Investment theme: Sectors, stocks to benefit from amendments to Land Act

The government has pushed the pedal on reforms by clearing the ordinance to amend the Land Acquisition Act.

Land purchases for five purposes, i.e. infrastructure projects, affordable housing, industrial corridors, defense purposes, and rural infrastructure, have been exempted from both the consent clause and the social impact assessment.

The market has taken the decision positively and infrastructure stocks have rallied nearly 7 per cent in anticipation of a pick-up in business.

"We see the changes on provisions pertaining to land purchases for the five above-mentioned uses as a positive for medium-term demand. However, there has been no change pertaining to land acquisition for private projects, including industries," stated a Morgan Stanley report.

The brokerage is of the view that the cement industry is expected to benefit from the Land Act. "We, thus, believe that capacity addition will take longer, which is positive for medium-term supply demand balance and earnings trajectory of the industry. In our view, companies that have brownfield expansion potential will benefit on a relative basis," the report added.

According to Hemang Jani, Senior Vice President, Sharekhan, amendments to the Land Acquisition Bill are aimed at easing some of the clauses that could have acted as a deterrent for the industry, real estate companies and infrastructure developers.

"The ordinance is favourable for a host of companies from these sectors, including Larsen & Toubro, IRB Infra, IL&FS Transportation, DLF and Unitech, among others," he said.

Goldman expects Power Grid to find it easier to get right of way (RoW) for T&D projects, while Container Corporation of India will benefit through faster implementation of industrial corridors and L&T will gain as the execution on PPP projects picks up pace.

Meanwhile, Nomura in its note said the land acquisition law passed by the previous government in 2013 had made land acquisition a very cumbersome process for the industry, and was proving to be a major bottleneck in the current government's effort to revive infrastructure development and greenfield investment.

"Like the previous ordinances, though, this again underlines the government's commitment to reforms, but investors may still choose to wait for parliamentary approval before taking up fresh projects, as there is a risk that the stalemate between the government and the opposition parties continues in the next session and the ordinances lapse," the report added.

Source: http://economictimes.indiatimes.com/

Rate of penalty was reduced to 15 per cent

CST & VAT : Uttarakhand VAT : Where assessee had not deposited admitted tax along with returns and thereupon Tribunal imposed penalty at rate of 20 per cent, since it was stand of assessee that first time it was levied with penalty, rate of penalty was reduced to 15 per cent
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[2014] 52 taxmann.com 292 (Uttarakhand)
HIGH COURT OF UTTARAKHAND
Texplas (India) (P.) Ltd.
v.
Commissioner of Commercial Tax, Dehradun*
K.M. JOSEPH, CJ.
AND V.K. BIST, J.
COMMERCIAL TAX REVISION NOS. 8, 9, 21 AND 22 OF 2014
SEPTEMBER  16, 2014
Section 58 of the Uttarakhand Value Added Tax Act, 2005 read with section 9 of the Central Sales Tax Act, 1956 - Penalty - For failure to deposit tax due along with return - Assessment years 2011-12 and 2012-13 - For two quarters, assessee filed returns both under VAT Act and Central Act on time - It had not deposited admitted tax along with returns - For failure to deposit admitted tax in time, Tribunal imposed penalty upon assessee under section 58(1)(vii)(a) at rate of 20 per cent - Assessee submitted that first time it was levied with penalty - Whether in peculiar facts of case rate of penalty required to be reduced from 20 per cent to 15 per cent - Held, yes [Para 15] [Partly in favour of assessee]

Where assessee had failed to explain credit in question to be related to sale of goods; addition of said amount as cash credit was to be sustained

IT : Where assessee had failed to explain credit in question to be related to sale of goods; addition of said amount as cash credit was to be sustained
IT : Where assessee's appeal was partly allowed by Commissioner (Appeals) and in revenue's appeal before Tribunal, issues assailed by assessee were not challenged at behest of revenue, assessee could not challenge issues against him by filing an application under section 27 of ITAT rules
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[2014] 51 taxmann.com 137 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Self Knitting Works
v.
Commissioner of Income-tax, Central Circle, Ludhiana*
AJAY KUMAR MITTAL AND JASPAL SINGH, JJ.
IT APPEAL NO.138 OF 2014†
JULY  11, 2014
Section 68, read with section 145 of the Income-tax Act, 1961 - Cash credits (Sale of goods) - Assessment year 2005-06 - Assessee contended that stocks which had deteriorated because of prolonged storage for want of export orders, were sold in lots against cash receipts to realize blocked funds - Tribunal, noticed that in relevant sale bills there was no mention of any quantity sold - Name of parties to whom goods were sold was also missing - There were totalling errors in each bill and mode of transportation of those goods also could not be explained by assessee - Tribunal concluded that genuineness of transaction could not be established and relevant credit of Rs. 37.30 lakhs in profit and loss account was as cash credit in nature of cash credit - Whether Tribunal was justified in sustaining addition - Held, yes [Para 6] [In favour of revenue]
Section 255 of the Income-tax Act, 1961 read with rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 - Appellate tribunal - Procedure of (Rule 27 of ITAT Rules) - Assessment year 2005-06 - Commissioner (Appeals) partly allowed assessee's appeal while making certain disallowance and addition - Revenue filed appeal before Tribunal - Assessee filed application under rule 27 of ITAT rules to assail that part of order of Commissioner (Appeals) that was decided against it - However, disallowance or addition made by Commissioner (Appeals) were not under challenge before Tribunal at behest of revenue - Whether only remedy available with assessee was to either file separate appeal or agitate issue by way of cross-objections in appeal filed by revenue - Held, yes [Para 10] [In favour of revenue]

After rejection of revision petition of assessee, it was not open to avail statutory remedy of appeal

IT : Where assessee had failed to produce any documentary evidence with regard to proof of agricultural land and sale of agricultural produce in order to substantiate his claim that income was agricultural income claim of assessee could not be accepted
IT : After rejection of revision petition of assessee, it was not open to avail statutory remedy of appeal
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[2014] 51 taxmann.com 199 (Punjab & Haryana)
HIGH COURT OF PUNJAB & HARYANA
Jaskaran Singh
v.
Union of India*
AJAY KUMAR MITTAL AND MS. ANITA CHAUDHRY, JJ.
C.W.P. NOS. 4471 & 4487 OF 2014
MARCH  12, 2014
I. Section 2(1A), read with section 28(i), of the Income-tax Act, 1961 - Agricultural Income (Conditions precedents) - Whether where assessee had failed to produce any documentary evidence with regard to proof of agricultural land and sale of agricultural produce in order to substantiate his claim that income was agricultural income, claim of assesse could not be accepted - Held, yes [Para 10] [In favour of revenue]
II. Section 246, read with section 264, of the Income-tax Act, 1961 - Commissioner (Appeals) - Appealable order (Revision) - Assessment year 2005-06 - Whether once assessee had taken recourse to revisional remedy under section 264, and its revision petition had been rejected, it was not open to have fallen back on statutory remedy of filing appeal under section 246 - Held, yes [Para 11] [In favour of revenue]

Electric installations that were part of plant and machinery, are eligible to depreciation as plant and machinery

IT : Where assessee maintained regular books of account which were duly audited, decline in gross profit and disproportionate increase in expenses in certain heads cannot, by itself, be ground to reject book results
IT : Variation in consumption of fuel in relevant year does not, by itself, empower Assessing Officer to assume some undisclosed production so as to make addition to book result
IT : Electric installations that were part of plant and machinery, are eligible to depreciation as plant and machinery
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[2014] 51 taxmann.com 515 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'D'
Century Tiles Ltd.
v.
Joint Commissioner of Income-tax*
N.S. SAINI, ACCOUNTANT MEMBER
AND KUL BHARAT, JUDICIAL MEMBER
IT APPEAL NOS. 2310 (AHD.) OF 2011 & 1058 (AHD.) OF 2013
[ASSESSMENT YEARS 2008-09 & 2009-10]
JUNE  9, 2014
I. Section 145 of the Income-tax Act, 1961 - Method of accounting - Rejection of books of account (Decline in GP rate) - Assessment year 2009-10 - Whether where assessee maintained regular books of account which were duly audited, decline in gross profit and disproportionate increase in expenses in certain heads, by itself, would not empower revenue to reject book results; said reason can, at best, present a case where Assessing Officer ought to have verified books with caution and make due inquiries - Held, yes [Para 23] [In favour of assessee]
II. Section 69C, read with section 145, of the Income-tax Act, 1961 - Unexplained expenditure (Unaccounted production) - Assessment year 2008-09 - Assessee was engaged in manufacturing and trading of glazed tiles - Assessing Officer noticing that fuel consumption increased abnormally in relevant assessment year in comparison to increase in production, computed unaccounted production and made addition - Whether in absence of any material to show that assessee actually produced quantity more than what had been disclosed in books of account, variation in amount of consumption of fuel did not by itself, empower Assessing Officer to assume some undisclosed production and thereby make addition to result disclosed by regularly maintained books of account - Held, yes [Paras 36 and 37] [In favour of assessee]
III. Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Electric installation) - Assessment year 2008-09 - Whether where electric installations were part of plant and machinery, assessee was entitled to depreciation at rate applicable to plant and machinery and not at rate applicable to electric installations - Held, yes [Para 39] [In favour of assessee]

Pre-deposit order was passed by Tribunal without hearing him, High Court remanded matter back to Tribunal

Excise & Customs : Where assessee had claimed that notice for hearing of stay application was not furnished to him and pre-deposit order was passed by Tribunal without hearing him, High Court remanded matter back to Tribunal
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[2014] 51 taxmann.com 558 (Andhra Pradesh)
HIGH COURT OF ANDHRA PRADESH
Harik Resins (P.) Ltd.
v.
CESTAT, Bangalore*
G. ROHINI AND A. RAMALINGESWARA RAO, JJ.
WRIT PETITION NO. 27770 OF 2013†
SEPTEMBER  25, 2013
Section 35F , read with section 11A, of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 and section 129E of the Customs Act, 1962 - Appeals - Deposit, pending appeal, of duty/tax demanded or penalty levied - Assessee-company and its managing director challenged demand/penalty and personal penalty vide separate appeals and also sought stay of demand - Tribunal recorded that no one was present nor any adjournment was sought and ordered partial pre-deposit - Assessee challenged said order same on ground that there was no notice for hearing of stay application - Tribunal records obtained under RTI Act disclosed that notice was sent and served in appeal filed by Managing Director and not in appeal filed by assessee company - HELD : There is some confusion with regard to appeal numbers preferred by assessee-company and its managing director in his individual capacity - There was no reason to disbelieve assessee - Since impugned order was passed without hearing assessee, matter was remanded back to Tribunal [Paras 8 to 11] [In favour of assessee]
Vedula Venkata Ramana, Senior Counsel for the Petitioner. V. Gopala Krishna Gokhale, Standing Counsel for the Respondent.

