Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 14, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194J - procurement of ready study data by the parent company, from another foreign company, and supplying it to the assessee amounts - Non deduction of tds on technical services rendered to a resident - No TDS required - HC
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Addition u/s 68 - cash credit - the alleged surplus cash accumulated in the cash book out of the withdrawals from the bank is to be considered as source of re-deposit - AT
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Disallowance on account of loss on sale of live stock - assessee was unable to prove that it was carrying on any business activity or possessing livestock in physical form and, therefore, ld. CIT(A) was correct in holding that appellant had not carried out any business activity nor it had sold the buffaloes - AT
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Long Term Capital Gain on sale of lease hold property by the assessee - provisions of section 50C of the Act cannot be invoked in respect to the transfer of leasehold rights - AT
Customs
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Remission of duty on Volatile goods u/s 70 - Specified Goods to which the provisions of that section shall apply when they are deposited in a warehouse - Notification
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Maintainability of writ petition - whether the respondent has got jurisdiction to demand differential customs duty beyond one year from the date of show cause notice are to be decided only by the appellate authority, but not by this Court. - Tri
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Revocation of CHA licence - sub-letting - Possession of a broker's licence brings with it a commensurate responsibility to be true to the source of livelihood i.e. fidelity in matters relating to collection and payment of statutory duties. - AT
Service Tax
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Restoration of appeal - CESTAT dismissed the appeal for non compliance of stay order - the delay of 5 days in depositing the amount is condoned - appeal restored before the tribunal - HC
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Cenvat Credit - duty paying documents - invoices which did not bear Sl.No. and registration number etc. - service tax paid on input services e.g. (i) repair charges; (ii) repair of company vehicles; (iii) rent a cab services used for transportation of staff/guests - Credit allowed - HC
Central Excise
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CBEC issues General guidelines for implementation of e-payment of refund/ rebate
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100% EOU - scope of the term 'manufacture' as per EXIM - manufacture means not only covered the activity which brings into, existence new product but it also includes independent activity such as re-packing, lebelling, etc. - AT
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Cenvat credit on the quantity of Dies Block - The entire exercise which was to be undertaken by the lower authorities to find out whether the same are manufactured and cleared on payment of duty as well as without payment of duty, was not properly addressed - Cenvat Credit allowed - AT
VAT
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Benefit of refund of tax paid on purchase of inputs as Special Economic Zone (SEZ) Developer - KVAT - The technicalities shall not come in the way of giving some reliefs. Hence, Section 20(2) has a over-riding effect - assessee is entitled for refund of input tax credit - HC
Case Laws:
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Income Tax
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2016 (1) TMI 504
Compensation received towards cancellation of the SPA - whether was a revenue receipt taxable in the hands of the appellant? - Held that:- If a receipt is a capital receipt in the hands of a recipient, it does not necessarily follow that expenditure is capital expenditure in the hand of a payer. Whether it is capital expenditure or revenue expenditure would have to be determined having regard to the nature of the transaction and other relevant factors. [M/s Empire Jute Co. Ltd. Versus Commissioner of Income Tax, (1980 (5) TMI 1 - SUPREME Court) ]. The assessee knew from the very beginning the conditionality Clause. He was conscious that no injury would be caused to his business in the event of SPA not being materialized and its non execution would in no manner impair its revenue. In the aforesaid factual background, in our considered view, the authorities below have rightly held the amount of compensation to be a revenue receipt. Income earned from such sources was to be taxed as business income.
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2016 (1) TMI 503
TDS u/s 194J - procurement of ready study data by the parent company, from another foreign company, and supplying it to the assessee amounts - Non deduction of tds on technical services rendered to a resident - Held that:- As the ready study data, purchased by M/s.Alkor Petroo Limited from M/s.Hardi Exploration and Production (Hardi UK), was supplied by them to their subsidiary i.e., the assessee; and the amount paid by M/s.Alkor Petroo Limited to Hardi UK was reimbursed by the assessee four years thereafter in the year 2008. It is evident, therefore, that no services were rendered by the parent company (M/s.Alkor Petroo Limited) to its subsidiary (i.e., the assessee) so as to be construed as technical services rendered to a resident under Section 194-J of the Act. Revenue has also not been able to show how procurement of ready study data by the parent company, from another foreign company, and supplying it to the assessee amounts to services rendered to a resident attracting Section 194-J of the Act. The Tribunal is the final court of facts and, as the finding recorded by it is on the basis of the material on record, the order under appeal cannot be said to be perverse. - Decided in favour of assessee
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2016 (1) TMI 502
Deduction under Section 80IB(10) denied - Held that:- Tribunal was right in holding that the assessee will be entitled for deduction u/s 80IB(10) with respect to income from flats measuring less than 1500 sq ft limit and assessee will not entitled for deduction u/s 80IB(10) proportionately only with respect to the income from the 2 flats exceeding the limit of 1500 sq ft when the assessee had considered all the flats as forming part of single project on interpretation of the provisions of section 80IB(10)(c). As in CIT Vs. Arun Excello Foundations (P) Ltd, (2012 (12) TMI 415 - MADRAS HIGH COURT ), wherein, it has been held that the language used in the relevant provision of law does not bar a deduction claim altogether if some of the units sold exceed the specified dimensions. - Decided in favour of the assessee
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2016 (1) TMI 501
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (1) TMI 500
Exclusion of expenses which was disallowed u/s 37(1) for computing book profit u/s 115JB - MAT computation - Distribution of samples of medicines to the physicians free of cost - Held that:- Distribution of samples of medicines to the physicians free of cost cannot be parted with the business purpose, as the object of supply of free samples of medicines is only to find out by the medical practitioners about the curative value of the medicines and such confidence could be created mainly by the medical practitioners, when they use such medicines towards treatment of the patients. Moreover, the real person who can create market for medicines are the medical practitioners and when compared to other industrial products, medicines are not ordinary products of consumption and its consumption is for only to get rid of some ailments. Reputation of such medicines would have to be confirmed by the medical practitioners and, therefore, the samples of medicines were distributed to them. In brief, distribution of samples of medicines to the physicians free of cost cannot be parted with the business conducted by the assessee. Section 37(1) of the Act speaks about the expenditure incurred for the purpose of business. Expenditure incurred upon supply of samples of medicines free of cost to the physicians is not required to be differentiated with the business in any manner. Taking into account all the facts and circumstances of the case, we are of the opinion that the learned CIT(A) has erred in confirming the order of the AO while declining the expenditure incurred for the said purpose. Therefore, it is observed that the expenditure incurred for providing the samples of medicines free of cost to the medical practitioners is liable to be allowed as business expenditure and, therefore, the order of the learned CIT(A) is hereby set aside in this regard and the file is hereby order to restore before Assessing Officer to reassess the assessment of assessee in view of the above said observations. Inclusion of amount disallowed u/s 14A to the book profit - Held that:- This issue is decided against the assessee in the case of CIT vs. Goetze India Ltd. (2013 (12) TMI 607 - DELHI HIGH COURT ). Accordingly, we uphold the order of learned CIT(A) on this issue. The disallowance of expenses made while computing total income under normal provision of the Act have not been prescribed to be included under the provision of section 115JB of the Act. Hence we uphold the matter of learned CIT(A) on this issue.
