NOTIFICATIONS/ INSTRUCTION
it16not81
NO TDS on payments made to Tirupati Devasthanams
F.No.225/195/2016-ITA II
Return-filing - Extension of due date - CBDT clarifies extension also applies to accounts audited as per Sec 44AB
FEMA Notification No 375
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Thirteenth Amendment) Regulations, 2016
CASE LAWS
2016-TIOL-2413-CESTAT-MUM + Story
VISHAL COLLECTION Vs CC: MUMBAI CESTAT (Dated: August 26, 2016)
Cus - Provisional release of seized goods - section 110A of Customs Act, 1962 applies only where matter is pending adjudication - since BE has been assessed, section 125 shall apply, according to which the assessee can take the release of the goods on payment of duty - Since confiscation of the goods has not yet concluded, therefore, the Bond for full value of the goods and Bank Guarantee of 25% has been correctly mandated by Commissioner - Orders upheld and appeals dismissed: CESTAT [para 4, 4.1, 5]
Appeals dismissed
2016-TIOL-2116-HC-AHM-VAT
ABC COTSPIN PVT LTD Vs STATE OF GUJARAT: GUJARAT HIGH COURT (Dated: Spetember 07, 2016)
Gujarat Value Added Tax Act, 2003 - Section 45 - Central Sales Tax Act, 1956.
Keywords: Debt - Immovable Property - Search - Nationalised Bank.
Whether provisional attachment to protect the interest of Revenue u/s 45 is justified when huge amount of debt is already due to the nationalized banks and material available suggest that the assessee has evaded payment of duty of sizable amounts - YES: HC
The assessee was a company and a registered dealer. It was engaged in the trading and manufacturing of cotton, cotton ginning and other related products. The Revenue carried out search operations at the premise of the assessee and seized large number of documents, laptops and hard-discs etc. Statement of the Director was also recorded. The Revenue issued orders to all the bankers of the assessee attaching as many as 14 different bank accounts. These orders of the Revenue were challanged by assessee before the High Court. It was submitted that the authorities had attached immovable properties of the company, when the VAT liability was yet to be ascertained by framing orders of assessment and in any case such assessments would be subject to further appeal and revisions. At this stage, therefore, attaching the bank accounts would be harsh and would effectively paralyze the business of the assessee company. The assessee had certain amount of refund due from Revenue for last AY, which in way secure the possible dues for current AY.
After hearing parties, HC held that,
++ the assessee is not in a position to dispute the averments made by the respondents in the affidavit-in-reply, particularly highlighting aspects that the assesseer had already mortgaged such immovable properties and availed huge credit facility from the banks and further that such information was withheld from the Court by the assessee. At our instance counsel for the assessee has filed a further affidavit dated 7.9.2016 in which the assessee has admitted to have mortgaged the properties for raising bank financing facilities. The assessee has attached various documents concerning the recovery proceedings instituted by such banks for the default by the assessee to repay the borrowings. Had the assessee disclosed such facts as the assessee was duty bound to do, surely the Court would not have granted relief to the assessee by lifting attachment of the bank accounts. As noted, the Court was primarily influenced by the assessee's assertion that the property situated at Mumbai is valued at nearly Rs.13.95 Crores. While so pointing out to the Court the assessee did not further reveal that against such property the assessee has obtained cash facility from the bank worth several hundreds of Crores of Rupees and for which the bank has instituted proceedings before Debts Recovery Tribunal and other judicial fora;
++ quite apart from this ground of conscious and blatant non-disclosure of most material facts by the assessee which led the Court into passing of interim order, which but for such suppression the Court would not have passed, even otherwise in facts of the case the petitioner has not made out any case for interference. When the assessee is in debt to nationalized banks to the tune of Hundreds of Crores of Rupees and when the department has also material to suggest that the assessee had evaded payment of duty worth sizable amounts, the Commissioner was well within his rights to exercise power of provisional attachment under Section 45 of the Act.
Assessee's petition dismissed
2016-TIOL-2115-HC-KOL-IT
CIT Vs EUREKA STOCK AND SHARE BROKING SERVICES LTD: CALCUTTA HIGH COURT (Dated: August 30, 2016)
Income tax - Sections 73, 147 & 148.
