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2016-TIOL-166-SC-IT
PK ASOKAN Vs CIT: SUPREME COURT OF INDIA (Dated: September 23, 2016)
Income Tax - Section 147.
Keywords: reassessment of income - interest - penalty.
Whether when the High Court, after analyzing the facts of the case, has passed an order in favour of the assessee, it is justified on part of the assessee to re-argue the same before the Apex Court with no change of circumstances - NO: SC
The assessee is an Individual. The assessment in case of assessee was reopened by the assessing officer. On appeal, the High Court had decided the issue in assessee's favour and held that no reassessment can be made.
The Apex Court held that,
++ we are not inclined to interfere with the reassessment order passed by AO which has been confirmed by the HC. However, in the peculiar facts of these cases, we are of the opinion that penalty should not have been imposed. The impugned order as also the assessment order is accordingly modified with the observation that though the petitioner(s) shall be liable to pay the amount of tax calculated along with interest thereupon, the penalty imposed against him stands quashed. The special leave petitions are disposed of accordingly. Application(s) pending, if any, shall be disposed of.
Assessee's appeal partly allowed
2016-TIOL-165-SC-CT
COMMERCIAL MOTORS LTD Vs COMMISSIONER OF TRADE TAX : SUPREME COURT OF INDIA (Dated: September 11, 2015)
U.P. Trade Tax Act, 1948 - Whether SCN issued under Section 21(2) of the Act seeking to reassess the assessee in respect of assessment year 1990-91 of which assessment was completed on 25.3.95 is valid and acceptable in law - Assessment year in question is 1990-91 or year ending 31.3.1991 - Original assessment order is dated 25.2.1995 and the notice for reassessment is dated 13.3.2002 - For the purpose of limitation under Section 21(1) and first proviso, period of limitation is to be counted from end of the relevant assessment year i.e. 31.3.1991 - Thus, notice dated 13.3.2002 was beyond six years or even eight years of the end of assessment year i.e. 1990-91.
Legislature has brought the amendment by reducing period from eight years to six years - The language employed in proviso has to be carefully scrutinised and appreciated - It is worth noting the period was reduced to six years, however, in language used, the outer limit has been fixed either six years or March 31, 2002 and, therefore, latter part of proviso also specifying the date 31st March, 2002 has to be appositely interpreted - The amendment, as we perceive, is not only beneficial to assessee but also intends to protect interest of revenue - Logical corollary is that the legislative intent was not to do away and erase the limitation period, but the date "March 31, 2002" was incorporated only to protect the cases which could be earlier governed by a limitation period of eight years - Thus, 2001 amendment is not fully retrospective, but it is partly retrospective - It reduces the limitation period from eight years to six years and simultaneously protects and safeguards the interest of the revenue in respect of cases within eight years and six years provided the reassessments are completed by 31st March, 2002 - Initiation of the re-assessment proceeding is set aside being barred by limitation: SC
Appeals allowed
2016-TIOL-2316-HC-AHM-VAT
STATE OF GUJARAT Vs BHARAT PEST CONTROL: GUJARAT HIGH COURT (Dated: September 22, 2016)
Value Added Tax Act, 2003 - Sections 2(10), 2(13), 2(23) & 80.
Keywords - Pest Control - Service - Transfer of property.
Whether the works contract for pest control involving the use of pesticides and chemicals is the pure process of rendering services - YES : HC
Whether the works contract for pest control would involve sale and supply of goods as per Section 2(13) and 2(23) of the Act - NO : HC
Whether a works contract for pest control would lead to transfer of property in goods making the transaction exigible to value added tax - NO : HC
The assessee was a proprietary concern and a registered dealer engaged in the business of providing pest control service to various commercial establishments. The assessee was awarded a work order by Reliance Industries for carrying out pest control measurements in the premises of the company. The State Government holds belief that the pesticides and other raw materials used by the assessee in execution of such contract would be exigible to value added tax, on the basis that in the process, there had been sale of such goods. The assessee however contended that the contract was one for providing service. The title in the goods in question never passed from the assessee to the company who had awarded such contract.The assessee approached the Joint Commissioner of Commercial Tax by filing an application u/s 80 of the VAT Act, which held that this transaction would fall within clause( b) of subsection (23) of section 2 of the VAT Act. The assessee challenged this order before the Value Added Tax Tribunal, which reversed the decision of the Joint Commissioner. The pesticides and chemicals used by the assessee were for the purpose of treatment against pests and rodents and were consumed in the process of rendering service. Aggrieved Revenue filed appeal before the HC.
