TMI Tax Updates - e-Newsletter
January 20, 2015

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Remission of duty - Goods destroyed in fire after removal of goods - failure to export the goods- remission denied but penalty waived -CGOVT

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Articles

1. Meaning of Group Company under para 9.28 of the FTP

2. DIRECT TAX CODE, 2013 – SCOPE FOR COMPANY SECRETARIES IN PRACTICE

   By: DR.MARIAPPAN GOVINDARAJAN

3. “Imposition of penalty under Section 77 and 78 of the Finance Act, 1994 when penalty under Section 76 thereof was waived off”

   By: Bimal jain

News

1. Auction for Sale (re-issue) of Government Stock

2. India Signs MoU with South Africa for Developing Youth Enterprises

3. RBI Reference Rate for US $

4. FM: Government has no Intention to Privatise Either Railways or Coal India

Notifications

Companies Law

1. F.NO. 1/19/2013-CL-V-PART - dated 16-1-2015 - Co. Law

Companies (Accounts) Amendment Rules, 2015

Highlights / Catch Notes

Income Tax

• Timber Importers Must Collect Tax at Source; No Distinction Between Domestic and Imported Timber Sales.

  Case-Laws - HC : Tax Collection at Source' (TCS) - The provision does not draw any distinction between 'Timber grown in India' and the 'Timber imported' from abroad - importer of timber selling the same in India is liable to collect tax at source - HC
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• Taxpayer's Cost for Converting Debentures to Equity Shares Classified as Capital Expenditure.

  Case-Laws - HC : Revenue v/s capital expenditure - , the expenditure incurred by the assessee on conversion of convertible debentures into equity shares has to be treated as capital expenditure - HC
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• Court Stresses Revenue Authority's Duty for Immediate Notices to Third Parties Post-Assessment u/s 158 BD.

  Case-Laws - HC : Revenue has to be vigilant in issuing notice to the third party under Section 158 BD, immediately after the completion of assessment of the searched person, this Court is of the opinion that a delay ranging between 10 months of 1 ½ years cannot be considered contemporaneous to assessment proceedings - HC
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• Income Accrual Depends on Defect-Free Work Over a Specified Period; Conditional Right to Receive Income Explained.

  Case-Laws - HC : Accrual of income - the right to receive that amount was contingent upon there not being any defects in the work, during the stipulated period. It is then, and only then, that the amount can be said to have accrued - HC
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• Assessee Penalized u/s 271(1)(c) for Providing Fake Entry Services, Income Addition Confirmed.

  Case-Laws - AT : Penalty under section 271(1)(c ) - where the complete chain of transactions had been established by the investigating authority and it has been established that the assessee was a professional entry provider and addition having been made in the hands of the assessee thus, attract the levy of penalty under section 271(1)(c) of the Act. - AT
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• Court Upholds Deduction for Merged Flats u/s 80IB(10); Post-Sale Merging Does Not Affect Eligibility.

  Case-Laws - AT : Deduction u/s 80IB(10) - option to merge flats - It is undisputed fact that few 1-BHK flats remain so without any merger despite the provision of ‘hole’ left and others are merged into duplex during the post sale using such provision - deduction allowed - AT
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• Gross Profit Rate Reduced from 20.89% to 8.50% Due to Uncontrollable Non-Production of Accounts Books by Taxpayer.

  Case-Laws - AT : Reduction of rate of gross profit from 20.89% adopted in assessment to 8.15% of turnover - Non production of books of accounts was beyond the control of the assessee - gross profits declared by the assessee should be taken at 8.50% which would meet the ends of justice - AT
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• Payee's obligation to deduct tax at source ceases once conditions u/s 194C(3) are met; reporting still required.

  Case-Laws - AT : TDS u/s 194C - Once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable u/s 194C(2) - AT
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Customs

• Exemption for Imported Vessel Under Notification No. 21/2002-Cus Upheld; Declared Value Stands Without Contrary Evidence.

  Case-Laws - AT : Valuation - import of vessel - Benefit of exemption under Notification No. 21/2002-Cus - value declared by the appellant in their bill of entry is really a transaction value and the same cannot be rejected without any supporting evidence - exemption cannot be denied - AT
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• Transferability of Duty Credit Scrips Denied Despite No Restriction in Paragraphs 3.12.7 and 9.28 for Group Companies.

  Case-Laws - HC : Rejection of request for transferability of Duty Credit scrips under the Served From India Scheme - neither the provision in para 3.12.7 nor definition in para 9.28 seeks to restrict transfer of Duty Credit Scrip from a group company to another company based on holding capacity - HC
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Central Excise

• Rebate on Gutkha Duty Allowed for Exports Before July 2, 2011 Amendment on Plastic Waste Regulations.

  Case-Laws - CGOVT : Rebate claim - Export of Gutkha prior to issue of amendment dated 02-07-2011 in the Plastic waste - Export takes place when the ship leaves or sailed out of India. - the rebate of duty paid on goods exported prior to 02-07-2011 is admissible - CGOVT
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• Duty Remission Denied for Destroyed Goods Post-Removal; Export Penalty Waived.

  Case-Laws - CGOVT : Remission of duty - Goods destroyed in fire after removal of goods - failure to export the goods- remission denied but penalty waived - CGOVT
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VAT

• Officer Change Doesn't Invalidate Samadhan Scheme Applications: Ensures Legal Continuity Under Samadhan Act.

  Case-Laws - HC : Benefit of the Samadhan Scheme under Samadhan Act - by a mere change of officer, now the clock cannot be set back and the petitioner's applications cannot be rejected, when the same were already entertained, the amounts demanded and the only dispute which was with regard to the quantum. - HC
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Case Laws:

