CASE LAWS
2018-TIOL-1611-HC-MUM-IT + Case Story
DAMAN COMPUTERS PVT LTD Vs INCOME TAX ASSESSING OFFICER: BOMBAY HIGH COURT (Dated: August 10, 2018)
Income Tax - Section 80IB.
Keywords - Attendance register - Contract manufacturer - Deployment of manpower - Manufacturing activity
THE assessee company, engaged in manufacturing computers, forged a contract with another entity for manufacture of computers. Although the factory of the other entity is located in another city the assessee claimed that such manufacturing activity was carried out by the other firm under the assessee's supervision & direct control. During the relevant AY, the assessee claimed deduction u/s 80IB on such manufacturing activity carried on by the other entity. On assessment, the AO denied such deduction on grounds that the manufacturing activity being carried out for and on behalf of the assessees, was in fact not being done under its direct supervision & control. On appeal, the CIT(A) upheld the AO's order on grounds that the assessee failed to produce evidence authorizing any director or employee of the assessee company to undertake supervision at the premises of the other entity. Later, the Tribunal too upheld such findings.
On appeal, the High Court held that,
Whether Sec 80IB benefits can be claimed on contract manufacturing even without having any control over it - NO: HC
Whether therefore, books of accounts, board regulations, deployment of manpower & attendance register serve as necessary evidence proving the claimant's control over the contract manufacturer - YES: HC
++ the findings recorded by the authorities and by the Tribunal are findings of fact. Neither before the AO nor at the appellate stage, did the assessee adduce any convincing evidence to hold that it had retained its control over the manufacture of electronic computers at the factory premises of M/s. Kobian ECS India Pvt. Ltd. in Silvassa. In fact, the observations in the findings recorded by the AO, CIT(A) show that the assessee could not even produce the primary evidence in the shape of books of accounts, resolutions, even to suggest that it had deployed its manpower at the factory premises of M/s. Kobian ECS India Pvt. Ltd. and had retained the control over the manufacturing activity. The assessee could not produce particulars like attendance register, qualifications of the employees in spite of being asked to do so by the AO. In fact, it appears even the packaging material was supplied to contract manufacturer by the assessee for finished products at Silvassa. All these facts cumulatively leads to hold that the assessee did not retain control over the manufacturing of the electronic computers at the factory premises of M/s. Kobian ECS India Pvt. Ltd. at Silvassa. In the circumstances, we do not find any reason to interfere with the findings recorded by the AO, CIT (A) and the Tribunal. Hence the assessee was not carrying out manufacturing activity of electronic computer products within the meaning of Section 80 IB of the Act.
Assessee's appeal dismissed
2018-TIOL-1606-HC-KERALA-WT + Case Story
PA JOSE Vs UoI: KERALA HIGH COURT (Dated: July 16, 2018)
Wealth Tax Act, 1957 - Writ - Sections 2(ea)(vi) & 25.
Keywords: 'Assets' - Amendment of 1992 - Cash-in-hand - Chelliah Committee report - Investment of dead capital - Non-productive assets & Productive asset.
The assessee, an individual, engaged in businesses of jewellery, chit funds, bar hotels and production and export of cashew had returned income for the relevant AY. During the assessment proceeding, the AO noted that the assessee's proprietorship concerns were involved in purchase of old gold and also had a huge turnover as also phenomenal stock. The assessee's proprietorship concerns could only be remunerated with cash. The assessee had cash in the form of loans which were availed from financial institutions. The said cash resulted in liability to interest which the proprietor was obliged to pay on loans. The AO was of the view that even if the cash was generated from the business, keeping the same in hand the assessee looses interest and he does not get any advantage other than its employment in the business. Accordingly, the AO treated the cash-in-hand as found from the books of accounts as an 'asset' u/s 2(ea).
