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TMI Tax Updates - e-Newsletter
January 15, 2015
Case Laws in this Newsletter:
Income Tax
Customs
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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Labour charges paid to the female relatives of the directors disallowed u/s 40A(2)(b) - there was no finding the effect that the labour charges paid were in excess of the fair market charges - expenses allowed - HC
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Penalty imposed u/s 271(1)(c) read with section 274 - It may be a good case for quantum addition but not for imposing penalty. Estimation is outcome of subjective approach of the individual. If we sustain the part penalty even after a huge surrender made by the assessee then the faith of the assessee will shake. Penalty deleted. - AT
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Penalty u/s 271(1)(c) - assessee who is described as an illiterate old Halwai who admittedly offered to surrender income for tax which was retracted - revenue failed to prove its case - no penalty - AT
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Exemption u/s 10B - Duty drawback - AO was not justified in disallowing the claim of the assessee on the basis of decision in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) - AT
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It is an established position of law that even when the undisclosed sale or receipt is found, then also only the income embedded in such undisclosed receipt can only be brought to tax. - AT
Indian Laws
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Levy of motor vehicle tax - whether dumpers, loaders, escort crane and maintenance van can be said to be “Motor Vehicle” - Held yes - HC
Service Tax
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Management consultancy service or merely reimbursement of expenditure - providing General support services, Operational services, Personal services and Secretarial services - not chargeable to tax - demand set aside - AT
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Imposition of penalty - suppression of facts - Validity of SCN - the appellant, without any protest, deposited the Service Tax with interest - show-cause notice is bad in terms of Section 73 of the Finance Act, 1994 - AT
Central Excise
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Claim of rebate on export of goods while availing the benefit of area based exemption (Kutch area) - claim of rebate / refund denied - HC
Case Laws:
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Income Tax
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2015 (1) TMI 526
Deduction/benefit under Section 80-I - Whether assessee is entitled to deduction/benefit under Section 80-I on the gross income without excluding/reducing deduction allowed under Section 80-HH? - Held that:- Benefits under Section 80-HH and Section 80-I were independent and consequently, there was no question of giving effect to Section 80-HH(9) and thereafter proceeding to bring the balance amount for the purposes of tax or benefit under Section 80-I. The question of law framed in this appeal is answered in terms of the law declared by the Supreme Court in Mandideep Engineering and Packaging Ind. Pvt. Ltd. [2006 (4) TMI 75 - SUPREME Court]. - Decided in favour of assessee.
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2015 (1) TMI 525
Revision of orders prejudicial to revenue - correctness of the method of accounting of the assessee company for recording the receipt by way of membership fee and the expenses by way of commission and insurance premium - Held that:- Do not find any infirmity in the order passed by the Tribunal as Tribunal has rightly considered that the method of accounting should be such from which the correct profit of each year can be deducted and that as per the method adopted by the Revenue, the profit in the year in which the card is issued would be more resulting in loss/less profit in the year in which the services will be rendered by the assesseee. We are of the opinion that when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses. Therefore, the Tribunal is justified in setting aside the order of the CIT passed under Section 263 of the Act. - Decided in favour of the assessee.
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2015 (1) TMI 524
Labour charges paid to the female relatives of the directors disallowed u/s 40A(2)(b) - the appellant had already shown corresponding receipts as and by way of job charges for polishing the same diamonds and therefore it cannot be presumed that those diamonds got polished without incurring any labour charges at all? - Held that:- Factual scenario permits us to held that provisions of Section 40A(2)(b) will permit the assessee allowance of labour charges paid to the female relatives of the Director of the assessee- Company as the interpretation of Section 40A(2)(b) would not permit disallowance when there was no finding the effect that the labour charges paid were in excess of the fair market charges and that the authorities below disallowed the labour charges without ascertaining the fair market value of the same. As the Tribunal did not appreciate corresponding receipts were already shown, and therefore, same is also answered in favour of the assessee - Decided in favour of assessee.
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2015 (1) TMI 523
Deduction u/s 80IA - generation of electricity would not amount to production of goods and article and hence not entitled to deduction u/s 80 IA of the Act? - Held that:- As there is a confusion in the mind as regards the granting of relief under Chapter VIA . When there is a specific provision to consider the claim on generation and distribution of energy under Section 80IA and on the admitted fact that the assessee's windmills are located in a backward area, the Tribunal and the other authorities should have adverted their attention to the specific provision for deduction, i.e., Section 80IA. Since the original authority has already declined to grant deduction under Section 80IA. The Tribunal shall therefore, re-examine the issues above in the light of the claim under Section 80IA. - Decided in favour of assessee by way of remand.
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2015 (1) TMI 522
Commission paid on domestic sales - unreasonable and excessive expenditure - Held that:- The assessee had taken a positive stand that he had paid commission for sourcing of raw material etc. The Assessing Officer, however, did not carry out any inquiry and by summarily holding that the assessee has not been able to place on record any confirmation, disallowed ₹ 92.00 lacs allegedly paid on account of commissions. ITAT has merely restored the matter to the assessing officer for examining the matter afresh by reference to the identity of the recipients and the nature of transactions said to be commissions paid by the assessee. Thus find no error of jurisdiction much less of law that would enable us to hold in favour of the revenue or to hold that the discretion exercised by the Tribunal is perverse or arbitrary. - Decided against the revenue. Dis allowance u/s 14A - Held that:- Alleged interest received by the assessee under Section 36(I) (iii) of the Act, the Assessing Officer has by a sleigh of hand made an attempt to place this income under Section 14A of the Act. Admittedly the investment was made in the year 1996 and though the assessee may have received interest and dividend at one stage but for the last over a decade M/s HMGV is before BIFR and has not been paying any interest to the assessee. The investment as is apparent from the facts was made as a business expediency to procure raw material manufactured by M/s Hindustan Max GB Ltd. The Income Tax Appellate Tribunal, therefore, rightly deleted the addition made by the assessing officer, under Section 14A of the Act. - Decided against the revenue.
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2015 (1) TMI 521
Penalty imposed u/s 271(1)(c) read with section 274 - assessment u/s 153A - revenue aggrieved by cancelling the penalty on the disallowances made and deleted on the additional profit at the rate of 1% of the sales amounting to ₹ 38,91,422/- - Held that:- Mere revision of income to a higher figure does not automatically warrant inference of concealment of income, consequently, it was held that penalty imposed u/s 271(1)(c) of the Act was not valid and thus deleting the penalty by the Tribunal was held to be justified. It is also noted that the ld. Commissioner of Income tax (Appeals), while examining the assessment order/penalty order has dealt with the disallowances/additions, individually/separately and after full analysis of the same came to a particular conclusion holding that the estimation was either not maintainable or towards higher side. It is not the case that the ld. Commissioner deleted the penalty without analyzing the facts and suddenly reached to a particular conclusion. In view of these facts, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income tax (Appeals), consequently, the order of the First Appellate Authority is upheld. - Decided gainst Revenue. Penalty with respect to alleged bogus purchases upheld by CIT - Held that:- There is a contradiction in the conclusion arrived at in the assessment order with respect to purchases. The AO made the addition by holding that since the corresponding sales have been made, therefore, the assessee purchased the goods not from M/s Triton Infotech Pvt. Ltd. but from the grey market to avoid local taxes such as sales tax, VAT, etc. Thus, he made disallowance of 20% of the total purchases which resulted into addition of ₹ 55,72,000/-. The ld. Commissioner of Income tax (Appeals) reduced the addition to ₹ 11,20,000/-. However, during search & seizure operation, as per the Revenue, documents were found and seized and it was concluded that the assessee company made purchases from M/s Triton Infotech Pvt. Ltd. The statement of Shri K.K. Gupta was recorded, who tendered that no actual sales were made to the assessee and only accommodation bills were received. What it may be the fact remains that the ld. Assessing Officer relied upon the statement of Shri K.K. Gupta and even no opportunity was provided to the assessee to cross examine him, which is against the principle of natural justice. It seems the whole addition is either based on estimation or on the basis of statement of Shri K.K. Gupta, thus in our view, at least penalty is not imposable. It may be a good case for quantum addition but not for imposing penalty. Estimation is outcome of subjective approach of the individual. If we sustain the part penalty even after a huge surrender made by the assessee then the faith of the assessee will shake. Penalty deleted. - Decided in favour of assessee.
