S. 254(2): Pendency of an appeal filed in the High Court u/s 260A bars the hearing of a MA filed u/s 254(2) even if the appeal is not admitted
The assessee has moved an instant Miscellaneous Application (MA) against the order of the !TAT. At the time of hearing, the AR for the assessee-appellant informed that the assessee has filed an appeal u/s 260A before the Hon'ble Bombay High Court, but is yet to be admitted. Since the appeal has been filed before the Hon'ble Bombay High Court, the judicial propriety does not allow the assessee to seek efficacious remedy simultaneously before two authorities and in particular where the issue is seized by a higher judicial forum, even if pending admission. On this ground, the instant MA is rejected S. 201/ 201(iA): The payer is not liable for TDS default if the Dept does not that the tax could not be recovered from the recipient
The assessee, a bank, was held liable u/s 201(1) and 201(1A) r.w.s. 194 A for failure to withholding TDS on interest paid by it to customers on deposits placed by them with the assessee. The assessee claimed that it could not be treated as an assessee-in-default as no steps had been taken to determine whether the recipients of the interest had paid tax thereon. HELD by the Tribunal allowing the appeal
Jurisdictional defect of framing assessment on non-existent entity couldn't be cured by resorting to sec. 292B
December 30, 2014[2014] 52 taxmann.com 356 (Delhi)
IT: Assessment on dissolved/amalgamated company is invalid
NEW DELHI, DEC 30, 2014: THE issue before the Bench is - Whether "amalgamation" as a term can include transfer of one or more undertakings to another company without actually blending existing companies into the amalgamated company. And the answer is YES.
Facts of the case
The assessee company is engaged in the business of manufacturing of textiles. Upon verification of its return, the assessee had claimed and was granted benefit of investment allowance or carried forward of investment allowance u/s 32A. Subsequently, it was noticed by the AO that under a scheme of arrangement u/s 391 and 394 of Companies Act, nine out of thirteen industrial units held by assessee were transferred to three newly formed companies, namely, M/s DCM Shriram Industries Ltd., M/s DCM Shriram Consolidated Ltd., and M/s DCM Shriram Industrial Enterprises Ltd. Accordingly, relying upon section 32A(5) and treating transfer of assets and liabilities, including plant and machinery as "sale or otherwise transfer", the AO passed an order u/s 32A(5) r/w/s 155(4A) and 154 withdrawing benefit of investment allowance or carried forward of investment allowance. On appeal, the CIT(A) confirmed the order of AO. On further appeal, the Tribunal reversed the order of CIT(A) by holding that scheme of arrangement did not result in 'transfer' u/s 35A(5).
Having heard the parties, the High Court held that,
++ the word "transfer" and its purport was examined by the Supreme Court in the case of CIT vs. Narang Dairy Products, wherein it was observed that 'even assuming that a transaction of 'transfer of possession and enjoyment of machinery or plant to a third person by way of lease' may not be a "transfer" as defined u/s 2(47), the definition section is an inclusive one and does not exclude the contextual or the ordinary meaning of the word, "transfer". Whether amalgamation results or constitutes transfer of assets was examined in detail by this Court in case of CIT vs. Mira Exim Ltd., wherein it was held that the term "merger or amalgamation" has no precise legal meaning but it involves blending of two or more existing undertaking into one. In case of merger, there is complete blending of the merged undertaking into the other company, but this does result in the transfer of the assets from the merged undertaking. Assets are acquired by the other undertaking. Upon merger, the earlier concern or undertaking loses its identity and the ownership in the asset. In these circumstances, the submission of the assessee that the scheme of arrangement or reconstruction in the present case did not result in transfer of the nine units of assessee to the three newly formed companies, cannot be accepted. The said three companies were in fact separate juristic entities in law. The expression "otherwise transfer" cannot be given a narrow meaning to exclude all transfers as a result of merger and amalgamation. No doubt that Section 32A(5) is a negative provision, which may be penal, but when the legislative intention and requirement is clear in the form of sub-section (6), it would be difficult to ignore the legislative mandate and hold that amalgamation or merger would not result and constitute transfer within the expression "otherwise transfer" used u/s 32A(5);
