TMI Tax Updates - e-Newsletter
January 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
Income Tax
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Fee paid to ROC - Expenditure incurred by a company in connection with issue of share with a view to increase its share capital, is directly related to the expansion of the capital base of the company, and is capital expenditure - even though it may incidentally help in the business of the company and in the profit making. - AT
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Penalty levied u/s 271(1)(C) - deemed income being loss claimed and disallowed - The AO has also not specified the charge on which penalty is being levied - No penalty - AT
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Charitable purpose - The mere fact that service charges have been received by the assessee donot vitiate the charitable nature of assessee’s activities - AT
VAT
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Classification of 'Nestle Toned Milk' - 'fresh milk' or 'pasteurized milk' - addition of any vitamins to the pasteurised milk nevertheless retains its character as milk for the purpose of exemption - HC
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (1) TMI 1005
Non deduction of tax at source on the payment of interest on the deposits to members and non-members - Held that:- Assessee which is a co-operative society carrying on banking business when it pays interest income to a member both on time deposits and on deposits other than time deposits with such co-operative society need not deduct tax at source under section 194A by virtue of the exemption granted vide clause (v) of sub-section (3) of the said section. We however find, as submitted by the learned DR, that the orders are not clear as to whether the entire interest disallowed u/s.40(a)(ia) of the Act relates to interest paid to members or part of the interest is also paid to non-members. We therefore set aside the order of the CIT(A) for the limited purpose of verifying as to any portion of the interest disallowed relates to payment to non-members and in that event restrict the disallowance in so far as it relates to payment of interest by the Assessee to non-members without deduction of tax at source. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 1004
Entitlement to deduction u/s.80P(2)(a)(i) - Income of the society on account of interest from banks other than Co-op. Banks, interest on Mutual Funds, long term capital gain on mutual funds and short term capital gain on Mutual Fund - Held that:- In the instant case there is no dispute to the fact that the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. We find the Pune Bench of the Tribunal in the case of Mahavir Nagari Sahakari Pat Sanstha Ltd.(2000 (2) TMI 234 - ITAT PUNE) has held that the credit society which is carrying on the business of banking activity and providing credit facility to its members is eligible for deduction u/s.80P(2)(a)(i). In view of the above discussion and following the decisions of the Ahmedabad Bench of the Tribunal and Cochin Bench of the Tribunal which in turn have considered the decision of the Hon’ble Supreme Court in the case of Totagar’s Cooperative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT ) we find no infirmity in the order of the Ld.CIT(A) to held that the assessee is entitled to deduction u/s.80P(2)(a)(i) - decided in favour of assessee.
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2015 (1) TMI 976
Entitlement to deduction under section 80-IA - Held that:- Once the losses and other deduction have set off against the income of the previous year, it should not be reopened again for the purpose of computation of current year income under Section 80I or 80IA of the Income Tax Act and the assessee should not be denied the admissible deduction under Section 80IA of the Income Tax Act. As 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. - Decided in favour of assessee.
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2015 (1) TMI 975
Responsibility to pay tds - false documents - Order for acquittal - assessee had claimed the refund on the basis of forged TDS certificates submitted in his income tax return, through respondent-accused Sudesh Kumar, Advocate - Held that:- As is evident from the record that the complainant-ITO claimed that the main assessee has submitted the income tax return for the assessment year 1987-88 claiming a refund of ₹ 3395/- based on false TDS certificate through respondent-accused Sudesh Sharma, Advocate. Strange enough, the complainant ITO had not filed any complaint against the main assessee and only arrayed the respondent Advocate as an accused, who was stated to have submitted the income tax return on his behalf. Meaning thereby, the respondent-accused had only submitted the income tax return along with all the pointed documents on behalf of main assessee. In other words, all the TDS certificates, which were purported to have been issued by the Northern Railway, were supplied by the main assessee to his Advocate. It was the main assessee, who had procured the documents from the concerned authorities and claimed the refund. In case, the main assessee had claimed the refund on the basis of forged TDS certificates, then, the Income Tax Authorities were competent and well within their jurisdiction to reject his claim of refund under the relevant provisions of The Income Tax Act. Thereafter, the aggrieved party had a right to file the statutory appeal in this relevant connection. Be that as it may, therefore, in that eventuality, the respondent-accused, who was an Advocate, had just submitted the income tax return on behalf of main assessee, cannot possibly be and indeed could not be held liable for criminal prosecution for procuring the documents by main assessee in order to attract the penal provisions of indicated offences, as contrary urged on behalf of complainant-ITO Meaning thereby, the trial Court has examined the matter in the right perspective and correctly acquitted the respondent-accused. The learned counsel for petitioners did not point out any material, much less cogent, so as to warrant any interference in the impugned judgments of acquittal. Such articulated impugned judgments of acquittal, containing valid reasons, cannot possibly be interfered with in exercise of limited jurisdiction under section 378(4)Cr.PC by this court, unless and until, the same are illegal, perverse and without jurisdiction. Since no such patent illegality or legal infirmity has been pointed out by the learned counsel for petitioners, so, the impugned judgments of acquittal deserve to be and are hereby maintained for the reasons mentioned here-in-above in the obtaining circumstances of the case.
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2015 (1) TMI 974
Disallowance of belated payment of PF and ESIC - Tribunal deleted the addition made u/s. 43B - Held that:- In view of the subsequent decision of this Court in the case of Commissioner of Income Tax v. Gujarat State Road Transport Corporation, reported in [2014 (1) TMI 502 - GUJARAT HIGH COURT] all these appeals are required to be remanded to the appropriate authority for deciding the issue afresh. In the said decision, this Court held that any sum received by the assessee-employer from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948, or any other fund for the welfare of such employees shall be treated as an "income". Under Section 36(1)(va), the assessee shall be entitled to the deduction in computing the income referred to in section 28 with respect to any sum received by the assessee from his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employees' accounts in the relevant fund or funds on or before the "due date". As per the Explanation to section 36(1)(va) for the purpose of clause (x), "due date" means the date by which the assessee is required as an employer to credit the employees' contribution to the employees account in the relevant fund under the Act, rule, order or notification issued thereunder or under any standing order, award, contract or service or otherwise. Section 43B is with respect to certain deductions only on actual payment. The deletion of the second proviso to Section 43B and the amendment in the first proviso to section 43B by the Finance Act, 2003, is required to be confined to section 43B alone and the deletion of the second proviso to section 43B by the amendment pursuant to the Finance Act, 2003, cannot be made applicable with respect to section 36(1)(va) of the Act. Accordingly, all these matters are remanded to the Assessing Officer for deciding the matters afresh - Decided in favour of revenue for statistical purposes.
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2015 (1) TMI 973
MAT credit - set off from the tax payable before setting off the tax deducted at source and advance tax paid - Held that:- It is evident that any tax paid in advance/pre-assessed tax paid can be taken into account in computing the tax payable subject to one caveat, viz, that where the assessee on the basis of self-computation unilaterally claims set off or the MAT credit, the assessee does so at its risk as in case it is ultimately found that the amount of tax credit availed of was not lawfully available, the assessee would be exposed to levy of interest under section 234B on the shortfall in the payment of advance tax. We reiterate that we cannot accept the case of the Department because it would mean that even if the assessee does not have to pay advance tax in the current year, because of his brought forward MAT credit balance, he would nevertheless be required to pay advance tax, and if he fails, interest under section 234B would be chargeable. The consequence of adopting the case of the Department would mean that the MAT credit would lapse after five succeeding assessment years under section 115JAA(3) ; that no interest would be payable on such credit by the Government under the proviso to section 115JAA(2) and that the assessee would be liable to pay interest under sections 234B and 234C on the shortfall in the payment of advance tax despite existence of the MAT credit standing to the account of the assessee. Thus, despite the MAT credit standing to the account of the assessee, the liability of the assessee gets increased instead of it getting reduced. - Decided in favour of assesee.
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2015 (1) TMI 972
Income from house property - value of the vacant area - Held that:- It is seen from the order of the Tribunal that the Tribunal has taken a different view that the assessee has held the balance property as stock-in-trade. Since the order of the Commissioner of Income Tax (Appeals), confirming the assessment of Annual Letting Value of the vacant space under the head 'income from house property in respect of both the assessment years, has not been challenged by the assessee, the Tribunal is not justified in coming to a conclusion that the property is held as stock-in-trade, thereby, upholding the deletion of the addition of Annual Letting Value. To that extent, the order of the Tribunal becomes beyond the scope of appeal. Hence, we find that the issue has to be re-addressed by the Tribunal. - Decided in favour of revenue for statistical purposes.
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2015 (1) TMI 971
Benefit of exemption under Section 80-IC - LCD Monitor - ITAT concurred with the findings of the CIT(A) that the assessee was eligible to claim deduction - Held that:- Aside from the reasons cited by the ITAT affirming the conclusions reached by the CIT (A), which we uphold, we must add that the plea that the LCD Monitor would not fall within the description of items at sl. No. 13 in part (c) of XIV Schedule is also not correct. The LCD Monitors do subscribe to the description of information and communication technology devices and, therefore, would attract, provided other statutory conditions are fulfilled, the benefit of exemption under Section 80-IC of Income Tax. We concur with the conclusion that A.O. had proceeded more on the basis of doubts entertained by him as to the genuineness of the claim rather than some concrete material. If he had any reasons to disbelieve the correctness of the claim about the manufacturing activity (on the basis of considerations such as wages paid, electricity bills generated, the nature of the plant and machinery etc.,), the least that could have been done by him was to have the manufacturing unit of the assessee inspected. For such purposes, he only had to take recourse to his statutory powers under the law. Without having undertaken any such exercise, as observed by the authorities below or rejecting the accuracy of the books of accounts, adverse conclusions on facts as reached could not have been drawn. No question of law arising for consideration. - Decided against revenue.
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2015 (1) TMI 970
Rate of depreciation - 100% on the centering material or normal rate of depreciation at 33.1/3% for plant and machinery - Held that:- Tribunal was justified in confirming the order of the CIT(A), allowing 100 per cent depreciation to the assessee as placing reliance on the decision of the Delhi High Court in "CIT VS. NATIONAL AIR PRODUCTS LTD." [1980 (4) TMI 72 - DELHI High Court] - Decided against revenue.
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2015 (1) TMI 969
Deduction of TDS - contracts pertaining to hiring agreement OR rental agreement - 194-C v/s 194-I - Held that:- We cannot accept the contention of the learned Counsel that if the Tribunal has recorded any erroneous finding of fact or has not properly interpreted the terms of the agreement, such would fall in the arena of substantial question of law. As such, the scope of appeal under Section 260-A of the IT Act is limited to the substantial question of law and cannot be considered based on any question of fact. The Tribunal was satisfied on facts that it was hiring agreement and not rental agreement. Such finding of fact cannot be re-examined by us in the appeal under Section 260-A on the ground as sought to be canvassed. In our view, the scope of applicability of Section 194-C and Section 194-I are different, for which no substantial question arises for interpretation or for examination before this Court. Appeal dismissed. - Decided against revenue.