Having heard the parties, the High Court held that,
Whether if there is a disclosure of cash-in-hand made in the books of accounts, the term 'other persons' as provided u/s 2(ea)(vi) needs to be understood by the qualification made of being exempt - YES: HC
Whether when a proprietary firm being an assessable unit has kept cash-in-hand, the same is liable to be taxed as 'assets' u/s 2(ea)(vi) of the Act even if, disclosure was made in its books of accounts - NO: HC
Whether as per Sec. 2(ea)(vi) if, the word 'other persons' allowing to keep cash-in-hand within the limit of Rs.50,000/- then, the same will include those persons who carry a commercial activity and are statutorily required to maintain books of accounts under the Income Tax Act - YES: HC
++ sec. 2(ea)(vi) was brought in based on the Chelliah Committee report, which seeks to discourage the tendency to keep 'assets' dead without it being put to any productive use. The recommendations were also to ensure investment of dead capital in productive activities. The speech of the Finance Minister, adopting the recommendation of the Chelliah Committee, lays emphasis on the need to encourage tax payers to invest in productive assets, such as shares, securities, bank deposits, bonds. The Finance Minister's speech also spoke of assets like residential houses, farm houses and urban land, jewellery, bullion, motor cars not being put to use for commercial purposes, being included in the definition of assets, which are liable to taxation under the Act. What was sought to be taxed was ostentatious investments, stashing or hoarding of wealth, without the same being put to productive use contributing to national economy and the general welfare; in larger public interest;
++ from Moopil Nair's case, we understand that inequality arises not only when equals are classified differently, but also when in-equals are put in the same category. We also have to look at the policy of the legislature as evident from the statute for the purpose of discerning as to who and what is to be taxed under the Act, specifically under the definition of 'assets'. The vexing question is as to who comes under the class 'individuals' and 'HUF's' and who are sought to be included or excluded under the category of 'other persons'; in deciding the levy on cash-in-hand, with or without limit, as a productive or non-productive asset. The policy is also to tax the non-productive assets. The charge as per Sec. 3 is on the net wealth of every individual, HUF and company, which by virtue of Sec. 4 also includes the value of assets held. The classification, in Sec. 2(ea) being the definition of assets in relation to AY commencing from 01-04-1993, has to be understood as of the object on which the tax is levied, the liability being on the person who holds that object. A productive asset is anything employed in generation of income as distinguished from one stashed or hoarded for the luxury or mere whim of the holder, on an ostentatious consideration and is in effect dead, not in any manner contributing to the economy;
++ sec. 3 created a charge on every individual, HUF and company, when amendments were made including certain 'assets' to come within such definition under the Act, on the distinction drawn of productive and non-productive, the legislature thought it fit to classify individuals and HUF as falling under one category and 'other persons' in yet another category. The earlier Division Bench decision was set aside by the Supreme Court, for reason only of no question of law having been framed; we still had the benefit of going through the judgment. The Judges have proceeded on the premise that 'other persons' would include only a Company. We, with all respect at our command, are unable to accede, especially looking at the different entities made mention of in the charging Section. Companies were specifically mentioned in the charging Section at Sec. 3. The avoidance of the word 'company' and the use of the words 'other persons' by the legislature was conscious and not without a specific intention. The words 'other persons' are of a wider import and has to be understood by the qualification made of being exempt when there is a disclosure made in the books of accounts;
++ a partnership firm, though a compendium of individuals and legally not treated as separate from the partners; for income tax purpose, the firm itself is an assessable unit as is an association of persons. An assessable unit whether it be an individual, a firm, a proprietorship concern or a company, whether incorporated as a company registered under the Indian Companies Act, or otherwise; are all required to maintain books of accounts for the purpose of Income Tax Act, the officers of which Department also makes assessments under the Wealth Tax Act. The requirement to maintain the books of accounts also is insofar as the proprietorship concern being assessable to income tax, while many of those classified as individuals, for example, a salaried individual, not being required to maintain any books. The classification has hence to be understood as one facilitating the levy of tax on unproductive assets and the categorization is of those persons required to maintain books of accounts and others who have no such statutory liability. The use of the word 'other persons' reveals a common stream of persons, qualified with recording of cash-in-hand in the books of accounts. There can be no classification on the basis of the mere status, of an individual, HUF or Company. The classification has to be understood as between persons who are statutorily mandated to maintain accounts and those who are not. The former is engaged in productive activities, generating income for themselves, taxable under the Income Tax Act and those assets acquired from the income generated, being kept productive. When such books of accounts are maintained, there is absolutely no reason why the assessable units and the cash-in-hand of such assessable units, which is recorded in the books of accounts, should be included in the definition of 'assets' for the purpose of taxation under the Act;
