SARFAESI : Appellate Tribunal under SARFAESI Act has power to condone delay in filing an appeal before it by virtue of section 18(2) of SARFAESI Act and proviso to section 20(3) of RDB Act
[2015] 61 taxmann.com 104 (SC)
SUPREME COURT OF INDIA
Baleshwar Dayal Jaiswal
v.
Bank of India
[2015] 61 taxmann.com 104 (SC)
SUPREME COURT OF INDIA
Baleshwar Dayal Jaiswal
v.
Bank of India
T : The provision of roaming services do not require any human intervention and accordingly, cannot be construed as technical services. Thus, payment of roaming charges by telephone operator does not fall under the ambit of TDS provisions under section 194J.
IT : In the absence of human intervention, the roaming facility does not fall under the definition of 'work' as defined in section 194C and, hence, the provisions of section 194C are not applicable on payment of roaming charges by telephone operator.
IT : The assessee cannot be said to have used the equipment which is involved in providing the roaming facility. The assessee collects the roaming charges from its subscriber and passes it on to the other service provider. Thus, such payment made by telephone operator does not fall under the ambit of TDS provisions under section 194-I.
€ ¢â' ¢ The disputed issue was:
Whether sum paid by telecom operator towards roaming facility provided by other telecom operators would be liable to TDS either under section 194J or section 194C or section 194-I?
The Tribunal held as under:
A. On applicability of section 194-J
€ ¢â' ¢ Human intervention is required only for installation/ setting up/repairing/ servicing/ maintenance /capacity augmentation of the network. But after completing this process, mere interconnection between the operators while roaming, is done automatically and does not require any human intervention and, accordingly, cannot be construed as technical services.
€ ¢â' ¢ It is common knowledge that when one of the subscribers in the assessee' s circle travels to the jurisdiction of another circle, the call gets connected automatically without any human intervention and it is for this, the roaming charges is paid by the assessee to the Visiting Operator for providing this service. Hence we have no hesitation to hold that the provision of roaming services do not require any human intervention and accordingly we hold that the payment of roaming charges does not fall under the ambit of TDS provisions u/s 194Jof the Act.
B. On applicability of section 194C
€ ¢â' ¢ Provisions of section 194C would become applicable only where some work (works contract) is being carried out and there is some human intervention involved in the carriage of such work. For carrying out any work, manpower is sine qua non and without manpower, it cannot be said that work has been carried out.
€ ¢â' ¢ The word 'work' in section 194C referred to and comprehends only the activities of workman. It is the physical force which has comprehended in the word 'work' . We have already held that the payment of roaming charges does not require any human intervention. Hence, in the absence of human intervention, the services rendered in the context of the impugned issue does not fall under the definition of 'work' as defined in section194C and, hence, the provisions of section 194C are not applicable to the impugned issue.
C. On applicability of Section 194-I
€ ¢â' ¢ For applicability of section 194-I the real test to be considered is whether it is possible to say that it is the assessee who has used the equipment and has paid the roaming charges to the other service provider with whom it has entered into a national roaming agreement. We hold that it is not possible to say so because if at all anyone can be said to have used the equipment it can only be the subscriber of the assessee but not the assessee. If anything the assessee is placed in a position of a mere facilitator between its subscriber and the other service provider, facilitating a roaming call to be made by the subscriber.
€ ¢â' ¢ The assessee cannot be said to have used the equipment which is involved in providing the roaming facility. The assessee collects the roaming charges from its subscriber and passes it on to the other service provider.
€ ¢â' ¢ It is relevant at this juncture to get into the judgment of the apex court in the case of BSNL and Another v. Union of India and Others [2006] 282 ITR 273 (SC). One of the questions which arose for consideration was whether there was any transfer of a right to use any goods by providing access or telephone connection by the telephone service provider to a subscriber. The Supreme Court posed to itself the question whether the electromagnetic waves through which the signals are transmitted can fulfil the criteria for being described as "goods" . It held that the electromagnetic waves cannot be called goods. Thus, the payment of roaming charges by the assessee to other service provider cannot be considered as rent within the meaning of section 194I of the Act.
[2015] 61 taxmann.com 263 (Kolkata - Trib.)
IN THE ITAT KOLKATA BENCH 'B'
Vodafone East Ltd.
v.
Additional Commissioner of Income-tax, Range-7, Kolkata
IT : In the absence of human intervention, the roaming facility does not fall under the definition of 'work' as defined in section 194C and, hence, the provisions of section 194C are not applicable on payment of roaming charges by telephone operator.
IT : The assessee cannot be said to have used the equipment which is involved in providing the roaming facility. The assessee collects the roaming charges from its subscriber and passes it on to the other service provider. Thus, such payment made by telephone operator does not fall under the ambit of TDS provisions under section 194-I.
€ ¢â' ¢ The disputed issue was:
Whether sum paid by telecom operator towards roaming facility provided by other telecom operators would be liable to TDS either under section 194J or section 194C or section 194-I?
The Tribunal held as under:
A. On applicability of section 194-J
€ ¢â' ¢ Human intervention is required only for installation/ setting up/repairing/ servicing/ maintenance /capacity augmentation of the network. But after completing this process, mere interconnection between the operators while roaming, is done automatically and does not require any human intervention and, accordingly, cannot be construed as technical services.
€ ¢â' ¢ It is common knowledge that when one of the subscribers in the assessee' s circle travels to the jurisdiction of another circle, the call gets connected automatically without any human intervention and it is for this, the roaming charges is paid by the assessee to the Visiting Operator for providing this service. Hence we have no hesitation to hold that the provision of roaming services do not require any human intervention and accordingly we hold that the payment of roaming charges does not fall under the ambit of TDS provisions u/s 194Jof the Act.
B. On applicability of section 194C
€ ¢â' ¢ Provisions of section 194C would become applicable only where some work (works contract) is being carried out and there is some human intervention involved in the carriage of such work. For carrying out any work, manpower is sine qua non and without manpower, it cannot be said that work has been carried out.
€ ¢â' ¢ The word 'work' in section 194C referred to and comprehends only the activities of workman. It is the physical force which has comprehended in the word 'work' . We have already held that the payment of roaming charges does not require any human intervention. Hence, in the absence of human intervention, the services rendered in the context of the impugned issue does not fall under the definition of 'work' as defined in section194C and, hence, the provisions of section 194C are not applicable to the impugned issue.
C. On applicability of Section 194-I
€ ¢â' ¢ For applicability of section 194-I the real test to be considered is whether it is possible to say that it is the assessee who has used the equipment and has paid the roaming charges to the other service provider with whom it has entered into a national roaming agreement. We hold that it is not possible to say so because if at all anyone can be said to have used the equipment it can only be the subscriber of the assessee but not the assessee. If anything the assessee is placed in a position of a mere facilitator between its subscriber and the other service provider, facilitating a roaming call to be made by the subscriber.
€ ¢â' ¢ The assessee cannot be said to have used the equipment which is involved in providing the roaming facility. The assessee collects the roaming charges from its subscriber and passes it on to the other service provider.
€ ¢â' ¢ It is relevant at this juncture to get into the judgment of the apex court in the case of BSNL and Another v. Union of India and Others [2006] 282 ITR 273 (SC). One of the questions which arose for consideration was whether there was any transfer of a right to use any goods by providing access or telephone connection by the telephone service provider to a subscriber. The Supreme Court posed to itself the question whether the electromagnetic waves through which the signals are transmitted can fulfil the criteria for being described as "goods" . It held that the electromagnetic waves cannot be called goods. Thus, the payment of roaming charges by the assessee to other service provider cannot be considered as rent within the meaning of section 194I of the Act.
[2015] 61 taxmann.com 263 (Kolkata - Trib.)
IN THE ITAT KOLKATA BENCH 'B'
Vodafone East Ltd.
v.
Additional Commissioner of Income-tax, Range-7, Kolkata
ST - Refund - Legal consultancy services are indispensable for any business to satisfy proper compliance of laws & hence are input services - Design services for getting Coffee mugs printed with logo cannot be input service: CESTAT
NEW DELHI: THE appellants are providing 'Business Auxiliary Service' to their overseas clients and availing Cenvat Credit of Service Tax paid on input services.
They filed a refund claim of Rs.2.45 crores for the period October 2010 to December 2010.
The original authority disallowed the claim of Rs.54.84 lakhs and in appeal the Commissioner( A) allowed a major portion of the same but rejected an amount of Rs.7.53 lakhs.
Against the rejection of this quantum, the appellant is before the CESTAT.
The appellant is not contesting an amount of Rs.4381/- but seeks relief of an amount of Rs.7.49 lakhs only.
This amount, the appellant submits, comprises of the following services which have not been considered as Input services by the lower authorities. The justification offered for claiming these as being Input services and the stand taken by the Bench is as below -
1. Rent-a-cab service - Rs.76,463/- : Allowed
Appellants are a BPO Company and these services are utilized for the purposes of transportation of its employees to and from the workplace and their homes and also for business meetings. Further, that for the safety of lady employees the vehicles are used and plied in the night also. The appellants being a BPO Company the odd working hours and transportation of employees, especially the lady employees is a service necessary and indispensable for the activities in which the Company is engaged. By an amendment in the definition of input services w.e.f. 1.4.2011 the same excludes Rent-a-Cab services. But the department vide Circular No. 943/04/2011- CX dated 29.4.2011 has clarified that the credit on such services shall be available if its' provision had been completed before 1.4.2011 and in their case the period is October 2010 to December 2010. Case laws cited Stanzen Toyotetsu India (P) Ltd 2011-TIOL-866- HC-KAR-ST & KPMG 2013-TIOL-761- CESTAT-DEL.
Held: The appellants being a BPO, where the employees have to work in shifts even during night hours, I cannot agree with the view of the authorities below that the such services have no nexus with the output services provided . The refund on these services is allowed.
2. Courier Service - Rs.6,670/- : Allowed
Refund has been denied for the reason that these were used for dispatch within India where as appellant is engaged in export of services. That therefore these services has no nexus with the output services. The appellants submitted that courier services are used for dispatch of the appellants documents to various offices, units etc. which are necessary for running the day to day business of the appellant. The important documents have to reach the destination in time for which it is not possible to hand deliver them, and that these services are extremely necessary for the business of the appellant.
Held: To carry out the domain activity of exports, the appellants may require to send documents and such other to Offices, units within the country. Merely because the courier service was utilized within the country it cannot be assumed that the services does not have nexus with output services.
3. Management, Maintenance & Repair Service - Rs.37,048/- : Allowed
Refund denied for the reason that such services were used for painting and mica finishing work and that these services do not have nexus with the provision of output service. Case laws cited Lupin Ltd. - 2012-TIOL-2099- CESTAT-MUM, L'Oreal India Pvt. Ltd. 2011-TIOL-95- CESTAT-MUM.
Held: What needs to be seen is whether the said service can be considered to be an activity relating to business rather than testing whether it is used in manufacture or for providing output service. The service in question, according to appellants was received for maintaining its' business premises from where the activities of output service are carried out. Following the ratio laid in the above judgments I find that appellants are entitled to credit.
4. Manpower Recruitment Services- Rs.91,958/- : Allowed
The credit is disallowed on the ground that these services have no nexus with the provision of output services. That the absence of such services would not affect the provision of output service. The appellants contended that the appellant received services from various service providers, who provide support staff and nurses to the appellant on temporary basis. Such services have integral nexus with providing output services. Case laws relied Lupin Ltd. - 2012-TIOL-2099- CESTAT-MUM & Utopia India Pvt. Ltd. - 2011-TIOL-1080- CESTAT-BANG .
Held: € ¢â' '¸Recruitment and quality control' is specifically mentioned as a service in the inclusive part of the definition of input services under activities related to business. The appellant has availed the services of man-power recruitment and supply agency's service for hiring nurses for its' employees and also for hiring administrative and support staff which is required for carrying out its' day to day business activities. Therefore I find that the denial of refund on Manpower Recruitment Service, is unjustified.
5. Security Agency Services - Rs.37,548/- : Allowed
According to appellants being a Call Centre and BPO, their employees have to work and also leave office at odd hours. The security service was used to provide safety to employees. The Commissioner (Appeals) has rejected the claim holding that the invoices show security guard for pickup and drop of employees and has no nexus with output service.
Held: Applying the ratio laid in the judgment Utopia India Pvt. Ltd. - 2011-TIOL-1080- CESTAT-BANG I am of the view that appellants are entitled to credit/refund on these services.
6. Cleaning services of Guest house : Allowed
Guest houses are being maintained for use by employees of the appellants who travel from one place to another for business purposes. Lupin Ltd - 2012-TIOL-2099- CESTAT-MUM & Paper Products - 2012-TIOL-2011- CESTAT- MUM relied upon.
7. Business Support Services - Rs.8240/- : Allowed
Summits were conducted which helped them improve their clientele. That such Summits helps the Company to meet potential clients and promote its' business and gain knowledge.
Held: I cannot differ with the submissions made as such 'summits&# 39; do help the Company to promote and develop its' business. The credit and refund denied on these services in my view, is unjustified. The same is allowed.
8. Legal Consultancy Services - Rs.6,180/- : Allowed
Appellants were denied refund holding that these services have no nexus with the output services. Appellants submitted that the service was utilized for drafting reply and appeal papers. The First appellate authority has held that to file an appeal is not a mandatory requirement under law and, therefore, has no nexus with the output service.
Held: The rejection of claim on the ground that filing of appeal or reply is not mandatory requirement is baseless. Legal consultancy services are indispensable for any business to satisfy proper compliance of legal requirements. Therefore, I hold appellants are eligible for refund of credit on these services.
9. Chartered Accountancy Services : Allowed
Appellants submitted that these services were utilized for compliance of industrial and Labour Laws and also for statutory compliances under Income Tax Act, 1961 and Companies Act, 1956, and for services availed for filing of refund claims.
Held: The definition of 'input services' during the relevant period was very wide so as to include all activities relating to business. I am of the view that appellants are entitled to refund claimed for these services.
10. Renting of immovable property (Rs.52,413/- ) : Denied
The appellants have claimed credit on service tax paid for stay in hotel as renting of hotel/renting of immovable property. The appellants have claimed credit of tax paid by persons for stay in hotels in the guise of the heading 'Renting of Immovable Property' . Therefore the denial of credit/refund on these services, is correct and, therefore, sustained.
11. Design Services - Rs.753/- : Denied
Appellants supplied coffee mugs bearing the logo of the appellant Company and claimed ST credit towards these services naming it as Design services. It is not shown by the appellants as to why these mugs were supplied or the category of persons to whom these mugs were supplied. I fail to understand how these would qualify as input service related directly or indirectly to the output service. The Commissioner (Appeals) has rightly rejected the claim of refund which calls for no interference.
12. Deficiency in invoice - Credit of Rs.1,69,346/ - : Partly allowed
Refund denied on the ground that the invoices did not contain PAN based service tax registration number of the service provider/name and address of consignee is not proper or the address mentioned is not registered with the service tax department.
Held: It is not disputed that tax was paid for the services utilized; so also there is no dispute that the services were utilized in the taxable output services. It has been settled in a catena of decisions that non-mentioning of registration number of the service provider is only a procedural lapse and Credit cannot be denied on account of procedural lapse when substantive entitlement itself is not disputed. Further, the proviso to sub clause (2) of Rule 9 of Cenvat Credit Rules, provide that if documents do not contain full particulars the DC/AC has powers to condone the defects after satisfying whether properly accounted. In view thereof, the rejection of claim for the defects alleged in invoices is incorrect.
Conclusion: Refund claim for Rent-a-Cab Services, Courier Services, Management, Maintenance & Repair Service, Manpower Recruitment Service, Security Services, Cleaning Services, BSS Services (Summit), Legal Consultancy Services, Chartered Accountancy Services, are allowed. The refund claim on improper/defective invoices pertaining to services other than Telecommunication Services and Renting of immovable property are allowed.
In summation, the appeal was partly allowed.
NEW DELHI: THE appellants are providing 'Business Auxiliary Service' to their overseas clients and availing Cenvat Credit of Service Tax paid on input services.
They filed a refund claim of Rs.2.45 crores for the period October 2010 to December 2010.
The original authority disallowed the claim of Rs.54.84 lakhs and in appeal the Commissioner( A) allowed a major portion of the same but rejected an amount of Rs.7.53 lakhs.
Against the rejection of this quantum, the appellant is before the CESTAT.
The appellant is not contesting an amount of Rs.4381/- but seeks relief of an amount of Rs.7.49 lakhs only.
This amount, the appellant submits, comprises of the following services which have not been considered as Input services by the lower authorities. The justification offered for claiming these as being Input services and the stand taken by the Bench is as below -
1. Rent-a-cab service - Rs.76,463/- : Allowed
Appellants are a BPO Company and these services are utilized for the purposes of transportation of its employees to and from the workplace and their homes and also for business meetings. Further, that for the safety of lady employees the vehicles are used and plied in the night also. The appellants being a BPO Company the odd working hours and transportation of employees, especially the lady employees is a service necessary and indispensable for the activities in which the Company is engaged. By an amendment in the definition of input services w.e.f. 1.4.2011 the same excludes Rent-a-Cab services. But the department vide Circular No. 943/04/2011- CX dated 29.4.2011 has clarified that the credit on such services shall be available if its' provision had been completed before 1.4.2011 and in their case the period is October 2010 to December 2010. Case laws cited Stanzen Toyotetsu India (P) Ltd 2011-TIOL-866- HC-KAR-ST & KPMG 2013-TIOL-761- CESTAT-DEL.
Held: The appellants being a BPO, where the employees have to work in shifts even during night hours, I cannot agree with the view of the authorities below that the such services have no nexus with the output services provided . The refund on these services is allowed.
2. Courier Service - Rs.6,670/- : Allowed
Refund has been denied for the reason that these were used for dispatch within India where as appellant is engaged in export of services. That therefore these services has no nexus with the output services. The appellants submitted that courier services are used for dispatch of the appellants documents to various offices, units etc. which are necessary for running the day to day business of the appellant. The important documents have to reach the destination in time for which it is not possible to hand deliver them, and that these services are extremely necessary for the business of the appellant.
Held: To carry out the domain activity of exports, the appellants may require to send documents and such other to Offices, units within the country. Merely because the courier service was utilized within the country it cannot be assumed that the services does not have nexus with output services.
3. Management, Maintenance & Repair Service - Rs.37,048/- : Allowed
Refund denied for the reason that such services were used for painting and mica finishing work and that these services do not have nexus with the provision of output service. Case laws cited Lupin Ltd. - 2012-TIOL-2099- CESTAT-MUM, L'Oreal India Pvt. Ltd. 2011-TIOL-95- CESTAT-MUM.
