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TMI Tax Updates - e-Newsletter
September 24, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Late filing fee u/s 234E - late filing of TDS return prior to 1.6.2015 - demand notices u/s 200A for intimation for payment of fee u/s 234E can be said as without any authority of law and the same are quashed and set aside to that extent - HC
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TDS u/s 192 - pro-rate medical allowances given by the Employer to the employees - The company when ensured that such reimbursement was not in excess of actual expenditure incurred by the employees, this objection of the Revenue also cannot survive- HC
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Penalty u/s 271B - assessee firm could not get the accounts audited within time limit prescribed u/s 44AB - there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed. - AT
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Charge to income tax in respect of a house property - deemed income - The words “where the property is let” in sections 23(1)(b) and 23(1)(c), thus, represents a state of actual letting and cannot be extended to a state of ‘intended letting’. ‘Letting’, it may be appreciated, is a culmination of ‘intended letting’, so that the Act stipulates a maturity/completion of the intention to let. The words “actually let” in section 23(3) have no bearing at all in the matter. - AT
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Levy of fees u/s 234E - TDS return - adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated u/s 200A. - AT
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The interest free loan was given to another trust and the common trustee have no substantial interest in any of the trust. Therefore in the absence of any direct or indirect benefit to the trustees or author of assessee trust or to the trustees of the resident trust the provisions of section 13(1)(c) cannot be attracted. - AT
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The embezzled cash by an employee of the assessee in the course of business activity has to be allowed as business loss. - AT
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The interest received prior to commencement of commercial operations of the specified mega road projects will be in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources” - AT
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The assessee has laid new floor on the leased asset of the company, for which it has purchased tiles for this purpose and by claiming the same as revenue expenditure - claim of expenditure u/s 37(1) allowed - AT
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When the salary paid to the Director is still less than the salary paid to the other Directors during the year under consideration then the provisions of Section 40A(2) cannot be invoked. - AT
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Penalty u/s 271(1)(c) - Claim of depreciation on financed leased assets - AO while disallowing the claim of depreciation has not considered the exclusion of the principle component of the lease rental clearly shows that the penal provisions of Section 271(1)(c) of the Act cannot be attracted in this case - AT
Customs
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To conclude that the imported goods were not PDO but ‘base oil’ and allege mis-declaration on the part of the importer only on the basis of the chemical examiner’s report on one out of three characteristics will not be correct - AT
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Testing procedure should not be subject to cross-examination by the appellant as the credibility of the test is not in question and a non-expert may not be in a position to query an expert on technicalities - AT
Corporate Law
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Lifting of corporate veil - Mr. Surinder Singh Bhatia and his members of his family had created several corporate bodies and they were controlled by Mr. S.S. Bhatia and his family and therefore the learned Single Judge has rightly come to the conclusion that they had to be treated as one single entity as they were being used as cloaks behind which Mr. Surinder Singh Bhatia and his family were using the devise of incorporation as ploy adopted for preventing execution of the international award which was passed against BIL and in favour of Respondent No.2 Vitol. - HC
Service Tax
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Whether services provided by the appellant as commission agent for sale of goods of its foreign principal M/s Barco Control Rooms GMBH, Germany on their behalf is to be treated as export of services under Rule 3 of Export of Service Rules, 2005 during the relevant period - Held Yes - AT
Central Excise
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Validity of order directing special audit - Section 14AA of the Central Excise Act, 1944 - The Commissioner has not discussed of the quantum of the duty credit or utilised cenvat credit by the manufacturer - petitioner was not afforded any opportunity of hearing - order of audit set aside - HC
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Disallowance of rebate - goods manufactured by SAIL were exported - alleged procedural lapses for the consignment under consideration have not been alluded to or identified - rebate allowed - HC
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The assessee cannot be said to be at fault at that time in view of circular of the Board and earlier order of Tribunal in favour of the assessees. Hence, the assessee was not at fault and the extended period of limitation was not available - HC
VAT
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Sale of apartment - agreement to sell the apartment - works contract - the petitioner does not become works contractor, unless there are materials to indicate that the petitioner had already entered into a contract with potential purchasers - HC
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Works contract - valuation - the deduction under the VAT act would be either on the actual value of labour, services and other like charges; or it would be at the prescribed percentage, in such cases where the charges towards labour, services etc. are not ascertainable from the terms and conditions of the contract - HC
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Any deduction made by the principal while making payments towards the works contract would always remain subject to the final assessment by the AO; and deduction at source (TDS) by the principal, by itself, is not decisive of the actual amount of VAT payable. - HC
Case Laws:
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Income Tax
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2016 (9) TMI 964
Late filing fee under Section 234E - Constitutional validity of Section 234E - exercise of power under Section 200A - Held that:- The intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded by us hereinabove, when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent-authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent. As such, as recorded earlier, it is on account of the intimation received under Section 200A for making computation and demand of fees under Section 234E, the same has necessitated the appellant to challenge the constitutional validity of Section 234E. When the intimation of the demand notices under Section 200A is held to be without authority of law so far as it relates to computation and demand of fee under Section 234E, we find that the question of further scrutiny for testing the constitutional validity of Section 234E would be rendered as an academic exercise because there would not be any cause on the part of the petitioners to continue to maintain the challenge to constitutional validity under Section 234E of the Act. At this stage, we may also record that the learned counsels appearing for the appellant had also declared that if the impugned notices under Section 200A are set aside, so far as it relates to computation and intimation for payment of fee under Section 234E, the appellant-petitioners would not press the challenge to the constitutional validity of Section 234E of the Act. But, they submitted that the question of constitutional validity of Section 234E may be kept open to be considered by the Division Bench and the Judgment of the learned Single Judge may not conclude the constitutional validity of Section 234E of the Act. Under these circumstances, we find that no further discussion would be required for examining the constitutional validity of Section 234E of the Act. Save and except to observe that the question of constitutional validity of Section 234E of the Act before the Division Bench of this Court shall remain open and shall not be treated as concluded. In view of the aforesaid observations and discussion, the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. It is clarified that the present judgment would not be interpreted to mean that even if the payment of the fees under Section 234E already made as per demand/intimation under Section 200A of the Act for the TDS for the period prior to 01.04.2015 is permitted to be reopened for claiming refund. The judgment will have prospective effect accordingly. It is further observed that the question of constitutional validity of Section 234E shall remain open to be considered by the Division Bench and shall not get concluded by the order of the learned Single Judge.
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2016 (9) TMI 963
TDS u/s 192 - pro-rate medical allowances given by the Employer to the employees - whether is taxable as perquisite in their hands under the head “Salary” as per sub clause (iiia) and (iiib) of section 2(24) r.w.s. 17 ? - Held that:- Section 17(2) of the Act refers to term “perquisite” as to include range of benefits to be paid by the employer to the employees. Proviso to said sub section, however, provides that nothing in this clause shall apply to in clause (v) where any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or the treatment of any member of his family, so, however that such sum does not exceed ₹ 15,000/- in the previous year. Thus, reimbursement of medical expenditure actually incurred by the employee on himself or his family or upto a ceiling of ₹ 15,000/- would not be included in the term “perquisite”. This is precisely what are the facts in the present case. The Revenue does not contend that the ceiling of ₹ 15,000/- was breached. Prime objection of the Revenue appears to be the fixed reimbursement commensurate with the level of the employee irrespective of the demand for medical reimbursement. The company, however, when ensured that such reimbursement was not in excess of actual expenditure incurred by the employees, this objection of the Revenue also cannot survive. - Decided in favour of assessee
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2016 (9) TMI 962
Penalty u/s 271B - assessee firm could not get the accounts audited within time limit prescribed u/s 44AB - reasonable cause for delay - Held that:- The assessee firm got the accounts audited on 1-05-2009 and filed the return of income on 23-05-2009 which resulted delay of almost 08 months. It is noted from the submissions of the assessee that it is the first instance of delay in getting the accounts audited pertaining to assessment year 2008-09. The assessee submitted that the bone of contention of the issue was on account of audit fees of the auditor which resulted delay in completion of the audit and the same was completed by 01-05-2009 and thereafter the assessee filed the return on 26-05-2009. It is noted from the records that the assessee was not provided opportunity by the lower authorities to cross examine the statements given by Shri R.A. Sharma, Auditor of the firm and the assessee was deprived of countering Shri R.A. Sharma, Auditor. It appears from the discussions held hereinabove that the delay made by the assessee firm in filing the return of income is for the first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between the assessee and the auditor. Hence, it appears that the dispute with the statutory auditor is a reasonable cause within the meaning of Section 273B as held in the case of Kripa Industries (I) Ltd. vs. JCIT (2001 (10) TMI 300 - ITAT PUNE ) that there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed. Taking into consideration we feel that the ld. CIT(A) is not justified in imposing the penalty u/s 271B. - Decided in favour of assessee.
