Monday, November 17, 2014

[aaykarbhavan] Judgments and Information [1 Attachment]





Income-tax (11th Amendment) Rules, 2014 – Amendment in Rules 2C, 2CA, 11AA, Form 10A, Form 56 and Form 56D

INCOME TAX NOTIFICATION NO 61/2014,
Dated: November 10, 2014
S.O. 2874 (E). – In exercise of the powers conferred by section 295 read with sub-clauses (iv), (v), (vi) and (via) of clause (23C) of section 10, clause (aa) of sub-section (1) of section 12A and clause (vi) of sub-section (5) of section 80G of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (11th Amendment) Rules, 2014.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, -
(A) in rule 2C, -
(i) in sub-rule (1), the following proviso shall be inserted, namely:-
"Provided that on or after the specified date, the prescribed authority under sub-clauses (iv) and (v) of clause (23C) of section 10 shall be the Principal Commissioner or Commissioner, to whom the application shall be made as provided in sub-rule (2).";
(ii) for the Explanation, the following Explanation shall be substituted, namely : -
"Explanation.—For the purposes of this rule,-
(i) "Chief Commissioner or Director General" means the Chief Commissioner or Director General whom the Central Board of Direct Taxes may, authorise to act as prescribed authority for the purposes of sub-clause (iv) or sub-clause (v) of clause (23C) of section 10 in relation to any fund or trust or institution;
(ii) "Principal Commissioner or Commissioner" means the Principal Commissioner or Commissioner whom the Central Board of Direct Taxes may, authorise to act as prescribed authority for the purposes of sub-clause (iv) or sub-clause (v) of clause (23C) of section 10 in relation to any fund or trust or institution;
(iii) "specified date" means the date which the Central Board of Direct Taxes may, by notification in the Official Gazette, specify in this behalf.";
(B) in rule 2CA,-
(i) in sub-rule (1), the following proviso shall be inserted, namely:-
"Provided that on or after the specified date the prescribed authority under sub-clauses (vi) and (via) of clause (23C) of section 10 shall be the Principal Commissioner or Commissioner, to whom the application shall be made as provided in sub-rule (2).";
(ii) for the Explanation, the following Explanation shall be substituted, namely : -
"Explanation.—For the purposes of this rule,-
(i) "Chief Commissioner or Director General" means the Chief Commissioner or Director General whom the Central Board of Direct Taxes may, authorise to act as prescribed authority for the purposes of sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 in relation to any fund or trust or institution;
(ii) "Principal Commissioner or Commissioner" means the Principal Commissioner or Commissioner whom the Central Board of Direct Taxes may, authorise to act as prescribed authority for the purposes of sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 in relation to any fund or trust or institution;
(iii) "specified date" means the date which the Central Board of Direct Taxes may, by notification in the Official Gazette , specify in this behalf.";
(C) in rule 11AA, in sub-rule (6), for the words "date on", the words "end of the month in" shall be substituted;
(D) in the Appendix II,-
(I) in Form 10A, for items 1 to 5, the following items shall be substituted, namely: -
"1. Name of the * trust/institution in full [in block letters] …..
2. Permanent Account Number …..
3. Address …..
4. Name(s) and address(es) of author(s)/founder(s) …..
5. Date of creation of the trust or establishment of the institution …..
6. Name(s) and address(es) of trustee(s)/manager(s) …..";
(II) in Form 56, in the Notes,-
(a) for item 2, the following item shall be substituted, namely: -
"2. The application form,-
(a) filed before the specified date, should be sent to the Chief Commissioner or Director General whom the Central Board of Direct Taxes may authorise to act as prescribed authority, for the purposes of sub-clause (iv) or sub-clause (v) of clause (23C) of section 10, through the Commissioner of Income-tax or Director of Income-tax (Exemptions) having jurisdiction over the trust or institution;
(b) filed on or after the specified date, should be sent to the Principal Commissioner or the Commissioner whom the Central Board of Direct Taxes may authorise to act as prescribed authority for the purposes of sub-clause (iv) or sub-clause (v) of clause (23C) of section 10.
Four copies of the application form along with the enclosures should be sent.";
(b) for item 4, the following item shall be substituted, namely: -
"4. The applicant shall furnish any other documents or information as required by the Chief Commissioner or Director General or Principal Commissioner or Commissioner or any authority authorised by the Chief Commissioner or Director General or Principal Commissioner or Commissioner, as the case may be.";
(III) in Form 56D, in the Notes,-
(a) for item 1, the following item shall be substituted, namely: -
"1. The application form,-
(a) filed before the specified date, should be sent to the Chief Commissioner or Director General whom the Central Board of Direct Taxes may authorise to act as prescribed authority for the purposes of sub-clause (vi) or sub-clause(via) of clause (23C) of section 10 through the Commissioner of Income-tax or Director of Income-tax (Exemptions) having jurisdiction over the university or other educational institution or hospital or other medical institution referred to in serial number 1 of this Form;
(b) filed on or after specified date, should be sent to the Principal Commissioner or the Commissioner whom the Central Board of Direct Taxes may authorise to act as prescribed authority for the purposes of sub-clause (vi) or sub-clause (via) of clause(23C) of section 10.
Four copies of the application form along with the enclosures should be sent.";
(b) for item 3, the following item shall be substituted, namely: -
"3. The applicant shall furnish any other documents or information as required by the Chief Commissioner or Director General or Principal Commissioner or Commissioner or any authority authorised by the Chief Commissioner or Director General or Principal Commissioner or Commissioner, as the case may be.".
[F.No.142/5/2014-TPL]
(Ashish Kumar)
Director (Tax Policy and Legislation)
Note. – The principal rules were published in the Gazette of India vide notification number S.O. 969 dated the 26th March, 1962 and was last amended by the Income-tax (10th Amendment) Rules, vide notification S.O. No.2556 (E) dated 30.09.2014.
- See more at: Income-tax (11th Amendment) Rules, 2014 - Amendment in Rules 2C, 2CA, 11AA, Form 10A, Form 56 and Form 56D

