TMI Tax Updates - e-Newsletter
January 23, 2015

Case Laws in this Newsletter:

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

Articles

1. No Service tax leviable on Chit Fund business even after June 1, 2007 – SC dismisses SLP against Order of the Hon’ble AP High Court

   By: Bimal jain

News

1. Launch of Small Savings Instrument for Girl Child “Sukanya Samriddhi Account”

2. RBI Reference Rate for US $

Notifications

Service Tax

1. 01/2015 - dated 20-1-2015 - ST

Seeks to Amend Notification No. 20/2014-Service Tax dated 16th September, 2014.

Circulars / Instructions / Orders

Income Tax

1. 01/2015 - dated 21-1-2015

EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE (No.2) ACT, 2014

FEMA

2. 59 - dated 22-1-2015

Overseas Direct Investments by proprietorship concern / unregistered partnership firm in India - Review

3. 60 - dated 22-1-2015

Foreign Direct Investment (FDI) in India – Review of FDI policy –Sector Specific conditions- Construction Development

4. 61 - dated 22-1-2015

Depository Receipts Scheme

Highlights / Catch Notes

Income Tax

• Finance Act 2014: New Tax Rates, Deductions, and Exemptions to Simplify Compliance and Boost Revenue Collection.

  Circulars : EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE (No.2) ACT, 2014 - Circular
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• Changes to Assessment Orders Require Strict Compliance with Section 147/148 of the Income Tax Act.

  Case-Laws - HC : Once an assessment order is being passed, it has some sanctity. If the assessment order is to be disturbed, then the Assessing Officer must strictly satisfy the condition precedent as provided under Section 147/148 of the Act before he can issue a notice - HC
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• Revenue Must Be Recognized Proportionately for Partially Rendered Services; Assessee Can Distribute Membership Fees and Expenses Accordingly.

  Case-Laws - HC : Method of accounting - when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses. - HC
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• Tribunal Finds Oil Cake Purchases from 33 Parties Fake, Disallows 25% of Purchase Price.

  Case-Laws - HC : Bogus purchases - oil cakes shown as purchases by the assessee from 33 parties were not genuine transactions -Tribunal was justified in disallowing 25% of the purchase price - HC
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Customs

• Chartered Accountant Penalized for False Certification u/s 112(a) Due to Unsigned, Unaudited Documents.

  Case-Laws - AT : Penalty u/s 112(a) on Chartered Accountant (CA) for issuing false certificate - certificate issued on the basis of unsigned and unaudited documents - penalty confirmed - AT
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• IP Cassette and Imaging Plates Eligible for Tax Benefits Under Notification No. 21/20029-Cus; FCR Capsula Excluded.

  Case-Laws - AT : Import of IP Cassette and Imaging Plates would be eligible for the benefit of Notification No. 21/20029-Cus dated 01/03/2002 under Serial No. 357B (ii); FCR Capsula will not be eligible for the aforesaid exemption- AT
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Service Tax

• Supreme Court Upholds Service Tax on Non-Resident Providers for BCCI Cricket Match Coverage Services.

  Case-Laws - SC : Import of services - programme producer's service - non-residents, were required to produce audio-visual coverage of the cricket matches conducted by BCCI - levy of service tax as confirmed by the Tribunal is confirmed - SC
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Central Excise

• Central Excise Duty Demand Case Remanded for New Decision Over Export Proof Submission Issues.

  Case-Laws - AT : Demand of central excise duty - non-submission of proof of export before the jurisdictional Central Excise Authorities - matter remanded back for fresh decision - AT
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• Transportation Costs to Buyer's Premises Not Eligible for Cenvat Credit u/r 2(1) of Cenvat Credit Rules, 2004.

  Case-Laws - AT : Cenvat Credit - Merely on the ground that the appellant-assessee arranged the transportation for delivery of the goods to the buyer’s premises, they cannot be permitted to claim such transportation as an input service under Rule 2(1) of the Cenvat Credit Rules, 2004 - AT
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• Rebate Claim Denied Unjustly Despite Using Self-Sealing Procedure for Export Without Physical Examination.

  Case-Laws - CGOVT : Denial of rebate claim - applicant cleared the goods by following self sealing procedure, and good were not physically examined at the port of export - rebate cannot be denied on this ground - CGOVT
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Case Laws:

• Income Tax

• 2015 (1) TMI 838
  Transfer pricing adjustment - addition to the total income by way of adjustment to the Arms’ Length Price - selection of comparables - Held that:- KALS Information Systems Limited and Accel Transmatic, Tata Elxsi Ltd. companies be excluded from the list of 14 comparable arrived at by the TPO as are not functionally comparable with that of the Assessee. Comparable company at Sl.No.6 viz., Flextronics Software Systems Pvt. Ltd. should be taken as a comparable, while comparable at Sl.No.24 viz., Tata Elxsi Ltd. should be rejected as a comparable. Lucid Software Ltd., is engaged in the development of software products whereas the assessee, in the case on hand, is in the business of providing software development services, thus excluded. TPO is directed to compute ALP after excluding the 4 comparable companies dealt with in this order. - Decided in favour of assessee. Entitlement to claim deduction u/s.10A - expenses that are reduced from the export turnover should also be reduced from the total turnover - AO in the draft assessment order dated 10.12.2009 has referred to the fact that the proposal to exclude the aforesaid charges from the export turnover was accepted by the Assessee and therefore the export turnover is being reduced accordingly - Held that:- A perusal of the provisions of Sec.144C of the Act makes it clear that the draft assessment order of the AO will attain finality to the extent that the Assessee does not object to the proposals in the draft assessment order. The DRP is at liberty to consider any issue after due opportunity to the AO and the Assessee. The directions issued by the DRP are binding on the Assessing officer. The above provisions of Sec.144C of the Act which are applicable to the Assessee for the present assessment year, are applicable notwithstanding anything to the contrary under any other provisions of this Act. We are of the view that in the light of the above statutory provisions, the Assessee cannot seek to raise an issue before the Tribunal in respect of which he has not filed any objection before the DRP nor has the DRP considered the issue in exercise of their powers under Sec.144C (8) of the Act. We therefore decline to admit the additional ground for adjudication. - Decided against assessee.