++ the cash-in-hand held by the assessee herein are with respect to business transactions, the accounts of which were regularly maintained and the income thereon proffered for assessment before the Income-tax authorities. The cash so held in their hand were also recorded in the books of accounts, with certain exceptions, as we see from the orders of the AO. The exceptions are in so far as the AO having taxed only such amounts, which were kept in hand and which were in excess of Rs.50,000/- on a reading of Sec. 2(ea)(vi). The levy made by the authorities of all such cash-in-hand, whether disclosed in the accounts or not was only of that in excess of Rs.50,000/-. Sub-clause (vi) of Sec. 2(ea) is in two limbs, one covering individuals & HUF's and the second 'the other persons'. As far as the former is concerned, only such cash-in-hand in excess of Rs.50,000/- would be brought to tax under the Act and as far as the second limb 'the other persons' are concerned, any amount, even within the limit of Rs.50,000/- kept in hand and not recorded in the books of account will be brought to tax under the Act. We have also found that there is no warrant for assuming that 'other persons' as seen from the provision includes or refers only to Companies. We are of the opinion that 'the other person' refers to any assessable unit on whom there is a specific statutory mandate to maintain books of accounts, in the present case under the Income Tax Act;
++ the Companies Act definitely mandates maintenance of books of accounts by a company as a regular measure, whereas the Income Tax Act insists on such maintenance for the purpose of proper assessment of income, also making it mandatory for a statutory audit with respect to certain assessees on the basis of the income exceeding a particular limit. As in the case of Companies, a proprietorship firm, partnership firm or an association of persons carrying on trading activities are also required to maintain books of accounts as per the Income Tax Act. The emphasis as we see from clause (vi)(ea) is on the cash-in-hand being recorded in the books of accounts of 'other persons', who are required to statutorily maintain such books of accounts. We see from all the W.T.Appeals, the assessees were maintaining books of accounts and the Income Tax officials responsible for assessment of their income under the Income Tax Act has looked into the cash-in-hand disclosed in the books of account to proceed for assessment under the Act. The AO, in some cases, had also excluded those amounts in excess of Rs.50,000/-, when disclosed in the books of accounts, following an earlier Tribunal order, which was taken up for suo motu revision;
++ there is a definite policy as discernible from the Act, as also the specific amendment brought in by way of introduction of clause (ea) in Sec. 2, which is to tax non productive assets, including cash, in excess of Rs.50,000/- in case of individuals & HUF's and with respect to all other persons who regularly maintain books of accounts, on cash so held without disclosure. There is no classification which is arbitrary or discriminatory and violating the rights guaranteed of equal protection of laws. The policy and principle discernible from the enactment provides clear guidelines for selecting those to be taxed and does not leave it to the arbitrary exercise of the officers constituted under the Act. The classification herein is on the basis of whether an assessee is required to maintain regular books of accounts in the course of business or not. For anyone, who is not so required, the tax will be on any cash-in-hand exceeding Rs.50,000/-. For the others, for whom the requirement is mandatory, any cash not disclosed in the books of accounts will be taxed as wealth. The classification is based on a reasonable differentia and has a reasonable nexus with the object sought to be achieved by the taxing enactment;
++ the law, in this case the specific amendment seeking to tax the non-productive cash-in-hand as wealth, available in Sec. 2(ea)(vi) is constitutionally valid. However, the officers have deviated from the policy and principle explicit from the enactment and hence such action taken under the Act for assessment of cash-in-hand of the assessees, disclosed in the books of accounts, but in excess of Rs.50,000/-, has to be set aside. We find the challenge to be capable of decision, on the said principles extracted from Shri.Ram Krishna Dhalmia. We do not hence find any reason to set aside the provision as arbitrary or discriminatory nor to read it down; on the interpretation placed by us on Sec. 2(ea)(vi). We dispose of the Writ Petition declaring and holding that the 'other persons' as coming in the second limb of Sec. 2(ea)(vi) includes those persons who carry on a commercial activity and are statutorily required to maintain books of accounts under the Income Tax Act. The writ petitioner, a proprietary firm engaged in the business of jewellery, is declared to be entitled to be absolved from the liability to tax under the Wealth Tax Act, for any amounts held as cash-in-hand, recorded in the books of accounts. It is made clear that any amounts not recorded in the books of accounts of similarly situated individual proprietorships, without reference to any limit of Rs.50,000/-, would be exigible to tax under the Wealth Tax Act.