NEW DELHI, NOV 13, 2014: THE issue before the bench is - Whether the assets or cash seized u/s 132 of the Act is adjustable against the amount of any "existing liability" under the Act which does not include "advance tax" payable in accordance with the provisions of Part 'C' of Chapter XVII of the Act. And NO is the answer.
Facts of the case

A) Revenue
raised additional ground in this appeal challenging the order of CIT(A) in admitting the additional evidences in the form of the letters dated 30.06.2008 and 18.08.2008 and allowing the appeal of the assessee on the basis of the two letters.

B) Search and seizure operation was carried out on the premises of the assessee during the financial year 2008-09 which was related to A.Y. 2009-10. At the time of search cash was found at different places and seized by the Revenue authorities. On 29.4.2008 a letter addressed to Additional Director of Investigation requesting that the seized cash may kindly be adjusted and appropriated against the tax liability in respect of the income of the A.Y. 2008-09 which was offered as the income in the statement made u/s 132(4). Letter dated 30.06.2008 addressed to Assistant Director Investigation was also filed stating the fact that the assessee had discharged its more than 60% of tax liability in the form of seized cash which had been requested to be adjusted towards the tax liability for the A.Y. 2008-09 and also paid first installment of the tax. Another letter dated 18.8.2008 addressed to Additional Director of Investigation was also submitted and reiterated the fact that the assessee has discharged its more than 70% of tax liability in the form of seized cash which had been requested to be adjusted towards tax liability and also paid 2nd instalment of the tax. Assessee filed return u/s 139(1) of the Act on 30.9.2008 disclosing taxable income including therein such sum which had not yet been entered in the books of accounts including the cash. In response to notice dated 31.08.2009 issued to the assessee u/s 153A of the Act, Assessee filed a return of income on 18.05.2010 disclosing income including an income which had been disclosed u/s 132(4) of the Act. The assessment was framed u/s 153A/143(3). An outstanding demand was raised after giving credits of taxes already and also by granting adjustment of refund relating to A.Y. 2009-10 against the total tax payable. AO denied prayer of the assessee that the adjustment of seized cash should be given from the date of search i.e. 29.4.2008. AO gave adjustment of seized cash towards aforesaid demand from 23.2.2011. AO levied interest u/s 234A & 234B.

Revenue submitted that the two letters dated 30.06.2008 and 18.08.2008 were not filed before the AO and the CIT(A) erred in accepting the additional evidence without following the due procedure as per Rule 46A of the Income Tax Rules, 1962 and considering and accepting these letters without confronting them to the AO.