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2016 (1) TMI 499
Addition on book profit of the interest received on tax refund - Held that:- In the case of the assessee, the refund was determined in previous year 2010-11, corresponding to assessment year 2011-12 i.e. present assessment year, so the interest also accrued only in assessment year 2011-12 and not in any year earlier to it. Therefore, we hold that the interest of ₹ 4,66,110 accrued in relevant assessment year only. In the case in hand the interest was not only accrued in the relevant year but the assessee has also accepted the mistake of not crediting the amount of ₹ 2,50,737 in its profit and loss account for the year under consideration. The case of the assessee falls in first category of cases as it was discovered beyond doubt that profit and loss account was not drawn up in accordance with the Part II and Part III of the Schedule VI of the Companies Act. Therefore, respectfully following, the decision of the Special Bench of Tribunal in the case of Rain Commodities (2010 (7) TMI 794 - ITAT HYDERABAD ), we hold that the amount of ₹ 2,50,737 was correctly added by the Assessing officer while computing the book profit of the assessee and no interference is required in the order of the learned Commissioner of Income-tax (Appeals). - Decided against assessee
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2016 (1) TMI 498
Mistake in TDS deducted - assessee filled correction statement with NSDL - order passed u/s 201(1)/201(1A) of the Act raising a demand - Held that:- Original TDS return has been filed showing TDS deducted at ₹ 7,01,986/- and TDS return filed on 2.2.2008 and later on assessee realized after going through its books of account that the correct figure of TDS deducted for quarter 3rd for Asst. Year 200809 was ₹ 5,79,983/- and not ₹ 7,01,986/-. But in due course of time assessment order u/s 201(1)/201(1A) of the Act was framed by ACIT-TDS wherein assessee had shown to have deducted TDS of ₹ 7,01,986/- and TDS deposited is shown at ₹ 5,79,983/- and accordingly assessee has been treated as assessee in default for low tax deposit of ₹ 1,30,180/- and coupled with interest of ₹ 83,250/- demand of ₹ 2,14,330/- has been raised. The ld. AR of the assessee submitted that the assessee has actually deducted ₹ 5,79,983/- and has deposited the same and has also revised the TDS return by filing correction statement with NSDL and accepted by NSDL. We are, therefore, of the view that with reference to the provisions of the Act duly supported by the Centralized Processing of statement of TDS Scheme 2013 referred above, the assessee is entitled to revise the TDS return and once this TDS return has been accepted by NSDL then the correct amount of TDS by the assessee for quarter 3rd will stand at ₹ 5,79,983/- and to verify this fact, we set aside the matter to the file of Assessing Officer with the instruction to give proper opportunity to the assessee who will appear before the Assessing Officer with proof of revised return filed for quarter 3rd along with necessary details to the satisfaction of Assessing Officer and if the same are found correct then the contention of the assessee to be accepted by taking TDS deducted for quarter 3rd at ₹ 5,79,983/- in place of ₹ 7,01,986/-. - Decided in favour of assessee for statistical purpose.
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2016 (1) TMI 497
Disallowance of service charges expended by the assessee wholly and exclusively for the purpose of its business - Held that:- In the light of the evidence on record it is not possible to accept the claim of the revenue that the commission expenditure in question is not genuine or the assessee has failed to prove that the commission expenditure in question is wholly and exclusively for the purpose of the assessee's business. The Hon'ble Punjab and Haryana High Court in the case of CIT vs Mandeep Singh [2009 (8) TMI 40 - PUNJAB AND HARYANA HIGH COURT] has taken a view that commission paid and allowed in an earlier year cannot be disallowed in the subsequent year when the facts and circumstances are identical. In the case of Mobile Communication (India) (P)Ltd vs DCIT [2009 (11) TMI 81 - ITAT DELHI-E ] the Hon'ble ITAT Delhi Bench has also taken the same view. We are of the view that with the evidence on record the assessee ahs established that the commission paid to SFPL was for the purpose of services rendered by SFPL and therefore the same has to be allowed as deduction as the same is for the purpose of business of the assessee. We, therefore, direct the AO to allow the deduction as claimed by the assessee. - Decided in favour of assessee.
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2016 (1) TMI 496
Selection of TDS rates - TDS u/s 194C OR 194J - Rectification of mistake - assessee submitted that instead of remitting the mater back to the file of the Assessing Officer, the Tribunal could have decided the issue on the basis of facts and material available on record - Held that:- On a perusal of the finding of the Tribunal it is seen that the Tribunal, after analysing the terms of the agreement between the assessee and the service provider and the nature of work undertaken, has observed that the services rendered in pursuance of master service agreement, whether in the nature of payment to a contractor, as envisaged under S.194C or fee for technical services as covered by S.194J, has to be decided keeping in view the terms of Master Service agreement. The Tribunal after considering the principle of law decided by the Hon'ble Delhi High Court in the case of Bharti Cellular Limited (2008 (10) TMI 321 - DELHI HIGH COURT ) and the judgment of the Hon'ble Supreme Court in the same case, as reported in [2010 (8) TMI 332 - Supreme Court of India] finally directed the Assessing Officer to examine the issue of involvement of human element or human interface in the services rendered by the service provider to the assessee to finally determine, whether it is simply a contract as envisaged in S.194C or in the character or nature of technical services as per S.194J. The Tribunal, after considering all the facts and materials on record, having taken a conscious decision to remit the matter back to the file of the Assessing Officer for deciding the issue, thus , the assessee cannot challenge the appropriateness of such a direction, by terming it as a mistake apparent from record. On perusing these Miscellaneous Applications, as well as after considering the submissions of the learned counsel for the assessee, we are of the opinion that in the garb of rectification of mistake, the assessee actually wants a review of the order passed by the Tribunal, which is not permissible in law or within the scope and ambit of S.254(2) of the Act. These applications filed by the assessee, are therefore, devoid of merit, and are liable to be dismissed. - Decided against assessee
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2016 (1) TMI 495
Disallowance of claim for carry forward of deficit - whether resulting out of excess application over income - Held that:- The claim of the assessee that deficit from earlier years can be set-off against current year’s income for working out the utilisation, found approval. In view of this, we are of the view that assessee is eligible for claiming carry forward of the deficit, and CIT (A) was justified in directing so. - Decided in favour of assessee
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2016 (1) TMI 494
Estimation of income - whether the gross profit rate (GP rate) or the net Profit rate (NP rate) should be adopted - Held that:- A.O proceeded to adopt the GP rate at 6.19% and did not grant the deduction of expenses of transportation of loading and unloading charges only for the reason that Assessee could not prove the genuineness of expenses. It is an undisputed fact that Assessee is engaged in the business of coal trading and in the nature of business in which Assessee is engaged into, the expenditure on loading and unloading of expenses and the transportation is an important constituent of expenditure and without considering it the correct profits cannot be determined. We also find that Hon’ble Gujarat High Court in the case of CIT vs. President Industries (1999 (4) TMI 8 - GUJARAT High Court) has also noted that entire undisclosed sales could not be added as income of Assessee but addition could be made only to the extent of embedded profits embedded in sales and for which net profit was adopted. Thus we are of the view that in the present case when the sales are undisputed, the ends of justice shall be met if the income of the Assessee is estimated after taking into consideration the net profit rate of 1.5%. - Decided in favour of assessee.
