Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 12, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Whether surcharge and education cess could be charged when the tax is determined to be payable under the double taxation avoidance agreement? - The surcharge and education cess is not leviable when the tax rate is prescribed under DTAA - AT
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Additional depreciation u/s 32(1)(iia) - power turbines - Admissibility of additional depreciation cannot be denied to the assessee merely on the ground that electricity is not an article or thing. - AT
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Transfer pricing adjustment - Early or late realization of sale proceeds is only incidental to transaction of sale, but not a separate transaction in nature. - the impugned transaction of interest on delayed realization of sale proceeds is not international transaction - AT
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Addition made u/s.69B - it is not the case of assessee that the value adopted by him for bank and declared to Revenue is different but the quantity matches - additions confirmed - AT
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Depreciation on the boilers and windmill leased out by the assessee disallowed to the extent of 50% - unless various components and accessories of the boiler and windmill are assembled and constituted to fullfledged boiler and windmill, this Tribunal is of the considered opinion that there cannot be any delivery of the asset, namely, boiler and windmill. - AT
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Eligibility for claim of carry forward of deficit of an earlier year to assessee registered u/s.12A - The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. - AT
Service Tax
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Scope of Works Contract Service - Since, in the instant case the issue appears to be latent to the interpretation of law at the initial stage of introducing due service, there was scope of bonafide belief that the appellants did not have to pay tax. - demand set aside - AT
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Sub-Broker services or BAS - the show-cause notice in this case was raised on the respondent classifying the service as Stock Broker Service. Therefore, it cannot now be stated that the demand is payable under the Business Auxiliary Services. - AT
Central Excise
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Adjustment of Payment of duty under the wrong code - whatever be the accounting difficulty, when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of the entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties - HC
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Extended period of limitation - It was the duty of the audit party to consider whether the classification was correct and the appellant had availed the benefit of Notification correctly or otherwise. - demand set aside - AT
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Denial of CENVAT Credit - "goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed". Therefore, credit on duty paid on air conditioners installed in office of the factory is admissible. - AT
VAT
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The petitioner having chosen not to produce his books of accounts for perusal by the 1st respondent before the assessment, cannot be heard to complain of a violation of the Rules of Natural Justice while passing order - HC
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Disallowance of exemption claim - sale of Maize - TNVAT - The exemption was a product based exemption and not user based exemption or an assessee based exemption - AO committed a jurisdictional error warranting interference by this Court - HC
Case Laws:
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Income Tax
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2016 (1) TMI 415
Disallowance u/s 14A - contention of the assessee is that the investments were made for acquiring control of other companies which are in the similar business of the assessee and all those companies subsequent to acquisition of the shares has become the sister concerns of the assessee. Moreover, the investments made were out of non-interest bearing funds of the assessee company - Held that:- In the interest of justice, we hereby remit back the matter to the file of Ld. Assessing Officer, in order to verify whether the investments made by the assessee company were in its sister concerns, or after such investments those companies have become the sister concerns of the assessee company by virtue of such investments, and further such investments were made from the non-interest bearing fund of the assessee company, and if found so, grant relief to the assessee in the light of the decision of the Chennai Bench of the Tribunal in the case of M/s Agile Electric Sub Assembly Pvt. Ltd.[2016 (1) TMI 322 - ITAT CHENNAI] - Decided in favour of assessee for statistical purposes
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2016 (1) TMI 414
Surcharge and education cess - whether could be charged when the tax is determined to be payable under the double taxation avoidance agreement? - Held that:- Article 2 of the India UK Treaty provides that income tax including any surcharge thereon and it further provides that this convention shall also apply to any identical or substantially similar taxes which are imposed by either contracting state after the date of signature of this convention in addition to or in place of the taxes of the contracting state referred to in paragraph 1 of this article. Hence by this , it can safely be concluded that the levy of education cess though introduced from Finance Act, 2004 which is much after the date of signing of this convention would also be made applicable while determining the tax rates under the convention. It is well settled that the education cess is nothing but an additional surcharge. When the Article 2 states that surcharge is included in income tax and the tax rate of 15% for fee for technical services is prescribed in Article 13 shall have to be deemed to include surcharge and since cess is nothing but an additional surcharge, the tax prescribed under DTAA @ 15% in the instant case shall be deemed to included surcharge and education cess. Hence we hold that when the tax rate is determined under DTAA, then the tax rate prescribed thereon shall have to be followed strictly without any additional taxes thereon in the form of surcharge or education cess. The surcharge and education cess is not leviable when the tax rate is prescribed under DTAA. Hence we do not find any infirmity in the order of the Learned CITA in this regard. - Decided against revneue
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2016 (1) TMI 413
Disallowance of expenditure for replacement cost of remembraining in membrance cell-III - Held that:- As decided in assess's own case the attempt to contend that life of membrane would be spread over from 3 to 5 years or that the amount involved for replacement of membrane is huge and, therefore, the departure on the part of the Revenue could be said as justified, in our view, cannot be countenance for two reasons. One is that the amount involved would not make difference for chargability of the tax but the nature of expenditure would be relevant for the chargability of tax. It hardly matters whether the amount is more or less. Further, on the aspect of life of the membrane, nothing is referred to by the A.O. nor by C.I.T. (Appeals) that earlier, such aspect, namely, life of the membrane spread over from 3 to 5 years was not considered or it had missed or otherwise. We find no infirmity in the order of CIT(A) and accordingly delete the addition and in the alternative allow the cost of remembraining in membrance cell-II as revenue expenditure. Decided in favour of the Assessee.
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2016 (1) TMI 412
Disallowance of statutory claim for deduction of additional depreciation u/s 32(1)(iia) - power turbines employed for generation of power for captive consumption in the business of manufacturing of steel and iron products - Held that:- Admissibility of additional depreciation cannot be denied to the assessee merely on the ground that electricity is not an article or thing. The order of the Learned CIT(Appeals) is reversed to this extent and the disallowance is deleted. - Decided in favour of assessee.
