SHYAM BURLAP COMPANY LTD vs.COMMISSIONER OF INCOME TAX
HIGH COURT OF CALCUTTA
Income from house property—Deductions from income from house property—Whether Business income or not—Assessee was a public limited company within the meaning of the Companies Act, 1956 and its main objects, as specified in its Memorandum of Association, was to acquire and develop properties and to deal with the same by way of sale, lease, letting out—Assessee had acquired premises comprising land and buildings and raised two new constructions on the said premises at a substantial cost after demolishing some of the existing buildings—One of the new constructions was sold to different buyers and the profit and loss arising therefrom was assessed under the head "business" and Portions of the second new construction were let out to different tenants—Assessee in its accounts for the financial year ending March 31, 1996 treated the said payments aggregating to Rs.53,50,000, as revenue expenditure and claimed the same as deduction—AO rejected the said claim and disallowed the said payment as capital expenditure—CIT(A) allowed the same holding that the income from rent constituted the assessee's business income and that the compensation amount of Rs.53,50,000 was expenditure laid out wholly and exclusively for the purposes of business on grounds of commercial expediency and had resulted in having a higher income— Tribunal allowed the appeal of the revenue—Held, Since the object in the Memorandum permitted the assessee to carry on business in letting out properties and as 85 percent of the income of the assessee was by way of deriving rent and lease rentals, it was viewed that the income from rent constituted the business income of the assessee—That the compensation of Rs.53,50,000 was paid by the assessee (being the landlord of the premises) to obtain possession from the lessee/tenant so as to earn a higher rental income and so it had arisen out of business necessity and commercial expediency—Further since there was no question of acquiring a property it could not be said that the payment made was for having a benefit of enduring nature—Rather compensation was paid to the existing tenants to have their portions vacated to have new tenants with higher rent and thus to have a higher rental income which was a business activity permitted by the Memorandum—That the CIT(A) while allowing the appeal of the appellant had referred to the Memorandum and it was incumbent on the part of the Tribunal to deal with the said Memorandum instead of denying deduction on the ground that the assessee in the preceding years throughout had declared the rental income under the head "Income from house property"—The fact that assessee being the owner of the property, was carrying on business and had paid compensation for deriving higher rent which was in tune with the Memorandum was not at all considered by the AO—Hence CIT(A) had rightly after considering the object's clause of the Memorandum, observed that assessee was within its rights to avail of the statutory deductions under the law and held that the income from rent constituted the appellant's business income and allowed deduction—Assessee's appeal allowed
HIGH COURT OF CALCUTTA
Income from house property—Deductions from income from house property—Whether Business income or not—Assessee was a public limited company within the meaning of the Companies Act, 1956 and its main objects, as specified in its Memorandum of Association, was to acquire and develop properties and to deal with the same by way of sale, lease, letting out—Assessee had acquired premises comprising land and buildings and raised two new constructions on the said premises at a substantial cost after demolishing some of the existing buildings—One of the new constructions was sold to different buyers and the profit and loss arising therefrom was assessed under the head "business" and Portions of the second new construction were let out to different tenants—Assessee in its accounts for the financial year ending March 31, 1996 treated the said payments aggregating to Rs.53,50,000, as revenue expenditure and claimed the same as deduction—AO rejected the said claim and disallowed the said payment as capital expenditure—CIT(A) allowed the same holding that the income from rent constituted the assessee's business income and that the compensation amount of Rs.53,50,000 was expenditure laid out wholly and exclusively for the purposes of business on grounds of commercial expediency and had resulted in having a higher income— Tribunal allowed the appeal of the revenue—Held, Since the object in the Memorandum permitted the assessee to carry on business in letting out properties and as 85 percent of the income of the assessee was by way of deriving rent and lease rentals, it was viewed that the income from rent constituted the business income of the assessee—That the compensation of Rs.53,50,000 was paid by the assessee (being the landlord of the premises) to obtain possession from the lessee/tenant so as to earn a higher rental income and so it had arisen out of business necessity and commercial expediency—Further since there was no question of acquiring a property it could not be said that the payment made was for having a benefit of enduring nature—Rather compensation was paid to the existing tenants to have their portions vacated to have new tenants with higher rent and thus to have a higher rental income which was a business activity permitted by the Memorandum—That the CIT(A) while allowing the appeal of the appellant had referred to the Memorandum and it was incumbent on the part of the Tribunal to deal with the said Memorandum instead of denying deduction on the ground that the assessee in the preceding years throughout had declared the rental income under the head "Income from house property"—The fact that assessee being the owner of the property, was carrying on business and had paid compensation for deriving higher rent which was in tune with the Memorandum was not at all considered by the AO—Hence CIT(A) had rightly after considering the object's clause of the Memorandum, observed that assessee was within its rights to avail of the statutory deductions under the law and held that the income from rent constituted the appellant's business income and allowed deduction—Assessee's appeal allowed
SHREE BHAGWAN vs.INCOME TAX OFFICER
DELHI TRIBUNAL
Income—Cash credits—Validity of addition—On the basis of an information from ADIT, the case of the assessee was reopened u/s 147 after recording the reason and taking approval of ADIT—Notice u/s 148 was issued which remained un-complied—No return had been filed by the assessee u/s 139(1) and even in response of notice u/s 148—In the absence of return, AO estimated the income of the assessee at Rs. 1,10,000, being the minimum amount chargeable to tax and since no explanation alongwith source of cash deposit of Rs. 20,34,000 in HDFC Bank was filed by the assessee, the same was treated as unexplained and added to the income of the assessee—CIT(A) dismissed assessee's appeal—Held, in the present case, the reasons and the information referred to was extremely scanty and vague—There was no reference to any document or statement, except an Annexure which could not be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income—Annexure was not a pointer and does not indicate escapement of income—Further, it was apparent that the AO did not apply his own mind to the information and examine the basis and material of the information—That the AO and CIT accepted the plea on the basis of vague information in a mechanical manner—Thus, reasons did not satisfy the requirements of s 147—Assessee's appeal allowed
DELHI TRIBUNAL
Income—Cash credits—Validity of addition—On the basis of an information from ADIT, the case of the assessee was reopened u/s 147 after recording the reason and taking approval of ADIT—Notice u/s 148 was issued which remained un-complied—No return had been filed by the assessee u/s 139(1) and even in response of notice u/s 148—In the absence of return, AO estimated the income of the assessee at Rs. 1,10,000, being the minimum amount chargeable to tax and since no explanation alongwith source of cash deposit of Rs. 20,34,000 in HDFC Bank was filed by the assessee, the same was treated as unexplained and added to the income of the assessee—CIT(A) dismissed assessee's appeal—Held, in the present case, the reasons and the information referred to was extremely scanty and vague—There was no reference to any document or statement, except an Annexure which could not be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income—Annexure was not a pointer and does not indicate escapement of income—Further, it was apparent that the AO did not apply his own mind to the information and examine the basis and material of the information—That the AO and CIT accepted the plea on the basis of vague information in a mechanical manner—Thus, reasons did not satisfy the requirements of s 147—Assessee's appeal allowed
COMPANY CASES Volume 192 Part 2 (Issue dated 11-9-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Scheme of amalgamation --Sanction of court--Change of name of transferee company to that of transferor company--Chapter V is a complete code--Procedure laid down in section 391 complied with--Separate compliance with section 21 of 1956 Act read with 13 of 2013 Act not necessary--Scheme not prejudicial to public interest or interest of company or its employees--Scheme not violative of any statutory provisions-- Scheme not against any public policy or pubic interest--No proceedings pending under sections 231 to 237--Scheme sanctioned-- Companies Act, 1956, ss. 21, 391 to 394--Companies Act, 2013, s. 13--General Circular No. 45/2011, dated 8-7-2011-- Michelin India P. Ltd., In re (Mad) . . . 152
Winding up --Grounds for winding up--Inability to pay debts--Company standing guarantee for amount advanced by overseas bank to its overseas subsidiary-- Failure by company or its subsidiary to repay amount due--Existence of foreign decree and pendency of execution proceedings not bar to creditor filing petition for winding up--Failure to pay admitted debt--Defence raised not valid and mere moonshine--Petition admitted--Advertise ment deferred to allow company time to repay debt--Companies Act, 1956, ss. 433(e), 434(1)(a)-- Mauritius Commercial Bank Ltd. v. Sujana Universal Industries Ltd. (T & AP) . . . 164
COMPANY LAW BOARD ORDERS
Shares --Substantial acquisition of shares--Register of members--Rectificat ion of register--Company Law Board--Allegation that shares acquired in concert in violation of 1997 Regulations- -Each shareholder acquiring less than 5 per cent.--Ex facie no violation of 1997 Regulations- -Whether acquirers acted in concert to be decided by competent authority of Securities and Exchange Board of India--Petition dismissed as premature--Companie s Act, 2013, s. 59(4)--Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997-- Transchem Ltd. v. Firstcorp International Ltd. . . . 120 4.1
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Scheme of amalgamation --Sanction of court--Change of name of transferee company to that of transferor company--Chapter V is a complete code--Procedure laid down in section 391 complied with--Separate compliance with section 21 of 1956 Act read with 13 of 2013 Act not necessary--Scheme not prejudicial to public interest or interest of company or its employees--Scheme not violative of any statutory provisions-- Scheme not against any public policy or pubic interest--No proceedings pending under sections 231 to 237--Scheme sanctioned-- Companies Act, 1956, ss. 21, 391 to 394--Companies Act, 2013, s. 13--General Circular No. 45/2011, dated 8-7-2011-- Michelin India P. Ltd., In re (Mad) . . . 152
Winding up --Grounds for winding up--Inability to pay debts--Company standing guarantee for amount advanced by overseas bank to its overseas subsidiary-- Failure by company or its subsidiary to repay amount due--Existence of foreign decree and pendency of execution proceedings not bar to creditor filing petition for winding up--Failure to pay admitted debt--Defence raised not valid and mere moonshine--Petition admitted--Advertise ment deferred to allow company time to repay debt--Companies Act, 1956, ss. 433(e), 434(1)(a)-- Mauritius Commercial Bank Ltd. v. Sujana Universal Industries Ltd. (T & AP) . . . 164
COMPANY LAW BOARD ORDERS
Shares --Substantial acquisition of shares--Register of members--Rectificat ion of register--Company Law Board--Allegation that shares acquired in concert in violation of 1997 Regulations- -Each shareholder acquiring less than 5 per cent.--Ex facie no violation of 1997 Regulations- -Whether acquirers acted in concert to be decided by competent authority of Securities and Exchange Board of India--Petition dismissed as premature--Companie s Act, 2013, s. 59(4)--Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997-- Transchem Ltd. v. Firstcorp International Ltd. . . . 120 4.1
Direct Tax Basket
2015-TIOL-1443- ITAT-AHM
Shri Monal Y Thakkar Vs ACIT
Whether it can be said that no income ultimately resulted in to the assesses when whatever amounts they had illegally earned, which could be assessed as their income, had been taken away by virtue of the Order passed by the SEBI - Whether the CIT(A) was justified in holding that amount of Rs.5,48,385/ - is to be assessed as STCG when the investment to this is a bona fide investment of the assessees, and it has no link with the other IPOs investments. - Assessee' s appeal partly allowed : AHMEDABAD ITAT
2015-TIOL-1442- ITAT-HYD
DCIT Vs Kakatiya Cements Sugar & Industries Ltd
Whether deduction u/s 80IA can be denied to the Assessee on the ground that power generation unit claimed to have been set up is not a new unit but has been set up by splitting up of earlier business when generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA - Whether steam produced by the assessee is eligible unit is a by-product and income from sale of steam is the income derived from industrial undertaking, eligible for deduction u/s 80-IA. - Revenue' s Appeal Partly Allowed : HYDERABAD ITAT
2015-TIOL-1441- ITAT-HYD
ACIT Vs Late Allam Adavaiah
Whether assessee is assessable to capital gains in the current AY in respect of the land transferred by it in the previous year relevant to present AY - Whether the assessee as a respondent can raise a new issue, which was not raised by him either before the AO or before the CIT(A), for the first time before the Tribunal as a respondent in the appeal filed by the department. - Case Remaded : HYDERABAD ITAT
2015-TIOL-1440- ITAT-HYD
M/s Nadella Estates Ltd Vs ITO
Whether addition u/s 68 can be made on the ground that that the assessee has failed to prove the creditworthiness of share applicants when AO having failed to bring any material on record to disprove share applicant' s claim of having agricultural land holding or engaged in agricultural activity. - Assessee' s appeal partly allowed : HYDERABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1921- CESTAT-MUM + Story
Shipping Corporation Of India Ltd Vs CCE
ST - Appellants are experts in the shipping business and were called upon by the UT of Lakshadweep to assist them in finalising the kind of a ship that may be required for movement of men and material from island to mainland - appellant charged the UT for this assistance - ST not payable during the material period February 1999 to January 2004 under 'Consulting Engineer Service' as appellant not an engineering firm - Appeal allowed with consequential relief: CESTAT [para 8, 9] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2102- HC-JHARKHAND- CX
Dilip Kumar Jaiswal Vs UoI
Central Excise - Central Excise Act, 1944, Section 35 and Limitation Act 1963, Section 14 - Bar of limitation - 480 days of delay in preferring appeal - Condonation - Whether Commissioner (A) was justified in dismissing appeal on the premise of appeal being filed after expiry of 90 days and beyond the limitation of condonation of delay without excluding the time spent in prosecuting litigation diligently before the High Court - Appellant took chance and preferred appeal directly before the High Court without exhausting statutory appeal before the Commissioner - High Court dismissed appeal on merits - Appellant thus is not entitled to take recourse to the benefit of section 14 of Limitation Act seeking exclusion of period spent in appeal before the High Court as the appeal was neither preferred before wrong forum nor was the High Court lacks jurisdiction - Impugned order warrants no interference - Writ dismissed. (Para 5, 6) : JHARKHAND HIGH COURT
2015-TIOL-2101- HC-MAD-CX
M/s Automotive Coaches & Components Ltd Vs CCE
Cenvat credit - Reversal of credit based on endorsed invoice - Validity - Invoice based on which credit is availed must be in the name of the manufacturer availing credit - Appellant received duty paid trailers to remake and convert for required model and availed Cenvat credit on basis of endorsed invoices issued in the name of consignee - Invoice thus is not endorsed in the name of the appellant as such is not a valid duty paying document to avail Cenvat credit - CESTAT justified in affirming the order of the Commissioner (A) in reversing the credit and invoking extended period of limitation.
Whether CESTAT is justified in upholding the findings of the department in reversing the Cenvat credit on ground that duty paying documents were not issued in the name of the assessee availing the credit but were endorsed in the name of another manufacturer? - Writ dismissed : MADRAS HIGH COURT
CUSTOMS SECTION
2015-TIOL-2105- HC-DEL-COFEPOSA
Harpal Singh Vs UoI
COFEPOSA - Writ Petition challenging the detention under COFEPOSA at pre-detention stage, in the absence of "live link" due to time gap between the detention order dated 31st March, 2015 and the occurrence on 7th July, 2014.
