IT : Where Tribunal, while granting exemption from capital gains, did not consider whether lands in question were agricultural lands on not, since Assessing Officer did not doubt such fact, order of Tribunal did not call for interference
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[2013] 33 taxmann.com 511 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax, Delhi Central - III
v.
Nirmal Bansal*
BADAR DURREZ AHMED AND VIBHU BAKHRU, JJ.
IT APPEAL NOS. 198, 203, 204 & 205 OF 2013
C.M. NOS. 5523, 5527 & 5528 OF 2013†
C.M. NOS. 5523, 5527 & 5528 OF 2013†
APRIL 30, 2013
Section 2(14), read with section 253, of the Income-tax Act, 1961 - Capital gains - Capital assets [Agricultural land] - Assessment years 2008-09 and 2009-10 - Assessee sold plot of land, claimed to be agricultural lands - Assessing Officer did not grant exemption under section 2(14)(iii) on ground that there was possibility of distance shorter than 8 kms between plots of land and municipal limits - However, Assessing Officer did not doubt use of land being for agriculture - Whether, question of law can be raised before Tribunal only if it arises from facts as found by Income-tax authorities - Held, yes - Whether, therefore, where Tribunal did not consider question raised by revenue that land in question were not agricultural lands as Assessing Officer had not doubted such fact, order of Tribunal did not call for any interference - Held, yes [Para 7] [In favour of assessee]
FACTS
| ■ | The assessee sold different plots of land, which were claimed to be agricultural land, situated at distance of more than 8 kms. from municipal limits. In support of his contention, the assessee furnished certificate of Tehsildar and letter of District Town Planner stating that the land was situated beyond 8 kms from Municipal Committee. | |
| ■ | However, the Assessing Officer did not grant exemption under section 2(14)(iii), taking a view that there was possibility of some other shortest distance between the plots of land and the municipal limits, being less than 8 kms. | |
| ■ | On appeal, the Commissioner (Appeals) allowed assessee's claim as Assessing Officer's contention was not based on any hard evidence. | |
| ■ | On appeal, the Tribunal upheld the order of Commissioner (Appeals). | |
| ■ | On further appeal by revenue, it contended that the Tribunal did not consider the question raised by the revenue that the lands in question were not agricultural lands at all. |
HELD
| ■ | The Tribunal noted that the Assessing Officer had made the disallowance merely on the ground that there was the possibility of a shorter distance, which would be less than 8 kms from the outer limits of the municipal corporation. The Tribunal noted that the Assessing Officer had not doubted the nature of the land being for agriculture. It was in these circumstances that the Tribunal rejected the plea of the revenue that the matter be restored to the file of the Commissioner (Appeals) for verification of the fact as to whether the lands were agricultural in nature or not. [Para 6] | |
| ■ | The decision in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) would be of no assistance to the revenue. In the said decision it has been clearly noted that the Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the Income-tax authorities and which had a bearing on the tax liability of the assessee. The point to be noted is that the question of law which could be raised before the Tribunal would have to arise from the facts as found by the Income-tax authorities. In the present case, the Assessing Officer had not doubted the fact that the lands in question were agricultural in nature. There was no foundational fact that the lands were not agricultural in nature. As such the plea raised by the revenue before the Tribunal could not be gone into by the Tribunal as there was no foundational basis for the same. Clearly, the decision in National Thermal Power Co. Ltd. (supra) would be of no avail to the revenue in the facts of the present case. [Para 7] | |
| ■ | In view of the foregoing, no interference is called for with the impugned order of the Tribunal. In any event no substantial question of law arises for the consideration of this Court. [Para 8] | |
| ■ | The appeals are dismissed. [Para 9] |
CASE REVIEW
National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) (para 7) distinguished.
Sanjiv Sabharwal for the Appellant.
JUDGMENT
CM No. 5523/2013 in ITA No. 198/2013
CM No. 5527/2013 in ITA No. 203/2013
CM No. 5528/2013 in ITA No. 205/2013
Badar Durrez Ahmed, J. Exemption is allowed subject to all just exceptions.
