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TMI Tax Updates - e-Newsletter
January 5, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Effect of amendment to section 272A(2) - Penalty for TDS return default - The Tribunal rightly observed that the quantum of penalty must be determined by reference to the law as it stood when the offence or default was committed - HC
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Applicability of section 50 on sale proceeds on sale bottles, crates and cylinders whose individual cost did not exceed ₹ 5,000 - purchase were made before 1.4.2006 - Not taxable - HC
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Merely because subsequently another decision of the Coordinate Bench of the ITAT is noticed by the AO, that will not vests the jurisdiction in the AO to exercise his powers u/s. 147 of the Act - AT
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Collection of tax during remand proceedings ignoring the order of Tribunal - AO tendered an unconditional apology for his conduct and submitted that it was collected with the consent given by the appellant - Approach of the AO cannot be approciated - Refund to be granted - AT
Customs
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Petition for release the pending balance duty drawback claim amount, entitled to the petitioner - Classification of HDPE / PP Bags, Flexible Intermediate Bulk Container (FIBC Bags) - this Court has no hesitation to allow the prayer made by the petitioner. - HC
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Penalty on CHA - Goods being loaded on foreign going vessel without having obtained the necessary LEO from the Customs - penalty confirmed - HC
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How and in what manner the foreign trade needs to be developed and regulated is essentially to be decided by the authorities under the Parliamentary statute. - These are not matters which ought to be brought before a Court of law. - HC
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SEP Samrat imported by the respondent without drilling or production capability is correctly classifiable under CTH 8905 90 90. - AT
Central Excise
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Utilization of CENVAT Credit - credit availed during the next period utilized for duty of the previous period - in the absence any restrictive provision, utilization allowed - AT
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Whether the fuel and ash handling system manufactured by the appellant are eligible for exemption under Notification No.6/2002-CE dt. 1.3.2002 - non-conventional energy device/system specified - exemption denied - AT
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Denial of refund claim - Unjust enrichment - amount deposited during investigation - and amount of pre-deposit - Refund allowed - AT
VAT
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Whether transformation of noncommercial underground raw water into packaged drinking water amounted to “manufacture“ as defined u/s 2(30) of the Assam Value Added Tax Act, 2003 - Held No - HC
Case Laws:
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Income Tax
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2015 (1) TMI 111
Non-speaking order passed by Tribunal - Validity of action of Tribunal in set aside the assessment - prescriptions of section 144C not adhered - Recall u/s 254(2) rejected by Tribunal – Held that:- There is totally non-application of mind by the Tribunal - The core issue raised in the appeal, the objections of the appellant and the non-consideration of the issue raised in appeal clearly makes the order of the Tribunal a non-speaking order – assessee rightly contended that there was no scope for passing such a non-speaking order of remand, for which the reasons are well recorded - the order of assessment u/s 143(3) of the Income Tax Act dated 30.10.2010 is also in relation to the order passed by the Transfer Pricing Officer dated 28.10.2010 u/s 92CA(3) and that was challenged before the CIT(A), which was allowed in favour of the assessee - against which, the Department filed an appeal to the Tribunal, the scope of which is limited to that portion of the order of the CIT(A) interfering with the entire order passed u/s 143(3) - it should be limited only to the order relatable to the order of the Transfer Pricing Officer dated 28.10.2010 - That matter was pending before the Tribunal for more than two years - Thereafter, additional grounds have been raised, which was objected to by the assessee saying that new plea was sought to be raised and that issue has not been addressed by the Tribunal. The core issue raised by the assessee is with regard to the order passed by the AO u/s 143(3) r.w. Section 92CA(3) – assessee contended that the requirement u/s 144C(1) has not been followed and the CIT(A) has accepted such a stand and it is for the Tribunal to consider the objection of the assessee in the light of the objection filed in relation to the non-compliance of Section 144C of the Income Tax Act - that aspect has not been considered by the Tribunal and therefore the question of law which is raised by the assessee ought to have considered by the Tribunal and there was no scope for passing a non-speaking remand order; and the Tribunal ought to have considered the scope of such appeal, the additional grounds raised and the objections of the assessee and should have given a ruling on the same – thus, the order of the Tribunal is a non-speaking order and the Tribunal has not considered the issue raised and objected by either side the order of the Tribunal is set aside and the matter is remitted back to the Tribunal for fresh consideration – Decided in favour of assessee.
