TMI Tax Updates - e-Newsletter
August 25, 2015

Case Laws in this Newsletter:

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

Articles

1. CBEC clarifies on SCN issuance & proceedings conclusion as per amended penal provisions in Service Tax and Central Excise

   By: Bimal jain

2. Making India easy for business--Make in India

   By: Sumit Arora

3. NOTICE TO BOARD MEETING

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Major Initiatives on Improving ‘Ease of Doing Business’ in India.

2. Updation of addresses of the Association / Federation of Manufacturers of Consumer Items

Highlights / Catch Notes

Income Tax

• Leasing Income from Multiplexes, Malls, and Theatres Classified as Business Income, Not House Property Income.

  Case-Laws - AT : Income/loss from letting out of multiplex/shopping mall and cinema theatre along with amenities - The very object is the commercially exploitation of the properties. - the income/loss from the multiplex is liable to be assessed as “business income/loss" and not as "income from house property" - AT
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• Court Rules Sham Sale Agreement Invalid; Earnest Money Forfeiture Not Applicable for Bogus Accommodation Entry Case.

  Case-Laws - AT : Bogus accommodation entry - since the assessee has never rescinded the agreement the question of forfeiting the earnest money does not arise - the agreement of sale in question is proved to be a sham transaction having been prepared to provide accommodation entry - AT
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• Section 68: Absence of donor details doesn't imply wrongdoing in unaccounted funds under Income Tax Act.

  Case-Laws - AT : Addition u/s 68 - the complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts - AT
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• Taxpayer's Income Increased: No Evidence of Wife's Funded Investment, Says Commissioner of Income Tax (Appeals).

  Case-Laws - AT : Unaccounted investment - CIT(A) has given a categorical finding that the assessee has brought no evidence on record to show that investment was indeed made by his wife out of her funds because no funds are available with wife of the assessee. - additions confirmed - AT
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• Income Declared u/s 132(4) as "Other Sources" Qualifies Assessee for Exception u/s 73 for Share Trading.

  Case-Laws - AT : Explanation to section 73 - share trading - If the income declared u/s. 132(4) is considered to be “Income from other sources”, then the main income of assessee would be income from other sources and assessee company would be covered under the first exception to explanation below section 73 - AT
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• Government Grants Cannot Be Excluded from Book Profits for MAT Calculation u/s 115JB of Income Tax Act.

  Case-Laws - AT : Computation of book profit u/s 115JB - MAT - whether Parts II and III of Schedule VI to the Companies Act permits the exclusion of the receipts relating to Central and State Government grant? - it cannot be reduced from book profits u/s.115JB of the Act. - AT
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• Loans to Sister Concerns Not Tax Deductible When Written Off as Capital Loss, Not Business Expense.

  Case-Laws - AT : Loss of capital cannot be allowed as an expenditure, when it became bad and thereafter, written off. Advance of loans to a sister concern or a subsidiary company cannot be said to be for the purpose of business. - AT
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• Trust's Exemption Restored: No Violation of Section 13(1)(c) Found, Overturning Previous Denial u/s 11.

  Case-Laws - AT : Denial of exemption under section 11 - whether the trust has violated the provisions of section 13(1)(c) by incurring development expenses on the land belonging to the trustees - land was transferred to the assessee-trust which was orally gifted earlier - Held No - AT
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• Penalty u/s 27(1)(c) Overruled for Business Loss Conversion to Capital Loss Without Quantum Appeal.

  Case-Laws - AT : Penalty u/s. 27(1)(c) - conversion of business loss into capital loss and in adoption of higher rate for shares sold - though the assessee has not preferred any quantum appeal, we do not find it appropriate to levy of penalty - AT
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• Tulsi Project Eligible for Tax Deductions if Linked to Vrindavan Project u/s 80IB(10) of Income Tax Act.

  Case-Laws - HC : Deduction under section 80IB(10) - if other project styled as “Tulsi” is part or extension of Vrindavan Project, then, Vrindavan Project is entitled to the benefit and deduction under section 80IB(10), Tulsi Project will also be entitled for the same. - HC
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Corporate Law

• Directors Liable for Cheque Dishonor u/s 138 if Responsible for Company Operations, Says Supreme Court.

  Case-Laws - SC : Dishonor of Cheque - Liability of Director - if concerned Director was in-charge of and was responsible to company for its conduct of business, he can be held to be guilty of offence under Section 138 of negotiable instruments act, 1881 – Therefore, High Court ought not to have quashed proceedings against such directors - SC
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• High Court Denies Injunction on Copyright Claims Over Cricket Scores, Citing Limits on Information Property Rights.

  Case-Laws - HC : Dissemination of information – Copyright over Information – property right in "scores" and other happenings on field towards cricketing events in India - the plaintiffs cannot claim an injunction based on either the doctrine of unfair competition or unjust enrichment - HC
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Service Tax

• Tribunal Urged to Tackle Cooperative Societies' Delays with Pragmatic Solutions for Condonation of Delay Issues.

  Case-Laws - HC : Condonation of delay - the cause of the cooperative societies actually becomes nobody's child. In such circumstances, the Tribunal ought to have taken a pragmatic view. - HC
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• Court Dismisses Appeal for Department's Gross Negligence in Delayed Prosecution, Nearly Three Years to Realize Dismissal.

  Case-Laws - HC : Restoration of appeal - Appeal dismissed for want of prosecution - when the Department took nearly three years to notice the dismissal, this is a case of gross negligence on the part of the Department and which cannot be condoned - HC
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• Program Producer Faces Service Tax Demand for "Antakashari" Show; Section 76 Penalty Confirmed, Section 78 Penalty Waived.

  Case-Laws - AT : Programme Producers Service - appellant herein had produced a programme i.e. "Antakashari" for Star India and received consideration from them but did not discharge the service tax liability - demand of service tax with interest and penalty u/s 76 confirmed - penalty u/s 78 waived - AT
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VAT

• Court Rules Retrospective Cancellation of Seller's Registration Doesn't Affect Purchasers Who Relied on Valid Registration.

  Case-Laws - HC : Input tax credit – Cancellation of Registration certificate of the seller – Whatever may be effect of retrospective cancellation upon selling dealer, it can have no effect upon any person who has acted upon strength of registration certificate when registration was current – Hence, cross objections allowed - HC
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• TNVAT Registration Certificate Cancelled Due to Forged Rent Agreement Amidst Rival Claims and Alarming Circumstances.

  Case-Laws - HC : Cancellation of Registration Certificate – TNVAT - Forged rent agreement – Rental agreements was not mandatory either for issuing Registration Certificate or cancelling same –But in current case, impugned order came to be passed only on alarming circumstances of presentation of forged documents and related rival claims - HC
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Case Laws:

• Income Tax

• 2015 (8) TMI 888
  Eligibility for deduction u/s.80IB(10) - Whether Tribunal was justified in holding that the deduction u/s. 80IB(10) is admissible to a Housing Project on the size of two plots of land together making minimum area of one acre? - whether admissible to a Housing Project comprising of residential and commercial units?" - Held that:- Revenue very fairly states that the impugned order of the Tribunal has followed its orders dated 4 May 2012 for the Assessment Years 2005-06 and 2006-07. Being aggrieved, the revenue had filed two appeals in respect of the order dated 4 May 2012 for each of the two Assessment Years i.e. 2005-06 and 2006-07 [2015 (8) TMI 860 - BOMBAY HIGH COURT] and [2015 (8) TMI 859 - BOMBAY HIGH COURT] wherein held it is not in dispute that where a project is approved as a housing project without or with commercial user to the extent permitted under the rules / Regulations, then, deduction under section 80-IB(10) would be allowable. In other words, if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression “housing project” in section 80-IB(10) is applicable to projects having only residential units. This Court by orders dated 4 December 2014 and 9 January 2015 in respect of each appeal respectively were not entertained as it did not give rise to any substantial question of law. - Decided against revenue.

