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TMI Tax Updates - e-Newsletter
January 16, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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No refund will be issued and the processing of a return cannot be undertaken after notice has been issued u/s 143(2) for scrutiny - CBDT
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Reopening of assessment u/s 147 r.w 148 – till the time available to the assessee for filing return u/s 139(4) has not expired, it cannot be said that any income has escaped assessment - AT
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Liability to deduct tax at source as required u/s. 194A - Tribunal was not right in holding that appellants-assessees were liable to deduct tax at source as required under under Section 194A of the Act, in spite of the order of the Special Court. - HC
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Treatment of dividend stripping transactions as sham or bogus - Section 94(7) - until change by registration is effected in the books of the company, the transferor continues to be the holder of the shares. - HC
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Carry forward unabsorbed depreciation in respect of Bogus and Non-existent assets - unless the earlier orders of assessment are rectified, the unabsorbed depreciation will continue to stand at the figure determined in the respective assessment orders. - HC
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Grant of depreciation - written value of block of assets as per books of account of the assets taken over from the demerged company v/s written down value as per the provisions of Income Tax Act of the transferred assets of the demerged company - contentions of the assessee rejected - AT
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Transfer pricing adjustment - Turnover is an important filter which has to be adopted for determination of the ALP. The FAR analysis would not alter the turnover of the company. - turnover being higher than ₹ 200 to be excluded - AT
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TDS u/s 195(1) - usance charges are not interest u/s 2(28A) except where an undertaking is engaged in the business of ship breaking in view of explanation (2) to Sec. 10(15)(iv)(c) - Revenue appeal allowed - AT
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Transfer pricing adjustment - the transaction of providing loans to subsidiary whether a direct loan or providing credit for initial expenditure, which is stated to be reimbursable, do call for adjustment. - AT
Service Tax
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Cenvat Credit - input services - services of empty containers sent back to the yard - credit allowed - AT
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Evasion of service tax - huge amounts shown in exempted service column of ST-3 return - prima facie extended period of limitation is not applicable - AT
Central Excise
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100% CENVAT Credit availed on capital goods in the same year - removal as such or not - capital goods which were put to use and when cleared from the factory, would be eligible to the balance 50% of CENVAT credit in the same year - AT
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Excisability of diesel generating sets - D.G. Sets are huge and are installed in a separate building, spread over large area. The same are not portable D.G. sets which can come to market for being bought and sold - demand set aside - AT
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Imposition of penalty u/s 11AC - Bogus invoices - invoices were allegedly issued without ever supplying any goods - appellants contention that they are not liable to penalty under Rule 25 ibid is untenable - AT
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Penalty u/s 11AC - Non-payment of duty on the price escalation amount received - S A part of excise duty was paid only when it was pointed out by the DGAE - penalty to be levied - HC
VAT
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Detention of goods - Serial Number and TIN not printed on products - writ petition is disposed of directing the respondent to release the goods upon payment of the tax amount - HC
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ITC availed by the petitioner could not have been proposed to be reversed or reversed on the grounds stated by the respondent, i.e., the selling dealer has not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled - HC
Case Laws:
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Income Tax
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2015 (1) TMI 572
Carry forward and set off of brought forward business losses and unabsorbed depreciation – Held that:- CIT (A) has correctly held the assessee company to be entitled to carry forward its losses only from AY 2001-02, while the losses for earlier years are not so entitled - the unabsorbed depreciation has also been correctly allowed to be carried forward by the CIT (A) holding the provisions of Section 32 (2) of the Act, rather than those of Section 79, to be applicable. Expenses under VRS disallowed – Expenses on spares, stores and tools consumed by the assessee - Held that:- At no stage either during assessment proceedings or during remand proceedings or during appellate proceedings the amount of claim got verified by any authority and, therefore, this issue also needed to go back to the AO who, on the basis of documents to be submitted by the assessee needed to arrive at the amount of claim and, further, needed to verify as to how the two claims made by the assesse were different – Decided in favour of assessee.
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2015 (1) TMI 571
Offshore supply of material – Chargeability u/s 44BB - Whether the CIT(A) erred in not appreciating that even if any part of the transaction of offshore supply of material was executed in India, only such profits could be held taxable in India as were attributable to the Indian permanent establishment of the appellant and not the entire receipts – Held that:- Following the decision in Baker Hughes Asia Pacific Ltd., C/o Nangia & Co., and others Versus Addl. Director of Income-tax, International Taxation, Dehradun [2014 (7) TMI 601 - ITAT DELHI] - section 44BB is applicable in the case of the assessee and they restored the matter to the file of the AO for attributing the income out of two contracts to the extent of operations relating to sales carried out in India – thus, the matter is to be remitted back to the AO for recomputation of income – Decided in favour of assessee. Determination of income u/s 44BB – Inclusion of service tax in the gross receipts – Held that:- Following the decision in M/s Sedco Forex International Drilling Inc C/o Nangia & Company Versus Assistant Director of Income Tax, International Taxation [2014 (1) TMI 1322 - ITAT DELHI] - service tax being a statutory liability, would not involve any element of profit and accordingly, the same could not be included in the total receipts for determining the presumptive income – thus, service tax paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement – Decided in favour of assessee. Chargeability of interest u/s 234B – Held that:- Following the decision in Baker Hughes Asia Pacific Ltd., C/o Nangia & Co., and others Versus Addl. Director of Income-tax, International Taxation, Dehradun [2014 (7) TMI 601 - ITAT DELHI] The AO is directed not to charge interest u/s 234B in respect of all contracts entered into by the assessee with various organizations in India except with respect to the contracts entered into with HOEC and ONGC - as far as income taxable u/s 44BB in respect of various contracts are concerned, the assessee itself has accepted the liability from the very beginning - it cannot be inferred that assessee would have made any representation which would have influenced the deductor companies for not deducting the tax - as far as contract with HOEC and ONGC are concerned, income arose in India – thus, Following DIT-I, International Taxation Versus Alcatel Lucent USA, Inc., Alcatel Lucent World Services Inc. [2013 (11) TMI 734 - DELHI HIGH COURT] the interest u/s 234B is leviable – Decided partly in favour of Assessee.
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2015 (1) TMI 570
Reopening of assessment u/s 147 r.w 148 – Reason to believe – Whether it can be said that an income has escaped assessment on the date of issue of notice u/s 148 of the Act i.e. on 30/03/2006 - Notice u/s 148 of the Act was issued by the AO on 30/03/2006 and it was duly served on the assessee on 30/03/2006 and the assessee has filed its return of income on 31/03/2006 – Held that:- The basis of the decision of the authorities below is that since the assessee has not filed any return of income by the due date u/s 139 (1), income has escaped assessment - if the assessee does not file any return of income on or before the due date as prescribed u/s 139(1) of the Act, then the AO may issue notice to the assessee for filing return of income u/s 142(1) of the Act - when an assessee does not file its return of income within the time prescribed under sub section (1) of section 139 of the Act, the AO can ask the assessee to furnish the return of income - Similarly as per the provisions of section 147, if the AO has reason to believe that the income chargeable to tax has escaped assessment, he can assess or reassess such income – the AO has to record his reasons for belief and then issue notice u/s 148 - till the time available to the assessee for filing return u/s 139(4) has not expired, it cannot be said that any income has escaped assessment - such time has not expired on 30/03/2006 when the AO issued notice to the assessee u/s 148 and therefore, the action of the AO in issuing notice u/s 148 is not valid because no income has escaped assessment till that date - the proceedings initiated by AO by issuing notice u/s 148 is not valid and the assessment framed u/s 143(3)/148 is to be set aside – Decided in favour of asseesee.
