is that which has to be incurred from year to year. If the expenditure is to bring into existence or advantage for the enduring profit of the business, then expenditure may be capital in the nature but where the expenditure has direct nexus, connection or relation to the carrying on or conducting the business of the assessee, it must be recorded as an integral part of profit making process and hence revenue in nature. The maintenance of these vessels and rigs is a sine-qua-non for carrying on its business of exploration and production of oil. In the case of the appellant, expenditure was claimed as revenue. Therefore, the AO was not right in disallowing the expenditure as capital expenditure. - Decided against revenue.

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• 2015 (6) TMI 103
  Replantation subsidy received from Tea Board - whether is to be taken into consideration for computing the profits of eligible business for the purpose of determining the deduction under Section 32AB ? - Held that:- In the present case, the Tribunal had found that the assessee was not entitled to deduction under section 32AB in respect of income from house property, dividend income, bank interest and long-term capital gains as these incomes did not form part and parcel of the business carried on by the assesse. It cannot be disputed that all the heads of income which fell for consideration in that case were chargeable to tax. Whereas we are concerned with the income which is not chargeable to tax, therefore, that judgment of Britannia Industries Ltd. [2004 (9) TMI 90 - CALCUTTA High Court] has no manner of application. In any case, the assessee cannot be heard to say that he should be allowed double deduction as held by the Apex Court in the case of Escorts Ltd.(1992 (10) TMI 1 - SUPREME Court). The submission as regards tax effect is also without any substance because the appeal preferred by the Revenue indeed related to other questions as indicated above but the appeal was admitted with regard to this question. Therefore, it cannot be said that even under section 268A and assuming everything in favour of the assessee, the appeal was incompetent going by the circular issued by CBDT, which was in force at the time when the appeal was preferred. - Decided in favour of revenue.

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• 2015 (6) TMI 102
  Eligibility of deduction under Section 80IA - Tribunal allowed the claim - whether the generation unit is only the extension of existing business of the assessee and there was no business activity on the part of the undertaking (power generation) because? - Held that:- As regards the first question, Mr. Khaitan, learned Senior Advocate wanted to file a written notes of submissions. We have, therefore, reserved our judgment on the first question, which we propose to deliver soon after the note by Mr. Khaitan and counter note, if any, by the learned advocate for the revenue are filed. Such note and counter note, if any, have to be filed on or before the first working day after the summer vacation. Disallowance of depreciation on capitalization of foreign gain/loss - Tribunal deleted the addition - Held that:- As appear from the submissions advanced by the assessee himself that the claim could not have come within the four corner of Section 43A. Therefore, the claim for depreciation was altogether bad and illegal. The assessee did not incur any loss arising out of fluctuations in the exchange price. The assessee, on the contrary, claims to have incurred the expenditure of a sum of Rs. 49,62,133/- because it had got to get rid of the forward contracts which it had entered into for the purpose of protecting itself from the fluctuations of the foreign exchange.Therefore, the assessee might have claimed it as an expenditure which could have been considered in accordance with law. But there was no case for any claim being put forward on account of depreciation. - Decided in favour of revenue. Depreciation on forklift trucks - Tribunal allowing depreciation @100 - Held that:- Electrically operated vehicles including battery power or fuel cell powered vehicles are entitled to 100% depreciation under Appendix I, Part-A, Item III(3)(xiii)(o) of the Income Tax Rules, 1962. Therefore, the question is answered in the negative and against the revenue. Addition on account of advances written off by treating it as revenue in nature - Tribunal deleted the addition - Held that:- The fact that the advances were made for purchasing the raw material made it an expenditure of a revenue character and, therefore, that was deductible. In the case before us the finding of fact is that the expenditure was incidental to the business. Therefore, the expenditure partook the character of revenue expenditure which is allowable deduction - Decided against the revenue

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• 2015 (6) TMI 101
  Revision u/s 263 - payment of interest was in accordance with the provisions of Section 40(b)(iv) - Held that:- In view of the fact that the order dated 02.01.2012 has attained finality, it would in any event not be possible to proceed any further in the parallel proceedings under section 263 of the Act. The observations in the order dated 02.01.2012 regarding the validity of the payment of interest by the respondent/assessee have also attained finality. The appellant can not succeed in the proceedings under section 263 only by an order and upon a finding which would be contrary to and in conflict with the findings and the decision dated 02.01.2012 of the C.I.T. (A) in the appeal filed by the respondent against the order of assessment dated 03.07.2007. This would be impermissible as two parallel proceedings cannot be allowed against the same assessment order.

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• 2015 (6) TMI 100
  Set off of losses of the amorphous division against the profit of the other Units - Held that:- The Court after analyzing all the decisions was of the opinion that previous ruling in Tei Technologies (2012 (9) TMI 47 - DELHI HIGH COURT) that set off is impermissible was justified. In these circumstances, the reliance placed by the assessee, upon the aforesaid circular is unpersuasive. Decided in favour of the Revenue. Set off of the loss claimed by the Bangalore Unit from the profit of the Mumbai Unit - the loss making unit claimed benefit under Section 10A whereas the Mumbai Unit was not an eligible unit - Decided in favour of the Revenue as relying on CIT vs. Kei Industries Ltd [2015 (3) TMI 618 - DELHI HIGH COURT]

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• 2015 (6) TMI 99
  Non-service of notice or otherwise under Section 143(2) - Held that:- The decision of the Tribunal to remand the matter on the limited issue of giving findings of fact appears to be unassailable considering that a pure question of law recently settled by the Supreme Court in the case of Assistant Commissioner, Income Tax & another Vs. Hotel Blue Moon & Ors: [2010 (2) TMI 1 - SUPREME COURT OF INDIA] has been raised by the assessee before the Tribunal but there being no finding of fact on the question of valid service of notice under Section 143(2) within the period of limitation provided under the Act, the said pure question of law could not have been decided in the absence of first there being finding of fact regarding the service or non-service of notice under Section 143(2) of the Act. No ground to interfere with the order of the Tribunal