Held: What needs to be seen is whether the said service can be considered to be an activity relating to business rather than testing whether it is used in manufacture or for providing output service. The service in question, according to appellants was received for maintaining its' business premises from where the activities of output service are carried out. Following the ratio laid in the above judgments I find that appellants are entitled to credit.
4. Manpower Recruitment Services- Rs.91,958/- : Allowed
The credit is disallowed on the ground that these services have no nexus with the provision of output services. That the absence of such services would not affect the provision of output service. The appellants contended that the appellant received services from various service providers, who provide support staff and nurses to the appellant on temporary basis. Such services have integral nexus with providing output services. Case laws relied Lupin Ltd. - 2012-TIOL-2099- CESTAT-MUM & Utopia India Pvt. Ltd. - 2011-TIOL-1080- CESTAT-BANG .
Held: € ¢â' '¸Recruitment and quality control' is specifically mentioned as a service in the inclusive part of the definition of input services under activities related to business. The appellant has availed the services of man-power recruitment and supply agency's service for hiring nurses for its' employees and also for hiring administrative and support staff which is required for carrying out its' day to day business activities. Therefore I find that the denial of refund on Manpower Recruitment Service, is unjustified.
5. Security Agency Services - Rs.37,548/- : Allowed
According to appellants being a Call Centre and BPO, their employees have to work and also leave office at odd hours. The security service was used to provide safety to employees. The Commissioner (Appeals) has rejected the claim holding that the invoices show security guard for pickup and drop of employees and has no nexus with output service.
Held: Applying the ratio laid in the judgment Utopia India Pvt. Ltd. - 2011-TIOL-1080- CESTAT-BANG I am of the view that appellants are entitled to credit/refund on these services.
6. Cleaning services of Guest house : Allowed
Guest houses are being maintained for use by employees of the appellants who travel from one place to another for business purposes. Lupin Ltd - 2012-TIOL-2099- CESTAT-MUM & Paper Products - 2012-TIOL-2011- CESTAT- MUM relied upon.
7. Business Support Services - Rs.8240/- : Allowed
Summits were conducted which helped them improve their clientele. That such Summits helps the Company to meet potential clients and promote its' business and gain knowledge.
Held: I cannot differ with the submissions made as such 'summits&# 39; do help the Company to promote and develop its' business. The credit and refund denied on these services in my view, is unjustified. The same is allowed.
8. Legal Consultancy Services - Rs.6,180/- : Allowed
Appellants were denied refund holding that these services have no nexus with the output services. Appellants submitted that the service was utilized for drafting reply and appeal papers. The First appellate authority has held that to file an appeal is not a mandatory requirement under law and, therefore, has no nexus with the output service.
Held: The rejection of claim on the ground that filing of appeal or reply is not mandatory requirement is baseless. Legal consultancy services are indispensable for any business to satisfy proper compliance of legal requirements. Therefore, I hold appellants are eligible for refund of credit on these services.
9. Chartered Accountancy Services : Allowed
Appellants submitted that these services were utilized for compliance of industrial and Labour Laws and also for statutory compliances under Income Tax Act, 1961 and Companies Act, 1956, and for services availed for filing of refund claims.
Held: The definition of 'input services' during the relevant period was very wide so as to include all activities relating to business. I am of the view that appellants are entitled to refund claimed for these services.
10. Renting of immovable property (Rs.52,413/- ) : Denied
The appellants have claimed credit on service tax paid for stay in hotel as renting of hotel/renting of immovable property. The appellants have claimed credit of tax paid by persons for stay in hotels in the guise of the heading 'Renting of Immovable Property' . Therefore the denial of credit/refund on these services, is correct and, therefore, sustained.
11. Design Services - Rs.753/- : Denied
Appellants supplied coffee mugs bearing the logo of the appellant Company and claimed ST credit towards these services naming it as Design services. It is not shown by the appellants as to why these mugs were supplied or the category of persons to whom these mugs were supplied. I fail to understand how these would qualify as input service related directly or indirectly to the output service. The Commissioner (Appeals) has rightly rejected the claim of refund which calls for no interference.
12. Deficiency in invoice - Credit of Rs.1,69,346/ - : Partly allowed
Refund denied on the ground that the invoices did not contain PAN based service tax registration number of the service provider/name and address of consignee is not proper or the address mentioned is not registered with the service tax department.
Held: It is not disputed that tax was paid for the services utilized; so also there is no dispute that the services were utilized in the taxable output services. It has been settled in a catena of decisions that non-mentioning of registration number of the service provider is only a procedural lapse and Credit cannot be denied on account of procedural lapse when substantive entitlement itself is not disputed. Further, the proviso to sub clause (2) of Rule 9 of Cenvat Credit Rules, provide that if documents do not contain full particulars the DC/AC has powers to condone the defects after satisfying whether properly accounted. In view thereof, the rejection of claim for the defects alleged in invoices is incorrect.
Conclusion: Refund claim for Rent-a-Cab Services, Courier Services, Management, Maintenance & Repair Service, Manpower Recruitment Service, Security Services, Cleaning Services, BSS Services (Summit), Legal Consultancy Services, Chartered Accountancy Services, are allowed. The refund claim on improper/defective invoices pertaining to services other than Telecommunication Services and Renting of immovable property are allowed.
In summation, the appeal was partly allowed.
ST - Real Estate Agency - AA agreed that cost of land cannot be included in gross value, yet he proceeded to confirm ST on entire sum received - balance of convenience is in favour of Appellant - Pre-deposit ordered of 5% of profit earned: HC
NEW DELHI: SAHARA India Commercial Corporation Ltd. (SICCL) was keen to set up residential townships in or around Allahabad and Jodhpur. At each of the locations, SICCL required around 100 to 150 acres of land. SICCL entered into MOUs with M/s. Sahara India (SI) which in turn entered into two separate MOUs for purchase of land in Allahabad and Jodhpur. The MOUs specified the extent of land to be purchased and the rate of land per acre at which SI would purchase land at each of the cities. The Appellant was entitled to difference, if any, of the amount actually paid for purchase of land to the original owners of land and the "agreed rate" between the Appellant and SI. In other words, the Appellant was entitled to the profit/loss on account of purchase and sale of the land.
The DGCEI issued a demand notice dated 22.10.2010 alleging that the appellant had provided taxable € ¢â' '¸Real Estate Agency' Services and, therefore, is liable to service tax.
The Adjudicating authority (AA) in his order 29.11.2013 held that the Appellant had provided taxable 'real estate' services. He, however, agreed with the contention of the Appellant that "the cost/value of land cannot be included in the gross value for levy of service tax". Nevertheless, while proceeding to determine the service tax payable, the original authority stated that in the absence of the Appellant providing the necessary details, the entire sum received by it would be considered as the taxable value for the purpose of computation of service tax. Inasmuch as the taxable value was taken as Rs. 9,62,98,304 and service tax liability, interest and penalty were determined on that basis for the period 1st January 2004 to 31st March 2008.
The CESTAT in its order dated 31.03.2015 directed the appellant to make a pre-deposit of 25% of the tax demanded along with proportionate interest.
Before the High Court against this order, the appellant, inter alia , submitted that the AA having agreed with the Appellant that the entire sum received by the Appellant for purchase of land could not form the basis for computation of the service tax, there was no logic in the AA proceeding to raise a demand of service tax of Rs. 98,22,427 calculated on the taxable value of Rs. 9,62,98,304. Inasmuch as the impugned orderrequiring the Appellant to deposit 25% of the said sum was unreasonable particularly considering that Section 35F of the Act as amended with effect from 6th August 2014 required a maximum pre-deposit of 7.5% of disputed tax.
Without prejudice, the appellant also submitted that even assuming that they had provided taxable service, the tax at 10% could be levied only on the commission/profit earned and not on the entire sum received by it for purchase of the lands. They handed over a calculation sheet which showed that a profit of Rs. 1,62,40,700 was made in respect of purchase of land at Jodhpur.
The counsel for the Revenue had nothing more to add beyond the order of the AA.
The High Court after considering the submissions observed -
++ Appellant has made out a prima facie case on the aspect whether the entire amount received by it pursuant to the MoUs would be considered to be the 'gross&# 39; or 'taxable value' for the purposes of computation of service tax liability. Indeed it appears that the AA agreed with the Appellant that the entire sum received by the Appellant for purchase of land could not form the basis for computation of the service tax. Yet when the AA's order dated 29th November 2013 is examined carefully it shows that the AA has computed the service tax demand as Rs.98,22,427 [service tax Rs.96,29,830/ - plus Education Cess of Rs.1,92,597/ -] calculated @ 10% on the taxable value of Rs. 9,62,98,304. This prima facie appears unsustainable since the total sum shown to have been received by the Appellant under the two MOUs, even as per the SCN, is around Rs. 10.79 crores [4+6.79]. It further appears that the interest and penalty have also been calculated on that basis.
++ It further prima facie appears that the AA overlooked the fact that even as per the SCN no land in Allahabad was purchased although the Appellant received Rs. 4 crores for that purpose. The Appellant' s explanation that it returned the said sum to SICCL in the form of shares of two of its group companies does not appear to have been considered. A further question that would arise is whether the entire profit generated from the purchase of land in Jodhpur can be taken to be value of the taxable services, if any, rendered by the Appellant. Those questions cannot obviously be examined at this stage but will have to await the final determination in the appeal before the CESTAT.
Holding that the Appellant has made out a prima facie case and that the balance of convenience is in their favour, without expressing any opinion on the merits of the case, the Court directed the appellant to make a pre-deposit of 5% of the profit earned of Rs.1,62,40,700/ - i.e Rs.8,12,035/ - on or before 15.10.2015 and upon compliance of the same directed the CESTAT to consider and dispose of the appeal.
NEW DELHI: SAHARA India Commercial Corporation Ltd. (SICCL) was keen to set up residential townships in or around Allahabad and Jodhpur. At each of the locations, SICCL required around 100 to 150 acres of land. SICCL entered into MOUs with M/s. Sahara India (SI) which in turn entered into two separate MOUs for purchase of land in Allahabad and Jodhpur. The MOUs specified the extent of land to be purchased and the rate of land per acre at which SI would purchase land at each of the cities. The Appellant was entitled to difference, if any, of the amount actually paid for purchase of land to the original owners of land and the "agreed rate" between the Appellant and SI. In other words, the Appellant was entitled to the profit/loss on account of purchase and sale of the land.
The DGCEI issued a demand notice dated 22.10.2010 alleging that the appellant had provided taxable € ¢â' '¸Real Estate Agency' Services and, therefore, is liable to service tax.
The Adjudicating authority (AA) in his order 29.11.2013 held that the Appellant had provided taxable 'real estate' services. He, however, agreed with the contention of the Appellant that "the cost/value of land cannot be included in the gross value for levy of service tax". Nevertheless, while proceeding to determine the service tax payable, the original authority stated that in the absence of the Appellant providing the necessary details, the entire sum received by it would be considered as the taxable value for the purpose of computation of service tax. Inasmuch as the taxable value was taken as Rs. 9,62,98,304 and service tax liability, interest and penalty were determined on that basis for the period 1st January 2004 to 31st March 2008.
The CESTAT in its order dated 31.03.2015 directed the appellant to make a pre-deposit of 25% of the tax demanded along with proportionate interest.
Before the High Court against this order, the appellant, inter alia , submitted that the AA having agreed with the Appellant that the entire sum received by the Appellant for purchase of land could not form the basis for computation of the service tax, there was no logic in the AA proceeding to raise a demand of service tax of Rs. 98,22,427 calculated on the taxable value of Rs. 9,62,98,304. Inasmuch as the impugned orderrequiring the Appellant to deposit 25% of the said sum was unreasonable particularly considering that Section 35F of the Act as amended with effect from 6th August 2014 required a maximum pre-deposit of 7.5% of disputed tax.
Without prejudice, the appellant also submitted that even assuming that they had provided taxable service, the tax at 10% could be levied only on the commission/profit earned and not on the entire sum received by it for purchase of the lands. They handed over a calculation sheet which showed that a profit of Rs. 1,62,40,700 was made in respect of purchase of land at Jodhpur.
The counsel for the Revenue had nothing more to add beyond the order of the AA.
The High Court after considering the submissions observed -
++ Appellant has made out a prima facie case on the aspect whether the entire amount received by it pursuant to the MoUs would be considered to be the 'gross&# 39; or 'taxable value' for the purposes of computation of service tax liability. Indeed it appears that the AA agreed with the Appellant that the entire sum received by the Appellant for purchase of land could not form the basis for computation of the service tax. Yet when the AA's order dated 29th November 2013 is examined carefully it shows that the AA has computed the service tax demand as Rs.98,22,427 [service tax Rs.96,29,830/ - plus Education Cess of Rs.1,92,597/ -] calculated @ 10% on the taxable value of Rs. 9,62,98,304. This prima facie appears unsustainable since the total sum shown to have been received by the Appellant under the two MOUs, even as per the SCN, is around Rs. 10.79 crores [4+6.79]. It further appears that the interest and penalty have also been calculated on that basis.
++ It further prima facie appears that the AA overlooked the fact that even as per the SCN no land in Allahabad was purchased although the Appellant received Rs. 4 crores for that purpose. The Appellant' s explanation that it returned the said sum to SICCL in the form of shares of two of its group companies does not appear to have been considered. A further question that would arise is whether the entire profit generated from the purchase of land in Jodhpur can be taken to be value of the taxable services, if any, rendered by the Appellant. Those questions cannot obviously be examined at this stage but will have to await the final determination in the appeal before the CESTAT.
Holding that the Appellant has made out a prima facie case and that the balance of convenience is in their favour, without expressing any opinion on the merits of the case, the Court directed the appellant to make a pre-deposit of 5% of the profit earned of Rs.1,62,40,700/ - i.e Rs.8,12,035/ - on or before 15.10.2015 and upon compliance of the same directed the CESTAT to consider and dispose of the appeal.
I-T - Whether papers found during search can be considered as incriminating material to initiate proceedings u/s 153C even if assessment has attained finality before AO records satisfaction - NO: ITAT Third Member
KOCHI: THE issue before the Bench is - Whether the documents found during the course of search can be considered as incriminating material to initiate proceedings u/s 153C, even if assessment u/s 143(1) had attained finality before satisfaction was recorded by the AO. NO is the verdict.
Facts of the case
The assessee is engaged in the business of manufacture of cartons and sale thereof. Search and seizure operations were carried out in the premises of M/s. Matha Enterprises Ltd. on 13-02-2007. One of the Directors of the assessee company was a partner in M/s. Matha Enterprises. During the course of search, a bunch of loose sheets containing balance sheet, P&L account etc. were found which pertained to the assessee company, M/s. Royal Cartons (P) Ltd.. According to counsel for the assessee, the balance sheet and profit and loss account of the assessee company, i.e., M/s. Royal Cartons (P) Ltd. for the period 01/04/2005 to 31/03/2006 were found which were forwarded to the concerned AO by the search team. Based on the balance sheet and profit and loss account pertaining to AY 2006-07, AO issued notice u/s. 153A r.w.s. 153C. In response to the said notice, assessee filed its return of income declaring loss of Rs.2,65,510/ -, which was originally returned. The assessee filed its return of income for the AY 2005-06 and the same was processed u/s. 143(1) and intimation was forwarded to the assessee. The return was processed after initiating the search proceedings in the case of M/s. Matha Enterprises Ltd. It was well-settled that a return processed u/s. 143(1) can be taken up for scrutiny by issuing notice u/s. 143(2) within a period of 12 months from the date of filing of return of income. In this case, notice u/s. 143(2) could have been issued on or before 31/03/2007. No such notice having been issued, the proceedings u/s. 143(1) attained finality. The jurisdiction of assessee was originally vested with AO, Ward-1, Ernakulam w.e.f. 27/11/2007. It was transferred to Central Circle-I, Ernakulam. Accordingly jurisdiction, to initiate the proceedings u/s. 153C, was conferred on the Deputy Commissioner of Income-tax, Central Circle-I only on 27/11/2007; thereafter seized documents were transferred to Dy.CIT. The balance sheet found during the course of search was for the period 1.4.2005 to 31.03.2006 which was relevant for AY 2006-07. Therefore, according to the assessee, no incriminating material pertaining to previous year 2004-05 was found during the course of search so as to assume jurisdiction u/s. 153C. AO observed that as per the balance sheet, as on 31/03/2005, filed alongwith the return of income by the assessee, unsecured creditors during the year were to the tune of Rs.12,42,000/ - and the assessee did not file confirmation letters of the sundry creditors. Therefore, AO treated the same as unexplained cash credits and completed the assessment u/s. 153C.
On appeal before CIT(A), assessee contended that sufficient opportunity was not given by AO and therefore, the proceedings were not valid either u/s. 153A or 153C. It had also contended that even the additions made by AO had no legs to stand. The CIT(A) considered all the issues but chose to delete the additions on merits. Therefore, the Revenue preferred an appeal before the Tribunal and the assessee, by way of Cross Objections, contended that AO made the additions u/s. 153C without obtaining any incriminating material during the course of search and he erred in making addition merely on the basis of figures available in balance sheet filed alongwith the return. The appeal and the Cross Objections were heard by the Division Bench. The Judicial Member observed that the proceedings were initiated against the assessee, u/s. 153C, by treating the assessee company as a person other than the searched person. In such an event, as per proviso to section 153C, the date on which the books of account, documents etc are forwarded and received by AO having jurisdiction over such other person, shall be the relevant date for consideration as to whether the jurisdiction was invoked properly or not. In other words, that date should be determined as the date of initiation of search. In this case, the seized documents would have been handed over to AO on or after 27/11/2007 by which date assessment proceedings completed on the strength of return filed on 27/03/2006 attained finality. Since assessment proceedings attained finality, by operation of law, the same cannot be re-opened by invoking provisions of section 153C. The Judicial Member extracted the provisions of section 153C to highlight that the said section comes into play only when an assessment had to be made on a person, other than a person searched, subject to fulfilling two conditions, i.e., (1) a finding that money bullion, jewellery or other valuables or books of account or other documents seized belongs to a person other than the searched person (2) the same had to be handed over to the AO having jurisdiction over such person, other than searched person, for proceeding further. Thereafter the concerned AO had to record satisfaction. As per the proviso to section 153C, the date of initiation of search proceedings u/s. 132 was the date of receipt of books of account, etc. by AO having jurisdiction over such other person.
