Kapurthala Improvement Trust vs. CIT (ITAT Amritsar)
by editor The impact of the proviso to Section 2(15) being hit by the assessee will be that, to that extent, the assessee will not be eligible for exemption under section 11 of the Act. The mere fact that the assessee is granted registration under section 12 A or 12AA as a charitable institution will have no bearing on this denial of registration. As a corollary to this legal position, the fact that the objects of the assessee may be hit by the proviso to section 2(15) cannot have any bearing on the grant, denial or withdrawal of the registration under section 12AA
Kapurthala Improvement Trust vs. CIT (ITAT Amritsar)
| COURT: | ITAT Amritsar |
| CORAM: | A. D. Jain (JM), Pramod Kumar (AM) |
| SECTION(S): | 11, 12AA, 2(15) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | cancellation of registration, Charitable purpose |
| COUNSEL: | Y. K. Sud |
| DATE: | June 11, 2015 (Date of pronouncement) |
| DATE: | June 15, 2015 (Date of publication) |
| AY: | 2009-10 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 11/ 12AA(3): The Proviso to s. 2(15) has no bearing on the grant or denial of registration. The applicability of the proviso has to be evaluated on a year to year basis and it only affects the grant of exemption u/s 11 | |
(i) The scope of powers of the Commissioner under section 12AA(3) for cancellation of registration already granted is very limited in scope inasmuch as it can only be invoked only when (i) that the activities of the trust are not genuine, and (ii) that the activities of the trust or the institution are not being carried out in accordance with the objects of the trust or the institution. Section 12AA(3) specifically provides that when the CIT "is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution". It is not even the case of the CIT that the activities of the assessee trust are "not genuine" or that the "activities of the assessee are not being carried out in accordance with the objects" of the assessee trust. The case of the CIT rests on the first proviso to Section 2(15) coming into play on the facts of this case but then such a factor cannot warrant or justify the powers under section 12AA(3) being invoked. We, therefore, uphold the grievance of the assessee that the action of the Commissioner, in withdrawing
the registration under section 12AA(3), was well beyond the limited scope of the powers conferred on him by the statute.
the registration under section 12AA(3), was well beyond the limited scope of the powers conferred on him by the statute. (ii) There is, however, a much more fundamental reason for the assessee succeeding in this appeal. In our considered view, the considerations with respect to the first proviso to Section 2(15) coming into the play and, for that reason, the objects of an assessee trust or institution being held to be not covered by the definition of 'charitable purposes', have no role to play in the matters relating to registration of a trust or institution under section 12A or 12AA- whether in respect of granting or declining of a registration or in respect of cancellation, even if otherwise permissible, of a registration. A closer look at the scheme of the Act would unambiguously show this aspect of the matter;
(iii) The definition of 'chartable purposes' is that the rider set out therein, under first proviso to Section 2(15), can only come into play on year to year basis and not in absolute terms. The same activity can be hit by this rider in one year and thus the assessee trust or institution may not qualify to be existing for 'charitable purposes', and that very activity of the assessee trust or institution may remain unaffected by the same disabling provision for another year. The reason is that it is not only the nature of the activity but also the level of activity which, taken together, determine whether this disabling clause can come into play. The safeguard against the objects of the trust being vitiated insofar as their character of 'charitable activities' is concerned, is inbuilt in the provisions of Section 13(8) which was brought into effect with effect from the same point of time when proviso to Section 2(15) was introduced – i.e. with effect from 1st April 2009;
(iv) The impact of the proviso to Section 2(15) being hit by the assessee will be that, to that extent, the assessee will not be eligible for exemption under section 11 of the Act. The mere fact that the assessee is granted registration under section 12 A or 12AA as a charitable institution will have no bearing on this denial of registration. As a corollary to this legal position, the fact that the objects of the assessee may be hit by the proviso to section 2(15) cannot have any bearing on the grant, denial or withdrawal of the registration under section 12AA;
(v) The scheme of the Act is clear. The status of registration under section 12A or 12AA has no bearing, as recognized in Section 13(8), on the availability of exemption under section 11. To the extent income of the assessee arises from the activities hit by the first proviso to Section 2(15) in any assessment year, the assessee will be disentitled for exemption under section 11 to that extent. It is also important to bear in mind the fact that the disentitlement for exemption under section 11, as a result of the activities of an assessee being held to be not for charitable purposes under section 2(15) read with provisos thereto, is in respect of entire income of the assessee trust or institution but only for the assessment year in respect of which the first proviso to Section 2(15) is triggered.
