Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 22, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Furnishing of statement of income by a business trust to the prescribed authority and the unitholders - procedure prescribed - Notification
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Unaccounted gifts - creditworthiness of donor and genuineness of gift is not proved because the assessee had no direct relationship with the donor and in the absence of any direct relationship, natural love and affection between the donor and donee was not established - AT
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Long Term Capital Gain - assessee executed a release deed of property - when undisputedly, there is no cost of acquisition to assessee, the computation provision fails, accordingly, capital gain cannot be computed - AT
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Exemption U/s 10(23C)(iiiae) on interest income - only those income which are received by a hospital on account of treatment is exempt u/s 10(23C)(iiiae) and not any income received by the said entity. - AT
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Maintainability of the assessment u/s 153C of the Act - The date on which this exercise is done would be considered as the date of receiving the books of account or document by the AO having jurisdiction over such other person. - AT
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Labour charges for repairing of vehicles - assessee has not placed any evidence on record proving the nature of repairs on vehicles carried out - no description of the vehicles is given - disallowance confirmed - AT
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When the assessee claims that the assessee has paid the management fee to the AE, no doubt the burden is on the assessee to prove that it has received services from its AE. But when the assessee has produced such material before any of the authorities below it is also the duty of the authorities to consider the same before coming to any conclusion on merits. - AT
Customs
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Whether the furniture exported by the appellant would be considered as handicraft or not - furniture with design items have visual appeal in the nature of ornamentation have to be held as handicraft. - AT
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Classification of goods - import of Chrysler 300C Sedan RHD car - the vehicle merits classification under CTH 8702 has to be allowed in the light of the registration certificate, fitness certificate and the tourist permit granted to the appellant by the RTO authorities in Delhi - AT
Service Tax
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Rent-a-cab service - transportation services - transportation of papers/answer sheets, examiners – petitioner cannot escape tax liability on the ground that the hiring is different from renting - HC
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Rent-a-cab service - agreement terms indicating vehicle itself not given for operation under ownership and management of client - payments made for operating trips to various places. - the service tax taxable but demand set aside on the ground of period of limitation - HC
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Merely because the petitioner got himself registered and by way of abundant caution incorporated and accepted its liability in one of the terms of agreement, as and when arises, that ipso facto cannot be adjudged as his deliberate act of non-payment of tax alleging suppression and mala fide intention. - HC
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Revenue is not correct to treat the chit fund business to fall within the ambit of asset management as there is subtle difference between “banking and financial services” as defined under the Act and the services of the chit transactions - SC dismissed the Revenue appeal - SC
Central Excise
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Summons in Excise and Service Tax matters - senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. - Order-Instruction
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Summons in Excise and Service Tax matters - Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner - Order-Instruction
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Duty demand u/s 11D - duty variation due to re-determination of petroleum products - only a composite price under the administered pricing mechanism has been charged from the buyers under relevant invoices - demand u/s 11D is not maintainable - AT
Case Laws:
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Income Tax
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2015 (1) TMI 792
Bogus purchases - CIT(A) deleted the addition accepting additional evidence - Held that:- The ld. CIT(A) required the assessee to substantiate the purchases by proving through mode of delivery and transport receipts. He also required the assessee to furnish the stock register to examine, whether raw material purchased has been consumed or not. He also asked the assessee to produce bank statement to see whether any cash has been withdrawn after making the payment through cheque for the purchases made from these parties. On perusal and examination of these records, he found that, firstly no cash has been withdrawn from the bank account for making the cash payment to the alleged purchasers to show that it was for the purposes of accommodation entries; secondly, the purchase bills were duly supported by GR Nos. and mode of delivery and; lastly, stock register reflected the consumption of material bought by the assessee. On these three counts, correctly held that the purchases cannot be said to be non-genuine. Deletion of addition on account of bogus purchases by the ld. CIT(A) is factually correct and no interference is called for. - Decided against revenue. Regarding violation of Rule 46A as raised by the department, we are of the opinion that, if the first appellate authority in exercise of his powers has directed the assessee to produce any evidence, information or material not produced or considered by the AO, then there is no violation of Rule 46A. The Rule 46A provides that, when the assessee on its own file any additional evidence, then the ld. CIT(A) has to follow the provisions of the said Rule. There is no fetter on the powers of the first appellate authority to call for any fresh information or materials for adjudicating the lis before him. Thus, in this case, there is no violation of Rule 46A, as the additional evidences were filed on the direction of the ld. CIT(A). - Decided against revenue.
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2015 (1) TMI 791
Valuation of stock - Addition made u/s 145A - Condonation of delay of 368 days in filing appeal - AY 2007-08 - Held that:- After the effect of ld.CIT(A)’s order with regard to the addition made u/s 145A, there was no addition as it was neutralized by the adjustment made in the opening stock. It was in this background, the assessee did not chose to file any appeal before the Tribunal due to neutralization of tax effect. The reasons advanced in the affidavit filed by the Accountant of the assessee are not supported by any cogent or supporting evidence, but were self serving statement and that to be by an accountant. No material has been placed before the Tribunal to show that contents are correct. It is a mere assertion by an accountant who is not responsible person, the affidavit should have been filed by the Managing Director of the assessee-company. Thus, we do not find any bonafide reasons on the basis of which the delay of 368 days can be condoned. Accordingly, the appeal filed by the assessee is not admitted being barred by limitation. Resultantly, the appeal filed by the assessee for the assessment year 2007-08 is dismissed in limine. Deduction under section 145A - corresponding deduction u/s 145A on account of addition in the opening stock for the year not done - AY 2008-09 - Held that:- On perusal of the impugned order, we find that in the earlier year the ld. CIT(A) has given direction to the AO that adjustment should made to the opening stock also in view of the decision of the Hon’ble Delhi High Court in the case of Mahavira Aluminum Ltd [2007 (11) TMI 41 - HIGH COURT OF DELHI]. Such a direction is to be carried out by the AO and consequential relief should be given. Thus ground no.1 is disposed off in the aforesaid manner. Deduction of proportionate Land Premium - Held that:- The assessee had taken a land on leasehold bases in the year 1994-95 for a period of 80 years for a sum of ₹ 8,35,452/-. Each year the assessee is claiming 1/80th part of the lease premium as a deduction. The issue is covered against the assessee by the decision of the Special Bench of the Tribunal in the case of Mukund v. JCIT [2007 (2) TMI 358 - ITAT MUMBAI]. Decided against assessee. Non-granting of MAT credit - Held that:- The tax on normal computation under the other provisions of the Act is more than the tax computed on the book profit, therefore credit of MAT i.e. an amount of tax computed on the book profit u/s 115JA(1) is to be given on the amount of tax payable by the assessee on its income under the normal provisions. The ld. CIT(A) has wrongly held that tax credit is to be allowed only on the tax computed under the book profit. Thus, the finding of the ld. CIT(A) is reversed and the AO is directed to allow the MAT credit being carried forward from assessment year 2006-07 and from assessment year 2007-08 on the tax payable under normal provisions of the Act. Decided against revenue.
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2015 (1) TMI 790
Interest on self- assessment tax u/s 244A by filing rectification application u/s 154 - rejection of claim - eligibility of assessee for interest on refund as per clause (b) of Sub-section (1) of section 244A - Held that:- Nothing in the language of the provision or the Explanation thereto, that would suggest the commencement date of the interest as the date of the processing of the return qua which the refund is being granted, i.e., as being argued before us in context of refund of self assessment tax. True, it is only upon processing of the return that the excess is determined under the procedure of assessment provided for under the Act. However, the payment of self-assessment tax assumes the nature of income tax on its payment by the assessee itself (refer: s. 140A). The date of payment of the excess is not to be confused with the date on which it is so found, i.e., to be in excess; the payment of interest being even otherwise compensatory in character. The issue involved is debatable and, thus, outside the ambit of sec. 154. However, as sought to be clarified hereinbefore, the reading of the order, the language of sec. 244A(1) is patently clear and admits of no debate. Even the argument raised by the Revenue with reference to the Explanation thereto arises only out of a misreading of the same. Under the circumstances, we, for the reasons afore-stated, confirm the order of the first appellate authority in principle. The AO shall verify if any interest has been allowed to the assessee on the processing of its return for the year or not, and allow interest u/s. 244A(1)(b) on the self-assessment tax of ₹ 150 lacs accordingly. Decided against revenue.
