Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 17, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Constitutes the Goods and Services Tax Council - Notification
Income Tax
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TDS u/s 195 - Chargeability to tax in India as fees for included services - professors who come for a short period are well accommodated by Northwest India which does not create a Permanent Establishment of the applicant in India. - AAR
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Rebate u/s 88E - the interest earned by the assessee on the FDRs has intrinsic and inseggregable nexus with the work undertaken and, therefore, the interest earned by the assessee is capital in nature and shall go towards adjustment against the project expenditure and the same cannot be assessed as income from other sources. - AT
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The basis of assessing the tax and income from house property is the ownership of the property and not the actual realization of income. The ownership by itself attracts the charge. - AT
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Where assessee is carrying out CGS activities which is nothing but infrastructure facility as defined under section 80IA(4). - Deduction allowed - AT
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Bogus accommodation entries with regard to short-term/long term capital gain/loss - The assessee failed to produce share certificate numbers, distinctive numbers and how these shares were dealt with. In other words, nothing has been brought on record for justifying the transaction - additions confirmed - AT
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Addition u/s 68 - when the alleged entry operators have admitted on oath that they ran this racket ; and when name of the assesee is discovered as one of the beneficiaries of the alleged racket ; and when amounts are actually found in the books of assessee to be credited in the name of alleged entry operators ; burden was on the assessee to prove that it was not a beneficiary of the racket. - AT
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The Assessing Officer cannot insist the assessee to prove the authenticity of circumstances leading to write off the bad debts - AT
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Net surplus on sale of shares under investment portfolio should be chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolio. - AT
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The assessee, as such exclusively not claimed the interest expenditure against the salary income, rather, his stand is to be construed that he claimed interest expenditure on the ground that such interest bearing funds were used for making investment in the company. In such situation, he cannot be visited with penalty u/s 271(1)(c) - AT
Customs
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Validity of order of Settlement Commission - One cannot lose sight of the fact that the importers purchased the DEPB license from the petitioner for valuable consideration. Hence it is only fair that the petitioner pays the entire import duty – rejection of application by settlement commission not correct. - HC
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Release of detained consignments - If the petitioner had raised such a plea before the Tribunal, the Tribunal may probably take a holistic view of the entire matter. For the purpose of seeking an interim relief, an interpretation of the nature made by the petitioner cannot be accepted by the Court. - Writ Petition dismissed - HC
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Effective date of notification - tariff rate - import of edible oil including palmolein oil - In the present case, admittedly, second condition was not satisfied inasmuch as it was offered for sale only on 06.08.2001, as it was published on 03.08.2001 in late evening hours and 04/05.08.2001 were holidays - the notification will be effective only from 06.08.2001. - HC
Service Tax
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Taxability of receipt of "Supervision Charges" on construction contract - appellant corporation is made up of officers on deputation from the police Department and hence are not professionally qualified engineers or an engineering firm and hence not covered by the definition of consultant engineer service - AT
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Curriculum development even for scientific course cannot be brought under scientific or technical consultancy. It is beyond comprehension as to preparation of accounts manual proposal for carrier facilitation centre or handicraft product falls within the above category - No service tax liability - AT
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Refund of Cenvat Credit - 100% EOU - the formula in the notification used the word 'total CENVAT credit taken on input services'. Therefore the inadmissible part of input services cannot be deducted before applying the formula - AT
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Special Economic Zone (SEZ) - services rendered to SEZ - whether an unconditional exemption granted in a statute can be restricted by a statutory instrument issued in exercise of delegated authority under another statute that is hierarchically not even its equal in the event of a conflict - Held No - AT
Central Excise
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Cenvat Credit - pre-mature credit on input services - credit availed before making payment - Scope of Rule 4(7) of Cenvat Credit Rules, 2004 - credit cannot be denied - AT
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Classification - woven goods - labels/labels tapes bearing lace like ornamental designs/images - only choice for the classification now in the present proceedings is Chapter Heading 5807 - AT
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Cenvat credit - reversal of credit availing on transportation of inputs removed as such - demand set aside - AT
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Intermediate product - captive consumption - production of Sugar Syrup - neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellants factories, are marketable - no demand - AT
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Cenvat credit - input services - Clean Development Mechanism Service in relation to Carbon Credit Management Services is an eligible input service - AT
VAT
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The assessee is entitled to interest for delayed refund of amount deposited to Governent. However, assessee not entitled to interest on interest for delayed refund. - HC
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The goods being transported in a vehicle running upon fixed rails could not be detained under Section 51 of the Act, at the relevant time. - HC
Case Laws:
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Income Tax
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2016 (9) TMI 656
Eligibility of deduction u/s 80IA(4) - assessee company is engaged in the providing “Container Freight Station” (CFS) which has been duly approved as ‘Inland Port’ by Ministry of Finance, Department of Revenue, CBEC in its Circular - Held that:- CFS has been defined as a common user facility with public authority status equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs transit by any applicable mode of transport placed under customs control. All the activities related to clearance of goods for home use, warehousing temporary admissions, re-export, temporary storage for onward transit and outright export, trnas-shipment, take place from such stations. Hon’ble Delhi High Court in the case of Container Corporation India Ltd. (2012 (5) TMI 260 - DELHI HIGH COURT ) where the assessee carried out activities of Inland Container Depot; Central Freight Stations and port Containers’ Terminals, the Hon’ble Court held that the profit derived from such activity is eligible for deduction under section 80IA(4). Where assessee is carrying out CGS activities which is nothing but infrastructure facility as defined under section 80IA(4). Accordingly we confirm the order of the CIT(A) and direct the AO to allow the deduction under section 80IA(4). - Decided in favour of assessee Disallowance under section 14A - Held that:- We find that so far as the disallowance of interest expenditure is concerned under Rule 8D(2)(ii), the same is not sustainable, because admittedly, the surplus funds with the assessee far exceeds the investments made and, therefore, in view of the ratio laid down by the Hon’ble jurisdictional High Court in the aforesaid cases, no disallowance can be made. Accordingly, we direct the AO to delete the same. So far as disallowance of indirect expenditure is concerned under Rule 8D(2)(iii), the same stands admitted by the Ld. Counsel, therefore the disallowance under section 8D(2)(iii) is confirmed. As regards the disallowance under section 14A under MAT provision, that is, under section 115JB, the disallowance as sustained under normal provision shall be added to the book profit, therefore grounds raised in Cross objections for both the impugned assessment years stands party allowed.
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2016 (9) TMI 655
Reopening of assessment - Held that:- As far as arguments of the ld.counsel for the assessee that there is no quantification of escaped income in the reasons recorded by the AO is concerned, we find no substance in it, because, the AO has duly quantified the income in Column no.6 and this complete form is in accordance with law and part of the reasons recorded by the AO. It contained various details i.e. name and address of the assessee, PAN, status, assessment year and many other things. From the reasons, one has to find out whether the AO was possessing any information which could enable him to harbor a belief that the income has escaped assessment. On complete reading of the reasons, it is ascertainable that income has escaped assessment in the case of the assessee. As far as the objection with regard to territorial jurisdiction of the AO is concerned, as find that ITO, Ward-10(4) has recorded reasons, because, the transaction was carried out from address situated within his territorial jurisdiction. Moment, the assessee appraised him about his new address, jurisdiction to the AO having territorial jurisdiction over new address has been given. No prejudice is being caused to the assessee on the basis of this procedure. bogus accommodation entries with regard to short-term/long term capital gain/loss - Held that:- The AO has directed the assessee to produce evidence demonstrating the genuineness of this transaction. The assessee failed to produce any documents. Firstly, onus is upon the assessee to demonstrate that his claim towards long term capital gain is a genuine claim. The AO has not made reliance either upon the statement of Mukesh Chokshi or any other information from Mahasagar Securities Pvt. Ltd. He has made reference to the facts and circumstances revealed during the course of search, but he has deducted defects in the conduct of the assessee only. In para-13, he has specifically mentioned that the assessee has not submitted delivery notes, issued by Goldstar Finvest P.Ltd. indicating that the assessee has purchased shares. The assessee has not produced DEMAT account, and thereafter an additional circumstances was mentioned by the AO that Buniyad Chemicals went into liquidation and it was wound up on 9.7.1999. According to the AO no prudent businessmen would purchase shares of such company, and that will ever generate profit to an assessee. The assessee failed to produce share certificate numbers, distinctive numbers and how these shares were dealt with. In other words, nothing has been brought on record for justifying the transaction. Even if for arguments sake, the contention made by the assessee that no opportunity to cross-examination was given, and therefore, that material is excluded is accepted, then also it would come that ld.AO did not rely upon on those evidence. There is no evidence produced by the assessee to justify the genuineness of his transaction. In the present case, assessee failed to discharge his primary onus of establishing claim of genuine capital gain. - Decided against assessee.
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2016 (9) TMI 654
Addition u/s 68 - racket of bogus accommodation entries - Held that:- As the ITAT is a final fact finding authority we feel that all relevant facts should be allowed to emerge before the issue is decided on merits. We also feel that both sides, Revenue as well as assessee should have got adequate opportunity to bring relevant facts on record. If either of the two sides has not got reasonable opportunity for this purpose it will be appropriate to cause such opportunities to be provided. As we have already noticed neither Revenue nor the assessee has received full opportunity to make relevant facts emerge. Perusal of ground 2.2 of appeal filed by Revenue shows that assesee is one among many persons who may have attempted to benefit from the alleged racketeering. When Investigation Wing of Income Tax Department has busted the racket of bogus accommodation entries ; and when the alleged entry operators have admitted on oath that they ran this racket ; and when name of the assesee is discovered as one of the beneficiaries of the alleged racket ; and when amounts are actually found in the books of assessee to be credited in the name of alleged entry operators ; burden was on the assessee to prove that it was not a beneficiary of the racket. In view of the foregoing we set aside the order of the Ld. CIT(A) and restore the matter to the file of the Ld. Assessing Officer to complete the assessment de novo with the direction to the Ld. Assessing Officer to provide copies of whatever adverse material the Ld. AO has in his possession, which were used or are proposed to be used against the assessee. The Ld. Assessing Officer will be free to carry out further inquiries as per law ; and the assesee will be free to submit / produce further materials / evidences before the Assessing Officer.
