Companies (Removal of Difficulties) Third Order, 2014. – Dated 2-6-2014 – Companies Law
Companies (Removal of Difficulties) Third Order, 2014. – Dated 2-6-2014 – Companies Law
MINISTRY OF CORPORATE AFFAIRS
ORDER
New Delhi, the 2nd June, 2014
S.O. 1429(E).—In exercise of the powers conferred by sub-section (I) of Section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order, namely:-
1. (1) This Order may be called the Companies (Removal of Difficulties) Third Order, 2014.
(2) It shall come into force at once.
2. Jurisdiction, powers, authority and functions of Company Law Board.- Until the National Company Law Tribunal is constituted under section 408 of the Companies Act, 2013 (18 of 2013), the Board of Company Law Administration constituted in pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 ( 1 of 1956) shall exercise the jurisdiction, powers, authority and functions under the first proviso to clause (41) of Section 2 of the Companies Act, 2013 (18 of 2013).
[F. No. 2/9/2014-CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy.
Gaurav Luthara vs. ITO (ITAT Agra)
S. 153(3) Expl 3/ 267: Benefit of extended period of limitation to pass assessment order pursuant to finding/ direction of appellate authority not available if affected party not heard
U/s 267, the CIT(A) and Tribunal are empowered, while making a change in the assessment of a body of individuals or an association of persons, to direct the AO to amend/ make a fresh assessment on any member of the body or association. Under Explanation 3 to s. 153(3), the time limit for making an assessment in such a case of finding or direction does not apply provided such other person was given an opportunity of being heard before the said order was passed. The opportunity of hearing to the assessee in whose hands income of the assessee in appeal is to be added is a condition precedent for giving any finding adverse to such assessee vis-à-vis the time limits for completion of his assessment, reassessment or recomputations are concerned. That is the unambiguous scheme of Explanation 3 to s. 153(3). If an appellate authority does not do so, the affected assessee can not be put to any disadvantage as far as the statutory time limits for completion of assessments, reassessment or recomputations. An opportunity to be so given should be a specific opportunity and the affected assessee is required to be put to notice on that issue. A general hearing given to the representative of the trusts in question cannot be equated with such specific opportunity to the affected assessee and the affected assessee being put to notice about the conclusions adversely affecting him. The scheme of the Income Tax Act fiercely guards the rule of finality to income tax proceedings, whether in assessment, reassessment, revisions, rectifications or any other proceedings, and once the time limit for that course of action is over, the finality thereto cannot be disturbed except under the specific provisions of the Act. The only thing which can help the cause of the revenue is thus a specific notice of hearing having been given to the assessee before us, as mandated by Explanation 3 to s. 153(3). It is only when the AO can demonstrate that this assessee was given a specific opportunity of hearing, before the appellate order was passed in the cases of the Trust that the impugned assessment order can be treated as legally valid
LSG Sky Chef (India) Pvt. Ltd vs. DCIT (ITAT Mumbai)
Assessee cannot be denied credit for TDS on the ground of discrepancy in Form 26AS filed by the deductor
Though Form 26AS (r/w r.31AB and ss. 203AA and 206C(5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee. The assessee, by furnishing the TDS certificate/s bearing the full details of the tax deducted at source, credit for which is being claimed, has discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee's claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee's claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably armed by law there for. The plea that the deductor may have specified a wrong TAN, so that the TDS may stand reflected in the account of another deductee, is no reason or ground for not allowing credit for the TDS in the hands of the proper deductee. The onus for the purpose lies squarely at the door of the Revenue
Toscana Lasts Limited vs. ITO (ITAT Delhi)
S. 271(1)(c): Fact that assessee has huge carry forward losses and depreciation and filed a nil return suggests that there is no motive or incentive to make a bogus claim in the return
Quantum additions and penalty proceedings are two separate and distinct proceedings. Penalty cannot be levied for every disallowance made in the assessment order. The assessee has submitted the agreement, debit note for these expenses, ledger account of APR Limited to whom the payments were made. Further, the confirmation from APR Limited was also filed in penalty proceedings. The revenue authorities have not brought anything on record which could prove the non-genuineness of these documents. The facts with regard to these claims were clearly mentioned and disclosed in the return of income. The expenses payable to APR Limited were shown separately by the assessee in the profit and loss account and the same has been also discussed by the auditor in the audit report. Thus, assessee has made a claim which was transparent and bona fide. Assessee has not concealed anything in this regard. Therefore, it cannot be a case of concealment of facts. As far as the filing of inaccurate particulars of income is concerned, the assessee was having huge carry forward losses and depreciation and the return was filed at nil income. In our considered view, there cannot be a motive or incentive for the assessee to make any bogus claim in the return of income. These facts show that whatever claim made by the assessee was under good faith and with the advice of the auditors and the employees. The assessee has furnished an explanation which has not been found false.
Clarifications on Rules related to appointment and qualifications of directors and Independent Directors
General Circular No. 14/2014, Dated: 9thJune, 2014
Subject: Clarifications on Rules prescribed under the Companies Act, 2013 -Matters relating to appointment and qualifications of directors and Independent Directors – reg.
Government has received representations from Industry Chambers, Professional Institutes and other stakeholders seeking clarifications inter alia about appointment of Independent Directors (IDs) under the relevant provisions of the Companies Act, 2013 (Act) read with relevant rules with effect from 1st April, 2014. The representations have been examined and clarifications on the following points are hereby given:-
(i) Section 149(6)(c): "pecuniary interest in certain transactions" :-(a) This provision inter alia requires that an 'ID' should have no 'pecuniary relationship' with the company concerned or its holding/ subsidiary/ associate company and certain other categories specified therein during the current and last two preceding financial years. Clarifications have been sought whether a transaction entered into by an 'ID' with the company concerned at par with any member of the general public and at the same price as is payable/paid by such member of public would attract the bar of 'pecuniary relationship' under section 149(6)(c). The matter has been examined and it is hereby clarified that in view of the provisions of section 188 which take away transactions in the ordinary course of business at arm's length price from the purview of related party transactions, an 'ID' will not be said to have 'pecuniary relationship' under section 149(6)(c) in such cases.
(b) Stakeholders have also sought clarification whether receipt of remuneration, (in accordance with the provisions of the Act) by an 'ID' from a company would be considered as having pecuniary interest while considering his appointment in the holding company, subsidiary company or associate company of such company.
The matter has been examined in consultation with SEBI and it is clarified that 'pecuniary relationship' provided in section 149(6)(c) of the Act does not include receipt of remuneration, from one or more companies, by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission approved by the members, in accordance with the provisions of the Act.
(ii) Section 149: Appointment of 'IDs' : Clarification has been sought if 'IDs' appointed prior to April 1, 2014 may continue and complete their remaining tenure, under the provisions of the Companies Act, 1956 or they should demit office and be re-appointed (should the company so decide) in accordance with the provisions of the new Act.
The matter has been examined in the light of the relevant provisions of the Act, particularly section 149(5) and 149(10) 86 (11). Explanation to section 149(11) clearly provides that any tenure of an 'ID' on the date of commencement of the Act shall not be counted for his appointment/holding office of director under the Act. In view of the transitional period of one year provided under section 149(5), it is hereby clarified that it would be necessary that if it is intended to appoint existing 'IDs' under the new Act, such appointment shall be made expressly under section 149(10)/ (11) read with Schedule IV of the Act within one year from 1st April, 2014, subject to compliance with eligibility and other prescribed conditions.
(iii) Section 149(10)/(11) – Appointment of 'IDs' for less than 5 years:-Clarification has been sought as to whether it would be possible to appoint an individual as an ID for a period less than five years.
It is clarified that section 149(10) of the Act provides for a term of "upto five consecutive years" for an 'ID'. As such while appointment of an 'ID' for a term of less than five years would be permissible, appointment for any term (whether for five years or less) is to be treated as a one term under section 149(10) of the Act. Further, under section 149(11) of the Act, no person can hold office of 'ID' for more than two consecutive terms'. Such a person shall have to demit office after two consecutive terms even if the total number of years of his appointment in such two consecutive terms is less than 10 years. In such a case the person completing 'consecutive terms of less than ten years' shall be eligible for appointment only after the expiry of the requisite cooling-off period of three years.
(iv) Appointment of 'IDs' through letter of appointment:- With reference to Para IV(4) of Schedule IV of the Act (Code for IDs) which requires appointment of -IDs' to be formalized through a letter of appointment, clarification has been sought if such requirement would also be applicable for appointment of existing 'ID s'?
The matter has been examined. In view of the specific provisions of Schedule IV, appointment of 'IDs' under the new Act would need to be formalized through a letter of appointment.
This issues with the approval of the competent authority.
Yours faithfully
(Kamna Sharma) Assistant Director
One Documentary Proof of Address – RBI further simplifies KYC Norms for Bank Accounts
RBI/2013-14/634
DBOD.AML.BC. No. 119/14.01.001/2013-14
DBOD.AML.BC. No. 119/14.01.001/2013-14
June 9, 2014
The Chairperson/CEOs of all Scheduled Commercial Banks (Excluding RRBs)/
Local Area Banks / All India Financial Institutions
Local Area Banks / All India Financial Institutions
Dear Sir/ Madam,
Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT) /Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Clarification on Proof of Address
Please refer to paragraph 2.4 (h), (i), (j) (l), (m) and Annex I of Reserve Bank's Master Circular on Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligations under Prevention of Money Laundering Act (PMLA), 2002, issued vide DBOD. AML. BC. No. 24/14.01.001/2013-14 dated July 1, 2013, regarding requirement of 'proof of address' while opening a bank account by individuals.
2. Reserve Bank has been receiving representations/references from various quarters' especially migrant workers, transferred employees, etc. regarding problems faced in submitting a proof of current/permanent address while opening a bank account. The matter has since been examined in the light of amendment to the Prevention of Money Laundering Rules (Maintenance of Records), 2005, and accordingly it has been decided to simplify the requirement of submission of 'proof of address' as follows:
- Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the branch within a period of six months.
- In case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer. No proof is required to be submitted for such address for correspondence/local address. This address may be verified by the bank through 'positive confirmation' such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc. In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the bank within two weeks of such a change.
3. Banks may revise their KYC policy in the light of the above instructions and ensure strict adherence to the same.
4. Please advise your Principal Officer to acknowledge receipt of this circular letter.
Yours faithfully
(Lily Vadera)
Chief General Manager
Chief General Manager
Section 68 – Addition could not be on account of share application money, only on basis of any third party statement: Addition under section 68 on basis of statement made by third parties stating that the alleged companies were engaged in providing accommodation entries in lieu of commission; However, said third party statement was made behind back of assessee and no opportunity of being heard or cross-examining third parties was provided to assessee; Assessing Officer could not bring any material to disapprove genuineness of confirmation, affidavits and various details furnished by assessee; [CIT v. Supertech Diamond Tools (P) Ltd [2014] 44 taxmann.com 460 (Rajasthan HC) dated 12 December 2013] - See more at: http://taxguru.in/income-tax-case-laws/direct-tax-updates-judgements-courtroom.html#sthash.pBohsqYk.dpuf
S. 147: Strict guidelines laid down to streamline procedure for reopening of assessments
(i) In large number of cases pertaining to reopening of assessments, we have noticed that different stages of the assessees demanding reasons recorded by the AO, supplying of such reasons, the assessees raising objections and the AO disposing of such objections, consume considerable time. In many cases, the last stage of disposing of the objections raised by the assessee is reached only a few weeks, and in some cases even days, before the assessment would be time-barred. This situation is quite unsatisfactory, both from the point of the assessee as well as the department. In the last minute rush, the AO frames assessment in a most hurried manner. In the process, important and valid grounds raised by the assessee are often times lost sight of. Additions are thus made which could have been avoided forcing the assessee to prefer appeal which could have been avoided, further creating needless strain on the system. On the other hand, some times additions were made without full and proper scrutiny. The additions which should have otherwise stood the test of appellate scrutiny fail the test.