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2015 (1) TMI 789
Reimbursement of freight charges - Held that:- Find ourselves to be in complete agreement with the findings by the ld. CIT(A), whose order has not been impugned by the assessee in any meaningful manner. The receipt on account of freight is not in vacuum, and its basis lies in the incurring of the freight and insurance expenses by the assessee. Both the incurring of the expenditure on these counts, as well as the raising of the bills on cum freight and insurance basis on the overseas customers, has not been disputed by the Revenue. How then, we wonder, could it adopt a view as that followed by the A.O. Further, the source of the said receipt does not clearly lie in any separate or independent source of income, i.e., distinct and apart from the assessee’s business of manufacture and export of goods outside India. We, accordingly, find no merit in the Revenue’s stand, and the said receipt would stand to form as a part of the assessee’s export business. - Decided against revenue. DEPB receipt for being included in computing the deduction u/s.10B - Held that:- The receipt by way of DEPB shall not form part of the eligible profit of the assessee’s EOU u/s.10B(1) r/w s. 10B(4). Decided against assessee.
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2015 (1) TMI 788
Grant of registration u/s. 12A of to the assessee society - Held that:- According to section 12AA of the I.T. Act the Commissioner on receipt of application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A shall call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he shall pass an order in writing registering the trust or institution; shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant. After going through the observations made by the Ld. DIT(E) has verified the same and held that no specific verifiable activity finds mention in the details submitted by the applicant. Due to lack of evidence of the activities, the Ld. DIT(E) has rejected the application for registration filed by the applicant and passed the impugned order. We are of the view that no interference is called in the impugned order, hence, we uphold the same by dismissing the appeal of the Assessee. - Decided against assessee.
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2015 (1) TMI 787
Unaccounted gifts - Addition made by CIT(A) - Held that:- From the above facts and circumstances, we find that even if the prayer of Ld. A.R. is accepted for readjudication, no fruitful purpose will be served as already a period of more than 12 years has passed after giving the so called gift and it is not possible that donor will recollect all things which he had not been able to answer after a period of 6 years from the date of making gifts. Further, we find that Ld. A.R. during proceedings before lower authorities or before us could not bring to our notice any other additional evidence other than already on record by which he would be able to prove genuineness and creditworthiness of donor. As find from the documents on record creditworthiness of donor and genuineness of gift is not proved because the assessee had no direct relationship with the donor and in the absence of any direct relationship, natural love and affection between the donor and donee was not established and neither any proof was filed before the authorities below or before us to substantiate that parties had extraordinary relationship. The donor himself has stated that he had been into export business up to 2003 which was closed due to losses. We are aware that a business is closed only after consistent losses in various years and therefore, a person who had incurred losses cannot be expected to give a gift to an unknown person and that too of a huge amount of ₹ 25 lacs. The donor had not given any gift to his close relatives including his brothers, sisters etc.. Cheques of gift were issued against cash deposited in the bank account and the cash was stated to be lying at home which is again against human probabilities. The donor had stated that cash was deposited out of cash lying at home and he had submitted that he does not remember the source of the said cash. - Decided against assessee.
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2015 (1) TMI 786
Application of Net profit rate of 5% on estimated turnover of ₹ 90,00,000/- - Held that:- It is not in dispute that payment of ₹ 84,18,580/- was made for purchase of trading goods. The Authorized Representative of the assessee could not bring any material before us to show that any trading goods so purchased remained unsold at the end of the relevant year. The assessee’s turnover also includes the business expenditure and profit of the assessee, besides the purchases. The assessee was not able to bring any material before us to show the amount of its other business expenses and the amount of gross profit earned by it. Thus, we find no infirmity in the order of the CIT(A) in estimating assessee’s turnover at ₹ 90,00,000/- which was most reasonable in the facts and circumstances of the case. The contention of the assessee that purchases of ₹ 13,73,600/- was shown by his wife in her Return of Income merits no interference with the finding of the CIT(A) as the assessee miserably failed to bring on record any material to show that payments were made from his credit card in respect of purchases made by his wife and in absence of any material to show how and when such repayments were made by his wife to him. - Decided against assessee. Addition on investment as peak deposit - Held that:- The assessee has brought no material before us to show that there was any error in the finding of the CIT(A) that the assessee made peak deposit of ₹ 5,26,869/- on 19.11.2007. Further, the assessee has brought no material to explain the source of the said peak deposit.- Decided against assessee. Unexplained credit card expenditure - purchase of trading goods - CIT(A) deleted the addition - Held that:- No material was brought on record by the Revenue after making necessary enquiries to show that payments from credit card was not made for purchase of trading goods, but was made for any personal expenses cannot be brushed aside simply on the basis of surmises and conjectures and without bringing on record material to controvert the explanation of the assessee. In absence of any material brought before us to show that the explanation of the assessee was not plausible, we find no good reason to interfere with the order of the CIT(A). - Decided against Revenue.
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2015 (1) TMI 785
Enhancement of income - no notice issued - Powers of CIT(A)- Held that:- Ld CIT(A) has proposed the enhancement by way of order sheet noting dated 06.11.2003 by asking various details. Further it is not the case of the assessee that the Ld CIT(A) has not given reasonable opportunity of being heard of showing cause against such enhancement as contemplated in sec. 251(2) of the Act. Hence, we do not find any merit in the said contention and accordingly reject the same. - Decided against assessee. Income recognition - power of enhancement of Ld CIT(A) - whether the income due from M/s India Value Investment Ltd is a “separate source of income” - income due from M/s India value investment fund also relates to “Investment Advisory fees - Held that:- According to Ld A.R, the assessee has reached settlement with M/s India Value Investment Ltd with regard to the Investment Advisory fee received from them on 09-04-2009 and the amount due from them was settled at GBP 12,14,022. According to Ld A.R, the assessee has offered the rupee equivalent of the above said amount in AY 2010-11. Since the assessee has settled the amount at GBP 12,14,022, we are of the view, of course subject to verification, that the income that should be considered in the hands of the assessee should not exceed the rupee equivalent of GBP 12,14,022 as per the Settlement agreement. As already noticed that the Ld CIT(A) took the view to assess the entire amount of income in AY 2009-10 only for the reason that the assessee has failed to furnish the details. The submissions of the assessee that the settlement was reached on 09-04-2009 and it has offered the entire amount of rupee equivalent of GBP 12,14,022 in AY 2010-11 are new facts that were not available before Ld CIT(A). Hence, in our view, the questions of ‘year of accrual’ and/or ‘year of assessment’ are to be considered afresh at the end of the Ld CIT(A) in the light of new facts brought on record by the assessee. Thus set aside the order of Ld CIT(A) with regard to the assessment of GBP 14,78,484 or as the case may be GBP 12,14,022 and restore the same to his file with the direction to examine about the assessability of the same afresh, i.e., year of accrual and/or year of assessment, in the light of the facts surrounding the same and accordingly decide the issue in accordance with the law. - Decided in favour of assessee for statistical puposes. Penalty u/s 271(1)(c) - Held that:- As we have restored the matters relating to the year of accrual and/or assessment of the income due from M/s India Value Investment Ltd to the file of the Ld CIT(A). Hence we are of the view that the issue relating to the penalty also requires to be set aside to his file.- Decided in favour of assessee for statistical puposes.