HC held that,
++ from the terms of contract, it can thus, be seen that the assessee was awarded the contract for pest control measures at the office of factory premises of the company situated within the SEZ area. The contract would include complete treatment of pest control and rodent control, for which, the assessee would use the pesticides and chemicals of reputed companies. In essence therefore, this was a contract for carrying out the pest control service which would require special knowhow and use of pesticides in recommended measures. The concentration of the pesticides, the amount of usage, the places to be applied and all other relevant aspects would be a matter of considerable technical expertise. The use of the pesticides in the process was wholly incidental. The dominant purpose was to provide a composite pest control and rodent control service. The use of pesticides and chemicals was wholly incidental. There was no intention of sale of goods from the assessee to the company;
++ the Patna High Court in case of Pest Control India Ltd. v. Union of India and others, reported in 75 STC 188 Patna, examined a question very similar to one on hand before us. The Division Bench in the context of pest control service rendered by the assessee held that in execution of such a contract, the chemicals are sprayed through machines so that when the process ends; the chemicals were consumed and nothing tangible remained in which the property is transferred. Such a transaction does not involve transfer of any goods as understood in subclause (b) of clause (29A) of Article 366. Such a contract is a pure service contract and no sales tax is leviable. This decision was followed by Kerala High Court in case of The Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M.K. Velu, reported in 89 STC 40 (Ker) in the context of levy service tax on the explosives consumed in exhibition of fire works. The decision was also followed by the same High Court in case of Microtrol Sterilization Services Pvt. Ltd. v. State of Kerala, reported in [2009] 26 VST 213 in the context of the contract for sterilization of goods. The assessee would use ethylene oxide. In the process of such sterilization, it was found that no trace of such chemical would be left in such sterilized goods and that therefore, property in the goods did not pass to the customers. Value of ethylene oxide was not exigible to tax. Likewise, in case of Dynamic Industrial and Cleaning Service reported in 97 STC 564, Single Judge of Kerala High Court held that the chemicals used by the assessee in the business of cleaning boilers in thermal power stations and fertilizer plants were only in aid of the work undertaken by it as a cleaning agent. There was no transfer of such goods and no sales tax would therefore be payable.
Revenue's appeal dismissed
2016-TIOL-2315-HC-AHM-IT
BAPUNAGAR MAHILA CO OP BANK LTD Vs DCIT : GUJARAT HIGH COURT (Dated: September 27, 2016)
Income Tax - Section 68
Keywords - Creditworthiness - FDR - reopening
Whether reopening of assessment in case of a bank by invoking Section 68 would be maintainable - No: HC
Whether Section 68 would be applicable in case of a bank - No: HC
The assessee is a cooperative bank. It filed the return of income declaring nil income after claiming deduction u/s 80P(2). AO took such return in scrutiny. He passed the order of assessment u/s 143(3) determining nil income of the assessee by allowing deduction u/s 80P(2) of the Act. AO sent notice to reopen assessment. In the notice for reopening it was stated that 250 FDR Accounts were opened in the bank without properly identifying the person and their creditworthiness, thus, income in the form of acceptance of 250 FDRs pertaining to the relevant AY, had escaped assessment. The petitioner raised objections to the said notice of reopening. However, such objections were rejected. Aggrieved assessee preferred an appeal.
