S. 40(a)(ia): Despite stay by High Court, Special Bench verdict In Merilyn Shipping is binding on the ITAT due to judicial discipline
The Tribunal had to consider whether in view of the Special Bench verdict in Merilyn Shipping & Transport 146 TTJ 1 (Vizag), a disallowance u/s 40(a)(ia) could be made in respect of the amounts that have already been paid during the year and are not "payable" as of 31st March. The Tribunal held that as the department's appeal against the said verdict was pending in the High Court and as the High Court had granted an interim suspension, the AO should decide the issue after the disposal of the appeal in the case of Merilyn Shipping by the High Court. HELD by the High Court:
We are of the view that until and unless the decision of the Special Bench is upset by this Court, it binds smaller Bench and coordinate Bench of the Tribunal. Under the circumstances, it is not open to the Tribunal to remand on the ground of pendency on the same issue before this Court, overlooking and overruling, by necessary implication, the decision of the Special Bench. We simply say that it is not permissible under quasi judicial discipline. Under the circumstances, we set aside the impugned judgment and order, and restore the matter to the file of the Tribunal which will decide the issue in accordance with law and it would be open to the Tribunal either to follow the Special Bench decision or not to follow. If the Special Bench decision is not followed, obviously remedy lies elsewhere.
S. 40(a)(ia): Merilyn Shipping 146 TTJ 1 (Vizag) has binding effect in view of the SLP dismissal & the clarification in Janapriya Engineers (AP HC) and so amounts already paid during the year cannot be disallowed
The Tribunal had to consider whether in view of the Special Bench verdict in Merilyn Shipping & Transport 146 TTJ 1 (Vizag), a disallowance u/s 40(a)(ia) could be made in respect of the amounts that have already been paid during the year and are not "payable" as of 31st March. HELD by the Tribunal:
In the light of the decision rendered by Hon'ble Supreme Court in the form of dismissal of Revenue's SLP in the case of Vector Shipping Services (P) Ltd. Section 40(a)(ia) is not applicable with reference to payments already made since the expression 'payable' has to be satisfied for invoking provisions of section 40(a)(ia). The fact that the order of the Special Bench delivered in the case of Merilyn Shipping & Transports has been kept in abeyance by the Andhra Pradesh High Court and that the Gujarat High Court has taken a different view is not relevant. In Janapriya Engineers Syndicate (I.T.T.A. No. 352 of 2014 dt. 24.06.2014) the Andhra Pradesh High Court has clarified the issue of interim stay granted by it in the case of Merilyn Shipping & Transports and held that until and unless the decision of the Special Bench is upset by the High Court, it binds smaller Bench and coordinate Bench of the Tribunal. From the clarification issued by the High Court, it is clear that until and unless the decision of Marilyn Shipping & Transport is reversed by the Court, it is binding on all the benches of the Tribunal. We find that the Hon'ble Court has held that judicial discipline mandates that the decision of the special bench has to be followed by other benches. As on today, the stay order granted by the Hon'ble Court has been vacated and the order of the special bench is binding on other benches of the Tribunal. Therefore, respectfully following the same, we hold that no disallowance u/s 40(a)(ia) can be made for amounts already paid during the year and which are not payable as of 31st March (Amit Naresh Shah (ITAT Mumbai) followed).