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2016 (1) TMI 493
Benefit of accumulation as specified under section 11(2) denied - application of the assessee in form no.10 - Held that:- In the case of the assessee the Assessing Officer has nowhere examined the utilization of funds of previous years as to whether the separate records were kept for each year of accumulation and whether the fund has been utilized for the purpose of the trust within the time limit mentioned in the provisions of the Act relevant to the Assessment Year in which it has been accumulated. Rather the Assessing Officer has only dealt with the issue, of whether the accumulation of fund is for a specific purpose or not, which in the case of assessee was properly done as they have mentioned that they are accumulating/setting apart funds for the purpose of the trust. 14. The claim of the assessee further gets strengthened looking to the history of the assessee’s assessment proceedings wherein its setting apart/accumulation of funds in form no.10 for the purpose of the trust has duly been accepted by the Assessing authorities and the same is being continued in the years after the year under appeal before us. Also in the case of DIT (Exemption) vs. Guru Nanak Vidya Bhandar Trust (2004 (1) TMI 11 - DELHI High Court), Hon’ble Delhi High Court has dealt with the issue wherein assessee’s claim for accumulation set out in form no.10 were accepted in the preceding and subsequent years to held CIT(A) was not justified in upholding the action of Assessing Officer in rejecting the application in form No.10 for accumulation of funds u/s 11(2) of the Act and accordingly adding to the income of the assessee - Decided in favour of assessee
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2016 (1) TMI 492
Capital gains - measurement of distance of land from the end of the municipal limits - agriculture land - Held that:- As the capital gains worked out on transfer of lands was held justified as these lands, being non-agricultural lands, are capital assets in accordance with section 2(14) of the Act and second, that the Assessing Officer, in his remand report, rightly stated that Gunnor Town and Village Panchi Gujran have common boundary and distance measured for other lands (other than lands in question) from the office of the Tehsildar by vehicle was more than 6 kms. With these observations, the CIT(A) directed the Assessing Officer to measure the shortest possible distance of lands, other than mentioned in para 4 of the CIT(A) order, the CIT(A) in principle decided that the order of the Assessing Officer will remain upheld if the distance from municipal limit to lands is upto 2.00 kms, otherwise the same would not hold the field. The CIT(A) after laying dicta in principle, restored the issue to the file of the Assessing Officer for limited purposes of factual verification and we are unable to see any perversity or any other valid reason to interfere with the same. Before we part with the discussion on this issue, it is relevant to mention that the Assessing Officer will also take into consideration the binding Circular no. 17/2015 dated 6.10.2015 of the CBDT (supra) while verifying the facts and while applying the law in pursuance to the order of the first appellate authority. Accordingly, we uphold the conclusion of the CIT(A) with the direction to the Assessing Officer, as set out above. - Decided against revenue. Rejection of book results u/s 145(3) - Held that:- CIT(A) reduced the addition without pointing out any mistake in the calculation of the Assessing Officer and without recording any findings regarding conclusion of the Assessing Officer which is an incorrect approach for a first appellate authority. We, therefore, are of the opinion that this issue requires afresh adjudication at the end of the CIT(A) and hence, we restore this ground to the file of the CIT(A) for re-adjudication on this sole issue. Needless to say that the CIT(A) shall provide due opportunity of hearing to the assessee and shall decide the issue without being prejudiced from his earlier order and our observations in this order. Accordingly, ground of the revenue is deemed to be allowed for statistical purposes.
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2016 (1) TMI 491
Disallowance of five different heads of expenditure, i.e., electricity, telephone, mobile, conveyance and miscellaneous expenditure - Held that:- The disallowance made on the ground that there would be possible leakages is not acceptable as such ad hoc disallowance of 25% is not called for. Thus, this disallowance is deleted. - Decided in favour of assessee. Addition made u/s 40A(iii) - assessee had purchased medical instruments worth ₹ 25,000/- in cash - Held that:- As the assessee does not deny the fact of having incurred expenditure for purchases by way of cash above ₹ 20,000/-, in my view, the first appellate authority was right in upholding this disallowance. The findings of the order of the ld.CIT(A) are confirmed.- Decided against assessee. Disallowance of bank interest - Held that:- The disallowance was confirmed by the ld.CIT(A) on the ground that no details and evidence was filed. In my view, the disallowance is not sustainable for the reason that the AO has not made any such allegation. There is no basis for the Revenue to reject this claim of the assessee.- Decided in favour of assessee. Addition towards household expenses - Held that:- The assessee submits that the total household expenses actually incurred and shown are for ₹ 1,68,000/- which is very reasonable. The AO estimated the household expenses at ₹ 2,04,000/- and made an addition of ₹ 36,000/-. Thus in view, such an addition cannot be sustained as it is based on surmises and conjectures.- Decided in favour of assessee.