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2015 (1) TMI 110
Claim of deduction u/s 10A - Unit –B to treated as separate and independent unit or not – Held that:- The intention of the Assessee was to claim Unit-B as a separate Unit - That is to enable it to extend the tax holiday of 10 years enjoyed by Unit-A and particularly when it was coming to an end in the AY 2005-06 - the nature of the business activities, location, lease agreement, layout plans and photographs of the premises Unit-B, which are all forming part of the order of the Commissioner and the remand report of the AO have been extensively referred to - The Tribunal concludes that all this material shows that Unit-B is a separate or an independent Unit - no contrary material was brought on record by the Departmental Representative or the Revenue before the Tribunal - The Tribunal has upheld the finding of fact of the Commissioner by concluding that merely because a new permission is obtained in relation to this Unit, containing reference to the original licence, that is not conclusive to demonstrate that the new Unit is a separate or independent Unit - The Software Technology Park is the broad identity of the area, but the Unit-B is held not to be expansion of the existing Unit-A, rather it is a separate or an independent Unit – as such no substantial question of law arises for consideration – Decided against revenue. Incomes by way of sales tax refund, liabilities required to be written back and profit on sale of assets are eligible incomes for computing deduction u/s 10A for Unit-A or not – Held that:- There is some substance in the contention of assessee that if the deduction shall be allowed from the total income of the Assessee in the manner set out by section 10A and the computation is also provided in that provision itself namely sub-section 4, then there is a complete Code which is evolved and formulated by the Legislature – relying upon The Commissioner of Income Tax-10 Versus Black & Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT] - Chapter VIA provides for deduction to be made in computing the total income and section 80HH deals with deduction in respect of profit and gains from the newly established undertaking or Hotel business in backward areas, then the attempt of the Revenue to telescope Chapter VIA in the context of the deduction, which is permissible under section 10A falling in Chapter III, cannot be countenance. Section 10A categorically clarifies that the profits derived from export of computer software, which is what is the activity shall be the amount which bears to the profits of the business, the same proportion as the export turnover in respect of such computer software bears to the total turnover of the business carried out by the Assessee - The Tribunal has, therefore, proceeded by relying upon the language of section 10A itself - once the expression "derived from" has been specifically defined in the same section, then the meaning of such expression as understood in common parlance will not be applicable - the view taken by the Tribunal and in upholding the conclusion of the Commissioner, is in consonance with the language of section 10A and also takes into consideration the relevant sub-section thereof namely sub-section 4 thereof, then it cannot be said that its conclusion or order is vitiated by any error of law apparent on the face of the record – thus, no substantial question of law arises for consideration – Decided against revenue.
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2015 (1) TMI 109
Rejection of approval u/s 80G(5) – Held that:- Following the decision in COMMISSIONER OF INCOME TAX RAJKOT III Versus VIPASSANA TRUST [2015 (1) TMI 63 - GUJARAT HIGH COURT] wherein the decision in NN. Desai Charitable Trust Versus Commissioner Of Income-Tax [1999 (5) TMI 11 - GUJARAT High Court] wherein it has been held that the inquiry should be confined to finding out if institution satisfies prescribed conditions as mentioned in Section 80G of the Act - at the time of granting approval u/s 80G of the Act, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment - the assessee-Trust was refused recognition only on the ground that it had not spent 85 per cent of the amount towards the objects of the Trust - the Tribunal committed no jurisdictional error in issuing direction to grant recognition to the Respondent-Trust u/s 80G(5) of the Act – as such no substantial question of law arises for consideration – Decided against revenue.