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2015 (1) TMI 569
Validity of reassessment u/s 147 – Income escapement – Notice u/s 148 issued – Held that:- A valid return of income submitted by assessee u/s. 139(4) of the Act was pending assessment - AO is empowered to issue notice u/s. 143(2) of the Act as the time limit has not expired - The AO cannot ignore a valid return filed under various provisions of section 139 of the Act and any notice issued u/s. 148 of the Act read with section 147 of the Act, ignoring such return, is invalid – relying upon Smt. Sova Sarkar Vs. [1977 (6) TMI 1 - CALCUTTA High Court] - There can be no doubt that when there is no question as to the validity of a return filed by an assessee, the ITO has to complete the assessment in accordance with s. 143 of the Act and before such completion he would not have any jurisdiction to ignore the return and to issue a notice u/s 148 – u/s 147(a) of the Act one of the grounds which enables the ITO to assess or reassess the income of an assessee by issuing a notice u/s 148 is that the ITO has reason to believe that, by reason of the omission or failure on the part of the assessee to make a return under s. 139 of the Act for any assessment year, income chargeable to tax has escaped assessment for that year - The assessee filed returns, but they did not include certain particulars regarding the profits and gains of his business. It were signed and verified by the assessee - when a return has been filed by an assessee, it cannot be ignored by the ITO and he will have no jurisdiction to issue a notice u/s 148 without completing the assessment on the return filed by the assessee - Even though a return is invalid in the sense that it is not correct and complete within the meaning of s. 139 of the I.T. Act, 1961, the ITO cannot ignore or disregard the same for the purpose of issuing a notice under s. 148 of the Act, unless the return can be regarded as not a return in the eye of law - the ITO acted on the returns filed by the appellant, issued notices u/s 143(2) and heard the appellant u/s 143(3), but without completing the assessments he took recourse to reopen the assessments u/s 147 by issuing the notices u/s 148 of the Act - the notice issued u/s. 148 of the Act for initiation of reassessment proceedings u/s. 147 of the Act for escapement of income is bad in law ans is set aside – Decided in favour of assessee.
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2015 (1) TMI 568
Liability to deduct tax at source as required u/s. 194A - loan against pledge of shares - Special Court conclusively held that the provisions of TDS do not apply to the alleged liability to pay interest to the Custodian by order dated 14.08.1993, 20.2.1995 and 9.9.1996 and 3.5.199 - Held that:- In the present case, we find that the Tribunal has committed serious error in interpreting the provisions of law. It goes without saying that Special Court was created for fast tracking the economy. The purpose for which the Special Court was enacted will prevail over the other law. Hence, we are of the opinion that the Tribunal has committed grave error in holding that the order of the Special Court will not prevail and that the TDS is required to be deducted by interpreting that it will apply only from the date of the order of the Supreme Court i.e. 9th September, 1996. In our view, the Tribunal has committed an error of law in restraining / prohibiting / constraining. Apart from that the appellants-assessees have not made any payment to the Department but have so simply made provision for it. The interpretation put forward by the Tribunal that TDS is income of the Department is misconceived. Therefore, in our view, restrained TDS could not have been deducted. Tribunal was not right in holding that appellants-assessees were liable to deduct tax at source as required under under Section 194A of the Act, in spite of the order of the Special Court. - Decided in favour of assessee.
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2015 (1) TMI 567
Speculative transaction - transactions entered into by the appellant in respect of ACC shares and the loss of ₹ 14.82 lacs incurred - adverse price fluctuation - Scope of section 43(5) - Held that:- The undisputed facts in this case, contain ingredients of hedging. The result of those transactions, however, was gain in the holding of shares by the assessee by incurring loss of the said sum of ₹ 14.82 lacs, the value of increase in the holding of the appellant in the shares in that period. Therefore, when ultimately the appellant sold those shares at an even greater value, it was denied the windfall profit it would have made if it had not hedged at all. For the reasons aforesaid we answer the questions in the negative. - Decided in favour of assessee. Treatment of dividend stripping transactions as sham or bogus - Share transaction of the assessee in respect of UTI Master Share Units - Held that:- the appellant incurred a loss of ₹ 68,900/- and was in receipt of dividend income of ₹ 1,26,000/- as claimed by it or as held by the Tribunal, it made a profit of ₹ 56,000/- and the dividend amount and consequently deduction under Section 80M and credit for tax deducted at source has to be excluded from the appellant's assessment - Held that:- Though the contract was entered into, it was not specifically performed. There was an alteration made thereto in as much as the assessee obtained the dividends and then sold the shares at the reduced price to its buyer. Alteration of contract is permissible in law. The Hon'ble Supreme Court in Walfort Share and Stock Brokers's case [2010 (7) TMI 15 - SUPREME COURT] had made the position clear regarding dividend stripping by owners of shares in the period prior to 1st April, 2002, while this court had clearly held until change by registration is effected in the books of the company, the transferor continues to be the holder of the shares. - Decided in favour of assessee.
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2015 (1) TMI 566
Inordinate delay in issuing the notice u/s 158BD to the assessee - Held that:- In the facts and circumstances of the present case, it cannot be held that there was any delay in recording the satisfaction note. The assessment of the searched person was completed on 31.12.2001. The satisfaction note was recorded on 30.05.2002 i.e. just about five months after the date of completion of searched person. Notice was issued on 03.06.2002, immediately after the satisfaction note was recorded to the present assessee. Thus there was no delay in issuance of notice under Section 158BD in the facts of the case. So far as the merits of the appeal are concerned, Court notices that the ITAT had not dealt with the merits of the assessee’s contentions with regard to the various additions made, and grounds urged in that regard. In these circumstances, the matter is remitted to the ITAT to decide the contentions on merits. - Decided partly in favour of assessee.
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2015 (1) TMI 565
Carry forward unabsorbed depreciation in respect of Bogus and Non-existent assets - Held that:- AO ought not to have disturbed the figure of unabsorbed depreciation, without dealing with the earlier assessment orders. Since, unless the earlier orders of assessment are rectified, the unabsorbed depreciation will continue to stand at the figure determined in the respective assessment orders. We are, therefore, of the opinion that the Tribunal committed no error in confirming the order of the CIT(A), holding that the assessee cannot be denied the benefit of carry forward unabsorbed depreciation, since, same is based on past record. This appeal, hence, deserves dismissal. - Decided in favour of assessee.
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2015 (1) TMI 564
Reopening of assessment - notice issued u/s 148 - Held that:- There has been no formation of opinion before passing the assessment order in regular proceedings, for there to be any change of opinion in issuing the impugned notice. Although it is not necessary that the assessment order should contain discussion with regard to the issue raised but the petitioner should be able to show with evidence on record that during the assessment proceedings the very issue now raised was a subject of consideration during the process of passing an assessment order in regular proceedings. The reasons in support of the impugned notice do reflect an independent application of mind of the Assessing Officer. The reference to the audit query is only in support of the prima facie view arrived at by the Assessing Officer. The order disposing of objection while discussing the objection of the petitioner that reasons are mere change of opinion, states that it is not so, as this issue was not considered during the regular proceedings as the Assessing Officer had not applied his mind to the issue. Thus there is no improvement in the reasons. - Decided against assessee.