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2016 (9) TMI 961
Charge to income tax in respect of a house property - deemed income - annual value - Held that:- The basis of the charge to income tax in respect of a house property, not occupied by its’ owner for the purpose of business or profession carried on by him, is its’ annual value; its income potential, as reflected in its’ fair rental value (FRV), i.e., the rent at which it may reasonably be expected to be let from year to year. This is irrespective of whether the property is actually let or not. The exception to taxing the FRV of a house property under the Act is provided in respect of one house property which the owner could not, by reason of his employment or business/profession, occupy, provided it is not actually let and no other benefit has been availed of by him during the relevant year, in which case the AV is taken at nil. The position in law is clear; in fact, stands enunciated by a number of decisions by the higher courts of law (refer paras 4,5.1). The fact of letting assumes significance only where the property is actually let and the rent received/receivable exceeds the fair rental value, so that the enhanced sum substitutes the FRV as the AV. A further exception is drawn where on account of vacancy this rent falls even below the FRV, in which case it is this reduced amount which is to be adopted as the AV. The property being let, though unable to fetch the rent due to vacancy, the amount actually realized/realizable is taken as the AV, whether lower or higher than the FRV. That is, where the property is let, the actual rent is made the basis for AV in preference to the notional (fair) rent provided the decline in rent (w.r.t. fair rent) is on account of vacancy or unrealizability. This is the effect of a combined/conjoint reading of section 23(1), i.e., of all its limbs together, even as the entire section stands read, as is to be, as a whole. Both ss. 23(1)(b) and 23(1)(c) only represent different scenarios qua a property which is let. That the letting is for rent is both plain and manifest, so that it contemplates actual letting only. How else could, one may ask, the reduction in rent received/receivable and, thus, in AV, be possible? The actual letting is thus the sine qua non where a reduction or remission in rent on account of vacancy occurs, and is thus to be taken in to account. The words “where the property is let” in sections 23(1)(b) and 23(1)(c), thus, represents a state of actual letting and cannot be extended to a state of ‘intended letting’. ‘Letting’, it may be appreciated, is a culmination of ‘intended letting’, so that the Act stipulates a maturity/completion of the intention to let. The words “actually let” in section 23(3) have no bearing at all in the matter. The same have perhaps been used to emphasize the deemed letting where some benefit is derived by the owner in respect of his house property, whether self-occupied or not, and also of such deeming in respect of all such residential houses, save one (sections 23(2), 23(3) and 23(4)). There is also no anomaly in the provision, which is sought to be pleaded with reference to the word “whole” occurring in s. 23(1)(c). Before parting, we may also advert to the argument advanced during hearing of the occupation certificate being issued by Brihan Mumbai Mahanagar Palika only on May 21, 2009 and the final payment of ₹ 875 lacs to the seller being, as provided in the conveyance deed, made only there-upon, seeking its’ admission as additional evidence on that ground. The same is without merit, even as noted by the Bench during hearing itself. The possession of the property has been admittedly taken on 18/12/2008, and the property is fully constructed, having all amenities (refer Clause (xv) of the Conveyance Deed). The property is lettable and, in fact, actually let 1/4/2009 onwards. The conveyance of the property is complete, and the Deed only recognizes a lien thereon in favour of the Vendor to the extent of the amount unpaid, i.e., ₹ 875 lacs, about 10% of the property value.
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2016 (9) TMI 960
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. The impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (9) TMI 959
Disallowance of depreciation as deduction U/s.35(2)(iv) is allowed in respect of capital expenditure on scientific research - depreciation allowability to charitable trust - double deduction - Held that:- CIT(Appeals) has allowed the claim of the assessee by following the various decisions including the decision of Hon'ble Bombay High Court in the case of CIT Vs. Institute of Banking Personnel Selections (2003 (7) TMI 52 - BOMBAY High Court ) as well as the decision in the case of CIT Vs. Society of the Sisters of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court ]held that depreciation is allowable on capital assets on the income of the charitable trust for determining the quantum of funds which have to be applied for the purpose of trusts in terms of section 11 of the Act. We find that this issue is now settled in favour of the assessee by a series of decisions by the High Courts as well as this Tribunal - Decided in favour of assessee. Interest free loans given to the charitable trust - Held that:- For attracting the provisions of section 13(1)(c)(ii), the beneficiary of income or property has to be the author trust, any person who has made substantial contribution to the trust in case HUF is the author of the trust, a member of the family or any trustee of the trust or manager, any relative of any such author, founder trustee or manager. Any concern in which any of the persons referred in clause (a) to (d) has a substantial interest. Thus in the case of the assessee, the interest free loan was given to another trust and the common trustee have no substantial interest in any of the trust. Therefore in the absence of any direct or indirect benefit to the trustees or author of assessee trust or to the trustees of the resident trust the provisions of section 13(1)(c) cannot be attracted. Revenue appeal dismissed.
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2016 (9) TMI 958
Disallowance on account of embezzlement of cash by an employee - Held that:- For the purpose of claiming a debt as bad, the conditions prescribed u/s 36(2) of the Act have to be complied with. In the case before us, the conditions prescribed u/s 36(2) of the Act were not complied with, therefore, the claim of the assessee cannot be allowed as bad debt. However, it is a loss suffered in the course of business activity and it is inevitable loss in the hands of the assessee. When the assessee trusted Shri Arumugamswamy and allowed him to manage the day-to-day affairs, embezzled the cash to the extent of ₹ 240 lakhs. The net embezzled amount comes to ₹ 1,86,24,839/-. This Tribunal is of the considered opinion that the embezzled cash by Shri Arumugamswamy in the course of business activity has to be allowed as business loss. In view of the above, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow the embezzled cash of ₹ 1,86,24,839/- by Shri Arumugamswamy as business loss. Addition towards excess stock - Held that:- During the course of search operationo, the Revenue authorities found excess stock in the showroom of the assessee. Both the assessee and the Revenue valued the excess stock by reducing the gross profit margin from MRP value of the stock available at the end of the financial year. The Assessing Officer has also taken 14% as gross profit on the tag price for the purpose of computing the value of the stock. As rightly submitted by the ld. Representative for the assessee, while arriving at the excess stock, the Assessing Officer instead of 14% has adopted 20% as gross profit ratio which resulted in the excess stock of ₹ 3,25,16,473/-. Therefore, this Tribunal is of the considered opinion that the addition of ₹ 88,76,731/- is unwarranted. In view of the above discussion, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed. Addition on account of fall in gross profit rate - Held that:- It is not in dispute that the assessee has offered excess stock of ₹ 2,36,39,742/- for taxation. This excess stock is nothing but profit of the assessee. Therefore, this excess stock has to be taken into consideration while estimating the gross profit. As rightly submitted by the ld. Representative for the assessee if the excess stock of ₹ 2,36,39,742/- was taken into consideration, the gross profit margin of the assessee would come to 21% which is admittedly more than the average gross profit ratio shown by the assessee @ 18% for the earlier assessment years. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.