Assessee's writ petition allowed
2018-TIOL-1605-HC-MUM-IT
PR CIT Vs SANDVIK ASIA PVT LTD: BOMBAY HIGH COURT (Dated: July 31, 2018)
Income tax - Section 145A
Keywords - scientific basis - unutilized CENVAT credit - valuation of stock - warranty provision
The Revenue Department preferred present appeals challenging the action of ITAT in allowing the entire disallowance of Rs.45.52 lakhs on account of warranty provision holding that the decision of Supreme Court in the case of Rotork Controls Ltd - 2009-TIOL-64-SC-IT was applicable in this case, when scientific basis of the provision of warranty was not conclusively established.
The Depatment had further challenged the action of ITAT in holding that the unutilized CENVAT credit could not be treated as income of assessee, when Section 145A introduced w.e.f. April 01, 1999 mandates inclusion of tax, duty, cess etc in the value of stock.
On appeal, the HC held that,
Whether when warranty is attached to sale price of goods being an integral part of it, then obligations arising from past events rather than scientific basis have to be recognized as provisions - YES: HC
Whether merely because CENVAT credit is irreversible credit offered to manufacturers upon purchase of duty paid raw-materials, that would not amount to income taxable under I-T Act - YES: HC
++ as far as warranty provision is concerned, the Revenue's counsel fairly admits that the appeal of Revenue from the common impugned order dated Dec 31, 2014 in respect of assesssment year 2002-03 was the subject matter of consideration by this Court in the Principal Commissioner of Income Tax vs. Sandvik Asia Pvt. Ltd. in ITA No.250 of 2016 - 2018-TIOL-1476-HC-MUM-IT, wherein an identical question was not entertained as it did not give rise to substantial question of law. Therefore, this question also does not give rise to any substantial question of law;
++ as far as CENVAT Credit is concerned, the counsel for assessee invited the attention of this Court towards the decision in the case of Commissioner of Income Tax vs. Diamond Dye Chem Ltd. - 2017-TIOL-1297-HC-MUM-IT wherein identical issue arising on identical facts relating to assessment year 2008-09 in the context of amended Section 145A stands concluded against the Revenue. It is also found that in both cases, the assessee had adopted exclusive method of accounting i.e. valuing raw material on purchase prices minus Cenvat credit and at the same time not including the Cenvat credit in its closing stock. In the present facts as in Diamond Dye Chem Ltd., it is not a case of mismatch. The counsel for Revenue is unable to show why the said decision in this Court in Diamond Dye-chem Ltd. will not apply to the present case. In view of the same, this question as proposed does not give rise to any substantial question of law.
Revenue's appeal dismissed
2018-TIOL-1604-HC-MAD-IT
K SUBRAMANIAN Vs CIT: MADRAS HIGH COURT (Dated: June 27, 2018)
Income Tax - Writ - Section 10(10C) & Rule 2BA.
Keywords: Substantive provisions - VRS & Voluntary Retirement Scheme.
The assessee, an individual had returned income for the relevant AY. In the course of assessment proceeding, the AO noted that the assessee had received an amount under "Optional Early Retirement Scheme of RBI". While considering the matter, the AO believed that the said amount was liable to be taxed as per Rule 2BA. Objecting the AO's opinion, the assessee submitted that as per the provisions of Sec. 10(10C), a sum received under Voluntary retirement scheme was exempted and was not liable to be taxed. However, the AO rejected the assessee's submissions and directed the assessee to deposit the taxable amount as computed by the AO.