The Judicial Member observed that the proceedings were initiated against the assessee, u/s. 153C , by treating the assessee company as a person other than the searched person. In such an event, as per proviso to section 153C, the date on which the books of account, documents etc are forwarded and received by AO having jurisdiction over such other person, shall be the relevant date for consideration as to whether the jurisdiction was invoked properly or not. In other words, that date should be determined as the date of initiation of search. In this case, the seized documents would have been handed over to AO on or after 27/11/2007 by which date assessment proceedings completed on the strength of return filed on 27/03/2006 attained finality. Since assessment proceedings attained finality, by operation of law, the same cannot be re-opened by invoking provisions of section 153C. As per the proviso to section 153C, the date of initiation of search proceedings u/s. 132 was the date of receipt of books of account, etc. by the AO having jurisdiction over such other person. The Judicial Member has also relied upon the provisions of section 153A and second proviso thereto which provides for procedure for making a block assessment and observed that only such assessments, which are pending on the date of initiation of proceedings u/s. 132, shall not be abated. In other words, if the assessment was completed or terminated by operation of law on the basis of the return of income filed in the regular course, the assessment proceedings shall not be abated. On conjoint reading of section 153A and 153C and the facts of the case, the Judicial Member was of the view that the assessment proceedings for assessment year 2005-06 can be said to have been terminated by operation of law as on 31/03/2007. If the AO seeks to initiate proceedings u/s. 153C, he has to prove that there was some incriminating material for the year under consideration. In fact, balance sheet as on 31/03/2005 clearly shows the position of sundry creditors and hence, it was deemed to have been taken into consideration by the AO at the time of processing of the return. It was also not in dispute that there was no material found during the course of search operations for the AY 2005-06. The AO, in the proceedings u/s. 153C, made addition on the basis of the balance sheet as on 31/03/2005 which was filed alongwith the return of income as on 27/03/2006 itself. In such circumstances, the JM concluded that in the absence of any incriminating material found during the course of search, the AO cannot re-open the assessments completed on the basis of the return filed by the assessee on 27/03/2006 wherein the unsecured creditors of Rs.12,42,000/ - was disclosed. He, accordingly, deleted the addition on the ground of lack of jurisdiction to initiate proceedings u/s. 153C.
The Accountant Member was however of the opinion that the bunch of loose sheets containing balance sheet and profit and loss account reveals the income of the assessee which would be sufficient for the Assessing officer to reopen the assessments u/s. 153C. In his opinion, the documents seized during the course of search in the premises of the assessee, can be treated as incriminating material. The Ld. AM also extracted provisions of section 153A and 153C of the Act and observed that proviso to section 153A mandates Assessing officer to assess or reassess the total income in respect of each assessment year falling within six assessment years. The proviso further mandates that any assessment or re-assessment in respect of any of those six years which are pending shall not abate. In his opinion, a careful perusal of the provisions show that the assessments have to be compulsorily made for all the six years and nowhere it is mentioned that no regular assessment or re-assessment can take place for any particular year if there is no incriminating material found. In this regard, he relied on the decision of the Shyam Lata Kaushik vs. ACIT (114 ITD 305) wherein it was held that there is no requirement for an assessment made u/s. 153A to be based on any material seized in the course of search. Similar view was taken in the case of Shivnath Rai Harnarain (India). He was also of the opinion that the assessments can be reopened by the Assessing officer even if there is no incriminating material found during the course of search. He was also of the opinion that the material found in the course of search is sufficient to initiate proceedings u/s. 153C. Thereafter, the Accountant Member considered the legality of the additions by going through the material placed before the CIT(A). It may be noticed that the Judicial Member having quashed the proceedings, there was no occasion for him to consider the order of the CIT(A) on merits. The Accountant Member noticed that the CIT(A) deleted the addition of Rs. 2 lakh received from Shri Nelson stating that Mr. Nelson had enough resources in the form of agricultural income. The AM was of the opinion that the assessee having produced documents for the first time before the CIT(A), the issue deserves to be remitted back to the file of the Assessing officer. Similar view was taken in respect of other additions.
Having heard the matter, the Tribunal third member held that,
++ we have also gone through the provisions of section 153A which provides for procedure for making block assessment. Second Proviso to section 153A clearly says that the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s 132 shall abate. In other words, if the assessment is completed or terminated by operation of law on the basis of the return of income filed in the regular course, the assessment proceeding shall not be abated. Therefore, in respect of pending assessment proceedings on the date of the search, the assessment shall be made on the basis of the seized material and other material found on record. However, in respect of the assessment proceeding which is not pending on the date of search has to be made only on the basis of the material found during the course of search operation. The completed proceedings on the date of search cannot be reopened by AO. In the case before us, admittedly, the assessee has filed the return of income on 27-03-2006. The period of 12 months for issuing notice u/s 143(2) expires on 31-03-2007. It is also not disputed that the Commissioner of Income-tax by an order dated 27-11- 2007, in exercise of his powers u/s 127(2) transferred the jurisdiction from Ward.1, Ernakulam to DyCIT / ACIT, Central Circle.1, Ernakulam. Therefore, the assessing officer of the assessee, the DyCIT / ACIT Central Circle, Ernakulam might have received the records on or after 27-11-2007 only and certainly not before that. Therefore, the assessment proceedings on the basis of the return of income filed in the regular course on 27-03- 2006 got terminated by operation of law on 31-03-2007. In other words, the assessment proceedings on the basis of the return of income filed on 27-03-2006 is not pending as on 27-11-2007 when the assessing officer is supposed to have received the seized document of the assessee;
++ hence, the income disclosed in the return filed in regular course on 27-03-2006 on the basis of the balance-sheet as on 31-03-2005 cannot be disturbed by the assessing officer unless there is a specific material found during the course of search operation. In this case, it is not in dispute that there is no material found during the course of search operation for the assessment year 2005-06. The assessing officer made the addition only on the basis of the balance-sheet as on 31-03-2005 which was filed by the assessee originally alongwith the return of income filed on 27-03-2006 itself. Therefore, even if the copy of the said document was found on the date of search still, that document cannot be treated as seized material. In other words, the copy of the balance-sheet s on 31-03-2005 is very much available with the revenue authorities along with the return of income filed on 27-03-2006. Therefore, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, the assessing officer cannot reopen the assessment completed on the basis of the return filed by the assessee on 27-03-2006 wherein the unsecured creditors of Rs.12,42,000 was disclosed. Hence, the CIT(A) has rightly deleted the addition. We do not find any infirmity in the order of the CIT(A). The same is upheld. In the result, the cross objection of the assessee stands allowed and the appeal of the revenue stands dismissed;
++ the Accountant Member was of the opinion that any document found can be treated as incriminating material. With due respects, I am of the firm view that such document should reflect something to indicate that in the year under consideration, the assessee has not disclosed income whereas, in the instant case, the assessee has filed its return of income much before the date of search and on the strength of the profit and loss account and the balance sheet filed before the Assessing officer, the return was processed u/s. 143(1) of the Act. In fact, there was clear finding by the CIT(A) in his order, in respect of assessment year 2006- 07, wherein it was stated that there was no incriminating document found during the course of search; the Revenue has not preferred any appeal against the order of the CIT(A). Under these circumstances, it cannot be said that the same document can be treated as incriminating material for the assessment year under consideration. Since Point No. 1 is decided in the negative, i.e. the document found cannot be considered as incriminating document, Question No. 2 does not require adjudication and therefore, need not be answered;
++ Since there was a difference of opinion between the two Members constituting the Division Bench of ITAT, Cochin, the matter was referred to the Third Member by the Hon'ble President u/s. 255(4) of the Act. The Third member has agreed with the view taken by the Judicial Member in respect of both the questions referred above. Accordingly, as per the majority view, the appeal filed by the revenue is dismissed and the Cross Objection filed by the assessee is allowed;
++ in the result, the appeal filed by the revenue stands dismissed and the Cross Objections filed by the assessee is allowed.
KOCHI: THE issue before the Bench is - Whether the documents found during the course of search can be considered as incriminating material to initiate proceedings u/s 153C, even if assessment u/s 143(1) had attained finality before satisfaction was recorded by the AO. NO is the verdict.
Facts of the case
The assessee is engaged in the business of manufacture of cartons and sale thereof. Search and seizure operations were carried out in the premises of M/s. Matha Enterprises Ltd. on 13-02-2007. One of the Directors of the assessee company was a partner in M/s. Matha Enterprises. During the course of search, a bunch of loose sheets containing balance sheet, P&L account etc. were found which pertained to the assessee company, M/s. Royal Cartons (P) Ltd.. According to counsel for the assessee, the balance sheet and profit and loss account of the assessee company, i.e., M/s. Royal Cartons (P) Ltd. for the period 01/04/2005 to 31/03/2006 were found which were forwarded to the concerned AO by the search team. Based on the balance sheet and profit and loss account pertaining to AY 2006-07, AO issued notice u/s. 153A r.w.s. 153C. In response to the said notice, assessee filed its return of income declaring loss of Rs.2,65,510/ -, which was originally returned. The assessee filed its return of income for the AY 2005-06 and the same was processed u/s. 143(1) and intimation was forwarded to the assessee. The return was processed after initiating the search proceedings in the case of M/s. Matha Enterprises Ltd. It was well-settled that a return processed u/s. 143(1) can be taken up for scrutiny by issuing notice u/s. 143(2) within a period of 12 months from the date of filing of return of income. In this case, notice u/s. 143(2) could have been issued on or before 31/03/2007. No such notice having been issued, the proceedings u/s. 143(1) attained finality. The jurisdiction of assessee was originally vested with AO, Ward-1, Ernakulam w.e.f. 27/11/2007. It was transferred to Central Circle-I, Ernakulam. Accordingly jurisdiction, to initiate the proceedings u/s. 153C, was conferred on the Deputy Commissioner of Income-tax, Central Circle-I only on 27/11/2007; thereafter seized documents were transferred to Dy.CIT. The balance sheet found during the course of search was for the period 1.4.2005 to 31.03.2006 which was relevant for AY 2006-07. Therefore, according to the assessee, no incriminating material pertaining to previous year 2004-05 was found during the course of search so as to assume jurisdiction u/s. 153C. AO observed that as per the balance sheet, as on 31/03/2005, filed alongwith the return of income by the assessee, unsecured creditors during the year were to the tune of Rs.12,42,000/ - and the assessee did not file confirmation letters of the sundry creditors. Therefore, AO treated the same as unexplained cash credits and completed the assessment u/s. 153C.
On appeal before CIT(A), assessee contended that sufficient opportunity was not given by AO and therefore, the proceedings were not valid either u/s. 153A or 153C. It had also contended that even the additions made by AO had no legs to stand. The CIT(A) considered all the issues but chose to delete the additions on merits. Therefore, the Revenue preferred an appeal before the Tribunal and the assessee, by way of Cross Objections, contended that AO made the additions u/s. 153C without obtaining any incriminating material during the course of search and he erred in making addition merely on the basis of figures available in balance sheet filed alongwith the return. The appeal and the Cross Objections were heard by the Division Bench. The Judicial Member observed that the proceedings were initiated against the assessee, u/s. 153C, by treating the assessee company as a person other than the searched person. In such an event, as per proviso to section 153C, the date on which the books of account, documents etc are forwarded and received by AO having jurisdiction over such other person, shall be the relevant date for consideration as to whether the jurisdiction was invoked properly or not. In other words, that date should be determined as the date of initiation of search. In this case, the seized documents would have been handed over to AO on or after 27/11/2007 by which date assessment proceedings completed on the strength of return filed on 27/03/2006 attained finality. Since assessment proceedings attained finality, by operation of law, the same cannot be re-opened by invoking provisions of section 153C. The Judicial Member extracted the provisions of section 153C to highlight that the said section comes into play only when an assessment had to be made on a person, other than a person searched, subject to fulfilling two conditions, i.e., (1) a finding that money bullion, jewellery or other valuables or books of account or other documents seized belongs to a person other than the searched person (2) the same had to be handed over to the AO having jurisdiction over such person, other than searched person, for proceeding further. Thereafter the concerned AO had to record satisfaction. As per the proviso to section 153C, the date of initiation of search proceedings u/s. 132 was the date of receipt of books of account, etc. by AO having jurisdiction over such other person.
The Judicial Member observed that the proceedings were initiated against the assessee, u/s. 153C , by treating the assessee company as a person other than the searched person. In such an event, as per proviso to section 153C, the date on which the books of account, documents etc are forwarded and received by AO having jurisdiction over such other person, shall be the relevant date for consideration as to whether the jurisdiction was invoked properly or not. In other words, that date should be determined as the date of initiation of search. In this case, the seized documents would have been handed over to AO on or after 27/11/2007 by which date assessment proceedings completed on the strength of return filed on 27/03/2006 attained finality. Since assessment proceedings attained finality, by operation of law, the same cannot be re-opened by invoking provisions of section 153C. As per the proviso to section 153C, the date of initiation of search proceedings u/s. 132 was the date of receipt of books of account, etc. by the AO having jurisdiction over such other person. The Judicial Member has also relied upon the provisions of section 153A and second proviso thereto which provides for procedure for making a block assessment and observed that only such assessments, which are pending on the date of initiation of proceedings u/s. 132, shall not be abated. In other words, if the assessment was completed or terminated by operation of law on the basis of the return of income filed in the regular course, the assessment proceedings shall not be abated. On conjoint reading of section 153A and 153C and the facts of the case, the Judicial Member was of the view that the assessment proceedings for assessment year 2005-06 can be said to have been terminated by operation of law as on 31/03/2007. If the AO seeks to initiate proceedings u/s. 153C, he has to prove that there was some incriminating material for the year under consideration. In fact, balance sheet as on 31/03/2005 clearly shows the position of sundry creditors and hence, it was deemed to have been taken into consideration by the AO at the time of processing of the return. It was also not in dispute that there was no material found during the course of search operations for the AY 2005-06. The AO, in the proceedings u/s. 153C, made addition on the basis of the balance sheet as on 31/03/2005 which was filed alongwith the return of income as on 27/03/2006 itself. In such circumstances, the JM concluded that in the absence of any incriminating material found during the course of search, the AO cannot re-open the assessments completed on the basis of the return filed by the assessee on 27/03/2006 wherein the unsecured creditors of Rs.12,42,000/ - was disclosed. He, accordingly, deleted the addition on the ground of lack of jurisdiction to initiate proceedings u/s. 153C.
The Accountant Member was however of the opinion that the bunch of loose sheets containing balance sheet and profit and loss account reveals the income of the assessee which would be sufficient for the Assessing officer to reopen the assessments u/s. 153C. In his opinion, the documents seized during the course of search in the premises of the assessee, can be treated as incriminating material. The Ld. AM also extracted provisions of section 153A and 153C of the Act and observed that proviso to section 153A mandates Assessing officer to assess or reassess the total income in respect of each assessment year falling within six assessment years. The proviso further mandates that any assessment or re-assessment in respect of any of those six years which are pending shall not abate. In his opinion, a careful perusal of the provisions show that the assessments have to be compulsorily made for all the six years and nowhere it is mentioned that no regular assessment or re-assessment can take place for any particular year if there is no incriminating material found. In this regard, he relied on the decision of the Shyam Lata Kaushik vs. ACIT (114 ITD 305) wherein it was held that there is no requirement for an assessment made u/s. 153A to be based on any material seized in the course of search. Similar view was taken in the case of Shivnath Rai Harnarain (India). He was also of the opinion that the assessments can be reopened by the Assessing officer even if there is no incriminating material found during the course of search. He was also of the opinion that the material found in the course of search is sufficient to initiate proceedings u/s. 153C. Thereafter, the Accountant Member considered the legality of the additions by going through the material placed before the CIT(A). It may be noticed that the Judicial Member having quashed the proceedings, there was no occasion for him to consider the order of the CIT(A) on merits. The Accountant Member noticed that the CIT(A) deleted the addition of Rs. 2 lakh received from Shri Nelson stating that Mr. Nelson had enough resources in the form of agricultural income. The AM was of the opinion that the assessee having produced documents for the first time before the CIT(A), the issue deserves to be remitted back to the file of the Assessing officer. Similar view was taken in respect of other additions.
Having heard the matter, the Tribunal third member held that,
++ we have also gone through the provisions of section 153A which provides for procedure for making block assessment. Second Proviso to section 153A clearly says that the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s 132 shall abate. In other words, if the assessment is completed or terminated by operation of law on the basis of the return of income filed in the regular course, the assessment proceeding shall not be abated. Therefore, in respect of pending assessment proceedings on the date of the search, the assessment shall be made on the basis of the seized material and other material found on record. However, in respect of the assessment proceeding which is not pending on the date of search has to be made only on the basis of the material found during the course of search operation. The completed proceedings on the date of search cannot be reopened by AO. In the case before us, admittedly, the assessee has filed the return of income on 27-03-2006. The period of 12 months for issuing notice u/s 143(2) expires on 31-03-2007. It is also not disputed that the Commissioner of Income-tax by an order dated 27-11- 2007, in exercise of his powers u/s 127(2) transferred the jurisdiction from Ward.1, Ernakulam to DyCIT / ACIT, Central Circle.1, Ernakulam. Therefore, the assessing officer of the assessee, the DyCIT / ACIT Central Circle, Ernakulam might have received the records on or after 27-11-2007 only and certainly not before that. Therefore, the assessment proceedings on the basis of the return of income filed in the regular course on 27-03- 2006 got terminated by operation of law on 31-03-2007. In other words, the assessment proceedings on the basis of the return of income filed on 27-03-2006 is not pending as on 27-11-2007 when the assessing officer is supposed to have received the seized document of the assessee;
++ hence, the income disclosed in the return filed in regular course on 27-03-2006 on the basis of the balance-sheet as on 31-03-2005 cannot be disturbed by the assessing officer unless there is a specific material found during the course of search operation. In this case, it is not in dispute that there is no material found during the course of search operation for the assessment year 2005-06. The assessing officer made the addition only on the basis of the balance-sheet as on 31-03-2005 which was filed by the assessee originally alongwith the return of income filed on 27-03-2006 itself. Therefore, even if the copy of the said document was found on the date of search still, that document cannot be treated as seized material. In other words, the copy of the balance-sheet s on 31-03-2005 is very much available with the revenue authorities along with the return of income filed on 27-03-2006. Therefore, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, the assessing officer cannot reopen the assessment completed on the basis of the return filed by the assessee on 27-03-2006 wherein the unsecured creditors of Rs.12,42,000 was disclosed. Hence, the CIT(A) has rightly deleted the addition. We do not find any infirmity in the order of the CIT(A). The same is upheld. In the result, the cross objection of the assessee stands allowed and the appeal of the revenue stands dismissed;
++ the Accountant Member was of the opinion that any document found can be treated as incriminating material. With due respects, I am of the firm view that such document should reflect something to indicate that in the year under consideration, the assessee has not disclosed income whereas, in the instant case, the assessee has filed its return of income much before the date of search and on the strength of the profit and loss account and the balance sheet filed before the Assessing officer, the return was processed u/s. 143(1) of the Act. In fact, there was clear finding by the CIT(A) in his order, in respect of assessment year 2006- 07, wherein it was stated that there was no incriminating document found during the course of search; the Revenue has not preferred any appeal against the order of the CIT(A). Under these circumstances, it cannot be said that the same document can be treated as incriminating material for the assessment year under consideration. Since Point No. 1 is decided in the negative, i.e. the document found cannot be considered as incriminating document, Question No. 2 does not require adjudication and therefore, need not be answered;
++ Since there was a difference of opinion between the two Members constituting the Division Bench of ITAT, Cochin, the matter was referred to the Third Member by the Hon'ble President u/s. 255(4) of the Act. The Third member has agreed with the view taken by the Judicial Member in respect of both the questions referred above. Accordingly, as per the majority view, the appeal filed by the revenue is dismissed and the Cross Objection filed by the assessee is allowed;
++ in the result, the appeal filed by the revenue stands dismissed and the Cross Objections filed by the assessee is allowed.