Held: The petitioner has not been able to make an exceptional ground, to accept the present writ petition at the pre-detention stage - No reason to agree that there is lack of perceptible live nexus and link between the events on 7th July, 2014 and the detention order dated 31st March, 2015 for the connection snapped on account of the time gap between the two dates and delay in execution of the detention order dated 31st March, 2015, which was attempted to be first served on 1st June, 2015 - The respondents in the reply have set out in detail the material which had to be first collected in the investigation to ascertain involvement of different persons in the smuggling of gold. The persons involved had to be discerned and evidence collated. This as per the respondents took time as statements had to be recorded, facts had to be verified and documentary material collected. Each stage required application of mind and examination. Detention order cannot be passed in haste and hurry without evidence justifying such action. The detention order would not become stale because of the time gap between the occurrence which becomes the substratum of the detention order, if the authorities can explain the reason and cause for the period in question. Case for interference at the pre-detention stage under the exceptions is not made out. (Para 16) - Petition dismissed : DELHI HIGH COURT
2015-TIOL-1920- CESTAT-MUM + Story
CC Vs M/s Eagle Poonawala Industry Ltd
Cus - Rule 10(1)(c) of the Customs Valuation Rules - Ground of Revenue appeal is very weak - Royalty can be added to the price of the goods only if the same is a condition of the sale of the imported goods - Interestingly, there is no import of goods on the value of which the amount of royalty is sought to be added - Appeal dismissed: CESTAT [para 4, 5] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-1443- ITAT-AHM
Shri Monal Y Thakkar Vs ACIT
Whether it can be said that no income ultimately resulted in to the assesses when whatever amounts they had illegally earned, which could be assessed as their income, had been taken away by virtue of the Order passed by the SEBI - Whether the CIT(A) was justified in holding that amount of Rs.5,48,385/ - is to be assessed as STCG when the investment to this is a bona fide investment of the assessees, and it has no link with the other IPOs investments. - Assessee' s appeal partly allowed : AHMEDABAD ITAT
2015-TIOL-1442- ITAT-HYD
DCIT Vs Kakatiya Cements Sugar & Industries Ltd
Whether deduction u/s 80IA can be denied to the Assessee on the ground that power generation unit claimed to have been set up is not a new unit but has been set up by splitting up of earlier business when generation of power unit is separate and distinct undertaking for which separate approval was obtained and recognised by the IREDA - Whether steam produced by the assessee is eligible unit is a by-product and income from sale of steam is the income derived from industrial undertaking, eligible for deduction u/s 80-IA. - Revenue' s Appeal Partly Allowed : HYDERABAD ITAT
2015-TIOL-1441- ITAT-HYD
ACIT Vs Late Allam Adavaiah
Whether assessee is assessable to capital gains in the current AY in respect of the land transferred by it in the previous year relevant to present AY - Whether the assessee as a respondent can raise a new issue, which was not raised by him either before the AO or before the CIT(A), for the first time before the Tribunal as a respondent in the appeal filed by the department. - Case Remaded : HYDERABAD ITAT
2015-TIOL-1440- ITAT-HYD
M/s Nadella Estates Ltd Vs ITO
Whether addition u/s 68 can be made on the ground that that the assessee has failed to prove the creditworthiness of share applicants when AO having failed to bring any material on record to disprove share applicant' s claim of having agricultural land holding or engaged in agricultural activity. - Assessee' s appeal partly allowed : HYDERABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1921- CESTAT-MUM + Story
Shipping Corporation Of India Ltd Vs CCE
ST - Appellants are experts in the shipping business and were called upon by the UT of Lakshadweep to assist them in finalising the kind of a ship that may be required for movement of men and material from island to mainland - appellant charged the UT for this assistance - ST not payable during the material period February 1999 to January 2004 under 'Consulting Engineer Service' as appellant not an engineering firm - Appeal allowed with consequential relief: CESTAT [para 8, 9] - Appeal allowed : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2102- HC-JHARKHAND- CX
Dilip Kumar Jaiswal Vs UoI
Central Excise - Central Excise Act, 1944, Section 35 and Limitation Act 1963, Section 14 - Bar of limitation - 480 days of delay in preferring appeal - Condonation - Whether Commissioner (A) was justified in dismissing appeal on the premise of appeal being filed after expiry of 90 days and beyond the limitation of condonation of delay without excluding the time spent in prosecuting litigation diligently before the High Court - Appellant took chance and preferred appeal directly before the High Court without exhausting statutory appeal before the Commissioner - High Court dismissed appeal on merits - Appellant thus is not entitled to take recourse to the benefit of section 14 of Limitation Act seeking exclusion of period spent in appeal before the High Court as the appeal was neither preferred before wrong forum nor was the High Court lacks jurisdiction - Impugned order warrants no interference - Writ dismissed. (Para 5, 6) : JHARKHAND HIGH COURT
2015-TIOL-2101- HC-MAD-CX
M/s Automotive Coaches & Components Ltd Vs CCE
Cenvat credit - Reversal of credit based on endorsed invoice - Validity - Invoice based on which credit is availed must be in the name of the manufacturer availing credit - Appellant received duty paid trailers to remake and convert for required model and availed Cenvat credit on basis of endorsed invoices issued in the name of consignee - Invoice thus is not endorsed in the name of the appellant as such is not a valid duty paying document to avail Cenvat credit - CESTAT justified in affirming the order of the Commissioner (A) in reversing the credit and invoking extended period of limitation.
Whether CESTAT is justified in upholding the findings of the department in reversing the Cenvat credit on ground that duty paying documents were not issued in the name of the assessee availing the credit but were endorsed in the name of another manufacturer? - Writ dismissed : MADRAS HIGH COURT
CUSTOMS SECTION
2015-TIOL-2105- HC-DEL-COFEPOSA
Harpal Singh Vs UoI
COFEPOSA - Writ Petition challenging the detention under COFEPOSA at pre-detention stage, in the absence of "live link" due to time gap between the detention order dated 31st March, 2015 and the occurrence on 7th July, 2014.
Held: The petitioner has not been able to make an exceptional ground, to accept the present writ petition at the pre-detention stage - No reason to agree that there is lack of perceptible live nexus and link between the events on 7th July, 2014 and the detention order dated 31st March, 2015 for the connection snapped on account of the time gap between the two dates and delay in execution of the detention order dated 31st March, 2015, which was attempted to be first served on 1st June, 2015 - The respondents in the reply have set out in detail the material which had to be first collected in the investigation to ascertain involvement of different persons in the smuggling of gold. The persons involved had to be discerned and evidence collated. This as per the respondents took time as statements had to be recorded, facts had to be verified and documentary material collected. Each stage required application of mind and examination. Detention order cannot be passed in haste and hurry without evidence justifying such action. The detention order would not become stale because of the time gap between the occurrence which becomes the substratum of the detention order, if the authorities can explain the reason and cause for the period in question. Case for interference at the pre-detention stage under the exceptions is not made out. (Para 16) - Petition dismissed : DELHI HIGH COURT
2015-TIOL-1920- CESTAT-MUM + Story
CC Vs M/s Eagle Poonawala Industry Ltd
Cus - Rule 10(1)(c) of the Customs Valuation Rules - Ground of Revenue appeal is very weak - Royalty can be added to the price of the goods only if the same is a condition of the sale of the imported goods - Interestingly, there is no import of goods on the value of which the amount of royalty is sought to be added - Appeal dismissed: CESTAT [para 4, 5] - Appeal dismissed : MUMBAI CESTAT
Direct Tax Basket
2015-TIOL-1439- ITAT-JAIPUR
ACIT Vs M K Exim (India) Ltd
Whether re-opening of Assessment u/s 147 can be said to be justified when the AO had not made any addition on the basis of reopening or satisfaction recorded. - Revenue' s Appeal dismissed : JAIPUR ITAT
2015-TIOL-1438- ITAT-AHM
Megha Developers Vs ITO
Whether assessee can be denied deduction u/s 80IB on the ground that the assessee had not incurred expenditure, such as purchase of cement, purchase of steel, labour expenses etc., and the society was the sole owner of the land and the assessee constructed and sold shops in the scheme, the built up area of which exceeds limit of 2000 sq.ft prescribed in clause (d) of section 80IB(10) with respect to shops constructed where the assessee had satisfied all the conditions for deduction u/s 80IB and assessee had actually carried out the work of development and construction and there was no other person who had done the work. - Assessee' s Appeals allowed : AHMEDABAD ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1919- CESTAT-BANG
Bharat Earth Movers Ltd Vs CCE, C & ST
Central Excise - Motor Vehicle cess payment under the Industries (Development & Regulation) Act, 1951 - Debit through Cenvat - Scope - Deposit of duty confirmed by debit of Cenvat credit account, in terms of provisions of CENVAT Credit Rules, 2002 and 2004, held is permissible - Appellant allowed debiting their CENVAT credit account for payment of the said duty - Pre-deposit of amount within limitation ordered - Balance due is waived. (Para 5) - Stay granted : BANGALORE CESTAT
2015-TIOL-1918- CESTAT-MUM
Neelikon Food Dyes & Chemicals Ltd Vs CCE
CX - CENVAT - In the case of Export of goods, 'Port' is the 'place of removal' - accordingly, services of port service, storage and warehousing service, cargo handling service, CHA service, export freight charges and outward courier charges are entitled as CENVAT credit - Dy. Commr. CE, Raigad has adjusted the total amount plus penalty and interest against duly sanctioned rebate claim for export of goods - such adjustment and recovery is improper in law - authority concerned to refund the adjusted amount with interest - appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CUSTOMS SECTION
DGFT PUBLIC NOTICE
35
Amendments in Appendix 4J and Appendix 4B of Appendices and Aayat Niryat Forms of FTP 2015-20
2015-TIOL-1439- ITAT-JAIPUR
ACIT Vs M K Exim (India) Ltd
Whether re-opening of Assessment u/s 147 can be said to be justified when the AO had not made any addition on the basis of reopening or satisfaction recorded. - Revenue' s Appeal dismissed : JAIPUR ITAT
2015-TIOL-1438- ITAT-AHM
Megha Developers Vs ITO
Whether assessee can be denied deduction u/s 80IB on the ground that the assessee had not incurred expenditure, such as purchase of cement, purchase of steel, labour expenses etc., and the society was the sole owner of the land and the assessee constructed and sold shops in the scheme, the built up area of which exceeds limit of 2000 sq.ft prescribed in clause (d) of section 80IB(10) with respect to shops constructed where the assessee had satisfied all the conditions for deduction u/s 80IB and assessee had actually carried out the work of development and construction and there was no other person who had done the work. - Assessee' s Appeals allowed : AHMEDABAD ITAT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-1919- CESTAT-BANG
Bharat Earth Movers Ltd Vs CCE, C & ST
Central Excise - Motor Vehicle cess payment under the Industries (Development & Regulation) Act, 1951 - Debit through Cenvat - Scope - Deposit of duty confirmed by debit of Cenvat credit account, in terms of provisions of CENVAT Credit Rules, 2002 and 2004, held is permissible - Appellant allowed debiting their CENVAT credit account for payment of the said duty - Pre-deposit of amount within limitation ordered - Balance due is waived. (Para 5) - Stay granted : BANGALORE CESTAT
2015-TIOL-1918- CESTAT-MUM
Neelikon Food Dyes & Chemicals Ltd Vs CCE
CX - CENVAT - In the case of Export of goods, 'Port' is the 'place of removal' - accordingly, services of port service, storage and warehousing service, cargo handling service, CHA service, export freight charges and outward courier charges are entitled as CENVAT credit - Dy. Commr. CE, Raigad has adjusted the total amount plus penalty and interest against duly sanctioned rebate claim for export of goods - such adjustment and recovery is improper in law - authority concerned to refund the adjusted amount with interest - appeal allowed: CESTAT [para 4, 5] - Appeal allowed : MUMBAI CESTAT
CUSTOMS SECTION
DGFT PUBLIC NOTICE
35
Amendments in Appendix 4J and Appendix 4B of Appendices and Aayat Niryat Forms of FTP 2015-20
INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Industrial undertaking --Special deduction--Decision in Motilal Pesticides (I) Pvt. Ltd. v. CIT[2000] 243 ITR 26 (SC) that deduction to be out of net income--Concept of "income" different from "profits and gains"- -Correctness of decision in Motilal Pesticides (I) Pvt. Ltd. v. CIT[2000] 243 ITR 26 (SC) to be considered-- Income-tax Act, 1961, ss. 80HH-- Vijay Industriesv. CIT . . . 148
HIGH COURTS
Deduction of tax at source --Payment to contractor-- Effect of Explanation to section 194C--Agreement for manufacture of article--No supply of raw material--Licence granted for utilisation of technical know-how--Assessee not liable to deduct tax at source on payment to manufacturer- -Income-tax Act, 1961, s. 194C-- CIT v. Allergan India P. Ltd. (Karn) . . . 164
Income --Computation of income--Disallowanc e of expenditure incurred on non-taxable income--Assessee carrying on composite business--Disallowa nce not applicable where income chargeable to tax at lower rate or at regular rate--Income- tax Act, 1961, s. 14A-- DIT (International Taxation) v. American Express Bank Ltd. (Bom) . . . 153
Interest-tax --Interest earned from debentures and bonds--Not exigible to interest-tax- -Instruction No. 1919, dated March 14, 1995--Interest- tax Act, 1974, s. 2(7)-- CIT v. Pilani Investment and Industries (Cal) . . . 159
Non-resident --Expenditure incurred exclusively for Indian branch--Allowable- - DIT (International Taxation) v. American Express Bank Ltd. (Bom) . . . 153
Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment-- Not necessary to prove escapement of income--Warranty amounts shown as deferred revenue in original assessment and accepted--Reassessm ent proceedings on ground that such amounts had not been offered for tax in subsequent years--Notice valid--Income- tax Act, 1961, ss. 147, 148-- Dell India Pvt. Ltd. v. Joint CIT (LTU) (Karn) . . . 171
Revision --No error in order of Assessing Officer--Order of revision not valid--Income- tax Act, 1961, s. 263-- CIT v. P. Sudhakar (Karn) . . . 155
Writ --Existence of alternate remedy--Not an absolute bar for issue of writ--Constitution of India, art. 226-- Dell India Pvt. Ltd. v. Joint CIT (LTU) (Karn) . . . 171
PRINT EDITION
ITR Volume 377 : Part 1 (Issue dated : 14-9-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Appeal to High Court --High Court giving decision on merits without formulating questions of law--Recall of order--Proper- -Inherent power of High Court to review--Income- tax Act, 1961, s. 260A--Code of Civil Procedure, 1908-- CIT v. Meghalaya Steels Ltd. . . . 112
Interpretation of taxing statutes --Exemptions- -Strict interpretation- -Scope of exemption cannot be enhanced by court-- Oil and Natural Gas Corporation Ltd. v. CIT . . . 117
Surtax --Exemption- -Rule-making power--Power extending to chargeable profits of two categories of foreign companies : companies with whom Central Government has entered into agreements for association or participation in prospecting or extraction or production of mineral oils and companies providing services or facilities in connection with such business--Notificat ion granting exemption to former category of companies--Intentio n in notification consciously to restrict scope of exemption to one category of companies alone--Agreements with foreign companies for services or facilities or for supply of ship, aircraft, machinery and plant to be used in connection with the prospecting or extraction or production of mineral oils--Agreements not contemplating direct association or participation in business--Exemption not available--Companie s (Profits) Surtax Act, 1964, s. 24AA--Notification No. G. S. R. 307(E), dated 31-3-1983-- Oil and Natural Gas Corporation Ltd. v. CIT . . . 117