Having heard the parties, the High Court held that,
Whether in any case if the Rule is prevailing over the substantive provisions in the Act then, the same is to be treated as ultra vires - YES: HC
Whether when in terms of Sec. 10(10C), the statute prescribes Rs 5 lakh limit for exemption towards a sum received by way of VRS, the Rule may still demand an approval by the Departmental for such scheme - NO: HC
++ as per Sec. 10(10C), the amount received by way of VRS upto Rs.5 lakhs is exempted under the Act as it is not taxable. However, Rule 2BA specifies that VRS shall be approved by the Income Tax Department otherwise, the employees are not entitled to avail exemption granted u/s 10(10C);
++ the Bombay High Court in CIT Vs.Koodathil Kallyatan Ambujakshan has held that the Rules cannot prevail over the Act. Insofar as the Rule 2BA exceeds substantive provisions of the Act is concerned, it was rendered as ultra vires and that the entitlement of the assessee for the exemption was granted. It is a well settled law that the subordinate legislation shall not exceed the substantive provisions of the Act. If it exceeds the substantive provision, it shall be considered as ultra vires. The Bombay High Court has rightly decided the issue and it has become final. In view of the same, a direction is issued to the AO to consider the request of the assessee for refund of eligible amount u/s 10(10C) within a period of two months from the date of receipt of a copy of this order.
Assessee's Writ petition allowed
2018-TIOL-1603-HC-MUM-IT
CIT Vs KDA ENTERPRISES PVT LTD: BOMBAY HIGH COURT (Dated: July 25, 2018)
Income Tax - Sections 2(22)(e), 2(24), 14, 56(1) & 115JB.
Keywords: Capital Receipt - Gift & Heads of Income.
The assessee-company is engaged in the business of investment. In its return it disclosed receiving gifts from four companies which were shareholders of RIL and had received dividend income on investments. The Assessee and the four companies concerned, as per their MoA, were entitled to receive or gift gifts. During the assessment the AO raised queries about the gifts received. And the assessee sumbitted that the donor companies had given irrevocable instructions to Reliance Industries to pay dividend directly to the assessee. The receipt of dividend was debited to bank account and credited to Capital reserve account of the assessee. The assessee submitted that the Gift was in the nature of capital receipt and was not required to be credited to 'Profit and Loss Account'. The assessee further submitted that since the accounts were prepared as per the companies Act, no adjustment was required to be made to the book profit u/s 115JB on account of gift received. However the AO added gift received to the total income and to the book profit u/s 115 JB of the assessee. The CIT (A) set aside the additions made by the AO. On further appeal, the ITAT held that companies were competent judicial persons to make and receive gifts and natural love and affection were not necessary requirements.
On appeal, the High Court held that,
Whether loan waiver granted by overseas supplier of capital assets is waiver of trading liability and it falls within the purview of Sec 41(1) - NO: HC
Whether the benefit in the form of cash receipt, arising on account of loan waiver by the creditor, is to be taxed u/s 28 (iv), even though such provisions bring under sweep only the benefits other than in the form of money - NO: HC
++ the Tribunal held that the capital receipt by the assessee was not taxable u/s 28(iv). In this aspect, the Revenue very fairly states that the issue stands concluded in favour of the assessee by the decision of the Apex Court in CIT v/s. Mahindra and Mahindra Ltd. wherein, it was held that "... it is a well-settled principle that creditor or his successor may exercise their "Right of Waiver" unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a part waiver i.e., waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts ... the benefit in the form of cash receipt, arising on account of loan waiver by the creditor, is not to be taxed u/s 28 (iv), even though such provisions bring under sweep only the benefits other than in the form of money ..." Thus, the order calls for no interference on this issue;
++ the Tribunal was justified in law in deleting the addition made to the book profit u/s 115JB without appreciating the fact that such receipt will have to be taken as income and credited to the P&L account as per clause 2(b) and clause 3(xii)(b) of Part II of Schedule VI of the Companies Act. With this regard, the Revenue very fairly states that this issue stands concluded against the Revenue and in favour of the assessee by the decision of the Supreme Court in Apollo Tyres Ltd. v/s. CIT. Thus, the order calls for no interference on this issue.
