Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 16, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Stock Appreciation right expenses claimed by the appellant is not in a capital expenses, but revenue expenditure and ascertained liability therefore it is allowable expenses - AT
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Addition u/s.68 - AO has merely stated that the father of the assessee had meagre income - department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof - No additions - AT
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TDS u/s 195 - Royalty - providing of services to use of equipment and right to use equipment - There mere fact that there were certain technical inputs or that the assessee immensely benefited from these services, even resulting in value addition to the employees of the assessee, is wholly irrelevant. The expression ‘make available’ has a specific meaning - AT
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Validity of reopening of assessment - AO is under obligation to dispose of the objection raised by the assessee for the reopening of the case u/s 147 by way of speaking order - AO has erroneously usurped jurisdiction which law does not permit him to do - the entire action of AO is ab-initio void and is quashed - AT
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Levy of penalty u/s 271(1)(c) - since there is only a change of head of income from ‘STCG’ as declared by the assessee to ‘business income’ as held by the AO and no evidence brought on record that the assessee’s claim was not bona fide - No penalty - AT
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Unexplained creditors - Refusal of the Settlement Commission to make any additions on the basis of the entries in the Cash Flow Statement [CFS] of the alleged advances taken by the assessee - matter restored before the commission - HC
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Admissibility of expenditures u/s 37 - there is no violation by the assessee in so far as giving any kind of freebies to the medical practitioners - such kind of expenditures by a pharmaceutical companies are purely for business purpose which has to be allowed as business expenditure - AT
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TDS u/s 195 - purchase of copyrighted software - the software is for assisting the assessee in rendering its services of software development and testing services to its group companies. Thus, these softwares are, in a way, the tools used the assessee - No TDS liability - AT
Customs
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Jurisdiction - power to issue show cause notice (SCN) - DRI officials have been appointed as customs officers by in exercise of the powers conferred u/s 4(1) - the officials empowered to issue SCN - HC
Service Tax
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Natural justice - validity of SCN - The petitioner can not seek blanket relief preventing the competent authority from exercising his statutory power or discharging his duties and functions vested under the statue. - HC
Central Excise
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SSI exemption - export turnover not included in value of clearances - demand is not sustainable because under the SSI Exemption Notification only clearances made for home consumption is covered and not the exported goods - AT
VAT
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CST - situs of the inter-State sale - supply of Brahmos Missiles - There is a fundamental error, in the understanding of the AO, that the petitioners have attempted to establish that the movement of goods from Hyderabad to Nagpur is in accordance with the contract for supply of Combat Missiles to the Armed Forces - No tax to be levied in Maharashtra - HC
Case Laws:
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Income Tax
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2017 (1) TMI 783
Stock Appreciation right expenses - revenue or capital expenditure - Held that:- Hon’ble Madras High Court has also an occasion to consider the allowability of the ESOP expenditure [2012 (7) TMI 696 - MADRAS HIGH COURT] wherein Hon’ble high court has held that the claim of the ESOP is an ascertained liability for deduction on is allowable. Similarly Hon’ble Delhi High Court in case of CIT versus Lemon tree hotels Ltd [2015 (11) TMI 404 - DELHI HIGH COURT] has held that the expenses debited as cost of employee stock option plan in the profit and loss account is allowable. Thus we respectfully hold that stock Appreciation right expenses claimed by the appellant is not in a capital expenses, but revenue expenditure and ascertained liability therefore it is allowable expenses. In the result the disallowance made by the Ld. and assessing officer and enhancement made to that taxable income of the appellant by Ld. 1st appellate authority is held to be erroneous and therefore set aside - Decided in favour of assessee
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2017 (1) TMI 782
MAT applicability - Requirement to pay taxes on Book Profits as per the provisions of section 115JB - exclusion provided under section 115JB(6) - AO rejected the contention of the assessee and applied the provisions of section 115JB of the Act calculating tax under MAT and levied the same - Held that:- The assessee conceded that the findings of the Ld. CIT (Appeals), that the assessee did not qualify as an entrepreneur or developer as defined under SEZ Act, nor was situated in a unit or Special Economic Zone as defined under the Act, was correct. In view of the above admission made by the Ld. Counsel for the assessee, we find no reason to interfere in the order of the CIT(A), holding that the assessee is not covered under the exclusionary provisions of section 115JB(6) of the Act, and is thus liable to pay tax on its Book Profits as per the provisions of section 115JB of the Act. We therefore uphold the order of the Ld. CIT (Appeals) on this ground, and dismiss the ground raised by the assessee.
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2017 (1) TMI 781
Addition u/s.68 - received of alleged gift given by father - Held that:- Assessing Officer has merely stated that the father of the assessee had meagre income without bring on record any material in support of the issue. In my considered opinion, such a vague and unspecific and unsubstantiated observation has no value in the eyes of law. Therefore, considering the entirety of the facts and circumstances of the case I find that the plausible explanation of the assessee was rejected by the Assessing Officer merely on the basis of suspicion and doubt and without bringing even an iota of material on record and even pointing out any inconsistency in the statement of Shri L. Anand Rao, father of the assessee recorded u/s.131 of the Act. Hon’ble Supreme Court in the case of Sreelekha Banerjee vs CIT (1963 (3) TMI 47 - SUPREME COURT ), wherein, it was held that the department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof. Therefore, in my considered opinion, the order of the Assessing Officer cannot be sustained and the ld CIT(A) was not justified in confirming the same. Therefore, setaside the orders of lower authorities and delete the addition - Decided in favour of assessee
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2017 (1) TMI 780
Fee for Technical Services (FTS) - deduction of tax at source under section 195 - Payment made towards various IT support services received from the Holding Company and associated enterprises of the group concerns - Held that:- We find that the related payments made by the assessee to BT Canada were in the nature of reimbursements, and, as evident from the details taken to record earlier in this order, there were specific cost allocations which were borne by the assessee. These payments, by no stretch of logic, could be viewed as payments for right to use the equipment. The assessee was entitled to certain services, during rendition of which even if certain equipment were to be used, but that by itself did not result in any use of or right to use the equipment by the assessee. The service may involve use of equipment but that does not vest right in the assessee to use the equipment. Even if a part of consideration can be said to be on account of use of equipment by breaking down all the components of economic activity for which consideration is paid, it is neither practicable, nor permissible, to assign monetary value to each of the segment of this economic activity and consider that amount in isolation, for the purpose of deciding character of that amount. The payment, as we have observed earlier, is for the activity of specialized data processing. It is neither practicable, nor permissible, to assign monetary value to each of the segment of this economic activity and consider that amount in isolation, for the purpose of deciding character of that amount. Therefore, neither the impugned payment can be said to be towards use of, or right to use of, the mainframe computer, nor is it permissible to allocate a part of the impugned payment, as attributable to use of, or right to use of, mainframe computer. Accordingly, the provisions of art. 12(3)(b) cannot have any application in the matter.” Going by this logic even if one proceeds on the basis that any equipment is used in rendition of these services, such a payment, or part thereof, cannot be treated as payment for use of equipment. Revenue’s case is thus acceptable as payment for use of equipment. In any case, the details furnished by the assessee also support the fact of reimbursement. When recipient does not have any income embedded in the related payment as reimbursement, there cannot be any occasion for deduction of tax at source under section 195. In view of these discussions, as also approving the reasoning adopted by the CIT(A), we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.