IT : In view of CBDT Instruction No. 1916 of 11-05-1994, gold jewell
IT : In view of CBDT Instruction No. 1916 of 11-05-1994, gold jewellery of 471 grams found during course of search could reasonably be treated as streedhan of assessee' s wife and would not be treated as undisclosed money
[2015] 60 taxmann.com 400 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
R. Umamaheswar
v.
Deputy Commissioner of Income-tax
[2015] 60 taxmann.com 400 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
R. Umamaheswar
v.
Deputy Commissioner of Income-tax
Direct Tax Basket
2015-TIOL-2213- HC-P&H-IT
Principal.CIT Vs Avtar Kukreja
Whether when the lower authorities have properly analyzed the facts of the case to determine a particular question of fact, is it mandatory on the part of High Court to intervene in such cases without any genuine basis - NO: HC - Revenue' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2212- HC-DEL-IT
CIT Vs Sergi Transformer Explosion Prevention Pvt Ltd
Whether when assessee has produced supporting vouchers and bills in order to substantiate his claim of expense before the lower authorities, is it still possible for the High Court to held otherwise in case of no change in circumstances - NO: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2211- HC-MAD-IT
CIT Vs DXN Herbal Manufacturing Industries Pvt Ltd
Whether when the assessee has paid excise duty pursuant to an order passed by this Court, then the fact that the assessee has taken up the matter before the Supreme Court, would not make the payment a non-payment - YES: HC - Revenue' s appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2210- HC-P&H-IT
Ajay Pal Singh Vs CIT
Whether when the onus to prove earning of agricultural income by the assessee, was not substantiated through any substantial evidence on record, it is still possible for the assessee to argue for admission of additional evidence - NO: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-1495- ITAT-VIZAG
Hindustan Shipyard Ltd Vs Addl.CIT
Whether when prior period expenses were disallowed then the prior period income cannot be accepted - Whether demurrage charges are in the nature of penalty and hence not allowable as deduction u/s 37(1). - Assessee' s appeal partly allowed : VISAKHAPATNAM ITAT
2015-TIOL-1494- ITAT-DEL
ADDL CIT Vs Hyundai Engineering and Construction Co Ltd
Whether freight expenses should be allowed when it is mainly a administrative expenses and the assessee has earned meager amount as other income from this project - YES :ITAT
Whether addition of business expenditure is not justified when assessee has filed all the relevant documentary evidences before the Revenue - YES : ITAT - Revenue' s appeal dismissed : DLEHI ITAT
2015-TIOL-1493- ITAT-MUM
Asphalt India Corporation Vs ACIT
Whether matter needs to be considered for fresh adjudication, when the assessee has not made any submission before the FAA -YES: ITAT
Whether the claims made by the assessee with regard to the sub contract payment and interest payments, needs to verified before passing the assessment order - YES: ITAT - Case remanded : MUMBAI ITAT
2015-TIOL-1492- ITAT-MUM
ACIT Vs S I Investments and Broking Pvt Ltd
Whether addition on account of expense incurred for earning tax free income @ 5% of such dividend income would meet the ends of justice - YES : ITAT
Whether sale and purchase of shares in short duration is rightly treated as STCG and not a business income - YES : ITAT - Revenue' s appeal partly allowed : MUMBAI ITAT
2015-TIOL-1491- ITAT-MUM
Saigal Sea Trade Vs ACIT
Whether AO has correctly disallowed the fees paid under portfolio management scheme as it had no direct nexus with the purchases and sale of shares – Whether when AO failed to record the dissatisfaction that the working of the disallowance made by the assessee against the income exempt from tax, under section 14A, was incorrect, disallowance u/s 14A r.w. Rule 8D is not warranted – Whether assessee is entitled for deprecation on the flat which was given to its employees. - Assessee' s appeal is partly allowed : MUMBAI ITAT
2015-TIOL-1490- ITAT-MUM
ZEE Media Corporation Ltd Vs DCIT
Whether reopening of assessment is justified where reopening was based on the ground which was already examined by the AO in the regular assessment on which an opinion was formed and AO had no tangible material on the incorrectness of the claim of the assessee – Whether the assessee is entitled to claim the purchases of news items/non fictional items as an allowable expenditure – Whether the debits relating to the purchases of the TV Programs/Film rights is to be treated as an intangible asset and entire cost has to be disallowed except the depreciation where the assessee amortised the 'inventories&# 39; as per the method of accounting consistently followed by him over the years and the revenue has consistently allowed the claim in the past. - Assessee' s appeal allowed : MUMBAI ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2000- CESTAT-DEL
Jindal Steel And Power Ltd Vs CC & CE
ST - Refund - Assessee had initially filed a claim before Delhi Commissionerate which rejected the same on the ground that it had no jurisdiction since the assessee was pursuing business outside its jurisdiction - Bilaspur Commissionerate also rejected refund claim of assessee on the ground that provider of service is not within its jurisdiction - If assessee who is a recipient of non taxable service, files a claim for refund within prescribed period of limitation, it is axiomatic that it is entitled to do so before the Commissionerate under whose jurisdiction it pursues its taxable activities, business or is a registrant; or before Commissionerate having authority over provider of service - Rejection by both Commissionerates is unsustainable - Assessee is entitled for refund: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-1999- CESTAT-DEL
Magnum Ventures Ltd Vs CCE & ST
ST - Period of dispute is 2010-2011 - Demand alongwith interest and penalty confirmed on the ground that assessee had not paid 6%/8% of value of exempted service while they had taken Cenvat credit without maintaining of separate accounts of input service credit in respect of taxable as well as exempted output services - Assessee contends that restaurant service and short term accommodation service were not even taxable during said period and therefore those cannot be treated to be exempted service - Pre-deposit of amount of Cenvat credit taken towards so-called "non-taxable output service" along with proportionate interest would meet requirement of Section 35F of CEA, 1944 - Pre-deposit of Rs.20.34 lakhs ordered: CESTAT - Appeal partly allowed : DELHI CESTAT
2015-TIOL-1998- CESTAT-DEL
CCE Vs SCI Coaching