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2016 (1) TMI 490
Excess consideration received treated as “on money” - Held that:- In the present case, the materials based on which the additions have been made namely the data obtained from external sources does not seem to have been confronted to Assessee. It is pertinent to observe that for adjudicating any controversy, the adjudicator is required to follow either deductive reasoning method or inductive reasoning method. In the first principle the adjudicator will draw inference in support of his conclusion based on the material already available on record, under the 2nd method, in support of his conclusion, he will induct some material namely data, commentary about any concept etc. In the present case, ld. CIT(A) has followed the 2nd method but failed to establish the nexus from that material vis-à-vis the case of the Assessee while arriving at the conclusion and secondly, as observed earlier, failed to provide opportunity of hearing to the Assessee on that material. In view of these facts, we are of the view that the matter needs to be readjudicated by ld. CIT(A) by following the principles of natural justice. Needless to state that ld. CIT(A) shall grant adequate opportunity of hearing to the Assessee. The Assessee shall also be free to place any submissions or details in its support to present its case. - Decided in favour of assessee for statistical purposes.
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2016 (1) TMI 489
Addition u/s 68 - cash credit - Held that:- Assessee claimed that sum of amount has been received from her son and daughter - the assessee has produced prima facie evidence about the source of amount - The AO, except disbelieving the version of the assessee, failed to bring any evidence contrary to the one submitted by the assessee. Thus, the addition to this extent, source proved, would be deleted. The assessee has explained the sources. There is a rotation of the amounts. Some of the amounts deposited by the assessee duly tallied with the amounts available in the cash book on that date. In other words, the assessee has withdrawn sufficient amounts from the bank account, which was entered into in the cash book, and after withdrawing the amount from the bank, the amount was again re-deposited. The claim of the assessee is that her personal cash book has been ignored and the same amount has been accounted twice in the bank account. The ld.AO has not given any plausible reasoning for rejecting this explanation. From the perusal of the bank statement, it is discernible that some of the cash was withdrawn and re-deposited within very short period. Therefore, in our opinion, the alleged surplus cash accumulated in the cash book out of the withdrawals from the bank is to be considered as source of re-deposit. - Decided in favour of assessee in part.
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2016 (1) TMI 488
Disallowance on account of loss on sale of live stock - Held that:- Both the facts are contradictory i.e. on one hand the revenue from sale of milk has increased at three fold and on the other hand, there was great down fall in the business of the assessee and also assessee was not having its own business/factory premises to run the dairy business. Sale of milk in a dairy industry is based on proper mechanical system in which milk has to be stored in special dairy industry plant and thereafter after meeting the safety standard and other regular activities attached to the dairy industry including storage of milk in chilling plant followed by packaging milk to be sold in the market. Not a single piece of evidence has been produced by the assessee to both the lower authorities as well as before the Tribunal to prove the genuineness of the sale of milk. The only plea by the ld. AR taken repeatedly is that the assessee company was having opening balance of buffaloes and some buffaloes were sold and there ought to have been milk production with the resultant sale which cannot be accepted under the given circumstances. Accordingly, we do not find any force in the contentions made by the assessee and accordingly we do not find any reason to interfere with the order of ld. CIT(A). - Decided against assessee. Disallowance of loss and treating of receipt from sale of buffaloes as income from other sources - Held that:- There is no dairy activity carried out by the assessee nor it seems that it possessed livestock of buffaloes in physical form and the opening balance of buffaloes in assets has been used to claim business loss as neither the assessee nor the audited balance sheet as well as the written submissions furnished are giving any indication of such transaction. We, therefore, are of the view that there was no such transactions of sale of buffaloes during the year meaning thereby that the ld. CIT(A) was correct in disallowing the loss allegedly claimed by the assessee and consequently CIT(A) was correct in sustaining the alleged sale of buffaloes as income from other sources. Disallowance of expenses relating to buffaloes - Held that:- he assessee was unable to prove that dairy business was actually carried on by it during the year under appeal as the business premises were attached by Dena Bank and there was no possibility to run the business and nor any evidence is available on record to verify that assessee has actually carried out any dairy business activity at any other place other than its regular business/factory premises. As such we find no reason to differ from the view taken by the CIT(A) and accordingly uphold the order of CIT(A) Company had not carried out any business activities nor it had sold the buffaloes - whether assessee not allowed sufficient opportunity? - Held that:- We have already held above that assessee was unable to prove that it was carrying on any business activity or possessing livestock in physical form and, therefore, ld. CIT(A) was correct in holding that appellant had not carried out any business activity nor it had sold the buffaloes. As regards the allegation made by assessee company that Assessing Officer had not allowed sufficient opportunity, we find that there is no truth in this ground raised by the assessee company which can be verified by the observations of Assessing Officer in his assessment order, thus it is amply clear that assessee was given sufficient opportunity of being heard and, therefore, this ground of the assessee is also dismissed.
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2016 (1) TMI 487
Validity of revision u/s 263 - addition u/s 68 - Held that:- In view of the discussion and following the view taken in Subhlakshmi Vanijya Pvt. Ltd. [2015 (8) TMI 174 - ITAT KOLKATA ] we have drawn the following conclusions: - A. Contention of the assessee that since the AO of the assesseecompany was not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment to section 68 by the Finance Act, 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable. B. Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order, by holding that :- i) the enquiry conducted by the AO in such cases can’t be construed as a proper enquiry; ii) CIT u/s 263 can set aside the assessment order and direct the AO to conduct a thorough enquiry, notwithstanding the jurisdiction of the AO in making enquiries on the issues or matters as he considers fit in terms of section 142(1) and 143(2) of the Act, which is relevant only up to the completion of assessment ; iii) Inadequate inquiry conducted by the AO in the given circumstances is as good as no enquiry and as such, the CIT was empowered to revise the assessment order ; iv) The order of the CIT is not based on irrelevant considerations and further in the present circumstances, he was not obliged to positively indicate the deficiencies in the assessment order on merits on the question of issue of share capital at a huge premium ; and v) the AO in the given circumstances can’t be said to have taken a possible view as the revision is sought to be done on the premise that the AO did not make enquiry thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue on that score itself. C. In the given facts and circumstances of all such cases, the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases. D. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit. E. The CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 andnot other CIT. F. Addition in the hands of a company can be made u/s 68 in its first year of incorporation. G. After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid. H. Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. I. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT. J. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. K. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. - Decided against assessee
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2016 (1) TMI 486
Long Term Capital Gain on sale of lease hold property by the assessee - invocation of the provisions of section 50C in transfer of leasehold right - Held that:- From the transactions, it appears that it was a distress sale and the market value of the property cannot be assessed for computing the long term capital gain. Moreover, we have also examined the other aspects of invocation of provisions of section 50C of the Act relating to leasehold rights. The issue was examined by different Benches of the Tribunal in a number of cases referred to by the assessee, in which the Tribunal has held that the provisions of section 50C of the Act cannot be invoked in transfer of leasehold rights. Since it has been repeatedly held by different Benches of the Tribunal that provisions of section 50C of the Act cannot be invoked in respect to the transfer of leasehold rights, we find no infirmity in the order of the ld. CIT(A), who has rightly adjudicated the issue following the order of the Tribunal. We accordingly confirm the same. - Decided against revenue.