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2016 (9) TMI 957
Interest earned on shortterm receipts (STR) prior to commercial operations of the roads - treated as income from other sources rather than reducing it from the capital cost of construction of the roads - Held that:- In the instant case, undisputedly, the funds have been borrowed for the specific purpose of execution of the mega road projects and as per the loan agreement executed between the consortium of bankers and the assessee dated 23.11.2005, all the disbursements shall be deposited in the trust and retention account which shall be subject to strict control and verification by the Senior lenders and all disbursements shall be utilised solely for the purposes of implementation of the project and no other purpose. The funds are thus inextricably linked to the setting up of the mega road projects and interest earned on such borrowed funds infused in the business could not be classified as income from other sources. We also note a distinguishing feature in the instant case that the assessee is not at liberty to use the interest so earned as per its will and discretion unlike the case in Tuticorin Alkali Chemicals & Fertilizers (1997 (7) TMI 4 - SUPREME Court) and the interest has to be used solely for the purposes of implementation of the specified projects only. The impunged interest receipt of ₹ 35,39,479/- on such borrowed funds relates to the mega road projects/stretches which were under construction and the completed road projects/stretches upto the date of commencement of commercial operations. Therefore, the interest received prior to commencement of commercial operations of the specified mega road projects will be in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources”. - Decided in favour of assessee Double taxation of interest income - Held that:- From the perusal of the CIT(A)’s order it is noted that the interest income of ₹ 1,64,07,481/- was reduced from the interest expenditure debited in the P&L account in other words the interest expenditure has been shown net of interest income of ₹ 1,64,07,481/-. This shows that the interest income has already been credited in the profit and loss account. However, the way it has been reflected in the profit and loss account is by way of reduction from the overall interest expenditure. We accordingly agree with the contentions of the ld. AR that where the income has already been offered in the profit and loss account there is no occasion for the AO to bring the same income to tax again as this will result in double taxation. Hence we direct to delete the addition in the hands of the assessee - Decided in favour of assessee
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2016 (9) TMI 956
Disallowance of expenditure incurred on repairs and maintenance in the lease hold premises - revenue or capital expenditure - Held that:- Admittedly, in the present case, the assessee has laid new floor on the leased asset of the company, for which it has purchased tiles for this purpose and by claiming the same as revenue expenditure, debited an amount of ₹.27,09,957/- under the head ‘building maintenance’. However, the Assessing Officer treated the same as capital expenditure and addition made was further confirmed by the ld. CIT(A). On similar facts and circumstances, the Hon’ble Jurisdictional High Court in the case of CIT v. Ayesha Hospitals (P) Ltd. (2006 (10) TMI 117 - MADRAS High Court) has observed that the expenditure incurred by the assessee on painting, relaying of damaged floors, partitions, etc. in leasehold premises is allowable as revenue expenditure and relevant portion of the order is reproduced hereinabove. Respectfully following the above decision of the Hon’ble Jurisdictional High Court, we direct the Assessing Officer to delete the addition made on this account - Decided in favour of assessee.
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2016 (9) TMI 955
Disallowance of salary paid to the Director by applying the provisions of Section 40A(2) - Held that:- Assessing Officer has disallowed the salary increase in the salary by invoking the provisions of Section 40A(2) which mandates that in case the Assessing Officer of the opinion that an expenditure is excessive or unreasonable having regard to Fair Market Value of goods; services or facilities for which the payment is made or legitimate need of the business or profession so much of the expenditure as was considered excessive or unreasonable salary shall not be allowed as a deduction. Thus once the Assessing Officer has to form an opinion that a particular expenditure is excessive or unreasonable. The formation of opinion should be based on having regard to the fair market value of the services or goods. However the Assessing Officer has not conducted such enquiry but disallowed the salary of the same director in the earlier year. It is pertinent to note that when the salary paid to the Director is still less than the salary paid to the other Directors during the year under consideration then the provisions of Section 40A(2) cannot be invoked. It may be a case that this particular Director was under paid in earlier year and just to bring the parity of the salary with the other Directors the salary of the Director was increased during this year. In view of the above facts as well as decision of this Tribunal in assessee's own case (supra), the disallowance made by the Assessing Officer is not justified and the same is deleted. Addition made on account of difference between the balances in the accounts of M/s. Kayen Print Services Pvt. Ltd. and M/s. UPM Kymmene India Pvt. Ltd. - Held that:- It is manifest from the record that the assessee failed to explain the differences in the balance outstanding in the accounts of these two parties as per the confirmation of accounts by these parties. Before the Tribunal the assessee has explained the differences due to certain investments that were not taken into consideration by these parties however in the absence of the relevant evidence produced before the authorities below for their examination and verification this explanation of the assessee cannot be accepted at this stage
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2016 (9) TMI 954
Penalty u/s 271(1)(c) - Claim of depreciation on financed leased assets - Held that:- We note that the Assessing Officer while disallowing the depreciation has not excluded the capital / principle component in the lease rentals which are included in the total income of the assessee. If the Assessing Officer has taken a view that the transaction in question is a finance lease and depreciation on such asset is not allowable to the assessee then only the interest component in the lease/repayment amount received by the assessee can be assessed to tax instead the entire lease amount. Therefore we find that the Assessing Officer while disallowing the claim of the assessee on account of depreciation of ₹ 7,27,04,961 has not excluded the principle component in the lease rental of ₹ 14,84,88,074. If the Assessing Officer would have computed the correct income of the assessee then despite being disallowance of the depreciation the total income of the assessee would have been much less than the total income by allowing the claim of depreciation. We note that the assessee has included in the total income a sum of ₹ 17,63,40,728 being lease rentals which includes principle as well as finance charges. Therefore in view of the above facts when the Assessing Officer while disallowing the claim of depreciation has not considered the exclusion of the principle component of the lease rental clearly shows that the penal provisions of Section 271(1)(c) of the Act cannot be attracted in this case. Even otherwise, it is a case of difference of opinion on an issue of allowabilty of depreciation on lease assets wherein the Assessing Officer has not accepted the view and belief of the assessee which has been confirmed by this Tribunal however, in view of the judgment of Hon'ble Supreme Court in the case of ICDS Ltd. Vs. CIT [2013 (1) TMI 344 - SUPREME COURT ], this issue is a debatable issue and if the assessee has claimed depreciation on leased asset which is a possible view then disallowing of said claim of the assessee would not ipso facto amount to concealment of income or furnishing of inaccurate particulars of income. Accordingly, in view of the above discussion, we do not find any error or illegality in the impugned order of the CIT (Appeals). - Decided against revenue.
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2016 (9) TMI 953
Expenses on foreign travel of Directors wives - Held that:- The issue cannot be decided on the basis of the result of the assessment proceedings relating to the same question in another assessment year. Whether a Director’s spouse has traveled with him for business purpose or not, is essentially a question of fact not only in respect of each year but in respect of each tour. One visit may be for business purpose and another visit may not be for any business purpose whatsoever. The decision of the Tribunal, therefore, is incorrect for the nature and purpose of the visits that the Tribunal considered in respect of the assessment year 1990-91, would be different from the visits that the Tribunal had to consider in respect of the present assessment year. We hasten to add that there may be cases where the tour in a given year may be of the same nature in another year or other years. That would also depend upon the facts of each case. The burden of proving the same is, however, on the assessee. The respondent has not established such a case. Question is, therefore, answered in favour of the appellant/Department. The decision of the Assessing Officer to delete the disallowance is upheld. Proportionate management expenses allocated against dividend income for purpose of computation of deduction u/s 80M - Held that:- The deductions under section 80M must be computed in accordance with the provisions of section 80M. If the Appellate Authorities find that the expenses liable to be deducted have been considered under the wrong head, they must direct the Assessing Officer to rectify that error for all purposes. We have by our judgment passed in Commissioner of Income Tax (Central) Ludhiana v. M/s Hero Cycles Ltd. Ludhiana [2016 (9) TMI 901 - PUNJAB AND HARYANA HIGH COURT ], held that where income is considered under the wrong head in the computation of income, the Assessing Officer must be directed to pass a fresh assessment order after considering it under the correct head for all purposes including for the purpose of computation of income for deductions under section 80HHC. It would follow then that the same rule ought to apply also to expenses which are entitled to be deducted. They must be deducted qua/in respect of the correct head of income. In the present case the expenditure incurred to yield dividend under section 80M must be deducted under section 57(i)(iii) of the Act.