(ii) It can thus be seen that there are four important stages once the AO issues notice for reopening of the assessment. Such stages are: (i) the assessee if he so wishes, may demand the reasons recorded by the AO after filing return in response to notice u/s 148 of the Act, (ii) the AO supplying such reasons to the assessee, (iii) the assessee raising objections to the notice for reopening and (iv) the AO disposing of the objections raised by the assessee. With a view to streamlining this procedure, and to ensure, as far as possible, the AO is not faced with the unenviable task of completing the assessment proceedings in a few days left before the same became time barred, we would like to give certain directions of general implication which, we would expect, are followed by all concerned. While doing so, we are conscious that these stages are provided by the Supreme Court in GKN Driveshafts (India) Ltd 259 ITR 19 and we would be giving directions only to the extent the said judgment already does not provide for. We have noticed that considerably long time is consumed sometimes by the assessee demanding the reasons recorded by the Assessing Officer and sometimes the AO complying with such a request of the assessee. It is an accepted proposition that the reasons recorded by the AO are not confidential and the assessee whose assessment is being reopened has a right to know such reasons. We therefore thought that these two stages can be substantially eliminated by giving suitable directions. The further stage is of the assessee raising objections which often times is done after much delay and the last stage comes where the AO deals with such objections. This is yet another problem area where unduly long time is consumed by the AO. Under the circumstances, following directions are issued:
(1) Once the AO serves to an assessee a notice of reopening of assessment u/s 148 of the Income-tax Act, 1961, and within the time permitted in such notice, the assessee files his return of income in response to such notice, the AO shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return by the assessee without waiting for the assessee to demand such reasons.
(2) Once the assessee receives such reasons, he would be expected to raise his objections, if he so desires, within 60 days of receipt of such reasons.
(3) If objections are received by the AO from the assessee within the time permitted hereinabove, the AO would dispose of the objections, as far as possible, within four months of date of receipt of the objections filed by the assessee.
(4) This is being done in order to ensure that sufficient time is available with the AO to frame the assessment after carrying out proper scrutiny. The requirement and the time-frame for supplying the reasons without being demanded by the assessee would be applicable only if the assessee files his return of income within the period permitted in the notice for reopening. Likewise the time frame for the AO to dispose of the objections would apply only if the assessee raises objections within the time provided hereinabove. This, however, would not mean that if in either case, the assessee misses the time limit, the procedure provided by the Supreme Court in GKN Driveshafts (India) Ltd would not apply. It only means that the time frame provided hereinabove would not apply in such cases.
(5) In the communication supplying the reasons recorded by the AO, he shall intimate to the assessee that he is expected to raise the objections within 60 days of receipt of the reasons and shall reproduce the directions contained in sub-para 1 to 4 hereinabove giving reference to this judgment of the High Court.
(6) The Chief Commissioner of Income Tax and Cadre Controlling Authority of the Gujarat State, shall issue a circular to all AOs for scrupulously carrying out the directions contained in this judgment.
IT: Where assessee, a builder and managing director of a company in which he was holding 63 per cent shares, received a construction contract from said company, in view of fact that assessee executed said contract in normal cause of his business as builder, advance received in connection with construction work could not be taxed in assessee's hands as 'deemed dividend' under section 2(22)(e)
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[2014] 45 taxmann.com 274 (Madras)
HIGH COURT OF MADRAS
Commissioner of Income-tax, Chennai
v.
Madurai Chettiyar Karthikeyan*
MRS. CHITRA VENKATARAMAN AND T. S. SIVAGNANAM, JJ.
TAX CASE (APPEAL) NO.898 OF 2013†
APRIL 16, 2014
Section 2(22) of the Income-tax Act, 1961 - Deemed dividend (Loans or advances - Business Transactions) - Assessment year 2007-08 - Assessee was proprietor of 'V' Builders and he also happened to be Managing Director of 'S' Limited, in which he held 63 per cent shareholding - 'S' Ltd. awarded construction contract to assessee's proprietary concern - Assessee's case was that it being a normal business transaction, advance received for purpose of executing construction work would not fall within scope of 'loans and advances' under section 2(22)(e) - Assessing Officer, however, viewed that since assessee was having more than 10 per cent share holding in 'S' Ltd., amount in question was liable to be assessed as deemed dividend - Whether since revenue had not disputed fact that assessee had executed construction work for 'S' Ltd. in nature of simple business transaction, there was no justifiable ground to bring case of assessee within definition of 'deemed dividend' under section 2(22)(e) - Held, yes - Whether, therefore, impugned addition deserved to be deleted - Held, yes [Para 6] [In favour of assessee]
CASES REFERRED TO
CIT v. Jamnadas Khimji Kothari [1973] 92 ITR 105 (Mum.) (para 2), Miss. P. Sarada v. CIT [1998] 229 ITR 444/96 Taxman 11 (SC) (para 2), CIT v. Ambassador Travels (P.) Ltd. [2009] 318 ITR 376/[2008] 173 Taxman 407 (Delhi) (para 3) and CIT v. Raj Kumar [2009] 318 ITR 462/181 Taxman 155 (Delhi) (para 3).
T. Ravikumar for the Appellant.
JUDGMENT
Mrs. Chitra Venkataraman, J. - Revenue seeks admission of the Tax Case (Appeal) relating to the assessment year 2007-08 raising the following question of law:
"Whether on the facts and in the circumstances of the case the Income Tax Tribunal was right in law in holding that Section 2(22)(e) of the Income Tax Act is not attracted?"
2. The assessee is the proprietor of Shri Vekkaliamman Builders and Promoters and he also happens to be the Managing Director of Southern Academy of Maritime Studies Private Limited, in which he holds share of 63%. The Assessing Officer added a sum of Rs.87,57,297/- to the assessee's income under Section 2(22)(e) of the Income Tax Act, 1961 as deemed dividend from Southern Academy of Maritime Studies Private Limited, rejecting the assessee's contention that the company awarded construction contract to the assessee's proprietary concern after completing with the procedures of the companies Act. The assessee stated that it being a normal business transaction, the amount received for the purpose of executing the construction work would not fall within the scope of ''loans and advances'' under Section 2(22)(e) of the Income Tax Act, 1961. The Assessing Officer however viewed that when the assessee was having more than 10% share holding in the company, the said amount received by the assessee was liable to be assessed as deemed dividend. In so holding the Assessing Officer referred to an amount of Rs.1,90,00,000/- (Rupees one crore and ninety lakhs only) shown by the assessee under the head unsecured loan received from Vista Securities Technics Pvt. Ltd. Applying the decisions of the Mumbai High Court CIT v. Jamnadas Khimji Kothari [1973] 92 ITR 105 and the Apex Court Miss. P. Sarada v. CIT [1998] 229 ITR 444/96 Taxman 11 the Assessing Officer however, held that an amount of Rs.87,57,297/- was liable to be treated as deemed dividend at the hands of the assessee.
3. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals) who agreed with the assessee that he was rendering services to his client M/s. Southern Academy Maritime Studies P. Ltd. by constructing building; that the advance money received was towards construction of the building for the said private limited company. The assessee produced the minutes of the board meetings and ledger copies of the transactions. Referring to the decisions of the Delhi High Court CIT v. Ambassador Travels (P.) Ltd. [2009] 318 ITR 376/[2008] 173 Taxman 407 (Delhi) and CIT v. Raj Kumar [2009] 318 ITR 462/181 Taxman 155 (Delhi) the Commissioner viewed that the trade advance was in the nature of money given for the specific purpose of constructing the building for the private limited company and hence the payment could not be treated as deemed dividend falling within the ambit of Section 2(22)(e) of the Income Tax Act, 1961. Thus, the Commissioner allowed the assessee's appeal.
4. Aggrieved by this, the Revenue went on appeal before the Income Tax Appellate Tribunal, which confirmed the view of the Commissioner. The Tribunal pointed out that the reliance placed on by the Revenue on the decision of the Apex Court Miss P. Sarada (cited supra) and the Bombay High CourtJamunadas Khimji Kothari (cited supra) were distinguishable on facts. When the Commissioner had come to the factual finding after verifying the minutes and ledger copies that the amount received by the assessee was in the course of normal business transaction against the services rendered by him to the company for constructing buildings, the question of invoking Section 2(22)(e) of the Income Tax Act, 1961 did not arise. The Tribunal further relied on the decision of the Delhi High court referred to by the Commissioner in his order and held that the same covered the issue in assessee's favour. In the course of considering the merits of the assessee's case as well as the Revenue's case, the Tribunal pointed out that the Assessing Officer, in one place had stated that the amounts were received by the assessee from the Southern Academy of Maritime Studies Pvt. Ltd., whereas in para No.4.2, of the Assessment order he mentioned about another company in the name of M/s. Vista Securities Technics Pvt. Ltd., which clearly pointed out that the Assessing Officer was not clear as to from which company, the assessee had received this amount. Thus, the Tribunal rejected the Revenue's appeal. Hence the present appeal by the Revenue.
5. Learned Standing Counsel appearing for the Revenue submitted that the mere mistake in mentioning of the correct name of the company from where the amounts were received would not be fatal to the case of the Revenue. Quite apart, the Southern Academy of Maritime Studies Private Limited paid a sum of Rs.1,20,23,396/- to the assessee by cheque on various dates and such receipts were not related to any business dealings and were only in the nature of receipt of loans or advances merited to be re-considered by this Court.
6. We do not agree with the said submission primarily for the reason that the amount referred to as received from M/s. Vista Securities Technics Pvt. Ltd., is stated to be to the tune of Rs.1,90,00,000/-, whereas the amount treated as deemed dividend in the order of assessment was to the tune of Rs.87,57,297/-. Apart from that, the ground taken before us also states that the private limited company had paid a sum of Rs.1,20,23,396/-. This has no correlation to the assessed figure and the deemed dividend considered under Section 2(22)(e) of the Income Tax Act, 1961 to the extent of Rs.87,57,297/-. Thus, we find apart from agreeing with the conclusion in the order of the Tribunal pointing out to the confusion in the assessment order, the ground taken before this Court also suffers from the same error. Going by the undisputed fact that the Revenue had not disputed the fact that the assessee had executed work for the company in the nature of construction of buildings and the said transaction being in the nature of a simple business transaction, we do not find any justifiable ground to bring the case of the assessee within the definition of deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961. In the circumstances, we reject the Revenue's case at the admission stage itself.
7. In the result, the Tax Case (Appeal) is dismissed. No costs. Consequently, the connected miscellaneous petition is closed.
