2017-TIOL-2109-HC-MUM-IT
CIT Vs MAKWANA BROTHERS AND COMPANY: BOMBAY HIGH COURT (Dated: September 25, 2017)
Income Tax - Section 80-IB(10).
Keywords: Completion certificates - Developing & building - Housing project - Residential plus commercial & Specified time limit.
The Assessee, a Pune-based company, was in the business of construction and development of properties, filed its return for AYs 2005-2006 & 2006-2007 declaring certain income after claiming deduction u/s 80IB(10). During the assessment proceedings, the AO compared the profitability figures of "Shivanand Garden" project of which deduction u/s 80IB(10) was not available, viz-a-viz the profitability of "Dayanand Garden" project which was eligible for deduction u/s 80IB(10). The AO observed that there was a difference in the cost of construction of the two cited projects and asked clarification in this regard. However, the Assessee failed to provide with any details of cost of construction leading to which the AO held that since, there was no justification for higher construction cost for Dayanand Garden project, he reallocated the deductions. The assessment order was partly interfered with by the CIT(A).
On appeal, the Tribunal relied upon, essentially, the judgment of Division Bench of Bombay High Court rendered in the case of Brahma Associates, as also in the case of Vandana Properties. The Tribunal deleted the addition made by the AO after adopting 49.27% of gross profit of "Dayanand Garden" project to the "Shivanand Garden Project". However, the assessment order, as maintained by the CIT(A) of addition of Rs.8,92,604/- on the issue of lower profit margin of "Shivanand Garden" project as compared with higher profit margin of "Dayanand Garden" project, was maintained.
For AY 2006-2007:
During the assessment proceeding, the AO noticed that in respect of the project "Shivanand Garden", as per the revised layout, there were eight buildings/blocks in the project, namely, buildings "A" to "H" and which were all completed by 31st March, 2006. However, in respect of another project "Dayanand Garden", it was noted that it was approved by the Pune Municipal Corporation which was repeatedly revised. As per the last revised building plan, there were 10 buildings in the project commencing from building "A" to building "J". Out of these, "G" block had 40 tenements including 10 shops on the ground floor and had builtup area of 2490 sq. ft, however, "H" and "J" buildings were bungalows with builtup areas of 2690 sq.ft. and 3767 sq. ft. respectively which exceeded the limit set out in clause (c) of Subsection (10) of Section 80IB. The AO held that the completion certificate of "G" building was not available, while the Assessee could only produce the completion certificates for "J" and "H" buildings. Consequently, the AO rejected the Assessee's claim of deduction on the ground that the project was not completed within the stipulated period of time as prescribed by Section 80IB(10)(a). On appeal, the CIT(A) upheld the assessment order.
However, the Tribunal, apart from relying upon the orders passed by its coordinate benches in the case of Varun Developers and Brahma Associates, also relied upon the order in the case of Rahul Construction Co. The matters were decided by answering the questions in favour of the Assessee and against the Revenue. The Assessee was held to be entitled to the deduction u/s 80IB(10).