- Decided against revenue Royalty payment - make available clause - Payment made towards providing of services to use of equipment and right to use equipment received from the Holding Company and associated enterprises of the group concerns are not in the nature of - Held that:- In order to invoke article 12(4)(a) it is necessary that such services should “make available” technical knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design The services provided by BT Canada were simply management support or consultancy services which did not involve any transfer of technology. It is not even the case of the Assessing Officer that the services were such that the recipient of service was enabled to perform these services on its own without any further recourse to the service provider. It is in this context that we have to examine the scope of expression ‘make available’. Its not even the case of the Assessing Officer that the assessee, i.e. recipient of services, was enabled to use these services in future without recourse to BT Canada. There mere fact that there were certain technical inputs or that the assessee immensely benefited from these services, even resulting in value addition to the employees of the assessee, is wholly irrelevant. The expression ‘make available’ has a specific meaning in the context of the tax treaties and there is, thus, no need to adopt the day to day meaning of this expression, as has been done by the Assessing Officer. In view of these discussions, and as we concur with the well reasoned findings of the learned CIT(A), we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this count as well. The order of the CIT(A) stands confirmed. - Decided against revenue
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2017 (1) TMI 779
Validity of reopening of assessment - reasons to believe - non passing of speaking order - Held that:- In the reasons recorded, there is no live link between the reasons to believe and income escapement assessment. We are aware that the reason recorded to re-open has to be seen on a standalone basis which triggered to reopen the case under section 147 of the Act. In the light of the above we are of the opinion that it cannot be concluded that AO was not having sufficient information at the time of initiating action u/s 147 for forming reason for escapement of income. In the light of the above, we hold that there was no fresh tangible material available for the foundation on which the AO has made up his mind to reopen the case under section 147 of the Act. Accordingly we find force in the contention of the ld. AR that there was no shred of evidence in the hands of the AO while reopening the case which can be termed as a new tangible material and link to base a reason to believe escapement of income. Therefore, the entire reopening is vitiated on this count. In the absence of the said jurisdictional fact renders the reopening 'coram non judice' and the assessment 'null' in the eyes of law. We also find that the AO is under obligation to dispose of the objection raised by the assessee for the reopening of the case under section 147 of the Act by way of speaking order in terms of the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd v. Income Tax Officer (2002 (11) TMI 7 - SUPREME Court ). But we find that the AO failed to pass a speaking order on the objections raised by the assessee to the reopening of the assessment. The AO assumed jurisdiction in the instant case on wrong assumption of facts. In view of above, we are of the view that AO has erroneously usurped jurisdiction which law does not permit him to do on the reasons given above, so the entire action of AO is ab-initio void and is quashed. - Decided in favour of assessee
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2017 (1) TMI 778
Assessment of income - Interest on loans categorized as NPA - accrual basis or receipt basis - Held that:- No infirmity in the order of the CIT(A),holding the interest on NPA's as taxable in the year of receipt , so as to warrant interference - Held that:- The undisputed facts in the present case are that the assessee is a cooperative bank registered under the Punjab State Government Cooperative Act. Undeniably, the assessee is following the mercantile system of accounting and as per its Revenue Recognition policy for the impugned year, the income and expenditure were to be accounted for on accrual basis, except interest income from non-performing assets, NPA's, which was to be accounted for on receipt basis. It is also not disputed that this accounting policy, for interest earned on NPAs, was being followed consistently by the assessee in the past also. Further the fact that the assessee has been accounting for this interest as per the RBI guidelines and as per the guidelines prescribed by Punjab State Cooperative Limited, the apex bank of the assessee, is also not disputed. We find that the issue of accounting for interest on sticky loans/NPA's, has been dealt with in a number of decisions both by the Apex Court and various High Courts and Tribunals also, wherein after applying the "Real Income Theory", the prescribed Accounting Standard issued by ICAI on Revenue Recognition, AS-9, the accounting practise of the asseessee relating to interest on sticky loans and the RBI guidelines relating to accounting for interest on NPA's, it was held that such income was taxable in the year of receipt only, when its realisation becomes reasonably certain. - Decided in favour of assessee
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2017 (1) TMI 777
Levy of penalty under section 271(1)(c) - change of head of income - the income shown under the head STCG by the assessee is to be assessed under the head income from ‘Business and Profession’ - Held that:- The assessee had declared the income arising out of purchase and sale activity in shares and securities as STCG as against business income assessed by the AO. It is seen that the assessee had also filed written submissions before the authorities below that she was under the bona fide belief that its activity of purchase/sale of shares and securities was only capital gain and not business income and also that the assessee’s claim of capital gains/loss has been accepted by the AO in the assessee’s own case for the next assessment year i.e. A.Y. 2009-10, which was completed in scrutiny under section 143(3) of the Act. The authorities below were not able to controvert arguments put forth by the assessee or hold them to be false. In this view of the matter and respectfully following the decision of the Hon'ble Bombay High Court in the case of Bennett Coleman & Co. Ltd. (2013 (3) TMI 373 - BOMBAY HIGH COURT) and of the Coordinate Bench of the Tribunal in the case of Mita J. Jhaveri (2017 (1) TMI 682 - ITAT MUMBAI) we hold that since there is only a change of head of income from ‘STCG’ as declared by the assessee to ‘business income’ as held by the AO and no evidence brought on record that the assessee’s claim was not bona fide, we delete the penalty of ₹ 1,18,735/- levied under section 271(1)(c) of the Act for A.Y. 2008-09. - Decided in favour of assessee
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2017 (1) TMI 776
Purchase-sale of securities - whether is a business profit or capital gain ? - Held that:-On perusal of final accounts of the assessee, for the assessment year under consideration and immediately preceding assessment year 2004-05 we find that the assessee has been showing all the securities as investment in its books of accounts. The corresponding income on sale and purchase of securities has been offered under the head of capital gain by the assessee for both the years. The AO has merely treated the transaction of sale purchase of securities as an adventure in the nature of trade merely on the ground of magnitude and frequency of the transaction. The securities in the books of accounts maintained by the assessee were classified as investment. Thus in our considered view the AO cannot step into the shoes of the assessee to decide the business decisions for purchase and sale of securities. It is the discretion of the assessee to carry out the activity to the best of his wisdom. Therefore we do not find any substance in the case before us. We are of the opinion that the income shown by the assessee under the head of capital gain is consistent with the accounting treatment made in the books of accounts. Income from undisclosed source - Held that:- As there was no fault on the part of the assessee we are inclined to reverse the order of lower authorities. Hence this ground of appeal of the assessee is allowed. Disallowance of dividend income from UTI master value fund wherein the amount was invested - Held that:- We find that assessee has made investment on 07.02.2005 for ₹ 75,000/- and on same day the dividend income was received from UTI as evident from the account statement. We also find that the same amount of dividend is also reflecting in the bank statement of assessee and said amount was credited in the bank of assessee on 19.02.2005 through account payee cheque. To this point, Ld. DR for the Revenue has not brought anything on record to contradict the argument made by Ld. AR. Considering the facts and circumstances of the case, we reverse the order of Ld. CIT(A) and this ground of assessee is allowed.