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2016 (9) TMI 952
Claim of deduction u/s 80P - Assessee is a Co-operative Society - whether the Assessee falls within the ambit and four corners of the expression 'Co-operative Bank' or it is merely a credit society which is carrying on its business by making available credit facilities to its members? - Held that:- If we spare a look at the provisions of Tamil Nadu Co-operative Societies Act, 1983 henceforth called as Co-operative Societies Act, 1983 as well as its immediate predecessor namely Tamil Nadu Co-operative Societies Act, 1961, which have provided for the registration of Co-operative Societies. Under Section 4 of the 1983 Act, a society can be registered which has as its objects of promotion of the economic interests or general welfare of its members in accordance with the Co-operative Principles or a society established with the object to facilitate the operations of such society by the society registered under the Act with limited or unlimited liability. Thus if a society is interested in extending certain credit facilities on the basis of Co-operative Principles, such a credit society is liable to be registered under the provisions of the 1983 Act as well as its predecessor 1961 Act. As is now made out such societies essentially render certain services or facilities for purposes of the benefit and promotion of the welfare of its members. In other words the basic theme behind the formation of such a society and its registration is to promote the objectives for which it is established for the benefit of its members only. In contrast to the above principles, if we examine the expression 'banking' as defined in Section 5 (b) of the Banking Regulation Act, 1949 the distinction between a 'Co-operative Credit Society' and a 'Co-operative Society' carrying on banking business becomes imminently clear. Thus, banking means accepting of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise and such acceptance of money is intended for the purpose of lending or investment by itself. Therefore, the crucial expression relevant for making one answer the description of banking is that it is capable of accepting money from the general public but not necessarily confined to its members. Any such activity carried on by anybody requires, apart from licensing, to answer the regulatory domain prescribed under the 1949 Act. Even a Co-operative Bank which carries on banking activity requires to be regulated by the provisions of the 1949 Act. Section 80P(4) therefore is clearly attractive to such an institution. But not to credit society. Even while dealing with a Co-operative Bank sub-section (4) has taken care to ensure that the Primary Agricultural Credit Societies and Primary Co-operative Agricultural and Rural Development Banks are kept out of the purview of the said provision. Sub-section (4) of Section 80P therefore, in its application is confined in relation to Co-operative Banks only. In the instant case the Assessee being, a Co-operative Credit Society which in turn is providing for certain credit facilities to its members alone but not to the general public at large and which also does not receive monies by way of deposit from the general public, it does not answer the description of a Co-operative Bank. Consequently, the main provision contained under sub-section (i) of Section 80P gets attracted and consequently the Assessee is entitled to seek the deduction which has been provided for under Section 80P. - Decided in favour of assessee.
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2016 (9) TMI 951
Refund - interest computation - Held that:- When an appeal is allowed and answered the substantial questions against the revenue, it is duty on the revenue to refund the amount within the statutory period as it is referred under Sec. 153 of the Income Tax Act. In the instant case, refunding the amount as per the order of this court and non-considering the representation dated 18.1.2016 vide Annexure-B is contrary to law. It is expected of the Revenue, that they shall not assign any reasons including technical reasons for not complying the provisions of the Act and the orders passed by this Court. It ought to have communicated the petitioner for the delay. This shall be done here afterwards. With these observations, petition stands disposed of, directing the respondents to consider Annexure- B for refund of the amount in the light of the directions issued with in a period of three weeks from today
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2016 (9) TMI 950
Addition on account of interest on loan attributable to the investments in securities - CIT(A) deleted the addition - Held that:- From the foregoing discussions we find that the AO has presumed that the shares held as stock in trade were converted into investments on dated 01.04.2004 and accordingly interest expenses pertaining to the investment were disallowed. However, the ld. CIT(A) has granted relief to the assessee by holding that the shares were converted as investment on dated 31.03.2005. Now the question before us arise so as to whether the shares were converted on 01.04.2004 or 31.03.2005. On query from the Bench the ld. DR has not shown any evidence that the shares were converted on dated 01.04.2004. The ld. DR failed to bring anything on record. On the other hand, the ld. AR has given sufficient proof as stated above in support of his claim that the shares were converted as investment on dated 31.03.2005. At the time of hearing the ld. DR failed to bring anything contrary to the findings of the ld. CIT(A). In view of the above we do not find any reason to interfere in the order of the ld. CIT(A). Hence this ground of appeal of the revenue is dismissed.
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2016 (9) TMI 949
Deduction u/s.54 or 54F - Held that:- In view of the said circumstances for the purpose of deduction u/s.54 or 54F of the Act, the land appurtenant on constructed house is liable to be considered for exemption. Therefore, in view of the said circumstances the purchase value of the house to the tune of ₹ 30,29,296/- is liable to be considered to the extent of the share of the assessee, therefore, we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to reassess the deduction u/s.54 or 54F of the Act in view of the circular no.667 dated 18.10.1993 in accordance with law. - Decided in favour of assessee.
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2016 (9) TMI 948
Taxing of compensation - revenue or capital receipt - Held that:- Huge compensation was awarded by the arbitrator. The basis of award remained the lost profit due to non-supply of the knowhow and not on loss of profit and that newly installed machinery in absence of supply of knowhow have gone completely wasted. Reliance was placed on several decisions. After dealing with the issue in detail, the ITAT has decided the issue in favour of the assessee. When we examine the facts of the present case in view of the above cited decision of Pune Bench of the ITAT, we find that in the present case before us also the injury was caused to the profit making apparatus as the land which was profit making apparatus for the assessee was not supplied by JMA Buildcom (P) Ltd. as per the agreement entered into between the assessee and associates, and JMA Buildcom (P) Ltd. Appreciating the same, compensation was awarded in the arbitration proceedings initiated against JMA Buildcom.(P) Ltd. In other words, the basis of award remained the lost profit due to non-supply of the land i.e. profit making apparatus and not on loss of profit. We thus find that the only inference can be drawn is that the compensation received by way of reward due to non-supply of land by JMA Buildcom (P) Ltd. under the agreement was capital receipt.
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2016 (9) TMI 947
Depreciation claimed by the assessee charitable trust - assessee engaged in health care activities and registered under section 12AA enjoying the benefit of Section 11 of the Act - Held that:- In the case of the assessee which is a charitable trust registered under section 12AA of the Act and enjoying the benefit of section 11 of the Act, will not be entitled to claim the benefit of depreciation while computing the income of the trust and further there would be no scope arithmetically to set off excess application of fund during the earlier assessment years in the relevant assessment years. Accordingly, we hereby sustain the order of the learned Commissioner of Income Tax (Appeals) on both the issues raised by the assessee for both the assessment years. - Decided against assessee.