On appeal, the High Court held that,
Whether when it is found that there was no deliberate act on part of the Assessee which could be the reason for the order of the AO, such a factual exercise would not in any manner give rise to a substantial question of law - YES: HC
++ from a reading of the Tribunal's order, we find that the Tribunal noted the facts correctly. Thereafter, it referred to the justification or explanation of the Assessee and concluded that the addition in respect of the profits by the CIT(A) alone can be sustained and the remaining has to be deleted. The order of the Commissioner, therefore, was upheld. The basis for the exercise of the AO may have been sustained, but it was found that there was no deliberate act on the part of the Assessee which could be the reason for the order of the AO. The explanation on facts has been accepted and we do not think that such a factual exercise would in any manner raise any substantial question of law. The factual exercise and which has been maintained by the Tribunal cannot be said to be vitiated by perversity or error of law apparent on the face of record. It is a possible view of the matter and looked at holistically;
++ since no deduction was claimed on bungalows "H" and "J" insofar, we do not think that any question could have been proposed in relation to these buildings. As far as the building "I" is concerned, the approval was later on cancelled. In all these Appeals, therefore, even if some questions, which are common to those which have been already admitted, arise, we do not think that the Revenue should be allowed to get over the binding judgments of this Court. Each of the Appeals are dismissed but without any order as to costs;
Whether deduction permissible u/s 80-IB(10) can be denied merely on the ground that construction of housing project was not completed within specified time limit - NO: HC
++ a bare perusal of this 80IB(10) would reveal that the amount of deduction in the case of an undertaking developing and building housing projects approved before 31st March, 2008 by a local authority shall be 100% of the profits derived in the previous year relevant to any AY and from such housing project, if (a) such undertaking has commenced or commences development and construction of the housing project on or after 1st October, 1998 and completes such construction, in a case where a housing project has been approved by the local authority before 1st April 2004, on or before 31th March, 2008; and in a case where a housing project has been or is approved by the local authority on or after 1st April, 2004 but not later than 31st March, 2005, within four years from the end of the financial year in which the housing project is approved by the local authority;
++ the provision 80IB(10) itself is clear and should not entertain any doubt but in cases after cases, the Revenue's understanding and construction of the provision gave rise to litigation. That litigation appears to be endless. The Division Bench reproduced Section 80-IB(10) prior to its substitution by the Finance (No.2) Act, 2004 with effect from 1st April, 2005 and thereafter, it adverted to the very explanations;
++ we are not in agreement with Mr. Gupta that when the Supreme Court gave illustrations of the commercial user in residential projects that user must be restricted to professional activities, particularly of Doctors, Chartered Accountants, Advocates, etc. The clarification by the Supreme Court also does not lead to an acceptance of his argument and where the project is predominantly housing/residential, but commercial activity in the residential units is permitted. We do not think that the Supreme Court restricted the commercial activities in the residential units to its own illustrations. It clearly referred to the Development Control Regulations in the preceding paragraphs and thus, upheld the conclusions of the High Courts that an element of the commercial activity is provided but the project as a whole is still treated as a housing project. What could be the permissible limit on commercial activity would depend upon the Development Control Regulations and which can be considered on fact to fact basis. In other words, the Development Control Regulations, which prevail for cities and planning authorities in each case, would have to be noted for the interpretation of this expression as also the nature of the users envisaged and permitted therein (residential and commercial) in a housing project;
++ to our mind, once the Revenue has not been successful in having the judgments of this Court in Bramha Associates and Vandana Properties reversed, in an oblique and indirect manner and by referring to Veena Developers case and the observations therein, we cannot be persuaded to take a different view. What judicial discipline demands is that we must follow the binding judgments of this Court and in law, any hair splitting of its findings and conclusions in the manner suggested by the Revenue would be plainly violating not only the rule of precedents but also the discipline. It would also be doing violence to the language of the statutes;
++ hence, we are of the view that the questions which we have reproduced above in all these Appeals would have to be answered in favour of the Assessees and against the Revenue. They having been so answered, these Appeals cannot be entertained. Once all these questions stand concluded and answered authoritatively by this Court, then all the more, we are disinclined to entertain these Appeals.