SUNIL †Arising of order of ITAT dated 31-10-2013.
2014-TIOL-935-HC-KAR-IT
IN THE HIGH COURT OF KARNATAKA
AT BANGALORE
ITA No.916/2007
M/s MAC CHARLES (INDIA) LTD
NO 28, SANKEY ROAD, BANGALORE-560052
REPRESENTED BY ITS MANAGING DIRECTOR
MS SANGEETHA C PARDHANANI
AGED ABOUT 39 YEARS,
D/o SRI C B PARDHANANI
NO 28, SANKEY ROAD, BANGALORE-560052
REPRESENTED BY ITS MANAGING DIRECTOR
MS SANGEETHA C PARDHANANI
AGED ABOUT 39 YEARS,
D/o SRI C B PARDHANANI
Vs
ASST COMMISSIONER OF INCOME TAX
CIRCLE - 12(1), 14/3, RASTROTHANA BHAVAN
4TH FLOOR, NRUPATHUNGA ROAD
OPP RESERVE BANK OF INDIA, BANGALORE-560002
CIRCLE - 12(1), 14/3, RASTROTHANA BHAVAN
4TH FLOOR, NRUPATHUNGA ROAD
OPP RESERVE BANK OF INDIA, BANGALORE-560002
Dilip B Bhosale And B Manohar, JJ
Dated: April 22, 2014
Appellant Rep by: Sri S Parthasarathi, Adv.
Respondent Rep by: Sri K V Aravind, Adv.
Respondent Rep by: Sri K V Aravind, Adv.
Income Tax - Sections 80HHD, 143(1)(a), 143(1)(b), 154 & 260A, CBDT Circular No.14/2001 - forward losses - application for rectification - Whether as per a CBDT Circular, rectification application would be deemed to have been allowed in case the AO fails to pass the same within a period of six months from the end of the month in which, the application is received.
The assessee, a Public Limited Company carrying on the hotel business had filed its return. The returned was first assessed u/s 143(1)(a) and then revised u/s 143(1)(b). After the assessment order was revised, it was again rectified u/s 154 by the AO. During the rectification process, the assessee was allowed deduction u/s 80HHD. The assessee filed an application to rectify the mistakes done by the AO during computation of deduction u/s 80HHD. Such application was rejected and assessee was further issued with notices u/s 142(1) and 143(2). The AO demanded the assessee to file certain documents. The AO after scrutinizing the documents, passed an assessment order and issued a demand notice to the assessee. The assessee filed an appeal before the CIT(A), against the assessment order and also in respect of the application for rectification. The application was allowed and the matter was remanded back to the AO, whereas the appeal aginst the assessment order was partly allowed. On appeal, the Tribunal held the issue in favor of the assessee and directed the AO to include the interest from Bill of Discount as income from business for the purpose of computing deduction u/s 80HHD.
The AO under the direction of the Tribunal, passed a revised assessment order. The assessee against this order filed a rectification application, which was rejected after 6 months of filling it. On appeal before the CIT(A), the assessee submitted that such application was deemed to be rectified in case of nonpassing of an order on the said application within a period of six months. The CIT(A) held the matter against the assessee, relying on the Circular No.14/2001 issued by the CBDT. On appeal, the Tribunal upheld th order of the CIT(A) and the AO. Hence, the present appeal.
Held that,
++ in pursuance of the order passed by the Tribunal as well as the First Appellate Authority, the Assessing Authority in order to give effect to the said order, passed the revised assessment order on 11-08-2004 giving deduction under Section 80HHD and also depreciation. The assessee being dissatisfied with the deduction under Section 80HHD, preferred an application under Section 154 of the Act on 31-12-2004 for rectification of the revised assessment order dated 11-8-2004. The Assessing Authority after considering the application, by its order dated 20th October 2005, rejected the same holding that no further modification is required since the revised order has been passed pursuant to the order passed by the First Appellate Authority as well as the Appellate Tribunal;
++ the assessee preferred an appeal before the First Appellate Authority contending that the order passed by the Assessing Authority is contrary to law. The order on Rectification application has to be passed within a period of six months. If no order is passed on the said application, the application is deemed to have been allowed. The order passed by the Assessing Authority is beyond the prescribed limit, hence, sought for setting aside the same. The First Appellate Authority examined the matter in detail and held that the Assessing Authority has to pass a rectification order within a period of six months from the end of the month in which, the application is received, to pass necessary order or reject the same. In the instant case, the Assessing Authority has passed the order after a lapse of six months. Under Section 154 of the Act, it is mandatory requirement that the Assessing Authority has to pass the order within a period of six months from the date of receipt of the application. However, in the circular bearing No.73 dated 7-1-1972 issued by the CBDT it was clarified that if the Assessing Authority do not dispose of the application within the time specified under sub-Section 7 of Section 154, it may be disposed of by that authority even after expiry of the statutory time limit on merit in accordance with law. Hence there is no infirmity in the order passed by the authorities below;
++ with regard to the contention of the assessee that if the Assessing Authority failed to pass order within the period of limitation prescribed and the rectification deemed to have been granted is concerned, there is no such provision under the Act. Hence no relief can be given. Further, set off of brought forward loss is not challenged in the appeal. The circular issued by the CBDT is binding on the authorities concerned. We find no infirmity or irregularity in the finding recorded by the First Appellate Authority as well as the Tribunal. All the three authorities below concurrently held against the assessee and the finding recorded by the authorities below is purely a question of fact. Hence, the assessee is not entitled for any relief in the appeal.
Assessee's appeal dismissed
JUDGEMENT
Per: B Manohar:
The assessee has filed this appeal under Section 260A of the Income-Tax Act, 1961 (for short 'the Act') challenging the order dated 3-8-2007 made in ITA No.296/2006 passed by the Income Tax Appellate Tribunal, Bangalore Bench 'A' (for short 'the Tribunal') whereby the Tribunal dismissed the appeal filed by the assessee while confirming the order passed by the Commissioner of Income Tax (Appeals) (for short 'the First Appellate Authority') and the Assessing Authority wherein the Assessing Authority rejected the application filed by the assessee under Section 154 of the Act for rectification of the assessment order dated 11-08-2004.
2. The assessee is a Public Limited Company carrying on the hotel business. The appellant-assessee filed return of income for the assessment year 1997-98 on 19-11-1997 declaring the total income comprising of income from business, capital gain and other sources. The said return was originally processed under Section 143(1)(a) subsequently, it was revised under Section 143(1)(b) to adjust the brought forward loss and depreciations of the earlier years. The said order was rectified under Section 154 of the Act by the Assessing Officer on 26-10-1998 by allowing deduction under Section 80HHD of the Act. On 23-3-1999, the assessee filed an application to rectify certain mistakes while calculating deduction under Section 80HHD of the Act. The said application was rejected by the Assessing Authority on 8-9-1999. In the meanwhile, the case of the appellant was selected for scrutiny and notices under Section 142(1) and 143(2) were issued to the assessee. The assessee produced necessary documents, thereafter an assessment order was passed on 30th March 2000 and a demand notice was issued to the assessee. The assessee being aggrieved by the said assessment order, preferred an appeal before the First Appellate Authority. Further, the appellant also filed an appeal challenging the order dated 8-9-1999 rejecting the application filed under Section 154 of the Act. The said appeal was allowed by the First Appellate Authority on 16-11-2000 and directed the Assessing Authority to re-compute the deduction in accordance with law. Further the appeal filed by the assessee challenging the assessment order dated 30-3-2000 was also partly allowed by the First Appellate Authority by its order dated 19-2-2001. The assessee being aggrieved by the order dated 19-2-2001 passed by the First Appellate Authority preferred an appeal before the Tribunal in appeal No.301/2001. The Appellate Tribunal by its order dated 27-4-2004, allowed the appeal directing the Assessing Officer to include the interest from Bill of Discount as income from business even for the purpose of computing deduction under Section 80HHD.
3. The Assessing Officer in order to give effect to the order passed by the Tribunal as well as the First Appellate Authority, passed the revised assessment order on 11-8-2004 in accordance with the directions issued by the Tribunal. The assessee filed an application under Section 154 of the Act on 31-12-2004 for rectification of the revised assessment order dated 11-08-2004. After lapse of more than six months, the said application was rejected by the Assessing Authority on 20th October 2005. Being aggrieved by the said rejection order, the assessee preferred an appeal before the Commissioner of Income-Tax (Appeals)-III, Bangalore contending that the order passed by the Assessing Authority rejecting the application for rectification of mistake is contrary to law in view of nonpassing of order on the said application within a period of six months and the application is deemed to have been rectified. Hence, sought for allowing the appeal.
4. The First Appellate Authority after considering the matter in detail, taking into consideration Section 154(8) of the Act and also taking into consideration Circular No.14/2001 issued by the CBDT, rejected the said appeal by its order dated 20th February 2006. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal challenging the same on various grounds. The Appellate Tribunal after considering the matter in detail, dismissed the appeal filed by the assessee confirming the order passed by the Assessing Authority as well as the First Appellate Authority by its order dated 3-8-2007. Being aggrieved by the said order, the assessee has preferred this appeal.
5. The appeal is admitted to consider the following substantial questions of law:
(i) Whether the Tribunal was justified in holding that the Assessing Authority can pass an order in respect of the application under Section 154 of the Act beyond the period of six months, when statutorily there is no bar for passing the order denying the benefit to the appellant beyond the period of three months.?(ii) Whether the Tribunal was justified in impliedly holding that the Assessing Authority can set off the unabsorbed depreciation by arriving at the profit for quantification of the relief under Section 80HHD of the Act, contrary to the decision of CIT(A) which had become final for the relevant assessment year in the appellant's own case.?
6. We have carefully considered the arguments addressed by the parties and perused the impugned orders and other relevant records.
7. The records clearly disclose that in pursuance of the order passed by the Tribunal as well as the First Appellate Authority, the Assessing Authority in order to give effect to the said order, passed the revised assessment order on 11-08-2004 giving deduction under Section 80HHD and also depreciation. The assessee being dissatisfied with the deduction under Section 80HHD, preferred an application under Section 154 of the Act on 31-12-2004 for rectification of the revised assessment order dated 11-8-2004. The Assessing Authority after considering the application, by its order dated 20th October 2005, rejected the same holding that no further modification is required since the revised order has been passed pursuant to the order passed by the First Appellate Authority as well as the Appellate Tribunal.
8. Being aggrieved by the said order, the assessee preferred an appeal before the First Appellate Authority contending that the order passed by the Assessing Authority is contrary to law. The order on Rectification application has to be passed within a period of six months. If no order is passed on the said application, the application is deemed to have been allowed. The order passed by the Assessing Authority is beyond the prescribed limit, hence, sought for setting aside the same. The First Appellate Authority examined the matter in detail and held that the Assessing Authority has to pass a rectification order within a period of six months from the end of the month in which, the application is received, to pass necessary order or reject the same. In the instant case, the Assessing Authority has passed the order after a lapse of six months. Under Section 154 of the Act, it is mandatory requirement that the Assessing Authority has to pass the order within a period of six months from the date of receipt of the application. However, in the circular bearing No.73 dated 7-1-1972 issued by the CBDT it was clarified that if the Assessing Authority do not dispose of the application within the time specified under sub-Section 7 of Section 154, it may be disposed of by that authority even after expiry of the statutory time limit on merit in accordance with law. Hence there is no infirmity in the order passed by the authorities below.