Time-limit of section 11B applies to service tax paid by mistake, if assessee makes an application for refund under section 11B

Service Tax : Time-limit of section 11B applies to service tax paid by mistake, if assessee makes an application for refund under section 11B
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[2014] 51 taxmann.com 564 (Karnataka)
HIGH COURT OF KARNATAKA
M.C.I. Leasing (P.) Ltd.
v.
Commissioner of Central Excise, Mysore*
N. KUMAR AND RAVI MALIMATH, JJ.
CEA NO. 21 OF 2009†
SEPTEMBER  22, 2011
Section 11B, of the Central Excise Act, 1944, read with section 83 of the Finance Act, 1994 and section 27, of the Customs Act, 1962 - Refund - Period of Limitation - Assessee was registered as a service provider and voluntarily paid tax on 'interest earned' - Later, on realizing that it was not liable to pay tax, it filed refund claim under section 11B - Department disallowed a part of refund claim barred by limitation - Assessee argued that time-limit of section 11B was not applicable to service tax paid by mistake - HELD : All refund claims (except those claimed on ground that provision/ law under which tax is levied is declared unconstitutional) have to be and must be filed and adjudicated under provisions of Finance Act/Central Excise Act - Moreover, since assessee had chosen to file refund claim under section 11B, time-limit of section 11B was applicable and provisions of general law stood automatically excluded - Since tax was not paid under protest, time-limit of 1 year was applicable and denial of refund claim beyond 1 year was valid [Paras 4 to 6] [In favour of revenue]

Waiver of penalties under section 80

Service Tax : Waiver of penalties under section 80 on ground that issue involved is one of interpretation of law, proves that ingredients required for invoking extended period were not present; hence, extended period was not invocable.
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[2014] 51 taxmann.com 264 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Sankhla Udyog
v.
Commissioner of Central Excise & Service Tax, Jaipur*
JUSTICE G. RAGHURAM, PRESIDENT
AND R.K. SINGH, TECHNICAL MEMBER
FINAL ORDER NO. 52861/2014
APPLICATION NO. ST/STAY/56543/2013
APPEAL NO. ST/56085/2013-CU-(DB)
JULY  10, 2014
Section 73, read with section 80, of the Finance Act, 1994 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Invocation of extended period of limitation - Adjudication authority waived penalties relying upon section 80 on ground that there was interpretation of law involved; however, invocation of extended period was upheld - Assessee challenged same - HELD : Waiver of penalties under section 80 clearly shows that ingredients required for invoking extended period were not present in this case - Further, in entire adjudication order, there was no word as to how extended period is invocable - Hence, extended period was not invocable [Para 6] [In favour of assessee]
Section 73, of the Finance Act, 1994, read with sections 11A and 33A of the Central Excise Act, 1944 and Section 28, of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Adjudication of demand - Department confirmed demand on ground that there was difference between balance sheet figures and ST-3 returns - Assessee argued that balance sheet was prepared on accrual basis, while ST-3 returns were filed on receipt basis, leading to impugned difference - Adjudicating authority held that it is not possible to check each and every entry running into thousands; hence, demand was confirmed - HELD Once assessee contended that difference was because of accrual and receipt system of accounting, a clear finding was required to be given by adjudicating authority instead of brushing it aside on ground that it was not possible to verify their claim - Hence, matter was remanded back for adjudication afresh [Para 7] [In favour of assessee]
Circulars and Notifications : Notification No. 6/2005-ST dated 1.3.2005

Premature payment of deferred sales tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable

IT : Where assessee due to certain scheme made premature payment of deferred sales tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable
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[2014] 52 taxmann.com 15 (Karnataka)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax, Central Circle, Bangalore
v.
McDowell & Co. Ltd.*
N. KUMAR AND MRS. RATHNAKALA, JJ.
IT APPEAL NO. 899 OF 2008†
SEPTEMBER  2, 2014
Section 41(1), read with section 43B, of the Income-tax Act, 1961 read with section 38 of the Bombay Sales Tax Act, 1959 - Remission or cessation of trading liability (Sales Tax) - Assessment year 2004-05 - Assessee was allowed to retain sales tax and pay same 15 years thereafter according to deferral scheme - However, by a subsequent scheme, a provision was made for premature payment of an amount equal to net present value of deferred tax and on such payment balance amount of deferred tax would be waived - Assessee paid net present value and did not offer remaining amount for tax - Revenue relied on section 41(1) to levy tax on remaining amount - Whether where assessee made premature payment and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable to assessee - Held, yes [Para 12] [In favour of assessee]
Circulars and Notification : CBDT Circular No. 496, dated 25-9-1987 and No. 612, dated 29-12-1993

Services had been actually rendered by AE to it, lower authorities were justified in considering ALP to be nil

IT/ILT: Where assessee had not been able to bring anything on record to prove that services had been actually rendered by AE to it, lower authorities were justified in considering ALP to be nil
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[2014] 52 taxmann.com 19 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'C'
Cranes Software International Ltd.
v.
Deputy Commissioner of Income-tax, Circle- 11 (2), Bangalore*
RAJPAL YADAV, JUDICIAL MEMBER
AND ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
IT (TP) APPEAL NO. 1594 (BANG.) OF 2012
[ASSESSMENT YEAR 2008-09]
SEPTEMBER  26, 2014
Section 92C of the Income-tax Act, 1961 read with rule 10D of the Income-tax Rules, 1962 - Transfer pricing - Computation of arm's length price (Comparables & Adjustments) - Assessment year 2008-09 - Whether when assessee was not able to bring on record anything to show any services to have been rendered by AE to it and there were no documentations to show any services to have been received from AE, it was rightly concluded that no services were in fact rendered by AEs to assessee - Held, yes - Whether since no services were received by assessee from its AEs, lower authorities were justified in considering ALP to be nil - Held, yes [Para 9][In favour of revenue]

Petitioners failed to substantiate allegations of oppressions and mismanagement

CL : Where petitioners failed to substantiate allegations of oppressions and mismanagement and petition was filed for collateral purpose to escape possible liabilities that might arise on account of recovery proceedings initiated by bank, such petition could not be allowed
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[2014] 51 taxmann.com 344 (CLB - Mumbai)
COMPANY LAW BOARD, MUMBAI BENCH
Bharat Savla
v.
Hirak Plastics (P.) Ltd.
ASHOK KUMAR TRIPATHI, JUDICIAL MEMBER
CP NO. 121 OF 2008
SEPTEMBER  16, 2013
Section 241, read with section 242 of the Companies Act, 2013/Section 397, read with sections 398 and 402, of the Companies Act, 1956 - Oppression and mismanagement - Whether in absence any registered instrument evidencing transfer of company's property, allegation of siphoning off funds in such matter was to be rejected - Held, yes - Whether where tax consultant's appointed by petitioner's group as statutory auditor's of company failed to make statutory compliances as a result of which there was a lapse in filing statutory returns and company had to pay penalties, respondent group could not alone be held responsible - Held, yes - Whether where statement of account's of company were signed by persons belonging to rival group, respondent group alone could not be blamed for any misappropriation of funds; further petitioner founder director could not be absolved from his responsibility to look after affairs of company - Held, yes - Whether since instant petition was filed for collateral purpose as petitioner was trying to escape from possible liabilities that might arise on account of recovery proceeding initiated by bank under SARFAESI and DRT Acts, such petition could not be allowed - Held, yes

Expenditure claimed for establishing airport being disallowed as not related to business

IT : Expenditure claimed for establishing airport being disallowed as not related to business of development authority, no concealment penalty could be levied
IT : Where taxability of instalment amounts received on sale of flat as a result of change of accounting method was remitted to Assessing Officer for de novo consideration, concealment penalty was to be deleted
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[2014] 51 taxmann.com 463 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'A'
Deputy Commissioner of Income-tax
v.
Punjab Urban Planning & Development Authority*
T.R. SOOD, ACCOUNTANT MEMBER
AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER
IT APPEAL NOS. 26 & 27 (CHD.) OF 2012
AND 149 & 815 (CHD.) OF 2013
FEBRUARY  26, 2014
I. Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 2008-09 - Whether where assessee has bona fide explanation for non-exclusion of receipts as its income or for claiming particular item of expenditure as deduction, even where claim of assessee is rejected, no penalty could be levied under section 271(1)(c) - Held, yes - Assessee was an urban planning and development authority - It claimed expenditure incurred for establishing an international airport in vicinity of area under its control as revenue expenditure on plea that it would result in higher profitability to assessee vis-a-vis increase in price of land/houses sold by assessee - Claim was disallowed on ground that expenses was not related to assessee's business - Assessing Officer levied penalty under section 271(1)(c) for making wrong claim - Whether assessee having declared complete facts with regard to expenditure and claim of assessee being bona fide, though not allowed as expenditure in hands of assessee, levy of penalty under section 271(1)(c) was not justified - Held, yes [Paras 55 to 57] [In favour of assessee]
II. Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income (Delation of additions, effect of) - Assessment years 2004-05, 2005-06, 2007-08 to 2009-10 - Assessee had changed its method of accounting to mercantile system of accounting, but instalments received on sale of houses/flats under various schemes were not recognized as income while computing its income for relevant years - Addition was made in assessee's hands on account of such receipts and on that basis penalty was levied under section 271(1)(c) - In quantum appeal, issue of aforesaid addition had been remitted to Assessing Officer to decide same de novo - Whether on facts issue of levy of penalty under section 271(1)(c) in relation to addition did not stand and penalty was liable to be deleted - Held, yes [Para 64] [In favour of assessee]

Penalty under section 271(1)(c) could not be levied on account of addition made on estimate basis

IT : Penalty under section 271(1)(c) was not leviable on account of wrong claim made by assessee in his original return of income, which was corrected in return of income filed under section 153A
IT : Penalty under section 271(1)(c) could not be levied on account of addition made on estimate basis
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[2014] 51 taxmann.com 204 (Jodhpur - Trib.)
IN THE ITAT JODHPUR BENCH
Mahaveer Jain
v.
Deputy Commissioner of Income-tax*
HARI OM MARATHA, JUDICIAL MEMBER
AND N.K. SAINI, ACCOUNTANT MEMBER
IT APPEAL NO. 121 (JODH.) OF 2013
[ASSESSMENT YEAR 2004-05]
SEPTEMBER  13, 2013
Section 271(1)(c), read with section 153A, of the Income-tax Act, 1961 - Penalty - For concealment of income (Section 153A return) - Assessment year 2004-05 - Assessee originally filed his return of income under section 139(1) - During search certain incriminating documents assessee were seized - Assessee filed return under section 153A and surrendered certain amount on account of sundry creditors and offered same for levy of tax as amounts in question were small and assessee wanted to avoid undue litigation - Assessing Officer framed assessment on basis of return filed by assessee under section 153A and not on basis of original return - Whether assessee could be said to have concealed income in respect of sundry creditors so as to levy penalty under section 271(1)(c) - Held, no [Para 9] [In favour of assessee]

Reopening of assessment on ground that said expenditure was of enduring nature was unjustified

IT : Where expenditure on software charges was an annual expenditure and such fact had been disclosed by assessee, reopening of assessment on ground that said expenditure was of enduring nature was unjustified
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[2014] 52 taxmann.com 44 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'I'
Deputy Commissioner of Income-tax
v.
India Infoline Insurance Services (P.) Ltd.*
VIJAY PAL RAO, JUDICIAL MEMBER
AND RAJENDRA, ACCOUNTANT MEMBER
IT APPEAL NO. 5758 (MUM.) OF 2011
[ASSESSMENT YEAR 2005-06]
JULY  21, 2014
Section 37(1), read with section 147 of the Income-tax Act, 1961 - Business expenditure - Allowability of (Software expenses) - Assessment year 2005-06 - Assessing Officer reopened assessee's assessment on ground that expenditure incurred by assessee under head software charges was of enduring nature and, therefore, was to be added to total income of assessee - Whether expenditure incurred on software charges could be held tangible material especially when it was an annual expenditure and said fact was disclosed by assessee - Held, no - Whether, therefore, reopening of assessment was bad in law - Held, yes [Paras 7 & 8] [In favour of assessee]