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2015 (1) TMI 520
Disallowance u/s.14A - CIT(A) had reduced the said disallowance by deleting 50% of the disallowance - Held that:- Provisions of Rule 8D of the Rules were introduced w.e.f. 01.04.2008 are not applicable to the years prior to the said insertion. However, the Hon'ble Bombay High Court in Godrej Boyce Manufacturing Co. Ltd. Vs. CIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) had elaborately considered the issue of applicability of the provisions of Rule 8D of the Rules to the years prior to 01.04.2008 and it was held that proportionate disallowance out of administrative and personnel expenses may be made, keeping in mind the facts of the case. In view thereof, we direct the disallowance of ₹ 2 lakhs out of administrative expenses - Decided partly in favor of the assessee. Transfer pricing adjustment - Held that:- The comparison between the export to associated enterprises and export to third parties would not provide accurate results as economic value of the transactions, risk involved were different. We find merit in the plea of the assessee in this regard. We uphold the aggregation of transactions in the TP study carried on by the assessee where the said transactions after benchmark were at arm's length price, no adjustment was to be made. In view thereof, we find no merit in the analysis carried out by the TPO by benchmarking the transactions of exports to third parties with exports to associated enterprises resulting in addition of ₹ 22.49 lakhs. In view of our discussion herein above, we delete the addition of ₹ 22.49 lakhs - Decided in favour of assessee.
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2015 (1) TMI 519
Unexplained Cash credits - addition u/s 68 deleted by CIT - Held that:- Undisputedly before the Assessing Officer complete details were not filed and the Assessing Officer has made addition of ₹ 7.65 lakhs under section 68 of the Act. But when the matter arrived before the ld. CIT(A), the ld. CIT(A) has asked the assessee vide order sheet entry dated 23.1.2013 to file details of PAN and other relevant details of the cash creditors. Consequent thereto complete details including the copy of Income-tax return, copy of PAN, copy of Khasra & Khataoni, ID Card, etc. were filed before the ld. CIT(A) which were properly examined by him before accepting the genuineness of the contribution made by the 14 persons. Accordingly, no infirmity find in the order of the ld. CIT(A) in admitting the evidence filed on his direction.- Decided in favour of assessee. Difference in valuation of construction of building as per valuation report of the DVO and as disclosed by the assessee in its books of account - addition u/s 68B deleted by CIT - Held that:- On carefully examining the photographs and the evidence filed with regard to the quality of constructions of the building and rooms constructed by certain donors and it is quite evident from the photographs that the quality of construction was not as suggested by the DVO in his report which is available on record. Most of the walls are not even plastered and the floors are also made of bricks. Also carefully examining the findings of the ld. CIT(A) in this regard and of the view that the ld. CIT(A) has examined each and every aspect and quality of construction and after giving credit of self-supervision charges, etc., the ld. CIT(A) did not find much difference in the valuation declared by the assessee and estimated by the DVO. Therefore, we confirm the order of the ld. CIT(A) deleting the additions made by the Assessing Officer. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm the same. - Decided in favour of assessee. Entitlement to exemption u/s 10(23C)(iiiad) - Held that:- In the absence of any specific assertion, it cannot be held that the assessee was engaged in profit making activities in the light of the fact that the assesseetrust is running an educational institution and the activities were never doubted by the Assessing Officer. CIT(A) has rightly held that the assessee-trust is charitable institution and is entitled for exemption under section 10(23C)(iiiad) of the Act. Accordingly we confirm his order on this issue.- Decided in favour of assessee.
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2015 (1) TMI 518
Exemption claimed u/s 11 withheld - Whether AO has wrongly added back a sum of ₹ 1,01,06,162/- as capital expenditure incurred during the year which has not been debited to profit and loss account at all? Held that:- It can be said that objects/activities of the assessee are more of commercialized nature and no charity is involved in it. At the time, if these facilities are not provided, then nobody will purchase a plot. It can be said that it is a means of attracting the people so that maximum people may apply for the same and the hidden cost is already added, so no charity is involved. At best, the assessee can be said to be an authority created to help it to achieve certain objects. It can be said that it is the duty of the Government to create / provide all these facilities to public large, which is being done through is agency in a particular area. At the same time, the funds which are provided to the assessee by the Government is again a public money or generated from public itself. The objects of the assessee, though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. In view of the above discussion, we are inclined to hold that the CIT(A) is justified in rejecting the claim of exemption u/s. 11 of the I.T. Act. The CIT(A) ought to have noted that capital expenditure has not been debited to the Income and Expenditure AI c. for the year of the appellant at all and if for any reason it is ultimately held that the appellant is not entitled to exemption ss] S.ll and 12 of the Act, the addition I disallowance of the capital expenditure should have been directed to be deleted. For the above and other grounds that may be adduced at the time of hearing, the order of the CIT(A) may be modified to the extent prayed for as above. Since the issues raised by the assessee are not adjudicated by the CIT(A) for the reasons that the main claim of exemption u/s 11 has been allowed. Since we have reversed the order of the CIT(A) upholding the exemption u/s 11, the grounds raised by the assessee in the Cross Objection would go back to the file of the CIT(A) for fresh adjudication. - Decided in favour of revenue whereas the Cross Objection of the assessee is allowed for statistical purpose.
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2015 (1) TMI 517
Trading addition - CIT(A) deleted the addition - Held that:- The assessee has submitted every lot of seeds purchased containing different quantity of oil and after making laboratory test report, the payments are made to the supplier which is evident from the assessee’s reply dated 16.12.2009, which has been reproduced by the CIT (A). Also for the year under consideration, the gross profit rate of 8.18% was better than the gross profit rate of 7.68% in the immediate preceding year. For the year under consideration, the turnover has also increased - Decided against revenue. Addition invoking the provisions of section 2(22)(e) of the Act - CIT(A) deleted the addition - Held that:- The transactions are of business nature. Therefore, they do not fall within the ambit of section 2(22)(e) of the Act - Decided against revenue. Addition made u/s 80IB - CIT(A) deleted the addition - whether the assessee is a small scale industry or not? Held that:- This issue has already been decided in favour of the assessee by the ITAT in assessee’s own case for assessment years 2000-01 to 2003-04 wherein it has been held that assessee was enjoying the SSI status, therefore, it is entitled for deduction u/s 80IB in those years also. The facts remain same, hence, the assessee is entitled for deduction in this year also. As far as, the allowability of deduction u/s 80IB on the trading profit is concerned, the CIT (A) has not given any finding. Therefore, in the interest of justice and equity, we find it appropriate to remand the issue to the file of the CIT (A) - Decided in favour of revenue for statistical purposes. Addition u/s 80IA - CIT(A) deleted the addition - when the provision of section 80IA will become applicable upon the appellant? - Held that:- It is not at all required that losses or other deduction which have already been set off against the income of the previous year should be reopened again for the purpose of computing admissible deduction u/s 80IA of the Income Tax Act, 1961. The year from which option has been exercised is to be treated as the initial assessment year but after that the 10 years have in continuity. Thus no fault in the order of the CIT (A) - Decided against Revenue. Dis allowance section 14A of the Act read with Rule 8D - Held that:- Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] held that Rule 8D is applicable from assessment year 2008-09 only. But, at the same time, Hon’ble High Court has also observed that the AO is duty bound to compute the disallowance by applying a reasonable method having regard to the facts and circumstances of the case. Considering all these facts and case laws, we find it appropriate to set aside this issue to the file of the AO to be decided as per law, of course after providing an opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 516
Depreciation - disallowance of claim in respect of assets given on lease by the appellant by holding them as pure finance transactions - Held that:- Despite the fact that the assessee had prayed for joint inspection of leased assets and evidences there off, the revenue authorities brushed aside the requests made. This, is against the principals of natural justice, which can only be remedied by restoring the issues/transactions to the file of the AO for fresh adjudication. We, therefore, set aside the order of the CIT(A) and direct the AO to examine the transactions with Kedia Group of companies, REPL Engineering Ltd., Patheja Bros Forging & Stampings Ltd., and Padma Alloys Castings Ltd. afresh, for the allowance and claim of depreciation as per law and judicial decisions as mentioned in pre para - Decided in favour of assessee by way of remand. Deduction u/s 80M - Held that:- Even 1% disallowance upheld by the learned CIT(A) is on the higher side because the assessee's business was not to earn dividend income and the main activity is to give loans and as the name itself suggests, the bank is engaged in the industrial development of the country by advancing thousands of crores to the entrepreneurs. The loans advanced by the bank during the year under appeal stood over 20,000 crores. We set aside the order of the CIT(A) and delete the addition as made by him - Decided in favour of assessee.