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• 2015 (1) TMI 837
  Transfer pricing adjustment - Arms length price - adjustment to the interest charged by the assessee company in respect of short term facility granted to its subsidiary - Held that:- As the assessee has advanced the loan in foreign currency PLR rate of interest will not be applicable. Moreover, since the AE is situated at Belgium EURIBOR rates would be more appropriate. Thus we direct the AO to accept EURIBOR rate at which the interest has been charged by assessee. Accordingly, we delete the addition made on account of TP adjustment to the arm’s length rate of interest. - Decided in favour of assessee. Transfer of know-how - dis-allowance as capital receipts - Held that:- On a perusal of the auditor’s certificate dated 2nd February, 2010, it is to be noticed that the auditor has merely certified that assessee has not transferred through sale or outright licencing any technical know-how in relation to four ARVs to any other third party during the period from 1st April, 2005 to 30th September, 2009. However, such non-transfer of technical know-how by assessee to any other party in no way proves the fact that technical know-how relating to the four products was absolutely transferred to Astrix by assessee without retaining any right thereof. In fact the certificate supports the fact that the assessee has rights on the know-how, but has not transferred to any other party. As far as supplementary agreement dated 01/01/2010 is concerned, a perusal of the same brings out some interesting facts. As can be seen from the agreement, the shareholders agreement between assessee and AspenSA was terminated on 09/10/08 as a result of which Astrix has ceased to be a joint venture between Matrix and AspenSA. Even though such event occurred in October, 2008, but on perusal of draft assessment order as well as other materials on record, it appears, this fact was not brought to the notice of AO. Furthermore, assessee and Astrix never thought it expedient or necessary to enter into a supplementary agreement immediately upon termination of joint venture, but, waited for more than a year to enter into such agreement. Therefore, the supplementary agreement entered into between the parties in 2010 after the draft assessment order was passed, appears to be an afterthought not only to get over the hurdle created by the original agreements executed in 2005 and to dilute the view taken by the AO but an attempt made for establishing the fact that Astrix shall be treated as the exclusive owner of know-how in respect of the four ARVs. Thus the supplementary agreement being a self-serving document to help assessee get over the addition made by AO, cannot be given much importance. Thus we hold that there being no ‘transfer’ in terms of section 2(47) of the Act, the amount received towards allowing Astrix to use the technical know-how has to be treated as business income. - Decided against assessee. Superannuation contribution paid to LIC in respect of the working directors of the company disallowed - Held that:- The expenditure incurred is allowable as deduction if not u/s 36(1)(iv) but u/s 37 of the Act as it is exclusively incurred for the purpose of business. Moreover, it is not disputed that assessee has deducted tax at the time of making contribution to the superannuation fund and has treated it as part of salary of the concerned directors. That being the case, the expenditure incurred should be allowed as a deduction. Accordingly, we delete the addition made by the AO - Decided against revenue. Reduction from taxable income the amounts of interest granted u/s 244A and subsequently withdrawn - Held that:- When the assessee has shown the income which was subsequently withdrawn by the department effectively no income on account of interest granted under section 244A accrues to the assessee. Therefore, the income already shown by the assessee by taking into account the interest granted earlier under section 244A requires to be reduced from the taxable profit for assessment year 2006-07. In fact, this is the precise direction of the DRP to the assessing officer. However, the A.O. has exceeded his brief by not complying to the directions of the DRP by observing that assessee’s appeal for the relevant A.Y. are still pending. The action of the A.O. cannot be appreciated. We, therefore, direct the A.O. to allow assessee’s claim after verifying the fact as to whether the assessee has shown the interest income which was subsequently withdrawn by the department. - Decided in favour of assessee for statistical purposes. Employee stock option scheme - AO disallows such amount debited to Profit profits of business or profession cannot be substituted into the computation scheme as prescribed in sec. 115JB which is an alternative computation to the normal computation of income. Deduction under clause (iv) of Explanation for the export profits should not be phased out as provided in sub-section (1B) of sec. 80HHC because, 115JB is an independent code and it covers full export profits as the eligible profits for the purposes of book profits tax and no phasing is required to be carried out. Thus we direct the Assessing Officer to compute the book profit under section 115JB accordingly. - Decided in favour of assessee.

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• 2015 (1) TMI 836
  Nature of income – STCG or business income - Held that:- Income derived from sale of shares was, not business income but capital gains. Decided against Revenue. SLP dismissed.

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• 2015 (1) TMI 835
  Dis allowance of depreciation - Premium on redemption of debentures - Deduction on restructuring of the term loan - Deduction u/s 36[1](iii) - Held that:- Appeal decided in favour of assessee as decided by GUJARAT HIGH COURT [2013 (8) TMI 300 - GUJARAT HIGH COURT ]. No reason to entertain these Special Leave Petitions, which are, accordingly, dismissed.

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• 2015 (1) TMI 834
  Guest house expenses - disallowance u/s 37(4) - Held that:- Deductibility of guest house expenses under Section 37(4) is concerned it is not disputed that the matter is covered by the decision of the Supreme Court in Britannia Industries Ltd. vs. CIT and Ors., (2005 (10) TMI 30 - SUPREME Court). The question is accordingly answered in terms of the said decision, in favour of the revenue - Decided against the assessee. Interest on FDR, Misc. Receipts and interest from customers on delayed payments - whether be considered for the purpose of Section 80-I of the Act? - Held that:- It is not disputed that so far as the first limb i.e. interest received from customers on account of late payment beyond the credit period goes, the matter is covered against the revenue in the decisions of this Court reported as CIT V. Advance Detergents Ltd., (2009 (11) TMI 638 - Delhi High Court) and CIT V. Jackson Engineers Ltd., ( 2009 (12) TMI 649 - Delhi High Court). Accordingly, it is held in favour of the assessee that such interest received from customers due to late payment beyond credit period is permissible as a business income and entitled to benefit under section 80(I). As far as the second limb i.e. interest on FDR, bank guarantees, deposits and miscellaneous receipts are concerned, the benefit of section 80I would be not available in view of the conclusion in CIT V. Shri Ram Honda Power Equipment and Ors., (2007 (1) TMI 86 - HIGH COURT, DELHI). The assessee would be entitled to clam a limited benefit of the expenditure of net interest by application of principles/conclusions Nos 8 and 9 in Shri Ram Honda Power Equipment and Ors. (supra). The matter is remitted to the AO to this limited extent to enable the assessee to prove the nexus as stipulated in Shri Ram Honda Power Equipment and Ors. (supra). - Decided partly in favour of assessee and revenue. Deduction u/s. 32AB - whether available on the profits of industrial undertaking and not on the aggregate profit of the assessee? - Held that:- It is pertinent to note that by Finance Act, 1989 the concept of eligible business and determination of profits of eligible business whose accounts have been maintained separately have been done away with prospectively with effect from 1/4/1991. It is true that under Section 70 of the Act, while determining the total income chargeable to tax under the head "profits and gains of business", the loss from the agro division has to be set off against the profits of the paper division. However, the said set off is not relevant for the purpose of computing 20% deduction under Section 32AB(1) of the Act, in view of the specific provisions contained in Section 32AB(3)(a) of the Act for determining the profits of each eligible business of the assessee. The amendments made by Finance Act, 1989 applicable from 1st April, 1991. With effect from the said date, the concept of eligible business referred to in Section 32AB was negated. With effect from 1st April, 1991, the provisions of Section 32BA will have to be read and interpreted in light of the said amendments. However, for the assessment years in question under the applicable provisions only the profits of the eligible business can be taken into consideration for computing the deduction under Section 32AB of the Act and aggregation will not be permissible. Decided in favour of the assessee. Interest on debentures, interest on loans and dividend - computation of profits earned by eligible business under Section 32AB - Held that:- For the purpose of deduction u/s 32AB, the benefit of said section will be available to all business income from whatever source, other than those mentioned in sub-section (a)(b) of clause (1) of sub sec.(ii) of the said section. Therefore, the view of the CIT (A) that income from other sources will not be considered is not correct in the matter. As such for the purpose of deduction u/s 32AB, the profit of the eligible business are not to be computed in accordance with the provisions of the I.T. Act but are to be computed in accordance with the requirement of sixth schedule to the Companies Act, 1956. Thus as per the findings recorded by the Tribunal, the interest income on debentures and fixed deposits of 20,775/-, interest on loan and intercorporate deposits amounting to 86,16,571/- and dividend of 3,01,460/- were income from business and was accordingly shown in Part II and II of the Sixth Schedule of the Companies Act.The Revenue has not placed any material documents or papers on record to show that the aforesaid finding is wrong and incorrect. Revenue has not placed the complete order under Section 263 on record - Decided in favour of assessee.