Direct Tax Basket
INSTRUCTION
12
Custody of Refund Vouchers-regarding
CASE LAWS
2015-TIOL-1476- ITAT-HYD
Konar Greenlands Pvt Ltd Vs DCIT
Whether if an assessee fails to pay either wholly or partly self assessment tax, he will be treated as assessee in default in respect of unpaid amount and hence liable to pay penalty of such amount as the Assessing Officer may impose. - Assessee' s appeal partly allowed : HYDERABAD ITAT
2015-TIOL-1475- ITAT-JAIPUR
DCIT Vs Maverick Share Brokers Pvt Ltd
Whether addition made by the AO was justified simply on the basis of surrender made during the course of survey when no incriminating documents were found during the course of survey on which assessee can disclose additional income. - Revenue' s appeal dismissed : JAIPUR ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1973- CESTAT-MUM
Mileen Engineers Vs CCE
CX - CENVAT - Credit availed in respect of capital goods received and installed in the adjacent premises which is not incorporated in the registered premises of appellant - SCN issued seeking denial of credit - Adjudicating authority dropped demand on the ground that subsequently premises where capital goods were installed have been indicated in registered premises - however, interest was held payable and penalty imposed of Rs.2000/- - Order maintained by Commissioner( A) hence appeal before CESTAT in the matter of interest and penalty. Held: Incorporation of premises in registered premises is merely a procedural requirement - since capital goods were used in the manufacture of final product on which excise duty was paid, credit is admissible from date of installation and use of capital goods - since the main requirement of availing CENVAT credit is that capital goods should be used in the manufacture of dutiable goods and which is not in dispute, credit has been correctly availed - order is modified and appeal of appellant is allowed: CESTAT [para 6] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1972- CESTAT-DEL
Purify Filters Vs CCE
CX - Whether assessee collected in name of excise duty any amount from their buyers which they failed to deposit to Government - Assessee submits that in all inclusive price purchase order they have only charged concessional rate of excise duty which they have deposited with Government - Rate mentioned in purchase order is per piece price + Central Excise duty of 10% or 13% - It is apparent that maintenance of two sets of same invoice as explained by Revenue and admitted by assessee is a clear indication of method followed by assessee for collecting extra amount in name of CE duty form their buyers - The single clearance document having different factual details in original and triplicate cannot be considered as procedural lapse - Assessee did collect amounts representing CE duty and retained the same - Same is to be paid to credit of Central Government in terms of Section 11D of CEA, 1944 - It is apparent that assessee made documentation deliberately to this end and as such are liable for penalty under Rule173Q: CESTAT
CX - Regarding confiscation of goods loaded into tempo, same was in factory premises and confiscation was apparently ordered on grounds of incomplete particulars in records and discrepancy between copies of invoice - Since goods are still in factory premises and documentation were required to be completed at the time of clearances, there is no sufficient cause to order confiscation of said goods - Confiscation set aside: CESTAT - Appeal partly allowed : DELHI CESTAT
INSTRUCTION
12
Custody of Refund Vouchers-regarding
CASE LAWS
2015-TIOL-1476- ITAT-HYD
Konar Greenlands Pvt Ltd Vs DCIT
Whether if an assessee fails to pay either wholly or partly self assessment tax, he will be treated as assessee in default in respect of unpaid amount and hence liable to pay penalty of such amount as the Assessing Officer may impose. - Assessee' s appeal partly allowed : HYDERABAD ITAT
2015-TIOL-1475- ITAT-JAIPUR
DCIT Vs Maverick Share Brokers Pvt Ltd
Whether addition made by the AO was justified simply on the basis of surrender made during the course of survey when no incriminating documents were found during the course of survey on which assessee can disclose additional income. - Revenue' s appeal dismissed : JAIPUR ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1973- CESTAT-MUM
Mileen Engineers Vs CCE
CX - CENVAT - Credit availed in respect of capital goods received and installed in the adjacent premises which is not incorporated in the registered premises of appellant - SCN issued seeking denial of credit - Adjudicating authority dropped demand on the ground that subsequently premises where capital goods were installed have been indicated in registered premises - however, interest was held payable and penalty imposed of Rs.2000/- - Order maintained by Commissioner( A) hence appeal before CESTAT in the matter of interest and penalty. Held: Incorporation of premises in registered premises is merely a procedural requirement - since capital goods were used in the manufacture of final product on which excise duty was paid, credit is admissible from date of installation and use of capital goods - since the main requirement of availing CENVAT credit is that capital goods should be used in the manufacture of dutiable goods and which is not in dispute, credit has been correctly availed - order is modified and appeal of appellant is allowed: CESTAT [para 6] - Appeal allowed : MUMBAI CESTAT
2015-TIOL-1972- CESTAT-DEL
Purify Filters Vs CCE
CX - Whether assessee collected in name of excise duty any amount from their buyers which they failed to deposit to Government - Assessee submits that in all inclusive price purchase order they have only charged concessional rate of excise duty which they have deposited with Government - Rate mentioned in purchase order is per piece price + Central Excise duty of 10% or 13% - It is apparent that maintenance of two sets of same invoice as explained by Revenue and admitted by assessee is a clear indication of method followed by assessee for collecting extra amount in name of CE duty form their buyers - The single clearance document having different factual details in original and triplicate cannot be considered as procedural lapse - Assessee did collect amounts representing CE duty and retained the same - Same is to be paid to credit of Central Government in terms of Section 11D of CEA, 1944 - It is apparent that assessee made documentation deliberately to this end and as such are liable for penalty under Rule173Q: CESTAT
CX - Regarding confiscation of goods loaded into tempo, same was in factory premises and confiscation was apparently ordered on grounds of incomplete particulars in records and discrepancy between copies of invoice - Since goods are still in factory premises and documentation were required to be completed at the time of clearances, there is no sufficient cause to order confiscation of said goods - Confiscation set aside: CESTAT - Appeal partly allowed : DELHI CESTAT
Direct Tax Basket
2015-TIOL-2177- HC-MUM-IT
CIT Vs Pankaj S Samdhani
Whether expenditure in the form of interest is allowedable when it has been incurred, even if there is no legal obligation to incur the same - YES: HC
Whether cash expenses be disallowed entirly on the ground that it is supported by self made vouchers - NO : HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2176- HC-MUM-IT
Nafissa Shaikhally Vs CIT
Whether the case is to be remanded to be considered afresh on the issue of interest payment on delayed refund of TDS, when CIT(A) has misread the earlier order of the Court as there is no dispute between the parties that the assessee is entitled to refund - YES: HC - Case Remanded : BOMBAY HIGH COURT
2015-TIOL-2175- HC-P&H-IT
Krishan Kumar Palta Vs CIT
Whether having a close association between the donor and the donee is must for genuine gifts except made for charity and philanthropic purpose - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1477- ITAT-MAD
DCIT Vs W S Industries (India) Ltd
Whether amount claimed as Corporate Guarantee given to another company is allowedable expenditure as it is in the interest of the assessee and hence the commercially expedient decision- YES : HC - Revenue' s appeal dismissed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1977- CESTAT-DEL + Story
M/s HCL Technologies Ltd Vs CC, CE & ST
ST - Refund - Input Service - Rule 2(l) of CCR, 2004 - Legal consultancy services are indispensable for any business to satisfy proper compliance of legal requirements and hence are input services - Design services for getting Coffee mugs printed with logo of appellant cannot be input service; credit on service tax paid for stay in hotel as renting of hotel/renting of immovable property is not Input service - Refund claim for Rent-a-Cab Services, Courier Services, Management, Maintenance & Repair Service, Manpower Recruitment Service, Security Services, Cleaning Services, BSS Services (Summit), Legal Consultancy Services, Chartered Accountancy Services, are Input services, hence allowed - Refund claim on improper/defective invoices pertaining to services other than Telecommunication Services and Renting of immovable property are allowed: CESTAT [para 4 to 15] - Appeal partly allowed : DELHI CESTAT
2015-TIOL-1974- CESTAT-MUM
Balmer Lawrie And Co Ltd Vs CCE
ST € ¢â' '³ Appellant, a Container Freight Station received amounts on the goods auctioned by them € ¢â' '³ these goods were abandoned by the importer and the said goods were auctioned as per the provisions of the Customs Act, 1962 and after discharging all the duties as per section 150 of the CA, 1962 the appellant retained an amount which was to be returned to the importer € ¢â' '³ it is the case of the Revenue that on this amount Service Tax liability arises under the category of € ¢â' '¸Storage and Warehousing service' . Held: Issue is no longer res integra in view of the Tribunal decision in Maersk India - 2012-TIOL-840- CESTAT-MUM where it is held that in view of Board Circular no. 11/1/2012-TRU dated 01.08.2002 clarifying that Service Tax is not leviable on the activities of the custodian where he auctions abandoned Cargo and ST/VAT is paid in respect of that cargo € ¢â' '³ Order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-1976- CESTAT-DEL + Story
National Engineering Industries Ltd Vs CCE
CX - CENVAT credit cannot be denied even in the absence of registration of the Head Office as ISD - Order set aside & Appeal allowed with consequential relief: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1975- CESTAT-MAD
Sri Eswari Auto Components Pvt Ltd Vs CCE
Central Excise - CENVAT credit - Unit-I of the appellant procuredcapital goods like Grinding Machine, Thread Rolling, Air Compressor, Power Press hydraulic Cutting etc. from various suppliers and installed in their Unit-II and Shop-II, for executing job work for Unit-I - Since the capital goods were not returned within 180 days as per the Cenvat Credit Rules, the adjudicating authority demanded and confirmed recovery of ineligible credit with interest and penalty; same upheld by Commissioner (Appeals) and agitated herein.
Held: Rule 4 (5) (a) of CCR provides for supply of capital goods for job work for manufacture of intermediate goods with the condition that it should be returned within 180 days failing which appellants have to pay equivalent amount of credit availed on the capital goods - Out of 13 machines, 5 machineswere returned and subsequently cleared to new plant on payment of duty and remaining 8 were installed in Unit IIand Shop-II - Unit-I requested for inclusion of the premises of Shop-II with the main unit which is still pending - Prima facie, the main unit and the two units belong to the appellant and exclusively used for carrying out job work only for them - The Apex Court in the case of Madras Cements Ltd. Vs CCE Chennai held that credit on capital goods installed in the captive mines are eligible for the entire capital goods credit even though they are located outside the factory - Following the Apex Court decision and considering the fact that there was no recovery mechanisms built in CCR for recovery of capital goods credit prior to 1.3.2013, the appellants are eligible for capital goods credit installed at their own units for job work purpose - impugned order is set aside. [Para 6] - Appeal allowed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2173- HC-MAD-CUS
The Mehta Fine Arts Vs CESTAT
Cus - There is no bar on the adjudicating authority, in a de-novo proceedings, to determine the quantum of fine or penalty - earlier order imposing fine or penalty does not have any relevance - It does not matter whether the proceedings have been initiated afresh or heard by way of de-novo proceedings on the orders of the Tribunal - Question of challenging enhancement of penalty does not arise in a case of this nature, where the adjudication order itself has been set aside in its entirety and the matter remanded back to the original authority for re-adjudication, namely de-novo enquiry - Civil Miscellaneous Appeal dismissed: CESTAT [para 5, 6] - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2177- HC-MUM-IT
CIT Vs Pankaj S Samdhani
Whether expenditure in the form of interest is allowedable when it has been incurred, even if there is no legal obligation to incur the same - YES: HC
Whether cash expenses be disallowed entirly on the ground that it is supported by self made vouchers - NO : HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2176- HC-MUM-IT
Nafissa Shaikhally Vs CIT
Whether the case is to be remanded to be considered afresh on the issue of interest payment on delayed refund of TDS, when CIT(A) has misread the earlier order of the Court as there is no dispute between the parties that the assessee is entitled to refund - YES: HC - Case Remanded : BOMBAY HIGH COURT
2015-TIOL-2175- HC-P&H-IT
Krishan Kumar Palta Vs CIT
Whether having a close association between the donor and the donee is must for genuine gifts except made for charity and philanthropic purpose - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1477- ITAT-MAD
DCIT Vs W S Industries (India) Ltd
Whether amount claimed as Corporate Guarantee given to another company is allowedable expenditure as it is in the interest of the assessee and hence the commercially expedient decision- YES : HC - Revenue' s appeal dismissed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1977- CESTAT-DEL + Story
M/s HCL Technologies Ltd Vs CC, CE & ST
ST - Refund - Input Service - Rule 2(l) of CCR, 2004 - Legal consultancy services are indispensable for any business to satisfy proper compliance of legal requirements and hence are input services - Design services for getting Coffee mugs printed with logo of appellant cannot be input service; credit on service tax paid for stay in hotel as renting of hotel/renting of immovable property is not Input service - Refund claim for Rent-a-Cab Services, Courier Services, Management, Maintenance & Repair Service, Manpower Recruitment Service, Security Services, Cleaning Services, BSS Services (Summit), Legal Consultancy Services, Chartered Accountancy Services, are Input services, hence allowed - Refund claim on improper/defective invoices pertaining to services other than Telecommunication Services and Renting of immovable property are allowed: CESTAT [para 4 to 15] - Appeal partly allowed : DELHI CESTAT
2015-TIOL-1974- CESTAT-MUM
Balmer Lawrie And Co Ltd Vs CCE
ST € ¢â' '³ Appellant, a Container Freight Station received amounts on the goods auctioned by them € ¢â' '³ these goods were abandoned by the importer and the said goods were auctioned as per the provisions of the Customs Act, 1962 and after discharging all the duties as per section 150 of the CA, 1962 the appellant retained an amount which was to be returned to the importer € ¢â' '³ it is the case of the Revenue that on this amount Service Tax liability arises under the category of € ¢â' '¸Storage and Warehousing service' . Held: Issue is no longer res integra in view of the Tribunal decision in Maersk India - 2012-TIOL-840- CESTAT-MUM where it is held that in view of Board Circular no. 11/1/2012-TRU dated 01.08.2002 clarifying that Service Tax is not leviable on the activities of the custodian where he auctions abandoned Cargo and ST/VAT is paid in respect of that cargo € ¢â' '³ Order set aside and appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-1976- CESTAT-DEL + Story
National Engineering Industries Ltd Vs CCE
CX - CENVAT credit cannot be denied even in the absence of registration of the Head Office as ISD - Order set aside & Appeal allowed with consequential relief: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1975- CESTAT-MAD
Sri Eswari Auto Components Pvt Ltd Vs CCE
Central Excise - CENVAT credit - Unit-I of the appellant procuredcapital goods like Grinding Machine, Thread Rolling, Air Compressor, Power Press hydraulic Cutting etc. from various suppliers and installed in their Unit-II and Shop-II, for executing job work for Unit-I - Since the capital goods were not returned within 180 days as per the Cenvat Credit Rules, the adjudicating authority demanded and confirmed recovery of ineligible credit with interest and penalty; same upheld by Commissioner (Appeals) and agitated herein.