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2015 (1) TMI 515
Revision u/s 263 - higher depreciation on hospital equipment - assessee in the present case is an educational society - Held that:- We uphold the impugned order of the learned Commissioner holding the orders of the Assessing Officer passed under S.143(3) read with S.153A of the Act for the years under consideration, to be erroneous and prejudicial to the interests of the Revenue on the issues of allowing higher depreciation on furniture as well as on the issue of allowing claim of the assessee for higher depreciation on hospital equipment and for unsecured loans without making proper and adequate enquiries. We however, set aside the impugned order of the learned Commissioner on the issue of corpus receipts by holding that he was not justified in treating the orders of the Assessing Officer in not bringing to tax the corpus receipts in the hands of the assessee as erroneous and prejudicial to the interests of the Revenue - Decided partly in favour of assessee for assessment years 2006-07 to 2010-11 whereas the appeals of the assessee for assessment years 2004-05 and 2005-06 are dismissed.
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2015 (1) TMI 514
Addition on account of interest on non-performing assets - Held that:- Following the precedent in the assessee’s own case for the assessment year 2008-09, we set aside the impugned order of the Commissioner (Appeals) and direct the Assessing Officer to delete the addition of ₹ 7,88,22,858/- as the lower authorities have misguided themselves in rejecting the claim of the assessee for non-recognition of interest income on NPAs. - Decided in favour of assessee. Interest on agricultural credit stabilization fund disallowed - Held that:- As noticed the assessee had suo-motu disallowed the said amount in the computation of income filed along with the revised return of income filed on 31st March 2011. In this background, it is also noticeable that before the learned Commissioner (Appeals) also, no specific ground was raised in this regard. Furthermore, the learned Authorised Representative submitted at the time of hearing that similar issue has been decided against the assessee by the Tribunal in the assessee’s own case for the assessment year 2008-09. - Decided against assessee. Claim of deduction under section 36(1)(viia)denied - Held that:- Tthe orders of the lower authorities deserve to be upheld inasmuch as the assessee has not made a Provision for bad and doubtful debts in the books of account equal to the amount of deduction sought to be claimed under Section 36(1)(viia) of the Act, and therefore, in our view, the lower authorities were justified in restricting the deduction to ₹ 50,00,000/- , being the amount of Provision actually made in the books of account. - Decided Against assessee.
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2015 (1) TMI 513
Penalty u/s 271(1)(c) - incriminating material found during the search or not - surrender of income - Held that:- In the facts of the present case it stands fully addressed that the assessee has offered an explanation consistently in terms of clause (A) of Explanation-1 to section 271(1)(c) and considering the overall conduct of the assessee as is discernable form the record, we are of the view that the bonafides contemplated in Clause B of the said explanation cannot be doubted as in the facts of the present case the occasion to conceal and filing of inaccurate particulars does not arise as the assessee who is described as an illiterate old Halwai who admittedly offered to surrender income for tax which was retracted on the grounds that offer was made on the belief that incriminating material was found during the search where admittedly the seized documents when made available showed that nothing incriminating was found. Where admittedly the jewellery found was less than the disclosed jewellery and in the said period no property either by the assessee or the family had been purchased and cash found was claimed consistently belonging to the various firms and explainable from that recorded books of accounts and none of these findings and claims have been shown to be incorrect. Thus we set aside the impugned order and quash the penalty holding that the explanation offered by the assessee is a bonafide explanation on facts which deserves to be accepted. Decided in favour of assessee.
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2015 (1) TMI 512
Exemption u/s 10B - Duty drawback - whether CIT(A) has erred in allowing the duty drawback to be included as part of eligible profit derived from export oriented unit u/s 10B of the Income Tax Act? - Held that:- CIT(A) was right in holding that section 10B(4) of the Act is a complete code which provides a formula/mechanism for computing the profits of the business eligible for deduction u/s 10B of the Act and in view of the decision of Special Bench in the case of Maral Overseas Ltd.,(2012 (4) TMI 345 - ITAT INDORE ) the present assessee was rightly held to be eligible for the claim of deduction on the export incentive received by it as per provision of section 10B (1) r.w.s. 10B(4) of the Act. AO was not justified in disallowing the claim of the assessee on the basis of decision of Hon’ble Apex Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) since provisions of section 10B are different from the provisions of section 80lA wherein no formula has been laid down for computing the eligible business profit Thus we are inclined to hold that the ld. CIT(A) was right and quite justified in granting relief for the assessee - Decided against revenue.