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2016 (1) TMI 411
Addition as agricultural income - Held that:- No doubt, there cannot be a surmise that it was not probable for an assessee to retain cash withdrawn from bank account, without utilizing the same. However, here the explanation for the same was not withdrawal from the bank, but earnings from agricultural income. It is difficult to believe that a person who was having a bank account would have kept as much as 18 lakhs in cash in her / his house without banking. In such circumstances, we are of the opinion that AO was justified in considering ₹ 5 lakhs as saving from agricultural income that could have been kept by the assessee. In our opinion, lower authorities were justified in making an addition of ₹ 13 lakh - Decided against assessee Addition on withdrawal from a cash credit account with bank - Held that:- No man with reasonable prudence would have taken an interest bearing loan and kept it with him / her as cash without utilising for a period of one year. Therefore, preponderance of probability is that the amount of ₹ 2.98 lakhs withdrawn by the assessee in August and September 2005 would have been used by her for some other purposes. This cannot be considered as a surmise, for a simple reason that assessee had to pay interest on the cash credit account. In such a situation, we are of the opinion that lower authorities were justified in not accepting the withdrawal from the cash credit account, more than one year back, as a source for investment in the property. Case of Meena Nagaraj Naik (supra) of coordinate bench would not come to the aid of assessee since the drawings were from the cash credit account and not a savings account. Accordingly we are of the opinion that lower authorities were justified in making an addition - Decided against assessee Undisclosed loan - Held that:- claim of creditors that they did not have any bank account, since the village they lived viz., Huilgol / Kelur had no bank account cannot be accepted, when there were banks available within a reasonable periphery. It is against the principle of preponderance of probability that huge sums of money would have been kept in cash by them, over a number of years and loaned to the assessee in one go. Assessee might have been able to prove the credit worthiness of the parties and identity of the creditors. However in our opinion genuineness of the transaction has not been proved by the assessee. In such a situation, we are of the opinion that lower authorities were justified in disbelieving the version of loan of ₹ 8 lakhs from Veeranna Sajjanar. Coming to the loan of ₹ 5 lakhs alleged to have been taken from Shivanna, the said transaction was also claimed to be in cash. No doubt here also, the village accountant had certified the holding of the concerned Shivanna to be about 30 acres. As mentioned by us, Shivanna was also a resident of Huilgol village. To believe that he had saved and kept a sum of ₹ 5 lakhs in cash at his residence over various years and loaned it in cash to the assessee is difficult to believe. It is not a surmise but against the principle of preponderance of probability . Just because the creditor had produced evidence in the nature of agricultural holding or income of ₹ 4.5 lakhs per year would not be sufficient to come to a conclusion that they had funds with them to give a loan to the assesee in cash. Here also, in our opinion, genuineness of the loan has not been proved by the assessee. Coming to the loan of ₹ 5 lakhs claimed to have been taken from Allasab, we find that the contentions were very similar to that of the loan claimed to have been taken from Shivappa. Transactions were claimed to have been in cash. There is no evidence for sale of agricultural produce. Money claimed to have been accumulated was never banked. Claim that there was no banking facility in Huilgol was only a camouflage since admittedly there was a bank facility in Gadag which was only ten kms away. In this case also assessee has not been able to establish the genuineness of loan. Coming to the loan of ₹ 5 lakhs taken from Devappa, situation is almost the very same. Claim is that loan was taken in cash and the creditor had saved the money out of agricultural income over various years. In our opinion, genuineness of the transaction has not been proved here also. However, addition of ₹ 7 lakhs loan being loan received from Kanakadasa Shikshana Samithi is not warranted and such addition is deleted. - Decided partly in favour of assessee.
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2016 (1) TMI 410
Transfer pricing adjustment - whether the transaction of receivable is outside the purview of international transactions as argued by assessee - as per assessee the notional interest should be calculated on the net amount i.e after adjusting the amount due and paid to the AE by the assessee company - Held that:- The assessee company reported international transactions in its TP report. On a reference by the AO, the learned TPO accepted that the price charged by the assessee company on these transactions are at arm’s length. However, the TPO made adjustments on account of notional interest for the excess period allowed by the assessee- company to its AE for realization of its dues. The TPO applied 14% of interest on the outstanding amount of Rs. The learned DRP also had also concurred with the finding of learned TPO. There is no dispute that the transaction in question falls within the ambit of international transactions u/s 92B of the IT Act. However, this transaction is not an independent transaction. It is an integral part of transaction of sale made to the AE and therefore, it has to be considered alongwith the main transaction. The similar issue had come up for consideration before the Co-ordinate Bench of Mumbai in the case of M/s Goldstar Jewellery Ltd [2015 (2) TMI 58 - ITAT MUMBAI ] wherein held both the TPO and the DRP has taken into consideration the lending rates, however, this is not a transaction of loan or advance to the AE but it is only an excess period allowed for realization of sales proceeds from the AE. Therefore, the arm’s length interest in any case would be the average cost of the total fund available to the assessee and not the rate at which a loan is available. Accordingly, we direct the AO/TPO to re-do the exercise of determination of the ALP in terms of above observation”. Respectfully following the above decision, we hold that there can be no separate international transaction of ‘interest’ in the international transaction of sale. Early or late realization of sale proceeds is only incidental to transaction of sale, but not a separate transaction in nature. Since we hold that the impugned transaction of interest on delayed realization of sale proceeds is not international transaction, it is not necessary to adjudicate upon the additional grounds raised by the assessee company. - Decided in favour of assessee partly allowed for statistical purposes.
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2016 (1) TMI 409
Claim for deduction under section 80(P)(2)(a)(i) - Held that:- As found by the ld. CIT(Appeals), from the perusal of the objects of the assessee-Society as extracted by him in the impugned order from the Bye-Laws, the assessee-Society is not allowed to accept deposits of money from Public for the purpose of lending or investment. As further found by him, the entire transactions of accepting deposits and giving loans have been done by the assessee-Society with its members only and there are no such transactions done by it with nonmembers. He has also found that the assessee-Society was not registered under the Banking Regulation Act, 1949 and it was registered under the West Bengal Cooperative Societies Act , 1983. On the basis of all these findings of fact recorded by him, the ld. CIT(Appeals) has held that the assessee-Society is not a Cooperative Bank, which is covered by section 80P(4) and it is, therefore, eligible for deduction under section 80P(2)(a)(i). At the time of hearing before us, ld. D.R. has not been able to rebut or controvert any of the findings of facts recorded by the ld. CIT(Appeals). He has also not been able to cite any authority where a different or contrary view is taken on this issue, which is in favour of the Revenue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for deduction under section 80P(2)(a)(i) - Decided against revenue Direction to treat the interest income earned by the assessee on its investment as business income eligible for deduction under section 80P(2)(a)(i) by CIT(A) - Held that:- a perusal of the relevant balance-sheet of the assessee as on 31.03.2009 (copy of which at pages 67 & 68 of the paper book), shows that the total investment made by the assessee-Society was ₹ 22.08 crores as on 31.03.2009, whereas the Reserves & Surplus and Prof it & Loss A/c. balance as on the said date were ₹ 1.76 crores and 1.73 crores respectively. The major amount appearing on the liability side of the balance-sheet as on 31.03.2009 was deposit and other account aggregating to ₹ 28.89 crores, which comprised of various funds and deposits. Keeping in view these facts and figures, we are of the view that the issue as to whether the relevant investment is made by the assessee out of its own surplus funds or out of the amount payable to its members, which represent its liability, requires verification in order to determine the exact head of income under which the interest on such investment is chargeable to tax in the hands of the assessee by applying the relevant case laws. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the f i le of the Assessing Officer for deciding the same afresh - Decided in favour of revenue for statistical purposes.
