TMI Tax Updates - e-Newsletter
January 1, 2014

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Implications of tax levied at first point of sales on certain goods under Punjab VAT

   By: AMIT BAJAJ ADVOCATE

News

1. RBI Reference Rate for US $ and Euro

2. Anand Sharma Expresses Optimism for Economy in 2014

3. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Silver and Gold Notified

4. Index of Eight Core Industries (Base: 2004-05=100) November, 2013

5. Issue of Rs.500 Banknotes with incorporation of Rupee symbol Rs. and inset letter 'R'

6. RBI announces rate of interest on Floating Rate Bonds, 2017

7. RBI's clarification on Scribbling on Banknotes

8. YEAR END REVIEW-2013 COMPETITION COMMISSION OF INDIA

9. India’s External Debt at End-September 2013

10. Proposals Considered in the Foreign Investment Promotion Board (Meeting Held on 09.12.2013)

Notifications

Central Excise

1. 18/2013 - dated 31-12-2013 - CE (NT)

CENVAT Credit (Third Amendment) Rules, 2013

2. 17/2013 - dated 31-12-2013 - CE (NT)

Central Excise (Third Amendment) Rules, 2013

Customs

3. 134/2013 - dated 31-12-2013 - Cus (NT)

Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

4. 133/2013 - dated 30-12-2013 - Cus (NT)

Amendment of Customs Baggage Declaration Regulations, 2013

DGFT

5. 62 (RE–2013)/2009-2014 - dated 1-1-2014 - FTP

Export of Stone Aggregate to Maldives.

Circulars / Instructions / Orders

FEMA

1. 82 - dated 31-12-2013

Import of Gold by Nominated Banks/Agencies/Entities

Highlights / Catch Notes

Income Tax

• Interest Income from Non-Residents Abroad Not Taxable u/s 9, Confirmed by Section 5 of Income-tax Act.

  Case-Laws - AT : By virtue of the provisions of section 5 interest income received abroad and paid by a non-resident cannot be brought to tax under Section 9 of the Income-tax Act- AT
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• Payment to State Electricity Board for Line Work Deemed Revenue, Not Enduring Asset Acquisition.

  Case-Laws - HC : It cannot be said that by changing the line the assessee procured some enduring asset - The amount paid to the State Electricity Board, for laying additional lines, and for shifting HT lines, was of revenue nature - HC
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• Court to Review Legal Stance on Investigating India Development Bonds as Gifts from Non-Resident Indians Under Tax Law.

  Case-Laws - HC : Genuineness of gift received in the form of IDBs - matter referred to larger bench - whether the decision that no investigation can be allowed to be held pertaining to the India Development Bonds which were received from NRI's/overseas, Corporate Bodies as gifts is a correct view, in law? - HC
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• Masala Production Using Spices Qualifies as Manufacturing for Tax Deductions u/s 80-IB of Income Tax Act.

  Case-Laws - AT : Producing different varieties of masala using different spices as inputs would amount to manufacturing and such a process is eligible for deduction under section 80-IB - manufacturing different masala powders amounts to manufacturing activity - AT
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• Interest on Refunds u/s 244A: Applicable for Excess Amounts Held, Not Revenue's Delay in Processing.

  Case-Laws - HC : Interest on the refund for the period of delay u/s 244A - interest is payable on account of the amount in excess of what is payable was remaining with the revenue and not for the delay caused by the revenue in determining the refund of the amount - HC
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• Software Expenses Classified as Revenue Expenditure: Accounting Records Do Not Determine Nature of Expense.

  Case-Laws - AT : The treatment of a particular expense or a provision in the books of account can never be conclusively determinative of the nature of the expense - The expenditure incurred by the assessee on account of software expenses was a revenue expenditure - AT
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• Section 80P(2)(a)(i) Deduction: Non-Banking Activities Excluded from Tax Benefits Under Income Tax Act.

  Case-Laws - AT : Deduction u/s 80P(2)(a)(i) of the Act – An activity which is not connected with banking operation cannot come or fall within the phrase “any such activities“ - AT
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• Real estate firms can classify land as stock or investment; sales from investments taxed as capital gains.

  Case-Laws - AT : Real estate companies can also hold separate port folio of land as stock in trade and as investment port folio; the sale of investment portfolio is always taxed as capital gains - AT
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Customs

• Government Servants Can Receive Ex Gratia Rewards as Informers Only in Extraordinary Cases Meeting Specific Criteria.

  Case-Laws - HC : Reward to informer being government servants - It is only in extraordinary circumstances and events that the ex gratia payment of reward is contemplated when the Government servant fall under any of those set out parameters. - HC
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• High Court accepts petitioner's argument for delay condonation due to misdirected notice to Panchkula taken over by Bank.

  Case-Laws - HC : Condonation of delay - The plea of the petitioner is that the notice was sent at Panchkula, which was taken over by the Bank, and therefore, he did not receive the order of the Commissioner merits acceptance. - HC
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Service Tax

• Service Provider Supplying Buses for Staff Transport Subject to Service Tax under 'Tour Operator' and 'Rent-a-Cab' Categories.

  Case-Laws - AT : Service of Tour Operator' & 'Rent-a-cab operator' - assessee was providing buses to L.G. Electronics for dropping the staff of L.G. Electronics and was receiving the payment for the service - services are liable to service tax - AT
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• Pre-deposit waiver granted for service tax on renting immovable property; payment deferred until further notice.

  Case-Laws - AT : Waiver of pre-deposit of service tax - Renting of immovable property - Hexplanation to renting of immovable property service is added w.e.f. 1.7.2010 - stay granted - AT
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• Court Grants Stay in Works Contract Case Involving Service Tax Valuation u/r 2A, Dispute Over Deduction of Material Costs.

  Case-Laws - AT : Works Contract Service - considering the provisions of Rule 2A ibid applicable to valuation of ‘works contract service’, as the appellant has admittedly paid service tax on 15% of the gross value after deducting the cost of goods and materials involved in the execution of works - stay granted - AT
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Central Excise

• Extended 5-Year Excise Duty Limit Inapplicable When Bona Fide Doubt Exists on Goods' Excisability; License Lapse Insufficient Justification.

  Case-Laws - HC : When there was bona fide doubt as to non-excisability of the goods, the extended period of 5 years cannot be invoked - Mere failure or negligence in not taking license or not paying duty, is not sufficient for invoking extended period. - HC
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• Rule 16: Streamlining Cenvat Credit on Returned Goods Without Burden; Avoid Overemphasis on Specific Identification.

  Case-Laws - AT : Availability of cenvat credit of duty paid on its returned goods – Provisions of Rule 16 is a beneficial piece of legislation - Revenue's insistence on the identification particulars cannot be appreciated - AT
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• Cenvat Credit on Capital Goods Unused; Considered Paper Entry, No Penalty Imposed.