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2016 (9) TMI 946
Addition made on account of cessation of bank liability - Held that:- Since there is a categorical findings of the Tribunal that there was a cessation/remission of liability u/s.41(1) of the Act, on earlier occasion confirming the order of ld. CIT passed u/s.263 of the Act, wherein the Ld.CIT directed the AO to verify from the assessment records whether interest/depreciation/hire charges or any other expenditure related to bank liability has been claimed and allowed by the AO in the earlier years and if ‘Yes’, the taxability of the remission of bank liability should be examined by the AO under relevant provisions of the Act. The ld. Assessing Officer consequent to this examined the issue and observed that there is remission of bank liability accrued to the assessee at ₹ 46.05 crores. Contrary to this, Ld.CIT(A) observed that there was no cessation of liability in the hands of assessee and it was only in the hands of URMP(SPV) and if any cessation is to be considered in the hands of URMP. We are not in a position to uphold the argument of the ld.A.R as held by the Tribunal on earlier occasion. There is a remission of liability in favour of assessee company and the liability payable to the bank has been reduced to ₹ 43 crores and it has to be brought to tax in the hands of assessee only u/s.41(1) of the Act. Accordingly, the ground raised by the Revenue is allowed.
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2016 (9) TMI 945
CIT invoking revisionary jurisdiction u/s 263 - funds deployed in share business is more than that deployed in loans and advances - why the loss incurred on purchase and sale of shares amounting should not be treated as speculation loss by invoking the Explanation to section 73 - Held that:- CIT had taken the total inventories of ₹ 43.95 crores as stock of shares, whereas it admittedly includes closing stock of sarees to the extent of ₹ 38.66 crores, thereby leaving a balance of ₹ 5 crores approx towards the closing stock of shares. From the Note No. 8 of the audited financial statements, the assessee had given the clear break up of closing stock of shares and closing stock of sarees. We also find that the ld CIT in his order itself in page 2 had stated that the closing stock of shares is only ₹ 5,17,00,000/-. Hence the very basis for his decision based on funds deployed in share business is more than that deployed in loans and advances gets defeated. On both the counts of income criterion and funds deployment criterion, it could be safely concluded that the assessee’s case squarely falls under the two exceptions provided in Explanation to Section 73 of the Act and hence the order passed by the ld AO in these circumstances cannot be termed as erroneous much less prejudicial to the interests of the revenue warranting revisionary jurisdiction u/s 263 of the Act. Apart from this, we also find that the ld AO had made a specific enquiry with regard to the applicability of Explanation to Section 73 of the Act during the course of original assessment proceedings for which the necessary order sheet entries were placed on record in the paper book. We find from the said order sheet entry on 10.3.2010 and 24.3.2010, a specific query was raised by the ld AO on the applicability of Explanation to section 73 of the Act and the assessee had given due reply to the same and the fact of assessee’s reply is also mentioned in the said order sheet entry recorded on 24.3.2010 by the ld AO. The queries raised by the ld AO and the replies filed thereon in this regard are part of the records. Hence in these circumstances, it could be safely concluded that the ld AO on due appreciation of the replies filed in the given set of facts and circumstances after making requisite enquiries thereon, had come to a conscious conclusion that provisions of Explanation to Section 73 of the Act could not be made applicable to the assessee and had taken a possible view in the matter by allowing the claim of share trading loss in the sum of ₹ 1,07,87,500/- in the assessment to be set off against some other income. It is well settled that this possible view cannot be the subject matter of revision u/s 263 of the Act by the ld CIT. - Decided in favour of assessee.
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Customs
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2016 (9) TMI 976
Demand of differential duty - imposition of penalty - Declaration of consignments - Pressed Distillate Oil - Base Oil - chemical examination of the consignments - no clear statement by chemical examiner. Only indication that the samples have the characteristics of Base Oil - denial of Cross Examination of the chemical examiner before the Adjudicating Authority - principles of natural justice - Held that: - In the absence of conclusive evidence of mis-declarations, the Customs Authorities have gone with the declaration and finalized the assessments. Valuation of imported goods - rejection of Declared value - Rule 12 (1) of Customs Valuation Rules, 2007, read with Section 14(1) of Customs Act - Held that: - The SPI classification for ‘base oil’ divides it into five groups based on three parameters.(i) Sulpher %(ii) Saturates %(III) Viscosity Index. The chemical examiner has not indicated the first two characteristics, viz, sulphur % and saturates in his report. Reference has been made only to one of the three parameters mentioned in API. This limited approach to decide the mis-declaration is incorrect. At the most, the viscosity index may raise doubt in our minds that the imported goods may be base oil. However, to conclude that the imported goods were not PDO but ‘base oil’ and allege mis-declaration on the part of the importer only on the basis of the chemical examiner’s report on one out of three characteristics will not be correct - the mis-declaration in the imported goods have not been established. Consequently, there is no basis the disregard the declared value. No valid reason to reject the classification or valuation of imported goods - demand of duty and imposition of penalty failed - consignments to be released immediately - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 975
Imposition of penalty - Port Clearance Certificate - Charter Agents - Bagged Rice - extension of port clearance upto 07.02.2012 - surrender of original Port Clearance Certificate on 08.02.2012 - Section 42 of the Customs Act, 1962 - whether the penalty imposed for the reason that the vessel has left the port without Port Clearance Certificate as envisaged in Section 42 of the Act is justified? - Held that: - Section 42 states that no vessel can leave without written order given by the proper officer. It does not say that the original Port Clearance Certificate has to be in the hands of the master of the vessel while leaving the port though it may be necessary for the vessel to have the original port clearance certificate in case it is intercepted or for that matter for any other inspections. Section 42 of the Act only says that the vessel shall not sail unless a written order is given by a proper officer. Perhaps the appellant, Steamer Agent was in possession of the Port Clearance Certificate and the Master of the ship had in possession only a photocopy of Port Clearance Certificate. Section 148 of the Act states that the principal/master of the vessel shall be liable for the acts or omissions committed by the agent and vice versa. At the time of sail of the vessel if the appellant who are Steamer Agents of the vessel were holding the Port Clearance Certificate, it cannot be said that there is violation of Section 42 if the vessel leaves the port during the validity of Port Clearance Certificate. The department has issued Port Clearance Certificate which was valid till mid night of 07.02.2012. So also department does not have a case that the vessel sailed after mid night of 07.02.2012. Therefore, at the time of sail of the vessel from the port, there was a valid Port Clearance Certificate issued by the department. Penalty imposed under section 42 of the Customs Act, 1962 is unsustainable - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 974
Enhancement of value - demand of differential duty - import of second hand cannon copiers - examination of goods by department and SIIB - unauthorized import - prices of some of the models were found higher than the prices declared by importers - Held that: - proceeding sequentially through rules 5 to 8 of the Customs valuation Rules, 1988 to determine the value of the goods under reference is the correct methodology to be followed - no infirmity found in the assesseble value arrived. Imposition of redemption fine under section 125 of the Custos Act, 1962 - Held that: - the appellant did not produce required license for importation rendering the import unauthorized and in violation of Sections 3(2) and 3 (3) of the F T(D& R) Act, 1992. The goods become liable to confiscation under section 111(d) of the Customs Act, 1962 - goods becoming liable to confiscation thereby option available to appellant to pay redemption fine in lieu of confiscation - imposition of redemption fine within ambit of law and also reasonable in quantum. Imposition of penalty under section 112(a) of the Act also justified - appeal dismissed - decided against appellant.
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2016 (9) TMI 973
Provisional release of confiscated goods - confiscation of consignment of rubber - option to redeem on payment of fine only for re-export within 90 days - imposition of penalties - classification of imported goods - under 27101960 as base oil - under 27079900 leviable to duty at 10% - waste product listed in Schedule III Part A of Hazardous Waste (Management, Handling and Trans-boundary Movement) Rules, 2008 - hazardous waste - Held that: - the imports of the appellants do contain a higher percentage of aromatic constituent than prescribed for classification under 2710. The alternate heading which describe the imported goods to be waste brings it under the ambit of Hazardous Waste (Management Handling & Trans Boundary Movement) Rules, 2008 Rules and therefore liable for action under section 111 and section 112 of Customs Act, 1962. In relation to the goods imported earlier that had not been subject to testing at the time of import, it is not in dispute that, in the absence of such verification, it would be inequitable to consider those to be at par with imports lying uncleared. Refining of crude petroleum involves complicated processes and there may not be any ground to conceive that an output of the production process which is imported in the country for a specific industrial use would have uniform composition on each occasion. Competence of CRCL to test the product - laboratory approved by the Ministry of Environment & Forests - Held that: - testing is for coverage under note 2 of Chapter 27 of First Schedule of Customs Tariff Act, 1975. It is following a re-classification on account of non-fitment with that note that the goods become subject to Rules governing handling of hazardous waste. The origin of confiscation resides in the domain of Customs procedures and hence reliance on testing by CRCL is not questionable - the samples subjected to a valid test - testing procedure should not be subject to cross-examination by the appellant as the credibility of the test is not in question and a non-expert may not be in a position to query an expert on technicalities. It was open to the appellants to produce expert witnesses on their side during the adjudication proceedings. No such request was canvassed on behalf of appellants. The imported product subject to the provision of Hazardous Waste (Management Handling & Trans Boundary Movement) Rules, 2008 - appeal rejected - decided against appellant.