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2016 (9) TMI 653
Allowable deduction u/s 37 - payment of interest charges - Held that:- It is observed that the terms of agreement have been placed by the assessee wherein the terms of settlement of dues and the payment schedule has been specified. It is observed that the payment made by the assessee is part of the contract / settlement entered into between the assessee and IFCI Ltd. and interest paid from 01.01.2007 till 15.02.2007 is a part of agreement and does not assume the nature of penalty. We are, therefore, of the considered opinion that the said expenditure should be allowed as deduction as per provisions of Section 37(1) of the Act. - Decided in favour of assessee Allowance of old stock written off - Held that:- On perusal of the statement of account of the assessee for the year under consideration, it is found that the assessee has incurred expenses for maintaining office premises as well as paid salary and other miscellaneous expense relating to the administration of the business. It cannot be said that the business activities were completely shut down after the lock out that took place at the manufacturing unit in Kerala. It is observed that the reason for not continuing the manufacturing activities was due to power supply being cut by KSEB. Further, there is no material to suggest that the manufacturing operation of the assessee were in a stage of more than that of suspension.Section 36(1)(vii) and 36(2) of the Act require the assessee to write off the bad debts which are irrecoverable and that it has been considered as income in any of the previous year if it relates to such previous year. The Assessing Officer cannot insist the assessee to prove the authenticity of circumstances leading to write off the bad debts.The assessee has furnished the details of financial year in which write off of bad debts were taken into account in computation of income. The assessee has also placed reliance upon the decision of Hon'ble Supreme Court in the case of TRF Ltd. Vs CIT reported [2010 (2) TMI 211 - SUPREME COURT ]. Thus the disallowance made by the Ld. Assessing Officer stands deleted. Addition u/s 41 - secured loan from IFCI Ltd - Held that:- Respectfully followings the decision of Hon'ble Jurisdictional High Court in the case of Tosha International Ltd (2007 (7) TMI 346 - ITAT DELHI-F) we are inclined to hold that the waiver of loan does not amount to cessation of liability and cannot be brought to tax by invoking the provisions of Section 41(1) of the Act.
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2016 (9) TMI 652
Sale of shares and securities held as ‘investment’ - short term capital gains or income from business - Dual portfolio - Held that:- There is no material brought in by the revenue to show that separate accounts of two portfolios are only a smokescreen and there is no real distinction between two types of holdings. This could have been done by showing that the distinction sought to be created between two types of portfolios is not real but only artificial and arbitrary. In the instant case, the ld AO himself admits that the assessee maintains two separate portfolios in the year under appeal and also in the earlier years. The books of accounts of the assessee also support the same. The books of accounts of the assessee were not rejected by the ld AO and the stand of the assessee in offering long term capital gains under investment portfolio is not disputed by the revenue. Therefore, in absence of any material to the contrary, and on appreciation of cumulative effect of several factors present as culled out above, we hold that the net surplus on sale of shares under investment portfolio should be chargeable to capital gains only and assessee is not to be treated as trader in respect of sale and purchase of shares in investment portfolio. Disallowance u/s 14A - Held that:- As decided in assessee’s own case in Asst Year 2005-06 as observed that in the relevant year under consideration i.e. A.Y. 2005-06, Rule 8D was not applicable and, therefore, the disallowance under section 14A on account of expenditure incurred by the assessee in relation to the exempt income is required to be made on some reasonable basis. In this regard, this Tribunal has taken a consistent view that the disallowance under section 14A on account of expenses incurred in relation to the income at 1% of such exempt income would be fair and reasonable. Following this consistent stand taken by the Tribunal, we restrict the disallowance under section 14A to the extent of 1% of the exempt income in the form of dividend and long-term capital gain
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2016 (9) TMI 651
Penalty imposed under section 271(1)(c) - AO was opinion that the assessee has reduced the incidence of tax by claiming deduction of interest expenditure against salary income, and thus, he deserves to be visited with penalty - Held that:- . In the first round of litigation upto the level of the Tribunal, it has been held that interest expenditure cannot be allowed as set off against salary income, but this order was recalled by the Tribunal in Misc. Application, as noticed by the ld.CIT(A) in the finding extracted supra. The Tribunal has allowed set off of the interest expenditure against interest income of ₹ 35,203/-. This reasoning of the Tribunal would indicate that interest bearing funds were used by the assessee for making investment in the company. In other words, he would earn interest income. It is a different matter that in this year, the income was to the extent of ₹ 35,203/-. Had there been more interest income, then, the total claim of interest expenditure would have been set off. So, the question is whether the claim of the assessee was not tenable at all or it was not allowed because sufficient interest income was not there for a set off. Even if a part of the interest expenditure is being set off against alleged interest income, it would falsify the reasoning of the AO. The assessee, as such exclusively not claimed the interest expenditure against the salary income, rather, his stand is to be construed that he claimed interest expenditure on the ground that such interest bearing funds were used for making investment in the company. To my mind, in such situation, he cannot be visited with penalty under section 271(1)(c) of the Act. - Decided in favour of assessee.
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2016 (9) TMI 650
TDS u/s 195 - Chargeability to tax in India as fees for included services - Taxability of the consideration paid by Northwest in favour of the applicant for the services which it provides or as agree to provide - India-US DTAA - exemption from taxation - P.E. in India Held that:- The applicant has provided all certificates including the certificate of its incorporation and has filed them as Exhibit-1 before us. From the certificate, it is clear that it is an educational institution for carrying on charitable and educational activities allowed by law. These Articles of incorporation were in respect of Newco Executive Education institution which ultimately transformed into UC Berkeley Centre for Executive Education. We, therefore, do not have any doubt that the applicant is an educational institution. Shri Sachit Jolly the learned counsel appearing for the applicant also invited our attention to page No. 5, which has been issued by the Department of the Treasury Internal Revenue Service, Philadelphia PA-19255 which is the certificate issued showing that the applicant is an exempt organization under Section 501(C)(3) of US Internal Revenue Code, or a religious or apostolic organization under Section 501(d). The learned counsel points out that this will be clear to support his contention that the applicant is an educational cum charitable institution. These certificates are countered by the Revenue. The other objection of the Revenue was that all the faculties provided for educating is provided by Berkeley University and not by the applicant. The learned counsel points out that in fact the applicant is a child of Berkeley University and is created and owes its existence to that University but for which the faculty of the Berkeley University would not be available in India on its behalf. We are quite convinced by this argument and we would choose to reject the objections by the Revenue. The other insignificant objection by the Revenue was that these professors who come for a short period are well accommodated by Northwest India which creates a Permanent Establishment of the applicant in India. We have mentioned this objection only for being rejected. The Authority in its Ruling in Eruditus had also held that there not be a Permanent Establishment even if the Faculty is provided by the non-tax resident INSEAD. We would choose to go by that finding. Thus the programme fee received by the applicant from Northwest would be governed by Article 12 of the India-US Double Taxation Avoidance Agreement (DTAA) and would be free from the taxability. There would, therefore, be no necessity to withhold the tax under Section 195 of the Income Tax Act, 1961. Also there would be no Permanent Establishment in India.