  Case-Laws - AT : Cenvat credit on capital goods - The credit so availed was not even utilised by the appellant, the same was more or less in the nature of a paper entry - no penalty - AT
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Case Laws:

• Income Tax

• 2014 (1) TMI 35
  Disallowance of payment made to consultants u/s 40A(a)(2b) of the Act – Held that:- From the certificates placed on record, it is revealed that Ms.R.B.Tanna has received remuneration ranging from Rs.1,000/- to Rs.5,000/- for the entire year from a few companies - She has also stated to have received a remuneration of Rs.36,000/- from Mercury Marketing & Consulting Services - There is nothing on record to prove that she has obtained any other qualification with respect to medicines and pharmacy which could help in marketing the products manufactured by the assessee - CIT(A) has held that the nature of the services rendered by Ms.R.B.Tanna includes the work of technical nature and for which she does not appear to be technically qualified - the entire amount cannot be considered for disallowance, however a fair estimate of disallowance needs to be made – thus, the disallowance restricted to Rs.80,000 – Decided partly in favour of Assessee. Disallowance of marketing expenses and Gift articles expenses – Held that:- AO while perusing the voucher on sample basis noted that it was without bills or invoices has not disallowed the entire expenses but only 1% of expenses - CIT(A) while upholding the order of AO has held that assessee has filed to furnish supporting evidences to establish that all expenditure incurred were wholly and exclusively for business purposes - AO has not disallowed the entire expenses but only 1% which has been upheld by CIT(A) for the reason that no details were filed by assessee - there was no reason to interfere with the order of CIT(A – Decided against Assessee.

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• 2014 (1) TMI 34
  Exemption From capital gains u/s 10(23G) of the Act – Held that:- Explanation 2 to section 10(23G) inserted by the Finance Act, 1999 is declaratory, thus, retrospective in operation - the assessee was entitled to exemption under section 10(23G) on long-term capital gains arising on infrastructure capital fund invested before 1st June, 1998 - Following Vbc Ferro Alloys Limited. Versus Assistant Commissioner Of Income-tax, Circle 3(4), Hyderabad. [2005 (9) TMI 253 - ITAT HYDERABAD-B] - The Assessing Officer and the Commissioner of Income-tax (Appeals) erred in rejecting the exemption provided under the statute to the assessee on the reason that the investments made prior to April 1, 2002 are not eligible for exemption - the Indian company was already approved as an infrastructural company and was allowed deduction under section 80-IA and further at the time of sale the conditions as provided under section 10(23G) are satisfied – Thus, the sale of shares of an infrastructural company is eligible for exemption as provided under section 10(23G) - on both the counts, i.e., by virtue of the Double Taxation Avoidance Agreement as well as by virtue of section 10(23G), the assessee s claim of exemption from capital gain is to be upheld - The Assessing Officer is directed to treat the amount as exempt from tax under the income-tax provisions. Issue of interest received on delayed payment - Sale consideration paid by the buyer – Applicability of Section 9(1)(v) of the Act - Held that:- Payment of sale consideration and payment of interest are of two different transactions - The interest was calculated for the period of delay on the balance amount of sale consideration which was due on a given day - The Assessing Officer as well as the Commissioner of Income-tax (Appeals) relied on section 9(1)(v) of the Act to consider that this amount is taxable as per the provisions of the Act - Sub-clause (c) only is applicable in respect of income by way of interest under section 9(1)(v) - the interest payment payable on any debt incurred or moneys borrowed and used for the purpose of a business or profession carried on by such persons in India - neither assessee nor the purchaser is carrying on any business in India nor the interest is payable in respect of any debt incurred or moneys borrowed and used for the purpose of business - the interest payment received by the assessee was received outside India and the payment was made by a non-resident neither in relation to any debt incurred or moneys borrowed nor used for the purpose of business or profession in India. The interest income cannot be considered as received or deemed to have received or accrued or arising or deemed to have accrued or arise as provided by section 9 of the Act - by virtue of the provisions of section 5 interest income received abroad and paid by a non-resident cannot be brought to tax under the Income-tax Act – the interest was paid by the purchaser to compensate the delay in discharging the consideration and cannot be considered as part of consideration - If it were to be considered as part of consideration, then it becomes part of the sale consideration which was already considered as exempt from the long-term capital gain. - Thus, the interest received by the assessee abroad from a non-resident cannot be brought to tax as the provisions of section 9 or section 5 are not applicable to the transaction - the Assessing Officer is directed to exclude the interest amount – Decided in favour of Assessee.

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• 2014 (1) TMI 33
  Additional depreciation u/s 32(1)(iia) – Held that:- Following DCIT vs Cosmo Films Ltd [2012 (9) TMI 281 - ITAT DELHI] – As per provisions of section 32(1)(iia) and proviso to section 321)(ii) of the Act - The extra depreciation allowable u/s 32(1)(iia) in an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage - The so earned incentive must be made available in the subsequent year - The overall deduction of depreciation u/s 32 shall definitely not exceed the total cost of machinery and plant - When there is no restriction in the Act to deny the benefit of balance 50%, the assessee is entitled for the balance additional depreciation in the subsequent assessment year – Decided in favour of assessee. Share issue expenditure – Held that:- It was not claimed before the lower authority that the expenditure was incurred in respect of issue of shares and fees paid to Registrar of Companies – It was not clear to the lower authorities that the capital was raised for augumentation of the working capital or increase in share capital - The Tribunal is of the opinion that the matter needs to be reconsidered by the assessing officer – The matter was restored for fresh adjudication to find out whether, funds raised by the assessee and utilization thereof was for the purpose of acquiring a capital asset by way of its expansion or it is for the working capital of the existing business. Disallowance of investment written off – Held that:- Since the departmental appeal is already pending before the High Court against the order of this Tribunal for assessment year 2002- 03, reference to larger bench will not serve any purpose - Following the order of this Tribunal for the assessment year 2002-03, the order of assessing officer is set aside and the assessing officer is directed to allow 10% of the remaining investment written off as business loss as held by the earlier bench. Disallowance of loss on the loan to subsidiary company – Held that:- If the money was advanced for the purpose of acquiring a capital interest which is enduring in nature, then the loss or profit suffered in that process has to be treated in the capital field. The loss / profit was not earned / received in the process of earning profit. The loss is suffered in the course of acquiring a capital asset for expansion of the profit earning apparatus - The assessing officer had rightly found that there is no loss suffered by the assessee in conversion of loan into preferential shares of the Mauritius subsidiary company and the loss shown is only a book loss – Even if it is assumed that it is a loss acquiring capital asset, such capital loss cannot be considered for computing total income - Decided against assessee. Disallowance of depreciation u/s 38(2) - Let out portion of the corporate office building – Held that:- Following assessee’s own case for the A.Y. 2006-07 - The assessee is not entitled for depreciation on the Gurgaon office premises - Decided against assessee. Interest on advance to associated enterprise – Held that:- Following Siva Industries & Holdings Ltd vs ACIT ITA No.2148/Mds/2148 [2011 (5) TMI 451 - ITAT, CHENNAI] - The loan was given in foreign currency - The transaction was an international transaction, commercial principle with regard to international transaction has to be applied - The Tribunal found that the prime lending rate in domestic market has no application and international market rate fixed by LIBOR would come into play - LIBOR should be applied - The assessee charged interest at 7.5% which is higher than the LIBOR rate of interest during that period 5.39% per annum - The assessing officer is not justified in rejecting the LIBOR rate of interest by determining the arm's length price in respect of loan advanced to associate enterprise – Decided in favour of assessee. Deduction u/s 80IA – Held that:- Following assessee’s own case for the A.Y. 2055-06 - Diesel power generation unit for captive consumption is also eligible for deduction u/s 80IA of the Act - In respect of gas turbine power generation unit, the issue was remanded back to the file of the assessing officer since the same was raised before this Tribunal as an additional ground – Partly decided in favour of assessee. Additional deduction of 50% expenditure on in-house research and development u/s 35(2AB) – Held that:- The issue was remanded back to the file of the assessing officer as the assessee failed to claim the same before the assessing officer – The issue was restored for fresh adjudication.

