2016-TIOL-126-SC-CT
ACC LTD Vs STATE OF KERALA: SUPREME COURT OF INDIA (Dated: July 28, 2016)
Kerala General Sales Tax Act - In respect of manufactured goods other than tea which are sold under the trade mark or brand name, the sale by the brand name holder or the trade mark holder within the state shall be the first sale for the purposes of this Act - Held, on a perusal of the agreement entered into between the parties, it is not remotely suggestive of the fact that Cochin Cement Limited is a brand name holder or trade mark holder. The appeals, being devoid of merit, are dismissed.
Appeal Dismissed - in favour of Revenue
2016-TIOL-1851-HC-KOL-IT
MOHINDER SINGH ARORA Vs CIT: CALCUTTA HIGH COURT (Dated: August 23, 2016)
Income Tax - Sections 37, 69A, 255(6) & 260A
The Customs Act 1962 - Section 135(1)(b)(i)
Keywords - Business loss - Confiscated smuggled goods - Income from business - Undisclosed source
Whether the confiscated smuggled goods which is only a solitary adventure and has not been claimed as business adventure can be treated as business loss - NO : HC
Whether the disallowance of the business loss can be challenged in the review petition on the basis of criminal proceedings ruled in the favour of the assessee, when criminal proceeding by no stretch of imagination would be binding in a civil proceeding - NO: HC
The assessee is an individual. He filed return for the relevant AY. The assessee claimed business loss on certain foreign origin wrist watch in the possession of the assessee, which were confiscated by the Customs authority. The tax authority as well as the Commissioner of appeal assessed the same as an income from undisclosed source and added to the income of the assessee as income from business. The Tribunal affirmed the order against which the assessee had filed an appeal u/s 260A of Act. The Customs authorities also initiated a criminal case against the assessee u/s 135(1)(b)(i) of the Customs Act on the self-same allegation of seizure of a large number of wrist watch movements of foreign origin from the chamber of false ceiling and boxes on demand. The assessee failed to prove any document in support of his legal possession of those watch movements. The raid was also conducted in the house of the assessee wherefrom also a large number of watch moments were recovered. In the trial the Metropolitan Magistrate held that the assessee was not guilty and acquitted him of charges. The Customs filed an appeal from the same before the High Court and the Single Judge of the High Court had dismissed the same. The assessee filed review appeal before the High Court and submitted that he was entitled to have the reliefs as prayed by him before the Income Tax authorities, namely, allowance of loss caused by the seizure in view of the finding of facts relating to the fundamental basis of the decision of the Income Tax authorities as well as the Tribunal and High Court. According to him the very basis and reasoning could not be sustained and, therefore, the judgment passed by this Court in the Income Tax appeal requires a review.
The HC held that,
++ we have given our anxious consideration to the contention of the assessee and do not find that the finding of the criminal court can be applied to the facts of this court de hors the contextual aspects. Before the criminal court the prosecution was required to prove the case to its hilt which they failed. This Court while dismissing the appeal by the prosecution had had occasion to record that the case could not be proved probably due to the negligence of the officials of the Customs Department. That apart the proceeding under the Income Tax Act is very different from the prosecution in the criminal case. Before the Income Come Tax authority the main issue was whether return made by the assessee reflected the true state of income and he had any undisclosed source of income. Thus, the assessment to tax of the assessee was the issue before the tax authorities and that connected question of undisclosed income and business loss etc. came up for consideration;
++ the second ground of review as mentioned above is taken first. The second ground formulated by the Division Bench related to the justification of the Appellate Tribunal in applying the explanation to Section 37 to the facts of the case. Even if the question had not been separately dealt with it cannot be said that the Division Bench was oblivious of the points so formulated by it. Section 37 of the Income Tax Act has been discussed in the body of the judgment in several paragraphs and Division Bench relied on the judgment reported in Bimal Kumar Dimani versus Commissioner of Income Tax, . The said judgment has been extensively quoted by the Division Bench where also Section 37 has been discussed. As such this ground cannot be allowed to be agitated by the assessee as a ground of review;
++ the Court entered into the discussion that the confiscation of the smuggled goods which was only a solitary adventure was not part of the series of the activities undertaken by the assessee and this not having been claimed to be a business adventure by the assessee could not be treated as business loss or business expenditure.