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Corporate Laws
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2016 (9) TMI 967
Lifting of corporate veil - whether the concept of lifting of corporate veil was available even in execution proceedings and whether any interference was called for in the finding recorded by the learned Single Judge? - Held that:- The concept of removing corporate veil is applicable not only in the cases of holding of subsidiary companies or in the case of tax evasion but can be equally applied in execution proceedings.We are therefore of the view that the corporate veil can be lifted in cases where the Court from the material on record comes to the conclusion that the Judgment Debtor is trying to defeat the execution of the Award which is passed against him. In our view, the learned Single Judge was justified in carrying out that exercise. We concur with the view taken by the learned Single Judge. The learned Single Judge has considered all the circumstances which indicate that Mr. Surinder Singh Bhatia and his members of his family had created several corporate bodies and they were controlled by Mr. S.S. Bhatia and his family and therefore the learned Single Judge has rightly come to the conclusion that they had to be treated as one single entity as they were being used as cloaks behind which Mr. Surinder Singh Bhatia and his family were using the devise of incorporation as ploy adopted for preventing execution of the international award which was passed against BIL and in favour of Respondent No.2 Vitol.. It has to be noted that the learned Single Judge proceeded to examine the material on record which indicated that the BILL and the BIL was a single entity and has come to the said conclusion after piercing the corporate veil of both the companies. It has to be noted that the learned Single Judge proceeded to examine the material on record which indicated that the BILL and the BIL was a single entity and has come to the said conclusion after piercing the corporate veil of both the companies. Learned Single Judge was justified in lifting the corporate veil in this case and was further justified in coming to the conclusion that BILL and BIL was a single economic entity. No interference is called for in the order passed by the learned Single Judge
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Service Tax
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2016 (9) TMI 988
Refund claim - Cenvat Credit lying unutilised in their books of account - for the period of April 12 to June 12 - export of information technology software service and business support service and availing Cenvat credit of service tax on input service - Held that:- it is found that both the orders passed i.e. one is in the appeal filed by the assessee on inadmissibility of refund claim of ₹ 55,30,685/- and other is in the appeal filed by Revenue on admissibility of refund claim of ₹ 13,35,62,158 by the Ld. Commissioners (Appeals) are in conflict. Further, the appeal of the Revenue was pending before the Ld. Commissioners (Appeals) when the appeal of assessee was taken up and disposed of separately. It is a matter of policy and judicial discipline to hear and dispose the cross appeals arising out of the common impugned order together, for avoiding conflict in orders. Accordingly we set aside the impugned orders in both the appeals and remand the matters to the Ld. Commissioners (Appeals) with the direction to take up both the appeals together for denovo disposal and after hearing the parties to pass a reasoned order in accordance with law. - Appeals allowed by way of remand
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2016 (9) TMI 987
Demand alongwith interest and penalty - Work Contract Service - work of clearing/ supplying laying and jointing the concrete pipes, construction of concrete cradle bedding for these pipes and other related works as a contractor for U.P. Jal Nigam - received payment for such work - Held that:- we deem it fit and proper in the interest of justice and accordingly, set aside the impugned order and remand the matter back to the Ld. Commissioner/ adjudicating authority for a denovo decision on merits after hearing the appellant and considering the law laid down by the Larger Bench in Lanco Infratech Ltd. Vs. CC, CE & S.T. [2015 (5) TMI 37 - CESTAT BANGALORE (LB)] during the pendency of this appeal and other rulings. - Appeal allowed by way of remand
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2016 (9) TMI 986
Whether services provided by the appellant as commission agent for sale of goods of its foreign principal M/s Barco Control Rooms GMBH, Germany on their behalf is to be treated as export of services under Rule 3 of Export of Service Rules, 2005 during the relevant period, i.e. 01.04.2006 to 31.03.2011 - Held that:- the issue herein is squarely covered by the precedent ruling of this Tribunal in the case of Microsoft Corporation (I) (P) Ltd. [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)]. We also take notice of the fact of the C.B.E.C. Circular No. 111/5/2009-, S.T. dated 24-02-2009. As per the law explained by the C.B.E.C., it is explicit that the services provided by the appellant is to their foreign principal who have paid for such services in convertible foreign exchange. Accordingly, we hold that appellant has satisfied both the conditions under the Rule 3 of Export of Service Rules of 2005. Accordingly, we hold that the appellant have exported the services in question and they are not liable to pay service tax under the Finance Act, 1994. Accordingly, the impugned order is set aside. - Aplication dsposed of
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Central Excise
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2016 (9) TMI 984
Validity of order directing special audit - Section 14AA of the Central Excise Act, 1944 - breach of principles of natural justice - petitioner was not afforded any opportunity of hearing - non-specification of any ground that the petitioner has availed of duty credit or utilised cenvat credit beyond the normal limits - Held that:- Section 14AA of the said Act empowers the Principal Commissioner or the Commissioner of Central Excise to have the accounts of a manufacturer audited by a cost accountant or a chartered accountant nominated by them in the event he finds any of the grounds enumerated therein to be satisfied. As the impugned order stands, the Commissioner has not specified the materials on the basis of which he has formed the opinion that the petitioner has availed of duty credit or utilised cenvat credit beyond the normal limits having regards to the nature and quantity of finished goods manufactured and cleared. The Commissioner has not discussed the nature of finished goods manufactured and cleared by the petitioner. The Commissioner has not discussed of the quantum of the duty credit or utilised cenvat credit by the manufacturer. The foundational basis for the assumption of jurisdiction by the Commissioner under Section 14AA of the said Act has not been stated in the impugned order. Therefore, the impugned order is unreasoned. Section 14AA of the said Act does not contemplate that the assessee is entitled to a right of hearing before a decision is taken thereunder. By applying the ratio of decision of Hon'ble Supreme Court in the case of Sahara India (firm) vs. Commissioner of Income-Tax & Another [2008 (4) TMI 4 - Supreme Court] and more particularly when Section 14AA of the said Act entails civil consequences and where such section does not specifically debar the application of the principles of natural justice, the authorities are, therefore, required to afford a reasonable opportunity of hearing to an assessee before a decision is arrived at under such section. In the present case, it does not appear from the materials made available on record that the authorities have afforded the petitioner an opportunity of hearing prior to the issuance of the impugned order. Therefore, the impugned order is set aside. - Appeal disposed of
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2016 (9) TMI 983
Disallowance of rebate - goods manufactured by SAIL were exported - petitioner had allegedly committed procedural lapses which was condoned on the earlier occasion - validity of Revision order under Section 35EE of the Central Excise Act, 1944 - Held that:- the revisional authority has not found that, the petitioner did not export Central Excise Duty Paid goods out of India, or that the relevant ARE forms do not bear the appropriate customs endorsements. The alleged procedural lapses for the consignment under consideration have also not been alluded to or identified. Therefore, the impugned order is set aside. - Decided in favour of petitioner
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2016 (9) TMI 982
Input tax credit - whether the CESTAT is correct in rejecting the appeals, wherein the refund sought under Rule 5 of the CCR, 2004 is deniable to the party, as for the export of wholly exempted goods, execution of bond/LUT is neither required nor legally acceptable - Held that:- once the issue involved in the present appeal has already been gone into by the Hon'ble Supreme Court and judgments of Bombay High Court and Himachal Pradesh High Court, have been upheld granting relief to the assessee, we do not find that any substantial question of law arises in the present appeal. - Decided against the Revenue
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2016 (9) TMI 981