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• 2014 (1) TMI 32
  Application for transfer of income tax records - Held that:- The objection to the jurisdiction of the present Assessing Officer was only taken after survey proceedings commenced - The petitioner have not shown any prejudice would be caused to them in case, the case records are not transferred while the Commissioner in his order does record the prejudice likely to be caused to the revenue, if case records are transferred at this stage - The application for transfer was not bonafide - Decided against petitioner.

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• 2014 (1) TMI 31
  Penalty u/s 271(1)(c) - Loss on exempt income cannot be set-off against taxable income - Held that:- True and full disclosure, i.e., assuming so, is by itself not sufficient to escape penalty u/s.271(1)(c) - The requirement of law as per Explanation 1(B) to the provision, couples with a condition that the assessee is able to substantiate its explanation and proves it to be bona fide - The assessee offers no explanation, so that its case falls under Explanation 1 (A) to the provision - The mere fact that a baseless claim was raised by some over-enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier - The paper return was required to follow the e-return as per the new procedure, was filed on 13.11.2007, i.e., within the prescribed period of 15 days of the filing of the e-return - As per the Board Circular the assessee was entitled to furnish all the reasons and disclosures in support of its claim per the return of income for the year, on 29.09.2008 - This was admittedly not done - Even the computation of the total income was not filed - The assessee had not availed of the first opportunity to make full disclosure in terms of the Board Circular and, thus, the same must be deemed to be per its return of income for the year - The first instance on which proper disclosure, was made only vide the assessee s letter dated 28.08.2009 which was in response to the requisition dated 13.08.2009, and upon hearing on 17.08.2009 - The assessee cannot be said to have furnished any explanation, rather, contrary to it, cannot be considered as an explanation in law, and that in any case the assessee can only be considered as having failed to substantiate its explanation - Explanation 1(A) or 1(B) is applicable in such case - Penalty levied at minimum was sustained - Decided in favour of Revenue.

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• 2014 (1) TMI 30
  Whether amount paid for laying new cables for the supply of electricity be revenue expenditure - Held that:- Following Commissioner of Income Tax Vs. Kanodia Cold Storage [1974 (5) TMI 18 - ALLAHABAD High Court] - The object of incurring the expenditure was to get the existing power line replaced so as to enable the assessee to receive higher K. V. A. electric power - It cannot be said that by changing the line the assessee procured some enduring asset - The amount paid to the State Electricity Board, for laying additional lines, and for shifting HT lines, was of revenue nature - Decided against Revenue.

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• 2014 (1) TMI 29
  Undisclosed investment - date of sale / transfer - Held that:- no document is available on record to suggest that the physical possession of the property was handed over to the purchaser on 14-12- 2007 at the time of agreement. In the absence of any material evidence, this Tribunal is of the considered opinion that the contention of the ld.counsel for the assessee cannot be accepted. - Decided against the assessee. Determination of cost of purchase - Held that:- The selling rate adopted by the AO was on the basis of the sale agreement, which was also confirmed by assessee, the co-owner of the land and also by one of the purchasers of the land - The basis for adoption of sales rate at Rs.25,000/- per cent is the sale agreement only and not the sworn statement - As per the sworn statement of assessee the selling rate was Rs. 10250/- which was not supported by any corroborative material - The responsibility to prove the purchase consideration lies upon the assessee - The Ld CIT(A) was justified in rejecting the claim of the assessee for enhancing the purchase consideration - Decided against assessee.

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• 2014 (1) TMI 28
  Undisclosed investment in new project - Held that:- Addition u/s 69 cannot be made on the basis of estimated figure of investment shown in estimated project report impounded during search operation - Report might have been prepared for diverse purposes and really do not indicate as to actual investment having made by the assessee - The assessing officer has blindly made addition merely on the basis of project report without bringing further evidence in the form of valuation report which may have been obtained by the assessing officer from its valuation officer - No substantial question of law arises - Decided against Revenue.

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• 2014 (1) TMI 27
  Genuineness of gift received in the form of IDBs - matter referred to larger bench with the following questions:- Whether the immunity provided to the bond holder of India Development Bond in US dollars, under Sections 6 and 7 of the Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 which includes that no enquiry to be made from bond holder, regarding the source, is also available to gifts, which are found to be bogus gifts, routing the unaccounted money of the bond holder, through such bonds, by purchasing the bonds for consideration in India? Whether the view taken in the judgment Commissioner of Income Tax vs. Smt. Usha Omer [2011 (7) TMI 441 - Allahabad High Court], that no investigation can be allowed to be held pertaining to the India Development Bonds which were received from NRI's/overseas, Corporate Bodies as gifts is a correct view, in law?

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• 2014 (1) TMI 26
  Deduction u/s 80-IB of the Act – Process amounts to manufacture or not – Masala products manufactured - Held that:- Following Assistant Commissioner of Income-tax Versus Empire Spices & Foods Mumbai Ltd. [2008 (9) TMI 879 - ITAT MUMBAI] and Aspinwall and Co. v. CIT [2001 (9) TMI 3 - SUPREME Court] - producing different varieties of masala using different spices as inputs would amount to manufacturing and such a process is eligible for deduction under section 80-IB of the Act - manufacturing different masala powders amounts to manufacturing activity – Decided against Revenue.

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• 2014 (1) TMI 25
  Interest on the refund for the period of delay u/s 244A - Held that:- Following Commissioner of Income Tax v. Larsen and Toubro Ltd. [2010 (6) TMI 414 - Bombay High Court] - The interest cannot be denied for the time taken by the appellant assessee to cure the defects in the TDS certificates as no amount is due from the assessee so far as TDS certificates and the amount was lying with the revenue - The interest is payable on account of the amount in excess of what is payable was remaining with the revenue and not for the delay caused by the revenue in determining the refund of the amount - Decided against Revenue.

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• 2014 (1) TMI 24
  Reimbursement of service lax, is to be included in the gross receipts u/s 44BB - Held that:- Following Commissioner of Income Tax vs Halliburton Offshore Services Inc. [2007 (9) TMI 230 - UTTARAKHAND HIGH COURT] - When it was not in dispute that the amount had been received by the assessee i.e. nonresident company rendering services under the provisions of section 44BB - The Assessing Officer was justified in imposing income tax thereon - Decided against assessee. Whether reimbursement of actual expenses incurred on behalf of customers be included in the gross receipts u/s 44BB - Held that:- The assessee is getting reimbursement of service tax paid to the Government of India from its client on production or submission of original treasury challan of payment - There is no element of income in the hands of assessee or any occasion of incurring any expenses by the assessee in this regard - The Assessing Officer and the Commissioner of Income Tax(A) were not justified in holding that the amount of reimbursement of service tax received by the assessee is to be included in the gross receipts for the purpose of section 44BB of the Act - Decided in favour of assessee.