9. With regard to the contention of the assessee that if the Assessing Authority failed to pass order within the period of limitation prescribed and the rectification deemed to have been granted is concerned, there is no such provision under the Act. Hence no relief can be given. Further, set off of brought forward loss is not challenged in the appeal. The circular issued by the CBDT is binding on the authorities concerned. We find no infirmity or irregularity in the finding recorded by the First Appellate Authority as well as the Tribunal. All the three authorities below concurrently held against the assessee and the finding recorded by the authorities below is purely a question of fact. Hence, the assessee is not entitled for any relief in the appeal. The substantial questions of law formulated in this appeal are held against the assessee. Accordingly, we pass the following:
ORDER
The appeal is dismissed. No order as to costs.
2014-TIOL-923-HC-AHM-IT
IN THE HIGH COURT OF GUJARAT
AT AHMEDABAD
Special Civil Application No.3890 of 2014
DEEPAKBHAI RAMJIBHAI PATEL
Vs
INCOME TAX OFFICER
Akil Kureshi And Sonia Gokani, JJ
Dated: April 29, 2014
Appellant Rep by: Mr S N Divatia, Adv.
Respondent Rep by: Mrs Mauna M Bhatt, Adv.
Respondent Rep by: Mrs Mauna M Bhatt, Adv.
Income Tax - Sections 54B, 143(3), 147, 148 - reassessment - agricultural land - non agricultural land - Whether merely because during scrutiny, the AO did not look at the angle of denying exemption on the ground that what the assessee sold was not an agricultural land, would permit the AO to reopen the assessment for denying the claim on a new ground - Whether such exercise on the part of AO would be a mere change of opinion - Whether the claim which did not present any complex facts and which was virtually the sole claim made in the return filed and examined during the course of assessment proceedings, can be revisited on a new ground which may have occurred to AO.
The assessee is an individual. It had challenged notice issued u/s 148. Under such notice, AO desired to reopen the assessment of assessee for AY 2009-10 which was previously framed after scrutiny. The notice was thus issued within the period of four years from the end of relevant assessment year. The AO supplied the reasons recorded by him for issuing such notice to the assessee. It was submitted that the assessee was assessed to tax in the status of Individual. The return of income for A.Y.2009-2010 was furnished declaring taxable income of Rs.1,46,590/-. The assessment was finalised u/s.143(3). It was seen from the records that the assessee was co-owner of land., which was purchased by the assessee and his co-owner Shri Dhirubhai Thakarshibhai in 1998 vide deed registration. The land was agricultural land as on the date of transfer. Thereafter the assessee started procedure to convert this agricultural land into non agricultural land and paid premium amount into Govt. account as per order of District Collector. The said agricultural land was converted into non agricultural land vide State Govt.'s order after following statutory / administrative procedure. The said non agriclutural land was sold by the assessee and his co-owner vide sale deed registered. Assessee had claimed exemption u/s 54B on the ground that the said long term capital gain was invested in purchase of another agricultural land. The scrutiny of details on records revealed that on the date of transfer, the land sold was not agricultural land. As such conditions laid down u/s. 54B were not satisfied and the assessee was not entitled to deduction u/s. 54B. The claim for exemption to the extent of Rs.9,84,302/- was erroneously allowed at the time of framing the assessment u/s. 143(3). Thus, there was reason to believe that income chargeable to tax to the extent of Rs.9,84,302/- had escaped assessment within meaning of provisions of section 147. Assessee had raised objections to such notice for reopening, which were rejected by AO. Assessee had, therefore, filed the present petition.
Before HC, the assessee's counsel drew attention to the documents on record and pointed out that in the return filed, major claim of the assessee was for exemption u/s 54B. During the course of the original assessment, such claim was scrutinized thoroughly by AO. Only upon being satisfied about the validity of the claim, AO framed assessment making no change. It was this assessment which the AO wanted to reopen on the basis that the assessee sold the land which was converted into non-agricultural land and that therefore exemption u/s 54B was not available. It was submitted that such ground even otherwise lacked validity. The assessee held agricultural land and used it for agricultural purpose right till the end it was sold. In order to sell the land to a non-agriculturist, the same had to be converted into a non-agricultural land. Such permission was granted by the Government and the land was sold. On the other hand, the Revenue's counsel had opposed the assessee contending that in the original assessment, the question of exemption u/s 54B with respect to the land which was sold as non-agricultural land was never examined by AO. At that stage, sufficiency of reasons recorded by him cannot be gone into. From the record, it emerges that in the return filed by the assessee, the main claim was for exemption u/s 54B on sale of his land.
Held that,
++ from such note, it can be seen that the petitioner has paid premium for conversion of the land. Thus, even in the return, the petitioner pointed out out to the department that the land was converted from agricultural land. Additionally, during the course of assessment, further details were also brought to the notice of the Assessing Officer. On 9.8.2011, AO raised certain queries to the assessee with respect to his claim. The assessee had filed three replies. In his reply it was pointed out copy of sale deed of immovable property (Land) sold of Rs.36,66,180/-.The Assessee was owner of the agricultural land situated in Ahmedabad. The said land was joint property. Assessee was having ½ holder of the said property. The said land was sold out for net consideration of Rs.20,63,700/- (Sale price Rs.36,66,180/- less conversion premium paid to state government of Rs.16,02,480/-) in which share of assessee was Rs.10,31,850/- (½ of Rs.20,63,700/-). The said property was purchased on 28.05.1998 for Rs.57,352/- (including stamp, registration fee & premium) in which share of assessee of Rs.28,676/- (½ of Rs.57,352/-). The long term capital gain on sale of such land is already considered at the time of filing return of income for A.Y. 2009-2010.(A) in respect of above mentioned transaction following enclosures are attached herewith.1) Copy of sale deed of Rs.36,66,180/- is enclosed on poage No.12 to 22. 2) Copy of Bank statement for verification of receipt of sale proceed on sale of land is enclosed on page no.01 to 01.(B) Enclosures regarding evidences for purchase of said property are attached herewith as under:1) Copy of Purchase deed is enclosed on page No.24 to 39.2) Copy of premium paid Rs.16,693/- on page no.40 to 42. By his reply dated 2nd August 2011, he clarified that he was the owner of agricultural land having ½ share which was sold on 17.2.09 for a net consideration of Rs.20.63 lacs (rounded off) which included the sale price of Rs.36.66 (rounded off) less conversion premium of Rs.16.02 lacs (rounded off) paid to the State Government. He also pointed out that the sale deed was already on record. In a further reply assessee had clarified that the proceeds of the sale of land was invested in purchase of another agricultural land and hence the same was claimed u/s.54B . The details of the same has been shown in the Statement of Total income attached with the Return of income filed in your office and the copy of the same is attached at page No. 6 - 10. The consideration of sale of the land as per Sale deed is credited in the assessee's Savings Bank Account No.27582 with the Saurashtra Coop Bank Ltd. Bapunagar - Ahmedabad Branch. The copy of the bank statement has been submitted. The conversion premium has been paid through the above bank account and the copy of the receipt showing the payment made is enclosed at page No.1 - 5;
++ it can thus be seen that in the original assessment, the claim of the assessee for exemption under section 54B was thoroughly scrutinized. The Assessing Officer had raised certain questions. The assessee gave detailed answers to such questions. It was made plain to the Assessing Officer that the petitioner as an agriculturist had purchased agricultural land in the year 1998 and sold the same on 17.2.2009 after converting the same into non-agricultural land on 10.2.2009. It was after examination of such details, the Assessing Officer accepted the claim for exemption under section 54B. The issue was thus thoroughly scrutinized. Merely because during such scrutiny, the Assessing Officer did not look at the angle of denying exemption on the ground that what the assessee sold was not an agricultural land, would not permit him to reopen the assessment for denying the claim on a new ground. Any such exercise on his part would be a mere change of opinion inasmuch as having examined the claim at length, the claim which did not present any complex facts and which was virtually the sole claim made in the return filed and examined during the course of assessment proceedings, cannot now be revisited on a new ground which may have occurred to the Assessing Officer. The assessee had presented all facts before the Assessing Officer and on the basis of such facts during the original assessment if he was of the opinion that the claim was not acceptable for any reasons, he would have expressed such opinion. In any case, to permit him to reopen the assessment to press in service a new ground for denying the claim would not be permissible. In the result, only on the first ground, the impugned notice dated 21.8.2013 is quashed. We, therefore, do not enter into the question of validity of the reasons recorded by the Assessing Officer to hold a belief that income chargeable to tax has escaped assessment. The petition is allowed and disposed of accordingly.
Assessee's appeal allowed
JUDGEMENT
Per: Akil Kureshi:
1. Petitioner has challenged notice dated 21.8.2013 issued under section 148 of the Income Tax Act, 1961 ('the Act' for short). Under such notice, the Assessing Officer desired to reopen the assessment of the petitioner for the assessment year 2009-10 which was previously framed after scrutiny. The notice was thus issued within the period of four years from the end of relevant assessment year. The Assessing Officer supplied the reasons recorded by him for issuing such notice to the petitioner which read as under:
"The assessee Shri Deepakbhai R. Patel is assessed to tax in the status of Individual. The return of income for A.Y.2009-2010 was furnished on 18.09.2009 declaring taxable income of Rs.1,46,590/-. The assessment was finalised u/s.143(3) of I.T.Act, 1961 vide order dated 18.10.2011.The taxable income was determined at Rs.1,99,350/-.2. It is seen from the records that the assessee was co-owner of land situated at Village: Chadiel, Tal. Daskroi, Dist. Ahmedabad bearing survey No.83 Block No.130. The land was purchased by the assessee and his co-owner Shri Dhirubhai Thakarshibhai on 28.05.1998 vide deed registration No.1556/1998 for Rs.33,385/-. The land was agricultural land as on the date of transfer i.e. 28.05.1998.3. Thereafter the assessee started procedure to convert this agricultural land into non agricultural land and paid premium amount of Rs.16,02,480/- into Govt. account on 14.10.2008 as per order of District Collector Ahmedabad dated 30.09.2008. The said agricultural land was converted into non agricultural land vide State Govt.'s order dated 10.02.2009 after following statutory / administrative procedure/formalities.4. The said N.A.land was sold by the assessee and his co-owner for Rs.36,66,180/- vide sale deed registered at Sr.No.1159/2009 on 17.02.2009. It is further seen from the records that the capital gain was worked out at Rs.9,84,302/- by the assessee for A.Y. 2009-2010 and claimed deduction u/s.54B of I.T.Act 1961 on the ground that said long term capital gain was invested in purchase of another agricultural land.5. The scrutiny of details on records reveals that on the date of transfer, the land sold was not agricultural land, as discussed in foregoing paras. As such conditions laid down u/s. 54B of I.T.Act, 1961 are not satisfied and the assessee was not entitled to deduction u/s. 54B of I.T.Act, 1961.6. The claim for deduction to the extent of Rs.9,84,302/- was erroneously allowed at the time of framing the assessment u/s. 143(3) of I.T.Act, 1961. I have therefore reason to believe that income chargeable to tax to the extent of Rs.9,84,302/- has escaped assessment within meaning of provisions of section 147 of I.T. Act, 1961.This is a fit case for issue of notice u/s.148 of I.T.Act,1961."