ITA Nos. 198/2013, 203/2013, 204/2013 & 205/2013
1.1 These four appeals seek to raise common issues and are directed against the common order passed by the Income Tax Appellate Tribunal, New Delhi, on 31.01.2012 in ITA Nos. 5304-5307/Del/2011 pertaining to the assessment years 2008-09 and 2009-10. Two appeals are in respect of the assessee Smt. Manju Bansal and the other two are in respect of the assessee Smt. Nirmal Bansal.
2. Mr Sabharwal, the learned counsel appearing on behalf of the appellant / revenue submitted that the Tribunal had misdirected itself in law in not considering the question as to whether the land was agricultural in nature or not. He submitted that the issue before the Tribunal was with regard to the addition of Rs. 2,34,70,697/- which had been made by the assessing officer on account of short term capital gain in respect of sale of different plots of land at village Hayatpur, district Gurgaon, by the respondent/assessee. The Commissioner of Income Tax (Appeals), had deleted the said addition. It may be pointed out that in the assessing officer's order the only reason as to why the assessing officer had not granted the exemption to the respondents on account of the provisions of section 2 (14)(iii) of the Income-tax Act, 1961, was because the assessing officer had taken the view that the possibility of there being some other 'shortest distance' between the area where the plots of land were situated and the municipal limits of Gurgaon so as to rule out the possibility that the lands were situated beyond 8 kms from the municipal limits. The assessing officer had arrived at the above conclusion in the following manner:-
"3. During the year the assessee has sold land at village Harsaru / Hayatpur, Distt Gurgaon for a sum of Rs.2,97,94,502/-. The assessee has claimed that the capital gain from the sale proceeds of the land is exempt because the land is situated at a distance of more than 08 kms from the outer municipal limits of Gurgaon. In support of his contention the assessee has furnished from Revenue authorities which is Tehsildar of Gurgaon wherein he has certified that the land whose particulars are given in the sale deed of the assessee is at a distance of 09 kms. Further inquiries in this regard was made from the District Town Planner of Gurgaon wherein he was asked to specify the distance of the land from the outer limits of Gurgaon Municipal Committee. The District Town Planner, Gurgaon vide letter memo no.70954 dated 21-12-2010 has intimated this office that the distance of the land from the outer limits of the Municipal Committee of Gurgaon was 8.5 kms on the date of sale. The distance given by District Town Planner, Gurgaon is very narrow as compared to the distance mentioned in the Act. In these circumstances the possibility of any other shortest distance cannot be ruled out and the land sold by the assessee during the year is taken as "Capital Asset" within the meaning of 2(14) of Income Tax Act, 1961 and the profit thereof is treated as short term capital gain. Addition of Rs.2,97,94,502/- is hereby made as short term capital gain."
3. The Commissioner of Income Tax (Appeals), after considering the assessment order and the submissions of the respondent's / assessee's observed that the assessees, during the course of assessment proceedings had submitted a certificate issued by the Tehsildar, Gurgaon to the effect that the plots of land were situated at a distance of about 9 kms from the outer municipal limits of Gurgaon. The district town planner, Gurgaon by a letter dated 21.12.2010 had also indicated that the distance of the said plots of the land was about 8.5 kms from the outer municipal limits of Gurgaon. The Commissioner of Income Tax (Appeals), thus held that two competent authorities, namely, the Tehsildar, Gurgaon and the District and Town Planner, Gurgaon had both, independently certified that the lands in question were situated beyond 8 kms of the municipal limits of Gurgaon. Consequently, the Commissioner of Income Tax (Appeals) held that the observation of the assessing officer that there was a possibility of some other shorter distance was not based on any hard evidence. It was also concluded by him that such an apprehension on the part of the assessing officer could not form the basis of denial of the assessees' claims. Consequently, the Commissioner of Income Tax (Appeals) deleted the addition of Rs. 2,97,94,502/-.
