CIT vs. M/s Dawoodi Bohara Jamat (Supreme Court)
A charitable and religious trust which does not benefit any specific religious community is not hit by s. 13(1)(b) & is eligible to claim exemption u/s 11
The assessee filed an application for registration before the CIT for registration u/s 12A/ 12AA to avail exemption u/s 11. The CIT held that though the assessee was a charitable trust, since its object and purpose was confined only to a particular religious community (Dawoodi Bohra), the bar in s. 13(1)(b) was attracted. On appeal, the Tribunal held that as the objects of the trust are wholly religious in nature, the provisions of s. 13(1)(b) which are otherwise applicable to charitable trusts was not applicable. The assessee was held entitled to claim registration u/s 12A & 12AA. On appeal by the department, the High Court declined to entertain the appeal on the ground that the Tribunal had given a finding of fact that the assessee was a religious trust. On further appeal by the department the Supreme Court had to consider (i) whether the issue as to whether the assessee was a charitable/ religious trust was a finding of fact & (ii) whether the assessee was hit by the bar in s. 13(1)(b). HELD by the Supreme Court:
(i) Normally a finding of fact as decided by the last fact finding authority is final and ought not to be lightly interfered by the High Court in an appeal. The exceptions to the said rule have been well delineated by this Court and for the present case do not require to be noticed. The appellate Courts however ought to be cautious while weeding out such questions and should the question in examination involve examination of finding of fact, ex cautela abundanti the appellate Courts would require to examine that whether the question involves merely the finding of fact or the legal effect of such proven facts or documents in appeal. While the former would be a question of fact which may or may not be interfered with, the latter is necessarily the question of law which would require consideration. It is often that the questions of law and fact are intricately entwined, sometimes to the extent of blurring the domains in which they ought to be considered and therefore, require cautious consideration. The question where the legal effect of proven facts is intrinsically in appeal has to be differentiated from the question where a finding of fact is only assailed;
(ii) The legal effect of proved facts and documents is a question of law. The determination of nature of trust as wholly religious or wholly charitable or both charitable and religious under the Act is not a question of fact. It is but a question which requires examination of legal effects of the proven facts and documents, that is, the legal implication of the objects of the trust as contained in the trust deed. It is only the objects of a trust as declared in the trust deed which would govern its right of exemption u/s 11 or 12. It is the analysis of these objects in the backdrop of fiscal jurisprudence which would illuminate the purpose behind creation or establishment of the trust for either religious or charitable or both religious and charitable purpose. Therefore, the High Court has erred in refusing to interfere with the observations of the Tribunal in respect of the character of the trust;
(iii) In certain cases, the activities of a trust may contain elements of both: religious and charitable and thus, both the purposes may be over lapping. More so when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the community and also public at large;
(iv) On facts, the objects of the assessee are not indicative of a wholly religious purpose but are collectively indicative of both charitable and religious purposes. The fact that the said objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust would be purely religious in color. The objects reflect the intent of the trust as observance of the tenets of Islam, but do not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. In judging whether a certain purpose is of public benefit or not, the Courts must in general apply the standards of customary law and common opinion amongst the community to which the parties interested belong to. Customary law does not restrict the charitable disposition of the intended activities in the objects. Neither the religious tenets nor the objects as expressed limit the service of food on religious occasions only to the members of the specific community. The activity of Nyaz performed by the assessee does not delineate a separate class but extends the benefit of free service of food to public at large irrespective of their religion, caste or sect and thereby qualifies as a charitable purpose which would entail general public utility. Even the establishment of Madarsa or institutions to impart religious education to the masses would qualify as a charitable purpose qualifying under the head of education u/s 2(15). The institutions established to spread religious awareness by means of education though established to promote and further religious thought could not be restricted to religious purposes. The assessee is consequently a public charitable and religious trust eligible for claiming exemption u/s 11;
(v) The interpretation of the Tribunal & High Court that s. 13(1)(b) would only be applicable in case of income of a trust for charitable (& not religious) purpose established for benefit of a particular religious community is not correct. S. 13(1)(b) applies also to composite trusts set up for both religious and charitable purposes if it is established for the benefit of any particular religious community or caste.