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2015 (1) TMI 511
Deduction u/s. 80IA - whether was not allowable in respect of income from investment/deposits as the income was not derived from business of generation of electricity - Held that:- This issue has been decided by the Tribunal against the assessee in earlier assessment year. However, the appeal has been filed before the Hon'ble Jurisdictional High Court and, therefore, in order to keep the issue alive, these grounds may be decided as per the decisions of earlier assessment years for the reasons given in assessment year 2003-04 that the contention of the assessee that Interest received for delayed payment of power bills by M/s. GRIDCO is not borne out of the facts on record. The assessee has not been able to show any nexus between impugned interest received by it with interest payments - Decided against assessee. Peripheral development expenses disallowed - Held that:- The assessee had not clarified that the expenditure had been incurred in respect of area where industrial activity was being carried out. Therefore, the facts for assessment year 2009-10 wherein CIT(A) has directed to restrict the disallowance to an amount of ₹ 25,41,312/- on account of peripheral development because the amount paid through Corporation office at Bhubaneswar was not in connection with business are distinguishable from the facts for assessment year 2007-08 - Decided against assessee. Entertainment expenses - dis allowance of 20% of such expenses on estimate basis - Held that:- AO has disallowed 20% of the claim of entertainment expenses on adhoc basis without pointing out specific item, which allegedly were personal in nature. The assessee is a Government of Odisha Undertaking. Thus being a legal entity, no disallowance is called for particularly on the ground of the same being personal in nature - Decided in favour of assessee. Disallowance under section 80-IA - assessee's claim is that if disallowances are sustained correspondingly eligible business profits will increase - Held that:- There was no ground before ld CIT(A) in this regard. Therefore, this issue does not arise out of the order of ld CIT(A). Thus, this ground is misconceived and, therefore, dismissed - Decided against assessee. Period expenses disallowed - Held that:- Since the AO has himself observed that these expenses crystalised in assessment year 2007-08, therefore, he is directed to allow these expenses in assessment year 2007-08 while giving effect to our order for assessment year 2007-08 vide ITA No.554/Ctk/2012 - Decided in favour of assessee for statistical purposes. Disallowance of periphery development - Held that:- No reason to interfere with the order of ld CIT(A) directing the AO to allow ₹ 33,12,500/- being the amount paid to Collector for peripheral development. He observed that whether the total amount of ₹ 1,08,77,070/- included the amount of ₹ 33,12,500/- as claimed by the assessee was to be verified by the AO. Accordingly, he directed the AO to verify the same and recompute the disallowance accordingly. However, in sum and substance, he confirmed the action of the AO following the assessment year 2004-05, by excluding an amount of ₹ 33,12,500/- and confirming the addition of ₹ 75,64,170/- - Decided against assessee. Disallowance of entertainment expenses - Held that:- Since the AO has himself observed that these expenses crystalised in assessment year 2007-08, therefore, he is directed to allow these expenses in assessment year 2007-08 while giving effect to our order for assessment year 2007-08 vide ITA No.554/Ctk/2012 - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 510
Depreciation on computers, software and peripherals - 25% OR 60% - Held that:- We are of the considered view that router and switches can be classified as a computer Hardware when they are used along with a computer and when their functions are integrated with a 'computer'. In other words, when a device is used as part of the computer in its functions, then it would be termed as a computer." Thus following the decision of the coordinate bench in assessee's own case direct the AO to allow depreciation @ 60% as claimed by assessee. - Decided in favour of assessee. Disallowance of expenditure u/s 40(a)(ia)- non deduction of tax at source u/s 194C - Held that:- Disallowance u/s 40(a)(ia) may not be made by the AO for the amounts/payments which have already been paid before the end of the relevant accounting year, out of the amounts disallowed which have been upheld by the CIT (A). - Decided Partly in favour of assessee for statistical purposes. Disallowance of prior period expenses - Held that:- Merit in the alternative contention of the assessee inasmuch as if an amount of ₹ 2,11,34,759 out of total amount of ₹ 2,38,85,000 was already offered to tax in the earlier years, the prior period adjustment made in that behalf by the assessee, on account of the concerned parties declining to make the payments due to discrepancies in the billing, the same should be allowed as deduction as bad debts. We therefore, set aside the impugned order of the CIT(A) and direct the Assessing Officer accordingly to restrict the disallowance made. - Decided partly in favour of assessee.
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2015 (1) TMI 509
Revision u/s 263 - whether CIT erred in concluding that the assessment was completed in hasty manner without making necessary enquiry - whether CIT(A) erred in presuming that nothing was mentioned regarding the method for valuation in 3CD report - whether CIT(A) erred in holding the view that the AO did not examine the stock details with regard to the secured loans and the payment of commission Held that:- In respect to the first issue of understatement of stock, we find that the assessee has valued the stock at cost on the basis of cost price or market price whichever is less. The assessee has maintained complete stock records in its computer system item wise containing full details of opening stock, purchases made, sales made and closing stock giving quantity, quality, rate and value. Once these facts are very much available before the AO during the course of assessment proceeding and even before CIT during the revision proceeding, but CIT has failed to verify the factum of closing stock that there is no difference while valuing closing stock and no average can be taken when the exact facts are before him. The stock statement submitted to bank and stock as per stock register is exactly matching in term of quality and quantity and rate. Once this is the position, how the CIT can propose a possible understatement and can give a finding that “likewise the AO accepted the closing stock declared by the assessee without calling any detail of making the required verification thereof. As find that the AO has carried out verification of commission paid by issuing notices u/s. 133(6) of the Act to 17 parties, who admitted to have received the commission from the assessee in its communication in response to notices u/s. 133(6) of the Act. The assessee covered almost 80% of commission paid at ₹ 5,53,54,513/- out of the total commission paid at ₹ 6,94,43,342/-. The assessee has also explained the nature of services rendered by these parties to whom commission is paid during the course of assessment proceedings and even during revision proceedings u/s. 263 of the Act. The AO has also verified the sundry creditors on account of commission payable outstanding as on 31.03.2009, which was paid in the subsequent financial year 2009-10 relevant to AY 2010-11 and the details were also filed before CIT during revision proceedings and even now before Tribunal in its paper book. In the present case the AO has made enquiries and the assessee replied to the enquiries, the order passed by the AO in the present case cannot be said to be either erroneous or prejudicial to the interest of revenue. Accordingly, we quash the revision order passed u/s.263 of the Act by CIT. - Decided in favour of assessee.
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2015 (1) TMI 508
Addition on account of undisclosed income from job receipts out side books - estimating G.P. of 10% on net additional turnover - Held that:- Assessing Officer has accepted the expenses shown in regular books as correct and only taken receipt from the data found in the laptop. The Assessing Officer has given absolutely no reason as to why only receipt was taken from the laptop data and why expenses appearing in laptop data were not taken into consideration. It is not the case of the Revenue that the data found in the laptop shows that the actual net income of the assessee was more by ₹ 4,20,73,972/- from the income disclosed in the return of income. It is an established position of law that even when the undisclosed sale or receipt is found, then also only the income embedded in such undisclosed receipt can only be brought to tax. The entire sales could not be added as income of the assessee but addition could be made only to the extent of estimated profits embedded in sales. In the above circumstances, we do not find any force in the appeal of the Revenue and accordingly, the same is dismissed. - Decided against revenue. CIT(A) while estimating the gross profit at 10% has not given any basis for the same, though he has referred to the gross profit rate of the assessee at 5.22% in Assessment Year 2006-07 and 4.85% in the present assessment year. Thus the highest rate of gross profit shown by the assessee in Assessment Year 2006-07 and accepted by the Department is 5.22% and in our considered view, keeping in view the gross profit rate disclosed in respect of recorded receipt at 4.85% which is lower than now admitted gross profit rate of 5.22% to take care of this it will be just and fair to estimate the gross profit of the unrecorded receipt @ 6.50%. Therefore, modify the order of the CIT(A) to this extent and direct the Assessing Officer to accept the gross profit rate of the suppressed receipt of ₹ 4,20,73,972/- @ 6.50%. - Decided partly in favour of assessee.
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2015 (1) TMI 507
Undisclosed investment in land - nature of land - agriculture land or not - Held that:- Only basis on which impugned addition was made was answer No. 18 of the statement recorded from Shri Mavjibhai on 29.03.2007. Said Mavjibhai was not even clear on the exact quantum of the consideration. This statement was not supported by any evidence in the form of banakhat, dates and mode of payment with regards to on money received. Assessing Officer failed to make any efforts to go beyond the statement given by Shri Mavjibhai (for whatever reasons best known to him) to justify the allegation that on money was paid to assessee. Mere statement of a third party could not be the basis for making addition in absence of any corroborative evidence. Assessee is agriculturalist and was not filing returns of income. For the year under consideration, return of income was filed in response to notice u/s. 148 admitting only agricultural income. The immovable property under consideration is agricultural land and there is nothing on record to suggest that agricultural land sold was ‘capital asset’ within the meaning of Section 2(14) and hence liable to capital gains. Thus CIT(A) was justified in deleting addition in question - Decided in favour of assessee.
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Customs
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2015 (1) TMI 534
Imposition of penalty - Repeat offender - old and used photocopier machines imported was imported without licence - Held that:- Repeat violator has to be imposed appropriate fine and penalty in order that the same acts as a deterrent to the repeated violation of law, however, at the same time, the Tribunal could not lose site of the fact that in similar cases it had reduced redemption fine to 10% and penalty to 5%. Without going into the issue whether the restriction imposed vide notification dated 05.06.2012 was applicable or not in view of the period involved being prior to 05.06.2012, we hold that the ends of justice would be met if the quantum of redemption fine and penalty is reduced from the excessive rate at which it has been imposed to 20% each of redemption fine as well as penalty imposed vide the order in original - Following decision of M/s BE Office Automation Products Limited, Baddi Vs. Commissioner of Central Excise, Gurgaon [2013 (11) TMI 1032 - PUNJAB & HARYANA HIGH COURT] - Decided partly in favour of assessee.