2. The petitioner raised objections to such notice for reopening under communication dated 22.1.2014. Such objections were rejected by the Assessing Officer by order dated 7.2.2014. The petitioner has, therefore, filed the present petition.
3. Counsel for the petitioner drew our attention to the documents on record and pointed out that in the return filed by the petitioner on 18.9.2009, major claim of the petitioner was for exemption under section 54B of the Act. During the course of the original assessment, such claim was scrutinized thoroughly by the Assessing Officer. Only upon being satisfied about the validity of the claim, he framed assessment making no change. It is this assessment which the Assessing Officer desires to reopen on the basis that the petitioner sold the land which was converted into non-agricultural land and that therefore exemption under section 54B of the Act was not available. He submitted that such ground even otherwise lacked validity. The petitioner held agricultural land and used it for agricultural purpose right till the end it was sold. In order to sell the land to a non-agriculturist, the same had to be converted into a non-agricultural land. Such permission was granted by the Government on 10.2.2009 and the land was sold on 17.2.2009.
4. On the other hand, learned counsel Mrs.Bhatt for the Revenue opposed the petition contending that in the original assessment, the question of exemption under section 54B of the Act with respect to the land which was sold as non-agricultural land was never examined by the Assessing Officer. At this stage, sufficiency of reasons recorded by him cannot be gone into.
5. From the record, it emerges that in the return filed by the petitioner, the main claim was for exemption under section 54B of the Act on sale of his land. In the return itself, he appended a note stating that :
"4) Sale of land:The assessee was owner of land agri. Land situated at Chandiel village, Ta. Daskroi, Dist. Ahmedabad, Sur. No.83, Block No.130. The said land is joint property. Assessee is ½ holder of the said property. The said land is sold out on 17.02.2009 of Rs.20,63,700/- (Sale price Rs.3666180 - preimum paid conversion Rs.1602480) in which share of assessee was Rs.10,31,850/- (½ share of assessee of Rs.28,676/- (½ of Rs.57,352/-) .The land term capital gain is calculated as above computation."
6. From such note, it can be seen that the petitioner has paid premium for conversion of the land. Thus, even in the return, the petitioner pointed out out to the department that the land was converted from agricultural land. Additionally, during the course of assessment, further details were also brought to the notice of the Assessing Officer. On 9.8.2011, the Assessing Officer raised certain queries to the assessee with respect to his claim, which included following:
"i. Please furnish the complete details of the sources for the sums invested for purchase of agricultural land along with the proof.ii. Please furnish the copy of the proof of the conversion premium paid to government.iii. Please justify the capital gains ons ale of property with reference to provisions of section 50C of Income Tax Act, 1961.iv. Please furnish detail copy of the account with Kirti Milk Bar. Also give details that the transaction with KIRTI MILK BAR is whether falls within the person cover u/s 40a(2)(b) of Income Tax Act, 1961 or not."v.
7. The petitioner filed three replies. In his reply dated 7th February 2011 he pointed out as under:
"Copy of sale deed of immovable property (Land) sold of Rs.36,66,180/-.The Assessee was owner of the agricultural land situated at Chandeil village, Ta. Daskroi, Dist. Ahmedabad, Sur. No.83, Block No.130 since 28.05.1998. The said land is joint property. Assessee is having ½ holder of the said property. The said land is sold out on 17.02.2009 for net consideration of Rs.20,63,700/- (Sale price Rs.36,66,180/- less conversion premium paid to state government of Rs.16,02,480/-) in which share of assessee was Rs.10,31,850/- (½ of Rs.20,63,700/-). The said property was purchased on 28.05.1998 for Rs.57,352/- (including stamp, registration fee & premium) in which share of assessee of Rs.28,676/- (½ of Rs.57,352/-). The long term capital gain on sale of such land is already considered at the time of filing return of income for A.Y. 2009-2010.(A) in respect of above mentioned transaction following enclosures are attached herewith.1) Copy of sale deed of Rs.36,66,180/- is enclosed on poage No.12 to 22. 2) Copy of Bank statement for verification of receipt of sale proceed on sale of land is enclosed on page no.01 to 01.(B) Enclosures regarding evidences for purchase of said property (sur.No.83 block No.130) are attached herewith as under:1) Copy of Purchase deed is enclosed on page No.24 to 39.2) Copy of premium paid Rs.16,693/- on page no.40 to 42.(C) Working of long term capital gain:
| Sr. No. ParticularsPurchase DateSale DateNet Sale Value (½ share)Cost (½ shareIndexed cost | L.T.C.G. |
| 1Non Agri. Land at Chandial, Ta. Daskroi, Dist. Abad. S. No.83, B.No. 130 (½) share28.05.9817.2.0910318502867647548 | 984302 |
| Total10318502867647548 | 984302 |
* Indexed cost: 28,676 * 582/351 = 47548."
8. By his reply dated 2nd August 2011, he clarified that he was the owner of agricultural land having ½ share which was sold on 17.2.09 for a net consideration of Rs.20.63 lacs (rounded off) which included the sale price of Rs.36.66 (rounded off) less conversion premium of Rs.16.02 lacs (rounded off) paid to the State Government. He also pointed out that the sale deed was already on record. In his further reply dated 24th August 2011, he further clarified as under:
"Justification of Capital Gain:The proceeds of the sale of land was invested in purchase of another agricultural land and hence the same was claimed u/s.54B . The details of the same has been shown in the Statement of Total income attached with the Return of income filed in your office and the copy of the same is attached at page No. 6 - 10. The consideration of sale of the land as per Sale deed is credited in the assessee's Savings Bank Account No.27582 with the Saurashtra Coop Bank Ltd. Bapunagar - Ahmedabad Branch. The copy of the bank statement has been submitted vide submission dtd. 07.02.2011 page No.1. The conversion premium has been paid through the above bank account and the copy of the receipt showing the payment made is enclosed at page No.1 - 5.
9. It can thus be seen that in the original assessment, the claim of the assessee for exemption under section 54B of the Act was thoroughly scrutinized. The Assessing Officer had raised certain questions. The assessee gave detailed answers to such questions. It was made plain to the Assessing Officer that the petitioner as an agriculturist had purchased agricultural land in the year 1998 and sold the same on 17.2.2009 after converting the same into non-agricultural land on 10.2.2009. It was after examination of such details, the Assessing Officer accepted the claim for exemption under section 54B of the Act. The issue was thus thoroughly scrutinized. Merely because during such scrutiny, the Assessing Officer did not look at the angle of denying exemption on the ground that what the assessee sold was not an agricultural land, would not permit him to reopen the assessment for denying the claim on a new ground. Any such exercise on his part would be a mere change of opinion inasmuch as having examined the claim at length, the claim which did not present any complex facts and which was virtually the sole claim made in the return filed and examined during the course of assessment proceedings, cannot now be revisited on a new ground which may have occurred to the Assessing Officer. The assessee had presented all facts before the Assessing Officer and on the basis of such facts during the original assessment if he was of the opinion that the claim was not acceptable for any reasons, he would have expressed such opinion. In any case, to permit him to reopen the assessment to press in service a new ground for denying the claim would not be permissible.
10. In the result, only on the first ground, the impugned notice dated 21.8.2013 is quashed. We, therefore, do not enter into the question of validity of the reasons recorded by the Assessing Officer to hold a belief that income chargeable to tax has escaped assessment. The petition is allowed and disposed of accordinglyFifth Avenue Sourcing Pvt Ltd Vs CST (Dated: January 8, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Applicants engaged in identifying overseas buyers for garments from Indian suppliers – Transferable LOC opened by the buyers in favor of the applicants - margin retained as commission by the applicant viewed as taxable under 'Business Auxiliary Services' by Revenue; tax demands with interest and penalties adjudicated on the ground that the service was delivered in India and is not an "export of service"; and agitated herein. Held: Classification of the service is material to decide particular sub-rule under Rule 3 of the Export of Service Rules 2005 actually applicable - prima facie, consideration received is for service rendered by the appellant to the purchaser and it is billed on the purchaser abroad which is paid in foreign exchange by the purchaser abroad - no doubt that the service was provided from India - for a buyer abroad, who paid for the service, the use of the services given by the applicant is in getting the goods abroad and hence the benefit accrues outside India and services are used outside India - argument of Revenue that service is used in India and hence not exported, in effect equates services specified in Rule 3 (1) (ii) with services specified in Rule 3 (2) (iii) that is to say the factum of export should be decided with reference to place of performance of service which is not a harmonious interpretation - prima facie, consideration in question was for services rendered by applicant to the foreign buyers and not to the vendors since the consideration had been realized in foreign exchange by the applicant - pre-deposit of dues arising out of impugned order waived for admission of the appeals, with stay on collection of such dues during pendency of appeals. |
M/s British Airways Vs CCE (Dated: May 23, 2014) |
| Service Tax - Demand of service tax under Section 66A on services alleged to be received from outside India - Contention that the British Airways UK and British Airways India are separate entities and the service cannot be treated as received by British Airways India. |
| Also see analysis of the Order |
Jain Construction Vs CCE (Dated: March 10, 2014) |
| ST – Renting of Immovable Property Service – deposits received from tenants, whether includible in gross value while discharging ST – there is no evidence on record to show that the security deposit had influenced the rent received – in view of Stay order passed in case of Magarpatta Township Development & Construction Co. Ltd. - 2013-TIOL-1068-CESTAT-MUM pre-deposit waived and stay granted – Stay petition allowed: CESTAT [para 5] |
Rohan Ravindra Raje Vs CST (Dated: January 31, 2014) |
| S.37C of CEA, 1944 - Service of order through 'Speed Post' is not a proper service during the material period – order not served through 'Registered Post' hence it cannot be said that order has been communicated to the appellant – only by Finance Act, 2013 has 'Speed Post' been notified as a proper mode of service of order, decision etc. – appeal filed as soon as adjudication order was made available to appellant hence dismissal of appeal as time barred not proper – matter remanded: CESTAT [para 6] |
M/s Maheshwari Handling Agency Pvt Ltd Vs CCE (Dated: March 6, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Tax demand with interest and penalties under 'Port Services' confirmed in adjudication and disputed herein. Held: Issue involved is contentious in as much as there is an acceptance of the fact that the appellants were working under an authorization given by the Port to some other persons like Kandla Dock Labour Board or Kandla Port Trust - The only question which needs deeper consideration whether the appellant having taken the services or operated under the authorization given to these persons would get covered under the category of Port services or not - appellant would definitely have a prima facie case on the plea that the amount which has been paid by them as per billing done by Kandla Dock Labour Board of Kandla Port Trust, are nothing but reimbursement of the expenses incurred by them - there is a mark-up of the billing done by the appellant to their service recipients on the services received by them form Kandla Dock Labour Board etc. - Service Tax liability may get fastened upon the appellant for the differential amount billed and charged by them as mark-up - main appellant M/s Maheshwari Handling Agency Pvt Ltd. needs to be put to some condition for hearing and disposing the appeals and is accordingly, directed to deposit an amount of Rs. 5 lakhs (Rupees Five Lakhs only) within a period of eight weeks; upon compliance, applications for waiver of pre-deposit of balance amount involved are allowed and recovery thereof stayed till the disposal of appeals. |
