IT : Explanation 2 to section 132B as inserted by Finance Act, 2013
IT : Explanation 2 to section 132B as inserted by Finance Act, 2013 with effect from 1-6-2013 is prospective
[2015] 61 taxmann.com 255 (Nagpur - Trib.)
IN THE ITAT NAGPUR BENCH
Assistant Commissioner of Income-tax, Central Circle-2 (2), Nagpur
v.
Concreta Developers
[2015] 61 taxmann.com 255 (Nagpur - Trib.)
IN THE ITAT NAGPUR BENCH
Assistant Commissioner of Income-tax, Central Circle-2 (2), Nagpur
v.
Concreta Developers
IT : An amount received by a prospective employee 'as compensation for denial of employment&# 39; was not in nature of profits in lieu of salary. It was a capital receipt that could not be taxed as income under any other head
Facts:
(a) In terms of employment agreement, the assessee was to be employed as CEO of M/s ACEE Enterprises ('ACEE&# 39;). The ACEE was unable to take assessee on board due to sudden change in its business plan. The ACEE paid compensation of 1.95 crores to assessee as a "one-time payment for non-commencement of employment as proposed" . (b) The assessee had not offered such compensation to tax. The AO rejected the claim of assessee on the ground that under Section 17(3)(iii) receipt by the assessee of any sum from any person prior to his joining with such person was taxable. (c) As per Section 17(3)(iii) "profits in lieu of salary" include any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person or after cessation of his employment with that person. (d) However, the CIT(A) held that Section 17(3)(iii) had been brought in to account for taxing 'joining bonus' received from the prospective employer as profit in lieu of salary. The ITAT upheld the findings of CIT(A). (e) The ld. Counsel of department urged that since the wording of Section 17(3)(iii) was that "any amount received from any person" , it was not necessary that the amount had to be received only from an employer in order that such sum be brought to tax in the hands of an assessee under the had 'profits in lieu of salary'. It was submitted that the expression any person could include a prospective employer in the present case. The High Court held as under:
(1) The interpretation sought to be placed by revenue on plain language of Section 17(3)(iii) could not be accepted. The words "from any person" occurring therein have to be read together with the following words in sub-clause (A): "before his joining any employment with that person" . In other words, Section 17(3)(iii) pre-supposes the existence of the relationship of employee and employer between the assessee and the person who makes the payment of "any amount' in terms of Section 17(3)(iii). (2) Therefore the words in Section 17(3)(iii) cannot be read disjunctively to overlook the essential facet of the provision, viz, the existence of 'employment&# 39;, i.e., a relationship of employer and employee between the person who makes the payment of the amount and the assessee. (3) The other plea of revenue that said amount should be taxed under some other head of income, including 'income from other sources' , was also unsustainable. In case of CIT v. Rani Shankar Mishra [2009] 178 Taxman 324 (Delhi) it was held that where an amount was received by a prospective employee 'as compensation for denial of employment&# 39;, such amount was not in nature of profits in lieu of salary. Thus, it was a capital receipt that could not be taxed as income under any other head.
[2015] 61 taxmann.com 322 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax- IV
v.
Pritam Das Narang
Facts:
(a) In terms of employment agreement, the assessee was to be employed as CEO of M/s ACEE Enterprises ('ACEE&# 39;). The ACEE was unable to take assessee on board due to sudden change in its business plan. The ACEE paid compensation of 1.95 crores to assessee as a "one-time payment for non-commencement of employment as proposed" . (b) The assessee had not offered such compensation to tax. The AO rejected the claim of assessee on the ground that under Section 17(3)(iii) receipt by the assessee of any sum from any person prior to his joining with such person was taxable. (c) As per Section 17(3)(iii) "profits in lieu of salary" include any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person or after cessation of his employment with that person. (d) However, the CIT(A) held that Section 17(3)(iii) had been brought in to account for taxing 'joining bonus' received from the prospective employer as profit in lieu of salary. The ITAT upheld the findings of CIT(A). (e) The ld. Counsel of department urged that since the wording of Section 17(3)(iii) was that "any amount received from any person" , it was not necessary that the amount had to be received only from an employer in order that such sum be brought to tax in the hands of an assessee under the had 'profits in lieu of salary'. It was submitted that the expression any person could include a prospective employer in the present case. The High Court held as under:
(1) The interpretation sought to be placed by revenue on plain language of Section 17(3)(iii) could not be accepted. The words "from any person" occurring therein have to be read together with the following words in sub-clause (A): "before his joining any employment with that person" . In other words, Section 17(3)(iii) pre-supposes the existence of the relationship of employee and employer between the assessee and the person who makes the payment of "any amount' in terms of Section 17(3)(iii). (2) Therefore the words in Section 17(3)(iii) cannot be read disjunctively to overlook the essential facet of the provision, viz, the existence of 'employment&# 39;, i.e., a relationship of employer and employee between the person who makes the payment of the amount and the assessee. (3) The other plea of revenue that said amount should be taxed under some other head of income, including 'income from other sources' , was also unsustainable. In case of CIT v. Rani Shankar Mishra [2009] 178 Taxman 324 (Delhi) it was held that where an amount was received by a prospective employee 'as compensation for denial of employment&# 39;, such amount was not in nature of profits in lieu of salary. Thus, it was a capital receipt that could not be taxed as income under any other head.
[2015] 61 taxmann.com 322 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax- IV
v.
Pritam Das Narang
Special Courts Act: Where appellant was declared as notified party and its tenancy rights over a flat came to be attached and there was no dispute as to liabilities outstanding for statutory period, tenancy rights of appellant had been rightly disposed of
[2015] 61 taxmann.com 258 (SC)
SUPREME COURT OF INDIA
Fairgrowth Financial Services Ltd.
v.
Custodian
[2015] 61 taxmann.com 258 (SC)
SUPREME COURT OF INDIA
Fairgrowth Financial Services Ltd.
v.
Custodian
Whether anti-dumping duty imposed with respect to imports made during period between expiry of provisional anti-dumping duty and imposition of final anti-dumping duty is legal and valid - NO: Supreme Court
NEW DELHI: THE representative facts:
1. The Union Government imposed, by a notification dated 2nd May, 2002, a provisional antidumping duty under Section 9 A ( 2) of the Customs Tariff Act read with Rules 13 and 20 of the Antidumping Rules.
2. The Union Government issued a notification on 1st May, 2003 imposing a final anti-dumping duty with effect from the date of the imposition of the provisional antidumping duty i.e. 2nd May, 2002.
The question before the Court is as to whether the Central Government was within its jurisdiction in imposing a final antidumping duty between 2nd November, 2002 and 30th April, 2003. This, according to the assessees, is the "gap period" when the provisional duty had come to an end by efflux of six months until a final notification was issued by the Union Government on 1st May, 2003.
The Supreme Court has in detail examined the submissions of the Counsel, various provisions of the Law, International agreements and orders of various courts.
The Supreme Court explained the legal provisions as:
Section 9A .
Section 9 A ( 1) refers to an anti-dumping duty. Such duty is only imposed when an article is exported from a country outside India to India at less than its normal value. Such duty can, in the Central Government&# 39;s discretion, be imposed at a rate that does not exceed the margin of dumping, which only means the difference between the export price and the normal value of such article in international trade. It is clear that sub-section (1) refers to a "final" or "definitive&qu ot; duty, and has to be read with sub-section (3) thereof, which authorises the levy of the "final" or "definitive&qu ot; anti-dumping duty retrospectively in the circumstances mentioned in sub-section (3). The scheme therefore of Section 9 A ( 1) and (3) is that an anti-dumping duty is normally to be imposed with prospective effect unless, inter alia, because of massive dumping of an article in a relatively short time the remedial effect of the anti-dumping duty to be levied would be seriously undermined. This would therefore require a retrospective duty being levied, but not beyond a period of 90 days, to undo the effect of undermining the anti-dumping duty to be levied. Short of sub-section (3), no other part of Section 9A authorises the Central Government to levy an anti-dumping duty with retrospective effect.
Section 9 A ( 2) speaks of an anti-dumping duty which the Central Government levies on the basis of a provisional estimate, thus referring to a provisional anti-dumping duty. The Section further goes on to say that after a final determination is made in accordance with the Rules, the Central Government may reduce such provisional anti-dumping duty, having regard to the final determination made by the designated authority under the Rules. If and when this happens, what is important to note is that refund shall be made of so much of the anti-dumping duty which has been collected in excess of the final anti-dumping duty so reduced. Under sub-section (5), a maximum period of five years is allowable on the anti-dumping duty imposed. This is extendable only for a further period of five years and not beyond. Sub-section (6) in turn refers to the Central Government&# 39;s power to make rules, inter alia, to assess and collect anti-dumping duty.
It is important to note that neither sub-section (2) nor sub-section (6) authorises the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect. This is in contrast with sub-section (3) which expressly so authorises the Central Government in the circumstances mentioned in the sub-section.
Anti-Dumping Rules
The first thing to notice about Rule 20 is, as its marginal note states, that it is concerned only with the date of commencement of duty. Once this is appreciated, it becomes clear that its focus is only on when anti-dumping duties are to commence. In sub-rule (1), it speaks of anti-dumping duties levied under Rule 13 and Rule 19, and states that they shall take effect only prospectively, i.e. from the date of publication in the official gazette. It is clear that Rule 19 is a mistake made by the draftsman of the Rules. Rule 18 is obviously referred to. Thus, under sub-rule (1), the provisional anti-dumping duty takes effect on and from the date of its publication in the official gazette. Same is the case with the final anti-dumping duty levied under Rule 18.
The final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13. Thus, it is clear that such incorporation can only be the period upto which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the "gap" or interregnum period between the lapse of the provisional duty and the imposition of the final duty. Such interpretation makes it clear that clause 10.2 of the WTO Agreement is reproduced in the same sense though not in the same form in sub-rule (2)(a).
The American Position:
The Supreme Court noted that interestingly enough, in the United States Manual dealing with anti-dumping duties, the following is the statement of law:-
"Therefore, a period of time, known sometimes as the "gap period" may exist between the expiration of the end of the provisional measures, even if extended, and the publication of the ITC's final determination (the starting of definitive duties) where the DOC cannot require CBP to collect cash deposits, bonds, or other securities. (The gap period begins the day after the end of the 4- or 6-month period, and ends the day before the ITC's final determination is published). The DOC normally administers this problem in one of two ways. We either send instructions to CBP towards the beginning of the gap period, instructing them to stop collecting cash deposits or bonds, or we wait until the order has been published, then instruct CBP to liquidate all entries during the gap period without regard to antidumping duties."
The Supreme Court was heartened to note that one other signatory nation has taken the stand that no duty can be collected during the "gap period" .
The Supreme Court emphatically held that levy of anti-dumping duty during the interregnum between the expiry of a provisional duty notification and the imposition of a final anti-dumping duty, is not valid.
NEW DELHI: THE representative facts:
1. The Union Government imposed, by a notification dated 2nd May, 2002, a provisional antidumping duty under Section 9 A ( 2) of the Customs Tariff Act read with Rules 13 and 20 of the Antidumping Rules.
2. The Union Government issued a notification on 1st May, 2003 imposing a final anti-dumping duty with effect from the date of the imposition of the provisional antidumping duty i.e. 2nd May, 2002.
The question before the Court is as to whether the Central Government was within its jurisdiction in imposing a final antidumping duty between 2nd November, 2002 and 30th April, 2003. This, according to the assessees, is the "gap period" when the provisional duty had come to an end by efflux of six months until a final notification was issued by the Union Government on 1st May, 2003.