ST - Commercial training or coaching service - It is not disputed that ST has been demanded on amount received in months of May and June, 2003 for providing commercial training or coaching service while said service became taxable only from 1.7.2003 - Without going into legal aspect whether amendment of Rule 6(1) had retrospective effect, it is quite reasonable on part of assessee to entertain a belief regarding non taxability of amount received prior to the date when said service became taxable, especially when there is no evidence produced by Revenue to establish that there was wilful suppression of facts on part of assessee - As service became taxable from 1.7.2003 and so it is rather unreasonable to require (or expect from) assessee to file ST-3 return from April, 2003 onwards - As SCN was issued on 2.7.2006, entire demand is beyond normal period of one year and is therefore fatally hit by time-bar: CESTAT - Appeal dismissed : DELHI CESTAT
2015-TIOL-1997- CESTAT-BANG
Milestone Property Services Vs CCE & ST
Service Tax - Penalty - Delayed payment - Financial Difficulty - Reasonable cause under section 80 - Appellant registered as a service provider in July 2008 and visit of officers took place within six months thereafter - Appellant paid entire tax liability with interest including some excess amount for the period prior to the due date - Intention to evade duty cannot be attributed - More so, appellant being new to the tax provisions, taking a lenient view is warranted - On facts, tax amount paid with interest is confirmed and penalty imposed is waived - (Para 5) - Assessee appeal allowed : BANGALORE CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2218- HC-ALL-CX + Story
CC & CE Vs M/s Hindalco Ltd
CX - MODVAT - 'Synthetic Filter Cloth' and 'Asbestos Mill Board' cannot be treated as "inputs" as both the items were part and parcel of machine, plant, equipment etc. used for producing and processing of goods and were specifically excluded under Explanation to Rule 57A of CER, 1944 - Tribunal has clearly erred in law - question of law answered in favour of revenue: High Court [para 11, 12, 13] - Reference answered in favour of Revenue : ALLAHABAD HIGH COURT
2015-TIOL-2006- CESTAT-AHM
Fairdeal Supplies Ltd Vs CCE & ST
CX - Penalty - Rule 25(1) of CER, 2002 - Default in payments of duty as per Rule 8 (3A) of CER, 2002, for the period 05.6.2011 to 12.12.2011 - Entire amount alongwith interest has been paid by assessee through challans - It was the case of assessee that at the time of clearance of goods, duty was being paid through CENVAT credit account and goods cannot be said to have been cleared without payment of duty - As per Indsur Global Limited 2014-TIOL-2115- HC-AHM-CX, penalty is set aside and appeal allowed: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-2005- CESTAT-MUM
ADF Foods Ltd Vs CCE
CX - Appeal dismissed on the ground of limitation without entering into merits.
Held: Commissioner( A) is in error in holding that service of order on appellant has been made on 18/04/2009 without proof of the same available on record - date of service of order as 23/06/2009 as claimed by appellant is accepted as there are no facts on record to the contrary - Order set aside and matter remanded to Commissioner( A): CESTAT [para 5] - Matter remanded : MUMBAI CESTAT
2015-TIOL-2004- CESTAT-MAD
Anglo French Textiles Vs CCE
Central Excise - Demand - Appellants are manufacturers of cotton fabrics, manmade fabrics, woven fabrics, apparels and made-ups - Department conducted physical stock verification based on the internal audit of the appellant-company and detected difference in the stock of finished goods as compared to RG-I Register - Duty demand for shortage of finished goods for extended period under proviso to section 11A adjudicated with interest and penalty under sections 11AB and 11AC; agitated herein on limitation as well as merits.
Held: Earlier Show-cause notice was issued for confiscation of the excess goods seized at the units; the adjudicating authority decided the same and imposed penalty under Rule 173Q for improper maintenance of statutory records - the proceedings initiated in the show-cause notice dated 14.8.2000 was entirely different and it is only related for the excess stock found in the premises which was not accounted in the RG-I Register and there was no demand since the physical goods were available - In the present case the show-cause notice relates to the demand of excise duty on the shortage of goods for the past period and the facts in the first show-cause notice are different from the facts in the present show-cause notice - the appellant' s contention that the demand is hit by limitation is not sustainable and liable to be rejected - Statements recorded from various persons clearly prove the continued shortage of goods over the period - The very fact that the appellant themselves have constituted two committees, as directed by CAG Audit Report, proves that there was huge shortage where the appellants were unable to explain the reasons with clear evidence - adjudicating authority has rightly confirmed the demand and invoked the extended period as there was clear suppression of facts. [Para 8, 11]
On merits, adjudicating authority has clearly come to the conclusion that the appellant' s contention of notional elongation of 4.68% is not acceptable; he has discussed that elongation of fabrics relates to only the processed fabrics whereas the shortage of finished goods is not only the processed fabrics but also in the unprocessed fabrics as well as other made-ups; he has also allowed the percentage of shrinkage of fabrics to the extent of 1 to 1.5% from the total shortage - ratio laid down by the High Court of Madras in the Alagappa Cements case squarely applicable to the facts of the present case - demand of duty on the shortage of goods confirmed by the adjudicating authority is sustained - impugned order upheld. [Para 9, 10, 13] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2003- CESTAT-MAD
Eid Parry India Ltd Vs CCE
Central Excise - CENVAT credit - appellants are engaged in the manufacture of sugar, molasses and denatured ethyl alcohol - they are clearing the said goods on payment of duty and are also availing CENVAT credit on oxygen and acetylene gases as input and on welding electrodes as capital goods - The adjudicating authority has held that oxygen and acetylene gases do not form part of the manufacturing process in the conversion of raw material of 'sugarcane&# 39; to finished goods 'sugar&# 39;; that they are not directly or indirectly used in the manufacture of sugar and thus cannot be considered as inputs - demand for recovery of credit adjudicated and agitated herein.