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2015 (1) TMI 533
Revocation of CHA license - Non compliance with Tribunal's order of restoration of license lead to contempt proceedings - Held that:- Revenue nor its officers are at fault. They have filed Appeals to this Court and the Appeals are registered but do not reach admission. They are not heard for admission not because of any fault of the officers or the Advocates but because of pressure of work on this Court. The Tribunal therefore should not have passed such an order and visiting the party with contempt proceedings for failure to implement it. - The Tribunal's order can be given effect to subject to the pending Appeal by the Revenue in such cases. Ordinarily, this would not require any application before the Tribunal or before this Court. - licence of the Respondent Agency be restored subject to the outcome of the instant Appeal. The restoration will not prejudice the rights of the Revenue in this Appeal.
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2015 (1) TMI 532
Labelling of packages - Non-Compliance of labeling requirements on food Articles imported - Held that:- Disputes with respect to the label is not one that can be gone into in writ proceedings. As to whether the labels on the various packages, imported by the petitioner, were originally affixed by the manufacturer/exporter of the country of origin or not is an aspect which does not appear to have been considered or addressed by the authorized officer in his report of 5-5-2014. In the circumstances, the authorized officer shall after giving due notice to the petitioner inspect the said consignments and prepare an appropriate report within two weeks. While doing so, the authorized officer shall take into consideration not only the requirements of guidelines and clarifications issued by the FSSAI, but also the guidelines contained in Circular/Notice, dated 24-1-2013 - Petition disposed of.
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2015 (1) TMI 531
Seizure of goods - provisional release of the goods - Held that:- As is evident from a reading of the impugned order, over and above the duly paid, i.e. ₹ 10.09 lakhs, the Commissioner has insisted upon execution of a bond for the re-determined value of the goods, i.e., ₹ 84,79,376/-. In addition, he has insisted upon furnishing a bank guarantee to the tune of ₹ 30 lakhs and payment of differential duty of ₹ 12,15,577/-. Under normal circumstances, this Court would have relegated to the petitioner to the remedy of appeal to the CESTAT. However, we are of the opinion that since the petitioner had already approached this Court and having regard to the nature of the goods and the order, this Court is of the view that the conditions are excessive, in the circumstances, the goods are directed to be released upon the petitioner furnishing differential duty and on furnishing a bond for ₹ 20 lakhs. Upon compliance with these directions, the goods are directed to be released. - Decided partly in favour of assessee.
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2015 (1) TMI 530
Maintainability of appeal - Refund claim - cess on the agricultural products exported - Held that:- As per Instruction F. No. 390/Misc./163/2010-JC, dated 17-8-2011 issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi, Government of India under Section 35R of the Central Excise Act, 1944; since the amount of CESS involved in this appeal is less than the monetary limit prescribed under the aforementioned Instruction, which is ₹ 10,00,000/- insofar as the High Court is concerned, this appeal is not maintainable. - Decided against Revenue.
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Service Tax
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2015 (1) TMI 550
Denial of refund claim - notification No.41/07-ST - Non production of original documents - Appellants had taken stand that since the invoices were required under Income-tax Act, they could not file the original invoices with the department - Held that:- It is observed that the basic issue relating to non-production of records have also been raised in the Commissioner (Appeals) s order. It is considered essential that the production of relevant records to examine the claim for refund for proper prospective. Accordingly, it is considered necessary to remand the matters back to the original adjudicating authority to ascertain the correctness of the refund claim without considering limitation factor. However, Commissioner may also go into the limitation issue in de novo adjudication as pointed out by ld.Counsel as well as ld.DR. - bunch of all the 12 appeals are remanded back to the original adjudicating authority for finalization of the refund claims within three months from the date of receipt of this order so that long pending issue could be finalized - Matter remanded back.
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2015 (1) TMI 549
Management consultancy service or merely reimbursement of expenditure - providing General support services, Operational services, Personal services and Secretarial services - Held that:- clauses of the Agreement that reimbursement is being made by M/s. Centak Chemicals for use of the facilities provided by the appellant. The income received from M/s. Centak Chemicals is reflected in the balance sheet of Century Enka. We have considered the definition of management consultancy service and management consultant. As per Section 65(65), Management Consultant means "any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management". No services are provided by the appellant in connection with the management of M/s. Centak Chemicals Ltd. They are not rendering any advice or consultancy to M/s. Centak Chemicals Ltd. The very nomenclature of the service "management consultancy" indicates that it has nothing to do with provisions of facilities such as water, effluent treatment, etc. the expenditure of which is all reimbursed to the appellant. - Decided in favour of assessee.
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2015 (1) TMI 548
Goods Transport Agency Service - construction and maintenance of sewage treatment plants, effluent treatment plants and water treatment plants - Held that:- The major portion of the demand relates to EPC contracts for constructing the effluent and water treatment plants - against most contracts, the specific service under the Finance Act, 1994 under which the activity falls is not stated; rather the description of service is mentioned generally - department has to first fix the classification of a particular activity and only then proceed to work out the demand of service tax which is due. This is necessary because different services may operate under different schemes, different notifications, different abatements etc. The classification under which charge of non payment is made in the show cause has not been specified. Secondly, there is reference during the period in dispute. We also note that the adjudicating authority has not applied the relevant law for determining at what stage service tax payment is due. In the present case, it was due on receipt of payment for the services whereas the adjudicating authority has ignored this issue altogether. - Assessee is directed to deposit ₹ 10,00,000 towards the GTA service provided by them - Matter remanded back.
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2015 (1) TMI 547
Waiver of pre deposit - Penalty u/s 76, 77 & 78 - appellant has rendered the services to a client situated abroad and has received commission in convertible foreign exchange - export of service in terms of Rule 3(1)(iii) of the Export of Service Rules, 2005 - Held that:- Appellant has undertaken business promotion of the principal situated abroad. Therefore, the benefit of the service accrues to the client situated abroad. The place of provision of service is where the service recipient is situated. In the present case, since service recipient is situated abroad, the delivery of the service has taken place outside India. Inasmuch as the consideration is received in convertible foreign exchange, the twin conditions of export, namely the service should be rendered from India and delivered outside India and the payment should be received in convertible foreign exchange are satisfied. Therefore, the activity undertaken by the appellant prima facie, is covered by the provisions of Export of Service Rules, 2005. The decisions of this Tribunal in the case of Paul Merchants case cited [2012 (12) TMI 424 - CESTAT, DELHI (LB)], clearly support the case of the appellant. Thus, the appellant has made out a strong prima facie case for grant of stay. -Unconditional waiver from pre deposit of the dues- Stay granted.
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2015 (1) TMI 546
Imposition of penalty - suppression of facts - Validity of SCN - the appellant, without any protest, deposited the Service Tax with interest - Held that:- No case of suppression is made out against the appellant. Further, as the appellant have declared the expenses of service incurred specifically in its books of account and final account and subjected to audit by Revenue twice before further enquiry made by the Revenue, no case of suppression or any intention to evade duty is attributable to the appellant. I further hold that as the appellant has paid the Service Tax along with interest, soon after being so pointed out by the Revenue and in less than 7 days on grant of registration under the specific head, no show-cause notice was required to be issued and adjudicated in terms of the clear mandate under Section 73(3) of the Finance Act, 1994. Thus, I hold that the show-cause notice is bad in terms of Section 73 of the Finance Act, 1994 - Decided in favour of assessee.