Note: In ITO vs. M/s.Theekathir Press (ITAT Chennai) it was held that as there is a conflict of opinion amongst High Courts, the view favourable to the assessee should be taken. However, a contrary view has been taken in Rishti Stock and Shares (ITAT Mumbai), M/s Orchid Marine vs. ITO (ITAT Cochin) & The Ramanthali Service Co-operative Bank Ltd (ITAT Cochin)
INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
Appeal to Appellate Tribunal --Rectification of mistakes--Failure to deduct tax at source--Amendment allowing benefit where payee has paid tax on receipts effective from 1-4-2013--Tribunal relying on decision of jurisdictional High Court rejecting application for rectification--Assessee to pursue remedy by filing appeal before High Court--Writ petition not maintainable--Income-tax Act, 1961, ss. 254(2), 260A-- Thomas John Muthoot v. Asst. CIT (Ker) . . . 525
Assessment --Additional tax--Rectification of mistakes--Appeal--Deletion of disallowance on appeal--Assessing Officer can delete additional tax in rectification proceedings--Income-tax Act, 1961, ss. 143, 154, 250, 254-- CIT v. Redico Khaitan Ltd. (All) . . . 424
Business --Income from house property--Business income or income from house property--Rent from letting out buildings with amenities in software technology park--Assessable as business income--Income-tax Act, 1961, ss. 22, 28-- CIT v. Information Technology Park Ltd. (Karn) . . . 460
Capital gains --Long-term capital gains--Full value of consideration--Distress sale--Assessee objecting to value adopted by stamp valuation authority--Assessing Officer instead of referring valuation to Valuation Officer estimating capital gains tax confirmed by Tribunal--Specific claim that Assessing Officer should have referred matter to Valuation Officer for valuation of capital asset in terms of section 50C(2)--Mere assertion by assessee suffice for attraction of section 50C(2)--Assessing Officer directed to work out capital gains by adopting market value under section 50C(2)--Income-tax Act, 1961, s. 50C(1), (2)-- Appadurai Vijayaraghavan v. Joint CIT (OSD) (Mad) . . . 486
----Long-term capital gains--Full value of consideration--Distress sale--Specific objection for adopting market value--Authorities instead of referring valuation to District Valuation Officer adopting guideline value relating to property sold--Assessing Officer directed for working out capital gains--Income-tax Act, 1961, s. 50C-- S. Muthuraja v. CIT (Mad) . . . 483
----Sale of agricultural lands--Classification of lands in revenue records as agricultural lands--Adangal and letter of tahsildar satisfying other conditions of section 2(14)--Adjacent lands divided into plots for sale not a reason that lands sold by assessee were for purposes of development of plots--Record showing lands are agricultural lands classified as dry lands for which kist has been paid--Entitled to exemption--Income-tax Act, 1961, s. 2(14)-- Mrs. Sakunthala Vedachalam v. Asst. CIT (Mad) . . . 558
Charitable purposes --Charitable trust--Cricket Association--Registration--First application not traceable--Defective second application not cured despite opportunities--Condonation of delay--Not a matter of right--Failure to provide satisfactory explanation--Tribunal justified in declining plea--Another application with retrospective effect--Commissioner could not grant registration with retrospective effect since rejection of defective application for registration with retrospective effect attaining finality--Income-tax Act, 1961, s. 12A-- Kerala Cricket Association v. Addl. CIT (Ker) . . . 528
----Charitable trust--Education society--Registration--Assessee collecting capitation fee for admission in addition to regular fees--Assessee not carrying on any charitable activities entitling it for registration--Income-tax Act, 1961, s. 12AA-- Travancore Education Society v. CIT (Ker) . . . 534
----Charitable trust--Registration--Employees’ pension fund trust--Pensionary benefit to employees of GCDA from corpus created out of contributions made by employees of GCDA--Activity not general public utility--Not entitled to registration--Income-tax Act, 1961, ss. 2(15), 12AA-- GCDA Employees’ Pension Fund Trust v. CIT (Ker) . . . 532