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• 2015 (6) TMI 98
  Transfer pricing adjustment - ALP - excluding Vishal as a comparable - Held that:- Merely because the assessee had included a comparable in its TP documentation, it could not be debarred from seeking rejection of that company at a later stage of assessment appellate proceedings. Applying the same principle, the assessee pleads to consider the aforementioned reasons for excluding Vishal as a comparable. Further, under TNMM, minor differences in the business profile of the appellant and the comparables would be evened out. However, selecting only few comparables from the entire comparable set would defeat the meaning of application of TNMM as the most appropriate method. Thus respectfully following the precedents of the Tribunal in the case of M/s TNS India Pvt. Ltd. vs. Addl. CIT Assessment Year 2006-07 (2014 (10) TMI 504 - ITAT HYDERABAD) and M/s Google India Pvt. Ltd. vs. DCIT (2013 (3) TMI 172 - ITAT BANGALORE) we direct the AO to exclude M/s Vishal Information Technologies Ltd. from the list of comparables. - Decided in favour of assesse.

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• 2015 (6) TMI 97
  Release of reward money of the petitioner - petitioner, who is an alleged informer of the search proceedings in the matter of Jai Singh Thakur & Sons, Poanta Sahib, District Sirmour, Himachal Pradesh - Held that:- It is a fit case whereby the petitioner is entitled for the said relief, as per Clause 13.1 of the guidelines titled as 'Guidance for Grant Of Rewards To Informants, 1993' issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. The said clause provides that the authority competent to grant reward may grant the same to the extent of 10% of the extra income tax, wealth tax, gift tax and estate duty, levied and actually realised. A ceiling of Rs. 5 lacs has been fixed with the proviso that the same would go upto 10% of the extra tax actually realised, which was liable to be waived in suitable cases, after getting approval of the Full Board. The respondents cannot be permitted to take a summersault and now, submit that on the basis of lack of specific information, the petitioner was not entitled for the reward money, as has been laid down in the guidelines, as noticed above. The purpose of the guidelines cannot be frustrated by taking such a narrow view. Rather, apart from the sum of Rs. 5 lacs which the petitioner is entitled to after adjusting the sum of Rs. 80,000/- already received, this Court is of the opinion that keeping in view the benefits which have accrued to the Department in view of the information received, as noticed in the communication above, it would be a fit case whereby the competent authority, is liable to consider whether reward money upto the ceiling of 10% of the tax levied, can be granted. Accordingly, the present writ petition is allowed. Respondent No.2 shall ensure that the balance amount of Rs. 5 lacs, after adjusting a sum of Rs. 80,000/- already received, is paid to the petitioner, within a period of 2 months from today. Regarding the balance claim of 10%, as per the proviso, the case will be forwarded to the competent authority and decision would be taken on the said case, within a period of 3 months, thereafter and the same be communicated to the petitioner.

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• 2015 (6) TMI 96
  TDS on provisions made at the end of the year - The assessee claimed that in number of cases, the exact payees and the amounts payable to them could not be identified before closure of books and in the absence of any identified payees, the provisions of TDS were not applicable - Held that:- adhoc provision so made was reversed in the succeeding year in which actual expenses were booked under specific heads and TDS compliance was also made - We find no merit in the orders of authorities below that the assessee had defaulted in not deducting the tax at source out of such amounts due to non-existing payees and hence, had defaulted under section 201(1) of the Act and also interest was chargeable on such demand under section 201(1A) of the Act. Also see IDBI Vs. ITO (2006 (7) TMI 248 - ITAT BOMBAY-H ). However, for part of the amount reversed, assessee failed to reconcile the balance of Rs. 14 lakhs, hence the assessee is in default for non-deduction of tax in respect of the above said balance amounts and the Assessing Officer is directed to work out the demand under section 201(1) of the Act and also charge interest under section 201(1A) of the Act. - Decided partly in favour of assesse.

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• 2015 (6) TMI 95
  Sale of shares - business profits or short term capital gains - Held that:- Gains derived from the purchase and sale of shares by the assessee is rightly offered to tax under the head capital gains and not business income. The facts show that out of the total short term capital gain of Rs. 1,75,51,496/- the undisputed fact is that an amount of Rs. 1,39,41,555/- was earned on shares which were held by the assessee for more than 30 days. In fact short term capital gain of Rs. 83,56,196/- was earned on shares which were held for more than 4 months. Similarly the assessee earned capital gains of more than Rs. 40 lakhs for shares which were held for more than 5 months. This is not a characteristic of a trader. There are no borrowed funds. The assessee has always classified the purchases as investments in its books of accounts. In the earlier year the assessee has disclosed capital gains and the AO in the order passed u/s 143(3) accepted the same. On this factual matrix we agree with the contentions of the Ld.Counsel for the assessee that the gains in question cannot be assessed under the head income from business. - Decided in favour of assesse. Disallowance of expenditure under Section 14A - whether disallowance is excessive and unreasonable? - Held that:- Contention of the assessee is not acceptable that the disallowance restricted and upheld by the CIT(A) was incurred for the maintenance of the legal existence of the assessee company when the assessee company is earning exempt dividend income of Rs. 17,27,369 on the average investment of Rs. 32.81 crore, then the disallowance of Rs. 1,65,196/- under section 14A r/w Rule 8D(iii) being the actual expenses claimed by the assessee cannot be held as unjustified. It is pertinent to note that while the company was created for the purpose of real estate business and had not conducted any business in this regard, then the huge exempt dividend income earned from huge average investment of Rs. 32.8 crore cannot be ignored. On the basis of above noted fact, we safely conclude that the legal existence of assessee company during the year under consideration was maintained for the purpose on investments and as such no other business activity was conducted by the assessee during the period. Hence, in our considered opinion, in this situation there is no requirement of bifurcation of claimed expenses viz. for maintaining the legal existence of company and for making investments in shares. At the same time, we are inclined to hold that the CIT(A) was quite justified and reasonable in restricting the amount of disallowance to the amount of expenses claimed by the assessee - Decided against assesse. Loss on sales of shares - whether loss was also business loss and was to deducted from the total income from business? - Held that:- As per calculation of income submitted along with return of income available at page 20 of the paper book, we note that the assessee has shown long term capital loss of Rs. 66,59,311. From bare reading of assessment order, we observe that the issue has not been properly and expressly addressed by the AO while framing assessment order and this issue was not raised by the assessee before the CIT(A) in the first appeal. Hence, we are of the considered view that the contention of the assessee cannot be accepted as the assessee itself has made the claim that the entire income/loss from sale of shares is either long term capital gain or loss or short term capital gain or loss and there was no other business activity of the assessee company during the period under consideration. Hence, as per settled legal position of the Act, the long term capital loss on sale of shares during the year under consideration cannot be deducted and allowed against the business income of the assessee. The AO is directed to provide reasonable treatment to this long term capital loss as per relevant provisions of the Act. - Decided against assesse.