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Central Excise
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2015 (1) TMI 544
CENVAT Credit - inputs in WIP destroyed in fire - appellant has failed to reverse the CENVAT Credit on the inputs involved (in WIP) which was lost in fire - contravention of the provisions of Rule 3 of Cenvat Credit Rules, 2002 - Penalty u/s 11AC read with Rule 13 - confiscation under Section 34 of the Act - Held that:- during the relevant period there no provision for reversal of cenvat credit on inputs destroyed in fire - Case is squarely covered by the decision of the Hon'ble Supreme Court in the case of Indchem Electronics (2003 (4) TMI 556 - Supreme Court of India) and ruling of the Hon'ble Karnataka High Court [2006 (8) TMI 66 - HIGH COURT OF KARNATAKA] relied upon by the Revenue is of no help. In these circumstances, I allow the appeal of the appellant and set aside the impugned order - Decided in favour of assessee.
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2015 (1) TMI 543
CENVAT Credit - erection, commissioning of fly ash handling plant - Held that:- services of Fly Ash Handling Plant set up by the respondent assessee has been used by it in procuring its raw material being flay ash for the purpose of manufacture of its end product being cement. Thus, the expenses incurred at the Handling Plant are in the nature of expenditure for the purpose of manufacture of its end product and in such circumstances, the services availed by the respondent assessee at the fly ash handling plant are inputs services eligible within the meaning of Rule 2(l) of Cenvat Credit Rules, 2004 for the purpose of manufacture of its final product. Further, the issue is covered by the earlier rulings of this Tribunal in the case of Ultratech Cement (2010 (7) TMI 302 - CESTAT, MUMBAI). - Decided against Revenue.
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2015 (1) TMI 542
Imposition of penalty - determination of annual capacity of production - Held that:- Provisions of Rule 96(ZP) of the said Compounded Levy Rules were omitted from this Statute Books with effect from 01.03.2001 and Section 3 A of the Act was omitted w.e.f. 11.05.2001, without any saving clause. The Hon’ble Gujarat High Court in the case of Krishna Processors vs. Union of India reported in [2012 (11) TMI 954 - GUJARAT HIGH COURT] has held that after the omission of the said Rules, proceedings cannot be continued under the omitted Rules inasmuch as there was no saving clause. In a recent decision, the Tribunal in the case of Shri Surinder Steel Rolling Mill vide [2014 (7) TMI 699 - CESTAT NEW DELHI], has taken note of the said decision of the Hon’ble Gujarat High Court in the case of Krishna Processors, as also other decisions of the Hon’ble Supreme Court, and has come to a finding that the adjudication order passed subsequent to 01.03.2001, even where the proceedings were initiated prior to the said date, cannot be sustained. Provisions of Rule 96 (ZP), of the Annual Capacity Determination Rules have been held to be ultra vires by the Hon’ble High Court of Punjab and Haryana in the case of Bansal Alloys and Metals Pvt. Ltd. vs. Union of India reported in [2010 (11) TMI 83 - PUNJAB & HARYANA HIGH COURT] as also by the Hon’ble High Court of Himachal Pradesh in the case of Shubh Timb Steel Ltd. Vs. Union of India reported in [2012 (9) TMI 458 - HIMACHAL PRADESH HIGH COURT] As such, no penalty can be imposed under the said Rules. Otherwise also we find that the original dispute related to Annual Determination of Annual Production Capacity which culminated against the assessees by the order of the Hon’ble Supreme Court. In between, the Tribunals orders as also of the Hon’ble High Courts orders were in favour of the assessees. The said fact reflects that this is a case of bonafide interpretation of the provisions of law and the element of any malafide is missing, in which case imposition of penalty cannot be called for. Imposition of interest – Held that:- as per the declaration of law by the Hon’ble Delhi High Court in the case of Hindustan Insecticides Ltd. vs. Commissioner of Central Excise LTU, [2013 (8) TMI 225 - DELHI HIGH COURT], the Revenue is expected to issue show cause notice within the period of limitation, prescribed under the provisions of Section 11A of the Central Excise Act. The interest does not arise as an automatic appendix to the duty demand. Inasmuch as in the present case, neither show cause notice nor the demand for interest has been made within the limitation period, we find no justification for confirmation of interest. – Decided in favour of assesse.
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2015 (1) TMI 541
Manufacturing process - Excisability of Aluminium Dross - Marketability - Section 2(d) of the Central Excise Act, 1944 - Held that:- following the judgement of the Hon'ble Supreme Court in the case of Indian Aluminium Co. Ltd. (2006 (9) TMI 6 - SUPREME COURT OF INDIA) demand is set aside - Decided in favour of assessee.
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2015 (1) TMI 540
Waiver of pre deposit - evasion of Excise duty - Clandestine removal of goods - Held that:- K/s K.P. Pouches were found to have indulged in clandestine removal of Gutkha evading Central Excise duty of more than ₹ 10 crores. It is not denied that marking Rajshree and Safal were found on the bags kept in the godown at Raipur. Prima facie, clandestine removals of such magnitude from this kind of factory could not have happened without the knowledge and approval of its two Directors. While any pre-deposit ordered will feel like causing some financial hardship which in any case is the consequence of the appellant s own acts/omissions, pre-deposit needs to be so calibrated as not to cause undue hardship. - Partial stay granted.
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2015 (1) TMI 539
Area based exemption - Constitutional validity of Circular dated 25th April, 2006 - Denial of benefits in the Notification No. 39/2001, dated 31-7-2001 - first commercial production for cast iron was done prior to 31-12-2005. However, the entire plant and machineries for production/ manufacturing of Pig Iron was not commissioned and installed (Fully) prior to 31-12-2005, and therefore, naturally the petitioners could not have commenced the production/manufacturing of Pig Iron. - Held that:- that so far as the exemption/benefits contained in the Notification No. 39/2001 are concerned, same shall not be available to the petitioner with respect to the production of Pig Iron, as admittedly, the plant/unit and machinery for production of Pig Iron were not commissioned/installed (Fully) prior to 31-12-2005. Under the circumstances, no error or illegality has been committed by the concerned respondents in denying the exemption/benefit of Scheme contained in the Notification No. 39/2001, with respect to the production of Pig Iron. So far as the non-granting of the exemption/benefits contained in the Notification No. 39/2001, on production/manufacturing of cast iron articles is concerned, it is not clear as to whether on production/manufacture of cast iron articles on the unit/plant and machineries fully installed and commissioned prior to 31-12-2005, the petitioners have been denied the said benefits or not - if, the unit/plant and machineries have been commissioned/installed (Fully) prior to 31-12-2005, the petitioner may be entitled to the benefits contained in the aforesaid Notification, on manufacture/production of cast iron articles for a period of five years from the date of commencement of the first commercial production of such goods on such unit. Under the circumstances, the concerned respondent are required to consider the case of the petitioner for grant of the benefit under the Notification No. 39/2001 with respect to the production/manufacture of cast iron articles. So far as challenge to the clarificatory Circular, dated 25-4-2006, issued by the Director (TRU), clarifying that, if, the commercial production of a particular kind of specified goods has not commenced prior to 31-12-2005, there again the benefit of such notification would not be available to the such goods, is concerned, so far as the claim of the petitioner with respect to the Pig Iron is concerned, as stated and observed herein above, said situation may not arise, as industrial Unit was not commissioned and the plant and machineries were not installed (Fully) prior to 31-12-2005. So far as the grant of benefits with respect to the same Scheme contained in the Notification No. 39/2001 on manufacturing/production of cast iron is concerned, as stated above, the matter is required to be considered by the appropriate authority - Following decision of M/s. Plastene India Ltd. [2015 (1) TMI 527 - GUJRAT HIGH COURT] - Matter remanded back - Decided partly in favour of assessee.
