IT : An order rejecting application under section 254(2) is not appealable under section 260A - [2011] 10 taxmann. com 193 (All.)
Sunday, June 12, 2011
Bank cannot be compelled to give loan: consumer court
..Bank cannot be compelled to give loan: consumer court
A bank cannot be compelled to provide loan "under any law or procedure" to a consumer and the latter cannot demand compensation for expenses incurred in applying for the process, the Delhi State Consumer Forum has ruled.
"Under no law and procedure, a bank can be compelled to give loan, and that is what the complainant wants. If in the process of furnishing documents, some expenses have been incurred by him, as argued, he can not be entitled to the compensation," Justice Barkat Ali Zaidi said.
The State Consumer Commission gave the order while dismissing an appeal by three Delhi residents against ING Vysya Bank at the admission stage in an ex-parte order.
Applicants Muni Lala Goel, Veenu Mangla and Suresh Mangla had approached the state consumer commission to appeal against a Delhi district consumer forum ruling, which had dismissed their pleas for compensation from the bank for rejecting their loan applications.
Alternatively, they had sought consumer forum''s direction to the bank to advance loan to them.
However, the Delhi State Consumer Commission dismissed their appeal saying that neither a bank can be compelled to give loan nor the consumer can demand compensation incurred in the process.
Earlier, the matter was also adjudicated by the Banking Ombudsman under the Banking Ombudsman Scheme and then by its appellate authority.
The state consumer forum also observed that it cannot reopen the same proceedings now.
"The State Consumer Forum cannot reopen the proceedings and pass another judgment on the dispute. There is no question of deficiency in service involved," it said.
...
A bank cannot be compelled to provide loan "under any law or procedure" to a consumer and the latter cannot demand compensation for expenses incurred in applying for the process, the Delhi State Consumer Forum has ruled.
"Under no law and procedure, a bank can be compelled to give loan, and that is what the complainant wants. If in the process of furnishing documents, some expenses have been incurred by him, as argued, he can not be entitled to the compensation," Justice Barkat Ali Zaidi said.
The State Consumer Commission gave the order while dismissing an appeal by three Delhi residents against ING Vysya Bank at the admission stage in an ex-parte order.
Applicants Muni Lala Goel, Veenu Mangla and Suresh Mangla had approached the state consumer commission to appeal against a Delhi district consumer forum ruling, which had dismissed their pleas for compensation from the bank for rejecting their loan applications.
Alternatively, they had sought consumer forum''s direction to the bank to advance loan to them.
However, the Delhi State Consumer Commission dismissed their appeal saying that neither a bank can be compelled to give loan nor the consumer can demand compensation incurred in the process.
Earlier, the matter was also adjudicated by the Banking Ombudsman under the Banking Ombudsman Scheme and then by its appellate authority.
The state consumer forum also observed that it cannot reopen the same proceedings now.
"The State Consumer Forum cannot reopen the proceedings and pass another judgment on the dispute. There is no question of deficiency in service involved," it said.
...
Saturday, June 11, 2011
Closing stock of an erstwhile firm converted into stock-in-trade
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Closing stock of an erstwhile firm converted into stock-in-trade by a proprietorship concern will have to be valued at the market value.Income-tax : On dissolution of a firm closing stock has to be valued on the basis of real value i.e., market value, which is independent of the fact whether or not the erstwhile partners of a dissolved firm continue to do business with assets received on dissolution [Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of stock] - [2011] 10 taxmann.com 126 (Delhi)
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Friday, June 10, 2011
ITAT (PUNE) : -AO directed to pay costs for “Recovery Harassment"
Shramjivi Nagari Sahakari Pat Sanstha vs. ACIT (ITAT Pune)
*AO directed to pay costs for “recovery harassment”
The assessee, a credit co-operative society, contravened s. 269SS & 269T because of which penalty u/s 271E was levied. The CIT(A) confirmed the levy of penalty. *Before service of the CIT(A)’s order, the assessee’s bank account was attached u/s 226(3)*. The assessee filed a stay application and claimed that as the assessee had to bear costs owing to the illegal action of the AO, costs had to be awarded to it. HELD upholding the assessee’s plea:
