CASE LAWS
2018-TIOL-2407-HC-KERALA-IT
CHOICE FOUNDATION Vs DCIT: KERALA HIGH COURT (Dated: September 25, 2018)
Income Tax - Section 11(6).
Keywords - Charitable body - Income on acquisition of capital asseets.
The assessee-charitable institution, filed its return for the relevant AY. Further, it was noted that the assessee had claimed expenditure for acquisition of assets as application of income was for charitable purpose. However, in the assessment proceedings, the AO mentioned that the assessee were not entitled to claim further depreciation on the same as institution acquired medical equipments with surplus funds available and the expenditure was treated as application of income of trust for charitable purposes. Accordingly, such claim was not sustained in the given decision. On appeal, the CIT(A) affirmed the appeal. On further appeal, the Tribunal recalled the matter in order to be re-heard.
On appeal, the High Court held that,
Whether depreciation on capital assets acquired by a charitable body can be allowed u/s 11(6) which has prospective effect from AY 2015-16, where such claim was filed before such AY - YES: HC
++ it is to be noticed that in Lissy Medical Institution's case, the Judges of the Supreme Court specifically observed that they are not going into the merits of the case. In the later judgment, however the merits were looked into and the claim of the assessee which was allowed. It is also specifically noticed that Section 11(6) has only prospective effect from the assessment year 2015-16. The subject assessment years in the present appeals being prior to the assessment year 2015-16, the Court allows the appeals answering the questions of law in favour of the assessee and against the Revenue.
Assessee's appeals allowed
2018-TIOL-2406-HC-ALL-IT
INDIA GOOD NEWS ASSOCIATES Vs ITO: ALLAHABAD HIGH COURT (Dated: November 02, 2018)
Income Tax - Writ - Re-assessment.
The assessee-Associates, filed its return for the relevant AY. During the proceedings, the AO noted that the assessee did not provide with necessary documents regarding its income which lead to escaped assessment. However, the AO issued notices regarding such assessment. Further, the assessee had supplied with the 'reasons to believe' in regard to the income which lead to reassessment. Further, the assessee had raised objections regarding notice and the 'reasons to believe' so supplied which was not considered and hence the appeal was remained pending before the CIT(A).
In writ, the High Court held that,
Whether the writ court's juridiction can be invoked where the assessee's objections to the re-opening of assessment, are pending disposal before the authority concerned - NO: HC
++ since the objections of the assessee have not been considered and decided properly that the assessee should wait for the decision of the Court. Accordingly, the Court is not inclined to exercise discretionary jurisdiction in the matter where at this stage and dispose of the writ petition with the direction that the Revenue authority would before making the reassessment would decide the objections. The assessee at the same time, if advised, may get the appeal in respect of the AY 2010-11 decided and it is expected that the appellate authority would consider the request of the assessee for expeditious disposal and would oblige by deciding the appeal most expeditiously.
Assessee's writ petition disposed of
2018-TIOL-2405-HC-MAD-IT
LAKSHMI VILAS BANK LTD Vs ACIT: MADRAS HIGH COURT (Dated: October 11, 2018)
Income tax - Sections 80M & 263
Keywords - remand order - prejudice to taxpayer - neccesary verifications
The present appeal had been preferred by the assessee bank challenging the action of ITAT in remanding the matter relating to broken period interest, income from inter corporate dividend and interest on accrual basis, to the CIT for exercising his revisionary jurisdiction u/s 263 and verify as to whether the allowance granted by AO on these receipts were justified or not. In short, the counsel for assessee pleaded that the Tribunal ought to have held that the CIT u/s 263 without establishing that the assessment order was erroneous and prejudicial to the interest of Revenue had merely ordered roving enquiry.