Held: Madras High Court in the case of CCE, Coimbatore Vs. Madras Aluminium Company Ltd., referred to the decision of the Hon'ble Supreme Court in the case of CCE Vs. Jawahar Mills Ltd. And held the impugned goods admissible to credit - following judicial discipline, appellant-assessee is held entitled to avail CENVAT credit on oxygen and acetylene gases which are being used in repair and maintenance of plant and machinery as inputs. [Para 4, 5] - Appeal allowed : CHENNAI CESTAT
2015-TIOL-2002- CESTAT-MAD
CCE Vs The India Cements Ltd
Central Excise – MODVAT credit – appellant availed modvat credit on lubricating oil used outside the factory area; same denied in adjudication, demand for recovery confirmed under erstwhile Rule 57U (3) of Central Excise Rules, 1944 along with interest and penalty under erstwhile Rule 57U(6) read with 173Q(bb) of CER - Commissioner (Appeals) set aside the demand whereupon Revenue preferred an appeal before the Tribunal, who, vide Final Order No.1436/2009 dt. 15.10.2009 held that lubricating oil used in the mines are eligible for credit as they are captive mines of the assessee and dismissed Revenue' s appeal - The Revenue filed a C.M.A. before the High Court of Madras, who set aside the Tribunal' s order and remanded the matter for denovo consideration, taken up herein.
Held: the short issue in the present appeal relates to verification of factual position on the issue of admissibility of capital goods - The eligibility of capital goods credit on lubricating oils was already decided in the appellant' s own case - The Madras High Court while remanding the matter has set aside the Tribunal order on the ground that the Tribunal has not recorded any finding on the facts (a) whether the mines are captive mines; and (b) whether the mining products are supplied to other cement companies with evidence on the ownership of captive mines. [Para 6]
In respect of (a), the TN Govt had granted mining lease in favour of the respondent for the period of 30 years and 20 years respectively subject to fulfilment of various conditions as set out in the G.O itself and also subject to the payment of royalty and other rents - In terms of above G.O's, appellants have executed lease deed dated 17.6.95 and 5.3.92, wherein the rights, liabilities, restrictions of use of mines and the mode of payment are set out - clearly established beyond doubt that respondents had captive mining lease during the relevant period [Para 7]
In respect of (b), appellant in their letter addressed to the jurisdictional Range Officer, enclosed an undertaking that the limestone mining has been captively consumed by them in the process to produce cement and not sold to outsiders - Revenue has not brought out any evidence to the contrary - appellants availed the credit on lubricating oils for the use in the manufacture at their captive mines and by following the ratio of the Apex Court ruling in the case of Vikram Cement Vs CCE, the appellants are eligible for cenvat credit on capital goods and at captive mines - the impugned order is upheld and Revenue appeal is rejected subject to the condition that mining products in dispute are not cleared to outsiders which may be verified by the Revenue. [Para 8] - Appeal rejected : CHENNAI CESTAT
2015-TIOL-2001- CESTAT-DEL
Vikrant Auto Industries Vs CCE
CX - Whether during period from 6/6/2012 to 18/12/2012, i.e., period of delay in discharge of duty liability for April, 2012 which is beyond the period of one month from due date, assessee were liable to pay duty in respect of goods cleared during this month only through PLA without utilizing CENVAT Credit and whether penalty under Rule 25 of CER, 2002 would be attracted - Both sides agreed that Gujarat High Court in Indsur Global Limited 2014-TIOL-2115- HC-AHM-CX has specifically held that requirement of sub rule 3 (A) of Rule 8 of CER to pay duty without utilizing CENVAT Credit during period of delay in discharge of duty liability for a particular month, which is beyond the period of one month from due date is unconstitutional - When sub-rule 3 (A) of Rule 8 has been struck down as unconstitutional by two High Courts, impugned order would not survive - Appeal allowed: CESTAT - Appeal allowed : DELHI CESTAT
CUSTOMS SECTION
2015-TIOL-2008- CESTAT-DEL + Story
M/s Savi Vision Pvt Ltd Vs CC
Cus - s.4A of CEA, 1944 - Appellant importing notified goods and selling to NCCF/KB - NCCF/KB purchase goods in bulk for effecting sale to ultimate consumers and do not fall into the category of institutional consumers - MRP required to be affixed - sale of goods by appellant at price higher than the RSP declared can only lead to the conclusion that appellants mis-declared the RSP of such goods at the time of import - Appellant to pay differential duty: CESTAT [para 6] - Appeal partly allowed : DELHI CESTAT
2015-TIOL-2007- CESTAT-MAD
KBS Manian and Brothers Pvt Ltd Vs CC
Customs - CHALR 2004 - appellant was a holder of CHA licence valid upto 10.5.2014 - investigations carried out by DRI relating to seizure of cigarettes revealed that CHA had not met the actual importer and not followed the KYC checks prescribed by CBEC circular No.9/2010-Cus. dt. 8.4.2010; that CHA unilaterally determined the duty liability and completed the self-assessment formalities through ICES/ICEGATE in respect of the impugned Bill of Entry without consent of importer; that CHA used another importer' s DEPB scrip without proper authorization from DEPB licence holder; and that CHA did not inform the Customs about concealment of cigarettes in the declared cargo - Based on the allegations and investigations, the appellant' s CHA licence was suspended under Regulation 20 (2) of CHALR, 2004 and subsequently ordered to be continued by the adjudicating authority vide the impugned Order agitated herein.