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2015 (1) TMI 784
Enhancement of income - applying higher rate of profit at 12% - assessee complaint of not giving proper and sufficient opportunity of being heard - Held that:- As is clearly evident from the averments made by assessee in his affidavit, Ld. CIT(A) has passed the impugned order enhancing the income of the assessee without giving proper and sufficient opportunity of being heard to the assessee and this position is not disputed even by learned D.R. In our opinion, the impugned order passed by Ld. CIT(A) enhancing the income of the assessee, thus, is in violation of the principles of natural justice. Accordingly, we set aside the same and remit the matter back to him to dispose of the appeal of the assessee afresh, after giving the assessee a proper and sufficient opportunity of being heard. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 783
Long Term Capital Gain - assessee executed a release deed of property - whether ‘release’ is regarded as a transfer for the purpose of capital gains, when cost of acquisition to appellant is nil and when there is no cost of acquisition, whether capital gain arises - Held that:- When there is a case to which computation provision cannot apply at all, it is evident that such a case was not intended to fall within the charging section. On a reading of computation provision as contained u/s 48 of the Act, it is clear that while computing capital gain, the cost of acquisition has to be reduced. The cost of acquisition to assessee in the present case cannot be arrived at u/s 49 of the Act as the transaction entered into by assessee does not fall within any of the categories mentioned therein. Even the cost of acquisition cannot be taken to be ‘nil’ in terms with section 55(2) of the Act, as it is not coming within the category of transaction mentioned therein. In the aforesaid facts and circumstances, when undisputedly, there is no cost of acquisition to assessee, the computation provision fails, accordingly, capital gain cannot be computed. In the aforesaid view of the matter, assessee, in the peculiar facts and circumstances of the case, cannot be charged to LTCG on the value of consideration deemed to have been received on execution of release deed. Accordingly, we do not find any infirmity in the order of ld. CIT(A), which is upheld. - Decided in favour of assessee.
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2015 (1) TMI 782
Re-assessment - addition u/s 68 - CIT(A) deleted the addition - Held that:- Assessee had placed on record confirmations, income tax returns, bank-statements and share-application forms from each of the share-holders. Summons issued to them, have also been responded to, confirming the investment. However, we find that AO made no further enquiry to discredit the claim of the assessee in this respect. Admittedly,the prior-enquiry made by the investigation wing which triggered the re-assessment, has been made behind the back of the assessee, which does not justify the inference of the AO. - Decided in favour of assessee.
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2015 (1) TMI 781
Exemption U/s 10(34) and 10(38) on dividend income and on redemption of Mutual fund units - Exemption U/s 10(23C)(iiiae) on interest income - AO challenged CIT(A) order allowing such exemption as without appreciating the fact of the case that the assessee has never claimed exemption under these sections, in the return of income - assessee trust is registered u/s 12AA - Held that:- It is noted by CIT(A) that the Assessing Officer while completing the assessment has treated the income of ₹ 7.50 lac of the hospital as exempt u/s 10(23C)(iiiae) of the Act and the income of the liaison office was determined at ₹ 71,93,691/-. We do not find any merit in this stand taken by CIT(A) because this expenditure of donation cannot be considered as an expense incurred for earning interest income or dividend income or capital gain. Therefore, on this aspect, we reverse the order of CIT(A) and restore that of the Assessing Officer. In addition to this, the CIT(A) has directed the Assessing Officer for allowing exemption to the assessee u/s 10(34) in respect of dividend income of ₹ 61.46 lacs and exemption u/s 10 (38) of ₹ 1,17,262/-. On this aspect, we do not find any infirmity in the order of CIT(A) and therefore, decline to interfere in the order of CIT(A) on this issue. Thereafter in Para 4(11), it is held by CIT(A) that in his view, the hospital and liaison office are to be considered as a whole and not separately and therefore, the income generated at the liaison office having been utilized for the objects of the assessee trust, which is philanthropic u/s 10(23C)(iiiae) of the Act, is eligible for exemption under that section. Thereafter, he directed the Assessing Officer to allow exemption u/s 10(23C)(iiiae) on the entire income of ₹ 71,93,691/-, which also includes income of ₹ 62.64 lacs being separately exempt u/s 10(34) and 10 (38). On this aspect, we do not find any merit in the stand taken by CIT(A) because as per the provisions of clause (iiiae) of section 10(23C), only those income which are received by a hospital on account of treatment is exempt u/s 10(23C)(iiiae) and not any income received by the said entity. Hence, on this aspect, we reverse the order of CIT(A) and restore that of the Assessing Officer. - Decided partly in favour of revenue. Exemption U/s 10(23C)(iiiae) - Entire receipts of the appellant being below ₹ 1 Crore is fully covered within the provisions of Section 10(23C)(iiiae) as held by CIT(A) - Held that:- it is noted by the Assessing Officer that the total receipt from hospital was ₹ 3,41,437/- and bank interest on FDR was ₹ 22,06,224/-. Thereafter, it is noted that the net surplus from hospital was declared at ₹ 9,48,174/-, which was held to be exempt u/s 10(23C)(iiiae) of the Act. In addition to that, the Assessing Officer worked out the income of liaison office at Mumbai at ₹ 17,88,398/- consisting of interest income and dividend income. Against this, the Assessing Officer has allowed deduction to the extent of ₹ 11.07 Lacs being 15% of the gross receipts of ₹ 73,10,836/- and assessed the net income at ₹ 7,38,018/-. It goes to show that the income assessed by the Assessing Officer is consisting of interest income only. We have already decided while deciding the appeal of the Revenue for assessment year 2005- 06 that exemption is not allowable to the assessee u/s 10(23C)(iiiae) of the Act in respect of interest income. Hence, we decline to interfere in the order of CIT(A) on this issue. - Decided against assessee. Donation to trust outside India - CIT(A) deleted the addition considering additional evidence - Held that:- Issue was decided in favour of the assessee on the basis of this fact that the donnee M/s Lions Clubs International Foundation is having office at Mumbai also. This amount has been given towards the project of campaign sight first- II. It is also noted by CIT(A) that M/s Lions Clubs International Foundation is assessed in India under PAN AAAAL1691F. He has given a clear finding that the income has been properly applied for charitable purposes u/s 11 of the Act and no addition is warranted. Learned D.R. of the Revenue could not controvert this finding of CIT(A). Regarding the technical objection that there is violation of Rule 46A, we are of the considered opinion that for a small amount and after such a clear finding, no purpose will be served by restoring the matter back to the Assessing Officer and therefore, we decline to interfere in the order of CIT(A) on this issue. Decided in favour of assessee
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2015 (1) TMI 780
Maintainability of the assessment order passed by the AO u/s 143(3) instead of Section 153C of the Act - Held that:- As per clause (b) of subsection (1) of section 153A and second proviso, the AO can be issue notice for assessment or reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted. As per proviso to section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the AO having jurisdiction over such other person. For initiating valid jurisdiction u/s 153C, even if the AO of the person searched and the AO of such other person is the same, he has to first record the satisfaction in the file of the person searched and thereafter, such note alongwith the seized document/books of account is to be placed in the file of such other person. The date on which this exercise is done would be considered as the date of receiving the books of account or document by the AO having jurisdiction over such other person. Also as per section 153(1), the AO can issue the notice for the previous year in which search is conducted (for the purpose of Section 153C the document is handed over) and six assessment years preceding such assessment year. Therefore, issue of notice u/s 153C issued by the Revenue cannot be sustained on both the above counts, i.e., it is legally not valid as conditions laid down u/s 153C has not been fulfilled and it is barred by limitation. In view of the above, we quash the notice issue du/s 153C and consequently, the assessment completed in pursuance to such notice, is also quashed. - Decided in favour of assessee.
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2015 (1) TMI 779
Disallowance of deduction u/s 80IB(10) - Held that:- Entire work from the stage of the commencement to the stage of making the residential unit habitable have been carried out by the assessee only and, therefore, assessee is eligible for deduction u/s.80-IB(l0) of the Act. We direct the A.O to grant the deduction to the assessee u/s. 80IB(10) of the Act as relying on Satsang Developers [2014 (5) TMI 184 - ITAT AHMEDABAD ], Narayan Reality Ltd. [2014 (5) TMI 221 - ITAT AHMEDABAD] - Decided in favour of assessee.
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2015 (1) TMI 778
Reopening of assessment - computation of exemption u/s 10B based on apportionment of expenses between eligible and non eligible units - Held that:- We certainly cannot accept the argument of the CIT(A) that initial initiation of reassessment proceedings was to examine the acceptability of claim of exemption u/s 10B and the current one is to restrict the exemption. This is because, the AO had the occasion to examine the details filed by the assessee, which were considered not only by the AO but also by the CIT(A), who in the initial proceedings directed the AO to allow the deduction as per law. In the current proceedings also, the revenue authorities examined those vary details to come to a different conclusion. Another major discrepancy noticed during the course of arguments is that there is no mention of authorization of a higher authority to initiate the current reassessment proceedings. Approval of CIT is mandatory. Since there is no mention of the approval sought from the CIT on the reasons, as recorded by the AO to initiate reassessment proceedings, the entire initiation has been vitiated and become bad in law. - Decided in favour of assessee.