On appeal, the HC held that,
Whether a simple remand order passed by ITAT for making verification of the neccesary workings submitted by the taxpayer in relation to its claims, keeping in mind the judicial precedents, need not be challenged on the touchstone of prejudice and hence merits no writ interference - YES: HC
++ as far as broken period interest is concerned, the assessee's counsel submitted that the said issue is squarely covered by the decision of Supreme Court in the case of CIT vs. Citi Bank NA - 2008-TIOL-255-SC-IT, wherein, identical issue was considered as to whether the interest paid for broken period should not be considered as part of purchase price, but, should it be allowed as revenue expenditure in the year of purchase of securities. The Supreme Court held that where the securities were part of trading assets, the income, by way of interest on such securities could come u/s 10 of Indian Income Tax Act, 1922. Further, it is pointed out that in assessee's own case for the assessment year 1989-90 and 1990-91 and other years, the issue was decided in favour of assessee in a case arising out of the re-opening proceedings u/s 147, in the case of CIT vs. Lakshmi Vilas Bank Ltd., (2010) 78 CCH 0182 Chen HC. This decision can very well be placed before the CIT(A) when the matter is being considered by the Appellate Authority in terms of the order of remand passed by the Tribunal. Therefore, this Court is not inclined to interfere with the order of remand of Tribunal;
++ regarding the income from inter corporate dividend under the provisions of Section 80-M, the Tribunal has remanded the matter by directing the AO to disallow only such expenses in this regard which are clearly identified to have been spent towards earning the said income. The AO was directed to keep in mind the decision of the Special Bench of the Tribunal in the case of Punjab State Industrial Development Corporation Ltd., Vs Deputy Commissioner of Income Tax - 2006-TIOL-171-ITAT-CHD-SB. In the light of the specific directions issued by the Tribunal, this Court is of the view that the said directions need not be interfered with;
++ likewise, with regard to taxing of income on accrual basis is concerned, since the assessee contended before the Tribunal that they had accounted income on accrual basis and submitted necessary working, the AO was directed to verify the same and decide accordingly. The assessee cannot be stated to be aggrieved by such a direction. In the light of same, the directions issued by the Tribunal, calls for no interference.
Assessee's appeal dismissed
2018-TIOL-2404-HC-MUM-IT
PR CIT Vs DHARIWAL INDUSTRIES LTD BOMBAY HIGH COURT (Dated: September 04, 2018)
Income tax - Sections 80IA & 271(1)(c)
Keywords - capital receipt - concealment - disallowance u/s 80IA - full disclosure - levy of penalty - sales tax incentive - quantum addition
The assessee company is engaged in the business of manufacturing of Pan Masala as well as manufacturing and sale of rawa, atta, maida and salt. Over and above this, they are also involved in sale of mineral water and are also doing business in the area of power generation by wind mills. It was the case of the Revenue that for the A.Y 2003-04, the assessment was completed u/s 143(3) after making disallowance u/s 80IA restricted to gross total margin at Rs.35,05,981/-. In addition, the AO also rejected assessee's claim that sales tax incentive was in nature of capital receipt and therefore not taxable. He further made additions on account of items not considered to be eligible for 100 % depreciation at Rs.2,37,05,481/-. Pursuent thereto, the AO initiated penalty proceedings u/s 271(1)(c) and ultimately penalty of Rs.3,68,00,000/- came to be levied.
On appeal, the CIT(A) deleted the penalty with respect to the additions on account of disallowance u/s 80IA and sales tax incentive. He however, confirmed the penalty with respect to the additions on account of items not considered to be eligible for 100% depreciation.
On further appeal, the ITAT confirmed the order of CIT(A) deleting the penalty. In addition thereto, the ITAT, relying upon the decision of this Court in the case of CIT Vs M/s Nayan Builders and Developers in Income Tax Appeal No. 415 of 2012, also deleted the penalty imposed with respect to the addition made on account of depreciation disallowance.