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2016 (1) TMI 408
Addition made towards difference in valuation of closing stock - Held that:- The method of valuation of closing stock adopted by the Learned AO in this assessment year should be adopted for valuation of opening stock for the assessment year under appeal. Hence we deem it fit and appropriate to set aside this issue to the file of the Learned AO to follow the aforesaid direction in respect of valuation of opening and closing stock of goods. - Decided in favour of assessee for statistical purposes. Addition made towards cash found during the course of survey - Held that:- AO had not rejected the books of accounts produced by the assessee. The cash was found and the business was allowed to be continued by the survey team. Hence there could be a situation that certain business receipts and payments could not have been properly entered on the day of survey itself. However, the cash book has been prepared and final balance sheet is prepared later on and presented before the Learned AO which are not rejected by the Learned AO. Hence in these facts and circumstances , we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law. The assessee is at liberty to file additional evidences and documents to explain the cash found during the course of survey with reference to its cash book of various divisions before the Learned AO. - Decided in favour of assessee for statistical purposes. Applicability of provisions of sec.40(ia) - whether applicable only to amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during previous year without deduction of TDS as held by CIT(A) - Held that:- We find that the provisions of section 40(a)(ia) of the Act have been held to be applicable even for amounts paid before the end of the previous year by the decision of the Jurisdictional High Court in the case of CIT vs Crescent Export Syndicate (2013 (5) TMI 510 - CALCUTTA HIGH COURT ). Accordingly the ground raised by the revenue stands allowed. However, the alternative argument of the Learned AR that the second proviso to section 40(a)(ia) inserted with effect from 1.4.2013 in the statute wherein if the payee has included the relevant receipts in his books and filed returns thereon, then the assessee should not be invited with disallowance u/s 40(a)(ia) of the Act contains lot of force. This amendment has been held to retrospective in nature by the decision of the Hon’ble Delhi High Court in the case of CIT vs Ansal Land Mark Township (P) Ltd reported in (2015 (9) TMI 79 - DELHI HIGH COURT ) - Decided in favour of revenue for statistical purposes.
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2016 (1) TMI 407
Addition on account of deemed lease rent - diversion of income by overriding title - Held that:- Assuming for moment that the assessee was the owner of the impugned flat therefore liable to be taxed at the annual let out value, as mentioned elsewhere, there was a specific charge on the property prior to the purchase of the said property by the assessee and by way of this charge Shri Samir Bojwani received the lease rent from the licencee M/s. Accor Radha Krishna Corporate Service Private Limited. Thus, if there is a iota of doubt that the impugned ALV should be taxed in the hands of the assessee, it is a clear case of diversion of income by overriding title. In our understanding of the facts, there is no need for going into the assumptions as in the purchase Deed itself, it is clearly mentioned that the assessee will get the physical possession of the said premise only after 31.10.2007. Therefore, there is no question of any accrual of rent during the year under consideration. The facts of the case are squarely covered by the decision of the Privy Council in the case of Raja Bejoy Singh Budhuria Vs CIT Bengal (1933 (3) TMI 20 - THE PRIVY COUNCIL) and also by the decision of CIT Vs Sitaldas Tirathdas [1960 (11) TMI 17 - SUPREME Court] . In both these cases, there was a charge for maintenance created against the assessee. In the case before us too, as evident from the above discussion, the lease rent was to go to Shri Sameer Bojwani by virtue of the specific clauses of Leave and Licence Agreement dated 27.11.2004. Since it stood pre-created against the assessee and in keeping with the enunciation by the Privy Council in Raja Bejoy Singh Budhuria (supra), the income must not be deemed to have reached the assessee, since it was actually earned by Shri Samir Bojwani. Therefore, the case of the present assessee falls squarely within the ratio of Raja Bejoy Singh Budhuria (supra) as considered in Sitaldas Tirathdas (supra). - Decided in favour of assessee. Addition on deemed interest earned by the assessee - Held that:- As mentioned elsewhere, the security deposit was taken by Shri Samir Bojwani pursuant to the Leave and Licence Agreement entred by him with M/s. Accor Radha Krishna Corporate Service Private Limited and since as mentioned elsewhere, the assessee could not have earned the rent during the impugned assessment year. We do not find any logic in taxing deemed interest in the hands of the assessee. The AO is directed to delete the same. The findings of the Ld. CIT(A) are accordingly reversed.- Decided in favour of assessee.
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2016 (1) TMI 406
Addition on account of disallowance of non-genuine brokerage expenses - CIT(A) deleted the addition - Held that:- CIT(A) is not controverted by the Revenue by placing any material on record suggesting that the payments paid by the assessee were bogus. In absence of such material establishing that the payments were not genuine or bogus, we do not see any reason to interfere with the finding of the ld.CIT(A), same is hereby upheld. - Decided against revenue. Addition u/s.68 - CIT(A) deleted the addition - Held that:- From the above, it is evident that the ld.CIT(A) has given a finding on fact that the depositors were assessed to tax and the entire records were available to verify the same. Therefore, the AO treated the same as unexplained amount on the basis of superficial reasons. The ld.CIT(A) has given finding on fact that the loan is genuine, supporting evidences with regard to the identity of the creditor in the form of Income Tax Return, etc. was furnished to the authorities below, therefore, in our considered view, the AO was not justified in making the addition and disallowance of interest thereof. Therefore, we do not see any reason to interfere with the finding of the ld.CIT(A), same is hereby upheld.- Decided against revenue. Addition on account of alleged excess claim of shortage - CIT(A) deleted the addition - Held that:- There is no dispute with regard to the fact that the AO has not pointed out any specific defects in the books of account. The AO has also not resorted to the rejection of books of account, however, he made estimation on the basis that the yield as declared in earlier year which was higher than as claimed in the year under appeal. The basis of such finding as per AO is that normally in textile mill processing, there is percentage of shortage at 15 to 17% in the yield. The AO has not given any basis as to why he is not accepting the contention of the assessee when the assessee has placed all details before him with regard to yield. Under these facts, we do not see any reason to interfere with the finding of the ld.CIT(A), same is hereby upheld.- Decided against revenue. Addition made u/s.69B - CIT(A) deleted the addition - Held that:- We find that the AO has given finding that there was a difference between the quantity of stock furnished to its Banker and shown to the Revenue. The only question left with us is whether the information furnished to the Banker by the assessee was correct or not. The assessee has accepted the quantitative figure of stock given to its Banker and the same has been disclosed in the Audit Report which was enclosed while filing the return of income. In view of the fact that there was a quantitative difference in the stock furnished to the bank and submitted before the Revenue-Department by the assessee, we are unable to agree with the finding of ld.CIT(A), as it is not the case of assessee that the value adopted by him for bank and declared to Revenue is different but the quantity matches. Therefore, we hereby set aside the finding of the ld.CIT(A) on this issue and sustain the addition made by the AO.- Decided in favour of revenue.
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2016 (1) TMI 405
Non deduction of tds on repairs and maintenance expenses - Held that:- It can be assumed that the repairs and maintenance expenses debited to the profit & loss account was purely in the nature of labour charges for repairs and maintenance and did not include any expenditure on account of purchase of any components/parts. We find that the AO has not made any enquiry with regard to the nature of expenditure. However, before the ld.CIT(A), the assessee has given separate account of replacement of spares and labour charges. Under these facts, we deem it proper to restore these issues to the file of AO for decision afresh. Needless to say that the AO would afford reasonable opportunity of being heard to the assessee. - Decided in favor of assessee for statistical purposes.