The Supreme Court has in detail examined the submissions of the Counsel, various provisions of the Law, International agreements and orders of various courts.
The Supreme Court explained the legal provisions as:
Section 9A .
Section 9 A ( 1) refers to an anti-dumping duty. Such duty is only imposed when an article is exported from a country outside India to India at less than its normal value. Such duty can, in the Central Government&# 39;s discretion, be imposed at a rate that does not exceed the margin of dumping, which only means the difference between the export price and the normal value of such article in international trade. It is clear that sub-section (1) refers to a "final" or "definitive&qu ot; duty, and has to be read with sub-section (3) thereof, which authorises the levy of the "final" or "definitive&qu ot; anti-dumping duty retrospectively in the circumstances mentioned in sub-section (3). The scheme therefore of Section 9 A ( 1) and (3) is that an anti-dumping duty is normally to be imposed with prospective effect unless, inter alia, because of massive dumping of an article in a relatively short time the remedial effect of the anti-dumping duty to be levied would be seriously undermined. This would therefore require a retrospective duty being levied, but not beyond a period of 90 days, to undo the effect of undermining the anti-dumping duty to be levied. Short of sub-section (3), no other part of Section 9A authorises the Central Government to levy an anti-dumping duty with retrospective effect.
Section 9 A ( 2) speaks of an anti-dumping duty which the Central Government levies on the basis of a provisional estimate, thus referring to a provisional anti-dumping duty. The Section further goes on to say that after a final determination is made in accordance with the Rules, the Central Government may reduce such provisional anti-dumping duty, having regard to the final determination made by the designated authority under the Rules. If and when this happens, what is important to note is that refund shall be made of so much of the anti-dumping duty which has been collected in excess of the final anti-dumping duty so reduced. Under sub-section (5), a maximum period of five years is allowable on the anti-dumping duty imposed. This is extendable only for a further period of five years and not beyond. Sub-section (6) in turn refers to the Central Government&# 39;s power to make rules, inter alia, to assess and collect anti-dumping duty.
It is important to note that neither sub-section (2) nor sub-section (6) authorises the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect. This is in contrast with sub-section (3) which expressly so authorises the Central Government in the circumstances mentioned in the sub-section.
Anti-Dumping Rules
The first thing to notice about Rule 20 is, as its marginal note states, that it is concerned only with the date of commencement of duty. Once this is appreciated, it becomes clear that its focus is only on when anti-dumping duties are to commence. In sub-rule (1), it speaks of anti-dumping duties levied under Rule 13 and Rule 19, and states that they shall take effect only prospectively, i.e. from the date of publication in the official gazette. It is clear that Rule 19 is a mistake made by the draftsman of the Rules. Rule 18 is obviously referred to. Thus, under sub-rule (1), the provisional anti-dumping duty takes effect on and from the date of its publication in the official gazette. Same is the case with the final anti-dumping duty levied under Rule 18.
The final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13. Thus, it is clear that such incorporation can only be the period upto which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the "gap" or interregnum period between the lapse of the provisional duty and the imposition of the final duty. Such interpretation makes it clear that clause 10.2 of the WTO Agreement is reproduced in the same sense though not in the same form in sub-rule (2)(a).
The American Position:
The Supreme Court noted that interestingly enough, in the United States Manual dealing with anti-dumping duties, the following is the statement of law:-
"Therefore, a period of time, known sometimes as the "gap period" may exist between the expiration of the end of the provisional measures, even if extended, and the publication of the ITC's final determination (the starting of definitive duties) where the DOC cannot require CBP to collect cash deposits, bonds, or other securities. (The gap period begins the day after the end of the 4- or 6-month period, and ends the day before the ITC's final determination is published). The DOC normally administers this problem in one of two ways. We either send instructions to CBP towards the beginning of the gap period, instructing them to stop collecting cash deposits or bonds, or we wait until the order has been published, then instruct CBP to liquidate all entries during the gap period without regard to antidumping duties."
The Supreme Court was heartened to note that one other signatory nation has taken the stand that no duty can be collected during the "gap period" .
The Supreme Court emphatically held that levy of anti-dumping duty during the interregnum between the expiry of a provisional duty notification and the imposition of a final anti-dumping duty, is not valid.
ST - Commission received by re-insurance broker between Indian and Foreign Insurance Companies - To be treated as Export of Service - Tribunal has misdirected itself in upholding demand: HC
CHENNAI: THIS is an appeal by the assessee against the order of the Tribunal which went against them on merits (2009-TIOL-338- CESTAT-MAD) . Revenue is also in appeal against restricting the demand to normal period and vacating penalties.
The appellant acted as broker for re-insuring between New India Assurance Co. Ltd and a Foreign Insurance Company. The appellant deducted his commission amount and paid the net premium to the Foreign Insurance Company (Re-insurer) in foreign currency. (For more details of the transactions, please see Commission received from 'reinsures&# 39; is taxable even before amendment to Finance Act in 2006: CESTAT ).
It is the case of revenue that as the appellant had rendered service to Indian Insurance Company and also received the commission in Indian Rupees, the same cannot be treated as export of service. The Tribunal also confirmed the demand, with partial relief on limitation and penalties. The assessee is now before the High Court.
After thoroughly examining the transactions among the three entities, i.e., both the insurance companies and the broker, and by drawing reference to the judgment of the Supreme Court in case of JB Boda & Company Private Ltd. v. CBDT, the High Court held :
++ On the issue as to whether the retention of the commission of brokerage by the appellant - J.B.Boda , the insurance broker would amount to receipt of convertible foreign exchange as required under Section 80-O of the Income Tax Act, the Supreme Court placing reliance on the circular No.731 dated 20.12.1995 held that the premium that is payable to the re-insurer abroad is transferred through the medium of Reserve Bank of India in foreign exchange terms and the retention of the fee due to the appellant - J.B.Boda is in dollars for the services rendered. According to the Supreme Court, the retention of the amount by J.B.Boda would be a receipt of income in convertible foreign exchange to avoid unnecessary two-way traffic, i.e., to avoid formal remittance to the foreign insurers first and thereafter to receive the commission from the foreign reinsurer, as it may be an empty formality and a meaningless ritual. It is to be noted that in J.B.Boda' s case, the amount was received by the appellant re-insurance broker in Indian rupees and thereafter by approaching the Reserve Bank of India necessary permission was sought for to convert the same into US dollars. In the present case, the amount is received by the assessee in Indian Rupees and through the banking channels, the premium less the commission/brokerag e is sent in foreign exchange to the re-insurer abroad.
++ In answer to the issue raised before the Supreme Court in J.B.Boda' s case, taking note of the nature of transaction, the Supreme Court clearly held that the view of the respondent/Departme nt therein that in respect of re-insurance service, there is no generation of income in India, but it is only in relation to the services rendered outside India. This finding of the Supreme Court, which is in two components, has not been taken note of by the Adjudicating Authority as well as the Tribunal. Hence, it is held that the services rendered by the assessee in this case to the re-insurer abroad and the transaction with the foreign re-insurer would have to be necessarily accepted as 'export of service'
++ It is clarified by the Government of India, Ministry of Finance vide circular dated 25.4.2003, that service tax is destination based consumption tax and it is not applicable to export of service. They have clarified that export of service would continue to remain tax-free even after withdrawal of notification No.6/99 dated 9.4.99. In effect, if the destination based consumption tax is relatable to export of service, all notifications will have no effect. This clarification gets the stamp of approval by the Supreme Court in the decision reported in 2007-TIOL-149- SC-ST
++ There is also a clear finding by the Tribunal that the assessee serves the foreign company in the course of the business, but the apprehension of the Department, confirmed by the Tribunal, is that most of the work done by the assessee is in relation to the Indian Insurance Company and therefore, it is not an export of service.
++ That finding is a fallacy in the light of the findings given by the Supreme Court in JB Boda's case, as also the provisions of the Service Tax Act, more particularly, the binding circular dated 25.4.2003. On the issue of non-receipt of the commission or brokerage in convertible foreign exchange, the Adjudicating Authority as well as the Tribunal have time and again misdirected themselves to hold that since the New India Assurance Co. Ltd. have paid the premium amount, it cannot be treated as receipt of amount in convertible foreign exchange.
Accordingly, the High Court allowed the appeal filed by the assessee and dismissed the appeal by revenue.
CHENNAI: THIS is an appeal by the assessee against the order of the Tribunal which went against them on merits (2009-TIOL-338- CESTAT-MAD) . Revenue is also in appeal against restricting the demand to normal period and vacating penalties.
The appellant acted as broker for re-insuring between New India Assurance Co. Ltd and a Foreign Insurance Company. The appellant deducted his commission amount and paid the net premium to the Foreign Insurance Company (Re-insurer) in foreign currency. (For more details of the transactions, please see Commission received from 'reinsures&# 39; is taxable even before amendment to Finance Act in 2006: CESTAT ).
It is the case of revenue that as the appellant had rendered service to Indian Insurance Company and also received the commission in Indian Rupees, the same cannot be treated as export of service. The Tribunal also confirmed the demand, with partial relief on limitation and penalties. The assessee is now before the High Court.
After thoroughly examining the transactions among the three entities, i.e., both the insurance companies and the broker, and by drawing reference to the judgment of the Supreme Court in case of JB Boda & Company Private Ltd. v. CBDT, the High Court held :
++ On the issue as to whether the retention of the commission of brokerage by the appellant - J.B.Boda , the insurance broker would amount to receipt of convertible foreign exchange as required under Section 80-O of the Income Tax Act, the Supreme Court placing reliance on the circular No.731 dated 20.12.1995 held that the premium that is payable to the re-insurer abroad is transferred through the medium of Reserve Bank of India in foreign exchange terms and the retention of the fee due to the appellant - J.B.Boda is in dollars for the services rendered. According to the Supreme Court, the retention of the amount by J.B.Boda would be a receipt of income in convertible foreign exchange to avoid unnecessary two-way traffic, i.e., to avoid formal remittance to the foreign insurers first and thereafter to receive the commission from the foreign reinsurer, as it may be an empty formality and a meaningless ritual. It is to be noted that in J.B.Boda' s case, the amount was received by the appellant re-insurance broker in Indian rupees and thereafter by approaching the Reserve Bank of India necessary permission was sought for to convert the same into US dollars. In the present case, the amount is received by the assessee in Indian Rupees and through the banking channels, the premium less the commission/brokerag e is sent in foreign exchange to the re-insurer abroad.
++ In answer to the issue raised before the Supreme Court in J.B.Boda' s case, taking note of the nature of transaction, the Supreme Court clearly held that the view of the respondent/Departme nt therein that in respect of re-insurance service, there is no generation of income in India, but it is only in relation to the services rendered outside India. This finding of the Supreme Court, which is in two components, has not been taken note of by the Adjudicating Authority as well as the Tribunal. Hence, it is held that the services rendered by the assessee in this case to the re-insurer abroad and the transaction with the foreign re-insurer would have to be necessarily accepted as 'export of service'
++ It is clarified by the Government of India, Ministry of Finance vide circular dated 25.4.2003, that service tax is destination based consumption tax and it is not applicable to export of service. They have clarified that export of service would continue to remain tax-free even after withdrawal of notification No.6/99 dated 9.4.99. In effect, if the destination based consumption tax is relatable to export of service, all notifications will have no effect. This clarification gets the stamp of approval by the Supreme Court in the decision reported in 2007-TIOL-149- SC-ST
++ There is also a clear finding by the Tribunal that the assessee serves the foreign company in the course of the business, but the apprehension of the Department, confirmed by the Tribunal, is that most of the work done by the assessee is in relation to the Indian Insurance Company and therefore, it is not an export of service.