Whether the Hon'ble Tribunal was correct in dropping the demand towards pertaining to the extended period of limitation when it had itself relied upon the judgment of Hon'ble Apex Court in the case of Maruti Suzuki India Ltd. vs. CCE Delhi [2014 (9) TMI 229 - SUPREME COURT] and Super Synotex (India) Ltd. vs. CCE Jaipur [2014 (3) TMI 42 - SUPREME COURT] wherein it was held that amount of sales tax concession retained by the respondent is required to be added in the assessable value - Held that:- once the assessee was found to be at fault in view of the law laid down by Hon'ble the Supreme Court, the extended period of limitation could have been permitted. Therefore, we do not find any merit in the present appeal. The Tribunal has dealt with the issue of limitation that circular dated 30.06.2000 issued by Central Board of Excise and Customs providing that any amount of concession on sales tax retained by the assessee is not required to be added in the assessable value and an earlier order passed by the Tribunal in favour of the assessee has also been referred to. Hence, the assessee cannot be said to be at fault and the extended period of limitation was not available. - Decided against the Revenue
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2016 (9) TMI 980
Whether the Tribunal is correct in holding that the extended period of limitation cannot be invoked when the respondent has failed to disclose or suppressed the material information from the department as the same came to the knowledge of the Department during the course of Audit only - Held that:- once the assessee was found to be at fault in view of the law laid down by Hon'ble the Supreme Court in the case of Maruti Suzuki India Ltd. vs. CCE Delhi [2014 (9) TMI 229 - SUPREME COURT] and Super Synotex (India) Ltd. vs. CCE Jaipur [2014 (3) TMI 42 - SUPREME COURT], the extended period of limitation could have been permitted. Therefore, we do not find any merit in the present appeal. The Tribunal has elaborately dealt with the issue of limitation. The assessee cannot be said to be at fault at that time in view of circular of the Board and earlier order of Tribunal in favour of the assessees. Hence, the assessee was not at fault and the extended period of limitation was not available. - Decided against the Revenue
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2016 (9) TMI 979
Maintainability - writ petition before this Court - seeking issue a writ, order or directions in the nature of certiorari to quash the impugned order passed by respondent, impugned order passed by CESTAT, New Delhi and order of the respondent no. 2. Also seeking to issue writ, order or direction in the nature of mandamus directing the CESTAT, New Delhi to decide the appeal of the petitioner on merit - remedy of appeal under section 35-G of the Central Excise Act, 1944 is available to the petitioner - Held that:- after arguing the writ petition at some length, the petitioner seeks to withdraw present writ petition with liberty to file the statutory appeal under section 35-G of the Central Excise Act, 1944. - Writ petition disposed of as withdrawn
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2016 (9) TMI 978
Demand alongwith interest - Shortage of TMT bars - such shortages were accepted by the Appellant in physical stock-taking, but never admitted that the shortages were clandestinely removed from the factory - no evidence of clandestine removal from Appellant's factory - only statement of Shri Dipak Choudhary, Manager of the Appellant was available - Held that:- appellant never reverted back to the investigation before the issue of show cause notice that shortages found were reconciliable and that in fact there was no shortages in the stock of finished goods. A different stand taken after the issue of show cause notice, without any retraction, will have to be considered as an after-thought under proper legal advice. By admitting the shortages and not coming forward to explain the same, blocks the investigation. In the case of Majestic Auto Ltd. v. CCE [2004 (7) TMI 136 - CESTAT, NEW DELHI] CESTAT held that demand with respect to shortages can be confirmed when no tangible evidence and explanation was offered by the noticee. It is also made clear in this case law that there is no need for the department to produce any tangible and positive evidence to prove clandestine removal when Appellant has admitted the shortages and does not come forward to explain the shortages. No contrary judgement has been brought on record by the Appellant. Therefore, duty has been correctly confirmed against the Appellant along with interest. Non-extension of option of 25% reduced penalty - Section 11AC of the Central Excise Act, 1944 - Held that:- in the interest of justice, Appellant is given the option to pay 25% reduced penalty if the same is paid along with duty and interest demanded within 1(one) month from the date of receipt of this order. - Decided in favour of appellant
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2016 (9) TMI 977
Demand and imposition of penalty - appellant admitted the duty liability wherever extra considerations were received from the buyers over and above the invoice amount - demand raised on the basis of value of moulds arrived at based on statements given by other such manufacturers - denial of cross-examination and lack of other corroborative evidence to support the demand - Held that:- on collection of details by way of various corroborative evidence and admissions by the proprietor of the appellant firm, the conclusion was arrived that the value of footwear moulds shown in the bills is not correct transaction value and the appellant mis-declared the same to evade payment of Central Excise duty. Regarding correct valuation of the impugned goods based on evidences collected and the appellant's own admission, the calculation was concluded. Though, admittedly the appellant is free to dispute and challenge the duty payment afresh in the appeal proceedings before us it will be worthwhile to note that before another statutory authority, the Settlement Commission, the full duty liability has been accepted by the appellant. Therefore, the present appeal is to be decided only on material evidence available on record and not based on the application before the Settlement Commission. Therefore, the Revenue is able to establish with overwhelming evidence the evasion of duty by the appellant. hence, the appellant could not make out a convincing case to interfere with the order of the lower Authority. - Decided against the appellant
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CST, VAT & Sales Tax
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2016 (9) TMI 972
Recovery of dues - priority of discharge of dues - lifting/shifting the stocks of paddy bags from the rice mill premises and godown premises - Andhra Pradesh Revenue Recovery Act, 1864 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - delivery of 8085.95 quintals of rice leaving a balance of 4007.18 quintals of rice undelivered, which is equivalent to 5892.91 quintals of paddy - demand of sum of ₹ 1,04,23,732.78 ps., representing the cost of paddy - failure to pay the demanded amount - letter addressed by to initiate proceedings under the RR Act - Section 2 of the RR Act - possession of the rice mill including stocks taken over - Held that: - first charge over the dues has primacy over the dues of the Banks, Financial Institutions and Secured Creditors. It is not in dispute that the dues payable treated as arrears of land (public) revenue. The dues claimed by Telangana State Civil Supplies Corporation are subject to the statutory charge under Section 2 of the RR Act and therefore, they have the precedence over the dues claimed by the petitioner. It is only after the satisfaction of the dues of Telangana State Civil Supplies Corporation that the petitioner can recover its dues from out of the balance sale proceeds. In the Telangana State Civil Supplies Corporation is unable to recover the dues to the full extent, from out of the sale of the balance paddy seized by it from Mill, Telangana State Civil Supplies Corporation is entitled to sell the immovable properties such as factory, building etc. It is only after the debt of Telangana State Civil Supplies Corporation is satisfied that the petitioner is entitled to recover its dues from out of the left over properties or balance sale proceeds. Petition dismissed - decided against petitioner.
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2016 (9) TMI 971
Assessment - taxable turnover - purchase value of material - proviso to Rule 10 (2) (a) of the KVAT Rules - sale of apartment - agreement to sell the apartment - works contract - non-consideration of relevant material by Assessing Officer amounting to an error apparent on the face of the record - whether there is any error apparent on the face of the record to enable the officer concerned to reconsider the matter? - Held that: - the decision in the case Larsen and Toubro Limited and another v. State of Karnataka and another [2013 (9) TMI 853 - SUPREME COURT] is considered where it was held that the petitioner does not become works contractor, unless there are materials to indicate that the petitioner had already entered into a contract with potential purchasers. The Assessing Officer is bound to consider a matter when the same is brought before him, especially when a rectification application was filed. Perusal of Ext.P6 order would show that the assessing officer had merely rejected the same by forming an opinion that all the points raised had been considered. When questions are specifically raised by the petitioner, the same cannot be ignored by the officer while considering rectification application - the matter requires a re-consideration - petition disposed off - decided in favor of petitioner.