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2016 (1) TMI 404
Penalty u/s 271(1)(c) - undisclosed sales/purchase figures - Held that:- The only facts that the assessee could not produce all sales/purchase bills, does not mean that the detail furnished is in accurate in any manner. These facts were also told to CIT, Appeal during the penalty proceedings. In spite of not having any shortcomings/discrepancies and to end the proceeding amicably, she had offered to surrender a sum of ₹ 5,00,000/- on agreed basis.as additional income to buy peace with the department and the Id., A.O. accepted the said offer and made addition of ₹ 5,00,000/- only. However the penalty proceeding was still initiated which is uncalled for as no specific defect was found while making the addition of ₹ 5,00,000/- This figure was based on the voluntary amount offerto tax to end the prolonged litigation by the assessee and the A.O. has only reproduced the submission of surrender in the penalty order. Hence the penalty imposed on account of concealment of Income and furnishing inaccurate particular u/s 271(1)© is not justified and needs to be deleted. Levy of penalty in this case is not justified. Accordingly, set aside the orders of the authorities below and delete the levy of penalty in dispute as section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee’s conduct cannot be said to be contumacious so as to warrant levy of penalty. - Decided in favour of assessee
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2016 (1) TMI 403
Reopening of assessment - disallowance of claim u/s 10B - Held that:- t is an undisputed fact that, assessee is a 100% EOU; eligible for deduction u/s 10B on the profits derived from such undertaking; it has commenced its production/manufacturing from the assessment year 1994-95; and the period of 10 years there from would be available up till assessment year 2003-04. However, the assessee as per then relevant provision of section 10B had chosen the initial assessment year AY 1997-98 and started its claim for deduction u/s 10B from AY 1997-98 onwards. In support of its claim, it has filed an Audit report as per the requirement of section 10B along with the return of income. The Ld. AO during the course of the original assessment proceedings has specifically embarked upon this issue and has noted the fact about the period of manufacturing; period of claim of deduction and also the overall components of profit of 10B as we have noted above. After examining the various issues relating to section 10B, he has computed the deduction u/s 10B. Thus, from the face of the assessment order it appears that, AO has applied his mind and has reached to a certain conclusion in respect of claim u/s 10B.From the perusal of the “reasons recorded”, it is evident that there is no whisper or reference about any tangible material coming on record having live-link-nexus with the income chargeable to tax escaping assessment. AO in the original assessment order has applied his mind and even noted down the entire facts and has computed the deduction u/s 10B. It is not a case where the assessment order is sub-silentio on the issue on which reasons have been recorded. Accordingly, on preliminary ground, we hold that the impugned assessment order passed u/s 143(3) r.w.s. 147 passed in pursuance of notice u/s 148 is void-ab-initio and deserves to be quashed. We order accordingly. - Decided in favour of assessee
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2016 (1) TMI 402
Depreciation on the boilers and windmill leased out by the assessee disallowed to the extent of 50% - Held that:- In the case before us, it is not in dispute that the boiler and windmill are not available in the market as such. It is an admitted fact that the assessee has to purchase various components and accessories of boiler and windmill and it has to be assembled and installed to make it as an asset, namely, boiler and windmill so as to enable the same to lease out to the lessee. Therefore, mere purchase of components and accessories of boiler and windmill cannot be construed as delivery of asset. It is for the assessee to bring into existence the asset, namely, boiler and windmill. The material available on record clearly shows that even though the components and accessories of boiler and windmill were delivered in the month of August, 1996, the assembling and installation were completed in the months of January, 1997 and March, 1997 respectively. Therefore, the boiler could have been delivered to the lessee only in the month of January, 1997 and the windmill in the month of March, 1997. In other words, unless various components and accessories of the boiler and windmill are assembled and constituted to fullfledged boiler and windmill, this Tribunal is of the considered opinion that there cannot be any delivery of the asset, namely, boiler and windmill. Therefore, full-fledged asset, namely, boiler and windmill came into existence only on 21.03.1997 and 31.03.1997 respectively. Therefore, this Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. - Decided against assessee
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2016 (1) TMI 401
Disallowance of employees contribution for PF & ESI - Held that:- This issue has been decided by the Hon’ble Jurisdictional High Court in favour of the Revenue in the case of CIT vs. Gujarat Road State Transport Corporation reported at (2014 (1) TMI 502 - GUJARAT HIGH COURT ) - Decided against assessee Disallowance of expenses u/s.40(a)(ia) - deduction of tax paid after the specific date - contention of the ld.counsel for the assessee is that the TDS was deposited before the due date for filing of return - Held that:- The law is well settled, in case the assessee has paid tax before the due date of filing of the return, then disallowance u/s.40(a)(ia) is not called for on the ground that TDS was not paid before the due date specified in the section. The Revenue has not controverted the fact that the assessee has deposited the tax before the due date of filing of the return, therefore we direct the AO to delete the disallowance. - Decided against revenue Short deduction or non-deduction of TDS - disallowance of expenses by invoking the provisions of section 40(a)(ia) - Held that:- restore this issue back to the file of AO to verify whether any order u/s.201 has been passed against the assessee. In case, no order has been passed, the AO would decide this issue in the light of the judgement of the Hon’ble High Court of Delhi in the case of CIT vs. Ansal Land Mark Township (P) Ltd.(2015 (9) TMI 79 - DELHI HIGH COURT ). Thus, this ground of assessee’s appeal is allowed for statistical purposes. Addition u/s.68 - unexplained cash credit - Held that:- There were debit and credit entry into the ledger account of the depositor. We find that there are debit entries of ₹ 1,50,000/-, then credit entries of ₹ 50,000/- & ₹ 1 lac, again there is a debit entries of ₹ 20,000/- and there is corresponding credit entry f ₹ 20,000 and again there is a credit entry of ₹ 72,000/- and debit entry of ₹ 72,000/-. The AO has added the entire entry entries of ₹ 3,94,000/- All these transactions have been routed through banking channel. The closing balance is of ₹ 1,52,000/-. We find that the AO has not given set off of these debit entries, when the transaction is routed through banking channel, identity of depositor is established, therefore in our considered view, the AO was not justified in making the disallowance of the entire credit entries amounting to ₹ 3,94,000/- and he ought to have given the set off of the debit entry. Therefore, the addition is sustained to the extent of ₹ 1,52,000/- and rest of the addition is directed to be deleted - Decided partly in favour of assessee.