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2015 (1) TMI 777
Dis allowance u/s. 14A, Rule 8D(2)(ii) in respect of speculation business - interest costs for earning dividends - Held that:- If the conclusion arrived at by the Tribunal in the case of the assessee itself for Assessment Year 2009-10 is analyzed with the facts of the present Assessment Year, uncotrovertedly the disallowance computed under Rule 8D of the Income Tax Rules cannot be more than the actual expenditure incurred by the assessee for the dividend income excluding the activity of share trading which is the business activity of the assessee. The computation of disallowance arrived at as per Rule 8D of the Rules should be restricted only to the extent of actual expenditure or to the extent of the expenditure which can be attributable to the activity of the dividend income excluding the business activity of share trading. Thus, we direct the Assessing Officer to re-compute the disallowance u/s 14A with the rider to the actual expenditure which can be attributable to the receipt or earning of dividend income excluding the expenditure related to business activity of share trading. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 776
Agricultural v/s non agricultural land - situation of lands in any area within such distance not being more than 8 kms from the local limits of any municipality or cantonment board - whether assessee’s 16 acres 24 guntas land, 3 acres can be held as non agricultural land and the balance 13 acres can be treated as agricultural land? - Held that:- It was submitted that 1 acre 20 guntas could be taken as land put to use by each of the brothers and not 3 acres in the case of Raghavalu alone. We find merit in the arguments of the ld Counsel. The CIT (A) cannot presume that another 1 acre 20 guntas are to be set apart by the assessee over the above 1 acre 20 guntas used by the assessee for storage of metal stone crushers and stocking yard for spalls, metal, metal dust, labour quarters etc. The excess of 1 acre 20 guntas wrongly looked by the CIT (A) towards metal stone crushers and stocking yard for spalls, metal, metal dust, labour quarters etc.could be kept for the purpose of cultivation of land and growing of crops. It seems that the ld CIT (A) has got confused about the extent of 3 acres being jointly held by the brothers and hence observation. Therefore, we clearly conclude that in our opinion, 1 acre and 20 guntas of land are taxable in the case of Shri Raghavalu, while the rest are exempt as they are covered by the provisions of section 2(14)(iii) of the I.T. Act. We direct the AO to rework the relief to the assessee accordingly. Decided partly in favour of assessee.
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2015 (1) TMI 775
Dis allowance of labour charges for repairing of vehicles - Held that:- The authorities below have given a finding on fact which is not controverted by the assessee by placing any contrary material on record. Moreover, the assessee has not placed any evidence on record proving the nature of repairs on vehicles carried out by the assessee and even no description of the vehicles is given. Hence, we do not find any reason to interfere with the order of the ld.CIT(A), same is upheld. - Decided against assessee. Disallowance of carting charges on estimated basis - rejection of filing of additional evidence - Held that:- CIT(A) has not considered the remand report stating that qua the carting expenses of ₹ 1,23,35,232/-, the amount towards carting charges was only ₹ 84,03,989/- out of which, a sum of ₹ 25,38,518/- was paid by the assessee through cheque and remaining amount of ₹ 58,65,471/- was paid by cash through vouchers which were verified by the AO as per books of accounts. Hence, we are of the considered view that the ld.CIT(A) was not justified in sustaining the addition when the AO himself has pointed out that there was wrong entry of some of the amount paid by cheque and amount paid by cash through vouchers were verified as per the books of accounts. Moreover, the ld.CIT(A) has failed to appreciate the fact that the AO has not rejected the books of accounts by invoking the provisions of section 145(3) of the Act. Therefore, we hereby direct the AO to delete the addition made on account of carting expenses. - Decided in favour of assessee.
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2015 (1) TMI 774
Suppression of sales - CIT(A) deleted the addition - Held that:- production in the month of February was lesser as compared to the month of July and so was the consumption of electricity. Assessing Officer failed to appreciate the very basic that production could not be consistent in all months. In principle, Assessing Officer accepted the variation to reach the conclusion that monthly variation could not be in excess of 20-30%, her action of reducing the total production figure by 30% to arrive at suppressed sales is devoid of logic. In view of this, CIT(A) was justified in deleting the addition made by Assessing Officer after rejecting the books account. This reasoned factual finding of CIT(A) needs no interference. - Decided against Revenue. Understated agricultural expenses - CIT(A) restricted the addition to ₹ 13,714 out of Rs, 78,000/- - Held that:- Total expenses inclusive of expenses of ₹ 8,50,305/- incurred by assessee and his brothers were worked out to ₹ 11,32,229/- resulting in net agricultural income in the hands of land owners of ₹ 19,03,972/-. The total expenditure of ₹ 11,32,229/- represented 37.29% of gross agricultural receipt of ₹ 30,26,200/-. CIT(A) held that reasonable expenses incurred on any agricultural activity would constitute 40% of total agricultural receipt. In case of assessee, the percentage was 37.29 which meant that there was still a gap of 2.71%. i.e. assessee had understated the expenditure to the extent of ₹ 82,281/-. Assessee's l/6th share worked out to ₹ 13,714/-. Accordingly, addition was limited to that extent. - Decided against Revenue. Unexplained investment u/s. 69B - CIT(A) deleted the addition - Held that:- Reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same because the said provision of Section 50C of the Act was not applicable at relevant point of time and provides that valuation made by Stamp Valuation Authority is to be deemed as consideration received by seller. Accordingly, order of CIT(A) on the issue is uphold. - Decided against Revenue. Unexplained cash credit - CIT(A) deleted the addition - Held that:- Assessee had furnished all relevant details including confirmation letters showing complete addresses of the creditors. Instead of conducting any inquiry of his own by issuing summons etc, Assessing Officer simply chose to add the cash deposits in the bank account of creditors in the hands of the assessee. He completely ignored the fact that loans had been repaid during the year by cheques and this was evidenced by bank statements/pass books of the creditors. In other words, they no longer appeared as outstanding unexplained in the hands of assessee. In such circumstances, additions were not justified and they were rightly deleted by CIT(A). - Decided against Revenue.
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2015 (1) TMI 773
Transfer pricing adjustment - payment of management fee unwarranted - Held that:- When the assessee claims that the assessee has paid the management fee to the AE, no doubt the burden is on the assessee to prove that it has received services from its AE. But when the assessee has produced such material before any of the authorities below it is also the duty of the authorities to consider the same before coming to any conclusion on merits. In view of the same, without verification of proper evidence, it not justified to come to the conclusion that payment of management fee of ₹ 1.55 crore is unwarranted. In view of the same, we set aside the order of the AO on this issue and remit the issue to the file of the AO/TPO for readjudication of the issue and re-determination of the arm’s length price in accordance with law. The assessee shall also be given an opportunity to produce all the relevant materials before the AO and the assessee shall co-operate with the AO for early determination of the arm’s length price by the AO/TPO. Decided in favour of assessee for statistical purposes. Disallowances in computation of deduction u/s 10A - Held that:- When two reasonable constructions are possible, then the construction in favour of the assessee must be adopted. Thus the decision of the Hon’ble Karnataka High Court in the case of Yokogawa India Ltd.(2011 (8) TMI 845 - Karnataka High Court ) holds the field stating that the income of the section 10A unit has to be excluded before arriving at the gross total income of the assessee - The issue of reducing expenditure incurred on telecommunication, insurance and in foreign currency both from the export turnover as well as total turnover is covered by the decision of the jurisdictional High Court in the case of Tata Elexsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT ). - Decided in favour of assessee. Addition of various amounts as ‘income from other sources’ - Held that:- Interest on deposits which are deposited to obtain bank guarantee issued to the customs authorities, reimbursement of expenses by the customers on account of certain bills produced by the company on their behalf and recovery from the employees leaving the company without the giving notice period are part of the business income of the assessee and have to be considered for computation of deduction u/s 10A of the Act. - Decided in favour of assessee.