++ That finding is a fallacy in the light of the findings given by the Supreme Court in JB Boda's case, as also the provisions of the Service Tax Act, more particularly, the binding circular dated 25.4.2003. On the issue of non-receipt of the commission or brokerage in convertible foreign exchange, the Adjudicating Authority as well as the Tribunal have time and again misdirected themselves to hold that since the New India Assurance Co. Ltd. have paid the premium amount, it cannot be treated as receipt of amount in convertible foreign exchange.
Accordingly, the High Court allowed the appeal filed by the assessee and dismissed the appeal by revenue.
I-T - Whether if Sec 17(3) pre-supposes existence of employer-employee relationship, sum received 'after cessation of employment&# 39; is capital receipt - YES: HC
NEW DELHI: THE issue before the Bench is - Whether if Section 17(3) pre-supposes the existence of employer-employee relationship, the amount received by the assessee "after cessation of his employment" is a capital receipt and could not be taxed under the head 'profits in lieu of salary'. YES is the answer.
Facts of the case
The assessee filed return of income declaring total income of Rs. 1,65,70,750/ - and also claiming a refund of Rs.1369/-. During assessment, the assessee was asked to furnish the bank accounts for the period 1st April, 2007 to 31st August, 2008. AO noticed a credit entry of Rs.1,70,90,650/ -. Assessee filed a letter explaining the circumstances under which the payment was received from M/s. ACEE Enterprises against an Employment Agreement. As per the agreement, either party at its option could terminate the employment by giving six months' notice to the other party in writing. In case the notice period was less than six months, then compensation equivalent to the shortfall of the notice period was payable by the party concerned. Assessee submitted before AO that he had received a letter from ACEE informing him that there was a "sudden change in business plan of the Company vis-a-vis foraying into new financial ventures" and that "the company is extremely disappointed to convey that it shall not be able to take you on board from 1st July, 2007 as per employment contract." ACEE promised to reconsider the Assessee' s services "as and when its operation starts" . Assessee also received another letter which was the Assessee' s response to ACEE that the news was a "big financial loss personally" since there were "many other opportunities available to me". The Assessee stated that since he had opted for ACEE he did not consider "other lucrative opportunities available to me". Thus, assessee proposed ACEE to give him one year compensation to cover up the financial loss incurred, But ACEE announced a payment of Rs.1,95,00,000/ - to assessee subject to income tax compliances as "a one-time payment to you for non-commencement of employment as proposed." Before the AO, assessee pointed out that the tax of Rs.22,09,350/ - had been deducted at source and therefore it had not offered the same for taxation along with the explanation as to why he had not offered the above sum to tax or claimed refund of TDS. AO rejected the Assessee' s explanation on the ground that u/s 17 (3) (iii) the receipt by the Assessee of a sum from any person prior to his joining with such person was taxable. The AO held that the condition of a pre-existing relationship of employer and employee was done away with by the use of the words "by any Assessee from any person" introduced by the Finance Act, 2001 with effect from 1st April, 2002. AO also drew an adverse inference as regards failure to disclose that TDS had been deducted by ACEE, in particular since the Assessee had not brought a claim in the return regarding such TDS. The AO concluded that the payment was taxable under the head 'salary&# 39;. The addition of Rs.1.95 crores was added to the returned income and penalty proceedings were also directed to be initiated.
On appeal, CIT(A) allowed the appeal of the assessee. noted that Clause (iii) of Section 17(3) had been brought in to account for 'joining bonus' received from the prospective employer as profit in lieu of salary liable to be included as part of taxable income under the head 'salary&# 39; or also the amount paid to an employee 'after the employment comes to an end (termination bonus).' The CIT (A), after analysing the documents on record, came to the conclusion that there was no master and servant relationship between the Appellant and ACEE. No payment had been made by ACEE to the Appellant from the date on which the contract was signed till the date when the offer of employment was withdrawn. The CIT(A) concluded that the payment was made by the prospective employer as compensation towards breach of promise and not for any services rendered or to be rendered. Such payment could not be taxed u/s 17(3)(iii). Nor could it be taxed under some other head. The CIT(A) relied on the decision of this Court in Rani Shankar Mishra to conclude that the said receipt could not be taxed as a business/profession al receipt under Section 28 or as a gift u/s 56. The CIT(A) concluded that the receipt by the Assessee was bonafide and, accordingly, deleted the addition. The CIT (A) further ordered that "the appellant is entitled to refund of TDS paid on Rs. 1,95,00,000/ - and accordingly the refund of TDS may be adjusted against tax demand if any arising on appeal effect to this order, and further refund due may be given to appellant. On further appeal, Tribunal had dismissed the appeal filed by the Revenue and observed that prior to the coming into existence of any relationship of employer and employee between the Assessee and ACEE, the offer on the basis of which the employment agreement was drawn up had itself come to an end. This was a case where a prospective employee i.e. the Assessee had been compensated for denial of opportunity to be employed by the prospective employer. Therefore, the amount paid could not be said to be in lieu of the salary and a benefit of employment. On the second issue the ITAT observed that the finding of the CIT (A) that the receipt of Rs.1.95 crore was taxable as capital receipt has been upheld by it and therefore the second ground also had to be rejected.
Held that,
++ this Court is unable to agree with the above submissions on behalf of the Revenue. The Employment Agreement itself mentions that the employment shall commence 'latest by 1st July, 2007'. Although it further states that the employee "shall endeavour to join the company as early as possible" , the intention and expectation of the parties was that the employment would commence not earlier than 1st July 2007. This becomes evident from a reading of the letter dated 1st May 2007 written by ACEE to the Assessee in which it stated that that it would not be possible to take the Assessee "on board from 1st July, 2007 as per employment contract." That the employment did not commence from the date of the Employment Agreement is further evident from the fact that ACEE stated in its letter dated 25th August 2007 that it was making the payment of Rs. 1.95 crores as "a one-time payment to you for non-commencement of employment as proposed." The Court is unable to accept the interpretation sought to be placed on the plain language of Section 17 (3) (iii) by the Revenue. The words "from any person" occurring therein have to be read together with the following words in sub-clause (A): "before his joining any employment with that person" . In other words, Section 17 (3) (iii) (A) pre-supposes the existence of an employment, i.e., a relationship of employee and employer between the Assessee and the person who makes the payment of "any amount" in terms of Section 17 (3) (iii). Likewise, Section 17 (3) (iii) (B) also pre-supposes the existence of the relationship of employer and employee between the person who makes the payment of the amount and the Assessee. It envisages the amount being received by the Assessee "after cessation of his employment" . Therefore, the words in Section 17 (3) (iii) cannot be read disjunctively to overlook the essential facet of the provision, viz., the existence of 'employment&# 39; i.e. a relationship of employer and employee between the person who makes the payment of the amount and the Assessee;
++ the Court accordingly concurs with the concurrent view of the CIT (A) and the ITAT that this was a case where there was no commencement of the employment and that the offer by ACEE to the Assessee was withdrawn even prior to the commencement of such employment. The amount received by the Assessee was a capital receipt and could not be taxed under the head 'profits in lieu of salary'. The other plea of the Revenue that the said amount should be taxed under some other head of income, including 'income from other sources' , is also unsustainable. The decision of this Court in Rani Shankar Mishra held in similar circumstances that where an amount was received by a prospective employee 'as compensation for denial of employment,&# 39; such amount was not in the nature of profits in lieu of salary. It was a capital receipt that could not be taxed as income under any other head. Question (a) is accordingly answered in the negative, i.e. in favour of the Assessee and against the Revenue. Consequently, question (b) is also answered in favour of the Assessee and against the Revenue. The order of the CIT (A), as concurred with by the ITAT, that the Assessee is entitled to the refund of the TDS paid on Rs. 1,95,00,000/ - and that the refund of TDS may be adjusted against tax demand if any arising on appeal effect being given to the said order of the CIT (A) is upheld. The appeal is dismissed but without any order as to costs.
NEW DELHI: THE issue before the Bench is - Whether if Section 17(3) pre-supposes the existence of employer-employee relationship, the amount received by the assessee "after cessation of his employment" is a capital receipt and could not be taxed under the head 'profits in lieu of salary'. YES is the answer.
Facts of the case
The assessee filed return of income declaring total income of Rs. 1,65,70,750/ - and also claiming a refund of Rs.1369/-. During assessment, the assessee was asked to furnish the bank accounts for the period 1st April, 2007 to 31st August, 2008. AO noticed a credit entry of Rs.1,70,90,650/ -. Assessee filed a letter explaining the circumstances under which the payment was received from M/s. ACEE Enterprises against an Employment Agreement. As per the agreement, either party at its option could terminate the employment by giving six months' notice to the other party in writing. In case the notice period was less than six months, then compensation equivalent to the shortfall of the notice period was payable by the party concerned. Assessee submitted before AO that he had received a letter from ACEE informing him that there was a "sudden change in business plan of the Company vis-a-vis foraying into new financial ventures" and that "the company is extremely disappointed to convey that it shall not be able to take you on board from 1st July, 2007 as per employment contract." ACEE promised to reconsider the Assessee' s services "as and when its operation starts" . Assessee also received another letter which was the Assessee' s response to ACEE that the news was a "big financial loss personally" since there were "many other opportunities available to me". The Assessee stated that since he had opted for ACEE he did not consider "other lucrative opportunities available to me". Thus, assessee proposed ACEE to give him one year compensation to cover up the financial loss incurred, But ACEE announced a payment of Rs.1,95,00,000/ - to assessee subject to income tax compliances as "a one-time payment to you for non-commencement of employment as proposed." Before the AO, assessee pointed out that the tax of Rs.22,09,350/ - had been deducted at source and therefore it had not offered the same for taxation along with the explanation as to why he had not offered the above sum to tax or claimed refund of TDS. AO rejected the Assessee' s explanation on the ground that u/s 17 (3) (iii) the receipt by the Assessee of a sum from any person prior to his joining with such person was taxable. The AO held that the condition of a pre-existing relationship of employer and employee was done away with by the use of the words "by any Assessee from any person" introduced by the Finance Act, 2001 with effect from 1st April, 2002. AO also drew an adverse inference as regards failure to disclose that TDS had been deducted by ACEE, in particular since the Assessee had not brought a claim in the return regarding such TDS. The AO concluded that the payment was taxable under the head 'salary&# 39;. The addition of Rs.1.95 crores was added to the returned income and penalty proceedings were also directed to be initiated.