On appeal, the HC held that,
Whether when deduction claimed by the assessee was on the basis of judicial precedents prevailing at that time and all particulars relating thereto were disclosed in his return, it can be said that he has furnished inadequate particulars or concealed his income within the meaning of section 271(1)(c) - NO: HC
Whether when no penalty was levied by the AO for a particular disallowance in the preceding year, then no penalty is called for in the succeeding A.Y as well for the very similar disallowance - YES: HC
++ it is not in dispute that the penalty was imposed u/s 27(1)(c) by AO for deduction claimed u/s 80IA in respect of Gutkha. It is also not in dispute that at the time of claiming the deduction in the return, a favourable decision of the Ahmedabad Bench of ITAT in the case of Kothari Products Ltd. V/s ACIT (38 ITD 285) was very much in force which inter alia held that Pan Masala containing tobacco cannot be regarded as a tobacco preparation covered by item No.2 of the 11th Schedule of the Income Tax Act. It is true that this order of CIT(A) for the A.Ys 1999-2000 & 2000-2001 that were passed in quantum proceedings, were set aside by the Tribunal in an appeal filed by the Revenue. Be that as it may, it is quite clear that the deduction claimed by assessee u/s 80IA was on the basis of judicial decisions prevailing at the time of making such a claim and all particulars relating thereto were disclosed in the return. Taking all this into account, it can hardly be said that assessee has furnished inadequate particulars or had concealed his income within the meaning of section 271(1)(c);
++ similar is the case with reference to rejection of Assessee's claim that sales tax incentive is in the nature of a capital receipt and therefore not taxable. This claim was made by the Assessee on the basis of a decision of a Special Bench of ITAT, Mumbai in the case of DCIT v/s Reliance Industries Ltd - 2003-TIOL-14-ITAT-MUM-SB. Further, in the facts of the present case, in the revised return filed by the assessee for A.Y 2003-2004, the facts relating to the receipt of subsidy by way of sales tax exemption / differal scheme and its treatment by the assessee, have been clearly mentioned in the computation of income accompanying such return. Taking all these facts into consideration, the Tribunal were not incorrect in deleting the penalty;
+ as far as depreciation disallowance is concerned, the same is with reference to A.Y 2003 -04. Though the CIT(A) has upheld the levy of penalty, the Tribunal had set aside the order of the CIT(A). This was done on the basis that in the preceding Assessment Year, on a similar dis-allowance, no penalty was levied by the AO. This being the case and in identical facts, the penalty could not be levied in the succeeding Assessment Year for the very same dis-allowance. To further fortify these findings, the Tribunal relied upon a decision of its Coordinate Bench in the case of C.P. Mohan v/s DCIT in ITA No.957/PM/2011. Apart from this, the Tribunal also held that as far as the rate of depreciation is concerned, the Assessee has admitted that a genuine mistake was made in adopting 100% depreciation and which mistake was a bonafide one. This explanation was accepted by the Tribunal. Considering that it was a bonafide mistake, the Tribunal held that penalty ought not to have been levied and therefore deleted the penalty onfirmed by the CIT(A). Looking to this entire discussion, it cannot be said that the view taken by the ITAT either suffers from any perversity or an error of law apparent on the face of the record that would give rise to any substantial question of law.