Revenue submitted that Advance tax is referable to the income of the current year which has not yet ended on search. Unless the investigations are carried out which end only on assessment, it can never be said with certainty that the assets seized were acquired from the current year's income. With regard to the letters relied on by the assessee, it was submitted that letters were not in regard to application of seized cash towards the advance tax liability and two of the letters were for release of jewellery, hence, these could not be taken to be letters towards adjustment of cash towards advance tax. It was submitted that all three letters were found addressed to the ADIT (Inv) and not the AO and the ADIT has no power at all to appropriate the seized cash in any manner as this power involves discharge of quasi judicial function was to be performed by the AO, a quasi judicial authority. It was submitted that search took place on 29-04·-2008 relevant to AY 9-10 whereas the assessment under consideration is AY 8- 9, therefore, there cannot be any question of adjustment of cash seized against the advance tax for AY 8-9 at all because advance tax is payable only during the currency of the assessment year and not for the closed assessment years. It was submitted that the question of adjustment of cash towards the advance tax liability would have been possible only for AY 2009-10 and not for earlier years.

Assessee submitted that these impugned letters were placed before the AO by the assessee during assessment proceedings, hence, there was no requirement to follow Rule 46A of the Rules. It was also contended that as per certification given on the paper book filed by the assessee, these letters were placed before the AO, hence, additional grounds of the Revenue were irrelevant and could not be admitted.

Assessee submitted that amount which was seized on 29.4.2008 was actually adjusted but instead of having given credit of the same from the date of search and seizure i.e. 29.4.2008 the same was given credit only on 23.2.2011 by the AO himself without any basis. It was submitted that amount of cash seized was to be adjusted against existing liability, if any, and since there was no existing liability of A.Y. 2008-09 and therefore the remaining sum ought to have been adjusted against the admitted liability of tax on declared income. It was submitted that it was not permissible for the Revenue that on one hand the Revenue is holding the amount of cash seized without giving any credit and paying any interest thereon despite the fact that the assessee had prayed that the said sum be adjusted towards the tax liability and further on the other hand, the Revenue charged the interest from the assessee. It was submitted that provision section 234B(2) specifically provides that whereby on the date of determination of total income or completion of regular assessment, if tax was paid by the assessee u/s 140A of the Act or otherwise, the total interest u/s 234B of the Act shall be calculated after reduction of interest on tax already paid, and no interest u/s 234B (2) could be levied without giving adjustment of the amount seized on 29.4.2008 which was to be prayed by the assessee to be adjusted by the assessee towards the tax on that date i.e. 29.04.2008 and not on 23.2.2011.
Having heard the parties, the tribunal held that,

A)
++ The letters dated 30.06.2008 and 18.08.2008 were submitted before the AO and the AO gave detail deliberations and findings thereon. However, during first appellate proceedings the CIT(A) considered these letters and relief was granted for the assessee relying on the same letters but this contention of the Revenue is not acceptable that the CIT(A) admitted additional evidence without confronting the same to the AO in contravention of Rule 46A of the Rules. Hence, additional grounds based on this legal contentions are not admissible and we dismiss the same;

B) ++ Clarificatory Explanation No. 2 inserted to section 132B of the Act would be of retrospective effect from the date of insertion of provision of section 132B of the Act i.e. from 01.06.2002;

++ we take respectful guidance from the decision of Apex Court in the case of CIT vs. Shelly Products and Ors. and CIT vs. Kanji Shivji and Co. wherein it was held that the clarificatory and declaratory provisions which were inserted to clarify the law so as to remove doubts are of retrospective effect even if, the same provisions are stated to be applicable from a particular assessment year or date;

++ the Explanation 2 attached to section 132B of the Act, is a clarificatory provision which is of retrospective effect, even if, the same was stated to be applicable from a particular date. We also hold that Explanation 2 to section 132B of the Ac t is retrospectively effective from the date of insertion of provision of section 132B of the Act w.e.f. 1.6.2002;

++ the assets or cash seized u/s 132 of the Act is adjustable against the amount of any "existing liability" under the Act which does not include "advance tax" payable in accordance with the provisions of Part 'C' of Chapter XVII of the Act. At the same time, we take cognisance of the provisions of section 208 which stipulates the conditions of liability to pay "advance tax";