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2017 (1) TMI 775
Unexplained creditors - Refusal of the Settlement Commission to make any additions on the basis of the entries in the Cash Flow Statement [CFS] of the alleged advances taken by the assessee - Held that:- The manner in which additions have been refused to be made, is without any reasoning especially when the Commissioner of Income Tax had specifically, in his report, stated that the details of the creditors were not furnished and there was no manner in which the credit-worthiness of the said persons could be verified. The loans if not proved have to be computed as total income and additions made in a normal assessment, which principle regulates the Settlement Commission too. On the above reasoning, it has to be held that the Settlement Commission had not properly considered the issue of addition or the genuineness of claim of advances from others. To that extent, Exhibit P1 order would stand set aside and the matter is remanded to the Settlement Commission for consideration of the particular aspect which this Court has interfered with.
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2017 (1) TMI 774
Revision u/s 263 - addition u/s 68 - Held that:- As neither the transaction appears to be genuine nor are the applicants of share are creditworthy. We have demonstrated in some detail as to why is the order of the assessing officer erroneous and prejudicial to the revenue. HC order [2016 (5) TMI 801 - CALCUTTA HIGH COURT] confirmed - Decided against assessee
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2017 (1) TMI 773
Carry forward of depreciation - Held that:- We direct the AO to allow carry forward of depreciation which has not been allowed to the assessee because unabsorbed depreciation upto 1997-98 would become depreciation of the current year and it is to be treated in accordance with law. See General Motors India P. Ltd. Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT ]
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2017 (1) TMI 772
Transport subsidy received taxability - revenue receipt or capital receipt - Held that:- The transport subsidy received by the assessee during the assessment year 2001-02 is intended to stimulate industrial activity in the backward region, to generate employment opportunities and bring about developments in the N.E. States and it is not meant to provide higher profit for the entrepreneur. It is intended to encourage investment in difficult and far flung states and the sum received under subsidy head cannot be treated as revenue receipt. Instead such incentives should be treated as capital receipt and thus not taxable, in the hands of the assessee. Accordingly the substantial question of law in this appeal is answered against the revenue and in favour of the assessee.
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2017 (1) TMI 771
Admissibility of expenditures incurred by the assessee (a pharmaceutical company)u/s 37 - Held that:- From the perusal of the nature of expenditure incurred by the assessee, it is seen that under the head “Customer Relationship Management”, the assessee arranges national level seminar and discussion panels of eminent doctors and inviting of other doctors to participate in the seminars on a topic related to therapeutic area. It arranges lectures and sponsors knowledge upgrade course which helps pharmaceutical companies to make aware of the products and medicines manufactured and launched by it. Under Key Account Management, the assessee makes endeavour to create awareness amongst certain class of key doctors about the products of the assessee and the new developments taking place in the area of medicine and providing correct diagnosis and treatment of the patients. The said activities by the assessee are to make the doctors aware of its products and research work carried out by it for bringing the medicine in the market and its results are based on several levels of tests and approvals. Unless the pharmaceutical companies make aware of such kind of products to key doctors or medical practitioners, then only it can successfully launch its products/medicines. This kind of expenditure is definitely in the nature of sales and business promotion, which has to be allowed. Coming to the gift articles and free samples of medicines, it is seen that the assessee gives various kind of articles like, diaries, pen sets, calendars, paper weights, injection boxes etc. embossed with bold logo of its brand name and the product name so that the doctors remembers the brand of the assessee and also the name of the medicine. All the gift articles, as pointed out by the assessee before the authorities below and also before us are very cheap and low cast articles which bears the name of assessee and it is purely for the promotion of its product, brand reminder, etc. These articles cannot be reckoned as freebies given to the doctors. Even the free sample of medicine is only to prove the efficacy and to establish the trust of the doctors on the quality of the drugs. This again cannot be reckoned as freebies given to the doctors but for promotion of its products. The pharmaceutical company, which is engaged in manufacturing and marketing of pharmaceutical products, can promote its sale and brand only by arranging seminars, conferences and thereby creating awareness amongst doctors about the new research in the medical field and therapeutic areas, etc. Every day there are new developments taking place around the world in the area of medicine and therapeutic, hence in order to provide correct diagnosis and treatment of the patients, it is imperative that the doctors should keep themselves updated with the latest developments in the medicine and the main object of such conferences and seminars is to update the doctors of the latest developments, which is beneficial to the doctors in treating the patients as well as the pharmaceutical companies. Further as pointed out and concluded by the learned CIT(A) there is no violation by the assessee in so far as giving any kind of freebies to the medical practitioners. Thus, such kind of expenditures by a pharmaceutical companies are purely for business purpose which has to be allowed as business expenditure and is not impaired by EXPLANATION 1 to section 37(1). - Decided in favour of assessee
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2017 (1) TMI 770
Interest free advances to the sister concern - disallowance of interest - Held that:- The assessee has un-secured loan amounting to ₹ 5.1 crores as at the end of the previous year relevant to assessment year under consideration. The assessee has paid interest on bank charges at ₹ 69.29 lakhs. We further find that the interest free advances given to sister concern have no business link with the assessee company. The claim of the ld. Authorized Representative of the assessee that the assessee had capital reserves to the tune of ₹ 6.3 crores, hence, non-interest bearing loan, were deemed to have been utilized from the said funds, is also not found acceptable on the ground that the assessee company took a loan for the first time under C.C. account of ₹ 2.16 crores and term loan of ₹ 2.56 crores from the Bank of Baroda, during the financial year 2005-06 out of which the assessee has extended the advance to the aforesaid sister concern during the financial year 2005-06 also. This proves that the assessee needed such a huge bank loan, because share capital, reserve and profits of the Company, which stood at ₹ 8.44 crores as on 31.03.2010. Therefore, we are of the considered opinion that capital reserve standing at ₹ 6.38 crores as on 31.03.2010 stands already utilized towards investment in fixed assets. Hence, there was no surplus funds available with the assessee for making interest free advances to the sister concern. Hence, the proportionate disallowance of interest of ₹ 30.80 lakhs on advance of ₹ 2.20 crores is upheld. - Decided against assessee
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2017 (1) TMI 769