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2016 (9) TMI 970
Imposition of penalties - Luxuries Act, 1976 - bifurcation of luxury tax - Banquet Hall - Poolside area for serving food as well as conducting other services - Rule 3 C of Kerala Tax on Luxuries Rules, 1976 - 25% of the total charges treated as eligible for luxury tax - services rendered while serving food, drink and other services in a hotel, hall, auditorium and other similar places - payment of VAT on entire amount without bifurcation of the Luxury Tax Component - whether there was any necessity to impose penalty on the petitioner for not having bifurcated the assessment to tax with reference to VAT and luxury tax for the years 2005-06, 2006-07 and 2007-08? - Held that: - As far as the assessment year 2005-06 is concerned, there is no dispute about the fact that the amendment to the Rules had come into effect only on 28.07.2006. Under such circumstances, there was no necessity to initiate any penalty proceedings against the petitioner for having not complied with the bifurcation so contemplated during the said assessment year - Tribunal not justified in imposing penalty on the petitioner as far as assessment year 2005-06 is concerned. There is deficiency on the part of the assessee in bifurcating the luxury tax as well as VAT, even after the Rule had been amended. However, it is to be noticed that when the entire VAT amount has been paid for the total amount received which includes the rent for Banquet Hall or the Poolside, there is no deliberate attempt to evade payment of VAT or luxury tax. There is no suppression of facts. It is apparently a mistake being committed by the assessee while imposing tax and insofar as no loss has been caused to the Government - imposition of penalty not justified. If at all there is any deficit in the collection of tax, the same can be recovered by assessment proceedings. As far as the charging of luxury tax on the Poolside area is concerned, the Deputy Commissioner (Appeals) had come to a finding that the luxury tax is not leviable as far as the Poolside is concerned. - penalty not imposed. Petitions disposed off - decided against Revenue.
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2016 (9) TMI 969
Rejection of settlement application under Section 6(3) of the Settlement Act - settlement of arrears of Sales Tax - Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 - applications filed by petitioner under the Settlement Act, dated 30.12.2010 - applications filed by the petitioner were put in cold storage by the competent authority - after about five years show cause notices issued to the petitioner for the assessment years 1997-1998 and 1991-1992, dated 19.12.2015 and 11.01.2016 stating that the petitioner has not paid 90% of the amount payable under Section 7 of the Act along with the applications and proposed to reject the applications under Section 6(3) of the Settlement Act - Held that: - the impugned orders have been passed on account of total non-application of mind and without appreciating the scope and object of the Settlement Act. The assessment for the relevant years 1997-1998 and 1991-1992 should be revised and there was a statutory duty on the part of the Assessing Officer to pass the revised assessment orders and for reasons best known, the Assessing Officer has not done so, therefore, the dealer cannot be blamed for the inaction on the part of the Assessing Officer, therefore, the designated authority under the Settlement Act should call for entire files or in the alternative direct the Assessing Officer to pass revised assessment orders in terms of the orders passed by the Appellate Authority and thereafter, examine the applications filed by the petitioner, on merits and in accordance with law. Matter remanded - petition allowed - decided in favor of appellant.
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2016 (9) TMI 968
Quantification of amount of tax deducted at source of VAT - taxable turnover - total value of the work contracts - deductions as per Section 5 - Section 106 of the Meghalaya Value Added Tax Act, 2003 - works contract - MES Builders Association of India and others vs. Union of India and others [2009 (9) TMI 880 - GAUHATI HIGH COURT] - in relation to Section 106(2) of the Act, if the deduction had already been made per Schedule IV-A, further deduction per Section 5(2)(c) would not be made - for the purpose of Section 106 (2) of the Act of 2003, the deduction in relation to Section 5 (2) (c) of the Act of 2003 would be either on the actual value of labour, services and other like charges; or it would be at the percentage provided in Schedule-IV-A, in such cases where the charges towards labour, services etc. are not ascertainable from the terms and conditions of the contract. Final assessment by assessing officers - Held that: - any deduction made by the principal while making payments towards the works contract would always remain subject to the final assessment under the Act of 2003 by the Assessing Officer; and deduction at source by the principal, by itself, is not decisive of the actual amount of VAT payable. Petition disposed off - decided against petitioner.
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Wealth tax
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2016 (9) TMI 985
Reopening of assessment - claim of deduction of proportionate liability from the gross wealth of the appellant - Held that:- When once all the assets of the business are sought to be valued, the necessity to undertake individual or proportionate distribution of the debts is not required to be undertaken separately. It is a fundamental principle of law that no part of a Statute should be construed as carrying no meaning at all. Every provision must be construed as intended to achieve some purpose or object by the Statute Maker. In other words, no provision of the Statute can be treated as otiose or useless. Keeping those principles in mind, when the Proviso to Rule 14 is examined, it becomes clear that the same will be applicable where it is not possible to calculate the amount of debt that is utilised for purposes of acquiring each of the assets and the formula contained therein brings out the theory of proportionate liability and the principle that would become applicable. In that view of the matter, the Assessee has made a claim to extend the proportionate liability to the value of the 3 assets that was initially applied by the Assessing Officer, but however, it was taken up for re-examination under Section 17 of the Act. Unfortunately, the re-examination has not been confined to that specific area at all and it went into the merits of the matter. In normal circumstances, we would have remanded the matter back for consideration afresh by the Assessing Authority. But, however, due to lapse of more than 15 years period and also in view of the fact that the Wealth Tax Act itself has already been done away with, we find that no useful purpose would be served in remanding the matter and hence, we restore the original order passed by the Assessing Authority under Section 16(1) of the Act, and the appeals stand accordingly allowed to the extent indicated supra.
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Indian Laws
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2016 (9) TMI 966
Refund of the amount deposited in compliance of the requirement of the second proviso to section 18(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for maintaining an appeal denied - Held that:- Similar issue in the case of Axis Bank vs. SBS Organics Private Limited & Anr. [2016 (4) TMI 917 - SUPREME COURT ] wherein held the Appeal under section 18 of the Act is permissible only against the order passed by the DRT under section 17 of the Act. Under section 17, the scope of enquiry is limited to the steps taken under section 13(4) against the secured assets. The partial deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of section 18 of the Act, is not a secured asset. It is not a secured debt either, since the borrower or the aggrieved person has not created any security interest on such pre-deposit in favour of the secured creditor. If that be so, on disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, in case, the appellant makes a prayer for refund of the pre-deposit, the same has to be allowed and the pre-deposit has to be returned to the appellant, unless the Appellate Tribunal, on the request of the secured creditor but with the consent of the depositors, had already appropriated the pre-deposit towards the liability of the borrower, or with the consent, had adjusted the amount towards the dues, or if there be any attachment on the pre-deposit in any proceedings under section 13(10) of the Act read with Rule 11 of the Security Interest (Enforcement) Rules, 2002, or if there be any attachment in any other proceedings known to law. Accordingly, we dispose of this appeal, set aside the impugned judgment of the High Court as well as the order of the DRAT impugned before the High Court and remit the matter to DRAT for consideration afresh.
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2016 (9) TMI 965
Complaint under Section 138 read with Section 141 of the Negotiable Instruments Act - petitioner ceased to be a director of the company - Held that:- The petitioner had ceased to be a director of the accused company on November 12, 2009, which fact is apparent from Form 32 submitted to the Registrar of Companies, the fact that he was a director of the company when the negotiations took place would be irrelevant.
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