Keywords - apportionment of expenses - change of opinion - consequential business - reopening - set off of losses & speculative loss
Whether when the AO concerned has doubts with regard to the facts based on misrepresentation made by the assessee, it cannot be said that he subsequently changed his opinion when he issues notice seeking to disallow the loss earlier allowed expressly to be set off against the income arising out of the brokerage of shares - YES: HC
The assessee had filed its return declaring loss of Rs.80,01,831/- and the original assessment was passed accepting the same. However, subsequently the AO noted that the entire business of the assessee co. was not that of purchase and sale of shares but a part of its business was of purchase and sale of shares in which it incurred a loss of Rs.80,01,831/-. The assessee co. also did not fall under any of the tests excepting as laid down in provisions of Explanation to section 73. Hence such loss of Rs.80,01,831/- incurred in purchase and sale of shares should be treated as speculating loss. Further, as per P&L Act, it was found that the assessee's total expenses during the year was of Rs.1,6617959/-. Therefore, on apportionment of expenses among brokerage income, loss on purchase and sale of shares and other income, the expenses attributable to loss on purchase and sale of shares should be at Rs. 67,83,364/-. Taking into account the proportionate expenses, the speculative loss should be of Rs.147,85,195/- which was not to be allowed to set off against other income but to be carried forward for set off against any future speculation profit. In view of the same, the AO had reason to believe that the income charged to tax to the extent of Rs.1,47,85,191/- had escaped assessment. Hence proceedings u/s 147 was initiated by the AO. On appeal, the CIT(A) reversed the order of AO by holding that the reassessment was mere change of opinion.
Having heard the parties, the High Court held that,
++ it is noted that the assessee has actively misled the AO into believing that "in order to earn brokerage income, the share broker has to purchase or sale various sharesn on their own account also. This does not mean that this is a loss to the assessee. ….." The suggestion made by the assessee, it was not disputed by his counsel, was factually incorrect. The AO, who succeeded, realised that the assessee had misrepresented the facts to the earlier AO. He in the circumstances issued the notice u/s 148 and also recorded the reasons. It is not therefore a case of change of opinion. The facts have to be correctly understood by the concerned officer. When the concerned officer was under a misapprehension as regards the facts based on misrepresentation made by the assessee it cannot, in that case, be said that he subsequently changed his opinion when he issued notice seeking to disallow the loss earlier allowed expressly or impliedly to be set off against the income arising out of the brokerage of shares. It is not in dispute that originally the assessee had made a misrepresentation of fact which misled the AO in believing that the loss was suffered in the course of share broking business. Whereas the truth is that loss was suffered in sale and purchase of shares which had no connection with the business of the assessee as a share broker. There is in fact tangible material to come to the conclusion that income has escaped assessment. For the aforesaid reasons, the question is answered against the assessee. However, considering the view we have taken and considering that the CIT(A) and the Tribunal did not go into the merits of the matter, we refrain from expressing our views with regard to the other questions.
Case remanded
2016-TIOL-2114-HC-P&H-IT
JOSH BUILDERS & DEVELOPERS PVT LTD Vs PR CIT: PUNJAB AND HARYANA HIGH COURT (Dated: September 9, 2016)
Income tax - Sections 143(2) & 292BB.