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• 2014 (1) TMI 23
  Employee Stock Option Plan expenses - Held that:- Following Biocon Limited Vs. DCIT(LTU), Bangalore [2013 (8) TMI 629 - ITAT BANGALORE] - The issue was set aside for fresh adjudication. Whether expenses on software are capital or revenue - Held that:- Following CIT Vs. Asahi India Safety Glass Ltd [2011 (11) TMI 2 - DELHI HIGH COURT] - Either the extent of the expense or the expense being incurred in close proximity, in the subsequent years, would not be conclusively determinative of its nature - The application software would have to be updated from time to time based on the requirements of the assessee in the context of the advancement of its business and/or its diversification, if any; the changes brought about due to statutory amendments by law or by professional bodies, which are given the responsibility of conceiving and formulating the accounting standards from time to time, and perhaps also, by reason of the fact that expenses may have to be incurred on account of corruption of the software due to unintended or intended ingress into the system, ought not give a colour to the expenditure incurred as one expended on capital account - The treatment of a particular expense or a provision in the books of account can never be conclusively determinative of the nature of the expense - The expenditure incurred by the assessee on account of software expenses was a revenue expenditure - The issue was restored for fresh adjudication.

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• 2014 (1) TMI 22
  Revision u/s 263 of the Act – Disallowance u/s 40(a)(ia) of the Act – Held that:- The revision order is not sustainable in law for the very elementary reason that the grounds on which order was subjected to revision are different vis-à-vis the grounds on which revision proceedings have been initiated - the conclusion drawn in the revision proceedings are different than the reasons for which revisions proceedings were initiated - In the show cause notice the CIT has clearly noted that the assessment records indicate the disallowance of expenditure u/s 40(a)(ia) of the Act was to be on the basis of invoking the provision of section 194C of the Act, in so far as the AO had after verification disallowed a portion thereof not identified that in case the disallowance cannot be made u/s 40(a)(ia) of the Act - Reasoning by the CIT for re-examination and re-verification by the AO on the order is a fact which the CIT himself is not clear to the extent that his justification in assuming jurisdiction u/s 263 of the IT Act. Relying upon VESUVIUS INDIA LIMITED Versus COMMISSIONER OF INCOME TAX [2012 (6) TMI 510 - ITAT, KOLKATA] - disallowance to be made whether could be considered in isolation but without importing in other provisions of Income tax Act, in so far as, the cart cannot be put before the horse - The proceeding should begin on the basis of assessment records available which are the facts brought on record by the AO on such order when the disallowance having been made cannot be further deliberated upon by the CIT to give a direction to disallow the claim either u/s 40(a)(ia) of the Act and if not u/s 40A(3) of the Act. The AO after having carried out adequate enquiries and having verified the claim of expenditure under the provision of section 40(a)(ia) of the Act had partly disallowed which disallowance have been appealed before the First Appellate Authority cannot be thrust upon the AO for re-consideration in the line of holding a view which view as per the show cause notice and as per the deliberation in the order differ – order u/s 263 set aside – Decided in favour of Assessee.

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• 2014 (1) TMI 21
  Deduction u/s 80P(2)(a)(i) of the Act – Held that:- In case of a co-operative society the whole of the amount of profit and gains of business attributable to anyone or more of such activities is eligible for deduction under this section - The Legislature employed the words "the whole of the amount of profit and gains of business attributable to anyone or more of such activities” - Rule of ejusdem generis or noscitur a sociis would come into operation for interpreting the words "any such activities" - the words "any such activities" employed by the Legislature have to be in connection with the business of the taxpayer - An activity which is not connected with banking operation cannot come or fall within the phrase "any such activities" - Thus, any profit or gain of the taxpayer which is attributable to banking business or which has nexus with the banking business is eligible for deduction under section 80P(2)(a)(i) of the Act. Nexus between interest on income-tax refund with the business of banking – Held that:- Following Totgar's Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] - interest on income-tax refund cannot be considered to be operational income. The interest on such refund of income-tax has to be assessed under the head "Income from other sources” - Payment of income-tax has nothing to do with any business/activity - Payment of income-tax comes much after the completion of the entire transaction/activity - Total income would include all incomes irrespective of the source from which it was derived - However, deduction under section 80P(2)(a)(i) is only on the operational income from banking activity - Payment of income tax is a statutory liability on the total income irrespective of the source from which it was earned - The payment of income-tax is an application of income after it was earned to discharge the statutory liability under the Income-tax Act - The interest on income-tax refund has to be classified as "income from other sources" and it cannot be considered as "operational income" from banking activity – decided against Assessee.

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• 2014 (1) TMI 20
  Whether in the absence of any incriminating material found during the course of search addition can be made by assessing officer as undisclosed income u/s 153A - Held that:- The purchases of agricultural land has been accepted by department as part of fixed asset/ investment of the assessee by assessment u/s 143(3) - Both the lower authorities have rather relied only on the original return of income, returns on record and explanations filed by the assessee and not on any incriminating material found as a result of search - Following Jai Steel India v. ACIT [2013 (6) TMI 161 - RAJASTHAN HIGH COURT] - The assessing officer could not have made these additions in the impugned assessee u/s 153A, there being no incriminating material indicating any undisclosed income found as a result of search - Merely because a search is conducted and even though no incriminating material is found as a result thereof the original assessment of the assessee cannot be reviewed or substituted by a change of opinion about any claim of deduction, allowance or claim of exempt income. Rejection of books of accounts - Held that:- No inconsistencies or defects have been pointed out in the books of accounts maintained by the assessee - The assessee has claimed to have carried out agriculture operations and earned agriculture income which is offered in the return of income, which is accepted - Conveyance of sale of land also demonstrates that the land in question was agriculture land - It has not been disputed that the assessee on its own as an independent entity has not carried out any development activity or moved any application for commercial exploitation of the land to any local, state or Central agency - These glaring facts and circumstance do not raise any occasion for rejection of books - In the absence of any worthwhile defect in the books of accounts, rejection of books was unjustified. Whether gain arising from purchase and sale of agricultural land be treated as business income - Held that:- In a big group launching of several corporate entities each company is an independent assessee in the eyes of law - Their activities are to be analyzed on the basis of actual activities and cannot be ignored merely because the associate concern is engaged in some other activities - This inference by lower authorities amounts to a pure guess work and conjecture - Group companie's business activities, which are distinct and separate entities, cannot be held as a factor to discard the assessee's actual activity. The land in question was situated outside the specified municipal limits and as per the prescription of sec. 2(14) it does not amount to an asset - The income arising from the sale of agriculture land falls u/s 2(14)(iii) read with sec. 10(1) and is to be treated as agriculture income - Following Delhi Apartments Pvt. Ltd. and DLF United Ltd [2013 (3) TMI 330 - DELHI HIGH COURT] - Real estate companies can also hold separate port folio of land as stock in trade and as investment port folio; the sale of investment portfolio is always taxed as capital gains - The assessee's gains were profits from sale of specified agriculture land which does not come within the definition of asset as prescribed u/s 2(14) and by virtue of sec. 2(1A)(a) read with sec. 2(14)(iii) r.w.s. 10(1) the assessee's gains from sale of such agriculture land are exempt income - Decided in favour of assessee.