Held: Rule 4 (5) (a) of CCR provides for supply of capital goods for job work for manufacture of intermediate goods with the condition that it should be returned within 180 days failing which appellants have to pay equivalent amount of credit availed on the capital goods - Out of 13 machines, 5 machineswere returned and subsequently cleared to new plant on payment of duty and remaining 8 were installed in Unit IIand Shop-II - Unit-I requested for inclusion of the premises of Shop-II with the main unit which is still pending - Prima facie, the main unit and the two units belong to the appellant and exclusively used for carrying out job work only for them - The Apex Court in the case of Madras Cements Ltd. Vs CCE Chennai held that credit on capital goods installed in the captive mines are eligible for the entire capital goods credit even though they are located outside the factory - Following the Apex Court decision and considering the fact that there was no recovery mechanisms built in CCR for recovery of capital goods credit prior to 1.3.2013, the appellants are eligible for capital goods credit installed at their own units for job work purpose - impugned order is set aside. [Para 6] - Appeal allowed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2173- HC-MAD-CUS
The Mehta Fine Arts Vs CESTAT
Cus - There is no bar on the adjudicating authority, in a de-novo proceedings, to determine the quantum of fine or penalty - earlier order imposing fine or penalty does not have any relevance - It does not matter whether the proceedings have been initiated afresh or heard by way of de-novo proceedings on the orders of the Tribunal - Question of challenging enhancement of penalty does not arise in a case of this nature, where the adjudication order itself has been set aside in its entirety and the matter remanded back to the original authority for re-adjudication, namely de-novo enquiry - Civil Miscellaneous Appeal dismissed: CESTAT [para 5, 6] - Appeal dismissed : MADRAS HIGH COURT
Direct Tax Basket
2015-TIOL-2186- HC-UKHND- IT
Uttarakhand Van Vikas Nigam Vs ACIT
Whether excluded income of original assessee, can be assessed as the income of a third party, only if that party was heard by the Authority before making observations or issuing direction regarding the excluded income - YES: HC - Revenue' s appeal dismissed : UTTARAKHAND HIGH COURT
2015-TIOL-2185- HC-P&H-IT
Shahabad Cooperative Sugar Mills Ltd Vs ACIT
Whether deduction u/s 80P(2)(iii) is to be allowed even if it has not been claimed - NO: HC
Whether amount spent on repair and maintenance of the building by purchase of ACC sheets, dryerand and construction of boundary is capital expense - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2184- HC-DEL-IT
Stitchwell Qualitex Vs ITO
Whether depreciation can be allowed when plant and machinery installed in the building is ready for use for the purpose of business of the Assessee - YES: HC - Assessee' s appeal allowed : DELHI HIGH COURT
2015-TIOL-2183- HC-DEL-IT
CIT Vs Soni Associates Pvt Ltd
Whether service of notice u/s 143(2) of act to person other than assessee or its authorised agent, would be valid service of notice - NO: HC
Whether service of notice to a wife of director,who is not an agent empowered to accept service, is bad in law - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2182- HC-MUM-IT
Mumbai Metropolitan Region Development Authority Vs DIT
Whether when the same member of judiciary has authored a different High Court decision given in the favour of the assessee, it is correct on his part if he passes an order against the assessee, without considering his earlier decision based on similar issues - NO: HC
Whether the Director of Income Tax ( Exemptions) has no jurisdiction to withdraw or cancel registration granted u/s 12AA in exercise of its power u/s 12AA(3) - YES: HC
Whether when during the pendency of an appeal, there is an urgency to decide an issue, the same is decided by an interim order, pending the final disposal of the appeal - YES: HC - Case remanded : BOMBAY HIGH COURT
2015-TIOL-2181- HC-P&H-IT
Manpreet Kaur Vs CIT
Whether in order to claim exemption u/s 54, merely reflecting the expenditure incurred on construction in the balance sheet alongwith the income tax return is a sufficient compliance to establish the claim - NO: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2180- HC-MUM-IT
CIT Vs Jai Roadways
Whether condonation of delay be allowed when earlier their is a conscious decision taken by Revenue not to file an appeal, but later it is influenced by the fact that an appeal has been filed in respect of another case of the Tribunal - NO: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2179- HC-MUM-IT
CIT Vs Datta Mahendra Shah
Whether when the activities carried out by the assessee are classified under the head 'short term capital gains' as claimed by the assessee on application of CBDT Circular, it is possible for the Revenue to contest it later on - NO: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-1484- ITAT-COCHIN + Story
DCIT Vs Royal Cartons Pvt Ltd
Whether the documents found during the course of search can be considered as incriminating material to initiate proceedings u/s 153C, even though the assessment u/s 143(1) was completed and attained finality before satisfaction was recorded by the AO - NO: ITAT
Whether in case of search, pending assessment proceedings shall be made on the basis of the seized and other materials found on record, the assessment proceeding which were not pending on the date of search has to be made only on the basis of the material found during the course of search operation - YES: ITAT
Whether in the absence of any incriminating material found during the course of search, AO can re-open the assessments completed on the basis of the return filed by the assessee, even in case there was a disclosure of unsecured creditors in the balance sheet filed - NO: ITAT - Revenue' s appeal dismissed : KOCHI ITAT
2015-TIOL-1483- ITAT-MUM
Ima Pg India Ltd Vs DCIT
Income Tax - Whether addition on the ground of excess remuneration to the directors is justified when the payment of remuneration to the Director was approved by the Central Government as required by the Companies Act. - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1482- ITAT-MAD
HTC Software Development Centre Pvt Ltd Vs ITO
Whether interest income being the deposits in EEFC A/c in bank and deposit in bank A/c is eligible for deduction u/s 10A & 10B of the Act even though this income has no direct link with export business of the assessee - YES : ITAT - Assessee' appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2178- HC-DEL-ST + Story
Mercury Estates Vs CST
ST - Real Estate Agency service - Adjudicating Authority agreed with the Appellant that the cost/value of land cannot be included in the gross value for levy of service tax, yet he proceeded to confirm ST on the entire sum received - Tribunal ordering pre-deposit of 25% of tax demanded with interest - balance of convenience is in favour of the Appellant - Pre-deposit ordered of 5% of profit earned: High Court [para 12, 13, 14] - Appeal disposed : DELHI HIGH COURT
2015-TIOL-2190- HC-MUM-ST
Sunil Agnihotri Productions Vs UoI
ST - Voluntary Compliance Encouragement Scheme (VCES) - Petitioner, a proprietor of sole proprietary firm sought to avail of benefit of ST VCES, 2013 - Petitioner under the Scheme and for availing the benefits thereof, requires to fulfill a condition that he must and on or before 31st December 2013 pay not less than 50 % of tax dues and submit proof thereof, which he failed to do so - No right seems to be created by any law in favour of parties like petitioner that they will go on defaulting in payment of tax and that their hard and difficult times should be taken note of either by authorities or by Court to give such concessions and reliefs - If admitted tax dues is not remitted and deposited even under Service Tax VCES, 2013, then petitioner cannot fault authorities for addressing impugned communications, recovering 'tax dues' by coercive means if permissible in law: HC - Petition dismissed : BOMBAY HIGH COURT
2015-TIOL-2189- HC-AP-ST
Chandrika Environ Vs ADDL CCE, C & ST
Service Tax - Appeal against the order of Tribunal directing the appellant to deposit Rs 25 lakhs as a pre-condition for hearing the appeal - Plea that an opportunity may be provided to plead financial hardship before the Tribunal and to place relevant documents.
Held: Liberty granted to file all the relevant documents in relation to financial stringency that the appellant is undergoing to pay service tax by filing a petition seeking modification of the order passed by the Tribunal both on facts and law within a period of two weeks - Upon such documents being filed along with a petition seeking modification of the order, the Tribunal shall pass appropriate orders thereon after considering the relevant material that may be filed by the appellant, within a period of four weeks thereafter. (para 8) - Appeal disposed of : ANDHRA PRADESH HIGH COURT
2015-TIOL-1984- CESTAT-AHM
S B Engineers Vs CCE, C & ST
ST - Whether assessee is required to pay an amount equivalent to 8% or 6% with respect to exempted activities undertaken by job worker which are exempted under Notfn 8/2005 - Issue stands settled in view of ordered in case of JBF Industries 2014-TIOL-972- CESTAT-AHM - Provisions of Rule 6(1) of CCR, 2004 cannot be invoked for denying Cenvat credit of input services used by assessee for manufacture of job-worked goods - Appeal allowed: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-1983- CESTAT-MUM + Story
CST Vs ICICI Bank Ltd
ST - Banking & Other Financial Services - Bond subscriber does not pay ICICI Bank anything more than the bond price and it is from RBI that assessee-appellant obtains the remuneration - RBI is not a client as far as the securities are concerned because they are not the owners of the bonds - Without rendering of custodian services, it would not be correct to hold that the appellant is liable to service tax for the consideration received from the RBI - custodial services in relation to securities is primarily the safekeeping of the securities of a client - Sans client-custodian relationship and sans entrusting of securities for safekeeping, the incidental services are not relevant: CESTAT - Revenue appeal dismissed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2192- HC-MAD-CX + Story
CCE Vs Sundaram Auto Components Ltd
Central Excise - CENVAT Credit - Credit availed inputs cleared to job worker - Job Worker retuned the processed goods to the respondent assessee on payment of duty which was availed as credit by the respondent assessee - Revenue in appeal against the order of the Tribunal alleging double benefit.
Held: Department went on a wrong presumption that credit had been claimed twice by the first respondent - The assessee did not claim credit twice over - At the time when the goods were supplied, they availed the credit - The Company which undertook the job work, had paid the duty though the job worker was not liable to pay it and the same was availed as credit by the respondent - The original authority and the appellate authority wrongly construed the same as a double benefit by applying the theory of unjust enrichment. This is what was rectified by the Tribunal. Hence, the order of the Tribunal is in accordance with law - The question of law is answered in favour of the assessee and the appeal is dismissed. (para 8) - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-1982- CESTAT-MAD
Tantech Agro Chemicals Ltd Vs CCE
Central Excise - CENVAT credit - Appellants are manufacturers of pesticides namely "Monocrotophos " (Technical Grade) who classified the goods under Heading 3808.10 and cleared on payment of appropriate rate or duty - Consequent to an intervention by the DGCEI, the department proposed to re-classify the goods under Chapter Heading 2942.00 and demand differential duty; the proposals were dropped in adjudication and the appellants took suo motu recredit of amount paid by them - Notice was issued proposing its recovery as erroneously availed credit, with interest and penalty; the same was adjudicated by the lower authority who confirmed recovery of the amount and also imposed penalty under rule 13 of Cenvat Credit Rules - Commissioner (Appeals) remanded the case to the original authority with a direction to ascertain the fact of appellant' s claim whether a refund claim was filed by the appellant or a notice under writing was submitted by the appellant before taking the re-credit and to consider the validity of the claim - The original authority in his de novo order reconfirmed the demand which was upheld by Commissioner (Appeals) on the ground that appellant did not produce any evidence in proof of having filed refund claim or any intimation to the department about suo motu availment of credit - same agitated in the second round of litigation herein.
Held: The issue involved in this case is whether suo motu credit taken by the appellant after favourable order by Commissioner, without filing refund claim under Section 11B is correct or not and whether recovery of such credit ordered by the Department is valid - The adjudicating authority the first OIO dt. 29.8.2003has clearly recorded that first six debit entries was paid under protest in July'97 and other two payments were made without any protest - major amount of Rs.26,51,215/ - was paid on 9.7.97 - When the facts stated at para (2) of first OIO dt. 29.8.2003 and those mentioned at para (4.4) of OIO dt. 13.6.2005 are read together, it is clearly evident that the appellant was made to pay duty on 9.7.97 by debit in RG 23 account during investigation carried out by DGCEI on 9.7.97 - Therefore, it is proved beyond doubt that the lump sum amount paid by the appellant during investigation is not the duty amount calculated by the department but only deposit made by the appellants pending investigation proceedings, which cannot be construed as excise duty paid - Tribunal ruling in the case of Gujarat Engineering Works squarely applicable. [Para 7, 11]
Once adjudicating authority dropped the proceedings in this case the consequential benefit is automatic in so far as the deposits made by the appellant during pendency of adjudication proceedings; therefore, the question of refund claim under Section 11B and time-bar and unjust enrichment does not arise [Para 12, 13]
Division Bench in the case of Ultratech Cement Ltd held that suo motu availment of credit reversed during pendency of decision is valid; asking the appellant to follow refund route is incorrect and not sustainable - Tribunal in the case of Unique Structure & Towers held that appellant not intimating the department of taking suo motu re-credit is only technical and procedural lapse and liable to be condoned - Following the ratio of these rulings, impugned order set aside. [Para 15, 17] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1981- CESTAT-DEL
L G Electronics India Pvt Ltd Vs CCE
CX - Assessee imports various electronic components required for manufacture of PCBs for manufacture of C.T.Vs - Inputs are removed to job workers/ancillary units by reversing CVD and SAD paid at the time of import and availed by assessee in their Cenvat account - It is found that assessee had short reversed impugned credit and same remained in their CENVAT account - They reversed the same before issue of SCN - As assessee were having sufficient balance in their Cenvat Credit Account, demand of interest is not sustainable - As SCN was also issued by invoking extended period of limitation, therefore, penalty is also not imposable: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1980- CESTAT-DEL
Bony Polymers Pvt Ltd Vs CCE
CE - Exemption notifications have to be strictly construed and if duty exemption, is subject to certain conditions, for availing the exemption, the assessee has to satisfy those conditions and an assessee not satisfying those conditions would not be eligible for exemption - Since, the exemption Notification No. 23/2003-CE in terms of its condition, provides concessional rate of duty only to the goods cleared into DTA in accordance with sub-para (a), (d), (e) or (g) of para 6.8 of the Foreign Trade Policy and since it does not cover the goods cleared into DTA against advance DTA sale permission given under sub-para (k) of para 6.8 of the Foreign Trade Policy, it is very clear that the goods sold into DTA against advance DTA sales permission granted under para 6.8 (k) are not covered by this notification - appellant has no case on merits & is, therefore, liable to pay duty as demanded: CESTAT [para 7, 9, 10]
CE - Limitation - Appellant is not able to fulfill Condition No.II attached to the Notification No.23/03-CE - Therefore, claiming the benefit thereof does not arise - This fact was not brought to the knowledge of the Department by the assessee - extended period of limitation rightly invoked - appeal dismissed: CESTAT [para 11] - Appeal dismissed : DELHI CESTAT
2015-TIOL-1979- CESTAT-MAD
Ashok Leyland Ltd Vs CCE
Central Excise - MODVAT/CENVAT credit - Adjudicating authority confirmed demand for recovery of irregularly availed credit; Commissioner (Appeals) ordered pre deposit and subsequently dismissed the appeal for non compliance with stay order - Tribunal remanded the case to Commissioner (Appeals) for consideration on merits in the first round of litigation; whereupon the original order was upheld in the denovo impugned order, culminating in the second round of litigation in the instant appeal.
Held: The first issue relates to denial of modvat credit availed on 57E certificates issued by the Customs for payment of CVD after the amendment of Section 57F (4A) of the Central Excise Rules 1944,effective 16.3.1995 - The second issue is denial of modvat credit on ineligible document issued by the supplier who is not registered with Central Excise [Para 5]
On the first issue, in view of the Tribunal' s Division Bench orders dated 3.5.2002 and 26.10.2006, appellant is not entitled to the creditavailed after the amendment of Section 57F(4A) -On the second issue, Notification No.27/92-CE( NT) dt. 9.10.1992, clearly exempts from taking registration under Rule 174 of every manufacturer who gets his goods manufactured on his account from any other person - The notification clearly stipulates that the person who is getting the goods manufactured and availing the exemption notification shall discharge all liabilities; hence invoice issued by the supplier who is exempted from taking registration is a valid document - there is no dispute on the payment of Central Excise duty on the inputs; accordingly, the appellants are eligible for credit on this count - impugned order stands modified accordingly. [Para 7, 8, 9] - Appeal partially allowed : CHENNAI CESTAT
2015-TIOL-1978- CESTAT-MAD
Cprm Steels Ltd Vs CCE
Central Excise € ¢â' '³ Demand - demand of central excise duty with penalty under Rules 9(2), Rule 173 (2) and 226 of Central Excise Rules 1944 read with Section 11AC of the Central Excise Act 1944 adjudicated on the quantity of shortage of finished products noticed during stock taking; upheld by Commissioner (Appeals), and agitated herein.
Held: Shortage of CTD bars was noticed during physical stock taking, to the extent of 104.46 MT - no further investigation carried out except recording of statement from the M.D. of appellant company; the department has not established actual shortage so as to attribute clandestine removal - any shortage of finished goods not accounted in the records is liable for excise duty - Every shortage of finished goods cannot be attributed as clandestine removal unless it is proved to the contrary with evidence - appellants are liable for payment of excise duty on the quantity of 102.476 MTs admittedly found short in their accounts on the date of stock taking € ¢â' '³ Penalty set aside in view of the Tribunal rulings in J.C Rerolling Mills Pvt. Ltd. Vs CCE and CCE Nashik Vs Nashik Strips Pvt. Ltd. [Para 5] - Appeal partly allowed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2188- HC-P&H-CUS
Tdt Copper Ltd Vs UoI
Customs - Valuation - Enhancement of declared value - On appeal by the importer, Commissioner (Appeals) allowed the appeal by the importer by directing that the goods should be assessed based on the value declared by the importer - On appeal by revenue, Tribunal grants stay of the order passed by the Commissioner (Appeals) - Assessee in appeal against the order of the Tribunal.
Held: The order passed by the Commissioner (Appeals) nowhere gives any justification for accepting the declared value by giving the reasons for the same. In the absence of any cogent reasons, direction for accepting the declared value by the Commissioner (Appeals) was unjustified - The Tribunal was right in staying the operation of the impugned order in appeal with regard to direction for reassessment of the bill of entry on the declared value - Appeal dismissed. (para 9) - Appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2187- HC-MAD-CUS
CC Vs El Tece Associates
Customs - CHA - Appeal by revenue against the order of Tribunal setting aside the first order of suspension as well as the order of continuation of suspension of CHA Licence - Held: The Tribunal followed its own decision in Manjunatha Shipping Services Vs. Commissioner of Customs (Imports), Chennai on the scope of Regulations 20 and 22 of the Regulations and also took note of the decision rendered by this Court and held that after the issue of the suspension order on 21.1.2013 under Regulation 20(2), no show cause notice was issued by the Commissioner under Regulation 22(1) - Following the decision of this Court, the Tribunal allowed the appeals - There is no illegality in the order of the Tribunal - It is clear from the facts that no Show Cause Notice was issued - Revenue appeal has no merit (paras 5&6)) - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2186- HC-UKHND- IT
Uttarakhand Van Vikas Nigam Vs ACIT
Whether excluded income of original assessee, can be assessed as the income of a third party, only if that party was heard by the Authority before making observations or issuing direction regarding the excluded income - YES: HC - Revenue' s appeal dismissed : UTTARAKHAND HIGH COURT
2015-TIOL-2185- HC-P&H-IT
Shahabad Cooperative Sugar Mills Ltd Vs ACIT
Whether deduction u/s 80P(2)(iii) is to be allowed even if it has not been claimed - NO: HC
Whether amount spent on repair and maintenance of the building by purchase of ACC sheets, dryerand and construction of boundary is capital expense - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2184- HC-DEL-IT
Stitchwell Qualitex Vs ITO
Whether depreciation can be allowed when plant and machinery installed in the building is ready for use for the purpose of business of the Assessee - YES: HC - Assessee' s appeal allowed : DELHI HIGH COURT
2015-TIOL-2183- HC-DEL-IT
CIT Vs Soni Associates Pvt Ltd
Whether service of notice u/s 143(2) of act to person other than assessee or its authorised agent, would be valid service of notice - NO: HC
Whether service of notice to a wife of director,who is not an agent empowered to accept service, is bad in law - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2182- HC-MUM-IT
Mumbai Metropolitan Region Development Authority Vs DIT
Whether when the same member of judiciary has authored a different High Court decision given in the favour of the assessee, it is correct on his part if he passes an order against the assessee, without considering his earlier decision based on similar issues - NO: HC
Whether the Director of Income Tax ( Exemptions) has no jurisdiction to withdraw or cancel registration granted u/s 12AA in exercise of its power u/s 12AA(3) - YES: HC
Whether when during the pendency of an appeal, there is an urgency to decide an issue, the same is decided by an interim order, pending the final disposal of the appeal - YES: HC - Case remanded : BOMBAY HIGH COURT
2015-TIOL-2181- HC-P&H-IT
Manpreet Kaur Vs CIT
Whether in order to claim exemption u/s 54, merely reflecting the expenditure incurred on construction in the balance sheet alongwith the income tax return is a sufficient compliance to establish the claim - NO: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2180- HC-MUM-IT
CIT Vs Jai Roadways
Whether condonation of delay be allowed when earlier their is a conscious decision taken by Revenue not to file an appeal, but later it is influenced by the fact that an appeal has been filed in respect of another case of the Tribunal - NO: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2179- HC-MUM-IT
CIT Vs Datta Mahendra Shah
Whether when the activities carried out by the assessee are classified under the head 'short term capital gains' as claimed by the assessee on application of CBDT Circular, it is possible for the Revenue to contest it later on - NO: HC - Revenue' s appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-1484- ITAT-COCHIN + Story
DCIT Vs Royal Cartons Pvt Ltd
Whether the documents found during the course of search can be considered as incriminating material to initiate proceedings u/s 153C, even though the assessment u/s 143(1) was completed and attained finality before satisfaction was recorded by the AO - NO: ITAT
Whether in case of search, pending assessment proceedings shall be made on the basis of the seized and other materials found on record, the assessment proceeding which were not pending on the date of search has to be made only on the basis of the material found during the course of search operation - YES: ITAT
Whether in the absence of any incriminating material found during the course of search, AO can re-open the assessments completed on the basis of the return filed by the assessee, even in case there was a disclosure of unsecured creditors in the balance sheet filed - NO: ITAT - Revenue' s appeal dismissed : KOCHI ITAT
2015-TIOL-1483- ITAT-MUM
Ima Pg India Ltd Vs DCIT
Income Tax - Whether addition on the ground of excess remuneration to the directors is justified when the payment of remuneration to the Director was approved by the Central Government as required by the Companies Act. - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1482- ITAT-MAD
HTC Software Development Centre Pvt Ltd Vs ITO
Whether interest income being the deposits in EEFC A/c in bank and deposit in bank A/c is eligible for deduction u/s 10A & 10B of the Act even though this income has no direct link with export business of the assessee - YES : ITAT - Assessee' appeal allowed : CHENNAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2178- HC-DEL-ST + Story
Mercury Estates Vs CST
ST - Real Estate Agency service - Adjudicating Authority agreed with the Appellant that the cost/value of land cannot be included in the gross value for levy of service tax, yet he proceeded to confirm ST on the entire sum received - Tribunal ordering pre-deposit of 25% of tax demanded with interest - balance of convenience is in favour of the Appellant - Pre-deposit ordered of 5% of profit earned: High Court [para 12, 13, 14] - Appeal disposed : DELHI HIGH COURT
2015-TIOL-2190- HC-MUM-ST
Sunil Agnihotri Productions Vs UoI
ST - Voluntary Compliance Encouragement Scheme (VCES) - Petitioner, a proprietor of sole proprietary firm sought to avail of benefit of ST VCES, 2013 - Petitioner under the Scheme and for availing the benefits thereof, requires to fulfill a condition that he must and on or before 31st December 2013 pay not less than 50 % of tax dues and submit proof thereof, which he failed to do so - No right seems to be created by any law in favour of parties like petitioner that they will go on defaulting in payment of tax and that their hard and difficult times should be taken note of either by authorities or by Court to give such concessions and reliefs - If admitted tax dues is not remitted and deposited even under Service Tax VCES, 2013, then petitioner cannot fault authorities for addressing impugned communications, recovering 'tax dues' by coercive means if permissible in law: HC - Petition dismissed : BOMBAY HIGH COURT
2015-TIOL-2189- HC-AP-ST
Chandrika Environ Vs ADDL CCE, C & ST
Service Tax - Appeal against the order of Tribunal directing the appellant to deposit Rs 25 lakhs as a pre-condition for hearing the appeal - Plea that an opportunity may be provided to plead financial hardship before the Tribunal and to place relevant documents.