HIGH COURTS
Appeal to High Court --Appeal by Department against order of Tribunal following jurisdictional High Court--Must be accompanied by reasons for appeal--Income- tax Act, 1961, s. 260A--CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
Appellate Tribunal --Special Bench--Constitution of--Powers of President--Exercise must be informed by procedural justice--Income- tax Act, 1961, s. 255-- Jagati Publications Ltd. v.President, ITAT (Bom) . . . 31
----Special Bench--Constitution of--Procedure- -Natural justice--Central Board of Direct Taxes requesting President to constitute Special Bench in assessee’s case--Regular Bench after hearing parties not recommending constitution of Special Bench but of "appropriate Bench" outside State--Vice- President after meeting Department’s counsel in private recommending constitution of Special Bench on ground matter politically sensitive--Presiden t suo motu constituting Special Bench without hearing assessee--Failure by Board to make request by judicial order not bona fide--Private meeting between Vice-President and special counsel and Vice-President influencing decision improper--Failure by President to hear assessee and failure to give reasons--Constituti on of Special Bench opposed to rule of law, fairness and transparency- -Income-tax Act, 1961, s. 255-- Jagati Publications Ltd. v.President, ITAT (Bom) . . . 31
Business expenditure --Disallowance- -Guest house--Deletion of section 37(4) with effect from 1-4-1988--Deletion of disallowance on account of guest house expenses--Justified --Income- tax Act, 1961, s. 37(4)-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Disallowance- -Payment to non-resident- -Failure to deduct tax at source--Payment to master card international and visa card international- -Not disallowable- -Income-tax Act, 1961, s. 40(a)(i)-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Unmatured foreign exchange contracts--Notional loss--Allowable- -Income-tax Act, 1961, s. 37-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
Capital or revenue expenditure --Expenses for production of television films and commercials- -Revenue expenditure- -Income-tax Act, 1961-- CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
Exemption --Interest on foreign currency loans--Allowable on gross basis and not on net basis--Income- tax Act, 1961, s. 10(15)(iv)(h) -- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Income --Interest earned on Nostro account--Taxable- -No disallowance of interest expenditure- -Income-tax Act, 1961, s. 14A-- Director of Income-tax (International Taxation)v. Credit Agricole Indosuez (Bom) . . . 102
----Mutual concern--Co- operative society allotting plots in lands to members at premium--Ownership of land remaining with society--Premium to be utilised for development of common facilities and amenities--Co- operative society a mutual concern--Premium received for transfer of plots exempt from tax--Income- tax Act, 1961-- CIT v. Prabhukunj Co-operative Housing Society Ltd. [FB] (Guj) . . . 13
Income from undisclosed sources --Fall in rate of profits--No reasonable explanation for such fall--Addition to income justified--Income- tax Act, 1961-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
Income-tax --General principles-- Political affiliation of assessee--Irrelevan t--Income- tax Act, 1961-- Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
Income-tax Department --Appeal to High Court--No appeal filed from order of Special Bench of Tribunal--Appeal from order following Special Bench not to be filed without special justification- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Appeal to High Court--Question decided by Tribunal based on concession by Department or on agreed position that question covered by decision of court--Appeals not to be filed in such matters--Income- tax Act, 1961, s. 260A-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Industrial undertaking --Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income--Income- tax Act, 1961, ss. 80HH, 80-I-- Vijay Solvex Ltd. v.CIT (Raj) . . . 93
Interest --Refund--Chargeabl e at rate prescribed in article 12 of DTAA between India and France--Double Taxation Avoidance Agreement between India and France, art. 12--Income-tax Act, 1961, s. 244A-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Non-resident --Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Income-tax Act, 1961, ss. 37, 44C--Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
----Indian permanent establishment of foreign bank--Interest received from head office and other overseas branches--Not chargeable to tax--Income- tax Act, 1961-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Penalty --Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected--Income- tax Act, 1961, ss. 201, 221, 246(1)(i), (l)-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable--Income- tax Act, 1961, ss. 201(1), (1A), 221--Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Failure to deposit tax deducted at source--Financial difficulty-- Diverse locations and lack of computerisation- -Would not justify failure to deposit tax deducted at source--Income- tax Act, 1961, s. 221-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
Reassessment --Notice--Condition s precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- -Income-tax Act, 1961, ss. 147, 148-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Income-tax Act, 1961, ss. 115JB, 147, 148-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Companies (Profits) Surtax Act, 1964 :
S. 24AA --Surtax--Exemption --Rule-making power--Power extending to chargeable profits of two categories of foreign companies : companies with whom Central Government has entered into agreements for association or participation in prospecting or extraction or production of mineral oils and companies providing services or facilities in connection with such business--Notificat ion granting exemption to former category of companies--Intentio n in notification consciously to restrict scope of exemption to one category of companies alone--Agreements with foreign companies for services or facilities or for supply of ship, aircraft, machinery and plant to be used in connection with the prospecting or extraction or production of mineral oils--Agreements not contemplating direct association or participation in business--Exemption not available-- Oil and Natural Gas Corporation Ltd. v. CIT (SC) . . . 117
Double Taxation Avoidance Agreement between India and France :
Art. 12 --Interest-- Refund--Chargeab le at rate prescribed in article 12 of DTAA between India and France-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez(Bom) . . . 102
Income-tax Act, 1961 :
S. 10(15)(iv)(h) --Exemption- -Interest on foreign currency loans--Allowable on gross basis and not on net basis-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 14A --Income--Interest earned on Nostro account--Taxable- -No disallowance of interest expenditure- - Director of Income-tax (International Taxation) v. Credit Agricole Indosuez(Bom) . . . 102
S. 37 --Business expenditure- -Unmatured foreign exchange contracts--Notional loss--Allowable- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Non-resident- -Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 37(4) --Business expenditure- -Disallowance- -Guest house--Deletion of section 37(4) with effect from 1-4-1988--Deletion of disallowance on account of guest house expenses--Justified -- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
S. 40(a)(i) --Business expenditure- -Disallowance- -Payment to non-resident- -Failure to deduct tax at source--Payment to master card international and visa card international- -Not disallowable- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
S. 44C --Non-resident- -Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 80HH --Industrial undertaking- -Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
S. 80-I --Industrial undertaking- -Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
S. 115JB --Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 147 --Reassessment- -Notice-- Conditions precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- - Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 148 --Reassessment- -Notice-- Conditions precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- - Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 201 --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 201(1), (1A) --Penalty--Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable-- Reliance Industries Ltd.v. CIT (Bom) . . . 74
S. 221 --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Penalty- -Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Penalty- -Failure to deposit tax deducted at source--Financial difficulty-- Diverse locations and lack of computerisation- -Would not justify failure to deposit tax deducted at source--Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 244A --Interest-- Refund--Chargeab le at rate prescribed in article 12 of DTAA between India and France-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 246(1)(i), (l) --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected--Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 255 --Appellate Tribunal--Special Bench--Constitution of--Powers of President--Exercise must be informed by procedural justice-- Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
----Appellate Tribunal--Special Bench--Constitution of--Procedure- -Natural justice--Central Board of Direct Taxes requesting President to constitute Special Bench in assessee’s case--Regular Bench after hearing parties not recommending constitution of Special Bench but of "appropriate Bench" outside State--Vice- President after meeting Department’s counsel in private recommending constitution of Special Bench on ground matter politically sensitive--Presiden t suo motu constituting Special Bench without hearing assessee--Failure by Board to make request by judicial order not bona fide--Private meeting between Vice-President and special counsel and Vice-President influencing decision improper--Failure by President to hear assessee and failure to give reasons--Constituti on of Special Bench opposed to rule of law, fairness and transparency- - Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
S. 260A --Appeal to High Court--Appeal by Department against order of Tribunal following jurisdictional High Court--Must be accompanied by reasons for appeal-- CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
----Appeal to High Court--High Court giving decision on merits without formulating questions of law--Recall of order--Proper- -Inherent power of High Court to review-- CIT v. Meghalaya Steels Ltd. (SC) . . . 112
----Income-tax Department-- Appeal to High Court--Question decided by Tribunal based on concession by Department or on agreed position that question covered by decision of court--Appeals not to be filed in such matters-- Director of Income-tax (International Taxation) v.Credit Agricole Indosuez (Bom) . . . 102
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Industrial undertaking --Special deduction--Decision in Motilal Pesticides (I) Pvt. Ltd. v. CIT[2000] 243 ITR 26 (SC) that deduction to be out of net income--Concept of "income" different from "profits and gains"- -Correctness of decision in Motilal Pesticides (I) Pvt. Ltd. v. CIT[2000] 243 ITR 26 (SC) to be considered-- Income-tax Act, 1961, ss. 80HH-- Vijay Industriesv. CIT . . . 148
HIGH COURTS
Deduction of tax at source --Payment to contractor-- Effect of Explanation to section 194C--Agreement for manufacture of article--No supply of raw material--Licence granted for utilisation of technical know-how--Assessee not liable to deduct tax at source on payment to manufacturer- -Income-tax Act, 1961, s. 194C-- CIT v. Allergan India P. Ltd. (Karn) . . . 164
Income --Computation of income--Disallowanc e of expenditure incurred on non-taxable income--Assessee carrying on composite business--Disallowa nce not applicable where income chargeable to tax at lower rate or at regular rate--Income- tax Act, 1961, s. 14A-- DIT (International Taxation) v. American Express Bank Ltd. (Bom) . . . 153
Interest-tax --Interest earned from debentures and bonds--Not exigible to interest-tax- -Instruction No. 1919, dated March 14, 1995--Interest- tax Act, 1974, s. 2(7)-- CIT v. Pilani Investment and Industries (Cal) . . . 159
Non-resident --Expenditure incurred exclusively for Indian branch--Allowable- - DIT (International Taxation) v. American Express Bank Ltd. (Bom) . . . 153
Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment-- Not necessary to prove escapement of income--Warranty amounts shown as deferred revenue in original assessment and accepted--Reassessm ent proceedings on ground that such amounts had not been offered for tax in subsequent years--Notice valid--Income- tax Act, 1961, ss. 147, 148-- Dell India Pvt. Ltd. v. Joint CIT (LTU) (Karn) . . . 171
Revision --No error in order of Assessing Officer--Order of revision not valid--Income- tax Act, 1961, s. 263-- CIT v. P. Sudhakar (Karn) . . . 155
Writ --Existence of alternate remedy--Not an absolute bar for issue of writ--Constitution of India, art. 226-- Dell India Pvt. Ltd. v. Joint CIT (LTU) (Karn) . . . 171
PRINT EDITION
ITR Volume 377 : Part 1 (Issue dated : 14-9-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURT
Appeal to High Court --High Court giving decision on merits without formulating questions of law--Recall of order--Proper- -Inherent power of High Court to review--Income- tax Act, 1961, s. 260A--Code of Civil Procedure, 1908-- CIT v. Meghalaya Steels Ltd. . . . 112
Interpretation of taxing statutes --Exemptions- -Strict interpretation- -Scope of exemption cannot be enhanced by court-- Oil and Natural Gas Corporation Ltd. v. CIT . . . 117
Surtax --Exemption- -Rule-making power--Power extending to chargeable profits of two categories of foreign companies : companies with whom Central Government has entered into agreements for association or participation in prospecting or extraction or production of mineral oils and companies providing services or facilities in connection with such business--Notificat ion granting exemption to former category of companies--Intentio n in notification consciously to restrict scope of exemption to one category of companies alone--Agreements with foreign companies for services or facilities or for supply of ship, aircraft, machinery and plant to be used in connection with the prospecting or extraction or production of mineral oils--Agreements not contemplating direct association or participation in business--Exemption not available--Companie s (Profits) Surtax Act, 1964, s. 24AA--Notification No. G. S. R. 307(E), dated 31-3-1983-- Oil and Natural Gas Corporation Ltd. v. CIT . . . 117
HIGH COURTS
Appeal to High Court --Appeal by Department against order of Tribunal following jurisdictional High Court--Must be accompanied by reasons for appeal--Income- tax Act, 1961, s. 260A--CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
Appellate Tribunal --Special Bench--Constitution of--Powers of President--Exercise must be informed by procedural justice--Income- tax Act, 1961, s. 255-- Jagati Publications Ltd. v.President, ITAT (Bom) . . . 31
----Special Bench--Constitution of--Procedure- -Natural justice--Central Board of Direct Taxes requesting President to constitute Special Bench in assessee’s case--Regular Bench after hearing parties not recommending constitution of Special Bench but of "appropriate Bench" outside State--Vice- President after meeting Department’s counsel in private recommending constitution of Special Bench on ground matter politically sensitive--Presiden t suo motu constituting Special Bench without hearing assessee--Failure by Board to make request by judicial order not bona fide--Private meeting between Vice-President and special counsel and Vice-President influencing decision improper--Failure by President to hear assessee and failure to give reasons--Constituti on of Special Bench opposed to rule of law, fairness and transparency- -Income-tax Act, 1961, s. 255-- Jagati Publications Ltd. v.President, ITAT (Bom) . . . 31
Business expenditure --Disallowance- -Guest house--Deletion of section 37(4) with effect from 1-4-1988--Deletion of disallowance on account of guest house expenses--Justified --Income- tax Act, 1961, s. 37(4)-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Disallowance- -Payment to non-resident- -Failure to deduct tax at source--Payment to master card international and visa card international- -Not disallowable- -Income-tax Act, 1961, s. 40(a)(i)-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Unmatured foreign exchange contracts--Notional loss--Allowable- -Income-tax Act, 1961, s. 37-- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