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2016 (9) TMI 649
Disallowances of expenses u/s 14A - Held that:- It is true that the authorities below have erred in applying Rule 8D to the year under appeal i.e. AY 2006-07 whereas Rule 8D has been held by various judicial pronouncements to be applicable prospectively from AY 2008-09. Further, on a perusal of the orders of the authorities below, it is seen that the AO as well as the Ld. CIT (A) have not recorded any finding as to how the disallowance of ₹ 32,875/- made by the assessee was incorrect. The authorities below have also not pointed out the nexus between the investments and the expenditure incurred. The Assessing Officer has adopted the formula for estimating expenditure on the basis of investments but the justification for calculating the disallowance is missing. Thus the disallowance u/s 14A was made without due deliberation and analysis by the Assessing Officer and the Ld. CIT (A) was also patently wrong in confirming the disallowance without testing the sustainability of the disallowance. Hence, we set aside the findings of the Ld. CIT (A) on this issue and restore the matter to the file of the AO for fresh adjudication after due verification of the claim of the assessee Addition on account of alleged difference in valuation of stock - Held that:- The assessee has been consistently valuing the stock of shares on FIFO basis and the it is undisputed that the department has accepted this method of valuation in preceding as well as subsequent assessment years. The AO has not been able to justify the need for the change in valuation and the Ld. CIT (A) has also confirmed the action of the AO in this regard. However, even in the arguments before us, the Ld. DR could not give a cogent reason that warranted a change in the method of valuation especially when the method was accepted by the department in earlier as well as subsequent years. It is also seen that due credit for the difference in valuation of closing stock in the year under appeal has also not been incorporated by the department in the valuation of opening stock by the department in AY 07- 08. Hence, we find that the stock valuation figure has been disturbed without any basis whatsoever and we find ourselves unable to agree with the stand of the department on this issue. We, accordingly, set aside the order of the Ld. CIT (A) on this issue and direct the AO to delete this addition. Addition on account of extra depreciation claimed on computer peripherals and accessories - Held that:- This issue has been settled in favour of the assessee in a plethora of judicial pronouncements and the ld. CIT(A) has also followed the reasoning that the computer is of no use if it does not have any support of printer/mouse/UPS etc. Hence, on this issue also we find no reason to interfere with the findings of the ld. CIT(A) and we uphold the same. Rebate u/s 88E - Held that:- The case of the assessee is squarely covered by the decision of the Hon’ble Jurisdictional High Court in CIT vs. Jaypee DSC Ventures Limited [2011 (3) TMI 309 - Delhi High Court ] wherein held that the interest earned by the assessee on the FDRs has intrinsic and inseggregable nexus with the work undertaken and, therefore, the interest earned by the assessee is capital in nature and shall go towards adjustment against the project expenditure and the same cannot be assessed as income from other sources. CIT has rightly adjudicated the issue by directing the AO to allow rebate u/s 88E of the Act and we find no reason to interfere with the same. MAT compuation - Rebate in respect of securities transaction tax u/s 88E - adjustment from the tax as payable for the purpose of Section 115JB - Held that:- As decided in CIT vs MBL & Co. Ltd [2013 (5) TMI 669 - DELHI HIGH COURT ] there is no reason why the remission in tax which is available u/s 88E of the Act to an assessee be not available on the tax as computed under the Minimum Alternate Tax Scheme as both section 115JB of the Act as well as the other provisions of the Act referred above have been enacted to provide the machinery for computing total income of an assessee which is exigible to Income Tax. The rebate u/s 88E of the Act provides for certain rebates available on the tax payable by an assessee. In our view, there would be no rationale to limit the plain words of sec. 88E of the Act to hold that the rebate in payment of the tax is only applicable to tax as determined under the normal provisions of the Act and not available with respect to Minimum Alternative Tax as computed u/s 115JB of the Act. The purpose of section 88E of the Act is to grant an assessee, to a limited extent, credit in tax on account of security transaction tax already borne by him in respect of the business carried out by him in dealing in securities. This rebate would be equally applicable to tax as computed under section 115JB of the Act as under the normal provisions of the Act
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2016 (9) TMI 648
Penalty under section 271(1)(c) - disallowance of loss of income from house property - Held that:- The assessee did got the possession from the builder after the completion of building and occupation certificate obtained from Bombay Municipal Corporation (BMC) and had also made the entire payment as agreed in the sale agreement. It is also an admitted fact that, the assessee in the return of income had taken municipal ratable for the purpose of ALV under section 23(1)(a). From such computation, the assessee has claimed the interest paid on the borrowed capital for the said house property. The Ld. AO has disallowed the loss claimed under the head “income from house property” on the ground that, the assessee himself has admitted that, he has not taken the actual possession in the relevant financial year. Such contention of the Ld. AO cannot be upheld, because it cannot be denied on the present facts that the assessee was the actual owner of the said property during the relevant previous year and once the assessee was the owner of the house property, then charge is created for the determination of income from house property by way of ALV. The basis of assessing the tax and income from house property is the ownership of the property and not the actual realization of income. The ownership by itself attracts the charge. The assessee was thus under the law liable to disclose the ALV from the said property. In fact, the assessee had shown the ALV on the municipal ratable value which again is one of the accepted method for showing the ALV in terms of various decisions which has been relied upon before the authorities below. Hence, it cannot be held that, income from house property was not assessable in the case of the assessee in this year. Once the income from house property is assessable, then as a natural corollary deduction of interest paid on the borrowed funds for the purpose of house property has to be allowed in terms of section 24(b). Accordingly, the claim of the assessee was not only bona fide but also was duly supported under the provisions of law. Thus, we hold that, no penalty for disallowance of loss of income from house property can be made and we direct the AO to delete the penalty - Decided in favour of assessee
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2016 (9) TMI 647
Reopening of assessment - receipt of share capital or share premium money - Held that:- Assessing Officer had no material to suggest that the petitioner company had during the period relevant to the assessment year 2008-09, received any share capital or share premium money to the tune of ₹ 20 lakhs or any other sum from the companies controlled and managed by Shri Pratik R. Shah. In fact, the order of assessment refers to 10 such companies so managed and controlled by Shri Pratik R. Shah, but does not refer to any of them from whom the petitioner had received any such amounts during the said period. The order of assessment itself thus, falsifies the ground on which the notice for reopening was issued. Revenue however, made a last desperate attempt to save the proceedings by suggesting that the notice of reopening merely carried a reference to a wrong assessment year through a typographical error. On the basis of material pertaining to the financial year 2008-09 by error notice came to be issued for the assessment year 2008-09 instead of assessment year 2009-10. Had this been a mere typographical error so treated by the Assessing Officer, we would have considered the question whether a mere typographical error could invalidate otherwise valid proceedings. However, even the Assessing Officer has not treated the impugned notice as to referring to the assessment year 2009-10 wrongly typed as assessment year 2008-09. He has all along acted as if through the impugned notice, the assessment for the assessment year 2008-09 having been reopened. Whatever doubt one may have would disappear when one refers to multiple notices that the Assessing Officer issued to the assessee for supplying documents pertaining to the said assessment year and the final order of assessment that he passed. The Assessing Officer made multiple additions in the assessment order for the assessment year 2008-09 which obviously he could not have done had he treated the notice for reopening as relatable to the assessment year 2009-10. Thus inescapable conclusion that one would reach is that the notice for reopening the assessment for the assessment year 2008-09, was based on completely wrong reasons. In other words, reasons lacked validity. When the notice itself was thus, defective, it would have no effect of reopening on the assessment. Any action taken by the Assessing Officer subsequent to or in pursuance of such notice would also be invalidated. - Decided in favour of assessee
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2016 (9) TMI 646
Non-deduction of tax in respect of interest paid to non-banking finance companies - Held that:- Since there are conflicting views of the Hon’ble High Courts, therefore, the view favourable to the assessee is being adopted by respectfully following the judgment of the Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd (1973 (1) TMI 1 - SUPREME Court ). The fact whether the amount was outstanding requires verification at the end of the AO hence the order of the ld. CIT (A) is set aside. The issue is restored to the file of the AO to verify whether any amount is payable on the last date of financial year in the balance sheet and in case he finds that no amount is payable on the last day of the financial year, he would delete the disallowance. Addition on trading advances - Held that:- We find that the advances are in the nature of trade advances. The AO has already rejected the books of account and made the addition on account of suppressed sales. The Hon’ble Jurisdictional High Court in the case of G.K. Contractor [2009 (1) TMI 840 - RAJASTHAN HIGH COURT] has held that when estimated profit is considered after rejecting assessee’s books of accounts by invoking the provisions of section 145(3) of the Act, no separate addition can be made even u/s 68 of the Act, even though the assessee has failed to discharge the onus of proof in explaining the amount shown in the books of accounts as ‘market outstanding’. Respectfully following the same, we direct the AO to delete the disallowance. Addition on sales estimation - Held that:- The assessee has not challenged rejection of books of accounts. The AO has made addition on the basis of the difference in sales. As per the material consumption, the AO estimated the sales at ₹ 1,56,09,536/- and as per books of accounts, the sales were reflected at ₹ 1,32,70,543/-. We find that there is no scientific reason for such estimation. The AO has not considered the past history. Therefore, after considering the totality of the facts and considering the past history of the assessee, we restrict the disallowance to the extent of ₹ 15,00,000/-. The AO is directed to restrict the addition to the extent of ₹ 15,00,000/-. This ground of the assessee is partly allowed.
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2016 (9) TMI 645
Applicability of provisions of Sec. 50C(2)(b) - valuation of Stamp Valuation Authority - Held that:- Referring to the provisions of section 16A of the Wealth Tax Act, 1957 to the extent they are relevant for the present purpose, sub-section (1) of section 16A of the Wealth Tax Act provides for making reference to the Valuation Officer. Sub-sections (2) to (5) of section 16A provide for the mode and manner in which the value of an asset is to be estimated. Sub-section (6) of section 16A of the Wealth Tax Act provides that on receipt of an order under sub-section (3) or sub-section (5) from the Valuation Officer, the Assessing Officer shall, so far as valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. Accordingly, once a reference is made under section 50C of the Act to the Valuation Officer for valuation of the capital asset, the Assessing Officer is obliged to complete the assessment in conformity with the estimate made by the Valuation Officer pursuant to such reference made by him. In the facts of the present case, the Valuation Officer has estimated the value of the capital asset at a lower amount than the value adopted or assessed by the stamp valuation authority. In terms of sub-section (2) of section 50C of the Act, it is such valuation which is required to be taken into consideration for the purposes of assessment. In the light of the above discussion, while not agreeing fully with the reasoning adopted by the Commissioner (Appeals), in the facts and circumstances of this case, this court is in agreement with the final conclusion arrived at by the Commissioner (Appeals) as well as by the Tribunal.
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2016 (9) TMI 644
Reopening of assessment - reasons the believe - Held that:- The impugned notice under section 148 of the Act has been issued on 18.03.2015 for reopening the assessment for assessment year 2008-09, which is clearly beyond a period of four years from the end of the relevant assessment year. On a perusal of the reasons recorded it is amply clear that there is nothing stated therein to the effect that there was any failure on the part of the petitioner to disclose fully and truly all material facts. Thus, the second condition precedent for exercise of powers under section 147 of the Act is clearly not satisfied. Moreover, even as regards the first condition, namely, that the Assessing Officer should record satisfaction that income chargeable to tax should have escaped assessment, in the light of the reasons recorded by this court in the case of Shri Chalthan Vibhag Khand Udhyog Sahakari Mandali Ltd. v. Deputy Commissioner of Income Tax (2015 (7) TMI 297 - GUJARAT HIGH COURT ), it cannot be said that on the reasons recorded for reopening the assessment, the Assessing Officer could have formed the belief that income chargeable to tax has escaped assessment. Therefore, even the first condition precedent for exercise of powers under section 147 of the Act, is not satisfied. Under the circumstances, the impugned notice issued under section 148 of the Act cannot be sustained.