Disallowance of interest expenditure on account of capital work-in-progress - Held that:- We noticed that the assessee itself has admitted that loan funds have been used for giving share application money to its subsidiary. We also noticed that the own funds available with the assessee is in far excess of the capital work-in-progress. Hence, we are of the view that there is no requirement to make any disallowance out of interest expenditure on account of capital work-in-progress. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the disallowance - Decided in favour of assessee Disallowance of Repairs and Maintenance - Held that:- The ledger account copy of M/s Repairs & Maintenance account show that the assessee has credited the sum of ₹ 62.00 lakhs to the above said account on 31.3.2006, i.e., the assessee has not shown the amount of ₹ 62.00 lakhs as a separate item of credit in the Profit and Loss account and instead reduced the Repairs and maintenance account with the above said figure. The net effect is that the assessee has already offered the sum of ₹ 62.00 lakhs as its income. Thus, we notice that the AO has assessed the above said amount of ₹ 62.00 lakhs without properly appreciating the facts, whereas the Ld CIT(A) has deleted the same by correctly appreciating the facts.- Decided in favour of assessee Disallowance made u/s 14A - Held that:- CIT(A) had restricted the disallowance to 10% of the dividend income in the succeeding year and the same has been accepted by the assessee. Accordingly, considering the factual matrix available during the year under consideration, we are of the view that the disallowance u/s 14A of the Act may be restricted to the same level of 10% of dividend income and the same, in our considered view, would work out to a reasonable figure for making disallowance. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance to 10% of the exempt dividend income earned by the assessee during the year under consideration. Addition on the basis of AIR information - According to Ld A.R, the assessee has reconciled the TDS amount vis-ŕ-vis the rental income declared by the assessee and hence the error, if any, has occurred at the end of M/s Kamat Hotels (P) Ltd - Held that:- We notice that the difference noticed by the AO requires to be reconciled. According to the assessee, it has duly declared the receipts and the same has been reconciled with TDS amount also. Accordingly it was contended that the mistake, if any, should have occurred at the end of M/s Kamat Hotels P Ltd. Since it is a matter requiring reconciliation, we are of the view that this issue needs to be examined afresh at the end of the AO. Disallowance of depreciation at higher rate - Held that:- In the computation of total income made in the assessment order, we notice that the AO has also disallowed the above said amount of book depreciation and allowed depreciation for income tax purposes at ₹ 2,41,65,640/-. If the above said figure of ₹ 2.41 crores does not include the depreciation amount of ₹ 97,118/-, then there is no requirement of disallowing the same again. Accordingly we set aside this to the file of the AO for the limited purpose of verifying as to whether the depreciation of ₹ 2.41 crores allowed by the AO includes the amount of ₹ 97,118/- or not. If it is not included, then the AO should delete the addition of ₹ 97,118/-, otherwise the addition shall be sustained. The order of Ld CIT(A) passed on this issue stands set aside accordingly. Disallowance of bidding expenses - Held that:- These expenses have been incurred by the assessee in the course of carrying on its business and hence the same has to be allowed as deduction, since it has been incurred in furtherance of the business activities of the assessee as the expenditure incurred on bidding, even if it is unsuccessful, should be allowed as deduction
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2017 (1) TMI 768
Decline of claim of deduction u/s.80IB(10) - as per AO the profit claimed as deduction u/s 80-IB(10) of the Act was not derived from the housing project but from sale of unutilized FSI - Held that:- The assessee had fully utilized the FSI as per the rehabilitation scheme. The consideration for construction of the rehabilitation building was received in the form of FSI which could either be used for sale, or for construction of the sale building. Unlike the facts of the case before the Hon'ble Gujarat High Court, the assessee had not acquired any land with FSI. The assessee's case was that the receipt of the consideration for developing housing project in the form of FSI which was encashed and converted by the assessee in monetary terms by sale of the said FSI. We had verified the P & L account of the assessee which reflects that the only source of Revenue out of the construction carried out was sale consideration of FSI. Accordingly, profit earned by assessee was entirely due to construction activity and not due to purchase and sale of land / FSI. Consideration in the instant case was received for handing over the constructed tenements to the Slum Rehabilitation Authorities free of cost. Whether FSI sold was part of the project under development, therefore the project itself was incomplete, therefore, on such incompleted project the assessee was not eligible for deduction u/s.80IB(10)? - Held that:- From the record, we found that the Commencement Certificate dated 04/10/2011 and permission for construction of the saleable area under the said Scheme would not have been issued in case the project meant for rehabilitation of the downtrodden was incomplete. Thus, the FSI for construction of the saleable area was the 'consideration' for undertaking construction of the rehabilitation buildings and by no stretch of imagination the revenue could have assumed that the State would have given the consideration before completion of construction of the awarded project. In any case, as per the proviso below clause (b) in S. 80-IB(10) of the Act neither clause (a) concerning completion of the project, nor clause (b) relating to the size of the land applies to a project constructed for rehabilitation of slum dwellers. Accordingly, the objection raised by Revenue authorities are devoid of any merit. FSI sold to each of the person was in excess of 1000 sq.ft which was in violation of Section 80IB(10)(iii)(c) - Held that:- As we found that this objection of the AO was misconceived. The stipulation of limitation of the area of the constructed tenements prescribed in clause (c) of Section 80IB (10)((iii) of the Act is concerned with the residential units constructed and not for sale of FSI received as consideration towards the cost of construction undertaken. We found that the tenements so constructed under the said scheme was much below the ceiling fixed under the statute i.e., 250 sq.ft. In inferring that there was breach of the condition prescribed u/s. 80-IB(10)(c)(iii) of the Act the Assessing Officer mistook the area of FSI sold to the area of the tenements constructed. Thus, the objection raised by AO with regard to the area is also devoid of any merit. Objection to the price at which FSI were sold to the party on the plea that they were related to the assessee - Held that:- As found that Smt. Kantarani Gulati was an independent buyer and she was erroneously mentioned as a related party. Similarly, Shri Hafeez Contractor was, and still is, a renowned Architect and the fact as to how he and Smt. Pearl Contractor were considered as related parties is a mystery. In so far as Smt. Kunjal Shah and Smt. Falguni Shah were concerned, they were not partners of the assessee but were having 7.03% and 8.74% shareholding in M/s. Hubtown Limited which was 27.25% stakeholder in the assessee. Therefore, the stake of Smt. Kunjal Shah and Smt. Falguni Shah were only to the extent of 1.91% and 2.38% respectively. As regards Shri Rushank Shah, he was having only 5% stake and, hence, none of the parties was closely associated with the assessee, as assumed by AO. However, we do not find any material having been brought on record by the AO to prove close connection between the buyers and the assessee, and any 'arrangement' between the parties so as to produce more profit to the assessee. With regard to the observation of the AO to the effect that FSI sold was at inflated rates, we found that all the sales were at ‘arm’s length’. The rates at which FSI were sold to Smt. Kantarani Gulati and Shri Hafeez Contractor, who were independent and unrelated parties, were ₹ 82,364/- (incorrectly mentioned by the Assessing Officer as ₹ 67,545/-) and ₹ 72,874/- respectively, as against ₹ 85,437/- to Shri Rushank Shah having 5% shareholding. In so far as Smt. Kunjal Shah and Smt. Falguni Shah having 1.91% and 2.38% stakes respectively through M/s. Hubtown Limited, it was sold at ₹ 83,552/- and ₹ 83,543/- respectively. In view of these comparison the inference drawn by the Assessing Officer that the FSI sold was at inflated rates was contrary to his own record. - Decided in favour of assessee