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2016 (1) TMI 400
Surplus of sale and purchase of shares - CIT(A) treated as Income from STCG on which STT is paid - whether A.O. had established that the assessee was engaged in purchase and sale of shares and, hence the trading activity was business activity? - Held that:- The investment is not made out of borrowed funds. The value of investment as on 31/03/2006 is at ₹ 6.02 lacs. The volume of transactions is also not very high. The ld.CIT(A) has observed that in the case of Dineshkumar Kunjbihari Almal, Ahokkumar Babulal Almal and in the case of assessee himself during AY 2005-06, similar transactions were held to be as investment and not as business. This finding of the ld.CIT(A) is not controverted by the Revenue and no change into facts is pointed out as to why in this year under appeal the transactions are not treated as investment. Under these facts, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, all the grounds of Revenue’s appeal are rejected. - Decided in favour of assessee
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2016 (1) TMI 399
Penalty u/s 271(1) (c) - deduction u/s 80 denied - Held that:- The assessee attempted to correct the mistake by filing re- revised return. In the totality of circumstances of this case, the Appellate Authorities cannot be faulted in not finding it to be a case of making a willfully wrong claim by furnishing inaccurate particulars - Decided in favour of assessee.
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2016 (1) TMI 398
Reopening of assessment - Non deduction of tds - Held that:- As during the original scrutiny assessment proceedings u/s 143(3), the AO had issued detailed questionnaire to the assessee seeking information relating to contract and sub-contract works, supervision fee, legal & professional Services etc and TDS compliance thereon; and the assessee has duly replied the questionnaire and complied with the said notice by submitting information regarding the same and further information sought by the AO thereupon has been found to have been complied with. We further take note that questionnaire of AO dated 27.10.2008 sought information pertaining to the impugned reopening vide question no. 19 and the assessee in response to it had filed reply to it on 26.11.2008 and 03.12.2008 which have also been before the AO during the original assessment. So, it cannot be said that the assessee has failed to disclose any material fact before the AO during the original scrutiny assessment. We further concur with the view of the ld. CIT (A) that there has been no failure which could be attributed to the assessee of not disclosing fully and truly all relevant primary material facts necessary for completion of assessment because in the reasons itself it was mentioned, “as per column 27(a) of the Audit Report, it is stated that the assessee has not deducted tax at source in accordance with the provisions of chapter.". This averment in the reasons recorded for reopening is itself copied from the very same audit report of the assessee which was furnished with the original return of income. Thus, we find that the assessee has truly and completely disclosed all material facts relating to all the expenses at the time of scrutiny assessment proceedings itself and the AO, after scrutinizing the details furnished by the assessee in the course of scrutiny assessment, has passed the original assessment order u/s 143 (3) of the Act. Therefore, we concur with the CIT (A) that no new facts were brought on record which can be the basis for reasons to believe that the income of the assessee had escaped assessment and, therefore, the reopening of assessment in the present case had been merely on the basis of change of opinion, which is not permissible in the eyes of law. Therefore, we uphold the view of the ld. CIT (A) that this is not a fit case for reopening of assessment. - Decided in favour of assessee
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2016 (1) TMI 397
Deduction u/s 80IC - Bank Interest - CIT(A) deleted the addition - Held that:- The assessee has to import raw materials for which it has to open letters of credit(LC). The LC is an integral part of the business activity carried on by the assessee. Since pledging of FDR is necessary for drawing LC, the FDR is also an integral part of the business. The ld.CIT(A) at para 1.4 of his order observes that such FD’s had to be made before the raw material could be imported and hence the FD’s were inextricable part o the assessee’s business. We, do not find any infirmity with the findings of the ld.CIT(A). We therefore uphold the action of the ld.CIT(A) in respect of interest of FD’s given as security for LC’s. Miscellaneous Income - Held that:- In the course of carrying out business operation of the assessee that the assessee had debited this miscellaneous income to the P&L Account and claimed as business expenditure while computing the profits of business which was eligible for deduction u/s 80IC. The ld. CIT(A) observed that the provision for expenses had been made for AY 2007-08 and when the same was not required it was credited back in A.Y. 2008-09 and that such amount has been treated as part of the business income in accordance with provision of section 41 of the I.T. Act. It has been observed by the ld. CIT(A) that the provision has been made in respect of business expenditure and there is no reason why the same should be treated as anything but profit derived from business when part of such liability is returned back as the same is not required anymore.We, do not find any infirmity with the findings of the ld.CIT(A). We therefore uphold the action of the ld.CIT(A) in deleting the addition in respect of the miscellaneous income. Foreign Exchange Gain - Held that:- In reality there is no gain or loss. The cost of the purchase either goes up or goes down as the case may be. No doubt, the fluctuation in the cost of the purchase has the effect of reducing or enhancing the profit of business. The ld.CIT(A) held that such fluctuation is an essential and inextricable function of the business and the gain in question cannot be segregated from the profits derived from the business.We therefore uphold the action of the ld.CIT(A) in deleting the addition made by the ld. Assessing Officer in respect of foreign exchange fluctuation. In the light of the decision of Mepco Industries Ltd.(2009 (11) TMI 24 - SUPREME COURT ), one can have no escape from the conclusion that the nature of the subsidy has to be examined by the Court, In each case, in order to determine if as assessee’s undertaking is entitled to a particular deduction under sec. 80 IC of the Act.In the present case the issue is whether the interest income, miscellaneous expenses, foreign exchange fluctuation comes within the first degree.In the light if the above discussion, we are therefore of the considered opinion that the decision of the Ld.CIT(A) in deleting the addition made by the ld.AO in respect of Bank Interest, Miscellaneous expenses and Foreign exchange fluctuation gain, do not suffer from any infirmity, legal or factual and can be said to have a direct nexes with the business activity carried on by the assessee. Bank guarantee - Held that:- The bank guarantee is a part of the purchase process, and the income arising there from, has to be said to have been derived from the assessee’s business. We, therefore, delete the addition made by the ld. Assessing Officer in respect of the interest earned from bank guarantee.