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• 2015 (8) TMI 887
  Rejection of books of accounts - estimation of N.P. - CIT(A) while allowing deduction of depreciation, interest and salary to partners against his estimated net profit rate of 5% without looking to the provisions of section 184(5) as against 10% by A0 - Held that:- In the instant case, undisputedly the net profit rate was estimated at 4.49% in assessment year 2007-08 and 3.92% in assessment year 2008-09. Keeping the past net profit rate adopted, we find no infirmity in the order of the ld. CIT(A) in which he has estimated the net profit rate at 5% of the gross receipts. Accordingly we uphold the estimation of the net profit rate. - Decided against revenue. Further deduction of depreciation, interest and salary to partners - Held that:- Wherever the assessment is framed under section 144 of the Act on account of non-production of the requisite documents or the books of account by the assessee, no further deduction of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner shall be allowed. But under sub-section (5) of section 184 of the Act, nothing has been stated with regard to the allowance of depreciation against net profit rate. In the instant case, we are of the view that in the light of the provisions of section 184(5) of the Act, further deduction of interest and salary to partners cannot be allowed. 10. So far as allowance of depreciation is concerned, nothing has been stated in sub-section (5) of section 184 of the Act. Therefore, depreciation can further be allowed from the net profit rate estimated by the ld. CIT(A). Accordingly we modify the order of the ld. CIT(A) and direct the Assessing Officer to estimate the net profit rate at 5% and thereafter allow further deduction of depreciation of Rs. 87,294/- - Decided partly in favour of revenue. Provisions of section 40A(3) with respect to certain payment exceeding Rs. 20,000/- invoked - Held that:- Once the books of account are rejected, the same cannot be looked into for making further additions under different heads. While estimating the net profit, the Assessing Officer is required to take into cognizance all the relevant facts available before him. We have also carefully perused the aforesaid judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Banwarilal Banshidhar,[1997 (5) TMI 37 - ALLAHABAD High Court] in which it has been categorically held that once the books of account are rejected, separate addition by invoking the provisions of section 40A(3) of the Act cannot be made. We, therefore, find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition made by the Assessing Officer after invoking the provisions of section 40A(3) of the Act. Accordingly, the order of the ld. CIT(A) is confirmed. - Decided against revenue.

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• 2015 (8) TMI 886
  Income/loss from letting out of multiplex/shopping mall and cinema theatre along with amenities - “Income from house property’ or “business income’ - assessee is a partnership firm constituted by the partners for carrying out the business activity - Held that:- As decided in Chennai Properties but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned. The facts of the case of the assessee before us are on better footings. The assessee’s objects are not in respect of letting of any particular property, but it has the main objects of acquiring, constructing, operating and maintaining of the multiplexes, business center, marriage halls etc. The very object is the commercially exploitation of the properties. Besides that the assessee is also providing hosts of amenities and facilities, as discussed above, which amounts to composite business activity. Thus the issue is squarely covered in favour of the assessee by the above noted decisions of the Hon’ble Supreme Court. We therefore hold that the income/loss from the multiplex is liable to be assessed as “business income/loss" and not as "income from house property". The assessee consequently is also entitled to the claim of deductions in respect of expenditure incurred and depreciation on assets etc. in relation to such income. - Decided in favour of assessee.

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• 2015 (8) TMI 885
  Reopening of assessment - bogus accommodation entry - Held that:- A.O. has recorded the reasons which had very much linked with the material in possession of the A.O. and the assessee has not pointed out any infirmity in the reasons recorded by the A.O. before reopening of assessment u/s 147 of the Act. After perusing the orders passed by Revenue authorities, specific information from IT (Inv.) regarding bogus accommodation entry worth Rs. 20,.03,000/-, the notice was issued by the A.O. to the assessee. Secondly, the A.O. after receiving necessary approval from the competent authorities has issued notice u/s 148 to the assessee and also provided opportunity to the assessee to raise objection and file the reply if any. The A.O. has also recorded valid reasons on the basis of evidence available with him and reopening of the assessment in the case of the assessee and he has also provided reasons recorded to the assessee against which the assessee has raised objection and the same was elaborately discussed and decided by passing speaking order by the A.O. In view of the facts and circumstances, of the case, we are of the considered view that the A.O. has issued valid notice u/s 148 on the basis of material available with him and after prescribed procedure under law, therefore the issue raised is decided against the assessee Addition made u/s 143(3) for giving accommodation entries - Held that:- communication between the assessee and M/s Polo Leasing and Finance Pvt. Ltd goes to prove that none of them had any intention to sell or purchase the property in question. It is further observed that the conduct of M/s Polo Leasing and Finance in not confronting the assessee after receipt of notice dated 30.07.2004 that since it has not complied with clause 4 of the agreement to sell in question. It (assessee) has no right to forfeit the earnest money of Rs. 20 lacs. Factum of non challenging the locus of the assessee to forfeit the earnest money of Rs. 20 lacs by Polo Leasing and Finance Pvt. Ltd goes to prove that both the parties have entered into agreement to sell in question just to provide accommodation entry. So the agreement to sell in question is a sham transaction and ingenuine document. It is further noted that the assessee after issuing the notice dated 30.07.2004 asking M/s. Polo Leasing & Finance Pvt. Ltd. to get the sale deed executed before the date fixed, failing which earnest money of Rs. 20 lacs shall be forfeited, has never intimated M/s Polo Leasing & Finance Pvt. Ltd that it’s earnest money of Rs. 20 lacs stood forfeited. It is also noted that since the assessee has never rescinded the agreement dated 10.01.2003 the question of forfeiting the earnest money of Rs. 20 lacs, admittedly received from M/s. Polo Leasing and Finance Pvt. Ltd, does not arise and in such eventualities M/s. Polo Leasing Finance Company had the right to seek refund within three year commencing from 10th April 2004. Thus the agreement of sale in question is proved to be a sham transaction having been prepared to provide accommodation entry and as such, the question of providing protection to the same u/s 51 of the Income Tax Act does not arise. - Decided against assessee.

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• 2015 (8) TMI 884
  Addition u/s 68 - unsecured loan - AO made impugned addition in absence of details, confirmation, bank accounts and ITR copies of the alleged creditors Shri Manoj Kumar and Shri Uttam Singh - CIT(A) deleted the addition on the basis of information received from the respective banks of the creditors in compliance to the notice issued to these banks u/s 133(6) - Held that:- CIT(A) was right in holding that the assessee discharged her onus by way of filing required details, confirmation and other relevant documentary evidence and also by filing PAN Number and addresses of the respective creditors. However, the alleged creditors did not comply with the notice u/s 131 of the Act and did not appear either before the AO or before the CIT(A) but the first appellate authority adopted course of verifying the genuineness of the transaction and creditworthiness of the respective creditors from their respective banks by issuing notice u/s 133(6) of the Act. On the basis of information received therefrom the CIT(A) has drawn a logical conclusion that Shri Manoj Kumar and Shri Uttam Singh had sufficient bank balance in their accounts before issuing cheques to the assessee which shows genuineness of the transaction as well as creditworthiness of the alleged creditors. In this situation, the addition made by the AO u/s 68 of the Act could not be held as sustainable and the same was rightly deleted by the CIT(A). - Decided in favour of assessee. Interest paid on the loan taken from the bank - whether to be capitalized and reduced from the sale consideration of the property while computing the capital gain as directed by CIT(A) - Held that:- Respectfully following the dicta laid down by the Hon’ble Jurisdictional High Court in the case of CIT vs Mithilesh Kumari (1973 (2) TMI 11 - DELHI High Court), we hold that the assessee is entitled for capitalization of interest actually paid by the assessee on the loan taken for purchase of said property provided the interest so proposed to be capitalized is not claimed as deduction under the head of income from house property. We are also of the considered view that the calculation and verification of the interest for the period between date of acquisition and date of sale of property has to be done at the end of AO. Therefore, we reach to a logical conclusion that the AO was not correct in denying the capitalization of interest pertaining to the amount which was actually invested towards purchase of property for the period between the date of acquisition and date of sale of property. At the same time, we further hold that the CIT(A) was also not justified and correct in directing the AO for capitalization of entire amount of interest and to reduce it from the sale consideration of property at the time of calculating capital gains because the assessee obtained loan of Rs. 85 lakh jointly with her husband , a part therefrom which was utilized for repayment of home loan which was originally obtained at the time of purchase of property. In view of above conclusion of the AO as well as findings of the CIT(A) being not completely sustainable and in accordance with law, this issue is restored to the file of AO for a fresh adjudication in the light of relevant provisions of the Act and in accordance with the facts and circumstances of the case. The AO is directed to allow the interest on the loan raised for purchase of property and repayment of property loan which was utilized for the purpose of acquisition of property in question subject to verification - Decided in favour of revenue for statistical purposes Disallowance of vacancy allowance - Held that:- About the fact of vacancy of seven months, on careful consideration of observations and findings of the authorities below, we note that tax can only be imposed on the rental income actually earned by the assessee. The rental income from house property cannot be admitted for want of negative evidence about the vacancy period of the property under consideration. In this situation, we are of the considered view that the issue requires proper verification and examination at the end of AO and we restore this issue to the file of AO with a direction that the AO shall verify and examine the issue afresh after affording due opportunity of hearing for the assessee and without being prejudiced from the earlier assessment and impugned order on this issue.- Decided in favour of assessee for statistical purposes

