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CASE LAWS

2017-TIOL-91-SC-IT

PR CIT Vs SARVODAYA MINING SERVICE: SUPREME COURT OF INDIA (Dated: February 13, 2017)

Income Tax - Section 32

Keywords: higher depreciation & consistency

The assessee is into mining industry. The Revenue had filed present appeal to question the correctness of the order passed by ITAT who had affirmed the order passed by CIT(A) for AY 2010-11. During assessment, AO after considering all the relevant facts arrived at the conclusion that assessee was not using the vehicle in a business of running them hire, depreciation of 15% was allowable, therefore, he was not entitled for higher depreciation. Accordingly an addition was made.

On appeal, CIT(A) while accepting the appeal preferred by assessee held that for earlier years depreciation was extended and therefore, the consistency demands to grant the same. On further appeal, Tribunal too was on the same view, therefore, dismissed the appeal preferred by revenue. On further appeal, HC held that if an assessment made in consonance with the settled practice, which does not involve any substantial question of law, it cannot be raised before the HC in an appeal.

On further appeal by Revenue, the Apex Court dismissed the SLP filed and confirmed the decision of High Court that in case a decision passed by lower authorities does not suffer from any wrong, it do not constitute any substantial question of law.

Revenue's appeal dismissed

2017-TIOL-373-HC-MAD-CUS

PREETHI IMPEX Vs CC: MADRAS HIGH COURT (Dated: February 9, 2017)

Cus - Release of goods - Petitioner has already paid admitted customs duty based on self assessment scheme - As goods are seized on the allegation of mis-declaration, in order to facilitate the release of goods provisionally as contemplated under Section 110A of Customs Act, petitioner, apart from paying the admitted customs duty, has also come forward to pay differential duty and accordingly, paid the same to department - When petitioner himself has come forward to protect the interest of revenue by paying differential duty in full, Court views that petitioner shall furnish a bond for a sum of Rs.40,00,000/- and bank guarantee for Rs.5,00,000/- instead of furnishing a bond for Rs.16,62,974/- and bank guarantee for Rs.20,00,000/- as sought for in impugned order - On receipt of such personal bond and bank guarantee within the time stipulated, the respondents shall release the goods: HC

Writ Petition allowed

2017-TIOL-372-HC-MUM-IT

DIT Vs NORTH INDIAN ASSOCIATION: BOMBAY HIGH COURT (Dated: February 14, 2017)

Income tax - Sections 2(15), 12, 12AA(3) & 13(8)

Keywords - charitable trust - excess income - cancellation of registration

The assessee is a Trust registered u/s 12 of I-T Act. The DIT however cancelled its registration during the subject year, in exercise of powers u/s 12AA(3). The basis of the cancellation was the introduction of provisos to Section 2(15) w.e.f. 1st April, 2009. The DIT held that as the income earned on account of trade, commerce or business for the subject assessment year was in excess of the limits of Rs.10 lakhs, specified in the second proviso to Section 2(15), the assessee ceases to be a Trust for charitable purposes. On appeal, the ITAT held that Section 12AA(3) did not empower the DIT to cancel registration of a Trust registered prior to 1st June, 2010.

On appeal, the HC held that,

Whether the mere fact that in one particular year, the trust may have income receipts in excess of Rs.10 lakhs or such other limit as provided in the proviso to Section 2(15), that by itself would not warrant cancellation of the registration granted to such trust u/s 12AA(3) - YES: HC

++ we must not lose sight of the fact that there is a difference between Registration and Exemption. This understanding is fortified by virtue of Section 13(8). In fact, Section 13(8) was introduced into the Act w.e.f. 1st April, 2009 by the Finance Act, 2012 and provides that where the receipts are hit by the proviso to Section 2(15), the benefit of exemption to its income for the previous year relevant to the subject assessment year will not be available. Thus, income is brought to tax to secure the Revenue's interest but it does not necessarily result in automatic cancellation of Registration. Therefore, the mere fact that in one particular year, the trust may have income receipts in excess of Rs.10 lakhs or such other limit as provided in the proviso to Section 2(15), that by itself would not warrant cancellation of the registration u/s 12AA(3). A similar issue had arisen in Director of Income Tax (Exemption) Vs. Khar Gymkhana, wherein this court had relied upon the CBDT Circular No.21 of 2016 dated 27th May, 2016 to conclude that the amendment to the definition of 'charitable purpose" by addition of the proviso w.e.f. 12th April, 2009 would not ipso facto give jurisdiction to the Commissioner of Income Tax to cancel the registration. The Circular No.21 of 2016 in terms directed the Authorities not to cancel the registration of the Charitable Institution only because the proviso to Section 2(15) comes into play as the receipts are in excess of the specified limits therein. It also refers to Section 13(8) to support the view of the non cancellation;

