NATIONAL HYDROELECTRIC POWER CORPORATION LTD Vs CC : CALCUTTA HIGH COURT (Dated : May 11, 2018)
Cus - In 2004, the assessee company contested an Order-in-Original passed against it in 1987 - It claimed that it came to know of such order in 2002 - Its appeal to the Commr.(A) was dismissed - The Tribunal too dismissed its appeal on grounds that a copy of the order had been sent by post to the assessee - That it was sent with acknowledgment of the Revenue and was deemed to have been received by the assessee - The Tribunal also noted that while the assessee obtained an adjournment in 1987, it omitted to subsequently keep track of the case till 2002 - When the assessee approached the High Court on an earlier occasion, the Single Judge refused relief to the assessee, in light of such delay.
Held - It is essentially the Tribunal's order which is in challenge presently & through it the assessee sought to bring the Order-in-original into focus - However, this Court cannot examine the validity of the Order-in-Original, without the Order-in-Appeal and the Tribunal's order being found to be incorrect - In such case, the Single Judge too could not have examined the O-i-O - Considering such dismal conduct by the assessee, the orders of the Single Judge warrant no interference: HC
Appeal Dismissed
2018-TIOL-1039-HC-KOL-CX
CCE Vs SAIL DURGAPUR STEEL PLANT : CALCUTTA HIGH COURT (Dated : May 11, 2018)
CX - the assessee is a public sector enterprise - Pursuant to an Order-in-Original being passed against it, the assessee deposited an amount of duty demanded, albeit under protest - When the assessee's appeal succeeded, the duty paid was refunded to it - However the Apex Court later restored the adjudication order, whereupon the assessee paid the deficit duty - Demands for interest were raised on the assessee, but were set aside on grounds that no action had been taken by the Department u/s 11A.
Held - Considering the provisions of Section 11AA of the Act, it is seen that there must be a determination u/s 11A(2) before any measures taken u/s 11AA - The Tribunal correctly noted that no action u/s 11AA(2) was taken - Even otherwise, any action would be unwarranted, since the assessee paid the deficit duty within 3 months of the Apex Court's order, in compliance with Explanation (1) to Section 11AA: HC
Appeal Dismissed
2018-TIOL-1038-HC-MUM-CX
SARLA PERFORMANCE FIBERS LTD Vs UoI : BOMBAY HIGH COURT (Dated : April 27, 2018)
CX - the assessee is an EoU engaged in manufacture & export of synthetic yarn - It operates two units, both of which are licensed u/s 58 of the Customs Act, 1962 as well as u/s 6 of the CEA, 1944 - The licenses for both units were extended from time to time - During the period of dispute, the assessee purchased polyester yarn from units located in DTA - The assessee claimed that the supplies received from units located in DTA would be deemed export under certain provisions of the FTP & so the supplier was entitled to duty drawback - The assessee relied on relevant provisions of the Drawback Rules, the Foreign Trade (Development and Regulation) Act, 1992 and the FTP and claimed that drawback had been allowed in the past at All Industry Rate of Duty Drawback - The assessee filed two claims for drawback but both were rejected on grounds that the assessee already availed Cenvat credit - Subsequently the assessee's claim for deemed export drawback as per of All Industry Rate of Duty Drawback Schedule was rejected - It was claimed that issues arising from different interpretations of the provisions of the DGFT, could be resolved by the DGFT - Thus, the assessee ought to have approached the Additional Secretary in the Commerce Ministry & that such remedy was not utilized by the assessee.
Held - the assessee's claim is based on the premise that it could avail refund on duty drawback even after availing Cenvat credit - Further it is stated that if the supplier does not avail credit, it has the option to claim the duty drawback as per Column 'A' of All Industry Rate of Duty Drawback Schedule - Also these rates apply to deemed exports mutatis-mutandis - Where a supplier opts for Cenvat credit, an option is also provided for BCD to be taken back as brand rate of duty drawback, based upon documents proving payment of duty - The Revenue operated in the belief such option was not provided for in FTP 2015-20 - However, the FTP 2015-2020 only takes into account the clarified position of FTP 2009-2014 and cannot be considered as amendment of policy provision - The Revenue's findings that the refund of duty drawback for Customs duty can only be made through brand rate of fixation, are incorrect - Hence the claim for refund as per All Industry Rates of Duty Drawback Schedule cannot be denied: HC (Para 3-6,19,22)
Writ Petition Allowed
2018-TIOL-782-ITAT-DEL + Case Story
ACIT Vs SSA INTERNATIONAL LTD : DELHI ITAT (Dated : May 30, 2018)
Income tax - Sections 132(4) & 271AAA(2).
Keywords: Discrepancy in stock - Inability to explain - Manner of concealment & Undisclosed income.