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Customs
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2015 (1) TMI 795
Import of Polishing Material viz Stain Lacquer, Patina and Natural Wax - inputs to be used in the manufacture furniture - whether the furniture exported by the appellant would be considered as handicraft or not - Denial of benefit under Notification No. 21/2002-Cus dated 1.3.2002 - Import of goods on payment of Concessional rate of duty as also at NIL rate of duty under Notification No. 21/2002-Cus dated 1.3.2002 - held that:- Admittedly respondent have produced the certificate from the Export Promotion Council for Handicrafts, as required in the said notification - Revenue, apart from making a bald statement that such certificates stand issued based upon mis-declaration made by the assessee, has not referred to or relied upon any evidence to substantiate the said allegation. The Notification requires issuance of certificate by the highest body operating in the field of export of handicraft. To allege that the said certificates were wrongly procured is in excess jurisdiction of the Customs, who have not been given any authority by the notification in question the correctness of the EPC certificates. The respondents are registered as manufacturers with the said Export Promotion Council. To allege that such certificates were obtained by mis-declaration, without any evidence, amount to casting suppressions on the said highest body dealing with export of handicraft. Whether furniture exported by the appellant was simple furniture not covered by the definition of handicraft. - Held that:- We find that there is no definition of handicrafts available either in the act or under notification. Shri Sandeep Mundra of the Respondent unit, in his statement recorded on 4.10.2005, has categorical by stated that the furniture has visual appeal due to stone inlay, carving etc. and further hand embellishment & hand distressing were work done to make the furniture Artistic which are sold in the International market because of its beauty. We also note that the appellant had imported stone etc. also for use in the exported furniture. On the other hand the revenue has gone by the examination of the furniture by the customs officers, who cannot be held to be experts in the field. There is no expert opinion produced by the customs authorities. On the other hand the fact that the appellant is registered with the export promotion council in handicraft, is indicative of the fact that furniture manufacture by the appellant is handicraft, in which case the benefit of the notification No. 21/2002 would be available to them. - Decided against Revenue.
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2015 (1) TMI 794
Classification of goods - import of Chrysler 300C Sedan RHD car from M/s Paramount Auto Exports Inc., USA, a dealer for Chrysler Vehicles and engaged in converting vehicles into limousines - Classification under CTH 8702 1019 or under CTH 8703 - Held that:- Tribunal had clearly directed the Revenue to get the vehicle examined and obtain expert opinion from agencies such as ARAI/VRDE with regard to the seating capacity and determine the classification issue. When the said order was passed, the vehicle was very in the possession of the department and they could have got the necessary examination/verification done, which they failed to do. Even after the apex court decision, before allowing release of the vehicle, the said action could have been undertaken. This shows gross negligence and complete disregard on the part of the department to the directions given by this Tribunal. Thus the entire blame for the inaction lies squarely on the department. In the letter dated 19-11-2012, ARAI has not given any opinion on the seating capacity of the impugned vehicle. They have merely observed that the vehicle was originally designed for seating 5 persons. However, they advised the department to verify from the concerned vehicle manufacturer about the type approval certification issued from the country of origin for the above vehicle with modified seating capacity. This direction has also not been complied with. As regards the ARAI's observation that – "under provisions of Motor Vehicles Act, any modification/alteration to the original vehicle are not permitted under section 52 of the Motor Vehicle Act", this observation is quite irrelevant as the modification has been undertaken abroad before importation and the Indian Motor Vehicle Act does not have any extra-territorial jurisdiction. It is a well-settled position in law that imported goods have to be assessed to duty in the form in which they are presented. In the facts of the present case, the vehicle as imported has been presented with a seating capacity of 12. Further, the regional transport authorities at Delhi has registered the vehicle as having a seating capacity of 10. The certificate of fitness and the tourist permit for the vehicle issued by the RTO authorities at Delhi also confirm this fact - impugned order is not sustainable in law and the claim of the appellant that the vehicle merits classification under CTH 8702 has to be allowed in the light of the registration certificate, fitness certificate and the tourist permit granted to the appellant by the RTO authorities in Delhi - Decided in favour of assesse.
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2015 (1) TMI 793
Waiver of pre deposit - Classification of coal as bituminous coal - denial of the benefit of Notification No. 12/2012-Cus. Dated 17/03/2012 - Held that:- As per the explanatory Note 2 to Chapter 27, 'bituminous coal' means coal having a volatile matter limit (on a dry, mineral-matter-free basis) exceeding 14% and a calorific value limit (on a moist, mineral-matter-free basis) equal to or greater than 5833 kcal/kg. Any coal satisfying the above definition would merit classification as 'bituminous coal' under CTH 2701 12 notwithstanding the fact that the goods may be known otherwise in the commercial/trade parlance. As held by the hon'ble apex Court in the case of Indo International Industries vs. Commissioner of Sales Tax, Uttar Pradesh [1981 (3) TMI 77 - SUPREME COURT OF INDIA] "if any term or expression has been defined in the enactment, then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted." In the present case, since the Customs Tariff defines 'bituminous coal' by means of certain specifications and if those specifications are satisfied, the goods will have to be classified as 'bituminous coal' only and not otherwise. - appellant has not made out any case for waiver of the entire amount of dues adjudged. The appellant has not pleaded any financial hardship nor any evidence has been placed before - entire duty to be deposited - interest and penalty waived - Partial stay granted.
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Service Tax
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2015 (1) TMI 814
Denial of refund claim - Time limit for refund claim - Held that:- time limit for considering the appeal under Section 11 has to be reckoned from the date of export as discussed above. The appellants are contesting this ground. The learned counsel relied upon the decision in the case of Taco Faurecia Design Center Pvt. Ltd. and ors. Vs. CCE, Pune [2014 (3) TMI 78 - CESTAT MUMBAI] to submit that in the case of export of services, the relevant date has to be counted from the date of receipt of consideration. We find the decision to be applicable to the facts of this case. As regards the merits, the Commissioner has already taken a view with regard to several services and has remanded the matter for granting the refund after considering the documents etc. With regard to the Commissioners order as clearly held the appellant is to be eligible for refund on merits and only limitation is the issue, since we have taken a view that limitation has to be counted in a different manner, the original adjudicating authority has to proceed on the basis of the decision cited hereinabove. As regards merit, since the Revenue is not in appeal against the decision of the Commissioner(Appeals), his decision will have to be implemented. With reference to cases where there are no clear observations of the Commissioner(Appeals), the original adjudicating authority may after giving reasonable opportunity to the appellants to present their case decide the eligibility of particular input service for refund in accordance with law - Decided in favour of assessee.
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2015 (1) TMI 813
Waiver of pre-deposit of Service Tax - Penalty u/s 78 - GTA Service - Held that:- applicants had engaged various transporters who are owning the tankers in transferring the material or according to them for movement of their own goods from one location to another location. From the schedule of rates annexed at page 84 of the appeal memorandum, we find that for transfer of the goods, the respective transporters were paid on the basis of running of the tankers per km. basis and the contract is for three years from the date of deployment of the tanker. Prima facie, at this stage, we are convinced that the applicants had received the services of Goods Transport Agency Service during the relevant period and accordingly, the same is taxable. However, also prima facie, we find force in the submission of the ld. Advocate for the applicant that even the demand is confirmed, the same would be around 44.40 lakhs, The applicant has annexed the detailed workings in support of their claim being duly signed by their Finance Manager and hence carries weight in view of the fact that the applicant is a public sector undertaking, In these premises, the applicant could not make out a case for total waiver of pre-deposit of duty - Partial stay granted.
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2015 (1) TMI 812
Imposition of penalty - Invocation of Section 80 - Held that:- there is a case of wilful suppression and concealment of value of taxable services. Therefore, the plea of reasonable cause has been negatived by the original authority and the same has not been challenged by the appellant. In such circumstances, there can be no question of invocation of Section 80 of the Act. In view of the above, the Tribunal is fully justified in upholding the penalty order passed under Section 78 of the Act. On the facts of the case, if there is a finding of wilful suppression and concealment of value, there is no question of invocation of Section 80 of the Act. The lower authority rightly declined to exercise the power under Section 80 of the Act and the Commissioner was correct in seeking revision of that order and in the light of the said provision of law the order of the Tribunal is fully justified in the facts of the case. - Decided against assessee.