(vi) On facts, though the objects of the assessee-trust are based on religious tenets under Quran according to religious faith of Islam, the perusal of the objects and purposes of the assessee would clearly demonstrate that the activities of the trust are both charitable and religious and are not exclusively meant for a particular religious community. The objects do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of s. 13(1)(b).
TDS Credit to be allowed without form 26AS -TDS
Department is required to give credit for TDS once valid TDS certificate had been produced or even where deductor has not issued TDS certificates, on the basis of evidence produced by the assessee regarding deduction of tax at source and on the basis of indemnity bond.
For assessment year 2007-08, the assessee claimed total credit for TDS of Rs .21,51,63,912 c laim of Rs 16,52,09,344 was made in the original return and further claim of Rs 1,42,71,296 was made in revised return filed on 13-04-2009 and a claim of Rs 3,56,83,272 was made vide letter, dated 28-12-2010, filed in the assessment proceedings. The Assessing Officer (AO) granted credit of TDS only to the tune of Rs. 11,89,60,393. The AO did not grant credit claimed because of discrepancy with respect to credit shown in Form No. 26AS.
Aggrieved, the assessee preferred an appeal to CIT(A) who directed the assessee to furnish all TDS certificates in original before the AO and directed the AO to verify the claim of credit of TDS and to allow TDS as per original challans available on record or as per details of such TDS available on computer system of the department.
Aggrieved, the assessee preferred an appeal to the Tribunal where it was contended that credit of TDS has to be given on the basis of TDS certificates and in case TDS certificates are not available, on the basis of details and evidence furnished by the assessee regarding deduction of tax at source.
The Tribunal noted that the credit of TDS has been denied to the assessee on the ground that the claim for TDS was not reflected in computer generated Form No. 26AS. It observed that the difficulty faced by the tax payer in the matter of credit of TDS had been considered by the Hon'ble High Court of Bombay in the case of Yashpal Sawhney vs. DOT in which it has been held that even if the deductor had not issued TDS certificate, the claim of the assessee has to be considered on the basis of evidence produced for deduction of tax at source as the revenue was empowered to recover the tax from the person responsible if he had not deducted tax at source or after deducting failed to deposit with Central Government.
The Hon'ble High Court of Delhi in case of Court on its Own Motion v. CIT have also directed the department to ensure that credit is given to the assessee, where deductor had failed to upload the correct details in Form 26AS on the basis of evidence produced before the department. Therefore, the department is required to give credit for TDS once valid TDS certificate had been produced or even where the deductor had not issued TDS certificates on the basis of evidence produced by the assessee regarding deduction of tax at source and on the basis of indemnity bond.
The Tribunal directed the AO to proceed in the manner discussed above to give credit of tax deducted at source to the assessee
Citicorp Finance (India) Ltd. Vs. Addl. CIT [ITA No. 8532/Mum/2011, ITAT Mumbai Bench, dtd. 13.09.2013, in favour of assessee]
Source: www.simpletaxindia.net
UOI vs. Tata Chemicals Ltd (Supreme Court)
S. 244A: Deductor entitled to interest on refund of excess TDS from date of payment
The assessee made an application u/s 195(2) for permission to remit technical service charges and reimbursement of expenses to a foreign company without deduction of tax at source. The AO passed an order directing the assessee to deduct TDS at the rate of 20% before making remittance. The assessee effected the deduction and filed an appeal before the CIT(A) in which it claimed that the said remittance was not subject to TDS. The CIT(A) upheld the claim with regard to the reimbursement of expenses with the result that the TDS thereon was refunded to the assessee. However, the AO declined to grant interest u/s 244A on the said interest by relying on Circular Nos 769 dated 06.08.1998 and 790 dated 20.4.2000 issued by the CBDT. The CIT(A) upheld the AO's stand though the Tribunal and High Court upheld the assessee's stand. On appeal by the department to the Supreme Court HELD dismissing the appeal:
(i) A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company;
(ii) Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors' lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course;
(iii) The said interest has to be calculated from the date of payment of such tax.
Nowadays delay in payment of TDS and in TDS return Filing makes an assessee liable to Late Payment Interest, Late Payment Penalty, Late Filing Fees, Late Filing Penalty and Further makes him liable to prosecution under the provision of the Income Tax Act, 1961. In this article we are discussing some of these provisions which makes it clear that TDS cannot be taken lightly and we should take utmost care in timely payment of TDS and filing of TDS return.