Held: Liberty granted to file all the relevant documents in relation to financial stringency that the appellant is undergoing to pay service tax by filing a petition seeking modification of the order passed by the Tribunal both on facts and law within a period of two weeks - Upon such documents being filed along with a petition seeking modification of the order, the Tribunal shall pass appropriate orders thereon after considering the relevant material that may be filed by the appellant, within a period of four weeks thereafter. (para 8) - Appeal disposed of : ANDHRA PRADESH HIGH COURT
2015-TIOL-1984- CESTAT-AHM
S B Engineers Vs CCE, C & ST
ST - Whether assessee is required to pay an amount equivalent to 8% or 6% with respect to exempted activities undertaken by job worker which are exempted under Notfn 8/2005 - Issue stands settled in view of ordered in case of JBF Industries 2014-TIOL-972- CESTAT-AHM - Provisions of Rule 6(1) of CCR, 2004 cannot be invoked for denying Cenvat credit of input services used by assessee for manufacture of job-worked goods - Appeal allowed: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-1983- CESTAT-MUM + Story
CST Vs ICICI Bank Ltd
ST - Banking & Other Financial Services - Bond subscriber does not pay ICICI Bank anything more than the bond price and it is from RBI that assessee-appellant obtains the remuneration - RBI is not a client as far as the securities are concerned because they are not the owners of the bonds - Without rendering of custodian services, it would not be correct to hold that the appellant is liable to service tax for the consideration received from the RBI - custodial services in relation to securities is primarily the safekeeping of the securities of a client - Sans client-custodian relationship and sans entrusting of securities for safekeeping, the incidental services are not relevant: CESTAT - Revenue appeal dismissed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2192- HC-MAD-CX + Story
CCE Vs Sundaram Auto Components Ltd
Central Excise - CENVAT Credit - Credit availed inputs cleared to job worker - Job Worker retuned the processed goods to the respondent assessee on payment of duty which was availed as credit by the respondent assessee - Revenue in appeal against the order of the Tribunal alleging double benefit.
Held: Department went on a wrong presumption that credit had been claimed twice by the first respondent - The assessee did not claim credit twice over - At the time when the goods were supplied, they availed the credit - The Company which undertook the job work, had paid the duty though the job worker was not liable to pay it and the same was availed as credit by the respondent - The original authority and the appellate authority wrongly construed the same as a double benefit by applying the theory of unjust enrichment. This is what was rectified by the Tribunal. Hence, the order of the Tribunal is in accordance with law - The question of law is answered in favour of the assessee and the appeal is dismissed. (para 8) - Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-1982- CESTAT-MAD
Tantech Agro Chemicals Ltd Vs CCE
Central Excise - CENVAT credit - Appellants are manufacturers of pesticides namely "Monocrotophos " (Technical Grade) who classified the goods under Heading 3808.10 and cleared on payment of appropriate rate or duty - Consequent to an intervention by the DGCEI, the department proposed to re-classify the goods under Chapter Heading 2942.00 and demand differential duty; the proposals were dropped in adjudication and the appellants took suo motu recredit of amount paid by them - Notice was issued proposing its recovery as erroneously availed credit, with interest and penalty; the same was adjudicated by the lower authority who confirmed recovery of the amount and also imposed penalty under rule 13 of Cenvat Credit Rules - Commissioner (Appeals) remanded the case to the original authority with a direction to ascertain the fact of appellant' s claim whether a refund claim was filed by the appellant or a notice under writing was submitted by the appellant before taking the re-credit and to consider the validity of the claim - The original authority in his de novo order reconfirmed the demand which was upheld by Commissioner (Appeals) on the ground that appellant did not produce any evidence in proof of having filed refund claim or any intimation to the department about suo motu availment of credit - same agitated in the second round of litigation herein.
Held: The issue involved in this case is whether suo motu credit taken by the appellant after favourable order by Commissioner, without filing refund claim under Section 11B is correct or not and whether recovery of such credit ordered by the Department is valid - The adjudicating authority the first OIO dt. 29.8.2003has clearly recorded that first six debit entries was paid under protest in July'97 and other two payments were made without any protest - major amount of Rs.26,51,215/ - was paid on 9.7.97 - When the facts stated at para (2) of first OIO dt. 29.8.2003 and those mentioned at para (4.4) of OIO dt. 13.6.2005 are read together, it is clearly evident that the appellant was made to pay duty on 9.7.97 by debit in RG 23 account during investigation carried out by DGCEI on 9.7.97 - Therefore, it is proved beyond doubt that the lump sum amount paid by the appellant during investigation is not the duty amount calculated by the department but only deposit made by the appellants pending investigation proceedings, which cannot be construed as excise duty paid - Tribunal ruling in the case of Gujarat Engineering Works squarely applicable. [Para 7, 11]
Once adjudicating authority dropped the proceedings in this case the consequential benefit is automatic in so far as the deposits made by the appellant during pendency of adjudication proceedings; therefore, the question of refund claim under Section 11B and time-bar and unjust enrichment does not arise [Para 12, 13]
Division Bench in the case of Ultratech Cement Ltd held that suo motu availment of credit reversed during pendency of decision is valid; asking the appellant to follow refund route is incorrect and not sustainable - Tribunal in the case of Unique Structure & Towers held that appellant not intimating the department of taking suo motu re-credit is only technical and procedural lapse and liable to be condoned - Following the ratio of these rulings, impugned order set aside. [Para 15, 17] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-1981- CESTAT-DEL
L G Electronics India Pvt Ltd Vs CCE
CX - Assessee imports various electronic components required for manufacture of PCBs for manufacture of C.T.Vs - Inputs are removed to job workers/ancillary units by reversing CVD and SAD paid at the time of import and availed by assessee in their Cenvat account - It is found that assessee had short reversed impugned credit and same remained in their CENVAT account - They reversed the same before issue of SCN - As assessee were having sufficient balance in their Cenvat Credit Account, demand of interest is not sustainable - As SCN was also issued by invoking extended period of limitation, therefore, penalty is also not imposable: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1980- CESTAT-DEL
Bony Polymers Pvt Ltd Vs CCE
CE - Exemption notifications have to be strictly construed and if duty exemption, is subject to certain conditions, for availing the exemption, the assessee has to satisfy those conditions and an assessee not satisfying those conditions would not be eligible for exemption - Since, the exemption Notification No. 23/2003-CE in terms of its condition, provides concessional rate of duty only to the goods cleared into DTA in accordance with sub-para (a), (d), (e) or (g) of para 6.8 of the Foreign Trade Policy and since it does not cover the goods cleared into DTA against advance DTA sale permission given under sub-para (k) of para 6.8 of the Foreign Trade Policy, it is very clear that the goods sold into DTA against advance DTA sales permission granted under para 6.8 (k) are not covered by this notification - appellant has no case on merits & is, therefore, liable to pay duty as demanded: CESTAT [para 7, 9, 10]
CE - Limitation - Appellant is not able to fulfill Condition No.II attached to the Notification No.23/03-CE - Therefore, claiming the benefit thereof does not arise - This fact was not brought to the knowledge of the Department by the assessee - extended period of limitation rightly invoked - appeal dismissed: CESTAT [para 11] - Appeal dismissed : DELHI CESTAT
2015-TIOL-1979- CESTAT-MAD
Ashok Leyland Ltd Vs CCE
Central Excise - MODVAT/CENVAT credit - Adjudicating authority confirmed demand for recovery of irregularly availed credit; Commissioner (Appeals) ordered pre deposit and subsequently dismissed the appeal for non compliance with stay order - Tribunal remanded the case to Commissioner (Appeals) for consideration on merits in the first round of litigation; whereupon the original order was upheld in the denovo impugned order, culminating in the second round of litigation in the instant appeal.
Held: The first issue relates to denial of modvat credit availed on 57E certificates issued by the Customs for payment of CVD after the amendment of Section 57F (4A) of the Central Excise Rules 1944,effective 16.3.1995 - The second issue is denial of modvat credit on ineligible document issued by the supplier who is not registered with Central Excise [Para 5]
On the first issue, in view of the Tribunal' s Division Bench orders dated 3.5.2002 and 26.10.2006, appellant is not entitled to the creditavailed after the amendment of Section 57F(4A) -On the second issue, Notification No.27/92-CE( NT) dt. 9.10.1992, clearly exempts from taking registration under Rule 174 of every manufacturer who gets his goods manufactured on his account from any other person - The notification clearly stipulates that the person who is getting the goods manufactured and availing the exemption notification shall discharge all liabilities; hence invoice issued by the supplier who is exempted from taking registration is a valid document - there is no dispute on the payment of Central Excise duty on the inputs; accordingly, the appellants are eligible for credit on this count - impugned order stands modified accordingly. [Para 7, 8, 9] - Appeal partially allowed : CHENNAI CESTAT
2015-TIOL-1978- CESTAT-MAD
Cprm Steels Ltd Vs CCE
Central Excise € ¢â' '³ Demand - demand of central excise duty with penalty under Rules 9(2), Rule 173 (2) and 226 of Central Excise Rules 1944 read with Section 11AC of the Central Excise Act 1944 adjudicated on the quantity of shortage of finished products noticed during stock taking; upheld by Commissioner (Appeals), and agitated herein.
Held: Shortage of CTD bars was noticed during physical stock taking, to the extent of 104.46 MT - no further investigation carried out except recording of statement from the M.D. of appellant company; the department has not established actual shortage so as to attribute clandestine removal - any shortage of finished goods not accounted in the records is liable for excise duty - Every shortage of finished goods cannot be attributed as clandestine removal unless it is proved to the contrary with evidence - appellants are liable for payment of excise duty on the quantity of 102.476 MTs admittedly found short in their accounts on the date of stock taking € ¢â' '³ Penalty set aside in view of the Tribunal rulings in J.C Rerolling Mills Pvt. Ltd. Vs CCE and CCE Nashik Vs Nashik Strips Pvt. Ltd. [Para 5] - Appeal partly allowed : CHENNAI CESTAT
CUSTOMS SECTION
2015-TIOL-2188- HC-P&H-CUS
Tdt Copper Ltd Vs UoI
Customs - Valuation - Enhancement of declared value - On appeal by the importer, Commissioner (Appeals) allowed the appeal by the importer by directing that the goods should be assessed based on the value declared by the importer - On appeal by revenue, Tribunal grants stay of the order passed by the Commissioner (Appeals) - Assessee in appeal against the order of the Tribunal.