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• 2015 (1) TMI 833
  Deduction u/s 32AB(6) disallowed - amounts deposited in the Investment Deposit Account with IDBI pursuant to Investment Deposit Account Scheme - non utilised during the previous year for the purchase of any new ship, new aircraft, new machinery or plant - Held that:- In the present cases, we find that that all the conditions mentioned in the scheme are fulfilled. The scheme nowhere provides that term loan should be only for plant and machinery. The only condition provided by the scheme is that the term loan should be contracted for more than three years and it should be from a scheduled bank or a financial corporation. It is a special benefit given to industries to boost their production and to update their machineries and keep the industry abreast with new technology and to see that the industry does not carry on its business with old machinery and that the industry equips itself with the latest plant and machinery. Therefore, in order to take benefit of the beneficiary legislation, the assessee firm has every right to plan its tax payment accordingly. Essentially, it entitles an assessee carrying on a business or profession to reduce his taxable income by the sum utilised by him for purchase of new plant and machinery and or deposited with the Industrial Development Bank of India for such utilisation. A perusal of clause 9 of the Scheme mentions that the withdrawal could either be utilised for purchase of new ship, aircraft, plant & machinery or computers to be installed either in office or at the business premises. In the alternative, the amount can also be used for repayment of principal amount of term loans which should have been contracted after 31.03.1986 taken from a specified financial institution including specified banks. It is required to be noted that the clause does not state that the term loan should be used for any specific purpose like purchase of new machinery etc. - Decided in favour of assessee. Separate relief under sections 80HH and 80I of the Act - Held that:- The question is squarely governed by the decision of this Court in the case of Commissioner of Income tax vs. Amod Stamping reported in [2004 (1) TMI 15 - GUJARAT High Court] which has been considered by the Apex Court in the case of Joint Commissioner of Income-Tax vs. Mandideep Eng. And Pkg. Ind. P. Ltd reported in [2006 (4) TMI 75 - SUPREME Court] stating both the sections are independent and, therefore, the deductions could be claimed both under sections 80HH and 80-I on the gross total income. - Decided in favour of assessee.

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• 2015 (1) TMI 832
  Reopening of assessment - dis proportionate allocation of the common expenses between the three manufacturing units for the purposes of claiming deduction under Section 80IA/IB - Held that:- Once a query has been raised during the assessment proceedings and the Petitioner has responded to the query to the satisfaction of the Assessing Officer as is evident from the fact that the Assessment Order dated 9th March, 2005 accepts the Petitioner s claim for deduction under Section 80IA/IB of the Act. It must follow that there is due application of mind by the Assessing Officer to the issue raised. Reopening notice has to stand or fall on the basis of the reasons recorded at the time of issuing the notice for reopening. It is not open to the Assessing Officer to improve upon the reasons recorded at the time of issuing the notice either by adding and/or substituting the reasons by affidavit or otherwise. The tangible material i.e. letter dated 15th January, 2007 on which the Revenue relies upon for issuing of the notice, could have undoubtedly been the basis for issuing the impugned notice even if the same has been obtained in assessment proceedings for a subsequent assessment year provided the same was the basis of the impugned notice and so recorded in the reasons in support of the impugned notice. Thus reliance by the Revenue upon the letter dated 15th January, 2007 from the Additional Commissioner of Income Tax cannot be read into the reasons recorded while issuing the impugned notice. Thus once an assessment order is being passed, it has some sanctity. If the assessment order is to be disturbed, then the Assessing Officer must strictly satisfy the condition precedent as provided under Section 147/148 of the Act before he can issue a notice, seeking to reopen an assessment. In this case, as we have pointed out herein above, there has been a change of opinion on the part of the Assessing Officer in issuing a notice and, therefore, he has no reason to believe that income chargeable to tax has escaped assessment. In these circumstances, the jurisdictional requirement for issuing a notice is not satisfied and, therefore, the impugned notice and the consequent order dated 14th November, 2007 disposing of the objections, are not sustainable. - Decided in favour of assessee.

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• 2015 (1) TMI 831
  Reopening of assessment - assessee company, while computing the deduction u/s 80HHE has adopted incorrect turnover which has resulted excess claim of deduction U/s 80HHE to the tune of 46,65,749/- - Held that:- The re-opening of the assessment in the case at hand through notice under Section 148 of Income Tax Act issued on 22.03.2010 fails to pass the muster on both the tests. The satisfaction note does not disclose the foundation of “reasons to believe” as it vaguely refers to the perusal of “the records” without specifying the fresh “tangible material” that had come to light giving rise to a need for such action. Since the assessment had earlier been concluded under Section 143(3) by order dated 21.09.2007, the restrictions on the exercise of the power of re-assessment as contained in the first proviso to Section 147 would inhibit further action in absence of material showing default by the assessee to fully or truly disclose. In the above facts and circumstances, we concur with the view taken by the CIT(A) that it is a case of impermissible change of opinion. The order whereby the proceedings have been re-opened for assessment under Section 147/148 of Income Tax Act, thus, is found to suffer from jurisdictional error. Consequently, the proceedings taken out in its wake cannot sustain. - Decided in favour of assessee.

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• 2015 (1) TMI 830
  Entitlement to claim deduction under section 80-IA - AO disallowed the assessees claim under Section 80IA of the Income Tax Act primarily on the ground that carried forward loss of earlier years should be set off before computing the profit for the current year. - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in each of the appeal falls within the parameters of Section 80IA of the Income Tax Act. We, taking note of the decision rendered by this Court in the case of Velayudhasamy Spinning Mills (2010 (3) TMI 860 - Madras High Court ) and respectfully agreeing with the reasoning rendered by this Court, we are inclined to dismiss all the above Tax Case (Appeals), thereby confirm the order passed by the Tribunal. - Decided in favour of the assessee.

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• 2015 (1) TMI 829
  Method of accounting - correctness of the method of accounting of the assessee company for recording the receipt by way of membership fee and the expenses by way of commission and insurance premium - Revision u/s 263 set aside by Tribunal - Held that:- No infirmity in the order passed by the Tribunal as it rightly considered that the method of accounting should be such from which the correct profit of each year can be deducted and that as per the method adopted by the Revenue, the profit in the year in which the card is issued would be more resulting in loss/less profit in the year in which the services will be rendered by the assesseee. We are of the opinion that when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses. Tribunal is justified in setting aside the order of the CIT passed under Section 263 of the Act. - Decided in favour of the assessee.

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• 2015 (1) TMI 828
  Bogus purchases - oil cakes shown as purchases by the assessee from 33 parties were not genuine transactions - Tribunal allowed the assessee’s alternative claim (in spite of assessee’s purchases) to the extent of 7Rs.88,03,614/- having been made outstide assessee’s books of account constituted exceptions for purposes of Rule 6 DD(j) and were not hit by Sec.40A(3) - Held that:- In the present case the provisions of Section 40A(3) would not be applicable and even if they are held to be applicable, the expenditure would be covered by the exceptions provided in Rule 6DD(j) of the Rules. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price through the fictitious invoices in the names of 33 bogus suppliers. Considering the overall factual scenario, the Tribunal was justified in disallowing 25% of the purchase price. - Decided against the assessee Levy of penalty under Section 271(1)(c) - Held that:- The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement u/s.132(4) and thus, the assessee was entitled to immunity under clause (2) of Explanation 5 to section 271(1)(c). - Decided in favour of assessee.

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• 2015 (1) TMI 827
  Reopening of assessment - notice issued beyond the period of four years from the end of the relevant Assessment Year - accommodation entry by way of share capital - Held that:- In this particular case, the receipt of money through banking channels by the applicant for shares of the petitioner company may be considered to be a full disclosure but it may not be a true and full disclosure if the facts alleged in the reasons are not found to be false during the proceeding for reassessment. In the present case this would be an issue which would be considered during the reassessment proceedings. Thus we find that in the present case it cannot be said that there is no basis to conclude that there has been a failure to disclose truly and fully all material facts necessary of assessment. On reading of the reason in support of the impugned notice as a whole, we find that it does bring out the failure on the part of petitioner to disclose fully and truly all material facts necessary for assessment. There is no ambiguity in the information which would require investigation. The information of accommodation entries has been given by a participant and this is reason enough to believe that income chargeable to tax has escaped assessment. At this stage, the Assessing Officer is not required to conclusively prove that the reasons in support of the impugned notice establish that the petitioner has taken accommodation entries. This is a matter which would be subject of further investigation during the reassessment proceeding. At that stage it would be open to the petitioner to raise all permissible defences and also to insist on cross examination of the persons who have made a statement implicating the petitioner in having participated in taking accommodation entires. Thus we are not inclined to exercise our extraordinary jurisdiction under Article 226 of the Constitution of India and injunct the Revenue from proceeding further with the impugned notice for reassessment. However it would be open to the petitioner during the reassessment proceedings to challenge the reopening notice on the ground that the statement made by the Pravin Kumar Jain which forms the basis of the reopening notice is not sustainable. - Appeal dismissed.