Capital or revenue expenditure --Expenses for production of television films and commercials- -Revenue expenditure- -Income-tax Act, 1961-- CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
Exemption --Interest on foreign currency loans--Allowable on gross basis and not on net basis--Income- tax Act, 1961, s. 10(15)(iv)(h) -- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Income --Interest earned on Nostro account--Taxable- -No disallowance of interest expenditure- -Income-tax Act, 1961, s. 14A-- Director of Income-tax (International Taxation)v. Credit Agricole Indosuez (Bom) . . . 102
----Mutual concern--Co- operative society allotting plots in lands to members at premium--Ownership of land remaining with society--Premium to be utilised for development of common facilities and amenities--Co- operative society a mutual concern--Premium received for transfer of plots exempt from tax--Income- tax Act, 1961-- CIT v. Prabhukunj Co-operative Housing Society Ltd. [FB] (Guj) . . . 13
Income from undisclosed sources --Fall in rate of profits--No reasonable explanation for such fall--Addition to income justified--Income- tax Act, 1961-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
Income-tax --General principles-- Political affiliation of assessee--Irrelevan t--Income- tax Act, 1961-- Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
Income-tax Department --Appeal to High Court--No appeal filed from order of Special Bench of Tribunal--Appeal from order following Special Bench not to be filed without special justification- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Appeal to High Court--Question decided by Tribunal based on concession by Department or on agreed position that question covered by decision of court--Appeals not to be filed in such matters--Income- tax Act, 1961, s. 260A-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Industrial undertaking --Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income--Income- tax Act, 1961, ss. 80HH, 80-I-- Vijay Solvex Ltd. v.CIT (Raj) . . . 93
Interest --Refund--Chargeabl e at rate prescribed in article 12 of DTAA between India and France--Double Taxation Avoidance Agreement between India and France, art. 12--Income-tax Act, 1961, s. 244A-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Non-resident --Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Income-tax Act, 1961, ss. 37, 44C--Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
----Indian permanent establishment of foreign bank--Interest received from head office and other overseas branches--Not chargeable to tax--Income- tax Act, 1961-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
Penalty --Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected--Income- tax Act, 1961, ss. 201, 221, 246(1)(i), (l)-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable--Income- tax Act, 1961, ss. 201(1), (1A), 221--Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Failure to deposit tax deducted at source--Financial difficulty-- Diverse locations and lack of computerisation- -Would not justify failure to deposit tax deducted at source--Income- tax Act, 1961, s. 221-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
Reassessment --Notice--Condition s precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- -Income-tax Act, 1961, ss. 147, 148-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Income-tax Act, 1961, ss. 115JB, 147, 148-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Companies (Profits) Surtax Act, 1964 :
S. 24AA --Surtax--Exemption --Rule-making power--Power extending to chargeable profits of two categories of foreign companies : companies with whom Central Government has entered into agreements for association or participation in prospecting or extraction or production of mineral oils and companies providing services or facilities in connection with such business--Notificat ion granting exemption to former category of companies--Intentio n in notification consciously to restrict scope of exemption to one category of companies alone--Agreements with foreign companies for services or facilities or for supply of ship, aircraft, machinery and plant to be used in connection with the prospecting or extraction or production of mineral oils--Agreements not contemplating direct association or participation in business--Exemption not available-- Oil and Natural Gas Corporation Ltd. v. CIT (SC) . . . 117
Double Taxation Avoidance Agreement between India and France :
Art. 12 --Interest-- Refund--Chargeab le at rate prescribed in article 12 of DTAA between India and France-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez(Bom) . . . 102
Income-tax Act, 1961 :
S. 10(15)(iv)(h) --Exemption- -Interest on foreign currency loans--Allowable on gross basis and not on net basis-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 14A --Income--Interest earned on Nostro account--Taxable- -No disallowance of interest expenditure- - Director of Income-tax (International Taxation) v. Credit Agricole Indosuez(Bom) . . . 102
S. 37 --Business expenditure- -Unmatured foreign exchange contracts--Notional loss--Allowable- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
----Non-resident- -Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 37(4) --Business expenditure- -Disallowance- -Guest house--Deletion of section 37(4) with effect from 1-4-1988--Deletion of disallowance on account of guest house expenses--Justified -- Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
S. 40(a)(i) --Business expenditure- -Disallowance- -Payment to non-resident- -Failure to deduct tax at source--Payment to master card international and visa card international- -Not disallowable- - Director of Income-tax (International Taxation) v. Citibank N. A. (Bom) . . . 69
S. 44C --Non-resident- -Business expenditure- -Head office expenses on behalf of Indian branch of assessee--Deductibl e--Section 44C not applicable-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 80HH --Industrial undertaking- -Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
S. 80-I --Industrial undertaking- -Special deduction--Special deductions under sections 80HH and 80-I to be computed on net income-- Vijay Solvex Ltd. v. CIT (Raj) . . . 93
S. 115JB --Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 147 --Reassessment- -Notice-- Conditions precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- - Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 148 --Reassessment- -Notice-- Conditions precedent--Assessin g Officer has to satisfy cumulatively- -Notice would be tested only on basis of reasons recorded at the time of issuing notice--Reasons cannot later be added to, deleted from or supplemented- - Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
----Reassessment- -Notice after four years--Provisions for bad and doubtful debts and diminution of value of long-term investment reduced from net profit while arriving at book profit--Supreme Court decision that provision made for diminution in value of assets and is not a liability--Subseque nt amendment with retrospective effect--Not a ground to reopen assessment-- Godrej Industries Ltd. v. B. S. Singh, Deputy CIT (Bom) . . . 1
S. 201 --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 201(1), (1A) --Penalty--Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable-- Reliance Industries Ltd.v. CIT (Bom) . . . 74
S. 221 --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Penalty- -Failure to deposit tax deducted at source--Delay in depositing amounts of tax deducted with Government-- Voluntary deposit of tax deducted with interest before notice for declaring assessee in default--Penalty imposable-- Reliance Industries Ltd. v. CIT (Bom) . . . 74
----Penalty- -Failure to deposit tax deducted at source--Financial difficulty-- Diverse locations and lack of computerisation- -Would not justify failure to deposit tax deducted at source--Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 244A --Interest-- Refund--Chargeab le at rate prescribed in article 12 of DTAA between India and France-- Director of Income-tax (International Taxation) v. Credit Agricole Indosuez (Bom) . . . 102
S. 246(1)(i), (l) --Penalty--Delay in depositing tax deducted at source with Government-- Assessee admittedly in default--Separate notice for determining assessee in default not necessary--No bar to passing order under section 201 read with section 221 simultaneously- -Assessing Officer passing common order--Assessee’s right of appeal not affected--Reliance Industries Ltd. v. CIT (Bom) . . . 74
S. 255 --Appellate Tribunal--Special Bench--Constitution of--Powers of President--Exercise must be informed by procedural justice-- Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
----Appellate Tribunal--Special Bench--Constitution of--Procedure- -Natural justice--Central Board of Direct Taxes requesting President to constitute Special Bench in assessee’s case--Regular Bench after hearing parties not recommending constitution of Special Bench but of "appropriate Bench" outside State--Vice- President after meeting Department’s counsel in private recommending constitution of Special Bench on ground matter politically sensitive--Presiden t suo motu constituting Special Bench without hearing assessee--Failure by Board to make request by judicial order not bona fide--Private meeting between Vice-President and special counsel and Vice-President influencing decision improper--Failure by President to hear assessee and failure to give reasons--Constituti on of Special Bench opposed to rule of law, fairness and transparency- - Jagati Publications Ltd. v. President, ITAT (Bom) . . . 31
S. 260A --Appeal to High Court--Appeal by Department against order of Tribunal following jurisdictional High Court--Must be accompanied by reasons for appeal-- CIT v. Proctor and Gamble Home Products Ltd. (Bom) . . . 66
----Appeal to High Court--High Court giving decision on merits without formulating questions of law--Recall of order--Proper- -Inherent power of High Court to review-- CIT v. Meghalaya Steels Ltd. (SC) . . . 112
----Income-tax Department-- Appeal to High Court--Question decided by Tribunal based on concession by Department or on agreed position that question covered by decision of court--Appeals not to be filed in such matters-- Director of Income-tax (International Taxation) v.Credit Agricole Indosuez (Bom) . . . 102
Cus - DEPB scrip - Circular 72/2002-Cus is binding on Revenue authorities - Insisting that re-export should take place from same port is not legal & proper - Appeal allowed: CESTAT
MUMBAI : THE brief facts are that the appellants made import by debiting the DEPB Licenses at Air Cargo Complex, Mumbai and which were re-exported and permission was granted by the JNPT Customs authorities under section 74 of the Customs Act, 1962, subsequent to verifying that the goods exported were the same as imported by the Appellant.
The goods imported vide Bill of Entry dated 04.05.2007 were re-exported on 11.6.2007. The Certificate dated 21.04.2009 was issued by the Asstt. Commissioner of Customs, Gr./VA, JNCH, Sheva towards the refund of duty eligible to be credited, which was addressed to the Jt. DGFT, Churchgate, Mumbai.
Similarly, the goods imported vide B/E dated 09.06.2008 were re-exported on 25.11.2008. The Certificate dated 03.06.2009 was issued by the Asstt. Commissioner of Customs, Gr.II, C & D, JNCH towards the refund of duty eligible to be credited which was addressed to the Jt. DGFT, Churchgate, Mumbai.
Accordingly, the Appellant furnished both the Certificates before the DGFT authorities for issuing of necessary DEPB Scrips.The DGFT authorities were pleased to issue 2 DEPB Scrips dated August 2009 for re-crediting of the duty amount.
Thereafter, the appellant approached the O/o the Commissioner of Customs (Export), ACC, Mumbai for registering of the DEPB Scrips. The Addl. Commissioner of Customs refused to register the scrips &informed the appellant the reason - that the re-exports have not taken from the same Port, which is a requirement in terms of CBE&C Circular No. 75/2000-Cus dated 11.9.2000.
The Commissioner of Customs (Appeals), Mumbai-III upheld this order and so the matter was ported to the Tribunal.
The appellant submitted that once the Customs authority certified that the same goods which were imported earlier have been re-exported and they have issued certificate so as to enable the appellant to obtain fresh DEPB certificate as entitled, refusal to register the same is bad and it amounts to taking away by the other hand what has been given by one hand.
Reliance is also placed on the Customs Circular No. 71/2002 (should be 72/2002-Cus) dated 1.11.2002 wherein the Board has clarified that Drawback under Section 74 should be allowed on merits without insisting on re-export of goods from the same Port.
The AR did not have much to add.
The CESTAT held -
"5. …, I am satisfied that the re-export have been done as required under the provisions of Section 74 of the Customs Act. I also find that all the facts have also been recorded in both certificates dated 21.4.2009 and 3.6.2009 issued by the Assistant Commissioner of Customs addressed to the Joint DGFT. Further, in view of the Circular No. 71/2002-Cus which gave specific direction to the Customs authorities not to insist for re-export from the same Port in case of duty drawback. Accordingly, I hold that the said Circular is binding on the Revenue authorities, and the learned Commissioner is in error in refusing to allow registration of the DEPB scrip issued. Thus, the appeal is allowed. I further direct the Commissioner of Customs (Export), ACC, Mumbai to register both the DEPB scrips…"
In passing : For similar results, see Torrent Pharmaceuticals [2009-TIOL-586- CESTAT-MUM] .
(See 2015-TIOL-1927- CESTAT-MUM )
^
MUMBAI : THE brief facts are that the appellants made import by debiting the DEPB Licenses at Air Cargo Complex, Mumbai and which were re-exported and permission was granted by the JNPT Customs authorities under section 74 of the Customs Act, 1962, subsequent to verifying that the goods exported were the same as imported by the Appellant.
The goods imported vide Bill of Entry dated 04.05.2007 were re-exported on 11.6.2007. The Certificate dated 21.04.2009 was issued by the Asstt. Commissioner of Customs, Gr./VA, JNCH, Sheva towards the refund of duty eligible to be credited, which was addressed to the Jt. DGFT, Churchgate, Mumbai.
Similarly, the goods imported vide B/E dated 09.06.2008 were re-exported on 25.11.2008. The Certificate dated 03.06.2009 was issued by the Asstt. Commissioner of Customs, Gr.II, C & D, JNCH towards the refund of duty eligible to be credited which was addressed to the Jt. DGFT, Churchgate, Mumbai.
Accordingly, the Appellant furnished both the Certificates before the DGFT authorities for issuing of necessary DEPB Scrips.The DGFT authorities were pleased to issue 2 DEPB Scrips dated August 2009 for re-crediting of the duty amount.
Thereafter, the appellant approached the O/o the Commissioner of Customs (Export), ACC, Mumbai for registering of the DEPB Scrips. The Addl. Commissioner of Customs refused to register the scrips &informed the appellant the reason - that the re-exports have not taken from the same Port, which is a requirement in terms of CBE&C Circular No. 75/2000-Cus dated 11.9.2000.
The Commissioner of Customs (Appeals), Mumbai-III upheld this order and so the matter was ported to the Tribunal.
The appellant submitted that once the Customs authority certified that the same goods which were imported earlier have been re-exported and they have issued certificate so as to enable the appellant to obtain fresh DEPB certificate as entitled, refusal to register the same is bad and it amounts to taking away by the other hand what has been given by one hand.
Reliance is also placed on the Customs Circular No. 71/2002 (should be 72/2002-Cus) dated 1.11.2002 wherein the Board has clarified that Drawback under Section 74 should be allowed on merits without insisting on re-export of goods from the same Port.
The AR did not have much to add.
The CESTAT held -
"5. …, I am satisfied that the re-export have been done as required under the provisions of Section 74 of the Customs Act. I also find that all the facts have also been recorded in both certificates dated 21.4.2009 and 3.6.2009 issued by the Assistant Commissioner of Customs addressed to the Joint DGFT. Further, in view of the Circular No. 71/2002-Cus which gave specific direction to the Customs authorities not to insist for re-export from the same Port in case of duty drawback. Accordingly, I hold that the said Circular is binding on the Revenue authorities, and the learned Commissioner is in error in refusing to allow registration of the DEPB scrip issued. Thus, the appeal is allowed. I further direct the Commissioner of Customs (Export), ACC, Mumbai to register both the DEPB scrips…"
In passing : For similar results, see Torrent Pharmaceuticals [2009-TIOL-586- CESTAT-MUM] .