TDS payment and Return Filing
The provision of TDS is getting stringent and from now it is becoming very necessary for all to comply the same and understand the importance of TDS.
As per the provision of TDS is to be deducted on payment or credit whichever is earlier. So for e.g. If bill date is 15/4/13 amounting to 25000/- but advance payment is made on 05/04/2013 amounting to Rs. 85,000/- than TDS has to be deducted on 85,000/- on 05/04/2013 and to be paid either on same day or next day. Though the due date of payment is 7th of next month but that is not to be considered as due date, it is just grace days provided by department for the convenience of the assessee. Hence as soon as you deduct TDS it has to be paid. Even if we pay the TDS on 7th,the challan would get process with 24-48 hours as per banking terms. Hence as per Income tax department the date would not be considered as 7th but it would 8th or 9th as per the bank processing. Hence late payment interest would be charged for 2 months i.e. from date of deduction to date of payment.
If TDS is paid after 7th, Interest is charged at 1.5% p.m. (18% p.a.) from date of deduction till date of payment. For e.g. if TDS is deducted on 15th April and paid on 9th May than interest would be calculated for 2 months i.e. April and May. Hence, it is advisable to pay TDS on date of deduction itself rather than waiting for 7th of next month for payment. It is from now compulsory to pay online TDS for all assessee whose payment exceeds Rs. 1,00,000/- for the whole year. Hence if the assessee does not have online payment facility kindly get the same.
The chart for payment of TDS is as follows:
| S. No. | Particulars | Due Date |
| 1 | Tax Deductible in March | 30th April |
| 2 | Other Months and Tax opted to be deposited by the employer | 7th of next month |
Even if PAN is incorrect, TDS @ 20% needs to be deducted. Hence, always take PAN copy of the party and file return. Now, only 2 digits and 2 letters of PAN are allowed to be changed in revised return which would cause more difficulties as if whole PAN is in correct it would be difficult to change the same. Hence from now it is advisable that PAN copies is taken from all clients and then send all details.
The due date of filing of TDS return is as follows:
| Quarter | Form Nos. 24Q & 26Q | Form No. 27Q | Form No. 27EQ |
| April to June | 15 July | 15 July | 15 July |
| July to September | 15 October | 15 October | 15 October |
| October to December | 15 January | 15 January | 15 January |
| January to March | 15 May | 15 May | 15 May |
Late filing consequences
Fees for delay in furnishing the statements: (refer section 234E of Income Tax Act) Effective from 1st July 2012, any delay in furnishing the eTDS statement will result in a mandatory fees of Rs. 200 per day, the total fees should not exceed the total amount of TDS made for the quarter. The late filing fee should be paid before filing such delayed eTDS statement.
Penalty for failure to furnish statements and furnishing incorrect statements: (refer section 271H of Income Tax Act)
Failure to file eTDS statement delaying more than an year or furnishing incorrect details in the statement filed like PAN, Challan and TDS Amount etc, will result in a penalty ranging from Rs. 10,000 to one lac.
Due date for furnishing TDS certificate to the employee or deductee or payee is revised as under :
| Sl. No. | Category | Periodicity of furnishing TDS certificate | Due date |
| 1. | Salary (Form No.16) | Annual | By 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted |
| 2. | Non-Salary (Form No. 16A) | Quarterly | Within fifteen days from the due date for furnishing the 'statement of TDS' |
Failure to issue TDS certificate within the time allowed, attracts penalty of Rs. 100/- per day of default (Sec 272A(2)(g)). However, penalty will not exceed the amount of tax deductible or collectible, as the case may be.
As per Circular No. 01/2012 dated 09.04.2012, it mandatory for all deductors to issue TDS certificate in Form No. 16A after generating and downloading the same from TRACES website.
The TDS chart for the F.Y. 2013-14 is as below:
TDS Rate on Payment of Salary and Wages
Section 192 – Payment of Salary and Wages
- TDS is deducted if the estimated income of the employee is taxable.
- Criteria of Deduction: - Employer must not deduct tax on non-taxable allowances like conveyance allowance, rent allowance, medical allowance and deductible investments under sections like 80C, 80CC, 80D, 80DD, 80DDB, 80E, 80GG and 80U.