*AO directed to pay costs for “recovery harassment”
The assessee, a credit co-operative society, contravened s. 269SS & 269T because of which penalty u/s 271E was levied. The CIT(A) confirmed the levy of penalty. *Before service of the CIT(A)’s order, the assessee’s bank account was attached u/s 226(3)*. The assessee filed a stay application and claimed that as the assessee had to bear costs owing to the illegal action of the AO, costs had to be awarded to it. HELD upholding the assessee’s plea:
INCOME TAX REPORTS (ITR) HIGHLIGHTS
ISSUE DATED 13-6-2011 Volume 334 Part 3
SUPREME COURT JUDGMENTS
--> Business loss : Loss allowed for earlier and subsequent years : Matter remanded : Perfetti Van Melle India P. Ltd. v. CIT p. 259
--> Assessment order passed without granting opportunity to cross-examine : High Court ought only to direct AO to grant cross-examine : ITO v. M. Pirai Choodi p. 262
--> Huge stakes involved : Delay of department in appealing : High Court to decide case on merits and not to dismiss appeal on ground of delay : CIT v. West Bengal Infrastructure Development Finance Corporation Ltd. p. 269
HIGH COURT JUDGMENTS
--> Tribunal finding no error in unabsorbed depreciation allowed to be set of in assessment year in question while passing original assessment order : S. 154 cannot be invoked : CIT v. Eli Lilly and Co. India P. Ltd. (Delhi) p. 186
--> Income from sale of shares held as investment : Assessable as capital gains : CIT v. Amit Modi (P&H) p. 192
--> Construction business : Assessee regularly following completed contract method and not giving scope for any complaint in any earlier year : Unnecessary for AO to invoke s. 145(3) : CIT v. SAS Hotels and Enterprises Ltd. (Mad) p. 194
--> Unexplained investment : No evidence that admission by assessee was untrue : Assessment based on admission valid : Hukum Chand Jain v. ITO (Raj) p. 197
--> Power of Commissioner (Appeals) to admit additional evidence : Commissioner (Appeals) justified in obtaining revised report of DVO and deleting additions : CIT v. Om Overseas (P&H) p. 202
--> Settlement of cases : Notice u/s. 245D alleging fraud could not be quashed : Chandragiri Construction Co. v. ITSC (Mad) p. 211
--> Tribunal disallowing expenses on foreign travel on ground no evidence that visit was for business purpose : No question of law : Vithal Overseas v. CIT (P&H) p. 229
--> Transfer of cases : Reasons recorded in a separate sheet and not communicated to assessee : Requirement u/s 127 not satisfied : Deep Malhotra v. Chief CIT ( P&H) p. 232
--> Interest earned from fixed deposits taxable : Madras Cricket Club v. ITO (Mad) p. 238
--> Additional Director (Investigation) does not have power to issue warrant : CIT v. Pawan Kumar Garg (Delhi) p. 240
--> Assessment : Co-owners : Assessment to be made on co-owners as individuals and not in the status of AOP : CIT v. Smt. Sunita Rani Aggarwal (All) p. 252
--> Gas supplied to assessee by ONGC : Dispute regarding price settled subsequently : Liability to pay accrued during the years in which gas was received : CIT v. Mahendra Mills Ltd. (Guj) p. 254
--> Effect of s. 36 wef 1-4-1989 : Writing of debt as irrecoverable sufficient : CIT v. Sirpur Paper Mills Ltd. (AP) p. 256
--> Tribunal finding interest earned on unutilised portion of amount borrowed for business purposes : Interest constituted business income : CIT v. Varun Shipping Co. Ltd. (Bom) p. 263
--> Conviction and sentence of detention : Subsequent application for compounding of offence not maintainable : Anil Tools and Forgings v. Chief CIT ( P&H) p. 265
--> Provision for non-performing assets : Assessee not entitled to deduction : Indbank Merchant Banking Services Ltd. v. Asst. CIT (Mad) p. 271
--> No new industrial unit established nor existing industrial undertaking expanded : Disallowance of preliminary expenses justified : Indbank Merchant Banking Services Ltd. v. Asst. CIT (Mad) p. 271
STATUTES AND NOTIFICATIONS
--> Rules :
Income-tax (Third Amendment) Rules, 2011 (Contd.)
--> Notifications :
Income-tax Act, 1961 : Notification under rule 6(b) of Part A of the Fourth Schedule : Recognised provided fund : Rate of interest notified p. 295
Income-tax Act, 1961 : Notification under section 90 : Agreement between the Government of the Republic of India and the Government of the Commonwealth of the Bahamas for the Exchange of Information with respect to taxes p. 296
NEWS-BRIEF
--> India and Ethiopia sign Double Taxation Avoidance Agreement
India signed a Double Taxation Avoidance Agreement (DTAA) with the Federal Democratic Republic of Ethiopia for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on May 25, 2011 at Addis Ababa.