Having heard the parties, the High Court held that,
++ for two reasons, the impugned notice must be set aside. Firstly, the AO had tried to tax the income in the hands of the assessee bank. This order was set aside by the Commissioner(A) on merits holding that section 68 of the Act could not be invoked. Before the Commissioner(A), the question was not whether the income would be taxable in the relevant AY or its subsequent year. Plain question was whether the order of assessment invoking section 68 of the Act in case of the bank was proper or not. That being the question, the AO cannot without there being anything further on record, reopen the assessment of the same assessee for an earlier year on the same grounds. His attempt to tax income for the subsequent AY by passing order of assessment and his action of reopening the assessment of the same assessee on the same ground for the relevant AY, would be incongruent. It may be that the Tribunal upheld the order of the Commissioner(A) on two ground. Firstly, on the ground of additions and also fleetingly on the question of correct year under which the same could be done. This would neither expand the scope of the order passed by the Commissioner(A) nor convert the proceedings into one in which the higher authority could be seen to have held that the additions though justified were made in a wrong assessment year. Secondly, even on merits, the Tribunal has finally concluded against the Revenue that in facts of the case, section 68 cannot be invoked in case of the bank, a view with which we have a strong prima facie agreement.
Assessee's petition allowed 2016-TIOL-2314-HC-AHM-IT
UDHNA UDYOG NAGAR SAHKARI SANGH LTD Vs SHAILENDRA LODHA OR HIS SUCCESSOR : GUJARAT HIGH COURT (Dated: September 26, 2016)
Income Tax - Sections 139, 142(1), 143(1), 143(2), 147, 148 & 150(1). Keywords: period of limitation - issue of notice - unamended provision - expiry - service of notice.
Whether when on the date of issue of notice by the AO, amended provisions has already taken place, the AO is authorized to issue a notice as per such amended provision, as he is not bound by the unamended provision which has lost its precedent value - YES: HC
The assessee is a co-operative society registered under the Gujarat Co-operative Societies Act and is engaged in development of real estates. For the AY 2007-08, the petitioner filed the return of income on 21.08.2007. As per the then prevailing proviso to section 143(2), AO could not serve the notice on the assessee after expiry of twelve months from the end of the month in which the return was furnished. The outer limit as per this provision worked out to 31.08.2008. This proviso was, however, substituted w.e.f. 01.04.2008 which provided that no such notice could be served after expiry of six months from the end of the financial year in which the return was furnished. Thus, from computing the period of limitation from the end of the month during which the return was filed it was shifted to a period of six months from the end of financial year in which the return was furnished thereby bringing a greater uniformity of the last date for issuing the notice in case of commonly placed class of assessees. As per the proviso to sub-section (2) of section 143 which prevailed at the time of filing of the return, notice could be issued by AO latest upto a period of twelve months from the end of the month in which the return was filed. In case of present assessee, therefore, such notice could be issued latest by 31.08.2008. Under the Finance Act,2008, this proviso was, however, amended w.e.f. 01.04.2008 and the period for issuance of notice was changed to expiry of six months from the end of the financial year in which the return was furnished. In effect, therefore, by virtue of this amendment, such notice could be issued latest by 30.09.2008. AO issued such a notice on 18.09.2008.
Held that,
++ we may record that the Finance Act 2008 received assent of the President on 10.05.2008 and was published in official gazette on the same day. By 10.05.2008 therefore, this provision formed part of the statute and was given effect of 01.04.2008. For two reasons the contention of the petitioner cannot be accepted that such a provision cannot be applied to the petitioner. Firstly, on the date when such notice was being issued, the amended provision had already come into force. More particularly, this amendment was made effective from 01.04.2008 by the law which was passed on 10.05.2008 and thus, both the events took place long before the last date for serving of notice in case of the petitioner as per the unamended provision. We may recall, as per the unamended provision such a notice could be served latest by 31.08.2008. Long before that, the statutory provision underwent a change by virtue of which such a notice could be served latest by 30.09.2008. The Assessing Officer was, thus, authorized to issue such a notice as per the amended provision. He was not bound by the unamended provision since the same had already been amended long before the final date for serving of notice even as per the unamended provision had expired. This is therefore, not a case where a vested right is being taken away by amendment in the statute. The notice under section 143(2) had not yet become time barred by the time amendment in the statute took place. In the result, the petition is dismissed. Rule is discharged. Interim relief, if any, stands vacated.