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2015 (1) TMI 563
Revision u/s 263 - Erroneous assessment - income of the assessee from the letting out of godown - agricultural incom or not - whether was an income assessable as income from house property? - Held that:- it is seen that the assessee has taken two mutually divergent stands. Before the ld. CIT, it stated that it stood covered under Explanation 2 to Section 2 (1A). On the other hand, before us, it states that Explanation 2 cannot be invoked, since it (the assessee) passes the test of Section 2 (1A) (b) (ii) and (iii). Applicability or otherwise of Explanation 2 to Section 2 (1A), it is seen that this Explanation is with regard to income derived from any building referred to in Section 2 (1A) (c). ‘Building’ as referred to in Section 2 (1A) (c) is any building owned or occupied by the receiver of the rent or revenue of any land situated in India and used for agricultural purposes, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in Sections 2 (1A) (b) (ii) and (iii) is carried on. This definition of ‘building’ as seen above, does not get attracted to the present case. Thus, since the godown building in question does not come within the definition of ‘building’ as contained in Section 2 (1A) (c), the income therefrom cannot be held to be agricultural income with the help of Explanation 2 to Section 2 (1A). As it is seen that the explanation offered by the assessee before the Assessing Officer was accepted by the Assessing Officer without dealing with as to how such explanation was acceptable as assessment order states only that as it was noticed that the income derived by the assessee was letting out of godowns, it was required to explain as to why its income should not be assessed as income from ‘House Property.’ The assessee has filed a detailed written reply in this behalf wherein the assessee has relied upon the provisions of section 2 (1A) (c) of the Income-tax Act, 1961. Having considered assessee’s reply, the assessee’s claim of agricultural income is accepted. Thus, the assessment order is a non-speaking order. The CIT’s Order, per contra, is a detailed order, evincing how the view that the income of the assessee from the letting out of godown was an income assessable as income from house property taken by him is a view which is in accordance with law, as against the Assessing Officer’s view, which is not a possible view in law, much less a plausible one. Therefore, the grievance of the assessee in this regard is rejected and the action of the ld. CIT in holding the assessment order to be an erroneous order prejudicial to the interests of the revenue is confirmed. Decided against assessee. Issue of assessability of income under a particular head prescribed by the IT Act is an issue basically concerned with assessment. The Ld. CIT, after finding the order passed by the Assessing Officer to be erroneous and prejudicial to the interests of the revenue, ought to have set aside the matter to the Assessing Officer to decide the head of income. Such a course would have met the requirement of law. Since this has not been done, we remit the alternative contentions of the assessee to the file of the Assessing Officer for decision.
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2015 (1) TMI 562
Capital gain on sale of shares acquired by way of gift - period of holding - indexed cost of the acquisition of the shares sold by the assessee - Held that:- In the present case while computing the capital gains arising on sale of shares acquired by the assessee by way of gift, the indexed cost of acquisition is to be computed with reference to the year in which the previous owners first held the assets and not the year in which the assessee became the owner of the asset. We, therefore, do not find any infirmity in the order of CIT(A) directing the AO to compute the capital gains in the case of the assessee by applying the indexed cost of acquisition in which the previous owners first held the shares in question. - Decided in favour of assessee.
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2015 (1) TMI 561
Grant of depreciation - written value of block of assets as per books of account of the assets taken over from the demerged company v/s written down value as per the provisions of Income Tax Act of the transferred assets of the demerged company adopted by the lower authorities - whether CIT(A) erred in holding that amendment in Explanation 2B to section 43(6) of the Act by Finance Act, 2003 with effect from assessment year 2004-05 will have retrospective effect and will also apply to a demerger in assessment year 2003-04? - Held that:- The explanations 2A and 2B were inserted by Finance Act, 1999 w.e.f. 01.04.2000. The relevant words under clause 2A were “written down value of the block of assets of the demerged company” whereas the corresponding relevant words under clause 2B were “the value of assets as appearing in the books of accounts”. However, a subsequent amendment was made vide Finance Act, 2000 w.e.f. the same date i.e. 01.04.2000 vide which the words “the value of the assets as appearing in the books of account” were substituted with the words “written down value of the transferred assets as appearing in the books of account”. However, immediately, before these provisions come into operation, an amendment was brought out in explanation 2B and the relevant words were substituted with ‘written down value of the transferred assets’. However, the other relevant words “as appearing in the books of account” were not omitted. If we take the contention of the assessee as correct, then in that event there would not have been any impact or change in the interpretation of the relevant provisions even after the amendment made by Finance Act, 2000. whatever rights had accrued to the assessee in view of the ambiguity in the provisions at the time of their insertion vide Finance Act, 1999, the same had been taken away/clarified immediately by removing the ambiguity through amendment made vide Finance Act, 2000. Hence no hesitation to hold that the proposition laid therein cannot be applied to the facts and circumstances of the case in hand. - Decided against the assessee. Non chargeability of interest under section 234B of the Act - Held that:- Now the law has been settled that the levy of interest under section 234B is mandatory. - Decided against the assessee. Irrecoverable inter corporate deposits written off - CIT deleted disallowance - Held that:- finance business of the demerged company was further carried over by the assessee company, though, it was not the exclusive business but one of the business activities of the resulting company. The condition of passing the entry through P&L account is not mandatory in case of money lent in the business of money lending even as per the provisions of section 36(2)(i) of the Act. Thus infirmity in the order of the Ld. CIT(A) on this issue and the same is accordingly upheld. - Decided against revenue.
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2015 (1) TMI 560
Interest income - whether taxed under the head ‘Income from other sources’ instead of adjusting it against the interest expenditure capitalized to Incidental Expenditure during Construction (EDCP) account? - Held that:- Following the decision of the Tribunal in the assessee’s own case we restore the issue to the file of the AO with a direction to examine the nexus between interest paid on borrowed funds and decide the issue in terms of the above reproduced directions given by the Tribunal for earlier assessment year. - Decided in favour of assessee by way of remand. Disallowance of expenditure u/s. 14A - Held that:- Perusal of the assessment order reveals that the AO has not followed the guidelines of objective satisfaction. He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions of section 14A of the Income Tax Act. The learned CIT(A) also ignored the mandate of the provisions of section 14 A, while confirming the disallowance. Thus restore this issue back to the file of the AO with a direction that the AO will give opportunity to the assessee to place on record all the relevant facts including its accounts and then examine the computation/calculation made in this regard by the assessee having regard to the accounts of the assessee. - Decided in favour of assessee by way of remand. Deduction u/s. 80IB on the Technology Up-gradation Fund [TUF] subsidy denied - Held that:- After considering the arguments of both the sides, we deem it proper to set aside this particular issue to the file of the AO with the direction to examine whether the reimbursement of interest cost is reimbursement of revenue expenditure debited to the P & L Account of that eligible unit to that extent either in this year or in any earlier years. If it is so then due to reimbursement the expenditure incurred by the assessee is reduced, to the extent the profit of the industrial undertaking will increase. - Decided in favour of assessee by way of remand. Deduction u/s. 35AC disallowed - Held that:- Restore this issue is also restored to the file of the AO with a direction that the assessee will produce necessary evidence regarding the deduction claimed on this issue before the AO and the AO after proper verification of the same, if found genuine, will allow the claim of the assessee.- Decided in favour of assessee for statistical purposes. Addition made by AO on the basis of loose paper impounded - Held that:- CIT(A) after going through the evidences on file has held that the addition on this account was not sustainable as all the payments were made through account payee cheques and were duly reflected in the books of accounts. He however has rightly directed to reduce the amount of ₹ 65 lakhs from the value of assets and calculate the depreciation accordingly. We do not find any infirmity in the order of the CIT(A). It is accordingly upheld. - Decided against revenue. Computation of disallowance made u/s. 14A for computing book profit u/s. 115JB - Held that:- The expenditure found disallowable under section 14A can be added back while computing book profits under section 115 JB of the Act. Since in the case in hand, we have restored the issue of disallowance u/s 14A of the Act to the file of the A.O., hence, it is held that whatsoever expenditure would be found by the AO as disallowable under section 14A, the same can be added back while computing book profit under section 115JB in the case of the assessee.- Decided in favour of assessee TUF subsidy received - revenue v/s capital receipt - Held that:- Since this issue was not examined by the AO at all, we admit the additional ground and restore the matter to the file of the AO to examine the claim afresh. - Decided in favour of assessee by way of remand.