Revenue's appeal dismissed
2017-TIOL-2108-HC-MAD-CUS
CC Vs SRI GPR LEATHERS: MADRAS HIGH COURT (Dated: September 7, 2017)
Cus - Goods were declared as 'finished goods' by the exporter - Whereas, the reports indicate that they were 'unfinished', therefore, the department has contended that there is misdeclaration and goods are liable for confiscation under Section 113(i)(ii) of the Customs Act, 1962 and thus, seized in terms of Section 110 of the Customs Act, 1962 – Since the circular dated 04.01.2011 empowers the department to insist for appropriate security in order to cover redemption, fine and penalty, there is no manifest illegality in imposing a condition in the communication dated 10.01.2017 of the department, requiring the exporter to offer bank guarantee - What should be the form of security, is the discretion of the department and in the case on hand the department has sought for Indemnity Bond for value of goods and bank guarantee towards redemption, fine and penalty - On the facts and circumstances of the case, discretion exercised by the department, directing the exporters to submit bank guarantee, towards redemption, fine and penalty, cannot be said to be erroneous or contrary to the orders of this Court, in W.P.Nos.43062 to 43070 of 2016 dated 22.12.2016 – Bench is unable to subscribe to the views of the Single Judge that monetary value mentioned in the subsequent communication dated 10.01.2017 is in a sense diluted the very essence of the order dated 22.12.2016 - Even taking it for granted, that in the earlier round of writ petitions, respondents therein have not articulated that the exporters have to offer security towards fine and penalty, in the form of a Bank Guarantee, that does not amount to a waiver of exercise of the powers conferred on the department by virtue of Clause No.4(a) of the Board's circular dated 04.01.2011 - At the risk of repetition, when condition Nos.6(ii) & 6(iii) remain unaltered, as per the earlier orders made in W.P.Nos.43062 to 43070 of 2016 dated 22.12.2016, it cannot be contended that the department has erred in directing the exporters to offer Bank Guarantee as an appropriate security, in order to cover redemption, fine and penalty - department cannot be compelled to follow an earlier interim order, which has merged with a simple closure of writ petitioner, without there being any adjudication on the merits - interim order which does not finally and conclusively decide an issue cannot be a precedent - Orders impugned in these writ appeals are set aside - Writ Appeals are allowed: High Court [para 31, 38, 41, 48]
Appeals allowed
2017-TIOL-2107-HC-AHM-ST
ASST COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX Vs VODAFONE ESSAR GUJARAT LTD: GUJARAT HIGH COURT (Dated: September 28, 2017)
ST – CENVAT - Respondent assessee is engaged in providing cellular telephone services - For the relevant period, the assessee availed cenvat credit of the excise duty paid on inputs viz. angles, channels, beams etc. which were used in construction of towers and in tower materials, prefabricated buildings/shelters etc. - Department disputed such stand of the assessee and had been issuing periodic demand notices contending that the towers, tower parts, prefabricated buildings/shelters do not fall under “Inputs” as defined in rule 2(k) of CENVAT Credit Rules, 2004, since they are immovable structures and therefore, cannot be considered as goods – CESTAT held that the issue is squarely covered by the judgment of Bombay High Court in case of Bharti Airtel - 2014-TIOL-1452-HC-MUM-ST and therefore credit had been rightly denied – however, taking note of the fact that the claim of the assessee for input credit on parts used for construction of fixed and semifixed structures being a disputable and pure question of law, penalty was set aside – Department is in appeal before High Court against deletion of penalty.
Held: It emerges that the claim of the assessee for input credit on parts used for construction of fixed and semifixed structures was highly debatable one - issue ultimately got resolved by the judgment of Bombay High Court in case of Bharti Airtel (supra) - question of penalty has to be viewed in such background - When the assessee bonafide carrying a belief which cannot be stated to be wholly untenable that cenvat credit on such inputs was available, claimed the same with full knowledge of the department, merely because eventually such credit was disallowed, would not give rise to penalty proceedings - It is not compulsory to impose penalty the moment cenvat credit is disallowed – Tax Appeal dismissed: High Court [para 3, 4, 6]