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2017 (1) TMI 767
TDS u/s 195 - non deduction of TDS for purchase of copyrighted software - Held that:- The software allegedly purchased by the assessee are the end user software license packages and the remittances are to companies in various countries, such as USA, UK, Germany, Japan, Singapore etc. The copies of the invoices are produced in the form of a paper book and a glance through them shows that the payments are for purchase of End User License packages. The assessee gets the right to use the product. Thus, it can be seen that what the assessee has been granted is the license to use the software to test whether the wireless equipments are working according to the desired specifications. Thus, it can be see that the software is for assisting the assessee in rendering its services of software development and testing services to its group companies. Thus, these softwares are, in a way, the tools used the assessee. By the issuance of license to use the software, it cannot be said that the assessee has been granted a right to utilize the copyright embedded in the software, but it is seen that the assessee has been granted only a right to use the software product. We agree with the assessee’s contention that the software purchased by the assessee is the copyrighted articles and cannot be construed as the license to use the copyright itself. In view of the same, we find that this issue is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of M.Tech India (P) Ltd (2016 (1) TMI 812 - DELHI HIGH COURT ) wherein held that what was transferred was not copyright or the right to use a copyright but a limited right to use the copyrighted material and that did not give rise to any royalty income. - Decided in favour of assessee. Payments made to Verizon Business USA for providing internet and bandwidth services and also providing CPE to the assessee is not in the nature of royalty and therefore, TDS provisions are not applicable.
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2017 (1) TMI 766
Benefit of exemption u/s 80P(2)(a)(i) - denial of claim holding that the assessee society was engaged in the business of cooperative banking - Held that:- As decided in Asstt. Year 2009-10 the assessee society is maintaining operational funds and to meet any eventuality towards repayment of deposit the cooperative society is maintaining some liquidated funds as short term deposits with banks. Hence adhering to the doctrine stair desises, we hold that the assessee should be granted benefit of deduction under section 80P(2)(a)(i). - Decided in favour of assessee
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2017 (1) TMI 765
Estimation of profit in respect of IMFL business carried by the assessee -Determination of income - Held that:- We direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. Unexplained credits - Held that:- The assessee has proved identify of the party and also creditworthiness of the creditor and genuineness of the transaction. In our opinion, the assessee has discharged burden casted upon him to prove that the transaction is genuine. The Assessing Officer without examining the creditor, simply disbelieved the explanation given by the assessee and added the disputed amount in the hands of the assessee which is contrary to law. In appeal, Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer without considering the submissions made by the assessee. In view of the above, the order passed by the Commissioner of Income Tax (Appeals) is deserves to be reversed. - Decided in favour of assessee
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2017 (1) TMI 764
Disallowance of advances and bad debts written off - Held that:- We find that the assessee had written off certain amounts in its P&L account,that the AO had called for details in that regard, in its reply the assessee had filed details about the bad debts/advances written off and nature of the expenditure in dispute,that the AO did not make any enquiry and did not consider the reply while finalising the assessment,that general comments were made by AO in the assessment order,that the FAA had simply endorsed the view of AU without considering the judgments relied upon by the assessee. In these circumstances we are of the opinion that the issue needs further verification and investigation. Therefore, in the interest of justice we are restoring back the issue to the file of AO for fresh adjudication Disallowance on non deduction of TDS u/s. 195 - assessee had argued that the payments were reimbursement,that no deduction was to be made with regard to the reimbursement payments - Held that:- Considering the fact that payments in question were reimbursements, we reverse the order of the FAA and decide the issue in favour of the assessee.
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Customs
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2017 (1) TMI 749
Issue of SCN beyond 5 years - Confiscation - redemption fine - penalty - import of Harley Davidson motor bike - natural justice - Held that: - the Department has not conducted the investigation properly by not taking the investigation to its logical end. The Department has merely recovered the possession of the bike from the appellant on the allegation that it is smuggled goods. Whereas the fact of the matter is that motor bike is a non-notified goods and burden to prove that it is smuggled goods is on the Department which in this case the Department has failed to establish. Further the Department has not issued the show-cause notice to the registered owner of the vehicle from whom the appellant has purchased the same by paying a consideration and without having any knowledge of the defective title of the seller. Extended period of limitation - Held that: - the Department can only issue show-cause notice within a period of 5 years and which means the show-cause notice should have been issued on or before 01.06.2013 whereas in the present case the show-cause notice was issued on 30.10.2013 which is beyond the period of limitation. Appeal allowed - decided in favor of appellant.
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2017 (1) TMI 748
Jurisdiction - scope of judicial review of a SCN - whether the Directorate of Revenue Intelligence has power to issue SCN? - Held that: - the issue is no longer res integra in view of the judgment of this Court in Abishek Mundhra vs. A.D.G., D.G. of Revenue Intelligence, Chennai [2015 (7) TMI 417 - MADRAS HIGH COURT], where it was held that all officers of the Directorate of Revenue Intelligence to be Officers of Customs and the Notifications dated 26-4-1990, 6-7-2011 and 21-6-2012 and the Circulars dated 15-2-1999 and 23-9-2009, make it manifestly clear that DRI officials have been appointed as customs officers by in exercise of the powers conferred under Section 4(1) of the Act - the officials empowered to issue SCN - petition dismissed - decided in favor of Revenue.