High Court reduced amount of pre-deposit directed to be made by Tribunal

Service Tax : Where overall financial position of assessee, as reflected in Profit and Loss Account, showed erosion of profitability, High Court reduced amount of pre-deposit directed to be made by Tribunal
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[2014] 51 taxmann.com 562 (Madras)
HIGH COURT OF MADRAS
Suprasesh General Insurance Services & Brokers (P.) Ltd.
v.
Commissioner of Service Tax, Chennai*
M. JAICHANDREN AND MRS. ARUNA JAGADEESAN, JJ.
C.M.A. NO. 2930 OF 2014†
OCTOBER  13, 2014
Section 35F, of the Central Excise Act, 1944, read with section 83, of the Finance Act, 1994 and section 129E of the Customs Act, 1962 - Appeals - Deposit, pending appeal, of duty/tax demanded or penalty levied - Out of total demand of Rs. 108 lakh with interest, Tribunal ordered pre-deposit of Rs. 50 lakh, for entertaining Appeal - Assessee argued that it is facing undue financial hardship and said ground had been raised in stay application but Tribunal has not considered said ground - HELD : Assessee had pleaded financial difficulties and it had stated that overall financial position of company, which is reflected in Profit and Loss Account, shows erosion of profitability, and, as such, assessee is undergoing financial hardship - If assessee is directed to make pre-deposit of Rs. 50 lakh, as directed by Tribunal, it would cause undue hardship to assessee and it would defeat its right to file an appeal - Since assessee offered to make pre-deposit of Rs. 30 lakh, pre-deposit was reduced to Rs. 30 lakh [Paras 6 to 8] [Partly in favour of assessee]

nly rate of tax prevailing at time of rendition of taxable service could be levied and collected; rate in force on date when payment is made/received cannot be made applicable

Service Tax : Only rate of tax prevailing at time of rendition of taxable service could be levied and collected; rate in force on date when payment is made/received cannot be made applicable
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[2014] 51 taxmann.com 397 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Commissioner of Service Tax, New Delhi
v.
Lea Associates South Asia (P.) Ltd.*
JUSTICE G. RAGHURAM, PRESIDENT
AND R.K. SINGH, TECHNICAL MEMBER
FINAL ORDER NO. 52688/2014
APPLICATION NO. ST/STAY/4853/2012
APPLICATION ST/3843/2012-CU(DB)
JULY  1, 2014
Section 66, read with section 65(31) of the Finance Act, 1994 read with rule 5B of the Service Tax Rules, 1994 and rules 3, 4 and 5 of the Point of Taxation Rules, 2011 - Charge/Levy - Service Tax - Assessee had provided services and raised bill on service recipients prior to 13-5-2003, when rate of service tax was 5 per cent - However, payment for those services was received on or after 13-5-2003, when rate of service tax had increased to 8 per cent - Department demanded service tax at 8 per cent on ground that rate in force on date when taxable event takes place is applicable and since service tax is payable on receipt basis, rate in force on that date viz. 8 per cent is applicable - HELD : Only rate of tax prevailing at time of rendition of taxable service could be levied and collected - Neither CBEC letter nor rule 5B authorise levy of service tax, at a rate not in force on date of rendition of taxable service, which is taxable event - Hence, service tax was leviable at 5 per cent only [Paras 6 & 7] [In favour of assessee]
Circulars and Notifications : CBEC Letter dated 28-4-2008

Assessing Authority relying on section 22(4) of Kerala General Sales Tax Act initiated recovery proceeding against secretary for recovery of arrears of sales tax dues of society

CST & VAT: Kerala VAT : Where secretary of a society had resigned from society on 18-11-1998 and long thereafter Assessing Authority relying on section 22(4) of Kerala General Sales Tax Act initiated recovery proceeding against secretary for recovery of arrears of sales tax dues of society for assessment years 1981-82 to 1991-92, since section 22(4) was incorporated in statute only w.e.f. 1-4-1999, recovery proceedings against secretary were not permissible
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[2014] 51 taxmann.com 389 (Kerala)
HIGH COURT OF KERALA
Sales Tax Officer
v.
K.J. Augustine*
ANTONY DOMINIC AND ANIL K. NARENDRAN, JJ.
W.A. NO. 2085 OF 2012
W.P. (C) NO. 603 OF 2009
FEBRUARY  28, 2014
Section 22 of the Kerala General Sales Tax Act, 1963 - Recovery of tax - Liability of dealer to pay tax collected by him - Assessment years 1981-82 to 1991-92 - One 'B' was secretary of a Co-operative society - He resigned from service of society on 18-11-1998 - Long thereafter Assessing Authority relying on section 22(4) initiated recovery proceedings against 'B' for recovery of arrears of sales tax dues of society for assessment years 1981-82 to 1991-92 - Section 22(4) was incorporated in statute only with effect from 1-4-1999, which was long after relevant assessment years and even after resignation of 'B' from service of society - Whether in given situation recovery proceedings initiated against 'B' were not permissible - Held, yes [Para 4][In favour of assessee]
S. Sudheesh Kumar, Senior Government Pleader for the Appellant. Jairam V. Menon and V.P. Sukumar for the Respondent.

Dominance of opposite party a real estate developer in relevant market, its conduct could not be examined under provisions of section 4

Competition Law: Where, prima facie, no information was available to prove dominance of opposite party a real estate developer in relevant market, its conduct could not be examined under provisions of section 4
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[2014] 51 taxmann.com 323 (CCI)
COMPETITION COMMISSION OF INDIA
Deepak Kumar Jain & Manoj Kumar Jain
v.
TDI Infrastructure Ltd.
ASHOK CHAWLA, CHAIRPERSON
M.L. TAYAL, S.L. BUNKER,
SUDHIR MITAL AND AUGUSTINE PETER, MEMBER
CASE NO. 40 OF 2014
SEPTEMBER  24, 2014
Section 4 of the Competition Act, 2002 - Prohibition of abuse of dominant position - Informant buyer filed information against OP1 a real estate developer alleging, inter alia that OP1 had abused its dominant position by imposing highly arbitrary, unfair, unreasonable and discriminatory conditions on plot buyers, thereby causing serious adverse effects on rights of plot buyers - Whether higher prices of project belonging to a developer do not translate into dominance - Held, yes - Whether presence of other large developers in relevant geographic market as submitted by informant himself indicated that buyers had option to switch to other developers - Held, yes - Whether since there was no information available on record and on public domain to show position of strength of OP1 which enabled it to operate independent of competitive forces prevailing in relevant market, prima facie, OP1 did not appear to be in dominant position in relevant market - Held, yes - Whether in absence of dominance of OP1 in relevant market, its conduct could not be examined under provisions of section 4 - Held, yes [Paras 10, 11 & 12]

RBI comfortable on Current Account Deficit

The Reserve Bank of India (RBI) Deputy Governor H.R. Khan on Wednesday said that the central bank is reasonably comfortable with the present Current Account Deficit (CAD) position of the country.

The central bank is “reasonably comfortable from the current account point of view because of prices of oil,” which is hovering at five-year lows, said Mr. Khan while talking to reporters on the sidelines of ‘National Payments Excellence Awards 2014’ function here.

The Government recently scrapped the 80:20 rule on gold imports, mandating traders to export 20 per cent of all gold imported into the country. He said that a view has been taken in this regard after considering the CAD position into account.

Mr. Khan also said that the RBI is having concerns on e-commerce transactions and would issue guidelines to regulate these transactions.

National Payments Corporation of India (NPCI), the umbrella organization for all retail payments system in the country, has institutionalized ‘National Payments Excellence Awards 2014’ to recognize outstanding achievements in operating various payment systems.Source:http://www.thehindu.com/

Easy exit norms for foreign investors in construction sector

It has reduced minimum built-up area as well as capital requirement and eased the exit norms.

To help attract foreign funds in construction of townships, hospitals and hotels, the government on Wednesday relaxed the FDI policy for this sector by easing exit norms and reducing built-up area and capital needs.

The revised norms relating to construction development sector has been notified by the Department of Industrial Policy and Promotion (DIPP). India allows 100 per cent FDI in the sector through the automatic route.

The new policy has done away with the three-year lock-in period for repatriation of investment.

“The investor will be permitted to exit on completion of the project or after development of trunk infrastructure, that is, roads, water supply, street lighting, drainage and sewerage,” a DIPP circular said.

It is to be noted here, the official statement issued after the October 29 Cabinet meeting had mentioned that the investor can exit on completion of the project or “after three years from the date of final investment,” subject to development of trunk infrastructure.

Under the new policy, the minimum floor area requirement has been reduced to 20,000 square metres from 50,000 square metres earlier. It also brought down the minimum capital requirement to $5 million from $10 million.

In case of development of serviced plots, the condition of minimum land of 10 hectares has been completely removed. Reacting on the new policy, Chairman & Country Head of JLL India Anuj Puri said: “With the FDI policy now providing investors a much more attractive exit option...FII interest in the Indian construction sector is bound to increase.’’

SAIL share sale on Friday, retail investors to get 5% discount

Kicking off its disinvestment drive, government will sell its 5% stake in steel major Steel Authority of India Ltd (SAIL) on Friday to mop up about Rs.1,700 crore while giving retail investors 5% discount to bid price. The SAIL offering would be the first public sector undertaking (PSU) share sale under the new government, which targets to raise Rs.43,425 crore through selling shares in various state-owned firms during current fiscal. The SAIL scrip ended 4.67% lower at Rs.85.65 on the BSE, while the floor price for the offer-for-sale would be determined on Thursday. The sale of 5% stake or about 20.65 crore shares of SAIL at the current market price of Rs.85.65 apiece would fetch the exchequer over Rs.1,700 crore. As much as 10% of the offered shares has been reserved for retail investors, who can buy shares worth up to Rs.2 lakh in the share sale. A minimum of 25% of the issue size would be reserved for mutual funds and insurance companies. “Retail investors will be allocated shares at a discount of 5% to the bid price entered by them,” an NSE circular said, adding that the final allocation price may be below the floor price. The Cabinet had in July 2012 approved a 10.82% stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82% was completed in March 2013. The government has lined up a host of PSUs to pare its holdings. The disinvestment plan includes 5% stake sale in Oil and Natural Gas Corp. Ltd, 10% in Coal India Ltd and 11.36% in NHPC Ltd. HSBC Securities, Deutsche Equities, J P Morgan India are among the six merchant bankers advising the SAIL stake sale. While the new government assumed power in late May, there have been no PSU share sale so far in the current fiscal. During the previous 2013-14 fiscal, government has raised Rs.1,500 crore from sale of SAIL shares while the entire disinvestment proceeds stood at over Rs.16,000 crore.Read more at: http://www.livemint.com/