Appeal dismissed
2017-TIOL-2106-HC-AHM-CX
CCE, C & ST Vs TRANSPEK INDUSTRY LTD: GUJARAT HIGH COURT (Dated: September 28, 2017)
CX – CENVAT – Rule 2(l) of CCR, 2004 - Term 'input service' would mean any service used by the manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final product from the place of removal - There was no dispute even by the Department on the issue that the assessee had consumed for itself various services at various stages in their manufacturing and business activities - Cost was borne by the assessee which also formed a part of the value of the goods manufactured – therefore, in the light of the broad definition and the settled decisions in Essar Oil Ltd. - 2015-TIOL-2768-HC-AHM-CX and Ferromatik Milacron India Ltd., - 2010-TIOL-851-HC-AHM-ST CENVAT credit is admissible on ‘Outdoor Catering Services' and ‘Rent-a-Cab services' – Revenue Tax Appeal is dismissed and CESTAT order is upheld: High Court [para 3, 4]
Appeal dismissed
2017-TIOL-2105-HC-MAD-VAT
IN THE HIGH COURT OF MADRAS
GANGA FORTUNES Vs CTO: MADRAS HIGH COURT (Dated: September 7, 2017)
Tamil Nadu Value Added Tax Act, 2006 - Writ - Sections 22 & 27(3)
Keywords - Imposition of penalty - Intent to evade tax
The assessee is a Civil Works contractor and flat promoter, registered as a dealer since 2013-14. The revenue passed assessment orders for the AYs 2012-2013, 2013-2014, 2014-2015 & 2015-2016, levying penalty u/s 27(3) of the Act. Moreover for the four AYs tax demands were imposed for the AYs 2013-14 and 2014-15, and which were not contested by the assessee, and which the assessee agreed to pay. For the AYs 2012-13 and 2014-15, the assessee claimed to have discharged duty liability. Thereby, the assessee challenged levy of penalty for the AYs 2012- 2013 & 2015-2016.
On hearing the petition, the High Court held that,
Whether penalty could be imposed on an assessee merely based upon an allegation of wilful non-disclosure of turnover, but without any corroborative evidence of deliberate intent to evade payment of tax - NO : HC
++ one glaring error which requires to be pointed out is that in the impugned assessment order dated 20.07.2017 for the assessment year 2012-2013, the revenue has stated that the assessment has been finalised as deemed assessment under Section 22 of TNVAT Act, 2006. In the assessment order, while dealing with penalty, the revenue has pointed out that the assessee is a registered dealer only with effect from November, 2013. If the assessee was not a registered dealer before November, 2013, then, obviously, the assessee could not have been deemed to have been assessed under Section 22 of TNVAT Act, 2006, prior to the said period. This is an indication to show that there has been non-application of mind. Be that as it may. In these cases, it has to be seen as to whether the revenue was justified in imposing penalty @ 150% of the tax due, on the assessee.
++ the legal position as to under what circumstances, penalty could be imposed was considered by this Court in the case of Nokia India Private Limited V. Deputy Commissioner (CT)-IV, Large Tax Payers Union, Egmore, Chennai and Others. This Court took into consideration the statutory provisions and the decisions of the Supreme Court in Hindustan Steel Limited V. State of Orissa, Uniworth Textiles Limited V. Commissioner of Central Excise, Raipur & Abanloyd Chiles Offshore Limited V. Commissioner of Customs and held that "an act or omission is 'wilfully' done, if done voluntarily and intentionally and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done and that penalty will be imposed if the party had acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest or acted in conscious disregard of its obligation. Therefore, to impose penalty, it would be sufficient to merely mention that there was wilful non-disclosure on the part of the assessee and that, but for audit, the matter would not have come to light. What is required to be examined is whether the conduct of the assessee was wilful.
++ in the case on hand, except alleging that there has been wilful non-disclosure of assessable turnover, there is nothing on record to show that the assessee had deliberately acted with an intention to avoid payment of tax. In fact, all the materials have been gathered from the monthly returns filed by the assessee and there is no other allegation to show that the assessee had wilfully suppressed the turnover or refused to pay tax an intentionally avoided payment of tax. In such circumstances, the question of levy of penalty on the assessee for the AYs 2012-2013 & 2015- 2016 does not arise.