M/s Shree Bhairav Travels Vs CCE (Dated: January 31, 2014) |
| Service Tax – Demand – Tax demands confirmed against the appellant solely on the grounds that there is a difference in the figures available in the income tax returns and the value of services declared in the ST-3 returns filed by the appellants with the Revenue. Held: It is observed that calculation of Service Tax liability based on the income tax return and ST-3 returns is the basic point of the Revenue - Filing documents and pointing of correct calculation in determining of Service Tax liability can always be agitated by the appellant before the appellate authority; and this cannot be considered as additional grounds on some other legal issues which were not taken up before the adjudicating authority - Out of total duty demand of Rs.3,40,573/- confirmed by the adjudicating authority, an amount of Rs.1.5 lakh was deposited by the appellant at the time of admitting the stay - In the interest of justice and in view of the judicial pronouncements on the issue relied upon by the appellant, the matter is required to be remanded to the adjudicating authority to grant a personal hearing to the appellant to explain their case regarding quantification of duty and re-conciliation of difference between the income tax figures vis-a-vis those given in ST-3 returns - Quantum of penalties under Section 76 of the Finance Act, 1994 will also depend upon the short levy, if any, recalculated and determined by the adjudicating authority, apart from option of reduced penalty under Sec 78 - both the orders passed by the lower authorities are set aside and matter is remanded back to the original adjudicating authority to decide the matter afresh in de-novo proceedings, after extending a personal hearing to the appellant. |
M/s Bharat Sanchar Nigam Ltd Vs CCE (Dated: January 30, 2014) |
| Service Tax - Short payment - Difference in Service Tax payable - Appellant' s plea that if excess payment made during demand period is taken into account, there would not be any demand against them for short payment u/s. 11D of Central Excise Act, 1994 is a matter of reconciliation - Department has not considered appellant' s plea that payments shown in ST-3 returns for the demand period includes payments received against exempted services in terms of Board's Circular No. 91/2/07/ST dt. 13.12.2000, Circular No. 32/3/2000 dt . 20.12.2000 and under notification No.3/94-ST - Service Tax demand for enhanced rate of 5% to 8% for the period May, 2003 is not sustainable as enhanced rate cannot be applied in respect of payments received for the services provided prior to effective date, i.e. 14.05.2003 - Matter is remanded to Commissioner for de novo adjudication. |
M/s Sonigara Promoters Vs CCE (Dated: March 3, 2014) |
| ST – Construction Service - Revenue demanding Service tax in view of Explanation to sec. 65(105) dated 01.07.2010 – appellant contending that before the explanation came into force, almost 75% of the construction was complete as per books of accounts and, therefore, liability is approximately Rs.29 lakhs and they have paid more than Rs.56 lakhs along with interest of Rs.11 lakhs - explanation is prospective in nature – merit in contention of applicants hence pre-deposit of remaining dues waived and stay granted: CESTAT [para 4] |
M/s The Tinplate Company of India Ltd Vs CCE (Dated: January 15, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Demand under 'Business Support Services (BSS)' - Applicants are engaged by Tata Steel Ltd. (TSL) for conversion of raw materials on job work basis; the goods so manufactured were cleared by the Applicants on payment of appropriate excise duty – Department viewed that the Applicant had engaged transporters for transporting the job-worked goods to various stock yard of TSL, discharged freight and also paid appropriate service tax under GTA services and availed cenvat credit on such service tax paid by them; that TSL reimbursed the freight charges on actual basis but they had neither charged nor reimbursed the service tax amount paid; and that the Applicants are providing Marketing and Consignment Agency Services to TSL – Tax demands confirmed with interest and penalty in adjudication, agitated herein. Held: No evidence to show that the Applicants although re-imbursed with the freight amount in addition to the conversion charges by TSL, the same is attributable towards rendering of other post removal service and not transporting of the goods from their factory to the stock yards of TSL - prima facie, it could be said that the Applicant had not received any service charges in addition to conversion charges and freight charges at actuals towards the services relating to post removal activities of the job-worked goods manufactured in the factory - prima facie case made by applicant for total waiver of pre-deposit of dues adjudged; all dues adjudged is waived and its recovery stayed during pendency of the Appeals. |
Kikani Exports Vs CCE (Dated: February 11, 2014) |
| Service Tax – Business Auxiliary service – Appellant, exporter of Cotton fabrics, engaged agents abroad for canvassing orders and paid commission – Revenue viewed that it was taxable under the provisions of rule 2(1) (d) (iv) of Service Tax Rules, 1994 - tax demand with interest and penalty adjudicated; Commissioner (Appeals) set aside the portion of demand prior to 18.04.2006 and the OIA is agitated by the Party and the department herein. Held: Dispute is now well settled that prior to introduction of section 66A in Finance Act, 1994, no demand for service tax from recipient of service under reverse charge mechanism as per rule 2 (1) (d) (iv) could be sustained – Affirmed by Apex Court in Indian National Shipowners' Association case – Department's appeal dismissed – Party not claiming refund of tax paid for period prior to 18.04.2006 – Legality of tax under reverse charge in a state of flux during material period, imposition of penalties unwarranted and set aside; Party's appeal allowed. |
Shriram Epc Ltd Vs CST ( Dated: February 12, 2014) |
| Service Tax - Penalty - Appellant paid entire dues with interest on issues raised in an audit intervention - Penalty adjudicated subsequently, and agitated herein. Held: It is obvious that the appellant paid entire tax liability and interest, inferred from the impugned order restricting demand to penalty - When provisions similar to section 73 (3) was introduced in Central Excise Act, 1944 as section 11A (2B) in the year 2001, it was clarified that these provisions are meant for encouraging immediate realization of short payments detected by audit teams so that whoever discharges the short paid tax immediately need not get entangled in protracted litigations - unless there is a case of active suppression, provisions of Section 73 (3) should be extended, as viewed by the Karnataka High Court in the APECCO Flexione case - First Flight Couriers ruling was on a different footing because the appellant therein did not pay service tax and also did not file return on the ground there was a strike by the employees - High Court ruling in the case of APECCO Flexione Work Force Solutions Ltd. applicable to the instant case - penalty imposed on the appellant set aside. |
M/s Infotech Computer Education Vs CCE, C & ST ( Dated: March 27, 2014) |
Service Tax -Demand - Appellant had not defended the case at the original Adjudicating Authority effectively -Though appellant failed to utilize the opportunities given to defend the case, in the interest of the justice, appellant should be given another chance to defend their case properly in view of the fact that appellant had already deposited considerable amount out of the demand amount and there is a need to submit all the documents and explain the situation clearly - Pre-deposit of Rs.10 lakhs ordered - Matter remanded to Original Authority-Stay petition and appeal disposed of. |
M/s Riya Travels & Tours India (P) Ltd Vs CCE (Dated: June 2, 2014) |
| Condonation of delay of 69 days in filing appeal – delay cannot be condoned for the reason that appeal papers were misplaced by the clerk of the appellant – misplacement of records cannot be a sufficient ground for condonation of delay – application & appeal dismissed: CESTAT [ para 2] |
M/s Masicon Financial Services Pvt Ltd Vs CCE (Dated: May 16, 2014) |
| Service Tax - Limitation - Section 73 prior to 10.09.2004 - for invoking longer limitation period existence of fraud wilful mis-statement, suppression of facts etc, was not necessary - Demand upheld - Penalty set aside: It is only w.e.f. 10.09.04 that the section 73 was substituted by a new section 73 whose language was identical to the language of section 11A(1) of the Central Excise Act, 1944 in which the invoking of extended limitation period of five years from the relevant date is linked with the existence of fraud, wilful mis-statement, suppression of facts and deliberate contravention of rules on part of the assessee. In terms of section 73 as it stood during the period of dispute, for invoking longer limitation period existence of fraud wilful mis-statement, suppression of facts and deliberate contravention of the provisions of Finance Act. 1994 or of the rule made there under with intent to evade tax was not necessary and what was required was reason to believe on the part of the Assistant ./ Deputy Commissioner that on account of omission or failure on the part of the assessee to file return under section 70 for any prescribed period or to disclose wholly or truly all the material facts required for verification of assessment under section 71, some value of the taxable service has escaped assessment or has been under-assessed or service tax has not been paid or has been short-paid or any sum has erroneously been refunded . While the service tax demand is upheld, the penalty on the Appellant under section 76 & 78 is set aside. |
| Also see analysis of the Order |
Sify Technologies Ltd Vs CCE & ST (Dated: March 18, 2014) |
| Service Tax - Stay / dispensation of pre deposit – CENVAT credit – appellant engaged in providing both taxable and exempt (trading) On-line information and Database access/retrieval, Internet Cafe, Leased Circuit services etc. – credit denied on the ground that no separate accounts were maintained for taxable and exempt services; demands adjudicated with interest and penalty, agitated herein. Held: Applicant had not maintained separate accounts for trading activity and other services activities - adjudicating authority demanded the amount on the entire credit availed as common input services for both trading and service activity - applicant had reversed the credit used in the trading activities, which is also appropriated in the adjudication order - considering the earlier stay orders, predeposit of entire amount of tax along with interest and penalty waived and recovery stayed till disposal of the appeal. |
M/s Elcon Infrastructure Vs CCE, C & ST (Dated: March 25, 2014) |
| Service Tax – Supply of Tangible goods Service – Confirmation of demand by Commissioner against appellant by taking entire amount of income shown in balance sheet as received for rendering of supply of tangible goods service, is not sustainable since all the work orders submitted by appellant are not examined by Commissioner and the demand was concluded based on examination of selected orders, for the selection of which there is no basis – Though appellant in his statement admitted that the service is of supply of tangible goods service, since work orders speak otherwise, conclusions emerging from the records should have been made and if there is a contradiction between the records and the statements, it should have been verified and discussed, which is not done by Commissioner – Appellant's submission that transportation charges showed in balance sheet were from another business and does not relate to the transportation of supply of tangible goods is not considered by Commissioner and they have simply been assumed to be the cost of transportation of the equipment – Matter remanded to Commissioner for fresh adjudication as it requires complete re-examination. |
Deccan Developers Vs CCE, CC & ST (Dated: March 17, 2014) |
| Service Tax – Short Payment – Demand for Interest – Appellant's submission for adjustment of interest payable on delayed payment of service tax from the amount excess paid against non-payment, was not accepted by Revenue – Revenue's denial of appellant's submission and confirming the demand for interest on short payment tax on ground that the interest was not correctly quantified and not paid under the separate appropriate heading, is not sustainable since the fact that payment was made under a different head should not result in denial of benefit of such payment and appropriation of the payment towards the liability, in view of the decision of the Tribunal – Demand for interest separately made is set aside and appeal is allowed. |
