TIOL Update, Thursday, Jan 12, 2017

Order/Notification

Section 11C notification issued in r/o Tamarind Kernel Powder for the period 19.07.2011 to 18.07.2016

Provisional Anti-dumping duty imposed on 'Colour coated/pre-painted flat products of alloy or non-alloy steel' imported from PR China and EU

FEMA NOTIFICATION 377/ 2016-RB

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fifteenth Amendment) Regulations, 2016

ITBA-Revision-instruction No 1/2017

Launch of Post Assessment - Revision U/s 263/264 Proceedings module of Income Tax Business Application (ITBA) - Reg

No.10/7/2015-EO(SM-I)(pt.)

ACC appoints Alok Shukla, IRS-1988, as Counsellor at PMI to World Trade Organisation at Geneva

Office Order No 7/2017

CBEC posts Three officers to SEZ on deputation

CASE LAWS

2017-TIOL-15-SC-IT

CANARA HOUSING DEVELOPMENT COMPANY Vs CIT : SUPREME COURT OF INDIA (Dated: November 28, 2016)

Income tax - The assessee had preferred the present appeal seeking stay on recovery of penalty, since the tax dues had been deposited by the assessee.

On appeal, the SC held that,

Whether interim stay on recovery proceedings till disposal of appeal is warranted if the assessee has deposited all the tax dues and a portion of penalty imposed upon him thereof - YES: SC

++ it is seen that out of a penalty amount of Rs.14 crores, an amount of Rs.1.6 crores has already been recovered from the assessee. Therefore, this court grants stay of further recovery of penalty, from the assessee till the disposal of the appeal.

Assessee's stay application allowed

2017-TIOL-16-SC-IT

STATE BANK OF BIKANER AND JAIPUR Vs CIT : SUPREME COURT OF INDIA (Dated: January 6, 2017)

Income tax - The assessee preferred the present SLP challenging the order, whereby the High Court had adjourned the appeal sine die with liberty to the assessee to seek hearing of the same after the decision of this Court in Bank of Rajasthan Ltd. Vs. Commissioner of Income Tax. This was challenged by the assessee principally on the ground that the judgement given in Commissioner of Income Tax Vs. City Bank was applicable to the assessee's case and not the subject matter of appeal in case of Bank of Rajasthan Ltd. Vs. Commissioner of Income Tax.

On appeal, the SC held that,

Whether an assessee can challenge the basis of the High Court's order, when the matter was simply adjourned by the HC by granting liberty to the assessee to seek hearing against the same and the finality had yet not been arrived - NO: SC

++ it is seen that as the High Court has simply adjourned the matter and not decided it finally, it will always be open to the assessee to argue, at the stage of final hearing, that the judgment in Commissioner of Income Tax Vs. City Bank applies to the matter and it would be to the High Court to take an appropriate view at that time.

Assessee's SLP dismissed

2017-TIOL-75-HC-ALL-ST

CCE Vs BHARTI AIRTEL LTD : ALLAHABAD HIGH COURT (Dated: January 10, 2017)

ST - Tribunal found that there was no suppression of fact deliberate but there was a bona fide dispute and in any case demand being raised beyond period of limitation was not justified – accordingly, it directed Revenue authorities to requantify the demand falling within the period of limitation and thereafter proceed accordingly – Tribunal followed decision in Idea Mobile Communication - 2009-TIOL-318-HC-KERALA-ST and which decision has become final - no substantial question of law arises – appeal dismissed: High Court [para 3, 4]

Appeal dismissed

2017-TIOL-76-HC-ALL-CX

CC & CE Vs INTERNATIONAL TOBACCO COMPANY LTD : ALLAHABAD HIGH COURT (Dated: January 5, 2017)

CX - Respondent took CENVAT Credit on imported capital goods, which were in the nature of machine and which had been brought in the name of M/s Godfrey Phillips India Ltd., Friends Colony, New Delhi - Tribunal recorded that there was no dispute about the duty paid nature of the capital goods and receipt of same by the assessee and that the same was used also for its own internal purposes; that there was no violation of rule 9 of CCR, 2004 and respondent assessee was entitled to CENVAT credit - department in appeal before High Court taking a ground that the bills of entry did not bear the endorsement of the proper officer of Customs and said diversion was made in violation of Rule 9 of the CCR, 2004. Held: In view of the findings of fact recorded by the Tribunal, no questions of law arises – Revenue Appeal dismissed: High Court [para 6]

Appeal dismissed

2017-TIOL-77-HC-ALL-CX

CCE Vs KESAR ENTERPRISES LTD : ALLAHABAD HIGH COURT (Dated: January 9, 2017)