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• 2015 (6) TMI 94
  Addition u/s 92 - CIT(A) upholding the arm's length brokerage rate for yarn product at 2% as determined by Ld. AO as against 0.75% actually received by the appellant - whether 2nd proviso to section 92C(3) merely requires an "opportunity of being heard" to be given to assessee and nothing beyond that as held by CIT(A) - Held that:- Since the costs of all the raw materials is picked up by the assessee for all effective purposes. the transaction is actually between the assessee and the Diageo group concerns supplying the raw material to the CBU, and since the assessee as also these vendors are admittedly under the control of Diageo PLC, the transactions are clearly between the associated enterprises The objection raised by the assessee to the effect that the transactions of imports of raw material by the CBU, i. e. Konkan Agro, from Diageo group entities cannot be treated as international transactions between the associated enterprises, therefore, is rejected. There is no denial of the fact that Mr. Govind Karunakaran is Director and 99.9% shareholder of the assessee company and also is a Director and Chief Operating Officer of Kaybee Exim Pte Limited, Singapore. Therefore, Mr. Govind Karunakaran is not only participates in management of both the companies by he is holding the key position in the management of Kaybee Exim Pte Limited, Singapore and is part of decision making process of the said company since 1996. Shri Govind Karunakaran is a common director in both the company and participating in the management of both the companies not for the name sake but he is holding the key position in taking decision being a Chief Operating Officer of Kaybee Exim Pte Limited, Singapore and almost the entire shareholding of the assessee company, therefore, the condition of one enterprise participates directly or indirectly or through one or more intermediaries in its management or control or capital as prescribed under clause (a) & (b) of s.s. (1) of section 92A is satisfied. Hence, the assessee and Kaybee Exim Pte Limited, Singapore falls under the meaning of AEs as per the provisions of section 92A. - Decided against assesse. TP adjustment on account of service charges/commission received by the assessee in respect of procurement of yarn on behalf of Kaybee Exim Pte Limited, Singapore (AE) - held that:- The arm’s length price in relation to an international transaction shall be determined by any of the method prescribed u/s 92C of the Act, therefore, in order to determine the arm’s length price, the comparable uncontrolled price has to be considered as per the appropriate method applied in a particular case. In the case in hand, the A.O. has not determined the arm’s length price by taking into consideration an uncontrolled price or uncontrolled transaction. The A.O. has adopted the price being the commission received by the assessee in respect of textile procurement from its AE for the purpose of arm’s length commission for procurement of yarn, therefore, the price/transaction adopted by the A.O. is not an independent or uncontrolled price or transaction but it was a controlled transaction between related parties. Hence, the arm’s length price adopted by the A.O. is not sustainable as per the provisions of the Act. - remit the issue to the record of the A.O. for determination of the same afresh - Decided in favour of assesse for statistical purposes. Disallowance of society charges and property tax - as per AO the lease agreement is silent on this ground - Held that:- When the assessee has made the payment of property tax and society charges for the premises used for the business of the assessee, then, in the absence of any facts or material brought by the A.O. on record that the said payment was made by the assessee contrary to the terms and conditions of the agreement or on behalf of the owner of the property, then, the A.O. has proceeded only on the assumption and not on any tangible material or fact. Though the issue was decided by the Commissioner for the A.Y. 2004-05, however, the said order was not challenged before the Tribunal. We find that neither the A.O. has conducted the enquiry nor the assessee has produced any evidence in support of the claim that this payment was made by the assessee as per the mutual understanding. This issue required proper examination and verification -remit the issue to the record of the A.O. for determination of the same afresh - Decided in favour of assesse for statistical purposes.

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• 2015 (6) TMI 93
  Revision u/s 263 - directing AO to compute book profit u/s 115JB of the Act - Held that:- . It is well known that ld. CIT can exercise power u/s 263 of the Act, on fulfillment of the twin conditions enshrined in the said provision cumulatively. The conditions are, an order sought to be revised must be erroneous as well as prejudicial to the interests of revenue. In absence of any one of the aforesaid conditions, exercise of power u/s 263 becomes invalid. In the present case, even assuming that there is an error in the assessment order as AO has failed to compute book profit u/s 115JB, it cannot be said that assessment order passed is prejudicial to the interests of revenue as the income determined under the normal provisions was much more than the book profit computed u/s 115JB of the Act. Therefore, as one of the conditions of section 263 is not fulfilled, exercise of power u/s 263 is not valid. Accordingly, we set aside the impugned order of ld. CIT and restore the assessment order. - Decided in favour of assesse.