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2016 (1) TMI 485
Disallowance of transportation charges - transportation charges are not open for verification - CIT(A) made disallowance of the entire payment having invoked the provisions of section 40(a)(ia) - Held that:- From a careful perusal of the order of the ld. CIT(A), we do not find any narration with regard to the issuance of notice for enhancement of disallowance. Since the disallowance resulted into enhancement of income, the ld. CIT(A) was required to issue notice of enhancement before enhancing the disallowance from ₹ 2 lakhs to ₹ 48.26 lakhs. Therefore, enhancement made by the ld. CIT(A) suffers from irregularity, for which the order of the ld. CIT(A) deserves to be set aside and we accordingly set aside the order of the ld. CIT(A) and restore the matter to his file with a direction to issue notice of enhancement of disallowance to the assessee and thereafter readjudicate the issue after affording an opportunity of being heard to the assessee. Disallowance of vehicle running expenses - Held that:- The vehicle running expenses were incurred for the business purposes of the assessee-company, therefore, no ad hoc disallowance can be made. Since the assessee is a partnership firm, the element of personal use of vehicle cannot be ruled out. We are, however, of the view that the disallowance of expenditure of ₹ 20,000/- is on higher side. We accordingly reduce the same to ₹ 10,000/-. Addition under the head “repair and maintenance and bills and vouchers for the same were self-made and unverifiable in nature - Held that:- Assessing Officer has specifically pointed out that the bills and vouchers for repair and maintenance are self-made vouchers and are unverifiable in nature. Before the ld. CIT(A), the assessee has not placed any evidence to prove the genuineness of the claim. Even before us, no sample voucher is filed, wherefrom mode of preparation of voucher can be evaluated. Since the assessee has made a particular claim of expenditure, onus is upon the assessee to prove its genuineness. Self-made vouchers for entire expenses will not serve the purpose. We are accordingly of the view that the Revenue has rightly made the disallowance having concluded that the bills and vouchers maintained for repair and maintenance expenses are not open for verification. Accordingly we confirm the order of the ld. CIT(A). Nature of sale of land - computation of capital gain - agricultural land - Held that:- Once the land is situated within 8KM of the municipal limit, the land certainly falls within the category of capital asset and capital gain is to be worked out. Since the assessee has raised a claim that it is an agricultural land and does not falls within the definition of capital asset, the onus is upon it to place the relevant evidence by obtaining a certificate from the concerned authority, but the assessee has simply filed an affidavit along with notification of the boundaries of Kanpur city wherefrom the location of the land cannot be verified. We are accordingly of the view that the ld. CIT(A) has rightly disallowed the claim of the assessee in the given facts and circumstances. Accordingly we confirm his order on this issue.
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Customs
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2016 (1) TMI 474
Validity of petition - whether there is before this Court, any petition filed by a person in existence and through a properly authorized person. - Fixation of brand rate of duty drawback - It has been enquired from the counsel for the petitioner that once it is the averment in the petition itself that M/s Bimla Industries has as far back as on 1st July, 2004 merged with M/s Maa Kalyani Kitchenwares Ltd. and thereby ceased to exist, how has this petition been filed in the name of M/s Bimla Industries and how can Mr. Ashok Kumar Kansal today purport to act as proprietor thereof. - Held that:- The answer to that question has to be in the negative. Neither does M/s Bimla Industries exist as on date on which the petition was filed nor can Mr. Ashok Kumar Kansal represent himself to be the proprietor thereof and sue in the name of M/s Bimla Industries. There is another aspect of the matter. As aforesaid, the claim pertains to more than 15 years back i.e. August, 1989 to September, 2001. The petitioner did not pursue the same. Though as per the recommendation dated 15th July, 2008 supra only the claims of those were to be considered who had filed writ petitions and which writ petitions were pending and M/s Bimla Industries was admittedly not covered thereby but the applications of M/s Bimla Industries appear to have been erroneously revived. The said erroneous revival was contrary to the policy decision / recommendation dated 15th July, 2008 and would not vest any right in the petitioner. No ground for entertaining the petition is made out. Dismissed.
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2016 (1) TMI 473
Import of rutile welding grade - benefit of Notification No. 4/2006-CE for the purpose of CVD - Held that:- Notification No. 4/2006-CE inter-alia unconditionally exempts ores falling under chapter heading 2601 to 2617. - It is seen that nowhere in the lower adjudicating authorities orders it is brought out that the goods imported were concentrates. If the goods were not concentrates and were classified under 2614, they had to be "ore". Chapter Note-2 of Chapter 26 clearly states that it is not necessary that for the goods to be classified as ores they have to be necessarily intended for metallurgical purposes. From this it axiomatically follows that there was no basis for the lower authorities to deny the benefit of Notification No. 4/2006-CE when they have themselves classified the impugned goods under 2614 and at no stage even hinted that the goods were "concentrates". - Decided in favor of assessee.
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2016 (1) TMI 472
Maintainability of writ petition - alternative appellate remedy - Re-classifcation of Micom Px40 range of products (IEDs) as “Automatic Regulating or Controlling Instruments and Apparatus” - exemption of customs duty under Notification No.25/99-Cus. - Held that:- Prima facie, the impugned order is appealable before the Commissioner of Central Excise (Appeals), Chennai. In view of the settled legal position that the availability of alternative remedy would be a clear bar for approaching this Court under Article 226 of the Constitution of India, this Court could see that only for the purpose of avoiding the pre-deposit of 7.5% of the duty demanded, the petitioner has filed the present writ petition on the ground that the issues are covered. But still the issues as to whether the respondent can demand differential customs duty under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 and whether the respondent has got jurisdiction to demand differential customs duty beyond one year from the date of show cause notice are to be decided only by the appellate authority, but not by this Court. The second contention raised by the petitioner that the impugned order is a non-speaking order is also not acceptable. In any event, this Court is not inclined to entertain the writ petition, as the petitioner has to challenge the impugned order only before the appellate Commissioner. Since the writ petition is filed before this Court within sixty days, the petitioner is permitted to approach the appellate authority within sixty days from the date of receipt of a copy of this order. - Decided against the appellant.