- No tax is required to be deducted at source if the estimated total income of the employee is less than the minimum taxable income (Rs. 2,20,000/- in case of Individual, HUF, AOP, BOD and AJP. Nil for others.)
- TDS Rate - As per Income Tax, Surcharge and Education Cess rates applicable on the estimated income of employee for the year.
TDS Rates on Payments other than Salary and Wages to Residents (including domestic companies)
Section | For Payment of | On Payments Exceeding | Individual/HUF | Others |
| 193 | Interest on Debentures | Rs. 5000/- | 10% | 10% |
| 194 | Deemed Dividend | No minimum | 10% | 10% |
| 194 A | Interest other than on securities by banks | Rs. 10000/- | 10% | 10% |
| 194 A | Interest other than on securities by others | Rs. 5000/- | 10% | 10% |
| 194 B | Winnings from Lotteries / Puzzle / Game | Rs. 10000/- | 30% | 30% |
| 194 BB | Winnings from Horse Race | Rs. 5000/- | 30% | 30% |
| 194 C (1) | Payment to Contractors | Rs. 30000/- for single payment Rs. 75000/- for aggregate payment during Financial Year | 1% | 2% |
| 194 C (2) | Payment to Sub-Contractors / for Advertisements | |||
| 194 D | Payment of Insurance Commission | Rs. 20000/- | 10% | 10% |
| 194 EE | Payment of NSS Deposits | Rs. 2500/- | 20% | NA |
| 194 F | Repurchase of units by Mutual Funds / UTI | Rs. 1000/- | 20% | 20% |
| 194 G | Commission ons Sale of Lotterytickets | Rs. 1000/- | 10% | 10% |
| 194 H | Commission or Brokerage | Rs. 5000/- | 10% | 10% |
| 194 I | Rent of Land, Building or Furniture | Rs. 180000/- | 10% | 10% |
| Rent of Plant & Machinery | Rs. 180000/- | 2% | 2% | |
| 194 IA | Transfer of Immovable Property (w.e.f. 01.06.2013) | Rs. 50 lacs | 1% | 1% |
| 194 J | Professional / technical services, royalty | Rs. 30000/- | 10% | 10% |
| 194 J (1) | Remuneration / commission to director of the company | - | 10% | 10% |
| 194 J (ba) | Any remuneration / fees / commission paid to a director of a company, other than those on which tax is deductible u/s 192. | - | 10% | 10% |
| 194 L | Compensation on acquisition of Capital Asset | Rs. 100000/- | 10% | 10% |
| 194 LA | Compensation on acquisition of certain immovable property | Rs. 200000/- | 10% | 10% |
Notes:
- No surcharge or education cess is deductible / collectible at source on payments made to residents {Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes other than salary or wages.
- TDS at higher rate of 20% has to be deducted if the deductee does not provide PAN to the deductor.(section 206AA)
- All persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain Tax Deduction or Tax Collection Account Number (TAN).
The following are the list of consequences of TDS: Consequences of TDS defaults
Failure to deduct taxes or wrong deduction of TDS (non deposit, short deposit or late deposit):
| Default/ Failure Section Nature of Demand Quantum of demand or penalty | |||
| Failure to deduct tax at source | 201(1) | Tax demand | Equal to tax amount deductible but not deducted |
| 201(1A) | Interest | @1 % p.m. of tax deductible | |
| 271C | Penalty | Equal amount of tax deductible but not deducted | |
| Failure to deposit tax at source | 201(1) | Tax demand | Equal to tax amount not deposited |
| 201(1A) | Interest | @1.5% p.m. of tax not deducted | |
| 276B | Prosecution | Rigorous imprisonment for a term for a minimum of 3 months which may extend to 7 years and with fine | |
| Failure to apply forTAN No. u/s 203A | 272BB | Penalty | Rs. 10000 |
| Failure to furnish prescribed statements u/s 200(3) | 272A(2)(k) | Penalty | Rs. 100 every day during which the failure continues subject to maximum of TDS amount |
| Failure to issue TDS certificate u/s 203 | 272(A)(g) | Penalty | Rs. 100 every day during which the failure continues subject to maximum of TDS amount. |
| Failure to furnish statement of perquisite or profit in lieu of salary u/s 192(2C) | 272(A)(i) | Penalty | Rs. 100 every day during which the failure continues subject to maximum of TDS amount |
| Failure to mention PAN of the deductee in the TDS statements and certificates | 272B | Penalty | Rs. 10000 |
Now we can even get the refund of excess TDS paid by us in the following manner:
GUIDELINES- REQUEST FOR REFUND
It is mandatory to register digital signature on TRACES to submit the refund request.