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2015 (1) TMI 108
Taxability of interest - Income from other sources or not - Whether the Tribunal is right in holding interest of ₹ 9,86,430/arising out of mandatory precondition deposit towards supply of raw material is taxable as "income from other sources" – Held that:- Following the decision in EMPIRE PUMPS PVT. LTD. Versus ACIT [2014 (11) TMI 563 - GUJARAT HIGH COURT] wherein the judgment of SC in Commissioner of Income-Tax Versus Karnal Co-operative Sugar Mills Ltd. [1999 (4) TMI 7 - SUPREME Court] is discussed and held that the assessee had deposited money to open a letter of credit for the purchase of the machinery required for setting up its plant in terms of the assessees agreement with the supplier - It was on the money so deposited that some interest has been earned - This is, therefore, not a case where any surplus share capital money which is lying idle has been deposited in the bank for the purpose of earning interest – thus, the income received thereupon cannot be termed to be income from other sources – Decided in favour of assessee.
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2015 (1) TMI 107
Validity of cancellation of penalty u/s 271(1)(c) - fact of suppression of material facts or not – Application of Explanation to Section 271(1)(C) - Held that:- The Tribunal was rightly of the view that the AY involved in 1979-80 and the levy of penalty is to be governed by the provisions of Explanation to Section 271(1) (C), which was applicable from 1.4.1978 and not with reference to Explanation which was in subsection for the periods from 1.4.1964 to 31.3.1976 - in respect of the various disallowances and additions made by the AO which were challenged in the appeal before the CIT(A) and then before the Tribunal the assessee has given explanations, some of which were adopted by the CIT(A)/Tribunal and some of which were rejected - even in respect of those claims which were rejected by the Tribunal - reference applications were filed by the assessee and were allowed to the Tribunal and they are pending for adjudication before the Hon’ble High Court - the view taken by the Tribunal is just and proper - The Tribunal as well as the CIT(A) have taken care the factual aspects of the matter - the paper book shows that there was in fact reply filed and the AO had ample occasion to look at the explanation and the respondent-assessee did not fail to substantiate the claim and the explanation was considered to be bona fide and germane to the facts of the case - therefore, the cancellation of penalty was just and proper – the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 106
Non-speaking order by Tribunal - Deduction u/s 80HHC - Whether the Tribunal is right in reversing the order of the CIT(A) and directing the AO to exclude the excise duty from the total turnover for computing deduction u/s 80HHC when the net result in the export business is a loss – Held that:- While reversing the findings of the CIT(A), the Tribunal has not assigned detailed reasons and has straightway stated that there is considerable force in the contention of the counsel of the assessee that refund of excise duty amounting to ₹ 21,41,462/- appearing in the credit side of the profit and loss account should reduce cost of purchases - The Tribunal as an appellate Court was required to look into the matter and was to give its independent findings on the issue - while determining the issue of adjustment of freight and computation for deduction u/s 80HHC of the Act, the Tribunal again relied on the calculation given by the assessee, without given any reason for relying on the same, and directed the AO to verify the assessee's claim and to grant him deduction u/s 80HHC – thus, the matter is to be remitted back to the Tribunal for fresh consideration – Decided in favour of revenue.
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2015 (1) TMI 105
Nature of assessee and rate of depreciation - Whether the Tribunal was correct in holding that the assessee company is a semi- conductor industry and allowing depreciation at a higher rate of 40% - Held that:- POY is a semi-finished product - It is a raw material/input - The raw material or input gets converted into a texturized yarn by reason of the thermo mechanical process - POY is unfit for the manufacture of fabric – POY means partially oriented yarn whereas a cellulosic filament yarn is a final product in the sense after processing can be used directly for the manufacture of fabric - the reasons recorded by the CIT(A) as well as by the Tribunal are reasonable and proper and do not call for any interference - the technical expert from the Ministry of Communications and Information Technology has opined that for the purpose of mounting of silicon chips on PCB special equipments like chip bonding/wire bonding etc. are required which are the same required in any IC manufacturing industry and chip bonding operation in ECB assembly is 1st part of the manufacturing process - There is nothing contrary placed on record to controvert the expert opinion given by the technical person from the department of Information Technology - since the assessee is applying the use of machinery and plant used in the semi-conductor industry, the assessee company is entitled to claim depreciation at 40% in accordance with Entry no. XI part "A" (ii) of Old Appendix I under Rule 5 – the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 104
Disallowance of Royalty u/s 35A deleted by Tribunal – Held that:- The Tribunal was rightly of the view that the deletion of the amount of ₹ 2,90,602/- on account of royalty amount is justified - the assessee has used the term ‘Bisleri’ for selling its own goods and therefore the payment made cannot be covered within the provisions of section 35A and it has to be allowed as a revenue deduction for compensation or royalty for the use of the term ‘Bisleri’ in the goods sold by the assessee – Decided against revenue.