• Income Tax

• 2015 (1) TMI 707
  Applicability of Section 206C r.w.s. 44AC of the Income Tax Act - dealers like the petitioners, who are importing timber from abroad, to effect 'Tax Collection at Source' (TCS); and would the failure, if any, make them an 'assessee-in-default', to be saddled with the liability to pay tax and also interest as envisaged therein? - Held that:- The provision does not draw any distinction between 'Timber grown in India' (whether in forest or elsewhere) and the 'Timber imported' from abroad. The object of the Statute is important to be noted, to ascertain the scope of the provision. Procurement of revenue is of paramount importance and the Statute, to the best possible extent takes care of the different situations, where there is a chance to evade payment of tax suppressing such income. It is in the said circumstance, that 'evasion-prone' items have been identified and appropriate extent of collection of tax has been stipulated to be finalized in the due course, after verification of accounts of the buyers/traders concerned. It is known to everybody that 'Timber' is not such an item, transportation of which could be easily concealed. But the Department has come across several ways and means carved out by the traders in the field, to effect deals and evade tax through such dubious means. In such situation, commodity-wise preference has been made, identifying such items and the trade set up, considering the market conditions and such other circumstances. This includes trade in Liquor, Timber, Tendu leaves, Scrap, other Forest produces, Minerals being coal, lignite or iron ore. Depending upon the nature and extent of trade and the commodities concerned, different extent of deduction/percentage has also been specified, as given in the 'Table'. This is on the basis of the conscience and wisdom of the law makers and it is not for the Court to question or substitute the same. Whether 'Timber' is imported from outside the country or whether it comes to the hands of the petitioners by forest lease or any other mode, chance to evade tax 'by the buyer' weighed more with mind of the law makers, to have stipulated that, seller shall effect collection of tax at the prescribed rate, at the time of sale. Considering the factual position involved, though the 'Timber' was imported from abroad, after clearance from the Customs department paying the Customs duty, when sale is effected by the petitioners (sellers) to the concerned registered dealers or others (buyers), income can be said to have been accrued at the time of purchase to attract imposition of tax on the 'buyer'. For clarity and convenience, rate of tax to be collected is also specified under Section 206C, in respect of the concerned commodities, to be adjusted against the actual tax payable by the buyer under the regular assessment. This being the position, the source from which 'Timber' came to the hands of the petitioners does not have any relevance at all, and it very much satisfies the term "obtained by another mode", as envisaged under the relevant provisions of law. The version of the petitioners is that it has to be read and understood giving restrictive meaning referring to the circumstances under which section 44AC was introduced w.e.f 01.04.1988, does not hold any water at all. There is a feeble attempt to contend that the petitioners have to be treated as 'second sellers', as the first sale has already taken place on purchasing the goods from abroad. Since it is the second sale, no tax liability could be mulcted upon the shoulders of the petitioners. This proposition is cent per cent contrary to the case projected by the petitioners right from the beginning, that the transaction has to be considered in the 'Indian context', to ascertain whether Section 206C could be invoked in the case of the petitioners (who are importing Timber from abroad), contending that the said provision was intended to tackle the situation of tax evasion by "fly by night operators", who procured the specified commodities from soil of Indian origin. If the transaction has to be reckoned with reference to the Indian context as above, the 'first sale' to be effected is also to be considered in the Indian context and admittedly, the first sale effected in India has been performed by the petitioners in their capacity as sellers. - Decided against assessee.

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• 2015 (1) TMI 706
  Expenditure on the issue of convertible debentures - Revenue v/s capital expenditure - Held that:- Facts of the case clearly indicate that portion of the convertible debenture was converted into equity shares and assessee company had got enduring benefits and therefore, the expenditure incurred by the assessee on conversion of convertible debentures into equity shares has to be treated as capital expenditure. It may be noted that the Assessing Authority disallowed expenditure only to the extent pertaining to the convertible portion of the expenditure which formed part of the capital. As such disallowance made by the Income Tax Officer, which was confirmed by the Commissioner (Appeals) has to be sustained. The question of law raised by the Revenue, though not happily framed, is accordingly answered in the negative. Appeal dismissed. Decided in favour of revenue.

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• 2015 (1) TMI 705
  Notice under Section 158BD - notice to third party - period of limitation - block assessment - Held that:- As decided in CIT vs. Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] Revenue has to be vigilant in issuing notice to the third party under Section 158 BD, immediately after the completion of assessment of the searched person, this Court is of the opinion that a delay ranging between 10 months of 1 ½ years cannot be considered contemporaneous to assessment proceedings. We are of the opinion that notices were not issued in conformity with the requirements of Section 158BD, and were unduly delayed. The appeals of the Revenue accordingly fail and are dismissed. - Decided against revenue.

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• 2015 (1) TMI 704
  Deduction u/s. 80HHC and 80IA - Tribunal allowed the deduction on gross total income inclusive of income from other sources - Held that:- The Appellate Tribunal is right in law and on facts in allowing the deduction u/s. 80HHC and 80IA on gross total income inclusive of income from other sources. - Decided in favour of assessee. Depreciation allowance - Whether no claim for depreciation has been made in the return, the Income-Tax Officer should estimate the income without allowing depreciation allowance? - Held that:- As far as newly added question is concerned, there also we hold that the the Appellate Tribunal is right in law and on facts in holding that depreciation not claimed for by the assessee, cannot be allowed as a deduction despite the introduction of the concept of block assets. Decided in favour of assessee.

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• 2015 (1) TMI 703
  Admission of additional grounds - payments effected during the year for the buildings that existed on the land acquired for mining and demolished immediately such acquisition to prepare such land acquired for the purpose of mining operations admissible - cost incurred for preparation of land to make it minable if not allowable as revenue expenditure, is to be treated as an intangible asset eligible for amortization for depreciation - Held that:- Appellate Tribunal, which has been conferred with wide powers under the Act, is entitled to permit the parties before it to raise new questions before it for the first time subject to the condition that the relevant facts in respect of the claim raised before the Tribunal are available on record. In the present case though, the omission to urge the fresh grounds may not have been due to any malafide intention, in so far as these cases are concerned, we are satisfied that the relevant facts were not on record and that the appellant had no good reason whatsoever why these contentions were not urged on earlier occassions when the matter was pending before the assessing officer or the first appellate authority. Appeal dismissed. -Decided against assessee.

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• 2015 (1) TMI 702
  Accrual of Income - Inclusion of particular income in the assessment year - what is the system of accountancy adopted by the assessee? - year in which the amount representing 2.5% had accrued to the respondent - Held that:- In the instant case, the clause in the contract provided for deduction of 7.5% from each bill. Out of this, 5% would be payable on successful completion of the work and balance 2.5% after the expiry of the defect free period. For instance, if the value of the contract is 1.00 crore and the amounts are paid under four bills of 25.00 lakhs each. From each of the first 3 bills, sums representing 7.5% are deducted. On successful completion of the work, the amounts representing 5% deducted from the first three bills, would become payable along with the final bill. However, even from the final bill, 2.5% would be deducted. This amount of 2.5%, which stood deducted from all the four bills, becomes payable, only on expiry of the defect free period. If such period is one year, the amount becomes payable only when no defects whatever are found or noticed, during that period. It is, no doubt, true that in all the bills, reference was made to these amounts and corresponding entries were made in the books of account. However, the right to receive that amount was contingent upon there not being any defects in the work, during the stipulated period. It is then, and only then, that the amount can be said to have accrued to the respondent. It is represented by the learned counsel for the respondent that the amount was received by his client in the subsequent assessment year on expiry of the defect free period and that the amount has been brought under the tax. - Decided against revenue.

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• 2015 (1) TMI 701
  Depreciation disallowed - interest expenditure on unpaid purchase consideration - AO invoked the Explanation - 3 of Section 43(1) - Tribunal deleted addition holding that claim of depreciation on enhanced value of assets by the assessee was not with an intention to reduce tax liability - Held that:- It can be noted from the record that at the time of transfer of the assets, the assessee had no income for it to reduce its tax liabilities by way of such transfer, and therefore, both the CIT [A] and the Tribunal had rightly concluded that the Assessing Officer was in error in invoking Explanation 3 to Section 43 for determining actual cost in the said deal. Thus no mistake in CIT [A] as well as Tribunal in concluding that Explanation 3 to Section 43 of the Act was not required to be invoked. The first issue need no consideration therefore as no substantial question of law has arisen. Decided against revenue. For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset.The Tribunal has relied upon a decision of the Apex Court in the case of TRF Ltd. Vs. CIT reported in (2010 (2) TMI 211 - SUPREME COURT ) and observed that suitable test is required to be applied to examine as to whether the said bad debts have been actually written off as irrecoverable in the account books or not. We are in complete agreement with the reasonings adopted by the Tribunal and do not see any reason for interference. In the premises aforesaid, no substantial question of law requires adjudication afresh. Appeals stand dismissed accordingly. - Decided against revenue.