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• 2015 (8) TMI 883
  Unexplained jewellery - Held that:- The Departmental Valuer in this case has reported that the jewellery found with the assessee has gross weight of 7949.550 gms and net weight was 5400.450 gms. The A.O. held that the assessee has explained jewellery having gross weight 5686.310 gms and net weight 5144.600 gms. This leaves us with unexplained jewellery of net weight of 255.850 gms and gross weight of 2263.240 gms. The difference in net weight is reported by the departmental valuer. Instead of accounting the net weight jewellery as arrived by Departmental Valuer, the A.O. deducted 10.52% from the gross weight of jewellery i.e. 2263.2450 gms, which is gross weight of unexplained jewellery arrived at par the departmental valuer and arrived at a net weight of 2025.147 gms. of jewellery. Such estimation cannot be the basis of addition. When DVO has given a report specifying the gross and net weight of jewellery found, then applying a rough and ready formulae without an scientific basis to arrive at net weight, is only surmises and conjectures. Such a calculation cannot be the basis of addition. An expert opinion cannot be discarded without giving any room. Thus, the order of A.O. is bad in law.Merely saying that the assessee has not explained, when the A.O. stated otherwise, cannot be countenanced. The shortage or excess holding of gold and jewellery, under the facts of this case, has to be arrived at on an overall basis. Report of the Departmental Valuation Officer should be the basis of determining the value of unexplained jewellery. Thus, this ground of assessee is allowed and addition toward unexplained jewellery is deleted. - Decided in favour of assessee. Unexplained cash - Held that:- The A.O. and Ld. CIT(A) do not state that which evidence is sought by them and what was not furnished by the assessee. Withdrawal from bank accounts is very much evidenced by bank pass book and statement. In view of above discussion, though we are not accepting the general argument made by assessee based on turnover of the group and taxes paid, status of family etc., we delete the addition solely on the basis that the extract of copies of books of accounts, remained uncontroverted by the Department. This addition is deleted - Decided in favour of assessee. Unexplained gifts - Held that:- The gift of Rs. 5 lacs was received from the father Shri Rakesh Batra through cheque. He is an income tax assessee and filed a confirmation letter before the A.O. Similarly an amount of Rs. 21,000/- was received by the assessee from her brother Shri Manav Batra who is also an income tax assessee. On these facts, the first appellate authority deleted the addition. We find no infirmity in the same. Hence, we confirm the order of Ld. CIT(A) and dismiss this ground of revenue. - Decided in favour of assessee.

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• 2015 (8) TMI 882
  Income from sale & purchase of shares - “Long Term Capital Gain” OR ‘business income’ - AO finalized the assessment observing that entire sale/ purchase of shares deserved to be treated as ‘business income’ rejecting the special tax treatment as per section 111(A), denying exemption u/s 10(38) - CIT(A) granted relief to the assessee - Held that:- AO has not demolished the fact that the assessee utilized its own funds for the purpose of acquiring quoted shares, which were also shown as investment in the balance-sheet. The assessee also earned dividend income therefrom and the shares have been held under investment portfolio, which were valued at the end of the year in the audited balance-sheet at the cost of acquisition and the same were not held as stock-in-trade. The AO has also not controverted the fact that there were no multiple transactions of sale/ purchase of shares and the frequency and magnitude was also very low. The observations of the AO in this regard are baseless, which were rightly demolished by the CIT(A). The view taken by the CIT(A), treating the impugned income as long term capital gain, is sustainable in accordance with law and provisions of the Act and, thus, we uphold the same. - Decided against revenue.

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• 2015 (8) TMI 881
  Addition u/s 68 - whether donations cannot be included for the purpose of application of funds as required u/s 11? - CIT(A) deleted additions - Held that:- The assessee received donation of Rs. 75 lakh which were added by the AO to the returned income of the assessee u/s 68 of the Act and the said addition has also been upheld by the first appellate authority while passing the impugned order and with the conclusion as reproduced hereinabove. Turning to the issue of requirement of section 11 of the Act, we note that the Director of Income-tax (exemption) Vs Raunaq Education Foundation [2007 (4) TMI 61 - HIGH COURT, DELHI] explicitly held that to obtain the benefit of the exemption u/s 11 of the Act, the assessee is required to show that the donations were voluntary. Their lordships further held that the fact that the complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts. It was also held by Hon’ble Jurisdictional High Court that it is not in dispute that the objects and activities of the assessee were charitable in nature and it was duly registered u/s 12A of the Act, then in the situation of full disclosure of income by the assessee and also application of the donations for charitable purposes entitles the assessee to obtain benefit of exemption u/s 11 of the Act. In the present case, the assessee had not only disclosed the donations but also submitted names, confirmations along with PAN No., address of the donors before the AO during the assessment proceedings. However, the AO and the CIT(A) concluded that the creditworthiness of the donation could not be established, therefore, the impugned amount was added u/s 68 of the Act. At the same time, it cannot be ignored that the assessee is enjoying registration u/s 12A of the Act and the AO has not brought out any fact to controvert that the objects of the assessee charitable trust are charitable in nature and the assessee applied more than 85% of its income including impugned donations towards charitable purposes during the financial period under consideration. In this situation, the CIT(A) was right in following the ratio laid down in the case of DIT(E) vs Keshav Social and Charitable Foundation (2005 (2) TMI 84 - DELHI High Court) and we are unable to see any ambiguity, perversity or any other valid reason to interfere with the same, accordingly ground of the revenue being devoid of merits is dismissed. - Decided in favour of assessee.

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• 2015 (8) TMI 880
  Rectification of mistake - interest income of the assessee should be considered for the purpose of computation u/s 11 of the Act because the assessee is duly registered u/s 12A/12AA of the Act but this aspect of the matter has inadvertently escaped the attention of the Tribunal - Held that:- Assessee has given in writing to the Assessing Officer that although the assessee trust is registered u/s 12AA with effect from 03/02/81 but the assessee has claimed exemption u/s 10(23C) and not u/s 11 of the Act. Even after this finding of the A.O. in the assessment order, no such ground was raised by the assessee before CIT(A) that the case of the assessee should be considered for exemption u/s 11 and no such appeal has been filed by the assessee before the Tribunal also because out of these 4 appeals, 3 appeals are filed by the Revenue and although an appeal was filed by the assessee for assessment year 2006-07, no such ground is raised by the assessee in that year also that the case of the assessee should be considered u/s 11 of the Act. Now by way Misc. Applications, the assessee is raising this argument/contention that the case of the assessee should have been considered u/s 11 of the Act. Such a claim cannot be entertained in Misc. Application proceedings because the proceedings u/s 254(2) are in respect of any apparent mistake in the Tribunal order and when no such claim of exemption u/s 11 was raised by the assessee before the Assessing Officer or before CIT(A) or before the Tribunal, it cannot be said to be an apparent mistake in the Tribunal order. Hence, we do not find any merit in any of the Misc. Applications filed by the assessee. - Decided against assessee.

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• 2015 (8) TMI 879
  Unaccounted gifts - Held that:- A clear and categorical finding has been given by CIT(A) that the gift was stated to be made by an unrelated donor of the assessee (claimed to be cousin sister) but no evidence of relationship is brought on record. He has also noted that in Punjabis, it is considered an immorality to take money from sister. He has also noted that there was no relationship between the assessee and the donor and no occasion was also specified for making the gifts. He has also given a finding that no Evidence has been furnished during appeal proceeding to prove creditworthiness of the alleged donor. Hence, we find that the decision of CIT(A) is on various basis such as, no relationship between the donor and the assessee donnee and even if there is relation, then it is considered immorality to take money from sister as has been claimed in the present case. The third basis is that there is no occasion also for making the gift. The fourth basis is that the creditworthiness of the donor is not established. Considering all these facts, we do not find any reason to interfere in the order of CIT(A) on this issue. - Decided against assessee. Unaccounted investment - Held that:- A categorical finding has been given by CIT(A) that during assessment proceedings, the assessee was asked to establish the source of fund in the hands of his wife but no evidence of availability of funds in the hands of his wife was provided and therefore, the claim of the assessee that a double addition has been made is unsubstantiated. CIT(A) has given a categorical finding that the assessee has brought no evidence on record to show that investment was indeed made by his wife out of her funds because no funds are available with wife of the assessee. She is only a name lender to the transaction and on this basis, the addition was made substantive in hands of the assessee and he confirmed the same. Thus find no reason to interfere in the order of learned CIT(A) on this issue in assessment year 2005-06 also.- Decided against assessee.