Held: The suspension of licence is more than two and half years and the authority has not completed the proceedings till date - Department&# 39;s plea that Inquiry Officer was nominated on 15.10.2013 but he was transferred and another officer was nominated on 31.10.2013 is not justified and not acceptable - In spite of definite time limit of 9 months prescribed by Board circular dt. 8.4.2010 for completion of the proceedings, in the present case, even after two-and-a-half years the proceedings are not completed - the suspension of CHA licence is liable to be set aside and the appellants are allowed to perform their duties as CHA - impugned order is set aside; it is expressly clarified that the adjudicating authority is at liberty to continue the proceedings under Regulation 22 of CHALR. [Para 6-9] - Appeal allowed : CHENNAI CESTAT
Cus - NCCF/KB purchase goods from appellant in bulk for effecting sale to ultimate consumers and do not fall into category of institutional consumers - MRP required to be affixed - Appellant to pay differential duty: CESTAT
NEW DELHI 5: THE appellant deals in Audio-Visual Equipments such as LCD projector, Plasma TV, Home Theatre System, DVD CAMM etc.. During the disputed period from 2001 - 2002 to 2004 - 2005, the appellants imported goods by declaring the RSP and paying duty on such assessment.
A search was conducted on 12/01/2005 in the business premises of the appellants on a specific intelligence. Audio-visual equipments imported worth Rs.57,55,770/ - were found in the business premises of the appellant which did not have MRP displayed on the packing though these goods were imported by paying duty on RSP declared. The goods were seized and later provisionally released on furnishing bond of 100% value of seized goods and bank guarantee of 25%. Differential duty of Rs.6,93,820/ - was deposited.
On further enquiry, it was found that the appellants sold such imported goods to NCCF/KB at a price higher than the RSP declared at the time of import. The appellants had sold goods to retailers and other customers besides sale to NCCF/KB.
A show cause notice was issued alleging mis-declaration of RSP, and proposing inter alia, demand of differential duty taking into consideration the price at which goods were sold to NCCF/KB.
The notice was finalized by the order, inter alia, whichconfirmed -
(a) confiscation of goods worth Rs.57,55,770/ - and as the goods were provisionally released, a fine of Rs.5,00,000/ - was imposed in lieu of confiscation u/s 125 of CA, 1962;
(b) demand of Rs.3,19,593/ - being differential duty on seized goods along with interest;
(c) demand of Rs.1,50,88,287/ - being differential duty on past clearances along with interest;
(d) imposed equal amount of penalty besides penalty of Rs.25 lakhs on Director of appellant u/s 112 (a) of CA, 1962, and
(e) ordered appropriation of amount of Rs.6,93,820/ - already deposited.
Aggrieved by this order passed by Commissioner of Customs, (Preventive) New Delhi, the appellant is before the CESTAT.
The appellant, inter alia, submitted that NCCF/KB being institutional buyers, the provisions of SWM Act 1976 and PC Rules 1977 are not attracted to the supply of goods to these customers.
After considering the elaborate submissions made by both sides, the Bench extracted the relevant definitions & provisions &observed as under -
+ NCCF/KB are not institutional consumers. NCCF/KB purchase goods in bulk for effecting sale to ultimate consumers and do not fall into the category of institutional consumers. The argument on behalf of the appellants that the appellants relied upon the Board Circular dated 28.2.2002 and was under the belief that MRP need not be affixed in effecting supply to NCCF/KB is without merits. The sale of goods at price higher than the RSP declared can only lead to the conclusion that appellants mis-declared the RSP of such goods at the time of import. The appellants are, therefore, liable to pay differential duty.
+ Even though the appellant sold goods to other customers at prices lower than the declared RSP, as the appellant had mis-declared RSP, the highest price at which the goods were sold to NCCF/KB was rightly taken by the authorities below as the basis for calculation of differential duty.
+ RSP is only the upper limit of the sale price which the importer can charge from the consumer. The appellant is free to sell goods at any price lower than the RSP declared. The appellants have pleaded and put forward a consistent case, which is corroborated by the detailed list and invoices, that sales effected to customers other than NCCF/KB were made at RSP or prices lower than the RSP declared at the time of import. In such circumstances we have to agree with the appellant' s contention that the demand of differential duty on goods sold below RSP or goods sold at RSP is unjustified. Merely because the importer effected sale of some goods at price higher than the RSP declared, the Revenue cannot demand differential duty on entire import done as per various B/E during the period 2001- 2002 to 2004-2005.
+ That there is no stipulation in the said Act that all packings should bear the same MRP. It is a prerogative of the manufacturer to affix the MRP on the goods and if different MRPs are affixed keeping in view of the market conditions, different MRP so fixed would be the retail sale price in respect of each packet.
+ The goods were imported under different B/E declaring RSP and cleared after assessment. Law does not forbid sale of goods at prices lower than the declared RSP or equal to RSP. On such score, there cannot be any mis-declaration of RSP if goods are sold at RSP or below RSP. Undeniably the allegation of collection of higher price is confined to the sales effected to NCCF/KB. The demand of differential duty, in our view, has also to be confined to sales effected to NCCF/KB only. In such circumstances the demand of differential duty of Rs.1,50,88,287. 05 on entire sales is unsustainable.