(See 2015-TIOL-1927- CESTAT-MUM )
^
VAT AND SERVICE TAX CASES (VST)
PRINT EDITION
VOLUME 83 : PART 5 : ISSUE DATED 11-9-2015
HIGH COURTS
Appeal--Value added tax--Appeal to Appellate Tribunal--Pre- deposit-- Appeal to Appellate Tribunal against order dismissing appeal on question of pre-deposit- -Tribunal not justified in going into merits--Gujarat Value Added Tax Act, 2003 (1 of 2005), s. 73(4).--State of Gujarat v. Phil Corporation Ltd. (Guj) . . . 527
Assessment-- Writs under Constitution- -Alternative remedy--Several notices fixing dates for hearing served but assessee not appearing and sending letters for adjournment on ground that he had challenged assessment for previous years in appeal--Writ petition challenging assessment order dated December 24, 2012 and demand notices dated December 24, 2012 and August 28, 2014 alleging that assessment order not served on him--Claim by assessee that copy of order collected by him from office of respondent after receipt of notice in August, 2014 but no document produced showing assessee ever applied for copy of order--Records showing order and notices correctly addressed to petitioner, entered in register and dispatched-- Petitioner not filing appeal but challenging order after almost two years--Petition dismissed--Constitu tion of India, art. 226--Tripura Value Added Tax Act, 2004 (1 of 2005).--Sri Subhash Chandra Paul v. State of Tripura (Tripura) . . . 510
Check-post-- See Penalty (Raj) . . . 506
Declaration form--Value added tax--Penalty- -Evasion of tax--Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
Entry tax--Refund- -Assessment orders passed for 2006-07 and 2007-08 levying tax on carbon black feed stock and demand created pursuant to interim order passed by High Court in writ petition challenging validity of Entry Tax Act, 2007--Validity upheld by High Court and interim order passed by Supreme Court in SLP staying operation of judgment subject to deposit 50 per cent. of liability and furnishing bank guarantee for balance amount--Amount deposited and appeal filed before appellate authority against assessment order dismissed--Tribunal allowing appeal and directing authority to refund amount paid by petitioner and order confirmed by High Court--Authorities rejecting petitioner&# 39;s application on ground admitted tax not refundable-- Not justified--Finding by Tribunal that petitioner deposited tax under protest in terms of interim order by Court becoming final--Petitioner entitled to refund of amount deposited--Stand that amount not refundable till disposal of SLP erroneous--Writ of mandamus issued to refund amount deposited for assessment years 2006-07 and 2007-08, up to December 31, 2007--U. P. Tax on Entry of Goods Act (12 of 2000)--Uttar Pradesh Tax on Entry of Goods into Local Areas Act (30 of 2007)--U. P. Trade Tax Act (15 of 1948), s. 29.--SKI Carbon Black (India) Private Limited v. State of U. P. (All) . . . 552
Evasion of tax--Value added tax--Penalty- -Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
----Value added tax--Penalty- -Revision- -High Court--Check- post--Finding of Tax Board that there was vital difference in writing between original invoice and office copy--Original invoice not found at time of inspection of vehicle but produced later--Finding of Tax Board that it was prepared later when vehicle was intercepted and one bill left blank in original bill book--Finding of fact--No question of law for revision--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Kalra Steel Traders v. Assistant Commercial Taxes Officer (Raj) . . . 506
High Court--See Penalty (Raj) . . . 506
Input-tax credit--Input- tax credit--Value added tax--Purchase of taxable goods used as input for manufacture of goods sold in course of inter-State trade--Change of law--Doubt as to provision applicable-- Application for advance ruling by dealer--Assessing authority to wait for ruling--Order of authority quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 19(2)(ii), (v), 48A.--Wheels India Limited v. Assistant Commissioner (CT) (Mad) . . . 523
----Value added tax--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
Inter-State sale--Sales tax--Inter-State sale or local sale--Finding of Tribunal that goods delivered to dealer only after payment of price, that charges for transit insurance paid by seller, that dealer mentioned as buyer in documents and that movement was in pursuance of firm purchase order placed by dealer specifying quantity and variety--Transactio n inter-State sale not local sale--Central Sales Tax Act (74 of 1956), s. 3(a)--Tamil Nadu General Sales Tax Act (1 of 1959), s. 2(n).--State of Tamil Nadu v. Annamalaiar Mills Ltd. (Mad) . . . 536
----See also Value added tax (Mad) . . . 523
Luxury tax--Liability to tax--Luxury provided in hospital--Definitio n--Inclusion of facilities such as air-conditioner and television provided to patient or his attendant--Valid- -Luxury --Test--Assam Tax on Luxuries (Hotels and Lodging Houses and Hospitals) Act (5 of 1989), s. 2(7A).--All Assam Non Govt. Health Establishment Association v. State of Assam (Gauhati) . . . 542
Manufacture- -See Value added tax (Mad) . . . 523
Members' club--Service tax--Liability to tax--Services provided to members--Not taxable--Finance Act (32 of 1994), s. 65(25a), (105)(zzze). --Green Environment Services Cooperative Society Ltd. v. Union of India (Guj) . . . 519
Natural justice--Value added tax--Input-tax credit--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
Penalty--Value added tax--Evasion of tax--Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
----Value added tax--Revision- -High Court--Evasion of tax--Check-post- -Finding of Tax Board that there was vital difference in writing between original invoice and office copy--Original invoice not found at time of inspection of vehicle but produced later--Finding of Tax Board that it was prepared later when vehicle was intercepted and one bill left blank in original bill book--Finding of fact--No question of law for revision--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Kalra Steel Traders v. Assistant Commercial Taxes Officer (Raj) . . . 506
Pre-deposit- -See Value Added Tax Tribunal (Guj) . . . 527
Refund--Entry tax--Assessment orders passed for 2006-07 and 2007-08 levying tax on carbon black feed stock and demand created pursuant to interim order passed by High Court in writ petition challenging validity of Entry Tax Act, 2007--Validity upheld by High Court and interim order passed by Supreme Court in SLP staying operation of judgment subject to deposit 50 per cent. of liability and furnishing bank guarantee for balance amount--Amount deposited and appeal filed before appellate authority against assessment order dismissed--Tribunal allowing appeal and directing authority to refund amount paid by petitioner and order confirmed by High Court--Authorities rejecting petitioner&# 39;s application on ground admitted tax not refundable-- Not justified--Finding by Tribunal that petitioner deposited tax under protest in terms of interim order by Court becoming final--Petitioner entitled to refund of amount deposited--Stand that amount not refundable till disposal of SLP erroneous--Writ of mandamus issued to refund amount deposited for assessment years 2006-07 and 2007-08, up to December 31, 2007--U. P. Tax on Entry of Goods Act (12 of 2000)--Uttar Pradesh Tax on Entry of Goods into Local Areas Act (30 of 2007)--U. P. Trade Tax Act (15 of 1948), s. 29.--SKI Carbon Black (India) Private Limited v. State of U. P. (All) . . . 552
----Sales tax--Unjust enrichment-- Dealer depositing entire purchase tax element with assessing authorities as condition precedent to maintainability of its appeal--Court ultimately holding dealer not liable to pay purchase tax--Refusal to refund on presumption that dealer factored tax into its price--Not justified--Haryana General Sales Tax Act (20 of 1973).--United Spirits Ltd. v. State of Haryana (P&H) . . . 514
Revision--See Penalty (Raj) . . . 506
Service tax--Liability to tax--Members&# 39; club--Services provided to members--Not taxable--Finance Act (32 of 1994), s. 65(25a), (105)(zzze). --Green Environment Services Cooperative Society Ltd. v. Union of India (Guj) . . . 519
----Voluntary Compliance Encouragement Scheme--Disqualific ation for consideration of declaration- -Notice or determination in respect of same issue in earlier period--Notice and order in case of assessee not under section 73A--That period for which declaration made covered under earlier show-cause notice--Not ground to reject declaration- -Finance Act (17 of 2013), s. 106--Service Tax Voluntary Compliance Encouragement Scheme, 2013.--ALP Consulting Ltd. v. Assistant Commissioner of Service Tax (Karn) . . . 547
Unjust enrichment-- Sales tax--Dealer depositing entire purchase tax element with assessing authorities as condition precedent to maintainability of its appeal--Refund- -Court ultimately holding dealer not liable to pay purchase tax--Refusal to refund on presumption that dealer factored tax into its price--Not justified--Haryana General Sales Tax Act (20 of 1973).--United Spirits Ltd. v. State of Haryana (P&H) . . . 514
Value added tax--Input-tax credit--Purchase of taxable goods used as input for manufacture of goods sold in course of inter-State trade--Change of law--Doubt as to provision applicable-- Application for advance ruling by dealer--Assessing authority to wait for ruling--Order of authority quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 19(2)(ii), (v), 48A.--Wheels India Limited v. Assistant Commissioner (CT) (Mad) . . . 523
Value added tax--Value added tax--Input-tax credit--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
----See also Penalty (Raj) . . . 497, 506
Value Added Tax Tribunal--Value added tax--Appeal- -Appeal to Appellate Tribunal--Pre- deposit-- Appeal to Appellate Tribunal against order dismissing appeal on question of pre-deposit- -Tribunal not justified in going into merits--Gujarat Value Added Tax Act, 2003 (1 of 2005), s. 73(4).--State of Gujarat v. Phil Corporation Ltd. (Guj) . . . 527
Voluntary Compliance Encouragement Scheme--Service tax--Voluntary Compliance Encouragement Scheme--Disqualific ation for consideration of declaration- -Notice or determination in respect of same issue in earlier period--Notice and order in case of assessee not under section 73A--That period for which declaration made covered under earlier show-cause notice--Not ground to reject declaration- -Finance Act (17 of 2013), s. 106--Service Tax Voluntary Compliance Encouragement Scheme, 2013.--ALP Consulting Ltd. v. Assistant Commissioner of Service Tax (Karn) . . . 547
Words and phrases--" Luxury provided in hospital" --Definition. --All Assam Non Govt. Health Establishment Association v. State of Assam (Gauhati) . . . 542
Writs under Constitution- -Alternative remedy--Assessment- -Several notices fixing dates for hearing served but assessee not appearing and sending letters for adjournment on ground that he had challenged assessment for previous years in appeal--Writ petition challenging assessment order dated December 24, 2012 and demand notices dated December 24, 2012 and August 28, 2014 alleging that assessment order not served on him--Claim by assessee that copy of order collected by him from office of respondent after receipt of notice in August, 2014 but no document produced showing assessee ever applied for copy of order--Records showing order and notices correctly addressed to petitioner, entered in register and dispatched-- Petitioner not filing appeal but challenging order after almost two years--Petition dismissed--Constitu tion of India, art. 226--Tripura Value Added Tax Act, 2004 (1 of 2005).--Sri Subhash Chandra Paul v. State of Tripura (Tripura) . . . 510
____________ _
PRINT EDITION
VOLUME 83 : PART 5 : ISSUE DATED 11-9-2015
HIGH COURTS
Appeal--Value added tax--Appeal to Appellate Tribunal--Pre- deposit-- Appeal to Appellate Tribunal against order dismissing appeal on question of pre-deposit- -Tribunal not justified in going into merits--Gujarat Value Added Tax Act, 2003 (1 of 2005), s. 73(4).--State of Gujarat v. Phil Corporation Ltd. (Guj) . . . 527
Assessment-- Writs under Constitution- -Alternative remedy--Several notices fixing dates for hearing served but assessee not appearing and sending letters for adjournment on ground that he had challenged assessment for previous years in appeal--Writ petition challenging assessment order dated December 24, 2012 and demand notices dated December 24, 2012 and August 28, 2014 alleging that assessment order not served on him--Claim by assessee that copy of order collected by him from office of respondent after receipt of notice in August, 2014 but no document produced showing assessee ever applied for copy of order--Records showing order and notices correctly addressed to petitioner, entered in register and dispatched-- Petitioner not filing appeal but challenging order after almost two years--Petition dismissed--Constitu tion of India, art. 226--Tripura Value Added Tax Act, 2004 (1 of 2005).--Sri Subhash Chandra Paul v. State of Tripura (Tripura) . . . 510
Check-post-- See Penalty (Raj) . . . 506
Declaration form--Value added tax--Penalty- -Evasion of tax--Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
Entry tax--Refund- -Assessment orders passed for 2006-07 and 2007-08 levying tax on carbon black feed stock and demand created pursuant to interim order passed by High Court in writ petition challenging validity of Entry Tax Act, 2007--Validity upheld by High Court and interim order passed by Supreme Court in SLP staying operation of judgment subject to deposit 50 per cent. of liability and furnishing bank guarantee for balance amount--Amount deposited and appeal filed before appellate authority against assessment order dismissed--Tribunal allowing appeal and directing authority to refund amount paid by petitioner and order confirmed by High Court--Authorities rejecting petitioner&# 39;s application on ground admitted tax not refundable-- Not justified--Finding by Tribunal that petitioner deposited tax under protest in terms of interim order by Court becoming final--Petitioner entitled to refund of amount deposited--Stand that amount not refundable till disposal of SLP erroneous--Writ of mandamus issued to refund amount deposited for assessment years 2006-07 and 2007-08, up to December 31, 2007--U. P. Tax on Entry of Goods Act (12 of 2000)--Uttar Pradesh Tax on Entry of Goods into Local Areas Act (30 of 2007)--U. P. Trade Tax Act (15 of 1948), s. 29.--SKI Carbon Black (India) Private Limited v. State of U. P. (All) . . . 552
Evasion of tax--Value added tax--Penalty- -Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
----Value added tax--Penalty- -Revision- -High Court--Check- post--Finding of Tax Board that there was vital difference in writing between original invoice and office copy--Original invoice not found at time of inspection of vehicle but produced later--Finding of Tax Board that it was prepared later when vehicle was intercepted and one bill left blank in original bill book--Finding of fact--No question of law for revision--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Kalra Steel Traders v. Assistant Commercial Taxes Officer (Raj) . . . 506
High Court--See Penalty (Raj) . . . 506
Input-tax credit--Input- tax credit--Value added tax--Purchase of taxable goods used as input for manufacture of goods sold in course of inter-State trade--Change of law--Doubt as to provision applicable-- Application for advance ruling by dealer--Assessing authority to wait for ruling--Order of authority quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 19(2)(ii), (v), 48A.--Wheels India Limited v. Assistant Commissioner (CT) (Mad) . . . 523
----Value added tax--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
Inter-State sale--Sales tax--Inter-State sale or local sale--Finding of Tribunal that goods delivered to dealer only after payment of price, that charges for transit insurance paid by seller, that dealer mentioned as buyer in documents and that movement was in pursuance of firm purchase order placed by dealer specifying quantity and variety--Transactio n inter-State sale not local sale--Central Sales Tax Act (74 of 1956), s. 3(a)--Tamil Nadu General Sales Tax Act (1 of 1959), s. 2(n).--State of Tamil Nadu v. Annamalaiar Mills Ltd. (Mad) . . . 536
----See also Value added tax (Mad) . . . 523
Luxury tax--Liability to tax--Luxury provided in hospital--Definitio n--Inclusion of facilities such as air-conditioner and television provided to patient or his attendant--Valid- -Luxury --Test--Assam Tax on Luxuries (Hotels and Lodging Houses and Hospitals) Act (5 of 1989), s. 2(7A).--All Assam Non Govt. Health Establishment Association v. State of Assam (Gauhati) . . . 542
Manufacture- -See Value added tax (Mad) . . . 523
Members' club--Service tax--Liability to tax--Services provided to members--Not taxable--Finance Act (32 of 1994), s. 65(25a), (105)(zzze). --Green Environment Services Cooperative Society Ltd. v. Union of India (Guj) . . . 519
Natural justice--Value added tax--Input-tax credit--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
Penalty--Value added tax--Evasion of tax--Goods in transit--Declaratio n in form VAT-47 found completely blank except for seal of firm--Penalty attracted--Goods at destination but not fully unloaded--Can be considered still in transit for provisions to apply--Rajasthan Value Added Tax Act (4 of 2003), s. 76(2), Expln., (6).--Continental Containers v. Assistant Commercial Tax Officer (Raj) . . . 497