Case disposed of
2018-TIOL-1602-HC-MAD-CUS
PARAGON CHEMICALS Vs CC: MADRAS HIGH COURT (Dated: August 02, 2018)
Cus - The petitioner seeks for a direction to respondents to release the cargo covered under Bill of Entry - The Cargo, which was imported by petitioner was declared as "Mineral Oil" from United Arab Emirates through Chennai port and petitioner filed Bill of Entry - The said Cargo has now been confiscated under provisions of Customs Act, 1962 pursuant to the orders of second respondent as test report on samples drawn from Cargo states that the cargo contains a characteristic of kerosine - The second respondent would further state that the petitioner has smuggled into India under the guise of Mineral Oil viz., Kerosene, which is of canalized item, requiring a special import licence from Ministry of Petroleum and as per the import policy, Kerosene can be marketed / disposed only through State Trading Enterprises - In the light of stand taken by second respondent in counter affidavit, the petitioner should not be left without any remedy - The reasons for confiscation appears to be based on the test report of Custom House Laboratory - The petitioner is entitled to know the result of such test and a copy of test report should be furnished to the petitioner to work out their remedy in accordance with law - The second respondent is directed to furnish copy certified true copy of test report of Joint Director, Custom House Laboratory to the petitioner within a period of three days: HC
Writ petition disposed of
2018-TIOL-1601-HC-KERALA-CUS
MAHINDRA RETAILS PVT LTD Vs DEPUTY COMMISSIONER: KERALA HIGH COURT (Dated: August 01, 2018)
Cus - Petitioner has filed the writ petition, seeking a direction to assessing authority to re-hear the matter - The petitioner submits that there was a "communication gap" and that they could not produce the evidence before assessing authority, on time - The petitioner's plea of "communication gap" is evasive - Further, the assessing authority, too, issued a notice on 11.05.2018, requiring the petitioner to appear and place evidence - Only thus did the authority pass the Ext.P3 order on 16.05.2018 - It is the petitioner's plea that if one more opportunity is given, they could demonstrate before the assessing authority how the impugned assessment proceedings could not be sustained - Though this Court cannot appreciate the petitioner's indolent attitude, it may serve the interest of justice if petitioner places the desired evidence before the assessing authority; the petitioner must produce all the relevant records before the assessing authority by 10.08.2018, to enable the assessing authority to proceed further with the matter: HC
Writ petition disposed of
2018-TIOL-1600-HC-MUM-VAT + Case Story
AXIS MUTUAL FUND Vs STATE OF MAHARASHTRA: BOMBAY HIGH COURT (Dated: August 06, 2018)
Maharashtra VAT Act - Writ - Sections 30(3), 48 & Rule 53(6)(b).
Keywords: Creation of separate Trust - Floating of schemes - Gold ETF scheme - ITC claim - Mutual Fund Trust & Single Trust Deed.
The asssessee-trust had returned income for the relevant AY. During the assessment proceeding, the AO noted that the a mutual fund was created by a trust deed made between the Axis Bank Limited (Settlor) and the assessee (Trustee company). Further, Axis Asset Management Company Limited (AMC) was incorporated alongwith the approval of SEBI to act as an Asset Management Company for the various schemes of the assessee. While going through the said trust deed, the AO found that the Settlor declared and agreed that the assessee would manage a mutual fund and the assessee was allowed to float one or more schemes for the issue of units to be subscribed by the public. The Ao also noticed that by way of an investment Management agreement executed between the assessee and Axis AMC, the responsibility for the daily operations of the schemes was assigned to the Axis AMC. The assessee submitted that by the Trust Deed, multiple schemes, were created and floated. The assessee had also maintained separate books and banks of accounts for each fund in compliance of the SEBI regulations. Accordingly, as per the Trust Deed, the Axis AMC had floated the Axis Gold ETF scheme. The Gold ETF scheme, an open-ended mutual fund scheme was designed returns which would closely track the the domestic spot price from physical gold in the spot market. The said scheme provided the investor with an option to invest in gold without taking physical delivery of the gold and such investor was also allowed choose to redeem the value of his investment either in cash or in the form of gold. It was then clarified by the assessee that no other schemes were floated by the Axis AMC involving the sale or purchase of goods liable to be taxed under MVAT Act, 2002. The AO believed that as per the terms of the scheme, Axis AMC had to purchase and sell gold based on subscription or redemption requests received from investors and the same was taxable under the MVAT Act, 2002. Subsequently, the AO also stated that the assessee was not eligible to claim ITC on purchase of goods since, the sale of such golds wre not resold within a period of six months from the date of purchase. Therefore, the AO passed an assessment order rejecting the ITC claim under Rule 53(6)(b). Consequently, a tax demand alongwith interest and penalty was levied on the assessee.
On appeal, the FAA confirmed the disallowance of ITC under Rule 53(6)(b) and interest u/s 30(3) however, dropped the penalty as imposed on the assessee.