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2015 (1) TMI 538
Denial of CENVAT Credit - Large Tax Payer’s Unit (LTU) - revenue does not dispute that the assessee would be entitled to Cenvat Credit but a technical plea is taken and raised that subject units were not mentioned in the original application but were included in the revised or fresh list - Held that:- facts mentioned in the decision in Sharda Motor Industries Ltd. (2011 (2) TMI 94 - BOMBAY HIGH COURT) decided by the Bombay High Court would be equally applicable to the facts of the present case insofar as the Kaanchipuram unit is concerned. No contrary contention, it is apparent, was raised before the Tribunal, which has merely followed the decision of the Bombay High Court in Sharda Motor Industries Ltd. (supra). In view of the aforesaid position, the present appeal does not have merit and has to be dismissed - Decided against Revenue.
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2015 (1) TMI 537
Imposition of penalty - Rule 26 of Central Excise Rules, 2002 - Clandestine removal of goods - Supreme Court dismissed the appeal filed by the assessee against the Judgment of Gujarat High Court as reported in [2014 (11) TMI 620 - GUJARAT HIGH COURT] wherein High Court in its impugned order had confirmed the penalty.
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2015 (1) TMI 536
Extension of stay order - Waiver of pre deposit - Supreme Court extended the of stay period by further period of 7 days from time given in the order [2014 (11) TMI 572 - Supreme Court of India] since Assessee has made the deposit.
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2015 (1) TMI 535
Levy of penalty u/s 11AC - SSI exemption under Notification No. 8/2002-C.E., dated 1-3-2002 and 8/2003 as amended - Supreme Court admitted appeal filed by Assessee against the order of Tribunal [2012 (1) TMI 117 - CESTAT NEW DELHI] wherein Tribunal has set aside the penalty on the ground that there was no intention to evade duty.
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2015 (1) TMI 528
CENVAT Credit - Whether the assessee can avail Cenvat Credit on the inputs, capital goods and input services used in the manufacture of finished goods and make payment of Central Excise Duty @ 4% advelorum as provided under Notification No. 59/2008/CE dtd 7.12.2008 when another Notification No. 29/2004 CE dtd 9.7.2004 as amended specified ‘Nil’ rate of duty on the said finished goods and was operative at the material period - Held that:- Following decision of Arvind Mills Ltd [2014 (6) TMI 271 - CESTAT AHMEDABAD] - impugned order is liable to be set aside - Decided in favour of assessee.
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2015 (1) TMI 527
Claim of rebate on export of goods while availing the benefit of area based exemption (Kutch area) Notification No.39/2001CE( NT) dated 31.07.2001 - Rule 18 of the Central Excise Rules, 2002 - Held that:- for availing the exemption benefit under Notification No.39/2001, the industrial unit ought to have been set up on or before the cutoff date i.e. 31.12.2005 and the exemption shall be applied for a period not exceeding 5 years from the date of commencement of commercial production by such unit. - petitioners established their units in the Kutch area and installed the plant and machinery prior to 31.12.2005 (cutoff date) and also started manufacturing the goods and exported the goods after availing the benefit of exemption Notification No.39/2001CE. However, the petitioners installed additional machineries after 31.12.2005 and claimed the rebate with respect to the export of goods which are manufactured on the additional machinery installed after 31.12.2005 by submitting that with respect to the exports of such goods which are manufactured on the additional machinery installed after 31.12.2005, they will not claim the benefit under the exemption Notification No.39/2001CE and they will claim the rebate of the duty on export of goods. The aforesaid is rightly rejected by the Revisional Authority. The petitioners cannot be permitted to claim the rebate under Rule 18 of the Rules on the exported goods manufactured on additional machinery installed after 31.12.2005, may be on maintaining the separate accounts. Under the circumstances, as such the Revisional Authority has rightly denied the rebate to the petitioners on the exported goods on additional machinery installed after 31.12.2005, relying upon clause 2(h) of the notification under Rule 18 of the Rules. - admittedly, there is no new product by installing fresh plant, machinery or capital goods after the cutoff date i.e. 31.12.2005. The same product is manufactured / continued to be manufactured however, some additional machineries have been installed. Under the circumstances, the petitioners shall not be entitled to the benefit of exemption under Notification No.39/2001CE. The further distinction is sought to be canvassed by the petitioners i.e. the goods manufactured on the machinery installed prior to 31.12.2005 and the same product manufactured on the additional machinery installed after 31.12.2005, for the purpose of claiming the exemption under Notification No.39/2001CE is not permissible. Once the petitioners’ unit started and availed the benefit of exemption under Notification No.39/2001CE, considering clause 2(h) of the notification issued under Rule 18 of the Rules, the petitioners shall not be entitled to rebate of the duty on export of the goods manufactured. Under the circumstances, the petitioners are rightly denied the rebate. The impugned order passed by the Revisional Authority does not suffer from any illegality. - Decided against Assessee.
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CST, VAT & Sales Tax
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2015 (1) TMI 545
Denial of exemption under Section 5(2) of the Central Sales Tax Act, 1956 - Rejection on the ground that transaction is an inter-state sale falling under Section 3(a)-Validity of the assessment orders dated 20.1.2010 and 18.5.2010 passed by the Commercial Tax Officer - Agreement between assessee and Radha Industries, for which assessee was acting only as agent for Radha - whether there was a sale of goods by the petitioner, or whether it constituted a commission transaction as stated by them; and in the computer print out of the petitioners trading account, for the year 2005-06, the purchase was shown as purchase trading (high seas), and the relevant sale was shown as sales trading (high seas) - petitioners claim for exemption, on the ground that the said sale was effected by a transfer of documents of title to the goods before the goods had crossed the customs frontiers of India falling under Section 5(2) of the Act, the Commercial Tax Officer held that the goods must be treated as having crossed the customs frontiers of India, when the bill of entry was made and the goods were assessed to customs duty; the sale, effected by the petitioner, could not be said to be sales in the course of import or high sea sales in as much as the goods had crossed the customs frontiers; the second high sea sale agreement had not come into operation when the sale took place; there was no case for claiming that the transfer of documents was effected by virtue of the said agreement itself. Does the territorial assessing authority, before whom the dealer files his returns under the CST Act, have jurisdiction to pass an assessment order in the absence of authorisation from the Deputy Commissioner - Held that:- Section 9(2) of the CST Act provides that the authorities empowered to assess, reassess, collect and enforce payment of tax under the general sales tax law of the appropriate State, shall assess, re-assess, collect and enforce payment of tax under the CST Act as if the tax payable by such a dealer under the CST Act is a tax payable under the general sales tax law of the State. The said section further provides that, for this purpose, the authorities under the general sales tax law of the State may exercise all or any of the powers they have under the general sales tax law of the State and the provisions of such law, including provisions relating to returns etc, shall apply accordingly. The last limb of Section 9(2) of the CST Act, viz. "and the provisions of such law........ shall apply accordingly", mean that the provisions of the State Act are applicable for the purpose of assessment, re-assessment, collection and enforcement of payment of tax including penalty payable under the CST Act. The words, in the last part of section 9(2) viz. "shall apply accordingly", relate clearly to the words "and for this purpose" with the result that the provisions of the State Act shall apply only for the purpose of assessment, reassessment, collection and enforcement. The entire authority of the State machinery is "for this purpose" meaning thereby the purpose of assessing, re-assessing, collecting and enforcing payment of tax including any penalty payable under the Central Act; and they, meaning the State agencies, may exercise powers under the general sales tax law of the State. The APGST Act, 1957 was repealed by Section 80(1) of the VAT Act. However, in view of the proviso thereto, such repeal did not effect the previous operation of the APGST Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder; and, subject thereto, anything done or any action taken (including any appointment, notification etc.) in the exercise of any power conferred by or under the APGST Act must be deemed to have been done or taken in the