Request for refund can be submitted only if there is no outstanding demand against the TAN. Refund request can be submitted after total outstanding demand is closed.
A refund request can contain maximum of five challans. For claiming more challans, submit new request. Maximum refund amount will be the minimum challan balance amount in the challan history.
Available amount per challan must be greater than Rs.100/- Ensure that all statement in which the challan has been claimed have been processed before claiming refund for the challan.
Hence now it is becoming necessary to comply
CST & VAT : Fuel and lubricant used for generation of electricity, which, in turn, is used for manufacturing is to be regarded as 'raw material used in process of manufacture' and eligible for concessional sales/purchase-tax rate
■■■
[2014] 42 taxmann.com 567 (Rajasthan)
HIGH COURT OF RAJASTHAN
Assistant Commissioner of Commercial Taxes
v.
Rajasthan Textile Mills*
MS. BELA M. TRIVEDI, J.
SB SALES TAX REVISION NO. 192 OF 2011
FEBRUARY 3, 2014
Section 10, read with section 2(34), of the Rajasthan Sales-tax Act, 1994 - Charge/levy - Sales Tax/VAT - Assessee was engaged in manufacturing and selling of cotton yarn, acrylic yarn, synthetic yarn and staple yarn - Assessee purchased high speed diesel and lubricants at concessional rate of 3 per cent for using same as raw material for manufacture of various yarn, by making a prescribed declaration under section 10(1) - Department argued that since diesel and lubricants were used as raw material for generation of electricity in captive power plant for running its factory, said goods were used for generation of electricity and were taxable at 4 per cent under section 10(3) - HELD : In view of judgments in Commercial Taxation Officer v. Rajasthan Taxchem Ltd. [2007] 3 SCC 124 and Asstt. Commissioner, Anti Evasion Commercial Taxed Department v. Rajasthan Testile Mills [SB Sales Tax Revision Petition No. 187 of 2011, dated 27-8-2013], 'fuel' and 'lubricant' required for process of manufacture are eligible as 'raw materials' under section 2(34) read with section 10(1) - Diesel and lubricant were used for generation of electricity, which was used for purpose of manufacturing yarn - Since said goods are specifically included within definition of 'raw material', fact that said goods are used directly or indirectly is irrelevant - Hence, said were eligible for concessional rate of tax of 3 per cent [Paras 4 to 6] [In favour of assessee]
CASE REVIEW
Commercial Taxation Officer v. Rajasthan Taxchem Ltd. [2007] 3 SCC 124 (para 4) and Asstt. Commissioner, Anti Evasion Commercial Taxed Department v. Rajasthan Testile Mills [SB Sales Tax Revision Petition No. 187 of 2011, dated 27-8-2013] (para 5) relied on.
CASES REFERRED TO
Commercial Taxation Officer v. Rajasthan Taxchem Ltd. [2007] 3 SCC 124 (para 4) and Asstt. Commissioner, Anti Evasion Commercial Taxed Department v. Rajasthan Testile Mills [SB Sales Tax Revision Petition No. 187 of 2011 dated 27-8-2013] (para 5).
Ms. Tanvi Sahai and R.B. Mathur for the Petitioner.
ORDER
1. The instant sales tax revision petition has been filed by the petitioner-Department under section 86 of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as 'the said Act') challenging the order dated 10.11.04 passed by the Rajasthan Tax Board, Ajmer (hereinafter referred to as 'the Board') in Appeal No. 502/04, whereby the Board has dismissed the appeal filed by the petitioner-appellant, alongwith the other appeals.