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2015 (1) TMI 811
Waiver of pre deposit - Cargo handling service - Receipt of amount from FCI - Amount not deposited with Central Government - Held that:- Under the circumstances and considering the facts and circumstances, as such, the learned CESTAT has not committed any error in not passing the full waiver of pre-deposit. It is required to be noted that as such the petitioner has never pleaded any financial hardship, which is required to be considered while considering the issue with respect to pre-deposit. Identical question came to be considered by the division Bench of this Court in the case of M/s. Explosion Proof Electrical Control and Ors. (2011 (10) TMI 442 - GUJARAT HIGH COURT) and in the said decision the Division Bench has considered the decision of the Hon’ble Supreme Court in the case of Benara Valves Ltd. & Ors (2006 (11) TMI 6 - SUPREME COURT OF INDIA); the decision of the Hon’ble Supreme Court in the case of Mehsana District Cooperative Milk P.U. Ltd. v. Union of India reported in [2003 (3) TMI 113 - SUPREME COURT OF INDIA] and the decision of the Hon’ble Supreme Court in the case of Indu Nissan Oxo Chemicals Industries Ltd. Union of India reported in [2007 (12) TMI 220 - SUPREME COURT OF INDIA] wherein it is held that while considering waiver of condition as to pre-deposit, condition can be waived on the ground of undue hardship. As such the petitioner has not pleaded any undue financial hardship. Now so far as safeguarding the interest of the revenue is concerned, as it is required to be noted that as such the petitioner did charge and recovered the amount of service tax from FCI, which the petitioner retained with it and did not deposit the same in the Central Government Account and, therefore, considering Section 73A of the Act the petitioner is liable to deposit the same in the Central Government Account. Under the circumstances and in the facts and circumstances of the case and considering the provisions of Section 73 of the Act, no error has been committed by the learned CESTAT in not passing the order of full waiver of pre-deposit, which the petitioner charged and recovered from FCI and did not deposit the same in the Central Government Account. It is required to be noted that as per Section 73A of the Act even if a person, who is liable to pay the service tax, has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of Chapter V of the Act or the Rules made thereunder from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government. Under the circumstances, the contention on behalf of the petitioner that the petitioner may not be called upon to deposit the balance amount of ₹ 5 crores as pre-deposit, the amount of service tax, which the petitioner charged and collected from FCI, cannot be sustained. - However, pre deposit amount is reduced - Decided partly in favour of assessee.
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2015 (1) TMI 810
Validity of Show-cause Notice - Two show cause notices dated 21.4.2010 and 20.4.2011 were issued for the period April 2008 to March 2011 alleging that the assesee had provided Business Auxiliary Service and had failed to remit tax on amounts received for providing such service – Did the Tribunal fall into error in rejecting the Revenue’s appeal, holding that the Show Cause Notices in question were not in accordance with law - Held that:- Object and purpose of SCN is to inform the recipient of the allegations against him so that he can meet them effectively and is not prejudiced by manifestly vague notice which leaves him confused and unable to answer/reply. The assessee must be given a reasonable and real opportunity and made aware as to what he has to meet. But, the notice cannot be read as a legislative enactment which is to the point, precise and required to show exceptional lucidity. What is required to be seen is whether the allegations made have been conveyed and set forth, to enable the recipient/assessee to get an opportunity to defend himself against the charges. Notice should not suffer from obscurity and unintelligibility as to deny a fair and adequate chance to the recipient/assessee to get himself fully exonerated and avoid incidence of tax. What transpired after the notice was served, conduct of the parties thereafter, hearing given, are all factors that have to be examined to ascertain as to any prejudice was caused resulting in an arbitrary and unjust decision. Principle of prejudice resulting from vagueness and uncertainty has to be examined in pragmatic and a reasonable manner. No substantial question of law arises for consideration in the present appeal. It is not possible to agree with the said submission. As noticed above, substantial question of law was framed on 4th April, 2014. Tribunal in the impugned order has held that the show cause notices itself were vague and in violation of the principles of natural justice, and has set aside the order-in-original, which was passed. The show cause notices, averment made therein and principle of prejudice caused was not considered in proper legal perspective. Tribunal has not disposed of the appeal filed by the respondent-assessee on merits in respect of the findings given by the Commissioner of Service Tax, holding that the activities were taxable under the head ‘Business Auxiliary Services’. - Matter remanded back - Decided in favour of Revenue.
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2015 (1) TMI 809
Rent-a-cab service - transportation services - transportation of papers/answer sheets, examiners – agreement terms indicating vehicle itself not given for operation under ownership and management of client - payments made for operating trips to various places. - Non filing of ST-3 returns - levy of penalty. Held that:- petitioner cannot escape tax liability on the ground that the hiring is different from renting as the intention of the Government is to tax service provider of a service which involves both hiring and renting of a cab for a longer duration and distinction as sought to be carved out by the petitioner is not finding favour with this Court. - Despite there being Section 74 of Motor Vehicles Act, when Section 75 of the said Act is brought on statutory book, that does not also allow us to hail the submissions of the petitioner that those who give vehicle without exclusive control cannot be taxed. The Tribunal ignored the legal position. There is nothing to read into the taxing statute that only those persons who own the vehicles and give their vehicles on rent with exclusive control of the customer only would be charged. The scope of amended provision, which is as per Section 65(38), has been widened by deleting the requirement of holding a licence under Rent-a-cab Scheme, 1989. Under the amended provision any person engaged in business of renting of cabs becomes a rent-a-cab scheme operator. - if the petitioners are plying the motor cabs or maxi cabs and the services are provided by them to any person in relation to the renting of the cabs, such service becomes a “taxable service” and therefore, comes within the ambit of Section 66(3) of the Finance Act. In view of these provisions, it is not at all necessary to rely exclusively on Section 65(50), (51) and (52) which deal with the services offered by the “tour operators.” That subject is entirely distinct and separate from the subject of the services provided by a rent-a-cab scheme operator though relevant as we have already shown in paragraph 50 while dealing with the petitions of “tour operators”. In the case of Kuldeep Singh Gill [2010 (4) TMI 283 - PUNJAB & HARYANA HIGH COURT], it was held that transportation or vehicle hire service is different than the service being provided by rent-a-cab scheme operator and the same cannot be held to be covered under the said service category - The decision in the case of Kuldeep Singh Gill distinguished. Decision in the case of Federation of Bus-operators Assn T.N. v. UOI [2001 (4) TMI 7 - HIGH COURT MADRAS] followed by observing that applied all vital observations of Madras High Court mutatis mutandis to the case before the High Court. - Decided against the assessee. Extended period of limitation - Held that:- Merely because the petitioner got himself registered on 23-3-2004 and by way of abundant caution incorporated and accepted its liability in one of the terms of agreement, as and when arises, that ipso facto cannot be adjudged as his deliberate act of non-payment of tax alleging suppression and mala fide intention. It is a matter of record that the petitioner has been operating in the field from the year 1997. Every year by virtue of tender published by GSEB on the basis of yearly contract, it provides vehicles to the Board for the purpose of examining squad, for transfer of papers and for other requirements during the SSC and HSC examinations. Considering a serious legal debate as to who can be said to be renting of a cab, petitioner if has not paid service tax on such services, the Tribunal correctly appreciated that such, by no stretch of imagination, be held as mis-statement or deliberate act of suppression or mala fide intent. - Decided partly in favour of Revenue.
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2015 (1) TMI 772
Correctness of Circular No. 96/7/07-ST - banking and financial services - Chit fund business - Supreme Court dismissed the appeal filed by Revenue against the decision of High Court [2008 (7) TMI 227 - HIGH COURT ANDHRA PRADESH], wherein High Court held that Revenue is not correct to treat the chit fund business to fall within the ambit of asset management as there is subtle difference between “banking and financial services” as defined under the Act and the services of the chit transactions - further revenue cannot levy a tax for the first time on a totally new arena by issuance of a circular - as the Finance Act is not properly amended to bring within its fold chit transactions, the demand is unsustainable.
