SCHEDULE OF CLASSES OF CS PROFESSIONAL STARTING FROM 18TH MARCH

IT dept to accept returns on 30th and 31st March, 2013

SECTION 119 OF THE INCOME TAX ACT, 1961 – INCOME TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES – ORDER FOR FACILITATING FILING OF IT RETURNS BY TAX PAYERS FOR F.Y. 2012-13 ON 30th & 31st MARCH, 2013

ORDER [F. NO. 225/45/2013/ITA.II],DATED 13-3-2013

The Financial Year 2012-13 closes on 31-3-2013. In view of holidays on 27th and 29th of March and thereafter, on 30th and 31st March, being Saturday and Sunday it is directed that all the Income-tax Offices through out India shall remain open and the receipts counters shall also work during normal office hours on 30th and 31st of March 2013. The direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income-tax Act, 1961.

Special arrangements may also be made by way of opening additional receipt counters, wherever required on 30th and 31st March 2013 to facilitate filing of return of income and other related work of tax payers. These instructions may be given wide publicity.

Royalty is payable to State governments only on the metal content extracted

March 14, 2013:  

Royalty is payable to State governments only on the metal content extracted. Tailings and rejects dumped back into the earth obviously are not metals mined and, to that extent, royalty cannot be levied on them.

This is what the Supreme Court said in State of Rajasthan and Others V. Hindustan Zinc Ltd. and Another.

The Apex court rejected the contention of the State that royalty would have to be paid on the entire quantity excavated inasmuch as processing the ore would also amount to consumption of the ore.

Therefore, even if the said ores — tailings and rejects — are not physically taken out of the leased area, the royalty will have to be paid on the contents of lead and zinc contained in the ore, the State contended.

Instead the court approved the stand of the respondent that royalty is payable only on what is taken out of the mines.

Directors Responsibility in Cheque Bounced Cases

The Supreme Court of India in a far reaching Judgment of the Bench of Hon'ble Justice Mr Sathasivam and Mr Justice H.Dattu reported in the case of National Small Industries Corp. Ltd. Versus Harmeet Singh Paintal & Anr. has dealt with the liability of Directors in Check Bouncing Cases under Section 141 of the Negotiable Instruments Act 

Two separate Appeals came before the Apex Court one related to National Small Industries Corp. Ltd vs Harmeet Singh Paintal & Anr and DCM Financial Services Ltd., vs M/s International Agro Allied Products Ltd. 

BRIEF FACTS: 

National Small Industries Corporation Ltd. had filed 12 criminal complaints under Section 138 read with Sections 141 and 142 of the Act against M/s Jay Rapid Roller Limited, a Company incorporated under the Companies Act, its Managing Director - Shri Sukhbir Singh Paintal, and its Director - Shri Harmeet Singh Paintal. It is the claim of the appellant that so as to make the Managing Director and Director of the Company liable to be prosecuted under the provisions of the Act, they had specifically averred in the complaint that all the accused persons approached it for financing of bill integrated market support program. It was also stated that the accused persons had issued cheques which were dishonored on presentation against which the appellant had filed criminal complaints under the provisions of the Act against all the respondents herein. It is their further case that all the accused persons accepted their liability and delivered various cheques, which are the subject matter of the present appeals. 


DCM Financial Services Ltd., entered into a hire purchase agreement on 25.02.1996 with M/s International Agro Allied Products Ltd. At the time of entering into contract, the Company handed over post-dated cheques to the appellant towards payment of monthly hire/rental charges. Respondent No.1 - Dev Sarin was one of the Directors of the said Company. The cheque issued by International Agro and Allied Products Ltd. in favour of the appellant was duly presented for payment on 28.10.1998 and the same was returned unpaid for the reason that the Company had issued instructions to the bankers stopping payment of the cheque. The appellant issued a legal notice on 05.12.1998 to the Company, Respondent No.1 and other Directors under Section 138 of the Act informing them about the dis-honouring of the cheque in question. Despite the service of the notice, the Company did not make the payment to the appellant. The appellant, on 11.01.1999, filed a complaint before the Metropolitan Magistrate, New Delhi against respondent No.1 and others under Section 138 read with Section 141 of the Act. By order dated 04.02.1999, the Metropolitan Magistrate, New Delhi, after recording evidence summoned the accused persons including respondent No.1 herein. Respondent No.1 filed an application before the Additional Sessions Judge, Delhi for dropping of proceedings against him. By order dated 08.09.2004, the Metropolitan Magistrate dismissed the said application. Aggrieved by the said order, the respondent filed a petition under Section 482 of the Criminal Procedure Code before the High Court for quashing of the complaint. The High Court, after finding that the averments against respondent No.1 are unspecific and general and no particular role is assigned to the appellant, quashed the summoning order insofar as it concerned to him. 