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• 2015 (1) TMI 826
  Set off of business losses - selection of effective date of amalgamation - Held that:- In view of the provisions Section 79 of the Income Tax Act, we are of the considered opinion that the Tribunal was right in confirming the order of the CIT(A)to allow relief of set off of business losses considering the date of allotment as the actual date of scheme of amalgamation. - Decided in favour of assessee. Deduction u/s.80HHC - Tribunal considered the current year s profit without reducing therefrom the unabsorbed depreciation and unabsorbed investment allowance - Held that:- As decided in CIT v. Shirke Construction Equipment Ltd. [2007 (5) TMI 194 - SUPREME Court] Section 80AB of the Income - tax Act, 1961, specified that profits are those as determined for the purpose of the Act, will apply for determining profits from export business for the purpose of the deduction under Section 80HHC. In determining business profits for the deduction under Section 80HHC the unabsorbed business losses of earlier years under section 72 should be set off. - Decided in favour of revenue.

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• 2015 (1) TMI 825
  Reopening of assessment - whether the second reassessment notice in fact was an impermissible “change of opinion”? - Held that:- Second reassessment notice was based upon re-appreciation of the original record. This Court notices that the CIT as well as ITAT have concurrently ruled that whatever material or explanation in respect of the issues sought to be raised in the second reassessment notice to the assessee were part of the record and could have been noticed in the first reassessment proceedings. The “reason to believe” on which a reassessment can be validly ordered should necessarily be based on “tangible material” which an A.O. comes by after the assessment. Necessarily, such material is outside the record. Straying from this clear path would be sliding down the slippery slope into a quagmire of re-appreciation of existing material and -even the process of reasoning which is impermissible as it is a forbidden “merits review”. Reassessment, if permitted in such instances would be a route which (to borrow the phrase from another context) “unlocks the gate which shuts” the A.O’s review on merits. Appeal dismissed. - Decided against revenue.

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• 2015 (1) TMI 824
  Royalty paid to parent Company - Capital v/s Revenue - Held that:- It is not disputed that no new fact or development took place or was taken into account by the A.O. Considering that consistently for 12 years identical payments were treated as revenue expenditure and in fact are entitled to be treated as such this Court is of the opinion that the question of law has to be answered against the revenue - Decided in favour of the assessee. Payments made to M/s Denso Haryana for use of the intranet disallowed - Held that:- The facility was a communication network known as “NICE NET”. The network was availed on cost sharing basis for reporting and communication, and changed to the Denso Group Companies world over. Since it was an actual payment in respect of the service availed by the assessee, the first Appellate authority was of the opinion that there could be no dispute in this regard. The CIT (Appeals), therefore, set aside the observations of the A.O., based upon his surmise that no service was in fact rendered and agreement was itself sham. This Court is of the opinion that findings of the ITAT affirming the conclusions of the CIT (Appeals) are reasonable.- Decided in favour of the assessee. Know-how fees - benefit of Section 35AB - Held that:- Since the depreciation under Section 32(1) is available, in respect of an amount, claimed by the assessee, that it sought benefit under Section 35AB earlier could not have been the only reason to deny it. The revenue can succeed only if it establishes that such depreciation is impermissible in law. The ITAT’s findings are to the contrary. There is no substantial question of law on this aspect.- Decided in favour of the assessee.

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• 2015 (1) TMI 823
  Deduction under Section 80 I - losses incurred by the industrial undertaking claiming deduction under Section 80 I, which has been already set off against the profits of the other industrial undertaking should be notionally carried forward and set off against profit generated by the industrial undertaking during the relevant assessment year - Held that:- Once the depreciation allowance and development rebate for the past assessment years were fully set off against the total income of the assessee for those assessment years, the question of carry forward the same does not arise, more so for the purpose of determining the deduction under Section 80I of the Income Tax Act. - Decided in favour of assessee.

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• 2015 (1) TMI 822
  Entitlement to deduction of interest u/s 36(1)(iii) - funds borrowed for the purpose of setting up new units for the manufacturing of corrugated boxes - Held that:- Considering the decisions of Core Health Care case(2008 (2) TMI 8 - SUPREME COURT OF INDIA) as well as this Court in the case of Gujarat State Fertilizer and Chemical ltd. (2008 (8) TMI 313 - GUJARAT HIGH COURT) question is answered in the affirmative as Tribunal is right in law and on facts in holding that the assessee was entitled to deduction of interest amounting to 26,02,575/- made u/s 36(1)(iii) of the Act, incurred by the assessee in respect of funds borrowed for the purpose of setting up new units for the manufacturing of corrugated boxes. - Decided in favour of assessee.

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• 2015 (1) TMI 821
  Revision u/s 263 - assessee is not a Co-operative Bank and Section 80P(4) has no application - Tribunal set aside order u/s 263 denying benefit of exemption granted - Held that:- In the instant case, when the status of the assessee is a Co-operative society and is not a Co- operative bank, the order passed by the Assessing Authority extending the benefit of exemption from payment of tax under Section 80P(2)(a)(i) of the Act is correct. There is no error. When there is no error, the question of order being prejudicial would not arise. The Tribunal has rightly entertained the appeal and set- aside the order u/s 263. Therefore, the said order is in accordance with law and cannot be found fault with. The substantial question of law is answered in favour of the assessee - Decided against the revenue.

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• 2015 (1) TMI 820
  Disallowance of expenditure - deduction could have been claimed and allowed under section 37 of the Act and not under section 35DDA - ld that:- Merely invoking wrong provisions should not disentitle the Assessee from claiming the deduction if the same can be otherwise claimed and granted and with recourse to another provision in the Income Tax Act, 1961. - Decided in favour of assessee. Bifurcation of land and building - Exemption under section 54EC - Held that:- Gain in respect of land portion has to be computed as long terms capital gain and the Assessee has invested this gain in NABARD bonds. Therefore, it would be entitled to deduction under Section 54EC of the Act. It would be so entitled in respect of short term capital gain under under section 50 in respect of building portion, if the same was held for more than three years. There was nothing in section 50 to suggest that fiction created is not restricted in its application to sections 48 & 49, but to other provisions as well. Section itself makes it clear that the deeming fiction created in sub-sections 1 & 2 is restricted only to the mode of computation of capital gains contained in sections 48 & 49. Section 50 does not convert a long term capital asset into short term capital asset. - Decided in favour of assessee.

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• 2015 (1) TMI 819
  Entitlement to deduction u/s.80IA - Reopening of assessment - Held that:- It appears that the Assessing Officer had reopened the assessment on the ground that the activity of the assessee was not manufacturing activity and that the industrial undertaking was formed by splitting up the business which was already in existence. However, we find that there was nothing on record from which the Assessing Officer could have come to the conclusion that the assessee-firm was formed by splitting up of an industrial undertaking already in existence. There should have been something on record with the A.O for reopening the assessment alleging that the firm was formed by splitting up of an industrial undertaking already in existence. Thus the Assessing Officer could not be justified in stating that the assessee was formed by splitting up of an industrial undertaking. In any case, having not disallowed the claim of the assessee on this ground, the ground for reopening should also have failed. - Decided in favour of the assessee

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• 2015 (1) TMI 818
  Deduction u/s 80IB(10) - Housing project which also had certain units exceeding the prescribed ceiling on the built up area, the profits from the other units can be worked out separately and allowed deduction u/s 80IB(10), subject to fulfilling other conditions prescribed under the said section - Held that:- The Tribunal has taken a consistent view that if some of the flats are constructed in violation of the conditions of builtup area, then, the proportionate deduction will have to be reduced. Now, the proportionate deduction is available only when other conditions as regards the area of the plot is satisfied. The Tribunal applied the other condition, namely, project is on the size of the plot of a land which has a minimum area of one acre. Therefore, it does not affect the condition and section 80IB(10) benefit or deduction cannot be denied on that score. The Tribunal approved the finding of Commissioner of Income Tax. The Tribunal itself notes as to how the area crossed the limits only at the time of sale, that is, when the buyer requested the developer to alter the area and by either withdrawing or adding a portion from adjacent flats. The Developer adhered to the mandatory condition of the Construction not exceeding one thousand square feet whole completing the developmental work. In such circumstances, and when a finding rendered against the Assessee has been upheld by the Tribunal, then, all the more we do not see any substantial question of law. - Decided against revenue.