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2015 (1) TMI 559
Transfer pricing adjustment - assessee pressed adoption of turnover filter and to exclude the companies which are having turnover of more than ₹ 200 crores - selection of comparable - Held that:- Turnover is an important filter which has to be adopted for determination of the ALP. The FAR analysis would not alter the turnover of the company. In view of the turnover being higher than ₹ 200 crores in the case of the above companies, we direct the AO to exclude these companies from the list of comparables. - Decided in favour of assessee. We direct that KALS Information Systems Ltd., a software product company, be excluded from the comparables. The assessee before us is not developing any niche product,therefore direct that Tata Elxsi Ltd. be excluded from the comparables.Lucid Software Ltd. was not functionally similar to the assessee and the same has to be excluded from the comparables.here is no dispute that RPT filter in the case of Megasoft Ltd. was 17.08%, that of Aztech Software Ltd. was 17.78% and that of Geometric Software Ltd. was 19.34%. Coordinate Benches of the Tribunal are consistently following 15% as cut off mark for applying the RPT filter. Accordingly, we direct exclusion of Megasoft Ltd., Aztech Software Ltd. and Geometric Software Ltd. from the comparables. The AO is, therefore, directed to re-compute the ALP after excluding the companies directed by this Tribunal in this order. - Decided in favour of assessee by way of remand. Computation of deduction u/s 10A - Held that:- Computation of deduction u/s 10A of the Act and to adjust both export turnover as well as total turnover by reducing 50% of data link charges of ₹ 33,96,939/- for computing deduction u/s 10A of the Act is covered in favour of the assessee by the decision of the jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT ). Thus we allow the said ground of appeal of the assessee and direct the AO to exclude data link charges both from the export turnover as well as the total turnover for computing deduction u/s 10A of the Act. - Decided in favour of assessee
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2015 (1) TMI 558
Restricting the deduction to the extent of amount of provision made in the books, for bad and doubtful debt i.e. ₹ 58,00,000/- and there by disallowing deduction of ₹ 1,07,58,930/- - Held that:- This issue stands decided against the assessee by the decision of the Tribunal in assessee's own case for the A.Y. 2008-09 - Decided against assessee. Interest on NPA accounts - CIT (Appeals) erred by adding amount of ₹ 64,66,409/-on account of interest on NPA accounts which is not recognized as income? - Held that:- Following the decision of the Tribunal in assessee's own case in the immediately preceding assessment year and in the absence of any distinguishable feature brought on record by the Ld. Departmental Representative, the above ground by the assessee is allowed - Decided in favour of assessee. Premium amortised on HTM Securities - Held that:- CIT(A) made no mistake in allowing the claim of the assessee for deduction of ₹ 51,95,263/- representing amortization of premium paid on Government Securities under the HTM category. Thus on this Ground also, Revenue fails - Decided in favour of assessee.
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2015 (1) TMI 557
Commission / brokerage towards sale proceeds paid to the directors - CIT(A) deleted the addition - Held that:- Ld. CIT(A) has misdirected himself in allowing the relief by simply observing that there is no bar for any person to act as a property broker. He has totally missed the fact that the persons who got commission were executive directors of the company who we al ready in receipt of the salary and were duty bound to per form the functions which were assigned to them with the remuneration paid to them. Therefore, we set aside his order and restore that of Assessing Officer - Decided against assessee. Long Term capital Gain - assessee adopting the value of industrial Plot at ₹ 138 Per sq. yard instead of ₹ 600 Per sq. yard adopted by the assessee company on the basis of valuation report of the approved Registered valuer of the Income Tax department - CIT(A) deleted the addition - Held that:- Assessee has filed the valuation report from a registered valuer. However, the Assessing Officer correctly pointed out the defect that no year was mentioned against the current year. Moreover, nowhere it was mentioned in the valuation report regarding valuation of ₹ 3000/ - per square yard in the cur rent year. Normally in such a situation the matter should have been referred to the valuation cell but Assessing Officer has referred the mater to the PSIDC which is a government agency responsible for allotting the industrial plots in Mohali area where the plot of the assessee was also located. Agency itself has allotted a plot of 11245 square yard on 22.7.1981 @ ₹ 46/ - per square yard the value which was required to be found is on 1.4.1981 and the plot has been allotted by PSIEC on1 July 1981 and the period comes quite in proximity to the date of 1.4.1981 and therefore, in our opinion the Assessing Officer could have applied this rate easily. The Assessing Officer has been more than reasonable in further increasing this rate by three times to as certain the market value, therefore, the valuation as adopted by Assessing Officer seems to be correct. Therefore, we set aside the order of Ld. CIT(A) and restore that of Assessing Officer - Decided against assessee.
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2015 (1) TMI 556
Disallowance and addition during the assessment or reassessment proceedings u/s 153A - Genuineness of the expenses - CIT(A) deleted the addition of ₹ 10,00,000/- out of the total expenses claimed of ₹ 5.25 crores - Held that:- Assessing Officer made impugned disallowance and addition out of total expenses claimed by the assessee without any incriminating material said to be found during the course of search and on the estimate and ad hoc basis. On the other hand, the Commissioner of Income Tax(A) deleted the addition with an observation that when the Assessing Officer himself has failed to invoke the relevant provisions of the Act to ensure compliance of the directions by the assessee, it may not be a strong basis to make a random estimated disallowance out of expenses debited to the P&L account. The Commissioner of Income Tax(A) was also justified in holding that no defect or even doubt has been pointed out by the Assessing Officer with regard to any particular expense to which disallowance could have been pegged and under these circumstances, ad hoc disallowance being without any basis is not sustainable. Under these facts and circumstances and on the basis of foregoing discussion, we are of the firm opinion that the Assessing Officer made disallowance and addition during the reassessment proceedings u/s 153A of the Act without any basis and justified cogent reason. On the other hand, the Commissioner of Income Tax(A) rightly deleted the disallowance and addition as per letter and spirit of the relevant provisions of the Act.- Decided against revenue.
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2015 (1) TMI 555
Setting off the brought forward depreciation against the income from Business or Profession of the current year disallowed - Held that:- Current depreciation is deductible in the first place from the income of the business to which it relates. If such depreciation amount is larger than the amount of the profits of that business, then such excess comes for absorption from the profits and gains from any other business or business, if any, carried on by the assessee. If a balance is left even thereafter, that becomes deductible from out of income from any source under any of the other heads of income during that year. In case there is a still balance left over, it is to be treated as unabsorbed depreciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. Thus we disapprove the conclusions arrived at by the authorities below and direct the Assessing Officer to grant the set off of the unabsorbed depreciation in the light of the legal position set out. - Decided in favour of assessee. Increasing the book profit under Section 115JB - Prior period expenses - Held that:- As regards the adjustment of ₹ 4,12,896 in respect of the prior period expenses, learned representatives fairly agree that this issue is covered, in favour of the assessee, by a coordinate bench decision in the case of Shivashahi Punarvasan Prakalp Ltd Vs ITO [2011 (10) TMI 153 - ITAT MUMBAI]. - Decided in favour of assessee. Disallowance of expenses under Section 14A - Held that:- here cannot be any disallowance under section 14A unless there is corresponding exempt income and the assessee has no such exempt income, adjustment under clause (f) of Explanation to Section 115JB (2) cannot indeed be made. The adjustment has to meet the tests of law and what cannot be considered to be ‘expenditure relatable to exempt income’ under the law, cannot be subjected to the adjustment either. The mere fact that the assessee has accepted this disallowance affects that disallowance only and nothing more than that; it does not clothe such an adjustment, in computation of book profit under section 115JB, with legality. There is no dispute that there is no corresponding tax exempt income. Therefore, the adjustment in question is indeed unsustainable in law. Thus direct the AO to delete the impugned adjustment of 2,00,225. Decided partly in favour of assessee.