Deduction of tax at source --Transmission transaction charges to Gas Authority of India for supplying gas--GAIL not only showing transaction as sale in its relevant records but paying due tax thereon--Contract for supply of gas was for sale of goods and not works contract or contract for rendering technical services--Transaction outside purview of sections 194C and 194J--No liability for tax deduction at source--Income-tax Act, 1961, ss. 194C, 194J-- CIT (TDS) v. Samtel Glass Ltd. (Raj) . . . 392
Depreciation --Enhanced depreciation--Notification confining benefit of enhanced depreciation for year 2009-10 to only such commercial vehicles as have been purchased and put to use during period 1-4-2009 to 30-9-2009--Assessee, an advocate, purchasing a car outside the period for accelerated depreciation--Accelerated depreciation conferred taking into account the policy decision of Union Government to stimulate country’s economy--Not discriminatory--Not violative of fundamental rights--Constitution of India, art. 14--Income-tax Act, 1961, s. 32-- R. Surendran v. Union of India (Ker) . . . 536
----Exercising of option--Returns filed under section 139(1) and exercised option in form prescribed therein--No separate letter or request or intimation with regard to exercise of option required--Option once exercised will continue to subsequent years--Income-tax Rules, 1962, r. 5(1A)--Income-tax Act, 1961, ss. 32, 139(1)-- CIT v. Kikani Exports P. Ltd. (No. 2 ) (Mad) . . . 500
----Higher rate of depreciation--Plant--Neither includes “building†nor includes “roadâ€--â€Road†is a “building†and not a “plantâ€--Toll road is a capital asset and not an implement or a tool used by assessee for his business--Would not qualify as a “plantâ€--Not entitled to a higher rate of depreciation--Income-tax Rules, 1962, Appex. I--Income-tax Act, 1961, s. 32(1)-- Moradabad Toll Road Co. Ltd. v. Asst. CIT (Delhi) . . . 403
----Investment allowance--Carry forward and set off--Unabsorbed depreciation against capital gains--Allowable but restricted to two-thirds of such allowance--Matter remanded to Assessing Officer to recompute unabsorbed depreciation--Income-tax Act, 1961, s. 34A-- CIT v. Madras Forging and Allied Industries (CBE) Ltd. (In liquidation) (Mad) . . . 552
Double taxation avoidance --Non-resident--Income deemed to accrue or arise in India--Royalty--Danish company supplying equipment and information regarding installation of such equipment--Consideration received not royalty--Not assessable in India--Income-tax Act, 1961, s. 9(1)(vi)--Double Taxation Avoidance Agreement between India and Denmark-- Director of Income-tax (International Taxation) v. Haldor Topsoe (Bom) . . . 453
Exemption --Development of computer software--Conditions precedent--Customs bonding not a condition precedent--Assessee fulfilling conditions laid down in section 10A--Entitled to exemption--Income-tax Act, 1961, s. 10A-- CIT v. Caritor (India) P. Ltd. (Karn) . . . 463
Export --Special deduction under section 80HHC--Computation of turnover for purposes of section 80HHC--Service charges must be included--Income-tax Act, 1961, s. 80HHC-- CIT v. Nahar Spinning Mills Ltd. (P&H) . . . 467
Housing projects --Special deduction under section 80-IB(10)--Conditions precedent--Not necessary that developer should own the land--Income-tax Act, 1961, s. 80-IB -- CIT v. Shital Corporation (Guj) . . . 476
Income from undisclosed sources --Amounts claimed to be gifts from foreign residents--No relationship between assessee and donors--No occasion for gift--Addition of amounts as undisclosed income of assessee--Justified--Income-tax Act, 1961-- CIT v. Sandeep Goyal (P&H) . . . 471
Interest-tax --Interest on debentures--Notional interest--Not chargeable interest--Interest-tax Act, 1974, s. 2(7)-- CIT v. Golden Investments Ltd. (Mad) . . . 544
International transactions --Transfer pricing--Arm’s length price--Assessee issuing equity shares to its non-resident associated enterprises--Income of assessee would not include income on account of adjustment for short receipt of price for issued additional share capital--Transfer pricing provisions not applicable--Income-tax Act, 1961, s. 92CA(3)-- Shell India Markets P. Ltd. v. Asst. CIT (LTU) (Bom) . . . 516
----Transfer pricing--Arm’s length price--Issue of shares at premium by assessee to its non-resident holding company--Does not give rise to income in an international transaction--Capital receipts arising out of capital account transaction--Transfer pricing provisions not applicable--Income-tax Act, 1961, s. 92CA(3)-- Vodafone India Services P. Ltd. v. Union of India (Bom) . . . 511
Interpretation of taxing statutes --Literal interpretation-- CIT v. Shital Corporation (Guj) . . . 476