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• 2015 (8) TMI 878
  Penalty u/s. 271(1)(c) - disallowance of claim of loss on sale of shares - Held that:- In the case of Omni Finstock Pvt. Ltd. (2015 (8) TMI 861 - ITAT AHMEDABAD) identical issue was involved wherein held that for the computation of capital gain in the present case, the A. O. shall work out the capital gain/capital loss on the basis of consideration received by the assessee and not on the basis of alleged market value of the shares sold by the assessee. Considering the facts of the case and the above discussions, though the assessee has not preferred any quantum appeal, we do not find it appropriate to levy of penalty because, on identical facts of computation of capital gain on the sale of shares of "Market creators Ltd.", on the basis of actual consideration received ie., @ Rs. 0.26 per share and not on the basis of alleged market value, it has been decided by the Tribunal in favour of the assessee on an earlier occasion in another assessee’s case mentioned supra. Accordingly, we set aside the order of the ld. CIT(A) and delete the penalty. - Decided in favour of assessee.

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• 2015 (8) TMI 877
  Deduction under section 80IB disallowed - CIT(A) excluded from the profits eligible for deduction under sect ion 80IB, i.e. Rebate on Central Sales Tax payable as per Schedule 10 of Pilerne Unit and Commission on High Sea Sales payable as per Schedule 11 of other operational income - Held that:- By considering the totality of the facts, we restore both the issues to the file of Assessing Officer for considering it afresh regarding eligibility of these two items, deduction under section 80IB in accordance with law in the light of decision of the Hon’ble Supreme Court in the case of Liberty India –vs.- CIT reported in [2009 (8) TMI 63 - SUPREME COURT.] - Decided in favour of assessee for statistical purposes. Disallowance of loss suffered in its SEZ Unit which was claimed by the appellant adjustable against business income - Held that:- Assessing Officer as well as the ld. CIT(Appeals) have not properly appreciated under which provision the assessee was required to furnish the details. The Assessing Officer has himself observed that the deduction was claimed under section 10AA, but he referred to the details as were required to be furnished as per section 10AA(8). Under such ci rcumstances and for proper appreciation of facts and law, we restore the matter back to the file of Assessing Officer for fresh adjudication after providing reasonable opportunity of being heard to the assessee. Working out S.T. capital gains at Rs. 1,19,66,299/- by CIT(A) as against Rs. NIL as claimed by the appellant - Held that:- Admittedly in the books of account the assessee’s block of assets was Rs. 1,33,701/- which was liquidated by way of sale at a total consideration of Rs. 1,21,00,000/-. Therefore, there was no justification in allocating the sale consideration against various items, i.e. furniture & fixtures, elect ric instal lation, air conditioners, office equipment s, etc. The ld. CIT(Appeals) has observed that in the sale deed, there is no such bifurcation, though such bifurcation was made at the time of amalgamation. Under such circumstances, we do not find any infirmity in the order of ld. CIT(Appeals). Accordingly this ground is dismissed.

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• 2015 (8) TMI 876
  Explanation to section 73 - whether the main source of income of the assessee company was share trading and not income from other sources? - CIT(A) held that by virtue of main source of income of the assessee being “Income from other sources” explanation to section 73 was not applicable - Held that:- In the present case, the AO has considered the income of Rs. 30 crores, disclosed u/s. 132(4) by the assessee as income from other sources because such income was declared to buy peace and there is no evidence in the form of seized documents as per the assessment order, to correlate such income with any business transactions. This income is not declared against any undisclosed assets such as cash, jewellery etc. as per the assessment order so that it could be deemed as an income u/s. 69 etc of the Act. It has been held that the income declared u/s. 132(4) is required to be taxed under the head “Income from other sources”. If the income declared u/s. 132(4) is considered to be “Income from other sources”, then the main income of assessee would be income from other sources and assessee company would be covered under the first exception to explanation below section 73 and by virtue of main income assessee being the “income from other sources”, then explanation to Section 73 is not applicable. Accordingly, in the facts and circumstances of the case, we find no infirmity in the impugned order of the ld.CIT(A). We uphold the same. - Decided against revenue. Interest u/s. 234B - whether interest should not be charged from 01/05/2008 because assessee had made a request to adjust the cash so seized from M/s. Shoparna Bros. P.Ltd towards estimated tax liabilities of the assessee in the statement recorded u/s. 132(4) during the course of search on 08-04-08? - CIT(A) accepted the arguments made by the assessee and held that calculation of interest u/s. 234B the AO should have credited the tax of Rs. 10,06,00,000 from 06-08-2008 because subsequent delay in such credit was a delay on part of the AO beyond the time allowed by the Income Tax Act - Held that:- No infirmity in the order of the ld. CIT(A), who has rightly held that credit of Rs. 10,06,00,000/- w.e.f 06-08-2008 because subsequent delay in such credit was a delay on the part of the Assessing Officer beyond the time allowed by the Income Tax Act. Interest u/s. 234A is chargeable even on a return filed in time but taxes due remaining unpaid after the due date of filing of return of income. Therefore, in calculation of interest u/s. 234B, Assessing Officer should give credit for tax of Rs. 10,06,00,000/- from 06-08-2008 because subsequent delay in such credit was a delay on part of the Assessing Officer beyond the time allowed by the Income Tax Act. Therefore, CIT(A) correctly directed the Assessing Officer to calculate the interest u/s. 234B accordingly.- Decided against revenue.

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• 2015 (8) TMI 875
  Higher rate of depreciation - Assessee had claimed depreciation on the Dumpers at the rate of 30% - AO allowed at the rate of 15% - CIT(A) allowed the assessee’s appeal - Held that:- The Assessing Officer concluded that when the dumpers are given on hire, the assessee would be entitled for depreciation at the rate of 30%. However, that is not the correct interpretation of the law, because if the assessee is transporting the goods of other persons, then al so the dumper is given on hire and under such circumstances, in view of the decision in the case of Anup Chand & Co. [1999 (6) TMI 25 - MADHYA PRADESH High Court] the assessee was entitled for higher rate of depreciation as the vehicles are to be considered as being given on hire for transportation of goods of other persons. The assessee was not transporting its own goods but the goods of other persons and deriving hire charges. By considering the totality of the facts and circumstances, we do not find any infirmity in the order of ld. CIT(Appeals) on this count - Decided in favour of assessee. Unexplained cash credit - CIT(A) deleted the addition - Held that:- Out of the total sundry creditors aggregating to Rs. 2,19,93,756/-, the Assessing Officer has made the addition of Rs. 6,50,000/- as the assessee neither produced the creditors nor gave any detail s in regard to suppliers. Merely submitting the bills in support of purchases cannot be the basis for deleting the addition unless the genuineness of purchases was duly established. Ld. CIT(Appeals) has merely deleted the addition on the ground that identity had not ultimately been doubted by the Assessing Officer. However, when confirmation was not filed by the creditors, then proper course was to give one more opportunity to the assessee to establish the genuineness of creditors. Therefore, we set aside the order of ld. CIT(Appeals) on this ground and restore the matter back to the file of Assessing Officer for verification.- Decided in favour of revenue for statistical purposes. Disallowance on account of payment of EPF after the due date - CIT(A) deleted the addition - Held that:- CIT(Appeals) deleted the addition by following the decision of Vinay Cement Limited reported in (2007 (3) TMI 346 - Supreme Court of India) wherein it has been held that statutory items like PF and ESI if paid before the due date of filing of the return have to be allowed irrespective of the fact whether the contributions related to the employer or the employee. It is not disputed by the Department that the payment s have been made before due date of filing of the return. We, accordingly confirm the order of ld. CIT(Appeals).- Decided in favour of assessee. Disallowance of excessive liability shown - CIT(A) deleted the addition - Held that:- In this case, the Assessing Officer has computed the disallowance by applying the ratio of expenses claimed in different years without pointing out even on a single item, which was not verifiable. We, therefore, do not find any reason to interfere with the order of ld. CIT(Appeals). - Decided in favour of assessee. Disallowance on account of excessive expenses claimed - CIT(A) deleted the addition - Held that:- reason to interfere with the order of ld. CIT(Appeals) because the assessee had duly explained the reasons for increase in expenses as noted by the ld. CITR(Appeals) and the assessee’s explanation on account of explosives being supplied by contractee had not duly been considered by the Assessing Officer. Therefore, the ad hoc disallowance, in any view of the matter, was not justified. - Decided in favour of assessee.

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• 2015 (8) TMI 874
  Penalty under section 271AAA - CIT(A) deleting the penalty noted that the disclosure of undisclosed income of Rs. 1 crore made was covered under the definition of "undisclosed income" as per Explanation (a) to section 271AAA of the Act - Held that:- Ld. CIT(A) with respect to the satisfaction of the requirement of clause (i) of sub section 2 to section 271AAA has given a finding that Shri Dipesh shah, the brother of the assessee, in the statement recorded under section 132(4), had in reply to question number 34, while disclosing Rs. 1 crore for the assessee, had mentioned that it was declared on account of current year income which implied that the income is from business. With respect to the fulfilling the requirement of clause (ii) of sub section 2 to section 271AAA, Ld. CIT(A) has noted that the same was also satisfied as during the course of search the authorized officer did not ask any specific question on substantiating the manner in which income was derived, but however the assessee had clearly mentioned in the statement recorded under section 132(4) that the undisclosed income was current year's business income. Ld. CIT(A) has also noted that clause (iii) of subsection 2 of section 271AAA was also satisfied by the assessee as the assessee had paid the tax along with interest. Ld. CIT(A) has thus given a finding that that the 3 conditions specified under section 271AAA were satisfied by the assessee in the light of decisions of Hon’ble Gujarat High Court and Allahabad High Court CIT v. Radha Krishna Goel [2005 (4) TMI 47 - ALLAHABAD High Court] and therefore no penalty was leviable. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A) nor has placed on record any contrary binding decision. In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. - Decided in favour of assessee.