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2015 (1) TMI 554
Transfer pricing adjustment - determination of Arm s Length Price - selection of comparable - Held that:- Assessee is entitled to object to certain comparables selected by TPO which were also initially selected as comparables by assessee itself. If actually the RPT of Caliberpoint Business Solutions Ltd. is more than 25%, it cannot be treated as a comparable to assessee. Accordingly, we direct AO/TPO to verify this aspect and if it is found that RPT as a percentage of sales is more than 25%, then, this company cannot be treated as comparable to assessee. For Cosmic Global Ltd. company it cannot be treated as comparable to assessee as it outsources its activities. For Infosys BPO Ltd.it cannot at all be considered as a comparable to assessee not only because of its size but also due its brand value, diversified activities, and other functional dissimilarities. For CG Vak Software cannot be treated as comparable to assessee on ground of functional dissimilarity as it is predominantly a computer software development company. For CEPHA Imaging P. Ltd there is nothing in the annual report to suggest that it is into software development. Further from the annual report as well as working submitted by assessee it appears that the RPT as a percentage of sale is 16.59%. Thus direct AO/TPO to verify this aspect and if it is found that RPT of this company is less than 25%, then, this company cannot be rejected as a comparable. For Celestial Biolabs Ltd. is concerned, we are of the view that this company cannot be treated as comparable to assessee as it is engaged in various activities. As far as TCG Life Science Ltd. is concerned can be seen from facts on record, substantial revenue earned by the company is from R D activities. Therefore, only because revenue from manufacturing activities exceed the cut off mark by 0.16%, the company cannot be treated as un-comparable to assessee. Thus direct the AO/TPO to compute the ALP of the international transactions under both the segments keeping in view our directions herein above. - Decided partly in favour of assessee for statistical purpose. Allowance of risk/working capital adjustment - Held that:- in the TP study assessee has not worked out any adjustment on account of risk or working capital. However, since we have directed the AO/TPO to compute ALP in accordance with directions given by us on comparables, while doing so, he shall also consider assessee s claim towards adjustments to be made on account of risk/working capital etc. after allowing opportunity of being heard to assessee. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 553
Disallowances u/s 40(a)(ia) - non deduction of tax at source u/s 195(1) on usance charges paid to a non resident through an intermediatory bank - whether the Assessee was bound to deduct TDS u/s 195(1) in respect of usance charges paid by the Assessee on import of raw material from countries outside India like Japan, Belgium, Germany, USA etc.? - Held that:- It is apparent that the Hon'ble Supreme Court has not reversed the decision in the case of CIT vs. Vijay Ship Breaking Corporation, (2003 (3) TMI 91 - GUJARAT High Court ) on the finding that the usance charges are not interest u/s 2(28A) except where an undertaking is engaged in the business of ship breaking in view of explanation (2) to Sec. 10(15)(iv)(c) inserted by the Taxation Laws (Amendment) Act, 2003 with retrospective effect. In our view, the decision of the Hon'ble Gujarat High Court has impliedly been approved by the Hon'ble Supreme Court in respect of Assessees who are engaged in the business of ship breaking. We, therefore, set aside the order of CIT(A) and allow the appeal of the Revenue. - Decided in favour of revenue.
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2015 (1) TMI 552
Deduction U/s.80IB(10) disallowed - Held that:- The learned A.O. has given specific finding in the assessment order that the claim of the appellant is disallowed on non-fulfillment of conditions U/s.80IB(10)(f)(iii) of the I.T.Act 1961 which is against the facts and materials available on record and principle of Board’s Circular, the claim of the appellant be allowed. That the order passed by learned A.O. in rejecting the claim of the appellant U/s.80IB(10) and confirmed by CIT(A) is bad in law, illegal; void and not in accordance with the provisions of the I.T.Act 1961.That the learned A.O. himself has admitted that the appellant could not furnish exact quantum amount of particular unit and profit of the whole project was only worked out which is against the materials available on record and the appellant had submitted working to the learned A.O. along with letter dated 10.12.2013 and therefore finding given by learned A.O. is perverse and alternative claim of proportionate be allowed. - Decided in favour of assessee.
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2015 (1) TMI 551
Transfer pricing adjustment - whether the interest free loans and guarantees provided by assessee to AE calls for any adjustment? - Held that:- There is no dispute to the fact that providing of loans to AE is an International Transaction as per the TP provisions. Therefore, the commercial considerations advanced by assessee can not be considered while examining the ALP of the transactions. We are of the opinion that the transaction of providing loans to subsidiary whether a direct loan or providing credit for initial expenditure, which is stated to be reimbursable, do call for adjustment. Therefore, in principle we approve the adjustment made on these transactions.Since, A.E. borrowed funds from ICICI Bank, U.K. @ LIBOR + 2.75%, we are of the opinion that, that rate should be considered as ALP of interest and A.O. is directed to workout the interest at that rate on the loan provided to SSTL north America. Assessee is also objecting to the adjustment on loan given to Arsin Corporation, another A.E. of Assessee. Here, assessee has charged interest at LIBOR + 1.50 BPS. Since, we have approved LIBOR + 2.75 points on the loan given to SST, North America (A.E.) we direct the A.O. to re-workout the interest on the loan provided to this A.E. at LIBOR + 2.75% only as against LIBOR + 4.75 charged by A.O./TPO. - Decided partly in favour of assessee. Guarantee fee - Held that:- We uphold the adjustment made on guarantee commission both on the guarantee provided to Bank directly and also on the guarantee provided to the erstwhile shareholders of JYACC for assuring the payment by AE. However, we direct the TPO to adopt the rate to 0.53% which is considered as arms length in other cases. - Decided partly in favour of assessee.
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Customs
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2015 (1) TMI 577
Suspension of CHA License - Non compliance of procedure of Regulation 22(2) - Held that:- Following decision of Following decision of D.Thimmeswara Rao & others [2013 (11) TMI 1045 - CESTAT CHENNAI] and Manjunath Shipping Services Vs Commissioner of Customs (Imports), Chennai [2013 (10) TMI 1002 - CESTAT CHENNAI] - initial suspension order dated 11.5.2012 was issued under Regulation 20 (2) of CHALR, 2004 and which was continued by the impugned order dt. 6.6.2012 issued under Regulation 20 (3) of CHALR, 2004. It is seen that no proceeding was initiated under Regulation 22 of CHALR, 2004 in so far as no show cause notice was issued to the appellant under Regulation 22 (1) of Regulations 2004, which is required to be issued within 90 days from the date of receipt of offence report. - the impugned suspension order cannot be sustained and accordingly, it is set aside - Decided in favour of appellant.
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2015 (1) TMI 576
Revocation of the licence of the Customs Broker - forfeiture of full amount of security deposit - mis-declaration of the goods - Regulations 20(2) of the CHALR, 2004 - Held that:- Appellant Shri M. Dhanraj, is sole proprietor and authorized signatory of the appellant company M/s. Transport Logistics - impugned shipping bill was filed in the name of the appellant CHA. The exported goods were examined in the presence of the Customs officers and stuffed and sealed with one time lock and loaded on the Trailor at CFS, Thirunallar, Karaikal. The containers were taken outside the city and tampered the seal and the red sanders were substituted in the place of Ragi with the connivance of the transporter. The export goods were substituted before entering into the port of export i.e., in between CFS and port of export. As evident from the records and the statements, the appellant signed the blank customs documents, declarations and given to other persons and lent his license. Any acts or deeds committed by Mr. Elengo and Mr. Mari of other freight forwarders is to construed as if it was done by the appellant himself. No reason to interfere with the order of the Commissioner. Accordingly, the impugned order is upheld - Decided against appellant.
