TIOL-DDT 2366
03.06.2014
Tuesday

OUR CESTAT has also achieved a not so rare distinction in Indian Judicial history. The number of pending cases in the beginning of this financial year has crossed the unmanageable level of 100,000 - yes ONE LAKH cases.

As on 1.5.2014 there are 1,01,074 cases pending in the 6 seats of CESTAT Benches. Delhi is leading with over 28,000 cases, while Mumbai is a close second with 21,000 cases. Kolkata is last with less than 10,000 cases. Bangalore has about 18,000 pending cases, while Chennai has nearly 12,000 cases and Ahmedabad has slightly over 12,000 cases.

The monthly disposal of all Benches put together is about 3000 and the fresh accruals are about 3500.

Maybe we need at least twenty more Benches to bring down the arrears to some manageable limits - and it doesn't really cost much to have more CESTAT Benches. A part of the cadre review in the Department should be diverted to CESTAT. Reduce the number of posts of Commissioners by about 50 and that money can be diverted to CESTAT. Less number of Commissioners means less litigation and more Members in the Tribunal means more disposal of cases.

It is possible to retrieve this Tribunal before it collapses under its own weight - the new FM should bestow his attention on this problem before it is too late.

CBDT makes e-filing of certain reports mandatory and prescribes new return forms

CBDT has amended the Income Tax Rules to prescribe new return forms and to make e-filing mandatory for certain reports.

As per the Proviso to Rule 12(2) of the Income Tax Rules,

Provided that where an assessee is required to furnish a report of audit specified under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, clause (b) of sub-section (1) of section 12A, section 44AB, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E or section 115JB 37[or to give a notice under clause (a) of sub-section (2) of section 11] of the Act, he shall furnish the same electronically .

Now the following sections are added in the above proviso:

10AA: Special provisions in respect of newly established Units in Special Economic Zones

44DA: Special provision for computing income by way of royalties, etc., in case of non- residents.

50B: Special provision for computation of capital gains in case of slump sale

115VW: Maintenance and audit of accounts.

The Following new Forms have been prescribed:

It may be recalled that the Board had earlier by Notification No. 24/2014 dated 01.04.2014 notified the Forms SAHAJ (ITR-1), ITR-2, SUGAM (ITR-4S) and ITR-V.

CBDT Notification No. 28/2014, Dated: May 30, 2014

Biggest ever Seizure of Opium by CBN

THE Amritsar unit of the Central Bureau of Narcotics led by Superintendents J L Meena and V S Meena seized 205 kgs of opium on 31.5.2014 at Gongunda Toll Plaza, Udaipur-Pindwara Road, NH-76, District-Udaipur, Rajasthan from a Maruti Swift Dezire Car. Four persons were arrested and the Maruti Swift Dezire car was also seized.

This is the biggest seizure of opium in last 25 years.

Drug traffickers use vehicles of non-cultivation areas to divert the attention of the officials. They are also accompanied by ladies to avoid searches by CBN sleuths.

TDS - Mis-match in Form 26AS - Assessee not responsible - IT Department asked to refund excess tax and cost of Rs. 25,000

WHAT will you do if your TDS details do not match with the figures shown in the Form 26AS? The Income Tax Department will not give you credit for the TDS.

In this case, the deductor was Indian Railways - a Government Department and the Income Tax Department refused to give refund to the assessee because the TDS certificates did not match with the Form 26AS. If they did not match, either the deductor or the Income Tax Department is responsible and certainly not the assessee.

But the Government is fond of punishing the assessee for the fault of any Government department.

The frustrated assessee had to approach the High Court for relief.

The High Court observed,

The petitioner has suffered a tax deduction at source, but has not been given due credit inspite of the fact that he has been issued a TDS certificate by a government department. There is a presumption that the deductor has deposited TDS amount in the government account especially when the deductor is a government department. By denying the benefit of TDS to the petitioner because of the fault of the deductor causes not only harassment and inconvenience, but also makes the assessee feel cheated. There is no fault on the part of the petitioner. The fault, if any, lay with the deductor. In the instant case, nothing had been indicated that the fault lay with the petitioner in furnishing false details.