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2015 (1) TMI 103
Validity block assessment u/s 158BD – search conducted in the premises and not against assessee - Notice served for suppression of income - Held that:- Making of block assessments is a rare phenomenon - It is only in respect of the assessees who are suspected to have withheld the important information and thereby, the income, that the searches are made – in ACIT Vs. HOTEL BLUE MOON [2010 (2) TMI 1 - SUPREME COURT OF INDIA] it was observed that it is only when some material which did not form part of the books of account, the returns and the corresponding orders of assessment is unearthed in the course of search, that an order of block assessment can be passed - no search as such was conducted against the respondent - the proceedings under Chapter XIVB of the Act were initiated against him on the basis of the alleged discoveries in the course of search, conducted in the premises of M/s. Mahaveer Group of Companies - it is quite possible that if a search, conducted against one assessee reflects some facts and figures referable to another assessee, proceedings can be initiated against the latter also - the finding that there was suppression of the sale of gift articles worth ₹ 49,90,175/- by M/s. Mahaveer Group of Companies itself is not well-founded - in their books of account, the transactions were very much reflected - the respondent has shown the purchase of the gift articles not only in their books of account, but also in the returns - there did not exist any occasion or basis for the Department to initiate block assessment proceedings against the respondent- the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 102
Effect of amendment to section 272A(2) w.e.f. 1.10.91 - Penalty for default towards filing of TDS return - Whether the Tribunal was justified in holding that penalty levied u/s 272A(2) (c) should be restricted to the amount to tax deductible at source by treating the amendment to the said provision as being clarificatory in nature – Held that:- The Tribunal rightly observed that the quantum of penalty must be determined by reference to the law as it stood when the offence or default was committed - the amendment brought about is purely procedural in nature providing for the machinery for having and collecting penalty - this amendment does not affect the very ingredients of the default contemplated u/s 206 - Since the appeal is a continuation of the original proceedings the amendment brought about was applicable to the facts of the case, benefit under the amendment was rightly made available to the assessee and the amount of penalty was rightly restricted to the amount of tax deducted at source – thus, the order of the Tribunal is upheld – Decided against revenue.
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2015 (1) TMI 101
Applicability of section 50 on sale proceeds on sale of assets - bottles, crates and cylinders whose individual cost did not exceed ₹ 5,000 - Whether the Tribunal was right in holding that the sale proceeds received on sale of assets, whose actual cost was allowed as a deduction under the first proviso to Section 32(1) of the Act, are taxable u/s 50 – Held that:- Following the decision in Nectar Beverages Pvt. Ltd. Versus Deputy Commissioner of Income Tax [2009 (7) TMI 5 - SUPREME COURT] wherein it has been held that by the Finance Act, the first proviso to section 32(1)(ii) stood deleted, with effect from April 1, 1996 - the purchases were made prior to the year 1995, thus, the assessee is entitled to deduction as claimed for – Decided in favour of assessee.
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2015 (1) TMI 100
Treatment of income from Interest - Whether the income from interest could be taxed holding it to be covered from prima facie adjustment u/s 143(1)(a) – Held that:- Assessee has not earned interest on the money lying idle with him for running industry - by virtue of terms and conditions of the contract petitioner was to submit a performance guarantee and for the same he had to deposit certain funds with the Bank as margin money and it is on this margin money the interest was earned – relying upon Commissioner of Income-Tax Versus Karnal Co-operative Sugar Mills Ltd. [1999 (4) TMI 7 - SUPREME Court] - the receipt of interest has some nexus and are linked to certain factors relatable to the setting up of capital, they can be set-off against each other as they are considered to be capital which would go to reduce the cost of capital structure - in the matter of assessment of income in question a debatable question arises and therefore taxing of income in the facts and circumstances of the present case holding it to be covered as prima facie adjustment u/s 143(1)(a) is not correct - the question as to whether the income in the facts and circumstances of the present case could be taxed under the provisions of section 143(1)(a) of the Act holding it to be prima facie adjustable, is not correct - the question is a debatable one and it requires consideration in accordance to the provisions of section 143 – thus, the order of the Tribunal is set aside – Decided in favour of assessee.