2. The short facts are that the respondent-assessee was engaged in manufacturing and selling of cotton yarn, acrylic yarn, synthetic yarn and staple yarn. On the inspection made at the premises of the assessee on 24-5-2011, it was found that during the assessment year 1996-97, the assessee had purchased high speed diesel and lubricants for using the same as raw material, by making such declaration on the Declaration Form ST-17, at the concessional tax rate of 3% under section 10(1) of the said Act. Since the assessee was found to be using the diesel and lubricants as raw material for the generation of the electricity in the captive power plant for running its factory, the assessing authority had found him responsible for the tax evasion, as according to the assessing authority the applicable tax rate for purchase of diesel for power generation was 4% as per section 10(3) of the said Act. The assessing authority, after serving the notice and taking into consideration the reply filed by the assessee, passed the order dated 14-6-2001 raising demand of Rs. 5,05,088/- against the respondent-assessee. Being aggrieved by the said order, the respondent-assessee had preferred an appeal before the Dy. Commissioner (Appeals), Commercial Taxes Department, Kota, which appeal was allowed by the said authority vide the order dated 16-7-2003. Being aggrieved by the same, the petitioner-Department had preferred the appeal before the Board, which was dismissed on 10-11-2004, against which the present revision petition has been filed.
3. The only issue raised by the learned counsel Ms. Tanvi Sahai for the petitioner is that the respondent-assessee was responsible to pay the tax on the purchase of diesel and lubricants used for power generation in the DG Set at 4% as required under section 10(3) of the said Act and not at the concessional rate of 3% under section 10(1) of the said Act.
4. In the opinion of the court, the decision of the Apex Court in case of Commercial Taxation Officer v.Rajasthan Taxchem Ltd. [2007] 3 SCC 124 clinches the issue, wherein it has been observed as under :—
"The definition of raw material under section 2(34) which specifically includes fuel required for the purpose of manufacture as raw material. The word includes gives a wider meaning to the words or phrases in the Statute. The word includes is usually used in the interpretation clause in order to enlarge the meaning of the words in the statute. When the word include is used in the words or phrases, it must be construed as comprehending not only such things as they signify according to their nature and impact but also those things which the interpretation clause declares they shall include. There is no dispute in the instant case that the diesel and lubricant is used to generate electricity through DG sets which is admittedly used for the purpose of manufacturing yarn. Thus, it is seen that as diesel is specifically and intentionally included in the definition of raw material by the legislature, the question that whether it is directly or indirectly used in the process of manufacture is irrelevant."
5. The aforesaid decision has also been relied upon by this court in case of Asstt. Commissioner, Anti Evasion, Commercial Taxed Department v. Rajasthan Testile Mills [SB Sales Tax Revision Petition No. 187 of 2011 dated 27-8-2013]. The learned counsel for the petitioner has not been able to show any legal position contrary to the one settled by the Apex Court in the aforestated decision.
6. Under the circumstances the court does not find any illegality in the impugned order passed by the Board. The petition being devoid of merits is dismissed.
VINEET[2014] 42 taxmann.com 403 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax
v.
Jikar A Saiyed*
M.R. SHAH AND R.D. KOTHARI, JJ.
TAX APPEAL NO. 368 OF 2008†
DECEMBER 21, 2013
Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings [Computation of deduction] - Assessment year 2001-02 - Whether in view of orders passed in cases of Dy. CIT v. Harjivandas Juthabhai Zaveri [2002] 258 ITR 785/[2003] 132 Taxman 923 (Guj.) and CIT v. Sadhu Forging Ltd. [2011] 336 ITR 444/200 Taxman 1/11 taxmann.com 322 (Delhi), Tribunal was justified in holding that assessee, engaged in manufacturing card boxes, was entitled to deduction under section 80-IB in respect of income arising from sale of scrap - Held, yes [Para 6][In favour of assessee]
CASE REVIEW
Dy. CIT v. Harjivandas Juthabhai Zaveri >[2002] 258 ITR 785/[2003] 132 Taxman 923 (Guj.) and CITv. Sadhu Forging Ltd. [2011] 336 ITR 444/200 Taxman 1/11 taxmann.com 322 (Delhi) (para 6)followed.
CASES REFERRED TO
Dy. CIT v. Harjivandas Juthabhai Zaveri [2002] 258 ITR 785/[2003] 132 Taxman 923 (Guj.) (para 2.2), CIT v. Sadhu Forging Ltd. [2011] 336 ITR 444/200 Taxman 1/11 taxmann.com 322 (Delhi) (para 5).
Sudhir M. Mehta for the Appellant. B.D. Karia and R.K. Patel for the Respondent.