Assessee's appeal dismissed 2016-TIOL-2313-HC-MUM-CX + Story
JBM AUTO LTD Vs UoI : BOMBAY HIGH COURT (Dated: September 26, 2016)
CX - Findings that the disclosures are honest and yet there is suppression and mis-declaration of facts cannot be reconciled – Remark made by Settlement Commission in final order deleted - petitioner will not derive any benefit in the form of refund of duty, interest and penalty already paid under the order of the Settlement Commission : High Court [para 7]
Petition allowed 2016-TIOL-2312-HC-MUM-ST
MUMBAI INTERNATIONAL AIRPORT PVT LTD Vs CST: BOMBAY HIGH COURT (Dated: September 26, 2016)
ST - Notice of motion moved by CST that the bid amount of M/s. SGI Commex Limited falls short of the reserve price to the extent of 81.8%; that Commissioner of Service Tax as also the Board of Excise and Customs have not given their approval to the sale - advocate appearing for the bidder, on instructions, states that the bidder would not like to precipitate the matter and would like to withdraw from the bid - the bid was dated 18th August, 2016 and validity of the same expired on 18th September, 2016 - bid is, therefore, no longer valid on the option having been exercised in terms of this clause - Respondent no. 3 was asked whether it would be in a position to place before the court some details of an independent third party/agency which has expertise in conducting a sale or auction of an aircraft and that professional body carries out the job in transparent manner - respondent seeks one week's time - High Court clarifies that it would be entirely for the bidder who has exercised the option, to enforce whatever rights and available to it in law insofar as the recovery of sums paid till date - Matter placed on 6 th October 2016: High Court [para 4 to 6]
Notice of motion disposed
2016-TIOL-2311-HC-MUM-CX
CCE Vs NARENDRA PLASTIC PVT LTD: BOMBAY HIGH COURT (Dated: September 26, 2016)
CX - Revenue raises the contention of non maintainability of the appeal and that too before the Commissioner of Central Excise (Appeals).
Held: legal position is enunciated in the Larger Bench judgment and order in case of Gaurav Pharma Ltd. - 2015-TIOL-2541-CESTAT-DEL-LB that appeal against an order of provisional release passed u/s 110A of the Customs Act, 1962 is maintainable before the the first appellate authority – no substantial question of law arises for determination and consideration of this court – same is kept open for deciding in appropriate case – appeal disposed of: High Court [para 4, 5]
Appeal disposed of
2016-TIOL-2310-HC-P&H-CX
CCE Vs NATIONAL FERTILIZERS LTD: PUNJAB AND HARYANA HIGH COURT (Dated: September 27, 2016)
CX - Section 11AA of the CEA, 1944 provides that if an assessee fails to pay duty within three months from the date of determination, he is liable to pay interest thereafter - Explanation 1 and 2 thereof will not be applicable in the present case as the duty determined has not been reduced or increased by the appellate authority - Rather, it is a case where the Tribunal finding merit in the contention raised by the respondent remanded the matter back to the adjudicating authority for fresh determination of the amount of duty payable, which necessarily means that the impugned order had lost its significance and it is only the order passed after remand, which would be applicable and enforceable - Once there is no delay in deposit of duty by the respondent after passing of the order passed by the adjudicating authority in remand proceedings, in view of Section 11AA of the Act, the demand of interest is not justifiable – No substantial question of law – Revenue appeal dismissed: High Court [para 8, 11]
Appeal dismissed
2016-TIOL-1739-ITAT-PUNE
GAJANAN CONSTRUCTIONS Vs DCIT: PUNE ITAT (Dated: September 23, 2016)
Income tax - Sections 154, 200A(3) & 234E.