The DTAA provides that business profits will be taxable in the source State if the activities of an enterprise constitute a permanent establishment in the source State. Examples of permanent establishment include a branch, factory, etc. Profits of a construction, assembly or installation projects will be taxed in the State of source if the project continues in that State for more than 183 days.
Profits derived by an enterprise from the operation of ships or aircrafts in international traffic shall be taxable in the country of residence of the enterprise. Dividends, interest, royalties and fees for technical services income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 7.5% in the case of dividends and 10% in the case of interest, royalties and fees for technical services. Capital gains from the sale of shares will be taxable in the country of source.
The Agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed only by the genuine residents of the two countries.
The Agreement will provide tax stability to the residents of India and Ethiopia and facilitate mutual economic co-operation as well as stimulate the flow of investment, technology and services between India and Ethiopia. [Source : www.pib.nic.in dated May 27, 2011]
Failure To Ask For S. 147 Reasons Fatal: Delhi High Court
CIT vs. Safetag International India Pvt Ltd (Delhi High Court)
If assessee does not ask for s. 147 reasons & object to reopening, ITAT cannot remand to AO & give assessee another opportunity
The assessee’s assessment was reopened u/s 147. *The assessee did not ask for the recorded reasons*. Even before the CIT(A), though the assessee challenged the reopening as being without jurisdiction, *it did not ask for the reasons*. Before the Tribunal, the assessee claimed that *it was not aware that it could demand the reasons and object thereto*. Pursuant thereto the Tribunal *remitted the case to the AO with direction that the reasons & opportunity to object be provided* and denovo assessment be framed if objections were rejected. On appeal by the department, HELD allowing the appeal:
Dear Friends : The emails are schedule to be posted in the blog and will sent to the group on carious dates and time fixed. Instead of sending it on one day it is spread on various dates. regards. R R Makwana
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IT : Decision regarding territorial jurisdiction of High Court in New India Assu
IT : Decision regarding territorial jurisdiction of High Court in New India Assurance Co. Ltd. v. UOI [AIR 2010 Delhi 43 (FB)] referred to a Larger Bench
Income-tax : Statement of law with regard to `cause of action', `sole cause of action', `forum conveniens' and `the imposition of limitation for exercise of jurisdiction under Article 226 and discretionary exercise of power' have been too broadly stated in all encompassing manner by Full Bench of High Court of Delhi in said case (supra) and, therefore, said decision requires to be reconsidered by a Larger Bench [Article 26 of the Constitution of India - Writ - Maintainability of] - [2011] 10 taxmann.com 120 (Delhi)
Income-tax : Statement of law with regard to `cause of action', `sole cause of action', `forum conveniens' and `the imposition of limitation for exercise of jurisdiction under Article 226 and discretionary exercise of power' have been too broadly stated in all encompassing manner by Full Bench of High Court of Delhi in said case (supra) and, therefore, said decision requires to be reconsidered by a Larger Bench [Article 26 of the Constitution of India - Writ - Maintainability of] - [2011] 10 taxmann.com 120 (Delhi)
Thursday, June 9, 2011
Sale of contract NOT covered u/s 194C
Contract for sale of goods will not be covered within ambit of section 194C of IT Act
Simply because the assessee monitors the manufacturing process it does not change the character of the transaction.
ITAT, MUMBAI BENCHES `G' MUMBAI
Glenmark Pharmaceuticals Ltd. v. ITO (TDS)
ITA NO. 935/Mum./2007
March 5, 2009
RELEVANT EXTRACTS:
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23. After careful consideration of the above circular it is clear that the contract for the sale of goods will not be covered within the ambit of sec. 194 C. In the present case we find that the assessee placed orders with the manufacturers for manufacturing of the medicines strictly according to its specifications but the property in such goods passed to the assessee only after these were delivered to him. When the manufacturers were purchasing the raw material at their own cost under incurring other expenses subsequently the product is delivered to the assessee. If it is manufactured according lo the specifications made by the assessee and delivered to it that property in goods can be set to have passed to the assessee. In the present case the assessee has simply placed the orders for the manufacture of medicines according to its own specifications and nil other relevant decisions for the manufacturing have been left to the wisdom of the manufacturer. The assessee only interested in the output coming of to its standard. How that output is achieved is the job of the manufacturer. Simply because the assessee monitor the manufacturing process it does not change the character-of the transaction.; When the manufacturers have their own establishment and their labour force, the raw material purchased by themselves, even the excise duty is also paid by them directly. Further when such manufacturers make the sale of such goods to the assessee the sales tax is also paid by them. Ultimately the manufacturers manufacturing the product by their own subjected to assessee's specifications supervision , control and later on sold such goods to the assessee. The property in goods passes over to the assessee only when such goods are manufactured and delivered to it. Hence, these arc only contract for sale of goods and not works contracts.