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• 2015 (6) TMI 92
  Capital gain in respect of the development right of property - AO held that since the property was acquired from her late parents, therefore, the cost of acquisition would be taken at ‘Nil’ - Held that:- The consideration as stipulated in the development agreement was passed to the assessee only in the A.Y. 2006-07. The amount of Rs. 80,000/- was mainly to allow the developer to develop the said plot. As per the express terms of the agreement with the developer, the assessee in lieu of surrendering the rights to the developer was entitled for flat admeasuring 700 sq. ft free of cost . Thus, the consideration for the transfer of rights was handing over the flat. This transaction had taken place in the December 2005. Thus, we agree with the contention of the department that the long term capital gain will arise in the A.Y. 2006-07. Regarding cost of acquisition we agree with the contention of the learned counsel that the same cannot be taken at ‘Nil’, because the previous owner, that is, father of the assessee had acquired the property much before 01.04.1981. Thus the market value as on 01.04.1981 has to be adopted and accordingly the fair market value has to be adopted as on 01.04.1981. Since the department has not adopted any fair market value as on 01.04.1981, the fare market value as determined by the registered valuer as on 01.04.1981 appears to be correct. However, the AO shall examine the said value as determined by the registered valuer. Regarding the sale value for the purpose of determination of long term capital gain, the same also needs to be verified because the learned counsel before us has submitted that the stamp valuation authority has determined the stamp value of the flat at Rs. 4,43,500/-. Thus, the issue of determination of fair market value as on 01.04.1981 and the sale consideration in the A.Y. 2006-07 is set aside to the file to the AO who shall examine the contention of the assessee, then determine the long term capital gain. Claim of benefit u/s 54F has not been taken either before the AO or before the Ld. CIT(A). Therefore, being a legal claim, the additional ground raised by the assessee is admitted and the matter is restored back to the file of the AO, who shall examine the same and allow the claim of deduction/benefit in accordance with law - Decided partly in favour of assesse for statistical purpose.

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• 2015 (6) TMI 91
  Revision u/s 263 - AO failed to disallow the interest debited to the P&L a/c as as there was no income from business, the expenditure debited for Rs. 40,33,313 needs to be disallowed - Held that:- The issue has been subjected to scrutiny by the AO as it is part of the reasons recorded for reopening the completed assessment u/s 143(3) of the Act. The AO had come to the conclusion and gave the finding for the set off of interest payment of Rs. 40,33,313 from out of the interest income of Rs. 46,28,979 based on the facts examined by him in the course of assessment/reassessment proceedings. Explanation was submitted before the AO and the AO had applied his mind on the issue. It is only when there is non-application of mind to relevant material or incorrect assumption of fact or an incorrect application of law that the CIT can assume jurisdiction u/s 263 as held in the case of CIT vs. Jawahar Bhattacharjee (2012 (4) TMI 222 - GAUHATI HIGH COURT). Further, when two views are possible and when the AO takes one of the two views permissible in law to which the Commissioner does not agree with, it cannot be treated as erroneous and prejudicial to the interests of the Revenue as held by the decisions (i) CIT vs. Max India Ltd (2007 (11) TMI 12 - Supreme Court of India) and (ii) Malabar Industries Company Ltd (2000 (2) TMI 10 - SUPREME Court). Hence, the revisionary jurisdiction assumed by the CIT (A) is invalid. The facts in the present case was that the assessee borrowed funds on interests, the same was kept in fixed deposit. Out of the interest received from FD’s, assessee paid interests on borrowed funds, which was allowable u/s 57(iii). AO after examining this has allowed the same. It is CIT who wrongly considered the expenditure as business expenditure. See CIT vs. Taj International Jewellers (2010 (12) TMI 451 - Delhi High Court) - Decided in favour of assesse.

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• 2015 (6) TMI 90
  Addition made on account of commission / brokerage - assessee has failed to produce evidences to show that the deductors have reversed the entries wrongly made by them in their original TDS returns by way of its revision - CIT(A) deleted the disallowance - Held that:- CIT(A) did not commit any error in granting appropriate relief to the assessee. Right from the beginning it was the case of the assessee that it had earned total commission of Rs. 1,91,84,002/- from both the parties and confirmations were also submitted. The Assessing Officer disbelieved such contention of the assessee on the ground that the assessee failed to show as to whether entries made by those companies were reversed or not. If confirmations are filed by the assessee from the parties then without verifying the same the Assessing Officer could not add any further amount to the income of the assessee without discarding evidence submitted by the assessee in the shape of the confirmation. Later on the assessee was able to submit TDS certificate also in which correct amount was shown - Decided against revenue. Disallowances of various expenses - CIT(A) deleted the disallowance - Held that:- Disallowance deleted by learned CIT(A) is on the submissions and explanation submitted by the assessee and some of the disallowances have been upheld on the basis of estimate. Keeping in view of the entirety of the facts mentioned above and also fact that the assessee has shown net profit @ 78.92%and also fact that the Assessing Officer did not follow the aforementioned Instruction of CBDT, we are of the opinion that no interference is required in the order of learned CIT(A) so as to it relates to Ground 2 to 5 of the Departmental appeal. It may be mentioned here that the Department did not bring any material on record to suggest that findings recorded by learned CIT(A), are contrary to the facts narrated by learned CIT(A). - Decided against revenue.

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• 2015 (6) TMI 89
  Reopening of assessment - jurisdiction of the Officer for re-opening the assessment - Held that:- The notice was issued not in pursuant to this letter of the Addl. Commissioner but the notice was issued pursuant to the approval given by the CommissionerConsidering the factual matrix of the case in hand, in the light of the judicial decisions the sanction for issue of notice is not as per the provisions of the law. Thus we hold that the order made under section 143(3) of the Act r.w.s. 147 is without jurisdiction and accordingly quashed. See Anirudh Sinhji Karan Sinhji Jadeja Vs. State of Gujarat [1995 (8) TMI 308 - SUPREME COURT] - Decided in favour of assesse.