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2016 (1) TMI 396
Eligibility for claim of carry forward of deficit of an earlier year to assessee registered u/s.12A - Held that:- As decided in Academy of Liberal Education [2015 (12) TMI 607 - ITAT BANGALORE ] the income of the trust has to be arrived at having due regard to the commercial principles, that s. 11 is a benevolent provision, and that the expenditure incurred on religious or charitable purposes in earlier year or years can be adjusted against the income of the subsequent year. The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. Tribunal had allowed set off of losses even for years prior to the immediately preceding assessment year. - Decided against revenue
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Customs
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2016 (1) TMI 418
Grant of Duty Credit Scrips - DGFT issued the Duty Credit Scrips for ₹ 50 lakhs and ₹ 1crore only as against the petitioner’s claims of ₹ 90,42,165 and ₹ 4,59,94,671. - Constitutional validity of Notifications Nos. 43 and 44 dated 25.09.2013 - As per the said scheme an IEC holder would be entitled for a Duty Credit Scrip at the rate of 2% on the incremental growth achieved by it during the period 01.01.2013 to 31.03.2013 compared to the period from 01.01.2012 to 31.03.2012 on the FOB value of exports. - another scheme called Incremental Exports Incentivisation Scheme (IEIS) on annual basis has been introduced. Under this scheme, an IEC holder would be entitled for a Duty Credit Scrip at the rate of 2% on an incremental growth achieved by it during a current year compared to the previous year on the FOB value of the exports. Held that:- On a careful consideration of the FTP 2009-14 as well as the Schemes in question vide paragraphs 3.14.4 and 3.14.5 read with the amendment vide Notifications dated 25.09.2013, we do not find any substance in the contention of the petitioner that the impugned amendments are sought to be enforced by the respondents with retrospective operation. We agree with the submission of the learned ASG that the amendments vide Notifications No.43 and 44 dated 25.09.2013 are only clarificatory and in no way affect the rights accrued to the petitioner to claim the benefit of Duty Credit. Therefore, we do not find any substance in the contention that the amendment to paragraph 3.14.4 and 3.14.5 of FTP 2009-14 vide Notifications No.43 and 44 dated 25.09.2013 are unconstitutional. However, the petitioner’s claims ought not to have been rejected without assigning any reasons - Respondent No.2 (regional authority) directed to ensure that a speaking order is passed in terms of Clause (ii) of paragraph 3.14.4(c) and 3.14.5(c) of FTP 2009-14 regarding the claims made by the petitioner. - Decided partly in favor of appellant.
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2016 (1) TMI 417
Disposal of SCN without adjudicating on payment of sum by the petitioner - In the Writ petition, a direction is sought to validate the SFIS scrip availed by the petitioners and to refund a sum of ₹ 89,95,627/- as deposited by the petitioners alongwith interest - Held that:- The show cause notice dated 27th March 2008 shows that the Respondents and particularly the Director General of Foreign Trade claims certain amounts. They have closed the file which without any adjudication order or decision but because of the act of the petitioners paying certain sums. To our mind, the continued retention of the sums or whether they were at all payable are matters to be decided in accordance with law and based on the allegations in the show cause notice. The Competent Authority cannot avoid the legal responsibility. We would therefore direct the Competent Authority viz. the Joint Director of Foreign Trade, Ministry of Commerce, Union of India to give a personal hearing to the petitioners on the two show cause notices dated 27th March 2008 and pas a reasoned order thereon as expeditiously as possible and within a period of four months from the date of receipt of copy of this order.
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2016 (1) TMI 416
When the matters were called, neither the appellant nor its counsel is present. This clearly shows that the appellant is not interested in pursuing the matter against [2011 (6) TMI 75 - CESTAT, CHENNAI] - ppeals are dismissed for non-prosecution.
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Service Tax
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2016 (1) TMI 395
Levy of penalty u/s 77 and 78 - appellant sought the benefit u/s/ 73(3) since it had already deposited the entire service tax objected by the Audit - Held that:- the transaction was properly recorded in the books of account regularly maintained by the assessee/appellant.- the issue was interpretational of notification and exempt on provisions and no active concealment or contumacious conduct having been found on the part of the appellant - penalty imposed under section 77 and 78 of the Act set aside - Decided in favor of assessee.
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2016 (1) TMI 394
Condonation of delay in filing of appeal before Commissioner (Appeals) - it was submitted that the concerned employee was on leave was given for delay in filing the appeal - Held that:- The delay was almost three months beyond the statutory time of three months. The learned Commissioner (Appeals) specifically examined the request for condonation of delay, to exercise powers under proviso to sub-section (3) of Section 85 of the Finance Act, 1994 and discussed the same in para 11 of her order. The material submitted by the appellants were examined and same are found to be factually incorrect and not in consonance with the pleadings made by the appellant. Accordingly, the ld. Commissioner (Appeals) came to the conclusion that there is no justifiable ground for condonation of delay as she was not satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of three months as stipulated under Section 85. Condonation denied - Decided against the appellant.
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2016 (1) TMI 393
Scope of Works Contract Service - extended period of limitation - bonafide belief - demand of service tax on works contract service of construction of pipeline and other structures for providing water supply for Tamil Nadu Water Supply and Drainage Board, in the Ananthapuram Town Panchayat of Villupuram - there was sufficient scope for the appellants to come into a bonafide belief that even during the said period, in absence of clear definition of the Works Contract Service to cover the specific service provided by them, no service tax was payable as the decision of the tribunal in their own case reported in 2008(12) STR 363 was in favour of them. Though this decision pertained to the period prior to 01.06.2007. We also noticed that the appellant had been informing the department of the contracts that they have entered into with various customers. The period involved being immediately after the introduction of Works Contract Service, clarity was required as to whether what was not covered under the erection, commissioning and installation service earlier, could be covered under the new service. Since, in the instant case the issue appears to be latent to the interpretation of law at the initial stage of introducing due service, there was scope of bonafide belief that the appellants did not have to pay tax. Therefore, viewing from this angle, the non obtaining of service tax registration and non payment of tax could be due to the bonafide belief that no tax was payable even under Works Contract Service. Consequently, the appellant’s contention that no returns were filed could also be due to such bonafide belief. We do not find that failure of their part in obtaining registration and non payment of tax could be attributed to deliberate suppression of facts and intention to evade tax. Invoking of the longer period of time limit is not justifiable in the instant case, as Sec 80 of the Finance Act, as it existed during the relevant time, would come to the appellant's rescue so far as invoking of the extended period of time limit is concerned. - Demand set aside - Decided in favor of assessee.
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2016 (1) TMI 392
Nature of sales incentive received from Mahindra & Mahindra Ltd. - Business Auxiliary Service (BAS) or in the nature of part of sales activity - Extended period of limitation - Held that:- it is not in dispute that whatever amount was received by the appellant was passed on the customers as incentive. Indeed the Commissioner (Appeals) recorded the fact that the entire component of sales incentive received had been passed on to the customers. Further, the respondent's appeal was allowed by the Commissioner (Appeals) on the ground of time bar also observing that the facts were in the knowledge of the Department by 05.12.2006 - Appeal of the revenue dismissed - Decided against the revenue.
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2016 (1) TMI 391
Sub-Broker services or BAS - sale or purchase of the securities - the case of the department is that the sub-broker arranged business for their principal broker and they issued contract note-cum bills to the ultimate clients. For the services rendered, the sub-brokers are paid brokerage/commission by the principal broker. Thus, it was held that the sub-brokers are liable to pay tax under the category of 'Stock Broker Services'. Held that:- During arguments an issue came up that the services provided by the sub-broker may not be brokerage service. It was only a service which facilitates the work of the Principal Stock Broker and therefore would get covered under the category of Business Auxiliary Services. We reject this view for two reasons. The first reason is that this view also taken in the case of Vijay Sharma [2010 (4) TMI 570 - CESTAT, NEW DELHI], was finally settled by the Larger Bench decision referred above. Secondly, we find that the show-cause notice in this case was raised on the respondent classifying the service as Stock Broker Service. Therefore, it cannot now be stated that the demand is payable under the Business Auxiliary Services. Appeal of the revenue dismissed - Decided against the revenue.
