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stnot16_039

Services provided by Govt. or a local authority by way of allowing a business entity to operate as a telecom service provider or use RF spectrum during the period prior to 01.04.2016 on payment of licence fee or spectrum user charges exempted - Notfn. 25/2012-ST, Entry 62 amended

CASE LAWS

2016-TIOL-2321-CESTAT-DEL + Story

MSS FOODS PROCESSORS Vs CCE, C & ST: DELHI CESTAT (Dated: June 23, 2016)

2016-TIOL-1994-HC-MUM-IT

ZUARI AGRO CHEMICALS LTD Vs CIT: BOMBAY HIGH COURT (Dated: August 19, 2016)

Income Tax - Sections 35D & 256(1)

Keywords - Expenses on travelling and retainer fee - Payment to promoters

Whether the expenses on travelling and retainer fees paid in connection with the Nagarjuna Project are revenue in character and should be allowed as a deduction in computing the assessee's income - NO: HC

Whether the amount paid to promoters for reimbursement of project development expenditure is eligible for relief u/s 35D of the Act even when the expenditure is incurred before incorporation though reimbursed later - YES: HC

The assessee is a Company. It filed return for relevant AY. During assessment process, AO noted that for its Nagarjuna Project, assessee had claimed expenses on travelling and retainer fees as Revenue Expenses. Also assessee claimed deduction u/s 35D of the Act being the payment made to its promoters. This payment to promoters was for the expenditure incurred by them for project development. This amount was paid by the assessee after its formation. The Assessing Officer, Commissioner of Income Tax (Appeals) and the Tribunal disallowed the claim of assessee. Matter finally reached before the High Court.

After hearing parties, HC held that,

++ Mr. Toor, the counsel for the applicant-assessee very fairly states that the issue arising herein stands concluded against the applicant-assessee and in favour of the Respondent-Revenue by the decision of this Court in Commissioner of Income Tax v/s. J. K. Chemicals Ltd. In the above view, the question as framed for our opinion is answered in the negative i.e. in favour of the Respondent-Revenue and against the applicant-assessee;

++ 5. Regarding Question no.(ii):

(b) Mr. Toor, the learned counsel for the applicant-assessee points out that the identical question as referred to herein above has been considered and decided in the Reference made for A.Y. 1975-76 being Income Tax Reference No.59 of 1991. A copy of the decision of this Court in the Reference for A.Y. 1975-76 tendered across the bar and it is reported in (2012) 251 CTR 233. We find that an identical question as raised herein has been answered by the above decision in favour of the applicant-assessee and against the respondent-revenue.

(c) Therefore, the question as framed for our opinion is answered in the negative i.e. in favour of the applicant-assessee and against the Respondent-Revenue.

Assessee's appeal partly allowed

2016-TIOL-1993-HC-DEL-IT

SUN PHARMACEUTICAL INDUSTRIES LTD Vs DCIT: DELHI HIGH COURT (Dated: August 10, 2016)

2016-TIOL-1992-HC-AHM-ST

CCE & ST VS GUJARAT STATE FEDERATION OF COOPERATIVE SUGAR FACTORIES LTD: GUJARAT HIGH COURT (Dated: August 19, 2016)

ST - Club's or Association's membership service - Assessee is collecting subscription from their members of federation - Issue is already dealt with by Court in case of Sports Club of Gujarat Ltd. 2013-TIOL-528-HC-AHM-ST, where Court followed the judgment of Division Bench of Jharkhand High Court at Ranchi in matter of Ranchi Club Ltd. 2012-TIOL-1031-HC-JHARKHAND-ST - Merely collecting the subscription from their members would not take assessee in ambit of Section 65 of FA, 1994: HC

Appeal rejected

2016-TIOL-1991-HC-ALL-CT

TATA MOTORS LTD Vs CIT: ALLAHABAD HIGH COURT (Dated: September 2, 2016)

U.P. Trade Tax Act, 1948 - Sections - 15A(1)(g) & 28B.

Keywords - Form 34 - Hire purchase agreement - Sale - Penalty.

Whether presumption u/s 28B of the Act is the rebuttable presumption and is only indicative of the person upon whom the burden of proof initially lies and rests - YES: HC

Whether to break the rebuttable presumption all that a person is obliged to do is to establish by way of evidence that the real fact is not as presumed - YES: HC

Whether a presumption made against the assessee to be the owner of vehicle should be declined when necessary delivery challans and sale invoices are produced as evidences - YES: HC

Whether assessee being no longer the owner of vehicle in question is not liable to pay tax and penalty imposed - YES: HC