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• 2015 (8) TMI 873
  Disallowance u/s 40(a)ia) - non deduction of tds - CIT(A) deleted addition accepting additional evidence - Held that:- CIT(Appeals) ’s order, there is no mention of remand report, though in the order sheet there is speci fic mention of the same. Therefore, in any view of the matter, ld. CIT(Appeals) has considered the additional evidence without considering Assessing Officer’s comments. Under such circumstances, we are of the opinion that the matter should be restored back to the file of CIT(Appeal s) for giving opportunity to Assessing Officer to offer his comments on the submissions made by the assessee. - Decided in favour of Revenue for statistical purposes

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• 2015 (8) TMI 872
  Computation of book profit u/s 115JB - whether Parts II and III of Schedule VI to the Companies Act permits the exclusion of the receipts relating to Central and State Government grant? - can a profit and loss account drawn up without considering the above receipts said to be in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act or not ? - Held that:- The entire mechanism for the computation of book profit is clearly set out in sub-section (1) of section 115JB read with Explanation thereto. The starting point being the net profit as shown in the profit and loss account prepared in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act but also the items, which are to be increased as stipulated in clauses (a) to (h), and the items, which are to be reduced as specified in clauses (i) to (vii), find separately mentioned in the scheme of the section itself. So, the computation of book profit is to be done strictly as per the Explanation to section 115JB of the Act and hence, no assistance from any other section of the Act can be taken for that purpose. The decisions relied upon by the learned Departmental representative in the cases of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME Court] and HCL Comnet Systems and Services Ltd. [2008 (9) TMI 18 - SUPREME COURT] had clearly laid down a law that the Assessing Officer has only limited power of making increases and reductions to the net profit shown in the profit and loss account except as provided for in the Explanation to section 115J or 115JA of the Act. In the light of the discussions made above, it is clear that the Assessing Officer, while computing the book profit of a company under section 115JB of the Act, has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having being properly maintained in accordance with the Companies Act, and the Assessing Officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to section 115JB of the Act. These receipts in question are not covered by any of the clauses (i) to (vii) of Explanation 1 to section 115JB of the Act and in our opinion, it cannot be reduced from book profits u/s.115JB of the Act. - Decided in favour of revenue.

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• 2015 (8) TMI 871
  Disallowance u/s 14A r.w.r. 8D - Held that:- In the case of ACIT Vs. M.Baskaran(2015 (3) TMI 192 - ITAT CHENNAI) the co-ordinate Bench following various decisions of High Courts deleted the disallowance made under section 14A for the reason that assessee has not earned any exempt income. When there is no claim for exemption of income in such situation section 14A has no application. Admittedly, in this case assessee has not received any exempt income during the assessment year 2010-11, therefore this decision is squarely applicable to the facts of the present case. The co-ordinate Bench while holding that provisions of section 14A have no application, when no exempt income is received in the previous year - Decided in favour of assessee.

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• 2015 (8) TMI 870
  Disallowance of the long term capital loss - Since loss is arising out of transactions between related parties and in the absence of explanation on how the value of Rs. 0.064 per share was determined, the loss claimed by the assessee was disallowed BY AO and CIT(A) - Held that:- As noted by the CIT(Appeals), the assessee has purchased shares at the rate of Rs. 10 per share from outside and also from company directly, when the net worth of the company was in negative. Later the same was sold to the wife of the Managing Director of the assessee company for a meagre amount of 6 paise per share. The assessee has not brought on record any evidence, even before us to establish that the loss was incurred by the assessee on genuine reason and as such, the same cannot be said to be genuine loss. The sale of shares of such lowest price is shocking conscious of the Bench and all human probability shows a prudent person never to sell the shares at such a sale price, as held in the cases of Sumati Dayal v. CIT (1995 (3) TMI 3 - SUPREME Court) and CIT v. Durga Prasad More (1971 (8) TMI 17 - SUPREME Court). Accordingly, we are inclined to say that this loss cannot be considered as capital loss so as to allow the claim of the assessee in the absence of any proper explanation to sell the share such low price. - Decided against assessee. Disallowance of advances written off - Held that:- In the present case, the assessee was not able to establish that the loan was advanced during the normal course of business carried on by it. There is no evidence to show that the assessee was carrying on money lending business and merely because, the assessee advanced the money to its sister concern, it cannot be said that the assessee is carrying on money lending business. Therefore, non-recovery of that loan cannot be treated as business loss. This is not an advance given to M/s. Sita-Gita.Com Ltd. in ordinary course of business of the assessee. In other words, though it was treated as an advance, it was not gone into the computation of income while computing the income of the assessee. At best, it could be advanced in the capital field. Being so, the loss of capital cannot be allowed as an expenditure, when it became bad and thereafter, written off. Advance of loans to a sister concern or a subsidiary company cannot be said to be for the purpose of business. It is true that, the assessee is entitled to write off of debt in a year in which the assessee feels that debt becomes irrecoverable. However, it cannot be said that it is an advance made in normal course of business of the assessee and also the assessee has not produced any evidence to show that the loan was advanced in the normal course of business. Hence, the mandatory conditions of sec.36(2) have not fulfilled for a claim of bad debt. In our opinion, these conditions have not been fulfilled by the assessee and therefore, we hold that the CIT(Appeals) is justified in confirming the addition made towards bad debt. - Decided against assessee.

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• 2015 (8) TMI 869
  Disallowance of expenses incurred towards feasibility study - CIT(A) deleted the addition - Held that:- Aappeal filed by the Revenue is dismissed on account of low tax effect. Addition being employee’s contribution deposited after the statutory due date but before the end of the relevant financial year - Held that:- As relying on case of CIT vs. M/s. Hindustan Organics Chemicals Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT] wherein held that we fail to understand how this deduction could have been disallowed to the Assessee. Admittedly, the Assessment Year in question is 2006-07. The second proviso to section 43B quoted above was deleted with effect from 1st April 2004 and simultaneously the first proviso was also amended bringing about a uniformity in deductions claimed towards tax, duty, cess and fee on the one hand and contribution to the employees' provident fund, superannuation fund and other welfare funds on the other. These deductions being claimed in the return of income filed for the Assessment Year 2006-07, the amendments to Section 43B which came into force with effect from 1st April 2004 would have clearly applied to the Assessee's case. In this view of the matter also, we find that the ITAT was fully justified in deleting the addition of Rs. 1,82,77,138/- on account of delayed payment of provident fund of employees' contribution. Considering the above settled position of law, we are of the opinion that the order of the CIT (A) is required to be reversed on this issue as such, the assessee is entitled to deduction. - Decided in favour of assessee. Allowability of the club expenses by way of membership entry fee to the club - Held that:- As decided in case of Clariant Chemicals (I) Ltd vs. Addl. CIT [2014 (11) TMI 439 - ITAT MUMBAI] in assessee’s own case for the earlier assessment year, it has been held that an expenditure incurred on account of payment of membership entrance fee paid to the club is an allowable expenditure – Decided against revenue.- Decided in favour of assessee.

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• 2015 (8) TMI 868
  Denial of exemption under section 11 - whether the trust has not violated the provisions of section 13(1)(c) by incurring development expenses on the land belonging to the trustees - gift of land - CIT(A) allowed exemption - Held that:- As could be seen from the findings of the Commissioner of Income-tax (Appeals) that the trustees have initially gifted the land to the assessee - trust by HIBBA and which was subsequently transferred to the assessee- trust by way of gift deed dated March 25, 2013. As the land was transferred to the assessee-trust which was orally gifted earlier, the trustees are not benefitted in any way. Therefore, we are of the view that there is no violation under section 13(1)(c) of the Act. We also find from the valuation report that certain extent of land was not even in the name of the trustees. The trustees have purchased this land on April 28, 2011 which fall under the assessment year 2011-12 and this was also gifted to the trust on March 25, 2013. The findings of the Commissioner of Income-tax (Appeals) have not been rebutted by the Revenue with evidences. In the circumstances, we uphold the order of the Commissioner of Income-tax (Appeals) holding that there is no violation of the provisions of section 13(1)(c) of the Act and consequently exemption under section 11 cannot be denied. - Decided in favour of assessee.