Revenue's appeal dismissed
2018-TIOL-2403-HC-MUM-CUS
BOMBAY DYEING AND MANUFACTURING COMPANY LTD Vs UoI: BOMBAY HIGH COURT (Dated: November 02, 2018)
Anti Dumping duty - This petition under Article 226 of Constitution of India challenges the final findings as recorded in order passed by Designated Authority, Directorate General of Anti Dumping and Alied Duties - The impugned order after considering the petitioners' application for initiation of Anti Dumping Investigation in respect of import of Polyester Staple Fibre (goods) under Customs Tariff Act, 1975 r/w Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles for Determination of Injury) Rules, 1995 (Anti Dumping Rules) and investigating into it found imposition of Anti Dumping Duty not warranted - The impugned order rejects the application by its final finding under Section 9B(bii) of the Tariff Act r/w Rule 14(b) of the Anti Dumping Rules - In view of decision of Delhi High Court in Jindal Poly Film Ltd. 2018-TIOL-1970-HC-DEL-CUS, court is not entertaining this petition - This as an efficacious alternative remedy to the Tribunal is available from the impugned order dated 25th January, 2018 - Therefore, court have not examined the merits of the petitioner's grievance - The petitioner is at liberty to file an appeal to the Tribunal under Section 9C of the Tariff Act: HC
Petition disposed of
2018-TIOL-2402-HC-DEL-NDPS
IKECHUKWU CHUKWUBUIKEM STANLEY Vs NARCOTIC CONTROL BUREAU: DELHI HIGH COURT (Dated: October 30, 2018)
NDPS - A complaint was filed by respondent contending that secret information was received that a parcel booked with DHL Express Pvt. Ltd. for Spain might contain narcotics substance - Search and seizure were carried out and the parcel was intercepted which contained 575 gms. of heroine which is a commercial quantity - The allegation is that petitioner booked the parcel - The defence of petitioner is that he was not aware that the parcel contained narcotics substance - The same plea of lack of existence of culpable mental state, is a defence which the petitioner has to raise in trial and thereafter rebut the statutory presumption at the stage of the trial - Even though in the statement under Section 67 of NDPS Act, the petitioner and co-accused have both stated that petitioner was not aware that parcel contained narcotics substance, same is a matter which would be tested at trial and is not something, based on which the Court can pass an order of discharge - Supreme Court in Mohan Lal 2015-TIOL-80-SC-NDPS itself has held that provision of Section 35 are as plain as day and section 35 raises a presumption as to knowledge and culpable mental state from the possession of illicit articles - There is no merit in petition and the order framing charge does not suffer from any infirmity - Keeping in view the fact that the petitioner has been declined the relief of grant of bail, trial court is directed to endeavour to conclude the trial expeditiously: HC
Petition dismissed
2018-TIOL-2401-HC-AHM-CUS
MEGHMANI ORGANICS LTD Vs UoI: GUJARAT HIGH COURT (Dated: October 17, 2018)
Cus - The petitioners were engaged in manufacturing various dyes and intermediates - They had a Export Oriented manufacturing unit situated at Bharuch - On such manufacture and clearance of goods, petitioners would receive various benefits as an EOU, one of them being reimbursement of central sales tax on goods purchased by petitioners and utilised for such manufacturing activity - The department however issued SCNs seeking recovery of part of such reimbursement which related to petitioners' purchases of such goods from other EOU units - While petitioners were in process of contesting such SCN, petitioners desired to exit from EOU - The departmental authorities would not permit debonding of petitioners' manufacturing unit unless and until all dues were cleared - According to petitioners, though the demands raised by authorities under SCNs were yet to be adjudicated, since the authorities would not allow the petitioners to exit from EOU, the petitioners deposited a total of Rs.45,74,285/under protest on two different dates - At the same time, petitioners continued to oppose SCN - Two things were somewhat curious about such order of Development Commissioner - Firstly, in concluding portion, he records that he found sufficient grounds to drop the SCN proceedings as the unit has paid total demand - The petitioners had deposited the amount under protest since the petitioners were in a hurry to exit EOU but still continued to contest the SCNs - There was therefore, no question of dropping the SCNs merely because the amount was deposited - Second curious aspect is that the