Assessee's writ petition allowed
2017-TIOL-2104-HC-KAR-IT
H NAGINCHAND KINCHA Vs CBI: KARNATAKA HIGH COURT (Dated: September 13, 2017)
Income Tax Act & Prevention of Corruption Act & Indian Penal Code - Sections 148 ; 7, 8 & 13(d) ; 120B
Keywords - Circumstantial evidence - Conspiracy u/s 120-B - Direct evidence
The petitioner herein is a practicing Chartered Accountant. The complainant herein filed a complaint in 2012, stating that he had been filing returns since 2006, and wherein his immovable property was reflected in the returns for 2008. He further mentioned that in 2011, the AO issued him a notice alleging that income tax declared for the AY 2008-09 had escaped assessment & so the AO proposed reassessment. The AO observed that the capital gain to an extent of 3,28,65,711/- stood in his name. The complainant claimed to have received a similar notice for the AY 2009-10. The complainant then claimed to have met the AO in 2012, whereupon the AO stated there to be several anomalies in the petitioner's returns. The petitioner then alleged that the AO asked for a bribe in return for closing the assessment with a considerably lower tax liability. The complainant then claimed to have disagreed with the proposition and alleged that the AO initially threatened to close the assessment with heavy imposition of tax, and later carried out the threat. Subsequently, the complainant filed such complaint with the Anti Corruption Bureau and the Central Bureau of Investigation. The complainant also produced a CD containing recordings of the conversations between himself and the AO.
Subsequently, the complainant met the petitioner and sought for his advise. He never sought for any help from the petitioner to appear before the AO. The complainant had approached him seeking help to draft the objection statement to the notices served on him pertaining to two AYs served on him. On that occasion he had paid Rs.25,000/- and a receipt was passed on to him. The complainant appeared on his own before the AO without any assistance. The complainant was informed by the said AO to collect the order copy from this petitioner and pass on the acknowledgement. The AO informed that if he did not pay tax within six months, it would attract the penalty of Rs. 30 lakhs. The complainant was not willing to give cheques and offered to pay Rs.5 lakhs cash and he wanted the petitioner to pay the 1st installment of tax and had stated that he will not commit default if permitted to pay in installments. When the complainant placed the trap money on his table towards payment of tax, the petitioner pushed back the amount by his hands and refused to accept the same. As per the recitals of the trap mahazar, the trap money was lying on the table. The complainant had replaced the money in a cover and then signaled the trap team. His hands were not subjected for sodium carbonate hand test. The petitioner had not even touched the said money.
When the petitioner filed an application before the High Court seeking to be discharged of the charges levelled under provisions of the Prevention of Corruption Act and the Indian Penal Code, the petitioner's application was dismissed.
On hearing the appeal, the High Court held that,
Whether the petitioner could seek to be absolved of charges of conspiracy, on grounds that said offence was required to be provied through direct evidence only, and not thrugh circumstantial evidence - NO : HC
++ in the backdrop of the above, now the concern is about the legal contentions raised on behalf of the petitioner. Firstly, he is disputing that no work was pending for demand of illegal gratification. Of course the AO which was seized from the chambers of this petitioner is shown to have been passed on 6.9.2012. But the IO has collected material that there is no proof from the official record that such an order was passed on the said date. Section 7 of the Act does not contemplate specifically that the work must be pending on the date of registration of the case. It is sufficient to make out an offence under Section 7 of the Act that he accepts or obtains or agrees to accept or admits to obtain from any person, for himself or for any other person, any gratification whatever, other than legal remuneration, as a motive or reward for doing or forbearing to do any official act. It is also possible that a public person having negotiated for the bribe amount and in anticipation of receiving bribe money despite passing the order waits for the compliance of illegal demand without disclosing that the order is already passed. The materials on record clearly show that even after passing the AO, it is not recorded in the proceedings book and not sent to tappal section.
++ regarding the contention that there was no recovery from the petitioner - The special court has considered this aspect of the matter and observed that the 1st accused himself had carried the office order to the office of the petitioner on a holiday. His voice sample is collected as per the standard procedure. The Trial Court in the body of its order has discussed this aspect of the matter filament wise. The petitioner himself had given his explanation stating that the complainant had approached him in respect of income tax matter and the order passed by the 1st accused had to be acknowledged by the complainant and the amount of Rs.5 lakhs was to be given to accused No.1 and his office premises (chamber of A-2) is used for the purpose. Thus, the seized amount of Rs.5 lakhs was the amount to be given to A-1 and he had not offered any reason as to why his office was used for receiving the bribe amount of Rs.5 lakhs. As per the recovery mahazar, very same currency notes mentioned in the entrustment mahazar are seized.