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2015 (1) TMI 968
Dis-allowance of the sum paid to outgoing Chairman - ITAT deleted the addition - Held that:- Object of making payment was to derive an advantage by eliminating the competition over a period of three years and the said period cannot be considered as sufficiently long period so as to ward off competition from Mr. Kapadia for a long time in future or forever so as to hold that benefit of enduring nature is received from such payment. The Tribunal has recorded a finding that exit of Mr. Kapadia would have immediate impact on the business of the assessee- company and in order to protect the business interest the assessee had paid the said amount to ward off the competition. Thus the decision of the Tribunal is based on finding of facts and therefore, first question cannot be entertained. - Decided against revenue. Bad debts claim - whether after the amendment to Sec. 36(1)(vii) of the Act it is no longer required for the respondent to prove that the debt has become bad for claiming the deduction? - Held that:- The said question stands answered against the revenue by the decision of the Apex Court in the case of T.R.F. Ltd. v. Commissioner of Income Tax reported in (2010 (2) TMI 211 - SUPREME COURT).- Decided against revenue.
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2015 (1) TMI 967
Disallowance of assessee’s claim for deduction under S.80IB(10) - apportionment of indirect expenses - Held that:- It is no doubt true that the turnover of the project involving only sale of land cannot be equated with or compared with the turnover of the project which involved construction and sale of a commercial or residential building for the purpose of apportionment of indirect expenses incurred by the assessee company in the construction Division and this position is not disputed even by the learned counsel for the assessee. At the same time, it is also true that it cannot be said that the activity involving purchase and sale of land does not require incurring of any indirect expense, which mainly involved general administrative expenses and this position is not disputed even by the Learned Departmental Representative. In this situation, neither the apportionment of indirect expenses made by the assessee on the basis of sales nor the apportionment of indirect expenses made by the Assessing Officer on the basis of sales but excluding the sale of land, can be said to be correct. Thus it would be fair and reasonable to make such apportionment of indirect expenses in the ratio of 4:1 in the case of turnover of projects involving construction and sale of commercial and residential buildings, and projects involving only sale of lands. It means that the turnover of sale of land should be taken only to the extent of 25% while making the apportionment of indirect cost to different projects and based on such apportionment, the profit of different projects eligible for deduction under S.80IB has to be worked out. Accordingly, we direct the AO to recompute the deduction allowable to the assessee under S.80IB - Decided partly in favour of assessee. Addition on account of interest income - assessee had completed FCCB issue - Held that:- there being no nexus between the interest income received by the assessee on bank deposits and the expenses incurred in connection with FCCB issue, the netting of interest income against such expenditure as done by the assessee is not permissible and the learned counsel for the assessee has also not been able to establish before us any such nexus. We therefore find no justifiable reason to interfere with the impugned order of the learned CIT(A) confirming the addition made by the Assessing Officer to the total income of the assessee on account of interest income received on bank deposits, treating the same as receipt of revenue nature taxable in the hands of the assessee. - Decided against assessee. Apportionment of managerial commission between the construction and hospitality Divisions - Held that:- As rightly submitted by the Learned Departmental Representative, the basis of allocation of managerial commission of ₹ 2.93 crores out of total of ₹ 5.45 Crores to the Hospitality Division in spite of lower turnover and loss shown by the said Division has not explained by the assessee before the authorities below and even at the time of hearing before us, the learned counsel for the assessee has not been able to explain any such basis satisfactorily. As rightly observed by the learned CIT(A) in his impugned order, managerial commission is generally paid on the basis of performance of the company as reflected in the profitability and since the Hospitality Division had suffered a loss for the year under consideration, there was no justification on the part of the assessee to allocate more managerial commission to the Hospitality Division and less to the Construction Division, which was performing better and earning good profits. As rightly submitted by the learned Departmental Representative, this was done apparently by the assessee to show more profit in Construction Division, in order to claim more deduction under S.80IA. As such, having regard to all the facts and circumstances of the case, we are of the view that allocation of managerial commission done by the authorities below on the basis of sales of the two Divisions of the assessee is fair and reasonable. - Decided against assessee. Disallowance of interest - Held that:- In the absence of any documentary evidence, we agree with the learned CIT(A) that the claim of the assessee for such commercial expediency is not substantiated by the documentary evidence and it is thus a case of diversion of interest bearing borrowed funds by the assessee to give interest free advances to its subsidiaries, other than for business purposes, as rightly held by the Assessing Officer. The interest attributable to such advances thus was rightly disallowed by the Assessing Officer, and we find no infirmity in the impugned order of the learned CIT(A) confirming the said disallowance. - Decided against assessee. Adoption of sale consideration - addition was made u/s. 69 - Held that:- The learned CIT(A) restricted the addition of ₹ 72,67,000 made by the Assessing Officer under S.69 to ₹ 60 lakhs, but without dealing with the argument of the assessee that extra consideration allegedly received by the assessee on sale of land could not be added under S.69. Moreover, the consideration received by the assessee against the sale of land, as stated in the relevant agreement, was ₹ 16,87,500 and not ₹ 56 lakhs as taken by the learned CIT(A), while sustaining the addition to the extent of ₹ 60 lakhs and relying on this sale consideration mentioned in the relevant sale deed, the Revenue has raised an issue in its appeal that the learned CIT(A) should have enhanced the income of the assessee on this issue. The learned counsel for the assessee has also raised the plea that the amount of addition made by the Assessing Officer and sustained by the learned CIT(A) is based on the statement of Shri G.Nageswra Reddy recorded during the course of survey, but the copy of the said statement was never made available to the assessee before using the same as evidence against the assessee to make the impugned addition. Thus we consider it fair and proper and in the in the interests of justice to set aside the impugned order of the learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh - Decided in favour of assessee for statistical purposes. Difference in total income - CIT(A) reduced the hedging loss of ₹ 4.86 crores from the returned income as acception addition evidence of assessee - Held that:- As rightly submitted by the Learned Departmental Representative, the claim of the assessee for hedging loss of ₹ 4.,86 crores made for the first time before the learned CIT(A) was accepted by him, without giving any opportunity to the Assessing Officer to verify the same in the light of the relevant details furnished by the assessee in this regard as well as the evidence filed in support. Thus there is clear violation of Rule 46A of the Income-tax Rules 1962 by the learned CIT(A), while giving relief to the assessee on this issue and this position is not disputed even by the learned counsel for the assessee at the time of hearing before us - matter is restored to the file of the Assessing Officer for deciding the same afresh. - Decided in favour of revenue for statisticl purposes. Disallowance u/s 14A read with Rule 8D - CIT(A) deleted addition - Held that:- All the facts and figures furnished by the assessee before the learned CIT(A) and relied upon by him to give relief to the assessee on this issue, were not furnished before the Assessing Officer during the course of assessment proceedings and the Assessing Officer therefore had no opportunity to verify the same.We find merit in this contention of the Learned Departmental Representative. Accordingly, we set aside the impugned order of the learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer for the limited purpose of verifying the stand of the assessee that sufficient own funds were available with it for making the investments in the shares of other companies and that the interest bearing borrowed funds were not utilised for making such investments. If the claim of the assessee is found to be correct on such verification, the Assessing Officer shall not make any disallowance under S.14A. - Decided in fvaour of revenue for statistical purposes.
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2015 (1) TMI 966
Disallowance of depreciation on BSE Card - Held that:- Keeping in view that now it is a case of demutualization, as result of corporatization of BSE, the issue is covered from both the angles against the assessee as relying on decision of Sino Securities (P) Ltd. vs ITO [2011 (11) TMI 535 - ITAT MUMBAI] - Decided against assessee. Disallowance of the foreign exchange loss on forex - Held that:- Considering the accepted fact that the Hon’ble Supreme Court in the case of CIT vs Woodward Governor India Pvt Ltd [2009 (4) TMI 4 - SUPREME COURT] has decided the issue in favour of the assessee, we, therefore, set aside the order of the CIT(A) on the issue and direct the AO to delete the addition of ₹ 24,149/-. - Decided in favour of assessee. Disallowance of non compete fee and customer rights - Held that:- An expense may be capital in nature or revenue in nature, but, to ascertain the nature, there is no fixed criteria. But the judicial fora has taken one manner to ascertain the distinction. If the expense is for short term benefit, it could be allowed as a revenue expenditure or an expense is made to acquire an asset giving enduring benefit to the assessee, in which case, it would be capital in nature view which has been taken by the Hon’ble Bombay High Court in the case of CIT vs Everest Advertising [2015 (1) TMI 968 - BOMBAY HIGH COURT]. Thus the assessee deserves the allowance. - Decided in favour of assessee. Disallowance of customer rights - Held that:- Once it is seen that the expenditure has been incurred for acquiring the business, we cannot hold that acquisition of customer rights are bogus. We, therefore, hold that the expenditure as such was genuine. Once the expense has been accepted by us to be genuine, it would fall within the inclusions of section 32(1)(ii). - Decided in favour of assessee. Disallowance of Bad debts - CIT(A) deleted the addition - Held that:- Bad-debts of ₹ 78,91,360/- written off pertained to the brokerage income already credited to the profit and loss a/c in the relevant years and accordingly the write off of the bad-debts must be allowed u/s 36(1)(vii) as it satisfies the conditions of section 36(2)(i). - Decided against revenue. Allowance of Vanda loss - AO had treated the loss as speculation loss u/s 73 - Held that:- Explanation to s. 73 is attracted only when part of the business of the assessee company consists of the purchase and sale of shares of other companies and in that situation only such dealings in shares is deemed to be carrying on a speculative business. It must be noticed that any kind of venture will not fall within the definition of "business". The venture or adventure will have to be In the nature of trade, commerce or manufacture. Thus, there is lack of ingredient called "business" in the sale and purchase done by the assessee of shares for which net loss has occurred to assessee. Thus the said loss arisen to assessee does not fall within the ambit of Explanation to s. 73. The loss occurred to assessee was in course of its business activity of brokerage. - Decided against revenue. Disallowance made u/s 14A - Held that:- As relying on Godrej & Boycee Manufacturing Co. Ltd. Vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D is not applicable for this assessment year, at the same time, it is held that reasonable disallowance should be made u/s 14A of the Act. - restore the issue to the AO to compute the disallowance as per the provisions of section 14A(2) . - Decided in favour of revenue for statistical purposes. Allowance of membership fees - Held that:- If an item of expenditure is to be considered capital in nature, the expenditure should bring into existence an asset or an advantage for the enduring benefit of a trade. Membership fee paid to a club does not bring into existence an asset or an advantage for the enduring benefit of the business. It is an expenditure incurred for the period of membership and is not long lasting. By subscribing to the membership of a club, no capital asset is created or comes into existence. By such membership, a privilege to use facilities of a club alone, are conferred oil assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to the assessee. Consequently, it cannot be treated as capital asset. - Decided in favour of assessee.