Assessee's claim that donation received from 'B' was towards corpus of trust

IT : Where Commissioner (Appeals) relying upon three decisions of different Benches of Tribunal, accepted assessee's claim that donation received from 'B' was towards corpus of trust, in view of fact that facts in cases relied upon were identical to facts involved in assessee's case, impugned order did not require any interference
■■■
[2014] 48 taxmann.com 348 (Agra - Trib.)
IN THE ITAT AGRA BENCH
Income-tax Officer
v.
Gaudiya Granth Anuved Trust*
BHAVNESH SAINI, JUDICIAL MEMBER
AND A.L. GEHLOT, ACCOUNTANT MEMBER
IT APPEAL NO. 386 (AGRA) OF 2012
[ASSESSMENT YEAR 2007-08]
AUGUST  2, 2013
Section 12A of the Income-tax Act, 1961 - Charitable or religious trust - Voluntary Contributions (Corpus donation) - Assessment year 2007-08 - Assessee-trust received certain amount of donation from 'B' - Assessing Officer computed taxable income of assessee rejecting its contention that donation received was towards corpus of trust - Commissioner (Appeals) relying upon three decisions of different Benches of Tribunal, accepted assessee's claim - Whether since facts in cases relied upon by Commissioner (Appeals) were identical to facts involved in assessee's case, impugned order passed by him did not require any interference - Held, yes [Para 6] [In favour of assessee]

Deductor could not be penalized for not deducting tax at source

IT: Where depositors had furnished declaration in prescribed manner requesting deductor not to deduct tax at source, deductor was under a statutory obligation not to deduct tax and in aforesaid circumstances, deductor could not be penalized for not deducting tax at source
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[2014] 48 taxmann.com 244 (Visakhapatnam - Trib.)
IN THE ITAT VISAKHAPATNAM BENCH
Deputy Commissioner of Income-tax, Circle -3(1) (TDS), Vijayawada
v.
Vijaya Bank*
J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
AND SAKTIJIT DEY, JUDICIAL MEMBER
IT APPEAL NOS. 515 TO 517 (VIZAG.) OF 2013
CO NOS. 6 TO 8 (VIZAG.) OF 2014
[ASSESSMENT YEARS 2009-10 & 2010-11]
JULY  7, 2014
Section 201, read with section 271C, of the Income-tax Act, 1961 - Deduction of tax at source - Consequences of failure to deduct or pay (Penal interest) - Assessment year 2009-10 - Whether assessee bank could not be penalized or saddled with liability under section 201(1) or 201(1A) when depositors to whom interest had been paid/credited had furnished declarations in prescribed manner requesting not to deduct tax - Held, yes - Whether merely because there were some technical defects in declarations or they had been received after date of credit of interest to account of payee, they could not be rejected - Held, yes [Para 7] [In favour of assessee]

Order passed by Tribunal in prior assessment years is followed for successive years in relation to same assessee, then, reference to order must be correctly denoted

IT/ILT : Where any order passed by Tribunal in prior assessment years is followed for successive years in relation to same assessee, then, reference to order must be correctly denoted
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[2014] 48 taxmann.com 243 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax-6, Mumbai
v.
Diamond Dye-Chem Ltd.*
S.C. DHARMADHIKARI AND B.P. COLABAWALLA, JJ.
IT APPEAL NO. 110 OF 2012†
JUNE  26, 2014
Section 254, read with section 92C, of the Income-tax Act, 1961 - Appellate Tribunal - Orders (General principles) - Assessment year 2003-04 - Whether if any order passed by Tribunal in prior assessment years is followed for successive years in relation to same assessee, then, it must indicate with sufficient clarity, issue dealt with, number of appeal and date of its order and reference to order must be correctly denoted - Held, yes [Paras 8, 10 & 11] [Matter remanded]

Where area of land short delivered in auction was less than 5 per cent, auction purchaser was not entitled to refund of any amount with respect to land short delivered

CL : Where area of land short delivered in auction was less than 5 per cent, auction purchaser was not entitled to refund of any amount with respect to land short delivered
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[2014] 48 taxmann.com 341 (Gujarat)
HIGH COURT OF GUJARAT
Aarsh Infrastructure Ltd.
v.
Official Liquidator of Aryodaya Ginning and Manufacturing Mills Ltd.
M.R. SHAH AND S.H. VORA, JJ.
O.J. APPEAL NO. 102 OF 2009†
CO. APPLICATION NO. 43 OF 2008
OFFICIAL LIQUIDATOR REPORT NO. 101 OF 2006
CO. PETITION NO. 157 OF 1989
JANUARY  15, 2013
Section 283 of the Companies Act, 2013/Section 456 of the Companies Act, 1956 - Winding up - Custody of company’s properties - Appellant was highest bidder in auction conducted in respect of industrial plot of company-in-liquidation consisting of two plots and sale was confirmed in its favour - However, on taking possession of land appellant found that land in plot was short conveyed and claimed refund in that respect - Company Court by impugned order dismissed appellant's claim holding that as area, which was short conveyed, was less than 5 per cent of total area of 5 per cent, appellant was not entitled to any refund - Whether since plots were sold under a composite offer and area short delivered was less than 5 per cent, Company Court was justified in its order - Held, yes - Whether even otherwise since sale was on 'as is where is' and whatever there is basis, it was not open for purchaser to make any grievance with respect to short delivery after sale was confirmed and conveyance deed had been executed - Held, yes [Paras 5 & 5.1]

Where amount collected is for various components of services, amount collected cannot be considered as including Service Tax; hence, benefit of cum-duty cannot be extended

Service Tax : Activity of receiving goods, warehousing them, receiving dispatch orders, arranging dispatch, maintaining records of incoming shipments and deliveries, etc. amounts to Clearing and Forwarding Agents Services even if : (a) warehouse, (b) computers and software; and (c) transports are provided/arranged by client
Service Tax : Where amount collected is for various components of services, amount collected cannot be considered as including Service Tax; hence, benefit of cum-duty cannot be extended
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[2014] 48 taxmann.com 233 (Mumbai - CESTAT)
CESTAT, MUMBAI BENCH
Talera Logistics (P.) Ltd.
v.
Commissioner of Central Excise, Pune-III*
S.S. KANG, VICE-PRESIDENT
AND P.K. JAIN, TECHNICAL MEMBER
FINAL ORDER NOS. A/2145-2146/2013-WZB/C-I(CSTB)
APPEAL NOS. ST/98/2006 & ST/71/2008-MUM.
OCTOBER  31, 2013
Section 65(25), read with section 65(104c) of the Finance Act, 1994 - Taxable services - Clearing and Forwarding Agent's Services - Period from October 1999 to April 2006 - Assessee was engaged in providing various services of receipt, storage, management, administration and invoicing, etc. of goods belonging to Ford at warehouse belonging to Ford using computers/software/system provided by Ford - Department demanded service tax under 'Clearing and Forwarding Agents' services -

Rejecting assessee's claim for write off of said amount under section 36(1)(vii)

IT: Where assessee could not recover amount advanced to associate company on account of security scam, since said event could not be foreseen, Assessing Officer was not justified in rejecting assessee's claim for write off of said amount under section 36(1)(vii) taking a view that loan was not given in ordinary course of business
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[2014] 48 taxmann.com 323 (Bombay)
HIGH COURT OF BOMBAY
Director of Income-tax (International Taxation)
v.
Deutche Bank A.G.*
M. S. SANKLECHA AND G.S. KULKARNI, JJ.
IT APPEAL NO. 234 OF 2011†
JULY  7, 2014
Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts (Loan advanced to associate company) - Assessment year 1993-94 - During relevant year assessee wrote off advance made to associate company - Assessing Officer opined that amount was advanced by assessee even though it was aware that financial position of associate company was not sound - He thus taking a view that advances were not given in ordinary course of business, rejected assessee's claim - Commissioner (Appeals), however, noted that advance made to associate company was lost only on account of security scam and since said event could not be foreseen, assessee claim was to be allowed - Tribunal confirmed order of Commissioner (Appeals) - Whether since findings recorded by authorities below were concurrent findings of fact, same did not require any interference - Held, yes [Para 8] [In favour of assessee]

Matter remanded to determine ALP of drug Mofetil when Assessing Officer had compared price of other drugs to determine ALP of Mofetil

IT/ILT : Matter remanded to determine ALP of drug Mofetil when Assessing Officer had compared price of other drugs to determine ALP of Mofetil
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[2014] 48 taxmann.com 157 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'B'
Concord Biotech Ltd.
v.
Assistant Commissioner of Income-tax, Range-1, Ahmedabad*
N.S. SAINI, ACCOUNTANT MEMBER
AND KUL BHARAT, JUDICIAL MEMBER
IT APPEAL (TP) NO. 558 (AHD.) OF 2014
[ASSESSMENT YEAR 2009-10]
JUNE  30, 2014
Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments) - Assessment year 2009-10 - Assessee was manufacturing bulk drugs - Assessee sold drug Mofetil to its US AE - TPO noted that same product was sold to non-associate enterprise, but prices could not be compared as non-associated enterprises were in uncontrolled market - TPO observed that assessee sold Pencillin and Lovastatin in US market which were also generic drugs and earned profit margin of 106.25 per cent - He took this margin as percentage of margin in respect of Mofetil for sale in US market and made TP adjustment - No material had been brought by both parties to show what was profit earned in these drugs in India or other uncontrolled markets - Whether since in absence of relevant details, it could not be adjudicated whether normal gross profit in Mofetil should be same as gross profit in sale of Pencillin and Lovastatin, matter be remitted back for re-adjudication - Held, yes [Paras 21 to 23] [In favour of assessee/Matter remanded]

Review to assessee loans as income from other sources was unjustified

IT: When in absence of satisfactory explanation about source, unsecured loan was treated by Assessing Officer under head business income, such a view of Assessing Officer being possible, review to assessee loans as income from other sources was unjustified
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[2014] 48 taxmann.com 352 (Kerala)
HIGH COURT OF KERALA
Commissioner of Income-tax, Calicut
v.
P.D. Abraham*
DR. MANJULA CHELLUR, CJ.
AND A.M. SHAFFIQUE, J.
IT APPEAL NOS. 147 OF 2012 & 46 OF 2014†
MARCH  28, 2014
Section 68, read with sections 69 and 263, of the Income-tax Act, 1961 - Cash credit (Loans) - Assessment year 2005-06 - Assessee businessman received an unsecured loan - No satisfactory explanation was given regarding source of creditor - Assessing Officer made addition invoking section 68 under head 'business income' - However, Commissioner opined that it should have been assessed under head 'income from other sources' and, thus, revised assessment - Whether view of Assessing Officer was a possible view and, hence, there was no reason for Commissioner to invoke section 263 so as to arrive at a different findings - Held, yes [Para 5] [In favour of assessee]

Tribunal must pass speaking order and record its satisfaction that delay in disposing of appeal is not attributable to assessee