JUDGMENT
M.R. Shah, J. - Feeling aggrieved and dissatisfied with the impugned judgment and order dated 02.03.2007 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as the "ITAT") in ITA No.2816/AHD/2003 for AY 2001-02, the revenue has preferred the present Tax Appeal to consider the following substantial question of law.
"Whether on the facts and circumstances of the case and in law was the Appellate Tribunal right in holding that deduction u/s 80IB is allowable from the income from sale of scrap?"
2. That the assessee filed return of income for AY 2001-02 declaring total income at Rs.21,34,149/- and agricultural income of Rs. 1,92,558/-. That the assessee is manufacturing card board boxes of various sizes and supplies the same to various parties. During the year, the appellant had also earned income from sale of scrap to the tune of Rs. 3,20,508/- In spite of the said income from sale of scrap the Assessing Officer held that only such profits which are directly derived from the business of Industrial undertaking shall be allowable under the deduction under Section 80IB of the Act. The Assessing Officer also observed and held that there was no direct nexus between the profits and gains and the industrial undertaking, accordingly the Assessing Officer has held that the sale of scrap is not derived from the manufacturing activity and is therefore, not entitled to deduction under Section 80IB of the Act.
2.1 Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer in making deduction under Section 80IB of Rs.3,20,508/- , the same being related to sale of scrap being an amount not eligible for deduction under Section 80IB on the ground that the same is not an income derived by the assessee from the industrial undertaking, the assessee preferred appeal before the learned CIT(A) and by order dated 28.03.2003 the learned CIT(A) allowed the said appeal deleting the disallowance of deduction under Section 80IB of Rs. 3,20,508/-.
2.2 Feeling aggrieved and dissatisfied with the order passed by the CIT(A) in making deletion of disallowance of deduction under Section 80IB of Rs.3,20,508/-, the same being related to scrap, the revenue preferred appeal before the learned ITAT and by impugned judgment and order relying upon the decision of the Division Bench of this Court in the case Dy. CIT v. Harjivandas Juthabhai Zaveri [2002] 258 ITR 785/[2003] 132 Taxman 923 (Guj.), the learned ITAT has dismissed the said appeal confirming the order passed by the learned CIT(A) deleting the disallowance of the deduction under Section 80IB of Rs.3,20,508/-.
2.3 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT, the revenue has preferred the present Tax Appeal to consider the following the substantial question of law.
"Whether on the facts and circumstances of the case and in law was the Appellate Tribunal right in holding that deduction u/s 80IB is allowable from the income from sale of scrap?"
3. Heard Shri Sudhir Mehta, learned advocate for the revenue and Shri B.D. Karia, learned advocate appearing for Shri R.K. Patel, learned advocate for the assessee.
4. The short question which is posed for consideration of this Court is whether on the facts and circumstances of the case and in law the Appellate Tribunal is right in holding that the deduction under Section 80IB is allowable from the income from sale of scrap ? It is also required to be noted at this stage that while passing the impugned judgment and order, the learned ITAT has relied upon the decision of the jurisdictional High Court in the case of Harjivandas Juthabhai Zaveri (supra). In the case of Harjivandas Juthabhai Zaveri (supra) while answering the question whether the Appellate Tribunal is right in law and on facts in allowing deduction under Section 80IB of the Act on the items (i) Job work receipt, (ii) sale of empty soda ash bardana, (iii) sale of empty barrels and (iv) sale of plastic waste. The Division Bench has observed and held as under:
"So far as question No. 5 is concerned, learned counsel Mr. Soparkar drew our attention to section 80.I of the Act and submitted that this section is meant for deduction in respect of profit and gains from industrial undertakings. With regard to the question raised by the Revenue that the amount received on sale of jute bags, barrel etc. ought to have been deducted from the cost of the material, Mr. Soparkar, learned advocate for the assessee submitted that it would not make any difference if the amount received by the sale of empty barrel or ' bardan' (jute bags) is deducted from the cost of the raw material. He submitted that if the cost is reduced by deducting the sum so received, the profit will increase and ultimately, the total would be the same. He submitted that the Commissioner of Income Tax (Appeals) and the Tribunal has rightly come to the conclusion that the items covered by question No. 5 are covered by section 80.I of the Act inasmuch the amount received can be said to have been received from the activities undertaken by the Assessee. He submitted that no question of law is raised, more particularly, when a Division Bench of this Court in Income Tax Application No. 70 of 1997 had considered a similar question and held that "it was, however, found that the items of kasar and sale of empty soda ash bardans, as directly connected with the manufacturing activities of the assessee and should be allowed". It is required to be noted that if the Assessee was not engaged in industrial activities, there was no question of empty barrels or bardans. Instead of manufacturing if the assessee was doing trading activities I.e. dealing in raw material and if the assessee had sold the material on retail basis and earned amount by sale of bardans, then obviously this section will not apply."