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2015 (1) TMI 965
Fall in G.P. rate from 18.52% in the preceding year to 15.71% during the year in question - rejection of books of accounts - CIT(A) deleted the addition - Held that:- Since AO was swayed only by the decline in the G.P. rate to reject the books of account without anything else, we are of the considered opinion that such an action of the Assessing Officer has no sanction of law. The assessee has placed on record a copy of Chart, which was also filed before the Assessing Officer to demonstrate that there has been an alarming increase in the prices of steel round bar. The AO has not contradicted the contents of such chart. When we consider this factor pushing down the gross profit rate coupled with fact that the Assessing Officer has not pointed out any mistake in the quantitative records maintained by the assessee or the value of the closing stock, the only conclusion which in our considered opinion can be drawn is that the books of account were properly maintained. We, therefore, hold that the learned CIT(A) was justified in cancelling the action of the AO in rejecting the books and resultantly deleting the addition of ₹ 1.19 crore on this score. - Decided in favour of assessee. Unaccounted receipt of FDRs - CIT(A) deleted the addition - Held that:- Once the receipt of deposits amounting to ₹ 44 lac from the six depositors is held to be genuine, the consequent disallowance of interest amounting to ₹ 1,94,710/- made by the Assessing Officer would automatically stand deleted. We, therefore, uphold the impugned order in deleting the addition of ₹ 45.94 lacs. - Decided in favour of assessee. Capital subsidy on sales tax - CIT(A) deleted the addition - Held that:- As the nature of subsidy in the present facts and circumstances is undisputed, being towards the setting up of unit in remote and rural areas, the natural conclusion which therefore follows is that this subsidy is a capital receipt and not chargeable to tax. - Decided in favour of assessee. Apportionment of electricity expenses and Directors’ remuneration - Held that:- It is observed that the assessee was consistently apportioning electricity expenses between factory premises and office building in the ratio of number of employees in the works and in administration office. This practice adopted by the assessee, has not been disturbed by the Revenue in the past. Once a particular accounting practice is consistently followed, then there is no rationale in disturbing the same.The Directors’ remuneration is an item of administrative expenses and cannot be considered as a part of trading account so as to qualify as a direct expense for the production of expenses. It is but natural that only the expenses in the trading account, which are otherwise direct in nature, can be considered in valuing the closing stock. No expense of the administration nature, which falls in the Profit and loss account can be considered for valuing the closing stock. In our considered opinion, there is no infirmity in the impugned order deleting this addition. - Decided in favour of revenue. Voluntary Retirement Scheme (VRS) expenses - CIT(A) deleted the addition - Held that:- We find from the remand report that the AO has not disputed the amount of VR expenses for the two years in respect of which the ld.CIT(A) granted the relief. The AO simply stood by the action taken by him in the assessment order. To view of the ld. CIT(A) in allowing the relief is, therefore, upheld. As regards the other amount, we find that section 35DDA came to be inserted by the Finance Act, 2001 w.e.f. 1.4.2001 providing deduction under VRS @ 1/5 of the amount so paid in five equal installments. The claim of the assessee for making deduction for a sum of ₹ 1,06,210/- in respect of the year 2000-01 is clearly impermissible in view of section 35DDA coming into force later on. Such expenditure assuming the character of prior period expenses for the year in question for which the liability got crystalised and stood discharged in the earlier year cannot be allowed as deduction in the current year. - Decided in favour of assessee. Unascertained liability in the form of warranty claimed - CIT(A) deleted the addition - Held that:- It is apparent that the last item is a debit for a sum of ₹ 2,36,150/- and, in the narration column, it has been mentioned ‘being the provision’. In view of this factual scenario, it becomes abundantly clear that the ld. CIT(A) erred in deleting this addition by considering the amount of ₹ 2.36 lac as warranty expenses actually incurred and not as a provision. The view taken by the ld. CIT(A) is, therefore, not sustainable. - Decided in favour of revenue. Insurance expenses - CIT(A) deleted the addition - Held that:- As observed from the assessment order that the assessee did make a claim for deduction of insurance expenses. Not only that, the assessee also submitted before the AO, vide its reply dated 23.2.07 that the amount was paid to Bajaj Allianz and General Insurance Company Ltd., for a Standard Fire Policy for the calendar year 2005. When the facts are crystal clear that the assessee did make a claim for deduction of ₹ 4.93 lac, the view point of the ld. CIT(A) cannot be accepted unless the assessee shows that no deduction was claimed for the amount disallowed. Since necessary details were not instantly available with the ld.AR, we are of the considered opinion that it would be in the fitness of things if the impugned order on this issue is set aside and the matter is restored to the file of AO for a fresh determination. - Decided in favour of revenue for statistical purposes. Non deduction of TDS on freight and forwarding expenses and on the amount of printing and stationery - CIT(A) deleted the addition - Held that:- In view of the fact that the assessee did deduct tax at source on the freight payments made to the above parties and such tax was duly deposited in the exchequer, we are of the considered opinion that the provisions of section 40(a)(ia) are not triggered. As regards non-deduction of tax at source on the amount of printing and stationery, as find that the details, it can be seen that these are for purchase of printing and stationery and there is nothing like any works contract having been carried out by the supplier. These are small amounts comprising of purchase of papers for balance sheet, material dispatch register, tags, excise challans and envelopes, etc. The definition of ‘works’ under section 194C does not include such printing and stationery expenses. We, therefore, hold that the ld. CIT(A) was justified in deleting this addition. - Decided in favour of assessee. Cessation of liability u/s 41 - CIT(A) deleted the addition - Held that:- The details of such amounts that some of them have been actually written back by the assessee in the succeeding year and the other amounts were existing liabilities not having ceased to exist. Merely because the creditor gets more than three years old, does not ipso facto obliterate the liability in itself. So long as the liability is payable, it cannot be considered as income. Taking into consideration the entirety of facts and circumstances of this issue, we are satisfied that the ld. CIT(A) was right in deleting the addition. - Decided in favour of assessee. Disallowance of foreign travel expenses - CIT(A) deleted the addition - Held that:- foreign travelling expenses were incurred by the directors of the company who visited several countries where the company was making exports for last couple of years. In support of the deduction for expenses, the assessee also furnished copies of e-mails exchanged with the customers abroad. The AO in the remand report chose not to adversely comment on this evidence. In view of these facts, it is clear that such foreign travelling expenses were incurred for the purpose of the assessee’s business and there is no warrant for making any disallowance.- Decided in favour of assessee. Addition of vehicle running and maintenance and telephone expenses expenses for non-business purpose - CIT(A) deleted the addition - Held that:- The company is a separate legal entity distinct from its directors and the use of vehicles by the directors cannot be characterized as user for non-business purpose and, hence, no addition can be made. There cannot be any non-business user in so far as a company assessee is concerned. In view of the above discussion, we find that the ld. CIT(A) has taken an unimpeachable view in deleting disallowance of 20% of vehicle running and maintenance expenses for non-business purpose. - Decided in favour of assessee. Adiition entertainment expenses - CIT(A) deleted the addition - Held that:- All the payments have been made through cheques and the assessee has mentioned the name and designation of the customer who was taken for meals, etc. In our considered opinion, there can be no reason for sustaining this disallowance. - Decided in favour of assessee. Addition on account of demurrage charges - CIT(A) deleted the addition - Held that:- This amount represents excess freight charged by a customer M/s Mid West Truck Auto Parts, which was in turn, recovered by bank. Complete evidence and explanation in this regard was filed before the AO as well, who did not offer any adverse comment on the same. As this amount is nothing, but, excess freight charges, it cannot be treated as penal in nature warranting any disallowance in terms of Explanation 1 to section 37(1) of the Act. - Decided in favour of assessee. Addition on account of sales and business promotion expenses - CIT(A) deleted the addition - Held that:- Gold items were distributed on the occasion of Diwali festival to its customers and complete details about the name and designation of the persons to whom such gifts were given, has been provided in the paper book. Invoices for the purchase of such gold items are also available on record. In so far as shaguns are concerned, the assessee is in the practice of giving shaguns on the occasion of girl marriage in the family of its employees. On random basis, a receipt from the recipient along with the copy of the wedding card has also been made available. Thus the ld. CIT(A) was justified in deleting the addition. - Decided in favour of assessee.
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2015 (1) TMI 964
Disallowance u/s. 14A read with Rule 8D - CIT(A) deleted the disallowance in part - whether addition of ₹ 50,000/- sustained by CIT(A) is very excessive? - Held that:- Considering Audited Balance Sheet and P&L A/c for the year ended 31.3.2009 it is seen that no fresh investments during the year under consideration were made and source of such earlier year’s investment are out of interest free funds in the form of share capital and interest free loans as taken; no dividend income / tax free income was earned; entire expenditure as incurred under various heads was relatable to income from training services, which stands taxed. CIT(A) was right to some extent in deleting the disallowance of ₹ 17,27,733/-, but on the other hand we find no basis on which he has sustain the adhoc disallowance of ₹ 50,000/- as there was no basis for the Ld. CIT(A) to sustain ad-hoc disallowance of ₹ 50,000/- by holding that "the only expenses which can be attributed to exempt income likely to be earned in future are the auditor's remuneration and legal & professional charges". The auditor's remuneration and legal & professional charges incurred for maintenance of statutory books and its audit etc. were required to be incurred irrespective of whether the Company had any income or not and hence, there was absolutely no basis for considering a part of such expenditure towards earning of exempt income. Decided in fvaour of assessee.