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Central Excise
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2016 (1) TMI 390
Clandestine removal of goods - admissibility of computer print out as evidenced against the manufacturer during a raid, the Department had collected a USB device and print out of data contained therein were obtained. - The Tribunal observed that reliance on such material was impermissible in view of non-fulfilling the conditions contained in sub-section (2) of section 36-B of the Central Excise Rules. - Held that:- the entire issue of establishing clandestine removal against the assessee is one of facts. Even with the aid of the contents of print out, the allegation could not have been sustained. As noted, cross-examination of random four witnesses was permitted, all of whom disowned their statements. There were little other evidence on record. Keeping the question of law suggested by the Revenue open, these tax appeals are, therefore, dismissed.
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2016 (1) TMI 389
Adjustment of Payment of duty under the wrong code - Petition has used wrong registration number in the challan wrongly - The petitioner immediately thereupon pointed out this issue to the Audit Officer under letter dated 19.03.2015 in detail explaining he background leading to such mistake. On 05.05.2015, the Department wrote to the petitioner that the assessee code now cannot be changed and only remedy available to the petitioner would be to seek refund. - t was conveyed to the petitioner that the duty paid in the wrong assessee code cannot be treated as payment of excise duty for the month of July 2014 and the assessee should therefore make payment of the said amount again. Any delay would invite interest and penalty. Held that:- whatever be the accounting difficulty, when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of the entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties. Such amount was deposited by the petitioner with the Government of India and it was duly credited in the Government account. It is not even the case of the respondents that the petitioner had any other code by the number and for which there was separate manufacturing activity inviting separate duty liability. Indisputably, thus, the petitioner had singular duty liability for which the actual payment was also made. Under the circumstances, the impugned communication dated 05.05.2015 and notice dated 21.07.2015 are quashed. The respondents are directed to give credit of the duty paid by the petitioner Decided in favor of assessee.
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2016 (1) TMI 388
Refund of duty alongwith interest thereon - Period of limitation - The petitioner had paid the excise duty on iron and steel products made of steel ingots amounting to ₹ 1,03,670.60 in terms of notification No. 206/63. Since no duty was liable to be paid on such products, the petitioner applied for refund - Held that:- Apex Court in M/s Doaba Cooperative Sugar Mills Ltd., Jaandhar [1988 (8) TMI 103 - SUPREME COURT OF INDIA] has ruled that, "in making claims for refund before the departmental authority, an assessee is bound within four corners of the statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act" - This decision was confirmed in Apex Court in Porcelain Electrical Mfg. Co's case [1994 (11) TMI 145 - SUPREME COURT] The application for refund of duty paid for the period in question was lodged on 4.6.1973 which was clearly beyond the period of three months from the date of payment of the said duty as required under Rule 11 of the 1944 Rules. The petitioner was, therefore, not entitled to any refund in terms of Rule 11 of the 1944 Rules. - Decided against the assessee.
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2016 (1) TMI 387
Reversal of cenvat credit on sale of electricity outside buyers - Rule 6 - assessee did not maintain separate accounts with regard to inputs used for generation of electricity meant for sale to outsiders and that for captive consumption - period October, 2001 to July, 2003 - Held that:- The question urged before us for non-compliance of the statutory requirement under Rule 6(2) and the statutory presumption under Section 11A(4)(e) has not been considered by the Tribunal. We are further of the opinion that if no separate accounts were maintained, how was the separate quantification to be arrived at has also not been discussed by the Tribunal. For all the aforesaid reasons, we are satisfied that the order under appeal dated 3-11-2009 is not sustainable in its present form. It is set aside. The matter is remanded to the Tribunal for hearing the parties afresh.
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2016 (1) TMI 386
Classification of forged round bars - Extended period of limitation - Whether the articles manufactured by appellant get covered under Heading 7214 or 7326 during the relevant period - Held that:- Appellant's records were audited by audit party in EA-2000, Comprehensive audit, which has been formulated by the Govt. of India, includes all the aspects of business of the unit which is being audited. This would mean that EA-2000 audit were also looking at the discharge of duty liability of the appellant in accordance with law. Appellant had clearly indicated in the monthly returns that the products manufactured by them are being classified under Ch. Heading 72.14 and cleared by availing the benefit of Notification 16/04. It was the duty of the audit party to consider whether the classification was correct and the appellant had availed the benefit of Notification correctly or otherwise. The audit report which has been produced before us indicate that this issue was not raked by the audit team would mean that it was accepted by the audit team that the classification of products is under Notification 72.14. On limitation the appeal succeeds and the demand for the period 01.03.2004 to 31.10.2004 is blatantly hit by limitation and the show-cause notice invoking the period of limitation under the provisions of Section 11A(1) is not correct. The impugned order is liable to be set aside on limitation only - Decided in favour of assessee.
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2016 (1) TMI 385
Benefit of Notification No.6/2003-CE dated 01/03/2003 - 100% EOU - DTA Clearances - Denial of refund claim - Unjust enrichment - Held that:- Respondent filed refund claim with the lower authorities for sanctioning the refund of the amount which was paid during the proceedings. The adjudicating authority rejected the refund claim on the ground that the documents which were furnished are not sufficient and they have not passed on the incidence of duty to any other person. On appeal, the first appellate authority reversed the order-in-original and held that the appellant has produced various documents before him and that he has not passed on the incidence of duty to their clients. Holding so he allowed the appeal filed by the respondent with direction to the lower authorities to refund the amount to the respondent. The Revenues case is that the appellant had not passed the hurdle of unjust enrichment and has not provided any documents as also that the CVD payable is as per tariff rate. We find that as regards the discharge of CVD, we held that CVD has been correctly discharged @ ₹ 30/- per Sq. Mtr. Hence, on this point, there cannot be any dispute. First appellate authority has categorically recorded that invoices raised by the respondent indicate only discharge of Central Excise duty as per Notification No.6/2003-CE and the amount deposited were subsequent to the clearances made by them. On perusal of the records, we find it so. We perused the invoices and also copies of the certificate issued by the various buyers to the respondent herein. We find that the certificates clearly indicate that the purchasers have not paid any excess amount to the appellant as Central Excise duty/CVD. - Impugned order is correct - Decided against Revenue.
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2016 (1) TMI 384
SSI Unit - dummy units - Clubbing of clearance - SCN was issued to one of the partners of M/s Prashant Industries only calling upon to show-cause for imposition of penalty, though penalty has been dropped by the adjudicating authority. - Held that:- it is settled law that when the Revenue proposes to club the clearances of two units, the show-cause notice has to be issued to both the units. Clubbing clearance of M/s Prashant Industries, without issuing any show-cause notice to them, with the clearance of the present appellants, also affects M/s Prashant Industries inasmuch as the order holds M/s Prashant Industries as a dummy unit. To hold them so without, following the principle of ‘natural justice' cannot be appreciated. - Demand of duty and penalty set aside - Decided in favor of assessee.