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2015 (1) TMI 99
Validity of notice for reopening of assessment u/s 147/148 - Change of opinion – Allowability of exemption u/s 10B - Held that:- The assessee company is a 100% Export Oriented Unit engaged in manufacturing of steel forging for export - the reasons recorded by the AO for issuing the notice u/s. 148 are verbatim as in the case of the present assessee – Following the decision in Magna Casting and Machine Works Pvt. Ltd., Pune Vs. Assistant Commissioner of Income Tax, Circle- 11(2), Pune [2015 (1) TMI 64 - ITAT PUNE] - the AO has allowed the deduction claimed by the assessee u/s. 10B - assessee had made a disclosure in the notes forming part of the accounts of the nature of payments required to be made to the foreign principal on account of CDC - a reference was made to the fact that as a result of a circular issued by the RBI, the assessee was not permitted to remit a certain proportion equivalent to US $ 1.5 for each container - the statutory auditors had also included a note in the report. During the course of assessment proceedings, the assessee addressed a comprehensive letter dt. 18th Nov., 2009 making a full disclosure of facts - AO specifically discussed in the course of the assessment order the matters in respect of which he has made a disallowance either fully or in part - Since the AO did not find any justification to reject the claim of the assessee in respect of the issue of CDC, there was no specific discussion in the course of order. Merely because subsequently another decision of the Coordinate Bench of the ITAT is noticed by the AO, that will not vests the jurisdiction in the AO to exercise his powers u/s. 147 of the Act - the AO was not justified at all on the facts of this case to initiate the proceedings u/s. 147 and issued the notice u/s. 148 of the Act – thus, the proceedings initiated by the AO u/s 147 is set aside – Decided in favour of assessee.
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2015 (1) TMI 98
Validity of order passed u/s 153A - Payment of commission on sale or purchase – Held that:- The commission paid to the parties have been challenged by the department - it is total contradictory on part of the revenue that in one case, they are accepting these above parties as genuine and in another non-genuine - the assessee had deducted TDS, payments were made through account payee cheques, given PAN number of the parties and confirmed the commission payment - the law does not require from the assessee to enter in agreement on stamp paper for claiming commission as held in the case of Chicago Pneumatic India Ltd. Vs. Dy. CIT [2007 (3) TMI 409 - ITAT MUMBAI] - the books of account are audited which has been accepted by the AO, sale and purchase have been treated genuine, but doubted the commission payment and the AO made addition on surmises and conjectures - commission paid by the assessee either on sale and purchase are allowable as the expenses incurred wholly and exclusively for the purpose of business U/s 37 of the Act. Addition of unexplained investment in excess stock – Held that:- The assessee contended that it has maintained/recorded/received/issued the stock of raw material by weight and there is no concept of per piece or standard/averaging of weight per piece – the authorized officer gave the copy of panchnama at the end of search, but no copy of statement and copy of stock inventory taken at the time of search, which was asked to supply by the appellant on 06/9/2010 - when the scrutiny assessment proceedings were started by the AO, he supplied the copy of statement along with copy of inventory and copy of statement of various persons on 13/09/2010 - AO as well as CIT(A) has considered the assessee’s reply but which was not found convincing to them - it is also difficult for the authorized officer to weigh the stock lying in the factory premises on weighing machine but the item is excisable and is required to be inspected spontaneously by the excise authority when entry of the raw material in the factory and dispatch of the final product from the factory premises - Further the Director of the company has not able to explain the difference during the course of recording of statement U/s 132(4) of the Act and stated that he would explain the difference later on. Authorised officer has taken closing stock on the basis of counting of M.S. Ingots/TMT Saria/CTD on the basis of rows and pieces - the size of the ingots also was not same of every piece - the assessee purchased the raw material from the primary source i.e. material made out of scrap and not from the virgin metal and therefore, the standard of M.S. ingots is not same in form of size and volume - The method of the stock taking adopted by the search party was eye estimation counting bundles in rows and then multiplying the same with the standard weight of a bundle in scissors of bundles - These items of stock are heavy in weight and it can be displaced with the help of crane - The total stock found during the course of search was also in volume and in size, the time taken by the authorized officer for verifying the closing stock was very short as search was concluded on 18/09/2008 i.e. second day of search - no incriminating documents regarding purchase of raw material and sales of goods outside the book was found and seized by the authorized officer, which supports the assessee’s claim that weighment done by the authorized officer was not scientific to arrive the correct discrepancy in the stock of the appellant company – assessee rightly relied upon Utkal Alloys (P.) Ltd. Versus Deputy Commissioner Of Income-Tax [2002 (3) TMI 215 - ITAT CUTTACK] and addition in the stock on the basis of sampling method without physically weighing - AO was not justified in making addition on account of excess stock as stocks were checked by the Central Excise authorities from time to time - there is no revenue loss as such except shifting of the revenue from year under consideration to subsequent year - valuation made by the authorized officer was not scientific and had not arrived at right conclusion, thus, the order of the CIT(A) is set aside – Decided in favour of assessee.