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• 2015 (6) TMI 88
  Transfer pricing adjustment - adjustment to the arm's length price of the 'international transactions' of call centre services - Held that:- DRP has not addressed any of the contentions raised by the assessee and has not given reasons or findings on the rejection of the comparables considered by the assessee. The Ld. DRP has simply mentioned that the AO has given cogent and detailed reasons for the same. In our considered opinion, the finding given by the Ld. DRP is not a speaking one and is not sustainable in the eyes of law. Therefore, in the interest of justice, we cancel the assessment order dated 19.10.2010 passed u/s. 143(3) r.w.s. 144C of the I.T. Act and remit back all the issues to the file of the Ld. DRP with the directions to properly consider and examine the issues in detail and give a finding on each of the contention raised by the assessee in its appeal and pass a speaking order thereon. - Decided in favour of assesse for statistical purposes.

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• 2015 (6) TMI 87
  Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- This is an admitted fact that assessee had not earned exempted income during the present year, therefore, following above judicial pronouncement in the case of Holcim India (P) Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] we hold that disallowance was not sustainable and, therefore, we dismiss ground - Decided in favour of assesse. Disallowance u/s 36(1)(iii) - CIT(A) deleted part addition - Held that:- The principle that follows when the sale proceeds, recoveries from the debtors and internal accruals etc. are deposited by the assessee in OD/CC account and the investment in assets is made which are not put to use in business, the disallowance of interest cannot be made only on the ground that the payments have been made from OD I CC account, provided the internal accruals are sufficient to meet the investments made in the assets. We find that Ld. CIT(A) has made a clear finding of fact that internal accounts of the assessee represented about 30% of value of fixed assets and, therefore, he had allowed relief to the extent of 30% and has upheld addition to the extent of 70% of disallowance. Ld. CIT(A) has passed a well reasoned and speaking order and, therefore, we are in agreement with his findings - Decided against revenue.

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• Customs

• 2015 (6) TMI 111
  Seizure of goods - Held that:- Once it is established that cheques in issue were not seized. Furthermore, return of cheques cannot, to my mind, stifle or impede investigation as is sought to be portrayed by Mr. Nijhawan. In the absence of power the respondent cannot withhold the cheques. - even if, one were to equate resumption with seizure (in so far as documents or things are concerned) the said power has to be exercised, with reasonable despatch. This is so as Section 110(3) of the Customs Act does not lay down any specific time frame, for which, seizure, can continue via-a-vis document or things. - respondent is directed to hand over the 14 cheques to the petitioner. The respondent will, however, before doing so obtain self attested photocopies of the cheques from the petitioner. The statement of the learned counsel for petitioner made before me that the petitioner will not dispute the veracity of the said cheques if they are used as relied upon documents, at any stage of proceedings by the respondent, is also taken note of. The petitioner will be bound by the statement. - Decided in favour of Appellant.

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• 2015 (6) TMI 110
  Waiver of pre deposit - mandatory pre deposit - applicability of amended provisions to the old matters - Held that:- the effect of the amendment cannot be restricted only for those appeals which are filed after 06.08.2014. Such a restriction will be violative of Article 14 of the Constitution of India and taking note off the amendment introduced from 6th August, 2014, interim protection has been granted provided the appellant deposits 10% of the adjudicated amount in terms of the amendment of Sec. 35F, recovery proceedings in furtherance thereto have been kept in abeyance and that has been relied upon by the coordinate Bench of this Court in DB Central Excise Appeal [2015 (4) TMI 463 - RAJASTHAN HIGH COURT]. - Partial stay granted.

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• 2015 (6) TMI 109
  Determination of valuation of imported goods - related party transaction - differential customs duty - held that:- DC (SVB) has finalized the valuation under Rule 2 (2) (i) (ii) ofo CVR and rejected their invoice value and ordered for 39% loading - LAA has held in the impugned order that rejection of the transaction by the adjudicating authority was right and further held that loading of 39% of the invoice value by the adjudicating authority is not correct and the correct loading should be 65.125%. We find the appellant's main contention before LAA is to set aside the loading of 39% ordered by adjudicating authority whereas the LAA before enhancing the percentage of loading from 30% to 65.125% ought to have given an opportunity to the appellant to put for their defence. Further, the appellants have submitted entire records of third party invoice which has not been taken into consideration - If the LAA wants to enhance the penalty, fine or demand any duty such order shall be passed only after the appellant is given notice. In the present case even though there is no demand of customs duty but by enhancing the value of loading from 39% to 65.125% which has extra duty liability on the appellants and the enhancement had direct bearing on the increase of duty. It is mandatory on the LAA to follow principles of natural justice before proposing for enhancement of value from 39% to 65.125% which the LAA has not followed in this case and the case needs to be remanded to LAA. Accordingly, impugned order is set aside and the matter is remanded to Commissioner (Appeals) with a direction to decide the issue on merits after giving sufficient opportunity to the appellant. The appellant is directed to co-operate with the proceedings and produce all the relevant documents before LAA. - Decided in favour of assessee.

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• Corporate Laws

• 2015 (6) TMI 108
  Transfer of shares - Section 399 of the Companies Act, 1956 and Regulation 44 of the Company Law Board Regulations, 1991 - Held that:- The contention of the appellants is that as on the date of filing of Company Petition before the Company Law Board the respondents were not shares holders, therefore, the petition is not maintainable. When the dispute is with regard to legally or illegally transfer of shares from the name of the respondents to the name of the appellants, the petition cannot be dismissed at threshold holding that such petition is not maintainable. Unless and until the opportunity is given to the respondents to show their shares have been illegally transferred to the name of the appellants, the petition cannot be dismissed at the thresh hold. In the light of the observation made by the Company Law Board at Para-11 of the order, we do not see any reason to interfere with the order of the Company Law Board. - Decided against the appellant.