Excise & Customs : Stay granted by Tribunal may be extended even beyond 365 days, but, for every extension beyond 180 days, Tribunal must pass speaking order and record its satisfaction that delay in disposing of appeal is not attributable to assessee
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[2014] 48 taxmann.com 274 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner
v.
Adani Gas Ltd.*
M.R. SHAH AND K.J. THAKER, JJ.
TAX APPEAL NO. 605 OF 2014†
JULY  17, 2014
Section 35C, read with section 35, of the Central Excise Act, 1944, section 86 of the Finance Act, 1994 and Section 129B of the Customs Act, 1962 - Appeals - Orders of - Appellate Tribunal - Tribunal extended stay beyond 365 days without passing any speaking order - Department argued that : (a) Tribunal had no power to extend stay beyond 365 days and (b) even otherwise, stay could not be extended without passing any speaking order - HELD : In case and having satisfied that delay in not disposing of appeal within 365 days (total) from date of grant of initial stay is not attributable to assessee in whose favour stay has been granted and Appellate Tribunal is satisfied that such assessee has fully co-operated in early disposal of appeal and/or has not indulged into any delay tactics and/or has not taken any undue advantage, Appellate Tribunal may, by passing a speaking order, extend stay even beyond total period of 365 days from date of grant of initial stay - However, period of stay may be extended only on good cause and only if Appellate Tribunal is satisfied that matter could not be heard and disposed of by reason of fault of Appellate Tribunal for reasons not attributable to assessee - Tribunal cannot extended stay indefinitely - On expiry of maximum period of 180 days, assessee is required to submit application for extension of stay each time and Appellate Tribunal is required to consider individual case and pass a speaking order - Since, in this case, stay was extended without passing any speaking order, matter was remanded back to Tribunal for consideration afresh [Paras 4 to 6] [Partly in favour of assessee]

Where receipts of assessee-society from two institution managed and run by it exceeded Rs. 1 crore

IT: Where receipts of assessee-society from two institution managed and run by it exceeded Rs. 1 crore, in absence of exemption certificate under section 10(23C), receipt exceeding over Rs. 1 crore was rightly brought to tax
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[2014] 48 taxmann.com 386 (Amritsar - Trib.)
IN THE ITAT AMRITSAR BENCH
Income-Tax Officer
v.
Vivekanand Society of Education and Research*
H.S. SIDHU, JUDICIAL MEMBER
AND B.P. JAIN, ACCOUNTANT MEMBER
IT APPEAL NO. 305 (ASR.) OF 2010
[ASSESSMENT YEAR 2005-06]
FEBRUARY  13, 2014
Section 10(23C) of the Income-tax Act, 1961 - Educational - Institutions - Assessment year 2005-06 - Whether as and when gross receipt of society exceeds Rs. 1 crore, such society requires approval from prescribed authority for exemption of its income under section 10(23C)(iiiad) - Held, yes - Whether where receipts of assessee-society from two institution managed and run by it exceeded Rs. 1 crore, in absence of exemption certificate under section 10(23C), receipt exceeding over Rs. 1 crore was rightly brought to tax - Held, yes [Paras 10 & 13] [In favour of revenue]

Compliance with direction of Tribunal and, therefore, assessee was liable to full penalty

Excise & Customs : Where Tribunal gave an option to assessee pay 25 per cent penalty within 30 days from today i.e., from 22-7-2010; payment on 30-8-2010 was not in compliance with direction of Tribunal and, therefore, assessee was liable to full penalty
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[2014] 48 taxmann.com 397 (Allahabad)
HIGH COURT OF ALLAHABAD
Nanumal Glass Works
v.
Commissioner of Central Excise, Kanpur*
ASHOK BHUSHAN AND PRAKASH KRISHNA, JJ.
CENTRAL EXCISE APPEAL NO. 492 OF 2012
MAY  7, 2012
Section 11AC, of the Central Excise Act, 1944, read with section 78, of the Finance Act, 1994 and Section 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Commissioner (Appeals) dropped penalty levied on assessee but Tribunal restored penalty vide order dated 22-7-2010 with an option to pay 25 Per cent penalty within 30 days from today (i.e., from 22-7-2010) - Assessee paid 25 per cent penalty on 30-8-2010 arguing that said payment was made within 30 days from date of communication of Tribunal order - HELD : Tribunal gave option to pay 25 per cent penalty within 30 days from today i.e., date of order i.e., from 22-7-2010 - Moreover, since order of Tribunal was passed in presence of assessee's counsel on 22-7-2010, same was deemed to be served on assessee on 22-7-2010 - Hence, payment on 30-8-2010 was not in compliance with direction of Tribunal - Assessee was liable to pay full penalty [Paras 9 to 16] [In favour of revenue]
Section 37C, of the Central Excise Act, 1944, read with section 83, of the Finance Act, 1994, Section 153, of the Customs Act, 1962 and rules 13 and 35 of the Cestat (Procedure) Rules, 1982 - Service of decisions, orders, summons, etc. - As per section 37C(1)(a), in case decision is tendered to person or his authorised agent, same shall be deemed to be served in accordance with Act - Since Advocate is authorised agent within meaning of section 37C and he was present on date of order, service of order shall be deemed to be made to authorised agent on same date [Paras 11 to 16] [In favour of revenue]

Application filed by applicant under section 219 was to be dsimissed

CL : Where applicant demanded copy of annual accounts of company but cheque of requisite fee could not be encashed due to overwriting, application filed by applicant under section 219 was to be dsimissed
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[2014] 48 taxmann.com 334 (CLB - Mumbai)
COMPANY LAW BOARD, MUMBAI BENCH
Anil Kumar Poddar
v.
Alka India Ltd.
ASHOK KUMAR TRIPATHI, JUDICIAL MEMBER
CO. PETITION NO. 79 OF 2013
JANUARY  28, 2014
Section 136 of the Companies Act, 2013/ Section 219 of the Companies Act, 1956 - Accounts - Right of member to copies of balance sheet and auditor's report - Applicant shareholder had sent a cheque to respondent company and requested for copies of memorandum and articles of association and last five years annual report - On failure to receive such documents, applicant filed application under section 219 against company - Company in its reply stated that requisite fees through cheque had overwriting and, hence, cheque could not be encashed and being a listed company annual accounts of company were available on BSE website - Whether applicant was in habit of making such frivolous application and had filed instant application with an oblique motive - Held, yes - Whether applicant failed to give any specific reason as to why he submitted requisite fees through cheque which could not be encashed by company due to overwriting and, therefore, application being devoid

Undisclosed income disclosed by assessee after filing revised return under section 158BC

IT: Undisclosed income disclosed by assessee after filing revised return under section 158BC, would attract penalty under section 158BFA
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[2014] 49 taxmann.com 33 (Jharkhand)
HIGH COURT OF JHARKHAND
Commissioner of Income-tax
v.
Hitech Chemical (P.) Ltd.*
MS. R. BANUMATHI, CJ.
AND CHANDRASHEKHAR, J.
TAX APPEAL NO. 7 OF 2005†
FEBRUARY  14, 2014
Section 158BFA, read with section 158BC, of the Income-tax Act, 1961 - Block assessment in search cases - Levy of interest and penalty in certain cases (Penalty) - Block period 1-4-1989 to 29-10-1998 - Whether an assessee is not entitled to file a revised return once return under section 15BC is filed - Held, yes - Whether since undisclosed income disclosed by assessee by filing a revised return after filing of return under section 158BC, would be liable to be treated as concealed income and, hence, penalty under section 158BFA is imposable on said income - Held, yes [Paras 18-21] [In favour of revenue/Matter remanded]

Claim of exemption for export sales on ground of non production of 'C' forms and 'H' forms

CST & VAT : Where Assessing Officer had disallowed assessee's claim of exemption for export sales on ground of non production of 'C' forms and 'H' forms, matter was remanded for passing fresh order after considering declaration forms being produced by assessee
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[2014] 49 taxmann.com 152 (Madras)
HIGH COURT OF MADRAS
G. Bala Mohanan Pillai
v.
Assistant Commissioner of Commercial Taxes, Kuzhithurai*
R. SUBBIAH, J.
W.P. (MD) NO. 10530 OF 2014
JULY  1, 2014
Section 5 of the Central Sales Tax Act, 1956 - Sale - In course of export - Assessment year 2011-12 - Assessing Officer issued on assessee a pre assessment notice stating that in return filed he had wrongly reported export sales under section 5(3) and proposed to disallow claim of exemption for export sales on ground of non filing of 'C' forms and 'H' forms - Assessee approached Assessing Officer for grant of time to submit declaration forms and produced all available 'C' forms and 'H' forms before Assessing Officer on 18-3-2014 - He also requested for a month's time to produce balance declarations - In mean while, Assessing Officer passed assessment order dated 1-4-2014 on assessee and disallowed claim of exemption for export sales - Whether in peculiar facts of case matter required to be remanded back to Assessing Officer for passing fresh order after considering all declaration forms being produced by assessee - Held, yes [Para 7] [In favour of assessee]
Circulars & Notifications : Circular dated 29-6-1999, Circular dated 28-2-2001

Delay in making pre-deposit as directed by Tribunal can be condoned where such delay occurred due to assessee pursuing appeal remedy before High Court

Excise & Customs : Delay in making pre-deposit as directed by Tribunal can be condoned where such delay occurred due to assessee pursuing appeal remedy before High Court against pre-deposit order of Tribunal
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[2014] 49 taxmann.com 163 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Praveen Chandra
v.
Commissioner of Central Excise, Panchkula*
AJAY KUMAR MITTAL AND JASPAL SINGH, JJ.
CEA NO. 54 OF 2014 (O & M)†
JULY  18, 2014
Section 35F of the Central Excise Act, 1944, read with section 83 of the Finance Act, 1994 and section 129E of the Customs Act, 1962 - Appeals - Deposit, pending appeal, of duty/tax demanded or penalty levied - Assessee-director challenged personal penalty of Rs. 50 lakhs imposed upon him and Tribunal directed pre-deposit of Rs. 5 lakhs - Assessee challenged same in writ proceedings and interim stay was granted - Later, appeal was filed in High Court in place of writ and High Court dismissed appeal vide order dated 1-5-2013 - Assessee made pre-deposit on 13/14-5-2013 and requested that delay in making pre-deposit be condoned - Tribunal dismissed appeal for default in making pre-deposit - HELD : In view of facts and circumstances noticed hereinbefore, present appeal was allowed, order of Tribunal was set aside and delay, if any, in making pre-deposit of Rs. 5 lakhs as directed by Tribunal was condoned - Tribunal was directed to hear appeal on merits [Para 5] [In favour of assessee]
Jagmohan Bansal, Advocate for the Appellant. Kamal Sehgal, Advocate for the Respondent.

Unaccounted commission in respect of giving accommodation entries to various parties

IT: Where assessee challenged addition made on account of unaccounted commission in respect of giving accommodation entries to various parties taking a plea that said addition had already been made in case of his brother, since aforesaid plea required verification at level of Assessing Officer, matter was to be remanded back for disposal afresh
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[2014] 48 taxmann.com 403 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'I'
Sudhir B. Vora
v.
Assistant Commissioner of Income-tax, Central Circle-18 & 19, Mumbai*
VIJAY PAL RAO, JUDICIAL MEMBER
AND N.K. BILLAIYA, ACCOUNTANT MEMBER
IT APPEAL NOS. 3895 & 5030 OF 2007, 4619 & 4620 (MUM.) OF 2013
[ASSESSMENT YEARS 1994-95 TO 1996-97 AND 1999-2000]
SEPTEMBER  27, 2013
Section 69A of the Income-tax Act, 1961 - Unexplained moneys (Accommodation entries) - Assessment years 1994-95 and 1995-96 - A survey under section 133A was carried out in 'V' group cases in course of which it was found that assessee and his brother 'N' were engaged in activity of providing hawala bills and accommodation entries to various parties at pre-determined commission rate along with their regular business - Assessing Officer assessed unaccounted commission at rate of 4 per cent of total cash deposited during year under consideration - In appellate proceedings, assessee raised a plea that since an addition in respect of unaccounted commission was already made in case of his brother, no further addition could be made in hands of assessee - Commissioner (Appeals) having accepted said plea, deleted addition made by Assessing Officer - Whether since question as to whether addition on account of commission income had been made in hand of assessee's brother was required to be verified at level of Assessing Officer, impugned order was to be set aside and, matter was to be remanded back for disposal afresh - Held, yes [Para 6][Matter remanded]
A.L. Sharma for the Appellant. O.P. Singh for the Respondent.