++ the third fold of argument that the accused No.2 is not a public servant and is beyond the contemplation of the statute. The words occurring at Section 8 of the Act “Whoever accepts or obtains, or agrees to accept, or attempts to obtain, from any person, for himself or for any other person, any gratification…………” covers the persons other than the public servants contemplated by definition clause (c) of section 2 of the Act and that does not require much elaboration. Regarding the contention that section 7 of the P.C.Act cannot be invoked against accused No.1 is not within the competency of the petitioner to urge before this court. Even otherwise the charge sheet material contains voice recording of the accused Nos.1 and 2 and the complainant and also there is material that this petitioner made demand for bribe on behalf of the petitioner. For framing the charge under Section 228 of the Cr.P.C. if the Judge is not required to record detailed reasons as to why such charge is framed. On perusal of the record and hearing the parties at the stage of discharge under Section 227 of Cr.P.C., if the Judge is of the opinion that there is ground for presuming that the accused has committed an offence, he is competent to frame charge for such offence even if not mentioned in the charge sheet.
++ the court below has dealt in detail each and every fabric of charge sheet material to come to the conclusion that there are grounds to frame the charge against the petitioner for the offences under Section 120-B of IPC and sections 7 and 13 (1)(d) r/w Section 13(2) of the P.C. Act and against accused No.2 for the offences under Section 120-B of IPC and Section 8 of the P.C. Act r/w Section 120 of IPC. The offence under section 120-B of IPC i.e. conspiracy cannot be expected to be proved by direct evidence. Generally, as a matter of prudence, it can only be construed on the basis of the circumstantial evidence and in connection with the allegation attributed against each of the accused. The order of the court below is well reasoned, not warranting revisional jurisdiction of this court.
Revision petition dismissed
2017-TIOL-2099-HC-MUM-IT
CIT Vs PRATIMA H MEHTA: BOMBAY HIGH COURT (Dated: September 26, 2017)
Income Tax - Sections 142(1), 144 & 145(2).
Keywords: Books of Account - Different view - Individual person's assets - No sustantial question of law - Paper-book & Special Court.
The Assessee-a notified person and of the Harshad Mehta Group as notified under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. The individual person's assets, including Bank Accounts were attached and stood vested in the hands of the Custodian appointed under the Act, therefore, the Assessee was held to be a benamidaar of Harshad S. Mehta. A search and seizure operations were conducted, where, no Books of Account were found and later it was found that no return was filed by the Assessee and simultaneously maintained e-bank accounts. The data available on computer was copied and seized. The Assessee failed to comply with the notice issued u/s 142(1) and hence, the AO completed the assessment u/s 144 determining the total income at Rs. 36,75,72,411/-. On appeal, the CIT(A) partly allowed the additions made by the AO, however, the Tribunal set aside both the assessment and CIT(A)'s order and restored the matter to the file of the AO for fresh consideration.
After such directions, the Assessee submitted copies of the printouts relating to the books of accounts. However, the AO rejected all the submitted documents for the books of account u/s 145(2) and proceeded to compute the Assessee's income using the net accretion method.