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• Customs

• 2015 (1) TMI 841
  Denial of refund claim - whether appellant is entitled to refund of 13,33,792/- which was paid by the appellant as a result of an order passed by Gujarat High Court - Held that:- there was a valuation dispute regarding inclusion of cost of transportation and insurance in the assessable value of the Ships imported for ship breaking. This issue was decided against the appellant vide CESTAT order No. A/359/WZB/2004/C-1 - M/125/WZB/04/C-1 dated 10.03.2004. Learned advocate appearing on behalf of the appellant could not bring to the notice of the bench whether any appeal was filed by the appellant against CESTAT order dated 10.3.2004 where issue on merits was decided against them. Once an issue is decided against the appellant on merits, it cannot be appreciated as to how refund is being pressed on the issue without challenging that order dated 10.3.2004 passed by CESTAT. - Decided against assesse.

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• 2015 (1) TMI 840
  Penalty u/s 112(a) on Chartered Accountant (CA) for issuing false certificate - certificate issued on the basis of unsigned and unaudited documents - Contravention of licensing provisions - Held that:- Appellant had issued the certificate which was proved to be false. As regards the submission of the learned Counsel that certificates were issued on the basis of documents produced by M/s. Elit, it has been admitted that the documents submitted by M/s. Elit was unsigned and not audited. As a Chartered Accountant he is of duty bound to issue any certificate only on the basis of audited books of accounts. From the records, it is a fact that the certificate was issued by the Chartered Accountant without having any audited balance sheet or books of accounts. It is clear from the fact that the appellant has intentionally and very consciously certified the export turn over during the period 1998-99, 1999-2000 and 2000-2001 - offence committed by the appellant is clearly established and I do not find any infirmity in such findings and the Commissioner (Appeals) also correctly upheld the penalty imposed on the appellant - Decided against assesse.

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• 2015 (1) TMI 839
  Import of Imaging Plate, IP Cassettes and FCR Capsula - Benefit of concessional rate of duty of 5% ad valorem under Serial No. 357B of Notification No. 21/2002-Cus dated 01/03/2002 - Classification under CTH 90189099 or under CTH 90229090 - Held that:- Imaging plates is an alternative or a substitute for an X-ray film which is used commonly. As regards the classification of these goods, though the Tribunal classifies this item under heading 90189099, no reasoning has been given in the impugned order except stating that these are rightly classifiable under the said heading. This conclusion of the Tribunal prima facie does not appear to be correct for the reason that all photographic plates and film in the flat, sensitized, unexposed, of any material fall under CTH 3701. The benefit of exemption under Notification No. 21/2002-Cum dated 01/03/2002 would still be available as serial no. 357B covers accessories of goods required for medical, surgical, dental or veterinary use, falling under Chapter 90 or any other chapter. A camera or an X-ray machine is complete even without a film. Therefore, a film or an imaging plate would come under the category of accessories to a machine. Since the coverage under 357B includes all products falling under Chapter 90 or any other chapter, goods falling under CTH 3701 would also be eligible for the benefit of concessional rate of 5% advalorem under the aforesaid notification. Thus, IP and IP cassette, which is only a protective cover for the imaging plates would be eligible for the exemption. As regards the FCR Capsula it has already held by this Tribunal that the same falls under CTH 90229090/90221490 and will not be eligible for the exemption under the aforesaid notification. - IP Cassette and Imaging Plates would be eligible for the benefit of Notification No. 21/20029-Cus dated 01/03/2002 under Serial No. 357B (ii); FCR Capsula will not be eligible for the aforesaid exemption - Decided partly in favour of assessee.

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• Service Tax

• 2015 (1) TMI 862
  Discharge of service tax liability by co-operative society - Held that:- Service tax in respect of the period October 2007 to June 2012 has already been satisfied under protest, but adjudication is still to be finalised, it is made clear that, in the course of such adjudication exercise, if the authority arrives at a finding that the petitioners are not liable to satisfy service tax, the amount already satisfied by the petitioners shall be refunded at the earliest, at any rate, within one month thereafter. - Petition disposed of.

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• 2015 (1) TMI 861
  Waiver of pre deposit - Management, Maintenance or Repair Service - whether the payment of service tax has to be made by the service recipient or by the appellant, has to be considered by the Tribunal in the Appeal - Held that:- It is a clear case of material evidence, which has to be appreciated by the Tribunal insofar as invocation of Rule 2(1)(d) of the Service Tax Rules, 1994 by the Original Authority, which was confirmed by the Commissioner of Central Excise (Appeals). The Adjudicating Authority was of the view that either the consignor or consignee, who incurred the freight, has to pay the service tax and as the appellant was not able to furnish documentary evidence, such as consignment notes, to prove that the freight and service tax was paid by the consigneee, the demand was confirmed. The Commissioner of Central Excise (Appeals), to uphold the view of the Adjudicating Authority, was of the view that profit and loss account and other documents produced by the appellant show that there has been non payment of service tax. The Tribunal, after following the decision in the case of RAMCO Cements Ltd., who is the recipient of service, held that the appellant had paid only freight and hence liable to pay tax under this category and directed pre-deposit of 10.00 lakhs. - disputed fact does not merit consideration or does not justify any modification of the order passed by the Tribunal. - Decided against assessee.

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• 2015 (1) TMI 860
  Waiver of pre deposit - promotional exercise enabling the group companies to dispose of the immovable properties. - Business Auxiliary Service - Held that:- Tribunal found that three Appellants before us urged that they were not providing any service and that was mere cost sharing arrangement with eight companies. Whether, such arrangement was devised to circumvent the provisions of the Finance Act and to get over the definition of the term “business axillary service”, is the issue which is at the root of the matter and will be answered at the hearing of the Appeals. Presently, the Tribunal found that this was not a case of mere cost sharing arrangement as pleaded and urged. Prima facie this was found to be a modus oparendi to circumvent and get over the Act. Thus, prima facie the Appellants’ case cannot be equated with K. Raheja [2013 (6) TMI 564 - CESTAT MUMBAI] and Jetlite (2010 (12) TMI 40 - CESTAT, NEW DELHI) .There, prima facie, the distinct legal entities have either advised or assisted the concerned companies in disposing off or selling flats/immovable property. The condition of 50% deposit, therefore, does not appear to us to be completely unreasonable or arbitrary. The Tribunal has rather balanced the rights and equities. This is not a matter where we should decide any wider controversy or larger question. The Appeals have been brought before us at an interlocutory stage. In these circumstances we would be better advised not to render any final opinion on the contested issues. - However, extention of time to make the deposit is granted. - Decided partly in favour of assessee.

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• 2015 (1) TMI 859
  Condonation of delay - Inordinate delay of 244 days - Held that:- in the facts and circumstances, the explanation offered by the petitioner for the delay of 244 days and the attempt made to cover up the delay by raising another matter, i.e. "a disciplinary action initiated against a Class-IV employee", we are afraid that the same does not show sufficient cause and the causes shown for condonation are of no acceptable value. - Condonation denied.