Development of infrastructure for shooting locations, such rental income being capital in nature could not be held income

IT : Where lease rentals were earned from land which were developed for creating film shooting facilities/locations and it was directly, connected with main activity of assessee, i.e., development of infrastructure for shooting locations, such rental income being capital in nature could not be held income
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[2014] 48 taxmann.com 364 (Andhra Pradesh)
HIGH COURT OF ANDHRA PRADESH
Commissioner of Income-tax, Hyderabad -I
v.
Usha Kiran Movies Ltd.*
KALYAN JYOTI SENGUPTA, CJ.
AND SANJAY KUMAR, J.
I.T.T.A. NOS. 31 OF 2007 & 60 OF 2010
FEBRUARY  6, 2014
Section 4, read with section 263 of the Income-tax Act, 1961 - Income - Chargeable as (Rent) - Assessment year 1995-96 - Assessee-company, engaged in development of infrastructure for shooting location, filed nil return for relevant year and same was accepted by Assessing Officer - Commissioner in exercise of jurisdiction under section 263 reversed assessment order and directed that rental income received by assessee would not be capitalised and same should be brought to tax - Whether since lease rentals were earned from land which were developed for creating film shooting facilities/locations and it was directly, connected with main activity of assessee, i.e., development of infrastructure for shooting locations, such rental income being capital in nature could not be held income - Held, yes [Para 6] [In favour of assessee]
J.V. Prasad for the Appellant. Ms. Mamata Chowdary and B. Nalin Kumar for the Respondent.

If tax, interest, penalty, etc., has been collected in excess and it is withheld beyond permissible period under Act, Revenue should compensate for same

September 25, 2014[2014] 49 taxmann.com 142 (Andhra Pradesh)
IT : If tax, interest, penalty, etc., has been collected in excess and it is withheld beyond permissible period under Act, Revenue should compensate for same
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[2014] 49 taxmann.com 142 (Andhra Pradesh)
HIGH COURT OF ANDHRA PRADESH
Sirpur Paper Mills Ltd
v.
Joint Commissioner of Income-tax, Hyderabad*
G. CHANDRAIAH AND CHALLA KODANDA RAM, JJ.
WRIT PETITION NO. 5807 OF 1999
MARCH  20, 2014
Section 244A of the Income-tax Act, 1961 - Refunds - Interest on (General principle) - Assessment year 1984-85 - Whether revenue is entitled to collect only tax, interest, penalty etc., within four corners of Act - Held, yes - Whether when any amount has been collected by revenue in excess and, it is withheld beyond period permissible under statute, taxpayer is entitled to be compensated for deprivation of said amount; such compensation would be in form of penal interest on revenue which may be up to 15 per cent and be levied for period from date of assessment till date of refund - Held, yes [Para 4] [In favour of assessee]

Where purchases were actually made and payment was made by account payee cheques, no disallowance could be made on account of undisclosed cash purchases

IT: Where purchases were actually made and payment was made by account payee cheques, no disallowance could be made on account of undisclosed cash purchases
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[2014] 50 taxmann.com 190 (Calcutta)
HIGH COURT OF CALCUTTA
Commissioner of Income-tax, Kolkata-XII
v.
Manish Enterprises*
SOUMITRA PAL AND ARINDAM SINHA, JJ.
ITAT NO. 51 OF 2014
G.A. NO. 1551 OF 2014†
AUGUST  21, 2014
Section 69 of the Income-tax Act, 1961 - Unexplained investments (Undisclosed cash purchases) - Assessing Officer made addition on account of undisclosed cash purchases and bogus sundry creditors - However, details of ledger account and copies of bill clearly indicated that purchases were made from these parties and payments were made through bank - All payments were made by account payee cheque which were duly debited in assessee's bank account and credited in bank account of suppliers - Whether since assessee had made purchases in actual which had been paid by account payee cheques, no disallowance coul

Addition an account of excise duty payable by simply relying on order passed by Tribunal

IT: Where Appellate Authorities had deleted addition an account of excise duty payable by simply relying on order passed by Tribunal in earlier assessment year, since said order was reversed by High Court and further facts were also not clearly brought out in assessment order, matter was to be readjudicated
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[2014] 50 taxmann.com 182 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax-II
v.
Lakshmi Sugar Mills Co. Ltd.*
SANJIV KHANNA AND V. KAMESWAR RAO, JJ.
IT APPEAL NO. 233 OF 2013†
SEPTEMBER  1, 2014
Section 43B, read with section 145, of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment (Excise Duty) - Assessment year 2008-09 - Assessing Officer disallowed certain amount shown as excise duty payable - Appellate Authorities deleted said addition by simply relying on order passed by Tribunal in earlier assessment year - Whether since said ITAT order was which stood reversed by High Court and further facts were also not clearly brought out in assessment order, matter was to be readjudicated - Held, yes [Para 8][In favour of revenue/Matter remanded]

Where assessee in support of loan transactions, submitted confirmation letters from creditors, impugned addition made under section 68 was to be set aside

IT : When developer has not performed or there is unwillingness to perform his part of contract, it cannot be concluded that there is transfer of capital asset in terms with section 2(47)(v) read with section 53A of Transfer of Property Act 1882, merely because assessee has entered into a development agreement or even handed over possession of land to developer during assessment year in question
IT : Where assessee in support of loan transactions, submitted confirmation letters from creditors, impugned addition made under section 68 was to be set aside and, matter was to be remanded back for disposal afresh
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[2014] 50 taxmann.com 178 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
Assistant Commissioner of Income-tax, Central Circle-5, Hyderabad
v.
R. Srinivasa Rao*
B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND SAKTIJIT DEY, JUDICIAL MEMBER
IT APPEAL NOS. 1703,1786 TO 1789 & 1806 TO 1809 (HYD.) OF 2012
[ASSESSMENT YEAR 2008-09]
AUGUST  28, 2014
I. Section 2(47) of the Income-tax Act, 1961 - Capital gains - Transfer (Land dealings) - Assessment year 2008-09 - Whether when developer has not performed or there is unwillingness to perform his part of contract, it cannot be concluded that there is transfer of capital asset in terms with section 2(47)(v) read with section 53A of Transfer of Property Act, 1882, merely because assessee has

It is duty of Court to deal with all arguments/points raised by parties

IT: It is duty of Court to deal with all arguments/points raised by parties and if petitioner has chosen to take a stand during course of argument, petitioner cannot take a 'U' turn and say that judgment may be reviewed as points for determination were limited
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[2014] 50 taxmann.com 191 (Allahabad)
HIGH COURT OF ALLAHABAD
M.D. Overseas Ltd.
v.
Director General of Income-tax (Inv.)*
PRAKASH KRISHNA AND VIPIN SINHA, JJ.
WRIT TAX NO. 75 OF 2010
JULY  31, 2013
Section 132 of the Income-tax Act, 1961, read with Article 226 of the Constitution of India - Search and seizure - General (Review of writ petition) - Petitioner sought review of High Court's order contending that Court had decided other issues also which were not urged by petitioner - Department opposed review application on ground that in impugned order Court had considered all arguments urged by petitioner and it was no longer open to petitioner to say anything otherwise - There was no affidavit by petitioner's counsel stating that he did not argue points mentioned in judgment - Whether it is duty of Court to deal with all arguments/points raised by parties - Held, yes - Whether if petitioner had chosen to take a stand during course of argument, it could not take a 'U' turn and say that judgment should be reviewed as points for determination were limited - Held, yes [Para 15][In favour of revenue]

Advertisement given by petitioner-chartered accountant for purpose of seeking association

Advertisement given by petitioner-chartered accountant for purpose of seeking association with other international chartered accountant firms did not warrant a severe punitive action as alleged misconduct was not grave and ICAI erred in undertaking disciplinary enquiry after a lapse of 18 years when alleged misconduct was done
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[2014] 51 taxmann.com 466 (Delhi)
HIGH COURT OF DELHI
Vipin Malik
v.
Institute of Chartered Accountants of India
VIBHU BAKHRU, J.
W.P.(C) NO. 2213 OF 2013
CM NO. 4199 OF 2013
NOVEMBER  3, 2014
V.P. Singh, Senior Advocate and Ms. Yukti Gupta for the Petitioner. J.S. Bakshi for the Respondent.

Method of valuation is such as has resulted in an artificially depressed or contrived valuation

CL: To disregard a method of valuation of shares in scheme of reduction, it must be shown that chosen method of valuation is such as has resulted in an artificially depressed or contrived valuation well below what a fair-minded person may consider reasonable
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[2014] 49 taxmann.com 52 (Bombay)
HIGH COURT OF BOMBAY
Cadbury India Ltd., In re
G.S. PATEL, J.
CO. PETITION NO. 1072 OF 2009
CO. APPLICATION NOS. 1332 OF 2009 AND 71 & 120 OF 2010
MAY  9, 2014
Section 66 of the Companies Act, 2013/Section 100 of the Companies Act, 1956 - Share capital - Reduction of - Whether before a Court can decline sanction to a scheme of reduction on account of a valuation, an objector to scheme must first show that valuation is ex-facie unreasonable - Held, yes - Whether sanctioning Court has no power or jurisdiction to exercise any appellate functions over scheme; it is not a valuer and it does not have necessary skills or expertise - Held, yes - Whether Court cannot substitute its own opinion for that of shareholders, its jurisdiction is peripheral and supervisory, not appellate - Held, yes - Whether it is impossible to say which of several available valuation models are 'best' or most appropriate - Held, yes - Whether no valuation is to be disregarded merely because it has used one or other of various methods; it must be shown that chosen method of valuation is such as has resulted in an artificially depressed or contrived valuation well below what a fair-minded person may consider reasonable - Held, yes - Whether where in proposed scheme of reduction of share capital of Cadbury India valuation of shares was done by Court appointed valuer and was accepted by overwhelming majority including a bulk of non-promoter minority, scheme was to be sanctioned - Held, yes [Paras 7.1.5, 7.1.7, 7.1.9, 7.1.11 & 8.1]

Cenvat reversal from recipient factories on ground of excess duty payment by supplier

Cenvat Credit : Where supplier factories and recipient factories, both, belonged to assessee only, demand of Cenvat reversal from recipient factories on ground of excess duty payment by supplier factories, was dropped on undertaking from supplier factories that they would not claim refund of such excess duty
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[2014] 49 taxmann.com 416 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Central Excise
v.
Cipla Ltd.*
S.C. DHARMADHIKARI AND B.P. COLABAWALLA, JJ.
CENTRAL EXCISE APPEAL NOS. 101 TO 103 OF 2012
CENTRAL EXCISE APPEAL (LODGING) NOS. 68 AND 69 OF 2012
JULY  3, 2014
Rule 3 of the Cenvat Credit Rules, 2004, read with sections 3 and 11B of the Central Excise Act, 1944 - CENVAT Credit - General - Assessee made clearances from its supplier factories at Kurkumbh/Bangalore to recipient factories at Pune/Mumbai/ Raigad/Goa, etc. - Department claimed that supplier factories had made clearances to recipient factories at higher amount of duty, thereby, passing more credit - Tribunal held that since supplier factories had not claimed refund/reversal of credit, no demand could be sustained - HELD : Recipient factories had taken credit of duty paid by supplier factories - Supplier factories had given undertaking that they shall not file refund of duty paid by them - Corporate identity of supplier factories and recipient factories was same - In view of : (a) peculiar facts of case, (b) undertaking given by supplier factories and protection of interests of revenue thereby; and (c) common corporate identity of supplier and recipient factories, appeal was dismissed keeping larger question of law open [Paras 4 to 7] [In favour of assessee]