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2017 (1) TMI 747
Restoration of CHA licence - as a customs’ broker, respondent, had not fulfilled the obligations cast on it in as much as there was no proper verification of the particulars of the party which it sought to represent - Held that: - This Court notices that the CESTAT construed the provisions of Regulation 11 and the Board Circular of 08.04.2010 and found that the partnership firm involved in the import of consignment was an existing concern, duly registered under a partnership deed and two existing partners and that its IEC copy, PAN Card, telephone bill of the firm, Voter ID of the partners, copy of the partnership deed have been verified by the respondent - licence rightly resored - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (1) TMI 743
Non-applicant-Company Petitioner locus standi to institute the Company Petition - Held that:- The Company has the paid up capital of ₹ 9, 15, 000 as mentioned in para 2.2 of the Company Petition. It is equal to 91,500 shares of ₹ 10/ each. The Petitioner’s holding of 500 shares comes to 0.54% of the total equity i.e. less than 1/10th. Such holding does not qualify the petitioner under sec. 399 to maintain the Company Petition under sections 397 and 398 of the Act. The Petitioner (non-applicant) has no locus standi to file the petition under sections 397 and 398 of the Companies Act. So far as rectification of Members’ Register is concerned, it involves intricate issues like fraud, manipulation and fabrication of records, which have to be adjudicated by Civil Court only and this Tribunal in a summary enquiry is not competent to decide those questions. So far as cancellation of the sale of property is concerned, already civil suit is pending and this Tribunal cannot decide that issue on the principle of subjudice.
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PMLA
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2017 (1) TMI 741
Additional Sessions Court jurisdiction money laundering - Transfer of case - Held that:- As heard the learned Additional Public Prosecutor, Enforcement Directorate, who has fairly admitted that the XI Additional Sessions Court for CBI Cases, City Civil Court, Chennai, has not been notified under Section 43 of the PMLA. Further, he has submitted that the respondent has already moved the learned XI Additional Sessions Judge for CBI Cases, City Civil Court, Chennai, by filing an application to transfer the case to the file of the learned Principal Sessions Judge, City Civil Court, Chennai and he seeks necessary directions of this Court to the learned XI Additional Sessions Judge for CBI Cases, City Civil Court, Chennai, to transfer the case to the learned Principal Sessions Judge, Chennai. For all the reasons stated above, this Court directs the learned XI Additional Sessions Judge for CBI Cases, City Civil Court, Chennai, to transfer the case pending on his file, to the learned Principal Sessions Judge, City Civil Court, Chennai, forthwith. The criminal original petition is disposed of accordingly. Consequently, connected miscellaneous petition is closed.
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Service Tax
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2017 (1) TMI 763
Business Auxiliary Service - commission received from BSNL for selling of SIM cards - whether the commission will be included in assessable value? - Held that: - the price at which the ultimate customer purchases the SIM Card is ₹ 331/- and admitted that BSNL pays ₹ 31 as Service Tax on the same - Revenue further contended that the respondent receiving SIM Card at ₹ 316/-which is ₹ 285+Rs.31 service tax paid and balance amount of ₹ 15 is retained by the respondent as commission - this clearly means that for ₹ 31 service tax, assessable value is ₹ 300/- which is inclusively ₹ 285/- paid to BSNL and ₹ 15 retained by the respondent - the commission received by the respondent is already subjected to Service Tax at the hands of BSNL - appeal rejected - decided against appellant-Revenue.
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2017 (1) TMI 762
Supply of labor - cargo handling service - the decision in the case of [2008 (3) TMI 93 - CESTAT, BANGALORE] contested - Held that: - the issue raised in this appeal stands settled by the judgment of this Court in the case of Deputy Commissioner, Central Excise and Ors. v. Sushil & Company [2016 (4) TMI 987 - SUPREME COURT] - appeal dismissed.
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2017 (1) TMI 761
Natural justice - validity of SCN - SCN came to be issued ignoring various communications made between the parties for the past four years - whether the show-cause notice, on the face of it, is illegal warranting interference by this Court? - Held that: - this Court is of the view that the contention of the learned senior counsel appearing for the petitioner that the show-cause notice lacks material particulars, cannot be accepted. Whether such reasonings stated in the show-cause notice are correct or not, is for the adjudicating authority to finally determine, after considering the objections to be filed by the petitioner while passing the order in original, of course by giving due opportunity of hearing to the petitioner - any view expressed in the show cause notice or opinion formed therein against the petitioner, is only a prima facie view or opinion of the authority and not the final conclusion itself. After all, it is only calling upon the petitioner to show cause. Absolutely no prejudice would be caused to the petitioner if they reply to the show cause notice. At this stage, this Court cannot get into the shoes of the adjudicating authority and find out as to whether the particulars furnished in the show cause notice would necessarily warrant the petitioner to show cause or not. The petitioner can not seek blanket relief preventing the competent authority from exercising his statutory power or discharging his duties and functions vested under the statue. Petition dismissed - petitioner given liberty to file explanation to SCN - decided against petitioner.
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2017 (1) TMI 760
Whether the amounts received by the appellant towards salary and other government dues are liable to service tax or otherwise under the category of manpower recruitment and supply agency service? - the decision in the case of Vidarbha Iron & Steel Co. Ltd. Versus Commissioner of Central Excise, Nagpur [2015 (8) TMI 593 - CESTAT MUMBAI] contested - Held that: - We do not see any merit in these appeals, which are hereby dismissed - decided against appellant.
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Central Excise
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2017 (1) TMI 759
SSI exemption - use of brand name of others - whether SSI exemption availed is correct in view of the fact that the appellants were located in the rural area? - Held that: - the appellant’s unit is located in the Industrial area, which is located in the Gram Sabha as per the Revenue records duly certified by the Revenue Authority of the State Government and, accordingly, I hold that the appellant’s unit is entitled to exemption under N/N.8/2003-CE in terms of Clause 4(C) read with Clause 5H of N/N.8/2003-CE - Pre- deposit made during pendency of the appeal, shall be refunded to the appellant within a period of 60 days with interest - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 758
Valuation - whether the amounts recovered for providing of drawings and documents in respect of the goods manufactured and supplied by the appellant is includable in the assessable value of the goods? - Held that: - the drawings are not used for the purpose of manufacturing of the goods manufactured by them because the piping drawings is for laying of pipes which has taken place at the site only and the fabrication drawings is related to goods for construction and the construction is also taken place at the site. Drawings of both the items are not related to or not required for the manufacture - the value of these drawings are not includable in the assessable value - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 757
Reversal of CENVAT credit - Rule 6(3) of Cenvat Credit Rules - quantity of inputs removed, as such and on such quantity of goods purchased and sold without bring the same into the factory Time bar - Held that: - audit was conducted on 20.06.2012 and show cause notice was issued after more than 30 months by invoking proviso to Sub section 1 of Section 11A of Central Excise Act, 1944 - the decision in the case of Triveni Engineering & Industries Ltd.[2015 (1) TMI 760 - ALLAHABAD HIGH COURT] is squarely applicable where it was held that if the show cause notice is issued say after 22 months after audit was conducted then provision related to invocation of extended period for demand of duty are not invokable - the impugned show cause notice is not sustainable - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 756
Clandestine removal - Whether under the facts and, circumstances, Commissioner (Appeals) have rightly retained penalty under Section 11 AC on the respondent-Company, and whether, he has rightly deleted the penalty against the Director, namely Sushil Kumar Goyal? Held that: - It is only in case duty is determined on the fact that the duty is evaded by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of this Act or the Rules made thereunder, with the intent to evade payment of duty, the liability to pay penalty arises - I find that the determination of duty was not involved. Further, it is admitted fact that duty had been paid on the date of inspection. Thus, the issue of show cause notice is void ab initio. Appeal disposed off - decided against Revenue.