Having heard the parties, the High Court held that,
Whether in terms of Rule 53(6)(b) of Maharashtra VAT Rules, proportionate disallowance of ITC to Mutual Fund Trust is allowed on account of gold which was sold after six months from date of purchase under Gold ETF scheme - YES: HC
++ this is not a case where the settlor has created more trusts under a single Trust Deed. This is a clear case where the Deed of Trust permits floating one or more schemes. That is not equivalent to creation of separate Trusts. It is in these circumstances that the AO, the FAA and the ITAT all rightly concluded that the set-off available under Rule 53 has to be reduced. It shall be accordingly in part or full in the event of any of the contingencies specified and to the extent specified in sub-rule (6) of Rule 53. Pertinently, the set-off has not been disallowed in full. It is hold that in the case clearly specified of gross receipts of a dealer in any year and if from that, receipts on account of sale are less than 50% of the total receipts, then, insofar as the dealer, who is not a hotel or restaurant, the set-off is permissible only on those purchases effected in that year where the corresponding goods are sold or resold within six months from the date of purchase. There is no creation of separate Trusts, but separate schemes under a single Trust Deed are floated;
++ none of the authorities were in any error nor their view can be termed as perverse while granting partial relief to the assessee. We do not see how the view taken by the FAA in the facts and circumstances peculiar to the assessee's case is perverse. We are of the view that the conclusion reached by the FAA is imminently possible. It is evident from the same that the assessee has obtained registration under the MVAT Act. It invested in the gold and disposed it of, may be on behalf of the customers. However, it paid VAT on it and was held liable to pay interest if the payment of VAT is delayed. Hence, the FAA has rightly concluded that the tax amount, together with interest is payable. He confirmed the demand to that extent. The ITAT also confirmed this view. It concurred with the AO and the FAA as both took a view on facts and on law, which is not perverse or vitiated by error of law apparent on the face of the record. In these circumstances, the disallowance of ITC under Rule 53(6)(b) was also confirmed and in our opinion is rightly.
Assessee's writ dismissed
2018-TIOL-1599-HC-KAR-CUS
DEEPAK M GANEYAN Vs CC & ST: KARNATAKA HIGH COURT (Dated: July 4, 2018)
Cus - Proper Authority - Jurisdiction of DRI officers - CESTAT remanding case to adjudicating authority - Assessee contending that CESTAT should not have and could not have remanded the case back to the adjudicating Authority, who, ultimately may not have the jurisdiction to decide these proceedings at all and it would depend upon the Judgment of the Hon'ble Supreme Court and therefore, a substantial question of law arises for consideration by this Court.
Held: Question of jurisdiction is obviously pending consideration before the Supreme Court of India in the case of Mangali Impex 2016-TIOL-877-HC-DEL-CUS and which decision has been stayed by Supreme Court - the law laid down by the Supreme Court is bound to be final and binding on all the Authorities and the Tribunal below - Therefore, since the present nature of the case as to which authority will have jurisdiction to decide the matter of the appellant and other persons mentioned in the show cause notice, will depend upon the Judgment of the Supreme Court, this matter need not be kept pending on the board of the High Court - no substantial question of law arises for consideration - appeal, since being devoid of merit, is dismissed: High Court [para 8]
Appeal dismissed
2018-TIOL-1598-HC-KAR-CX
CCE & ST Vs ASPINWALL AND CO LTD: KARNATAKA HIGH COURT (Dated: August 1, 2018)
CX - Monetary limit in respect of Revenue appeals filed before High Court raised to Rs.50 lakhs by instructions dated 11.07.2018 - Counsel for Revenue submitting that the present appeal is not maintainable due to the tax effect involved in the present case being less than the prescribed monetary limit of Rs.50,00,000/- and that the present case does not fall under the exception category of Notification/instruction dated 17.08.2011 referred in paragraph No.4 of the aforesaid Instructions dated 11.7.2018 - inasmuch as counsel for Revenue seeking permission to withdraw appeal as not pressed. Held: In view of instruction F No.390/Misc./116/2017.JC dated: 11.07.2018, appeal filed by Revenue is, accordingly, dismissed as withdrawn/not pressed: High Court [para 2, 3]
Appeal dismissed