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• 2015 (6) TMI 107
  Violation of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - Forfeiture of shares - Removal of name from Register of Members - Permanent injunction order to restrain from acquiring directly or indirectly equity in the Appellant Company - Jurisdiction of the CLB to entertain the Petition - Doctrine of abandonment, waiver and acquiescence - Held that:- I find enough force in the submissions advanced by the Ld. Counsel appearing for the Respondents that the CLB, in exercise of its rights and powers conferred upon it by virtue of the provisions contained in Section 59(4) of the Act, is not empowered to make investigation/enquiry into the allegation that the Respondents acting in concert have acquired shares in violation of the Takeover Code, and hence, the shares are liable to be forfeited and the Register of Members requires to be rectified under the said provisions by deleting the name of the Respondents there from. In my considered view, it is only the SEBI who has domain to enquire/investigate into as to whether the parties against whom the allegations have bee made, acting in concert, have acquired the shares more than threshold him prescribed under the provisions of the Takeover Code. In my view, the decisions, Kesha Appliances (P.) Ltd. v. Royal holdings Services Ltd. [2005 (11) TMI 261 - HIGH COURT OF BOMBAY ] , Azzilfi Finlease & Investments v. Ambala Sarabhai Enterprises [1999 (7) TMI 660 - COMPANY LAW BOARD, MUMBAI] , Redwood Holdings (P.) Ltd. v. Sandesh (P.) Ltd. [2002 (8) TMI 836 - COMPANY LAW BOARD, MUMBAI] relied upon by the Respondents' Counsel are squarely applicable to the Facts of the case in hand. In my considered view, on a careful analysis of the relevant provisions contained in the Takeover Code and Section 59(4) of the Act and upon a close scrutiny of the decisions cited above by the rival parties in support of their respective contentions, the legal position that emerges, in my opinion, is as follows - (i) where any acquirer(s) acquired impugned shares, which, ex-facie, are in violation of the Takeover Code, such acquisition shall be void and in that case no finding is required from the Competent Authority i.e. SEBI and in such case, the CLB by virtue of the powers conferred upon it under Section 59(4) of the Act, is empower to pass an order for rectification of Register of Members of a Company. - (ii) However, where the acquirer is more than one and there is allegation that the acquirers together, acting in concert, have acquired the shares in violation of the relevant provisions of the Takeover Code and the acquirers deny/rebut such allegation, then the question as to whether such acquirers have acquired the impugned shares, acting in concert is required to be investigated/enquired into by the SEBI and in case the Competent Authority/Adjudicator of the SEBI comes to the conclusion that the acquirers acting in concert, have acquired the shares, in that case, the company may refuse the registration of shares if such acquirers have sought for registration of the Impugned shares, and if their names are already entered in the Register of Members of the Company, they may approach the CLB for rectification of its Register of Members by deleting the names of such shareholders/members in respect of the impugned shares. In the present case, ex-facie there is no violation of the Takeover Code in view of the fact that each acquirer has acquired shares below 5% which is within the prescribed limit under the provisions of the Takeover Code. Further the Respondents have denied the fact that they acting in concert have acquired the impugned shares as alleged by the Respondents. Therefore, in my opinion, the Appellant is required to approach the Competent Authority of the SEB1 first, by way of filing a complaint in accordance with law. If such Competent Authority of the SEBI renders a finding to the effect that the Respondents, acting in concert, have acquired the shares-in-question, thereafter the Petitioner is entitled to approach the CLB seeking rectification of Register of Members of the Company. In my opinion, the CLB has no domain to entertain this Appeal in the present form for want of jurisdiction. The Appeal, therefore, deserves to be dismissed being pre-mature. In view of the foregoing discussions, I hold that the petition is barred by the provisions of Section 15Y and 20A of the SEBI Act. It deserves to be dismissed accordingly. Doctrine of abandonment, waiver and acquiescence - I have considered the submissions advanced on behalf of the Respondents. I respectfully agree with the contention of Mr. Chagla, Ld. Sr. Advocate that there can be no plea as to estoppel, waiver or acquiescence/ abandonment against the statutory provisions. However, I am not impressed with the submission advanced on behalf of the Appellant Company that the principles of waiver, acquiescence, estoppel and abandonment would not be attracted in the present case. In the present case, admittedly, the impugned shares were acquired from time to time by the Respondents since 2005 onwards within the knowledge of the company and its officers on the Board as shown by the Appellant in Chart- "C". The Company kept silent throughout during this period. It failed to assert its right at the proper opportunity and allowed the Respondents, shareholders to alter their positions from time to time. As indicated above, the Appellant Company did not raise this issue prior to filing of this petition, not even at the time of filing of the first Company Petition, being C.P. No. 111/2013, wherein the parties have jointly filed Consent Terms. It is a settled proposition of law that question "parties acting in concert" is a mixed question of fact and law. It is not a pure question of law. I have held here that the Competent Authority has to decide such question after due enquiry/investigation under the SEBI Act and Rules made there under to whom admittedly the Appellant Company did not approach till date. In these circumstances, it is difficult for me to accept the contention that doctrine of abandonment, waiver and acquiescence is not attracted in this case. However, having principally held that the petition itself is not maintainable due to lack of jurisdiction, I dismiss this petition accordingly. - Decided against the appellant.