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2015 (1) TMI 963
Unutilised Modvat Credit added to Closing Stock - Held that:- As the assessee has given the impact of the adjustment of Modvat Credit to the Profit & Loss Account for the year under consideration. In our opinion, in the interest of justice matter should be restored back to the file of the AO for fresh adjudication. He is directed to decide the issue after considering the order of the Tribunal dated 22. 05. 2013 and the decision of the Hon'ble jurisdictional High Court in the case of Mahalakshmi Glass Works (P) Ltd. (2009 (4) TMI 182 - BOMBAY HIGH COURT) - Decided in favour of assesse in part. Disallowance of deduction u/s. 80HHC - Held that:- In the absence of any profit available to the assessee from exports, the benefit of deduction under section80 HHC was rightly not available. In our considered opinion the ld CIT(A)was justified in rejecting the ground of the assessee on the claim of deduction under section 80HHC in the absence of any eligible profit. - Decided in fvaor of assessee. Provision for doubtful debts for purpose of calculating book profit u/s. 115 JB - Held that:- FAA had directed the AO make verification about the liabilities claimed by the assessee. He held that if the liabilities were ascertainable, he should allow the deduction and not otherwise. It was duty of the assessee to prove before the AO that the liabilities in question were not unascertainable. The assessee before us has not demonstrated as to how he proved his claim before the AO. So, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. - Decided against assessee. Transfer Pricing adjustment - Held that:- The assessee has adopted that external CUP method, that it relied upon the Bhun database, that the FAA had partly allowed the appeal filed by the assessee. Considering the peculiar facts and circumstances of the case, we are remitting the issue of TP adjustment to the file of the AO for fresh adjudication. - Decided in favour of assessee for statistical purposes. Delay in depositing contribution to Provident Fund (PF)account under both the categories-i. e. Employer’s contribution and Employees’ contribution - Held that:- Even if some of the payments were made late but within the grace period no disallowance should be made. - Decided in favour of assessee.
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2015 (1) TMI 962
Reopening of assessment - Assessee filed the return as ‘Resident but not ordinarily Resident’ - SOTP attributable to services rendered in India - value of perquisites as unexplained income - Indo-US DTAA - whether the provisions of the section 5(1)(c) and section 9(1)(ii) of the Act are not applicable to the appellant? - Held that:- As can be seen from facts on record, prior to his joining Microsoft India (R & D) P. Ltd., on 01.01.2004, assessee was an employee of Microsoft Corporation, USA and was a non-resident. While, he was employed with Microsoft, USA assessee was granted stock awards as per stock awards scheme of Microsoft USA. As per the scheme, stock awards granted to assessee between August, 2002 and September, 2005, amounting to ₹ 1,49,80,713 vested with the assessee during previous year 2006-07 relevant to assessment year under dispute. It is the claim of the assessee that out of stock amount vested of ₹ 1,49,80,713, an amount of ₹ 1,05,62,088 was attributable to services rendered in India and ₹ 44,18,625 is relatable to services rendered in USA. To substantiate such claim assessee has also submitted before the A.O. a working showing the details of stock amount granted. A perusal of the working, a copy of assessee’s paper book, reveals assessee has furnished all details relating to stock award granted, date of grant, date of vest of stock amount, total period between grant date and vest date, no. of days present in India between the grant date and vest date etc., Through this working assessee has also demonstrated the perquisite value of stock award which can be apportioned towards services rendered in India, depending upon the number of days stayed in India. As it appears, these facts and figures have not at all been examined by the Assessing Officer. Ld. CIT(A) has also not examined this issue with the attention it deserved. The order of the Ld. CIT(A) is non-speaking and bereft of any reasoning. When the residential status of the assessee is accepted as ‘not ordinarily resident’, income which accrues or arises to him outside India cannot and should not form part of the total income, unless the other conditions of proviso to section 5(1) are satisfied. Moreover, section 9(1)(ii) also makes it clear, income under the head “Salaries shall be deemed to accrue or arise in India if it is earned in India towards services rendered in India. The information submitted by the employer under section 133(6) in letter dated 10.03.2009 also does not conclusively prove that amount received under SOTP is entirely relatable to services rendered in India. The employer has only stated that the stock awards proceeds were received by the assessee in India. Rather, in the aforesaid letter the employer has clarified that stocks were allotted to assessee when he was under employment of Microsoft Corporation, USA. Further, assessee sold the stocks to broker appointed by Microsoft, USA in the year 2003. Assessee only received the final installment of SOTP sales in financial year 2006-07. Therefore, without ascertaining how much of the SOTP is attributable to services rendered in India, the entire amount cannot be made taxable only because the money was received in India. Therefore, we are of the view that the assessee having residential status of ‘not ordinarily resident’, only that portion of the stock awards and SOTP attributable to services rendered in India can form part of total income for the impugned assessment year. As neither the A.O. nor Ld. CIT(A) have examined the facts properly, we are inclined to remit the matter back to the file of A.O. for taking a fresh decision on the issue of taxability of amount received from stock amounts/SOTP. - Decided in favour of assessee for statistical purposes. Addition of an amount of ₹ 89,87,658 being final installment of SOTP - Held that:- The only additions made by A.O. are ₹ 1,49,80,713 towards stock awards and ₹ 30,46,287 towards post tax savings. Out of the additions of ₹ 1,49,80,713, assessee admits that an amount of ₹ 1,05,62,088 is taxable in India. Therefore, dispute remains with the amount of ₹ 44,18,625. The A.O. has not separately added the amount of ₹ 89,87,658. In these circumstances, we fail to understand how this ground arises. However, considering the fact that assessee has raised this issue in the petition filed under section 154 of the Act, which is still pending before the A.O., we remit the matter back to the file of the A.O. for deciding afresh after providing an opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Addition of an amount of ₹ 30,46,287 - Held that:- Neither the A.O. nor the learned CIT(A) have decided the issue with reference to evidences brought on record by the assessee. Accordingly, we consider it appropriate to remit this issue back to the file of the A.O. for deciding afresh after affording reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (1) TMI 961
Penalty u/s 271(1)( c) - disallowance of deduction u/s 80IB on income the assessee has concealed the particulars of its income or filed inaccurate particulars of income - Held that:- . The assessee has filed revised return of income. The assessee has not claimed the deduction u/s80IB. We find that the penalty u/s271(1)( c) is not leviable merely because the disallowance of particular claim made by the assessee was upheld. We find that the assessee has raised a bonafide claim, which was ultimately accepted in assessment year 2005-06. Therefore, when the assessee has claimed the deduction under bonafide and all the facts were disclosed before the department, it cannot be said that the assessee had concealed its particulars of income and no penalty can be levied. Therefore, we find that the assessee has made a bonafide claim and the issue was in favour of the assessee. Therefore, we are of the view that the ld.CIT(A) has taken a view that assessee has bonafide claim, which was disallowed and no penalty can be levied. Therefore, we are of the view that the ld.CIT(A) is justified in deleting the penalties levied u/s271(1) (c ) of the Act for the assessment years 2007-08 and 2008-09. - Decided in fvaour of assessee.
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2015 (1) TMI 960
Unexplained unsecured loan - CIT(A) deleted the addition - Held that:- CIT(A) has observed that he did not find that any evidence was unearthed during the search conducted on the assessee to indicate that these amounts were not genuine. Having searched the assessee and failed to get any evidence, it is not legally tenable for the Revenue to allege that the assessee has failed to prove the transactions. Ld. CIT(A) has further observed that once assessee gives some details the burden shifts on the Revenue to disprove the claim made. Else, the claim has to be accepted. When loans / advances taken through the banking channel and returned through the banking channel it cannot be doubted in the absence of evidence to the contrary. We find force in the conclusion drawn by the Ld. CIT(A) that as there is no evidence to the contrary, the additions made are not legally sustainable and are rightly deleted. In view of the above, we do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the same. - Decided in fvaour of assessee. Disallowance of interest on loan - CIT(A) deleted the addition - Held that:- Ld. CIT(A) has concluded that this ground of appeal is consequential to the fourth ground of appeal dealt while deleting the addition of ₹ 12,20,000/- above. Since relief has been allowed in the main ground, the consequential ground as to allowed. The disallowance of interest paid he deleted. - Decided in favour of assessee. Fee paid to ROC - Revenue v/s Capital - Held that:- The expenditure on issue of shares and the fees paid to the Registrar of the Company is capital in nature. Expenditure incurred by a company in connection with issue of share with a view to increase its share capital, is directly related to the expansion of the capital base of the company, and is capital expenditure, even though it may incidentally help in the business of the company and in the profit making. Hence, the same cannot be allowed as revenue expense. See PSIDC vs. CIT [1996 (12) TMI 6 - SUPREME Court] Brooke Bond vs. CIT [1997 (2) TMI 11 - SUPREME Court] and CIT vs. Kodak India Ltd. [2001 (10) TMI 7 - SUPREME Court]. - Decided in favour of revenue.
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2015 (1) TMI 959
Unaccounted cash credit - Held that:- In the present case it is noticed that the assessee received the deposits from 62 persons in cash, those persons were produced before the AO and their statements were recorded wherein they confirmed the deposits with the assessee. The depositors also explained the source of their deposits which was the agricultural income and the income from salary or profession/business etc. The AO however did not accept the explanation of the assessee and also doubted the confirmation by presuming that the persons having the land holding of 2 to 3 acres each were not in a position to advance the deposits of less than ₹ 20,000/-. . In the instant case, it was explained that the assessee was dealing in Petroleum Products and the persons who were mainly agriculturists deposited the amount in cash to ensure the regular supplies of the Petroleum Products like diesel etc. which was required for the purpose of harvesting and sowing, the said explanation of the assessee was not rebutted at any stage. It, therefore, appears that the impugned addition has been made merely on the basis of surmises and conjecture. Therefore, the deposits in question were genuine and the addition made by the AO and confirmed by the ld. CIT(A) was not justified, we, therefore, delete the same. - Decided in favour of assessee. Additional income from Tanker not shown - Held that:- In the present case it is an admitted fact that the assessee maintained separate books of accounts for the tanker which were not rejected by invoking the provisions of section 145(3) of the Act. The AO disallowed 50% of the total expenses without any basis and the ld. CIT(A) also worked out the expenses on the basis of consumption of diesel but ignored other expenses like salary to the driver & the cleaner, repairs & maintenance, depreciation etc. In the present case the assessee received the reimbursement of the expenses on the basis of certain parameters fixed by the Petroleum Company those parameters were not doubted. The assessee received the transportation charges of ₹ 18,82,516/- claimed the expenses at ₹ 16,86,875/- which were much less than the reimbursement made by the Petroleum Company, the assessee after claiming depreciation of ₹ 1,52,275/- had shown the income from tanker at ₹ 43,867/- which was more than ₹ 42,000/- i.e. the income to be shown u/s 44AE of the Act, on that score also the disallowance sustained by the ld. CIT(A) was not justified. Thus order passed by the ld. CIT(A) on this issue and the addition of ₹ 3,60,199/- sustained by the ld. CIT(A) is deleted. - Decided in favour of assessee.
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2015 (1) TMI 958
Penalty levied u/s 271(1)(C) - deemed income being loss claimed and disallowed - CIT(A) dismissed the appeal of the assessee both on the ground that the delay and on merits - Held that:- As when the company is under liquidation, and when any official liquidator was appointed and was in charge of the affairs of the company, he should have filed the appeal and perused the matter. We are of the view that the contention of the assessee that it was under a bonafide belief, that the appeal would have been filed by the official liquidator, is correct. We are of the view that the Ld.CIT(A) should have condoned the delay in filing of the appeal before him. - Decided in favour of assessee. As stated the AO has passed the order in a summary manner, without specifying the grounds of disallowance, item wise. The AO has also not specified the charge on which penalty is being levied. The explanation given by the assessee, during the course of assessment proceedings, explaining the variation between the provisional books and the audited records, were not considered by the AO. Under these facts and circumstances, we hold that the penalty levied cannot be sustained. Hence we quash the order levying penalty u/s 271(1)(c) and allow the appeal of the assess. - Decided in favour of assessee.