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• 2015 (1) TMI 858
  Scope of the term Motor Vehicle with regard to repair and management service - whether repair of part of vehicle is amount of repair of vehicle as such - Exclusion of the maintenance and repair of motor vehicle from service tax - period up to 30.4.2006 - Extended period of limitation - appellant engaged in the business of reconditioning engines and parts thereof and repairs of other parts of vehicles of all brands - appellant contended that they were in bona fide believed that they had no tax liability in respect of the activities in question and hence did not include the relevant particulars in their returns - Supreme Court after condoning the delay dismissed the appeal filed by the Revenue against the decision of High Court [2014 (5) TMI 1023 - KERALA HIGH COURT] wherein High Court held that if the motor vehicle was brought to the service centre of the appellant and they themselves had dismounted the engine and repaired it and then refitted it to the motor vehicle, they are entitled for the exclusion. But exclusion is not given by stating that dismounting has taken place at a different place. Such a view, according to us, cannot be accepted on account of the fact that motor vehicle apparently includes all its parts as well. Without its individual parts, it does not become a motor vehicle. Such part cannot be used for any other purpose as well and it is normally fitted to the same vehicle from which it is dismounted. Therefore, if any service centre or maintenance centre or workshop does maintenance or repairs to any part of the motor vehicle, it is also entitled to get the benefit of exclusion, as provided under Section 65(64) of the Finance Act, 1994.

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• 2015 (1) TMI 857
  Application for stay - Demand - appellant was engaged in preparation of ready mix concrete (RMC) - Supreme Court after hearing the parties dismissed the appeal filed by Revenue against the decision of Tribunal [2011 (11) TMI 425 - CESTAT, NEW DELHI] wherein tribunal held that Commissioner has not considered that it had not received any service tax over and above the gross amount collected from its customers - In absence of cogent evidence to the effect of providing taxable service, primary and dominant object of the contract throws light that contract between the parties was to supply ready mix concrete (RMC) but not to provide any taxable service.

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• 2015 (1) TMI 856
  Import of services - programme producer's service - non-residents, were required to produce audio-visual coverage of the cricket matches conducted by BCCI and the digitalized images of the coverage were uploaded for broadcasting for the viewers of the cricket match all over the world. - Supreme Court dismissed the appeal filed by the assessee against the decision of Tribunal [2014 (9) TMI 598 - CESTAT MUMBAI] wherein tribunal held that the services received by the appellant, BCCI from the non-resident service providers, namely, M/s. Taj TV Ltd., Dubai/Mauritius, M/s. TWI-U.K.Ltd. London, Nimbus Sports International Pte. Ltd., Singapore, M/s. Hawkeye Innovations Ltd., U.K. and IMG Media, London merit classification under 'programme producer's services as defined in sections 65 (86a), 65 (86b) read with 65 (105) (zzu) of the Finance Act, 1994 and the appellant is liable to pay service tax along with interest thereon on the consideration paid for the services received under the provisions of section 66A of the said Finance Act.

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• Central Excise

• 2015 (1) TMI 853
  Demand of central excise duty - non-submission of proof of export before the jurisdictional Central Excise Authorities - Held that:- It is an admitted fact that the appellant failed to produce the proof of export before the adjudicating authority in support of claiming the Central Excise duty exemption. It is the statutory requirement and the Central Excise statute clearly stipulates that the burden of proof of exportation of goods entirely rests with the assessee who claims such duty exemption. However due to unavoidable circumstances, which were explained in the grounds of appeal, the appellant could not produce the documents evidencing the fact that the goods have actually been exported. Considering such genuine problem, the matter was remanded by this Tribunal for verification of photocopies of Customs endorsed ARE1s available with the appellant. Original authority has not put any efforts to locate the original export documents available either in the Customs House or in the jurisdictional Central Excise office to ascertain the fact regarding actual exportation of goods, even though specific request was made by the appellant before conclusion of the adjudication proceedings. Therefore, in the interest of justice, proper verification of records available in the jurisdictional Customs House/Central Excise office, with the photocopies of export documents submitted by the appellant is required to be done for ascertaining the factual position regarding exportation of goods. It is made clear that the appellant is also duty bound to produce such substantial evidences in support of the claim of exportation of goods which he failed to produce before the adjudication proceedings, though the responsibility has been entirely cast on appellant for the purpose. Hence, I am of the opinion that the appellant should obtain the bank realization certificate in proof of receipt of the sale proceeds and produce the same before the original authority to prove that the goods have actually been exported. In view of the above observations, the impugned order is set aside and the matter is remanded to the original adjudicating authority with a request for verifying the records available in the Custom House/Central Excise office and also the documents to be furnished by the appellant and thereafter for passing a reasoned and speaking order in accordance with law. The appellant should obtain the bank realization certificate in proof of receipt of the sale proceeds and produce the same before the original authority to prove that the goods have actually been exported. In view of the above observations, the impugned order is set aside and the matter is remanded to the original adjudicating authority with a request for verifying the records available in the Custom House/Central Excise office and also the documents to be furnished by the appellant and thereafter for passing a reasoned and speaking order in accordance with law. - Decided partly in favour of assessee.

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• 2015 (1) TMI 852
  Disallowance of CENVAT Credit on plastic crates - Commissioner allowed credit that goods are eligible as inputs - Held that:- following the decision of the Hon’ble High Court of Madras [2005 (6) TMI 175 - CESTAT, CHENNAI] and the Larger Bench of the Tribunal [2009 (2) TMI 101 - CESTAT AHMEDABAD], the respondents are eligible for the CENVAT credit availed on plastic crates as inputs / material handling equipment. Accordingly, I do not find any infirmity in the order passed by the lower appellate authority and uphold the same - Decided against Revenue.

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• 2015 (1) TMI 851
  Availability of credit on freight charges incurred for FOR destination sale - Imposition of interest and penalty - Held that:- Appellants have failed to produce any evidence before this authority as well as the adjudicating authority that all the aforementioned three conditions were satisfied by the appellants. In this regard the contention of the appellants is that in fact in respect of the said transportation of the appellant’s products to the buyer’s premises, the appellants had made the payment of the transportation charges; thus, they (appellants) were responsible for the delivery of the goods to the buyer’s premises; this fact indicates that the sale/delivery of the goods was on the FOR basis and therefore, the credit of service tax on such service of outward transportation is admissible to the appellants. However, the appellants could not adduce any evidence of FOR destination sale viz. copy of the relevant agreement entered into between appellants and the concerned buyers, sale invoices etc. Merely on the ground that the appellant-assessee arranged the transportation for delivery of the goods to the buyer’s premises, they cannot be permitted to claim such transportation as an input service under Rule 2(1) of the Cenvat Credit Rules, 2004. In view of the above facts and rulings, I am inclined to hold that the said input service credit of 1,47,108/- on such service of outward transportation is not admissible to the appellants. Therefore, the above demand of 1,47,108/- and interest thereon is justified and hence the same is upheld. - Thus intention to avail fraudulent credit could not be imputed. I find that various forums have taken different stand and certainly on the issue was not there. I would have agreed with non invokation of penal provisions in the present case as per counsel’s contention but facts indicated in preceding paragraphs do not lead to conclusion as eligibility of FOR clearance itself is negated. Penal provisions are justified in the case and penalty is rightly imposable. Following decision of Lafarge India (P) Ltd.- [2011 (1) TMI 251 - CESTAT, NEW DELHI] - Decided against assessee.