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2015 (1) TMI 97
Addition in assessment u/s 153A - Addition u/s 68 - No relevant or incriminating material or evidence was found or seized during the course of search reflecting undisclosed income – Held that:- The search action was carried on in case of M/s K Sera Sera Productions Ltd, wherein the husband of the assessee Mr. Parag Sanghavi was director, therefore search operation was also carried out at his residence, however, during the course of the search at the resident of the assessee no incriminating documents, jewellery, cash, unaccounted bank accounts, undisclosed property, etc. were found and hence there was no seizure except some loose papers which were duly explained during the assessment proceedings and no addition was made with regard to these documents - the fact regarding assessee having received gift of ₹ 97 lakhs from Vijay Bhansali was found only during the course of assessment proceedings - Nowhere the AO has referred any incriminating material found during the course of search, based on which addition had been made – in M/s ALL CARGO GLOBAL LOGISTICS LTD Versus DEPUTY COMMISSIONER OF INCOME TAX [2012 (7) TMI 222 - ITAT MUMBAI(SB)] - addition u/s.153A can be made on the basis of incriminating material which in the context of relevant provisions means books of accounts and other documents found in course of search - summary assessment was done u/s.143(1) in respect of return of income filed on 29-3-2006 - The time limit for issue of notice u/s.143(2) was expired on 31st March, 2007 i.e 12 months from the end of the month in which return was furnished - the time limit for issue of notice u/s.143(2) has already expired on 31-3-2007, which is much prior to the date of search i.e. 12-9-2007 - no incriminating material with regard to alleged gift/loan was found during the course of search so as to empower the AO to make addition u/s.153A with regard to such gift/loan – there was no merit in the addition so made by AO u/s.153A without referring any incriminating material having found during the course of search, when the time limit for issue of notice u/s.143(2) had expired much prior to date of search. Assessee has discharged its burden of proof u/s.68 of the Act by proving identity of the loan creditor, Genuineness of the loan transaction and Credit worthiness of the loan creditor - the addition made by the AO without giving any finding otherwise is not justified - There is no dispute that in case of loan transaction assessee is not only required to prove the identity of the loan creditor but also the genuineness of the loan transaction as well as creditworthiness of the loan creditor - since the assessee has proved by the above documents that the loan creditor is a long and good friend of the assessee’s husband and the interest free loan was given to help the assessee to purchase of a residential flat in Bombay for which loan was actually utilized - the credit worthiness of the loan creditor is also proved by filing the Net Worth Certificate from Chartered Accountant firm of Dubai - AO also made addition of ₹ 65,000/- on account of foreign travelling expenses - during the year assessee along wither her husband and mother-in-law has shown withdrawal of ₹ 16,08,971/-, which has not been disputed by the AO - as the assessee could not furnish the details of expenses, the AO estimated the same and made addition of ₹ 65,000/- The tickets expenditure was estimated at ₹ 30,000/- the addition is restricted to ₹ 30,000/- u/s 69C. Addition u/s 69C with respect to credit card expenses – Held that:- Nothing positive material was brought on record in support of the allegation that assessee has actually used the credit card - assessee had made personal drawings from her bank account which was sufficient for her regular expenses and, therefore, any further estimation on account of credit card expenses is not justified without bringing any cogent material on record – the addition is directed the AO to delete the addition – Decided partly in favour of assessee.