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• 2014 (1) TMI 19
  Stay of demand - Held that:- no objection and/or representation has been filed before the Tax Recovery Officer against the attachment of its Bank Accounts on 2 September 2013 and has accepted the same. Therefore, it is not open to the Petitioner to now make a grievance with regard to the attachment of the bank accounts done by the Tax Recovery Officer almost two months ago - Rectification application has already been disposed off by the AO without granting a personal hearing to the Petitioner before passing of the order - The petitioner has already filed an appeal to CIT(A) it would be appropriate if the CIT(A) were to deal with the stay application, if filed by the Petitioner, within two weeks from the date on which a copy of this order is available.

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• 2014 (1) TMI 18
  Rectification of mistake - Held that:- There was nothing on record to show that any submission was made on behalf of the assessee at the time of hearing to the effect that there was no agreement between the assessee and M/S CEAT Tyres Ltd - No opportunity was given to the assessee in this regard to establish its case of such waiver - The issue was restored for fresh adjudication - Partly allowed in favour of petitioner.

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• 2014 (1) TMI 17
  Whether loss on share trading activity be set off against profits of business of the company - Held that:- Following Commissioner of Income-tax Vs. M/S Narain Properties Ltd [2012 (6) TMI 38 - ALLAHABAD HIGH COURT] - The petitioner is covered under Explanation to Section-73 of the Act and is entitled to set off the losses from sale and purchase of the share against the profits of the business of the company from loans and advance - Decided in favour of petitioner.

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• 2014 (1) TMI 16
  Expenditure on corporate brand image - Held that:- Following assessee s own case for A.Y. 2006-07 - The brand building of the corporate in advertisement is inherent and it cannot be inferred that such an advertisement goes to create a fixed capital - Even if there is some enduring benefit on account of brand building through advertisement then also, it cannot be held that it is on capital field - Advertisement creates on impression of the brand and product in the mind of the consumer and if there is no frequent advertisement of brand or the product, it is very difficult to push sales in the market - The advertisement on the TV, whether be it for the brand or the product, only goes to enhance the sales and profitability of the assessee company and, hence, the same is to be held as revenue in nature - Decided against Revenue. Transfer pricing adjustment - Held that:- Following assessee s own case for A.Y. 2006-07 - Charging of guarantee commission depends upon the transaction to transaction and mutual understanding between the bank and the parties - There could be instances, where on the evaluation of various parameters, of financial credibility and stakes of the client, the bank may not charge any guarantee commission which completely depends upon its evaluation, of a particular client - This is also evident from the fact that, in some of the years, in assessee s own case, no charges have been paid on account of guarantee commission - when there was an internal CUP in the form of bank guarantee charges, charged by the bank from the assessee, the same ought to have been first analysed and examined wherein the guarantee commission charged ranged between 0.25% to 0.35% - In the earlier years, the Tribunal has deleted the similar addition and no question of law on this score has been raised by the Department - No upward adjustment in the ALP in relation to charging of guarantee commission over and above 0.20% can be made - Decided against Revenue. Weighted deduction u/s 35(2AB) - Held that:- Following ACIT vs Torrent Pharmaceuticals Ltd. [2009 (11) TMI 819 - ITAT AHMEDABAD] - The relevant provisions of the Act did not contain any specific condition that the deduction u/s 35(2AB) and accordingly the claim of the assessee for deduction u/s 35(2AB) will be restricted to the amount of R D expenditure as contained in the certificate - Even the expenditure is not included in the said certificate was eligible for deduction u/s 35(2AB) in respect of the said expenditure - The claim of the assessee of having incurred the expenditure has not been examined either by the AO or by the ld. CIT(A) - The issue was restored for fresh adjudication.

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• Customs

• 2014 (1) TMI 15
  Reduction of Extra Duty Deposit - Denied of reduction from 5% to 1% - Held that:- Petitioners have made applications to the Additional Commissioner of Customs, Special Valuation Branch (SVB) seeking the benefit of EDD at 1% instead of 5% in respect of related party imports pending finalization of Bills of Entry. So far as Writ Petition No.8837 of 2013 is concerned, the Petitioner seeks the renewal of the benefit of 1% EDD granted to them by order dated 2 May 2008. While in respect of Writ Petition No.9960 of 2013, a fresh order is sought. In both the petitions, personal hearings have been fixed by the authorities and adjourned - Petitioners, there is no reason for the Respondent authorities not to dispose of the applications on the basis of the materials submitted by the Petitioners. In case there is lack of any information submitted by the Petitioners, it is at their peril. However, it is not fair for the Respondent authorities to sit over the applications and not dispose them. Therefore, we direct the Additional Commissioner of Customs to grant hearings in both the applications pending - Decided in favour of assessee.

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• 2014 (1) TMI 14
  Confiscation of goods - Benefit of confiscated goods denied - Undue delay in release of goods - Held that:- extension of the detention has been made till 10.01.2014, having regard to the fact that there can be no further extension after the said date and keeping in mind that matter requires adjudication on various aspects which have been stated in the order in original dated 09.07.2013, it would be in the interest of both the parties that the adjudication on these aspects shall be concluded at the earliest point of time, so that if really there is no irregularity in the import, the goods could be released to the petitioner herein at an earliest point of time - respondent is directed to initiate and conclude the adjudication within an expeditious period of time which means that the issue of notice to the petitioner shall be by 15.11.2013 and the adjudication on the various aspects stated in the impugned order or any other aspect which would arise shall be concluded by 27.12.2013. It is needless to observe that having regard to the aforesaid time frame, the petitioner would co-operate in the proceedings and shall not take time unnecessarily and prolong the proceedings. At the same time, having regard to the fact that the goods have been detained since December 2012, if the Department is convinced of the fact that if there is indeed no irregularity in the import, the detained goods shall be released to the petitioner at an earliest point of time - Decided in favour of assessee.

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• 2014 (1) TMI 13
  Reward to informer being government servants - Reward for seizures made or evasion of duty detection - Reward of 20% of the value of the contraband article detected - Held that:- Reward is purely an ex gratia payment which, subject to guidelines, may be granted on the absolute discretion of the authority competent to grant rewards and cannot be claimed by anyone as a matter of right. In determining the rewards which may be granted, the authority competent to grant reward will keep specificity and accuracy of the information, the risk and trouble undertaken, the extent and nature of the help rendered by the informer, whether information gives clues to persons involved in smuggling, or their association, etc.; the risk involved for the Government servants in working out the case, the difficulty in accruing the information, the extent to which the vigilance on the staff led to the seizures, special initiative, efforts and ingenuity displayed, etc. and whether, besides the seizure of contraband goods, the owners/organizers/financiers/racketeers as well as the carriers have been apprehended or not. Ordinarily, informers and Government servants up to the level of Group ‘A’ Superintendents/Assistant Collectors of Customs and Central Excise/Assistant Directors will be eligible for reward depending on the contribution made by them as a team as well as individually with regard to the collection of intelligence, surveillance, effecting of seizure etc. Due credit should be given to the staff employed on investigation. Government servant posted on the vital point to perform his duty is expected to do with utmost zeal and valor. He is also expected to be vigilant and take all necessary steps for preventing the crime or in apprehending the criminals. It is only in extraordinary circumstances and events that the ex gratia payment of reward is contemplated when the Government servant fall under any of those set out parameters. Mere recommendation also does not give the petitioner any right to receive the reward. The petitioner also has not been able to satisfy this Court as to how the Committee has disregarded the relevant material or has considered the irrelevant details or has done any procedural lapse necessitating any interference. This Court chooses not to examine the case of the petitioner on merit except to satisfy of its due consideration as it is not expected to delve into that aspect and it is also expected not to trade on exclusive domain of Committee by applying those parameters to the case of the petitioner and decide the case of petitioner on merit further. What is vital and crucial is to satisfy ourselves that the directions of this Court have been duly complied with and his case is considered by the Committee - Decided against appellants.