authority made fleeting observation on inadmissible portion of petitioners' reimbursement which runs counter to the judgment of this Court in case of Asahi Songwon Colors Ltd. 2017-TIOL-1456-HC-AHM-MISC - The petitioners' assertion that without depositing the disputed amount, the petitioners' request for debonding would not have been accepted, remains virtually admitted - Demand raised in SCNs would not be enforced against petitioners - The amount deposited by petitioners under protest would be refunded - If so done within the time permitted, there shall be no interest liability on the principal amount, failing which, the authorities would pay interest at the rate specified under section 75A of the Customs Act from such date: HC
Petition disposed of
2018-TIOL-2400-HC-AHM-CUS
KINSHUK OVERSEAS PVT LTD Vs UoI: GUJARAT HIGH COURT (Dated: October 24, 2018)
Cus - The petitioner had placed three separate orders for import of yellow peas - Against such imports, petitioner had paid sums - The respondent authorities refused to clear the imports upon which this petition was filed - In such petition, the Court granted interim relief that till the returnable date, the impugned communication dated 18.05.2018 shall not adversely affect the consignment - Under such interim order, which continued from time to time, the petitioner cleared the entire quantity of the imports - Yellow peas was free from any restriction for import as per the Government of India Import Export policy - This was amended by notification dated 25.04.2018 - As per this notification, the item in question was no longer free from import - Restriction being, that for a period between 01.04.2018 to 30.06.2018, the total quantity of one lakh MT of yellow peas, which would include the quantity, which have already imported between 01.04.2018 to 25.04.2018 shall be permitted - This term "already imported" would include shipments backed by irrevocable commercial letter of credit and advance payment made through banking channel - However in almost all cases under interim orders of the Court, imports have been allowed and cleared except in the first petition where out of total quantity of 25,000 MT of peas for which the order was placed, all but 177 MT of peas arrived and got cleared, which would neither be possible nor feasible - Under the interim orders, the petitioners thus got final relief, which obviously cannot be taken back now - However, for the remaining small quantity, petitioner’s plea not accepted - Though the interim orders were passed as far as back on 30.05.2018, till date the goods have not arrived - There is nothing on record to suggest that between the date of registration of the import and before the registration was cancelled, the goods were already put in transit - All the petitions are disposed of without any further order except for recording that the imports already completed would not be disturbed by disposal of these petitions: HC
Petitions disposed of
2018-TIOL-2399-HC-AHM-ST
SHREE DUTT ENTERPRISES Vs UoI: GUJARAT HIGH COURT (Dated: October 17, 2018)
ST - The short prayer of petitioner is for being granted installments for paying up department's dues arising out of order of assessment dated 27.03.2017 - While disposing of petitioner's request, the authorities proceeded further with recoveries and attached the petitioner's bank account, at which stage, this petition was filed - Petitioner is a small partnership firm and is unable to pay the entire amount in one installment - The petitioner had, therefore, approached the Commissioner for granting suitable installments - The authorities refused to grant the installments, however, no order is passed - When the department's circular recognizes the facility of granting installments in case of genuine hardships, court is inclined to grant reasonable time to the petitioner to clear the dues - At the same time, court cannot lose sight of the fact that the dues arose out of an order dated 27.03.2017 which was passed merely a year and a half back - Petitioner stated that in the meantime, a sum of Rs. 16 lacs approximately is deposited towards such dues - Considering such circumstances, the petitioner would clear the entire remaining dues in twelve monthly equal installments starting from 01.11.2018 - Installment of each month would be deposited latest by 5th of the month - The petitioner shall file undertaking before this Court latest by 25.10.2018 that such installments would be deposited with the authorities - If the petitioner fails in depositing any of the installments, at any stage, it would be open for the authorities to carry out coercive recoveries: HC
Petition disposed of