----Value added tax--Revision- -High Court--Evasion of tax--Check-post- -Finding of Tax Board that there was vital difference in writing between original invoice and office copy--Original invoice not found at time of inspection of vehicle but produced later--Finding of Tax Board that it was prepared later when vehicle was intercepted and one bill left blank in original bill book--Finding of fact--No question of law for revision--Rajasthan Value Added Tax Act (4 of 2003), s. 76(6).--Kalra Steel Traders v. Assistant Commercial Taxes Officer (Raj) . . . 506
Pre-deposit- -See Value Added Tax Tribunal (Guj) . . . 527
Refund--Entry tax--Assessment orders passed for 2006-07 and 2007-08 levying tax on carbon black feed stock and demand created pursuant to interim order passed by High Court in writ petition challenging validity of Entry Tax Act, 2007--Validity upheld by High Court and interim order passed by Supreme Court in SLP staying operation of judgment subject to deposit 50 per cent. of liability and furnishing bank guarantee for balance amount--Amount deposited and appeal filed before appellate authority against assessment order dismissed--Tribunal allowing appeal and directing authority to refund amount paid by petitioner and order confirmed by High Court--Authorities rejecting petitioner&# 39;s application on ground admitted tax not refundable-- Not justified--Finding by Tribunal that petitioner deposited tax under protest in terms of interim order by Court becoming final--Petitioner entitled to refund of amount deposited--Stand that amount not refundable till disposal of SLP erroneous--Writ of mandamus issued to refund amount deposited for assessment years 2006-07 and 2007-08, up to December 31, 2007--U. P. Tax on Entry of Goods Act (12 of 2000)--Uttar Pradesh Tax on Entry of Goods into Local Areas Act (30 of 2007)--U. P. Trade Tax Act (15 of 1948), s. 29.--SKI Carbon Black (India) Private Limited v. State of U. P. (All) . . . 552
----Sales tax--Unjust enrichment-- Dealer depositing entire purchase tax element with assessing authorities as condition precedent to maintainability of its appeal--Court ultimately holding dealer not liable to pay purchase tax--Refusal to refund on presumption that dealer factored tax into its price--Not justified--Haryana General Sales Tax Act (20 of 1973).--United Spirits Ltd. v. State of Haryana (P&H) . . . 514
Revision--See Penalty (Raj) . . . 506
Service tax--Liability to tax--Members&# 39; club--Services provided to members--Not taxable--Finance Act (32 of 1994), s. 65(25a), (105)(zzze). --Green Environment Services Cooperative Society Ltd. v. Union of India (Guj) . . . 519
----Voluntary Compliance Encouragement Scheme--Disqualific ation for consideration of declaration- -Notice or determination in respect of same issue in earlier period--Notice and order in case of assessee not under section 73A--That period for which declaration made covered under earlier show-cause notice--Not ground to reject declaration- -Finance Act (17 of 2013), s. 106--Service Tax Voluntary Compliance Encouragement Scheme, 2013.--ALP Consulting Ltd. v. Assistant Commissioner of Service Tax (Karn) . . . 547
Unjust enrichment-- Sales tax--Dealer depositing entire purchase tax element with assessing authorities as condition precedent to maintainability of its appeal--Refund- -Court ultimately holding dealer not liable to pay purchase tax--Refusal to refund on presumption that dealer factored tax into its price--Not justified--Haryana General Sales Tax Act (20 of 1973).--United Spirits Ltd. v. State of Haryana (P&H) . . . 514
Value added tax--Input-tax credit--Purchase of taxable goods used as input for manufacture of goods sold in course of inter-State trade--Change of law--Doubt as to provision applicable-- Application for advance ruling by dealer--Assessing authority to wait for ruling--Order of authority quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 19(2)(ii), (v), 48A.--Wheels India Limited v. Assistant Commissioner (CT) (Mad) . . . 523
Value added tax--Value added tax--Input-tax credit--Reversal- -Reversal based on formula not disclosed in notice--Reversal applying provision without assigning reasons--Violation of natural justice--Order liable to be quashed--Tamil Nadu Value Added Tax Act (32 of 2006), ss. 18(3), 19(2).--Flowserve (India) Controls Pvt. Ltd. v. Assistant Commissioner (CT) (Mad) . . . 502
----See also Penalty (Raj) . . . 497, 506
Value Added Tax Tribunal--Value added tax--Appeal- -Appeal to Appellate Tribunal--Pre- deposit-- Appeal to Appellate Tribunal against order dismissing appeal on question of pre-deposit- -Tribunal not justified in going into merits--Gujarat Value Added Tax Act, 2003 (1 of 2005), s. 73(4).--State of Gujarat v. Phil Corporation Ltd. (Guj) . . . 527
Voluntary Compliance Encouragement Scheme--Service tax--Voluntary Compliance Encouragement Scheme--Disqualific ation for consideration of declaration- -Notice or determination in respect of same issue in earlier period--Notice and order in case of assessee not under section 73A--That period for which declaration made covered under earlier show-cause notice--Not ground to reject declaration- -Finance Act (17 of 2013), s. 106--Service Tax Voluntary Compliance Encouragement Scheme, 2013.--ALP Consulting Ltd. v. Assistant Commissioner of Service Tax (Karn) . . . 547
Words and phrases--" Luxury provided in hospital" --Definition. --All Assam Non Govt. Health Establishment Association v. State of Assam (Gauhati) . . . 542
Writs under Constitution- -Alternative remedy--Assessment- -Several notices fixing dates for hearing served but assessee not appearing and sending letters for adjournment on ground that he had challenged assessment for previous years in appeal--Writ petition challenging assessment order dated December 24, 2012 and demand notices dated December 24, 2012 and August 28, 2014 alleging that assessment order not served on him--Claim by assessee that copy of order collected by him from office of respondent after receipt of notice in August, 2014 but no document produced showing assessee ever applied for copy of order--Records showing order and notices correctly addressed to petitioner, entered in register and dispatched-- Petitioner not filing appeal but challenging order after almost two years--Petition dismissed--Constitu tion of India, art. 226--Tripura Value Added Tax Act, 2004 (1 of 2005).--Sri Subhash Chandra Paul v. State of Tripura (Tripura) . . . 510
____________ _
Fast Track Exit
Introduction
The Fast Track Exit (FTE) mode is introduced by the Ministry of Corporate Affairs (MCA) vide General Circular No. 36/2011 dated 7th June, 2011 (the Circular) and made effective from 3rd July 2011 as a Fast Track opportunity for Defunct Companies i.e. Companies not carrying any business, to Strike off their names from Register of Companies under Section 560 of the Companies Act, 1956 (the Act) (corresponding to Section 248 of the Companies Act, 2013 which is not yet notified).
Conditions for FTE
The defunct company should have "Nil" Assets & Liabilities and
has not commenced any business activity or operation since incorporation; or
is not carrying over any business activity or operation for last one year before making application under FTE
A Company which has "Active" status or identified as "Dormant" by the MCA
Companies not eligible for FTE
Listed Companies
De-listed Companies
Section 8 Company (corresponding to Section 25 Company under the Companies Act, 1956)
Vanishing Companies
Companies under Inspection/Investig ation pending in any Court
Companies where order under Section 234 of the Companies Act, 1956 has been issued and reply thereto or prosecution, if any, is pending in the court
Companies against which prosecution for a non-compoundable offence is pending in court
Companies which have accepted public deposits and has made defaults in repayment of the same
Companies having secured loans
Companies having management disputes
Companies whose filing of documents has been stayed by Court or Company Law Board (CLB) or Central Government or any other Competent Authority
Companies having dues to income tax, sales tax, central excise, banks and financial institutions or Central Government or State Government or any local authorities
How to apply for FTE?
The application shall be made in Form FTE accompanied by filing fees of ₹ 5,000/-.
Attachments to Form FTE
Affidavit (as per "Annexure A" to the Circular) to be given individually or collectively by all Directors;
Indemnity Bond (as per "Annexure B" to the Circular) to be given individually or collectively by all Directors;
Statement of Accounts (as per "Annexure C" to the Circular) duly certified by Practicing Chartered Accountant or Statutory Auditor of the Company as the case may be;
Board Resolution stating to Strike off the name of the Company under FTE Mode;
Board Resolution for closure of Bank Accounts
Confirmation letter duly signed by the concerned Banks Official that the Bank Account of the Company is closed.
The company shall disclose pending litigations, if any, involving the company while applying under FTE.
Form FTE shall be certified by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant.
Note: In case, the applicants name are not available in database of directors maintained by the MCA, a certificate from Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant along with membership number certifying that the applicants are present Directors of the Company. In such cases the applicants will not be required to file Form DIR-12 (earlier Form 32) and Form DIR-3 (earlier Form DIN 3).
Procedure adopted by the Registrar of Companies (ROC)
The Registrar on receipt of application shall examine the same and if application found in order, it shall intimate the Company by issuing a notice under Section 560 (3) of the Act giving 30 days time, stating that unless cause is shown to the contrary, the name of Company be struck off from the register and the lead to dissolution of the Company.
The Registrar on being satisfied shall strike off the name of the Company from its Register and send notice under Section 560 (5) of the Act for publication in the Official Gazette and the Company stands dissolved from date of publication of the notice in the Official Gazette.
Note: A Company dissolved under Section 560 of the Act can be restored before expiry of 20 years from the date of publication of notice in the Official Gazette by order of the Court. The application for restoration can be made only by the Company, member or creditor. It must be shown that on the date of dissolution of the Company, the Petitioner was a member or creditor. The procedure for application for restoration should be as per provisions of Section 560 (6) of the Act.
By: Parth Sharma
Introduction
The Fast Track Exit (FTE) mode is introduced by the Ministry of Corporate Affairs (MCA) vide General Circular No. 36/2011 dated 7th June, 2011 (the Circular) and made effective from 3rd July 2011 as a Fast Track opportunity for Defunct Companies i.e. Companies not carrying any business, to Strike off their names from Register of Companies under Section 560 of the Companies Act, 1956 (the Act) (corresponding to Section 248 of the Companies Act, 2013 which is not yet notified).
Conditions for FTE
The defunct company should have "Nil" Assets & Liabilities and
has not commenced any business activity or operation since incorporation; or
is not carrying over any business activity or operation for last one year before making application under FTE
A Company which has "Active" status or identified as "Dormant" by the MCA
Companies not eligible for FTE
Listed Companies
De-listed Companies
Section 8 Company (corresponding to Section 25 Company under the Companies Act, 1956)
Vanishing Companies
Companies under Inspection/Investig ation pending in any Court
Companies where order under Section 234 of the Companies Act, 1956 has been issued and reply thereto or prosecution, if any, is pending in the court
Companies against which prosecution for a non-compoundable offence is pending in court
Companies which have accepted public deposits and has made defaults in repayment of the same
Companies having secured loans
Companies having management disputes
Companies whose filing of documents has been stayed by Court or Company Law Board (CLB) or Central Government or any other Competent Authority
Companies having dues to income tax, sales tax, central excise, banks and financial institutions or Central Government or State Government or any local authorities
How to apply for FTE?
The application shall be made in Form FTE accompanied by filing fees of ₹ 5,000/-.
Attachments to Form FTE
Affidavit (as per "Annexure A" to the Circular) to be given individually or collectively by all Directors;
Indemnity Bond (as per "Annexure B" to the Circular) to be given individually or collectively by all Directors;
Statement of Accounts (as per "Annexure C" to the Circular) duly certified by Practicing Chartered Accountant or Statutory Auditor of the Company as the case may be;
Board Resolution stating to Strike off the name of the Company under FTE Mode;
Board Resolution for closure of Bank Accounts
Confirmation letter duly signed by the concerned Banks Official that the Bank Account of the Company is closed.
The company shall disclose pending litigations, if any, involving the company while applying under FTE.
Form FTE shall be certified by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant.
Note: In case, the applicants name are not available in database of directors maintained by the MCA, a certificate from Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant along with membership number certifying that the applicants are present Directors of the Company. In such cases the applicants will not be required to file Form DIR-12 (earlier Form 32) and Form DIR-3 (earlier Form DIN 3).
Procedure adopted by the Registrar of Companies (ROC)
The Registrar on receipt of application shall examine the same and if application found in order, it shall intimate the Company by issuing a notice under Section 560 (3) of the Act giving 30 days time, stating that unless cause is shown to the contrary, the name of Company be struck off from the register and the lead to dissolution of the Company.
The Registrar on being satisfied shall strike off the name of the Company from its Register and send notice under Section 560 (5) of the Act for publication in the Official Gazette and the Company stands dissolved from date of publication of the notice in the Official Gazette.
Note: A Company dissolved under Section 560 of the Act can be restored before expiry of 20 years from the date of publication of notice in the Official Gazette by order of the Court. The application for restoration can be made only by the Company, member or creditor. It must be shown that on the date of dissolution of the Company, the Petitioner was a member or creditor. The procedure for application for restoration should be as per provisions of Section 560 (6) of the Act.
By: Parth Sharma
Cus - Claim of appellant that information on CD is nothing but IT Software merits acceptance as data on CD can be manipulated using AUTOCAD software - Designs & drawings contained in CD are correctly classifiable under heading 8523 8020 attracting Nil rate of duty: CESTAT
MUMBAI : THE appellant filed a bill of entry for the clearance of goods declared as "designs and drawing is for Hull number 398 and 397" through the CHA. The said B/E was facilitated by the Risk Management System (RMS) where no assessment and examination was prescribed.
The appellant had declared the said goods as classifiable under CTH49060000 claiming benefit of exemption under serial number 271 of notification number 12/2012-CUS.
Being a high value consignment the goods were examined by the shed staff under supervision of AC, CEX and on opening the consignment, in addition to the drawings and designs printed on paper, one number CD was also found. On being asked to explain the contents of the CD, the appellant informed that they had placed an order for supply of designs and drawings for construction of ship and had not placed any order for supplying designs and drawings on CD.
Not convinced, the Customs authorities conducted an investigation and after recording statements of company personnel came to a conclusion that appellant had tried to evade duty by mis-declaring the description of the goods imported.
A SCN was issued for classification of the CD under CTH 8523 8020 and demanding duty.
The appellant contested the SCN submitting that they had placed an order for design and drawings in CD form and even if the classification as claimed by the revenue is correct then also benefit of supplementary note to chapter 85 will apply as imported goods i.e. CD will fall under the category of "information technology software" ; there was no intention to misdeclare the goods as the purchase orders were placed specifically for the designs and drawings in printed form only and that they be allowed to re-export the CD back to the supplier.
The adjudicating authority did not agree and held against the appellant.
Elaborate submissions were made by both sides.
The Bench after considering the submissions extracted the supplementary note to chapter heading number 8523 which reads -
Supplementary Note:
For the purposes of heading 8523, "Information Technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine.