Reassessment --Limitation--Exclusion from limitation--Finding or direction by appellate or revisional authority, etc.--Appellate order that an amount was not assessable in a particular assessment year but was assessable in an earlier year--Order constitutes finding or direction--Consequent order not barred by limitation--Income-tax Act, 1961, ss. 150, 153-- CIT v. PP Engineering Work (Delhi) . . . 433
----Notice after four years--Condition precedent--Satisfaction of Commissioner or Chief Commissioner--No sanction or permission of Commissioner obtained--Reassessment not valid--Income-tax Act, 1961, ss. 148, 151(1)-- Reliable Finhold Ltd. v. Union of India (All) . . . 419
----Validity--Reassessment based on retrospective amendment of provision--Reassessment accepted by assessee--Subsequently retrospective amendment held invalid in an appeal filed by another assessee--Consequent appeal against reassessment after five years--Reassessment not rendered invalid--Income-tax Act, 1961, ss. 80HHC, 147, 148-- CIT v. Kultar Exports (Delhi) . . . 440
Rectification of mistakes --Mistake apparent from record--Export--Special deduction--Intimation to assessee--Claim debatable or doubtful--Disallowance part of claim not on basis of settled principles--No notice issued under sub-section (2) of section 143--Rectification pursuant to direction by Commissioner (Appeals)--Appellate authorities right in deleting disallowance--Income-tax Act, 1961, ss. 80HHC, 139, 154-- CIT v. Mekins Agro-Products Ltd. (T & AP) . . . 495
Search and seizure --Block assessment--Undisclosed income--Assessment of third person--Condition precedent--Recording of satisfaction that undisclosed income belonged to third person--Limitation--Satisfaction must be recorded within two year time period stipulated in section 158BE(1)--Income-tax Act, 1961, ss. 158BD, 158BE-- Raghav Bahl v. CIT (Delhi) . . . 447
Sikkim --Charge of tax--Application of Act--Extension of Income-tax Act, 1961, to State of Sikkim with effect from 1-4-1990--Effect--Repeal of Sikkim State Tax Manual by necessary implication--Assessments made under Sikkim Tax Manual for assessment years 1997-98 to 2005-06 not valid--State directed to refund amount--Constitution of India, art. 371F(n)--Sikkim State Income-tax Manual, 1948, cl. 4(i)--Income-tax Act, 1961-- Sikkim Manipal University v. State of Sikkim (Sikkim) . . . 567
Unexplained investment --No evidence regarding investment--Addition of amounts--Not justified--Income-tax Act, 1961-- CIT v. Gian Gupta (Delhi) . . . 428
Art. 14 --Depreciation--Enhanced depreciation--Notification confining benefit of enhanced depreciation for year 2009-10 to only such commercial vehicles as have been purchased and put to use during period 1-4-2009 to 30-9-2009--Assessee, an advocate, purchasing a car outside the period for accelerated depreciation--Accelerated depreciation conferred taking into account the policy decision of Union Government to stimulate country’s economy--Not discriminatory--Not violative of fundamental rights-- R. Surendran v. Union of India (Ker) . . . 536
Art. 371F(n) --Sikkim--Charge of tax--Application of Act--Extension of Income-tax Act, 1961, to State of Sikkim with effect from 1-4-1990--Effect--Repeal of Sikkim State Tax Manual by necessary implication--Assessments made under Sikkim Tax Manual for assessment years 1997-98 to 2005-06 not valid--State directed to refund amount-- Sikkim Manipal University v. State of Sikkim (Sikkim) . . . 567
S. 2(14) --Capital gains--Sale of agricultural lands--Classification of lands in revenue records as agricultural lands--Adangal and letter of tahsildar satisfying other conditions of section 2(14)--Adjacent lands divided into plots for sale not a reason that lands sold by assessee were for purposes of development of plots--Record showing lands are agricultural lands classified as dry lands for which kist has been paid--Entitled to exemption-- Mrs. Sakunthala Vedachalam v. Asst. CIT (Mad) . . . 558
S. 2(15) --Charitable purposes--Charitable trust--Registration--Employees’ pension fund trust--Pensionary benefit to employees of GCDA from corpus created out of contributions made by employees of GCDA--Activity not general public utility--Not entitled to registration-- GCDA Employees’ Pension Fund Trust v. CIT (Ker) . . . 532