+ As per the relevant provision of SWM Act 1976 and PC Rules 1977 the packages ought to have the MRP declared on them. Therefore, we hold that the confiscation and demand of differential duty on the seized goods, in our view, does not call for any interference.
+ The imposition of penalty of Rs.25 lakhs (on the Director of the appellant), in our view is slightly on the higher side. We consider that the penalty imposed is liable to be reduced to Rs.50,000/- which would be justifiable in the facts and circumstances of the case.
+ Perse the appellants have committed mis-declaration of RSP, and therefore this contention of the appellants (that the extended period of limitation is not invokable) deserves only to be brushed aside.
Held:
++ The order, to the extent of demand of differential duty of Rs.1,50,88,287/ - and imposing equal amount of penalty is set aside and differential duty and mandatory (equal) penalty only in respect of goods sold to NCCF/KB is upheld. The adjudicating authority is directed to (re)compute the demand of differential duty and penalty accordingly and inform the appellants.
++ The confiscation of goods worth Rs.57,55,770/ - and demand of differential duty of Rs.3,90,593. 62 is sustained along with the levy of redemption fine of Rs. 5 lakhs. (Five Lakhs).
++ The penalty of Rs.25,00,000/ - imposed on Shri Sanjeev Ratra, Director is reduced to Rs. 50,000/-.
The appeal was partly allowed.
(See 2015-TIOL-2008- CESTAT-DEL)
INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION ONLINE EDITION
STATUTES AND NOTIFICATIONS
Notifications :
Income-tax Act, 1961 :
Notification under section 35AC(1), Expln., clause (b) :
Eligible projects or schemes . . . 136
Notification under section 90 :
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
PRINT EDITION
ITR Volume 377 : Part 2 (Issue dated : 21-9-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
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--Authoritie s 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--Definitio n--Hospital- -Hire charges paid for equipment of doctors used in operations-- Exclusion prior to 13-7-2006--Provisio n 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--Completi on 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--Propriet orship 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--Partnersh ip 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--Disallowa nce 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--Reassessmen t 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
Words and phrases --Meaning of “interestâ€-- Beacon Projects P. Ltd. v. CIT (Ker) . . . 237
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
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--Deduction s--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--Propriet orship 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--Partnersh ip entitled to deduction--CIT v. Prisma Electronics (All) . . . 207
S. 80-IB(10) --Housing project--Special deduction--Completi on 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--Authoritie s 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--Reassessmen t 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--Reassessmen t 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--Provisio n 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--Concealm ent 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--Disallowa nce 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
Interest-tax Act, 1974 :
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
CX - MODVAT - 'Synthetic Filter Cloth' and 'Asbestos Mill Board' cannot be treated as 'inputs&# 39; as both items were part and parcel of machine & plant used for processing of goods and were excluded under Explanation to Rule 57A: HC
ALLAHABAD : REVENUE is in appeal before the Allahabad High Court.
The respondent assessee is engaged in manufacture of aluminium and other connected products and availed MODVAT credit in respect to 'Synthetic Filter Cloth' and 'Asbestos Mill Board' treating the same to constitute inputs used in or in relation to manufacture of their final products.
A declaration under Rule 57-G was made by the assessee wherein Synthetic Filter Cloth was declared as input & its nature/function was described as fabrication of process liquor. With regard to Asbestos Mill Board, its nature/function was described as Furnace/ Pot insulation.
Revenue took a view that these items are a part of plant and machinery, equipment & not liable to be treated as "inputs" in terms of Rule 57A of CER, 1944 & since the assessee suppressed the functionality of aforesaid items the irregularly availed MODVAT credit of Rs.1,02,582. 97 during the period of July 1989 to January 1991 is recoverable.
Rule 57A of CER, 1944, as it stood at the relevant time is extracted below -
Explanation: - For the purposes of this rule, "inputs includes-
(a) inputs which are manufactured and used within the factory of production in, or in relation to, the manufacture or final products, and
(b) paints and packaging materials,
but does not include-
(i) machines, machinery, plant, equipment, apparatus, toots or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products;
The Collector, Central Excise, Allahabad issued a SCN on 09.06.1992 proposing to disallow the credit and also impose penalties.
An o-in-o came to be passed on 16.3.1993/23. 3.1993. The adjudicating authority held that "inputs" would mean something in the nature of raw material, component etc. out of which the final product is manufactured and which forms part of final product in some form or which is used in the process of manufacture in such a way that without it final product cannot be manufactured in the form it is removed; that the "Synthetic Filter Cloth" and "Asbestos Mill Board" did not satisfy aforesaid requirement so as to qualify to be inputs entitling MODVAT Credit to the assessee. In fine, he disallowed the credit and imposed penalty of Rs.10,000/- on the assessee.
The Tribunal allowed the appeal of the assessee vide order dated 24.6.1997.
And, since the department was aggrieved by this order, they are before the High Court.
The High Court extracted rule 57A of the CER, 1944 and inter alia observed -
+ Provisions of Statute must be construed strictly and the Court neither should stretch the words nor add nor subtract words in order to bring in or include something therein. [Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi 2011-TIOL-73- SC-CX refers]
+ From the own claim of Assessee, it is clear that both the items were part and parcel of machines, plants, equipment etc. used for producing and processing of goods, hence, were excluded specifically under Rule 57A, Explanation which excludes "machines, machinery, plant, equipment, apparatus, toots or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products" .