4. The Income Tax Appellate Tribunal dismissed the appeals filed by the revenue and upheld the deletion made by the Commissioner of Income Tax (Appeals). The Tribunal held that the view taken by the CIT (Appeals) that the lands in question were situated beyond 8 kms from the outer limits of the municipal corporation of Gurgaon, could not be faulted.
5. The learned counsel for the revenue contended before us that the departmental representative had also raised the issue that the lands in question were not agricultural lands at all and that aspect of the matter had not been gone into by the Tribunal. He submitted that in order that the profits from sale of land are not subjected to capital gains tax, it has to be established that the lands in question were agricultural lands and that such lands were not situated within 8 kms of the municipal limits. He submitted that question of ascertaining whether the land was situated within 8 kms or beyond 8 kms was only the second condition. The first condition being that the land should have been agricultural. Mr Sabharwal submitted that while the departmental representative had raised the issue with regard to the lands not being agricultural in nature, the Tribunal had not gone into this aspect of the matter at all and, therefore, to that extent the twin conditions stipulated in section 2(14)(iii) had not been satisfied.
6. We have examined the decision of the Tribunal and we find that while Mr Sabharwal is right that the departmental representatives had raised the issue about the nature of the land in question, the Tribunal has correctly dealt with this aspect of the matter. The Tribunal noted that the assessing officer had made the disallowance merely on the ground that there was the possibility of a shorter distance, which would be less than 8 kms from the outer limits of the municipal corporation. The Tribunal noted that the assessing officer had not doubted the nature of the land being for agriculture. It is in these circumstances that the Tribunal rejected the plea of the departmental representative that the matter be restored to the file of the CIT (Appeals) for verification of the fact as to whether the lands were agricultural in nature or not.
7. Mr Sabharwal had also placed reliance on the Supreme Court decision in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383. He had relied on the said decision to canvas the proposition that the Tribunal could very well have examined the question of nature of the lands even though it had not been in issue before the lower authority. However, we find that the decision in National Thermal Power Co. Ltd. (supra) would be of no assistance to the revenue. In the said decision it has been clearly noted that the Tribunal had jurisdiction to examine a question of law which "arose from the facts as found by the Income Tax Authorities" and which had a bearing on the tax liability of the assessee. The point to be noted is that the question of law which could be raised before the Tribunal would have to arise from the facts as found by the income-tax authorities. In other words, there must be some factual basis on which the question of law is raised before the Tribunal. The relevant facts must be on record. In the present case the assessing officer had not doubted the fact that the lands in question were agricultural in nature. There is no foundational fact that the lands were not agricultural in nature. As such the plea raised by the departmental representative before the Tribunal could not be gone into by the Tribunal as there was no foundational basis for the same. Clearly, the decision in National Thermal Power Co. Ltd. (supra) would be of no avail to the revenue in the facts of the present case.
8. In view of the foregoing, no interference is called for with the impugned order of the Tribunal. In any event no substantial question of law arises for the consideration of this court.
9. The appeals are dismissed.
P. SEN ST : In case of assessee paying service tax on receipt basis under rule 6(1) of ST Rules, 1994, no Cenvat credit reversal can be required even if no service tax is payable on output services owing to non-recovery of consideration
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[2013] 34 taxmann.com 43 (Ahmedabad - CESTAT)
CESTAT, AHMEDABAD BENCH
Commissioner of Service Tax, Ahmedabad
v.