Clariya Steels Pvt Ltd Vs CCE, C & ST (Dated: March 25, 2014) |
| Service Tax – GTA Service – Liability – Appellant's submission that they are eligible for benefit of exemption under Notification No. 18/09 against demand on GTA services received by them, is acceptable – Appellant's also submitted that the transportation charges shown in income portion are actually the reimbursement of transportation cost made by the service receivers and hence that could not be charged to service tax – However, it cannot be said that appellant has made out a prima facie case entirely in their favour since considerable portion of the demand would be sustainable and there is something wrong with the quantification – Pre-deposit is ordered against appellant – Original authority shall adjudicate the matter afresh after noting the compliance. |
M/s Hindustan Steel Works Construction Ltd Vs CCE (Dated: May 9, 2014) |
| ST - Value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service would be outside the taxable value or the gross amount charged - matter no longer res integra - Appeal allowed: CESTAT |
| Also see analysis of the Order |
M/s Vijay Television Pvt Ltd Vs CST (Dated: February 5, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Business Auxiliary Service - applicant canvasses advertisement for Vijay TV owned by foreign entity who pays commission, viewed by Revenue as taxable under 'BAS' – Small amount of CENVAT credit proposed to be denied - Tax demands with interest and penalty adjudicated and agitated herein. Held: Prima facie merit in the argument of the applicant that the activity of selling time slot also will get classified under services of Broadcasting Agency - in the matter of interpretation of Export of Service Rules, 2005, the issue involved is whether when a service specified in Rule 3 (1) (iii) when performed in India and the recipient of Service is located outside India whether the service can be considered to be exported - dispute in the instant case is only about "use outside India" - concept of Export of Service has evolved over a period of time and this clause got omitted from 27-02-2010 – Legality in flux; Prima facie, it would appear that use outside India cannot be equated with performed outside India because the expression 'performed outside India' is already used in the case of services at Rule 3 (1) (ii) and when the Legislature is aware of one expression and if it is using a different expression in the same rules, the new expression has to be understood to be having a different meaning from what is already used - prima facie merit in the matter of claim of export of service - waiver of predeposit of dues arising from the impugned order granted for admission of appeal along with stay on its collection during the pendency of the appeal. |
Reliance Industries Ltd Vs CCE&ST (Dated: May 13, 2014) |
| ST - Supply of Tangible Goods for use Service - Offshore Supply Vessels supplied by foreign suppliers for exploration work - Applying the principle of Noscitur A Sociis, the vessels covered in amending notfn. 21/2009 - ST would be such vessels which are akin to installation and structures and which are to be stationed at a fixed location in the Continental Shelf and Exclusive Economic Zone of India while rendering services - the expression 'during the period of use' would mean that the tangible goods must be located in India during the entire period of use and if it is not so located in India for any part of the period it cannot be said to be located in India and the Service Tax in respect of the same cannot be levied under the reverse charge mechanism - a ship plying in the Continental Shelf and the Exclusive Economic Zone of India carrying goods or persons cannot be regarded as India for the purpose of Import of Service Rules - vessels were plying to Kakinada and various other places in the Continental Shelf and the EEZ of India which are beyond the territorial waters of India and which are non - designated places - appellant cannot be held to be under the reverse charge mechanism in respect of vessels not located in India during the entire period of their use - order set aside and appeals allowed: CESTAT [para 19, 24, 25] |
| Also see analysis of the Order |
M/s Essar Steel India Ltd Vs CCE&ST (Dated: May 2, 2014) |
| ST - appellant not disputing Service tax liability but contesting imposition of penalty - prima facie when the entire service tax alongwith interest is paid and there is no invocation of extended period on elements of fraud / suppression / misstatement, etc. then no penalty is imposable - pre-deposit waived: CESTAT [ para 4] |
CCE Vs Consulting Engineers Groups Ltd (Dated: May 15, 2014) |
| ST - Consulting Engineer - as the assessee was a company registered under the Companies Act, 1956, they were outside the purview of the definition of 'Consulting Engineer' during the period 2001-03 as 'body corporate' was brought within the ambit of the definition only w.e.f . 01.05.2006 - no ST payable - Revenue appeal dismissed: CESTAT |
| Also see analysis of the Order |
M/s GE Capital Transportation Financial Services Ltd Vs CCE&ST (Dated: May 6, 2014) |
ST - Consideration received towards cheque bouncing charges, on foreclosure charges, towards operating lease/hire purchase transactions - conflicting views and conclusions on the issue whether foreclosure charges fall within the ambit of "banking and financial" services – in the matter of financial leasing services, adjudicating authority failed to deal with the claim made of exemption under notification 4/2006-ST – prima facie invocation of extended period is not justified – pre-deposit waived of adjudged dues on condition that appellant remits Rs.2 lakhs comprising interest demand on CENVAT credit of Rs.1.56 lakhs plus ST payable on lease/hire purchase service which amount is around Rs.40,000/- - Stay application disposed of: CESTAT [ para 6, 7] |
Japfa Comfeed India Pvt Ltd Vs CCE (Dated: May 1, 2014) |
| ST - GTA Service - It is the claim of the appellant that whatever services received from goods transport agency at their Kharagpur Unit, they have discharged the service tax at Pune - they have also placed a CA certificate in support - Commissioner had confirmed the tax liability by holding that the claim of the appellant is not supported by proper evidences - Appeal to Tribunal. Held - appellant has now produced a letter from Supdt ., ST, Pune-II Commissionerate indicating therein that ST for the period 2005-06 to 2007-08 has been discharged at Pune - AR disputing as to whether the Supdt . has the authority to issue such letter - in the interest of justice matter is required to be remitted to adjudicating authority to consider all aspects including evidence produced - Appeal allowed by way of remand: CESTAT [ para 5] |
CCE Vs M/s Nestle India Ltd (Dated: May 16, 2014) |
| ST – Quality control Testing of the goods manufactured by the job workers and sister concerns situated abroad are not chargeable to Service Tax – for the period prior to 14/03/2005 no Service Tax would be chargeable in view of the exemption notification 21/2003-ST correctly claimed by the respondent; post 14/03/2005, the services rendered are to be treated as Export of Services in view of the Tribunal decision in B. A. Research India - As for payment of Service Tax on the testing services provided to the respondent's job workers, that there was nothing on record to show that the respondent had charged any amount for testing the samples received from the job workers and the hence the submission made by the AR was not substantiated - No infirmity in order of Commissioner (A) – Revenue appeals dismissed: CESTAT [para 6, 7] |
| Also see analysis of the Order |
Nagar Urban Co-Op Bank Ltd Vs CC, CE & ST (Dated: February 25, 2014) |
| CENVAT - Rule 6(3) of CCR, 2004 - applicant providing taxable as well as exempted services and availing credit on common input services - no separate accounts maintained - department seeking 6%/8% of the value of exempted services - rule 6 of CCR, 2004 has been amended retrospectively by FA, 2010 - reversal of credit taken on the entire input service along with interest amounts to non-availment of credit and, therefore, provisions of rule 6(3) of CCR, 2004 not attracted - prima facie applicant has made a strong case for waiver of pre-deposit - stay granted: CESTAT [para 6] |
CCE Vs M/s Rambel Consumer Services (Dated: February 27, 2014) |
| Service Tax – Business Auxiliary Service - primary adjudication orders levying service tax, interest and penalties on the ground that appellants had provided Business Auxiliary Service (BAS) to either the principal Indian agent, or wherever the appellants are the principal agent, to the overseas entity which is in the business of money transfers agitated herein by various parties including Revenue (on portions dropping demands). Held: There is no dispute that as a consequence of the ratio discernable from the judgement of the Larger Bench in Paul Merchant Ltd. principal agents and sub-agents of foreign Money Transfer entities are not liable to service tax under provisions of the Act since the services provided by these agents amounts to export of services and these are exempted from the levy of Service Tax under the Export of Service Rules 2005 - As on date the decision of the Larger Bench in Paul Merchant Ltd. is extant and operative and has not suffered any appellate eclipse - In the circumstances these appeals are required to be allowed. |
M/s ACL Mobile Ltd Vs CST (Dated: May 21, 2014) |
| ST - Web hosting service received by appellant from foreign service provider is used by appellant for marketing of his products - prima facie the same has to be treated as Support Service of business or commerce and cannot be classified as Information Technology Service – challenge to the demand on the ground of time bar being a mixed question of law and fact would be considered at the time of final hearing - Pre-deposit ordered of Rs.30 lakhs: CESTAT |
| Also see analysis of the Order |
M/s Karur Vysya Bank Ltd Vs CCE, (Service Tax) (Dated: January 24, 2014) |
| Service tax – CENVAT credit – Appellant providing "Banking and Financial Services" availed credit of duty paid on computers/printers/lockers etc., procured prior to 10.09.2004 – Revenue viewed that credit availed on procurements prior to 10.09.2004 violated Rule 3 of the CCR 2004 providing cut-off date of 10.09.2004; demand for recovery of credit with interest and penalty adjudicated, upheld by Commissioner (Appeals) and disputed herein. Held: There are clear provisions under Cenvat Credit Rules, 2004 that the new credit scheme is applicable only in respect of duties paid on or after 10-09-2004 and against invoices raised dated on or after 10.09.2004, giving a clear demarcation on time frame based on which the new scheme was to be operated - No reason for any doubt about the scope of the Rule and the Tribunal should not be deciding new policy by giving effect to such benefits retrospectively contrary to legal provisions and policies of the government – Citations by the appellant were in the context of situations where there could be doubt regarding the scope of the legislation, and the Govt. considered it appropriate to add explanations to clarify disputes - rule in question in the present appeal is different from explanations considered in the said cases; hence no merit in the appeal. |
M/s Naresh Organizers Pvt Ltd Vs CCE & ST (Dated: February 5, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Dispute on demands related to Renting of immovable property service under Sec 65(105)(zzzz) of the Finance Act 1994. Held: Agreements were for arrangement of business conducting and amenities agreement, prima facie fall under the category of renting of immovable property services - by the retrospective amendment brought in by Finance Act, 2010, it can be presumed that the appellant was aware of the service tax liability at least from that date - appellant has deposited an amount of Rs. 14.83 lakhs during the pendency of the proceedings before the lower authorities and prima facie not made out a case for complete waiver of the balance amounts involved, and as the issue is an arguable one - appellant should be put to further condition of depositing an amount of Rs. 10,00,000/- within the period of eight weeks; upon compliance, applications for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal. |
M/s Orpat Marketing Pvt Ltd Vs CST (Dated: April 7, 2014) |
| Service Tax – Renting of Immovable Property – Waiver of pre-deposit and stay of recovery - 50 percent of tax liability already paid by the recipient as per Supreme Court Directions in 2011-TIOL-104-SC-ST . Pre-deposit of balance waived and recovery stayed till the disposal of appeal. |