Claim for registration under section 12AA could not be rejected merely or ground that assessee had spent only small amount towards charitable activities

IT : Where assessee-trust satisfied requirements of Rule 17A of 1962 Rules and submitted Form No. 10A alongwith requisite documents, its claim for registration under section 12AA could not be rejected merely or ground that assessee had spent only small amount towards charitable activities
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[2014] 49 taxmann.com 99 (Madras)
HIGH COURT OF MADRAS
Director of Income-tax (Exemptions), Chennai
v.
R.J.B.V. Vasudevan Educational & Charitable Trust*
R. SUDHAKAR AND G. M. AKBAR ALI, JJ.
TAX CASE (APPEAL) NO. 729 OF 2013†
JULY  22, 2014
Section 12AA of the Income-tax Act, 1961, read with rule 17A of the Income-tax Rules, 1962 - Charitable or religious trust - Registration procedure (Relevance of quantum of amount spent on charitable activities) - Whether where assessee-trust satisfied requirements of rule 17A of 1962 Rules and submitted Form No. 10A alongwith requisite documents, its claim for registration under section 12AA could not be rejected merely or ground that assessee had spent only small amount towards charitable activities - Held, yes [Para 12] [In favour of assessee]

AMP expenditure, matter was to be remanded back to TPO

IT/ILT : Where assessee, a distributor of high end audio products manufactured by AE located abroad, incurred certain AMP expenditure for developing marketing intangibles for AE, in order to determine ALP of said AMP expenditure, matter was to be remanded back to TPO to determine same in light of decision in case of BMW India (P.) Ltd. v. Addl. CIT [2014] 146 ITD 165/[2013] 37 taxmann.com 319 (Delhi - Trib.)
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[2014] 49 taxmann.com 24 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'I'
Bose Corporation India (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Circle-3 (1)*
SMT. DIVA SINGH, JUDICIAL MEMBER
AND T.S. KAPOOR, ACCOUNTANT MEMBER
IT APPEAL NOS. 5178 (DELHI) OF 2011 & 263 (DELHI) OF 2013
[ASSESSMENT YEARS 2007-08 & 2008-09]
JULY  31, 2014
Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments/RPM) - Assessment years 2007-08 and 2008-09 - Assessee-company was a wholly owned subsidiary of 'B' Corporation, USA - It was engaged in business of reselling of

Technical services fee received by it in terms of those contracts was exempt from tax by virtue of proviso to section 9(1)(vii)

IT/ILT: Where assessee-company entered into contract with Indian companies for supply of technical know-how prior to 1-4-1976, technical services fee received by it in terms of those contracts was exempt from tax by virtue of proviso to section 9(1)(vii)
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[2014] 49 taxmann.com 8 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax, Bombay City -III
v.
Montedison of Italy*
S.C. DHARMADHIKARI AND B.P. COLABAWALLA, JJ.
IT REFERENCE NO. 202 OF 1993†
AUGUST  8, 2014
Section 9 of the Income-tax Act, 1961 read with article 12 of the Model OECD Convention - Income - Deemed to accrue or arise in India (Royalty/Fees for technical services) - Whether where assessee-company entered into contract with Indian companies for supply of technical know-how prior to 1-4-1976, technical services fee received by it in terms of those contracts was exempt from tax by virtue of proviso to section 9(1)(vii) - Held, yes [Para 10] [In favour of assessee]

There was contravention of provisions of section 53(2)(b)

CST & VAT: Where a transporter was transporting goods from Surat to Hubli and instead of unloading goods at Hubli, it carried vehicle beyond Hubli, there was contravention of provisions of section 53(2)(b)
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[2014] 49 taxmann.com 242 (Karnataka)
HIGH COURT OF KARNATAKA
State of Karnataka
v.
RCI Logistics (P.) Ltd.*
N. KUMAR AND B. MANOHAR, JJ.
SALES TAX REVISION PETITION NO. 5 OF 2012
JULY  3, 2014
Section 53 of the Karnataka Value Added Tax Act, 2003 read with rule 157 of the Karnataka Value Added Tax Rules, 2005 - Penalty - For contravention of provisions of section 53 - Assessee, a transporter, was transporting goods from Surat to Hubli - Instead of unloading goods at Hubli, driver carried vehicle beyond Hubli and parked same on Kolar road at Siddlaghatta, which was 50 Kms. away from border of Tamil Nadu - On interception of above vehicle, driver produced before Assessing Authority all documents to show that goods were transported from Surat to Hubli - He did not possess any document to show transportation of goods from Hubli to Siddlaghatta - He also stated that he was directed to deliver goods at Trichy in Tamil Nadu - Whether there was contravention of provisions of section 53(2)(b) by assessee - Held, yes - Whether, therefore, levy of penalty upon it under section 53(12) was justified - Held, yes [Para 15][In favour of revenue]

Secured creditors (including workmen) from proceeds received upon sale of mortgaged assets by Official Liquidator

CL: Income-tax department does not have a preferential right in matter of payment of dues over right of secured creditors (including workmen) from proceeds received upon sale of mortgaged assets by Official Liquidator
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[2014] 49 taxmann.com 75 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax-II
v.
Official Liquidator of Gujarat Telephone Cables Ltd.
K.J. THAKER, J.
CO. APPLICATION NOS. 245 OF 2012, 525 OF 2008,
286,295 OF 2011 AND 208, 209 & 210 OF 2013
CO. PETITION NO. 253 OF 2008
OFFICIAL LIQUIDATOR REPORT NO. 35 OF 2012
JUNE  30, 2014
Section 326, read with section 327, of the Companies Act, 2013/ Section 529A, read with section 530 of the Companies Act, 1956 and section 178 of the Income-tax Act, 1961 - Winding up - Overriding preferential payments - Whether there is nothing in section 178 of Income-tax Act which, apart from asking liquidator to set aside assets sufficient to meet possible tax liabilities commands liquidator to pay tax dues in preference over all other dues and it does not place tax dues or dues of State/department in a position higher or better than what is conferred by and what is available under Companies Act - Held, yes - Whether order of priority in matter of payment is prescribed by virtue of section 529A, read with section 530 of Companies Act and not in Income-tax Act and obligation which is created under section 178 of Income-tax Act, does not override right of priority and preference created by and under section 529A of Companies Act - Held, yes - Whether when pursuant to sale of mortgaged assets Official Liquidator sought disbursement of sale proceeds to secured creditors and workmen covered within purview of section 529A but income-tax department after relevant date raised a demand for payment of tax dues in respect of gain received, question of restraining liquidator from discharging dues of secured creditors and workmen covered under section 529A would not arise and claim of department could not be sustained - Held, yes [Paras 16, 16.1 & 26]

Consider appointment of petitioner on basis of his position in waiting list

IT : Where in course of examination for appointment of Members of Tribunal, petitioner was placed in waiting list but his appointment was not confirmed on account of contention made by Union of India that it would make suitable amendment in Rules for said purpose, in view of fact that fresh selection process was started without making any such amendment in Rules, instant petition was to be allowed with a direction to consider appointment of petitioner on basis of his position in waiting list
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[2014] 50 taxmann.com 50 (SC)
SUPREME COURT OF INDIA
Inturi Rama Rao
v.
Union of India
RANJAN GOGOI AND R.K. AGRAWAL, JJ.
WRIT PETITION (CIVIL) NO. 202 OF 2013
SEPTEMBER  23, 2014
Nidhesh Gupta, Sr. Adv. Atul Kumar, Adv. Amit Kumar Adv. and Avijit Mani Tripathi Adv. for the Petitioner. Tushar Mehta, ASG Shiv Mangal Sharma, Adv. Ms. Usha Reddy, Adv. Vivek Ranjan Mohanty, Adv. D.S. Mahra Adv. and B.V. Balaram Das Adv. for the Respondent.

Where petition alleging oppression and mismanagement was filed to create pressure on respondents to part with some money from them, petition was to be rejected

CL : Where petition alleging oppression and mismanagement was filed to create pressure on respondents to part with some money from them, petition was to be rejected
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[2014] 48 taxmann.com 391 (CLB - New Delhi)
COMPANY LAW BOARD, NEW DELHI BENCH
Bharat Bhushan Agarwal
v.
Jai Mata Foods Ltd.
B.S.V. PRAKASH KUMAR, JUDICIAL MEMBER
C.P. NO. 52 OF 2008
MARCH  28, 2014
Section 241, read with sections 242, 58 and 59 of the Companies Act, 2013/Section 397, read with sections 398 and 111A of the Companies Act, 1956 - Oppression and mismanagement - It appeared that petitioners had set up litigation to pressurise respondents to part with some money - Further, petitioners had no stake in R-1 company at relevant time - Whether they could not invoke jurisdiction under sections 397 and 398 - Held, yes - Whether since, in fact, no prejudice was caused to petitioners, their petition was to be rejected - Held, yes [Paras 38 & 39]

Relief under section 273A, question of making payment of penalty

IT : In order to qualify for relief under section 273A, question of making payment of penalty and interest in first instance can not arise because if such a construction is adopted, object of conferring discretion on Commissioner itself would be defeated
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[2014] 49 taxmann.com 182 (Delhi)
HIGH COURT OF DELHI
Asha Pal Gulati
v.
Central Board of Direct Taxes*
S. RAVINDRA BHAT AND R.V. EASWAR, JJ.
W.P. (C) NO. 3129 OF 1992
JANUARY  2, 2014
Section 273A of the Income-tax Act, 1961 - Penalty - Reduction or waiver of - Assessment years 1980-81 to 1988-89 - Whether in order to qualify for relief under section 273A, question of making payment of penalty and interest in first instance cannot arise because if such a construction is adopted, object of conferring discretion itself would be defeated - Held, yes [Partly in favour of assessee]

Section 67, read with sections 4 and 147, of the Income-tax Act, 1961 - Association of person

[2014] 50 taxmann.com 89 (Jodhpur - Trib.)
IN THE ITAT JODHPUR BENCH
Kumbh Singh Patawat
v.
Assistant Commissioner of Income-tax*
HARI OM MARATHA, JUDICIAL MEMBER
AND N.K. SAINI, ACCOUNTANT MEMBER
IT APPEAL NO. 546 (JODH.) OF 2013
[ASSESSMENT YEAR 2007-08]
MAY  2, 2014
Section 67, read with sections 4 and 147, of the Income-tax Act, 1961 - Association of person - Computation of a share of a member of (Reassessment) - Assessment year 2007-08 - Assessing Officer reopened assessment of assessee on basis of an agreement of purchase of certain land - Assessee contended that said agreement did not pertain to him as an individual but pertained to AOP of which he was one of members - It was found that same Assessing Officer had, later on, initiated reassessment proceedings under section 147 against AOP, on basis of same agreement - Whether since Assessing Officer himself had treated impugned agreement to belong to AOP, reassessment order made in assessee's case as individual could not survive and, accordingly, was liable to be quashed - Held, yes [Para 8] [In favour of assessee]