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2016 (1) TMI 471
Revocation of CHA licence - sub-letting - Action claimed to be unduly harsh and disproportionate to the role of the appellant in the alleged fraud that led to proceedings against them - Held that:- two errant employees were allowed to use the umbrella of the licence issued to the appellant viz. to make up for the lack of experience of the appellant in the brokering business and the consequent primacy accorded to them in the operation of the licence. Possession of a broker's licence brings with it a commensurate responsibility to be true to the source of livelihood i.e. fidelity in matters relating to collection and payment of statutory duties. We do not find sufficient cause to interfere with the impugned order. Appeal is rejected - Decided against the appellant.
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Corporate Laws
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2016 (1) TMI 466
Oppression and mismanagement - petitioners contend that the entire paper ballot is bad in law - question of law v/s question of facts - Held that:- On the face of the order of the CLB, it can be seen that considering the poll on the day, the 7th respondent was declared to have lost. It was also observed that he did not raise any objections during the voting. So the CLB has held that no prima facie case was made out. It has considered the questions of law but has only refrained itself from adjudicating on the issue of voting pattern for the time being. The CLB has given findings on all the tests required for grant of interim reliefs. It is not necessary for the CLB to specifically use the words, prima facie case, balance of convenience and irreparable loss. It is sufficient if specific findings on the tests are given. Upon perusal of the order it is clear that the CLB has given findings in page 6, 7 and 8 of its order. Therefore, this court does not agree with the contentions of the Learned Senior Counsel for the petitioners that the CLB has not considered the questions raised before it. In so far as the personal grievance of the 7th respondent is concerned, there are specific findings in para 6 of the order of the CLB at pages 6 and 7 of the order. The communication of the 7th respondent has been referred to in page 7 of the order of the CLB indicating that the grievance is not just the elections. Again considering all these aspects only, this court in a nutshell held that there is no perversity in the findings of the CLB and the questions raised are not pure questions of law. Hence, there is no error apparent on the face of the record, warranting interference. In so far as oppression is concerned, any decision on the same can be arrived at only if the other questions are decided. On the face of it, the 7th respondent has been permitted to participate in the elections and his family members have been permitted to vote. Therefore, again mindful of the prejudice, that may be caused before the CLB, this court held in para 23 that the same would have to be decided by the CLB during the final hearing. The CLB has exercised its discretion against the appellants after giving reasons. Even if prima facie case, regarding a question of law is made out, the interim relief can be denied. All the tests required for grant of interim relief must be satisfied. This court has already given its findings in Paragraphs 18 and 19. It is pertinent to mention here that this Court has only held that no pure question of law have been raised. The above only implies that the decision on the question of law is dependent on appraisal and decisions on various facts and interpretation of the provision and will of the parties regarding the election process. Hence, there is no error in the findings of this court. On consideration of facts, no new grounds have been made out and the points agitated were already negated by this Court in its earlier order. An attempt is only now made to re-appreciate the same contentions. The applications to review cannot be used as a substitute to file an appeal.
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2016 (1) TMI 465
Sanction of Amalgamation and Arrangement - Scheme of Amalgamation and Arrangement is hereby sanctioned with the direction to follow all the procedural formalities.
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Service Tax
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2016 (1) TMI 484
Waiver of pre-deposit - Tribunal directed the appellant to deposit entire amount of service tax to entertain the appeal - whether the amount of pre-deposit as directed by the Tribunal was unfair and excessive - works contract - contract of cleaning various parts of M/s Guru Gobind Singh Super Thermal Plant - Held that:- Appellant has already deposited 50% of the total tax demand - the present appeal is disposed of by making the interim order dated 15.12.2015 absolute. The Tribunal is directed to hear the appeal on merits without insisting for any further deposit.
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2016 (1) TMI 483
Waiver of pre-deposit - Tribunal directed the appellant to deposit entire amount of service tax to entertain the appeal amounting to ₹ 26,59,784/- - whether the amount of pre-deposit as directed by the Tribunal was unfair and excessive - works contract - contract of cleaning various parts of M/s Guru Gobind Singh Super Thermal Plant - Held that:- appellant has already deposited a further sum of ₹ 6,70,252/-, as per order dated 15.12.2015, the present appeal is disposed of by making the interim order dated 15.12.2015 absolute. The Tribunal is directed to hear the appeal on merits without insisting for any further deposit.
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2016 (1) TMI 482
Restoration of appeal - CESTAT dismissed the appeal for non compliance of stay order - the stay order stood complied with even though there was a delay of five days in depositing the amount? - Held that:- there is a delay of five days in depositing the amount as directed by this Court. The appellant deposited the amount on 5.5.2014 instead of 30.4.2014 due to financial hardship. Examining the factual matrix herein, there appears to be no malafide on the part of the appellant. Thus, keeping in view the totality of facts and circumstances of the case, the delay in depositing the amount is condoned. The appeal filed by the appellant shall be heard on merits by the Tribunal in accordance with law. Consequently, the present appeal stands disposed of. - Decided in favor of assessee.
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2016 (1) TMI 481
Cenvat Credit - duty paying documents - invoices which did not bear Sl.No. and registration number etc. - service tax paid on input services e.g. (i) repair charges; (ii) repair of company vehicles; (iii) rent a cab services used for transportation of staff/guests - Held that:- under the Scheme of Cenvat Credit Rules, 2004, the assessee is entitled to claim the credit on the service tax paid on all those services which the assessee has utilized directly or indirectly in relation to a final product involved in the manufacturing activity. The service tax paid for services of repair, maintenance of company vehicles/rent-a-cab services are in relation to the business activities of the company, which is directly or indirectly involved in the manufacturing activity of the final product, is an input service. As such, the CENVAT credit claimed on these two services namely, service tax paid for repair on Company vehicles and, rent-a-cab services would come within the realm of Rule 3 of Cenvat Credit Rules, 2004 read with Section 66 of the Finance Act, 1994 and thus, the assessee is entitled for the Cenvat credit of service tax paid on the input services. Credit allowed - Decided in favor of assessee.
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2016 (1) TMI 480
Levy of penalty - first appellate authority has reduced the penalty imposed under Section 78 to 25% of the tax liability and also set aside the penalty imposed under Section 76 for the period September 2007 to 9th May 2008 relying upon the provisions of Section 78 of the Finance Act, 1994 - Held that:- it is settled that the judgement on a particular issue which passed by a Jurisdictional High Court, judicial discipline needs to be followed in preference to any other judgements. In view of this, I find that the impugned order which extended the benefit of 25% of payment of penalty to the respondent is incorrect and liable to be set aside and I do so. As regards the simultaneous penalties imposed under Section 76 and 78 for the period September 2007 to 9th May 2008, I find that the respondent is required to discharge the penalty under Section 76 and 78 of the Finance Act, 1994 as per the judgement of the Apex Court in the case of Board of Control for Cricket in India [2015 (1) TMI 856 - SUPREME COURT]. Decided in favor of revenue.