Krishna Communication*
M.V. RAVINDRAN, JUDICIAL MEMBER
ORDER NOS. A/13304 - 13305/WZB/AHD/2013
APPEAL NOS. ST/554/2011 & ST/CO-2/2012
APPEAL NOS. ST/554/2011 & ST/CO-2/2012
FEBRUARY 4, 2013
I. Rule 3 of the Cenvat Credit Rules, 2004 - CENVAT Credit - General - Due to non-recovery of consideration for output services provided, assessee wrote them off as bad debts - Department argued that since service tax was payable under Rule 6(1) of Service Tax Rules, 1994 on actual receipt of consideration and there was no receipt of consideration in this case, assessee was required to reverse proportionate credit of input services attributable to output services on which no service tax was payable owing to non-receipt of consideration - HELD : There was no dispute as to : (1) eligibility of availment of CENVAT Credit, (2) receipt of input services by assessee and use thereof for providing output service; and (3) discharge of service tax liability by assessee as per law - Department's argument meant that it was trying to co-relate input services to output services while it is settled law that there need not be one-to-one co-relation of input services with output services - There is no provision in CENVAT Credit rules to deny proportional credit on inputs/input services used in providing output service on which recovery is pending - Hence, assessee was eligible for input service credit availed [Paras 9 to 12] [In favour of assessee]
II. Rule 14 of the Cenvat Credit Rules, 2004 - CENVAT Credit - Recovery of CENVAT credit wrongly taken or erroneously refunded - Department sought reversal of credit of input services on ground that no service tax was payable on output services owing to non-receipt of consideration - HELD : Services rendered by assessee were taxable services - Credit of inputs/input services availed was utilized in providing taxable output services - Hence, there was nothing wrong in availing and utilization of credit - Rule 14 does not envisage recovery of credit in situations where Service Tax recovery was pending and written off as bad debts later [Para 10] [In favour of assessee]
Dr. N.V. Suchak for the Appellant. Dr. J. Nagori for the Respondent.
ORDER
1. This appeal is directed against Order-in-Appeal No.159/2011 (STC)/K.Anpazakan/Commr(A)/Ahd, dt.30.06.2011.
2. The facts of the case, in brief, are that the appellants are engaged in providing taxable services in the category of Advertising Services. The said appellants are duly registered with the Department and are holding a valid Service Tax registration No.AADHR2726RST001.
3. During the course of audit conducted by CERA, it was noticed that Service Tax would be paid to the credit of Central Government on prescribed due date in which the payment are received towards the value of taxable services. Further, the amounts billed by the appellants against customers but not realized are not liable to Service Tax as the event of payment of Service Tax is on the basis of actual realization of amounts towards the cost of service. Where the cost of service billed become irrecoverable for any reason and the same is written off fully in the books of account of the assessee, the element of input service credit attributable to such write off was required to be reversed or paid by the appellants as no Service Tax was realized on the output service in which such input service has been used. The CENVAT Credit scheme envisages availment of credit towards payment of Service Tax on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service Tax credit was not available to the appellants and the credit cannot be used as set off against output service in such cases. In view of the above, the CENVAT Credit to be reversed by the appellants was calculated to be Rs.1,45,808/- and the appellants, vide letter dt.12.11.2009, were requested to pay up the said amount.
4. A show cause notice dt.27.01.2010, therefore, was issued to the appellants. Later on, the said show cause notice was decided by the Assistant Commissioner, Service Tax, Division-I, Ahmedabad vide the impugned order, under which the demand of CENVAT Credit amounting to Rs.1,45,808/- was confirmed against the appellants under Section 73(1) of the Finance Act. Also, interest at applicable rate was charged under Section 75 of the Act. Penalties under Section 77 of the Finance Act were also imposed on the appellants.
5. The assessee preferred an appeal before such impugned order before Commissioner (Appeals). The first appellate authority, after considering the submissions made in the appeal memoranda as well as during the personal hearing, held in favour of the assessee and set aside the Order-in-Original.
6. Revenue, aggrieved by such an order, is in appeal before the Tribunal.
7. Ld. Additional Commissioner (A.R.), submits that the appellant had availed the CENVAT Credit of input services on which Service Tax liability was paid and it was not utilized for providing the output services. It is his submission that the said output services were rendered to the recipient of the services by the respondent. It is his submission that some of the recipient of the services from the respondent did not pay the amount to the respondent and hence the respondent has written off the amount due from such recipients of the services, from the book of accounts. It is his submission that the respondent having not received the amount from the" recipient of the services and having written off the same as bad debt, did not discharge the Service Tax liability, as per the provisions of Service Tax entitled them not to discharge the Service Tax for the amount which was not received. It is also his submission that the CENVAT Credit Rules were framed in order to reduce the cascading effect of tax and in this case having not paid the Service Tax liability, they are required to reverse the CENVAT Credit of the input services which is proportionate to the amount which has been written off by the respondent as not received from the recipient of the services.