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2015 (1) TMI 96
Penalty under section 271(1)(c) - assessee had furnished inaccurate particulars of income - deduction under section 35D - Held that:- It is not a case for attraction of the provisions of section 271(1)(c). The assessee has explained that the error committed by it was inadvertent and due to bonafide mistake. We agree with the finding of the Ld. CIT (A) that in such a case the levy of penalty was not justified. We therefore, do not find any infirmity in the order of the Ld. CIT (A) and the same is hereby upheld. - Decided against Revenue.
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2015 (1) TMI 95
Classification of income - Business income or Income from other sources - Held that:- Admittedly, it is not the case of the Revenue that the assessee had invested his surplus money in FDR with the bank for earning of interest income. The bid amount was deposited by the assessee for acquisition of business of M/s. Riverdale Foods Ltd. i.e. for business purposes only. Even the FDR was made with Bank of India in the account of M/s. Riverdale Foods Ltd. Hence, under such circumstances it cannot be said that the assessee had invested the money for the purpose of earning of interest income. The FDR was deposited as a prerequisite to be eligible for making bid to acquire business of the sick company, and as such the deposit was made for business purposes only. Under such circumstances, we do not find any infirmity in the order of the Ld. CIT(A) in directing the AO to treat the said interest income received on the bid amount as business income of the assessee - Decided against Revenue.
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2015 (1) TMI 94
Transfer pricing adjustments - Determination of arm's length price - Held that:- It is well settled legal position that the ALP adjustments can only be made in respect of international transactions with the AEs and cannot extend to the transactions with non AEs. There are large number decisions of the coordinate benches, including in the case of Alstom Projects India Ltd Vs ACIT [2013 (8) TMI 442 - ITAT MUMBAI], holding so. In the case of CIT Vs Stratex Networks India Pvt Ltd (2013 (5) TMI 277 - DELHI HIGH COURT), Hon’ble jurisdictional High Court has also accepted this position. Learned Departmental Representative, even as vehemently relying upon the stand of the TPO, does not dispute this legal position but he contends that the factual elements embedded in this contention, at least on computation aspect, need to be verified by the TPO. That is only arithmetical part giving effect to this principle. We see no harm in this exercise. - it fit and proper to uphold the stand of the CIT(A) in principle but remit the matter for the limited purposes of verifying the computation of excluding transactions with non- AEs in calculating the ALP required to be made under the TNMM method. To this extent, the matter is restored to the file of the TPO. - Decided in favour of Revenue.
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2015 (1) TMI 93
Low tax effect - maintainability of revenue appeal - addition u/s 68 - Held that:- Tribunal in the case of Deputy Commr.Of Income Tax vs. Sushila Saraogi (2014 (11) TMI 294 – ITAT Kolkata) after considering the precedents on the subject held instruction No. 5/14 issued by the CBDT on 10.7.2014 is applicable to the pending appeals. The Tribunal followed the dictum laid down the judgments of the various High Courts including the two judgments of the Hon’ble Jurisdictional High Court in the case of CIT vs. M/s. P.S. Jain & Co. in [2010 (8) TMI 702 - Delhi High Court] and in the case of Commissioner of Income Tax vs. Delhi Race Club Ltd. [2011 (3) TMI 1488 - High Court of Delhi]. In view of the order of the Tribunal in the case of Deputy Commissioner of Income Tax vs. Sushila Saraogi which have elaborately considered the identical issue, we hold that instruction No. 5/2014 issued by the CBDT on 10.7.2014 is applicable to the pending appeals. In the instant case, the tax effect being below ₹ 4 lacs, without going into the issue on merit, we dismiss the appeal of the revenue in liminee. It is to be mentioned that Ld. DR was unable to point out any exceptional circumstances /situation (mentioned in board instruction No. 5 / 2014) for filing an appeal despite the monetary limit being below the prescribed limit. - Decided against Revenue.
