Tuesday, December 30, 2014

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]

Thursday, December 25, 2014

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]

Monday, December 22, 2014

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]

Wednesday, December 3, 2014

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/

Tuesday, December 2, 2014

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
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[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]

Monday, December 1, 2014

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]
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Farm House Plots for Sale


11000 Sq.ft. developed / under development farm house plots for Sale at Morgaon (Supa) near Morgaon Ganesh Temple only for Rs.15 Lacs.... Contact; Atul Karnawat on 9823479955 or Saideep Bagrecha on 7757888883 / 9823979955