Keywords - objection of assessee - service of notice & validity of notice
Whether two notices issued under different provisions of the Act to the same assessee can be dispatched under the same number - YES: HC
Whether objection raised by the assessee as regards the validity of a notice issued u/s 143(2) before filing of return, can similarly be taken to be an objection to any notice issued after the filing of return - NO: HC
The assessee is engaged in the business of Real Estate. During subject year, a survey operation u/s 133A was carried out at the business premises of the assessee's group, wherein an amount of Rs. 1,50,00,000/- was voluntarily surrendered by the group. Out of the aforesaid amount, Rs. 1,00,00,000/- was surrendered by the assessee as income from business. Thereafter, the assessee filed its return declaring the surrendered amount of Rs. 1,00,00,000/- under the head 'Closing Stock' in the credit side of its P&L A/c. However, its impact was nullified by setting off the same against business loss of the current year. However, in the final assessment, the AO being of the view that the assessee had deliberately tried to set off its undisclosed income with intent to escape liability of paying the due taxes, added the voluntarily surrendered amount of Rs. 1,00,00,000/- to its income for the relevant A.Y. On appeal, the CIT(A) was of the view that the notice u/s 143(2) which had been issued to the assessee beyond the time prescribed under proviso to Section 143(2)(ii), was invalid. Further, since there was no evidence of service of notice u/s 143(2) upon the assessee, the CIT(A) ordered the annulment of the assessment impugned before him. On appeal before the Tribunal, the Revenue submitted that at no point of time during the assessment proceedings, the assessee raised any objection with regard to non-service of notice, and therefore, in view of the provisions of Section 292-BB, the assessee could not raise the issue of non-service of notice and on the basis thereof, seek annulment of the assessment proceedings. The Tribunal, while agreeing with the CIT(A) that the notices were invalid, after accepting the above-referred submissions raised on behalf of the Revenue and relying upon the provisions of Section 292-BB, reversed the findings of the CIT(A) with regard to annulment of proceedings. Since the CIT(A) had decided the appeal of the assessee only on this issue, the matter was remanded back to adjudicate upon the appeal on merits.
Having heard the parties, the High Court held that,
++ it is true that the same number in the Dispatch Register has been allotted to both the notices, but that cannot lead to a conclusive determination that two notices, under different provisions of the Act, to the same assessee cannot be dispatched under the same number, especially when the Tribunal, after going through the Dispatch Register, has factually determined the issue against the assessee. The counsel for assessee further submitted that the findings recorded by the Tribunal that no objection had been taken by the assessee before the AO with regard to issuance of an invalid notice is wrong, as such objection had specifically been taken in the reply submitted by the assessee during the assessment proceedings. Upon perusal of the reply submitted by the assessee before the AO, it is seen that the objection so raised by the assessee before the AO was that the notice issued u/s 143(2) before 30th March, 2013 was invalid. Thus, such objection was taken only with regard to the earlier refused notice dated 28th Sep, 2012 and cannot be taken to be an objection to any notice issued after the filing of return by the assessee including the notice dated 20th Aug, 2013. From the above, it is abundantly clear that the Tribunal has essentially determined questions of fact. The conclusion being a possible view cannot be termed as perverse. Therefore, we are disinclined to interfere in the present appeal.
Assessee's appeal dismissed
2016-TIOL-2112-HC-MAD-IT
CIT Vs ISC INVESTMENTS & FINANCE PVT LTD: MADRAS HIGH COURT (Dated: August 08, 2016)
Income Tax Act - business income, business loss, interest income & set off of business loss.
Whether assessee is entitled to claim expenses where even after transfer of its business, the assessee retained a portion of the employees and infrastructure and by utilizing the said employees and infrastructural facilities, the assessee carried out a new contract work and earned business income - YES: HC
The assessee company, engaged in the business of providing automated teller machine (ATMs) infrastructural facilities under outsourcing, filed its return declaring loss. The Assessing Officer noticed that the assessee had received interest income of Rs.2,56,64,169/- and this interest income has been adjusted against business loss of Rs.2,86,09,185/-, apart from showing Rs.7,00,000/-, as income during the assessment year 2008- 09. The Assessing Officer was of the view that the assessee had transferred its business in the financial year 2004-05 to F through business transfer agreement, and by virtue of this agreement, the assessee sold its business in the year 2005, and that the assessee was barred from entering into same line of business for three years. According to the assessing officer, in the absence of any business activity during the assessment year 2008-09, the expenses claimed by the assessee were not prima-facie incidental to business and therefore, the interest expenses could not be allowed to set off against business losses. Assessing Officer assessed the income of the assessee under Section 143(3). CIT(A) allowed the appeal of the assessee. ITAT held that the assessee has not transferred the entire undertakings but only portion of it was transferred by way of business transfer agreement and the assessee has carried on the business of job work of outsourcing of ATMs business in the financial years 2005-06 and 2006-07 and earned income with the very same M/s. F to whom part of the business was already sold. It was held that the assessee had retained portion of employees and infrastructure i.e. fixed assets like computers, electrical equipments, furniture etc. and during the financial year 2007-08 relevant to the assessment year under consideration, the assessee utilizing the said employees, manpower and infrastructural facilities carried out a new contract work for M/s. C and earned business income. Therefore, the assessee is engaged in the business during the assessment year 2008-09, hence, loss is to be allowed.