The Hon’ble Court considered the Statutory position and the liability of Directors and specifically Section 141 of the Negotiable Instruments Act . 

As per the Judgment written by His Lordship Mr Justice P.Sathasivam J the following principles of Law emerge from the Apex Court for fixing the liability of Directors under Section 141 of the N.I. Act for prosecuting them for an action under under Section 138 of the N.I.Act. 



(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. 

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. 

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. 

Expenditure on corporate membership of club is revenue expenditure

CIT vs. Groz Beckert Asia Ltd (P&H High Court – Full Bench)

 
The assessee obtained corporate membership of the Golf Club on payment of Rs.6 lakhs. The AO disallowed the expenditure on the ground that it was capital expenditure. This was reversed by the CIT(A) & Tribunal which held that the expenditure was revenue in nature. The department filed an appeal to the High Court and relied on Majestic Auto Ltd where the High Court had held that expenditure on corporate membership is in the nature of capital expenditure. As the Bench was of the view that Majestic Auto was not the correct law, the issue was referred to the Full Bench. HELD by the Full Bench:
 
In order to decide whether the expenditure is a revenue or a capital one has to look at the expenditure from a commercial point of view. Not every advantage of enduring nature constitutes capital expenditure. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable. If the advantage consists merely in facilitating the assessee’s trading operations or enabling the management and conduct of the assessee’s business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. On facts, the corporate membership was for a limited period of 5 years. It was obtained for running the business with a view to produce profit. Such membership does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred on the assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset (Otis Elevator 195 ITR 682 (Bom), Engineers India 239 ITR 237 (Del), Gujarat State Export Corp 209 ITR 649 (Guj) followed; Framatone Connector OEN 294 ITR 559 (Ker) dissented from; Majestic Auto overruled)

The Landowners have to no longer pay stamp duty if they retain some flats or shops after getting their property developed by a builder/developer.

CHANDRAKANT NANEKAR vs THE STATE OF MAHARASHTRA AND ANR. (Bombay HC)

Dated: 1^st March 2013

 

Recently Bombay High court heard a PIL filed by petitioner seeking a declaration that land owners were not required to pay stamp duty on flats and shops retained by them after getting their property developed by a builder/developer. The lawyer in return said that retaining some commercial and residential premises after getting your own property developed by any developer or builder cannot be treated as conveyance as envisaged under the Bombay Stamp Act, 1958 and therefore no stamp duty can be levied in such a transactions. Adding further he said, stamp authorities in Maharashtra were insisting that landowners pay stamp duty on premises retained by them and cited a reply received from stamp authorities at Pune said the duty as per Article 25(b) and 25(d) of the Bombay Stamp Act was payable for commercial and residential premises.

 

Before high court, The state government said that a circular will be issued in next two weeks Ld. AGP, submits that the Inspector General of Stamps will issue appropriate circular to all concerned to follow the legal position expounded by this Court in the above said case. That circular be issued within two weeks from today.

Order passed without dealing with objections filed by the Assessee is not valid

Posted In Income Tax | Judiciary | No Comments »

The passing of an order dealing with theobjections filed by the assessee is not an empty formality. The assessing officer has to apply his mind to theobjections raised and has to deal with the objections in the order. This has not been done in the present case. Consequently, order dated 28.01.2013 is set-aside.