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• 2015 (1) TMI 700
  Depreciation claimed on the cylinders - asset not in use in the previous year - Tribunal allowed the claim - Held that:- Tribunal has considered the decision in the case of Pepsu Road Transport Corporation (2001 (9) TMI 65 - PUNJAB AND HARYANA High Court ) and was justified in in coming to the conclusion that that cylinders are business assets of the assessee and are to be first filled with gas and sending these cylinders for the purpose of filling of gas itself is for the purpose of business. Thus considering the facts of the present case wherein the gas cylinders were used for business purpose as when needed, we find that the Tribunal has rightly considered that as the cylinders were filled and kept ready for use of business purpose, depreciation ought to have been allowed. - Decided in favour of the assessee. Addition made on account of closing stock - Tribunal deleted the addition - Held that:- As relying on ALLIANCE INDUSTRIES Versus INCOME TAX OFFICER [2014 (11) TMI 935 - GUJARAT HIGH COURT] we answer the question in favour of the assessee. - Decided in favour of the assessee.

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• 2015 (1) TMI 699
  Transfer pricing adjustments - arms length price - Assessee considered Transactional Net Margin Method ("TNMM") as Most Appropriate Method and selected Operating Profit to Total Cost ("OP/TC") margin as Profit Level Indicator - selection of comparables - whether to include the results of M/s Dolphin Medical Services Ltd. or not? - Held that:- Results of Dolphin should not be excluded, as Dolphin is functionally acceptable comparable, whereby, the resultant PLI shall fall within safe harbor of +/-5 and no adjustment shall be required. Risk adjustment - Held that:- We direct the revenue authorities to delete the addition made on contract research and development segment, made at 2,04,84,562/-. TNMM method selection - Held that:- The assessee as well as the AE operates in a perfectly competitive market and the assessee does not have exclusive access to the factors that may result in the location specific advantages. As a result, there is no super profit that arises in the entire supply chain. Thus there is no unique advantage to the assessee over competitors. We are basing our opinion on the fact that the revenue authorities were not able to substantiate the adjustments made either from the present day scenario or any authenticated and globally material.Thus, once the TNMM method is accepted as method of considering assessee as a tested party then any benefit/advantage accruing to AE is irrelevant if the PLI is within the range of comparables. TPO has based his computation on a method, which is not ascribed by the provisions of the Act. Adjustment on account of location savings - Held that:- No doubt, clause (f) of section 92C(1) says, “such other method as may be prescribed by the Board”. For adoption of this method, the TPO has to take care that the method has to be prescribed by the Board, which can do so through relevant Rules. Even relevant Rules do not talk about the method adopted by the revenue authorities. This, in unison with the decision of the coordinate Bench on incorrect method of computation, we are of the view that the TPO/AO and DRP erred in making the adjustment on account of location savings. We, therefore, set aside the order of the DRP and direct the AO to delete the addition. Direction to the revenue authorities to make adjustments, taking into account the safe harbor range of +/- 5% - Held that:- Since the safe harbor range has been allowed by the legislature itself, the revenue authorities are bound to follow the same.Since we have set aside the order of the DRP, we, direct the AO to consider the safe harbor zone and compute the income accordingly. Disallowing interest income of 2,10,65,566/- for the purposes of computing deduction u/s 10B - Held that:- In such a situation where the incomes sought to be taxed are intrinsically connected to the business of the assessee and also that provisions falling under section 10A & 10B form a code within the code, we are of the opinion that no disallowance is called for. We therefore, set aside the order of the DRP and direct the AO to compute the deduction, taking into account the interest income as well as sale scrap as business income. - Decided partly in favour of assessee.

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• 2015 (1) TMI 698
  Eligiblity for the claim of deduction u/s. 80IB(10) - Held that:- The Appeal raises substantial questions of law. The Registrar (Judicial)/Registrar, High Court, Original Side, Bombay to ensure that the original record in relation to this Appeal is summoned from the Tribunal and offered for inspection of the parties. This paper book is treated sufficient for the purpose of admission of this Appeal. However, the Registry must further ensure preparation of complete paper book in accordance with the Rules. The Registry in the first instance must send intimation of admission of this Appeal enclosing therewith a copy of this order so as to enable the Tribunal to act accordingly.

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• 2015 (1) TMI 697
  Reopening of assessment - contributions made under the Employees State Insurance Act and towards Labour Welfare Fund disallowed as payments were effected after the due date - Held that:- Ext.P1 and P3 orders of disallowance need to be modified to allow the deduction claimed by the petitioner in respect of the employers contribution under the Employees State Insurance Act. In the orders impugned in the writ petition, while considering the assessment of the petitioner, the respondents had erroneously disallowed these payments for the purposes of deduction under the Income Tax Act. The eligibility of the petitioner for deduction of the employers contribution is now settled through the retrospective amendment made to Section 43B by the Finance Act, 2003, as clarified by the Supreme Court in the case of Commissioner of Income Tax v. Solar Export [2012 (11) TMI 897 - SUPREME COURT] - Decided in favour of assessee.

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• 2015 (1) TMI 696
  Withdrawal/cancellation of registration granted u/s 12A - Held that:- None of its receipts can be said to be arising or accruing from the activities which can be said to be for the purpose of business or in the nature of trade or commerce. Here in this case all the activities are carried out in accordance with the objects and none of its activities have been found to be non genuine. The assessee’s explanation before the DIT regarding nature of receipts clearly shows that they have been received from the members while pursuing objects of the society, specifically mentioned in the “objects” for which it was granted registration u/s 12A. Otherwise also, if any transaction of the trust which are incidental or ancillary towards fulfillment of the objects of other general public utility, will not normally amount to business trade or commerce, unless there is some intention to carry out business, trade or commerce on a permanent basis or for a reasonable continuity. The LD. DIT has not brought any evidence or material on record to show that the assessee was carrying out the activities on business or commercial principle or outside its objects. Thus on the facts of the present case it cannot be held that assessee’s case is hit by proviso to section 2(15) or the registration granted earlier can be canceled within the ambit of section 12AA(3). - Decided in favour of assessee.

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• 2015 (1) TMI 695
  Penalty under section 271(1)(c ) - inaccurate particulars of income shown by assessee - Held that:- In the present set of facts addition has been made in the hands of the assessee, after making due and diligent enquiries where the transaction in question was held to be not genuine and it was held to be a case of professional entry provider. The evidences collected by the Assessing Officer and the statement of Shri Sanjay Rastogi recorded, who had clearly stated that he was giving entries to various concerns including the assessee and the assessee was found to have received the amount through five concerns having similar address, which admittedly were being run by the same person i.e. Shri Sanjay Rastogi and Shri Ashwani Uppal, established the case of revenue. Thus where the complete chain of transactions had been established by the investigating authority and it has been established that the assessee was a professional entry provider and addition having been made in the hands of the assessee thus, attract the levy of penalty under section 271(1)(c) of the Act. It is not a case of a bonafide explanation being given by the assessee which has not been accepted by the Department but finding of fact by the Assessing Officer/Commissioner of Income Tax (Appeals) and the order of the Tribunal establishes deliberate attempt to evade tax by way of introduction of cash credits and the assessee having furnished inaccurate particulars of income makes it liable to levy of penalty under section 271(1)(c) of the Act. Upholding the order of the Commissioner of Income Tax (Appeals), grounds of appeal raised by the assessee are dismissed. - Decided against assessee.