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2016 (9) TMI 643
Penalty u/s 271AAA - Department has accepted the quantum of surrender made by the assessee in his statement recorded u/s 132(4) of the Act. The taxes due thereon have also been paid - Held that:- On having gone through the queries raised while recording the statement of the assessee u/s 132(4) of the Act, it is evident that nowhere has the Authorized Officer asked a specific question with regard to the manner in which the undisclosed income has been derived. Thus in absence of query raised by the Authorized Officer during the course of recording of a statement u/s 132(4) about the manner in which the undisclosed income has been derived and about its substantiation, the AO was not justified in imposing penalty u/s 271AAA of the Act specially when the offered undisclosed income has been accepted with a very minor variation of ₹ 49,250/- and also the due tax thereon has been paid by the assessee. As the case of DCIT vs. Pioneer Marbles & Interiors (P) Ltd. (2012 (2) TMI 261 - ITAT, KOLKATA ) for confirming the penalty is misplaced as in this case the coordinate Kolkata Bench has held that where the entire tax and interest has been duly paid well within the time-limit for payment of notice of demand u/s 156 and well before the penalty proceedings were concluded, the assessee could not be denied immunity u/s 271AAA(2) only because the entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings. We, thus, set aside the order of the ld. CIT (Appeals) and direct the AO to delete the penalty - Decided in favour of assessee.
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2016 (9) TMI 642
Disallowance u/s 14A - Held that:- Disallowance u/s 14A was made without due deliberation and analysis by the Assessing Officer and the Ld. CIT(A) was also patently wrong in confirming the disallowance without testing the sustainability of the disallowance. Hence, we set aside the findings of the Ld. CIT (A) on this issue and restore the matter to the file of the AO for fresh adjudication after due verification of the claim of the assessee regarding no expenditure having been incurred. Needless to say, the AO shall afford a proper opportunity to the assessee to present its case. This ground of appeal is accordingly allowed for statistical purposes. Capital gains v/s business income - sale of rights - Held that:- The assessee has not shown the rights in the property as stock-in-trade. No opening and closing stock was shown by the assessee. Since the Registry of the ‘rights’ was not done, the assessee had shown the same under the head “loans and advances”. It is undisputed that the assessee has entered into only one transaction of sale. The rights were purchased in 2005 and were sold in 2008 after retaining the rights for more than three and a half years. It is also undisputed that the assessee has been in receipt of rental income from other properties in subsequent assessment years which have been duly mentioned in the respective assessment orders. Hence, we are of the concerned opinion that the surplus resulting from the sale of rights is assessable to tax only as capital gains and not as business income because the Department has not been able to demonstrate that purchase and sale of the rights was affected in the usual course of carrying on the business of the assessee. The frequency of the purchase and sale is isolated in the case of the assessee and, therefore, there is no reason to allege that this was only a device to pay lesser taxes. It is also seen from the records that the assessee company is in the practice of passing separate resolutions for making investment in properties/rights. In our considered view, the assessee has discharged its primary onus by showing that the sale of rights was not in the regular course of business or trade but rather an isolated transaction and now the onus was on the Revenue to show that the apparent was not real. No material whatsoever has been brought on record by the Revenue to show that the transaction was only a smoke screen to camouflage the trading receipts. Therefore, in absence of any material to the contrary and on appreciation of cumulative effect of several factors present we hold that the surplus is chargeable to capital gains only and not as business income. - Decided in favour of assessee
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2016 (9) TMI 641
Assessment of loss - under the head “profit and gains from business or profession” OR under the head “income from house property” - Held that:- In view of the decision of the Tribunal in group cases of the assessee, we are of the considered view that the facts of the assessee’s case is fully covered by the decision of the Tribunal and therefore, respectfully following the decision of the same allow the appeal of the assessee by setting aside the order of ld.CIT(A) and direct the AO to treat the income of the assessee as “Income From House Property”.
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2016 (9) TMI 640
Sale of gold and silver ornaments - G.P. determination - Held that:- The appellant has not taken any grounds before us relating to rejection of books of accounts under section 145(3) and hence, the contention of the ld AR regarding invalid application of section 145 cannot be accepted. Regarding estimation of sales at ₹ 8 lacs as against declared sales of ₹ 7.73 lacs by the assessee in its return of income, no basis or justification has been given by the AO. Further, the basis of estimation of G.P @ 20% as against declared G.P of 13.11% is also not clear from the assessment order. Inspite of the fact that the books of accounts have been rejected, the estimation of sales and G.P need to necessarily have some rational and reasonable basis which is absent in the instant case. Hence, the trading addition of ₹ 56,223 is deleted and the ground of the assessee is allowed. Addition on account of outstanding debtors - Held that:- Additions made by the AO flow from the same set of documents namely the Katuria note book as well as Annex. A -12 to A-17 found during the course of survey. Given that the AO has verified the entries and worked out the outstanding debtors for the year under consideration as well as for the previous years, we do not see a basis to hold that the surrender made by the assessee of ₹ 3,06,080/- is in addition to ₹ 5,52,740/- worked out by the AO. In light of that, we agree with the contentions of the ld. AR that there is double addition which has happened to the extent of ₹ 3,06,080/- hence we restrict the subject addition on account of outstanding debtors to the extent of Rs., 2,46,060/-. Addition towards outstanding debtors of ₹ 2,46,060 shall be covered by the unexplained assets surrendered and disclosed by the assessee amounting to ₹ 36,16,140/-. Hence, the same has to be telescoped and cannot be brought to tax separately. In light of that, we delete the whole of additions towards the outstanding trade debtors - Decided in favour of assessee. Addition of shop expenses - Held that:- The addition confirmed by the ld, CIT(A) is purely on adhoc basis hence the same is deleted. Undisclosed income in the shape of outstanding debts - Held that:- The surrender of ₹ 36,13,140 during AY 2002-2003 relates to stock accumulated out of income earned from sale/purchase of gold and job work charges of ₹ 26,50,000, cash found during survey of ₹ 63,140, investment in house of ₹ 5,00,000, trade debtors outstanding of ₹ 3,00,000 and loan and interest of ₹ 1,00,000. In the statement of Shri Suresh Soni, son of the assessee and which is subsequently confirmed by the assessee in his own statement, it has been mentioned that investments made in stock, cash found during survey, etc are out of the same business receipts and trade debtors. Nothing has been brought on record by the Revenue in terms of any tangible evidence to prove otherwise. The surrender of ₹ 36,13,140 and additions of trade debtors over all these years amounting to ₹ 9,19,191 have their origin in terms of statements recorded of Shri Suresh Soni, the assessee as well as same set of documents in terms of katuria note book and loose papers found during the course of survey which have to be read and considered in entirety and which prove that the quality of trade debtors in all these years and surrender of stock and cash and even investment in house is not different. In the entirety of facts and circumstances of the case, where the realisation from sales for the year and previous years have been invested in the stock of gold and house property and which have already been brought to tax as surrendered income, the same trade debtors cannot be brought to tax again in the hands of the assessee.
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2016 (9) TMI 639
TDS u/s 194H - Addition made on account of disallowance of Financial Services Charges - non deduction of TDS on the amount paid to the employees of the company - Held that:- Both the authorities below have misdirected themselves for not appreciating the fact that the nature of payment as made by the assessee is neither a payment in the nature of salary nor related to employer-employee relationship. The payment is made in respect of the expenditure claimed to have been incurred for facilitating the loan transaction. The AO in the assessment order has considered this claim of the assessee i.e. expenditure being the reimbursement to the employees, and rejected the same on the ground that not a single bill was available with the assessee. As observed that these expenses were incurred for the services provided by the salesmen and that there was an absolute absence of even a single supporting voucher or any other documentary evidence which could prove assessee’s claim that the said expenses were reimbursements to the salesmen. The AO treated such payment as the payment of commission or brokerage to the employee. In support of such finding, the AO has not placed any material on record suggesting that these payments were in the nature of brokerage or commission. In the absence of such material, in our considered view, merely on the basis of conjectures, the payments made to the employees would not partake the character of payment of brokerage or commission. Another aspect of the matter, which the AO has not appreciated that in the normal loan transaction, the bank mostly debit the amount of processing charges. The AO has also not verified from the banker whether the said expenditures were debited to the account of the loan beneficiary by the banker or not. Whether there was any agreement between the banker and the assessee company in this behalf. Even the assessee has not furnished the requisite details in support of its claim that such payments were nothing but reimbursement to the employees and such expenditure is allowable deduction. After considering the totality of the facts and circumstances of the present case, it would be in the interest of justice if the issue is restored to the file of the AO for decision afresh. Hence we set aside the impugned order and restore the matter to the file of the AO with the direction to verify from the bank whether any loan transaction was carried out as claimed by the assessee and also to verify whether the expenditure incurred in respect of documentation of the loan transaction, the expenditure related to verification of title deeds/ownership title was carried out by the banker or by the assessee company - Decided in favour of revenue for statistical purposes. Addition u/s 14A read with Rule 8D - Held that:- As per section 14A of the Act, the AO has to satisfy himself in respect of the claim of expenditure. In the event the AO finds that the expenditure related to the exempt income have also been claimed by the assessee while computing its income, then the AO is empowered to make disallowance in the manner prescribed in rule 8D. In the instant case, the AO has not given any finding in respect of the disallowance of expenses. On the contrary, the assessee has pointed out that it had sufficient own funds and investment has been made out of its own funds. Therefore, the disallowance related to the interest was not justified. Thus we do not find any reason to interfere in the orders of the ld. CIT (A). In respect of administrative disallowance, as the assessee has stated that exempt income was directly credited to the bank account of the assessee, but it cannot be presumed that no administrative expenditure related to such exempt income was incurred. Therefore, in respect of administrative disallowance, we set aside the order of ld. CIT (Appeals) and restrict the disallowance to the extent of earning of exempted income of ₹ 30,000/-. Thus out of total disallowance of ₹ 5,81,868/-, the disallowance to the extent of ₹ 30,000/- qua the administrative expenses is sustained. - Decided in favour of revenue partly Disallowance of staff & labour welfare expenses - Held that:- The ld. CIT (A) held that the expenses under the head salary and labour welfare are necessary for carrying on the business. He observed that there is no evidence to suggest that the expenses incurred by the assessee were either inflated or bogus. At the time of hearing of the appeal, the ld. D/R has not controverted these findings of the ld. CIT (A). We, therefore, do not find any reason to interfere in the order of the ld. CIT (A), the same is hereby upheld. - Decided against revenue
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2016 (9) TMI 638
Forex Derivatives treating the same as unascertained liability and notional loss - Held that:- There is an underlying liability ( Loan) to hedge the risk and hence the derivative contract under consideration is for the purpose of business and not for the purpose to speculate the transaction without and underlying assets and liabilities. In the instant case there is an underlying liability and purpose of this derivative contract is to minimise the business risk by way of hedging therefore it is not a speculative transaction as Ld. DR has pointed out, hence we direct the Ld. CIT (A) to delete the addition. - Decided in favour of assessee. Replacement cost of combers and ring frames - Held that:- Each machine including the ring frame was an independent and separate machine capable of independent and specific function and therefore, the expenditure incurred for replacement of the new machine would not come within the meaning of the works `current repairs`. See M/s Saravana Spinning Mills Pvt. Ltd. [2007 (8) TMI 16 - SUPREME COURT OF INDIA ] and M/s Sri mangayarkarasi Mills (P) Ltd [2009 (7) TMI 17 - SUPREME COURT ]. Also on the similar set of facts, the Hon`ble ITAT has upheld the action of the assessing officer in treating the expenditure incurred by the assessee as a capital in the assessment year 2005-06 in the assessee`s own case, and the CIT (A) has also upheld the action of the Assessing Officer in treating the expenditure incurred by the assessee as a capital expenditure in the assessment year 2006-07 in the assessee`s own case. - Decided in favour of assessee. Disallowance under section 14A read with Rule 8D - Held that:- Working of Ld CIT(A) as per section 14A , read with Rule 8D seems to be correct. He has rightly excluded the investment made by assessee on 26/03/2008 at ₹ 1,44,804,322 to compute the average amount because the investment was done by the assessee at the end of the accounting year. The Ld.CIT (A) worked out the disallowance as per Rule 8D (2) (ii) by taking opening balance of investment at ₹ 25,57,753/- therefore the total disallowance worked out by him was [ 25,57,753 x6,38,29029/1815274370] at ₹ 89,936/- whereas as per AO the disallowance was at ₹ 26,26,964/- And as per Rule 8D (2) (iii) the disallowance worked out by him was [ ₹ 25,57,753 x 0.5] at ₹ 12788/- whereas as per AO the disallowance was at ₹ 3,73,550/-. Thus, out of ₹ 30,00,514/- the CIT(A) has deleted ₹ 28,97,790 (3000514-102724) and retained the addition of ₹ 102724/-. The said working has been done by the Ld.CIT(A) as per the procedure laid down in section 14A read with Rule 8D, therefore we did not find any mistake in the disallowance made by Ld. CIT (A), hence we confirm the order of the Ld. CIT (A).