(vi) If the status of registration is to be declined to an assessee only on the ground that some of the objects may be hit by the first proviso to Section 2(15) but the assessee's receipts from such activities do not exceed specified threshold in a particular assessment year, the assessee will be subjected to undue hardship in the sense that while the assessee will be disentitled to exemption under section 11 due to denial of registration under section 12 A or 12AA which is sine qua non for admissibility of exemption under section 11. On the other hand, if the status of registration is granted to the assessee even when some of the objects may be hit by the first proviso to Section 2(15) and the assessee's receipts from such activities do exceed specified threshold, no prejudice will be caused to the legitimate interests of the revenue because, notwithstanding the status of registration and by the virtue of section 13(8), the assessee will not be eligible for exemption under section 11 in respect of such income. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quam pereat, i.e., to make it workable rather than redundant.
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Jalandhar Improvement Trust vs. ITO (ITAT Amritsar)
by editorIt is only when payments are made "in pursuance of a contract" that the provisions of section 194C come into play. The contract may be oral or written, express or implied but there must be a contract nevertheless. In the present case, the payment is on account of legal obligation under section 24(1) of the Punjab Water Supply and Sewerage Board Act 1976. Accordingly, the provisions of section 194C did not come into play
Jalandhar Improvement Trust V ITO (ITAT Amritsar)
| COURT: | ITAT Amritsar |
| CORAM: | A. D. Jain (JM), Pramod Kumar (AM) |
| SECTION(S): | 194C |
| GENRE: | Domestic Tax |
| CATCH WORDS: | TDS deduction |
| COUNSEL: | Ashwani Gupta |
| DATE: | June 10, 2015 (Date of pronouncement) |
| DATE: | June 15, 2015 (Date of publication) |
| AY: | 2007-08 to 2010-11 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 194C: Only payments "in pursuance of a contract" are subject to TDS. Payments made under a legal obligation are not covered | |
The appellant has made payments to Punjab Water Supply and Sewerage Board for execution of work relating to sewerage pipe lines and for treatment of polluted water of the city. However, such payments are out of legal obligations rather than contractual arrangements. It is only when payments are made "in pursuance of a contract" that the provisions of section 194C come into play. The contract may be oral or written, express or implied but there must be a contract nevertheless. In the present case, the payment is on account of legal obligation under section 24(1) of the Punjab Water Supply and Sewerage Board Act 1976. Accordingly, the provisions of section 194C did not come into play on the facts of this case. Therefore, the impugned demands under section 201(1) and 201(1A) r.w.s. 194C are wholly devoid of any legally sustainable merits.
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Interesting Case:
Where VAT has been collected without authority of law and Service tax demand also has been raised for the same period then the VAT Assessing Authority is liable to transfer amount of VAT to Service Tax Department
Idea Cellular Limited (the Petitioner) is engaged in the business of cellular services and as a part of its business activated SIM cards. The Assessing Authority collected VAT on the premise that activation of SIM cards was a sale.
The Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India [(2006) 3 STT 245] held that activation of SIM card was a service and not a sale. Accordingly, the Service Tax Department raised demand of Service tax for the period, VAT was already been paid. Thus, the Petitioner approached the Haryana VAT Department for refund of the amount of VAT.
The Hon'ble High Court of Punjab and Haryana held as follows:
· In terms of the Article 265 of the Constitution where the levy and collection of tax is without authority of law, the State does not have right to receive or retain taxes or monies realised from the Assessee without authority of law;
· The Service Tax Department has raised a demand for Service tax for the period for which the State of Haryana has levied and collected VAT. In order to avoid double taxation, Haryana Vat Department was directed to forward the amount of VAT collected on activation of SIM cards to the Service Tax Department.