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Central Excise
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2016 (1) TMI 479
Levy of interest on differential duty - scope of Section 11AA before 11-5-2001 - Whether the CESTAT has not erred in law in holding that duty liability arises and commences from the date of the order of determination and not from the date of the actual liability especially when an order of determination always dates back to the actual date of liability?” - Held that:- So far as this case is concerned, the contention of the learned counsel for the Assessee is that, Section 11AA of the Act providing for charging of interest, came into effect only from 26.05.1995 (as per Finance Act, 1995) and as the tax liability of the Assessee was pertaining to the periods, 01.01.1994 to 31.01.1994 and 01.07.1994 to 30.12.1994, and that the amount of duty payable was remaining undetermined till the Order-in-Original was confirmed by the Order-in-Appeal, dated 26.12.2000 (which was communicated later) and that within three months, as the duty has been paid by the assessee, the question of payment of interest does not arise. The demand made for interest for the period from 26.08.1995 to 31.03.2001 has been rightly rejected by the Commissioner (Appeals) and as well as by the CESTAT, Chennai, is perfectly valid and is in accordance with the judgment rendered in Blue Star Limited's case [2009 (10) TMI 257 - BOMBAY HIGH COURT] - Decided against the revenue.
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2016 (1) TMI 478
Clandestine removal of goods - physical shortage of finished products - reliance on statements made by the officers of the appellant company - Held that:- the Tribunal had arrived at its conclusions, without properly appreciating the evidence available on record relating to the shortages and excesses found in the records of the appellant, including the internal audit. The actual audit practice of the appellant had not been considered by the appellant. The explanation submitted by the appellant, with regard to the manufacturing process and the stock taking procedure had not been appreciated by the Tribunal in its proper perspective, as there are no clear findings on the said issue. Further, there is no finding by the Tribunal, with regard to the removal of the goods, from the premises of the appellant, for the imposition of the excise duty. The conclusion arrived at by the Tribunal, relying on the statements made by the officers of the appellant company, cannot be sustained. - Matter remanded back.
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2016 (1) TMI 477
100% EOU - scope of the term 'manufacture' as per EXIM - demand of excise duty on the indigenously procured goods and custom duty on the imported goods on the ground that goods procured indigenously and imported were exported as such and was not used in the manufacture - Notification No. 52/2003-Cus., dated 31-3-2003 and Central Excise Notification No. 22/2003-C.E - The appellant time and again made categorical submission that goods indigenously procured and imported were exported after re-packing and labelling and the activity of repacking/labelling is amounting to manufacture as per the EXIM Policy. Held that:- From the definition, it is very clear that the manufacture means not only covered the activity which brings into, existence new product but it also includes independent activity such as re-packing, lebelling, etc. From the above definition it is very clear that if the imported goods or indigenous goods procured by the appellant has undergone the process of repacking and labelling/re-labelling as claimed and submitted by the appellant, then it cannot be said that the goods exported by the appellant is without carrying out manufacture activity. Commissioner have not given any emphasized on the aspect of re-packing and labelling/re-labelling as manufacture. The Commissioner has also not discussed in his order whether the re-packing and labeling has taken place and in what manner. - Commissioner has not dealt with submission the made by the appellant on the issue of Revenue neutrality - Matter remanded back.
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2016 (1) TMI 476
Cenvat credit on the quantity of Dies Block - according to the Department, Dies Block, were used exclusively in the manufacture of exempted goods viz. “Aluminium Road Wheels” and cleared without payment of duty to the defence establishment in terms of Notification No. 4/2006-C.E. - Held that:- the invoices No. 90073912 and 90076768 were indicating discharge of Central Excise duty @ 14% for the clearance of the final products manufactured out of “Die” No. 08008D when final goods were cleared as spares. - the very same final product when they are cleared as parts of original equipment, no duty is discharged. The entire exercise which was to be undertaken by the lower authorities to find out whether the same are manufactured and cleared on payment of duty as well as without payment of duty, was not properly addressed - Cenvat Credit allowed - Decided in favor of assessee.
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2016 (1) TMI 475
Denial of CENVAT Credit - credit on steel items used in fabrication of capital goods - repair and maintenance of the old machines. - Held that:- Assessee is a manufacturer of electrical insulators. To manufacture their final product, assessee is required to manufacture kilns, dryer, chimney, glazing machine etc. Admittedly all these machines are fabricated by the assessee in their factory by using the steel items in question. In assessees’ own case for the earlier period, same items used for same purpose on the same ground, this Tribunal held that assessee is entitled to take cenvat credit as per Final Order [2015 (12) TMI 844 - CESTAT NEW DELHI]. Therefore, following the precedent decision of this Tribunal in assessees' own case, I do not find any infirmity in the impugned order for allowing cenvat credit on steel items used in fabrication of Klins, dryers, storage tank, chimney, curing corusal glazing machines, racks etc. and repair and maintenance of the old machines. In these terms, appeal filed by the Revenue stand dismissed. Regarding imposition of penalty for steel items used in civil construction by the assessee - Held that:- In the show cause notice modus operandi of the assessee is missing. Although the appellant has already reversed the cenvat credit which was taken earlier along with interest on pointing by the Departmental officer at the time of investigation. In these terms, it cannot be said that assessee has taken the cenvat credit with malafide intention. As mansarea is missing in the show cause notice, therefore, penalty on the assessee is not imposable - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2016 (1) TMI 470
Detention of goods - driver of the vehicle has handed over some wrong invoice pertaining to some other goods of the respondent due to inadvertence - Held that:- Admittedly, the goods are detained from 16.09.2015. Till date, tax has not been quantified. Hence, for the purpose of release of goods, the respondent is directed to quantify the tax to be paid by the petitioner and intimate the same to the petitioner within a period of one week from today and on such payment being made by the petitioner, the goods detained are directed to be released forthwith. As far as the compounding fee is concerned, it is open to the petitioner to adjudicate the same in the manner known to law. - Petition disposed of.
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2016 (1) TMI 469
Waiver of pre-deposit - the condition under Section 62 (5) of the PVAT Act requiring pre-deposit of 25% of the tax, interest and penalty assessed additionally. No authority under the Act has been empowered to waive off the condition even in cases where the petitioner is unable to make the payment due to real hardship - Held that:- writ petition has been filed without even filing an appeal. In such a situation, the requirement of deposit of 25% of the amount as a pre-condition under Section 62(5) of the PVAT Act for hearing the appeal before the first appellate authority does not apply. Consequently, the writ petition is disposed of with the observation that it shall be open for the petitioner to file an appeal against the order of assessment in accordance with the provisions of the PVAT Act and also an application for interim protection/injunction from the requirement of pre-deposit of 25% of the amount - Decided against the assessee.