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• 2015 (1) TMI 694
  Computation adopted for filing return of income - non adjudication of the issue by the CIT(A) - Held that:- The computation made by assessee is in accordance with Rule-2 of the Insurance Act 1938 according to which only AO can base his computation. This also corresponds to the way incomes were assessed in earlier years i.e. the correct method as per Rule 2 and Sec 44 of IT ACT. AO is directed to compute the income of the assessee in accordance with the Rule-2 of the Insurance Act, 1938. Decided in favour of assessee. Disallowance under section 14A - Held that:- Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43B of the Act. Sec. 44 creates special application of these provisions in the cases of insurance companies. We therefore, agree with the assessee and delete the act as according to us, it is not permissible to the AO to travel beyond s. 44 and First Schedule of the IT Act. Decided in favour of assessee. Interpretation of the provision of section 44 of the Income tax Act r.w. Rule 2 of the 1st Schedule of the Income tax Act, 1938 - Held that:- The computation made by assessee is in accordance with Rule-2 of the Insurance Act 1938 according to which only AO can base his computation. This also corresponds to the way incomes were assessed in earlier years i.e. the correct method as per Rule 2 and Sec 44 of IT ACT. In view of the discussion above and after analyzing the Forms, Regulations and Provisions we have no hesitation to hold that the assessee working of actuarial surplus/ deficit is in accordance with Rule 2 of First Schedule. - Decided in favour of assessee and AO is directed to modify the order accordingly. Taxability of surplus of both policy and share holders account - Held that:- As per Insurance Act 1938 all incomes are part of one business only and these incomes are considered as part of same business. Therefore, the incomes in Shareholder's account are to be considered as arising out of Life insurance business only. More over Sec 44 mandates that only First Schedule will apply for computing incomes and excludes other heads of income like, Interest on Securities, income from house property, Capital gains or Income from other sources. Being non-obstante clause, sec. 44 mandates that the profits and gains of insurance business shall be computed in accordance with the rules contained in First Schedule. Therefore, the incomes in Shareholder's account are to be taxed as part of life insurance business only, as they are part of same business and investments are made as part of solvency ratio of same business. The grounds are allowed. AO is directed to treat them as part of Life Insurance Business and tax them u/s 115B. - Decided in favour of assessee. Claim of 100% depreciation on fixed assets - Held that:- As per the provisions of law only those adjustments which are expressly not prohibited under section 44 of the Act could be made. Consequently depreciation which has been debited in the audited accounts as per the consistently followed and accepted accounting policy need not be disallowed. - Decided in favour of assessee. Treating / excluding negative reserve for considering the taxable surplus - Held that:- ssessee is entitled to exemption under section 10. Therefore, we do not see any reason to differ from the order of the CIT (A) where he has allowed assessee's claim of exemption under section 10(23AAB) of surplus of Participating Pension Business and also dividend under section 10(34). -- Decided in favour of assessee.

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• 2015 (1) TMI 693
  Enhancement of income - revenue recognition - whether accrual of income has taken place or not? - CIT(A) held that the 1/5th of the consideration amounting to 2.30 crores in respect of the agreement of home video rights and satellite rights with Moser Baer granting rights for various films for a period of 5 years was assessable in the year under appeal - Held that:- Rights would commence in respect of each of the films on different dates and accordingly the assessee has offered the income in subsequent years as exhibited on page 22 to 24 of the paper book. These facts are so clear and it is difficult to hold or even to contend that there was accrual in the very first year. We, therefore, set aside the findings of the Ld. CIT(A) on this issue and direct the AO to delete the addition of 10.50 crores on account of revenue recognition. - Decided in favour of assessee. Addition u/s. 68 - unaccounted unsecured loans - Held that:- The loan was given by these persons to the assessee for which recovery proceedings are taken by the parties against the assessee, which proves beyond all doubts that the money was borrowed by the assessee. Subsequent payments by cheques on settlement also show that there remains no reason for making the impugned addition. We, accordingly, set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of 3.70 crores. - Decided in favour of assessee. Adhoc disallowance of 20% of motor car expenses, interest on car loan and depreciation - Held that:- Considering that in A.Y. 2004-05 adhoc disallowance was accepted by both parties. We do not find any reason to interfere with the findings of the Ld. CIT(A). Decided against assessee.

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• 2015 (1) TMI 692
  Addition under section 68 - Ingenuine loans - CIT(A) partly deleted addition on admitting additional evidence - procedural default on the part of the ld.CIT(A) in terms of Rule 46A - Held that:- There is no procedural default on the part of the ld.CIT(A) in terms of Rule 46A and consequently there is no merits in the grounds raised by revenue regarding violation of Rule 46A as AO in the remand report has accepted the additional evidences and has raised no objections, which he was given chance in terms of Letter written by the ld.CIT(A) to the AO. Once the AO has himself admitted the genuineness of loan in respect of all the the creditors, and same has been accepted by the ld. CIT(A) after calling for the rejoinder submissions and on perusal of records, then we do not find any reason to reverse the deletion of addition of loan amounts in respect of 31 creditors, merely on the ground that there is no elaborate discussion in the appellate order. Once the fact has been admitted after detailed inquiry and examination which is evident from the material placed on record, then there need not be any detailed discussion about acceptance of the loan.. Moreover, as submitted by the ld. counsel, these loans have been repaid to the creditors in the subsequent years, which fact, can be very well be verified by the AO. Thus, we do not find any merits in the grounds raised by the revenue and accordingly the same are dismissed.- Decided against revenue. Now coming to the grounds raised by the assessee in respect of three creditors, we find that there is a categorical finding by the AO as well as the ld. CIT(A), that creditworthiness of the said persons have not been proved by the assessee. Even before us, no documentary evidence has been filed to rebut the findings of the ld. CIT(A).- Decided against assessee. Disallowance of interest @ 8% on the addition for the loans - part relief by CIT(A) - Held that:- As said by CIT(A) the interest paid by the assessee was @ 8%. On the other hand, the assessee advanced loan of 38,53,285/- as per the Balance sheet of the assessee and collected interest of 1,99,972/- which works out to 5.1%. It is to be mentioned that it did not prove that the amount of 38.53 lakhs was advanced for business purposes, To be reasonable, the assessee should also have collected 8% interest on 38,53,285/- which comes to 3,08,000/-. Secondly, the assessee's without prejudice submission that the issue of charging interest on loan advanced was not the case of the Assessing Officer is misplaced, for the reason when, in the assessment proceedings while charging interest @ 18% on the loans of 96,30,000/- the issue of charging difference in the interest rate did not arise. The verification of the details during remand proceedings reveals that majority of loans received are in order. Therefore, issue of charging interest and payment of interest comes to the fore. This issue has become relevant and the same has to be adjudicated. Accordingly, I direct the AO to charge interest @8% on 38,53,285/- on the amounts advanced - the difference of which works out to. 1,08,028/- (Rs.3,08,000 - 1,99,972) as income of the assessee. The A.O. is further directed to calculate interest @ 8% on 2,50,000/- which has been confirmed in Ground no.2 above. Thus reasons given by the ld. CIT(A), for giving part relief on this score appears to be factually correct. - Decided against assessee.