Indicating IEC number so that activities of export could be correlated with documents and notifications

Service Tax : In order to claim refund of service tax paid on services used for export goods, it is incumbent upon assessee to produce necessary documents before adjudicating authority alongwith invoices indicating IEC number so that activities of export could be correlated with documents and notifications
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[2014] 51 taxmann.com 65 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Heritage Impex Worldwide
v.
Commissioner of Service Tax, Delhi-IV*
MANMOHAN SINGH, TECHNICAL MEMBER
FINAL ORDER NO. 53642/2014
APPEAL NO. ST/60279/2013-ST
SEPTEMBER  10, 2014
Section 93 of the Finance Act, 1994 - Exemptions - Service Tax - Refund of tax paid on services used for export goods - Assessee filed refund claim of tax paid on courier services used for export of books - Department denied refund on ground that assessee could not correlate invoices with export and certain invoices did not bear Import and Export Code (IEC) number - Assessee submitted declaration from courier agency that said charges were for export purposes and submitted some sample invoices - Assessee claimed that verification of each and every invoice can be at stage of adjudicating authority only, as it is a voluminous job - HELD : Proper reconciliation could be looked into by adjudicating authority - Onus is on assessee to produce necessary documents before adjudicating authority alongwith invoices indicating IEC number so that activities of export could be correlated with documents and notifications, which is mandatory requirement - Hence, matter was remanded back with a direction to complete adjudication within 3 months [Paras 6 & 7] [Matter remanded]
Circulars and Notifications : Notification No.17/2009-ST dated 7.7.2009
Tarun Rohtagi for the Appellant. B.B. Sharma for the Respondent.

Belated refund of Cenvat Credit is also eligible for interest on delayed refund under section 11BB of the Central Excise Act, 1944

Excise & Customs : Where assessee had applied for refund on 4/11-2-2003, but, had re-submitted same in June 2004 after having won on merits before Commissioner (Appeals), interest on refund would be granted with reference to 4/11-2-2003
Excise & Customs : Belated refund of Cenvat Credit is also eligible for interest on delayed refund under section 11BB of the Central Excise Act, 1944
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[2014] 50 taxmann.com 431 (New Delhi - CESTAT)
CESTAT, NEW DELHI BENCH
Rishab Velveleen Ltd.
v.
Commissioner of Central Excise, Meerut-I*
RAKESH KUMAR, TECHNICAL MEMBER
FINAL ORDER NOS. 53366-53367 OF 2014
APPEAL NOS. E/364-365 OF 2007 (SM)
AUGUST  28, 2014
Section 11BB, read with section 11B, of the Central Excise Act, 1944 - Interest - On delayed refunds - Assessee's raw material attracted Basic Excise Duty (BED) and Additional Excise Duty (Textile and Textile Articles) [AED (TTA)]; while final product attracted BED and Additional Excise Duty (Goods of Special Importance) [AED (GSI)] - Initially department did not allow use of AED (TTA) to pay BED or AED (GSI) but later Tribunal allowed same - Meanwhile assessee became eligible for area-based exemption in Uttarakhand and therefore, applied for refund of unutilized credit alongwith interest - Department granted refund but without interest on ground that section 11BB applies to refund of duty and not to refund to unutilized credit - HELD : Clause (c) of proviso to section 11B(2) refers to refund of credit - Hence, while dealing with interest on refund in section 11BB, no distinction can be made in between such credit and any other duty referred to in section 11B - Hence, assessee was entitled to interest on delayed refund [Para 6] [In favour of assessee]

Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings

[2014] 50 taxmann.com 37 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'F'
Income-tax Officer
v.
Velentine Developers*
D. MANMOHAN, VICE-PRESIDENT
AND N.K. BILLAIYA, ACCOUNTANT MEMBER
IT APPEAL NOS. 6901 & 8469 (MUM.) OF 2010
[ASSESSMENT YEARS 2006-07 & 2007-08]
MARCH  14, 2014
Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings (Housing projects) - Assessment years 2006-07 and 2007-08 - Whether section 80-IB(10) is prospective in nature and cannot be made applicable to projects approved prior to 1-4-2005 - Held, yes - Whether, therefore, where in case of assessee, engaged in business of developing housing project, approval was given to project prior to 1-4-2005, its claim for deduction could not be rejected on ground that space for commercial establishments was in excess of 2000 sq. ft. and, therefore, there was violation of clause (d) to section 80-IB(10) - Held, yes [Para 13] [In favour of assessee]

Where revised TDS return was filed by assessee during appellate proceedings, matter was restored to Assessing Officer to examine same

IT : Where revised TDS return was filed by assessee during appellate proceedings, matter was restored to Assessing Officer to examine same
IT : Where assessee-society, engaged in manufacturing and marketing of milk products, granted sums to different milk producer societies being suppliers of milk to put up a building to facilitate milk collection and testing, said expenditure was revenue expenditure
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[2014] 50 taxmann.com 46 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'B'
Assistant Commissioner of Income-tax
v.
Shimoga District Milk Producers societies Union Ltd.*
GEORGE GEORGE K., JUDICIAL MEMBER
AND JASON P. BOAZ, ACCOUNTANT MEMBER
IT APPEAL NO. 1059 (BANG.) OF 2012
[ASSESSMENT YEAR 2008-09]
OCTOBER  25, 2013
I. Section 40(a)(ia) of the Income-tax Act, 1961, read with rule 46A of the Income-tax Rules, 1962 - Business disallowance - Interest, etc., paid to resident without deduction of tax at source (Additional evidence) - Assessment year 2008-09 - Assessing Officer observed that assessee had not effected TDS on full amount of expenditure claimed - He, therefore, disallowed expenditure to that extent - On appeal, Commissioner (Appeals) deleted additions made by Assessing Officer by admitting revised TDS return filed by assessee - Whether since Assessing Officer did not have an opportunity/occasion to examine issue of disallowance revised TDS return, was to be restored to Assessing Officer - Held, yes [Paras 11 and 12] [In favour of revenue]

Only object of trust is required to be examined and, therefore, assessee's application seeking approval under section 80G(5)

IT : At time of granting approval of exemption under section 80G, only object of trust is required to be examined and, therefore, assessee's application seeking approval under section 80G(5) could not be rejected on ground that it failed to incur expenditure to extent of 85 per cent of its income during relevant year
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[2014] 49 taxmann.com 171 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax
v.
Shree Govindbhai Jethalal Nathavani Charitable/Trust*
M.R. Shah AND K.J. THAKER, JJ.
Tax Appeal Nos. 306,409 & 416 of 2014†
AUGUST  6, 2014
Section 80G of the Income-tax Act, 1961 - Deductions - Donations to certain funds, charitable institutions (Approval of exemption) - Assessment year 2012-13 - Whether at time of granting approval of exemption under section 80G, only object of trust is required to be examined and, therefore, assessee's application seeking approval under section 80G(5) could not be rejected on ground that it failed to incur expenditure to extent of 85 per cent of its income during relevant year - Held, yes [Para 8] [In favour of assessee] 

here assessee after taking loan from bank gave interest-free advances to its sister concern

IT: Where assessee after taking loan from bank gave interest-free advances to its sister concern which had gone into huge loss and there was no commercial expediency in advancing such loan, interest attributable to such loan was to be disallowed
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[2014] 49 taxmann.com 21 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
C. R. Auluck and Sons (P.) Ltd.
v.
Commissioner of Income-tax*
AJAY KUMAR MITTAL and Jaspal Singh, jj.
IT Appeal No. 128 of 2011 (O & M)†
OCTOBER  23, 2013
Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (Interest-free loan to sister concern) - Assessment year 2005-06 - Assessee and its sister concern had taken independent credit limits from bank - Assessee along with two group concerns stood guarantor to credit limits advanced to sister concern - Sister concern had gone into huge loss and its bank account was proposed to be declared as non-performing asset - Assessee took a loan from bank and gave interest-free advances to sister concern - Whether there was no commercial expediency in advancing loan by assessee to sister concern and, therefore, interest attributable to such loan was to be disallowed under section 36(1)(iii) - Held, yes [Paras 7 & 11][In favour of revenue] 

A registered trust is entitled to claim depreciation even though benefit of application of fund had already been granted to it at time of purchase of assets

IT : Where society, running school, had received development fund as part of students fee which was utilised in amenities and welfare of students, same was to be regarded as capital receipt not chargeable to tax
IT : A registered trust is entitled to claim depreciation even though benefit of application of fund had already been granted to it at time of purchase of assets
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[2014] 49 taxmann.com 294 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'D'
Income-tax Officer (Exemption)
v.
J.D.Tytler School Society*
Bhavnesh Saini, JUDICIAL MEMBER
AND Shamim Yahya, ACCOUNTANT MEMBER
IT Appeal No. 4476 (Delhi) of 2011
[ASSESSMENT YEAR 2008-09]
JANUARY  8, 2014
I. Section 4, read with sections 11 and 12, of the Income-tax Act, 1961 - Income - Chargeable as (Development fund) - Assessment year 2008-09 - Whether where assessee-society engaged in Charitable object of running school, received certain amount as development fund as part of students fee, in view of fact that said amount was utilised for development of amenities and welfare of students, same was to be regarded as capital receipt not chargeable to tax - Held, yes [Para 8] [In favour of assessee]
II. Section 32, read with section 12AA of the Income-tax Act, 1961 - Depreciation - Allowance/rate of (Charitable trust) - Assessment year 2008-09 - Assessee-society claimed depreciation on certain assets - Whether even though benefit of application of fund had already been taken when assets were purchased, in view of order passed in case of CIT v. Tiny Tots Education Society [2011] 330 ITR 21/11 taxmann.com 242 (Punj. & Har.), assessee's claim for depreciation was to be allowed - Held, yes [Para 15] [In favour of assessee]

Where assessee-broker was initially purchasing land in name of his associate and then transferring same to investor, no addition could be made on account of undisclosed investment

IT: Where assessee-broker was initially purchasing land in name of his associate and then transferring same to investor, no addition could be made on account of undisclosed investment
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[2014] 49 taxmann.com 189 (Jaipur - Trib.)
IN THE ITAT JAIPUR BENCH
Gaurav Kumar Sharma
v.
Assistant Commissioner of Income-tax*
HARI OM MARATHA, JUDICIAL MEMBER
AND N.K. Saini, ACCOUNTANT MEMBER
IT Appeal Nos. 366 to 368 (JP.) of 2013
[ASSESSMENT YEARS 2007-08 TO 2009-10]
JANUARY  31, 2014
Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Immovable property) - Assessment years 2007-08 to 2009-10 - In search, an agreement was found between company 'M' belonging to one 'RK' and company of assessee which showed that assessee was acting as a broker in acquiring land for company 'M' - Land purchased in name of assessee's associate 'S' was transferred to a nominee of 'RK' - Whether ignoring fact that company 'M' had made investment in impugned land, no addition could be made in hands of assessee-broker - Held, yes [Paras 5.2 and 5.3][In favour of assessee]