On appeal, CIT(A) allowed the appeal of the assessee. noted that Clause (iii) of Section 17(3) had been brought in to account for 'joining bonus' received from the prospective employer as profit in lieu of salary liable to be included as part of taxable income under the head 'salary&# 39; or also the amount paid to an employee 'after the employment comes to an end (termination bonus).' The CIT (A), after analysing the documents on record, came to the conclusion that there was no master and servant relationship between the Appellant and ACEE. No payment had been made by ACEE to the Appellant from the date on which the contract was signed till the date when the offer of employment was withdrawn. The CIT(A) concluded that the payment was made by the prospective employer as compensation towards breach of promise and not for any services rendered or to be rendered. Such payment could not be taxed u/s 17(3)(iii). Nor could it be taxed under some other head. The CIT(A) relied on the decision of this Court in Rani Shankar Mishra to conclude that the said receipt could not be taxed as a business/profession al receipt under Section 28 or as a gift u/s 56. The CIT(A) concluded that the receipt by the Assessee was bonafide and, accordingly, deleted the addition. The CIT (A) further ordered that "the appellant is entitled to refund of TDS paid on Rs. 1,95,00,000/ - and accordingly the refund of TDS may be adjusted against tax demand if any arising on appeal effect to this order, and further refund due may be given to appellant. On further appeal, Tribunal had dismissed the appeal filed by the Revenue and observed that prior to the coming into existence of any relationship of employer and employee between the Assessee and ACEE, the offer on the basis of which the employment agreement was drawn up had itself come to an end. This was a case where a prospective employee i.e. the Assessee had been compensated for denial of opportunity to be employed by the prospective employer. Therefore, the amount paid could not be said to be in lieu of the salary and a benefit of employment. On the second issue the ITAT observed that the finding of the CIT (A) that the receipt of Rs.1.95 crore was taxable as capital receipt has been upheld by it and therefore the second ground also had to be rejected.
Held that,
++ this Court is unable to agree with the above submissions on behalf of the Revenue. The Employment Agreement itself mentions that the employment shall commence 'latest by 1st July, 2007'. Although it further states that the employee "shall endeavour to join the company as early as possible" , the intention and expectation of the parties was that the employment would commence not earlier than 1st July 2007. This becomes evident from a reading of the letter dated 1st May 2007 written by ACEE to the Assessee in which it stated that that it would not be possible to take the Assessee "on board from 1st July, 2007 as per employment contract." That the employment did not commence from the date of the Employment Agreement is further evident from the fact that ACEE stated in its letter dated 25th August 2007 that it was making the payment of Rs. 1.95 crores as "a one-time payment to you for non-commencement of employment as proposed." The Court is unable to accept the interpretation sought to be placed on the plain language of Section 17 (3) (iii) by the Revenue. The words "from any person" occurring therein have to be read together with the following words in sub-clause (A): "before his joining any employment with that person" . In other words, Section 17 (3) (iii) (A) pre-supposes the existence of an employment, i.e., a relationship of employee and employer between the Assessee and the person who makes the payment of "any amount" in terms of Section 17 (3) (iii). Likewise, Section 17 (3) (iii) (B) also pre-supposes the existence of the relationship of employer and employee between the person who makes the payment of the amount and the Assessee. It envisages the amount being received by the Assessee "after cessation of his employment" . Therefore, the words in Section 17 (3) (iii) cannot be read disjunctively to overlook the essential facet of the provision, viz., the existence of 'employment&# 39; i.e. a relationship of employer and employee between the person who makes the payment of the amount and the Assessee;
++ the Court accordingly concurs with the concurrent view of the CIT (A) and the ITAT that this was a case where there was no commencement of the employment and that the offer by ACEE to the Assessee was withdrawn even prior to the commencement of such employment. The amount received by the Assessee was a capital receipt and could not be taxed under the head 'profits in lieu of salary'. The other plea of the Revenue that the said amount should be taxed under some other head of income, including 'income from other sources' , is also unsustainable. The decision of this Court in Rani Shankar Mishra held in similar circumstances that where an amount was received by a prospective employee 'as compensation for denial of employment,&# 39; such amount was not in the nature of profits in lieu of salary. It was a capital receipt that could not be taxed as income under any other head. Question (a) is accordingly answered in the negative, i.e. in favour of the Assessee and against the Revenue. Consequently, question (b) is also answered in favour of the Assessee and against the Revenue. The order of the CIT (A), as concurred with by the ITAT, that the Assessee is entitled to the refund of the TDS paid on Rs. 1,95,00,000/ - and that the refund of TDS may be adjusted against tax demand if any arising on appeal effect being given to the said order of the CIT (A) is upheld. The appeal is dismissed but without any order as to costs.
APPLICABILITY OF SERVICE TAX ON PLANTING THE TREES
Applicability of Service Tax on the activity of planting trees who intends to plant trees for Gujarat Ecological Commission, fully Govt. organization of Gujarat State.
After perusing all the services Specified in the Finance Act, 1994 (as amended), it is seen that this activity of planting trees has neither been specified in Negative List under Section 66 D of the Act nor in the list exempted services under Mega Exemption Notification No.25/12-ST dated 20.6.2012 effective from 1.7.2012 as amended vide Notification No.6/2015-ST dated 1.3.2015 (effective from 1.4.2015). Certain services provided to Govt., local authority or Govt. Authority have been exempted from payment of Service Tax either by virtue of Mega Exemption Notification No.25/12-ST dated 20.6.2012 effective from 1.7.2012 as amended vide Notification No.6/2015-ST dated 1.3.2015 (effective from 1.4.2015). The scope of these exemptions was pruned vide Notification No.6/15-ST dated 1.3.2015 and still the following services provided to Govt. are exempted and these are as follows :-
"12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) omitted
(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) omitted
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
(f) omitted
Exemption to the services mentioned in above (d) & (e) relate to water in different forms and with different purposes whether it is water supply or water treatment or storage of water in the form of dam or canal. Similarly, draining out of dirty water sewerage system is absolutely necessary. So we can understand that water being vital for human life, has granted exemption to these services in public interest.
The activity of planting trees on Govt. land has also not been included in serial No. 4 (relating to agriculture or agriculture produce) of Negative List of Services under Section 66 D of the Finance Act. Thus this service is automatically classified/pushed to the category of "Other Than Negative List" specified in CBEC Circular No.165/16/12- ST dated 20.11.2012. 'Other Than Negative list' is a sea and pari materia to erstwhile tariff item no. 68 (All other Goods not elsewhere specified) of the Central Excise Tariff Act. This tariff item 68 was called "Terror Item 68" because whatever was left fitted in this classification. This T.I. 68 was created in 1975 and ultimately abolished in December, 1985 with the introduction of new Central Excise Tariff Act, 1985. Similarly, there is no logic or legal sanctity in introducing "'Other Than Negative List". Every service should be specifically classified keeping in view description and nature of service. Whatever has been left to mention in the list of taxable services, that is to be treated under, "Other Than Negative List" notwithstanding description, nature of service, merits and demerits, pros. and cons. of any service, is not justified at all by any stretch of imagination. This 'Other Than Negative List' should be abolished like erstwhile T.I.68.
Keeping in view myriad benefits of planting the trees i.e. cleaning the air, providing oxygen, conserving energy, shielding from ultra violet rays, reducing global warming, preventive soil erosion etc. it can be concluded that this activity is as essential as water for human life. Moreover, planting trees is an eco-friendly act. In order to avoid unnecessary proceedings and litigation, the CBEC should either insert this at Serial No.12 of Mega Exemption Notification No.25/12-ST dated 20.6.12 as amended vide Notification No.6/15-ST dated 1.3.2015 or in the serial no.4 of Negative List of services relating to Agriculture under Section 66 D of the Act in public interest. Trees are nature's boon and hence this activity should never be taxed.
Planting trees fall under the scope of horticulture and horticulture is branch of agriculture. Agriculture has been put under the Negative List under section 66 D but unless and until the word, 'Horticulture' is specifically included in the category of agriculture, or at least 'planting the trees' is inserted therein, the contractors who provides the service to Govt. by way of planting the trees have either to pay Service Tax or face flood of Show Cause Notices and hence avoidable litigation which is not in the interest of the nation.
By: KASTURI SETHI
Applicability of Service Tax on the activity of planting trees who intends to plant trees for Gujarat Ecological Commission, fully Govt. organization of Gujarat State.
After perusing all the services Specified in the Finance Act, 1994 (as amended), it is seen that this activity of planting trees has neither been specified in Negative List under Section 66 D of the Act nor in the list exempted services under Mega Exemption Notification No.25/12-ST dated 20.6.2012 effective from 1.7.2012 as amended vide Notification No.6/2015-ST dated 1.3.2015 (effective from 1.4.2015). Certain services provided to Govt., local authority or Govt. Authority have been exempted from payment of Service Tax either by virtue of Mega Exemption Notification No.25/12-ST dated 20.6.2012 effective from 1.7.2012 as amended vide Notification No.6/2015-ST dated 1.3.2015 (effective from 1.4.2015). The scope of these exemptions was pruned vide Notification No.6/15-ST dated 1.3.2015 and still the following services provided to Govt. are exempted and these are as follows :-
"12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) omitted
(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) omitted
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
(f) omitted
Exemption to the services mentioned in above (d) & (e) relate to water in different forms and with different purposes whether it is water supply or water treatment or storage of water in the form of dam or canal. Similarly, draining out of dirty water sewerage system is absolutely necessary. So we can understand that water being vital for human life, has granted exemption to these services in public interest.
The activity of planting trees on Govt. land has also not been included in serial No. 4 (relating to agriculture or agriculture produce) of Negative List of Services under Section 66 D of the Finance Act. Thus this service is automatically classified/pushed to the category of "Other Than Negative List" specified in CBEC Circular No.165/16/12- ST dated 20.11.2012. 'Other Than Negative list' is a sea and pari materia to erstwhile tariff item no. 68 (All other Goods not elsewhere specified) of the Central Excise Tariff Act. This tariff item 68 was called "Terror Item 68" because whatever was left fitted in this classification. This T.I. 68 was created in 1975 and ultimately abolished in December, 1985 with the introduction of new Central Excise Tariff Act, 1985. Similarly, there is no logic or legal sanctity in introducing "'Other Than Negative List". Every service should be specifically classified keeping in view description and nature of service. Whatever has been left to mention in the list of taxable services, that is to be treated under, "Other Than Negative List" notwithstanding description, nature of service, merits and demerits, pros. and cons. of any service, is not justified at all by any stretch of imagination. This 'Other Than Negative List' should be abolished like erstwhile T.I.68.
Keeping in view myriad benefits of planting the trees i.e. cleaning the air, providing oxygen, conserving energy, shielding from ultra violet rays, reducing global warming, preventive soil erosion etc. it can be concluded that this activity is as essential as water for human life. Moreover, planting trees is an eco-friendly act. In order to avoid unnecessary proceedings and litigation, the CBEC should either insert this at Serial No.12 of Mega Exemption Notification No.25/12-ST dated 20.6.12 as amended vide Notification No.6/15-ST dated 1.3.2015 or in the serial no.4 of Negative List of services relating to Agriculture under Section 66 D of the Act in public interest. Trees are nature's boon and hence this activity should never be taxed.
Planting trees fall under the scope of horticulture and horticulture is branch of agriculture. Agriculture has been put under the Negative List under section 66 D but unless and until the word, 'Horticulture' is specifically included in the category of agriculture, or at least 'planting the trees' is inserted therein, the contractors who provides the service to Govt. by way of planting the trees have either to pay Service Tax or face flood of Show Cause Notices and hence avoidable litigation which is not in the interest of the nation.
By: KASTURI SETHI
Direct Tax Basket
2015-TIOL-208- SC-IT
Video Master Vs JCIT
Whether any substantial question of law arises when the findings of facts and evidence on record were found by the lower courts. - Assessee' s appeal dismissed : SUPREME COURT OF INDIA
2015-TIOL-2219- HC-P&H-IT
CIT Vs Ghunna Ram And Son
Whether when the assessee has already paid taxes on the income disclosed under the Amnesty Scheme in the earlier years, is is possible for the Revenue to make an addition again in respect of those amounts - NO: HC - Revenue' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-2010- CESTAT-MAD
Chemplast Sanmar Ltd Vs CCE
Central Excise - CENVAT credit - assessee agitates denial of credit on outward transportation, mobile phone services and documents addressed to head office while Revenue is in appeal on the issue of credit on outward transportation.