+ In view of specific exclusion, we are clearly of the view that Assessee was not entitled to claim MODVAT Credit on 'Synthetic Filter Cloth' and 'Asbestos Mill Board' treating the same to be "inputs" under Rule 57A of Rules, 1944. The Tribunal taking otherwise view has clearly erred in law.
The question of law was answered in favour of revenue.
(See 2015-TIOL-2218- HC-ALL-CX)
ALLAHABAD : REVENUE is in appeal before the Allahabad High Court.
The respondent assessee is engaged in manufacture of aluminium and other connected products and availed MODVAT credit in respect to 'Synthetic Filter Cloth' and 'Asbestos Mill Board' treating the same to constitute inputs used in or in relation to manufacture of their final products.
A declaration under Rule 57-G was made by the assessee wherein Synthetic Filter Cloth was declared as input & its nature/function was described as fabrication of process liquor. With regard to Asbestos Mill Board, its nature/function was described as Furnace/ Pot insulation.
Revenue took a view that these items are a part of plant and machinery, equipment & not liable to be treated as "inputs" in terms of Rule 57A of CER, 1944 & since the assessee suppressed the functionality of aforesaid items the irregularly availed MODVAT credit of Rs.1,02,582. 97 during the period of July 1989 to January 1991 is recoverable.
Rule 57A of CER, 1944, as it stood at the relevant time is extracted below -
Explanation: - For the purposes of this rule, "inputs includes-
(a) inputs which are manufactured and used within the factory of production in, or in relation to, the manufacture or final products, and
(b) paints and packaging materials,
but does not include-
(i) machines, machinery, plant, equipment, apparatus, toots or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products;
The Collector, Central Excise, Allahabad issued a SCN on 09.06.1992 proposing to disallow the credit and also impose penalties.
An o-in-o came to be passed on 16.3.1993/23. 3.1993. The adjudicating authority held that "inputs" would mean something in the nature of raw material, component etc. out of which the final product is manufactured and which forms part of final product in some form or which is used in the process of manufacture in such a way that without it final product cannot be manufactured in the form it is removed; that the "Synthetic Filter Cloth" and "Asbestos Mill Board" did not satisfy aforesaid requirement so as to qualify to be inputs entitling MODVAT Credit to the assessee. In fine, he disallowed the credit and imposed penalty of Rs.10,000/- on the assessee.
The Tribunal allowed the appeal of the assessee vide order dated 24.6.1997.
And, since the department was aggrieved by this order, they are before the High Court.
The High Court extracted rule 57A of the CER, 1944 and inter alia observed -
+ Provisions of Statute must be construed strictly and the Court neither should stretch the words nor add nor subtract words in order to bring in or include something therein. [Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi 2011-TIOL-73- SC-CX refers]
+ From the own claim of Assessee, it is clear that both the items were part and parcel of machines, plants, equipment etc. used for producing and processing of goods, hence, were excluded specifically under Rule 57A, Explanation which excludes "machines, machinery, plant, equipment, apparatus, toots or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products" .
+ In view of specific exclusion, we are clearly of the view that Assessee was not entitled to claim MODVAT Credit on 'Synthetic Filter Cloth' and 'Asbestos Mill Board' treating the same to be "inputs" under Rule 57A of Rules, 1944. The Tribunal taking otherwise view has clearly erred in law.
The question of law was answered in favour of revenue.
(See 2015-TIOL-2218- HC-ALL-CX)
IT : Where there was difference of certain amount between stock statement given by assessee to bank and stock statement filed by assessee before Assessing Officer and both statements were prepared on estimated basis and thereupon Assessing Officer added aforesaid amount in income of assessee under section 69 as unexplained investment in stock, statements could not be made basis of addition
IT : Where assessee had not charged interest on debit balance due from one 'V' on account of business transactions with it and had not paid interest to 'V' on interest free advances received from it which were higher than amount outstanding, there was no justification for Assessing Officer in disallowing proportionate interest out of interest expenditure claimed by assessee
[2015] 61 taxmann.com 241 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'B'
Income-tax Officer
v.
Triple V Timber Sales Corpn.
IT : Where assessee had not charged interest on debit balance due from one 'V' on account of business transactions with it and had not paid interest to 'V' on interest free advances received from it which were higher than amount outstanding, there was no justification for Assessing Officer in disallowing proportionate interest out of interest expenditure claimed by assessee
[2015] 61 taxmann.com 241 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'B'
Income-tax Officer
v.
Triple V Timber Sales Corpn.
DAKSHIN GUJARAT VIJ CO. LTD. vs.DEPUTY COMMISSIONER OF INCOME TAX
AHMEDABAD TRIBUNAL
Business Expenditure—Repair and maintenance expenses—Disallowance claim of financial loss—Addition—Validity—AO had made addition u/s 37(1) of Rs. 176.28 lacs on account of disallowance claim of financial loss under the schedule "repair and maintenance expenses"—Lower appellate court deleted same—Held, It was noticed that the CIT(A)'s findings under challenge duly taken into account details of loss with all necessary particulars of irregularities in question, division-wise break-up, work orders, bills involved, items selected for verification and actual work carried out—It has come on record that this assessee was already subjected to C & AG audit—Thus,CIT(A) had already concluded that in case there was any amount recovered in future from the concerned contractor, it shall be treated as assessee's income in the year of receipt. —Revenue fails to file any evidence to the contrary for rebutting the above stated factual findings—Tribunal does not see any reason to interfere in the lower appellate findings—Revenue's appeal dismissed.