Having heard the parties, the court held that,
+ the Commissioner of Income-Tax (Appeals)-II, has categorically held that even after transfer of "outsourcing of ATMs business" to M/s. F in 2005, the assessee has retained a portion of the employees' and infrastructure (fixed assets like computers, electrical equipment, furniture etc). Similarly, after perusal of the depreciation schedules of the financial years 2005-06, 2006-07 and 2007-08, the appellate authority has also found that even after transfer of "outsourcing of ATMs business" to M/s. F, the assessee was carrying on job-work business to M/s. F, during the financial years 2005-06 and 2006- 07. It is also the finding of the appellate authority, infrastructural facilities have been retained in the financial year 2007-08, as well. (para 10)
++ the appellate authority has also found that by utilizing the said employees and infrastructural facilities, the assessee has also carried out a new contract work for M/s. C and earned a business income of Rs.7,00,000/-, which was also included in the Profit and Loss Account and offered to tax in the assessment year 2008-09. The appellate authority has also noticed that the assessing officer has acknowledged the said contract receipts, by allowing credit for TDS, but surprisingly, ignored the said income, while computing the income under the head 'income from business'. (para 11)
++ analysing the reasons given by both the Commissioner of Income Tax (Appeals), the appellate authority and the ITAT, there is proper appreciation of evidence. (para 13)
++ a substantial question of law does not arise on the findings of fact, unless it is substantiated that there is perversity. (para 14)
++ the substantial questions of law, raised by the Revenue, are answered against them. (para 15)
Revenue's appeals dismissed
2016-TIOL-2111-HC-MAD-CX
RAJ PETRO SPECIALITIES PVT LTD Vs PR CCE: MADRAS HIGH COURT (Dated: August 03, 2016)
Central Excise – SCN issued as to why an amount quantified under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 towards reversal of CENVAT Credit availed on the exempted service of trading should not be demanded and recovered from the petitioner under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11 A(4) of Central Excise Act, 1944; Why interest and penalty should not be imposed and why an amount debited by the petitioner should not be appropriated against the amount demanded as CENVAT credit apart from levying interest and cess .
Held: the petitioner cannot maintain this Writ Petition to quash the impugned order, which is only a Show-Cause Notice - whether the Show-Cause Notice is barred by limitation in terms of Section 11A(7) of the Central Excise Act is essentially a question of fact - the reversal of appropriate input tax done by them and the claim for revision effected by them and the impact of those proceedings on the impugned Show-Cause Notice is also a factual issue - the action initiated by the petitioner based on audit paras has not attained finality pursuant to the petitioner's claim for refund on 26.09.2013 and SCN was issued on 23.09.2014 – Hence, such issue cannot be taken to have attained finality - Court would not be justified in interdicting the proceedings at the stage of Show-Cause Notice - the petitioner has to necessarily subject himself to the proceedings initiated by the first respondent and submit their reply to the Show-Cause notice - Court is not inclined to interfere with the impugned Show-Cause Notice and the Writ Petition fails and the same is dismissed.
Petition dismissed
2016-TIOL-2110-HC-KERALA-ST
SHERIN HI FABS Vs ACST: KERALA HIGH COURT (Dated: August 10, 2016)
Service Tax - order of assessment passed by the Commissioner of Central Excise by which the proposal for demand of service tax was confirmed - petitioner was directed to pay the amount with penalty – on appeal before the appellate authority, it was rejected – petitioner preferred a further appeal – During the pendency of appeal, the petitioner was served notice again – petitioner contended that once the appeal has been filed before the Tribunal along with the pre-deposit as contemplated under Section 35F of the Central Excise Act, there is an automatic stay of further proceedings and therefore, it is liable to be revoked – Hence, Petition filed challenging Ext- P5.