2018-TIOL-2398-HC-MAD-ST
CCE & ST Vs GANGA MEDICAL CENTRE AND HOSPITALS PVT LTD: MADRAS HIGH COURT (Dated: October 23, 2018)
ST - The only issue which falls for consideration is as to whether the Tribunal, while remanding the matter to Adjudicating Authority to re-consider the issue as to whether the services are taxable or not, including the issue relating to limitation, can consider the issue as to whether the penalty was leviable - By the impugned order, Tribunal allowed the assessee's appeal in part and set aside the penalty, which has been levied - The Revenue is not aggrieved by such remand order, but is only aggrieved by that portion of the order deleting the penalty - It is not clear as to whether the assessee filed any appeal as against the direction issued by Tribunal remanding the matter for de novo consideration - In any event, court is not adjudicating the correctness of such a direction and this order is confined only to the challenge only in respect of that portion of the order of the Tribunal deleting the penalty - The issue was an interpretational one and the services were taxable only for a limited period - The assessee also remitted the service tax collected from insurance company - Thus, Tribunal is right in deleting the penalty as being unwarranted - No question of law, much less, substantial question of law arises for consideration in this appeal: HC
CMA dismissed
2018-TIOL-2397-HC-KAR-ST
SKILL TECH ENGINEERS AND CONTRACTORS PVT LTD Vs CCT: KARNATAKA HIGH COURT (Dated: October 22, 2018)
ST - Despite the lapse of one year, though the learned counsels at the bar have made a statement that judgment of Delhi High Court has been upheld by Supreme Court in the light of judgment rendered earlier in case of Kusum Ingots & Alloys Ltd. 2004-TIOL-117-SC-CX-LB, neither the date of said judgment is available with the learned counsels nor the copy thereof, is produced for perusal - In view of this, writ petition is disposed of with a liberty and direction to the petitioner to appear before concerned authority and show cause before him in pursuance of SCN vide Annexure-E and cite the relevant judgments before said authority - It is expected of said authority to consider the judgments cited before him and pass appropriate speaking order within a period of six months: HC
Petition disposed of
2018-TIOL-2396-HC-KERALA-CX
SOUTHERN REFINERIES LTD Vs UoI: KERALA HIGH COURT (Dated: October 22, 2018)
CX - Issue relates to levy of excise duty on refined oil - Revenue would submit that assessee purchase and import used oil and refine it to sell it as lubricating oil - Assessee appearing in appeals would point out that they were producing rerefined oil, which is not a lubricating oil as such - It is noticed from the order of Tribunal that assessee was marketing only one product in the name of 'Jeezol' - It is also the contention that they were supplying it to lubricating dealers as also industrial consumers - There is no contention that there were two products and Revenue also did not specifically raise a contention before Tribunal that the assessee is dealing with only lubricating oils, which alone stands covered by the Chapter note '9' included in Central Excise Tariff Act - Since adjudication of factual aspects are involved, it is only proper that Tribunal considers the issue afresh - Matter remanded to the Tribunal for consideration - The assessee is the writ petitioner, who claimed waiver of deposit for purpose of consideration of appeals itself on merits - Considering the fact that Writ Petition itself was pending for the last five years with a stay, it is only proper that waiver be allowed and the issue be considered on merits, especially when remanding two other matters to the Tribunal: HC
Writ petition allowed
2018-TIOL-2395-HC-KERALA-VAT
KV JOSHY AND CK PAUL Vs ASSISTANT COMMISSIONER : KERALA HIGH COURT (Dated: October 26, 2018)
Kerala Value Added Tax Act - Writ - Section 67.
Keywords - Purchasing dealer - Selling dealer
A dealer in tobacco one A.P Kakku's premises was inspected by the intelligence wing of the Commercial Taxes Department. Further, allegations were raised of unaccounted sales to various dealers in and around Thrissur. However, in the proceedings, summons were issued to the said Kakku being also the purchasing dealers to produce their books of accounts. Further, the Intelligence Officer issued a notice of penalty against the said Kakku. Subsequently, a notices to the alleged purchasers were issued, long after the period of limitation that existed at the time of inspection as also the production of books of accounts. Thus, there was a limitation period of three years provided u/s 67.