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2016 (1) TMI 468
Benefit of refund of tax paid on purchase of inputs as Special Economic Zone Developer - Karnataka Value Added Tax Act, 2003 (KVAT) - Held that:- Respondent-assessee is a developer of Special Economic Zone at Rachenahalli as per the permission granted by the Government of India. As per the policy of the Government of India, the assessee is eligible for refund of tax paid on purchases from the local dealers for the purpose of development, operation or maintenance of the processing area in a Special Economic Zone. In order to give the said benefit to those SEZ developers, sub-section (2) of Section 20 of the KVAT Act has been inserted to the Act, by Act No.6/2007 and Rule 130A has been inserted vide notification dated 26-07-2007, which was given effect to from 01-04-2007. There is some delay in claiming refund of input tax because of many reasons. The refund of input tax cannot be denied on the ground of belated claim. A reading of Section 20(2), which is a beneficial legislation, makes it very clear that the developer of Special Economic Zone or an Unit located in any Special Economic Zone is entitled for the refund of input tax credit or deduction from the output tax payable by such dealer. Section 20(2) does not contemplate any period within which, such developer shall claim refund of input tax. Further, Rule 130A which was inserted w.e.f. 1-4-2007 also does not contemplate the period within which the developer shall claim the refund of input tax. Section 35 cannot control Section 20(2). The benefit of beneficial legislation has to be extended to the SEZ dealers. The technicalities shall not come in the way of giving some reliefs. Hence, Section 20(2) has a over-riding effect against Section 35 of the Act. The Tribunal, after examining the matter, has given the relief. We find no infirmity or irregularity in the said find. - assessee is entitled for refund of input tax credit. The appellant has not made out a case to interfere with the same. The substantial questions of law framed are held against the Revenue - Decided against Revenue.
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2016 (1) TMI 467
Eligibility for exemption subject to the proof of certificate - concessional rate of tax - Held that:- Yet another opportunity may be given to the petitioner with respect to the claim of production of declaration forms alone, this Court is inclined to grant sufficient time to the petitioner for production of C forms. - by quashing the impugned orders dated 07.09.2015, this Court permits the petitioner to file C declaration forms before the respondent within a period of two weeks from the date of receipt of a copy of this order and on such production, the respondent is directed to consider the same and pass orders on merits and in accordance with law, within a period of four weeks thereafter. - Petition disposed of.
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Indian Laws
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2016 (1) TMI 464
Challenge to Abkari Policy 2014-15 - Judge carved out an exception vis-a-vis the eligibility of Four Star and Heritage category hotels to the grant of FL-3 licence, finding their exclusion to be arbitrary and violative of Article 14 of the Constitution - Held that:- It is not the State that makes classification of Star Rating so far as hotels are concerned. This is intrinsically modulated by the Tourism Industry and not by the State Government. It seems to us that the impugned policy of eradicating consumption of alcohol in public applies to all stakeholders without exception. However, thereafter a relaxation or exception, in the interest of tourism, has been forged in favour of Five Star hotels alone so far as the drive against public consumption of liquor is concerned. In other words, were it not for considerations of tourism, this exception in favour of Five Star Hotels may have been struck down. As already noted, Courts should be chary from interfering in policy matters, by infusing or imposing its assessment of the policy. The Court may well opine that there is close similarity between Five Star and Four Star and Heritage Hotels with regard to foreign clientele; but that segregation or selection is the preserve of the State Government. This is altogether different from viewing the position from the stand point of creating a classification in favour of Five Star hotels. The State can draw support from Rule 13(3) which postulates that special measures for the promotion of tourism can be ordained by the State. We cannot subscribe to the view that this Rule violates Section 15C of the Abkari Act. What is certainly a strong criticism to the State policy on alcohol, namely, that FL-1 sales are a State monopoly and result in almost 80 per cent of the sales in the State of Kerala. The State has asserted that in keeping with its objective of bringing down alcohol sale it has devised and implemented a 10 per cent cut in the number of FL shops. This assertion of the State has been contested on the grounds that the sales have not reduced as a result, but we find no reason to disagree or doubt the bona fides of the State. The Court cannot be blind to the fact that a social stigma at least as far as the family unit is concerned still attaches to the consumption of alcohol. Free trade in alcohol denudes family resources and reserves and leaves women and children as its most vulnerable victims. Purchasing alcohol from a FL-1 shop would entail consuming it under the reproachful gaze of the dependants, especially the female members of the family. This is certainly a discouragement to regular and excessive consumption of alcohol. We must accept that that the possibility exists that rooms may be rented in Three and Four Star hotels, where alcohol can be brought from FL-1 shops and then consumed. However, this does not constitute public consumption, and therefore is not fatal to the besieged State’s policy. No illegality or irrationality with the intention of the State to clamp down on public consumption of alcohol. The One Man Commission Report has been considered, so the policy does not suffer from the vice of arbitrariness. In these circumstances, it is not for the Appellants to argue or for us to hold that the goal of prohibition would be more likely to be met by reducing the number of FL-1 shops or by introducing any other measure. As was held in Balco Employees' Union (Regd.) v. Union of India and Ors. [2001 (12) TMI 808 - SUPREME COURT OF INDIA], in a democracy, it is the prerogative of the elected Government to implement and follow its own policy, even if this adversely affects some vested interests, and the Court may not strike down a policy “at the behest of a Petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.” If the sale of beer and wine as a consequence of grant of FL-11 licenses discloses an increase or if there is a trend towards serving beer of a higher alcohol content, the State will have to review its stand, failing which it would inexorably invite further litigation. This curial warning also applies to any laxity in policing or ensuring that no person below the permissible age is allowed to consume alcohol in public. Additionally, we must note that thousands of workers at bars that lost their FL-3 licenses have been rendered unemployed as a result of the impugned policy, leading to over a dozen suicides. The State has imposed a 5 per cent cess on liquor sold in FL-1 shops for the purpose of rehabilitation of these workers. However, it has been argued before us that the amount mobalised by this cess is not being properly implemented. If this is indeed the case, the High Court may be approached to address this grievance. It does not affect the legality of the policy impugned before us, but there is no doubt that these workers do have a right to be rehabilitated. The State may be sanguine in its assessment of the success of the impugned policy, but it must be given a chance to combat the rise in alcohol. - No reason or justification in accepting these Appeals - Decided against appellants.
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