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2017 (1) TMI 755
Refund claim - unjust enrichment - N/N. 125/84-CE dated 26.05, 1984 - duty paid on cotton yarn on which exemption was available - Held that: - reliance placed in the case of Commissioner of Central Excise, Belgaum Vs. Jineshwar Malleable & Alloys [2011 (11) TMI 420 - KARNATAKA HIGH COURT], where it was held that if credit notes are raised and benefit is passed on to the customers, thus, not passing on burden on customers, the assessee is entitled to refund of the same. It is undisputed that the appellant initially recovered Central Excise duty and subsequently through credit notes refunded recovered duty to the accounts of buyers and therefore, established that duty incidence which was passed on to the buyers was withdrawn and recovered by the appellant - appellant is entitled for refund - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 754
CENVAT credit - documents and invoices for availing credit - attested copy of the Bill of Entry - whether the credit availed on the basis of documents which were not produced for verification, the invoices are addressed to the bonded premises and not relating to the manufacturing unit and on the basis of xerox copies of invoices, is justified? - Held that: - this case needs to be remanded back to the original authority for verification of the documents in the light of the judgment BHASKAR INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, BHOPAL [2004 (9) TMI 203 - CESTAT, NEW DELHI] where it was held that the Bill of Entry attested by the Customs Officer is a valid document for claiming cenvat credit and further that the original documents which are in possession of the appellant need to be verified by the original authority - appeal allowed by way of remand.
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2017 (1) TMI 753
Proceedings against the Firm - proprietor passed away - is proceedings legal and valid? - Held that: - proprietor Sh. Mukesh Sharma of the appellant’s firm has passed away on 17-5-2013 and the said facts were brought by the ld. Counsel in the knowledge of the ld. Commissioner - the decision in the case of Shabina Abraham And Others Versus Collector of Central Excise & Customs [2015 (7) TMI 1036 - SUPREME COURT], is applicable to the facts of the case, where it was held that an individual proprietor has died through natural causes and it is nobody's case that he has maneuvered his own death in order to evade excise duty - The ld. Commissioner (Appeals) had no respect to the decision of the higher forum which clearly shows that he has done a grave error of law - no proceedings are sustainable against the appellant - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 752
SSI exemption - export turnover not included in value of clearances - suppression of facts - time limitation - Held that: - the entire demand is time-barred. The period of dispute in the case is from July 2004 to December 2004 and the show-cause notice was issued in March 2007 which is much after the expiry of the period of limitation of one year. Moreover in the show-cause notice, extended period of limitation has not been invoked and there are no reasons given in the show-cause notice for invoking the extended period of limitation. On merit also the demand is not sustainable because under the SSI Exemption Notification 9/2003-CE dated 01.03.2003 only clearances made for home consumption is covered and not the exported goods. Appeal allowed - decided in favor of assessee.
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2017 (1) TMI 751
CENVAT credit - capital goods - MS angles, channels, sheets etc., - Held that: - the period involved is prior to 07/07/2009 on which date the restriction with regard to use of MS items came to be introduced in the definition of inputs. The appellants have been able to establish the use of the subject items by furnishing a Chartered Engineer certificate. So also, the Range Officer’s report furnished after inspection of factory premises pursuant to the direction of the adjudicating authority also shows that the subject items were used for manufacture of capital goods / parts / components as explained by the counsel for the appellant - The issue whether the MS angles, channels etc. used for fabrication of capital goods is eligible for credit during the relevant period was analysed by the Tribunal in many cases whereby it has been held that the credit is admissible - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.
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2017 (1) TMI 750
Section 35H (1) of Central Excise Act, 1944 - application moved seeking a direction to determine amount at the rate of 8 per cent, payable or reversible, by Assessee in terms of Rule 57CC and also to decide question of imposition of penalty, if any, imposed on Assessee - Held that: - Learned counsel appearing for Revenue, at the outset, could not dispute that pursuant to remand order, entire matter has to be decided by Adjudicating Authority. No question of law, therefore, has arisen in our view so as to be referred to this Court - application dismissed - decided against applicant.
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CST, VAT & Sales Tax
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2017 (1) TMI 746
Validity of assessment order - situs of the inter-State sale - liability of the dealer to pay tax to a particular State - orders for the supply of Brahmos Missiles are from the Defence Ministry to the head office at Delhi. Accordingly, the components are imported from Russia and stored at Nagpur. As per the delivery schedule, the components are transferred to Hyderabad works for the purpose of job work of assembly and fixing on the SKD articles. The semi finished job is then transferred to Nagpur works from Hyderabad for carrying out warhead integration and final assembly of the Brahmos Combat Missiles, its final sealing on excise job work challan. After carrying out leak test and electrical checks, the fully finished Combat Missile is cleared from Nagpur and despatched to various locations outside the State of Maharashtra without making payment of excise duty with prior permission of the Commissioner of Central Excise as per the provisions of Rule 16B of the Central Excise Rules - the understanding of the assessing officer is that the petitioners have attempted to establish that the movement of goods from Hyderabad to Nagpur is in accordance with the contract for supply of Combat Missiles to the Armed Forces. Held that: - The assessing officer holds that the movement of semi finished goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. - The assessing officer concludes that both situs of sales and appropriation of the goods is effected within the State of Maharashtra. Hence, the Maharashtra State is the appropriate State for the purpose of levy and collection of the Central Sales Tax on the transactions. It is on that footing that the assessment order has been passed. There is a fundamental error, in the understanding of the assessing officer, of the provisions of the Central Sales Tax Act, 1956. We had to elaborately analyse the provisions only for clearing certain doubts of the authorities, particularly in the State of Maharashtra. They have failed to notice the salient features of the Central Sales Tax Act, 1956. In our view, the understanding of the assessing officer that it is the movement of finished goods, which would be the determining and conclusive factor is legally flawed. It is untenable, inasmuch as the presumption that all the decided cases speak about and dealt with movement of finished goods from one State to another and not semi finished goods. It is this erroneous presumption that has resulted in a conclusion completely vitiated in law. There is non application of mind to very crucial and relevant factors, which govern the applicability of the Central Sales Tax Act to the inter- State trade and commerce. The movement of goods has been made pursuant to an agreement of sale with the President of India. The Ministry of Defence receives the missiles for use in times of war and also for training. Once the matter is covered by the judgment of the Hon'ble Supreme Court of India and noted above, then, we do not think that any other view is possible. Once the Hon'ble Supreme Court of India [1996 (4) TMI 419 - SUPREME COURT OF INDIA] has clarified that this is not a tax which could be said to be levied in its true sense by the State Government, it is only the Central Sales Tax, which has to be collected and the authority in that regard was in issue. Hence, we do not see any justification in law for the distinction made by the assessing officer about the goods being brought in semi finished or finished status. In the facts and circumstances, such a dispute does not arise. It is agreed that the petitioners manufactured missiles. These missiles are manufactured at the unit at Hyderabad. These missiles, only for warhead integration, are brought to Nagpur. The issue raised was that without warhead integration, the missile is not complete and cannot be used to target any particular place or point. The argument was that the components imported from Russia are brought to Nagpur, but the Revenue could not prove that the entire missile is manufactured at Nagpur. That the unit at Hyderabad assembles these components brought from Russia and makes a missile. Once the missile is the identifiable goods and it is in that form that it is sold, but the issue is whether the warhead integration makes it a different or distinct article or goods, then, we do not think any assistance can be derived from the judgment of the Andhra Pradesh High Court [2011 (4) TMI 1010 - Andhra Pradesh High Court]. That is distinguishable on facts. Once we have held that there is a fundamental and basic legal error so also the assumptions on the part of the assessing officer being untenable in law, we do not think that the writ petition cannot be entertained. There may be remedies available to challenge the assessment order, but it is not that there is any absolute bar to entertain a writ petition under Article 226 of the Constitution of India against an assessment order. Once that assessment order is found to be vitiated in law and the assessing officer exceeding his powers, authority and jurisdiction, then, in the absence of a factual dispute, a writ petition would lie. In the present case, we have entertained it to correct the legal error. Writ petition allowed - decided in favor of appellant.