8. Ld. Chartered Accountant submits that availment of input service credit is not in dispute. It is his submission that they have written off only 0.8% of the amount as bad debts and they have utilized 99.2% of the services rendered. It is his submission that there is no one to one co-relation for availment of CENVAT Credit and utilization thereof.
9. I have considered the submissions made at length by both the sides and perused the records. I find that the issue involved in this case is denial of the proportionate credit of Service Tax credit, on the ground that the appellant had written off the certain amount as bad debts from the books of account for which input services were utilised. It is also undisputed that the respondent had not received the Service Tax liability on the amount which has been written off by them., as per the provisions of Service Tax Rules. From the records, it is seen that there is no dispute as to the eligibility of availment of CENVAT Credit of the Service Tax paid, by the service provider. It is also not in dispute that such services were received by the appellant and were utilized for providing output service. It is also to be noted that there is no dispute as to the discharge of Service Tax liability by the service provider to the respondent.
10. I find that the grounds of appeal of the Department, would indicate that the Department is trying to co-relate the input services to the output services. It is settled law that there cannot be one to one co-relation in availing of the CENVAT Credit of the input service to the provision of output service. I find that the first appellate authority while appreciating the law, had recorded the following:-
"8. I find that the show cause notice has been issued to deny proportional CENVAT Credit on the ground that certain amount has been shown as 'bad debts' in the books of account of the appellants and the adjudicating authority has also confirmed the demand made in the show cause notice. As per Rule 6(10) of Service Tax Rules, 1994, Service Tax shall be paid to the credit of the Central Government on prescribed due date in which the payment are received towards the value of taxable services. Further, amounts billed by the service provider against customer but not realized are not liable to Service Tax as the event of payment of Service Tax is on the basis of actual realization of amounts towards the cost of service. However, in the impugned order, it is held that where the cost of service billed becomes irrecoverable for any reason and the same was written off fully in the books of account of an assessee, the element of input service credit attributable to such write off was required to be reversed or paid by the service provider as input service to this extent had gone into an output service on which no Service Tax was payable. The reason attributed for the proposed reversal of input credit availed is that the CENVAT Credit scheme envisages availment of credit towards payment of Service Tax on output services. Where no Service Tax is payable on any output service either because such service itself is exempt or because the service charges billed for in respect of such services becomes irrecoverable, the Service Tax credit was not available to the assessee, as the credit cannot be used as set off against output services in such cases. Accordingly, the adjudicating authority has confirmed the demand.
9. I find that the credit on the input service has been taken correctly. The inputs/input services have been used in providing output services. The output services are liable for payment of Service Tax. Hence, the eligibility of availing and utilizing the credit was not in question. As per Rule 6(10) of Service Tax Rules, Service Tax is payable when the payment towards taxable services are received. No Service Tax is payable on that part of the payment which is not received. No Service Tax is payable on that part of the payment which is not received. There is no provision in the CENVAT Credit rules to deny proportional credit on the inputs which were used in providing the output service on which recovery is pending. The adjudicating authority has cited Rule 14 of CENVAT Credit Rules and held that when Service Tax was not realized, the output service has not suffered any Service Tax. Hence, the credit availed would fall under the category of wrongly utilized credit and Rule 14 of CENVAT Credit Rules would be applicable in this case. Accordingly, he confirmed the reversal of CENVAT Credit under Rule 14 of the CENVAT Credit Rules, 2004. For the sake of easy reference, Rule 14 of the CENVAT Credit Rules is reproduced below:-
Rule 14: Recovery of CENVAT Credit wrongly taken or erroneously refunded. - Where the CENVAT Credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AB of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.