(emphasis supplied)
Thereafter, the CESTAT observed -
+ It can be seen from the above reproduced note that the information contained in the CD in question is definitely a data, image and is recorded in machine readable form. It is not the case of the revenue that the data on the CD is not machine readable. The date on the CD if is read in an automatic data processing machine would mean that the data on the CD is machine readable. The CD containing the designs and drawings is definitely satisfying the first limb of the definition of information technology software. The term "information&q uot; has been defined in section 2(1)(v) of the Information Technology Act, 2000 to include data, message, text, images, sound, voice, codes, computer programs, software and data basis and microfilm or computer generated Micro fiche.
+ Secondly, the 2 nd limb of the definition of information technology software requires that the representation of instructions, data, sound or image is capable of being manipulated. In the course of the hearing, it was demonstrated before us that the drawings contained in a CD form, when used in conjunction with AUTOCAD software provides interactivity to the user and the data in such a CD is also capable of being manipulated. The printed literature pertaining to AUTOCAD software, as extracted in the synopsis filed by the Appellant, shows that a user can change a drawing i.e manipulate it by giving different commands.
The commands appearing in the printed literature were extracted by the Bench and it was noted that the above features of the CD were explained in the course of investigation by Mr. Vipul Srivastav, Deputy General manager in his statement.
While rejecting the findings of the adjudicating authority as being without any basis, it was further observed -
+ We therefore find that the features of AUTOCAD software, as demonstrated before us, are consistent with the evidence on record. We find considerable substance in the argument that a drawing in a "soft" form which enables a user to view cross section when used to in conjunction with AUTOCAD software is information technology software, providing interactivity to the user as well as being capable of manipulation.
+ The manipulation to data on CD that could be undertaken as was demonstrated to us indicates that after the manipulations, the automatic data processing machine culls out immense information with respect to so many aspects of the vessel. The drawings and the designs on the CD is in a software form as stated above and can be manipulated to suit to the requirements of appellant' s customer or the user. The interactivity of the information on the CD can be also gauged from the fact that the appellant can entirely change the design and use the new design and also work of the minutest detail, a fact undisputed by the lower authorities.
+ The definition of information technology service talks about including of source code and object code; which we find is not required in the case in hand, inasmuch that when the CD is capable of being manipulated without having a source code or and object code would in itself mean that the said codes are built in the designs and drawings as found in the CD.
+ The definition of manipulation, as per Black's law dictionary also talks about alteration in the data, which we find can be done in the case in hand. The interactivity to the user is demonstrated from the fact that three-dimensional picture is presented on the screen after required changes are made to the data on the CD. The fact that software AutoCAD is being used by the importer to manipulate the information on CD is itself a indicator that the designs and drawings on the CD are interacting with the automatic data processing machine.
The apex court decision in Pentamedia Graphics Ltd. - 2006-TIOL-44- SC-CUS was held to be directly on the point whereas the decision relied by the adjudicating authority and special counsel for the Revenue in LML Ltd - 2010-TIOL-75- SC-CUS was distinguished.
The Bench concluded -
"…we find that the designs and drawings contained in the CD were correctly classifiable under Heading 8523 8020 and attracts 'nil' rate of duty as per Customs Tariff. The requirements of supplementary note to Chapter 8523 are therefore satisfied. Since designs and drawings in paper form as well as in the CD form attract nil rate of duty, the finding of the Commissioner about the applicability of section 19 of the Customs Act, 1962 becomes irrelevant since the rate of duty applicable to both goods even assuming them to be constituting a set, is 'nil' in view of the classification determined by us. The question whether a separate value could be attributed to the CD also becomes irrelevant in view of the classification under Heading 85238020 of the Tariff."
The order passed by the Commissioner of Customs (Import), Air Cargo Complex, Sahar, Mumbai was set aside and the appeal was allowed with consequential relief.
(See 2015-TIOL-1924- CESTAT-MUM)
MUMBAI : THE appellant filed a bill of entry for the clearance of goods declared as "designs and drawing is for Hull number 398 and 397" through the CHA. The said B/E was facilitated by the Risk Management System (RMS) where no assessment and examination was prescribed.
The appellant had declared the said goods as classifiable under CTH49060000 claiming benefit of exemption under serial number 271 of notification number 12/2012-CUS.
Being a high value consignment the goods were examined by the shed staff under supervision of AC, CEX and on opening the consignment, in addition to the drawings and designs printed on paper, one number CD was also found. On being asked to explain the contents of the CD, the appellant informed that they had placed an order for supply of designs and drawings for construction of ship and had not placed any order for supplying designs and drawings on CD.
Not convinced, the Customs authorities conducted an investigation and after recording statements of company personnel came to a conclusion that appellant had tried to evade duty by mis-declaring the description of the goods imported.
A SCN was issued for classification of the CD under CTH 8523 8020 and demanding duty.
The appellant contested the SCN submitting that they had placed an order for design and drawings in CD form and even if the classification as claimed by the revenue is correct then also benefit of supplementary note to chapter 85 will apply as imported goods i.e. CD will fall under the category of "information technology software" ; there was no intention to misdeclare the goods as the purchase orders were placed specifically for the designs and drawings in printed form only and that they be allowed to re-export the CD back to the supplier.
The adjudicating authority did not agree and held against the appellant.
Elaborate submissions were made by both sides.
The Bench after considering the submissions extracted the supplementary note to chapter heading number 8523 which reads -
Supplementary Note:
For the purposes of heading 8523, "Information Technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine.
(emphasis supplied)
Thereafter, the CESTAT observed -
+ It can be seen from the above reproduced note that the information contained in the CD in question is definitely a data, image and is recorded in machine readable form. It is not the case of the revenue that the data on the CD is not machine readable. The date on the CD if is read in an automatic data processing machine would mean that the data on the CD is machine readable. The CD containing the designs and drawings is definitely satisfying the first limb of the definition of information technology software. The term "information&q uot; has been defined in section 2(1)(v) of the Information Technology Act, 2000 to include data, message, text, images, sound, voice, codes, computer programs, software and data basis and microfilm or computer generated Micro fiche.
+ Secondly, the 2 nd limb of the definition of information technology software requires that the representation of instructions, data, sound or image is capable of being manipulated. In the course of the hearing, it was demonstrated before us that the drawings contained in a CD form, when used in conjunction with AUTOCAD software provides interactivity to the user and the data in such a CD is also capable of being manipulated. The printed literature pertaining to AUTOCAD software, as extracted in the synopsis filed by the Appellant, shows that a user can change a drawing i.e manipulate it by giving different commands.
The commands appearing in the printed literature were extracted by the Bench and it was noted that the above features of the CD were explained in the course of investigation by Mr. Vipul Srivastav, Deputy General manager in his statement.
While rejecting the findings of the adjudicating authority as being without any basis, it was further observed -
+ We therefore find that the features of AUTOCAD software, as demonstrated before us, are consistent with the evidence on record. We find considerable substance in the argument that a drawing in a "soft" form which enables a user to view cross section when used to in conjunction with AUTOCAD software is information technology software, providing interactivity to the user as well as being capable of manipulation.
+ The manipulation to data on CD that could be undertaken as was demonstrated to us indicates that after the manipulations, the automatic data processing machine culls out immense information with respect to so many aspects of the vessel. The drawings and the designs on the CD is in a software form as stated above and can be manipulated to suit to the requirements of appellant' s customer or the user. The interactivity of the information on the CD can be also gauged from the fact that the appellant can entirely change the design and use the new design and also work of the minutest detail, a fact undisputed by the lower authorities.
+ The definition of information technology service talks about including of source code and object code; which we find is not required in the case in hand, inasmuch that when the CD is capable of being manipulated without having a source code or and object code would in itself mean that the said codes are built in the designs and drawings as found in the CD.
+ The definition of manipulation, as per Black's law dictionary also talks about alteration in the data, which we find can be done in the case in hand. The interactivity to the user is demonstrated from the fact that three-dimensional picture is presented on the screen after required changes are made to the data on the CD. The fact that software AutoCAD is being used by the importer to manipulate the information on CD is itself a indicator that the designs and drawings on the CD are interacting with the automatic data processing machine.
The apex court decision in Pentamedia Graphics Ltd. - 2006-TIOL-44- SC-CUS was held to be directly on the point whereas the decision relied by the adjudicating authority and special counsel for the Revenue in LML Ltd - 2010-TIOL-75- SC-CUS was distinguished.
The Bench concluded -
"…we find that the designs and drawings contained in the CD were correctly classifiable under Heading 8523 8020 and attracts 'nil' rate of duty as per Customs Tariff. The requirements of supplementary note to Chapter 8523 are therefore satisfied. Since designs and drawings in paper form as well as in the CD form attract nil rate of duty, the finding of the Commissioner about the applicability of section 19 of the Customs Act, 1962 becomes irrelevant since the rate of duty applicable to both goods even assuming them to be constituting a set, is 'nil' in view of the classification determined by us. The question whether a separate value could be attributed to the CD also becomes irrelevant in view of the classification under Heading 85238020 of the Tariff."
The order passed by the Commissioner of Customs (Import), Air Cargo Complex, Sahar, Mumbai was set aside and the appeal was allowed with consequential relief.
(See 2015-TIOL-1924- CESTAT-MUM)
Incorporation of Private Limited Company
Features of Private Limited Company
Separate Legal Status
Capacity to borrow
Easy Transfer of shares
Minimum number of Members : 2 ; Maximum number of Members : 200
Minimum Capital : Nil {omitted by Companies (Amendment) Act, 2015}
Limited Liability
Minimum number of Directors : 2
Foreign investment permitted (subject to applicable Sectoral Cap as per FDI guidelines)
Capacity to sue or to be sued
Procedure for Incorporation of Company
Obtain Digital Signature Certificate (DSC) for the proposed Director / Promoter not having DSC;
Obtain Directors Identification Number (DIN) for proposed Director / Promoter not having DIN by applying to Ministry of Corporate Affairs (MCA) in Form DIR-3;
Requirements for Form DIR-3
Passport Size Photograph
Identity Proof: PAN (mandatory) duly attested by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant
Address Proof: Passport / Aadhar / Telephone Bill / Electric Bill (not older than 2 Months) duly attested by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant
Educational Qualification
Email Id and Mobile Number
Apply for Reservation of Name in Form INC-1 along with the prescribed fees
On approval of Name of the proposed Company is received, the following Forms need to be filed;
Form INC-7
Form INC-22
Form DIR-12
On scrutiny and examination of the aforesaid forms, the concerned Registrar of Companies (ROC) shall issue Certificate of Incorporation of Company along with Corporate Identification Number (CIN).
Note: Certificate of Commencement of business is not required to be filed in Form INC-21 as the same has been omitted by the Companies (Amendment) Act, 2015.
Requirements for Form INC-7, Form INC-22, Form DIR-12
Memorandum of Association & Articles of Association (MOA & AOA) along with subscribers sheet
INC-8 duly notarized
INC-9 duly notarized
INC-10 duly verified by Banker or notarized
Affidavit for non - acceptance of deposit
Full address of Police Station under whose jurisdiction the registered office is situated
Utility Bill (not older than two months) of the registered office premise
Conveyance/Lease deed/Rent Agreement
NOC from the owner of the premise, if taken on lease
Form DIR-2
Directors Directorship details in other Companies / LLPs, if any.
Note: For Incorporation fees please refer Table of Fees Rules and Stamp duty will be levied as per prevailing stamp rate of the concerned State.
Taxation of Companies
Direct Tax
Corporate Tax Rates
Particulars
Domestic Company
Rate of Tax
30% of the Total Income
Surcharge
5% of Income Tax, if taxable income exceeds ₹ 1 crore upto ₹ 10 crore
10% of Income Tax, if taxable income exceeds ₹ 10 crore
Education Cess
2%
S.H.E.C.
1%
Minimum Alternate Tax (MAT) @ 18.5% on Book Profits plus surcharge and cess, as applicable.
Due date for filing of returns: September 30 of the relevant Assessment year
Note: Maximum of MAT or Income Tax should be considered.
Indirect Tax
Service Tax
Service Tax Registration is mandatory if the annual turnover exceed ₹ 9 Lakhs Service Tax is charged at 14% (notified) plus 2% Swachh Bharat Cess (not yet notified) as per Finance Act, 2015.
VAT
VAT is levied on goods sold by the Company. The criteria for registration and charging VAT varies from State to State based on the rules and regulations formulated by the concerned state.
Mandatory Compliances
Quoting of CIN on all letterheads, invoices, notices etc.
Printing of share certificate and MOA & AOA
Opening Bank Accounts
Maintaining Books of Accounts
Appointment of First Statutory Auditor
Board Meeting Compliances as per Companies Act, 2013 and rules made thereunder
Maintaining Minutes Book
Annual General Meeting every year
Annual Filings with the MCA
Appointment of Company Secretary in whole-time employment if paid up capital exceeds ₹ 5 Crore
Maintaining Statutory Registers
Keeping Books of Accounts and Statutory Registers at the Registered Office of the Company
By: Parth Sharma
Separate Legal Status
Capacity to borrow
Easy Transfer of shares
Minimum number of Members : 2 ; Maximum number of Members : 200
Minimum Capital : Nil {omitted by Companies (Amendment) Act, 2015}
Limited Liability
Minimum number of Directors : 2
Foreign investment permitted (subject to applicable Sectoral Cap as per FDI guidelines)
Capacity to sue or to be sued
Procedure for Incorporation of Company
Obtain Digital Signature Certificate (DSC) for the proposed Director / Promoter not having DSC;
Obtain Directors Identification Number (DIN) for proposed Director / Promoter not having DIN by applying to Ministry of Corporate Affairs (MCA) in Form DIR-3;
Requirements for Form DIR-3
Passport Size Photograph
Identity Proof: PAN (mandatory) duly attested by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant
Address Proof: Passport / Aadhar / Telephone Bill / Electric Bill (not older than 2 Months) duly attested by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant
Educational Qualification
Email Id and Mobile Number
Apply for Reservation of Name in Form INC-1 along with the prescribed fees
On approval of Name of the proposed Company is received, the following Forms need to be filed;
Form INC-7
Form INC-22
Form DIR-12
On scrutiny and examination of the aforesaid forms, the concerned Registrar of Companies (ROC) shall issue Certificate of Incorporation of Company along with Corporate Identification Number (CIN).
Note: Certificate of Commencement of business is not required to be filed in Form INC-21 as the same has been omitted by the Companies (Amendment) Act, 2015.
Requirements for Form INC-7, Form INC-22, Form DIR-12
Memorandum of Association & Articles of Association (MOA & AOA) along with subscribers sheet
INC-8 duly notarized
INC-9 duly notarized
INC-10 duly verified by Banker or notarized
Affidavit for non - acceptance of deposit
Full address of Police Station under whose jurisdiction the registered office is situated
Utility Bill (not older than two months) of the registered office premise
Conveyance/Lease deed/Rent Agreement
NOC from the owner of the premise, if taken on lease
Form DIR-2
Directors Directorship details in other Companies / LLPs, if any.