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• 2015 (1) TMI 691
  Revision u/s 263 - order erroneous and prejudicial to the interest of revenue - Held that:- CIT has passed the impugned order u/s 263 of the Act without considering the submissions made before him. All the issues raised by the CIT were raised by the Assessing Officer in his notice dated 22.02.2010 issued u/s 142(1) of the Act and in reply to the same, the assessee filed all details which were verified by the Assessing Officer and after being satisfied, he passed the order u/s 143(3) of the Act dated 19.04.2010. Therefore, the order of the CIT u/s 263 should be cancelled. Thus it shall be just and fair to set aside the order of the CIT and restore the matter back to his file for adjudicating the issue afresh after proper appreciation of the submissions of the assessee by passing a speaking order on each of the issue raised in the notice issued u/s 263 of the Act. - Decided in favour of assessee for statistical purposes.

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• 2015 (1) TMI 690
  Deduction u/s 80IB(10) - as per the AO, 1 BHK flats do not conform to the conditions for the claim of deduction u/s 80IB(10), as the majority of the flats have been joined together and exceeded the limit of 1000 sq.ft. - Held that:- It is not case of the revenue that the developer constructed the duplex flats by merger of two 1-BHK flats with it own money and then sold as such to the buyers. It is on the records that the owners of duplex have merged the flats after taking possession of their flats using the design provisions supplied by the assessee in the brochure. There is evidence contrary to the same. Thus set aside the order of the CIT(A) on the impugned issue and direct the AO to allow the deduction u/s 80IB(10) as claimed by it. - Decided in favour of assessee.the merger of flats if any taken place after the sale of the said 1-BHK flats by the flat buyers and, may be using the design made available by the developer, the assessee cannot be penalized and denied the claim of deduction. As such, the relevant legal provisions do not authorize the AO to deny deduction based on the intention. What is required to be seen is if the 1-BHK flats are planned, designed, approved for construction, constructed and finally obtained the ‘completion certificate’ or not. If the answer is affirmative, the claims cannot be denied based on the intention of the assessee.the revenue authorities have decided the issue against the assessee prejudicially and ignored the evidences that are given against the revenue. In such case, the orders of the revenue cannot be held judicious ones. It is undisputed fact that few 1-BHK flats remain so without any merger despite the provision of ‘hole’ left and others are merged into duplex during the post sale using such provision. In our opinion, the developer cannot be penalized by denying the deduction. As such claim of deduction was found allowable by the then CIT(A) who decided the issues in earlier asst years. Of course, these orders are not relevant now considering the order of the Tribunal. Mere making a provision of a hole for future use by the flat buyers for erecting the stair case or so, should not come on the way of the assessee to claim deduction. Thus set aside the order of the CIT(A) on the impugned issue and direct the AO to allow the deduction u/s 80IB(10) as claimed by it. - Decided in favour of assessee.

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• 2015 (1) TMI 689
  Reduction of rate of gross profit from 20.89% adopted in assessment to 8.15% of turnover - Best judgment assessment - Held that:- In the grounds raised the revenue has agitated the ld. CIT(A) has erred in reducing the gross profit from 20.89% to adopted in assessment to 8.15% is factually incorrect as it is the assessee which has disclosed the turn over of gross profit at 8.15% and the ld. CIT(A) had reduced the estimate of gross profit from 20.89% adopted by the AO to 10%. It is a submission of the assessee that because of the hugely competitive market the assessee had to resort to under cutting in sale price as a result of this the assessee was able to increase the turn over from 13,02,13,946/- in the preceding assessment year to 34,63,55,301/- in the current assessment year. The gross profit in absolute terms had increased to 2,56,14,905 from 2,41,92,857 and the net profit in absolute terms had increased from 1,76,60,614 to 2,04,11,863. Thus by lowering its rate the assessee was able to substantially increase the turn over which also resulted in increase in gross profit. In this view of the matter also the gross profit disclosed by the assessee cannot be said to be unacceptable. In this regard it is also to be noted that despite its efforts the assessee could not repay its lenders and ultimately had become defunct and the unit was taken over by the bank. In the background and aforesaid discussion in our considered opinion the estimation of gross profit by the AO @ 20.89% of the turn over was not at all justified. Hence the ld. CIT(A)'s rejection of the assessment made by the AO is fully justified. Non production of books of accounts was beyond the control of the assessee. The reason for decrease in gross profit rates has been duly explained by the assessee. There has been substantial increase in the profits in absolute terms as compared to preceding assessment year. In this view of the matter the result declared by the assessee can be accepted subject to minor adjustment. Accordingly we hold that gross profits declared by the assessee should be taken at 8.50% which would meet the ends of justice. - Decided against revenue and cross objection filed by the assessee stand partly allowed.

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• 2015 (1) TMI 688
  Disallowance u/s. 40(a)(ia) - non deduction of TDS on lorry hire charges - CIT(A) deleted the disallowance holding that TDS disallowance applies only to amounts ‘payable’ as on 31st March and not to amounts already paid during the year - Held that:- The key words used in Section 40(a)(ia), according to us, are "on which tax is deductible at source under Chapter XVII -B". If the question is "which expenses are sought to be disallowed?" The answer is bound to be "those expenses on which tax is deductible at source under Chapter XVII -B. Once this is realized nothing turns on the basis of the fact that the legislature used the word 'payable' and not 'paid or credited. the legislature provided that the amounts, on which tax is deductible at source under Chapter XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor or sub-contractor shall not be deducted in computing the income of an assessee in case he has not deduced, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. - Decided in favour of revenue. Non deduction of TDS on Freight payments - whether compliance of third proviso can be deferred till 30th June of next financial year? - Held that:- Once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable under sub-section (2) of section 194C of the Act. In our view, therefore, the Tribunal was perfectly justified in taking the view in the impugned judgment. It may be that failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfillment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act. In the present case even though the assessee has filed the original Form No. 15J with the ITO (TDS), Ajmer within prescribed time limit as provided in Rule 29D, subsequently he also filed the form with required details in the office of the CIT-V, Pune also. In our opinion the principles laid down in the case of Valibhai Khanbhai Mandad (2012 (12) TMI 413 - GUJARAT HIGH COURT) are applicable to the assessee’s case. We, accordingly, allow the Ground - Decided in favour of assessee.

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• Customs

• 2015 (1) TMI 712
  Maintainability of appeal - Appeal against PH memo - Held that:- A personal hearing memo is not an appealable order and, therefore, the appeal is not maintainable. - Decided against Revenue.

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• 2015 (1) TMI 711
  Confiscation of goods - Redemption fine - imposition of penalty for violation of Section 111(m) - Held that:- Appellant imported a consignment of 500MT of 2- Ethyl Hexanol but a quantity of 15.160 MTs was received in excess in the shore tanks. Appellant filed a post B/E and paid the differential duty also. Adjudicating authority in Para 4.3 and 4.4 of the Adjudication order dated 09.10.2013 has recorded that appellant is a regular importer and has also paid duty on 515.160 MTs. It was also recorded that there is no ‘modus’ involved in the import and that there could be a variation between the weight based on volume calculation and actual delivery of Cargo. Once it is held that weight of the cargo of the nature imported is liable to vary it is not coming out from the records, as to why 1% difference is condonable and 3% is not condonable. Appellant never knew that there could be any quantity in excess of what is available in the import documents and what was ordered. It is not a case for confiscation of imported goods and imposition of redemption fine. - Decided in favour of assesse.