++ in view of the above provision of section 208 of the Act, the amount of cash seized could not be adjusted as advance tax for the A.Y. 2008-09. From the copy of return of income submitted by the assessee for A.Y. 2008-09, we observe the assessee has shown advance tax paid as Rs.1.50 crore besides self assessment tax paid of Rs.3,37,50,000/- and cash seized amount of Rs.4,44,81,500/-. Therefore the assessee himself has not treated the amount of cash seized as an advance tax;

++ in the statement recorded u/s 132(4) of the Act on 29.04.2008 Shri J.S. Chawla, Director of the assessee company has not clearly mentioned that the seized cash may be adjusted against the tax liability of the assessee;

++ there is no specific request for adjustment of cash seized and however in these letters the assessee has mentioned this fact that the assessee has infact discharged his tax liability due by more than 60% and 75% respectively on the date of filing of these letters compassing the adjustment of cash seized as well as the payment of installment of tax;

++ the assessment was framed u/s 153A/143(3) of the Act on 24.12.2010 on total income of Rs.27,91,00,920/- therefore, the application of assets u/s 132B of the Act r/w Explanation 2 would be possible only on conclusion of assessment proceedings i.e. 24.12.2010. Therefore, on the basis of foregoing discussions we reach to fortified and logical conclusion that the AO has wrongly granted adjustment of seized cash from 23.2.2011 and the CIT(A) also grossly erred in holding that the assessee was entitled to adjustment of seized cash from 01.07.2008. Hence, ground no. 1 of the assessee is adjudicated with the direction to the AO that the adjustment of cash seized be given for the assessee from the date of completion of assessment proceedings u/s 153A /143(3) of the Act i.e. from 24.12.2010 as per provisions of Explanation 2 to section 132B of the Act.
 

INSTRUCTION No. F. No. 267/60/2014-CX.8,
Dated- 11th November, 2014 
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Subject:  Judgement of Hon'ble Bombay High Court in the case of M/s Bharti Airtel Ltd. vs The Commissioner of Central Excise, Pune III in Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported as 2014-TIOL-1452-HC-MUM-ST) – reg.
            Attention is invited to the judgement of Hon'ble Bombay High Court in the case of M/s Bharti Airtel Ltd. vs The Commissioner of Central Excise, Pune III in Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported as 2014-TIOL-1452-HC-MUM-ST), wherein regarding the issue whether Cellular Mobile Service Provider is entitled to avail CENVAT credit on Tower Parts & Pre-fabricated buildings, the Hon'ble Bombay High Court has held in favour of revenue. While relying on the decision of the Hon'ble Supreme Court in the case of Saraswati Sugar Mills vs CCE Delhi, (2011(270)ELT 465) = 2011-TIOL-73-SC-CX, the Hon'ble Bombay High Court has, inter-alia, observed as under:
"It would be misconceived and absurd to accept that tower is a part of antenna. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna. The position in this regard stands fortified from the decision of the Supreme Court in the case of "Saraswati Sugar Mills vs CCE Delhi, (2011 (270) ELT 465) = 2011-TIOL-73-SC-CX". From the definition of the term 'input' as defined in 2 (k) of the Credit rules it is clear that the Appellant is a service provider and not a manufacturer of capital goods. A close scrutiny of the definition of the term capital goods and input indicates that only those goods as used by a manufacturer would qualify for credit of the duty paid. As observed hereinabove a service provider like the appellant can avail of the credit of the duty paid only if the goods fall within the ambit of the definition of capital goods as defined under Rule 2(a)(A) of the Credit Rules. The contention of the appellant that they are entitled for the credit of the duty paid towers and PFB and printers is defeated by the very wording of the definition of input. In any case towers and PFB are in the nature of immovable goods and are non-marketable and non-excisable. If this be the position then towers and parts thereof cannot be classified as inputs so as to fall within the definition of Rule 2(k) of the credit rules. We clarify that we are not deciding any wider question but restricting our conclusion to the factsand circumstances which have fell for our consideration in these appeals.
We therefore find no infirmity or illegality in the findings as recorded by the tribunal in holding that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellants. The appeals are devoid of merit and accordingly stand rejected. No orders as to costs."
  1. The above decision of the Hon'ble Bombay High Court is brought to notice of all concerned for compliance.
Yours faithfully,
(Vikas Kumar)
Director (CX-8)



__._,_.___
View attachments on the web

Posted by: Dipak Shah <djshah1944@yahoo.com>


receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.

To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.com





__,_._,___

No comments:

Post a Comment