CX – Section 35H(1) of the CEA, 1944 - Tribunal remanded the matter to Adjudicating Authority to determine the amount at the rate of 8 per cent, payable or reversible, by Assessee in terms of Rule 57CC of CER, 1944 and also to decide question of imposition of penalty, if any, on Assessee in the light of discussions made in the judgment of Tribunal – Counsel for Revenue does not dispute that pursuant to remand order, entire matter has to be decided by Adjudicating Authority – Therefore, no question of law, arises so as to be referred to the High Court – Reference application dismissed: High Court [para 4, 5]

Application dismissed

2017-TIOL-78-HC-MUM-IT

CIT Vs ARONI COMMERCIAL LTD : BOMBAY HIGH COURT (Dated: January 6, 2017)

Income tax - Sections 147 & 148.

Keywords - change of opinion - non consideration of queries - reasons for reopening & satisfaction of AO.

The assessee had filed its return declaring an income of Rs.6.05 crores. During the assessment, the AO noticed that the assessee had received compensation of Rs.4,59,72,000/- from Atofina Catalyst India Ltd for settlement of disputes in relation to the management and operation of affairs of company, and had claimed it as long term capital gain and offered tax @ 20% after claiming exemption u/s 54EC. The said claim was accepted by the department in original assessment u/s 143(3). Subsequently, the AO was of the opinion that the compensation treated as Long Term Capital Gain was not correct as the same was not covered u/s 45(1). Further, there was no transfer of capital asset or nor any extinguishment of any rights in capital assets. Therefore, the AO came to the conclusion that the compensation received had to be computed as business income u/s 28(ii) and (va)(a). Accordingly, he isued notices u/s 148 to the assessee and initiated reopening of the said assessment thereof.

On appeal, the ITAT concludes that the very basis of the reasons recorded in support of the reopening notice was considered during the regular assessment proceedings. It was only on the AO being satisfied with the justification of the assessee's claim that the AO accepted it to be capital gains. Therefore, the reopening is dismissed.

On appeal, the HC held that,

Whether non-consideration of reply filed by the assessee in answer to the queries raised by the AO in the assessment order, can be treated as a ground by the AO for not being satisfied with answers, for the purpose of invoking Section 148 - NO: HC

++ it is pointed out that the AO had not dealt with the issue raised in the reopening notice in the assessment order. This, it is submitted is an indication of nonconsideration of the aforesaid issue by him. This contention urged by the Revenue is identical to the contentions which was urged by the Revenue in the earlier decision of this Court in respect of the same assessee, in the case of Aroni Commercials Ltd. Vs. Deputy Commissioner of IncomeTax and Anr. 2014-TIOL-200-HC-MUM-IT , wherein it was observed that: "once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and / or discussion to disclose its satisfaction in respect of the query raised". The aforesaid observations will apply to the grievance of the Revenue. In this case also a query was raised during the regular assessment proceedings and it was responded to by the assessee. This non consideration of the same in the assessment order is no evidence of the Assessing Officer not being satisfied with the issue raised;

Whether 'oversight of the claim' can be urged as a ground by the AO to reopen an assessment, if the AO has ignored the relevant material in regular assessment proceedings - NO: HC

(i) Further, it is contended that the aspect now raised to the effect that the amount received on the so called extinguishment of capital gains was in fact a business income on account of the agreement entered into by the assessee and the same was not considered due to oversight during the regular assessment proceedings. This contention on behalf of the Revenue on consideration of the issue due to oversight in the regular assessment proceedings cannot be said to be forming of opinion, if an AO has ignored the relevant material in regular assessment proceedings in arriving at assessment. In the present case, queries raised touched upon all the facets of the amounts received on extinguishment of asset by the assessee. Therefore, this is not a case where the AO has overlooked by oversight the claim made by the assessee in its return while allowing it as in the case of Export Credit Guarantee Corporation of India. This is a case where the AO did apply his mind as evidenced by the query raised to the very issue which is now sought to be raised as the basis for reopening the notice and the AO was satisfied with the response to the query during the regular assessment proceedings.

Revenue's appeal dismissed

2017-TIOL-79-HC-MUM-CUS + Story

CMS INFO SYSTEMS LTD Vs UoI : BOMBAY HIGH COURT (Dated : December 19, 2016)

Cus - SAD refund - Merely because a condition is imposed to file a refund application within a stipulated time limit, it cannot be held to be onerous, excessive and, therefore, ultra vires Article 14 of the Constitution - Petition dismissed: High Court [para 28, 33, 34, 35, 36, 41]

Petition dismissed