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• 2015 (8) TMI 867
  Revision u/s 263 - deduction under section 80-IA - Held that:- The argument of the assessee that a perusal of the original order passed under section 143(3) of the Act on December 30, 2011, prima, facie demonstrates that the Assessing Officer had granted deduction under section 80-IA of the Act, after obtaining certain details and documents and hence the order passed under section 263 is against law has some force, which has to be examined at the final hearing. We make it clear that this is only a prima facie observation and shall not have any precedence value. Hence we are of the view that the assessee has demonstrated that, it has a prima facie case. At the same time we also notice that the time limit for completing the assessment under section 143(3) in pursuance of the order under section 263 dated March 30, 2014, will expire on March 31, 2015. The time left is a little over two months from today. Thus, it will not be correct to grant stay of assessment proceedings, which are a consequence to the impugned section 263 order, as any such order, may result in the order to be passed under section 143(3) read with section 263, becoming time barred. Hence we refrain from staying the said assessment proceedings. Be it as it may, as we are convinced that the balance of convenience is in favour of the assessee, we stay the operation of the order to be passed under section 143(3) read with section 263 of the Act for the assessment year 2009-10 for a period of 60 days, from the date of passing of such an order under section 143(3) read with section 263 or disposal of the appeal. Stay application is partly allowed.

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• 2015 (8) TMI 866
  Revision u/s 263 - fall in the gross profit rate set off of the brought forward losses and depreciation - Held that:- The assessee has been able to demonstrate before us that the Assessing Officer made detailed enquiry at the assessment stage with regard to the fall in the gross profit rate set off of the brought forward losses and depreciation. The Assessing Officer issued several statutory notices to the assessee and called for complete details with regard to the manufacturing process, month-wise production, consumption, quantitative sales and justification of major expenses. The assessee furnished complete details and replies before the Assessing Officer at the assessment stage and also produced the books of account which have been test checked by the Assessing Officer and no infirmity in the replies of the assessee and books of account have been found at the assessment stage. The Assessing Officer, almost took up each and every issue with regard to manufacturing activity of the assessee and was satisfied with the explanation of the assessee. The assessee has shown surrender of income as was made during the course of survey in the computation of income and after claiming set off of business loss and unabsorbed depreciation, shown taxable income at Rs. 63.42 lakhs. The nature of business of the assessee is manufacturing of sweet items on which the assessee explained that it was not possible to maintain the details of manufactured items or of the closing stock. The nature of business of the assessee clearly revealed that it may not be possible to give the exact detail of the manufacturing of the sweet items. The Assessing Officer has examined this aspect considering the history of the assessee and the learned Commissioner of Income-tax did not adversely committed upon the same in the impugned order that when the assessee is continuing with the same nature of business from the earlier year and similar data of manufactured items have not been prepared and have not been doubted by the Revenue-Department why such an item is considered in the proceedings under section 263 of the Act. The record further revealed that whatever objections have been raised by the learned Commissioner of Income-tax, have been met by the assessee by explaining the same before the Assessing Officer at assessment stage. The assessee explained the issue of set off of unabsorbed loss of Rs. 14,84,641 by referring to the reply filed before the Assessing Officer dated May 21, 2012 paper book 103 along with the details.The assessee also replied to the query raised by the Assessing Officer with regard to surrendered income, copies of the replies are filed on record. The assessee also explained that the Assessing Officer, after consideration of all the replies, has allowed the depreciation and the depreciation chart is filed at page 44 of the paper book. It is, therefore, clear that the assessee submitted complete details before the Assessing Officer at the assessment stage regarding all the issues which have been raised by the learned Commissioner of Income-tax in the impugned order under section 263 of the Act. It is, therefore, clear that the Assessing Officer was satisfied with all the items which have been raised in notice under section 263 of the Act and allowed the claim of the assessee after conducting proper enquiry into the matter. AO after making complete enquiries has made part addition, which will prove that the issues raised in the proceedings under section 263 of the Act have been correctly examined by the Assessing Officer at assessment stage. Therefore, when the Assessing Officer adopted one of the courses permissible in law and the view taken by the Assessing Officer was not found to be unsustainable in law, CIT(A) should not substitute the opinion of the Assessing Officer in the proceedings under section 263 of the Act. It, therefore, appears that the learned Commissioner of Income-tax changed the opinion by reappraising the evidences and explanation filed on record, thus it would not give revisional jurisdiction to him under section 263 of the Act to set aside the assessment order. - Decided in favour of assessee.

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• 2015 (8) TMI 861
  Penalty u/s. 27(1)(c) - conversion of business loss into capital loss and in adoption of higher rate for shares sold - Held that:- As referred to by the learned AR, ITAT Ahmedabad “B” Bench for AY 2004-05 in the case of Ergon Investments & Finance (P) Ltd. [2011 (10) TMI 581 - ITAT AHMEDABAD] has decided same issue(i. e., computation of capital gain on the sale of shares of “Market creators Ltd.”, on the basis of actual consideration received and not on the basis of alleged market value), in favour of the assessee relying on the decision of the case of Allure Investments & Finance (P) Ltd. for AY 2004-05 [2011 (8) TMI 1085 - ITAT AHMEDABAD] wherein held that for the computation of capital gain in the present case, the A.O. shall work out the capital gain/capital loss on the basis of consideration received by the assessee and not on the basis of alleged market value of the shares sold by the assessee. Considering the facts of the case and the above discussions, though the assessee has not preferred any quantum appeal, we do not find it appropriate to levy of penalty because, on identical facts of computation of capital gain on the sale of shares of “Market creators Ltd.”, on the basis of actual consideration received ie., @ Rs. 0.26 per share and not on the basis of alleged market value, it has been decided by the Tribunal in favour of the assessee on an earlier occasion in another assessee’s case mentioned supra. - Decided in favour of assessee.

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• 2015 (8) TMI 860
  Deduction under section 80IB(10) - Held that:- As decided in assessee's earlier AY it is not in dispute that where a project is approved as a housing project without or with commercial user to the extent permitted under the rules / Regulations, then, deduction under section 80-IB(10) would be allowable. In other words, if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression “housing project” in section 80-IB(10) is applicable to projects having only residential units. - Decided against revenue.

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• 2015 (8) TMI 859
  Deduction under section 80IB(10) - Held that:- It is not in dispute that where a project is approved as a housing project without or with commercial user to the extent permitted under the rules / Regulations, then, deduction under section 80-IB(10) would be allowable. In other words, if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the income tax authorities to contend that the expression “housing project” in section 80-IB(10) is applicable to projects having only residential units. See M/s. Happy Home Enterprises case [2014 (9) TMI 707 - BOMBAY HIGH COURT] - Decided against revenue. Thus if other project styled as “Tulsi” is part or extension of Vrindavan Project, then, Vrindavan Project is entitled to the benefit and deduction under section 80IB(10), Tulsi Project will also be entitled for the same.

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• Corporate Laws

• 2015 (8) TMI 890
  Sale of Assets – Repayment of loan – Validity of Auction proceeding - High Court dismissed appeal and review application of appellant company, filed against order confirming sale and handing over assets of appellant-company to respondent in lieu of repayment of loan amount – Held that:- Prima facie, it appeared that objections of appellant were not properly considered as objections were not heard on merit and auction sale was confirmed – Conduct of Official Liquidator in selling property at price of Rs. 45.45 lakhs without proper publicity through advertisement or fixing any reserve price for assets cannot be sustained in law, particularly, when predecessor Official Liquidator reported that property put in auction was of much higher valuation – Having considered illegality and irregularity committed in auction sale of property, entire process was vitiated – Company Judge also failed to exercise its judicial discretion to see that properties were sold at reasonable price – Therefore, impugned judgment passed by High Court hereby set aside – Official Liquidator directed to recover possession of properties and proceed with fresh auction in accordance with procedure established by law – Decided in favour of Appellant.

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• 2015 (8) TMI 889
  Dishonor of Cheque - Liability of Director - Cheque in name of Accused company-1 was issued to Appellant which was not honoured and in spite of statutory notice issued, no amount in respect of said cheque was paid – Respondents filed petitions for quashing said complaint, which was allowed – Held that:- admitted position that simply because someone was Director in company, he cannot be held responsible in respect of cheque issued on behalf of company, but if concerned Director was in-charge of and was responsible to company for its conduct of business, he can be held to be guilty of offence under Section 138 of negotiable instruments act, 1881 – Therefore, High Court ought not to have quashed proceedings against such directors – High Court committed error by making observation that not single statement was made in complaint to effect that Accused Nos. 3 to10 were in-charge of day-to-day business of Accused No. 1 – company –thus, impugned order of High Court set aside and Appeals allowed – Decide in favour of Appellant.