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2016 (9) TMI 637
Disallowance under section 14A - Held that:- Disallowance of interest expenditure is concerned under Rule 8D(2)(ii), we find that, at the time of making the investment, the assessee had huge surplus/own funds available which far exceeded the investment made, therefore no disallowance of interest should be made. Accordingly, we direct the AO to delete the disallowance of interest. As regards the disallowance of indirect expenditure under Rule 8D(2)(ii) we agree with the contention of the Ld. Counsel that, so far as the investment made in subsidiary and Associate Companies are concerned, they are by way of strategic investments and, therefore, same should not form part of the working of average value of investment while computing the disallowance. Accordingly, we hold that investments which have been made mostly by way of strategic investments and stock-in-trade should not rope in for the purpose disallowance. Looking to the facts and circumstances of the case and in the interest of justice, we are of the opinion that the disallowance should be scaled down and some estimate disallowance should be made, having regard to the nature of expenditure debited and the exempt income earned at ₹ 2,95,450/-. Accordingly, we hold that 10% of the dividend income would be reasonable for allocating the indirect expenditure for the earning of exempt income. Such an estimate is purely on the facts and circumstances of the case. Thus, grounds with regard to disallowance under section 14A are treated as partly allowed. Disallowance on account of transaction charges paid to stock-exchange by invoking of the provisions of section 40(a)(ia) - Held that:- The payments made to the stockexchange is not in the nature of ‘technical services’ but for facilities provided by the stock-exchange and accordingly, no TDS is deductible under section 194J. Assessee was not required to deduct TDS on such payment and accordingly, no disallowance under section 40(a)(ia) is called for.
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Customs
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2016 (9) TMI 675
Smuggling of gold - section 135(1)(a) of the Customs Act, 1962 - inspection of goods declared - silver bricks contained gold - statements made under Section 108 of Customs Act, 1962 - Whether sanction Ex.PW-1/B granted by the Commissioner of Customs was proved given that the sanctioning authority was not examined as a witness? - Held that:- the case of Directorate of Revenue Intelligence Vs. Mohd. Anwar [2010 (10) TMI 366 - DELHI HIGH COURT ] is relied upon. Even though the sanctioning authority has not been examined, it has been proved through the testimony of R.K.Duwan, Inspector, ICD, PW-1 that the sanction Ex.PW1/B had been duly accorded by the sanctioning authority. Whether the retraction of the accused persons were placed before the sanctioning authority at the time of grant of sanction? - Held that: - whether the sanction was granted by the Commissioner of Customs after due application of mind was a matter of evidence and was not relevant at the stage of framing of the charge - contention of accused could not be accepted. Whether a prima-facie case of commission of offence under Section 135(1)(a) of the Customs Act, 1962 was made out against A-2 to A-5? - Held that: - Section 135(1)(a) of the Customs Act, 1962 provides that any person ‘knowingly in any way concerned’ in the evasion of payment of duty would be liable under the section - the order discharging A-1 and A-2 has been set aside while upholding the same qua A-3 to A-5. Petition dismissed - decided against petitioner.
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2016 (9) TMI 674
Validity of order of Settlement Commission – rejection of settlement application - Section 127B of the Customs Act – export of ferro silicon – goods of Indian origin – DEPB license obtained by the petitioner to avail benefit of free import of goods – some of the license sold for valuable consideration – later found that goods were of Bhutanese origin and are not entitled to DEPB benefit – demand of duty and imposition of penalty on petitioner for wrong availment of DEPB license – duty discharged by petitioner and approach to settlement commission for waiver of penalty – rejection of application by settlement commission on the ground that the petitioner has discharged the entire liability himself, on behalf of the importers also to who he sold DEPB license – Held that: - the ground on which the Settlement Commission rejected the application for settlement under Section 127B of the Customs Act, is not sustainable at law. The department is concerned with the recovery of the import duty which was not paid by the concerned importers on the strength of the DEPB licenses. Since it is now admitted that the petitioner was not entitled to the benefit of the DEPB licenses all that the department should look forward to is recovery of the amount of ₹ 3,12,60,465/-. Who pays the money should not matter to the department. One cannot lose sight of the fact that the importers purchased the DEPB license from the petitioner for valuable consideration. Hence it is only fair that the petitioner pays the entire import duty – rejection of application by settlement commission not correct. Matter remanded to settlement commission for fresh adjudication without going to the merits of the case – writ application disposed off – decided in favor of petitioner.
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2016 (9) TMI 673
Re-assessment of value of goods - re-calculation of duty - order passed under section 17 of the act or section 18 of the act - opportunity of being heard - Rule 12 of the Customs Valuations (Determination Value of Imported Goods) Rules 2007 - alternative remedy of appeal - Retail Sale Price - bill of entry - Held that: - the petitioner was not been afforded proper opportunity of hearing, the order dated 18.03.2016 for re-assessment of goods is set aside and the matter is remitted back to the competent authority for fresh consideration. Perishable nature of goods - release of goods - provisional assessment of goods - Section 18 of the Act - Held that: - direction to the competent authority to provisionally assess the goods imported within a period of seven days and release the same to the petitioner on complying with the procedure required to be followed after provisional assessment. The final assessment under Section 17 B of the Act be framed thereafter, after granting an opportunity of hearing to the petitioner. Petition disposed off - decided partly in favor of petitioner.
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2016 (9) TMI 672
Release of detained consignments - Section 110 of the Customs Act, 1962 - option to pay redemption fine along with duty and interest - Sections 28 and 125 of the Customs Act, 1962 - Coke Breeze - benefit of exemption notification No.12/2012, dated 17.03.2012 - exemption from payment of Basic Customs Duty - Metallurgical Coke - clearance of 69848.48 metric tons of goods by availing benefit of exemption notification - denial of exemption for clearance of balance 14801.52 metric tons of consignments and goods detained - whether for the release of 14801.52 metric tons of material lying in Port, the petitioner should be directed to pay the differential duty relating to the total consignment of about 84365 metric tons or whether the goods can be released upon payment of the proportionate differential duty representing the duty payable for the goods, of which release is now sought? - Held that: - though the object of the proceedings under Sections 28 and 125 of the Act are different from each other, they overlap. This is the reason why the Supreme Court held in Commissioner of Customs (Import), Mumbai Vs. Jagdish Cancer & Research Centre [2001 (8) TMI 113 - SUPREME COURT OF INDIA)] that the order for payment of duty under Section 125(2) would be an integral part of the proceedings relating to confiscation and consequential orders thereon. All the goods, including those already cleared, were liable for confiscation under Section 111(m), and that since a major portion of the goods had already been cleared, it was not possible physically to confiscate or detain them. Since such a deeming fiction is created, even in respect of the goods already released, the expression such goods appearing in Section 125(2), has to be construed as referring to all the goods that were liable for confiscation, but which escaped confiscation for whatever reasons. Otherwise, the appeal filed by the petitioner before the CESTAT as against the order in original, will itself turn out to be an exercise confined only to the goods now detained. The entire order in original is on appeal before the CESTAT. What the petitioner is now seeking in this writ petition is to order the release of the goods, by accepting a portion of the order, without prejudice to their rights in the appeal. If the petitioner had raised such a plea before the Tribunal, the Tribunal may probably take a holistic view of the entire matter. For the purpose of seeking an interim relief, an interpretation of the nature made by the petitioner cannot be accepted by the Court. - Writ Petition dismissed. It will be open to the petitioner to seek appropriate orders from the CESTAT. - decided against petitioner.