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• 2014 (1) TMI 12
  Confiscation of goods - Import of PU Coated Fabric - Provisional release under Section 110A - Held that:- relevant guidelines to the effect that the Bank Guarantee shall not exceed twice the amount of duty is not to apply to a case involving a serious fraud. In the present case, as the affidavit in reply indicates, there are allegations of serious fraud and malpractice on the part of the petitioners. Hence, we do not find that there is substance in that contention of the petitioners - an amount of Rs. 2 crores is lying in deposit with the Customs authorities, the extent of the Bank Guarantee demanded appears to be disproportionate. The adjudication is still pending and the allegations against the petitioner are still to be proved in the course of adjudication. What should be the correct assessable value has to be still determined on adjudication. The ends of justice would be met if the quantum of the Bank Guarantee is duly modified from 30% of the redetermined assessable value to 15% of the redetermined assessable value - no need to interfere with the terms and conditions imposed in the order for provisional release - Decided against assessee.

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• 2014 (1) TMI 11
  Condonation of delay - Delay in receipt of order - Change of address - Held that:- appeal was filed on 27-4-2010, almost one year from the date of service of the order and the ground for condonation of delay was that the office at Panchkula had been taken over by the Bank in the year 2006 and, therefore, the petitioner did not get the order-in-original sent at that address. It was only when the recovery proceedings were initiated, that he came to know and got the copies of the orders on 26-2-2010 - petitioner had shown sufficient cause for condonation of delay. The petitioner had resigned in the year 2004 which has not been denied by respondent No. 2. The plea of the petitioner is that the notice was sent at Panchkula, which was taken over by the Bank, and therefore, he did not receive the order of the Commissioner merits acceptance. The Tribunal on the basis of a very techni-cal approach has dismissed the appeal on the ground of limitation - Tribunal was not right in declining the application for condonation of delay and the said order is legally not sustainable. Consequently, the order dated 30-6-2011 qua the petitioner is quashed and the plea of the petitioner regarding the condonation of delay is accepted and the delay in filing the appeal is condoned - Delay condoned.

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• Service Tax

• 2014 (1) TMI 47
  Stay application - Nexus of payment with demand - Held that:- appellant paid a total amount of nearly Rs.2.13 crores towards the impugned demand of Rs.2.39 crores inasmuch as the appellant is yet to receive any negative response to their letter dated 30.4.2013. Considering the substantial payment towards the impugned demand, which is open to scrutiny by the respondent, we grant waiver of pre-deposit and stay of recovery in respect of the balance dues. It is open to the respondent to verify the aforesaid claim of the party and report to this bench in the event of the claim being wholly or partly found incorrect - Prima facie case in favour of assessee - Stay granted.

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• 2014 (1) TMI 46
  Condonation of delay - Whether the Commissioner (Appeals) can condone the delay beyond the period of three months in addition to statutory limit of three months for filing the appeal under Section 85 of the Finance Act, 1994 - Held that:- Principle has been settled by the Hon’ble Supreme Court in the case of Singh Enterprises (2007 (12) TMI 11 - SUPREME COURT OF INDIA). Accordingly, the ld. Commissioner (Appeals) cannot condone the delay beyond three months in addition to the statutory limit of three months for filing the appeal under Section 85 of the Finance Act, 1994 - Decided against assessee.

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• 2014 (1) TMI 45
  Demand of service tax - Free service provided during warranty period - Held that:- The entire dispute arises out of the fact that this service being provided is commonly referred to in this industry as free service. This is not free service at all. This is rendered at a cost both for the services and for the parts which are paid by the manufacturer to the appellant. However, the owner of vehicle is one of the beneficiaries of the activity. The vehicle manufacturer is also a beneficiary because such services enhances his brand value and the reputation of his goods and customer satisfaction which helps in further business. So the manufacturer pays for it and naturally it is a service provided to the manufacturer of vehicles. Similarly the person who pays for the parts is the person to whom goods are sold. Therefore, we are of the view that there is sale of goods in this case and the benefit of exemption notification No.12/03-ST dt. 20.6.2003 is prima facie available to the applicant - Stay granted.

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• 2014 (1) TMI 44
  Demand of service tax - Penalty u/s 76 & 78 - Service of Tour Operator' & 'Rent-a-cab operator' - Held that:- assessee was providing buses to L.G. Electronics for dropping the staff of L.G. Electronics and was receiving the payment for the service. We find that the definition of tour is to mean a journey from one place to another irrespective the distances between such places and taxable service means any service provided to any person by a Tour operator in relation to tour. We find that there is no dispute that the activity of assessee for providing buses to L.G. Electronics for dropping of the staff is covered under the definition of the Tour and consequently the appellant/assessee is also falls under category of Tour operator. Commissioner (Appeal) in the impugned order has set aside the penalty under Section 78 of the Finance Act and reduced the penalty under Section 76 of the Act invoking the Section 80 of the Finance Act. We find that if the Section 80 is invokable then the penalty under Section 76 also cannot be imposed. We therefore find contradiction in the findings of the Commissioner (Appeal) in reducing penalty under Section 76 of the Finance Act and setting aside penalty of 78 of the Act. We therefore remand the matter back Commissioner (Appeal) Central Excise to decide the matter after considering the No. 15/2007 dated 04.04.2007 issued under Section 11C of the Central Excise Act and also decide the issue with regard the imposition penalty of under Section 76 and 78 of the Finance Act, afresh after affording hearing to the appellant - Decided partly in favour of assessee.

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• 2014 (1) TMI 43
  Demand of service tax - Bar of limitation - Commissioner set aside demand - Held that:- Commissioner (Appeal) has examined in detail the applicability of extended period in the present case. There is no dispute about the fact that ST-3 Return for the first six month of the year was filed on 15.10.2003 and ST-3 Return for the second six month was filed on 16.04.2004 There is also no dispute that the Show Cause Notice has been singed by the Assistant Commissioner on 19.01.2006 and Show Cause Notice has been issued without invoking the proviso to Sub-Section 73(1) of the Finance Act. It is also on record that Show Cause Notice does not make any allegation about suppression etc. - no infirmity in the finding of the Commissioner (Appeal) that Show Cause Notice is hit by the time limitation - Decided against Revenue.