S. 9(1)(vi) --Double taxation avoidance--Non-resident--Income deemed to accrue or arise in India--Royalty--Danish company supplying equipment and information regarding installation of such equipment--Consideration received not royalty--Not assessable in India-- Director of Income-tax (International Taxation) v. Haldor Topsoe (Bom) . . . 453
S. 10A --Exemption--Development of computer software--Conditions precedent--Customs bonding not a condition precedent--Assessee fulfilling conditions laid down in section 10A--Entitled to exemption-- CIT v. Caritor (India) P. Ltd. (Karn) . . . 463
S. 12A --Charitable purposes--Charitable trust--Cricket Association--Registration--First application not traceable--Defective second application not cured despite opportunities--Condonation of delay--Not a matter of right--Failure to provide satisfactory explanation--Tribunal justified in declining plea--Another application with retrospective effect--Commissioner could not grant registration with retrospective effect since rejection of defective application for registration with retrospective effect attaining finality-- Kerala Cricket Association v. Addl. CIT (Ker) . . . 528
S. 12AA --Charitable purposes--Charitable trust--Education society--Registration--Assessee collecting capitation fee for admission in addition to regular fees--Assessee not carrying on any charitable activities entitling it for registration-- Travancore Education Society v. CIT (Ker) . . . 534
----Charitable purposes--Charitable trust--Registration--Employees’ pension fund trust--Pensionary benefit to employees of GCDA from corpus created out of contributions made by employees of GCDA--Activity not general public utility--Not entitled to registration-- GCDA Employees’ Pension Fund Trust v. CIT (Ker) . . . 532
S. 22 --Business--Income from house property--Business income or income from house property--Rent from letting out buildings with amenities in software technology park--Assessable as business income-- CIT v. Information Technology Park Ltd. (Karn) . . . 460
S. 28 --Business--Income from house property--Business income or income from house property--Rent from letting out buildings with amenities in software technology park--Assessable as business income-- CIT v. Information Technology Park Ltd. (Karn) . . . 460
S. 32 --Depreciation--Enhanced depreciation--Notification confining benefit of enhanced depreciation for year 2009-10 to only such commercial vehicles as have been purchased and put to use during period 1-4-2009 to 30-9-2009--Assessee, an advocate, purchasing a car outside the period for accelerated depreciation--Accelerated depreciation conferred taking into account the policy decision of Union Government to stimulate country’s economy--Not discriminatory--Not violative of fundamental rights-- R. Surendran v. Union of India (Ker) . . . 536
----Depreciation--Exercising of option--Returns filed under section 139(1) and exercised option in form prescribed therein--No separate letter or request or intimation with regard to exercise of option required--Option once exercised will continue to subsequent years-- CIT v. Kikani Exports P. Ltd. (No. 2 ) (Mad) . . . 500
S. 32(1) --Depreciation--Higher rate of depreciation--Plant--Neither includes “building†nor includes “roadâ€--â€Road†is a “building†and not a “plantâ€--Toll road is a capital asset and not an implement or a tool used by assessee for his business--Would not qualify as a “plantâ€--Not entitled to a higher rate of depreciation-- Moradabad Toll Road Co. Ltd. v. Asst. CIT (Delhi) . . . 403
S. 34A --Depreciation--Investment allowance--Carry forward and set off--Unabsorbed depreciation against capital gains--Allowable but restricted to two-thirds of such allowance--Matter remanded to Assessing Officer to recompute unabsorbed depreciation-- CIT v. Madras Forging and Allied Industries (CBE) Ltd. (In liquidation) (Mad) . . . 552
S. 50C --Capital gains--Long-term capital gains--Full value of consideration--Distress sale--Specific objection for adopting market value--Authorities instead of referring valuation to District Valuation Officer adopting guideline value relating to property sold--Assessing Officer directed for working out capital gains-- S. Muthuraja v. CIT (Mad) . . . 483
S. 50C(1), (2) --Capital gains--Long-term capital gains--Full value of consideration--Distress sale--Assessee objecting to value adopted by stamp valuation authority--Assessing Officer instead of referring valuation to Valuation Officer estimating capital gains tax confirmed by Tribunal--Specific claim that Assessing Officer should have referred matter to Valuation Officer for valuation of capital asset in terms of section 50C(2)--Mere assertion by assessee suffice for attraction of section 50C(2)--Assessing Officer directed to work out capital gains by adopting market value under section 50C(2)-- Appadurai Vijayaraghavan v. Joint CIT (OSD) (Mad) . . . 486