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2016 (9) TMI 671
Application to issue writ of mandamus - direction to the respondent to provide documents / informations, as requested for by the petitioner - SCN - Sections 28 and 124 of the Customs Act, 1962 - import of PVC Flex banners - import from Malaysia or from China - copies of documents - mahazars - Held that: - during the course of adjudication, if the petitioner's contention is that, certain documents recovered from the office premises of those three companies are relevant, it would always be open to the petitioner to raise such a plea before the Adjudicating Officer and that cannot be a reason to submit a proper reply to the show cause notice and participate in the adjudicating proceedings - at this stage, the petitioner cannot insist upon the documents, which they now seek for, which are admittedly not recovered from their business premises - the prayer sought for by the petitioner cannot be granted. Petitioner is directed to submit their reply to the show cause notice, within a period of two weeks from the date of receipt of a copy of this order, after which the respondent shall fix the date of personal hearing and proceed to complete the adjudication, in accordance with law. petition dismissed - decided against petitioner.
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2016 (9) TMI 670
Effective date of notification - Notification No.36/2001-Cus(NT) dated 03.08.2001 - notification issued for publication in the gazette on 03.08.2001 - gazette made available to public on 07.08.2001 - Circular No.46/2001 dated 10.08.2001 - import of edible oil including palmolein oil - bill of entry for home consumption was filed on 03.08.2001 - powers conferred to fix the tariff value - Section 14(2) of the Customs Act, 1962 - customs duty paid on invoice value 248 U.S. dollars - whether liablity to pay customs duty at the tariff value, fixed under Notification No.36/2001, of 372 U.S. dollars per metric tonne correct? Held that: - the decision in the case Param Industries Ltd [2015 (6) TMI 732 - SUPREME COURT] is relied upon where it was held that Notification No.36/2001 came into force on or after 06.08.2001, the action of the respondents in applying the tariff value prescribed therein, for the earlier import of R.B.D. Palmolein oil on 03.08.2001, is illegal. Customs duty on R.B.D. Palmolein oil, imported on 03.08.2001, could only have been levied on its invoice value, and not on the tariff value prescribed subsequently in Notification No.36/2001 dated 03.08.2001. The High Court has stated that for bringing the notification into force and make it effective, two conditions are mandatory, viz., (1) Notification should be duly published in the official gazette, (2) it should be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. In the present case, admittedly, second condition was not satisfied inasmuch as it was offered for sale only on 06.08.2001, as it was published on 03.08.2001 in late evening hours and 04/05.08.2001 were holidays - the notification will be effective only from 06.08.2001. Petition disposed off - decided in favor of petitioner.
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2016 (9) TMI 669
validity of notifications - import of betel-nuts - notification dated 4/6/2008 issued by the Government of India, Ministry of Commerce and Industry, Department of Commerce - Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy 2004-09 - Held that: - Merely for the reason that the DGFT also hold the post of Additional Secretary to Government of India does not mean that he cannot exercise the powers vested in him as per the Rules especially when he had issued the notification in accordance with the procedure prescribed after due approval of the concerned authority - when the notification has been issued clearly indicating that it is a notification under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy, 2004-09 and the power is exercised by the Central Government and when it is stated that the "Central Government hereby amends the Schedule-1" and the signature is made by the DGFT as Additional Secretary to Government of India as well, the learned Single Judge was not justified in forming an opinion that DGFT himself has issued the notification in terms of Section 5 of the Act. Notification dated 20/2/2007 - notification dated 10/7/2007 - notification dated 29/8/2007 - restriction imposed for importing betel nuts from Mangalore Port - Held that: - these notifications have already been superseded by the notification dated 4/6/2008, which has later on underwent further amendments as well. Hence, there is no necessity to consider the validity of the notifications dated 20/2/2007, 10/7/2007 and 29/8/2007. Matter remanded back for further consideration - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 661
Import of Olive Oil from Turkey – Compliance with the requirements of Food Safety and Standards (Packaging and Labelling) Regulations, 2011 – minor violation of the requirements to be complied with – can the relief granted to the petitioner on the ground that the consignment which they have imported largely satisfies the labelling requirements under the Regulation and they were ready to explain the minor discrepancies pointed out by the authorised officer? - Held that: - though the violations pointed out are minor, there appears to be several violations which though are stated to be minor if considered cumulatively may have to be interpreted as not in conformity with the labelling requirement. However, this observation should not be mistaken to state that the product is not a quality product nor it is unfit for human consumption. Being conscious of the fact that Court is exercising jurisdiction under Article 226 of the Constitution of India, Court would not venture into disputed questions nor it would have expertise to find out as to whether what has been mentioned in Turkey language is in fact the name of the company or other details to verify the serial number, batch number etc. The ingredients which are contained in the product should be disclosed in the label as required under the Regulations - these issues being technical matters have to be considered by the competent authority under the Food Safety and Standards Act, 2006. Petitioner entitled to one time relaxation – petitioner to move to Director (Imports), Food Safety and Standards Authority of India, FDA Bhavan, Kotle Road, New Delhi 110 002 for one tie relaxation – opportunity of personal hearing to be granted to petitioner – decision to be taken within four weeks from the date on which the representation given as shelf life of product to expire in 2017 – petition disposed off – decided in favor of petitioner.
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Service Tax
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2016 (9) TMI 692
Recovery of dues - Commissioner (appeals) rejected the appeal on the ground of period of limitation - appeal is pending before tribunal - Held that:- the notice shall be kept in abeyance until a final decision is taken by the Tribunal in Appeal pending before the Appellate Tribunal.
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2016 (9) TMI 691
Refund of cenvat credit - 100% EOU - export of services - appellant is a 100% EOU engaged in the service of information technology service named E publishing of books , they are exporting output service namely information technology software service which is covered under section 3(iii) of the Service Tax Rules, 2005 - Held that:- renting of immovable property service is having direct nexus in the manufacture of goods. Rule 2(1) of CCR, 2004, clearly mentions that service utilized in or in relation to manufacture of final products is eligible as input services. Hence, credit on renting of immovable property is eligible for the appellants. Various other input services - Held that:- It is evident that without availing all these services, the appellant would not be in a position to provide the output service of E Publication of Books. Absence of it would adversely affect the provision of output service. Hence, such services are directly related to output service and fully satisfy the definition of input service as given in Section 2 (l) of the CCR, 2004, and accordingly shall be eligible for refund (except for meal charges/food coupon). Rejection of refund on procedural grounds / lapses - Held that:- the impugned O-in-As to the extent of rejection of refund, on grounds of non availability of service tax registration numbers, is not maintainable and the same is liable to be set aside and appeal is liable to be allowed. The rejection of refund covered by certain invoices on grounds that description of input service not mentioned properly is not proper since the appellant gave gave clear evidences before Commissioner (Appeals) explaining nature of service rendered by such input service providers and also justified the essentiality of such input services in rendering their output services. The Appellant shall be entitled for CENVAT Credit and consequent credit in accordance with the principles laid down by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. [2016 (2) TMI 902 - SUPREME COURT] - Decided in favor of assessee.
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2016 (9) TMI 690
Taxability of receipt of "Supervision Charges" on construction contract - demand under the category of Consulting Engineer as defined under section 65(31) of the Finance Act, 1994. - Held that:- by no stretch of imagination can the supervision charges paid to the appellant be considered as consideration received for rendering consulting engineer service inasmuch as the appellant corporation is made up of officers on deputation from the police Department and hence are not professionally qualified engineers or an engineering firm and hence not covered by the definition of consultant engineer service. The nature of the supervision charges are-reimbursement of establishment charges by the MP government to them. - Demand set aside - Decided in favor of assessee.
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2016 (9) TMI 689
Rectification of mistake - interchange of figures in the order - incorrect appreciation of facts - Held that:- there is an inadvertent interchange of figures inasmuch as the service tax demand under IPR service is ₹ 13,12,41,198/- and under franchise service is ₹ 20,27,06,713/ but these figures have got inter changed in opening para of the CESTAT order. - order rectified on this ground. Incorrect appreciation of facts - non-consideration of observation given in para 29 of the order in original - no findings has been given on penalty leviable under Sections 76 and 77 - Held that:- rectification of so called mistakes sought at Sr. No. (ii), (iii) and (iv) do not fall in this category. - ROM rejected on these grounds. Decided partly in favor of assessee.
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2016 (9) TMI 688
Tour operator services - Taxability of services of transportation of employees of M/s. HPCL from the respective residences and to their place of work - Held that:- Appellant were not engaged in the business or planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of ‘tour operator’ service but were adhering to the conditions laid down with various customers. Therefore, it cannot be said that they were covered under the first part of the amended definition of ‘tour operator’. As already discussed, the vehicles are also not “tourist vehicles” so as to be covered under the second part of the definition - Decision in the case of L.N. Gupta Transport Co. [2016 (2) TMI 547 - CESTAT MUMBAI] and others cases followed. - Decided in favor of assessee.
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2016 (9) TMI 687
Demand - Classification - Whether curriculum development, handicraft project, Accounts manual preparation, proposal for carrier facilitation centre etc. services would come under scientific and technical consultancy services or not - Held that:- the nature of the various services on which service tax have been demanded, it is fairly obvious that none of the services will fall even remotely within the category of scientific and technical consultancy under section 65(92) of the Finance Act 1994. Curriculum development even for scientific course cannot be brought under scientific or technical consultancy. It is beyond comprehension as to preparation of accounts manual proposal for carrier facilitation centre or handicraft product falls within the above category. Therefore, the demands made without any basis are set aside. - Decided in favour of appellant
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2016 (9) TMI 686
Refund of Cenvat Credit - 100% EOU - nexus of input services with output services - Held that:- the ineligible credit has been disallowed twice, first by reducing the credit as such and second by applying the formula - Thus, there has been in a way application of the formula twice over. Identical issue was considered by the Tribunal in the case of CST; Mumbai-I Vs Global Market Center Private Ltd., [2015 (2) TMI 271 - CESTAT MUMBAI]. The Tribunal observed that the formula in the notification used the word 'total CENVAT credit taken on input services'. Therefore the inadmissible part of input services cannot be deducted before applying the formula. - Decided in favor of assessee.