THE HIGH COURT OF DELHI AT NEW DELHI

 Judgment delivered on: 08.02.2013

 W.P.(C) 711/2013

M/S JAY BHARAT MARUTI LTD                 
versus

ASSTT. COMMISSIONER OF INCOME TAX AND ORS  

JUDGMENTBADAR DURREZ AHMED, J (ORAL)

This writ petition is directed against the notice dated 30.08.2011 issued by the respondent undersection 148 of the Income Tax Act, 1961 (hereinafter referred to as ^„the said Act^‟) pertaining to theassessment year 2007-08. It is also directed against the order dated 28.01.2013 whereby the respondent has rejected the objections raised by the petitioner pursuant to the receipt of the purported reasons behind the proposed reopening of the assessment for the said assessment year 2007- 08.

2. On going through the order dated 28.01.2013 we find that the same has been passed without anyapplication of mind. To say the least, it is a cut-and-paste job. This is apparent from the fact that the paragraph 3 is merely a repetition of the provisions of section 147 and 148 of the said Act. Thereafter, paragraphs 4, 5 upto 5.6 comprise of quotations and extracts from Supreme Court andHigh Court decisions. Paragraph 5.7 is perhaps a reference to the case at hand. However, we find that the words mentioned therein could apply to any case. It appears to be a generic paragraph which is perhaps applied by the respondent to several such cases. In order to appreciate this fact we are reproducing the paragraph 5.7 hereinbelow: -

“5.7 In this case, the belief of the AO has been held in good faith and not on the basis of any rumour. In fact the reasons for issue of notice existed at the time of issue of notice and the reasons are genuine. They were in fact communicated to the assessee also. The reasons recorded are quite detailed. As is evident from the perusal of the reasons recorded, they in fact record the satisfaction of the AO that the income has escaped assessment on the basis of the reasons elucidated and the material on record as relied upon by the AO at the time while recording his satisfaction that the income had in     fact escaped  assessment.”     

3. Apart from the aforesaid paragraph there is no discussion of the points raised by the petitioner in its objections. In fact, portions of the objections furnished by the petitioner have been copied verbatim as would be apparent from paragraph 2 of the order which reads as under: -

“2. Notice u/s. 148 was issued after recording the reasons under section 147 of the Act on 30.08.2011 and duly served. In response to the same, assessee has submitted written submission dated 27.09.2011 wherein the assessee submitted that the notice is illegal and without jurisdiction. We object the reassessment proceedings. The return already filed by u/s 139 for A Y 2007-08 may please be treated as return filed in pursuance of the notice now received. Further, it was also requested to enable us to make objections both on facts and in law to the proposed reassessment, please give us reasons recorded for reopening the assessee and also the order of sanction obtained for the purpose and on receipt of the same we shall make detailed submission and objection, both on facts and in law after which we wish to be heard in person for which adequate opportunity be granted to determine the justifiability or otherwise of the action for reassessment in terms of the decision of GKN Driveshaft Ltd. Vs. CIT (2003) 259 ITR 19 (SC) and not issue on merits be taken up for any decision before the validity of action for reassessment is decided. The reasons recorded under section 147 were provided to the AR of the Assessee Company. The assessee filed an objection against the issuance of notice under section 148 vide written submission.”

It is apparent on going through the above extract that the respondent has not even bothered to change the words such as “we”, “us”, etc. which the petitioner had used in its objections/ reply. This shows that the respondent had not even applied his mind and not even bothered to correct the contents of paragraph 2 so as to put it into second person or third person in the grammatic sense.

4. For the aforesaid reasons, after hearing the counsel for the parties at the stage of admission itself we feel that such an order cannot be permitted to stand as it smacks of non-application of mind. The passing of an order dealing with the objections filed by the assessee is not an empty formality. The assessing officer has to apply his mind to the objections raised and has to deal with theobjections in the order. This has not been done in the present case. Consequently, order dated 28.01.2013 is set-aside. The matter is remitted to the respondent to pass a fresh order after taking into account the objections filed by the petitioner as also after giving the petitioner an opportunity of hearing. The order be passed by the respondent within three weeks. We have not commented at all on the merits of this petition with regard to the validity of the notice dated 30.08.2011. That issue is kept open. The writ petition stands disposed of.