++ the expression 'amalgamation' does mean amalgamation of two or more companies which are merged into one. It has the effect of an arrangement by which one of the companies involved absorbs the business, all assets and liabilities of another with the latter being dissolved or in alternative two or more companies being absorbed into one company, formed for that purpose. Therefore, the term 'amalgamation' contemplates a state of things under which two companies are joined so as to form a third entity or one company is absorbed or blended with the other company. Amalgamating company, thereupon, loses its entity and ceases to exist. But there are instances or arrangements under which there is transfer of one or more undertakings to a new company or to another existing company. In these cases, the amalgamating company continues to exist and is not dissolved as it does not get fully merged. Such schemes are treated as scheme of reconstruction or reorganization or scheme of arrangement. The term 'amalgamation' as such is broad to include the said schemes. The term 'amalgamation', it has been observed, should not be given any definite legal meaning. Section 391 r/w/s 394 state that a scheme may take a form of 'arrangement' or 'reconstruction'. Thus, amalgamation as a term can include transfer of one or more undertakings to another company without really blending of one or more existing companies into the amalgamated company. All assets of the amalgamating company need not be transferred to the new company. The purpose and objective behind Section 32A(6) is to facilitate reconstruction and amalgamation and not to obstruct genuine transactions of such nature. The emphasis u/s 32A(6) is not upon the blending or merger of the existing company, which has availed of benefit u/s 32A into another or new company;
++ the case set up by the Revenue is that in case assessee had ceased to exist and had merged, conditions mentioned u/s 2(1B) would be satisfied. In other words, in case the scheme of arrangement had postulated creation of a fourth company to which four units which continued to remain with the assessee had been transferred, requirement of Section 2(1B) would have been satisfied. Thus, it is a matter of not selecting a correct taxable event, possibly due to inability and lack of foresight in comprehending the objection that could be raised. This would not be in consonance with the object, aim and purpose behind Section 32A(6). The submission of the Revenue that the assessee was not covered by Section 2(1B), should not be accepted because it does not promote the object, aim and purpose behind Section 32A and the restriction or the bar created in sub-section (5) and the exception which has been carved out in sub-section (6). The object and purpose of the provision as is discernible is to promote and encourage industrialization. The restriction of the sale or transfer is to ensure that an assessee who avails of investment allowance does not sell or otherwise transfer the plant and equipment after obtaining tax benefit as it would be contrary to the intention and the purpose behind the enactment of the Section. The legislature also intended that the amalgamated company must be bound by the terms and conditions, which were applicable to the amalgamating company even when there was transfer or sale of the relevant asset;
++ while interpreting Section 32A(6), it is to be kept in mind that the provision is broad enough and would include any scheme of merger provided the legislative stipulations in sub-section (6) are met. It is not necessary and required u/s 32A(6) that the amalgamating company should have been dissolved or fully merged. Thus, the assessee should be able to show and establish that the liabilities associated with the plant or machinery were transferred to the amalgamated company by virtue of amalgamation as also the condition that the shareholders not holding less than nine-tenth in value of the shares was satisfied. Similarly, the stipulations of sub-section (6) to Section 32A must be met and satisfied. As these aspects have not been examined, the matter requires to be remitted back to the Tribunal for proper examination. Accordingly, the assessee would be entitled to protection u/s 32A(6) if the conditions specified therein as well as Section 2(1B)(ii) & (iii) are satisfied. Therefore, the matter is remanded back to the Tribunal.
Sec. 80-IA relief granted as AO failed to show that assessee was shifting excessive profits to eligible units
December 29, 2014[2014] 52 taxmann.com 357 (Allahabad)
IT : Where assessee-company had maintained separate amounts for each unit and Assessing Officer could not prove that business transaction between its eligible unit and other unit were producing more profit to eligible unit assessee would be entitled for deduction under section 80-IA
IT : Interest received from trade debtor would be deductible under section 80-IA
Exp. incurred on development of website was allowable as business exp. even if there was no receipt during the year
December 30, 2014[2014] 51 taxmann.com 302 (Delhi - Trib.)/[2014] 33 ITR(T) 265 (Delhi - Trib.)/[2014] 151 ITD 722 (Delhi - Trib.)