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2016 (9) TMI 685
Waiver of interest and penalties - imposed under Section 76 and 78 of the Finance Act, 1994 - Security Agency services - appellant had already paid ₹ 33,450/- of service tax out of the total amount of ₹ 78,359/- - appellant has a reasonable cause for not paying service tax as the same was not paid by the recipient - Held that:- so far as chargeability of interest on the Service Tax amount due is concerned, it is observed that appellant has not discharged the entire Service Tax liability. Under the Service Tax law, if service tax liability is not discharged within the prescribed time then interest from the date of service tax due till it is paid is required to be paid. Appeal of the appellant with respect to chargeability of interest is, therefore, rejected. So far as imposition of penalties under Section 76 and 78 supra are concerned, it is observed that appellant was having a reasonable cause for not making payment to the department because Service Tax was not separately recovered from the service recipient. Appellant's case is, therefore, covered under the provisions of Section 80 of the Finance Act, 1994 and accordingly penalties imposed upon the appellant under Section 76 and 77 are set aside. - Decided partly in favour of appellant
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Central Excise
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2016 (9) TMI 684
Cenvat Credit - pre-mature credit on input services - credit availed before making payment - Scope of Rule 4(7) of Cenvat Credit Rules, 2004 - Held that:- Merely because the respondent have made an entry in their records prior to the date when the credit became due to them, would not result in denial of the credit. Similarly, if the credit has not been utilized by them prior to the said date of admissibility; no demand of interest can be made against them and no penalty can be imposed. Cenvat credit being a substantial benefit cannot be disallowed on the technicalities. - Decision in the case of CCE, Surat II vs. White En-All Pvt. Ltd [2003 (10) TMI 533 - CESTAT, MUMBAI] followed - Decided in favor of assessee.
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2016 (9) TMI 683
Classification - woven goods - It was contended that, all these goods are actually labels/labels tapes bearing lace like ornamental designs/images and were manufactured by the similar process of weaving along with other labels of various designs falling under CETH No. 58.07 attracting nil rate of duty. - goods falling under Chapter Heading 58.04 or CETH No. 58.07 - Held that:- Considering the Explanatory Notes of Chapter Heading 5804, when the subject goods cannot be classified as lace under this Chapter, other classification in alternative in the present proceedings is Chapter Heading 5807. Therefore, only choice for the classification now in the present proceedings is Chapter Heading 5807 as the Revenue has not pleaded any other classification i.e. in lieu of Chapter Heading 5804 other than 5807. We accordingly hold that the goods presently deserve classification under Chapter Heading 5807 of Central Excise Tariff. - Matter remanded back for quantification of duty, if any. - Decided partly in favor of assessee.
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2016 (9) TMI 682
Cenvat Credit on structural steel items - Held that:- applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. - Decided in favor of assessee.
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2016 (9) TMI 681
Cenvat Credit - input services - motor vehicle insurance, staff insurance policy, et cetera - documents relating to the services availed at other offices and invoices is in the name of the said offices - Held that:- in respect of services received at Dhampur unit but invoice raised on corporate office, Delhi, these are fully allowable as there is on procedural lapse in taking registration as ISD after some delay. So far input services have been received at other units and the invoices are on those units, I hold that credit in respect of these, cannot be taken by the Dhampur Unit and the Commissioner (Appeals) have rightly upheld the disallowance. So far penalty imposed under Rule 15 of CCR is concerned, I find that the issue is fully interpretational and there is no deliberate default and as such the penalty imposed is also set aside. - Decided partly in favor of assessee.
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2016 (9) TMI 680
Cenvat Credit - various input services - nexus with manufacturing activity - gardening services, booking binding services, ticket booking services, e-filing services, repairs to culvers & piling works, business improvement services/catering/restaurant services, painting services, mechanical repairs to tanks, washing of lab coats/ laundry services, crane hiring services, foreign payments, data entry services, consultancy services, fabrication services, erection & commissioning services, shifting of scrap services, road cleaning services, AMC for Godrej make furniture, water washing of vehicles etc. Held that:- the appeal is allowed except in respect of credit amount of ₹ 13,601/- availed by the appellant in relation to cleaning of roads. - Decided partly in favor of assessee.
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2016 (9) TMI 679
Cenvat credit - reversal of credit availing on transportation of inputs removed as such - acetic acid was their input which was used in manufacture of final product and that input was also sold by them and while clearing said input as such they reversed Cenvat credit as required by Rule 3(5) of Cenvat Credit Rules 2004 and that they did not reverse Cenvat credit of Service Tax paid on inward transportation. Held that:- The show cause notice contended that the respondent imported Acetic Acid for their own requirement and for sale. The goods which are procured for own requirement and used in the manufacture satisfy the definition of input in said Cenvat credit Rules. Further when the inputs are cleared as such Cenvat credit to be reversed on such clearance of inputs is provided in said Rule 3(5). However the grounds of appeal stated that the party had deliberately twisted the facts toward Rules 3(5). It is very clear that the grounds of appeal are travelling beyond Show cause notice. Therefore, the grounds of appeal are not sustainable. Therefore, the appeal filed by Revenue is not maintainable - Decided against the revenue.
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2016 (9) TMI 678
Intermediate product - captive consumption - production of Sugar Syrup - marketability - The Sugar Syrup appeared classifiable under chapter sub-heading No. 17029090 is being consumed in the manufacture of exempted finished goods i.e. Biscuits of MRP below ₹ 100/- per kgs - Held that:- neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellants factories, are marketable - Decision in the case of M/s Rishi Bakers Pvt. Ltd. [2015 (4) TMI 893 - CESTAT NEW DELHI] followed - Demand set aside - Decided in favor of assessee.
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2016 (9) TMI 677
Cenvat credit - input services - Clean Development Mechanism Service in relation to Carbon Credit Management Services - Held that:- the service tax paid for providing Consultancy Services in relation to greenhouse gas emission reduction and carbon credit management service as per guidelines under the Koyoto Protocol falls under the definition of input service and the appellants are entitled to Cenvat credit and the impugned order denying the Cenvat credit on the said services on account of lack of nexus is wrong and not sustainable in law. - Decided in favor of assessee.
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2016 (9) TMI 676
Waiver of pre-deposit - mandatory pre-deposit - constitutional validity of Sec.35F of the Act - The Tribunal heard the matter and passed an order, holding that Sec.35F would apply to the case of the petitioner irrespective of the fact that the proceedings commenced prior to 06/08/2014, the date on which amendment was brought in force. - Held that:- by virtue of Circular No.984/08/2014-CX dated 16/09/2014, clarification has been issued by the Government of India, Ministry of Finance, that the amended provisions apply to appeals filed after 06/08/2014. Sections 35F of the Central Excise Act, 1944 and 129F of the Customs Act, 1962 contain specific saving clause to state that all pending appeals/stay applications filed till the enactment of the Finance Bill shall be governed by the aforesaid provisions. In the said circumstances, I do not think that a case has been made out for challenging the constitutional validity of Sec.35F. - the petitioners are liable to deposit 7.5% or 10%, as the case may be, for preferring appeals before the Commissioner (Appeals) or the Tribunal. - Decided against the appellant.
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CST, VAT & Sales Tax
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2016 (9) TMI 667
Entitlement to interest on refund of purchase tax - Section 54(1) of the erstwhile Gujarat Sales Act,1969 - manufacture of Ayurvedic medicines - URD purchase - purchase tax - Section 15B under the erstwhile Gujarat Sales Act,1969 r/w Rule 42E of the Sales Tax Rules - gas used as fuel for manufacturing process - is the assessee entitled to interest on delayed refund of purchase tax and also interest on interest on delayed refund? - Held that: - the decision of the case State of Gujarat Versus Doshi Printing Press [2015 (3) TMI 211 - GUJARAT HIGH COURT] is relied upon. The assessee is entitled to interest for delayed refund of amount deposited to Governent. However, assessee not entitled to interest on interest for delayed refund. the decision of the cases Sandvik Asia Limited Vs. Commissioner of Income Tax & Others [2006 (1) TMI 55 - SUPREME Court] and Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] also relied upon. Appeal dismissed - decided against Revenue.
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2016 (9) TMI 666
Validity of order of assessment - assessment years 2006-07 to 2014-15 - Tamil Nadu Value Added Tax Act - opportunity of personal hearing - Held that: - decision of the case SRC Projects Private Limited vs. Commissioner of Commercial Taxes, Chennai and another [2008 (9) TMI 914 - MADRAS HIGH COURT] is relied upon - failure to grant an opportunity of personal hearing would render the impugned order as having been passed in violation of principles of natural justice. Re-assessment of turnover - alleged mismatch as per the departmental website - circular issued by the Principal Secretary/Commissioner of Commercial Taxes dated 01.04.2015 - Held that: - since the issue is a recurrent issue in all the assessment circulars, the Commissioner thought fit to issue a circular dated 01.04.2015 in Circular NO.10/2015/D3/8562/2014. As per this circular, in cases of mismatch, invoice-wise data for mismatch to each demand must be mandatorily attached or to the notice either in print form or as a CID or send as email (in case it is voluminous). Further, the fact of enclosing such mismatch transaction date shall be clearly mentioned entered in the notice and acknowledgment receipt obtained. Matter remanded - details of mis-match to be furnished as per direction issued by Commissioner - petitioner to be granted opportunity of personal hearing - assessment to be done by passing a speaking order - petition disposed of - decided in favor of petitioner.