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2016 (1) TMI 383
Denial of CENVAT Credit - air conditioners installed in office of the factory - whether the credit is admissible on re-constructed copies of bill of entry - Held that:- Appellant had originals of the documents in dispute. They lost the documents and FIR has also been lodged for the same. During the time of audit, the appellants could not place the original documents before the officers. But, however, they placed the photocopies. The credit was denied for the reason that bills of entry are photocopies. Later, they obtained reconstructed copies of these documents. Credit availed on reconstructed copies was also denied. It is seen from the documents that these reconstructed bills of entry have been attested as true copies by the officers of customs. By such authentication and attestation by the concerned officers of Customs Authorities, the copies of bills of entry have, in our view, become proper duty paying documents. The genuineness of the documents having been established the denial of credit is unjustified The receipt of inputs in the factory and duty paid upon them is not disputed. The Cenvat Credit Rules, 2002 do not provide any time limit for availing credit on inputs or capital goods. - In Board's Circular No.943/4/2011-CX dated 29.04.2011, it is mentioned that "goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed". Therefore, credit on duty paid on air conditioners installed in office of the factory is admissible. - Decided in favour of assessee.
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2016 (1) TMI 382
Rectification of mistake - Tribunal while passing the order it has escaped to notice the provisions of Section 35C (1)(a) of the Central Excise Act - Held that:- Tribunal while passing the order had committed apparent mistake in so far as, it failed to appreciate the scope of Section 37 C (1) (a) of the Act 1994. It is supported by the decision of the Hon’ble Supreme Court in the case of Saral Wire Craft Pvt. Ltd. (2015 (7) TMI 894 - SUPREME COURT), where it is observed that the Order served on a “kitchen boy” and not on concerned person or any authorised person of the appellant, is not valid service. She also relied upon the decision of the Honble Allahabad High Court in the case of R.K. Agarwal (2007 (11) TMI 62 - HIGH COURT ALLAHABAD) where the petitioner was ex-director of Company. - Tribunal had not examined scope of Section 37C of the Act in the light of Case laws as cited by the Learned Advocate. But the facts were not disputed by the applicants. In my considered view, the Tribunal cannot rectify such mistakes in the present application. - Rectification denied.
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2016 (1) TMI 381
Denial of refund claim - job worker and erroneously paid duty on clearance of job work material - Held that:- CENVAT Credit shall be allowed even if inputs or capital goods sent to job worker for further processing, testing, repair etc. for the manufacture of intermediate goods necessary for the manufacture of final product, and it is established from the records that the goods are received back in the factory within the stipulated period. So, Rule 4(5)(a) of the Rules permitted the manufacturer to send the inputs or capital goods to the job workers without reversal of CENVAT Credit. - Tribunal observed that the duty liability has been discharged by the supplier of the raw material and not by the job worker or processor of the goods and the demand on job worker is unsustainable. Assessee received the MMF for processing and after processing sent to the Principal, which is used in the manufacture of final product. In the present case, the fermenters/columns supplied by the Appellant were admittedly not used in the manufacture of final product viz. pharmaceuticals or chemicals. - decided against Assessee.
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CST, VAT & Sales Tax
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2016 (1) TMI 380
Whether the appellant is entitled to produce the STDIV declaration and ST-14B Forms, even before the appellate authority - Held that:- Petitioner therein is entitled to produce the tax invoices, Forms VAT C-4 and Forms VAT D-1 before the Assessing Authority who thereafter has to determine the tax liability by deciding the matter by passing a fresh order in accordance with law. In this view of the matter, the petitioner is entitled to produce the STD-IV declaration and ST-14B Forms before the Assessing Authority who shall thereafter examine the tax liability and decide the matter by passing a fresh order, in accordance with law Whether the amount of purchase tax can be demanded from the appellant under Rule 28B(3)(j) of the Rules especially when it had been granted exemption from payment of tax - held that:- A plain reading of Rule 28B(3)(j) of the Rules clearly spells out that the beneficiary unit is entitled to exemption from payment of sales tax on the sale of finished products and not exemption from the payment of purchase tax. In other words, the unit is entitled to exemption from the payment of sales tax only on the sale of goods manufactured by it and any purchase tax leviable was recoverable from the said unit. Thus, the Tribunal was right in holding that the notional tax liability calculated for the purposes of setting off against the tax exemption limit shall be the amount of tax payable on the sale of furnished products under the Local Sales Tax Law and the Central Sales Tax Act, 1956 which does not include purchase tax and, therefore, the amount of purchase tax levied was recoverable from the appellant. - No illegality or perversity could be demonstrated in the aforesaid findings recorded by the Tribunal which may call for interference by this Court on this question - Appeal disposed of.
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2016 (1) TMI 379
Waiver of pre deposit - Reduction of the amount of bank guarantee requirement to 20% of tax demand - Held that:- As can be seen from the impugned order passed by the Tribunal, the learned Government Representative has not objected to the request made by the learned counsel for the respondent for directing the first appellate authority to decide the appeal in view of the deposit of 5% of the tax demand and furnishing of bank guarantee for 20% of the tax demand. Therefore, the Tribunal does not appear to have assigned any reasons for reducing the amount of pre-deposit. As regards the contention that the Tribunal has not examined the facts of the case from the aspect of financial hardship, as rightly pointed out by the learned counsel for the respondent, subsection (3) of section 73 of the Act does not contemplate financial hardship as one of the factors to be taken into consideration for the purpose of waiver of pre-deposit - it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity giving rise to any question of law, much less, a substantial question of law as proposed or otherwise. - Decided against Revenue.
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2016 (1) TMI 378
Validity of impugned order - Opportunity of hearing not granted - Held that:- Documents produced by the petitioner would show that reply was submitted before the office of the 1st respondent only on 04.09.2015. By this time however, the 1st respondent had already passed assessment order, as also issued the notice of demand. Considering the fact that the petitioner had almost two weeks time after the submission of reply and before the 1st respondent passed order, to produce the books of accounts, in order to substantiate his contentions in reply, I am of the view that order of the 1st respondent cannot be faulted on the ground that it was passed in violation of Rules of Natural Justice. The petitioner having chosen not to produce his books of accounts for perusal by the 1st respondent before the assessment, cannot be heard to complain of a violation of the Rules of Natural Justice while passing order - Decided against assessee.
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2016 (1) TMI 377
Disallowance of exemption claim - sale of Maize - TNVAT - Held that:- What was sold by the appellant was Maize. Even the Assessing Officer does not dispute that what was sold by the appellant was Maize. But, unfortunately, the Assessing Officer had gone by the fact that the person to whom Maize was sold, used it as waste for poultry feeding. There is nothing either in the Act or in the circulars to indicate that the eligibility of a product for exemption depended upon its usage. The exemption was a product based exemption and not user based exemption or an assessee based exemption. Therefore, this is a case where the Assessing Officer committed a jurisdictional error warranting interference by this Court. Hence, the writ appeal is allowed, the order of the learned Judge is set aside - Decided in favour of assessee.
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