On appeal, the High Court held that,
Whether there is any justification to hold a different view on the issue when the Tribunal has remanded the same back to the AO for passing a fresh assessment order after giving reasonable opportunity of hearing to the Assessee - NO: HC
Whether a different view taken by the High Court is justified when no substantial question of law arises out of the Tribunal's order - NO: HC
++ having perused the paper-book and in its entirety, we find that the Tribunal had before it an order of the Commissioner. There were on the issues and grounds raised as many as 13 objections by the Assessee. He pointed out that the Commissioner could not have departed from his earlier views. More so, when in the earlier matters the Revenue has not questioned the approach of the Tribunal;
++ there was an additional ground raised in the sense that the Assessee contended before the Tribunal that the Commissioner ought to have appreciated that as per the decision of the Special Court, dated 30-4-2010, in Miscellaneous Petition No.41 of 1999 (by the Special Court for Trial of Offences relating to Securities), the assessment under consideration and consequentially the income belongs to Harshad Mehta. Hence, the income sustained by the AO ought to have been taxed in the hands of Harshad Mehta and the Assessee before the Tribunal. That is how the commonality to the case of Hitesh Mehta and others was attempted to be established;
++ the Special Counsel, appearing for the Revenue, would submit before the Tribunal that since similar issues are involved in the appeal of Smt. Pratima Mehta, the Assessee before us, when the Tribunal has remanded the matter back to the AO for passing a de novo assessment order after giving reasonable opportunity of hearing to the Assessee, then, he would have no objection to this course. The argument was that no useful purpose will be served by remanding the matter as the Books of Account were not audited.
++ the Tribunal has found that all these arguments were common and to the earlier cases. On facts, it found no justification for taking a different view. We do not think such an order of the Tribunal raises any substantial questions of law. The appeal is devoid of merits and is dismissed.
Revenue's appeal dismissed
2017-TIOL-2098-HC-KOL-CUS
BALAJI IMPEX PVT LTD Vs UoI: CALCUTTA HIGH COURT (Dated: August 29, 2017)
Cus - the assessee exported gloves and claimed duty drawback on such export - In the shipping bill, the assessee declared that it imported the specific number of cut inner lining to the gloves, free of cost and free of duty - The revenue denied drawback, on the strength of clause II of second proviso to Rule 3(1) of the DDR, 1995 - The assessee claimed that the aforementioned aspect was not considered while denying drawback.
Held - the assessee admitted having imported specified number of cut components for use as inner lining to the gloves manufactured by them, and that the same was imported free of cost & without any duty being payable - The inner material was an imported material which was exported as part of the gloves - In such case, where the assessee did not claim that the inner material was produced or manufactured in India for export, the question of applicability of clause II of second proviso to Rule 3(1) would not arise - The revenue directed to consider assessee's claim for drawback: High Court (Para 2,6)
Writ petition allowed
2017-TIOL-2097-HC-MUM-IT + Story
VIJAY VISHIN MEGHANI Vs DCIT: BOMBAY HIGH COURT (Dated: September 19, 2017)
Income tax - Section 80-O
Keywords - rectification application - condonation of delay - reasonable cause - advice of professionals
The Assessee, an individual, is a citizen of India, aged about 58 years and retired from service in January, 2003. During relevant period, he was employed with a German Bank as a Mumbai Representative and was rendering his services from India to a foreign employer. He, therefore, claimed a deduction u/s 80-O with respect to salary earned by him from the employer. The claim was however disallowed by both AO as well as CIT. Against this disallowance, the Assessee approached the Tribunal after consulting a Chartered Accountant. The assessee specifically stated that his previous CAs advised him not to file further appeals before the Tribunal to avoid multiplicity of litigation as the issue of Section 80O involved in A.Ys in question was identical to the one involved in the appeal before the Tribunal for A.Y 1993-94. He was also advised that after adjudication of the appeal for A.Y 1993-94, he could move a rectification application before AO to bring his assessment order in conformity with the decision of the Tribunal. After some time, the Assessee came to know that the Tribunal had restored the matter back to the file of AO for the A.Y 1993-94 to examine the issue of allowability of deduction u/s 80-O, and the AO passed an order allowing the claim in confirmity with the order of the Tribunal. That is how he first preferred a rectification application to the AO to rectify his order for A.Y 1994-95 and A.Y 1996-97. After continuous followup with the Department and also seeking information under the RTI, this rectification application was rejected. Thereafter, the assessee consulted another CA, who advised him to file appeals before the Tribunal against the initial orders of CIT together therewith an application for condonation of delay. It was in these circumstances that the assessee stated on oath that he acted bona fide under the advice from his CAs and there was no negligence on his part for seeking condonation of delay of 2984 days in filing the appeal. The Tribunal however refused to condone the delay.