IT : Even if there was no receipt during year, expenditure incurred on development of web and portal charges is to be allowed
IT : Even if there was no receipt during year, on expenditure incurred on development of web and portal charges assessee was entitled to depreciation
Sec. 154 had be invoked when AO had wrongly mentioned agriculture income under the head exp.
December 29, 2014[2014] 52 taxmann.com 142 (Jodhpur - Trib.)/[2014] 164 TTJ 4 (Jodhpur - Trib.)(UO)
IT : Where Assessing officer erroneously mentioned agricultural income under head expenses debited in profit and loss account against exempt income and assessee filed application for rectification, matter was to be remanded back to decide issue afresh
Direct Tax Basket
TRANSFER
Order No 233 of 2014
CBDT issues transfer order of Principal CCITs / CCITs; Santosh Kumar Srivastava is New Principal DGIT (Admin) in Delhi + Pradeep Sethi goes to Chandigarh as DGIT (Inv)
CASE LAWS
2014-TIOL-2402- HC-MUM-IT
CIT Vs Ms Bina Indrakumar
Income Tax - Section 263.
Keywords: change of opinion - occupation certificate - rectification agreement - stamp duty - additional consideration.
Whether an agreement for sale confers title in the immoveable property - Whether when the agreement for sale together with the Rectification Deed were taken as a document conveying immoveable property, the stamp authority under the Bombay Stamp Act, 1958 levy assess and recover stamp duty - Whether the date of transfer of a property starts from the date of issue of a certificate styled as 'occupation certificate&# 39; assigned by the local municipality. - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2014-TIOL-2401- HC-MUM-IT
CIT Vs Darbhanga Mansion CHS Ltd
Income Tax - Keywords - principle of mutuality - co-operative movement - transfer fees.
Whether a sum received by Co-operative Housing Society on account of transfer of flat and garage can be taxed as transfer fees - Whether the principle of mutuality would apply although such receipt may have been occasioned by the transfer - Whether any receipt beyond Rs 25,000 shall be considered as income and brought to tax, once the bye laws of the society prohibited receipt of transfer fees Rs.25,000 - Whether it would be a correct presumption that such a Co-operative Housing Society makes profit, merely because it receives something beyond the amount of Rs.25,000/-. - Revenue' s appeal dismissed : BOMBAY HIGH COURT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2014-TIOL-2630- CESTAT-MAD
CCE Vs Cuddalore Kalamandir Women Worker's Multi Purpose Co-Op Cottage
Central Excise - Classification - appellant firm engaged in the manufacture of Herbal Shikakai Powder under the name of "Ragaa" and classified it under sub-heading 3003.39 as "other medicaments" - Revenue viewed that Herbal Shikakai Powder is a preparation for use on the hair and would be classifiable under Chapter Heading 3305.99 as per Note 2 to Chapter 33 read with Chapter Note 1 (d) to Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985 attracting duty - Demands adjudicated, Commissioner (Appeals) upheld classification but set aside a portion of the demand on limitation; agitated by the firm and revenue on corresponding portions of the OIA.- Appeals disposed of : CHENNAI CESTAT
CUSTOMS SECTION
2014-TIOL-2631- CESTAT-BANG + Story
SDV International Logistics Ltd Vs CC & ST
Cus - CHA Licence - Export of Red Sanders - Prosecution of an employee would not result in closing down of the appellants business but non-renewal of the licence does - prima facie no evidence found to show the involvement of the appellants in loading/stuffing of red sanders - order of non-renewal set aside but not the proceedings for non-renewal: CESTAT [para 5 to 12] - Appeal allowed : BANGALORE CESTAT
TRANSFER
Order No 233 of 2014
CBDT issues transfer order of Principal CCITs / CCITs; Santosh Kumar Srivastava is New Principal DGIT (Admin) in Delhi + Pradeep Sethi goes to Chandigarh as DGIT (Inv)
CASE LAWS
2014-TIOL-2402- HC-MUM-IT
CIT Vs Ms Bina Indrakumar
Income Tax - Section 263.