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2015 (1) TMI 957
Charitable purpose - Incidental receipts on account of “cost of application fees and scheme brochure” in the nature of trade or commerce - Addition to income - assessee is a National Horticulture Board set up by the Government of India in 1984 as an autonomous society under the Societies Registration Act 1860 - Held that:- The authorities below were clearly in error in invoking first proviso to Section 2(15), particularly as it has not even been their case that the assessee was carrying out any business activity in charging the processing fees or service fees, even if receipts on account of application forms can be construed as such, from the applicants for the subsidy. The mere fact that service charges have been received by the assessee donot vitiate the charitable nature of assessee’s activities and, as observed by Hon’ble Delhi High Court in the case of GS 1 (2013 (10) TMI 19 - DELHI HIGH COURT), that “a small contribution by way of fee that the beneficiary pays would not convert charitable activity into business, commerce or trade in the absence of contrary evidence” and that “quantum of fee charged, economic status of the beneficiaries who pay, commercial value of benefits in comparison to the fee, purpose and object behind the fee etc. are several factors which will decide the seminal question, is it business”. There is nothing on the record to even suggest that the fees charged by the assessee is such that it suggests that it is in nature of a business, nor is it even the case of the Assessing Officer. It was, therefore, not a fit case for holding that merely because the assessee has charged a fees, even if that be so, for processing the subsidy applications, the assessee’s activities cease to be charitable activities under section 2(15). The Assessing Officer is, accordingly, directed to delete the impugned addition of ₹ 2,20,57,530. The assessee gets the relief accordingly. - Decided in favour of assessee.
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Customs
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2015 (1) TMI 982
Restoration of appeal - appeal was dismissed for non compliance of pre-deposit order - Benefit of exemption under Notification No.26/2000-Cus. dated 1.3.2000 - Imposition of interest and penalty - Confiscation of goods u/s 111 - Held that:- On facts, as presented by the Tribunal, we find no good reason to modify the order of the Tribunal ordering pre-deposit, as the factual aspect has to be gone into by the Tribunal on merits and the same cannot be agitated before this Court for the purpose of modification of the order of the Tribunal. However, taking note of the plea of Mr.R.Kannan, learned counsel appearing for the appellant, we are inclined to extend the time to make the pre-deposit as ordered by the Tribunal. - The order of the Tribunal dated 05.08.2014 is modified to the effect that the appellant shall make a pre-deposit as ordered by the Tribunal in two equal instalments, first of which shall be deposited on or before 30th January, 2015 and the second instalment shall be deposited on or before 27th February, 2015 - order of the Tribunal dated 19.11.2014 dismissing the appeal for non-compliance of the stay order is set aside and the appeal is restored to the file of the Tribunal subject to the appellant deposits the first instalment within the stipulated period and gives an undertaking to deposit the balance amount within the stipulated period - Appeal disposed of.
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2015 (1) TMI 981
Challenge to the show cause notice - revenue contended that petitioners were attempted to be exported by mis-declaring the same as handicrafts and thereby liable for confiscation under section 113 (d) of the Act. - Penalty under sections 114 and 114 AA - Held that:- We have seen the definition of 'illegal export' as defined under section 11-H (a) of the Act. Sandalwood has been listed as item No.182 in schedule 2 of the Indian Trade Classification (Harmonious System ) as item whose export in any form is prohibited excluding finished handicrafts products of Sandalwood, machine finished Sandalwood products and Sandalwood oil. Admittedly, the 1786 kgs., are in the form of Sandalwood logs and export of such logs is prohibited. The prohibition which is in the form of notification issued in exercise of the powers under the Foreign Trade Development and Regulation Act would fall within the umberage of section 113 of the Act. Clause (d) of section 113 of the Act covers any goods attempted to be exported contrary to any prohibition imposed by or under the Act or any other law. Therefore, the respondents 1 & 2 were vested with jurisdiction to issue the impugned show cause notice in so far as 1786 kgs. of Sandalwood logs lying in the petitioners' office premises. From the materials placed on record it is seen that there was no such intention expressed by the petitioners to deal with 1786 kgs., of Sandalwood logs in the manner now sought to be projected, for the first time in this Writ Petition. Therefore, this Court is of the considered view that the impugned show cause notice cannot be quashed on the grounds raised by the writ petitioners. - Decided against petitioner.
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2015 (1) TMI 980
Validity of detention order - Recovery of banned substances - Detention order of co-accused not confirmed however, that of appellant were confirmed - Held that:- in Deepak Bajaj (2008 (11) TMI 655 - SUPREME COURT), a two Judge Bench decision stated that the five grounds outlined in Alka Gadia (1990 (12) TMI 216 - SUPREME COURT OF INDIA) are "only illustrative and not exhaustive". The Court in Deepak Bajaj (supra) then proceeded to consider the challenge - on the merits of the detention order. This Court is of the opinion, with due deference that the rather elaborate reasoning in Alka Gadia (supra) preceding the "very limited" number of exceptions mentioned in that judgment cannot be said to have been expanded in Deepak Bajaj (supra), since in the latter case, firstly, no exceptional feature is discussed, and, secondly - rather more importantly - the judgment was by two Judges. The observations in Deepak Bajaj (supra) with respect, cannot be taken as having changed the rule and principle in Alka Gadia (supra). Court does not perceive any facts which would fall within the exception spelt out in Alka Gadia (supra) compelling a merits consideration of the impugned detention order that has not been served upon the petitioner. Consequently, this Court declines to entertain this petition, which is dismissed. - Decided against appellant.
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2015 (1) TMI 979
Detention under COFEPOSA - Exportation of misdeclared goods - Prosecution u/s 135 - Failure to act in discharge of their official duty - Held that:- there was no evidence at all before the Investigating Officer to show prima facie participation of the accused petitioners not named in the F.I.R. There was also no evidence to show any conspiracy or any evidence to indicate that they had entered into any agreement to do any unlawful act or to commit an offence along with the other accused persons/petitioners. The alleged confessional statement of Shri Vivek Chaturvedi, which is said to have been given to the Investigating Officer also does not disclose about any conspiracy between accused persons. They had gone there with a view to persuade opposite party no. 2 to accompany the officers of Delhi to go there for the purpose of inquiry, where for he had already been summoned. - There being no evidence at all to prove any conspiracy, none of the accused petitioners could be prosecuted for the offence under Section 120-B IPC. There is another allegation that while taking the opposite party no. 2 to Delhi enroute near Aligarh, Shri P.K. Katiyar snatched ₹ 400/- from opposite party no. 2 and paid the same towards the price of the petrol, which was filled in the vehicle, wherein he was being taken to Delhi and that on the case memo, Shri P.K. Katiyar endorsed that the amount of ₹ 400/- was paid by him. It is alleged that he made this endorsement to claim reimbursement of the amount from the Government. This was a subject matter of documentary evidence. The cash memo with endorsement was best proof. The petitioners have denied that any such sum was paid as price of fuel at any Petrol Pump in or near Aligarh or that any such endorsement was made by Shri P.K. Katiyar on any such cash memo or the said amount was claimed by him from the Government. The Investigating Officer could have collected the necessary documentary evidence in support of these allegations but no such evidence was collected and there being no evidence at all, this allegation also goes unsubstantiated by any material and therefore, it can safely be said that there is no evidence of snatching of any sum from opposite party No. 2 or making any endorsement on any cash memo by Shri P.K. Katiyar. No offence under Section 392 I.P.C. is prima facie made out against any of the petitioners as there is no evidence to that effect. In view of the above, there is no shred of evidence against the petitioners of Criminal Misc. Case No. 978 of 2005 Jogendra Singh and 11 others to make out any prima facie case for trial against them and they have been unnecessarily dragged in the criminal case. The petition filed by them deserves to be allowed on this ground alone. It is not the duty which requires examination so much as the act, because the official act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the public servant concerned. It is the quality of the act which is important and the protection of this section is available if the act falls within the scope and range of his official duty. There cannot be any universal rule to determine whether there is a reasonable connection between the act done and the official duty, nor is it possible to lay down any such rule. One safe and sure test in this regard would be to consider if the omission or neglect on the part of the public servant to commit the act complained of could have made him answerable for a charge of dereliction of his official duty. If the answer to this question is in the affirmative, it may be said that such act was committed by the public servant while acting in the discharge of his official duty and there was every connection with the act complained of and the official duty of the public servant. This aspect makes it clear that the concept of Section 197 Cr.P.C. does not get immediately attracted on institution of the complaint case. If on facts, therefore, it is prima facie found that the act or omission for which the accused was charged had reasonable connection with discharge of his duty then it must be held to be official to which applicability of Section 197 Cr.P.C. cannot be disputed. - It was also held that the bar created by Section 197 is absolute and complete hence Court cannot take cognizance of complaint against the public servant in respect of an offence alleged to have been committed in discharge of official duty unless sanction is obtained from the appropriate competent authority. It appears that under pressure of order passed by the High Court, the investigating agency filed charge-sheet No. 35A/2003 dated 29-10-2008 that has been impugned in this petition. At this point of time, in the impugned charge-sheet, even Senior Officers in the Ministry of Finance, Government of India, who dealt with the issue of considering grant or denial of sanction to prosecute have been implicated. The accused include Senior Officers who were not even related to the incident of 16-2-2001. The Court has been informed that petitioner no. 1—Jogendra Singh, IRS, superannuated as Chairman, Customs and Central Excise Settlement Commission. Petitioner No. 15, Chandrahas Mathur, IRS superannuated and earlier served as Member, Customs and Central Excise Settlement Commission. Likewise petitioner nos. 10, 11, 13, 14 and 15 are IRS Officers and hold senior positions. The said persons had no role to play in regard to the incident of 16-2-2001. Allegation is that the communication vide which Naseem Arshi, Under Secretary, Revenue Department, Government of India, had conveyed denial of sanction to prosecute, is forged. There is no allegation of personal enmity of the petitioners against respondent no. 2; case under Customs Act against respondent no. 2 was under investigation on account of detention of two consignments at Mumbai; the officers, who had intercepted the goods, are not the petitioners, and are different officials; the name of respondent no. 2 was disclosed by one of the accused in the case under Customs Act; presence of respondent no. 2 was required by Smt. Sanyogita Mishra, Superintendent, Directorate of Revenue Intelligence for making enquiry from him; the officers/petitioner nos. 7, 8 & 9 had come to the house of respondent no. 2 on 16-2-2001 to ensure his presence before DRI official at Delhi in connection with official business; respondent no. 2 did not take any ground in regard to house trespass, kidnapping/abduction or snatching of money when he was produced before Metropolitan Magistrate at Delhi; in the application for bail filed on behalf of respondent no. 2, no allegation was made that respondent no. 2 had been forcibly taken from his house, or any deceitful means had been employed to take him from his house, rather it was the case of the respondent in those applications that respondent no. 2 accepted the request of petitioner nos. 7, 8 & 9, went inside the house, came back well dressed and prepared for journey to Delhi - it cannot be said even prima facie that offence under Section 452, Indian Penal Code has been committed. It is not the case of respondent no. 2 that the petitioners were not serving in DRI, or that the name of the respondent has not cropped up in the statement of one of the accused directly involved in the commission of offence under the Customs Act. It is further not in dispute that presence of respondent no. 2 was required for enquiry/investigation. That is so because notices had been sent to the said respondent before 16-2-2001. The respondent was accordingly taken to Delhi for enquiry in regard to the case under Section 135, Customs Act. In view of above noted facts, wrongful confinement as defined under Section 340, Indian Penal Code cannot be even alleged. There is no material available on record to indicate commission of offence punishable under Section 342 of the Indian Penal Code. - Decided in favour of appellants.