PFA
Case Law: Pepsi Foods Pvt. Ltd vs. ACIT (Delhi High Court)
S. 254(2A): The Third Proviso which restricts the power of the ITAT to grant stay beyond 365 days "even if the delay in disposing of the appeal is not attributable to the assessee" is arbitrary, unreasonable and discriminatory. It is struck down as violative of Article 14. The ITAT has the power to extend stay even beyond 365 days
While it could be argued that the condition that the stay order could be extended beyond a period of 180 days only if the delay in disposing of the appeal was not attributable to the assessee was a reasonable condition on the power of the Tribunal to the grant an order of stay, it can, by no stretch of imagination, be argued that where the assessee is not responsible for the delay in the disposal of the appeal, yet the Tribunal has no power to extend the stay beyond the period of 365 days. The intention of the legislature, which has been made explicit by insertion of the words – 'even if the delay in disposing of the appeal is not attributable to the assessee'– renders the right of appeal granted to the assessee by the statute to be illusory for no fault on the part of the assessee. The stay, which was available to him prior to the 365 days having passed, is snatched away simply because the Tribunal has, for whatever reason, not attributable to the assessee, been unable to dispose of the appeal
Case Law: Pepsi Foods Pvt. Ltd vs. ACIT (Delhi High Court)
by Santosh Kumar AgarwalS. 254(2A): The Third Proviso which restricts the power of the ITAT to grant stay beyond 365 days "even if the delay in disposing of the appeal is not attributable to the assessee" is arbitrary, unreasonable and discriminatory. It is struck down as violative of Article 14. The ITAT has the power to extend stay even beyond 365 days
While it could be argued that the condition that the stay order could be extended beyond a period of 180 days only if the delay in disposing of the appeal was not attributable to the assessee was a reasonable condition on the power of the Tribunal to the grant an order of stay, it can, by no stretch of imagination, be argued that where the assessee is not responsible for the delay in the disposal of the appeal, yet the Tribunal has no power to extend the stay beyond the period of 365 days. The intention of the legislature, which has been made explicit by insertion of the words – 'even if the delay in disposing of the appeal is not attributable to the assessee'– renders the right of appeal granted to the assessee by the statute to be illusory for no fault on the part of the assessee. The stay, which was available to him prior to the 365 days having passed, is snatched away simply because the Tribunal has, for whatever reason, not attributable to the assessee, been unable to dispose of the appeal Read more of this post
FIPB defers Kotak bank's FII proposal; SEBI's clarification on ESOP deals soon
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CCI rejects Chennai based law firm, Surana and Surana's 'abuse of dominance' complaint against Dell India, alleging denial of market access to it and distributors / partners of Dell; Informant alleged that Dell prohibited its distributors/ partners to furnish price quotation for the product "x86 server" after one of its distributors had quoted the price; CCI delineated the relevant market as "market of x86 server in India", observing that x86 server was different from other servers, used for more efficient work with low power consumption, thus, could not be substituted with other servers; Refers to report of International Data Centre, notes that Dell's market share was 23% (in 2014) whereas, the market share of HP, Dell's nearest competitor was 37% in India, thus holds that Dell was not in dominant position in India; Also notes that,"other big players such as IBM, Lenovo, etc. are also operating in the relevant market indicating presence of competitive constraints for OP in the relevant market"; Further rejects anti competitive conduct allegation, observes that even though Dell and its distributors were vertically placed, the "conduct does not give rise to appreciable adverse effect on competition (AAEC) in the relevant market, considering the fact that "x86 server"of other companies are available in the market. The end consumers have option to get quote from the distributors of other companies who are manufacturing x86 server":CCI
The order was passed by Shri. Ashok Chawla (Chairperson), Shri. S. L. Bunker, Shri. Augustine Peter, Shri. Sudhir Mital, Shri. U. C. Nahta and Shri. M. S. Sahoo (Members).
Advocates Kalyan Jhabakh and Asha Treesa Joseph argued on behalf of the Informant.
Upholds bank management's decision to defer share transfer; RBI's approval a pre-requisite
CLB dismisses petition for transfer of 1073 shares held by petitioner (pvt ltd co) in private banking co, Tamilnadu Mercantile Bank Pvt Ltd ('respondent co'), holds that such transfer registration required prior approval of RBI; Accepts respondent co's submission that since petitioner was group / related entity with Shri B. Sivanthi Adithan and Shri B. Ramachandran Adithan (other investors), who already had invested in respondent co., thereby holding shares in excess of 10% of paid up share capital of respondent bank, which required RBI approval; Rejects petitioner's contention that relating it with other investors to form a 'group concern' was 'farce', 'deliberate with ulterior motive', only to invoke RBI guidelines and defer share transfer registration process; Observes that petitioner co had several investments in which the other investors were directors, thus, they were related / group concerns;Holds that thus, "reasoning given by the respondent…is a valid reason and cannot be treated as refusal", states that "respondent intends to comply with the statutory requirement of law to which the petitioner has to cooperate in complying…rather than approaching this Bench" :Chennai CLB
The Order was passed by Shri Kanthi Narahari, Judicial Member, CLB.
Advocate G.B. Sabari Das argued on behalf of Petitioner while respondent was represented by Advocate R. Shankaranarayanan.
LSI Note:
RBI by virtue of guideline issued on Feb.3, 2004 made it mandatory that any acquisition of shares of 5% and above of paid up capital of a private sector bank requires acknowledgement. RBI stated that no single entity or group of related entities should control directly/ indirectly by holding shares in excess of 10% of paid up share capital of the bank. It required banks to refer all cases of transfer of shares when it exceeds 5% to RBI.
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