The rule envisages reversal of credit wrongly utilized or erroneously refunded. In this case, the services rendered are taxable services. The credit of inputs/input services availed is utilized in providing taxable output services. Hence, there is nothing wrong in availing and utilization of the credit. Rule 14 does not envisage recovery of credit in situations where Service Tax recovery was pending and written off as bad debts later. Further, I find that the bad debts have accumulated over a period of time. It is not possible to identify this bad debt with any particular invoice/invoices on which the recovery was pending. There is no one-to-one connection in availing and utilization of the credit in taxable output services. Hence, I find that there is no merit in the allegation that the input credit has been wrongly utilized. Thus, I hold that proportional credit on the amount of bad debts written off by the appellants is not liable to be reversed. Since credit availment and utilization is not wrong, no penalty is imposable."
11. I find that that the above reasoning recorded by the first appellate authority are correct and are in consonance with the law as has been held by the higher judicial forum.
12. I find that the impugned order is correct, legal and does not suffer from any infirmity and no interference called for in such a well reasoned order.
13. Accordingly, the appeal filed by the Department is rejected. The cross objection filed by the respondent in support of the Order-in-Appeal also gets disposed of.
VINEETRegards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
Vrajlal T Gala (HUF) Vs ACIT
Income Tax - Sections 139, 271(1)(C), 153A, 153C - Resurgent India Bonds - Whether provisions of section 153A and 153C are complete code in itself for framing the assessment of search matter - Whether assessment under these provisions are not continuation of normal assessment, as prescribed under section 139 to 153 - Whether abated or not, whether for levying penalty under section 271(1)(C) in respect of assessment framed under new search provisions return filed in pursuance to the notice of 153A has to be seen for judging concealment. - Assessee's appeal allowed : MUMBAI ITAT
 | Applicability of Rule 19(2) of ITAT Rules, 1963 |
| Posted on 21 June 2013 by Diganta Paul | |
CourtINCOME TAX APPELLATE TRIBUNAL BriefNon presense of the appellant without taking adjournment. CitationM/s. Centenary Software Pvt. Ltd, H-108, IInd Floor,New Asiatic Bldg. Cannaught Place, New Delhi 110001 PAN No. AACC0793M (Appellant) Vs. ACIT, Central Circle-09 New Delhi (Respondent) Judgement INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'B': NEW DELHI BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA No. 3618/Del/2012 Assessment Year: 2007-08 M/s. Centenary Software Pvt. Ltd, H-108, IInd Floor, New Asiatic Bldg. Cannaught Place, New Delhi 110001 PAN No. AACC0793M (Appellant) Vs. ACIT, Central Circle-09 New Delhi (Respondent) Appellant by: None Respondents by: Sri D. K. Mishra, CIT DR O R D E R PER U. B. S. BEDI. JM This appeal of the assessee emanates from the order passed by Ld. CIT(A) XXXII, Delhi dated 2nd March, 2012 relevant to assessment year 2007-08. 2. Despite noting down the adjourned date of hearing for 22nd May, 2013, nobody attended when the case was called up nor any adjournment request has been received. Therefore, it is inferred that assessee is not interested in prosecution of this appeal. 3. Having regard to Rule 19(2) of ITAT Rules, 1963 and following various decisions of the Delhi Benches including in the case of CIT vs. Multiplan India (P) Ltd., reported in 38 ITD 320 (Del.) and the judgment of Hon'ble Madhya Pradesh High Court in the case of Estate of late Tukojirao Holkar vs. CWT, 223 I.T.R. 480 (MP), we treat the appeal of the assessee as unadmitted and dismiss the same. 4. Appeal of the assessee gets dismissed. Order pronounced soon after the conclusion of hearing on 22.05.2013. -Sd/- -Sd/- (T. S. KAPOOR) (U. B. S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 22/05/2013 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR: ITAT ASSISTANT REGISTRAR | |
| Tags :- applicability rule 19 2itat rules1963 | |
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