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• 2015 (8) TMI 865
  Dissemination of information – Copyright over Information – property right in "scores" and other happenings on field towards cricketing events in India - Single Judge vide impugned order granted limited interim injunction restraining appellant from disseminating contemporaneous match information in form of ball-by-ball or minute-by-minute score updates/match alerts for premium, without obtaining license from respondent – Appellant alleged that no statute creates property right in "scores" and other happenings on field; consequently Court fell into error in creating new property rights – Whether Respondents claim was precluded by Section 16 of Copyright Act – Held that:- Unlike Designs Act and Trademarks Act which drew from pre-existing common law rights, in case of Copyright Act, "except under provisions of Act, there cannot be copyright under common law – By Section 16,"copyright or any similar right" (in work) apart from what is created by Act is precluded – Broadcasting rights are "akin" to copyrights – Respondent seeks protection of widest amplitude (in respect of not preventing reproduction of content of broadcast), but facts underlying broadcast, was facially untenable – Such rights have long been held to be barred as they are "similar" to copyright protection – Thus, rights claimed by respondent, over and above broadcasting rights, to prevent others from publishing or sharing match information or facts, for irrespective of commercial or non-commercial use, was precluded by Section 16 of Copyrights Act – If Parliament had intended such rights to exist, they would have been enacted, with suitable mechanisms for their enforcement and effectuation. Dissemination of Information – Unjust Enrichment – Whether Respondents were unjustly enriched by dissemination of match information – Held that:- once we recognize that mere information cannot be subject matter of protection under common law, it becomes apparent that other means continue to remain available to protect such information – Doctrine of unfair competition prohibiting misappropriation of match information would either mean that misappropriation under common law can supersede Copyright Act or that copying and misappropriation refer to two distinct acts – Individual who freely accepts benefits of services of another must, on account of such unjust enrichment, restitute other - runs into difficulty in copyright claims – Thus, claim for copyright infringement would in no way differ qualitatively from unjust infringement claim over copyright subject matter that was not covered under Copyright Act. Even if claim of unjust enrichment was seen on merits, such claim cannot prohibit Appellant from disseminating match information, but rather, only be basis for restitutionary award – Section 38 of Specific relief act, 1963 suggests that obligations not spelt out in express terms and not found in either contract or statute, but arising out of relationship or peculiar conditions are enforceable through injunction – None of said conditions exist to entitle respondent to injunction – Therefore respondent cannot claim injunction based on either doctrine of unfair competition or unjust enrichment – Recognizing doctrine of unfair competition would inevitably restrict appellant’s ability to disseminate information, undoubtedly crucial component of Article 19(1)(a) –Therefore Respondents claim for ad interim injunction and claims for unfair competition and unjust enrichment cannot be granted – Consequently, impugned judgment set aside – Decided in favour of Appellant.

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• Service Tax

• 2015 (8) TMI 906
  Condonation of delay - delay due to election of the co-operative society challenged before courts - Held that:- Appellants in support of the applications for condonation of delay would show that the delay had in fact been properly explained with genuine reasons. It is common knowledge that elections to cooperative societies become a huge and acrimonious affair in the State of Tamil Nadu. Every time elections are held, the elections become the subject matter of challenge before courts and eventually, special officers get appointed in many cases. - Therefore, the cause of the cooperative societies actually becomes nobody's child. In such circumstances, the Tribunal ought to have taken a pragmatic view. The appellants also appear to have a good case on merits. The auction conducted by them of the agricultural produce, harvested by their own members, may not really be a service rendered by them. These societies are established for the purpose of enabling the farmers to market their agricultural produce in such a manner that the farmers are not exploited by middle men. - Eventually, any levy made upon these societies will offset the benefit that is sought to be conferred upon the farmers by legislation. Therefore, the Tribunal ought to have taken a practical view in such matters. - Matter remanded back - Decided in favour of assessee.

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• 2015 (8) TMI 905
  Validity of impugned order - Violation of principle of natural justice - Opportunity of hearing not granted - Held that:- The petitioner is correct in her submission that the respondents have passed the impugned order behind the back of the petitioner, without affording an opportunity of personal hearing. When the unit at Coimbatore was closed down way back in the year 2009, and thereafter, they have been functioning only from office at Bombay, the respondents were not correct in sending show cause notice to the Coimbatore address and then passing an exparte order, behind the back of the petitioner therefore, the order in original dated 30.11.2011 is quashed. Consequently, the recovery notice dated 4.2.2015 is also quashed. - Matter remanded back - Decided in favour of assessee.

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• 2015 (8) TMI 904
  Restoration of appeal - Appeal dismissed for want of prosecution - Held that:- It is not the case of the applicant that this Court dismissed the appeal when the name of the Advocate or the parties were incorrectly printed or that there was no name of the Advocate mentioned as against the parties’ description. Thus, there was no mistake or error in printing of the daily board. The matter was notified in terms of the computerized programme. In such circumstances, it was solely the responsibility of the applicant to have remained present and the absence of the Advocate does not mean that this Court should necessarily proceed to restore such appeal. All the more, when the Department took nearly three years to notice the dismissal, this is a case of gross negligence on the part of the Department and which cannot be condoned. - Condonation denied.

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• 2015 (8) TMI 903
  Admissibility of Cenvat Credit - freight services and GTA services- Held that:- Regarding the issue of admissibility of Cenvat Credit it has been held by Gujarat High Court in the case of Commissioner vs. Dynamic Industries Limited (2014 (8) TMI 713 - GUJARAT HIGH COURT) that point of export is the place of removal in case of exported goods. Reliance placed by the Learned (AR) in the case of M/s Market Systems vs. CCE and ST, Vadodara-II (2014 (6) TMI 33 - CESTAT AHMEDABAD) is not of any help to the Revenue as the same was passed by this bench when the benefit of law laid down by Gujarat High Court in the case of Commissioner vs. Dynamic Industries Limited (Supra) was not available. - Decided in favour of assessee.

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• 2015 (8) TMI 902
  Demand of service tax - Programme Producers Service - appellant herein had produced a programme i.e. "Antakashari" for Star India and received consideration from them but did not discharge the service tax liability - Held that:- agreement entered by appellant with Star India very categorically states that appellant was commissioning for producing the programme "Antakashari" for Star India. In view of this we hold that the service tax liability and interest thereof are correctly determined by the adjudicating authority and we also note that the appellant is not seriously contesting the service tax liability. - penal provisions of Section 76 and 77 would be clearly applicable in the facts and circumstances of this case - However, penalty u/s 78 is set aside - Decided partly in favour of assessee.

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• 2015 (8) TMI 863
  Waiver of pre deposit - Held that:- Assessee failed to produce any interim order of the Honble High Court against the stay order [2013 (8) TMI 295 - CESTAT CHENNAI]. In view of that, the appeals are dismissed for non-compliance under Section 35F of the Central Excise Act, 1944. - Decided against Assessee.

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• 2015 (8) TMI 862
  Penalty u/s 76, 77 & 78 - renting of immovable service - Held that:- Liability under renting of immovable service were challenged and same is still pending before the Hon'ble Apex Court, in these circumstances, appellant are entitled for benefit of Section 80 of the Finance Act, 1994. As they were under doubt whether they have to pay service tax on the above service or not. In these circumstances, by invoking the provision of Section 80 of the Finance Act, 1994, I waive the penalty under Sections 76 and 77 of the Finance Act, 1994 and set aside the impugned order qua confirming the penalty under Sections 76 & 77 of the Finance Act, 1994. - Decided in favour of assessee.

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• Central Excise

• 2015 (8) TMI 899
  Disallowance of CENVAT Credit - Violation of Rule 8(3A) of the Central Excise Rules, 2002 read with Section 11Aof the Central Excise Act, 1944 - Imposition of interest and penalty - Held that:- Judgement of the Division Bench of this Court in case of Indsur (2014 (12) TMI 585 - GUJARAT HIGH COURT) is decided almost around nine months ago. So far the department has not preferred any appeal to challenge the said decision of this Court in the Honourable Apex Court, hence in our opinion, the ratio expounded by this Court in the Indsur (2014 (12) TMI 585 - GUJARAT HIGH COURT) still holds the field - since the judgement of this Court is so far not challenged before Honourable the Apex Court and therefore, it holds the field, we are of the opinion that the CESTAT (West Zonal) Bench, Ahmedabad has not committed any error or irregularities in rejecting the appeal of the Revenue by the impugned order. - no substantial questions are involved in this appeal - Decided against Revenue.