Held: Law on admissibility of credit of tax paid on outward transportation is well settled by Madras High Court in the case of Commissioner of Central Excise, Chennai Vs M/s. Borg Warner Morse Tec. Murugappa Pvt. Ltd. and CESTAT, Chennai - So far as the Cenvat credit claim on availing of mobile phone services is concerned, there is no material on record to suggest that the mobile phones were unrelated to the manufacture or for the activities permitted by Rule 2 (l) of Cenvat Credit Rules, 2004; hence assessee succeeds on this count - So far as denial of Cenvat credit on the services used with the documents addressed to Head Office is concerned, there appears no material to suggest that particular services was not used for the purpose stated in Rule 2 (l) of the Cenvat Credit Rules, 2004 hence the claim thereon is allowed - assessee' s appeals are allowed and Revenue' s appeals dismissed [Para 3-6] - Appeals disposed of : CHENNAI CESTAT
2015-TIOL-2009- CESTAT-MUM
Embio Ltd Vs CCE
CX - Applicant seeking extension of stay on the ground that their appeal has not come up for disposal for no fault of theirs. Held: In the case of Venketeshwara Filaments Pvt. Ltd. - 2014-TIOL-2388- CESTAT-AHM it is held that consequent upon omission of 1 st, 2 nd and 3 rd proviso to section 35C(2A) of the CEA, 1944 by the FA, 2014 it is to be held that there is no provision for making further application for extension of stay and that the stay order passed by the Tribunal, if it is in force beyond 07.08.2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension of orders granting stay either fully or partially - since the stay in the present case was in force beyond 07.08.2014, same would continue till the disposal of the appeal - Application disposed of: CESTAT [para 1, 3] - Application disposed of : MUMBAI CESTAT
CUSTOMS SECTION
2015-TIOL-2011- CESTAT-MAD
Chakiat Shipping Services Pvt Ltd Vs CC
Customs - Red Sanders smuggling - Parties associated with non-existent exporter [M/s Ascending Impex] of prohibited goods, Appellants (1) and (2) indicted by Customs for misdeclaration of port of discharge for which penalty was imposed on each under section 117 of the Customs Act, 1962 - Appellant (3), the freight forwarder brought to the fold of penalty under section 114(i) of the Customs Act, 1962 - Appellants (4) and (5) were subjected to penalty under section 117 of the Customs Act, 1962 due to their involvement in the smuggling of red sanders as a vessel operator - Penalties agitated herein. - Appeals dismissed : CHENNAI CESTAT
2015-TIOL-208- SC-IT
Video Master Vs JCIT
Whether any substantial question of law arises when the findings of facts and evidence on record were found by the lower courts. - Assessee' s appeal dismissed : SUPREME COURT OF INDIA
2015-TIOL-2219- HC-P&H-IT
CIT Vs Ghunna Ram And Son
Whether when the assessee has already paid taxes on the income disclosed under the Amnesty Scheme in the earlier years, is is possible for the Revenue to make an addition again in respect of those amounts - NO: HC - Revenue' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
Indirect Tax Basket
CENTRAL EXCISE SECTION
2015-TIOL-2010- CESTAT-MAD
Chemplast Sanmar Ltd Vs CCE
Central Excise - CENVAT credit - assessee agitates denial of credit on outward transportation, mobile phone services and documents addressed to head office while Revenue is in appeal on the issue of credit on outward transportation.
Held: Law on admissibility of credit of tax paid on outward transportation is well settled by Madras High Court in the case of Commissioner of Central Excise, Chennai Vs M/s. Borg Warner Morse Tec. Murugappa Pvt. Ltd. and CESTAT, Chennai - So far as the Cenvat credit claim on availing of mobile phone services is concerned, there is no material on record to suggest that the mobile phones were unrelated to the manufacture or for the activities permitted by Rule 2 (l) of Cenvat Credit Rules, 2004; hence assessee succeeds on this count - So far as denial of Cenvat credit on the services used with the documents addressed to Head Office is concerned, there appears no material to suggest that particular services was not used for the purpose stated in Rule 2 (l) of the Cenvat Credit Rules, 2004 hence the claim thereon is allowed - assessee' s appeals are allowed and Revenue' s appeals dismissed [Para 3-6] - Appeals disposed of : CHENNAI CESTAT
2015-TIOL-2009- CESTAT-MUM
Embio Ltd Vs CCE
CX - Applicant seeking extension of stay on the ground that their appeal has not come up for disposal for no fault of theirs. Held: In the case of Venketeshwara Filaments Pvt. Ltd. - 2014-TIOL-2388- CESTAT-AHM it is held that consequent upon omission of 1 st, 2 nd and 3 rd proviso to section 35C(2A) of the CEA, 1944 by the FA, 2014 it is to be held that there is no provision for making further application for extension of stay and that the stay order passed by the Tribunal, if it is in force beyond 07.08.2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension of orders granting stay either fully or partially - since the stay in the present case was in force beyond 07.08.2014, same would continue till the disposal of the appeal - Application disposed of: CESTAT [para 1, 3] - Application disposed of : MUMBAI CESTAT
CUSTOMS SECTION
2015-TIOL-2011- CESTAT-MAD
Chakiat Shipping Services Pvt Ltd Vs CC
Customs - Red Sanders smuggling - Parties associated with non-existent exporter [M/s Ascending Impex] of prohibited goods, Appellants (1) and (2) indicted by Customs for misdeclaration of port of discharge for which penalty was imposed on each under section 117 of the Customs Act, 1962 - Appellant (3), the freight forwarder brought to the fold of penalty under section 114(i) of the Customs Act, 1962 - Appellants (4) and (5) were subjected to penalty under section 117 of the Customs Act, 1962 due to their involvement in the smuggling of red sanders as a vessel operator - Penalties agitated herein. - Appeals dismissed : CHENNAI CESTAT
Direct Tax Basket
2015-TIOL-2228- HC-DEL-IT
Avinash Gupta Vs UoI
Whether if no right is infringed and no prejudice is found to be caused to petitioner, merely because no prejudice would be caused to Respondents by extending the time for filing the ITR, would not be a ground for interfering with the policy decision of the Government and granting such extension - YES:HC
Whether extension of the date of filing return, is a matter of policy and which the Government is best entitled to take and with which the Courts are not to interfere with except when either find the same to be infringing a vested right or causing undue prejudice to the persons effected thereby - YES: HC - Writ Petition Dismissed : DELHI HIGH COURT
2015-TIOL-2226- HC-P&H-IT
Paras Rice Mills Vs UoI
Whether where the assessee has exhausted all the remedies available under the I-T Act, no separate suit is maintainable in a regular second appeal - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2224- HC-P&H-IT
Manish Bansal Vs ITO
Whether when no cogent and convincing reasons have been given by the Tribunal for not accepting the additional evidence submitted before it for the first time, the order so passed by the Tribunal has to be remanded to the Tribunal for deciding it afresh in accordance with law - YES: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2223- HC-MAD-IT
CIT Vs Tube Investments Of India Ltd
Whether when the CIT(A) is satisfied on the basis of clear and cogent reasonings given in his order not to levy penalty and when the Tribunal finds such satisfaction to have been correctly arrived at, the said orders do not suffer from any error of law - YES: HC - Revenue' s appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2222- HC-DEL-IT + Story
CIT Vs Pritam Das Narang
Whether if section 17(3) pre-supposes the existence of employer-employee relationship, the amount received by the assessee "after cessation of his employment" is a capital receipt and could not be taxed under the head 'profits in lieu of salary' - YES: HC
Whether in case an amount was received by a prospective employee 'as compensation for denial of employment,&# 39; such amount received is in the nature of capital receipt that could not be taxed as income under any other head - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2221- HC-KERALA- IT
Manural Huda Trust Vs CIT
Whether it is open to the assessee to claim that on account of the impounding of its books by the Department, the assessee was unable to get its books audited - NO: HC
Whether such intentional omission on the part of assessee can be relieved, in case the duty of assessee to get its books audited has already expired long before the survey operation and no application for copies of extracts of the records impounded has been made by the assessee - NO: HC
Whether levy of penalty u/s 271(1)(c) in the aforesaid circumstances can be interfered with, when the contention of furnishing inaccurate particulars are rightly proved by the Department - NO: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-2220- HC-MAD-IT
Seven Arts Films Vs ACIT
Whether the order of the Tribunal is sustainable in law where the Tribunal has taken divergent views one that supports the view of the Department and the other leaning on the view of the assessee - Whether the payment made by the assessee, as goodwill, is capital in nature or is it a payment made for the purpose of staying afloat in business as a measure of commercial expediency. - Case remanded : MADRAS HIGH COURT
2015-TIOL-1507- ITAT-MUM
Technology Distribution Association Of India Vs DIT
Whether object which seeks to promote or protect the interest of a particular trade or industry is object of public utility and should be considered charitable in nature - YES: ITAT
Whether rejecting the application of registration because the objects of a company were clearly not for the benefit of public as a whole but rather are confined to specific members only, is justified - NO: ITAT
Whether promotion and protection of trade, commerce and industry cannot be equated with promotion and protection of activities and interests merely of persons engaged in trade, commerce and industry - YES: ITAT - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1506- ITAT-NAGPUR
DCIT Vs Leben Laboratories Pvt Ltd
Whether an assessee is entitled to claim deduction u/s 80IB in respect of the units established by it in succeeding years, in case it has fulfilled the requisite conditions for obtaining such deduction and was also allowed the same consequtively for earlier A.Ys - YES: ITAT - Revenue' s appeal dismissed : NAGPUR ITAT
2015-TIOL-1505- ITAT-BANG
Syndicate Rythara Sahakara Bank Ltd Vs ITO
Whether the deduction claimed by the assessee u/s 80P(2)(a)(i) in respect of interest earned from investments in fixed deposits and Govt. Securities out of surplus funds from business, can be allowed. - Assessee' s appeal allowed : BANGALORE ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2225- HC-MAD-ST + Story
Suprasesh General Insurance Services & Brokers Pvt Ltd Vs CST
Service Tax - Insurance Auxiliary Service - Commission retained by the re-insurance broker in respect of transaction between Indian Insurance Company and Foreign reinsurance Company - Appeal by assessee against the order of Tribunal upholding the demand and appeal by revenue against findings on limitation and penalties. - Assessee' s Appeal allowed / Revenue' s Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2020- CESTAT-MUM
CCE Vs Central Warehousing Corporation
ST – Appellant, a Container Freight Station received amounts on the goods auctioned by them – these goods were abandoned by the importer and the said goods were auctioned as per the provisions of the Customs Act, 1962 and after discharging all the duties as per section 150 of the CA, 1962 the appellant retained an amount which was to be returned to the importer – it is the case of the Revenue that on this amount Service Tax liability arises under the category of 'Storage and Warehousing service' . Held: Issue is no longer res integra in view of the Tribunal decision in Maersk India - 2012-TIOL-840- CESTAT-MUM where it is held that in view of Board Circular no. 11/1/2012-TRU dated 01.08.2002 clarifying that Service Tax is not leviable on the activities of the custodian where he auctions abandoned Cargo and ST/VAT is paid in respect of that cargo - Order of CCE, Raigad setting aside the demand is correct and legal and no interference is called for – Revenue appeal rejected: CESTAT [para 4, 5, 6] - Appeal rejected : DELHI CESTAT
2015-TIOL-2019- CESTAT-DEL
Radical Instruments Vs CCE
ST - Assessee, manufacturer of microscopes and accessories was sending finished products to its buyers, domestic as well as overseas through courier services - Also availed cenvat credit paid on such courier charges and utilized the same for payment of ST on its output services like GTA, Repair & Maintenance and Erection, Commissioning or Installation services - Decision in case of Ambuja Cements Ltd. 2009-TIOL-110- HC-P&H-ST covers the issue in favour of assessee - Since the courier and GTA services are input services for rendition of output services, cenvat credit is equally admissible: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-2018- CESTAT-MAD
CCE & ST Vs Grasim Industries Ltd
Service Tax - CENVAT credit - credit availed on input services, namely 'maintenance of windmill' , and 'gardening services' held admissible in adjudication and agitated by Revenue herein.