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• 2015 (1) TMI 850
  Classification of lift machinery - parts of lift - Imposition of penalty - Bar of limitation - whether parts and components manufactured and supplied by the appellant, M/s. Bharat Bijlee Ltd. to their buyers would constitute a lift classifiable under CETH 84.28 or they would merit classification under CETH 84.31 as parts suitable for use solely or principally with the lift machinery - Held that:- The installation of a lift is governed by various rules and regulations and the various components of the lift have to satisfy the specifications prescribed in the Indian Standards. In fact, the Bombay Lift Rules, 1958 itself prescribes Standards for landing gates and doors, locking devices, lift cars, lift car frame, counter weights, car guides, buffers, suspension ropes, emergency safety devices, over speed governors, lift machines, controllers, sheaves and drums and so on. Many of these parts comprising a lift, which are essential for the functioning of the lift and for which standards have been laid down, have not been manufactured and supplied by the appellant. Therefore, from the Bombay Lift Rules, 1958, itself, it can be seen that what has been supplied by the appellant does not constitute a lift either in an incomplete form nor does it have the essential character of a lift. They are only components and parts of a lift. Therefore, the contention of the appellant that what they have supplied is a lift in incomplete form having essential character of the lift totally fails. The items supplied do not constitute a lift falling under CETH 84.28 either in an incomplete form or having the essential character. They can only be considered as parts and components falling under CETH 84.31 and we hold accordingly. The concept of essential character can also be seen from certain examples. A motor vehicle chassis may be capable of auto-movement. But can it carry a passenger or goods without the body. The answer would be a clear ‘NO’. Therefore, can we say that a motor vehicle chassis can be classified as a motor vehicle. The answer will be in the negative. In fact the tariff itself recognizes this fact and has provided a separate heading for automobile chassis. Let us consider another example. A mono-block pump set consists of an electric motor (the driver) and the pump. Without the motor, the pump cannot function. Therefore, can we say that an electric motor has the essential character of a pump. Here again the answer would be ‘NO’. On the same logic, the prime mover, safety gear and over speed governor, car and landing fixtures, by themselves do not have the essential character of a lift without the lift car, car frame, guide rails, counter-weights, cables/ropes, etc., even though they may be essential for the functioning of the lift. Assessments were provisional from 1-9-1990 onwards on account of non-finalisation of price lists. Therefore, the question of time bar would not arise in respect of demands for the period from 1-9-1990 onwards. However, as regards the demand for the period August, 1986 to August, 1990 is concerned, the demand would be time-barred for the reason that the entire issue regarding classification dispute was well known to the department and the department had also approved the classification list classifying the parts under CETH 8428 since 1987 onwards. In these circumstances, the allegation of suppression made in the show cause notice dated 5-4-1991 would not sustain and we hold accordingly. Thus the demand for the period August, 1986 to August, 1990 is clearly time-barred. Whether the impugned demand could be confirmed when the price lists themselves were provisionally approved and had not been finalized. - Held that:- The period of provisional assessment starts from 1-9-1990 onwards. The appellant has submitted copies of the price lists of the various goods supplied by them during the period of demand involved. As per the assessment memorandum, it is seen that the price lists were approved provisionally and the goods were also assessed to duty provisionally as per the endorsements made by the jurisdictional Range Officer. From the various correspondence exchanged between the department and the appellant assessee, it is seen that the assessments were provisional, inasmuch as details were sought for from the appellant for finalization of the assessment. Inasmuch as these details were not produced, only classification under CETH 84.31 was finalized. In these circumstances, the adjudicating authority should have confirmed the duty demand only after finalization of the prices by the competent authority. Therefore, there is merit in the appellant’s contention that the duty demand should have been confirmed only after the finalization of the price lists. - Matter remanded back. As regards the question of penalty, the same would not arise inasmuch as the issue involved relates to classification of the goods manufactured by the appellant. It is a settled position in law that in respect of classification disputes, where the assessee has classified the product as per his understanding and the department proposes to classify differently, the question of imposing any penalty would not arise. Therefore, imposition of penalty on the appellant is not warranted in the facts of the present case. Parts and components of the lift machinery, supplied by the appellant, merit classification under CETH 84.31 as it stood at the relevant time. The duty demand period for the period August, 1986 to August, 1990 is clearly time-barred and accordingly we set aside the same. For the period from 1-9-1990 onwards, inasmuch as the price lists and the consequent assessments were provisional, the matter is remanded back to the adjudicating authority for finalization of prices and thereafter, quantifying the duty demand liable to be paid by the appellant. Since the matter relates to interpretation of tariff, the imposition of penalty is not warranted. - Decided partly in favour of assessee.

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• 2015 (1) TMI 849
  Validity of order passed by Deputy Commissioner of Central Excise - Rejection of proof of export - Monetary limit - Held that:- appellate authority has given a categorical finding with respect to powers of adjudication and held that in the matter of imposition of penalty, AC/DCCE cannot adjudicate cases involving duty of more than 5.00 lakhs. He has also held that in the matter of acceptance of proof of export, there is no prescribed monetary limit for adjudication of case. In these cases the DCCE vide impugned order-in-original dated 28.7.11 has rejected the proof of export and ordered for recovery of duty to the extent of 4471024/-along with interest and has not imposed any penalty. Applicant department has not challenged the above said finding of appellate authority that DCCE has unlimited power to accept/reject proof of export. So, the DCCE was competent to pass said order. Commissioner (Appeals) has considered the ground of compliance of principles of natural justice and allowed both appeals by setting aside the order-in-original. Government notes that Commissioner (Appeals) has not considered the document submitted as proof of export and did not give any finding on the proof of export submitted by party and erred inpassing an order which is bad in law. Government therefore is of view that matter is required to b remanded back for considering the matter afresh on merits of the case by following principle of natural justice. - Decided in favour of Revenue.

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• 2015 (1) TMI 848
  Denial of rebate claim - applicant cleared the goods by following self sealing procedure, and good were not physically examined at the port of export and hence the provision of the para 3(xiv) of the Notification No. 19/2004-CE/(NT) dated 06.09.2004 were violated - Held that:- applicants can clear the goods from factory premises for export either under Central Excise supervision as mentioned in para 3(a)(i) of the Notification No. 19/2004-CE/(NT) dated 06.09.2004 or under self sealing procedure as prescribed in para 3(a)(ii) of the said notification. The applicants chose to dear the goods from factory for export by following procedure as provided in said section 3(a)(ii). There is no allegation of violation of said provision of para 3(a)(ii). Further, there is no allegation in impugned orders that the goods cleared under self sealing procedure for export, were not exported and diverted elsewhere. The applicants submitted before the original authority that they delivered the said goods to ICD and the packages were stuffed in container in the presence of customs officer and the containers were sealed with OTS; the OTS numbers were in mentioned on AREs-1 which was certified by the customs officer and no discrepancy was noticed by customs authorities. These submissions were nowhere controverted by the original authority to reach at the conclusion that goods cleared for factory were not actually physically exported. Further, when the applicant in column (11) of impugned AREs-1 has clearly mentioned thcthey exported the goods under claim of rebate, merely wrongly striking out ""availing facility under Notification No. 19/2004-CE/(NT) dated 06.09.2004" cannot make them ineligible for rebate claims. As such, rebate claim cannot be rejected on these grounds especially when the applicant substantially complied with provisions of Notification No. 19/2004-CE/(NT) dated 06.09.2004. - original authority while declining to accept the declared ARE-1 value as transaction value under section 4 of Central Excise Act, 1944 for the purpose of sanction of rebate as goods were exported to their holding company; has not arrived at correct transaction value. Since, the said exports are made to their parent holding company in Germany the correct transaction value was required to be, determined in terms of section 4 of Central Excise Act 1944. Original authority should have conducted proper enquiry in the matter and then decided the matter as per law. As such matter is required to be remanded back for fresh consideration. - Decided in favour of assessee.

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• 2015 (1) TMI 847
  Denial of refund claim - valuation - reduction of amount of discount from the value - Held that:- Commissioner of Central Excise (Appeals) has recorded a finding that the availability of the discount under the credit note was already known to the buyers before the sale and that the sale price actually realised by the assessee was less than the sale price realizable as per the invoices. The Commissioner of Central Excise (Appeals) has further held that it was not a case of recovery of additional duty amount from the buyers. - However, Tribunal held that that there was no evidence to show that the assessee had actually issued credit notes in respect of the duty burden initially passed on to its customers at the time of clearance of the goods. This finding of the Tribunal is contrary to the finding of fact recorded by the Commissioner of Central Excise (Appeals). In fact in the appeal memo filed by the revenue before the CESTAT, no such plea was raised by the revenue. In these circumstances, counsel for the parties state that the impugned decision of the Tribunal [2010 (11) TMI 300 - CESTAT, MUMBAI] be quashed and set aside and the matter be restored to the file of the CESTAT for de novo consideration in accordance with law. Accordingly, the impugned order dated 4-11-2010 is quashed and set aside and the matter is restored to the file of the CESTAT for de novo consideration in accordance with law - Decided in favour of assessee.