The assessee company, engaged in the business of rice milling and processing. A search and seizure operation was conducted at the business and residential premises of the assessee u/s 132(1) wherein, certain documents were seized. During the search proceeding, the assessee had surrendered an additional income of Rs.21 crores. Accordingly, the assessee had filed its return for the AY 2010-11 declaring its undisclosed income. It was noted that out of the declared undisclosed income, Rs.9.25 crores was on account of excess stock and income of Rs.11.75 crores was from other sources. The assessee submitted that it had already paid tax along with interest on the said surrendered income. The assessee had also expressed its inability to explain the seized documents. Subsequently, the AO declined to accept the assessee's contention that it had surrendered the said additional income during search proceeding to buy peace and to avoid any protracted litigation and thus, levied penalty u/s 271AAA. On appeal, the CIT(A) deleted the penalty.
On appeal, the ITAT held that,
Whether benefits u/s 271AAA(2) can be availed by the assessee merely because it had admitted an additional income during search proceeding however, failed to substantiate the source of such income - NO: ITAT
++ under Sec. 271AAA(2)(i), penalty @ 10% of the undisclosed income shall not be imposed if the assessee, "in the course of the search, in a statement u/s 132(4), admits the undisclosed income and specifies the manner in which such income has been derived" substantiates the manner in which the undisclosed income was derived and pays the tax together with interest if any on the undisclosed income. During the course of search, a specific question was put to Shri Anil Mittal, MD of the assessee company to explain certain seized documents and discrepancies in the stock who has answered the same;
++ the CIT(A) has deleted the penalty on the premise that if no specific question was put to assessee u/s 132(4), it cannot be concluded that the assessee has failed to reply or specify/ substantiate the manner of concealment. It is settled principle of law that assessee has to specify the manner in which income has been derived and substantiated the manner in which the undisclosed income was derived at the time of search in its statement recorded u/s 132(4) and not thereafter. However, answer to the said specific question categorically goes to prove that the assessee has shown his inability to reconcile the discrepancy in the stock found and failed to substantiate the manner in which income has been derived by the search team during the course of search, however has made the disclosure only in order to buy peace of mind and to avoid litigation. So, we are of the considered view that the assessee has failed to satisfy the conditions laid down u/s 271AAA(2) so as to get the general amnesty u/s 271AAA(2) because the assessee has neither specify the manner nor substantiate the manner in which the undisclosed income was derived;
++ the instant case is on better footing than Smt. Ritu Singhal's case because in reply to the specific query raised by the AO during search proceedings, assessee has expressed his inability to explain the discrepancy in the stock in order to substantiate the manner in which income in question has been derived rather categorically stated that he has made voluntary surrender of Rs.21 crores in order to buy peace of mind and avoid litigation. So, when the assessee has failed to specify the manner and substantiate the manner in which the undisclosed income was derived rather embark upon the mercy plea that he is making surrender to buy peace of mind and avoid litigation, he is not entitled for benefit of Sec. 271AAA(2). Case laws relied upon by the assessee is not applicable to the facts and circumstances of the case. Following the decision rendered by Delhi High Court in case cited as Smt. Ritu Singal, we are of the considered view that CIT (A) has erred in deleting the penalty of Rs.2,10,00,000/- u/s 271AAA, hence appeal filed by the Revenue is hereby allowed and penalty order passed by the AO is restored.
Revenue's appeal allowed
2018-TIOL-781-ITAT-MUM
DCIT Vs M/s LAFARGE AGGREGATES AND CONCRETE INDIA PVT LTD : MUMBAI ITAT (Dated : May 11, 2018)
Income Tax - Section 32(1)(2).
Keywords - Claim of depreciation - Intangible assets - Revise return of income.
A) The assessee company had filed return for relevant AY. The assessee did not made the claim of depreciation in the original return but made the claim during the assessment proceedings based on the decision of Supreme Court in the case of CIT vs. Smifs Securities Ltd. The AO did not allowed the claim of depreciation by observing that assessee could not make a fresh claim without filing revise return of income. The CIT(A) allowed the claim of the assessee.
B) During assessment, assessee made claim of depreciation on (1) Plant Network (2) Non-compete agreement, (3) customer contract and customer relationship (4) Assembled workforce (5) leasehold benefits. The AO disallowed the same on ground that these were not intangible assets as per the proviso to section 32(1)(2) of the Act. But CIT(A) following the earlier year's order allowed the claim of the assessee.