CCE Vs Bharat Sanchar Nigam Ltd (Dated: May 12, 2014) |
| ST - As for the same period, proceedings had already commenced against the respondent through a SCN in July, 2005, there was no need to issue another SCN in July, 2007 - Commissioner(A) rightly holding that the second SCN was void & illegal - Revenue appeal dismissed: CESTAT [para 6] |
| Also see analysis of the Order |
Prabhu Marketing Services Pvt Ltd Vs CST (Dated: March 19, 2014) |
| ST – Refund – appellant wrongly paying service tax although they were not required to pay the same – in view of the Madras High Court decision in Natraj & Venkat Associates - 2010-TIOL-67-HC-MAD-ST the provisions of s.11B of the CEA, 1944 are not applicable – refund claim filed beyond one year cannot be held as time barred – order set aside and appeal allowed with consequential relief: CESTAT [para 3] |
M/s Apeejay Surrendra Park Hotels Ltd Vs CST (Dated: February 18, 2014) |
| Service Tax - Stay / dispensation of pre deposit – Valuation of 'convention' service – dispute arising from denying the abatement under the notification No. 1/06-ST dated-1/3/2006 on the ground that the applicant had availed and utilized CENVAT credit on various input services. Held: For period prior to March 2007, force in argument that merely because they would be eligible to avail credit in future, would not disentitle them from availing the abatement under cited Notification, where the condition is specific on the availment of CENVAT credit and not laid down to eligibility of CENVAT credit in future - For the period March 2007 to April 2008, prima facie, CENVAT credit on various input services which have nexus with convention service has been availed; hence the applicant had not complied with the condition of Notification for the period April 2007 to March 2008 - No financial hardship has been pleaded – No case for full waiver; applicant to deposit Rs.25.00 Lakh (Rupees Twenty Five Lakh only) within a period of eight weeks; and on compliance, balance dues adjudged would stand waived and its recovery stayed during the pendency of the appeal. |
J A Anand Vs CCE ( Dated: March 5, 2014) |
ST - ST on reimbursements while providing C&F service - period of dispute is September 1999 to March 2001 - appellant paying ST on commission and not on gross amount received - upon pointing out by Revenue appellant paying ST on gross amount - matter adjudicated and penalties imposed - appeal before Tribunal seeking waiver of penalty on the ground that the matter was finally settled by LB decision in Sri Bhagavathy Traders. - 2011-TIOL-1155-CESTAT-BANG-LB and prior to this there were divergent views on the subject matter. Held: there is merit in the contention of the appellant, in view of the provisions contained in s. 80 of the FA, 1994, penalties imposed u/s 76 & 78 are set aside & appeal allowed: CESTAT [para 6] |
The Gmtd Bsnl Vs CC & CE (Dated: February 3, 2014) |
| COD Application - delay in filing appeal - contention that appellant has a strong prima facie case on merits and that the Tribunal has passed several orders granting stay in substantially similar cases is not relevant in considering the issue whether there is a delay and there is a reasonable ground to condone the same: CESTAT It is a well settled position in law that public authorities do not have an open invitation to litigate at a time of their choice and every litigant is requested to explain the cause for a delay in pursuing appellant's remedies, including in respect of fundamental rights - o-in-o was served on the authorized representative of appellant on 28.04.2010 so there is no justification in the submission made by the appellant that they were served the order on 09.11.2010 - no explanation offered for belated filing of appeal - no merit in COD application, hence dismissed - consequently, Stay as well as Appeal also rejected: CESTAT |
Fibrex Industries Vs CCE (Dated: May 12, 2014) |
| ST - Tax paid along with interest before issuance of SCN - appellant should have been given the option to pay 25% of duty as penalty - also simultaneous penalties cannot be imposed u/s 76 and 78 of FA, 1994 - penalty u/s 76 dropped - Appeal disposed of: CESTAT [para 7] |
Regards,
Pawan Singla , LLB
M. No. 9825829075Resident Director of Foreign Companies to Submit PAN at the time of Incorporation
General Circular No. 16/2014, Dated: 10.06.2014
Sub: Applicability of PAN requirement for Foreign Nationals
In continuation of the General Circular No. 12/2014 dated 22.05.2014 regards the above subject, it is clarified that the provisions of the said Circular are applicable to a Foreign National who is a subscriber/ promoter at the time of incorporation of the Company.
2. In case the said subscriber/promoter, does not possess Permanent Account Number (PAN), he/she shall furnish a declaration in the prescribed proforma, as an attachment to the Incorporation Form (INC-7).
3. Further, it is clarified that, in case of a Resident Director of the proposed company he/she shall be required to submit PAN details at the time of incorporation.
4. This issue with the approval of the Competent Authority.
F. No: 01/12/2013 CL-V
Yours faithfully
Encl- Undertaking
(Sanjay Kumar Gupta)
Deputy Director
—————–
Undertaking
I_________ (name)_______son of __________(father's name)________ , citizen of___________(nationality) R/o(Address) _____________having passport No.__________ (passport Number)___________hereby declare as under:
(i) That I am not required to obtain Income Tax Permanent Account Number (PAN) under the provisions of Income Tax Act, 1961;
(ii) That in view of the above I have not been issued any PAN; and
(iii) That I undertake to furnish to the Registrar of Companies (mention jurisdiction) details of my PAN as soon as a Permanent Account Number is allotted to me.
(Signature)
Name of the Person
Date:
Place:
Raise Income Tax Deduction Limit U/s. 80C – Banks tell FM
Union Finance Minister Holds Pre-Budget Consultation Meeting With the Representatives from Banking and Financial Institutions; Asks the Representatives of the Banks and Financial Institutions (FIs) for Joint Action to Steer the Economy in the Right Direction
The Union Finance Minister Shri Arun Jaitley said that slow down of economic growth coupled with high inflationary pressure poses a challenge to the economic environment. The Finance Minister asked the representatives of the Banks and Financial Institutions (FIs) that we together need to steer the economy in the right direction. The Finance Minister Shri Jaitley was making the opening remarks during his Pre-Budget Consultations with the representatives of Banks and Financial Institutions here today.
Along with the Finance Minister, the meeting was attended by Ms. Nirmala Sitharaman, Minister of State for Finance and Corporate Affairs, Dr. Arvind Mayaram, Finance Secretary, Shri Ratan P. Watal, Expenditure Secretary, Shri Rajiv Takru, Revenue Secretary, Shri G.S. Sandhu, Secretary, Financial Services, Dr. Urjit Patel, Deputy Governor, Reserve Bank of India and other senior officers of the Ministry of Finance among others.
Various suggestions were received from the different representatives of the Banks and Financial Institutions. Major suggestions include reduction in time limit and number of adjournments in case of SARFAESI matters for early resolution, statement in budget regarding recapitalization of public sector banks, dilution of government ownership in public sector banks up to 51%, implementation f recommendations of Naik Committee Report, removal of mismatch between asset liability and banks' balance sheets and need for revision of definition of priority sector lending among others.
Besides it, other suggestions include continuation of interest subvention scheme for the investment lending in agriculture sector, joint collaborative group about 6 lakh in number promoted by NABARD be included in priority Sector lending, about 72 lakh Self Help Groups(SHGs) of women promoted by NABARD be exempted from service tax for the services rendered by them to small farmers etc, tax benefit limit for health insurance be suitably raised, tax exemption under Section 80C of the Income Tax Act be raised, Insurance Awareness be made part of corporate social responsibility(CSR), availability of cheaper credit to 100 Mid Cap exporters , interest subsidy for solar power projects, setting- up of National Asset Management Company for dealing with NPAs of the banks, more bolder approach in case of Rajiv Gandhi Equity Scheme (RGESS) to enlarge its scope, relook at various provisions of New Companies Bill, inclusion of venture capital in case of small business/entrepreneurs as priority sector lending and making LIC a Public Limited Company among others..
Other suggestions included abolition of Section 80(P)(4) of the Income Tax Act, 1961 i.e. free urban cooperative banks from payment of income tax, need for an Umbrella Organisation in the form of National Level Urban Cooperative Bank (UCB) for all 1600 Primary Cooperative Banks of India and Rs. 5000 crore as Seed Share Capital to this National Level Apex bank of UCB Sector, removal of prohibition on admittance of Cooperative Society as a member of Urban Cooperative Bank existing in Banking Regulation Act, 1948, amendment to Chapter-V of Finance Act 1994 as amended by Finance Act, 2013 dated 10.5.2013 towards adding subscriptions of UCB's Association in 'Negative List', and amending DICGC Act, 1961 (i) to raise the existing limit from Rs. one lakh to Rs. three lakh in general and (ii) further to allow choice to UCBs to insure voluntarily deposits and loans up to Rs. 5 lakh per individual by paying risk weighted premia.
Representatives from different Banking and Financial Institutions who participated in today's meeting included Smt. Arundhati Bhattacharya, State Bank of India, Dr. Rajiv B. Lall, IDFC Ltd., Shri M. Narendra, Indian Overseas Bank (IOB), Shri K.R. Kamath, Punjab National Bank (PNB), Shri S.S. Mundra, Bank of Baroda (BOB), Shri Sudhir Kumar Jain, Syndicate Bank, Shri Rajiv Rishi, Central Bank of India, Shri M.S. Raghavan, IDBI, Dr. Harsh Kumar Bhanwala, NABARD, Shri S.K. Roy, LIC, Shri G. Srinivasan, New India Insurance, Shri Yaduvendra Mathur, EXIM Bank, Shri S.B. Nayar, India Infrastructure Finance Company Ltd. (IIFCL), Shri Arnab Roy, National Housing Bank, Ms. Naina Lal Kidwai, HSBC, Shri Sunil Kaushal, Standard Chartered Bank, Shri Uday Kotak, Kotak Mahindra Bank Ltd, Shri Malay Mukharjee, IFCI, Ms. Shikha Sharma, Axis Bank Ltd, Shri Mukund L. Abhyankar, National Federation of Urban Cooperative Banks and Credit Societies Ltd., (NAFCUB) and Shri Raman Aggarwal, Finance Industry Development Council (FIDC) among others.
The Finance Minister Shri Jaitley assured that the issues raised and suggestions made by different representatives of Banks and Financial Institutions will be looked into in detail and will be duly considered.
Source- Ministry of Finance- Press Release Dated – 10-June, 2014
Companies allowed to constitute Audit Committees, and Nomination and Remuneration Committees till 31st March, 2015
Following receipt of queries and suggestions from stakeholders, it has been decided to amend Rule 6 of the Companies (Meetings and Powers of Board) Rules, 2014. This will provide additional time for companies in constituting Audit Committees, and Nomination and Remuneration Committees till 31st March, 2015.
Government of India
Ministry of Corporate Affairs
NOTIFICATION
Dated 12th June, 2014
G.S.R…….. – In exercise of the powers conferred under sections173, 175, 177, 178, 179,184, 185, 186, 187, 188, 189 and section 191 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules to amend the Companies (Meetings and Powers of Board) Rules, 2014, namely:‑
1. (1) These rules may be called the Companies (Meetings and Powers of Board) Amendment Rules, 2014
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Meetings and Powers of Board) Rules, 2014, in rule 6, after the explanation, the following shall be inserted, namely:‑
"Provided that public companies covered under this rule which were not required to constitute. Audit Committee under section 292A of the Companies Act, 1956 (1 of 1956) shall constitute their Audit Committee within one year from the commencement of these rules or appointment of independent directors by them, whichever is earlier :
Provided further that public companies covered under this rule shall constitute their Nomination and Remuneration Committee within one year from the commencement of these rules or appointment of independent directors by them, whichever is earlier".
[F.No.1/32/2013 -CL-V Pt.]
(Amardeep Singb Bhatia) Joint Secretary to the Govt. of India
Note:- The principal notification was published in the Gazette of India vide No. G.S.R. 265(E) dated 31.03.2014.
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