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• 2015 (1) TMI 710
  Valuation - import of vessel - Benefit of exemption under Notification No. 21/2002-Cus - The only reason for denying the benefit of notification is that the value of the barge as shown in the invoice does not match to the value shown in the Insurance cover and the invoice issued by M/s. SEL on 17-3-2009. - Held that:- Reliance on the documents namely invoice issued in 2009 and the insurance cover for insurance of the impugned barge are not the evidences to determine the assessable value. We further find that in this case the adjudicating authority has not relied on any other evidence for enhancing the declared value. Therefore, the value declared by the appellant in their bill of entry is really a transaction value and the same cannot be rejected without any supporting evidence. We also find that the appellant produced a certificate issued by Chartered Engineers dated 31-12-2010 certifying the value of the barge is US$ 23.5 Million. The said evidence has not been discarded by the adjudicating authority. Further, the appellant has also produced a quotation to know the price of new identical barge and it shows that the new barge will cost USD 25 Million from the manufacturer. This evidence has also been discarded by the adjudicating authority. Impugned order is without justification as held by the decision in the case of Titan Medical Systems Pvt. Ltd. (2002 (11) TMI 108 - SUPREME COURT OF INDIA). We also find that in the case of CCE v. Wander Ltd. (2003 (8) TMI 48 - SUPREME COURT OF INDIA) the Hon’ble Apex Court held that the issue of valuation of barge seized have no relevance or significance if the same is exempted and there is no duty liability. - value declared by the appellant in the bill of entry is true and correct. Therefore, the impugned proceedings are not warranted. - The essentiality certificate issued for the barge in question is for “Swiber Victorious” therefore, the impugned order quo rejecting the essentiality certificate is set aside. As the value declared by the appellant is USD 23.5 Million is true and correct value therefore, we hold that the appellant is entitled for the benefit of exemption at Sl. No. 214 of Notification No. 21/2002, dated 1-3-2002. - Decided in favour of assessee.

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• 2015 (1) TMI 709
  Refund claim - Encashment of Bank guarantee - Bar of limitation - Held that:- appellants could have claimed the refund of encashed Bank Guarantee only after the completion of export obligations and after cancellation of Bank Guarantee. The cancellation happened on 26-5-2010 and the refund claim was filed on 19-7-2010, i.e., within a period of one year. The Revenue’s view is that inasmuch as the Bank Guarantee was encashed in March, 2006, the refund claim filed on 19-7-2010 is barred by limitation and cannot be sanctioned. On the other hand, the contention of the appellants is that they could file the refund claim of encashed Bank Guarantee only after completion of export and after cancellation of the Bank Guarantee, which they did immediately. - Refund sanctioned.

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• 2015 (1) TMI 708
  Rejection of request for transferability of Duty Credit scrips under the Served From India Scheme to GHIAL - petitioner is not holding more than 26 % of the shares in GHIAL, which is a mandatory requirement as per policy - Held that:- Central Government is giving lot of impetus to encourage exports, more particularly in service sector. As part of this impetus, the Duty Credit Scrips are issued as incentive. As per para 3.12.7, normally Duty Credit Scrips are not transferable but within the group companies, the said scrips can be transferred. While granting relaxation of conditions of non-transferability of Duty Credit Scrip within group companies, it has not put any further restrictions. Para 9.28 only deals with definition of term Group Company. On reading of this definition, it would mean that to qualify to be a group company, an enterprise must have minimum of 26% or more voting rights or in a position to appoint more than 50% of Board of Directors in another company. It does not envisage that the company which earned Duty Credit Scrips alone should hold 26 % or more voting rights or has power to appoint more than 50 % of Board of Directors in the other company. On a plain reading, neither the provision in para 3.12.7 nor definition in para 9.28 seeks to restrict transfer of Duty Credit Scrip from a group company to another company based on holding capacity as understood by the Director General of Foreign Trade. The petitioner company availed the SFIS and earned Duty Credit Scrips. When relevant provision does not impose any restriction on transferability of Duty Credit Scrips by invoking power of interpretation, Director General of Foreign Trade cannot introduce something which is not envisaged and impose an additional restriction. The Director General of Foreign Trade has only power to interpret the existing clauses but cannot seek to amend or alter the Foreign Trade Policy terms. The impugned decision amounts to altering the terms of Served From India Scheme and is in excess of power and jurisdiction vested in him. - Impugned order is set aside - Decided in favour of assessee.

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• Service Tax

• 2015 (1) TMI 729
  Waiver of pre deposit - Insurance services - whether what point of time service has been provided by the applicant and what time service tax is required to be paid by the applicant - Held that:- service tax is payable when they received service tax from the insurer. As the issue before us is that at what point of time the service has been provided to the insurer by the applicant and at what time service tax is payable, is to be decided on merits. After hearing both sides in detail. We are of the view that prima facieapplicant has made out a case for waiver of pre-deposit of interest and penalty. Accordingly, we waive the requirement of pre-deposit of entire amount of interest and penalty and stay recovery thereof during the pendency of the appeal. - Stay granted.

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• 2015 (1) TMI 728
  Waiver of pre-deposit of Service Tax - CENVAT Credit - Capital goods - erection, commissioning and installation services - Held that:- In this case the allegation of suppression has not been alleged against the applicant for taking Cenvat Credit on capital goods, which were used by the applicant during the impugned period for providing exempted service. In these circumstances, the applicant has made out a strong case for complete waiver of pre-deposit of the entire amount of tax, interest and penalty shall stand waived and recovery thereof during the pendency of the appeal. - Stay granted.

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• 2015 (1) TMI 727
  Denial of an exemption - Availment of 67% abatement under Notification No. 15/2004-ST dated 10.09.2004 and Notification No.1/2006-ST dated 01.03.2006 - Demand of interest - Receipt of advance - Held that:- during the relevant period the rate to tax applicable was rate of tax prevailing on the date of providing the service. Therefore, before the service was provided the appellants would have been in no position to know as to at what rate to pay the service tax. The service tax was paid as and when the service relating to advance received was rendered. In this view of the matter, it is not possible to sustain the order relating to recovery of impugned interest. It was only on 18.05.2012 that Section 67A was introduced which provided that the rate of service tax, value of taxable service and the rate of exchange, if any shall be the rate of service tax or value of taxable service or rate of exchange in force as applicable at the time when the taxable service has been provided or agreed to be provided. Obviously, Section 67A would only have prospective applicability. Thus, to reiterate, as the advance received by the appellants has been adjusted in due course as and when the service was provided coupled with the fact that unless the service was provided the rate at which the service tax was to be paid would not be known, it is not possible difficult to sustain the order with regard to confirmation of the impugned interest. - Following decision of M/s Bhayana Builders (P) Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] - Decided in favour of assessee.