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2015 (1) TMI 575
Confiscation of goods - International Mobile Equipment Identity number of phones were allocated to other brands like Nokia and Samsung and exported phones did not pertain to the declared brand - Re-export of goods - Redemption fine - whether the Customs authorities were justified in confiscating the goods and allow the re-export on payment of redemption fine and imposition of penalties on the ground that IMEI numbers available in respect of phones belonging to original equipment manufacturer like Nokia and Samsung - Held that:- The admitted position was that the mobile handsets did have IMEI numbers. Once the IMEI number was mentioned on the mobile handset and was duly declared, then there is no possibility or chance of misuse and accordingly no threat to national security. IMEI number once embedded in the mobile phone becomes the identification code for the said mobile handset. There was no tampering with the said IMEI number. It has not been explained, how and in what circumstances that there was a security threat in the present case. The requirement that there should be an IMEI code identification was satisfied. - M/s Bonae Innovation Corporation had only done re-designing and embellishing the casing of the existing handset by using their cutting edge engineering technology. The aforesaid findings of fact are not disputed and under challenge. The fact that the phones did have IMEI number is not disputed - Decided against Revenue.
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2015 (1) TMI 574
Application for settlement under Section 32E - Held that:- Settlement Commission was open to the idea of accepting the application for settlement provided the petitioner deposits the admitted amount of duty and interest and for which purpose it was suggested that the petitioner could approach the jurisdictional commissioner for release of the said amount against any surety and bank guarantee. - petitioner may file an application under the said provisions for provisional release of the seized amount and the concerned authority shall pass an appropriate order thereon in accordance with law. If such an application is made by the petitioner within a week from today the same shall be disposed of by the concerned authority within two weeks thereafter. - Petition disposed of.
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2015 (1) TMI 573
Refund of 4% of Special Additional Duty (ADC/SAD) - assessee filed refund in terms of Notification No.102/2007 – department rejected the claim on the ground that assessee failed to prove that they had not passed on the incidence of duty to the customers or any other person and also they have not furnished the required documents in relation to refund claims - held that:- In the Tribunal’s order, it is observed that ‘there is no dispute that all the conditions in terms of the Notification have been fulfilled excepting the unjust enrichment aspect which has been as submitted by the learned Counsel, prescribed by the Board’. Therefore, it is not open to the learned Counsel for the Revenue to contend that before this Court though the terms of the notification has not been complied with but the same has been considered and the point that was argued before the tribunal is only to prove unjust enrichment aspect. Section 28D of the Act states that there arise a presumption that the incidence of duty has been passed on to the customers. It also states that every person who has paid the duty on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. Therefore, it is clear that it is rebuttable presumption. To rebut such presumption, the assessee has produced auditor report required to claim the refund of special additional duty. The auditor has unequivocally stated in his report that the burden has not been passed on directly or indirectly and in coming to such conclusion, they have taken into account how the price of the traded goods has been arrived for this purpose. Therefore, such presumption stands rebutted. No substantial question of law would arise - Decided against Revenue.
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Service Tax
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2015 (1) TMI 597
Authorized service station service - Valuation of service - inclusion of value of parts - Demand of differential duty - Held that:- Appellant is authorized service station which sell parts of the vehicle as well as provide service station which sell parts of the vehicle as well as provide service of repairs, maintenance of the vehicle. - sale of parts have been shown separately on which VAT has been discharged at applicable rates and service portion of the service provided has also shown separately and paid service tax thereon. Therefore, the case of the appellant is squarely covered by the CBEC Circular No. 96/7/2007 dt. 23.8.2007 when VAT has been paid on the material supplied, they are not required to pay service tax. In these circumstances, we hold that the value of parts supplied is not includible in the value of taxable service. Appellant is authorized service station of M/s. Tata Motors and required to repair and maintain vehicles of Tata Motors. If the appellant has undertaken the repairs and maintenance activity of the other manufacturer, the same is not includible in the taxable service as held by this Tribunal in the case of Commissioner of Central Excise, Chandigarh Vs. Dynamic Motors reported in [2011 (11) TMI 308 - CESTAT, NEW DELHI]. In these circumstances, we do not find any merit in the impugned order, and the same is set aside - Decided in favour of assessee.
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2015 (1) TMI 596
Denial of input service credit - denial on the ground that services of empty containers sent back to the yard is not an input service as per Rule 2(l) - Held that:- If any input service provider avails any service in the course of the business of output service is entitled any input service credit. In fact the transportation of empty containers to yard is an integral part of the service provided by the appellant. In these circumstances, it cannot be said that the service of transportation of empty containers to yard is not consumed by the appellant for providing output service. In these circumstances, I hold that the appellant is entitled for input service credit on transportation charges of empty containers to the yard. With these observations, the impugned orders are set aside - Decided in favour of assessee.
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2015 (1) TMI 595
Waiver of pre deposit - application for extension of time for compliance of the stay order - Payment made by demerged company - Held that:- Applicant-company St. John CFS Park Pvt. Ltd., was directed to make a pre-deposit of ₹ 20,00,000/-. There is no dispute that the Registration Certificate is still alive in favour of St. John CFS Park Pvt. Ltd. It is also noted that there is no order of the High Court for amalgamation or the withdrawal of the demerger proposal of the applicant-company with the other company. It is seen from the records that the applicant filed applications dated 21.01.2014 and 15.04.2014 before the Tribunal requesting for time to produce the order the High Court. It is further seen from the records that thereafter the applicant-company was given several opportunities to produce the requisite order from the High Court with regard to the amalgamation of both companies. But no order of the Hon'ble High Court was placed. Hence, the deposit made by M/s. St. John Freight System Ltd. cannot be accepted as compliance of the stay order [2013 (11) TMI 872 - CESTAT CHENNAI]. - appeal gets dismissed for non-compliance of the stay order - Decided against assesse.
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2015 (1) TMI 594
Cenvat Credit - Services provided to SEZ units - Exemption under Notification No. 4/2004-ST dt. 31.3.2004 - CENVAT Credit - Held that:- In this case initially the appellant has claimed exemption under Notification No.4/2004-ST dt. 31.3.2004 on the clearance made to SEZ units. But after issuance of the show cause notice, the appellant has paid the service tax on the exempted service along with interest. Therefore, when the appellant has paid the service tax alongwith interest, it cannot be said that the appellant has availed the benefit of Notification No. 4/2004-ST. Further, more over we find that by insertion of Rule 6(6A) to the Cenvat Credit Rules 2004 by the Finance Act, 2012 retrospective amendment was made and it was incorporated that there is no requirement of reversal of Cenvat Credit on the services provided to SEZ unit. Therefore, in the light of this retrospective amendment and as the appellant has already paid the service tax, we hold that appellants are not required to reverse Cenvat Credit as demanded in the impugned order. Accordingly, demands confirmed in the impugned order are set aside - Decided in favour of Assesse.
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2015 (1) TMI 593
Waiver of pre deposit - Evasion of service tax - huge amounts shown in exempted service column of ST-3 return - Held that:- appellant has shown value of exempted service in returns and according to the appellant, they had shown the receipt for consideration of this service as exempted as they entertained a bona fide belief that the work undertaken by the appellant for Govt. of Andhra Pradesh is exempted. Per contra, learned A.R. submitted that there is no basis for such belief. Moreover, the Order-in-Original also indicated the fact that the appellant has shown huge amounts in ‘exempted service column’ and even then no enquiry was made by the department so that show-cause notice could be issued in time. Moreover, it cannot be said that the appellant could not entertain a bona fide belief that in view of the fact that the Tribunal itself has allowed unconditional waiver of pre-deposit and stay against recovery for similar items of work. Therefore, we consider that the appellant has made out a prima facie case for waiver of pre-deposit and stay against recovery during pendency of the appeal. - Decision of assessee's previous case relied upon [2013 (10) TMI 435 - CESTAT BANGALORE] - Stay granted.