Note: For Incorporation fees please refer Table of Fees Rules and Stamp duty will be levied as per prevailing stamp rate of the concerned State.
Taxation of Companies
Direct Tax
Corporate Tax Rates
Particulars
Domestic Company
Rate of Tax
30% of the Total Income
Surcharge
5% of Income Tax, if taxable income exceeds ₹ 1 crore upto ₹ 10 crore
10% of Income Tax, if taxable income exceeds ₹ 10 crore
Education Cess
2%
S.H.E.C.
1%
Minimum Alternate Tax (MAT) @ 18.5% on Book Profits plus surcharge and cess, as applicable.
Due date for filing of returns: September 30 of the relevant Assessment year
Note: Maximum of MAT or Income Tax should be considered.
Indirect Tax
Service Tax
Service Tax Registration is mandatory if the annual turnover exceed ₹ 9 Lakhs Service Tax is charged at 14% (notified) plus 2% Swachh Bharat Cess (not yet notified) as per Finance Act, 2015.
VAT
VAT is levied on goods sold by the Company. The criteria for registration and charging VAT varies from State to State based on the rules and regulations formulated by the concerned state.
Mandatory Compliances
Quoting of CIN on all letterheads, invoices, notices etc.
Printing of share certificate and MOA & AOA
Opening Bank Accounts
Maintaining Books of Accounts
Appointment of First Statutory Auditor
Board Meeting Compliances as per Companies Act, 2013 and rules made thereunder
Maintaining Minutes Book
Annual General Meeting every year
Annual Filings with the MCA
Appointment of Company Secretary in whole-time employment if paid up capital exceeds ₹ 5 Crore
Maintaining Statutory Registers
Keeping Books of Accounts and Statutory Registers at the Registered Office of the Company
By: Parth Sharma
ST - Matters which raise essentially disputed questions of fact cannot be decided by High Court - entertaining petition would amount to scuttling inquiry and delaying adjudication: HC
MUMBAI : THIS is a Service Tax case. The petitioner is before the Bombay High Court and prays for quashing and setting aside the SCN dated 24th April 2015.
It is the submission of the petitioner that the SCN has been issued without jurisdiction.
Inasmuch as in view of the apex court decision in Raza Textiles Ltd. v/s Income Tax Officer, Rampur, - 2002-TIOL-872- SC-IT-LB the authority cannot confer jurisdiction upon itself by deciding a jurisdictional fact wrongly, the petitioner avers.
The petitioner submits that it is alleged that the yare providing 'Business Auxiliary Services' , 'Business Support Services' in the sense that they were approaching the shipping lines/airlines only after getting inquiry from the client and, therefore, they were acting on behalf of the clients when they book the space or make available slots in the shipping lines / airlines. It is further submitted that the department has erroneously assumed that the arrangement creates a relationship of service provider and service recipient. The petitioner prays that there being no opportunity given to the Petitioner to first satisfy the authority about its jurisdiction and invite a ruling on this point, the Court should admit this Petition and direct the adjudicating authority to render a finding on jurisdiction and then allow the Petitioner, if need be, to challenge it in this very Writ Petition.
The High Court was not impressed with this argument of the petitioner.
Distinguishing the decision cited by the petitioner, the High Court further observed -
+ These allegations (in the SCN) may not be correct and that can be pointed out by the Petitioner by appearing before the Adjudicating Authority.
+ The Petitioner will have to demonstrate that it is not rendering any services within the meaning of Finance Act 1994, much less the 'business support services' .
+ It is the allegation in the show cause notice that the shipping lines / airlines are approached by the Petitioner–Assessee after getting inquiry from the clients and that is how the space or the slot is booked. That there is no such client who had approached the petitioner but the space is booked irrespective of any such inquiry from the client is a version of the Petitioner which the petitioner will have to establish and prove.
+ That there is no customer of the Petitioner and, therefore, the Petitioner is not an agent of such customer and hence whatever amounts are collected are not in the nature of service charge, are all matters which raise essentially disputed questions of fact.
+ The Petitioner will have ample opportunity before the Adjudicating Authority to urge that the jurisdictional facts have been wrongly assumed and that is why the show cause notice could not have been issued at all and that the services for which registration was obtained are not the same but distinct.
+ All such contentions can be raised and we cannot proceed on the basis that the Adjudicating Authority will not deal with them. We cannot assume that the petitioner will necessarily be served with an adverse order. In such a situation, we cannot entertain this Petition. In the given facts and circumstances, this is nothing but scuttling the inquiry and delaying the adjudication.
Holding that there is no merit in the petition, the same was dismissed.
(See 2015-TIOL-2118- HC-MUM-ST)
MUMBAI : THIS is a Service Tax case. The petitioner is before the Bombay High Court and prays for quashing and setting aside the SCN dated 24th April 2015.
It is the submission of the petitioner that the SCN has been issued without jurisdiction.
Inasmuch as in view of the apex court decision in Raza Textiles Ltd. v/s Income Tax Officer, Rampur, - 2002-TIOL-872- SC-IT-LB the authority cannot confer jurisdiction upon itself by deciding a jurisdictional fact wrongly, the petitioner avers.
The petitioner submits that it is alleged that the yare providing 'Business Auxiliary Services' , 'Business Support Services' in the sense that they were approaching the shipping lines/airlines only after getting inquiry from the client and, therefore, they were acting on behalf of the clients when they book the space or make available slots in the shipping lines / airlines. It is further submitted that the department has erroneously assumed that the arrangement creates a relationship of service provider and service recipient. The petitioner prays that there being no opportunity given to the Petitioner to first satisfy the authority about its jurisdiction and invite a ruling on this point, the Court should admit this Petition and direct the adjudicating authority to render a finding on jurisdiction and then allow the Petitioner, if need be, to challenge it in this very Writ Petition.
The High Court was not impressed with this argument of the petitioner.
Distinguishing the decision cited by the petitioner, the High Court further observed -
+ These allegations (in the SCN) may not be correct and that can be pointed out by the Petitioner by appearing before the Adjudicating Authority.
+ The Petitioner will have to demonstrate that it is not rendering any services within the meaning of Finance Act 1994, much less the 'business support services' .
+ It is the allegation in the show cause notice that the shipping lines / airlines are approached by the Petitioner–Assessee after getting inquiry from the clients and that is how the space or the slot is booked. That there is no such client who had approached the petitioner but the space is booked irrespective of any such inquiry from the client is a version of the Petitioner which the petitioner will have to establish and prove.
+ That there is no customer of the Petitioner and, therefore, the Petitioner is not an agent of such customer and hence whatever amounts are collected are not in the nature of service charge, are all matters which raise essentially disputed questions of fact.
+ The Petitioner will have ample opportunity before the Adjudicating Authority to urge that the jurisdictional facts have been wrongly assumed and that is why the show cause notice could not have been issued at all and that the services for which registration was obtained are not the same but distinct.
+ All such contentions can be raised and we cannot proceed on the basis that the Adjudicating Authority will not deal with them. We cannot assume that the petitioner will necessarily be served with an adverse order. In such a situation, we cannot entertain this Petition. In the given facts and circumstances, this is nothing but scuttling the inquiry and delaying the adjudication.
Holding that there is no merit in the petition, the same was dismissed.
(See 2015-TIOL-2118- HC-MUM-ST)
IT : Where assessee-company and its sister concern were in hotel business and assessee advanced an amount to sister concern free of interest on account of commercial expediency and same was used by sister concern for purpose of business, disallowance of interest paid by assessee on loans taken from banks was not justified
[2015] 61 taxmann.com 73 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Bright Enterprises (P.) Ltd.
v.
Commissioner of Income-tax, Jalandhar (Punjab)
[2015] 61 taxmann.com 73 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Bright Enterprises (P.) Ltd.
v.
Commissioner of Income-tax, Jalandhar (Punjab)
JAYENDRABHAI M. DESAI vs.ASSISTANT COMMISSIONER OF INCOME TAX
AHMEDABAD TRIBUNAL
Search and seizure—Agricultural activities—Addition of specified amount was made on account of unexplained income out of the opening balance of capital account of Rs.11,33,680—Validity—Pursuant to search and seizure action u/s 132 at the residential premises of the assessee notices u/s 153A was issued for filing return of income—Assessee had filed return of income declaring total income and agricultural income—Assessee had never filed return of income earlier—During the assessment proceedings assessee had submitted that he was involved in agricultural activities and allied activities for last many years and has been earning agricultural income in all these years—AO thereby made addition to the income of the assessee on grounds that reply of the assessee was not genuine and because of the fact that the assessee has never filed any return of income prior to issuance of notice u/s 153A—CIT(A) had deleted part of the addition made by the AO and confirmed the addition of Rs.6,37,000 instead of Rs.11,33,682—Held, assessee had shown that he was cultivating crops like bajra, maka, etc. and his main source of income, therefore, he was not filing return of income and it was apparent that these facts have not been disputed by the AO nor has he disputed crops in the records submitted to him—It was clearly accepted by AO as well as CIT(A) that the assessee was engaged in the agricultural activities and was holding agricultural land—It was not disputed that assessee had not been able to furnish proper details of his savings and earnings in previous years which in normal cases are being rarely maintained by the agriculturists as their income was exempt from tax—Looking at nature of source of income of the assessee and estimates made by CIT(A),addition was reduced from Rs.6,37,000/ - to Rs.1,00,000 only and the same was confirmed
AHMEDABAD TRIBUNAL
Search and seizure—Agricultural activities—Addition of specified amount was made on account of unexplained income out of the opening balance of capital account of Rs.11,33,680—Validity—Pursuant to search and seizure action u/s 132 at the residential premises of the assessee notices u/s 153A was issued for filing return of income—Assessee had filed return of income declaring total income and agricultural income—Assessee had never filed return of income earlier—During the assessment proceedings assessee had submitted that he was involved in agricultural activities and allied activities for last many years and has been earning agricultural income in all these years—AO thereby made addition to the income of the assessee on grounds that reply of the assessee was not genuine and because of the fact that the assessee has never filed any return of income prior to issuance of notice u/s 153A—CIT(A) had deleted part of the addition made by the AO and confirmed the addition of Rs.6,37,000 instead of Rs.11,33,682—Held, assessee had shown that he was cultivating crops like bajra, maka, etc. and his main source of income, therefore, he was not filing return of income and it was apparent that these facts have not been disputed by the AO nor has he disputed crops in the records submitted to him—It was clearly accepted by AO as well as CIT(A) that the assessee was engaged in the agricultural activities and was holding agricultural land—It was not disputed that assessee had not been able to furnish proper details of his savings and earnings in previous years which in normal cases are being rarely maintained by the agriculturists as their income was exempt from tax—Looking at nature of source of income of the assessee and estimates made by CIT(A),addition was reduced from Rs.6,37,000/ - to Rs.1,00,000 only and the same was confirmed
IT : There is no rational basis to confine the allowability of the expenditure incurred on the premium paid towards keyman insurance policy only to a situation where the policy is in respect of the life of an employee. So long as a policy is an insurance policy, whether it involves a capital appreciation or is under any other investment scheme, it meets the tests laid down under section 10(10D). The requirement of pure insurance policy is something which is not laid down by the statute.
• The disputed issue was:
• Whether premium paid on Keyman insurance policy is deductible even if it is not a pure life insurance policy on life of another?
• The ITAT held as under:
(1) The keyman insurance policy is a defined concept and as long as it meets the requirements of this definition, the terminology given by the insurers have no relevance for the purposes of the Income Tax Act. (2) So long as a policy is an insurance policy, whether it involves a capital appreciation or is under any other investment scheme, it meets the tests laid down under section 10(10D). The requirement of pure insurance policy is something which is not laid down by the statute. (3) Following observations made, by Hon'ble Delhi High Court in case of CIT v. Rajan Nanda [2012] 18 taxmann.com 98 (Delhi) was relevant in this context: • "The object and purpose of a Keyman insurance policy is to protect the business against a financial set back which may occur, as a result of a premature death, to the business or professional organization. There is no rational basis to confine the allowability of the expenditure incurred on the premium paid towards such a policy only to a situation where the policy is in respect of the life of an employee. A Keyman insurance policy is obtained on the life of a partner to safeguard the firm against a disruption of the business that may result due to the premature death of a partner. Therefore, the expenditure which is laid out for the payment of premium on such a policy is incurred wholly and exclusively for the purposes of business." (4) What can be sold as a 'life insurance policy' taken by a business entity for its employee, former employee or any other person important for business of such an entity is between the insurance regulator and insurance service provider. However, once it has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D). (5) Respectfully following the esteemed views of Hon'ble Delhi High Court, stand of the authorities was to be rejected on this aspect of the matter. Thus, premium paid on keyman insurance policy was deductible.
[2015] 61 taxmann.com 141 (Amritsar - Trib.)
IN THE ITAT AMRITSAR BENCH
Suri Sons
v.
Additional Commissioner of Income-tax, Range 1, Jalandhar
• The disputed issue was:
• Whether premium paid on Keyman insurance policy is deductible even if it is not a pure life insurance policy on life of another?
• The ITAT held as under:
(1) The keyman insurance policy is a defined concept and as long as it meets the requirements of this definition, the terminology given by the insurers have no relevance for the purposes of the Income Tax Act. (2) So long as a policy is an insurance policy, whether it involves a capital appreciation or is under any other investment scheme, it meets the tests laid down under section 10(10D). The requirement of pure insurance policy is something which is not laid down by the statute. (3) Following observations made, by Hon'ble Delhi High Court in case of CIT v. Rajan Nanda [2012] 18 taxmann.com 98 (Delhi) was relevant in this context: • "The object and purpose of a Keyman insurance policy is to protect the business against a financial set back which may occur, as a result of a premature death, to the business or professional organization. There is no rational basis to confine the allowability of the expenditure incurred on the premium paid towards such a policy only to a situation where the policy is in respect of the life of an employee. A Keyman insurance policy is obtained on the life of a partner to safeguard the firm against a disruption of the business that may result due to the premature death of a partner. Therefore, the expenditure which is laid out for the payment of premium on such a policy is incurred wholly and exclusively for the purposes of business." (4) What can be sold as a 'life insurance policy' taken by a business entity for its employee, former employee or any other person important for business of such an entity is between the insurance regulator and insurance service provider. However, once it has been sold as a life insurance policy on the keyman to the business, as long as it is in the nature of life insurance policy, whether pure life cover or term cover or a growth or guaranteed return policy, it is eligible for coverage of Section 10(10D). (5) Respectfully following the esteemed views of Hon'ble Delhi High Court, stand of the authorities was to be rejected on this aspect of the matter. Thus, premium paid on keyman insurance policy was deductible.
[2015] 61 taxmann.com 141 (Amritsar - Trib.)
IN THE ITAT AMRITSAR BENCH
Suri Sons
v.
Additional Commissioner of Income-tax, Range 1, Jalandhar
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