5. The decision of this Court in the case of Harjivandas Juthabhai Zaveri (supra) has been subsequently considered by the Delhi High Court in the case of CIT v. Sadhu Forging Ltd. [2011] 336 ITR 444/200 Taxman 1/11 taxmann.com 322 (Delhi) and it is held that receipt of sale of scrap part and parcel of industrial activity and therefore, deduction under Section 80IB is allowable. In the said decision, the Delhi High Court has held that the industrial undertaking set up by the assessee was for the purpose of manufacture of steel forging, transmission gears and part and accessories of motor vehicles and the scrap of these items was stated to be a by product of manufacturing process. The activity of forging was "manufacturing" within the ambit of section 80IB. It was immaterial that the assessee was doing the job of forging also for customers and was charging them on job work basis or on the basis of labour charges. It would still be qualified as carrying on eligible business under Section 80-IB. The activities of the assessee were in giving heat treatment for which it had earned labour charges and job work charges. It could thus be said that the assessee had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. These receipts could not be said to be independent income of the manufacturing activities of the undertaking of the assessee and thus could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under Section 80-IB. These were gains derived from the industrial undertaking and so entitled for the purpose of computing deduction under Section 80-IB. There could not be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts from sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under Section 80-IB.
6. Applying the ratio / law laid down by this Court in the case of Harjivandas Juthabhai Zaveri (supra) as well as Delhi High Court in the case of Sadhu Forging Ltd (supra), to the facts of the case on hand, it cannot be said that the learned Tribunal has committed any error in holding that the deduction under Section 80-IB of the Act is allowable for the income from sale of scrap. Under the circumstances, substantial question of law raised is answered against the revenue. Hence, present appeal deserves to be dismissed and is accordingly dismissed.
SUNIL †Arising out of order of Tribunal in ITA No. 2816 (Ahd.) of 2003, dated 2-3-2007.
Regards,
Pawan Singla , LLB
M. No. 9825829075ITR-V due date for A.Y. 2012-13 and 2013-14 extended to 31.03.2014
Notification for Extension of date for receipt of ITR-Vs in CPC, Bengaluru, for the cases of AY 2012-13 and 2013-14 received/e-filed in FY 2012-13- Reg.
There are many taxpayers who have uploaded their Income Tax Returns (without digital signature Certificate) for A.Y. 2012-13 [filed between 1.4.2012 to 31.10.2013] and for A.Y. 2013-14 [filed between 1.4.2013 to 31.10.2013], but have either not filed the corresponding ITR-V or have filed it with the local Income-Tax Office. ITR-V is accepted only at CPC, Bengaluru by ordinary or speed post. Therefore an opportunity is being given to such taxpayers to regularize their Income-tax returns.All Such taxpayers may mail the ITR-V, by 31St March, 2014, by ordinary post or speed post at Post Bag No. 1, Electronic city Post Office, Bengaluru-560100 (Karnataka). Taxpayers who have filed their ITR-V with the local Income-tax office may again mail their ITR-V to the CPC by 31St March, 2014. Those taxpayers who have earlier mailed their ITR-V, but have not received the acknowledgement e-mail from the CPC, may mail their ITR-V to the CPC again.
The ITR-V form should be mailed to the CPC only at the above address by ordinary post or speed post. Taxpayers may note that no other place or form of delivery will be accepted.
Taxpayers may also note that without acknowledgement of the ITR-V from the CPC it would not be possible for the Income -tax Department to process the Income-tax returns or issue any refunds there from, as these would be treated as not having been filed with the Department.
(Sanjeev Singh)
Director of Income Tax (Systems)-II
New Delhi
Director of Income Tax (Systems)-II
New Delhi
__._,_.___
No comments:
Post a Comment