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• Service Tax

• 2015 (6) TMI 122
  Denial of refund claim - Export of services or not - providing advisory services to M/s. AMP Capital (Australia) - Held that:- Services were carried out in India but the recipient is outside India and, therefore, the services provided by Indian entity deemed to be used by the person located outside India and, therefore, it satisfies the terms used "outside India" provided under the Export of Service Rules. Therefore, following the ratio of the above judgments it is absolutely undisputed that the appellant has provided the services from India and the same was used outside India. Accordingly it qualifies as 'export of services' and refund is admissible. - appellant is rightly entitled for the refund holding that the services provided by the appellant is export of services. Hence the impugned orders are not sustainable and the same is set aside. - Decided in favour of assessee.

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• 2015 (6) TMI 121
  Clearing and forwarding agency service - delcredere agent - Held that:- The appellant is found to be a delcredere agent who in the commercial world guarantees recovery of the debt. Even reading of the scope of the activities carried out by appellant as depicted in the appellate order does not appeal to common sense that the appellant carried out clearing and forwarding service when Department has not brought out which are the consignments he cleared and origin and destination of the goods for forwarding. - Decided in favour of assessee.

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• 2015 (6) TMI 120
  Rejection of the refund claim - service tax was paid under protest - Bar of limitation - Held that:- adjudicating authority has held that no service tax is payable for the period prior to 18.04.2006. It clearly evident from the above order that the appellants have paid the service tax amount of Rs. 18,24,156/- under protest on 14.08.2008. When the demand was dropped for the period prior to 18.04.2008, they are eligible for the consequential refund and they have rightly filed the refund claim on 05.12.2011, which is well within the time limit of one year from the date of order. Hence, the appellants are rightly entitled for the refund as the service tax was paid under protest and no time limit applies. - appellate authority has gone beyond the adjudication order and the show cause notice and taken relevant date as the date of re-submission of the refund claim and the appellate order is beyond the scope of adjudication order. - it is established from the records that the appellants have paid the service tax under protest, the question of time bar does not arise - Decided in favour of assessee.

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• 2015 (6) TMI 119
  Waiver of pre deposit - Activity of providing accommodation on the basis of holiday voucher issued by their corporate clients - Business Auxiliary service - Held that:- The applicant is engaged in the activity of providing accommodation on the basis of holiday voucher issued by their corporate clients by arranging of accommodation on the direction of their clients to the customers who win the vouchers. Admittedly, all these activities has been provided by the applicant after sale is effected by their clients. When sale has been effected by their client, therefore, the question of promotion their business does not arise. In these circumstances, prima facie we are of the view that the activity undertaken by the applicant does not qualify under the category of Business Auxiliary Service - All the activities referred by the Hon'ble High Court [2013 (1) TMI 304 - GUJARAT HIGH COURT ] with regard the promotion of sale but here the applicant is providing all services after effecting the sale. Therefore, the said case law is not relevant to the facts of this case. In these circumstances, the applicant has made out a prima facie case of complete waiver of pre-deposit of service tax, interest and penalties, therefore, we waive the requirement of pre-deposit of entire amount of service tax, interest and penalty and stay recovery thereof, during pendency of the appeal. - Stay granted.

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• Central Excise

• 2015 (6) TMI 116
  Duty demand - whether "Zn-dross" is excisable goods or not - Held that:- Petitioners have actually sold away this "Zn-dross" in open market for lakhs of rupees. These lakhs of rupees have been mentioned in all the four O-in-Os by the Assistant Commissioner of Central Excise, Jamshedpur. Therefore, "Zn-dross" is undoubtedly produced by these petitioners and they are produced as a by-product of galvanized tubes. Several times it happens that several by-products are also produced whenever main product is being manufactured Though the zinc dross produced by M/s Neepaz Tube Pvt Ltd had zinc contents more than 96 % in it, they cleared the same with-out payment of central excise duty and they neither reflected the production of zinc dross in their Daily Stock Account nor did they disclose this fact to the department through monthly ER-1 Return or through any other documents/submission. On the basis of specific classification of Zinc Dross in Central Excise Tariff with the amendment CETA, 1985 (Central Excise Tariff (Amendment) Act, 2004) wef 28.02.2005, an investigation was conducted by the department and sample of the zinc dross was drawn and tested and National Metallurgical Laboratory, Jamshedpur as regards to the recovery of percentage of zinc in the said zinc dross and it found to have contained 96.08 % of Zinc in it which is much more higher than the prescribed minimum percentage to qualify its place in tariff item No. 79020010 of Central Excise Tariff (Amendment) Act, 2004 w.e.f 28.02.2005 and thereby it is liable to Central Excise Duty @ 16 %Adv.” It is produced due to manufacturing process of galvanized tubes and it is commercially another item and as it is marketable, it is excisable goods. Thus, all the ingredients of Section 2(d) and 2(f) have been fulfilled by "Zn-dross". This item is, therefore, excisable and thus, no illegality has been committed by the Assistant Commissioner, Jamshedpur while passing order in O-in-O in all these four writ petitions. - "Zn-dross" has been sold away by these petitioners in the open market. There is definite sale value of the "Zn-dross" and, therefore, ad valorem duty is levied by the order of Assistant Commissioner of Central Excise, Jamshedpur and thus no illegality has been committed by the Assistant commissioner of Central Excise in passing Order-in-Originals. Zinc content is more than 96% in a "Zn-dross" which is a byproduct of main manufacturing process of galvanized tubes and this by-product viz. "Zn-dross" is a commercially another item, which is saleable and purchasable in a market. In the facts of the present case, actually it has been sold away by the petitioners worth rupees several lakhs, the “Zinc-dross” produced by these petitioners is undoubtedly arising out of manufacturing process and is undoubtedly excisable goods and, therefore, under the charging Section viz. Section 3 of the Central Excise Act, 1944 the central excise duty is rightly imposed and levied by the Union of India. - no reason to entertain these writ petitions - Decided against assessee.