exercise of the powers conferred by or under the VAT Act, as if the VAT Act was in force on the date on which such thing was done or action was taken. While the assessing authority, as prescribed in GO Ms.No.728 dated 14.07.1970, continues to be the Commercial Tax Officer of the circle even after the VAT Act came into force, the power of assessment under the VAT Act is conferred not on the assessing authority, but on the prescribed authority. It is only the authority, prescribed under Rule 59, who can make assessment under the VAT Act and not the assessing authority under Section 2(4) thereof or in G.O.Ms.No.728 dated 14.07.1970. Unlike the VAT Act, which confers power of assessment on the prescribed authority, the AP Rules confer power of assessment on the assessing authority which, in terms of GO Ms.No.728 dated 14.07.1970 issued in the exercise of the powers conferred under Section 2(1)(b) of the APGST Act, is the Commercial Tax Officer of the concerned circle. As neither Section 2(4) of VAT Act, nor the Commissioner under Section 3-A thereof, have specified who an assessing authority is, the assessing authority under G.O.Ms. No.728 dated 14.07.1970 continues to remain the assessing authority even after the VAT Act came info force in view of the proviso to Section 80 thereof. Contention, urged on behalf of the petitioner, that the Commercial Tax Officer of the circle, before whom the petitioner files his monthly returns, lacks jurisdiction to pass the impugned assessment orders does not merit acceptance - Suffice it to make it clear that the Commercial Tax Officer of the Circle, before whom a dealer files his CST returns, is empowered to assess him to tax under the CST Act. Does filing of a bill of entry by the petitioner, and their being assessed to customs duty, make the sale to Radha Industries an inter-state sale? - Held that:- goods would not be thought to have been imported if they were carried through the territorial waters of the Indian coast by a ship which did not put them into an Indian port. Importation of goods does not take place as soon as the ship carrying them enters the marginal seas, perhaps only to leave them again for navigational purposes as it moves towards the port of discharge. Entry into the port, with the intention of being landed, constitutes importation. (Shri Ramlinga Mills Pvt. Ltd. v. Assistant Collector of Customs [1982 (3) TMI 68 - HIGH COURT OF KERALA AT ERNAKULAM]. If the goods are brought into their port of destination for the purpose of being there discharged, the act of importation is complete. On the other hand, the act of importation is not complete if a ship enter some port of call with goods on board which is not the destined port of discharge of those goods. Unless the goods, brought into the country for the purpose of use, enjoyment, consumption, sale or distribution, are incorporated in and get mixed up with the totality of the property in the country, they cannot be said to have been imported. The law declared by the Division Bench, in Minerals and Metals Trading Corporation of India Ltd. [1998 (3) TMI 644 - ANDHRA PRADESH HIGH COURT], is that when the goods are assessed to duty by the Customs Authorities, after the bill of entry is filed, the importation is completed even if duty is not paid, and the goods remain within the customs station; it is only after the Bill of Entry is filed, and the import duty is assessed, can the goods cross the limits of the Customs Station; transfer of documents of title before clearance of goods by the Customs authorities, but after assessment of goods, would not amount to a sale in the course of import irrespective of whether duty is paid or not; on assessment to customs duty, after the Bill of Entry is filed, the goods get mingled with the general mass of goods and merchandise in the country; and physical movement of goods out of the customs station, and the time at which the duty is paid, would not be relevant. - The questions, whether the name on the bill of entry is relevant or not, and whether or not the name of the importer alone will be recorded in the Bill of Entry even if transfer by title deeds is effected before filing the bill of entry and assessment of duty under Section 28 of the Customs Act, did not arise for consideration in Minerals and Metals Trading Corporation. The observations of the Division bench in this regard are not preceded by an analysis of the relevant provisions of the Customs Act nor is it supported by any reason. These observations are, therefore, not a declaration of law binding on a co-ordinate bench. The assessing authority is, therefore, justified in holding that sale of goods by the petitioner to Radha Industries is not a sale in the course of import, but an inter-state sale liable to tax under the CST Act. Did the sale in favour of Radha Industries, Lucknow occasion movement of goods into the country? - Held that:- The petitioners case before the assessing authority was that the documents of title to the goods were transferred on high seas i.e., during the movement of goods from the country of export to India. It is for the first time before this Court, in proceedings under Article 226 of the Constitution of India, has this plea, of the sale of goods to M/s. Radha Industries having occasioned the import of goods, been taken placing reliance on certain clauses of the agreements. This Court would not, in proceedings under Article 226 of the Constitution of India, either re-appreciate the evidence on record or don the robes of the assessing authority to examine disputed questions of fact or interpret the clauses of the agreements. As this contention is not a pure question of law and, at best, is a mixed question of facts and law, this Court would be loathe to undertake such an exercise. Even otherwise, the submission that the sale to Radha Industries occasioned the import of goods is belied by the fact that it is the name of the petitioner which is reflected in the Bill of Entry as the importer of the goods, and not Radha Industries. The submission of Sri S. Ravi, Learned Senior Counsel, that the sale of goods to Radha Industries had occasioned the import necessitates rejection. Is the procedure prescribed for duty free shops applicable to the present case? - Held that:- Duty free shops are, in law, taken as being located beyond the customs frontiers and, consequently, the sale of goods at the duty free shops is in the course of import. Reliance placed by the petitioner on Hotel Ashoka (Indian Tour. Dev. Cor. Ltd) [2012 (2) TMI 62 - Supreme Court of India], to contend that the goods sold to Radha Industries is in the course of import, is therefore of no avail. Is the petitioner entitled to be granted time to submit C Forms - Held that:- Rule 12(7) enables the assessing authority, on sufficient cause being shown, to grant further time for production of C forms. Such an opportunity can be granted even after an assessment order is passed, provided sufficient cause is shown. On production of the prescribed C-Forms, the petitioner would be entitled to pay concessional rate of tax. As the petitioner can furnish C-Forms, in terms of the proviso to Rule 12(7) of the CST (R&T) Rules, even after the assessment order is passed, we see no reason to deny them an opportunity to produce the C-Forms, and avail the benefit of concessional rate of tax. Impugned assessment orders do not necessitate interference, and the challenge thereto by the petitioner is rejected. The petitioner is, however, granted three months time from today to produce the prescribed C- Forms. While the assessing authority has expressed his doubts regarding the very existence of some of the dealers outside the State, it is not necessary for us to delve on this aspect any further, as it is only if such dealers are in existence would the petitioner be able to procure C-Forms from them, and furnish it to the assessing authority. While the prescribed concessional rate of tax, payable by the petitioner on the inter-state sale of goods, shall be paid by them forthwith, the respondents shall not take coercive steps for recovery of the balance tax for a period of three months from today. In case the petitioner produces C-Forms within the aforesaid three month period, they shall be extended the benefit of concessional rate of tax to the extent for which C-Forms are produced. It is made clear that, in case the petitioner fails to submit the C-Forms within three months from today, it is open to the respondents thereafter to proceed and recover the balance tax due from them in accordance with law. - Decided against the assessee. However,assessee granted three months period to produce the prescribed C-forms to avail benefit of concessional rate of tax.
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Indian Laws
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2015 (1) TMI 529
Levy of motor vehicle tax - dumpers, loaders, escort crane and maintenance van - It is the case on behalf of the petitioner that aforesaid dumpers, loaders, escort crane and maintenance van cannot be said to be “Motor Vehicle” under the provision of Motor Vehicles Act and therefore, are not subject to motor vehicle tax. - Held that:- vehicles in question are rightly considered to be “motor vehicle” and subject to motor vehicle tax. We see no reason to interfere with the impugned judgment - Following decision of Reliance Industries Ltd. & 1 Versus State of Gujarat & 3 [2011 (7) TMI 1043 - GUJARAT HIGH COURT] - Decided against Assessee.
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