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• 2015 (1) TMI 726
  Denial of refund claim - Unjust enrichment - procedural violation - Held that:- Commissioner (Appeals) has come to the finding regarding admissibility of refund (other than relating to the unjust enrichment) by simply observing that procedural infringement is not sufficient to deny the substantive benefit without discussing whether the substantive benefit was otherwise actually available. The original adjudicating authority had not discussed that issue on merits. Therefore Revenue’s contention that if at all, the issue should have been examined by the Commissioner (Appeals) on merit before coming to a finding about admissibility of refund or he should have remanded the matter to the original adjudicating authority to decide the claim on merit has sustainable force. As regards unjust enrichment, we find that Revenue has clearly and documentarily brought out as to how the impugned amount has been taken into account as expenses in their accounts which by necessary implication means that the burden has been passed on to the customers. In the wake of such documentary evidence to the contrary, the CA certificate is an inadequate counter. Thus the original adjudicating authority was right with regard the aspect of unjust enrichment. - Decided in favour of Revenue.

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• 2015 (1) TMI 725
  Exemption on commission paid to foreign agent - wilful mis-statement or suppression of facts - Penalty under Sections 76, 77 and 78 - Held that:- It is seen that the appellants were issued two Show Cause Notices, one dated 15.04.209 covering the period 01.04.2008 to 31.01.2009 and the other dated 02.09.2009 covering the period 01.01.2005 to 31.01.2009. The original adjudicating authority confirmed the demands raised in both the Show Cause Notices although as is evident from the period, covered by them, the demand of 33,560/- raised under Show Cause Notice dated 15.04.2009 was included in the demand of 5,37,464/- raised in the Show Cause Notice dated 02.09.2009. It is seen that the impugned Order-in-Appeal corrected this mistake and deducted the amount of 33,560/- from the demand relating to Show Cause Notice dated 02.09.2009. Further, when penalties under Section 76, 77 and 78 were not imposed in respect of the demand pertaining to the Show Cause Notice dated 02.09.2009 (which invoked the extended period under proviso to Section 73 ibid) on the ground that the issue was interpretational, it is difficult to fathom as to how the demand for the extended period can be sustained. As regards the contention of the appellants that whatever service tax is demanded would have been available as credit or they would have been eligible for refund under Notification No. 41/2007-ST, even if not held fully acceptable, does lend support to the appellants contentions that there was no reason for them to indulge in mis-statement or suppression of the facts. - Partial stay granted.

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• Central Excise

• 2015 (1) TMI 722
  Refund claim - refund claim for the duty paid by M/s. Patel Stationers Pvt. Limited on the mixture of natural Graphite and natural Bentonite (clay) for the period March 2006 to December 2006 - adjudicating authority rejected the refund claim on the ground that mixture of natural Graphite and natural Bentonite (clay) is excisable and M/s. Patel Stationers Pvt. Limited has rightly paid the duty - Held that:- On perusal of the records, it is revealed from the order of the Commissioner (Appeals) that the ‘mixture of graphite and clay’ is not bought or sold in the market. The ld. Advocate submits that this mixture has a short life and used captively in the manufacture of pencil lead which attracts ‘Nil’ rate of duty. The Commissioner (Appeals) observed that the appellant availed the exemption notification and, therefore, it will be treated as excisable goods. In this context, the ld. Advocate contended that, inadvertently, they availed exemption notification and thereafter they contested the excisability of the goods. It is well settled that no product is ‘goods’ unless shown to be marketable by the department. In the case of United Phosphorous Ltd. (2000 (4) TMI 38 - SUPREME COURT OF INDIA), the Hon’ble Supreme Court observed that mere specification in the Dictionary, Excise Tariff and Drawback Schedule is of no consequence. - The lower authorities should have examined the issue on unjust-enrichment and the appellant should be given an opportunity to substantiate their case on the eligibility to refund claim and on unjust-enrichment. - Decided in favour of assessee.

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• 2015 (1) TMI 721
  Denial of input service credit - Denial on the premise that input service credit availed by the appellants does not qualify as ‘input service’ as per Rule 2(l) of Cenvat credit Rules, 2004 - outdoor catering service and rent-a-cab service - nexus with the business of manufacture of the appellant - Held that:- any services availed by a manufacturer of excisable goods in the course of their business, is entitled to take Cenvat credit. Admittedly, both the services have been availed by the appellant in the course of business of manufacturing of excisable goods. Therefore, I hold that appellant is entitled to take Cenvat credit of service tax on these services, subject to the fact that appellant has not recovered the amount from the employees towards rendering service of ‘outdoor catering’ and rent-a-cab services. As this fact has not been examined by the lower authorities, therefore, matter needs examination at the end of adjudicating authority to ascertain whether appellant has recovered any amount from the employees towards rendering a service of ‘outdoor catering’ and ‘rent-a-cab’ service. If any amount recovered from the appellant from the employees towards these services, same is not entitled to input service credit. With these terms the impugned order is set aside. - Matter remanded back - Decided in favour of assessee. Whether the appellant is entitled to take input service credit on repair and maintenance service availed by the appellant for repair and maintenance of the vehicles which have been used in their business activity - Held that:- any service availed by an assessee being a manufacturer of excisable goods in the course of their business, the assessee is entitled to take Cenvat credit. Admittedly, the vehicles in question have been used by the appellant in the course of their business being a manufacturer of excisable goods. Therefore, I hold that the appellant are entitled to take Cenvat credit on repair and maintenance services. In these circumstances, impugned order is set aside. - Following decision of Ultratech Cement [2010 (10) TMI 13 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2015 (1) TMI 720
  Rebate claim - Export of Gutkha prior to issue of amendment dated 02-07-2011 in the Plastic waste (Management and Handling) Rules 2011 issued by Ministry of Environment and Forest and CBEC circular dated 30-08-2011 - Held that:- export takes place when goods leave India to a place outside India. So the date of export in case of goods exported by sea will be date on which ship leaves India. The Commissioner (Appeals) has erred in considering the date of removal of goods from factory as date of export and granted rebate on wrong presumption. Export takes place when the ship leaves or sailed out of India. In this case, out of 27 cases, in 23 cases goods were exported after 01-07-2011, as is evident from table in para 2 above. As discussed above, the export of gutkha/Pan masala etc. in plastic sachet/pouches was prohibited w.e.f 02-07-2011 and rebate of duty paid on such goods is not admissible under rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-CE (NT), Notification No. 32/08-CE (NT) dt. 28-08-2008 and Rule 14 of Pan Masala Packing Machines Rules 2008. Following decision of assessee's own previous case [2015 (1) TMI 666 - GOVERMENT OF INDIA] - the rebate of duty paid on goods exported prior to 02-07-2011 is admissible - Decided partly in favour of Revenue.

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• 2015 (1) TMI 719
  Remission of duty - Goods destroyed in fire after removal of goods - failure to export the goods as per provision of Notification No. 42/2001-CE(NT) dated 26.06.2001 - Held that:- On a plain reading of the Rule 21(supra), it is clear that the remission of duty under the said rule is available only to the goods which have not been removed from the factory/warehouse. In the instant case, they have removed goods from manufacturer's premises and, therefore, they are not entitled for remission of goods under Rule, 21 of Central Excise Rules, 2002. - in this case goods were destroyed in fire and there is no case of willful evasion of duty on the part of applicant. As such the penalty imposed on the applicant is set aside - Decided partly in favour of appellant.