Keywords - belated filing of TDS return - intimation u/s 200A(3) - late filing fees - onus to prepare statement & power to levy.
Whether where tax has been deducted at source by a deductor out of the account of deductee, then the onus is upon the deductor u/s 200 to prepare a statement in which the particulars of TDS are to be provided and the said statement is to be delivered within such time as may be prescribed - YES: ITAT
Whether the prescribed authority has been vested with the power to charge fees u/s 234E only with regard to levy of fees by the substitution made by Finance (No.2) Act, 2015 - YES: ITAT
Whether once the power has been given under which any levy has to be imposed upon tax payer, then such power comes into effect from the date of substitution and cannot be applied retrospectively - YES: ITAT
Whether in the absence of enabling provisions, the AO while processing the TDS statements, even if the said statements are belated, is not empowered to charge the fees u/s 234E - YES: ITAT
Whether the amendment brought in by the Finance Act, 2015 w.e.f June 1st, 2015 by way of insertion of clause (c) to section 200A(1) is prospective in nature and hence cannot be applied to the pending assessments - YES: ITAT
Whether once intimation issued u/s 200A(1) is appealable order before the CIT(A) u/s 246A(1)(a), then such appealable order passed by the CIT(A) u/s 250 is also appealable before the ITAT u/s 253 - YES: ITAT
The assessee was required to deduct TDS out of payments made on account of salary, interest, etc. for the respective quarters in the accounting period and accordingly it was required to file quarterly TDS returns intimating the tax deducted at source from various payments made in each of the quarter. However, in the present case, TDS returns were filed belatedly. The AO while processing the TDS returns issued intimation to the respective assessee u/s 200A and levied late filing fees u/s 234E. Aggrieved by the said intimation, in some of the cases, the assessee in some cases filed an application u/s 154. However, the same were also dismissed by the respective AOs.
Having heard the parties, the Tribunal held that,
++ the issue arising in this bunch of appeals is against levy of fees u/s 234E. U/s 199, it is provided that any deduction made in accordance with the provisions of Chapter and paid to the Central Government shall be treated as payment of tax on behalf of the person from whose income the deduction was made. U/s 200(1), it is provided that any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. U/s 200(2), any person being an employer, as referred to u/s 192(1A) shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. Rule 31A provides that every person who is responsible for deduction of tax under Chapter XVIIB shall in accordance with the provisions of section 200(3), deliver or cause to be delivered, the quarterly statements to the Director General of Income Tax (Systems) or the persons authorized by them i.e. in respect of deductions under various provisions of the Chapter XVIIB. Once such statement has been so submitted by the deductor of tax deducted at source, then processing of statement is as per the provisions of section 200A. Section 234E(1) provides that where a person fails to deliver or cause to be delivered, a statement within time prescribed in section 200(3) or the proviso to section 206C(3), he shall be liable to pay, by way of fees, sum of Rs.200/- for every day during which the failure continues. A perusal of the above said provisions of the Act transpires that where tax has been deducted at source by a deductor out of the account of deductee, then the onus is upon the deductor u/s 200 to prepare a statement in such form and verified in such manner which is prescribed under the Act in which the particulars of TDS are to be provided and the said statement is to be delivered or cause to be delivered within such time as may be prescribed. Rule 31A provided the time limit for the furnishing of statement for tax deduction at source on quarterly basis. Section 234E levies fees for default in furnishing the statements of tax deducted at source. Such fees is to be paid before delivering or causing to be delivered a statement in accordance with section 200(3) or proviso to section 206C(3). Though the statement of tax deducted at source has to be furnished by the deductor, no doubt, u/s 200, but the same has to be processed by the prescribed authority as per provisions of section 200A;
