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Centre vests powers in States to take steps to regulate onion prices
Self-sealing of containers by exporters - CBEC notifies procedure for electronic sealing
CUSTOM CIRCULAR
cuscir36_2017
Implementing Electronic Sealing for Containers by exporters under self-sealing procedure prescribed vide circular 26/2017-Customs dated 1st July 2017-reg.
CASE LAWS
2017-TIOL-1699-HC-DEL-CUS
AARTI DRUGS LTD Vs DESIGNATED AUTHORITY: DELHI HIGH COURT (Dated: August 25, 2017)
Anti-Dumping - Pursuant to an order of the High Court, the petitioner firm had sought a sunset review (SSR) of the Anti-Dumping Duty (ADD) imposed on the subject goods in the petitioner's case - However, such request was denied by the Designated Authority (DA).
Held - Considering that the ADD imposed in the present case would expire on 29 th August 2017, the DA is directed to initiate sunset review in the petitioner's case - The SSR Notfn. to mention that the proceedings were subject to the final outcome of the writ petition - Final hearing listed for 29th August, 2017: High Court (Para 2,3,4)
Writ petition allowed
2017-TIOL-1697-HC-DEL-IT + Story
CIT Vs VASAVI PRATAP CHAND: DELHI HIGH COURT (Dated: August 23, 2017)
Income Tax - Section 2(47) - Transfer of Property Act - Section 53A.
Keywords : Capital assets - Cost of improvement - Capital Gains & Market Value.
Whether when the assessee enters into a development agreement with a builder and exchanges certain percentage of land against certain built up area, it can be claimed as transfer of entire land to the builder - NO: HC
Whether such transaction was only about transfer of possession as per Sec 2(47) of the I-T Act read with Sec 53A of the Transfer of Property Act - YES: HC
Whether if such a deal is to be treated as cost of improvement of assets, the cost of land is to be the marekt value of the land - YES: HC
A residential property situated in New Delhi comprising of a house and open land admeasuring 2.85 acres was purchased in 1947 by Mr. Sumer Chand. After his death in 1951, one of the co-owners, Mr. Pratap Chand, succeeded to the property. Mr. Pratap Chand converted the property into a Hindu Undivided Family (‘HUF') property in 1953-54 consisting of himself and both appellants ( his wife and his son). In 1969-70, the property was partially partitioned among the three members of the HUF in equal proportion. The property thus came to be owned by the three co-owners. To overcome the restrictions applicable to the property under the Urban Land Ceiling Act (‘ULCA'), the three co-owners entered into an agreement with Ansal Properties & Industries Ltd. (‘Ansals') on 2nd May 1984. In terms of said agreement, the building on the land was to be demolished and an apartment complex was to be constructed thereon. It was agreed that the co-owners would get built-up area of 89,136 sq. ft. which constituted 56% of total built up area. 44% of the built up area would belong to Ansals. The entire cost of construction was to be met by Ansals.
The co-owners entered into agreements with various flat buyers and ultimately sold constructed flats during the AYs 1993-94 to 1995-96. During the AY in question, i.e. 1995-96, the three co-owners sold 18,636 sq. ft. of built up area and disclosed a loss under the head “capital gains” in their individual returns.
Both the AO and the CIT (A) treated the flats as stock-in-trade and the land as converted stock-in-trade. They then concluded that the transaction was an adventure in the nature of trade and the income therefrom had to be taxed as business income.
On appeal, the Tribunal by its order, disagreed with such conclusions and held that neither the flats nor the land could be considered stock-in-trade. They were capital assets. Therefore, in the view of the Tribunal, the profit on sale of the capital assets was taxable under the head “Capital Gains”. Having held as such, the ITAT remanded the matter to the AO for calculation of “Capital Gains” in by taking cost of aquisition at 44 percent of total value of land.
On appeal, the High Court held that,
++ it is seen that the order of the Tribunal correctly understood the nature of transaction. There was no transfer of the title to the land by the Assessees in favour of Ansals. Indeed, what was transferred under the collaboration agreement was only 44% of the land owned by them in exchange for 56% of the built up area and not the entire land as contended even before the Tribunal by the Assessees;
++ further, the Assessees not only transferred the flats to buyers but the proportionate right in the appurtenant land as well. The contention of the Assessees that the land was transferred on the date of the collaboration agreement was also rightly rejected. There was a transfer of possession of 44% of the land by the Assessees to the builder and possession of 56% of the built up area by the builder to the Assessees in terms of Section 2 (47) of the Act read with Section 53A of the Transfer of Property Act. The consideration for the transfer of 44% land was the cost of construction of the 56% built up area;
++ the Tribunal is right in accepting the alternative contention of the Assessees that it was improvement of assets and costs of acquisition would include the costs of flats as well as the cost of land. There was no difficulty as far as costs of flat was concerned as it would be equal to costs of construction of 56% of the built up area. As far as cost of acquisition of land was concerned, it had to be the market value of land as on 1st April 1981. It was noted that no exercise was undertaken for determining the costs of acquisition of land as on 1st April 1981.
Revenue's appeals partly allowed
2017-TIOL-1696-HC-DEL-IT
PR CIT Vs GE CAPITAL SERVICES INDIA: DELHI HIGH COURT (Dated: August 23, 2017)
Income tax - Section 14A & Rule 8D.
Keywords - earning of exempt income - borrowed funds - adhoc disallowance
The Revenue preferred the present appeal challenging the order, whereby the ITAT had confirmed the order of CIT(A) deleting the addition made u/s 14A in the sum of Rs.12,65,44,530/- on account of interest paid on the borrowed funds utilized for making investment in shares yielding exempt income. The further ground urged was that the ITAT erred in deleting the addition of Rs.25 lacs made by the AO on account of purported management/administrative expenses and other costs attributed towards earning dividend income.
On appeal, the HC held that,
Whether disallowance u/s 14A can be sustained only if made on some reasonable basis - YES: HC
++ a perusal of the ITAT order reveals that both the disallowances were made by the AO on ad hoc basis. The ITAT relied on the order passed earlier by a coordinate Bench of the ITAT for AY 2000- 2001 deciding an identical issue in favour of the Assessee. The ITAT noted that there was no change in the facts and circumstances or the legal position requiring a different view to be taken. In any event, the Court finds that the disallowances were made by the AO on ad hoc basis. As explained by this Court in CIT v. State Trading Corporation Ltd., even prior to Rule 8D, the disallowance u/s 14A had to be on some reasonable basis. Therefore, the Court is not inclined to frame any question of law.
Revenue's appeal dismissed