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• 2015 (1) TMI 718
  Vacation of stay order - Non disposal of appeal with 180 days - Held that:- Considering the limited scope of the prayer, sought for, by the petitioner, in this writ petition, viz., to direct the first respondent to dispose of the appeal filed by the petitioner, viz., A. No. E. 294 of 2009, this Court directs the first respondent/appellate authority to dispose of the appeal filed by the petitioner as expeditiously as possible, preferably, within a period of six months from the date of receipt of a copy of this order. In view of the order of stay, granted by the first respondent earlier, wherein, the interest of the petitioner has been safeguarded, in my considered opinion, the same shall continue till the disposal of the Appeal and the third respondent is also refrained from initiating any recovery proceedings in pursuance to the order passed by the second respondent. - Petition disposed of.

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• 2015 (1) TMI 717
  Extension of stay order - Held that:- It is pertinent to mention that when the Co-ordinate Bench of this Court passed the order [2013 (9) TMI 778 - KARNATAKA HIGH COURT] the 3rd proviso was not brought to the notice of the Court. According to the 3rd proviso to sub-section (2A) of Section 35C of the Act, an application could be made to the Tribunal by a party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period as it thinks fit not exceeding one hundred and eighty-five days and in case the appeal is not so disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso the stay order shall, on the expiry of the said period, stand vacated. In view of the said proviso, the appellant can move the Tribunal either for vacating stay or for disposal of the appeal as the case may be. - Appeal disposed of.

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• 2015 (1) TMI 716
  Excise Duty - Manufacture - Clearance of Dross arising during the galvanization - by-product or not - High Court admitted the appeal of revenue against the decision of Tribunal [2013 (4) TMI 158 - CESTAT, MUMBAI] on the following question of law:- Whether the Hon’ble Tribunal was correct in setting aside the duty demand and holding that Zinc Dross cleared by the Respondents is non-excisable product in spite of (Amendment of the Central Excise Tariff Amendment Act, 2005 (No. 5 of 2005) which came into force w.e.f. 28-2-2005 when “Zinc Dross generated in galvanizing process has been specifically classified as excisable goods under Chapter 79 sub-heading 7902 00 10 OR 7902 00 90 of the Central Excise Tariff Act, 1985?

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• 2015 (1) TMI 715
  Duty demand - Imposition of penalty - 100% EOU - Clearance of goods to DTA - benefit of deemed export for the purpose of arriving at the additional DTA clearance over and above the permissible limit of 50% of FOB value of previous year export is not available to assessee - clearance were restricted to prescribed limit of 50% of the FOB value of previous years’ physical exports and the value of rejects and waste cleared under the DTA will be taken into consideration for the limit of 50% of the FOB value of export which can be cleared in DTA - High Court dismissed the appeal filed by the Revenue for want of Prosecution filed against the decision of Tribunal [2003 (10) TMI 519 - CESTAT, NEW DELHI].

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• 2015 (1) TMI 714
  Clandestine removal of goods - Penalty u/s 11AC - Held that:- Tribunal by its order [2015 (1) TMI 665 - CESTAT NEW DELHI] has considered the prima facie case and thereafter, on the basis of the facts and circumstances of the case has ordered the Assessee and Shri Dave to deposit 70,00,000/- and 10,00,000/- respectively. There is no illegality in the same. - Tribunal has allowed the application of Shri Goyal on the basis that nothing brought to its notice about the active involvement of Shri Goyal, which is not the case so far as Shri Dave was concerned. There is justification for passing different orders. - Decided against assessee.

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• 2015 (1) TMI 713
  Waiver of pre deposit - Held that:- Petitioners seek a direction to the Tribunal to dispose of the appeal on merits having deposited an amount of 5 lacs allegedly in January 2012. The said relief cannot be granted by this Court in the present proceedings once the petitioners have exhausted all the available remedies in respect of the order of pre-deposit. That apart, another writ petition filed by the petitioners being [2015 (1) TMI 667 - ALLAHABAD HIGH COURT] (M/s. Sameer Ispat and Others v. Custom, Excise and Service Tax) against the order of the Tribunal dismissing the appeal filed by the petitioners for non-compliance of the order requiring them to deposit 5 lacs has also been dismissed by a learned Single Judge of this Court - it would not be appropriate for this Court to issue any direction at variance with the direction which has already been issued by this Court earlier. - Decided against assessee.

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• CST, VAT & Sales Tax

• 2015 (1) TMI 724
  Deletion of penalty - Goods not in conformity with the document as well as Transit Declaration Form produced by the dealer/opposite party before the seizing authority or not - Transaction in contravention with the provision of the Act with an intention to evade tax or not - Whether the Commercial Tax Tribunal was legally justified in setting aside the penalty order passed u/d 54(1)(14) of the U.P. Value Added Tax Act – Held that:- Four trucks was intercepted on 19.8.2013 and three trucks were intercepted on 1.9.2014 - These trucks were found accompanied with challan of the respondent and invoices of different alleged firms of Delhi - on verification, all the firms of Delhi were found non-existent - on physical verification, the goods loaded in the respective trucks were found different from those mentioned in the alleged invoices or the challans - number of discrepancies were found are also recorded in the respective penalty order - The Tribunal has completely overlooked all the documentary evidences as well as the findings recorded by the assessing authority and the first appellate authority - the findings recorded by the Tribunal that the goods actually reached outside the State of U.P. and that the respondent is merely a transporter, appears to be perverse and without consideration to the relevant evidences and materials on record - The Tribunal should have considered each and every evidence which are on record and thereafter should have recorded its findings - failure of the Tribunal to do so renders the impugned order to be unsustainable – thus, the order of the Tribunal is set aside and the matter is remitted back to the Tribunal for fresh consideration – Decided in favour of revisionist revenue.

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• 2015 (1) TMI 723
  Benefit of the Samadhan Scheme under Samadhan Act - Representation raised on computation done under Scheme - Subsequent denial of benefit inspite of fact that benefit approved earlier - Held that:- Scheme of the Samadhan Act has provided necessary checks and balances and it is not as if as and when applications are filed under Section 7, they are automatically accepted. The first stage by which the designated authority has an opportunity to throw out an application is while examining the same under Section 6 of the Act. In the instant case, the petitioner's applications were examined and the authority was satisfied that the petitioner is entitled to the benefit of the Scheme and therefore orders were passed on 22.2.2011 demanding payment from the petitioner under Section 6(2) of the Act. The petitioner was granted seven days time. The petitioner disputed the computation by submitting representations. The first respondent neither resiled from his decision nor took any decision to state that the petitioner was not entitled to the benefit of the Samadhan Act by subsequent proceedings related to the computation of the amount demanded in the demand dated 22.2.2011 and the same was put to rest after the petitioner effected payments on 28.4.2012. Therefore, by a mere change of officer, now the clock cannot be set back and the petitioner's applications cannot be rejected, when the same were already entertained, the amounts demanded and the only dispute which was with regard to the quantum. Therefore, the impugned proceedings are vitiated on the ground that the procedure contemplated under the Act does not provide for passing such an order at such stage. Accordingly, the writ petitions are allowed and the impugned proceedings are quashed. - Decided in favour of assessee.

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