In writ, the High Court held that,
Whether the writ court can look into an issue involving appreciation of facts & whether in such cases, the appellate fact-finding authority is better suited for such roles - YES: HC
Whether nonetheless, the recovery of duty demanded from the assessee can be stayed, if the assessee appeals to the authority concerned within the time period stipulated - YES: HC
++ in the present cases, the Court found that the purchasing dealers the date of detection of offences should relate back to 30.09.2014. The order now issued against the purchasing dealers orders in the writ petitions are dated 18.03.2017; within the limitation period. It is within the five year reasonable time decalred by the Court, if the statute does not provide for a specific period of limitation to operate. The delay in detection by issuance of notice, to the selling dealer has been explained which the Court has found to be satisfactory. The period of three years hence commences from the date of issuance of notice to the selling dealer. The order against the purchasing dealers is passed within the period provided of limitation. The argument that notices to the purchasing dealers were delayed and was not proximate to the verification of their records, has no legs to stand since the proceedings were finalised within three years from 30.09.2014;
++ thus, the Court held that the assessees would have to be relegated to the statutory remedy. The assessees would be entitled to file appeals under the statute within 30 days from the date of receipt of a certified copy of this judgment. If such appeals are filed, within the date specified by the Court, the same would be considered as filed within time and decided on merit since the assessees had immediately on issuance of the orders, approached the Court;
++ however, considering the fact that the matters were pending here for more than an year, if appeals are filed within the time stipulated by the Court, recovery should be kept in abeyance for a further period of four months, within which time the stay applications filed would be considered.
Assessee's writ petition disposed of
2018-TIOL-2394-HC-MUM-VAT
MANOJ PREMCHAND DHARMANI Vs THE STATE OF MAHARASHTRA: HIGH COURT BOMBAY (Dated: October 26, 2018)
Maharashtra VAT - Writ - cancellation of registration certificate - show cause notice
The assessee company had preferred the present petition challenging the cancellation of the registration certificate granted to them under Maharashtra VAT Act, 2002 as well as Central Sales Tax Act, 1956.
On Writ, the HC held that,
Whether cancellation of registration certificates of dealers without being preceded by a show cause notice and/ or a personal hearing, cannot be sustained and deserves re-consideration in accordance with law - YES: HC
++ the counsel for Revenue states that so far as cancellation of registration is concerned, there is record available with them that the assessee's registration has been cancelled. However, the supporting documents namely the reasons for the cancellation and/or whether the same was preceded by a notice and/or a hearing are not available on record. Therefore, on instruction very fairly states that the registration would be restored and proceeding for cancellation of the registration would be initiated in accordance with law. So far as prayer deleting the name of assessee from the list of Non Genuine dealers displayed on the website of the Department, it is submitted that the assessee may file a representation and it shall be considered in accordance with law. In view of the same, for the time being, the registration is restored. However for cancellation of the registration, the Department will issue a show cause notice to the assessee setting out the reasons why they proposes to cancel the registration of assessee.
Case disposed of
2018-TIOL-2393-HC-MUM-MISC
SRI MANGAL MURTY MARKETING Vs STATE OF MAHARASHTRA: BOMBAY HIGH COURT (Dated: November 02, 2018)
Maharashtra Tax on Lotteries Act - Writ - Betting and gambling - Imposing tax & Legislative competence.
The assessee, a proprietor involved in business as a Sub Distributor of State organized lottery of Government of Arunachal Pradesh and Nagaland approached the Court seeking a declaration to the effect that Maharashtra Tax on Lotteries Act, be declared as void, being ultra vires to the provisions of Constitution. Further, a direction was also sought to the Revenue in order to restrain itself from levying or collecting tax on sale of lottery tickets in such state. However, such writ petition was issued to the effect that the State should not levy or collect any taxes from the assessee and also should not obstruct the assessee as long as it was carrying on lawful business.