Held: since the matter is pending before the Tribunal, it is for the Tribunal to consider whether there is any delay in filing the appeal or not - no reason why this Court should consider the matter – However, until such time pendency of Ext.P5 may cause substantial difficulty to the petitioner - Since no action has been taken by the respondents to withdraw Ext.P5 notice, it would be appropriate for this Court to interfere at this stage of proceedings to dispose the petition by directing for Ext.P5 notice to be kept in abeyance until a final decision is taken by the Tribunal and that The 1st respondent shall issue appropriate orders in this regard and communicate the same – (Para 4).
Petition disposed of
2016-TIOL-2109-HC-AHM-ST
UCB INDIA PVT LTD Vs UoI: GUJARAT HIGH COURT (Dated: August 9, 2016)
Service Tax - petitioner is a company registered under the Companies Act and is engaged in manufacture, marketing and distribution of pharmaceutical products and a subsidiary of UCB S.A., Belgium - Commissioner of Service Tax, Daman issued a SCN to the petitioner demanding service tax on expenses towards the sales promotion - According to the authorities, these activities appeared to be covered under the category of 'Business Auxiliary Service' and the petitioner was therefore, liable to pay service tax on the same - in background of such facts that the competent authority issued SCN notices calling upon the petitioner to show cause why services tax with interest and penalty be not recovered and notice for a lesser demand for the subsequent period was issued - Commissioner of Service Tax passed the impugned order for both the show cause notices and confirmed the service tax demand with interest also imposed penalty under Section 76 of the Finance Act,1994 – Hence, the present petition.
Petitioner submits that they had incurred sales promotion expenses to promote its products in the market - such sales promotion services were obtained by the petitioner from Indian service providers and the consideration for such services was paid to Indian service providers and that therefore, the petitioner had no liability to pay any service tax.
Held: The entire case of the department under the show cause notice rests on this single premise that the petitioner has made payments for various services in the nature of Business Auxiliary Service - The final order merely deals with the objections of the petitioner and rejects them by confirming prima facie assertions recorded in the show cause notice to finally come to the conclusion that the petitioner was required to pay service tax for the Business Auxiliary Service - Elaborate and empathetic objections of the petitioner to this effect were discarded –no case set up by the department that in the present case, reverse charge mechanism applies - If the case of the department was that the petitioner had provided services to its parent company situated in Belgium no such foundation has been laid - therefore proceeded on undisputable fact the petitioner had availed of Business Auxiliary Service for which expenditure was incurred - the question of making the petitioner liable to pay service tax simply does not arise - no such case has been set up by the department that the petitioner had received any taxable service which would fall under Section 66A of the Act - the Commissioner had no jurisdiction to levy tax in absence of any finding that the petitioner had provided a taxable service - relegating the petitioner to appellate remedy would be futile - When the show cause notices themselves are clear and which would not permit the department to levy service tax from the petitioner on the alleged facts, even if they were duly established, no useful purpose would be served in remanding the proceedings to the Commissioner – Hence, the order is set aside – (Para 7-16).
Petition allowed
2016-TIOL-2108-HC-MAD-CUS
ARPITA TELECOM AND COMPUTER SERVICES PVT LTD Vs CC: MADRAS HIGH COURT (Dated: August 09, 2016)
Customs - import of certain goods for supply to the Indian Air Force - paid duty - imported goods were installed in the establishments of the Indian Air Force - After installation Indian Air Force, Bangalore, issued a customs duty exemption certificate that these items are covered under the exemption notification and are eligible for exemption from payment of customs duty - the petitioner filed a refund application before Assistant Commissioner - SCN is issued as to why the claim should not be rejected for non submission of certain documents - Petitioner submitted that he is willing to submit the required documents - in respect of re-assessed copy of the Bill of Entry, the petitioner requested the second respondent by a representation for re-assessed Bill of Entry by relying upon an exemption notification and taking note of the customs duty exemption certificate issued by the Defence Establishment which is still pending.
Held: Writ petition disposed off directing the second respondent to consider the petitioner's representation on merits and pass appropriate orders on merits and in accordance with law based on the personal hearing - (Para 9).
Petition disposed of |