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• 2014 (1) TMI 42
  Waiver of pre-deposit of service tax - Renting of immovable property - Held that:- explanation to renting of immovable property service is added w.e.f. 1.7.2010 which provides that even the vacant land given or lease and licence for construction of building or temporary structure for use of commerce or business is covered under the scope of renting of immovable property service. Admittedly, the facts of the case that applicants are given only vacant land on lease prior to 1.7.2010. In view of this, prima facie we find that the applicant has a strong case in their favour. Therefore the pre-deposit of the remaining amount of service tax, interest and penalty is waived and recovery is stayed during the pendency of the appeal - Stay granted.

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• 2014 (1) TMI 41
  Refund of CENVAT Credit - Information Technology Service - Assistant Commissioner allowed partial refund - Nexus with output service - Held that:- consultants provided the services in order to file return in foreign countries for the income earned and this service has no nexus with the output service - Commissioner (Appeals) is not consistent in deciding the issue of eligibility of credit/refund in respect of Professional Charges and matter needs to be remanded back to Commissioner (Appeals) - Decided in favour of assessee.

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• 2014 (1) TMI 40
  Waiver of pre-deposit - Stay of recovery - Works Contract Service - whether the activities undertaken by the appellant during the aforesaid period should be classified as ‘Erection, Commissioning and Installation Service’ under Section 65(105)(zzd) of the Finance Act, 1994 as claimed by the assessee or as ‘Works Contract Service’ under Section 65(105) (zzzza) of the Act - Held that:- appellant should not be directed to make any pre-deposit inasmuch as the substantive issue is one of valuation of the service and, if the service is supposed to be ‘works contract service’, the provisions of Rule 2A of the Service Tax (Determination of Value) Rules, 2006 cannot be overlooked. As per this rule, the value of ‘works contract service’ shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract. As per Explanation to the rule, the gross amount charged for the works contract shall not include VAT or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract - considering the provisions of Rule 2A ibid applicable to valuation of ‘works contract service’, we are inclined to grant waiver of pre-deposit and stay of recovery inasmuch as the appellant has admittedly paid service tax on 15% of the gross value after deducting the cost of goods and materials involved in the execution of works - Stay granted.

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• 2014 (1) TMI 39
  Waiver of pre deposit - Demand of service tax - Business Auxiliary Service - Held that:- prima facie case for the appellants against the demands of Service Tax raised under the head ‘Business Auxiliary Services’. It is not in dispute that the appellants were canvassing purchase orders in India for their own overseas-based parent company. It is their submission that this activity involved export of services and hence not taxable. Prima facie, on the facts of this case, this argument is acceptable and is supported by the cited circular and decisions. Hence there will be waiver of pre-deposit and stay of recovery in respect of the balance amount of Service Tax and Education Cesses, interest thereon and penalties - Stay granted.

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• 2014 (1) TMI 38
  Waiver of pre-deposit of amount of service tax - Benefit of SSI exemption - Commission for the sale of the goods of products - Held that:- appellant is receiving commission for the sale of products of ‘Amway’. On a specific query from the Bench, learned counsel submits that the benefit of Small Scale Notification No. 06/2005-S.T., dated 1-3-2005 talks about the taxable services under the brand name or trade name and does not talk about the services rendered towards the products. It is his submission that the commission received by them is for the sale of goods of ‘Amway’ and the said goods cannot be considered as a taxable service - prima facie the said notification envisages denial of the benefit to taxable service to the brand name or trade name registered to the another person. In our considered view, the appellant has made out a case for the waiver of pre-deposit of amounts involved. Accordingly, the application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till disposal of appeal - Stay granted.

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• 2014 (1) TMI 37
  Denial of CENVAT Credit - Air travel agent services - Credit denied to them on the ground that the said services cannot be treated as input services - Held that:- air travel was performed for the purpose of company business. The Service Tax paid on the said air travel agent service is admissible as credit - value of travel stand paid by the company office indicating that the air travel was undertaken by the employees in connection with the business of appellant. In terms of provisions of Income Tax law an assessee cannot incur any expenses of any personal nature on any of its employees/Director. Inasmuch as it is the appellant who had paid for said air travel, it has to be held that the air travel was undertaken in connection with the business of the appellant company - Following decision of Commissioner of Central Excise, Ahmedabad v. Fine Care Biosystems [2009 (7) TMI 142 - CESTAT, AHMEDABAD] and ABB Ltd. [2009 (5) TMI 48 - CESTAT, BANGALORE] - Decided in favour of assessee.

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• 2014 (1) TMI 36
  Waiver of pre deposit - Disallowance of Cenvat credit - credit availed on advertisement service - Held that:- audit has been viewed by the Tribunal that Finance Act, 1994 not being a commodity taxation law for which there shall not be levy of Service Tax on such sale. So far as availing Cenvat credit on advertisement service, travel consultant service and recruitment and placement service availed is concerned, we are of prima facie of the view that if the appellant is directed to deposit Rs. 6.00 lakhs (Rupees Six lakhs) as an interim measure to protect interest of Revenue that shall serve interest of justice - Following decision of Modi Xerox Ltd. v. State of Karnataka [2005 (8) TMI 359 - SUPREME COURT OF INDIA] - Decided partly in favour of assessee.

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• Central Excise

• 2014 (1) TMI 10
  Restoration of appeal dismissed for no Clearance from Committee of Disputes – Held that:- The Tribunal in the case of Burn Standard Co. Ltd. Vs. Commr. of Central Excise, Kolkata II [2013 (11) TMI 615 - CESTAT KOLKATA] - the second and subsequent application filed before the Committee of Disputes seeking permission, were not considered as an application pending - the application that was filed earlier seeking clearance from the COD on 02.11.2006, was dismissed - The second application filed on 11th February, 2011, therefore, cannot be considered as an application pending before the Committee on Disputes as on 17.02.2011 – there was no merit in the appeal – Decided against Assessee.

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• 2014 (1) TMI 9
  Clandestine Removal of Goods – Clearance made by improperly declaring the retail sale price – Undervaluation of Tiles - Waiver of Pre-deposit – Held that:- The Tribunal has been following judgment of Hon’ble High Court of Gujarat that an assessee should deposit 8% of the amount of duty confirmed - The appellant has deposited an amount which is more than 8% of the duty liability - the amount already deposited is enough to hear and dispose the appeals – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 8
  Ineligible cenvat credit - Inputs used for the manufacturing of final product – Waiver of Pre-deposit – Held that:- The appellant considered their final product as liable for duty and paid the central excise duty on it and also availed the cenvat credit for the material period on the inputs on which central excise duty has been paid - If there is a discharge of duty liability, which is more than the cenvat credit availed - the appellant reversed the cenvat credit which is according to the first appellate authority is ineligible – Following MAHINDRA AND MAHINDRA LTD. Versus COMMR. OF C. EX., MUMBAI-V [2010 (12) TMI 403 - BOMBAY HIGH COURT ] - the appellant has made out prima facie case for the waiver of the pre-deposit of the amounts - Application for the waiver of pre-deposit of the balance amounts allowed till the disposal - Stay granted.