In writ, the High Court held that,
Whether the State Legislature in order to enact law can invoke the provisions of Entry 62 List II by imposing tax on betting and gambling if lottery falls within the purview of betting - YES: HC
++ there is no reason to differ from the reasoning in the Division Bench judgment. Thus, the Court do not find any error in the observations of the Division Bench which is based on the foundation that since lottery is gambling, Entry 62 of List II gets attracted. Further, in List I of Entry 40 which authorizes the Parliament to regulate the lotteries organized by the Government of India or Government of a Sate necessarily do not cover a taxing element. As a result, perusal of the Lotteries (Regulation) Act 1988 only regulates the lotteries and the Regulation is in form of the stipulation of terms and conditions when the Government organizes, conduct or promotes a lottery. The State has invoked Entry 62 of List II while enacting the legislation. This entry specifically empowers the State to tax on betting and gambling. Though the Senior counsel made a serious attempt to submit before the Court that a presumption that lottery is betting and gambling, is erroneous but once the Division Bench of this Court had fallen back on Entry 62 of List II, we do not find any error in the said conclusion;
++ thus, no flaw in the observation of the Division Bench, when it proceeds to hold that lottery falls within the purview of betting and therefore, Entry 62 List II is invoked by the State Legislature to enact a law imposing tax on betting and gambling. The Court is not convinced by the argument of the senior counsel to deviate from the reasoning of the Division Bench of this Court and to fall in line with the judgment of the Karnataka High Court. In any contingency, the judgment delivered by the Division Bench of this Court is subject matter of challenge before the Apex Court and since the Court are not sitting in an Appeal over the Division bench judgment delivered by this Court, the Court is not inclined to reexamine it as if the Court is sitting in Appeal. Thus, no force in the submission of the Senior counsel and are inclined to dismiss the Writ Petition and hold and declare that the Maharashtra Tax on Lotteries Act 2006 is well within the legislative competence of the State legislature and Writ Petition deserves to be dismissed.
Assessee's writ petition dismissed
2018-TIOL-2099-ITAT-MUM
ACIT Vs BUSINESS BROADCAST NEWS PVT LTD: MUMBAI ITAT (Dated: October 15, 2018)
Income tax - Sections 9(1)(vi), 40(a)(ia), 194C & 194J
Keywords - channel placement fees - royalty - tax at source
During the year under consideration, the assessee company had paid carriage fee of Rs. 39,61,12,085/- and when the AO perused the details, he noticed that the assessee had deducted TDS u/s 194C on payment of such fee at the rate of 2%. However, according to him, it should have deducted tax u/s 194J at the rate of 10% because these payments were in the nature of royalty as per Explanation 6 to section 9(1)(vi) and therefore, covered by section 194J. Accordingly, the AO disallowed these carriage/channel placement fee by invoking the provisions of section 40(a)(ia). On appeal, the CIT(A) deleted the disallowance.
On appeal, the ITAT held that,
Whether channel placement fees paid for broadcasting & telecasting, attracts deduction of tax at source u/s 194C - YES: ITAT
++ the counsel for assessee has stated that the Tribunal in assessee’s own case in ITA No. 2697,2698,4206 & 4207/Mum/2012 for AY 2008-09 to 2011-12, has deleted the addition, by observing that: "....There is no dispute that the payment in question was made by the assessee to the cable operators/ MSOs for placing the TV channels in the prime band in order to enhance the viewership and better advertisement revenue. The Delhi High Court in the case of CIT Vs. Prasar Bharati (Broadcasting Corporation of India), has observed that Explanation III, which was introduced simultaneously with section 194J, is very specific in its application to not only broadcasting and telecasting but also include "production of programmes for such broadcasting and telecasting". If, on the same date, two provisions are introduced in the Act, one specific to the activity sought to be taxed and the other in more general terms, resort must be had to the specific provision which manifests the intention of the Legislature. It is not, therefore, possible to accept the contention of the Revenue that programmes produced for television, including "commissioned programmes", will fall outside the realm of section 194C, Explanation III of the Act...." As the facts are exactly identical in both the years and nature of payment is same and the facts in AY 2012-13 in ITA No. 3690/Mum/2017 are also exactly identical, respectfully following the Tribunal’s decision in assessee’s own case and taking a consistent view, we confirm the order of CIT(A) deleting the disallowance.
Revenue's appeal dismissed