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• 2015 (8) TMI 898
  Waiver of pre-deposit - Review of previous order [2015 (3) TMI 860 - MADRAS HIGH COURT] - Held that:- The ground now pleaded by the petitioner is that some documents have been received to substantiate the plea of undue financial hardship. Even though the same was averred in the affidavit filed in support of the civil miscellaneous appeal, no evidence was produced to that effect when the appeal was taken up for hearing. All the issues now raised were highlighted by the review petitioner and that has been recorded in paragraph 11 of the judgment passed in the appeal. There is no mistake or error apparent on the face of the record as pointed out by the review petitioner to seek review of the judgment dated 26.2.2015. The order of the Supreme Court now relied upon by the review petitioner is dated 12.6.2013 and the judgment sought to be reviewed is dated 26.2.2015. Therefore, it cannot be pleaded that there is a new or important matter which was discovered for filing review petition and the same could not be produced by the petitioner even after exercising due diligence. The documents available with the review petitioner were not produced despite making a oral plea - Revision declined.

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• 2015 (8) TMI 897
  Condonation of delay - service of the Order-in-Original on the ex-employee of the Appellant while the Appellant had become sick and was closed down - Held that:- Findings of the first appellate authority with regard to service of notice are sought to be assailed on the ground of perversity or non consideration of any material. In the appeal, our jurisdiction is very limited as we decide only the substantial question of law after having found prima facie case. On appreciation of facts with regard to communication of the Order-in-Original and applying the law on the issue going by fact, the Tribunal came to a fact finding that the first appeal was sought to be preferred beyond the condonable period and dismissed the same. In view of the appreciation of fact and finding thereon, we do not find any element of law to decide in this appeal. - Decided against Assessee.

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• 2015 (8) TMI 896
  Penalty u/s 11AC - Evasion of duty - Duty on waste - Held that:- Where non-payment of duty is not with an intent to evade of payment then there can be no occasion to impose penalty under Section 11AC of the Act. In the present facts, the impugned order has recorded a finding of fact that the non-payment of duty on the goods by the respondent-Assessee was on account of bonafide understanding that the said goods are not chargeable to excise duty. Thus, the condition precedent for invoking Section 11AC of the Act is not satisfied in the present facts. Consequently, in such cases the authority cannot impose a penalty under Rule 57U read with Section 11AC of the Act. In fact, it is pertinent to note that even under Rule 57U of the Rules penalty is imposable only when there has been an intent to evade payment of duty. The factual finding arrived at in the impugned order has not been shown to be arbitrary or perverse. - Decision in the case of Commissioner of Central Excise, Mumbai-V V/s. Guru Plastics Work reported in [2009 (9) TMI 830 - BOMBAY HIGH COURT] and Rajasthan Spinning & Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA) followed - Decided against Revenue.

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• 2015 (8) TMI 895
  Restoration of Applications – Impact of order of BIFR on order of CESTAT directing to make pre-deposit - Jurisdiction of BIFR - Whether BIFR has the jurisdiction to direct CESTAT to recall an order which has already been approved by the High Court and Supreme Court and has merged with their orders – Held that:- order of the BIFR merely records that the petitioner had requested the BIFR for issuing the said directions to the CESTAT. The order does not grant the petitioner’s request. There is nothing on record that indicates that the BIFR had granted the request. In other words there is nothing on record to suggest that the BIFR directed the CESTAT in terms of the request of the petitioner. The appeal is, therefore, liable to be dismissed - Decided against assessee.

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• 2015 (8) TMI 894
  Denial of SSI Exemption - Denial of concessional rate of duty - Supreme Court dismissed the appeal due to low tax effect. The appeal was filed by the assessee against the decision of Tribunal [2003 (10) TMI 564 - CESTAT, MUMBAI]; wherein Tribunal held that since once an assessee has opted for payment of duty at the normal rate, he cannot revert to concessional rates thereafter, during the same financial year.

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• 2015 (8) TMI 893
  Valuation - Notional interest - Held that:- Respondents were taking certain advances from M/s. White Metals it had an effect of depressing the price at which the goods were not delivered to M/s. White Metals. This is a pure finding of fact and does not call for any interference. - Decided against Revenue.

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• 2015 (8) TMI 892
  Denial of benefit of notification - whether the benefit of Notification No. 205/88-C.E., dated 25-5-88 as amended is available to the appellant in respect of insulated wires and cables - Supreme Court dismissd the appeal as withdrawn filed against the decision of Tribunal [2002 (7) TMI 640 - CEGAT, NEW DELHI], wherein Tribunal held that Following the ratio of the decision of the Tribunal in CCE, Delhi v. Skytone Electricals reported in [2002 (2) TMI 158 - CEGAT, COURT NO. II, NEW DELHI], allowed the appeal filed by the Revenue.

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• 2015 (8) TMI 891
  Excisability - Marketability - Twisted filament yarn - Held that:- while dismissing the appeal of the Revenue/Department the Tribunal [2004 (3) TMI 465 - CESTAT, CHENNAI] referred to its earlier judgment. Against the said judgment appeals were preferred both by the Department as well as by the assessee which were dismissed by this Court in its decision and the same is reported in [2006 (4) TMI 134 - SUPREME COURT OF INDIA] in Devangere Cotton Mills Ltd. v. Commissioner of C.Ex., Belgaum - Decided against Revneue.

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• CST, VAT & Sales Tax

• 2015 (8) TMI 901
  Input tax credit – Cancellation of Registration certificate of the seller – Retrospectively – Petitioner/revenue challenging judgment and order of tribunal by which interest demanded and penalty imposed upon assesse was removed – Assesse challenges said judgment for entitlement of input tax credit since same was not granted on ground that registration of dealer/seller who had sold goods to assessee was cancelled with retrospective effect – Held that:- Tribunal had not committed any error in removing interest as well as penalty imposed upon assesse – It was undisputed fact that when assessee had purchased goods from dealer/seller, he was registered under provisions of VAT Act and subsequently, his registration was cancelled – Therefore assesse cannot be deprived of his right of getting credit of input tax available under provisions of VAT Act – Supreme court in State of Maharashtra v. Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA] observed that Whatever may be effect of retrospective cancellation upon selling dealer, it can have no effect upon any person who has acted upon strength of registration certificate when registration was current – Hence, cross objections allowed – Decided in favour of Assesse.

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• 2015 (8) TMI 900
  Cancellation of Registration Certificate – Forged rent agreement – Vide impugned order Registration Certificate granted to petitioner was cancelled, without even considering her objections and request for personal hearing – Whether cancellation of registration certificate on grounds that rent agreement was not authenticated one was justified – Held that:- Section 39(14) of Tamil Nadu Value Added Tax Act, 2006, empowers registering authority to cancel registration for any justifiable reasons – Rental agreements was not mandatory either for issuing Registration Certificate or cancelling same –But in current case, impugned order came to be passed only on alarming circumstances of presentation of forged documents and related rival claims – Against impugned order, there was alternative remedy under Section 54 of TNVAT Act to ventilate grievances of petitioner – It was always open to parties to seek appropriate remedies from Civil Court – Decided against the petition.

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• 2015 (8) TMI 864
  Withdrawal of Petition - Applicant moved application seeking permission of Court to withdraw petition as he wanted to file proper review petition - High Court dismissed application as withdrawn.

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• Indian Laws

• 2015 (8) TMI 907
  Dishonour of cheque - Liability of drawer of cheque - whether the respondent can be made liable in his personal capacity when the Company has not been made a party to the complaint - Held that:- Drawer of the cheque was the respondent, who had drawn the cheque, bearing No.075073 for Rs. 74,200/- on a bank account maintained by him towards the refund of the booking amount. Therefore, he was the drawer of the cheque. The case of the appellant, apart from being supported by the provision of Section 138 of the NI Act, also gets buttressed by the judgment in P.J. Agro Tech Limited and Ors. Vs. Water Base Limited, [2010 (7) TMI 280 - SUPREME COURT OF INDIA] where this Court has dealt with the scope of Section 138 and held that it is very clear that in order to attract the provisions thereof a cheque which is dishonoured will have to be drawn by a person on an account maintained by him with the banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part of any debt or other liability. It is only such a cheque which is dishonoured which would attract the provisions of Section 138 of the above Act against the drawer of the cheque. In the light of the position which the respondent in the present case held, we are of the view that the respondent be made liable under Section 138 of the NI Act, even though the Company had not been named in the notice or the complaint. There was no necessity for the appellant to prove that the said respondent was incharge of the affairs of the company, by virtue of the position he held. Thus, we hold that the respondent Vijay D Salvi is liable for the offence under Section 138 of the NI Act. - compensation is awarded to the extent of twice the cheque amount and simple interest thereon at 9% per annum to the complainant. Accordingly, the respondent Vijay D Salvi is sentenced to undergo simple imprisonment for a period of five months for the offence under Section 138 of the NI Act. - Decided in favour of appellant.

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