Held: Credit held admissible on maintenance of windmill as already decided - respondent being a manufacturer of cement was directed by Pollution control Board to prevent pollution planting trees in its factory area - Authorities are expected to record the material fact properly and test the same with evidence on record so that the decisions flows in accordance with law; Failure to do so results in mockery or miscarriage of justice - planting of trees cannot be equated with maintenance of garden - considering that a cement factory requires planting of the trees and maintenance thereof to prevent pollution, credit cannot be denied [Para 4] - Appeal dismissed : CHENNAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2021- CESTAT-MUM + Story
Fiat India Ltd Vs CCE
CX - Applicability of NCCD on Motor Vehicles - Road test is to carried on the vehicles before they are released for sale and so also certain items were to be fixed - as such, MV cannot be considered as manufactured on 28.02.2003 and, therefore, NCCD is chargeable - Demand upheld along with interest u/s 11AB of CEA, 1944 but penalty imposed u/r 25 of CER, 2002 set aside - Appeal disposed of: CESTAT [para 5] - Appeal disposed of : MUMBAI CESTAT
2015-TIOL-2017- CESTAT-MAD
M M Forgings Ltd Vs CCE
Central Excise - Refund - dispute relates to claim of refund of unutilized credit under Rule 5 of CENVAT Credit Rulesread with Notification No. 11/2002-CX dated 1.3.2002 - claim partially rejected in adjudication on the ground that the input credit involved relates to physical stock of raw material as on 31.3.2002; same upheld by Commissioner (Appeals) and agitated herein.
Held: The adjudicating authority has allowed the refund of credit correctly after taking into the facts and excluding the credit on the inputs lying in stock as on 31.3.2000 which has not gone to the manufacture of the exported goods - closing balance of CENVAT credit as on the relevant date includes the input credit on the physical stock of raw material and finished goods lying in stock - After excluding the credit on inputs lying in stock and the input contained in finished goods in stock the adjudicating authority has correctly arrived at the balance amount - the input credit is attributable to the goods already exported during the relevant quarter has been correctly worked out and the original authority has correctly sanctioned the refund - in view of this Tribunal Final Order dated 21.1.2015 against this appellant there is no merit in the appeal; accordingly, the impugned order is upheld. [Para 5, 6] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2016- CESTAT-MUM
Maharashtra Scooters Ltd Vs CCE
CX - Issue is whether during the period from 7/2006 to 3/2007 CENVAT credit is admissible on service of outward transportation.
Held: Commissioner( A) has given very detailed findings considering all issues and settled legal position in various judgments and which finding is reinforced by the High Court decisions in Vesuvious India 2013-TIOL-1038- HC-KOL-ST , Lafarge India 2014-TIOL-1720- HC-CHHATTISGARH- CX and Lumino Industries 2014-TIOL-25- HC-KOL-CX , order denying credit is sustainable - appeal dismissed: CESTAT [para 5] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-2015- CESTAT-DEL
M/s Jubilant Life Sciences Ltd Vs CCE
CX – Rule 6 of CCR, 2004 - When the audit objection was raised, appellant reversed the CENVAT Credit (along with interest) attributable to coal handling charges which was ultimately used for generation of steam, which was used for generation of electricity, which was ultimately used for manufacture of final exempted product - In these circumstances, the SCN was not required to be issued – moreover, as per FA, 2010 reversal of attributable credit along with interest is sufficient – no requirement to pay 8%/10% of the value of final exempted product as held by the Adjudicating Authority - appeal allowed with consequential relief: CESTAT [para 4] - Appeal allowed : DELHI CESTAT
2015-TIOL-2014- CESTAT-AHM
M/s Sabic Innovative Plastics Pvt Ltd Vs CCE & ST
CX - Whether assessee is entitled to avail Cenvat Credit on inputs and capital goods used exclusively for R & D and Quality Control Laboratory situated inside factory premises - Both Capital goods and inputs in R&D Laboratory are not used directly in manufacture of finished excisable goods - Assessee is using Laboratory for carrying out tests regarding necessary colour texture to plastic granule as per specifications and requirements of customers, to match specifications as per global norms and also for developing new products for customers - Such an activity in R&D and Quality Control Laboratory is essential for manufacture of finished goods and has to be held as in relation to manufacture of excisable goods and will be eligible to Cenvat Credit under CCR: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-2013- CESTAT-AHM
M/s Veer Plastics Pvt Ltd Vs CCE & ST
CX - Assessee paid certain dues under protest and reflected the same in books of accounts as receivable - CA's certificate produced by assessee confirms that amount paid by them was accounted for in books of accounts as deposits and receivable - Sale price of finished goods had shown no variation before period of refund and after period of refund - Initial burden, that amount claimed as refund has not been recovered from consumers, has been discharged by assessee - Doctrine of unjust-enrichment is not applicable - Appeal allowed: CESTAT - Appeal allowed : AHMEDABAD CESTAT
CUSTOMS SECTION
2015-TIOL-209- SC-CUS + Story
CC Vs M/s G M Exports
Customs - Anti Dumping Duty - Whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the provisional anti-dumping duty and the imposition of the final anti-dumping duty is legal and valid.- NO - Revenue Appeals Dismissed - Assessees Appeals llowed : SUPREME COURT OF INDIA
2015-TIOL-2012- CESTAT-DEL
Delhi International Airport Pvt Ltd Vs CC
Cus - Assessee was registered under Regulation 5 of Project Imports Regulations, 1986 at Commissionerate of Customs, (I&G), IGI, Airport, New Delhi - Under such registration, goods imported for IGI project as certified by concerned Ministry were allowed to be classified under 98.01 - Goods were imported at ICD, TKD - Assessee had not produced Release Advice from Custom House where project was registered and therefore assessing officer had no basis to classify impugned goods under CTH 98.01 and so assessed the goods on merit - Assistant Commissioner of Customs House where project was registered had declined to issue Release Advice for impugned goods which were never appealed against by assessee - In absence of any such indication, assessing officer at Customs House where goods were imported had no basis to grant the benefit of project import in respect of said Bills of Entry: CESTAT - Appeal rejected : DELHI CESTAT
2015-TIOL-2228- HC-DEL-IT
Avinash Gupta Vs UoI
Whether if no right is infringed and no prejudice is found to be caused to petitioner, merely because no prejudice would be caused to Respondents by extending the time for filing the ITR, would not be a ground for interfering with the policy decision of the Government and granting such extension - YES:HC
Whether extension of the date of filing return, is a matter of policy and which the Government is best entitled to take and with which the Courts are not to interfere with except when either find the same to be infringing a vested right or causing undue prejudice to the persons effected thereby - YES: HC - Writ Petition Dismissed : DELHI HIGH COURT
2015-TIOL-2226- HC-P&H-IT
Paras Rice Mills Vs UoI
Whether where the assessee has exhausted all the remedies available under the I-T Act, no separate suit is maintainable in a regular second appeal - YES: HC - Assessee' s appeal dismissed : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2224- HC-P&H-IT
Manish Bansal Vs ITO
Whether when no cogent and convincing reasons have been given by the Tribunal for not accepting the additional evidence submitted before it for the first time, the order so passed by the Tribunal has to be remanded to the Tribunal for deciding it afresh in accordance with law - YES: HC - Case remanded : PUNJAB AND HARYANA HIGH COURT
2015-TIOL-2223- HC-MAD-IT
CIT Vs Tube Investments Of India Ltd
Whether when the CIT(A) is satisfied on the basis of clear and cogent reasonings given in his order not to levy penalty and when the Tribunal finds such satisfaction to have been correctly arrived at, the said orders do not suffer from any error of law - YES: HC - Revenue' s appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2222- HC-DEL-IT + Story
CIT Vs Pritam Das Narang
Whether if section 17(3) pre-supposes the existence of employer-employee relationship, the amount received by the assessee "after cessation of his employment" is a capital receipt and could not be taxed under the head 'profits in lieu of salary' - YES: HC
Whether in case an amount was received by a prospective employee 'as compensation for denial of employment,&# 39; such amount received is in the nature of capital receipt that could not be taxed as income under any other head - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-2221- HC-KERALA- IT
Manural Huda Trust Vs CIT
Whether it is open to the assessee to claim that on account of the impounding of its books by the Department, the assessee was unable to get its books audited - NO: HC
Whether such intentional omission on the part of assessee can be relieved, in case the duty of assessee to get its books audited has already expired long before the survey operation and no application for copies of extracts of the records impounded has been made by the assessee - NO: HC
Whether levy of penalty u/s 271(1)(c) in the aforesaid circumstances can be interfered with, when the contention of furnishing inaccurate particulars are rightly proved by the Department - NO: HC - Assessee' s appeal dismissed : KERALA HIGH COURT
2015-TIOL-2220- HC-MAD-IT
Seven Arts Films Vs ACIT
Whether the order of the Tribunal is sustainable in law where the Tribunal has taken divergent views one that supports the view of the Department and the other leaning on the view of the assessee - Whether the payment made by the assessee, as goodwill, is capital in nature or is it a payment made for the purpose of staying afloat in business as a measure of commercial expediency. - Case remanded : MADRAS HIGH COURT
2015-TIOL-1507- ITAT-MUM
Technology Distribution Association Of India Vs DIT
Whether object which seeks to promote or protect the interest of a particular trade or industry is object of public utility and should be considered charitable in nature - YES: ITAT
Whether rejecting the application of registration because the objects of a company were clearly not for the benefit of public as a whole but rather are confined to specific members only, is justified - NO: ITAT
Whether promotion and protection of trade, commerce and industry cannot be equated with promotion and protection of activities and interests merely of persons engaged in trade, commerce and industry - YES: ITAT - Assessee' s appeal allowed : MUMBAI ITAT
2015-TIOL-1506- ITAT-NAGPUR
DCIT Vs Leben Laboratories Pvt Ltd
Whether an assessee is entitled to claim deduction u/s 80IB in respect of the units established by it in succeeding years, in case it has fulfilled the requisite conditions for obtaining such deduction and was also allowed the same consequtively for earlier A.Ys - YES: ITAT - Revenue' s appeal dismissed : NAGPUR ITAT
2015-TIOL-1505- ITAT-BANG
Syndicate Rythara Sahakara Bank Ltd Vs ITO
Whether the deduction claimed by the assessee u/s 80P(2)(a)(i) in respect of interest earned from investments in fixed deposits and Govt. Securities out of surplus funds from business, can be allowed. - Assessee' s appeal allowed : BANGALORE ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-2225- HC-MAD-ST + Story
Suprasesh General Insurance Services & Brokers Pvt Ltd Vs CST
Service Tax - Insurance Auxiliary Service - Commission retained by the re-insurance broker in respect of transaction between Indian Insurance Company and Foreign reinsurance Company - Appeal by assessee against the order of Tribunal upholding the demand and appeal by revenue against findings on limitation and penalties. - Assessee' s Appeal allowed / Revenue' s Appeal dismissed : MADRAS HIGH COURT
2015-TIOL-2020- CESTAT-MUM
CCE Vs Central Warehousing Corporation
ST – Appellant, a Container Freight Station received amounts on the goods auctioned by them – these goods were abandoned by the importer and the said goods were auctioned as per the provisions of the Customs Act, 1962 and after discharging all the duties as per section 150 of the CA, 1962 the appellant retained an amount which was to be returned to the importer – it is the case of the Revenue that on this amount Service Tax liability arises under the category of 'Storage and Warehousing service' . Held: Issue is no longer res integra in view of the Tribunal decision in Maersk India - 2012-TIOL-840- CESTAT-MUM where it is held that in view of Board Circular no. 11/1/2012-TRU dated 01.08.2002 clarifying that Service Tax is not leviable on the activities of the custodian where he auctions abandoned Cargo and ST/VAT is paid in respect of that cargo - Order of CCE, Raigad setting aside the demand is correct and legal and no interference is called for – Revenue appeal rejected: CESTAT [para 4, 5, 6] - Appeal rejected : DELHI CESTAT
2015-TIOL-2019- CESTAT-DEL
Radical Instruments Vs CCE
ST - Assessee, manufacturer of microscopes and accessories was sending finished products to its buyers, domestic as well as overseas through courier services - Also availed cenvat credit paid on such courier charges and utilized the same for payment of ST on its output services like GTA, Repair & Maintenance and Erection, Commissioning or Installation services - Decision in case of Ambuja Cements Ltd. 2009-TIOL-110- HC-P&H-ST covers the issue in favour of assessee - Since the courier and GTA services are input services for rendition of output services, cenvat credit is equally admissible: CESTAT - Appeal allowed : DELHI CESTAT
2015-TIOL-2018- CESTAT-MAD
CCE & ST Vs Grasim Industries Ltd
Service Tax - CENVAT credit - credit availed on input services, namely 'maintenance of windmill' , and 'gardening services' held admissible in adjudication and agitated by Revenue herein.