++ the issue needs to be adjudicated in the case of assessee, wherein admittedly, TDS returns which were deemed to be filed by the assessee were filed after delay and the question was whether the AO which processing the intimation u/s 200A could charge late fee under the provisions of section 234E. The assessee claims that the AO at best could charge the difference in tax deducted and not paid in Treasury from the deductor and / or any interest payable on such deduction of tax at source. However, till substitution of clause (c) to section 200A(1) by the Finance Act, 2015 w.e.f. 01.06.2015, the AO was not empowered to charge fees u/s 234E. The case of Revenue on the other hand, was that it was the duty of deductor while furnishing the statement u/s 200(3) to deposit the fees referred to in section 234E(1). However, various regulations and the statutory provisions in this regard point out that undoubtedly, the responsibility of the deductor was to deposit the tax deducted at source in time and if not so, then with interest and consequently, where the tax was not paid in time and interest was not paid in time and then, where the statement of tax deducted at source could not be filed before the prescribed authority within stipulated time, the assessee was liable to levy of fees u/s 234E. However, in case any default occurs due to the nonpayment of fees by the assessee in this regard, then the provisions which has to be considered is section 200A(1)(c). The power to charge / collect fees as per provisions of section 234E was vested with the prescribed authority under the Act only on substitution of earlier clause (c) to section 200A by the Finance Act, 2015. Once any provision of the Act has been made applicable from a respective date, then the requirement of the statute is to apply the said provisions from the said date. In respect of the issue raised, it is clear that the prescribed authority has been vested with the power to charge fees u/s 234E only with regard to levy of fees by the substitution made by Finance (No.2) Act, 2015 w.e.f. 01.06.2015. Once the power has been given, under which any levy has to be imposed upon tax payer, then such power comes into effect from the date of substitution and cannot be applied retrospectively. Thus, in the absence of enabling provisions, under which the prescribed authority is empowered to charge the fees, the AO while processing the returns filed by the deductor in respect of tax deducted at source can raise the demand on account of taxes, if any, not deposited and charge interest. However, prior to 01.06.2015, the AO does not have the power to charge fees u/s 234E while processing TDS returns. In the absence of enabling provisions, levy of fees could not be effected in the course of intimation issued u/s 200A prior to 01.06.2015;
++ another aspect of the issue is whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) is clarificatory or is prospective in nature and is not applicable to the pending assessments. Undoubtedly, the provisions of section 234E were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements / returns were filed belatedly to pay the fees as per said section. However, in cases, where the assessee has failed to deposit the said fees, then in order to enable the AO to collect the said fees chargeable u/s 234E, it is incumbent upon the Legislature to provide mechanism for the AO to charge and collect such fees. In the absence of enabling provisions, the AO while processing the TDS statements, even if the said statements are belated, is not empowered to charge the fees u/s 234E. The amendment was brought in by the Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment where empowerment is given to the AO to levy or charge the fees cannot be said to be clarificatory in nature and hence, applicable for pending assessments. Accordingly, we hold that the amendment to section 200A(1) is procedural in nature and in view thereof, the AO while processing the TDS statements/returns in the present set of appeals for the period prior to June 1st, 2015, was not empowered to charge fees u/s 234E. Hence, the intimation issued by the AO u/s 200A in all these appeals does not stand and the demand raised by way of charging the fees u/s 234E is not valid and the same is deleted. Since the intimation in question issued by the AO was appealable order u/s 246A(1)(a), therefore, the CIT(A) should have examined the legality of adjustment made under intimation issued u/s 200A. He however rejected the present set of appeals on the surmise that first of all, no appeal is provided against the intimation issued u/s 200A. We reverse the findings of CIT(A) in this regard. Once intimation issued u/s 200A(1) is appealable order before the CIT(A) u/s 246A(1)(a), then such appealable order passed by the CIT(A) u/s 250 is further appealable before the ITAT u/s 253. Hence, we admit the present appeals filed by the assessee even on this preliminary issue.
Assessee's appeal allowed
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