On appeal, Tribunal held that,
Whether claim of depreciation even if not made in the original return can still be allowed by the appellate authorities - YES : ITAT
++ counsel for the assessee filed copy of Tribunal order in assessee's own case for AY 2009-10, wherein Tribunal has affirmed the order of CIT(A) by observing as under " fresh claim cannot be accepted by the AO otherwise than a revised return and the appellate authorities can accept the new claim made by the assessee. So, in our opinion, he FAA had rightly allowed the depreciation on goodwill, following the judgment of the Supreme Court in the case of Smifs Securities Private Limited. Accordingly, we decide first ground of appeal against the AO." As the issue is covered and there is no factual different, respectfully following the Tribunal's decision, it was decided to affirm the order of CIT(A) and allowing the claim of the assessee. This issue of Revenue's appeal is dismissed;
Whether when the Revenue fails to establish the contrary, following the principle of consistency and the decision of the previous AY, depreciation can be allowed on intangible assets such as plant network, non-compete agreement & customer contract and customer relationship - YES : ITAT
++ counsel for the assessee filed copy of Tribunal's order in assessee's own case for AY 2009-10 wherein Tribunal affirmed the order of CIT(A) deleted the disallowance of depreciation by holding as under " There is no doubt that the four items are part of intangible assets that were acquired by the assessee while purchasing the business from L&T. We find that the FAA has followed the judgments of the Bombay High Court and Hon'ble Supreme Court, while allowing the appeal of the assessee. In our opinion, there is no need to interfere with the order of the FAA, as it does not suffer from any legal or factual infirmity. So, confirming his order we decide the second ground of appeal against the AO." As there is no factual difference and issue is exactly identical as in AY 2009-10 i.e. immediate proceeding year, respectfully following the Tribunal's order, it was decided to affirm the order of CIT(A) deleting the disallowance of depreciation. The appeal of Revenue is dismissed.
Revenue's appeal dismissed
2018-TIOL-778-ITAT-AHM + Case Story
ACIT Vs DR GUNWANT KANTILAL PATEL : AHMEDABAD ITAT (Dated : April 16, 2018)
Income tax - Sections 54 & 54EC
Keywords - discovery of additional sale consideration - investment in residential property
The assessee is an individual. Pursuent to filing of his income tax return, there was a search action on Sanghavi Group of cases which included one Smt. Kokilaben. It was found that Smt. Kokilaben had purchased an immovable property from the assessee and during the course of her statement u/s. 132(4), she admitted the payment of unaccounted sale consideration of Rs. 85,00,000/- Pursuant to the said search action, the assessee revised his return and computed the long term capital gains at Rs.NIL after claiming deduction u/s. 54 and u/s 54EC of the Act. Since the assessee had revised return after the admission made by Smt. Kokilaben, the AO was of the firm belief that deduction u/s 54 was not available to the assessee and accordingly him allowed deduction u/s 54C only.
On appeal, the FAA was convinced that the investment in residential house property was made well within the time prescribed under the law for claiming deduction u/s 54. He observed that "in any case, whether there was one unit or more than one unit existing on plots was a factually and physically verifiable aspect and there were at least two unitsone flat and one bungalow wherein the investment made was claimed eligible for deduction u/s 54. The FAA was further convinced that time prescribed u/s 54 i.e. two years from the date of transaction of sale, was not controlled by either the date of filing of return or of the fact of depositing into the capital accounts scheme.
On appeal, the ITAT held that,
Whether Section 54 benefits in respect of investment in residential property should not be taken away, simply because such investment was made after discovery of additional sale consideration during search proceedings - YES: ITAT
Whether purchase of multiple residential flats out of sale consideration of old property, will be construed as investment in only one residential unit, for purposes of Section 54 - YES: ITAT
++ there is no dispute that the assessee revised his return after the date of search in the case of Sanghavi Group. It is also true that pursuant to the statement made by Smt. Kokilaben, the assessee enhanced the sale consideration of the property sold by him to Smt. Kokilaben. It is equally true that the enhanced sale consideration was invested in the purchase of house property making the assessee eligible for the deduction u/s. 54. Thus, the assessee is not barred in making a further investment of sale consideration as discovered during the course of search at the purchasers place, if such investment is within the time allowed u/s 54. Once the genuineness of such investment in not in dispute, the benefit of such investment cannot be taken away simply based on the fact that such investment has been made after the discovery by the Department of any additional sale consideration;
++ insofar as the investment in multiple residential houses is concerned, the High Court of Karnataka in the case of K. G. Rukminiamma - 2010-TIOL-778-HC-KAR-IT had held that "for the purpose of section 54, profit on sale of property used for residence purpose, four residential flats cannot be construed as four residential houses for the purpose of Section 54, it has to be construed only as a residential house. The High Court of Delhi in the case of Gita Duggal - 2013-TIOL-143-HC-DEL-IT has held that the words "a residential house” appearing in section 54/54F cannot be construed to mean a single residential house since u/s 13(2) of the General Clauses Act, a singular includes Plural. It is found that because of these and similar judicial decisions, the amendment has been brought in Section 54 by Finance Act, 2014 and the legislature in its wisdom has enacted the amendment with effect from Apr 01, 2015 and therefore the same is not applicable to the subject assessment year. Considering the facts in totality in the light of the judicial decisions, there is no infirmity in the findings of CIT(A).
Revenue's appeal dismissed