The High Court directed refund of the amount claimed, with interest and also ordered payment of cost of Rs. 25,000 to the petitioner.

This is yet another kind of tax terrorism that Modi has promised to put an end to.

Please see 2014-TIOL-785-HC-ALL-IT

Jurisprudentiol - Wednesday's cases

Customs/CE

Appellant, 100% EOU procuring duty free imported/indigenous goods for use in manufacture - finished goods/raw materials destroyed in fire - One of conditions of licence and warehousing bond executed by appellant is that appellant shall insure goods at least for value equal to Customs duty - By failing to do so, clear breach of sections 58 & 65 of Customs Act, 1962 - demand upheld: CESTAT

THE appellant is a 100% EoU manufacturing bulk drugs and pharmaceutical products. In a fire accident, the raw materials procured by the appellant, both imported as well as domestic, as well as finished products manufactured by using duty-free raw materials were damaged by fire.

As per the insurance survey report, the VALUE of the finished goods destroyed in the fire on 17/10/2002 was Rs.1.52 Crores and the value of raw materials both imported and indigenous, destroyed in the fire was Rs.69 lakhs. Duty on the raw materials contained in the finished goods amounted to Rs.73.46 lakhs and the duty involved in the raw materials which were damaged amounted to Rs.39.48 lakhs.

Income Tax

Whether if closing stock value is enhanced by Revenue, it would concomittantly increase profit from business - NO: ITAT

THE assessments were completed in the hands of the assessee u/s. 143(3) r.w.s. 153C. The assessee had declared income from STCG arising from purchase and sale of immovable properties and the same was accepted by the AO without making any discussion about it. The CIT noticed that the assessee had undertaken many transactions of purchase and sale of immovable properties and accordingly, he took the view that the assessee was carrying on business in immovable properties. The CIT concluded that the income of the assessee has not been assessed fully and correctly which was erroneous and prejudicial to the interests of revenue. The CIT set aside the assessment orders with the direction to the AO to treat the transactions in real estate as a business venture carried on by the assessee.

The issues before the Bench are - Whether if the closing stock value is enhanced by the Revenue, it would concomittantly increase the profit from business and Whether any prejudice is caused to the Revenue if the gains from sale of immovable properties is treated as STCG rather than business income. And the verdict goes in favour of the assessee.

Service Tax

Consulting Engineer - as assessee was company registered under Companies Act, 1956, they were outside purview of definition of ‘Consulting Engineer' during period 2001-03 as ‘body corporate' was brought within ambit of definition only w.e.f. 01.05.2006 - no ST payable - Revenue appeal dismissed: CESTAT

THIS is a Revenue appeal.

A SCN was issued demanding Service Tax of Rs.17,85,768/- alleging that the assessee had provided ‘Consulting Engineer' service during the period 2001-03.

In response, the assessee inter alia submitted -

+ Rs.1,40,26,960/- is the consideration received for having provided the activity of soil testing, survey work, drilling survey to the National Highways Authority of India and this consideration falls outside the ambit of "consulting engineer" service.

+ Amount of Rs.90,03,799/- received by way of reimbursement of expenses for providing the "consulting engineer" service are liable to be excluded i.e. an amount of Rs.90,03,799/-.

+ Service tax liability, if any, is remittable by the principal consultants, namely Louis Berger Inc. and Scott Wilson Kirkpatrick India Pvt. Ltd.

+ Since the assessee was a company registered under the Companies Act, 1956, it was outside the ambit of the definition of "consulting engineer" which includes only a "consulting engineering" firm; that only with effect from 1.5.2006 Section 65(31) was amended to bring within the ambit of the definition "any body corporate".

The Joint Commissioner was in no mood to listen to all this and so he confirmed the demand with penalties et al.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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