AHMEDABAD TRIBUNAL
Business Expenditure—Repair and maintenance expenses—Disallowance claim of financial loss—Addition—Validity—AO had made addition u/s 37(1) of Rs. 176.28 lacs on account of disallowance claim of financial loss under the schedule "repair and maintenance expenses"—Lower appellate court deleted same—Held, It was noticed that the CIT(A)'s findings under challenge duly taken into account details of loss with all necessary particulars of irregularities in question, division-wise break-up, work orders, bills involved, items selected for verification and actual work carried out—It has come on record that this assessee was already subjected to C & AG audit—Thus,CIT(A) had already concluded that in case there was any amount recovered in future from the concerned contractor, it shall be treated as assessee's income in the year of receipt. —Revenue fails to file any evidence to the contrary for rebutting the above stated factual findings—Tribunal does not see any reason to interfere in the lower appellate findings—Revenue's appeal dismissed.
IT/ILT: As a general rule CPM would be MAM in case of contract manufacturers but that would be subject to satisfaction of parameters laid down in rule 10C(1) and (2) of Rules
[2015] 61 taxmann.com 109 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'A'
GE Medical Systems India (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle 11(3), Bangalore
[2015] 61 taxmann.com 109 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'A'
GE Medical Systems India (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle 11(3), Bangalore
VIJAI AUTO SALES & SERVICES PVT. LTD. vs.DEPUTY COMMISSIONER OF INCOME TAX
BANGALORE TRIBUNAL
Assessment—Ex parte order—No intentional absence from hearing—Validity—Assessee company had filed its return of income declaring total income—Case was taken up for scrutiny and the assessment was completed u/s 143(3) wherein the income of the assessee was determined at Rs.76,87,238/ - as against the returned income of Rs.18,16,070 and certain additions/disallowa nces were made—CIT haddismissed assesses appeal ex-parte—Held, on a perusal of the affidavit sworn to by the assessee it appears that the assessee's lack of response and non appearance to the scheduled appellate hearings before the CITL(A) was due to the fact that the assessee had shifted from its earlier place of business operations to a new place— it was viewed that the failure on the part of the assessee to comply with the notices of hearing issued by the CIT(A) was neither intentional or deliberate— Further, CIT(A) in the impugned order has also determined the assessee's appeal ex-parte without adjudicating on the merits of the grounds raised by the assessee—Intention of the Act being that the true and correct income of the assessee be brought to tax, require that the various issues raised by the assessee before the learned CIT(A) ought to be disposed off on merits which was not done in the instant case—Impugned ex-parte order of CIT(A) was set aside—Matter was remitted back to AO—assessee appeal allowed.
BANGALORE TRIBUNAL
Assessment—Ex parte order—No intentional absence from hearing—Validity—Assessee company had filed its return of income declaring total income—Case was taken up for scrutiny and the assessment was completed u/s 143(3) wherein the income of the assessee was determined at Rs.76,87,238/ - as against the returned income of Rs.18,16,070 and certain additions/disallowa nces were made—CIT haddismissed assesses appeal ex-parte—Held, on a perusal of the affidavit sworn to by the assessee it appears that the assessee's lack of response and non appearance to the scheduled appellate hearings before the CITL(A) was due to the fact that the assessee had shifted from its earlier place of business operations to a new place— it was viewed that the failure on the part of the assessee to comply with the notices of hearing issued by the CIT(A) was neither intentional or deliberate— Further, CIT(A) in the impugned order has also determined the assessee's appeal ex-parte without adjudicating on the merits of the grounds raised by the assessee—Intention of the Act being that the true and correct income of the assessee be brought to tax, require that the various issues raised by the assessee before the learned CIT(A) ought to be disposed off on merits which was not done in the instant case—Impugned ex-parte order of CIT(A) was set aside—Matter was remitted back to AO—assessee appeal allowed.
Service Tax : With a view to recover service tax dues pertaining to Kingfisher, Bombay High Court allowed auction of aircraft taken on 'finance lease' by Kingfisher but, in view of lessor's contention that aircraft is lessor's property, sale proceeds were directed to be deposited into Court
[2015] 61 taxmann.com 191 (Bombay)
HIGH COURT OF BOMBAY
Mumbai International Airport (P.) Ltd.
v.
Commissioner of Service Tax
[2015] 61 taxmann.com 191 (Bombay)
HIGH COURT OF BOMBAY
Mumbai International Airport (P.) Ltd.
v.