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• 2015 (6) TMI 115
  Exemption notification No. 23/03 and 22/03 - EOU - clearance of DTA - Held that:- Notification exempt the goods when brought in connection with manufacture and packaging or production into EOU, it relates to the procurement of inputs, raw materials and capital goods for manufacture of finished goods by the EOU. Therefore, notification referred both in the show cause notice and in the impugned order not related to EOU clearance of finished goods into DTA market and not relevant to the payment of duty on the goods cleared by EOU to DTA. - Bench considered Notification No. 23/03-C.E. as well. It also took into account the Development Commissioner s clarification which was to the effect that the resins used by EOUs in the polishing of granite blocks were only consumables. We are in full agreement with the view taken by the co-ordinate Bench. Accordingly, it is held that the appellants did not use any imported raw material in the manufacture of polished granite slabs during the material period and hence were eligible for the benefit of concessional rate of duty under Notification No. 23/03-C.E. ibid. The demand of duty is not sustainable. The impugned order is set aside and the appeal is allowed. - Decided in favour of assessee.

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• 2015 (6) TMI 114
  Rectification of mistake - Notification No. 90/91-Cus dated 25/07/1991 - Invocation of extended period of limitation - Held that:- Notification referred to in the Tribunal order at para 15.2 of the Tribunal order is Notification No. 205/1988-CE dated 25/05/88 which granted exemption to wind mills and any specially designed devices which run on wind mills, at Serial No. 12 of the table to the notification. This notification was applicable to Central Excise. The notification referred by the Counsel is a Customs notification. - no error apparent on record - audit report only refers to parts of iron and steel and does not mention anchor rings. The assessee's profile now enclosed as exhibit with the ROM was not presented earlier. It is handwritten and does not bear the stamp/signature of the appellant as in the case of Exhibit "C". Here again we find no error in recording the order. - Rectification denied.

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• 2015 (6) TMI 113
  Denial of CENVAT Credit - Bogus invoices - Non receipt of goods - Held that:- Appellants availed CENVAT credit on the strength of 18 invoices issued by the manufacturers of articles of Copper. The suppliers stated that the vehicles were arranged by the appellant and they have not verified the vehicles numbers at the time of dispatch. They further stated that they were unable to produce the Lorry Receipts in the instant case as the appellant had arranged for the transportation of the goods. It is seen from the adjudication order that verification report from respective jurisdictional Central Excise authorities were received stating that invoices referred for verification were issued by the respective supplier on payment of duty mentioned therein. Thus, there is no dispute that the duty paying documents are genuine. It is also revealed from the records that the suppliers supplied the goods and the appellant arranged the transportation. Impugned order that the Commissioner (Appeals) observed that the appellant had not produced the Lorry Receipts of the same and the evidence of payments made to the transporters. It is noticed that the appellants produced the Cash Payment Vouchers of transportation of goods before the Tribunal. On perusal of the said evidence, I find that some cash payment vouchers were signed on proper Revenue stamp and also signed by other persons of the appellant Company. The learned Authorised Representative for the Revenue submitted that these documents were not placed before the lower authorities. In my considered view, the appellant should be given an opportunity to produce these evidences before the adjudicating authority, in the interest of justice. - Decided in favour of assessee.

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• 2015 (6) TMI 112
  Rejection of request for permission under Rule 4(4) of Central Excise Rules, 2002 to store excisable goods out side the factory premises without payment of duty - Held that:- It would be seen from the Rule 4 that Commissioner is empowered in exceptional circumstances having regard to nature of the goods and shortage of storage space at the premises of the manufacturer where the goods are made, permit a manufacturer to store his goods to any other place out side such premises, without payment of duty subject to such condition as he may specify. - It is also noted that the appellant is noncommittal about the period and would need permission atleast for two years. - When space is available near the BSR there is no reason not to construct the storage place there itself. Exception circumstances undoubtedly would imply temporary and brief period. It is also to be noted that even now appellant can store the goods in the proposed place but after payment of duty on provisional or final assessment basis. What appellant is trying out seek is to allow clearance of the goods without payment of duty outside the factory i.e. to warehouse and clearance from there. Admittedly goods are not notified under warehousing provisions, thus what appellant is trying to seek is benefit of warehouse provision in respect of goods which are not notified. It may be noted that in customs there is provision wherein importer can store any dutiable goods imported in the country in bonded warehouse without payment of duty. No such scheme exist for the goods produced in India. - Reasons explained as exceptional nature to grant permission under Rule 4(4) of the Central Excise Rules, 2002. - Decided against assessee.

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• CST, VAT & Sales Tax

• 2015 (6) TMI 118
  Invocation of extended period of limitation - Section 34 of the Haryana Value Added Tax Act, 2003 - Held that:- Had the present case involved the sale of goods to the said Nigams, it may have been a different matter, altogether. It was necessary for the Tribunal, however, to first decide the issue as to whether this case is similar to the other case for it is only in the event of that finding being in the affirmative that the revisional jurisdiction could have been invoked under the second proviso to Section 34. This issue, admittedly, has not been raised much less dealt with in the impugned order. We would have considered deciding this issue ourselves but for the fact that it was suggested that there may be certain other aspects regarding the constitution of these bodies that may also require consideration. - matter remanded back - Decided in favour of assessee.

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• 2015 (6) TMI 117
  Detention of vehicle - goods are transported from Tamil Nadu to Andhra Pradesh without valid records i.e. original invoice copy of the machine - Held that:- Since the original invoice has been held by the bank, the petitioner was not in a position to produce the original invoice. However, the petitioner has produced a copy of the invoice and all other relevant documents to the second respondent. Therefore, I do not find any justification in the Detention Notice issued by the second respondent and the same is liable to be quashed. Accordingly, the detention notice, dated 2.5.2015, issued by the second respondent is quashed. The respondents are directed to release the vehicle bearing Registration No.AP Y 5372 with Hydraulic Excavator within a period of one week from the date of receipt of a copy of this order. - Decided in favour of assessee.

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