Held: The order passed by the Commissioner (Appeals) nowhere gives any justification for accepting the declared value by giving the reasons for the same. In the absence of any cogent reasons, direction for accepting the declared value by the Commissioner (Appeals) was unjustified - The Tribunal was right in staying the operation of the impugned order in appeal with regard to direction for reassessment of the bill of entry on the declared value - Appeal dismissed. (para 9) - Appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2187- HC-MAD-CUS
CC Vs El Tece Associates
Customs - CHA - Appeal by revenue against the order of Tribunal setting aside the first order of suspension as well as the order of continuation of suspension of CHA Licence - Held: The Tribunal followed its own decision in Manjunatha Shipping Services Vs. Commissioner of Customs (Imports), Chennai on the scope of Regulations 20 and 22 of the Regulations and also took note of the decision rendered by this Court and held that after the issue of the suspension order on 21.1.2013 under Regulation 20(2), no show cause notice was issued by the Commissioner under Regulation 22(1) - Following the decision of this Court, the Tribunal allowed the appeals - There is no illegality in the order of the Tribunal - It is clear from the facts that no Show Cause Notice was issued - Revenue appeal has no merit (paras 5&6)) - Appeal dismissed : MADRAS HIGH COURT
INCOME TAX OFFICER vs.LOKOPAYOGI ILLAKHE AND KARNATAKA NEERAWARI NAWAKARA
PANAJI TRIBUNAL
Deduction u/s 80P(2)€ ¢â' '´Deduction in respect of income of co-operative societies€ ¢â' '´Assessees had filed return of income after claiming deduction u/s 80P(2)(a)(i) on grounds that it was a Cooperative Society carrying on the business of banking or providing credit facilities to its members€ ¢â' '´AO disallowed same on grounds that the assessee was a cooperative bank, and hence, not entitled to claim deduction by virtue of s 80P(4)€ ¢â' '´CIT(A) on appeal allowed assessee€ ¢â' '¹s claim€ ¢â' '´Held, High Court of Karnataka in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha which was followed in the case of General Insurance Employees Cooperative Credit Society Ltd, had clearly held that a co-operative society registered as cooperative society, providing credit facilities to members and not registered with the RBI cannot be denied the exemption u/s 80P(2)(a)(i)€ ¢â' '´Revenue could not point out any specific error in the orders of the CIT(A) who had allowed the claim of deduction u/s 80P(2)(a)(i) by following the above mentioned decisions€ ¢â' '´No interference with orders of CIT was warranted€ ¢â' '´Revenue€ ¢â' '¹s appeal dismissed
PANAJI TRIBUNAL
Deduction u/s 80P(2)€ ¢â' '´Deduction in respect of income of co-operative societies€ ¢â' '´Assessees had filed return of income after claiming deduction u/s 80P(2)(a)(i) on grounds that it was a Cooperative Society carrying on the business of banking or providing credit facilities to its members€ ¢â' '´AO disallowed same on grounds that the assessee was a cooperative bank, and hence, not entitled to claim deduction by virtue of s 80P(4)€ ¢â' '´CIT(A) on appeal allowed assessee€ ¢â' '¹s claim€ ¢â' '´Held, High Court of Karnataka in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha which was followed in the case of General Insurance Employees Cooperative Credit Society Ltd, had clearly held that a co-operative society registered as cooperative society, providing credit facilities to members and not registered with the RBI cannot be denied the exemption u/s 80P(2)(a)(i)€ ¢â' '´Revenue could not point out any specific error in the orders of the CIT(A) who had allowed the claim of deduction u/s 80P(2)(a)(i) by following the above mentioned decisions€ ¢â' '´No interference with orders of CIT was warranted€ ¢â' '´Revenue€ ¢â' '¹s appeal dismissed
COMMISSIONER OF INCOME TAX vs. KABUL CHAWLA
HIGH COURT OF DELHI
Search and seizure€ ¢â' '´New scheme of assessment in search cases€ ¢â' '´Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies€ ¢â' '´Search was also carried out in the premises of the assessee€ ¢â' '´Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns€ ¢â' '´As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies€ ¢â' '´AO declined to rectify the assessments€ ¢â' '´CIT also held that addition need not be restricted only to the seized material€ ¢â' '´ITAT on appeal however deleted addition on grounds that the additions made for relevant AY€ ¢â' '¹s u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law€ ¢â' '´Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search€ ¢â' '´Held, present appeals concerned AYs, 2002-03, 2005-06 and 2006-07€ ¢â' '´On the date of the search the said assessments already stood completed€ ¢â' '´Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed€ ¢â' '´Question framed by the Court was answered in favour of the assessee and against the Revenue€ ¢â' '´Revenue€ ¢â' '¹s appeal dismissed
HIGH COURT OF DELHI
Search and seizure€ ¢â' '´New scheme of assessment in search cases€ ¢â' '´Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies€ ¢â' '´Search was also carried out in the premises of the assessee€ ¢â' '´Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns€ ¢â' '´As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies€ ¢â' '´AO declined to rectify the assessments€ ¢â' '´CIT also held that addition need not be restricted only to the seized material€ ¢â' '´ITAT on appeal however deleted addition on grounds that the additions made for relevant AY€ ¢â' '¹s u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law€ ¢â' '´Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search€ ¢â' '´Held, present appeals concerned AYs, 2002-03, 2005-06 and 2006-07€ ¢â' '´On the date of the search the said assessments already stood completed€ ¢â' '´Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed€ ¢â' '´Question framed by the Court was answered in favour of the assessee and against the Revenue€ ¢â' '´Revenue€ ¢â' '¹s appeal dismissed
ORIENTAL INSURANCE COMPANY vs.COMMISSIONER OF INCOME TAX
HIGH COURT OF DELHI
Reassessment€ ¢â' '´Income escaping assessment€ ¢â' '´Change of opinion€ ¢â' '´Assessee was a subsidiary of General Insurance Corporation of India and was engaged in the business of General Insurance comprising of Fire, Marine and Miscellaneous Insurance Business€ ¢â' '´Assessee had claimed that he invests its policy holder€ ¢â' '¹s funds as per the statutory guidelines provided under The Insurance Act, 1938 and IRDA (Investment) Regulations, 2000€ ¢â' '´AO computed the assessable income at Rs.35,87,12, 674 but since the adjusted book profits were higher at Rs.3,91,45,35, 826, the AO passed an assessment order for the A/Y 2004-05 assessing the tax payable at Rs.30,09,30, 018 u/s 115JB€ ¢â' '´AO had reassessed the income of the Assessee by including the sum of `505.33 crores in the total taxable income€ ¢â' '´Assessee challenged order of reassessment, inter-alia, challenging both the assumption of jurisdiction to reopen the assessment as well as including of profit on sale/redemption of investment in the total income€ ¢â' '´CIT(A) upheld the reassessment order but regarding issue of assumption of jurisdiction the CIT(A) had held that the AO had recorded adequate reasons to believe and, therefore, the AO had the jurisdiction to issue a notice u/s 148€ ¢â' '´Tribunal rejected Assessee appeal€ ¢â' '´Held, powers u/s 147 of an AO can be invoked only in cases where the AO has reason to believe that the income chargeable to tax has escaped assessment€ ¢â' '´Reason to believe must be based on tangible material and cogent facts€ ¢â' '´Powers u/s 147 cannot be exercised merely on suspicion or on an apprehension that the income of an Assessee has escaped assessment€ ¢â' '´It was not disputed that the Assessee was carrying on only one business€ ¢â' '´General Insurance Business, which was regulated under The Insurance Act, 1938€ ¢â' '´Indisputably, the insurers cannot carry on any business other than the insurance business or any prescribed business€ ¢â' '´The business of General Insurance was regulated and there was no allegation that the regulatory authority has found the Assessee to be in default of any provisions of The Insurance Act, 1938€ ¢â' '´AO€ ¢â' '¹s assumption that the Assessee was carrying on two streams of business was incorrect. Thus, this reason to believe that the Assessee€ ¢â' '¹s income had escaped assessment was clearly without any factual basis€ ¢â' '´Thus, proceedings u/s 147 was liable to be quashed as being without jurisdiction€ ¢â' '´Change in the opinion with regard to the taxability of the income in question€ ¢â' '´power u/s 147 was not a power of review but a power to reassess€ ¢â' '´Permitting reopening of assessment on a change of opinion as to the taxability of the income of the Assessee is, thus, outside the scope of Section 147€ ¢â' '´Reassessment was set aside€ ¢â' '´Assessees appeal allowed
HIGH COURT OF DELHI
Reassessment€ ¢â' '´Income escaping assessment€ ¢â' '´Change of opinion€ ¢â' '´Assessee was a subsidiary of General Insurance Corporation of India and was engaged in the business of General Insurance comprising of Fire, Marine and Miscellaneous Insurance Business€ ¢â' '´Assessee had claimed that he invests its policy holder€ ¢â' '¹s funds as per the statutory guidelines provided under The Insurance Act, 1938 and IRDA (Investment) Regulations, 2000€ ¢â' '´AO computed the assessable income at Rs.35,87,12, 674 but since the adjusted book profits were higher at Rs.3,91,45,35, 826, the AO passed an assessment order for the A/Y 2004-05 assessing the tax payable at Rs.30,09,30, 018 u/s 115JB€ ¢â' '´AO had reassessed the income of the Assessee by including the sum of `505.33 crores in the total taxable income€ ¢â' '´Assessee challenged order of reassessment, inter-alia, challenging both the assumption of jurisdiction to reopen the assessment as well as including of profit on sale/redemption of investment in the total income€ ¢â' '´CIT(A) upheld the reassessment order but regarding issue of assumption of jurisdiction the CIT(A) had held that the AO had recorded adequate reasons to believe and, therefore, the AO had the jurisdiction to issue a notice u/s 148€ ¢â' '´Tribunal rejected Assessee appeal€ ¢â' '´Held, powers u/s 147 of an AO can be invoked only in cases where the AO has reason to believe that the income chargeable to tax has escaped assessment€ ¢â' '´Reason to believe must be based on tangible material and cogent facts€ ¢â' '´Powers u/s 147 cannot be exercised merely on suspicion or on an apprehension that the income of an Assessee has escaped assessment€ ¢â' '´It was not disputed that the Assessee was carrying on only one business€ ¢â' '´General Insurance Business, which was regulated under The Insurance Act, 1938€ ¢â' '´Indisputably, the insurers cannot carry on any business other than the insurance business or any prescribed business€ ¢â' '´The business of General Insurance was regulated and there was no allegation that the regulatory authority has found the Assessee to be in default of any provisions of The Insurance Act, 1938€ ¢â' '´AO€ ¢â' '¹s assumption that the Assessee was carrying on two streams of business was incorrect. Thus, this reason to believe that the Assessee€ ¢â' '¹s income had escaped assessment was clearly without any factual basis€ ¢â' '´Thus, proceedings u/s 147 was liable to be quashed as being without jurisdiction€ ¢â' '´Change in the opinion with regard to the taxability of the income in question€ ¢â' '´power u/s 147 was not a power of review but a power to reassess€ ¢â' '´Permitting reopening of assessment on a change of opinion as to the taxability of the income of the Assessee is, thus, outside the scope of Section 147€ ¢â' '´Reassessment was set aside€ ¢â' '´Assessees appeal allowed
COMMISSIONER OF INCOME TAX vs.SRI VIJAY SINGH KADAN
HIGH COURT OF DELHI
Capital Asset€ ¢â' '´Addition on account of long term capital gain€ ¢â' '´During the course of the assessment proceedings, AO noted that Assessee had sold a property admeasuring 5.9625 acres€ ¢â' '´Assessee had claimed that the capital gain from the sale of the said land was not taxable because the land was agricultural land which did not fall within the definition of capital asset u/s 2(14)€ ¢â' '´AO held that as per Section 2(14)(iii)(b) , the agricultural land sold by the Assessee was a capital asset€ ¢â' '´AO accordingly made an addition to the income of the Assessee as long term capital gains€ ¢â' '´CIT (A) had affirmed the order of the AO that the land sold by the Assessee was a capital asset€ ¢â' '´ITAT concluded that the land had to be within the distance of 8 Kms. from the outer limit of the Gurgaon municipality and not from the outer limit of the village Ghata in which the land was located€ ¢â' '´Based upon certificate produced by the Assessee from the former Additional Director General, CPWD that the distance of the land from the outer limit of the Gurgaon Municipality was 10.4 Kms, the ITAT had held that the land owned by the Assessee did not fall within Clauses (a) or (b) of Section 2(14) (iii)€ ¢â' '´Held, for the purposes of Section 2(14)(iii)(b) , the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route€ ¢â' '´The distance has to be measured from the land in question itself and not from the village in which the land is situated€ ¢â' '´Thus, the impugned order of the ITAT suffers from no legal infirmity€ ¢â' '´No substantial question of law arises€ ¢â' '´Revenue€ ¢â' '¹s appeal was dismissed
HIGH COURT OF DELHI
Capital Asset€ ¢â' '´Addition on account of long term capital gain€ ¢â' '´During the course of the assessment proceedings, AO noted that Assessee had sold a property admeasuring 5.9625 acres€ ¢â' '´Assessee had claimed that the capital gain from the sale of the said land was not taxable because the land was agricultural land which did not fall within the definition of capital asset u/s 2(14)€ ¢â' '´AO held that as per Section 2(14)(iii)(b) , the agricultural land sold by the Assessee was a capital asset€ ¢â' '´AO accordingly made an addition to the income of the Assessee as long term capital gains€ ¢â' '´CIT (A) had affirmed the order of the AO that the land sold by the Assessee was a capital asset€ ¢â' '´ITAT concluded that the land had to be within the distance of 8 Kms. from the outer limit of the Gurgaon municipality and not from the outer limit of the village Ghata in which the land was located€ ¢â' '´Based upon certificate produced by the Assessee from the former Additional Director General, CPWD that the distance of the land from the outer limit of the Gurgaon Municipality was 10.4 Kms, the ITAT had held that the land owned by the Assessee did not fall within Clauses (a) or (b) of Section 2(14) (iii)€ ¢â' '´Held, for the purposes of Section 2(14)(iii)(b) , the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route€ ¢â' '´The distance has to be measured from the land in question itself and not from the village in which the land is situated€ ¢â' '´Thus, the impugned order of the ITAT suffers from no legal infirmity€ ¢â' '´No substantial question of law arises€ ¢â' '´Revenue€ ¢â' '¹s appeal was dismissed
COLLECTIVE TRADE MARK
The term € ¢â' '¸Collective mark€ ¢â' '¹ is defined under Section 2(1)(g) of Trade Marks Act, 1999 as a trade mark distinguishing the goods or services of members of an association of persons (not being a partnership with the meaning of the Indian Partnership act,1932) which is the proprietor of the trade mark those of others. Collective Trade mark is dealt with Chapter VIII of the Act containing Sections 61 to 68. Part II of the Trade Mark Rules, 2002 deals with special provisions for collective marks.
Article 7bis of the Paris Convention for Protection of Industrial Property makes it obligatory on a member country to accept for filing and to protect the collective marks belonging to associations, who are generally association of producers, manufacturers, distributors, sellers or other merchants of goods, in accordance with the national law. Our country is a member of the above convention. Trade Marks Act, 1999 is in compliance with its obligations.
Section 61 provides that the provisions of this Act shall apply to collective marks subject to the provisions contained in Chapter VIII. In relation to the collective mark to distinguishing the goods or service of one person from those of others shall be construed as a reference to distinguishing the goods or services of members of an association of persons which is the proprietor of the trade mark, from those of others. Thus the entire definition of € ¢â' '¸trade mark€ ¢â' '¹ applies to collective trade mark subject to the provisions contained in Chapter VIII.
Registration
Section 62 deals with the registration of a collective trade mark. The two components of Section 62 are as follows:
A collective mark shall not be registered if it is likely to deceive or cause confusion on the part of the public;
If it is likely to be taken to be something other than a collective mark and in such case the Registrar may require that the mark in respect of which application is made for registration comprise some indication that it is a collective mark.
Section 63 of the Act provides that an application for registration of a collective mark shall be accompanied by the regulations governing the use of such collective mark. The regulation shall specify the persons authorized to use the mark, the conditions of membership of association and, the conditions of use of the mark, including any sanctions against misuse and such other matters as may be prescribed.
The Registrar is having power to require that the mark contains some indication that it is a collective mark. Rule 25 (7)(a) of the Trade Marks Rules, 2002 provides that the application for registration for a collective Trade mark is in Form No.TM € ¢â' '³ 3. Rule 128 (1) provides that an application for the registration of a collective mark for goods or service under Section 63 (1) shall be made to the Registrar in Form TM-3, Form TM € ¢â' '³ 4 or in the case of a single application Form TM-66 or from TM € ¢â' '³ 67, as the case may be, in triplicate and shall be accompanied by five additional representations of the mark. The draft regulations to be submitted with the application shall be in triplicate and shall be accompanied by Form TM € ¢â' '³ 49.
The references to acceptance of an application for the registration of a trade mark shall be substituted by references to authorization to proceed with the application.
Regulations
The draft regulations shall specify-
The persons authorized to use the mark;
The conditions of membership of the association;
Conditions of use of the mark;
Sanctions against misuse.
The Regulations shall include the details as required under Rule 128-
The name of the association of persons and their respective office addresses;
The object of the association;
The details of members;
The conditions for membership and relation of each member with the group;
The persons authorized to use the mark and the nature of control the applicant exercise over the use of the collective mark;
Conditions governing the use of the mark including sanctions;
The procedure for dealing with appeals against the use of collective mark;
Such other relevant particulars as may be called for by the Registrar.
Acceptance of application and regulations
Section 64 provides that if it appears to the Registrar that the requirements for registration are satisfied he shall accept the application together with the regulations, either unconditionally or subject to such conditions including amendments of the said regulations, if any, as he may deem fit or refuse to accept it and if accepted shall notify the regulations.
Section 65 provides that the regulations shall be open to public inspection in the same way as the register as provided in Section 148.
Examination and hearing
The applicant shall submit to the Registrar along with his application a statement of case setting out the grounds on which he relies in support of the application. Such case shall be furnished in triplicate. The Registrar shall cause an application to be examined, in the first instance, as to whether it satisfies the requirements of the Act and Rules and issues a report to the applicant. The Registrar shall not refuse an application or accept the application subject to any conditions or impose amendments or modifications to the application or to the regulation without giving the applicant an opportunity of being heard and the procedure thereto shall be regulated by the provisions of Rule 38 (4) to 42.
Opposition
On acceptance of the application, the Registrar shall cause the applications to be advertised in the Journal. In any case of doubt with regard to proceedings on the opposition to the registration of a collective trade mark any party may apply to the Registrar for directions.
Amendment
An application registered proprietor of a collective trade mark for any amendment to the regulation shall be made in Form TM € ¢â' '³ 42. If the Registrar accepts any such amendment he shall advertise such application in the Journal and further proceedings in the matter shall be governed by Rules 47 to 57.
Infringement
Section 67 provides that in a suit for infringement instituted by the registered proprietor of a collective mark as plaintiff the Court shall take into account any loss suffered or likely to be suffered by authorized users and may give such directions as it thinks fit as to the extent to which the plaintiff shall hold the proceeds of any pecuniary remedy of such authorized users.
Removal of registration
Section 68 provides that the registration of a collective trade mark may also be removed from the register on the ground-
That the manner in which the collective trade mark has been used by the proprietor or authorized user has caused it to become liable to mislead the public as a collective mark; or
That the proprietor has failed to observe, or to secure the observance of the regulations governing the use of the mark.
The application for removal of a collective mark from the register including on any of the grounds above, shall be made in Form No. TM € ¢â' '³ 43 and shall set forth the particulars of the grounds on which the application is made.
By: Mr. M. GOVINDARAJAN
The term € ¢â' '¸Collective mark€ ¢â' '¹ is defined under Section 2(1)(g) of Trade Marks Act, 1999 as a trade mark distinguishing the goods or services of members of an association of persons (not being a partnership with the meaning of the Indian Partnership act,1932) which is the proprietor of the trade mark those of others. Collective Trade mark is dealt with Chapter VIII of the Act containing Sections 61 to 68. Part II of the Trade Mark Rules, 2002 deals with special provisions for collective marks.
Article 7bis of the Paris Convention for Protection of Industrial Property makes it obligatory on a member country to accept for filing and to protect the collective marks belonging to associations, who are generally association of producers, manufacturers, distributors, sellers or other merchants of goods, in accordance with the national law. Our country is a member of the above convention. Trade Marks Act, 1999 is in compliance with its obligations.
Section 61 provides that the provisions of this Act shall apply to collective marks subject to the provisions contained in Chapter VIII. In relation to the collective mark to distinguishing the goods or service of one person from those of others shall be construed as a reference to distinguishing the goods or services of members of an association of persons which is the proprietor of the trade mark, from those of others. Thus the entire definition of € ¢â' '¸trade mark€ ¢â' '¹ applies to collective trade mark subject to the provisions contained in Chapter VIII.
Registration
Section 62 deals with the registration of a collective trade mark. The two components of Section 62 are as follows:
A collective mark shall not be registered if it is likely to deceive or cause confusion on the part of the public;
If it is likely to be taken to be something other than a collective mark and in such case the Registrar may require that the mark in respect of which application is made for registration comprise some indication that it is a collective mark.
Section 63 of the Act provides that an application for registration of a collective mark shall be accompanied by the regulations governing the use of such collective mark. The regulation shall specify the persons authorized to use the mark, the conditions of membership of association and, the conditions of use of the mark, including any sanctions against misuse and such other matters as may be prescribed.
The Registrar is having power to require that the mark contains some indication that it is a collective mark. Rule 25 (7)(a) of the Trade Marks Rules, 2002 provides that the application for registration for a collective Trade mark is in Form No.TM € ¢â' '³ 3. Rule 128 (1) provides that an application for the registration of a collective mark for goods or service under Section 63 (1) shall be made to the Registrar in Form TM-3, Form TM € ¢â' '³ 4 or in the case of a single application Form TM-66 or from TM € ¢â' '³ 67, as the case may be, in triplicate and shall be accompanied by five additional representations of the mark. The draft regulations to be submitted with the application shall be in triplicate and shall be accompanied by Form TM € ¢â' '³ 49.
The references to acceptance of an application for the registration of a trade mark shall be substituted by references to authorization to proceed with the application.
Regulations
The draft regulations shall specify-
The persons authorized to use the mark;
The conditions of membership of the association;
Conditions of use of the mark;
Sanctions against misuse.
The Regulations shall include the details as required under Rule 128-
The name of the association of persons and their respective office addresses;
The object of the association;
The details of members;
The conditions for membership and relation of each member with the group;
The persons authorized to use the mark and the nature of control the applicant exercise over the use of the collective mark;
Conditions governing the use of the mark including sanctions;
The procedure for dealing with appeals against the use of collective mark;
Such other relevant particulars as may be called for by the Registrar.
Acceptance of application and regulations
Section 64 provides that if it appears to the Registrar that the requirements for registration are satisfied he shall accept the application together with the regulations, either unconditionally or subject to such conditions including amendments of the said regulations, if any, as he may deem fit or refuse to accept it and if accepted shall notify the regulations.
Section 65 provides that the regulations shall be open to public inspection in the same way as the register as provided in Section 148.
Examination and hearing
The applicant shall submit to the Registrar along with his application a statement of case setting out the grounds on which he relies in support of the application. Such case shall be furnished in triplicate. The Registrar shall cause an application to be examined, in the first instance, as to whether it satisfies the requirements of the Act and Rules and issues a report to the applicant. The Registrar shall not refuse an application or accept the application subject to any conditions or impose amendments or modifications to the application or to the regulation without giving the applicant an opportunity of being heard and the procedure thereto shall be regulated by the provisions of Rule 38 (4) to 42.
Opposition
On acceptance of the application, the Registrar shall cause the applications to be advertised in the Journal. In any case of doubt with regard to proceedings on the opposition to the registration of a collective trade mark any party may apply to the Registrar for directions.
Amendment
An application registered proprietor of a collective trade mark for any amendment to the regulation shall be made in Form TM € ¢â' '³ 42. If the Registrar accepts any such amendment he shall advertise such application in the Journal and further proceedings in the matter shall be governed by Rules 47 to 57.