Held: Credit held admissible on maintenance of windmill as already decided - respondent being a manufacturer of cement was directed by Pollution control Board to prevent pollution planting trees in its factory area - Authorities are expected to record the material fact properly and test the same with evidence on record so that the decisions flows in accordance with law; Failure to do so results in mockery or miscarriage of justice - planting of trees cannot be equated with maintenance of garden - considering that a cement factory requires planting of the trees and maintenance thereof to prevent pollution, credit cannot be denied [Para 4] - Appeal dismissed : CHENNAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2021- CESTAT-MUM + Story
Fiat India Ltd Vs CCE
CX - Applicability of NCCD on Motor Vehicles - Road test is to carried on the vehicles before they are released for sale and so also certain items were to be fixed - as such, MV cannot be considered as manufactured on 28.02.2003 and, therefore, NCCD is chargeable - Demand upheld along with interest u/s 11AB of CEA, 1944 but penalty imposed u/r 25 of CER, 2002 set aside - Appeal disposed of: CESTAT [para 5] - Appeal disposed of : MUMBAI CESTAT
2015-TIOL-2017- CESTAT-MAD
M M Forgings Ltd Vs CCE
Central Excise - Refund - dispute relates to claim of refund of unutilized credit under Rule 5 of CENVAT Credit Rulesread with Notification No. 11/2002-CX dated 1.3.2002 - claim partially rejected in adjudication on the ground that the input credit involved relates to physical stock of raw material as on 31.3.2002; same upheld by Commissioner (Appeals) and agitated herein.
Held: The adjudicating authority has allowed the refund of credit correctly after taking into the facts and excluding the credit on the inputs lying in stock as on 31.3.2000 which has not gone to the manufacture of the exported goods - closing balance of CENVAT credit as on the relevant date includes the input credit on the physical stock of raw material and finished goods lying in stock - After excluding the credit on inputs lying in stock and the input contained in finished goods in stock the adjudicating authority has correctly arrived at the balance amount - the input credit is attributable to the goods already exported during the relevant quarter has been correctly worked out and the original authority has correctly sanctioned the refund - in view of this Tribunal Final Order dated 21.1.2015 against this appellant there is no merit in the appeal; accordingly, the impugned order is upheld. [Para 5, 6] - Appeal dismissed : CHENNAI CESTAT
2015-TIOL-2016- CESTAT-MUM
Maharashtra Scooters Ltd Vs CCE
CX - Issue is whether during the period from 7/2006 to 3/2007 CENVAT credit is admissible on service of outward transportation.
Held: Commissioner( A) has given very detailed findings considering all issues and settled legal position in various judgments and which finding is reinforced by the High Court decisions in Vesuvious India 2013-TIOL-1038- HC-KOL-ST , Lafarge India 2014-TIOL-1720- HC-CHHATTISGARH- CX and Lumino Industries 2014-TIOL-25- HC-KOL-CX , order denying credit is sustainable - appeal dismissed: CESTAT [para 5] - Appeal dismissed : MUMBAI CESTAT
2015-TIOL-2015- CESTAT-DEL
M/s Jubilant Life Sciences Ltd Vs CCE
CX – Rule 6 of CCR, 2004 - When the audit objection was raised, appellant reversed the CENVAT Credit (along with interest) attributable to coal handling charges which was ultimately used for generation of steam, which was used for generation of electricity, which was ultimately used for manufacture of final exempted product - In these circumstances, the SCN was not required to be issued – moreover, as per FA, 2010 reversal of attributable credit along with interest is sufficient – no requirement to pay 8%/10% of the value of final exempted product as held by the Adjudicating Authority - appeal allowed with consequential relief: CESTAT [para 4] - Appeal allowed : DELHI CESTAT
2015-TIOL-2014- CESTAT-AHM
M/s Sabic Innovative Plastics Pvt Ltd Vs CCE & ST
CX - Whether assessee is entitled to avail Cenvat Credit on inputs and capital goods used exclusively for R & D and Quality Control Laboratory situated inside factory premises - Both Capital goods and inputs in R&D Laboratory are not used directly in manufacture of finished excisable goods - Assessee is using Laboratory for carrying out tests regarding necessary colour texture to plastic granule as per specifications and requirements of customers, to match specifications as per global norms and also for developing new products for customers - Such an activity in R&D and Quality Control Laboratory is essential for manufacture of finished goods and has to be held as in relation to manufacture of excisable goods and will be eligible to Cenvat Credit under CCR: CESTAT - Appeal allowed : AHMEDABAD CESTAT
2015-TIOL-2013- CESTAT-AHM
M/s Veer Plastics Pvt Ltd Vs CCE & ST
CX - Assessee paid certain dues under protest and reflected the same in books of accounts as receivable - CA's certificate produced by assessee confirms that amount paid by them was accounted for in books of accounts as deposits and receivable - Sale price of finished goods had shown no variation before period of refund and after period of refund - Initial burden, that amount claimed as refund has not been recovered from consumers, has been discharged by assessee - Doctrine of unjust-enrichment is not applicable - Appeal allowed: CESTAT - Appeal allowed : AHMEDABAD CESTAT
CUSTOMS SECTION
2015-TIOL-209- SC-CUS + Story
CC Vs M/s G M Exports
Customs - Anti Dumping Duty - Whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the provisional anti-dumping duty and the imposition of the final anti-dumping duty is legal and valid.- NO - Revenue Appeals Dismissed - Assessees Appeals llowed : SUPREME COURT OF INDIA
2015-TIOL-2012- CESTAT-DEL
Delhi International Airport Pvt Ltd Vs CC
Cus - Assessee was registered under Regulation 5 of Project Imports Regulations, 1986 at Commissionerate of Customs, (I&G), IGI, Airport, New Delhi - Under such registration, goods imported for IGI project as certified by concerned Ministry were allowed to be classified under 98.01 - Goods were imported at ICD, TKD - Assessee had not produced Release Advice from Custom House where project was registered and therefore assessing officer had no basis to classify impugned goods under CTH 98.01 and so assessed the goods on merit - Assistant Commissioner of Customs House where project was registered had declined to issue Release Advice for impugned goods which were never appealed against by assessee - In absence of any such indication, assessing officer at Customs House where goods were imported had no basis to grant the benefit of project import in respect of said Bills of Entry: CESTAT - Appeal rejected : DELHI CESTAT
CX - Applicability of NCCD on Motor Vehicles - Road test is to be carried on vehicles before they are released for sale - as such, MV cannot be considered as manufactured on 28.02.2003 and, therefore, NCCD is chargeable: CESTAT
MUMBAI: THE appellant is a manufacturer of motor vehicles. With effect from 01.03.2003, National Calamity Contingent Duty (NCCD) was imposed on motor vehicles. Appellant had certain motor vehicles which were in "substantially" manufactured condition though not in marketable condition. These vehicles were cleared after 01.03.2003.
Since the appellant did not pay NCCD on such motor vehicles, Revenue initiated proceedings for demand and recovery of the same.
As the demand was confirmed by the lower authorities, the appellant is before the CESTAT.
The appellant submitted that NCCD is a new levy and as held by the Supreme Court in the case of Vazir Sultan Tobacco Co. Ltd. 2002-TIOL-215- SC-CX-LB the new levy would be applicable only on the goods manufactured after 01.03.2003. Since some of the vehicles in question were 'almost manufactured&# 39; and even though cleared after 01.03.2003, no NCCD is applicable on the said goods. Appellant also relied on the Board letter 334/1/2003-TRU dated 28.02.2003, para 17 of which clarified that NCCD is not applicable to the pre-budget stock.
The AR while reiterating the findings of the original authority submitted that there is nothing like almost-manufactured motor vehicles ;that the motor vehicles admittedly were not manufactured as there is also a requirement of road testing as also certain items were to be fixed;that without these, motor vehicles are not marketable and cannot be taken on road and it is only when the goods are fully finished including road testing etc. the vehicles can be called manufactured motor vehicles. Since in the present case, the goods were manufactured after 01.03.2003, NCCD is applicable, the AR concluded.
The Bench observed -
"5. There is no dispute about the fact that for the pre-budget stock in respect of manufactured goods which have been manufactured before 01.03.2003, NCCD would not be applicable. However, we find that admitted position even from the appellant' s side is that the vehicles were not fully finished but substantially finished. It is seen that it is important that the road test are carried on the vehicles before it can be taken on road and released for sale. Similarly, it is an admitted position certain work remains to be done on these vehicles in as much as certain items were yet to be fixed. Under these circumstances, in our view, the motor vehicles cannot be considered as manufactured as on 28.02.2003 and, therefore, NCCD would be chargeable. In view of the above position, demand is upheld on merits. We also find that equivalent amount of penalty has been imposed under Rule 25 of the Central Excise Rules, 2002. In the facts and circumstances of the case, in our considered view, this is not a fit case for imposition of penalty and we accordingly set aside the penalty imposed under rule 25. Interest under Section 11AB is upheld."
The Appeal was disposed of.