S. 80HHC --Export--Special deduction under section 80HHC--Computation of turnover for purposes of section 80HHC--Service charges must be included-- CIT v. Nahar Spinning Mills Ltd. (P&H) . . . 467
----Reassessment--Validity--Reassessment based on retrospective amendment of provision--Reassessment accepted by assessee--Subsequently retrospective amendment held invalid in an appeal filed by another assessee--Consequent appeal against reassessment after five years--Reassessment not rendered invalid-- CIT v. Kultar Exports (Delhi) . . . 440
----Rectification of mistakes--Mistake apparent from record--Export--Special deduction--Intimation to assessee--Claim debatable or doubtful--Disallowance part of claim not on basis of settled principles--No notice issued under sub-section (2) of section 143--Rectification pursuant to direction by Commissioner (Appeals)--Appellate authorities right in deleting disallowance-- CIT v. Mekins Agro-Products Ltd. (T & AP) . . . 495
S. 80-IB --Housing projects--Special deduction under section 80-IB(10)--Conditions precedent--Not necessary that developer should own the land-- CIT v. Shital Corporation (Guj) . . . 476
S. 92CA(3) --International transactions--Transfer pricing--Arm’s length price--Assessee issuing equity shares to its non-resident associated enterprises--Income of assessee would not include income on account of adjustment for short receipt of price for issued additional share capital--Transfer pricing provisions not applicable-- Shell India Markets P. Ltd. v. Asst. CIT (LTU) (Bom) . . . 516
----International transactions--Transfer pricing--Arm’s length price--Issue of shares at premium by assessee to its non-resident holding company--Does not give rise to income in an international transaction--Capital receipts arising out of capital account transaction--Transfer pricing provisions not applicable-- Vodafone India Services P. Ltd. v. Union of India (Bom) . . . 511
S. 139 --Rectification of mistakes--Mistake apparent from record--Export--Special deduction--Intimation to assessee--Claim debatable or doubtful--Disallowance part of claim not on basis of settled principles--No notice issued under sub-section (2) of section 143--Rectification pursuant to direction by Commissioner (Appeals)--Appellate authorities right in deleting disallowance-- CIT v. Mekins Agro-Products Ltd. (T & AP) . . . 495
S. 139(1) --Depreciation--Exercising of option--Returns filed under section 139(1) and exercised option in form prescribed therein--No separate letter or request or intimation with regard to exercise of option required--Option once exercised will continue to subsequent years-- CIT v. Kikani Exports P. Ltd. (No. 2 ) (Mad) . . . 500
S. 143 --Assessment--Additional tax--Rectification of mistakes--Appeal--Deletion of disallowance on appeal--Assessing Officer can delete additional tax in rectification proceedings-- CIT v. Redico Khaitan Ltd. (All) . . . 424
S. 147 --Reassessment--Validity--Reassessment based on retrospective amendment of provision--Reassessment accepted by assessee--Subsequently retrospective amendment held invalid in an appeal filed by another assessee--Consequent appeal against reassessment after five years--Reassessment not rendered invalid-- CIT v. Kultar Exports (Delhi) . . . 440
S. 148 --Reassessment--Notice after four years--Condition precedent--Satisfaction of Commissioner or Chief Commissioner--No sanction or permission of Commissioner obtained--Reassessment not valid-- Reliable Finhold Ltd. v. Union of India (All) . . . 419
----Reassessment--Validity--Reassessment based on retrospective amendment of provision--Reassessment accepted by assessee--Subsequently retrospective amendment held invalid in an appeal filed by another assessee--Consequent appeal against reassessment after five years--Reassessment not rendered invalid-- CIT v. Kultar Exports (Delhi) . . . 440
S. 150 --Reassessment--Limitation--Exclusion from limitation--Finding or direction by appellate or revisional authority, etc.--Appellate order that an amount was not assessable in a particular assessment year but was assessable in an earlier year--Order constitutes finding or direction--Consequent order not barred by limitation-- CIT v. PP Engineering Work (Delhi) . . . 433