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2015 (1) TMI 978
Conviction under the offences punishable under Sections 132 and 135 of the Customs Act, 1962 - Rejection of regular bail - Whether the Metropolitan Sessions Judge has no jurisdiction to entertain the bail application but for by the learned Special Judge-cum-VIII Additional Metropolitan Sessions Judge, which is designated as Special Court, known as Special Judge for Trial of Economic Offences, more particularly by sitting against the dismissal order by the Special Judge or otherwise once bail application is filed before the Special Judge and disposed off and if so, the impugned order of the Metropolitan Sessions Judge is liable to be set aside, with what observations and consequences. Held that:- Criminal Procedure Code on the adjectival and procedural provisions, equally apply not only for the Indian Penal Code offences, but also for other offences; leave about even in investigating, inquiring or trying into I.P.C. offences and other offences together, but for to the extent saved by the said provisions of any other law to prevail, to say the Cr. P.C. provisions are in that area, general law to the extent special provisions covered those prevail and in the other areas the Cr. P.C. to apply. - It is also important to say from the designation of the Special Judge for Trial of Economic Offences as Special Judge for Trial of Economic Offences-cum-VIII Additional Metropolitan Sessions Judge, which is located at Nampally in Hyderabad, it is part of the Court of Sessions also being the VIII Additional Metropolitan Sessions Judge of the Metropolitan Sessions Division of Hyderabad headed by the Metropolitan Sessions Judge. The Metropolitan Sessions Division thereby includes Metropolitan Sessions Judge, Additional Metropolitan Sessions Judge and Chief Judicial Metropolitan Magistrates and Metropolitan Magistrates as the case may be which are part of the Division, from the combined reading of Sections 6 & 9 to 12 Cr. P.C. Special Additional Sessions Judge is not subordinate to the Sessions Judge, more particularly, for no similar provision to Section 10 of Cr. P.C., so far as the Additional Sessions Judges concerned with reference to Section 9(3) of Cr. P.C. - preamble of the notification under the heading special creation of the Special Judge’s Court in the cadre of District and Sessions Judge at Hyderabad to deal with the trial of Economic offences, the notification was issued and the notification is in supersession of the earlier notifications. It reads that the Governor of Andhra Pradesh specifies the whole of the State of Andhra Pradesh as the local area for the purpose of establishing a Special Court for the offences arising under the 12 Acts annexed and establishes a Special Court of Judicial Magistrate of First Class to try cases, arising under the enactments mentioned in the annexure, even if such cases include offence punishable under the Indian Penal Code and any other enactments, and the said Court shall be known, as the Court of the Special Judge for Economic Offences. Notification is in establishing the Special Court of Judicial Magistrate of First Class to try the cases whereas at the heading for creation of the Special Judge’s Court in the Cadre of District and Sessions Judge and it is not even indicating two Courts constituted one of the Sessions Judge cadre and the other of the Judicial Magistrate of the First Class cadre (for want of any committal procedure under any of the enactments within the purview of Sections 190, 209 & 193 of Cr. P.C.), but for instead of from the above of the Special Judge of the cadre of the Sessions Judge is also can exercise the powers of a Magistrate. All in reference to Prevention of Corruption Act and the provisions of Cr.P.C. the then prevailing having referred to the earlier expressions that even in respect of cases which are triable by the Court of Sessions, but then this would create a conflict that can be resolved by treating, although called ‘a Magistrate’, the Special Court as the Sessions Court and also referred, in this regard, Sections 26, 28 & 29 of Cr.P.C. regarding the power of sentence that to be passed by the Court of Sessions and the Chief Judicial Magistrate or Chief Metropolitan Magistrate and the Judicial First Class Magistrate and the Metropolitan Magistrates, etc., and concluded ultimately at para 13 that there is no manner of doubt that the Special Court, although called the Special Court of Judicial Magistrate of First Class, is also a Court of Session, and as the Court of Session has all the powers to act under various provisions of Chapter XXXIII of the Code of Criminal Procedure including for entertaining the applications for anticipatory bail under Section 438 of Code of Criminal Procedure. Once the Special Court has the jurisdiction in the matters as above, it would be creating conflict of jurisdiction if in addition to a Court of Session which is specially designated for such matters the regular Court of Session also is recognised as one empowered to grant bail under Cr.P.C. It will be, in our view, not legitimate only to retain the jurisdiction of the Special Court of Economic Offences for all purposes, other than the grant of anticipatory bail and recognise such power of granting anticipatory bail in the Sessions Court of the district in which the offence is allegedly committed of which the Court has otherwise jurisdiction in the matter. Metropolitan Sessions Judge has no right at all to entertain much less to grant bail and the bail order granted is unsustainable and thereby the bail order, dated 23-4-2014, in Crl. M.P. No. 1464 of 2014 is liable to be set aside. It is in this context to be kept in mind that, as per the Apex Court’s expression relied on by the accused-respondent to this application that is Omprakash (supra) the offence under the Central Excise Act and the Customs Act in view of Sections 9A, 19 and 20 of Central Excise Act and Sections 103 and 104 of Customs Act are bailable irrespective of the term of imprisonment fixed for said offence (irrespective what is contained in Schedule II of Cr.P.C.). Thus, to subserve the ends of justice any by invoking the inherent powers under Section 482 of Cr.P.C., the bail order to be kept in force for one week from today instead of cancelling forthwith and by directing the respondent-accused herein meanwhile to surrender himself before the learned Special Judge for Economic Offences, under Section 44 of Cr.P.C. to take him into custody and move for regular bail afresh to entertain the said bail application of the accused-respondent herein and to decide afresh including as to the same is bailable or non-bailable as the case may be and for granting bail subject to such conditions necessary which may not influence to the conditions imposed by the learned Metropolitan Sessions Judge in the impugned order since held without jurisdiction in granting bail as the conditions may include furnishing of full and correct address with proof with bank account particulars, passport particulars and surrender of passport, if any, attending to the investigation, assurance of availability and securing his presence before Court, non-interference with witnesses particularly the mediators to the panchanama and the like. By invoking the inherent powers of this Court under Section 482 of Cr.P.C., this order of setting aside the bail order granted by the learned Metropolitan Sessions Judge is stayed for one week from today, for the respondent-accused to continue on the bail meanwhile, so as to enable him to surrender before the learned Special Judge for Economic Offences, under Section 44 of Cr.P.C.; to take him to custody and move for regular bail afresh to entertain by the learned Special Judge to hear and decide, including as to whether the offences are bailable or non-bailable, with reference to the expression of the Apex Court in Omprakash (2011 (9) TMI 65 - SUPREME COURT OF INDIA) and in granting bail is with necessary conditions like execution of self bond with sureties furnishing of full and correct address with proof, with bank account particulars, surrender of passport, attending to the investigation, assurance of availability and securing his presence before Court, non-interefence with witnesses particularly of the mediators to the panchnama and the like. - Petition disposed of.
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FEMA
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2015 (1) TMI 977
Contravention of the provisions of Sections 8(1), Section 6(4) and Section 6(5) read with Section 7 of Foreign Exchange Regulation Act, 1973 - Imposition of penalty - Sale of foreign currency at higher value - Held that:- Two persons identified themselves as Hanif and Rajesh Mhatre of Hotel Zam Zam. Mhatre was carrying briefcase along with him. A search revealed that one Suleman Patel with the help of Ms. Pinky Jaisinghani and Sanjay Jadhwani were operating two FFMCs. As a result of the search documents, the authorities recovered and seized the articles under a Panchanama. The identical allegations pertaining to Hanif and Mhatre tendering two pay orders along with the advice letter on the cash counter of M/s. LKP Merchant Financing Ltd. are to be found in the present show cause notice. The statements of all these persons were recorded by the officers of D.R.I. The partner of the present appellants stated that the appellant’s firm has obtained FMC license, dated 28th September 1996 issued by the Reserve Bank of India for dealing with purchase of foreign currency, that he was the person responsible for day to day operation of foreign currency dealing. The foreign currency was sold to Hotel Zam zam, which was admittedly the licensed full fledged foreign money changer. It is in these circumstances that we are of the opinion that some of the allegations on page no. 55 of the paper book pertaining to lack of authorization should not be seen in isolation. Court is unable to accept the argument that the money or the foreign exchange leaving the authorized persons and reaching or being passed off to the unauthorized person was not the matter which was dealt with by the Hon’ble Supreme Court. Further, violation and contravention emphasized by him was not the subject matter of the Supreme Court judgment and proceedings. Once the Supreme Court was dealing with an identical allegation, identical breach and of similar legal provision and manual, then, we are unable to accept Shri Desai’s argument. The Hon’ble Supreme Court’s judgment is binding upon us. It is too well settled to require any reiteration that the judgment of the Hon’ble Supreme Court continues to bind us and will not lose its binding value merely because some argument which was canvassed before us was not raised or certain aspects were not considered or the relevant provisions were not brought to the notice of the Court. When we find that the judgment of the Hon’ble Supreme Court is dealing with the identical controversy, similar legal provision and even the allegations in the show cause notices are common, then, it would cover the matter fully. - Impugned order set aside - Following decision of Tulip Star Hotels Ltd., Peter Kerkar Versus Special Director of Enforcement [2014 (1) TMI 1348 - SUPREME COURT] - Decided in favour of assessee.