The assessee is a Company, engaged in the business of manufacture and sale of motor vehicles, chassis and other parts. For the purposes of effecting sales of the articles manufactured by it, it establishes regional sales offices in various States throughout the country. During the relevant AY, a motor vehicle was sold by it to M/s Motor & General Sales Limited, Karnal, Haryana. The said vehicle was given by M/s Motor & General Sales on hire purchase basis to one Sri Naseem Ahmad. It transpires that Sri Naseem Ahmad obtained a Form 34 at the entry check post at Kairana, District Muzaffarnagar for the purposes of taking the vehicle in the State. This Form 34 was not got cancelled at the exit checkpost of the State of U.P. This conduct was in violation of section 28B of the Act. Hence tax and Penalty was levied upon the assessee by the Revenue, on the ground that a hire purchase agreement by its very nature did not result in a sale or a transfer of property in goods and assessee, therefore, continued to be the owner of the vehicle and was liable to be proceeded against for violation of the provisions of Section 28B.The assessee assailed both the levy of tax as well as the imposition of penalty. It was submitted that the vehicle in question had been sold to M/s Motors and General Sales Limited at Karnal in the State of Haryana. Since the sale had taken place at Haryana itself, the presumption of sale which stands engrafted in Section 28B of the 1948 Act did not arise. It was also contend that the hirer in view of the explanation appended to Section 28B was deemed to be the owner of the vehicle. Hence assessee was not liable to pay tax and penalty.

After hearing parties, HC held that,

++ it becomes pertinent to note here that the presumption of sale embodied in Section 28B has been held to be a rebuttable presumption in Sodhi Transport Co. Vs. State of U.P. 1986);

++ court finds that a vehicle sales invoices cum delivery challan dated 24 March 1992 also existed. This invoice established a sale of the chassis by the revisionist to Motor and General Sales Limited Karnal. The vehicle was identified both by chassis number as well as engine number. On 5 June 1992 Motor and General Sales Limited Karnal drew up a sale certificate and delivery receipt in favour of Naseem Ahmad. These documents too identified the vehicle both by its engine and chassis number. Emphasis has been deliberately laid upon this aspect in order to indicate that the vehicle in question stood appropriated to the contract by identification of its chassis and engine numbers. The hire purchase agreement was of course between the revisionist and Naseem Ahmad and came to be executed on 29 June 1992. The issue which therefore primarily arises is whether the rebuttable presumption which stood raised under Section 28B stood discharged or not. As was noted in Sodhi Transport a rebuttable presumption is not evidence and is only indicative of the person upon whom the burden of proof initially lies and rests. A rebuttable presumption is clearly distinct from one which is conclusive in character. Under a rule of rebuttable presumption all that a person is obliged to do is to establish by way of evidence that the real fact is not as presumed. The character of the burden of proof placed upon the party has been described by the Supreme Court by the use of the words "fairly and reasonably tending to show". It has then been explained that if the evidence tendered tends to show that the real fact is not as presumed, the purpose of the statutory presumption is over and it is then for the party concerned by way of evidence to establish the true nature of the fact. The respondents in the present case had before them not just the invoices of sale executed by the revisionist in favour of Motor and General Sales Limited but also the delivery and sale invoice executed in favour of Naseem Ahmad. These documents evidenced a sale by way of hire purchase outside the State of U.P. The documents and evidences so led clearly tended to dislodge the rebuttable presumption raised. Whether the test of "tending to show" is applied or the test of "preponderance of probability", it is apparent that the presumption raised against the revisionist stood clearly discharged. In the opinion of this Court the evidence led before the respondents was clear and convincing and worthy of being placed in the category of evidence which fairly and reasonably showed that the real fact was not as presumed;

++ additionally, this Court finds merit in the submission of Sri Agarwal who relying upon the principles enunciated by the Supreme Court in Asea Brown Boveri submitted that the owner of the vehicle was for all practical purposes Naseem Ahmad and that therefore the levy of tax and imposition of penalty was clearly unjustified. The Supreme Court in Asea Brown Boveri held as under:

"In our opinion, financial lease is a transaction current in the commercial world, the primary purpose whereof is the financing of the purchase by the financier. The purchase of assets or equipments or machinery is by the borrower. For all practical purposes, the borrower becomes the owner of the property inasmuch as it is the borrower who chooses the property to be purchased, takes delivery, enjoys the use and occupation of the property, bears the wear and tear, maintains and operates the machinery/equipment, undertakes indemnity and agrees to bear the risk of loss or damage, if any. He is the one who gets the property insured. He remains liable for payment of taxes and other charges and indemnity. He cannot recover from the lessor, any of the above mentioned expenses. The period of lease extends over and covers the entire life of the property for which it may remain useful divided either into one term or divided into two terms with clause for renewal. In either case, the lease is noncancellable." (emphasis supplied);

++ whether Naseem Ahmad is treated to be the owner of the vehicle for all practical purposes or is viewed as the person in charge of the vehicle, the liability of tax and penalty foisted upon the assessee is unjustified and cannot be sustained. Accordingly, these revisions shall consequently stand allowed. The orders of the authorities below are set aside. The questions are answered in favor of the assessee.

Assessee's revision application allowed