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• 2014 (1) TMI 7
  Following the precedent – Onus to prove – Invocation of Extended period of limitation for time barred demand – Held that:- The Tribunal was justified in recording the findings - it was not possible to ascribed any willful suppression or mis-statement on the part of the assessee for not paying excise duty – Relying upon Continental Foundation Jt. Venture v. CCE, Chandigarh [2007 (8) TMI 11 - SUPREME COURT OF INDIA] - the activity of cutting, bending, bunching of plats or channels in which the assessee was engaged, did not amount to manufacturing activity - when there was bona fide doubt as to non-excisability of the goods, the extended period of 5 years cannot be invoked - Mere failure or negligence in not taking license or not paying duty, is not sufficient for invoking extended period. It cannot be said that the conduct of the assessee was not bona fide - When the activity undertaken by it was not treated as manufacture, it would not have been expected to pay the excise duty – the contention of the appellant that there was a suppression of facts and payment of duty was intentionally evaded by the assessee cannot be accepted – Decided against Appellant.

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• 2014 (1) TMI 6
  Applicability of Section 5 & Section 29(2) of of the Limitation Act to appeal u/s 35 of Central excise Act, 1944 – Held that:- The question has already been answered in series of judgements in Singh Enterprises Vs. Commissioner of C.Ex., Jameshedpur 2007 (12) TMI 11 - SUPREME COURT OF INDIA] –and Commissioner of Customs & Central Excise Vs. Hongo India (P) Ltd. [2009 (3) TMI 31 - SUPREME COURT] - under the proviso of Sec.35 a period of limitation came to be prescribed which being a special law would override the general law as provided in Sec.35 of the Act - the proviso to sub-section (1) of Sec.35 makes the position crystal clear that the Appellate Authority has no power to condone the delay beyond the period of 30 days and that the language used makes the position clear that the Legislature intended to entertain the appeal by condoning the delay only upto the 30 days and not 60 days. Appellant has tried his level best to convince the Court that all the judgments are distinguishable - Ignorance of the judgment of Apex Court cannot be considered as an excuse and it is always expected from the lawyer to come prepared and take note of the judgments of the Apex Court and of this Court before the matter is being argued before the Court and that is the only way to provide assistance to the Court for dispensation of justice to the litigants – Decided against Appellant.

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• 2014 (1) TMI 5
  Availability of cenvat credit of duty paid on its returned goods – Held that:- Provisions of Rule 16 is a beneficial piece of legislation allowing the manufacturer to avail the credit of duty in case of return of goods which were originally cleared by him on payment of duty - The safeguard for such availment of credit stands prescribed by way of trade notice and clarifications - As long as goods are received back under the cover of duty paying documents, which are easily co-relatable to the received back goods, no further insistence on identification marks is required - The goods are insecticides and pesticides, which do not carry any such manufacturing number or any other identification marks - It is not necessary that the entire packing cleared by the appellant would get damage and it may happen in certain cases that part of the certain goods gets damage - only a part of the goods are returned back to the appellant - Insistence on the fact that entire goods in the original packing should go back, would defeat the very purpose of Rule 16 - Rule 16 would become otiose in respect of number of goods manufacturer inasmuch as most of the goods do not carry any identification marks on them - it is the chemicals which do not carry any marks etc. the same can be identifiable with the original clearance only on the basis of original duty paying documents and the Revenue's insistence on the identification particulars cannot be appreciated. the appellants have produced on record the detailed chart showing co-relation of each of the returned consignment with the original clearance - Revenue intended to make a case under Rule 16 Central Excise Rules 2001, it proceeded to make allegation under Rule 7 of Cenvat Credit Rules 2001 - Rule 7 lends support to Rule 16 - But substantial allegation when appears to be under Rule 16 adjudication proceeded to examine technicality of that Rule without testing the principal allegation – decided in favour of Assessee.

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• 2014 (1) TMI 4
  Classification of goods - Held that:- In the show cause notice it was not the issue before adjudicating authority below to classify the product under Chapter Sub-heading 4010.90 of the Central Excise Tariff Act - The issue before the adjudicating authority was whether the impugned product is classifiable under Chapter sub-heading 5603.00 or CH. 5910.00 - As per various judgments available it is held that no one can travel beyond the issue involved in show cause notice - The Commissioner (Appeals) has no power to travel beyond the show cause notice - The order of CCE(A) is set aside - Decided in favour of assessee.

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• 2014 (1) TMI 3
  Cenvat credit on capital goods - Held that:- Following V.V.F. Ltd. v. C.C.E., Daman [2009 (4) TMI 657 - CESTAT, AHMEDABAD] - The credit so availed was not even utilised by the appellant, the same was more or less in the nature of a paper entry - There was no mala fide on the part of the appellant to avail excess credit in the first year itself so as to invoke penal action against them - Imposition of penalty on the appellant in terms of Section 11AC was not called for - Decided in favour of assessee.

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• 2014 (1) TMI 2
  Waiver of pre-deposit - Held that:- The provisions of Rule 26(2) for imposition of equivalent amount of penalty on a person, who has issued invoices without payment of duty facilitating the other person, was receiving goods without invoices - This plea can be pressed into only for the offences committed by under Rule 26 from 2007 only - The application for waiver of pre-deposit of the amount involved is allowed and stayed - Decided in favour of assessee.

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• 2014 (1) TMI 1
  Application for rectification - Held that:- The definite finding has been given by the Tribunal on applicability of the decision in the case of Nirma Ltd. In respect of CT-2 Certificates - They were proceeded by verification and that the cancellation of the certificates by the Superintendent who issued the certificates without following the principle of natural justice is arbitrary - It has also been recorded that if the material procured on payment of duty, the appellants were eligible for rebate of duty paid - A reasoned and speaking order has been issued - There is no error apparent on the face of records - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2014 (1) TMI 49
  Levy of additional sales tax - Whether Additional Sales Tax can be levied if the taxable turnover is less than 100 crores - Held that:- after taking the taxable turnover for the entire year, the taxable turnover upto the date of amendment has to be assessed with reference to the relevant tax rate therein applicable to the period - matter is remanded back to the Assessing Officer to work out the liability - Thus, taking the taxable turnover for the entire year, the taxable turnover up to the period 31st July 1996, has to be worked out to attract the liability at the rates specified therein and beyond that, the liability of the turnover has to be worked out based on the amended provision depending on the taxable turnover crossing Rs. 100 crores for the whole year - Following decision of State of Tamil Nadu Vs. Tvl. National Time Company [2010 (7) TMI 842 - MADRAS HIGH COURT] - Decided in favour of Revenue.

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• 2014 (1) TMI 48
  Demand of passenger tax along with additional tax - Vehicle become unusable - Held that:- petitioner had never surrendered her permit and therefore, the surrender application by the petitioner had not been accepted to be valid so as to entitle her to avoid the payment of passenger tax and the additional tax - there was absolutely no information in the surrender application qua the lost/stolen. No first information report lodged in that regard has been disclosed even in this petition in respect of the theft of the permit - appellate authority has provided that under Section 12 (6) of Act, 1997, it is still open to the assessee to seek refund of the tax provided the conditions mentioned in the said Section are established - Decided against assessee.

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