++ however, the issue of the trust not being genuine cannot be concluded by merely giving a finding in one year that income earned from activities of trade, business or commerce are in excess of the limit specified in the proviso to Section 2(15). This is so held in case of Khar Gymkhana. However, if this happens on continuous / regular basis, it could justify further probe / inquiry before concluding that the trust is not genuine. In fact, the Karnataka High Court in Director of Income Tax (Exemption) & Anr. Vs. Karnataka Badminton Association, had on similar facts, viz. cancellation of registration u/s 12AA(3) in view of amendment to Section 2(15), had not accepted an identical submission on behalf of the Revenue.

Revenue's appeal dismissed

2017-TIOL-371-HC-MAD-CUS

SHAIK SHAMIM BANU Vs GOVERNMENT OF INDIA: MADRAS HIGH COURT (Dated: January 24, 2017)

Customs - Gold - The order-in-original dated 20.04.2015, was passed, whereby, the petitioner was given the option of redemption of gold bangles and gold bars, totally weighing 1375 grams; and a redemption fine along with penalty was demanded - Commissioner of Appeals reduced the redemption fine as well as penalty and dismissed the departmental appeal - Revenue approached the Revisional Authority, impugning both the orders - The Revisional Authority allowed the Department's appeal; directed absolute confiscation of the goods and imposed a penalty on the petitioner, under Section 112 of the Act; culminating in the instant WP.

Held: It is not in dispute that the Commissioner of Appeals and the Joint Secretary of the GOI, who exercised the power of the revisional authority in the instant case, hold the same rank - In terms of the Punjab & Haryana High Court ruling in the NVR Forging's case, the contention of the petitioner that the impugned order has been passed by an Officer, who was not vested with the jurisdiction to hear and adjudicate upon the matter; will have to be sustained - the impugned order is set aside, with liberty to the GOI to pass a fresh order within a period of eight (8) weeks from the date of receipt of a copy of the order, after corrective measures are taken - In case, the requisite corrective steps are not taken, respondents No.4, will ensure compliance of the order dated 24.06.2015, passed by the Commissioner of Appeals. [Para 8, 9, 10, 10.1]

WP disposed of

2017-TIOL-370-HC-AHM-CX

CCE & C Vs SHABNAM SYNTHETHCS: GUJARAT HIGH COURT (Dated: February 1, 2017)

Central Excise – Demand – Duty demands with interest and penalties adjudicated in respect of indigenous and imported POY/PFY procured by the respondent and agitated before the Tribunal; who disposed of the said appeals in favour of the respondent assessee and relying upon its earlier decision in the case of Ginni International – The departmental appeals were disposed of on the sole ground that in terms of the Larger bench ruling in the case of LML Limited [scooters division], the appeals were not maintainable - Revenue has challenged the dismissals on the question of law as to whether the Tribunal is justified in dismissing the appeals filed by the revenue following Larger Bench ruling without considering them on limitation or merits solely on the ground that the appeals were filed much after orders were passed in the appeal of the assessee.

Held: The issue on merits now has been concluded by the Apex Court against the revenue, in the Virlon Textile Mills case - no fruitful purpose would be served in remanding the matter to the Tribunal to consider the issue on merits which is already concluded against the revenue by the Supreme Court in the case of Virlon Textile Mills Ltd. as well as decision of the Division Bench of this Court in the case of very assessee - without entering into the larger question, whether the learned tribunal was justified in not considering the appeals of the revenue on merits and whether decision of the Larger Bench of the learned tribunal in the case of LML Ltd. was applicable or not, when the main issue on merits has been concluded against the revenue, instant appeal not maintainable. [Para 4.3, 4.4]

Appeals dismissed

2017-TIOL-369-HC-MAD-CX

GLOVIS INDIA PVT LTD Vs DEPUTY REGISTRAR: MADRAS HIGH COURT (Dated: January 18, 2017)