Keywords: change of opinion - occupation certificate - rectification agreement - stamp duty - additional consideration.
Whether an agreement for sale confers title in the immoveable property - Whether when the agreement for sale together with the Rectification Deed were taken as a document conveying immoveable property, the stamp authority under the Bombay Stamp Act, 1958 levy assess and recover stamp duty - Whether the date of transfer of a property starts from the date of issue of a certificate styled as 'occupation certificate&# 39; assigned by the local municipality. - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2014-TIOL-2401- HC-MUM-IT
CIT Vs Darbhanga Mansion CHS Ltd
Income Tax - Keywords - principle of mutuality - co-operative movement - transfer fees.
Whether a sum received by Co-operative Housing Society on account of transfer of flat and garage can be taxed as transfer fees - Whether the principle of mutuality would apply although such receipt may have been occasioned by the transfer - Whether any receipt beyond Rs 25,000 shall be considered as income and brought to tax, once the bye laws of the society prohibited receipt of transfer fees Rs.25,000 - Whether it would be a correct presumption that such a Co-operative Housing Society makes profit, merely because it receives something beyond the amount of Rs.25,000/-. - Revenue' s appeal dismissed : BOMBAY HIGH COURT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2014-TIOL-2630- CESTAT-MAD
CCE Vs Cuddalore Kalamandir Women Worker's Multi Purpose Co-Op Cottage
Central Excise - Classification - appellant firm engaged in the manufacture of Herbal Shikakai Powder under the name of "Ragaa" and classified it under sub-heading 3003.39 as "other medicaments" - Revenue viewed that Herbal Shikakai Powder is a preparation for use on the hair and would be classifiable under Chapter Heading 3305.99 as per Note 2 to Chapter 33 read with Chapter Note 1 (d) to Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985 attracting duty - Demands adjudicated, Commissioner (Appeals) upheld classification but set aside a portion of the demand on limitation; agitated by the firm and revenue on corresponding portions of the OIA.- Appeals disposed of : CHENNAI CESTAT
CUSTOMS SECTION
2014-TIOL-2631- CESTAT-BANG + Story
SDV International Logistics Ltd Vs CC & ST
Cus - CHA Licence - Export of Red Sanders - Prosecution of an employee would not result in closing down of the appellants business but non-renewal of the licence does - prima facie no evidence found to show the involvement of the appellants in loading/stuffing of red sanders - order of non-renewal set aside but not the proceedings for non-renewal: CESTAT [para 5 to 12] - Appeal allowed : BANGALORE CESTAT
Commission paid to NR agent for procuring orders from foreign buyers wasn't 'FTS'; not liable to TDS
December 30, 2014[2014] 52 taxmann.com 382 (Lucknow - Trib.)
IT/ILT : Where services were rendered to assessee by non-resident agent to procure orders from foreign buyers which were not managerial in nature, provisions of section 9(1)(vii) were not applicable to assessee
Grant of interest-free loan to trust having similar objects would be prescribed mode of investment under sec. 11(5)
December 30, 2014[2014] 51 taxmann.com 248 (Chennai - Trib.)/[2014] 30 ITR(T) 264 (Chennai - Trib.)
IT-I : Advancement of interest free loan by a charitable institution to other having similar objects is not in violation of provisions of section 13(1)(d)
IT-II : Voluntary contribution made with a specific direction that it shall form part of corpus of trust cannot be treated as income of trust even if purpose for which such donation is given has not been specified
IT-III : While working out application of income as prescribed in relation to purposes/objectives of a trust in terms of section 11(1)(a) in computation of taxable income, no disallowance of depreciation could be made
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