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Central Excise
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2015 (1) TMI 589
Waiver of pre deposit - CENVAT Credit - credit on welding electrodes - Repair & Maintenance - Held that:- Bench in the case of M/s. Chettinadu Cement Corporation Ltd. Vs Commissioner of Central Excise & Service Tax, LTU, Chennai vide [2014 (9) TMI 683 - CESTAT CHENNAI] granted unconditional stay. It has been held that any item used for repair and maintenance of the plant and machinery, would have to be treated as used in or in relation to the manufacture of the final product - Court waives the pre-deposit of duty along with interest and penalty - Stay granted.
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2015 (1) TMI 588
100% CENVAT Credit availed on capital goods in the same year - removal as such or not - On receipt of the said moulds in their factory, the appellant availed 50% of the eligible CENVAT Credit and put the same to use in their factory for further manufacture of finished excisable goods. The appellant, in the same financial year, at the time of clearance of the said moulds to their sister concern, availed balance 50% of the CENVAT Credit and cleared the said moulds, as such, by debiting the entire amount of CENVAT Credit availed on such moulds. The Revenue has denied the balance 50% of the CENVAT Credit in the same financial year on the ground that once moulds are put to use, the same loose the character as such, hence the appellant could not be eligible to avail CENVAT Credit on the balance 50% of the CENVAT Credit at the time of its clearance in the same financial year. Held that:- Appellant had reversed the entire amount of CENVAT credit availed before removal of the capital goods in the same financial year. In the result, we have no hesitation to conclude that the capital goods which were put to use and when cleared from the factory, would be eligible to the balance 50% of CENVAT credit available on such capital goods on its clearance from the factory in the same financial year. Consequently, we do not find merit in the order of the Ld. Commissioner(Appeal) and the same is set aside - Decided in favour of assesse.
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2015 (1) TMI 587
Waiver of pre deposit - Cenvat credit - applicant availed irregular credit on the basis of supplementary invoices - contravention of Rule 9(1)(b) of the Cenvat Credit Rules, 2002 - Held that:- Rule 9(1)(b) would apply in the case of supplementary invoices issued by the importer. There is an exception in Rule that it would not apply in the case of and additional amount of duty become recoverable from the importer for non-levy or short-levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provisions of Excise Act, or of the Customs Act, 1962 or the rules made thereunder with intent to evade payment of duty. In the present case, we find that proceeding was initiated against the supplier for recovering of the amount on account of short-levy by reason of fraud, collusion etc. - Partial stay granted.
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2015 (1) TMI 586
Excisability of diesel generating sets - Imposition of penalty - Held that:- that D.G. Sets are huge and are installed in a separate building, spread over large area. The same are not portable D.G. sets which can come to market for being bought and sold. - Decision of Western India Machinery Company (2001 (1) TMI 579 - CEGAT, KOLKATA) followed - cannot be held to be marketable and excisable. Extended period of limitation - Held that:- Duty of demand is also barred by limitation. As per the statement of Authorised Representative dated 19.10.2002, the jurisdictional Central Excise Authorities were informed about the intended fabrication of the D.G. Sets at the premises in the year 1989 itself. Even the Tribunal’s decision in the case of Triveni Engg. (2000 (8) TMI 86 - SUPREME COURT OF INDIA), which held against the assessee on merits, the benefit of limitation was given by observing that there cannot be any reason for suppression inasmuch as in terms of the Board’s Circular dated 6.11.86, which was withdrawn subsequently on 11.10.90, no duty was to be discharged on the combination of engine and alternators assembled. As such, we find no suppression can be attributed to the assessee so as to uphold the longer period of limitation. We have also seen the photographs produced before us which establish that D.G. Sets are used as D.G. sets spread over in a separate building. - Decided in favour of assessee.
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2015 (1) TMI 585
Imposition of penalty u/s 11AC - Bogus invoices - invoices were allegedly issued without ever supplying any goods - Held that:- appellants have conceded that the invoices were issued without ever supplying any goods. As regards their contention that the order of Settlement Commission in respect of M/s. Talbros would cover them too, it is seen that the Settlement Commission itself did not admit their case and such non-admission was not on the ground that they would be covered by the main order in case of Talbros. The judgement in the case in K.I. International Ltd. (2013 (5) TMI 383 - CESTAT, CHENNAI) takes note of the judgement in the case of S.K. Colombowala (2007 (7) TMI 514 - CESTAT, MUMBAI) and holds that the benefit of the Settlement Commission s order cannot be extended to those who never approached the Settlement Commission. The ld. Advocate stated that the order in case of K.I. International Ltd. has been stayed by the High Court, but I find that the stay is an interim stay on condition of 50% deposit and bank guarantee for the remaining amount which obviously means that what has been stayed is the consequential recoveries in terms of that order. As stated earlier, the Settlement Commission itself did not consider that the appellants would be covered by their order in case Talbros. As such, the contention of the appellants in this regard is not sustainable. In the light of the foregoing the appellants contention that they are not liable to penalty under Rule 25 ibid is untenable - reduction to 25% of duty involved, under Section 11AC ibid is subject to several conditions. Further in the case of the appellants, the fraud committed is deliberate and blatant and involved manipulation of documents. In fact, I find no mitigating factors in this case to justify lower penalty. - Decided against assesse.
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2015 (1) TMI 584
Penalty u/s 11AC - Non-payment of duty on the price escalation amount received - Supplied concrete sleepers to railways under contract with price escalation clause - The price differential on account of price escalation from back date was received by the appellant in the year 1999 - Neither the duty was paid by the appellant nor the receipt of price differential was intimated to revenue - Held that:- The Assessee did not inform about the clause regarding escalation of the price; the bills claiming the escalated price; and the escalated price received by the Assessee - The Assessee neither applied for the provisional assessment nor paid excise duty when the escalated bills were raised or payment was received - A part of excise duty was paid only when it was pointed out by the DGAE - findings clearly show that the Assessee wanted to evade duty. These findings have been upheld by the Tribunal. There is no illegality in these findings. In view of this it is held that the Assessee is liable to pay penalty under Section 11AC of the Act. Section 11AC was inserted in the Act with effect from 28-9-1996, that is to say that the penalty under Section 11AC of the Act could only be imposed w.e.f. 28-9-1996. In view of the same, only penalty equal to the amount of the excise duty short-paid for the period from 28-9-1996 to 31-8-1998 can be imposed. - Decided partly in favour of assessee.
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2015 (1) TMI 583
Restoration of appeal - no notice received of the date of hearing - Held that:- Tribunal adopted a hyper-technical approach and which was uncalled for and unjustified then the impugned order cannot be sustained. The Tribunal was in error in refusing to restore the appeals and which are pending from the year 2000 on its file. The litigant and his advocate is expected to pursue the proceedings for a reasonable period. If the appeal is not likely to be heard for nearly 10 years and suddenly it is listed for hearing, the expectation would be that if the Advocate and parties are absent one more opportunity is given to them to remain present. This expectation even in today’s e-world is not unreasonable. In such circumstances we would not expect the Tribunal hereafter to reject the requests for restoration of Appeals on the above grounds and to consider them sympathetically by applying liberal principles. With this hope the impugned order is quashed and set aside. - Appeal restored.
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2015 (1) TMI 582
Condonation of delay - Whether the Tribunal was justified in law in not condoning the delay of 338 days in preferring the appeal and its purported findings dismissing the application for condonation of delay as well as the stay application and appeal are arbitrary, unreasonable and perverse - Held that:- Tribunal while not accepting the causes shown did not disbelieve per se, such causes but expected from the appellant conduct that would have shown better diligence on its part. Such findings of the Tribunal, in our view, could not be said to have been made in following the decision of the Hon’ble Supreme Court in the case of the Office of the Chief Post Master General (2012 (4) TMI 341 - SUPREME COURT OF INDIA) where the appellant Government company had not given any explanation at all. Since the Tribunal in its order did not deal with the explanation given in the appeal before it in the context of whether they by themselves were sufficient cause or not, we find the order was perverse and thus substantial question of law arises. - Matter remanded back - Delay condoned.