24. The Hon'ble Bombay court in case of BDA Ltd. Vs ITO [2006 ]281 ITR 99 (BOM). In this case M/s BDA Ltd. had distillary at Aurangabad and it purchased materials required for bottling and marketing the foreign made Indian liquor including the printing and packing material. M/s.Mudranika, another establishment was supplying the printed labels to be rapped on the bottles to the assessee. The ITO has held that the payment made to M/s.Mudranika. the supplier of the printed material from whom the printed labels were purchased, executed the contract liable for of tax at source u/s 194 C of the Act. The Hon'ble High Court observes M/s.Mudranika was an independent establishment in the business of supplying packing material to various establishments and the assessee had issued a order in favour of M/s.Mudranika for supply of printed labels as per the specification; provided by it but the raw material was not supplied by the assessee. It was noted that when the printing work was being carried in the premises of M/s. Mudranika though as per the specifications of the assessee the supply was limited to the quantity specified in the purchase order. There was nothing on record to show that all other ancillary cost were not incurred by M/s. Mudranika. In this background of the facts of the case, the Hon'ble Bombay High Court has held that the supply of printed labels by M/s. Mudranika to the assessee was "contract for sale" it could not be deemed as "works contract". Similar view has been taken by Delhi Bench of the Tribunal in DCIT Vs. Reebok India Company [2006] 100 TTJ 976(Del) which now stands approved by Hon'ble Delhi High Court in CIT Vs. Reebok India Company [2009] 221 CTR 508(Del). In another case Whirl Pool India Ltd Vs JCIT 16 SOT 435 Delhi Tribunal has held that where vendor purchases raw material on his own manufactured goods as per specifications of the assessee and the property in the goods passes to the assessee at the point of time goods are sold, it is a case of sale of goods not a job work.
25. Coining to instant case we find that there is a complete identity of facts with those considered by Hon'ble Jurisdictional High Court in as much as that the goods were manufactured by the manufacturers in their own establishments in accordance with the specifications given by the assessee. The raw material cost and other expenses incurred by their own. Even the excise duty was paid by them when the goods arc sold the sales tax also paid by the manufacturers. When the goods are sold to the assessee the property in them passed over to the assessee. Under these circumstances, we arc of the considered opinion that the agreements of the assessee with the manufacturers can not be termed as 'works contract'. "Die impugned order is therefore set aside and the application of section 194 C is ruled out. That being the position there can not be any question of treating the assessee as in default u/s 201(1) or charging any interest u/s 201(1A).
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Simply because the assessee monitors the manufacturing process it does not change the character of the transaction.
ITAT, MUMBAI BENCHES `G' MUMBAI
Glenmark Pharmaceuticals Ltd. v. ITO (TDS)
ITA NO. 935/Mum./2007
March 5, 2009
RELEVANT EXTRACTS:
** ** ** ** ** ** ** ** ** ** ** **
23. After careful consideration of the above circular it is clear that the contract for the sale of goods will not be covered within the ambit of sec. 194 C. In the present case we find that the assessee placed orders with the manufacturers for manufacturing of the medicines strictly according to its specifications but the property in such goods passed to the assessee only after these were delivered to him. When the manufacturers were purchasing the raw material at their own cost under incurring other expenses subsequently the product is delivered to the assessee. If it is manufactured according lo the specifications made by the assessee and delivered to it that property in goods can be set to have passed to the assessee. In the present case the assessee has simply placed the orders for the manufacture of medicines according to its own specifications and nil other relevant decisions for the manufacturing have been left to the wisdom of the manufacturer. The assessee only interested in the output coming of to its standard. How that output is achieved is the job of the manufacturer. Simply because the assessee monitor the manufacturing process it does not change the character-of the transaction.; When the manufacturers have their own establishment and their labour force, the raw material purchased by themselves, even the excise duty is also paid by them directly. Further when such manufacturers make the sale of such goods to the assessee the sales tax is also paid by them. Ultimately the manufacturers manufacturing the product by their own subjected to assessee's specifications supervision , control and later on sold such goods to the assessee. The property in goods passes over to the assessee only when such goods are manufactured and delivered to it. Hence, these arc only contract for sale of goods and not works contracts.