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2016 (9) TMI 665
Issuance of directions to the respondent to furnish the records in support of the alleged purchases and sales effected through containers - permitting the petitioner to conduct the cross examination of the 3rd parties - conduct a detailed enquiry, before proceeding with the Revision Notices and permit the petitioner to file their final objections and grant a personal hearing - receipt of the copy of the report from the Assistant Commissioner (CT), Central Enforcement Wing, Zone-1 by Assessing Officer - verbatim repetition of the report of the Enforcement Wing for issuance of pre-revision notice - Held that: - Assessing Officer is a Statutory Authority, who has to complete the Assessment in accordance with law and not be solely guided by the report of the Enforcement Wing and at best such report should be treated as an information and a cause of action for issuing a show cause notice. Once the dealer files their objections, the Assessing Authority is expected to independently apply his/her mind to the factual details and the legal positions pointed out by the dealer and then take a decision in accordance with law. The petitioner directed to submit a representation to Assessing Officer, clearly indicating the documents which they require. On receipt of the representation, the Assessing Officer, shall address the Assistant Commissioner (CT), Central Enforcement Wing-I, Chennai-6, inform about the directions issued by Court and request for supply of all the documents sought for by the petitioner. After receiving those documents from the Central Enforcement Wing-I, copies there of shall be provided to the petitioner and thereafter, the petitioner is entitled to submit their objections and on receipt of the objections, the Assessing Officer shall afford an opportunity of personal hearing to the petitioner and if the request for cross examination is made, such request should also be acceded to and thereafter, the Assessing Officer shall complete the assessment by independently applying her mind to all the issues that may be pointed out by the petitioner in their objections, after receiving the documents - petition disposed off - decided in favor of petitioner.
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2016 (9) TMI 664
Order of assessment - Tamil Nadu General Sales Tax Act, 1959 - best judgement assessment - summon to produce books of accounts - limitation bar - section 16 of the TNGST Act - Held that: - Sub-section (6) of Section 16 of the TNGST Act states that while completing the period of limitation for assessment or re-assessment, the time during which the appeal or proceedings are pending before the Appellate Authority or the Revisional Authority or the Special Tribunal or the Supreme Court shall be excluded. Time between the original order of assessment dated 10.03.2000 to the order passed by the Tribunal dated 23.12.2002 should stand excluded because after the Original Assessment order was passed, the petitioner filed an appeal before the first Appellate Authority, namely, the Appellate Assistant Commissioner (CT), Fort Round, Vellore and appeal was rejected as time barred. Thus if the time during which the matter was pending before the Appellate Authority and the Special Tribunal is excluded, then the impugned proceedings is not barred by limitation - no limitation bar. Liberty granted to the petitioner to treat the impugned proceedings as show cause notice and submit their objections within a period of two weeks from the date of receipt of copy of this. On receipt of the objections, the respondent shall afford an opportunity to the petitioner in which the petitioner shall produce the documents and books of accounts to show that they effected purchases from registered dealers and after perusing all the documents and considering the objections, the respondent shall re-do the assessment in accordance with law - assessment order dismissed - petition disposed off - decided partly in favor of petitioner
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2016 (9) TMI 663
Detention of goods - train rake carrying pig iron - goods vehicle or not - Section 2 (l) of the act - interpretation of the exception clause of the definition - Whether the goods being transported in a vehicle running upon fixed rails can be detained under section 51 of the VAT Act? - Held that: - The term ''goods vehicle'' has been defined in Section 2 (l) of the Act to mean any mechanically propelled vehicle adapted for use upon roads but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or any other enclosed premises. A plain reading of the exception clause shows that it is in two parts having no relation with each other. These being:- (i) the vehicle running upon fixed rail; (ii) the vehicle of a special type adapted for use only in a factory or any other enclosed premises. The language of Section is clear to the effect that these are types of vehicles, which are excluded from the definition of 'goods vehicle.' - the goods being transported in a vehicle running upon fixed rails could not be detained under Section 51 of the Act - penalty cannot be imposed. Appeal of Revenue dismissed - decided against Revenue.
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2016 (9) TMI 662
Imposition of Section 31 of VAT Act - rectification - tax liability - 3% or 4% - Entry No. 10 of the Schedule - is subsequent view taken by authority with regard to application of another entry be said to be a case of rectification so as to attract Section 31 of VAT Act, or a case of escaped assessment? - Held that: - Reliance is placed on M/s Deva Metal Powders Pvt. Ltd. Vs Commissioner of Trade Tax, [2007 (12) TMI 221 - SUPREME COURT OF INDIA]. There is any apparent mistake so as to attract power of rectification under Section 31 of VAT Act - petition allowed - decided in favor of petitioner.
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Indian Laws
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2016 (9) TMI 668
Conviction under Section 15 read with Section 8(c) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - sentence of rigorous imprisonment for four years and to pay fine of ₹ 20,000/- - further rigorous imprisonment for six months, in default of payment of fine - poppy-straw - contraband goods - sale to co-accused who did not have valid license - Maharashtra NDPS Rules, 1985 - raid - search of premises - testing of colored powder found in a polythene bag in which opium was present - Held that: - the appellant was found to have sold the contraband to the co-accused without any licence. The said finding, inter alia, is based on the evidence of PW1- Bhaskar Shetty, Inspector of Customs who seized the contraband from the co-accused- Karim Patel. The evidence in the form of statement of the appellant himself (Ex.-20) under Section 67 of the Act before his arrest clearly shows that the appellant had sold the contraband to the co-accused- Karim Patel who did not have any licence to purchase thereof. At the time of production of gunny bag no objection was raised on behalf of the appellant that the bag did not carry any label or sign of identity - the absence of label and sign of identity could not be presumed - no serious infirmity in the findings recorded by the courts in convicting and sentencing the appellant - appeal dismissed - decided against appellant.
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2016 (9) TMI 660
Dishonor of cheque - Summon to the petitioner under Section 319 Cr.P.C - Held that:- Undisputedly, the petitioner was the Chairman and Managing Director of the company and as per the judgment in the case of S.M.S. Pharmaceuticals (2005 (9) TMI 304 - SUPREME COURT OF INDIA ), the Managing Director would be responsible for day to day affairs of the company. The argument advanced by the learned Senior Counsel for the petitioner that the petitioner was not intervening in the day to day proceedings of the company, is of no consequence when the cheques in question were issued during the course of day to day business transactions for the benefit of the company. More the reason that in the complaint filed before the Trial Court the company had already been impleaded as one of the respondents. The only part left is that the name of Mr.Vijay Mallya as Chairman and Managing Director of the company was not added in the original complaint filed under Section 138 of the Negotiable Instruments Act. Adding the name of Mr.Vijay Mallya during the proceedings brought forth before the Court below that he was the Chairman and Managing Director of the company which is guilty for dishonouring the cheques in question, would be covered under Section 141 of the Negotiable Instruments Act and cannot be termed as abuse to the process of law as envisaged in Section 482 Cr.P.C. In view of the above facts and circumstances, this Court is of the considered opinion that the order passed by the learned Trial Judge cannot be termed as unsustainable or illegal or abuse to the process of law and no ground is made out to set aside the same.
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2016 (9) TMI 659
Professional misconduct - Chartered Accountants Act, 1949 - Held that:- A professional misconduct enumerated in the First Schedule of the Act would be a category by itself and other misconduct contemplated by Sub-Section (1) of Section 21 would have to be looked outside Part I of the First Schedule. It would be a conduct which any reasonable member of the society would frown upon. Now, a professional who threatens a client would certainly commit a misconduct because the act is of a kind which is not expected by members of a civil society to be committed by a professional.We concur with the view taken by the Council and thus dispose of the Reference levying penalty of reprimand upon the respondent; the penalty is envisaged by Section 21(6)(b) of the Chartered Accounts Act, 1949.
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2016 (9) TMI 658
Misconduct by Chartered Accountant - Held that:- Having perused the documents we find that the Disciplinary Committee of the Council had accorded full opportunity to the respondent to present his case. All material documents have been considered by the Disciplinary Committee. The Council has very fairly considered the respondent’s response to the report of the Disciplinary Committee and has re-appraised the material to conclude that whereas the respondent cannot be held guilty of professional misconduct within the meaning of clauses (5) and (6) of Part I of Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949, he would be guilty of professional misconduct within the meaning of clause (7) thereof. It is apparent that the misconduct contemplated by clauses (5) and (6) are severe vis-a-vis clause (7). Taking into account said fact and that we are deciding the reference in the year 2016 we are of the opinion that accepting the decision of the Council at its meetings held on January 16 and 17, 2011 in so far it concludes the respondent guilty of misconduct contemplated by clause (7) of Part I of Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949, ends of justice would suffice if penalty of severe reprimand contemplated by Section 21(6)(c) of the Chartered Accountants Act, 1949 is inflicted upon the respondent.
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2016 (9) TMI 657
Misconduct as per Section 21 and 22 of the Chartered Accountants Act - penalty of suspension of the name from the Register of Members - Held that:- The respondent is a Chartered Accountant. We fail to understand as to how come he proceeded to London and Norway if he had no documents with him concerning either Mr. Sanjay Aggarwal or M/s Sanvijay Rolling and Engineering Ltd., for obtaining funds. As a Chartered Accountant he ought to know that a person would advance a credit to an individual or a company after satisfying itself with the credit worthiness of the individual or the company. All documents required for a due diligence ought to have been taken by the respondent. It is a clear case where the respondent No.1 has cheated M/s Sanvijay Rolling and Engineering Ltd., Nagpur. Indeed, we concur that the respondent No.1 has committed misconduct as per Section 21 and 22 of the Chartered Accountants Act, 1949. The recommendation is to remove the name of the respondent from the Register of Members for a period of one year.The conduct of the respondent justifies the proposed penalty. We answer the Reference in the affirmative holding that the respondent is guilty of misconduct and we impose the penalty of suspension of the name of the respondent No.1 Rakesh Verma from the Register of Members for a period of one year.
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