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2015 (1) TMI 581
Utilization of accumulated money credit lying in its RG 23B, Section 38A-Effect of amendments, etc., of rules, notifications or orders, Part-II by representatives - The Central Excise authorities in case of vanaspati manufacturers including the petitioner-company disallowed use of accumulated money credit for discharging duty liabilities on vegetable/vanaspati products on the ground that the notifications allowing money credit stood rescinded with effect from 25-8-1989. - Held that:- vested right has accrued in favour of the manufacturers and that the money credit was a monetary right earned by the manufacturers on purchasing and utilizing unconventional/minor oils and for that the manufacturers had changed the manufacturing process and plants hoping to get money credit, and therefore, the aforesaid right cannot be taken away due to rescinding of the notification. - manufacturers were entitled to utilize the accumulated money credit in terms of the notification and the Money Credit Scheme. Further, the learned Single Judge rejected the claim of the manufacturers to get the accumulated money credit in cash. It is reported that against the said decision both the Revenue as well as the manufacturers had approached the Supreme Court and the Supreme Court dismissed both the Special Leave Petitions [2005 (3) TMI 746 - SUPREME COURT]. Therefore, the view taken by the Calcutta High Court [2004 (6) TMI 46 - HIGH COURT AT CALCUTTA] that the manufacturers were entitled to utilize the accumulated money credit has been upheld by the Supreme Court. In view of the above, the action on the parts of the respondents in restraining the petitioners from utilizing the accumulated money credit lying in RG-23B as on 21-7-1996 cannot be sustained and consequently any further order trying to recover the same also deserves to be quashed and set aside. - Respective petitioners are entitled to utilize the accumulated money credit lying in their RG-23B register, accumulated as on 21-7-1996 - Decided in favour of assessee.
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2015 (1) TMI 580
SSI Exemption - inclusion of value of captive consumption - as per dept value of plastic film and plastic laminated film captively consumed had not been taken into account while calculating the aggregate value of clearances - Supreme after hearing the counsel for the appellant dismissed the appeal filed by the assessee against the order of Tribunal [2013 (5) TMI 182 - CESTAT CHENNAI], wherein Tribunal held that value of plastic film and plastic laminated film used for making such pouches are to be included the aggregate value of clearances under Notification 8/99-CE.
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2015 (1) TMI 579
Classification of Goods - Assessee was engaged in the manufacture of bodies on the chassis for public transport passenger motor vehicle, ambulance, motor vehicle for transport of goods and special purpose motor vehicle - During the period the respondent claimed classification of above said goods under sub-heading No. 8702.00, 8704.00 & 8705.00 - Department was of the view the same were to be charged under sub-heading No. 8707.00. - Supreme Court after condoning the delay dismissed the appeal as devoid of any merit filed against the decision of Tribunal [2013 (9) TMI 496 - CESTAT, NEW DELHI].
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2015 (1) TMI 578
Waiver of pre deposit - Conversion of goods under EPCG scheme - Supreme Court dismissed the appeal filed by the assessee against the decision of High Court reported in [2012 (5) TMI 557 - RAJASTHAN HIGH COURT] wherein High Court held that considering reasons assigned by Tribunal, there is no ground for interference on case of petitioner pending before B.I.F.R as so far there is no dispute of industry declared sick. Appellant was required to make pre-deposit as directed by the Tribunal
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CST, VAT & Sales Tax
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2015 (1) TMI 592
Detention of goods - Serial Number and TIN not printed on products - Held that:- According to the petitioner, the goods are being moved to a new office opened at Gurgaon and they have time of 30 days to apply for TIN. Therefore, the petitioner claims that TIN will be obtained soon - writ petition is disposed of directing the respondent to release the goods upon payment of the tax amount - Decided conditionally in favour of assessee.
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2015 (1) TMI 591
Admissibility of set off - Whether the Tribunal was justified in holding that set off under Rule 42-H of the Bombay Sales Tax Rules, 1959 is not admissible if the goods sold are covered by a declaration in Form N-14B – Held that:- The Tribunal rightly noted that the Assessee before it had effected sale of Schedule 'C' goods against Form 'N14B' - That Form is prescribed in relation to the goods which have been procured from another dealer who sold them in the course of export, out of the territory of India within the meaning of Section 5(3) of the CST - That Form is prescribed by virtue of Rule 21A - That is a Form of a certificate to be furnished by a dealer in support of his claim for exemption in respect of sales deemed to be in the course of export, out of the territory of India - a dealer may make a claim that he is not liable to pay tax under the BST in respect of his sale of goods on the ground that the sale of such goods is a sale in the course of export of the goods out of the territory of India within the meaning of SubSection (3) of Section 5 of the CST - He can therefore produce a certificate in the Form along with evidence of export of such goods and claim exemption in respect of the liability to pay the Sales Tax - the sales and purchases which are not liable to tax under the BST by virtue of Section 75 have been rightly excluded or taken out of the purview of Rule 42-H and that is the only interpretation which can be placed on the said Rule - If one peruses Section 5 and particularly Sub Section (1) and SubSection (3) of the CST together with Section 75 of the BST, Rule 21A of the Bombay Sales Tax Rules, Form N-14B harmoniously and together, it would be apparent that what is not within the purview of the BST can never be brought in for the purposes of claiming a deduction or set-off under Rule 42H. In respect of the amount of tax payable by registered dealer on his sales or goods on which deduction under Section 8(1) has been not allowed is a case of the registered dealer to whom the BST was applicable - If it was applicable because the sale was not a sale which was beyond the purview or reach of the BST, it is to enable such a dealer to claim the drawback, set off etc. on goods purchased by him and liable for value added Sales Tax that Rule 42H was worded accordingly - once again the explanation appears in Rule 42H and after 1st April, 1999 is because a similar case of dealer holding a trademark or patent was before the legislature – there is no reason to interfere in the order of the Tribunal – Decided against petitioner assessee.
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2015 (1) TMI 590
Maintainability of the writ petition – Held that:- Revenue contended that the petitioner has got an effective alternative remedy of appeal and without exhausting the same, the petitioner cannot maintain the writ petition - it is the settled legal principle that, in all cases, where an alternate remedy is provided for, would not automatically oust the jurisdiction of the Court, under Article 226 of the Constitution of India - Each case has to be decided on facts and there can be no straight jacket formula - the notice, dated 20.07.2012, was issued solely on the premise that the petitioners' vendors either have not paid taxes or they are non-assessess or unregistered dealers - it is evidently clear that the respondent failed to apply his mind to the submissions made by the petitioner and the documents produced - the order, apart from being a non-speaking order, is vitiated on account of non-application of mind and an order devoid of reasons - the petitioner need not be compelled to avail the alternate remedy under the Act - the preliminary objection raised by the Additional Government Pleader with regard to maintainability is rejected. Reversal of Input Tax Credit u/s 19(13) of the VAT Act - Defects noted by Revenue on verification of returns filed – Held that:- In Althaf Shoes (P) Ltd. Versus Assistant Commissioner (CT), Valluvarkottam Assessment Circle, Chennai-6 [2011 (10) TMI 567 - Madras High Court] it has been held that the circular issued by the Commissioner clearly states that so long as the vendor is found to be a registered dealer on the files of the Revenue, the claim of the assessee for refund could not be rejected nor delayed - so long as the purchasing dealer has complied with the requirements as given under Rule 10(2), the claim of the purchasing dealer cannot, by any length of reasoning, be denied by the Revenue – thus, the ITC availed by the petitioner could not have been proposed to be reversed or reversed on the grounds stated by the respondent, i.e., the selling dealer has not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled - the exercise of the jurisdiction by the respondent itself is ex-facie arbitrary and the proceedings are not only vitiated by serious procedural infirmities, but are arbitrary and unreasonable and without jurisdiction and held to be illegal – thus, the order is set aside – Decided in favour of petitioner.
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