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Central Excise
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2015 (1) TMI 817
Confirmation of demand of an amount which is 5% of the value of Sulphuric Acid cleared by the appellant to manufacturers of fertilizers by availing the benefit of procedure of Chapter X (cleared at Nil rate of duty) - Held that:- identical issue of another manufacturer i.e. M/s Dharamsi Morarji Chemical Co. Ltd. [2010 (3) TMI 561 - CESTAT MUMBAI] was before the Tribunal in Mumbai and the final order specifically relies upon the decision of this Bench in the case of Advance Surfactants India Ltd and has allowed the appeal of M/s Dharamsi Morarji Chemical Co Ltd. At this juncture, we find that the issue involved in this case is also in respect of Notification No. 4/2006-C.E., which was being considered by the Bench in the case as cited herein above. - appellant has made out a prima facie case for waiver of the a amounts involved application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till the disposal of appeal. - Stay granted.
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2015 (1) TMI 816
Demand of Excise duty on value/price of the by-product namely Spent Acid cleared - while availing benefit of exemption under Notification No. 6/2002-C.E. – Held that:- Assessee in the process of manufacturing soap uses acid slurry and in the process Spent sulphuric acid gets generated as a bye product – demand set aside – Following decision of assessee's own previous case [2012 (10) TMI 138 - GUJARAT HIGH COURT] - Decided in favor of assessee.
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2015 (1) TMI 815
Duty demand u/s 11D - duty variation due to re-determination of petroleum products - Held that:- Section 11D requires that "every person who is liable to pay duty under this Act or the rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government." The main ingredients of this Section are that a person should have collected an amount (in excess of the duty assessed) in any manner as representing duty of excise from the buyer of such goods. In the instant case, we find that only a composite price under the administered pricing mechanism has been charged from the buyers under relevant invoices. We do not find any amount has been charged representing the same as duty of excise. Therefore, one of the main ingredient to attract Section 11D is lacking in this case - Following decision of M/s. Hindustan Petroleum Corporation Ltd. vs. CCE, Aurangabad [2003 (6) TMI 149 - CESTAT, MUMBAI] - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 806
Denial of rebate claim - applicant failed to give declaration regarding non-availment of cenvat credit, availed drawback benefit and as such, availed double benefit of drawback as well as cenvat credit - Held that:- appellate authority has'' rued that applicant has availed custom portion of drawback @12%, while they were eligible for drawback @4%. The applicants has contended that the observation of appellate authority is factually incorrect in as much as they claim drawback @4% of value or ₹ 12/- per kg. as value cap, whichever is lower and not @12% of value as observed by the appellate authority. Commissioner (Appeals) has on the one hand accepted that applicant has availed drawback of customs portion and rebate claim was admissible but on the other 'upheld rejection of rebate claim as applicant had availed DBK of custom portion @12% which is factually incorrect as claimed by applicant. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 805
Rebate claim - payment of duty on export goods at higher rate - Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-CE(NT) dated 06.09.2004 - manufacturers had cleared said goods for home consumption on payment effective rate of duty @ 4% upto 28.02.11 and @ 5% w.e.f. 01.03.11 under Notification No. 4/2006-CE dated 01.03.2006 as amended - original authority after following due process of law, held that duty was required to be paid on exported goods at the effective rate of duty @ 4%/5% in terms of Notification No. 4/2006-CE dated 01.03.2006 as amended and sanctioned the rebate claims to the extent of duty payable @ 4%/5%. Held that:- Further the classification and rate of duty should be as stated in schedule of Central Excise Tariff Act, 1985 read with any exemption notification and /or Central Excise Rules, 2002. The CBEC instructions clearly stipulate that applicable effective rate of duty will be as per the exemption notification. While sanctioning rebate claim of duty paid on exported goods and therefore the whole issue will have to be examined in the light of the instructions. As explained above, Notification No. 2/08-CE dated .1.03.08 as amended prescribed General Tariff rate of duty @10% which was in fact brought down from 16% to 14% and then to 8% and finally to 10% by different amending notifications. The notification No. 4/06-CE dated 1.03.06 as amended prescribed effective rate of duty from initial rate of 0% to 8%, 8% to 4% and finally to 5% by different amending notifications. As such it is not correct to say that it is a case of applicability of two notifications only and assessee is at liberty to choose anyone notification which is beneficial to. him. In this case, notification No. 2/08-CE as amended provided for General tariff rate of duty and Notification No. 4/06-CE as amended provided for effective rate of duty and they have to be strictly construed.as such. Therefore they have to be read together as stipulated in Para 4.1 of Part-I of Chapter 8 of CBEC Excise Manual. Both the Notifications prescribed effective rates of duty. Notification No. 30/04-CE prescribed nil rate of duty provided manufacturer does not avail cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover, there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-0X dated 26.11.10 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act, 1944. Applicants have relied upon CBEC circular No.510/06/2000-Cx dated 3.2.2000.In this regard, the Government observes that w.e.f. 1.7.2000, the concept of transaction value was introduced for valuation of goods under Central Excise Act and therefore said Circular issued prior to the introduction of transaction value concept, cannot be strictly applied after 1.07.2000. As per para 3(b)(ii) of Notification No. 19/04-CE(NT) dated 6.09.04, the rebate sanctioning authority has to satisfy himself that rebate claim is in order before sanctioning the same. If the claim is in order he shall sanction the rebate either in whole or in part. - There is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @4% or 5% in terms of exemption notification No.4/06-CE dated 1.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No.4/06-CE dated 1.03.06 as amended, as applicable on the relevant on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. As such the excess paid amount/duty is required to be returned to the respondent in the cenvat credit account of the concerned manufacturer subject to compliance of provisions of Section 12(B) of Central Excise Act 1944. The impugned orders-in-appeal are modified to this extent. - Appeal disposed of.
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2015 (1) TMI 804
Modvat / Cenvat Credit - eligible capital goods - parts of materials conveying equipments falling under Chapter Heading 84.28. - Held that:- Following decision of assessee's own previous case [2013 (8) TMI 576 - MADRAS HIGH COURT] - Decided against Revenue.
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2015 (1) TMI 803
Benefit of the Notification 67/95 - molasses used captively for manufacture of rectified spirit and denatured spirit - Held that:- As evident from the objection as made by the assessee, the issue pertains to rate of duty that is payable by the respondent, but for the notification in question. Therefore, the objection as raised by the respondent is liable to be sustained, more so, in view of the decision of the Supreme Court in Navin Chemicals Manufacturing & Trading Co. Ltd. - Vs Collector of Customs (1993 (9) TMI 107 - SUPREME COURT OF INDIA), which decision has been followed by this Court in Commissioner of Central Excise Vs - Vadapalani Press [2015 (1) TMI 318 - MADRAS HIGH COURT] - Court is not inclined to deal with the matter, while disposing off the present appeal as not maintainable, is inclined to grant liberty to the appellant/department to pursue the matter before the Supreme Court, if so advised - Decided against Revenue.
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2015 (1) TMI 802
Reversal of MODVAT Credit - Penalty u/s 11AC - Interest u/s 11AB - Whether the lower appellate authority was right in setting aside the mandatory penalty under Rule 57-I(4) of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 for the entire period subsequent to 28-9-1996 - Held that:- Following decision of COMMISSIONER OF CENTRAL EXCISE, CHENNAI Versus EUROTHERM DEL INDIA LTD. [2014 (11) TMI 745 - MADRAS HIGH COURT] decision of the Tribunal holding that mandatory penalty is not leviable cannot be accepted and accordingly set aside and the matter is remanded to the Tribunal to reconsider this issue afresh in the light of the decisions referred supra and Notification No.14/96-CE (NT), dated 23.7.1996. Refund Claims Non Speaking Order - order passed by the Tribunal is bereft of reasons and analysis, the same is set aside and the matter is remanded to the Tribunal for passing a reasoned order. - Decided in favour of Revenue.