MUMBAI: THE appellant is a manufacturer of motor vehicles. With effect from 01.03.2003, National Calamity Contingent Duty (NCCD) was imposed on motor vehicles. Appellant had certain motor vehicles which were in "substantially" manufactured condition though not in marketable condition. These vehicles were cleared after 01.03.2003.
Since the appellant did not pay NCCD on such motor vehicles, Revenue initiated proceedings for demand and recovery of the same.
As the demand was confirmed by the lower authorities, the appellant is before the CESTAT.
The appellant submitted that NCCD is a new levy and as held by the Supreme Court in the case of Vazir Sultan Tobacco Co. Ltd. 2002-TIOL-215- SC-CX-LB the new levy would be applicable only on the goods manufactured after 01.03.2003. Since some of the vehicles in question were 'almost manufactured&# 39; and even though cleared after 01.03.2003, no NCCD is applicable on the said goods. Appellant also relied on the Board letter 334/1/2003-TRU dated 28.02.2003, para 17 of which clarified that NCCD is not applicable to the pre-budget stock.
The AR while reiterating the findings of the original authority submitted that there is nothing like almost-manufactured motor vehicles ;that the motor vehicles admittedly were not manufactured as there is also a requirement of road testing as also certain items were to be fixed;that without these, motor vehicles are not marketable and cannot be taken on road and it is only when the goods are fully finished including road testing etc. the vehicles can be called manufactured motor vehicles. Since in the present case, the goods were manufactured after 01.03.2003, NCCD is applicable, the AR concluded.
The Bench observed -
"5. There is no dispute about the fact that for the pre-budget stock in respect of manufactured goods which have been manufactured before 01.03.2003, NCCD would not be applicable. However, we find that admitted position even from the appellant' s side is that the vehicles were not fully finished but substantially finished. It is seen that it is important that the road test are carried on the vehicles before it can be taken on road and released for sale. Similarly, it is an admitted position certain work remains to be done on these vehicles in as much as certain items were yet to be fixed. Under these circumstances, in our view, the motor vehicles cannot be considered as manufactured as on 28.02.2003 and, therefore, NCCD would be chargeable. In view of the above position, demand is upheld on merits. We also find that equivalent amount of penalty has been imposed under Rule 25 of the Central Excise Rules, 2002. In the facts and circumstances of the case, in our considered view, this is not a fit case for imposition of penalty and we accordingly set aside the penalty imposed under rule 25. Interest under Section 11AB is upheld."
The Appeal was disposed of.
CL : The appellant who is a Rajya Sabha MP and was a former Asstt Commissioner of Commercial taxes cannot be allowed to advance a remarkable plea that she had signed bank loan documents as co-applicant or guarantor showing deference to her late husband and was ignorant of forgery and that she had settled the dues and High Court's quashing of proceedings should not be disturbed .The assertions as regards the ignorance are a mere pretence and sans substance given the facts. Lack of awareness, knowledge or intent is neither to be considered nor accepted in economic offences. "The submission assiduously presented on gender leaves us unimpressed. "
[2015] 61 taxmann.com 323 (SC)
SUPREME COURT OF INDIA
State, Rep. By Inspector of Police Central Crime Branch
v.
R. Vasanthi Stanley
[2015] 61 taxmann.com 323 (SC)
SUPREME COURT OF INDIA
State, Rep. By Inspector of Police Central Crime Branch
v.
R. Vasanthi Stanley
IT : Where assessee-society, established by Christian community, had been running medical colleges and its main aims were to train professionals in field of medical and health care and also to provide medical facilities in its hospitals to all persons of any caste, activities carried out by assessee were charitable in nature and it was entitled to exemption under section 80G
[2015] 61 taxmann.com 68 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax
v.
Christian Medical College
[2015] 61 taxmann.com 68 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax
v.
Christian Medical College
ASSISTANT COMMISSIONER OF INCOME TAX vs.VIKRANT CHEMICO INDUSTRIES PVT. LTD.
LUCKNOW TRIBUNAL
Reassessment—Reopening on the basis of materials found during search—Validity—Assessee had filed its return of income declaring an income of specified amount—Thereafter, the search took place and in compliance to the notice issued by the AO u/s 153A, the assessee had filed return of income showing an income of Rs. 16,57,990—Assessee had declared extra income of Rs. 11,74,512/-. in the return filed pursuant to search—Whether on the basis of the same materials found in search which stand already considered in the assessment u/s 153A, the AO can start reassessment proceedings—Held, AO cannot start reassessment proceedings u/s 147 merely on the basis of the same materials found in search which stand already considered in the assessment u/s 153A—Same cannot be permitted because it will amount to considering same material twice—Delhi High Court in the case of CIT vs. Kelvinator of India Limited had held that an order which was passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceedings without anything further, the same would amount to giving premium to an authority exercising quasi judicial function to take benefit of its own wrong—AO does not have an option to make up his failure by issuing notice u/s 147 on the basis of the same search material, which was required to be considered in assessment u/s 153A because the provisions of section 153A have overriding effect over section 147—If the AO brings on record any new material on record other than the search material, it was always open to issue notice u/s 147 after recording reasons and complying with the requirements of law Proceedings and assessment order u/s 153A was quashed—In the present case, the AO failed to issue notice u/s 143 (2) in section 153A—Reopening was not valid in the present case because there was no other material with the AO other than search material for which he had reason to believe that any income has escaped assessment— No infirmity was found in order of CIT—Revenue's appeal dismissed
LUCKNOW TRIBUNAL
Reassessment—Reopening on the basis of materials found during search—Validity—Assessee had filed its return of income declaring an income of specified amount—Thereafter, the search took place and in compliance to the notice issued by the AO u/s 153A, the assessee had filed return of income showing an income of Rs. 16,57,990—Assessee had declared extra income of Rs. 11,74,512/-. in the return filed pursuant to search—Whether on the basis of the same materials found in search which stand already considered in the assessment u/s 153A, the AO can start reassessment proceedings—Held, AO cannot start reassessment proceedings u/s 147 merely on the basis of the same materials found in search which stand already considered in the assessment u/s 153A—Same cannot be permitted because it will amount to considering same material twice—Delhi High Court in the case of CIT vs. Kelvinator of India Limited had held that an order which was passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceedings without anything further, the same would amount to giving premium to an authority exercising quasi judicial function to take benefit of its own wrong—AO does not have an option to make up his failure by issuing notice u/s 147 on the basis of the same search material, which was required to be considered in assessment u/s 153A because the provisions of section 153A have overriding effect over section 147—If the AO brings on record any new material on record other than the search material, it was always open to issue notice u/s 147 after recording reasons and complying with the requirements of law Proceedings and assessment order u/s 153A was quashed—In the present case, the AO failed to issue notice u/s 143 (2) in section 153A—Reopening was not valid in the present case because there was no other material with the AO other than search material for which he had reason to believe that any income has escaped assessment— No infirmity was found in order of CIT—Revenue's appeal dismissed
M.S. ASSOCIATES vs.ASSISTANT COMMISSIONER OF INCOME TAX
DELHI TRIBUNAL
Business Expenditure—Depreciation—Closing of business—Assessee had not shown any receipt from its business of purchase and sale of state lottery tickets being sole distributors of lotteries of Nagaland and Meghalaya state—Assessee simultaneously claimed expenses and depreciation against the receipt from the said business—AO disallowed the expenses on ground that Director Meghalaya State Lotteries had stopped the distributorship of the assessee' s on line lotteries during November 2006 and from then on it had not been revived—Assessee claimed that it had incurred lots of expenditure in hope of resuming the business and there was no business receipt during the financial year—AO made disallowance of claim of expenses on the ground that no business activities had been carried out during the year under reference by assessee partnership firm—CIT(A) confirmed the order of the AO regarding closure of the business—Held, merely on the ground that there was no business receipt during the year, there cannot be any presumption about closure of the business—It was found from the record that the assessee was engaged in the business of lotteries and the business had never been closed or discontinued—Firm was still in existence and maintaining regular establishment and infrastructure—Lottery business was being carried out on in terms of agreement with Nagaland and Meghalaya Authorities, however, the business was discontinued by these authorities on the technical reasons and dispute was still pending in arbitration—It was further found that the assessee had a regular establishment and incurred various expenses as a part of running business which clearly established that business had neither been closed or discontinued by the assessee—Tribunal found considerable cogency in the assessee's submissions made before the CIT(A) that the assessee was a partnership firm and income under the head business had been computed at NIL and there was no case of any tax liability—Neither the AO nor the CIT(A) had appreciated the facts and evidence filed by the Assessee before them—Matter was thus remitted back to the file of the AO—Assessee's appeal allowed for statistical purposes
DELHI TRIBUNAL
Business Expenditure—Depreciation—Closing of business—Assessee had not shown any receipt from its business of purchase and sale of state lottery tickets being sole distributors of lotteries of Nagaland and Meghalaya state—Assessee simultaneously claimed expenses and depreciation against the receipt from the said business—AO disallowed the expenses on ground that Director Meghalaya State Lotteries had stopped the distributorship of the assessee' s on line lotteries during November 2006 and from then on it had not been revived—Assessee claimed that it had incurred lots of expenditure in hope of resuming the business and there was no business receipt during the financial year—AO made disallowance of claim of expenses on the ground that no business activities had been carried out during the year under reference by assessee partnership firm—CIT(A) confirmed the order of the AO regarding closure of the business—Held, merely on the ground that there was no business receipt during the year, there cannot be any presumption about closure of the business—It was found from the record that the assessee was engaged in the business of lotteries and the business had never been closed or discontinued—Firm was still in existence and maintaining regular establishment and infrastructure—Lottery business was being carried out on in terms of agreement with Nagaland and Meghalaya Authorities, however, the business was discontinued by these authorities on the technical reasons and dispute was still pending in arbitration—It was further found that the assessee had a regular establishment and incurred various expenses as a part of running business which clearly established that business had neither been closed or discontinued by the assessee—Tribunal found considerable cogency in the assessee's submissions made before the CIT(A) that the assessee was a partnership firm and income under the head business had been computed at NIL and there was no case of any tax liability—Neither the AO nor the CIT(A) had appreciated the facts and evidence filed by the Assessee before them—Matter was thus remitted back to the file of the AO—Assessee's appeal allowed for statistical purposes
BANGALORE TRIBUNAL
Income—Expenditure incurred in relation to income not includible in total income—Assessee a PSU Banking company had filed its return of income for the relevant A/Y declaring total income of Rs.459,23,47, 410—During the course of assessment proceedings u/s 143(3), the AO had observed that assessee has earned income from dividends which was exempt from tax u/s 10(34) as well as interest of Rs.2,00,37,578 from tax free bonds—AO had held that the provisions of section 14A were applicable and no deduction was required to be allowed in respect of expenses incurred by the assessee in relation to the income which does not form part of the total income—CIT(A) had granted relief to the assessee by observing that the assessment order does not contain any discussion as to how the assessee's claim in the accounts was incorrect and that the reliance by the AO on Rule 8D was clearly premature— Held, It was found that he AO had not brought out anything on record as to how the claim of the assessee was incorrect having regard to its books of account—Therefore, the disallowance made by the AO u/s 14A(2) read with Rule 8D of IT Rules was not sustainable—Revenue had also not been able to bring any material on record to demonstrate as to how the disallowance u/s 14A restricted by CIT(A) at 2 percent of the exempt income was not reasonable or not sustainable—No interference with order of CIT(A) was warranted—Revenue appeal dismissed
__._,_.___
No comments:
Post a Comment