S. 151(1) --Reassessment--Notice after four years--Condition precedent--Satisfaction of Commissioner or Chief Commissioner--No sanction or permission of Commissioner obtained--Reassessment not valid-- Reliable Finhold Ltd. v. Union of India (All) . . . 419
S. 153 --Reassessment--Limitation--Exclusion from limitation--Finding or direction by appellate or revisional authority, etc.--Appellate order that an amount was not assessable in a particular assessment year but was assessable in an earlier year--Order constitutes finding or direction--Consequent order not barred by limitation-- CIT v. PP Engineering Work (Delhi) . . . 433
S. 154 --Assessment--Additional tax--Rectification of mistakes--Appeal--Deletion of disallowance on appeal--Assessing Officer can delete additional tax in rectification proceedings-- CIT v. Redico Khaitan Ltd. (All) . . . 424
----Rectification of mistakes--Mistake apparent from record--Export--Special deduction--Intimation to assessee--Claim debatable or doubtful--Disallowance part of claim not on basis of settled principles--No notice issued under sub-section (2) of section 143--Rectification pursuant to direction by Commissioner (Appeals)--Appellate authorities right in deleting disallowance-- CIT v. Mekins Agro-Products Ltd. (T & AP) . . . 495
S. 158BD --Search and seizure--Block assessment--Undisclosed income--Assessment of third person--Condition precedent--Recording of satisfaction that undisclosed income belonged to third person--Limitation--Satisfaction must be recorded within two year time period stipulated in section 158BE(1)-- Raghav Bahl v. CIT (Delhi) . . . 447
S. 158BE --Search and seizure--Block assessment--Undisclosed income--Assessment of third person--Condition precedent--Recording of satisfaction that undisclosed income belonged to third person--Limitation--Satisfaction must be recorded within two year time period stipulated in section 158BE(1)-- Raghav Bahl v. CIT (Delhi) . . . 447
S. 194C --Deduction of tax at source--Transmission transaction charges to Gas Authority of India for supplying gas--GAIL not only showing transaction as sale in its relevant records but paying due tax thereon--Contract for supply of gas was for sale of goods and not works contract or contract for rendering technical services--Transaction outside purview of sections 194C and 194J--No liability for tax deduction at source-- CIT (TDS) v. Samtel Glass Ltd. (Raj) . . . 392
S. 194J --Deduction of tax at source--Transmission transaction charges to Gas Authority of India for supplying gas--GAIL not only showing transaction as sale in its relevant records but paying due tax thereon--Contract for supply of gas was for sale of goods and not works contract or contract for rendering technical services--Transaction outside purview of sections 194C and 194J--No liability for tax deduction at source-- CIT (TDS) v. Samtel Glass Ltd. (Raj) . . . 392
S. 250 --Assessment--Additional tax--Rectification of mistakes--Appeal--Deletion of disallowance on appeal--Assessing Officer can delete additional tax in rectification proceedings-- CIT v. Redico Khaitan Ltd. (All) . . . 424
S. 254 --Assessment--Additional tax--Rectification of mistakes--Appeal--Deletion of disallowance on appeal--Assessing Officer can delete additional tax in rectification proceedings-- CIT v. Redico Khaitan Ltd. (All) . . . 424
S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistakes--Failure to deduct tax at source--Amendment allowing benefit where payee has paid tax on receipts effective from 1-4-2013--Tribunal relying on decision of jurisdictional High Court rejecting application for rectification--Assessee to pursue remedy by filing appeal before High Court--Writ petition not maintainable-- Thomas John Muthoot v. Asst. CIT (Ker) . . . 525
S. 260A --Appeal to Appellate Tribunal--Rectification of mistakes--Failure to deduct tax at source--Amendment allowing benefit where payee has paid tax on receipts effective from 1-4-2013--Tribunal relying on decision of jurisdictional High Court rejecting application for rectification--Assessee to pursue remedy by filing appeal before High Court--Writ petition not maintainable-- Thomas John Muthoot v. Asst. CIT (Ker) . . . 525
S. 2(7) --Interest-tax--Interest on debentures--Notional interest--Not chargeable interest-- CIT v. Golden Investments Ltd. (Mad) . . . 544