On appeal, the HC held that,
Whether when the delay of over eight years in filing appeal is attributable to wrong professional advice, it can be said that reasons were beyond the assessee's control and condonation is justified - YES: HC
Whether a litigant can be deprived of adjudication on merits, if the Court of law or the Tribunal finds that the litigant has neither intentionally delayed filing of appeal, nor his conduct was lacking in bona fides - NO: HC
++ it is clear from the record that Assessee had filed an application supported by an affidavit. He stated that the order of CIT(A) was received for the A.Y 1994-95 on March 20, 2003. The last date for filing the appeal before the Tribunal was May 19, 2003. However, for the reasons beyond the control of the assessee, the appeal was filed on July 20, 2011 and there is a delay of 2984 days. We find that the Tribunal, out of sheer desperation and agitated by the fact that the Revenue is not opposing the request for condonation of delay, turned its attention towards the assessee's Chartered Accountant. It is very unfortunate that the Tribunal has, apart from seeking to advice professionals, blamed not only individual CAs but equally the Institute of Chartered Accountants of India. It is unfortunate that Courts of law or Tribunals, which are the last fact finding authorities in this case, adopted this course. A perusal of the whole order indicates that the Tribunal did not term the conduct of Assessee to be sole factor responsible for the delay. The conduct is not termed as negligent, callous and lacking in bona fides either. We find that the Tribunal holds that the assessee failed to show that there was sufficient cause. However, the explanation which the assessee provided was an advise from his Chartered Accountant. That is why the Tribunal stated that the advice of CAs were not only absurd but the assessee is faulted for blindly accepting such an advice;
++ it is noted that way back in the year 1979, in case of M/s. Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi and others, the Supreme Court has held that a legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay. Eventually, an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed filing of the appeal, that he is careless, negligent and his conduct is lacking in bona fides. It is seen that the Tribunal though aware of these principles, has been carried away by the fact that the delay of 2984 days is incapable of condonation. That is not how a matter of this nature should be approached. In the process the Tribunal went about blaming the assessee and the professionals and equally the Department. To our mind, therefore, the Tribunal's order does not meet the requirement set out in law. The Tribunal has completely misdirected itself and has taken into account factors, tests and considerations which have no bearing or nexus with the issue at hand;
++ the Tribunal, therefore, has erred in law and on facts in refusing to condone the delay. The explanation placed on affidavit was not contested nor we find that from such explanation can we arrive at the conclusion that the assessee was at fault, he intentionally and deliberately delayed the matter and has no bona fide or reasonable explanation for the delay in filing the proceedings. The position is quite otherwise. In the light of the above discussion, we condone the delay of 2984 days in filing the appeals but on the condition of payment of costs, quantified totally at Rs.50,000/-.
Case disposed of
2017-TIOL-2096-HC-KAR-FEMA
WOOD TECH CONSULTANTS PVT LTD Vs JOINT DIRECTOR OF ENFORCEMENT: KARNATAKA HIGH COURT (Dated: September 14, 2017)
FEMA - the appellant had filed an application for stay & waiver of pre-deposit of penalty imposed - The Tribunal partly set aside the deposit of penalty & directed pre-deposit of 10% of total penalty amount & furnishment of bank guarantee of 40% of the total penalty amount - Such order was passed under second proviso to Section 19(1) of the Act.
Held - Considering Section 19(1) of the Act, and also the reasoning of the Tribunal, it could not be said that the discretion exercised by the Tribunal in directing deposit of only 10% of the penalty and furnishing security (otherwise than bank guarantee) for 40% of the penalty, was unreasonable or arbitrary to warrant interference - No question of law arose in the present appeal, requiring filing of appeal u/s 35 of the Act: High Court (Para 1,2,3,5)
Appeal dismissed