24. The Hon'ble Bombay court in case of BDA Ltd. Vs ITO [2006 ]281 ITR 99 (BOM). In this case M/s BDA Ltd. had distillary at Aurangabad and it purchased materials required for bottling and marketing the foreign made Indian liquor including the printing and packing material. M/s.Mudranika, another establishment was supplying the printed labels to be rapped on the bottles to the assessee. The ITO has held that the payment made to M/s.Mudranika. the supplier of the printed material from whom the printed labels were purchased, executed the contract liable for of tax at source u/s 194 C of the Act. The Hon'ble High Court observes M/s.Mudranika was an independent establishment in the business of supplying packing material to various establishments and the assessee had issued a order in favour of M/s.Mudranika for supply of printed labels as per the specification; provided by it but the raw material was not supplied by the assessee. It was noted that when the printing work was being carried in the premises of M/s. Mudranika though as per the specifications of the assessee the supply was limited to the quantity specified in the purchase order. There was nothing on record to show that all other ancillary cost were not incurred by M/s. Mudranika. In this background of the facts of the case, the Hon'ble Bombay High Court has held that the supply of printed labels by M/s. Mudranika to the assessee was "contract for sale" it could not be deemed as "works contract". Similar view has been taken by Delhi Bench of the Tribunal in DCIT Vs. Reebok India Company [2006] 100 TTJ 976(Del) which now stands approved by Hon'ble Delhi High Court in CIT Vs. Reebok India Company [2009] 221 CTR 508(Del). In another case Whirl Pool India Ltd Vs JCIT 16 SOT 435 Delhi Tribunal has held that where vendor purchases raw material on his own manufactured goods as per specifications of the assessee and the property in the goods passes to the assessee at the point of time goods are sold, it is a case of sale of goods not a job work.
25. Coining to instant case we find that there is a complete identity of facts with those considered by Hon'ble Jurisdictional High Court in as much as that the goods were manufactured by the manufacturers in their own establishments in accordance with the specifications given by the assessee. The raw material cost and other expenses incurred by their own. Even the excise duty was paid by them when the goods arc sold the sales tax also paid by the manufacturers. When the goods are sold to the assessee the property in them passed over to the assessee. Under these circumstances, we arc of the considered opinion that the agreements of the assessee with the manufacturers can not be termed as 'works contract'. "Die impugned order is therefore set aside and the application of section 194 C is ruled out. That being the position there can not be any question of treating the assessee as in default u/s 201(1) or charging any interest u/s 201(1A).
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Dear Friends : The emails are schedule to be posted in the blog and will sent to the group on carious dates and time fixed. Instead of sending it on one day it is spread on various dates. regards. R R Makwana
Wednesday, June 8, 2011
ITR(Trib) Issue Vol 9 part 7 dated 13-06-2011
ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS
ISSUE DATED 13-06-2011
Volume 9 Part 7
APPELLATE TRIBUNAL ORDERS
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============================================================================= Dear Friends : The emails are schedule to be posted in the blog and will sent to the group on carious dates and time fixed. Instead of sending it on one day it is spread on various dates. regards. R R Makwana
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Corporat Loans/advances, can't be treated as deemed dividend
Loans/advances given by a company to another company, which is not a shareholder of lender company, can't be treated as deemed dividend
Income-tax : Deeming fiction of s. 2(22)(e) can be applied only in the hands of the shareholder and not the non-shareholder [Section 2(22) of the Income-tax Act, 1961 - Deemed dividend] - [2011] 10 taxmann.com 122 (Indore - ITAT)
Income-tax : Deeming fiction of s. 2(22)(e) can be applied only in the hands of the shareholder and not the non-shareholder [Section 2(22) of the Income-tax Act, 1961 - Deemed dividend] - [2011] 10 taxmann.com 122 (Indore - ITAT)
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