Commissioner of Service Tax
ARVIND KUMAR vs.INCOME TAX OFFICER
AMRITSAR TRIBUNAL
Addition—Validity of—AO observed that purchase value of plot as mentioned in the alleged agreement to sell was almost double the amount actually paid as mentioned in the sale deed—AO made addition on grounds that the assessee had not offered any explanation regarding source of payment—CIT(A) confirmed the addition made by the AO—Held, AO had initiated re-assessment proceedings and made addition on grounds that the assessees could not offer any explanation regarding source of payment—It remained undisputed that the agreement to sell relied on by the authorities below was a photo copy and not the original thereof—It was also undisputed that this sale agreement was admitted by the assessee—However it wasnot accepted that just because the assessee had made the admission, the additions were to follow inexorably, as a natural consequence of the admission made by assessee—Sellers of the property ought to have been called and examined—Matter was accordingly remitted to AO—AO was directed to call the seller of the property to verify the fact of sale rate mentioned in the alleged sale agreement and the rate as was settled between the seller and the purchaser at the time of execution of sale deed
AMRITSAR TRIBUNAL
Addition—Validity of—AO observed that purchase value of plot as mentioned in the alleged agreement to sell was almost double the amount actually paid as mentioned in the sale deed—AO made addition on grounds that the assessee had not offered any explanation regarding source of payment—CIT(A) confirmed the addition made by the AO—Held, AO had initiated re-assessment proceedings and made addition on grounds that the assessees could not offer any explanation regarding source of payment—It remained undisputed that the agreement to sell relied on by the authorities below was a photo copy and not the original thereof—It was also undisputed that this sale agreement was admitted by the assessee—However it wasnot accepted that just because the assessee had made the admission, the additions were to follow inexorably, as a natural consequence of the admission made by assessee—Sellers of the property ought to have been called and examined—Matter was accordingly remitted to AO—AO was directed to call the seller of the property to verify the fact of sale rate mentioned in the alleged sale agreement and the rate as was settled between the seller and the purchaser at the time of execution of sale deed
DISTRICT COOPERATIVE BANK LTD. vs.DEPUTY COMMISSIONER OF INCOME TAX
HIGH COURT OF ALLAHABAD
Reassessment—Issue of notice of reassessment—Validity of—Assessee filed return declaring a net loss of Rs. 7,48,180—Return was processed u/s 148(1), but subsequently, the case was taken under scrutiny and a notice u/s 148(2) was issued along with a questionnaire— Petitioner assessee filed its reply along with supporting documents—AO examined the profit and loss account from the books of account and other documents and thereafter, made an assessment declaring a net loss of Rs. 66,70,410—Thereafter, AO issued a notice u/s 154 alleging that an error had occurred in the assessment order which was apparent on the face of the record—On an objection being filed, the proceedings were dropped and thereafter, a notice was issued u/s 148 contending that the internal Revenue Audit Party in its report had submitted that the petitioner had debited an amount which was not allowable u/s 36(1)(viia) and therefore, the revenue had "reasons to believe" that an income of specified amount had escaped assessment—Petitioner filed his objection contending that reassessment proceedings were patently erroneous and that reasons to believe were nothing but a change of opinion on which no reassessment proceedings could be initiated—Objection of the petitioner was rejected—Held, In the instant case, it was found that there had been an assessment u/s 143(3)—Books of account were produced and the same were scrutinized—Profit and loss account was checked and only thereafter net loss of Rs.66,70,410 was determined—Merely because the audit report had opined that certain expenses were not allowable u/s 36(1)(viia), it does not entitle the AO to issue a notice u/s 148—It was found from a perusal of the reasons to believe that the AO had not applied its own mind and had not considered as to what would be the effect of the audit report nor had come to any conclusion as per which he could reasonably believe that an income had escaped assessment—Consequently, merely on the basis of the opinion rendered by the audit party, the ITO could not assume jurisdiction to issue a notice u/s 148—AO must, on its own wisdom, come to a conclusion and hold a belief that an income had escaped assessment to tax for issuing a notice u/s 148—Since this belief was not recorded by the AO, the issuance of the notice was done mechanically without any application of mind—Such action amounted to change of opinion, which was not permissible—Since the foundational requirement for issuance of a notice was lacking and the condition precedent for initiating a valid reassessment proceedings were not existing, it was held that the impugned notice issued u/s 148 initiating reassessment proceeding for the A/Y 2007-08 could not be sustained and was quashed—Writ petition was allowed
HIGH COURT OF ALLAHABAD
Reassessment—Issue of notice of reassessment—Validity of—Assessee filed return declaring a net loss of Rs. 7,48,180—Return was processed u/s 148(1), but subsequently, the case was taken under scrutiny and a notice u/s 148(2) was issued along with a questionnaire— Petitioner assessee filed its reply along with supporting documents—AO examined the profit and loss account from the books of account and other documents and thereafter, made an assessment declaring a net loss of Rs. 66,70,410—Thereafter, AO issued a notice u/s 154 alleging that an error had occurred in the assessment order which was apparent on the face of the record—On an objection being filed, the proceedings were dropped and thereafter, a notice was issued u/s 148 contending that the internal Revenue Audit Party in its report had submitted that the petitioner had debited an amount which was not allowable u/s 36(1)(viia) and therefore, the revenue had "reasons to believe" that an income of specified amount had escaped assessment—Petitioner filed his objection contending that reassessment proceedings were patently erroneous and that reasons to believe were nothing but a change of opinion on which no reassessment proceedings could be initiated—Objection of the petitioner was rejected—Held, In the instant case, it was found that there had been an assessment u/s 143(3)—Books of account were produced and the same were scrutinized—Profit and loss account was checked and only thereafter net loss of Rs.66,70,410 was determined—Merely because the audit report had opined that certain expenses were not allowable u/s 36(1)(viia), it does not entitle the AO to issue a notice u/s 148—It was found from a perusal of the reasons to believe that the AO had not applied its own mind and had not considered as to what would be the effect of the audit report nor had come to any conclusion as per which he could reasonably believe that an income had escaped assessment—Consequently, merely on the basis of the opinion rendered by the audit party, the ITO could not assume jurisdiction to issue a notice u/s 148—AO must, on its own wisdom, come to a conclusion and hold a belief that an income had escaped assessment to tax for issuing a notice u/s 148—Since this belief was not recorded by the AO, the issuance of the notice was done mechanically without any application of mind—Such action amounted to change of opinion, which was not permissible—Since the foundational requirement for issuance of a notice was lacking and the condition precedent for initiating a valid reassessment proceedings were not existing, it was held that the impugned notice issued u/s 148 initiating reassessment proceeding for the A/Y 2007-08 could not be sustained and was quashed—Writ petition was allowed
[2015] 60 taxmann.com 237 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax, Delhi
v.
M.M. Aqua Technologies Ltd.
__._,_.___
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