CX - Plea of petitioner is that untill the proceedings in Appeals preferred by them before the Tribunal is finally disposed of, criminal proceedings pending in Trial court, may be directed to be stayed - Held: Criminal case is decided on basis of evidence adduced therein and cannot be rejected on the basis of evidence in departmental proceedings and therefore, both proceedings pending before CESTAT and the trial court shall go on simultaneously and there is no impediment for the same - CESTAT is directed to dispose of the pending appeals before it within a period of 3 months from the date of receipt of a copy of this order: HC

Writ petition disposed of

2017-TIOL-368-HC-MAD-CX

AUSTRALIAN FOODS PVT LTD Vs CCE: MADRAS HIGH COURT (Dated: February 15, 2017)

CX - Appellant is a manufacturer of dough and Cookies - A SCN was issued on the basis that there had been clandestine removals of dough from appellants' unit at Ambattur to its unit at Spencer Plaza - Appellant had approached Settlement Commission for settlement of proceedings initiated against it after the investigation in January 2006 - Both the Single Judge as well as Division Bench have confirmed the position that a claim under Section 4A of CEA, 1944 would not come within the purview of jurisdiction of settlement commission and as such assumption of jurisdiction of the Settlement Commission was itself incorrect - Thus, order of Settlement Commission and findings therein are not be a factor to contend with - On the aspect of eligibility to exemption from Duty, notfn 20/2009-CE (N.T.) issued by Board in terms of section 11C indicates that there was an intention to exempt 'dough' from the payment of duty - Appellant has remitted the duty and is thus entitled to credit claimed - The embargo in terms of Rule 9(b) of CCR, 2004 is not attracted - Questions of law are answered in favour of assessee: HC

Appeal allowed

2017-TIOL-367-HC-MAD-CUS

SSD OIL MILS COMPANY LTD Vs ASDT DGFT: MADRAS HIGH COURT (Dated: January 6, 2017)

Customs - EXIM Policy - petitioner was given an EPCG Licence to import capital goods, conditional on fulfillment of export obligation of five (5) times the CIF value of capital goods imported, within a period of eight (8) years - the petitioner was able to fulfill only 30.19% of the total export obligation - Meanwhile, a change in the policy was brought about by notification dated 28.01.2004, whereby, in such like cases, the Government of India, granted permission to fulfill the export obligation by taking into account export value of alternate products, which were capable of being manufactured or produced by the use of capital goods imported under the EPCG licence - it was pleaded that the principal reason for non-fulfillment of the export obligation was on account of the ban on export of edible oil imposed by the Government of India vide notifications dated 17.03.2008 and 04.09.2009 - Duty demand on the imported capital goods was adjudicated and agitated up to the Tribunal, the petitioner, however, pursued its cause by making a representation to respondent No.2 which was disposed of to the effect that while the order dated 18.05.2016 could not be reviewed, it could file a representation with the EPCG Committee for relaxation of policy norms - the petitioner has filed a representation which is pending consideration with the EPCG Committee, culminating in this WP seeking directions for early disposal of their representation by the Committee.

Held: EPCG Committee directed to consider and dispose of the representation of the petitioner dated 26.08.2016, by way of a speaking order, after affording reasonable opportunity of hearing - Pending the disposal of the representation by the EPCG Committee and for a further period of four (4) weeks, no coercive measures will be taken against the petitioner - It is made clear that the disposal of the Writ Petition will not come in the way of the petitioner challenging the impugned order, i.e., 18.05.2016, for which liberty is granted to petitioner to take recourse to an appropriate remedy, albeit, in accordance with law. [Para 8, 8.1, 8.2, 8.3, 9, 9.1, 9.2]

Appeal disposed of

2017-TIOL-588-CESTAT-MUM + Story

ALLIED PHOTOGRAPHIC INDIA LTD Vs CCE: MUMBAI CESTAT (Dated: January 24, 2017)

CX - Refund - Unjust enrichment - Section 11B, 11BB of CEA, 1944 - No interest liability devolves on the Central Government for any delay in transferring the amount to the Consumer Welfare Fund as the amount remains in the Consolidated Fund of India and the only consequence of sanction is its shift to the Fund which is also under the control of the Central Government - Appellant has no vicarious standing to act on behalf of the Fund - Appeal dismissed: CESTAT [para 8 to 11]

Appeal dismissed