Infringement
Section 67 provides that in a suit for infringement instituted by the registered proprietor of a collective mark as plaintiff the Court shall take into account any loss suffered or likely to be suffered by authorized users and may give such directions as it thinks fit as to the extent to which the plaintiff shall hold the proceeds of any pecuniary remedy of such authorized users.
Removal of registration
Section 68 provides that the registration of a collective trade mark may also be removed from the register on the ground-
That the manner in which the collective trade mark has been used by the proprietor or authorized user has caused it to become liable to mislead the public as a collective mark; or
That the proprietor has failed to observe, or to secure the observance of the regulations governing the use of the mark.
The application for removal of a collective mark from the register including on any of the grounds above, shall be made in Form No. TM € ¢â' '³ 43 and shall set forth the particulars of the grounds on which the application is made.
By: Mr. M. GOVINDARAJAN
IT : Where expenditure on account of repairs and maintenance of buildings and theatres was only for purpose of carrying on of business and did not bring any capital asset into existence, same was to be treated as revenue in nature
[2015] 61 taxmann.com 129 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'A'
Assistant Commissioner of Income-tax
v.
SPI Cinemas (P.) Ltd
[2015] 61 taxmann.com 129 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'A'
Assistant Commissioner of Income-tax
v.
SPI Cinemas (P.) Ltd
Service Tax : Where belated appeal has been filed without any application for condonation of delay, appeal is liable to be dismissed as time-barred and Commissioner (Appeals) is not duty-bound to notify said defect
[2015] 61 taxmann.com 124 (Jharkhand)
HIGH COURT OF JHARKHAND
Adhunik Power Transmission Ltd.
v.
Union of India
[2015] 61 taxmann.com 124 (Jharkhand)
HIGH COURT OF JHARKHAND
Adhunik Power Transmission Ltd.
v.
Union of India
IT/ILT : Foreign exchange fluctuation income is an operating income and thus same has to be taken into consideration while determining ALP of international transactions entered into by assessee
IT/ILT : In case of assessee, rendering software development services to its AE, company acting as a specialised embedded software development service provider could not be accepted as comparable while determining ALP
[2015] 61 taxmann.com 127 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Agilis Information Technologies International (P.) Ltd.
v.
IT/ILT : In case of assessee, rendering software development services to its AE, company acting as a specialised embedded software development service provider could not be accepted as comparable while determining ALP
[2015] 61 taxmann.com 127 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Agilis Information Technologies International (P.) Ltd.
v.
Income-tax Officer, Ward-1(4) New Delhi
INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
Agreement between the Government of the Republic of India and the Government of the Republic of San Marino for the exchange of information with respect to taxes . . . 127
Appeal to High Court --Substantial questions of law--Re-filing of appeal--Condonation of delay of 395 days--Budgetary constraints--Practice directions pertaining to filing of soft copies of paper books--Change of standing counsel--Not reasons to condone delay--Income-tax Act, 1961, s. 260A-- CIT v. Dion Global Solutions Ltd. (Delhi) . . . 213
Assessment --Application of net profit rate--Relevant factors to be considered--Assessing Officer--Powers--Quasi-judicial--Authorities setting out different rates of net profit--Matter remanded to Assessing Officer for redetermination of net profit by applying relevant factors--Income-tax Act, 1961-- Telelinks v. CIT (P&H) . . . 158
----Application of net profit rate--Relevant factors to be considered--Tribunal applying net profit rate of five per cent. without reasons--Authorities setting out different rates of net profit rate--Matter remanded to Tribunal for determination of net profit rate by applying relevant factors--Income-tax Act, 1961, s. 145(3)-- CIT v. Satish Aggarwal and Co. (P&H) . . . 204
Business expenditure --Deduction only on actual payment--Service tax--Liability only upon receipt of consideration for services--Service tax on services rendered for which payment yet to be received--Not disallowable--Income-tax Act, 1961, s. 43B-- CIT v. Ovira Logistics P. Ltd. (Bom) . . . 129
Capital or revenue receipt --Non-compete consideration--Law prior to 1-4-2003--Capital receipt--Not taxable--Income-tax Act, 1961, ss. 28(va), 55(2)(b)-- CIT v. Bisleri Sales Ltd. (Bom) . . . 144
Company --Book profits--Non-compete consideration not brought to profit and loss account but taken as reserves to balance-sheet--Not to be added to arrive at book profits--Income-tax Act, 1961, s. 115JA-- CIT v. Bisleri Sales Ltd. (Bom) . . . 144
Deduction of tax at source --Commission--Hospital--Administration of drug store handed over to two persons--Payments made to manufacturers or reputed agents of manufacturers for procuring drugs and medicines for drug store--Not procurement for hospital through that two persons--Drug handling charges--Not commission or brokerage--Tax deduction at source not attracted--Income-tax Act, 1961, s. 194H-- CIT v. Jaslok Hospital and Research Centre (Bom) . . . 138
----Meaning of “interestâ€--Agreement for sale of flat--Purchaser making initial payments but subsequently dropping out of agreement--Sale of flat to third person at higher rate--Refund of amount paid by purchaser and part of excess price received--Excess price not interest--Tax not deductible from such payment--Income-tax Act, 1961, ss. 2(28A), 194A, 201-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
----Rent--Definition--Hospital--Hire charges paid for equipment of doctors used in operations--Exclusion prior to 13-7-2006--Provision requiring deduction of tax at source not attracted--Whether provision attracted for subsequent periods--Question of law--Income-tax Act, 1961, s. 194-I, Expln. -- CIT v. Jaslok Hospital and Research Centre (Bom) . . . 138
Housing project --Special deduction--Completion certificate--Architect certifying completion of project, application made to municipal corporation for issuance of completion certificate and fees paid therefor within time specified--Delay by municipal corporation in issuance of certificate--Delay cannot be attributed to assessee--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Hindustan Samuh Awas Ltd. (Bom) . . . 150
Income from house property --Business income--Income from house property or business income--Assessee engaged in construction of property--Unsold property let out--Rent assessable as income from house property--Income-tax Act, 1961-- CIT v. Sane and Doshi Enterprises (Bom) . . . 165
----Deductions--Interest on borrowed capital--Amount contributed by partners of firm--Interest deductible--Income-tax Act, 1961, s. 24-- CIT v. Sane and Doshi Enterprises (Bom) . . . 165
Industrial undertaking --Special deduction--Proprietorship converted into partnership--Transfer of industrial undertaking as a whole along with assets and liabilities--Not a case of transfer of plant and machinery to firm or of splitting or reconstruction of business--Two conditions for disqualification not existing--Partnership entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Prisma Electronics (All) . . . 207
Interest-tax --Assets under hire purchase shown as current assets of assessee--Assessee is owner--Nothing to show that assessee lent money to hirer for purchasing vehicle--Nothing to show that vehicle originally belonged to assessee and assessee in consideration of hirer promising to pay price in instalments delivered possession thereof to hirer--Hire charges received under hire purchase agreement--Not chargeable to tax--Circular dated 23-3-1943--Interest-tax Act, 1974, s. 2(7)-- Rani Leasing and Finance Ltd. v. CIT (Cal) . . . 220
Interpretation of taxing statutes --Strict interpretation-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
Penalty --Concealment of income--Furnishing inaccurate particulars of income--Assessee advancing interest-free advances to its sister concerns--Assessee under bona fide belief it was covered by Supreme Court decision--Disallowance of interest on ground commercial expediency not proved--Tribunal remanding matter to Assessing Officer--Actions of assessee not mala fide--No finding that there was active concealment or deliberate furnishing of inaccurate particulars--No notice issued to assessee before imposing penalty--Tribunal deleting penalty--Possible view--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Dalmia Dyechem Industries Ltd. (Bom) . . . 133
----Furnishing inaccurate particulars of income--Material particulars disclosed in return--Assessee obtaining legal opinion that entire receipt of non-compete fees from foreign collaborator a capital receipt and not on account of transfer of any capital asset--Basis for taking amount of compensation as business income of assessee debatable--Not a case of furnishing inaccurate particulars of income attracting penalty--Income-tax Act, 1961, s. 271(1)(c)-- Principal CIT v. Control and Switchgear Contractors Ltd. (Delhi) . . . 215
Reassessment --Notice after four years--Assessing Officer applying mind earlier on issue of service income--Reassessment on basis of subsequent decision of Supreme Court--Change of opinion--No allegations that assessee failed to disclose fully and truly all material facts--Assumption of jurisdiction not justified--Income-tax Act, 1961, ss. 147, 148-- CIT v. ITW India Ltd. (P&H) . . . 195
Unexplained investment --Purchase of sugar--Whether goods lying at spot and whether purchases had been made on credit basis and, thereafter, sold--Question of fact--Tribunal finding sugar purchased duly recorded in books of account duly audited--No evidence to show that purchases made outside regular books of account--Addition on ground of unexplained investment not warranted--Income-tax Act, 1961, s. 69-- CIT v. Bharat Bhushan (P&H) . . . 189
S. 2(28A) --Deduction of tax at source--Meaning of “interestâ€--Agreement for sale of flat--Purchaser making initial payments but subsequently dropping out of agreement--Sale of flat to third person at higher rate--Refund of amount paid by purchaser and part of excess price received--Excess price not interest--Tax not deductible from such payment-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
S. 24 --Income from house property--Deductions--Interest on borrowed capital--Amount contributed by partners of firm--Interest deductible-- CIT v. Sane and Doshi Enterprises (Bom) . . . 165
S. 28(va) --Capital or revenue receipt--Non-compete consideration--Law prior to 1-4-2003--Capital receipt--Not taxable-- CIT v. Bisleri Sales Ltd. (Bom) . . . 144
S. 43B --Business expenditure--Deduction only on actual payment--Service tax--Liability only upon receipt of consideration for services--Service tax on services rendered for which payment yet to be received--Not disallowable-- CIT v. Ovira Logistics P. Ltd. (Bom) . . . 129
S. 55(2)(b) --Capital or revenue receipt--Non-compete consideration--Law prior to 1-4-2003--Capital receipt--Not taxable-- CIT v. Bisleri Sales Ltd. (Bom) . . . 144
S. 69 --Unexplained investment--Purchase of sugar--Whether goods lying at spot and whether purchases had been made on credit basis and, thereafter, sold--Question of fact--Tribunal finding sugar purchased duly recorded in books of account duly audited--No evidence to show that purchases made outside regular books of account--Addition on ground of unexplained investment not warranted-- CIT v. Bharat Bhushan (P&H) . . . 189
S. 80-IB --Industrial undertaking--Special deduction--Proprietorship converted into partnership--Transfer of industrial undertaking as a whole along with assets and liabilities--Not a case of transfer of plant and machinery to firm or of splitting or reconstruction of business--Two conditions for disqualification not existing--Partnership entitled to deduction-- CIT v. Prisma Electronics (All) . . . 207
S. 80-IB(10) --Housing project--Special deduction--Completion certificate--Architect certifying completion of project, application made to municipal corporation for issuance of completion certificate and fees paid therefor within time specified--Delay by municipal corporation in issuance of certificate--Delay cannot be attributed to assessee--Assessee entitled to deduction-- CIT v. Hindustan Samuh Awas Ltd. (Bom) . . . 150
S. 115JA --Company--Book profits--Non-compete consideration not brought to profit and loss account but taken as reserves to balance-sheet--Not to be added to arrive at book profits-- CIT v. Bisleri Sales Ltd. (Bom) . . . 144
S. 145(3) --Assessment--Application of net profit rate--Relevant factors to be considered--Tribunal applying net profit rate of five per cent. without reasons--Authorities setting out different rates of net profit rate--Matter remanded to Tribunal for determination of net profit rate by applying relevant factors-- CIT v. Satish Aggarwal and Co. (P&H) . . . 204
S. 147 --Reassessment--Notice after four years--Assessing Officer applying mind earlier on issue of service income--Reassessment on basis of subsequent decision of Supreme Court--Change of opinion--No allegations that assessee failed to disclose fully and truly all material facts--Assumption of jurisdiction not justified-- CIT v. ITW India Ltd. (P&H) . . . 195
S. 148 --Reassessment--Notice after four years--Assessing Officer applying mind earlier on issue of service income--Reassessment on basis of subsequent decision of Supreme Court--Change of opinion--No allegations that assessee failed to disclose fully and truly all material facts--Assumption of jurisdiction not justified-- CIT v. ITW India Ltd. (P&H) . . . 195
S. 194A --Deduction of tax at source--Meaning of “interestâ€--Agreement for sale of flat--Purchaser making initial payments but subsequently dropping out of agreement--Sale of flat to third person at higher rate--Refund of amount paid by purchaser and part of excess price received--Excess price not interest--Tax not deductible from such payment-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
S. 194H --Deduction of tax at source--Commission--Hospital--Administration of drug store handed over to two persons--Payments made to manufacturers or reputed agents of manufacturers for procuring drugs and medicines for drug store--Not procurement for hospital through that two persons--Drug handling charges--Not commission or brokerage--Tax deduction at source not attracted-- CIT v. Jaslok Hospital and Research Centre (Bom) . . . 138
S. 194-I, Expln. --Deduction of tax at source--Rent--Definition--Hospital--Hire charges paid for equipment of doctors used in operations--Exclusion prior to 13-7-2006--Provision requiring deduction of tax at source not attracted--Whether provision attracted for subsequent periods--Question of law-- CIT v. Jaslok Hospital and Research Centre (Bom) . . . 138
S. 201 --Deduction of tax at source--Meaning of “interestâ€--Agreement for sale of flat--Purchaser making initial payments but subsequently dropping out of agreement--Sale of flat to third person at higher rate--Refund of amount paid by purchaser and part of excess price received--Excess price not interest--Tax not deductible from such payment-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
S. 260A --Appeal to High Court--Substantial questions of law--Re-filing of appeal--Condonation of delay of 395 days--Budgetary constraints--Practice directions pertaining to filing of soft copies of paper books--Change of standing counsel--Not reasons to condone delay-- CIT v. Dion Global Solutions Ltd. (Delhi) . . . 213
S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars of income--Assessee advancing interest-free advances to its sister concerns--Assessee under bona fide belief it was covered by Supreme Court decision--Disallowance of interest on ground commercial expediency not proved--Tribunal remanding matter to Assessing Officer--Actions of assessee not mala fide--No finding that there was active concealment or deliberate furnishing of inaccurate particulars--No notice issued to assessee before imposing penalty--Tribunal deleting penalty--Possible view-- CIT v. Dalmia Dyechem Industries Ltd. (Bom) . . . 133
----Penalty--Furnishing inaccurate particulars of income--Material particulars disclosed in return--Assessee obtaining legal opinion that entire receipt of non-compete fees from foreign collaborator a capital receipt and not on account of transfer of any capital asset--Basis for taking amount of compensation as business income of assessee debatable--Not a case of furnishing inaccurate particulars of income attracting penalty-- Principal CIT v. Control and Switchgear Contractors Ltd. (Delhi) . . . 215
S. 2(7) --Interest-tax--Assets under hire purchase shown as current assets of assessee--Assessee is owner--Nothing to show that assessee lent money to hirer for purchasing vehicle--Nothing to show that vehicle originally belonged to assessee and assessee in consideration of hirer promising to pay price in instalments delivered possession thereof to hirer--Hire charges received under hire purchase agreement--Not chargeable to tax-- Rani Leasing and Finance Ltd. v. CIT (Cal) . . . 220
Dividend payment vide 'share gifting' illegal; Strikes down Sec 391-394 scheme, upholds tax-objection
HC refuses to sanction Indian Seamless Enterprises Limited's ('petitioner') arrangement scheme u/s 391 - 394 of Cos Act, 1956, whereby it sought to make a gift of shares held by it in Taneja Aerospace and Aviation Limited ("TAAL"), to its shareholders, holds the same as 'illegal & 'contrary to law'; Accepts Regional Director's objections that gifting of shares in instant case amounts to payment of dividend, which violates Sec 123 of Cos Act, 2013 (relating to prohibition of dividend in kind) & Section 281 of Income Tax Act ('IT Act'); Relying on SC tax rulings in Kantilal Manilal vs CIT & CIT vs Central India Industries, holds that distribution of properties or rights having monetary value by a co. among its shareholders constitutes 'dividend'; Observes that in instant case, not just right to acquire shares is being gifted, but shares themselves are being gifted, holds "this is clearly distribution of dividend by the Petitioner Company"; Observes that though definition of 'dividend' u/s 2(35) Cos Act 2013 is an inclusive definition, it does not exclude ordinary meaning of dividend from its purview, and holds that in instant case gifting of shares was thus dividend and Sec 123 ought to have been complied with; Rejects petitioner's contention that Sec 123 is inapplicable as it is a scheme of distribution of co's assets under Sec 391-394 which is a complete code, holds that even if a company distributes its assets among its shareholders by means of a scheme of compromise or arrangement u/s 391 to 394, Sec. 123 shall have to be complied with if such distribution of assets amounts to distribution of dividend; Rejects petitioner's reliance on Bombay HC (Division Bench) ruling in SEBI vs Sterlite Industries (India) Ltd, as distinguishable on facts; With respect to tax related objection of Regional Director that the scheme violated Sec 281 of Income Tax Act (which prohibits gift of any asset by assessee to any person during pendency of proceedings under IT Act without permission of Assessing Officer), notes that assessment proceedings, outstanding demands & penalty proceedings under IT Act were pending against petitioner, despite such fact, it proposed to gift its shares, thus, holds the scheme as void; Rejects petitioner's contention that it had sufficient means to discharge tax liability as and when it accrued, petitioner cannot avoid applicability of Sec 281 of Income Tax Act on such a ground:Bombay HC
The ruling was delivered by Justice S. J. Kathawalla.
Senior Advocate Viraj Tulzapurkar and Advocate Hemant Sethi represented the Petitioner Company, whereas Senior Advocate Shyam Mehta, along with Mr. C.J. Joy represented the Regional Director.
SEBI and M C A , Registrar of Companies Gujarat and all other their offices not taking any action on C A of Ratnamani Engineering Limited for 21 years and more....!!! They are free ...............They are defending the Company some how or other??!!! Culture makes a Case....
SEC Charges CPA with Fraud
(Accounting Today) The Securities and Exchange Commission imposed sanctions Thursday against a Florida-based CPA for performing deficient and fraudulent audits and quarterly reviews for eight publicly traded companies, and issuing false and misleading audit opinions on the companies' annual financial statements.
(Accounting Today) The Securities and Exchange Commission imposed sanctions Thursday against a Florida-based CPA for performing deficient and fraudulent audits and quarterly reviews for eight publicly traded companies, and issuing false and misleading audit opinions on the companies' annual financial statements.
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