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2015 (1) TMI 801
CENVAT Credit - Credit availed on waste materials that would subsequently be converted into goods - Held that:- Appellate Tribunal is bound to decide the rival facts put forth on either side. But, in the instant case, even though a specific contention has been put forth on the side of the Department to the effect mentioned, the Appellate Tribunal has not at all considered the same. The Appellate Tribunal has simply quoted certain decisions and allowed the appeal and thereby, set aside the orders passed by the Authorities. Since the Appellate Tribunal is also a fact finding authority and since the same has not decided the facts put forth on the side of the Department, this Court is of the view that the impugned order passed by the Appellate Tribunal is not factually and legally sustainable. Under the said circumstances, the matter is liable to be remitted to the file of the Deputy Commissioner of Central Excise (Original Authority), Madurai. Since the matter is liable to be remitted as stated above, the substantial question of law settled on the side of the appellant - Decided in favour of Revenue.
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2015 (1) TMI 800
Rectification of mistake - Held that:- advocate appearing on behalf of the petitioner sought permission to withdraw the said Special Civil Application with a request to grant further time to the petitioner to comply with the order of pre-deposit and, therefore, we permitted him to withdraw Special Civil Application and extended time to make payment of pre-deposit. Therefore, it is factually incorrect to say that in the order, it is wrongly mentioned that “the petition is dismissed as withdrawn.” Therefore, there is no question of rectifying the order as requested. - Rectification denied.
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2015 (1) TMI 799
Demand of interest - Delay in payment of duty - Held that:- On the basis of the representation made on the side of the appellant, this Court has perused all the final orders and ultimately found that even without hearing the contention put forth on the side of the appellant, the CESTAT has simply upheld the orders passed by the Commissioner of Appeals and since in these matters, an important question of law involves and since no opportunity has been given to the appellant by the CESTAT, this Court is of the view to set aside the Final Orders in question and remit the matters to the file of CESTAT. Since the matters are liable to be remitted to the file of CESTAT, the substantial questions of law settled in the present Civil Miscellaneous Appeals need not be decided. - Decided in favour of assessee.
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2015 (1) TMI 798
Violation of the provisions of the Central Excise Act and Rules - Violation of principle of natural justice - Opportunity of hearing not given - Held that:- Petitioner has filed an application, as evidenced by Ext. P3, under the provisions of Section 35F of the Central Excise Act, 1944. It was also submitted that the petitioner was not informed at any point of time that the appeal was defective and copy of the show cause has to be furnished. Even in the notice also, it was not mentioned that the appeal was defective and copy of the show cause notice should be furnished. The petitioner has sought for an adjournment, as the notice intimating the hearing was received only on the day previous to the day fixed for hearing. Hence it appears from record, that the petitioner was denied an opportunity of being heard. I see valid force in the submission of the learned counsel for the petitioner that the order evidenced by Ext. P7 is passed in violation of the principles of natural justice. - Tribunal is directed to re-hear the memorandum of appeal - Decided in favour of assessee.
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2015 (1) TMI 797
Demand of duty - Clearance without warehousing certificate – SCN has been issued for clandestinely removal of said goods with intent to evade payment of duty leviable thereon – Whether the Tribunal [2012 (10) TMI 769 - CESTAT, AHMEDABAD] was legal and correct in upholding the Order-in-Appeal issued in violation of the prescribed procedure by solely relying upon the purported signature of the departmental officers, whereas they did not consider the substantial fact of the investigations which revealed that the vehicle purportedly used by the respondent for transportation of goods under ARE-3A No. 10 was utilized by some other party at the material time - Held that:- Tribunal concluded on the basis of the material that was made available to it. It also rightly pointed out that there was no claim on the part of the Department that any of the documents indicating clearly the proof of the goods having reached to the EOU at Calcutta, have been forged or the signature of officer being, in any manner, contradicted. The entire issue essentially is based on factual matrix. There is nothing in the findings of the Tribunal, which leads to conclude that there is any perversity giving rise to any question of law. - No sub substantial question of law arises - Decided against Revenue.
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2015 (1) TMI 796
Recall of order [2012 (5) TMI 173 - PUNJAB AND HARYANA HIGH COURT] - Levy of penalty under Rule 209 r.w.r. 26 of the Central Excise Rules,2001 directing the proprietor and partner of default companies to pay penalty – Held that:- Ground pleaded in the application is that Commissioner of Central Excise, Panchkula was wrongly impleaded as party-respondent, whereas the Commissioner of Central Excise, Chandigarh should have been made a party. None of these grounds would constitute a valid reason for recalling order dated 16-3-2012 particularly when at the time of admission of the appeal, learned counsel for the review-applicant-respondent was present - Recallind of order denied.
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CST, VAT & Sales Tax
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2015 (1) TMI 808
Opportunity of being heard – Incriminating material intended to be used supplied to petitioner or not - Whether a dealer is entitled to be supplied with the materials intended to be used against him in the assessment proceeding for his rebuttal – Held that:- It is shocking to see as to how very casually an order of escaped assessment u/s 43 of the OVAT Act has been passed raising huge demand of ₹ 8,34,77,727/- utilizing various allegations against the dealer without confronting the same to the dealer - in C. Vasantlal and Co. v. Commissioner of Income-tax, Bombay City [1962 (2) TMI 7 - SUPREME Court] and observed that the ITO is not bound by any technical rules of the law of evidence - It is open to him to collect materials to facilitate assessment even by private enquiry - But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it - an assessing authority is entitled to collect the materials behind the back of the assessee - all the materials so collected by the assessing authority need be confronted to the assessee - only those materials which the assessing authority intends to utilize against the assessee during assessment are bound to be disclosed to the assessee - a dealer is entitled to be supplied with the materials intended to be used against him in the assessment proceeding for rebuttal and the dealer's explanation with regard to those materials is bound to be considered by the AO in the assessment order either accepting or rejecting the same. Stage at which the copy of the seized documents should be supplied to the petitioner – dealer - Should it be supplied before or after production of books of account for verification by the assessing officer – Held that:- In order to plug the leakage of revenue, the fiscal statutes provide various measures to be taken by the departmental officers including surprise visit to the place of business, audit visit, establishment of check-post, inspection of goods in transit, etc. - Pursuant to such provisions, very often departmental officers used to pay surprise visit to the business premises of the dealer to find out whether all the transactions effected by a dealer in his day-to-day business are recorded in his regular books of account maintained for the purpose of paying tax - The inspecting officers while conducting inspection at the place of business of the dealer, invariably try to trace out such duplicate accounts - If any such account comes to their possession, they cross-verify the same with regular books of account maintained by the dealer and submit their verification report to the assessing officer alleging suppression of purchase and/or sale, if any, found on such verification - no opportunity of hearing has been afforded to the petitioner before passing the impugned order of assessment - the incriminating materials utilized against the petitioner in the assessment order have not been supplied to the petitioner to which the petitioner is entitled to – thus, the order passed u/s 43 is set aside and the matter is remitted back to the AO for fresh assessment – Decided in favour of petitioner.
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2015 (1) TMI 807
Tax liability on the Nitrogen component - Exemption in respect of Phosphate and Potassium contents of the fertilizer available or not – Held that:- In State Of UP. and others Versus Deepak Fertilizers & Petrochemical Corporation Ltd. [2007 (5) TMI 323 - SUPREME COURT OF INDIA] it has been held that the Notification dated 15.5.1995 is discriminatory as it exempts all kinds of Phosphatic content of NPK except 23:23:0. - fertilizer of the NPK category such as NPK 12:32:16; NPK 15:15:15; NPK 20:20:0;, NPK 14:35:14 are included in the exemption list whereas it is a mater of fact that the NPK 23:23:0 fertilizer is also a fertilizer of the same category but it has been omitted from the list and, therefore, the classification made under the Notification 1995 does not hold ground on a rational basis – thus, in view of the Circular dated 11.3.2013 issued by the Director of Agriculture, U.P. Lucknow and the revisionist is entitled to grant of exemption on the phosphate and potassium of NPK 10-26-26 in the light of the said circular and in the circumstances it is not necessary to relegate the assessee to the Tribunal – thus, the order of the Tribunal is set aside – Decided in favour of revisionist assessee.
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