Assessee's appeal dismissed
2016-TIOL-1850-HC-P&H-CX
SOMSON EXPORTS Vs UoI: PUNJAB AND HARYANA HIGH COURT (Dated: August 11, 2016)
Central Excise - Revision under Section 35EE - Revision by the same rank of officer who passed the impugned order – Court in NVR Forgings case 2016-TIOL-106 6 -HC-P&H-CX while considering the same issue relied upon the judgment in case of M/s Prakash Pipes Industries Limited's case wherein, while considering identical situation, after examining the relevant case law on the point, it was held that the revision by the officer of the same rank was not permissible - Impugned order was passed by the Joint Secretary to Government of India who was also Commissioner of Central Excise and Customs - Thus, the order in appeal as well as revisionary order had been passed by the officer of the same rank which is not permissible as per law - Impugned order is set aside with liberty to the respondent Revenue to proceed afresh in accordance with law – Petition disposed of: High Court [para 4, 6]
Petition disposed of
2016-TIOL-1849-HC-P&H-CX
PR CCE Vs UCAL FUEL SYSTEMS LTD: PUNJAB AND HARYANA HIGH COURT (Dated: August 9, 2016)
CX - Whether any amount of concession on sales tax retained by the respondent is required to be added in the assessable value - Supreme Court in case of Maruti Suzuki India Ltd. - 2014-TIOL-74-SC-CX has held that the transaction value was required to be calculated by including the amount retained by the assessee - however, during the relevant period there was a CBEC Circular dated 30.06.2000 which provided that any amount of concession on sales tax retained by the respondent is not required to be added in the assessable value - in view the aforesaid facts, the assessee cannot be said to be at fault and hence, the extended period of limitation was not available - No substantial question of law arises - Appeal dismissed: High Court [para 2, 4, 5]
Appeal dismissed
2016-TIOL-1848-HC-MUM-CUS + Story
AJAY SHINDE Vs UoI: BOMBAY HIGH COURT (Dated: August 2, 2016)
Cus - Petitioner seeking release of consignment meant for export - Detailed affidavit by Revenue turns counterproductive - whole case of the Department is revealed whereby all wrong doers are then alerted - authorities should either take a decision and issue show cause notice and commence the adjudication proceedings promptly or should take steps so that the export consignments are not withheld for an unnecessarily long duration - no opinion is expressed on the contention of the petitioner insofar as the ownership is concerned - If the petitioner is able to satisfy the authorities with regard to his claim of ownership of goods, and complies with all the circulars, so also the requirement of furnishing a bond with such security and conditions, upon this, the Competent Authority would take appropriate steps and provisionally release the goods - decision on application for provisional release is to taken as expeditiously as possible and within four weeks - Petition disposed of : High Court [para 6, 7, 12]
Petition disposed of
2016-TIOL-1544-ITAT-MUM
ACIT Vs GODREJ SARA LEE LTD: MUMBAI ITAT (Dated: August 22, 2016)
Income Tax - Sections 115JB, 143 (3) & 154.
Keywords - Limitation period - Rectification order.
Whether for the purpose of counting limitation period, the date to be reckoned with is the date on which the original assessment is passed - YES: ITAT
Whether the order u/s 154 is to be passed within four years from the end of the AY in which the original assessment order is completed - YES: ITAT
The assessee is a company, engaged in the business of manufacturing/marketing of mosquito repellent, mats, coils etc. It filed return for relevant AY. The AO completed the assessment, u/s 143 (3) of the Act. Aggrieved assessee preferred an appeal before the First Appellate Authority (FAA), who modified the order of AO and revised the amount of total assessable income. On verification of the records, the AO held that the assessee had debited certain amount under the head ‘provision for diminution in the value of investment', that it did not add back the said income to the book profit, that provision for diminution of value of investment was not an asset and liability, that it was not an allowable deduction, that same was to be added back to the total book profit, that the said mistake was apparent from the record. The AO issued a notice u/s 154 of the Act intimating the assessee about the proposed rectification. The assessee contended that there was no mistake apparent from the record. However, the AO did not agree with the assessee and held that subclause(i) to explanation 1 to subsection(2) of section 115 JB was substituted with effect from 01/04/2001, that the amount of Rs.4.08 crores had to be added back to the net profit of the assessee to arrive at the book profit. Accordingly, he added the said sum while the computing the book profit.The assessee preferred an appeal before the First Appellate Authority (FAA), challenging order passed by the AO u/s.154 of the Act and argued that the rectification order was barred by time and was void ab initio. The FAA held that in the original assessment there was no addition of section 115 JB and for counting the limitation period date to be recognised was date on which the original assessment was passed, that the order u/s.154 had to be passed within four years from the end of the assessment year in which the original assessment order was completed. Accordingly, he held that order passed by the AO was barred by limitation. Aggrieved Revenue filed appeal before the Tribunal.
After hearing parties, Tribunal held that,
++ while completing the original assessment, the AO had determined book profit of the assessee at Rs.40.89 crores, that the assessee had preferred an appeal before the FAA against the order of the AO passed u/s.143 (3) of the Act, that in the appeal it had not agitated the issue of 115 JB of the Act, that it had challenged the additions made by the AO under the normal provisions, that the matter had travelled up to the Tribunal, that neither in the order of the FAA nor in the order of the Tribunal the issue of completion of book profit was deliberated upon. In the circumstances the order passed by the AO on 28/11/2008 could be rectified up to 31/03/2013. The AO had passed the rectification order in the month of January, 2014. Clearly, the order of the AO was barred by limitation.We find that in the case of Tony Electronics Limited, the Delhi High Court decided the issue in favour of the Department considering the peculiar facts of that case.In that case the AO had made certain additions u/s.143(3) of the Act that were challenged before the FAA.The AO had passed order giving effect to the order of the FAA.Therefore, the Court had held that once an appeal against the order passed by an authority was decided by an Appellate Authority the order of the said authority would merge in the order of the FAA. However, in the case under consideration, as stated earlier, issue of computation u/s. 115JB was never adjudicated upon.First four cases relied upon by the assessee support the view taken by us.Even on merits, we find that the issue stands decided in favour of the assessee as held by the Supreme Court in case of Vijaya Bank.Hence, in our opinion, the order of the FAA does not suffer from any legal infirmity.Confirming his order, we decide the effective ground of appeal against the AO.
Revenue's appeal dismissed