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• 2015 (1) TMI 846
  Duty demand - Clandestine removal of goods - Held that:- Commissioner in his order, had recorded the role played by the appellant. It is found as a matter of fact that the appellant was the G.P.A holder of the partner of the appellant in [2014 (7) TMI 921 - ANDHRA PRADESH HIGH COURT] and he was involved in every activity including purchase of material in the names of 27 fictitious/non-existing firms and giving instructions in manufacture and clearance of the dutiable goods to Manager M. Narasing Rao. There is no material for us to take a contra view and in that view of the matter, we do not find any reason to interfere with the penalty imposed by the Commissioner as confirmed by the Tribunal and take a different view than that was taken by the Commissioner. - Decided against Assessee.

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• 2015 (1) TMI 845
  Availment of CENVAT Credit - Reversal of credit - High court dismissed the appeal filed by Revenue as being withdrawn being filed against the decision of Tribunal [2008 (6) TMI 515 - CESTAT, BANGALORE] wherein Tribunal held that assessee availed Cenvat credit wrongly on 7000 crates. But later they reversed the same. They have given evidence for reversal of the credit. The appellants have made a point that when they had not availed any credit, there is no question of reversing the same.

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• 2015 (1) TMI 844
  Refund - Unjust enrichment - Stock transfer to depots - Held that:- subject matter of this appeal was already confirmed by this Court by judgment [2010 (8) TMI 300 - ANDHRA PRADESH HIGH COURT]. In this view of the matter, this appeal does not survive for independent consideration and is accordingly dismissed. - Decided against Revenue.

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• 2015 (1) TMI 843
  Penalty u/s 11AC - High Court dismissed the appeal filed by the Assessee against the decision of Tribunal [2014 (3) TMI 914 - CESTAT NEW DELHI]a s withdrawn without prejudice to the right of the appellant to file an appropriate application.

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• 2015 (1) TMI 842
  SSI Exemption – Brand name of another – Lawful consent and assignment – exemption under notification not apply to the specified goods bearing a brand name or trade name whether registered or not of another person except in the cases specified - appellants case does not fall in any of the exceptions – High Court dismissed the case for want of prosecution [2010 (3) TMI 710 - CESTAT, NEW DELHI] - filed by the Revenue against the order of Tribunal [2010 (3) TMI 710 - CESTAT, NEW DELHI] wherein Tribunal held that existence of assignment cannot justify the benefit of the notification.

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• CST, VAT & Sales Tax

• 2015 (1) TMI 855
  Exemption from payment of sales tax - Whether surcharge is leviable on the amount paid by the assessee as a condition of exemption notification dated 30.04.1993 issued by the State Government at the relevant time under the extant Section 4(2) of the Rajasthan Sales Tax Act of 1954 pari materia to Section 15 of the Act of 1994. - Held that:- Language of notification dated 30.04.1993 issued under the extant Section 4(2) of the than Act of 1954 clearly resulted in exemption from payment of whole of the tax, albeit with conditions. Reference in this regard can be had to the succeeding Section 15 of the Act of 1994 which deals with “exemption of tax” and provides that notwithstanding anything contained in the Act, where the State Government is of the opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, exempt fully or partially, whether prospectively or retrospectively from tax the sale or purchase of any goods or class of goods or any person or class of persons, without any condition or with such condition as may be specified in the notification. The notification dated 30.04.1993 generally provides for an exemption from payment of tax under the Act of 1954 on the condition of payment of 1% of the total value of the works contract executed by the assessee in respect of works enumerated therein. Clearly the amount of 1% of the total value of contract in issue as paid by the assessee was not a payment of lump-sum in lieu of tax under Section 5 of the Act of 1994 as in fact has never been the case of the Department at any stage of the proceedings, but a payment to satisfy the condition for exemption from payment of tax. Even though the exemption notification does indeed refer to the payment of 1% of the work contract value as an “exemption fee”. Fee is a concept well known in law and has is own legal connotation. It would be desirable to note that nothing turns on the mere use of the word “fee” in a statute rule / circular / or notification. The nature and character of the impost is to be determined to conclude whether the charge is a fee or not. In the context of the legal connotation of a fee as enunciated by the Hon'ble Supreme Court, the payment of 1% of the total value of the works contract under the notification dated 30.04.1993 as a condition to avail the exemption from payment of tax otherwise leviable first under the Act of 1954 and then under the Act of 1994 can in no circumstance be described as a fee. - The charge of 1% of the value of the works contract for enumerated purposes was thus not a charge in lieu of fee or a lump sum in lieu of tax under Section 5 of the Act of 1994 but only a condition to avail an exemption from tax in whatever form on the transactions or events otherwise exigible to tax. It is settled that every charge levied by the Government need not necessarily be a tax or a fee or even one in lieu thereof. The Government has the power to require a payment as a consideration ( Commissioner of Income Tax, Udaipur, Rajasthan Vs. Mcdowell & Company Ltd. [2009 (5) TMI 28 - SUPREME COURT] ) and analogously as a condition of availing benefits its policy—of which exemption from tax is a part. Invoking of Section 13 of the Act of 1994 to levy a surcharge on the amount of 1% of the total value of the works contract paid by the assessee as a condition to avail the exemption on tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts relating to enumerated works was wholly misdirected and misplaced. Such a levy was not only on a narrow and erroneous understanding of the exemption notification dated 30.04.1993 but also against a wholistic construction of the statutory provisions of the Act of 1994. The Assessing Authority had made a fundamental error in interpreting Section 13 of the Act of 1994 and in seeking to visit the assessee with liability to surcharge on the amount of 1% of the value of the works contract paid under the exemption notification dated 30.04.1993. The Appellate Authority exercised its jurisdiction justly and fairly in setting aside the aforesaid order. The Tax Board rightly concurred with the Appellate Authority. - There is thus no occasion to interfere in this revision petition - Decided against Revenue.

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• 2015 (1) TMI 854
  Input tax credit - Credit on residue Sunflower De-oiled Cake - Whether Section 17 which deals with partial rebate, of the Act is attracted to a case where by-product sold, falls within the category of 'exempted goods - Held that:- The entire raw material named as Sunflower Cake purchased is for the manufacture of Sunflower Oil. But, in the process, after the entire Sunflower Oil is extracted, de-oiled cake remains. The said de-oiled cake also has a value. He cannot keep that de-oiled cake in his premises as it could occupy a large space and no purpose would be served by keeping the same. Merely because the said de-oiled cake also has a value and he sells the same, there is no justification to deny the benefit of deduction to the assessee, because there is no direct nexus between the sunflower oil cake and the de-oiled cake. Sunflower oil cake was purchased for the purpose of extracting oil from the said cake and for the sale of the de oiled cake, the assessee has not put-up a separate unit. Therefore, it is not the case that assessee has put-up a separate industry for the purpose of manufacture of de-oiled cake and merely because the de-oiled cake has some value and it is sold, that would not take away the benefit conferred on the assessee by the statute. The assessee cannot be denied the benefit, taking into consideration the sale of de-oiled cake which is an exempted goods. In that view of the matter, the authorities have not properly appreciated the said statutory provisions. The Legislative intent is defeated in denying the benefit of input tax deduction relying on Sections-11(a)(1) r/w. Section-17 of the Act. The impugned order is unsustainable - assessee is entitled to the benefit of Full Input Tax Deduction - Decided in favour of assessee.

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