R. 5(1A) --Depreciation--Exercising of option--Returns filed under section 139(1) and exercised option in form prescribed therein--No separate letter or request or intimation with regard to exercise of option required--Option once exercised will continue to subsequent years-- CIT v. Kikani Exports P. Ltd. (No. 2 ) (Mad) . . . 500
Appex. I --Depreciation--Higher rate of depreciation--Plant--Neither includes “building†nor includes “roadâ€--â€Road†is a “building†and not a “plantâ€--Toll road is a capital asset and not an implement or a tool used by assessee for his business--Would not qualify as a “plantâ€--Not entitled to a higher rate of depreciation-- Moradabad Toll Road Co. Ltd. v. Asst. CIT (Delhi) . . . 403
Cl. 4(i) --Sikkim--Charge of tax--Application of Act--Extension of Income-tax Act, 1961, to State of Sikkim with effect from 1-4-1990--Effect--Repeal of Sikkim State Tax Manual by necessary implication--Assessments made under Sikkim Tax Manual for assessment years 1997-98 to 2005-06 not valid--State directed to refund amount-- Sikkim Manipal University v. State of Sikkim (Sikkim) . . . 567
CHENNAI, DEC 23, 2014: THE petitioner is a registered manufactures of 'Printed Coffee Cans' and they have been clearing the said cans on payment of applicable central excise duty. During the period from 01.01.2010 to 31.03.2010, the petitioner cleared certain quantity of cans to three 100% Export Oriented Units (EOU) on payment of central excise duty. The petitioner contended that supplies made to EOU is construed as 'Deemed Exports' in terms of Para 8.2(b) of the Foreign Trade Policy and in terms of Para 8.4.2, such supplies to EOU shall be entitled to the benefits listed in paragraphs 8.3(a) to (c) of the Foreign Trade Policy, whichever is applicable. Based on the Foreign Trade Policy, the petitioner claimed refund of terminal excise duty of Central Excise Duty of Rs.12,50,738/-, Rs.2,73,089/- and Rs.29,93,042/- which according to them was paid during the supplies which were made to the three EOUs. The third respondent (JDGFT) rejected the refund claimed by order dated 09.09.2010 on the ground that the supplies made to 100% EOUs are exempted from the payment of terminal excise duty under the CT3 procedures. Aggrieved by the same, the petitioner filed a representation before the second respondent which is a Committee constituted for the purpose of interpretation of the policy guidelines. The said request made by the petitioner came to be disposed of by the second respondent by the impugned order.
Vide the impugned order dated 04.12.2012, Committee held that in terms of Para 6.11(2)( II) of the Foreign Trade Policy, read with CBEC Circular No.851/9/2007 dated 03.05.2007 supply of goods to EOU is exempted for payment of Terminal Excise Duty, hence, the supplier was not required to pay any duty while removing the goods for supplying the same to EOU. Further, it was stated that in terms of Para 6.2(b) of the Foreign Trade Policy, EOU may import goods from DTA unit without payment of duties hence EOU was not required to pay duty. Further, it was stated that refund of CENVAT credit provisions are available under the Excise Rule and CENVAT Rules hence refund of such credit by DGFT does not arise.
After hearing both sides, the High Court held:
It is seen that an identical set of facts, the Division Bench of the Delhi High Court in Kandoi Metal Powders Manufacturing Company Private Limited V. Union of India and others reported in 2014-TIOL-230-HC-DEL-EXIM took a decision in favour of the manufacturer. In fact, in the said case arose out of a decision taken pursuant to the resolution dated 04.12.2012 which is impugned in this writ petition. Therefore, the cause of action in the case before the Delhi High Court was the impugned resolution. Therefore, the decision rendered by the Delhi High Court binds the respondents and the Delhi High Court quoted with the approval in the decision of the Division Bench of the Calcutta High Court in JDGFT V. IFGL Refractories Limited.Thus, following the above referred decision, the Writ Petition is allowed and the impugned order is quashed and the third respondent is directed to process the refund claim in accordance with the 2009 Policy by taking into consideration the petitioner's refund application dated 16.08.2010 and pass appropriate orders in accordance with law, within a period of three months from the date of receipt of a copy of the order.(See 2014-TIOL-2323-HC-MAD-CX)
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