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Service Tax
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2015 (1) TMI 1003
Waiver of pre-deposit of service tax - manpower recruitment and supply service - Held that:- applicant had not appeared before the adjudicating authority nor produced any records as required by the adjudicating authority to show that the applicants are undertaking the job work and not supplying manpower to the principal. Even the applicants had not produced the copy of the work order. Similarly the applicant had not appeared before the Commissioner (Appeals) also. Now before us they produced the copy of the work order to show that the applicants are undertaking the job work and not providing any manpower supply service. In these circumstances, we find the matter requires reconsideration by the adjudicating authority afresh - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 1002
Waiver of pre deposit - Service provided to associate concern - Held that:- As per the Service Tax Rules, in case of associate firm the service tax is payable at the time of amount is credited to the account of the service provider. In this case the service tax has been paid at the time of actual receipt of the consideration. Therefore, prima facie the applicant is not required to pay interest for the alleged delay in making the payment of service tax. Accordingly, I grant waiver of pre-deposit of interest demand from the applicant and stay recovery thereof during the pendency of the appeal - Stay granted.
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2015 (1) TMI 1001
Waiver of pre deposit - SSI exemption - Held that:- Returns have been filed in the individual capacity and not HUF. As submitted by the learned counsel, the issue is covered by the precedent decision of the Tribunal in the case of Dinesh Chandra V. Patel Vs. CST, Ahmedabad [2013 (12) TMI 1428 - CESTAT AHMEDABAD] and other decisions relied upon by the learned counsel. Moreover we also find that show-cause notice itself recognized the appellants in two groups one of the present two appellants and other of the children of the brother of father of Shri Ratilal Naranji Patel. In view of these facts and circumstances and in view of the precedent decisions of the Tribunal, we consider that in this case also, the requirement of predeposit has to be waived and stay against recovery has to be granted during the pendency of appeals - Stay granted.
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2015 (1) TMI 1000
Waiver of pre deposit - Security agency service - Penalty u/s 77 & 78 - Held that:- Joint Commissioner himself has accepted that there were amounts collected under cleaning, driver and gardening charges. He has also listed some cases where service tax had been collected by the appellants. However, in the absence of the verification with the customers as to whether these charges were in reality for providing security services, the claim of the learned Chartered Accountant that these services cannot be classified under security services prima facie has to be accepted. Nevertheless, in the absence of any detailed explanation and further in the absence of evidence to show that all the amounts on which service tax has been demanded related to driving/cleaning/gardening charges, it may not be said that the appellants have made out a prima facie case. Moreover admittedly in respect of certain invoices, service tax has been collected on these aspects also. Under these circumstances, it is felt that the appellants are required to be put to terms for hearing the appeal - Partial stay granted.
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2015 (1) TMI 999
Denial of input credit - Online Data Retrieval or Access - Nexus with manufacturing activity - Held that:- On perusal of the definition of 'input service' as contained in Rule 2(l) of the Cenvat Credit Rules, 2004, it would reveal that the substantive part covers services used by a provider of taxable service for providing the output service; whereas, the inclusive part covers various services, which have been used/utilised by the service provider for accomplishing its business activities. In other words, the services envisaged in the inclusive part of the definition is very broad and a narrow interpretation cannot be placed to infer, without proper discussion, that certain services have no nexus with the output service provided by the service provider. The nature, purpose and use of the disputed services by the appellant as explained in the grounds of appeal, to my opinion, establish the fact that the expenditure incurred for those services are commercially required to be incurred with a view to facilitate carrying on the business as a service provider, and thus, confirming to the expression 'activities relating to business' as contained in the definition clause of 'input service'; as the word 'business' is one of wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense. - disputed goods indicated above should merit consideration as 'input service', since those services have nexus with the output service provided by the appellant - Decided in favour of assesse.
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2015 (1) TMI 998
Storage and warehouse charges - Assessee stopped paying service tax that there was litigation on issue storage and warehouse charges collected by them - Whether the impugned judgment and order has been passed in accordance with law or not? - Held that:- Tribunal has not decided the matter on merit and as a matter of course the appellant was imposed with the liability on the basis of an alleged admission. We think that this is not the way to adjudicate the matter. At the time of final hearing, the learned Tribunal is obliged to consider the contention raised by the appellant either to reject or accept the same. This must be done with proper application of mind and reasons. This course of action has not been followed. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 997
Validity of Tribunal's order - Whether the impugned judgment and order contains any findings and conclusions on the issue raised by the appellant or not - Held that:- Tribunal while rendering judgment, should have recorded the issues involved in the matter, then ought to have discussed the same and then come to conclusion. It appears that the learned Tribunal has referred some judgments, but whether the same are applicable or not to the case was not discussed. Meaning thereby, the learned Tribunal has not put a right question to itself. Learned counsel for the respondent agrees that the impugned judgment is not having clarity. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 996
Reduction in quantum of penalty - Held that:- Customs, Excise & Service Tax Appellate Tribunal has dismissed the appeal filed by the Revenue. The Tribunal, in our view has rightly not interfered with the possible view which was taken by the Commissioner (Appeals). There is no perversity in the approach of the Tribunal or, for that matter, in the order of the Commissioner (Appeals), reducing the penalty in the considered exercise of his jurisdiction. Hence, no substantial question of law would arise. - Decided against Revenue.
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2015 (1) TMI 995
Composite notice - Best judgment method - Held that:- composite nature of the show cause notices issued and impugned in these cases cannot be construed as ousting or depriving the petitioners right to appeal given that Section 73 which empowers the authorities to invoke the extended period of limitation has been expressly invoked. We are also of the opinion that the other questions pertaining to legality and jurisdiction as well as from their levying of the service tax given the nature of the petitioners activity can be suitably agitated before the adjudicating authority. - Commissioner of Service Tax, Delhi shall pronounce upon and decide all objections taken by the petitioner and replies to the show cause notices and deal with them expressly. In case of any adverse order, the petitioner is at liberty to avail the appellate remedies under Section 86 of the Finance Act, 1994. - Petition disposed of.
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2015 (1) TMI 994
Maintainability of appeal - Held that:- By virtue of provision of Section 35G sub-section (9) the provision of Civil Procedure Code, in so far as the appeals to the High Court are concerned are applicable. - Sub-section (3) of Section 96 of Civil Procedure Code provides that No appeal shall lie from a decree passed by the Court with the consent of parties. The decree passed by the Tribunal being a consent decree, this appeal is clearly not maintainable and is liable to be dismissed on this ground alone. - Decided against Revenue.
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Central Excise
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2015 (1) TMI 992
Clandestine removal of goods - Shortage of goods - Imposition of penalty where duty has been paid during investigation - Held that:- During the course of investigation finished goods were found short and the appellant has paid the duty thereon. Thereafter conclusion was drawn by the department that as they have paid the duty therefore these goods have been removed clandestinely. In this case, there are other charges on the appellants that goods have been removed clandestinely by the appellants but the charges of clandestine removal have been dropped and therefore, in these circumstances, it cannot be held that goods have been cleared clandestinely. Although the appellants has paid the duty that might be to settle the issue at that stage, but from the records it is not coming out that the charge of clandestine removal has been proved with any supportive evidence except the goods were found short during the course of investigation. In these circumstances, although the appellant is not contesting the duty demand, therefore the same is not issue before me. Further I find that in this case, when the appellant has paid the duty but there is no demand of interest proposed, in these circumstances I hold that charge of clandestine removal stands unapproved. Therefore question of imposing penalty does not arise on the appellant. As the appellant is not contesting demand of duty of ₹ 3,03,523/- therefore appellant cannot claim refund thereof in consequence of this order. In the result, impugned order qua demand of duty of ₹ 13,70,150/- along with interest and imposition of penalty on the main appellant and penalties on co-appellant is set aside. - Decided in favour of assessee.
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2015 (1) TMI 991
CENVAT Credit - Credit availed in respect of various services - appellant is availing CENVAT Credit in respect of Service Tax paid on expenses for various services, which were not considered as input service for the appellant like, insurance for transit (report) service, transport insurance being beyond the place of removal, brokerage charges, subscription fees, Credit card services etc. for the period - Held that:- under Rule 2(l) input includes not only expenses directly related but also indirectly related to the business of manufacturing - services in question are input services for the appellant manufacturer - Decided in favour of assessee.
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2015 (1) TMI 990
Variations in value of exported goods after export - Rule 6 of Central Excise Rules - permission for provisional assessment - Held that:- Appellant is not required to pay duty on the supplementary invoice raised in the case of completed export as it had exported under claim of rebate, which had been allowed on completion of the export. I also hold that the appellant have not undervalued its goods at the time of export/clearance for export as according to the agreement noticed hereinabove, the tentative price was subjection to variation after end of the financial year on finalization of the accounts and accordingly, there is no suppression or any intention to evade duty etc. on the part of the appellant. In this view of the matter, the show-cause notice is held to be time barred as the appellant is not liable to pay the duty in case of completed export on raising of supplementary invoice. At the subsequent point of time, there can be no demand of any interest for the same when duty itself is not payable. Thus, the impugned order is set aside - Decided in favour of assessee.
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2015 (1) TMI 989
Waiver of pre deposit - Denial of Cenvat credit on HIPS and GPPS - Imposition of interest and penalty - Held that:- Commissioner (Appeals) by Stay Order dated 10.06.2013 directed to a pre-deposit an amount on or before 29.06.2013 and, any failure to comply with such pre-deposit, the appeal shall stand dismissed automatically. The learned Counsel submits that they have filed the application for modification before 29.06.2013. We find that the said modification stay application was rejected by the letter dated 10.07.2013 issued by the Superintendent of Central Excise. Section 35A of the Act has given power to Commissioner (Appeals) to decide appeals, which cannot be disposed of by a communication of the Superintendent of Central Excise. We have noticed that the application for modification of the stay order was not considered by the Commissioner (Appeals). - we set aside the impugned order. The matter is remanded back to Commissioner (Appeals) to decide the application for modification of the stay order in accordance with law and thereafter, dispose of the appeal as per provisions of Section 35A of the Act. - Decided in favour of assessee.
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2015 (1) TMI 988
Proof of export - procedural relaxation for SSI units - Denial of the benefit of the SSI exemption notification - Held that:- dispute relates to acceptance of sales tax documents as proof of export by the exempted SSI units. The Board has clarified that the documents prescribed by the Sales Tax Department viz. H-Form or ST-XXII Form or any other equivalent Sales Tax Form will be accepted as proof of export. In the present case, Revenue has not disputed that the appellant placed sufficient material in the nature of H-Form or ST-XXII Form, Sales Tax Assessment Order as proof of export. There is no dispute that the Hangers were exported with garments by the merchant exporter. Thus, there is substantial compliance of the Board's circular. The Commissioner (Appeals) observed that there is procedural lapse in so far as the goods were not directly exported but through merchant exporter. The Board has clearly clarified that this facility is not available to the supplies made to any other domestic manufacturer who may or may not export its finished products. In the present case, it is observed from the record that the merchant exporter exported the goods which was not disputed at any point of time. - Impugned order set aside - Decided in favour of assessee.