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2017 (1) TMI 745
Release of detained goods - Form KK - Form LL - Held that: - What has clearly emerged and to that extent it is conceded, even by the petitioner, is that, in one of the Forms, i.e., Form No.FKK28121600008657019, dated 28.12.2016, the basic price was indicated as ₹ 27,01,648/-. Therefore, the respondent is right in contending, that, inadvertently or deliberately, the value was understated. There is material on record, which prima facie, does indicate that the subject goods were imported by SEL from JSL and that, in respect of the subject goods, a certificate has been issued by the Government of India, Ministry of New and Renewable Energy, granting exemption to SEL from payment of additional duty. It is directed to release the subject goods, on deposit of tax, equivalent to 5% of ₹ 10,00,000/-. This payment will be accepted by the respondent to the credit of the dealer i.e., SEL. In addition, a personal bond will be furnished by the authorised representative of the dealer i.e., SEL. On the fulfilment of the aforesaid conditions, the subject goods will be released to the petitioner. Petition allowed - decided partly in favor of petitioner.
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2017 (1) TMI 744
Validity of the impugned assessment order dated 28.11.2016 - denial of exemption of tax in respect of the sales made by the petitioner-company outside the State of Karnataka - the Company has not furnished the documents as required by the provisions of the Act i.e.,u/s 4 of CST’s Act 56. In the absence of such documents, the claim of exemption is rejected and levied tax thereby. Held that: - The imposition of tax under the provisions of the KVAT Act, 2003 in the present case on the sales claimed to be exempt and made outside the State of Karnataka requires going into the relevant facts of these transactions which have to be proved by the Assessee company as the sales taking place outside the State of Karnataka. This Court advisedly would not make any comment on the evidence so far produced by the Assessing Company and non recording of separate detailed findings by the Assessing Authority in the impugned order, as would appear from the quoted portion of the order as stated above, so that the interest of either of the parties is not adversely affected. The petitioner-assessing company not only has the remedy by way of filing an appeal against the impugned assessment order, but, if the assessing company is of the opinion that there are factual errors in the impugned order, and such mistake of facts is apparent on the face of the impugned order, it has a remedy by way of filing the appropriate Rectification application under the provisions of Section 69 of the Act. Petition disposed off - petitioner given liberty to make deposit and seek for rectification.
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Indian Laws
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2017 (1) TMI 742
Sale Notification issued by the appellant Bank under the provisions of the SRFAESI Act, 2002 - whether was in infraction of Section 187 of the Tripura Land Revenue and Land Reforms Act, 1960 as under the Tripura Act there is a legislative embargo on the sale of mortgaged properties by the bank to any person who is not a member of a scheduled tribe - The auction purchasers in the present case happened to be the persons who are not members of any scheduled tribe - Restepping by the provisions of the State Act dealing with land reform into an area of banking covered by the Central Act - which is the dominant legislation having regard the area of encroachment? Held that:- The Act of 2002 is relatable to the Entry of banking which is included in List I of the Seventh Schedule. Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted, is an attempt to consolidate the land revenue law in the State and also to provide measures of agrarian reforms. The field of encroachment made by the State legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to Entry 45 of List I, the State Act, including Section 187, operated validly. However, the moment Parliament stepped in by enacting such a law traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State law, to the extent that it is inconsistent with the Act of 2002, must give way. The dominant legislation being the Parliamentary legislation, the provisions of the Tripura Act of 1960, pro tanto, (Section 187) would be invalid. It is the provisions of the Act of 2002, which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960. The decision of this Court in Central Bank of India vs. State of Kerala and Ors. (2009 (2) TMI 451 - SUPREME COURT OF INDIA) holding that the provisions of the Bombay Sales Tax Act, 1959 and the Kerala General Sales Tax Act, 1963 providing for a first charge on the property of the person liable to pay sales tax, in favour of the State, is not inconsistent with the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions, Act 1993 (for short the “DRT Act”) and also the Act of 2002 must be understood by noticing the absence of any specific provision in either of the Central enactments containing a similar/parallel provision of a first charge in favour of the bank. The judgment of this Court holding the State enactments to be valid and the Central enactments not to have any overriding effect, proceeds on the said basis i.e. absence of any provision creating a first charge in favour of the bank in either of the Central enactments. Taking into account the averments made in the said affidavit, we find that the sale proclamation had mentioned a reserve price of ₹ 275 lacs and the property had been actually sold by auction at ₹ 416 lacs. That apart, the valuation report dated 14.06.2012 of the approved valuer valuing the property at ₹ 341.15 lacs has also been placed before us by way of an additional document which we are inclined to take on record. The requirements under Rule 5 and Rule 8(5) have, therefore, been complied with and the sale proclamation and the sale effected pursuant thereto cannot be invalidated on the above ground. For the aforesaid reasons, the impugned order passed by the High Court has to be set aside which we hereby do. The appeals are consequently allowed
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