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2015 (1) TMI 987
Benefit of exemption Notification No. 108/95-C.E., dated 28-8-1995 - while an exemption certificate has been produced, the same mentions the contractor’s name as “M/s. K. Rama Krishna, Plot No. 404, Veeru Castle, Durga Nagar Colony, Punjagutta, Hyderabad”, while the goods as per the invoices issued by the respondent have been supplied to M/s. Nagar Engineering Co., Jaipur. Held that:- There is no dispute that the goods supplied by the respondent were required for a project financed by the Asian Development Bank being implemented by the Government of Rajasthan. The certificate regarding requirement of the goods in question for this project has also been issued by the project implementing ‘authority’ and the same is counter-signed by the designated officers of the State Government. The certificate mentions the description and the quantity of the goods required for the project and also the name of the contractor - “M/s. K. Rama Krishna Contractor Pvt. Ltd., Hyderabad”, who has been engaged for implementation of the project. The only objection of the department is that invoices are not in the name of the contractor. We are of the view that when the invoices, though issued to M/s. Nagar Engineering Company as the buyer, show “M/s. K. Rama Krishna Contractor” as the consignee and there is no dispute that the goods though procured through M/s. Nagar Engineering Company had actually been received by M/s. K. Rama Krishna, the contractor, the benefit of the exemption under notification No. 108/95-C.E. cannot be denied. We, therefore, do not find any infirmity in the impugned order - Decided against Revenue.
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2015 (1) TMI 986
Confiscation of goods - Entry not done in RG-1 register - Penalty under Rule 25(1)(b) of Central Excise Rules, 2002 - Held that:- The appellants do not dispute the fact of non-accountal of this stock of writing and printing paper which represents more than one day’s production. The only explanation given by the appellant is that there was no intention on their part to clear the excess stock without payment of duty. In our view, this explanation is not acceptable, as in terms of the provisions of Rule 25(1)(b) of Central Excise Rules, 2002, penalty under this Rule is attracted for non-accountal of any excisable goods produced or manufactured by an assessee and in this regard mens rea is not required to be established. Therefore, the confiscation of the goods along with the option to the appellant to redeem the same on payment of redemption fine in lieu of confiscation and penalty on appellant company is upheld. Valuation of goods - Inclusion of freight value - Held that:- In terms of provision of Section 4 w.e.f. 1-7-2000, the “place of removal”, in terms of its definition given in Section 4(3)(c) cover only the factory or warehouse where the goods have been permitted to be deposited without payment of duty and from where such goods are removed. It is only with effect from 14-5-2003 that clause (iii) was added to Section 4(3)(c) of the Central Excise Act, 1944 so as to include “depot, premises of the consignment agent or any other place or premises from where excisable goods are to be sold after their clearance from their factory”, within the definition of “place of removal”. But during the period from 1-7-2000 to 13-5-2003, the depot or consignment agent’s premises were not included in the definition of “place of removal”. Therefore, during the period till 13-5-2003, the freight expenses from the factory gate to depot would not be includible in the assessable value of the goods and duty demand on this count would not be sustainable. It is only with effect from 14-5-2003 that the “depot” had also been included in the definition of “place of removal” and accordingly w.e.f. 14-5-2003 only, the freight expenses from the factory to depot would be includible in the assessable value and accordingly duty demand on this basis would survive only for the period from 14-5-2003 onwards. Thus out of total duty demand of ₹ 2,45,215/-, only duty demand for the period from 14-5-2003 onwards is upheld and balance amount of duty demand for the period from August, 2001 to 13-5-2003 is set aside. Penalty u/s 11AC - Held that:- Penalty is imposable on the persons who acquire possession of any excisable goods or are in any manner, concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner dealing with the excisable goods which they knew a bad reason to believe are liable for confiscation. No evidence has been produced by the department that Shri Amit Kumar and Shri R.P. Gupta, the authorised signatories of the appellant company, were involved in any such activity in respect of excisable goods which they knew a bad reason to believe are liable for confiscation. For non-accountal of finished goods in RG I register for which penalty on the appellant company under Rule 25(1)(b) has been imposed, these two persons cannot be penalized by invoking Rule 26. In view of this, penalty under Rule 26 of the Central Excise Rules on Shri R.P. Gupta and Shri Amit Kumar is not called for and the same is set aside. - Decided partly in favour of assessee.
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2015 (1) TMI 985
Valuation of goods - whether the cost of transportation + transit insurance have been included in the assessable value of the chassis fitted with engine supplied by Tata Motors - Held that:- Instead of doing the necessary verification, the adjudicating authority has unnecessarily proceeded to adjudicate the matter without verifying the facts and expecting that it is the Tribunal’s job to verify these facts and not that of the adjudicating authority. We strongly condemn this approach of the adjudicating authority. When a certificate is produced duly certified by the Chartered Accountant, it was the responsibility of the adjudicating authority to consider and accept the same. If he had any doubt about the voracity of the certificate, then he could have got the same verified through the jurisdictional excise authorities at Jamshedpur, which has not been done in the instant case. Therefore, we set aside the impugned order and remand the matter back to the adjudicating authority to conduct necessary verification of the claim of the appellant that the cost of transportation and transit insurance has already been included by M/s Tata Motors in respect of chassis fitted with engine supplied to the appellant. - Decided in favour of assessee.
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2015 (1) TMI 984
Classification of games - Benefit of Notification No. 6/2000-C.E., dated 1-3-2000 - Held that:- in respondent’s own case this Tribunal at Chennai Bench [2014 (6) TMI 131 - CESTAT CHENNAI (LB)] has held that the items namely (i) Game of Games, (ii) City Games (Paris), (iii) City Games (London), (iv) Game of States, (v) Game of States (New) and (vi) Mould and Paints are classifiable under Chapter Heading 95.03. Therefore, we hold that all these items are classified under Chapter Heading 95.03. - For the remaining items namely, Chip and Dale, Disney Telespin, beeline Disney Sorry, Disney Duck Tales, Dragster, Stratego, Fox and Ghees, Leverage, Pay Day, Hotel Travel Ludo, Travel Chinese Checkers, Junior Monopoly, Travel Snakes and Ladders Travel Chess Draughts, etc. are classifiable under Chapter Heading 95.04. - For rest matter, matter remanded back - Decided against Revenue.
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2015 (1) TMI 983
Discharge of duty on the basis of MRP less abatement - Whether the activity of labelling/re-labelling or putting stickers on the imported goods amounts to manufacture or not - Held that:- In the case of L’Oreal India Pvt. Ltd. (2014 (8) TMI 132 - CESTAT MUMBAI) we find that this Tribunal has observed that as the activity of fixing MRP stickers took place in Customs bonded warehouse therefore, the same does not amount to manufacture but in this case the MRP stickers have been fixed after clearance of the goods from the Customs. Therefore, as per Chapter note and Section 2(f)(iii) of the Central Excise Act, 1944, the activity undertaken by the appellant amounts to manufacture. In these circumstances, we hold that the activity undertaken by the appellant is amounts to manufacture. MRP declared before the Customs or before the Central Excise is the same therefore, the duty payable on the said goods is equal to the CVD paid by the appellant. Therefore, the situation is of Revenue neutrality as held by this Tribunal in the cases of L’Oreal (2014 (8) TMI 132 - CESTAT MUMBAI) and BASF India Ltd. (2009 (1) TMI 513 - CESTAT, AHMEDABAD). As the whole exercise in this case is of revenue neutrality, therefore, following the above cited decisions, we hold that although the activity undertaken by the appellant amounts to manufacture but the duty impact is nil being of Revenue neutrality situation therefore, we set aside the demand confirmed by the adjudicating authority in the impugned order and also set aside the imposition of redemption fine, interest and penalty. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (1) TMI 993
Classification of 'Nestle Toned Milk' - 'fresh milk' or 'pasteurized milk' falling under Sl. No. 6 of Part B of the Third Schedule to the Tamil Nadu General Sales Tax Act, 1959 – Entitlement for exemption - Held that:- There was no justification on the part of the Tribunal making reference to the provisions under the Tamil Nadu Value Added Tax Act for the purpose of considering the claim of exemption - even in the case of sale of toned milk, pasteurisation is an important process, that without boiling milk to a suitable temperature, the bacterial content cannot be removed - this is so required for the purpose of giving shelf life to milk - while pasteurisation is a process of heating fresh milk at least to 71.5 degree centigrade, the ultra-heat temperature goes further beyond that - The mere fact of further heat treatment to the milk to the higher degree does not mean any the less the product, being toned milk - It is no doubt true that in UHT packet, there are additives made to make good for the loss of vitamin content, therein by heating - in the absence of any specific entry to give a distinct treatment to ultra-high temperature heated milk product or milk packets under the Tamil Nadu General Sales Tax Act, toned milk would certainly call for similar treatment, be it a "pasteurised milk" with 74 degrees and odd treatment or "pasteurised milk", treated with ultra-high temperature. Exemption is granted in respect of sale of fresh milk, pasteurised milk and directly reconstituted milk - milk treated to UHT was not separately treated as an item of taxation or as an item of exemption - when the entry reads as "pasteurised milk", all that it was concerned was "milk", which was subjected to pasteurisation irrespective of the degree to which it has been heated - when the entry is clear indicating the item of exemption and further on the fact that the consistent case of the assessee was that what was sold was without any additives and what was sold was only a pasteurised milk in the name of toned milk, for the purpose of finding tax liability, one need not travel beyond entry 6 of Part B of the Third Schedule to the Tamil Nadu General Sales Tax Act - when the entry is very clear and the item sold by the assessee also admits that it is a pasteurised milk, and in the absence of any material placed by the Revenue that what was sold was flavoured milk - addition of any vitamins to the pasteurised milk nevertheless retains its character as milk for the purpose of exemption and when the Andhra Pradesh High Court dealt with UHT milk as distinct from pasteurised milk, this was done on account of the differential treatment meted out on account of the distinct entries - the entry in the Third Schedule of Part B of the Tamil Nadu General Sales Tax Act makes no distinction between "pasteurised milk" and "UHT milk", in the absence of any such distinction made and toned milk, by itself is again a pasteurised milk only, the assessee is entitled to exemption as goods falling under the Third Schedule to the Tamil Nadu General Sales Tax Act - when the Commissioner himself has admitted that toned milk sold in sachets is also pasteurised milk qualifying for exemption, there was no justification to restrict it for a particular period alone as referred to in the clarification – thus, the order of the Tribunal is set aside and assessee is entitled for exemption – Decided in favour of assessee.
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