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2015 (1) TMI 92
Collection of tax during remand proceedings ignoring the order of Tribunal - Transfer Pricing adjustments - Determination of arm's length price - Despite a specific direction by the Bench the AO decided to adopt an innovative method of collecting the revenue by utter disregard of the Tribunal order and obtained a consent letter from the assessee and collected a sum of ₹ 16.64 crores during the subsistence of the said order - Held that:- AO has followed an innovative method of collecting taxes despite specific directions of the Bench. Therefore we had called the AO who had collected the revenue by flouting the directions of the Bench. Shri Vishal Makawane, DDIT (Inv), Unit-VII(1), Mumbai appeared before us and tendered an unconditional apology for his conduct and submitted that it was collected with the consent given by the appellant vide letter dated 23.04.2014. The hapless Representative of the assessee had no other alternative but to admit that he has given the consent letter. It deserves to be clarified that neither the assessee nor the Revenue has the right to flout the decision of the Tribunal and being an officer functioning under the Government of India it is his obligation to follow the directions of the superior authority and even if there is consent he should not have collected the amount. We have recently come across in few other cases where similar consent letters were obtained or the Department has collected tax despite the stay order passed by the ITAT [2014 (3) TMI 254 - ITAT MUMBAI]. We deplore this practice and direct the Chief Commissioner of Income Tax to issue a letter to all the concerned Assessing Officers not to adopt this kind of approach of obtaining consent letters and to respect the order passed by the Tribunal as otherwise the Tribunal would be constrained to view the conduct of the Department adversely. Collection of outstanding demand for a further period of six months is stayed - AO is directed to refund the amount collected along with interest contrary to the order passed by the ITAT within 15 days - Decided in favour of assesse.
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Customs
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2015 (1) TMI 121
Levy of anti dumping duty - duty on Aluminium Alloy wheels - Extension of time period for completing the investigation by the DGAD in terms of first proviso to Rule 17 (1) of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - whether an extension of time could be granted under the first proviso to Rule 17(1), after the expiry of the initial period of one year or not - Held that:- Following decision of M/s. Hyundai Motors India Ltd. Versus Union of India And Other [2015 (1) TMI 23 - MADRAS HIGH COURT] - Decided against assesse.
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2015 (1) TMI 120
Petition for release the pending balance duty drawback claim amount, entitled to the petitioner - Classification of HDPE / PP Bags, Flexible Intermediate Bulk Container (FIBC Bags) - Whether the goods exported under the classification of CETSH 6305 32 00 shall be re-classified under CETH 3923 29 90 - Held that:- , the Commissioner of Customs (Appeals), Chennai, by adverting to another order passed by the CESTAT in the case of TPI India Ltd., vs. CCE, Mumbai II reported [2005 (5) TMI 159 - CESTAT, MUMBAI] has held in favour of the petitioner stating that the Flexible Intermediate Bulk Container would fall under Chapter heading 6305 32 00. Apart from the above, the issue also has been decided by the Director General of Foreign Trade, Udyog Bhawan, classifying that Flexible Intermediate Bulk Containers are covered under ITC(HS) Code 63 and not under ITC(HS) Code 39. The Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi, in Circular No.42/2011-Cus., dated 22.09.2011, F.No.609/82/2011-DBK, also has settled the dispute regarding the classification of FIBC by bringing it under Chapter 63, therefore, this Court has no hesitation to allow the prayer made by the petitioner. - Revenue directed to issue refund within two weeks - Decided in favour of assesse.
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2015 (1) TMI 119
Penalty on CHA - Goods being loaded on foreign going vessel without having obtained the necessary LEO from the Customs - Held that:- Tribunal has considered all relevant facts and in particular, relied upon its own decisions in identical matters where CHA such as the Appellant have been imposed penalty for the goods being loaded on foreign going vessel without having obtained the necessary LEO from the Customs. The Tribunal also relied upon the Customs Manual which specifically casts an obligation on the exporter or his agent to have the goods examined by the Customs. In this case, the CHA was obliged to present the goods to the shed appraiser (export) in docks for examination and it is only after examination of the goods that an LEO is passed. In this case, the impugned order records the fact that the Appellant was at all times aware that the vessel was to sale out of India on 9th October, 2009 and, therefore, ought to have ensured that the goods are examined before they are loaded on to the foreign going vessel. The alternate submission in respect of absence mens rea was also considered by the Tribunal and on interpretation of Section 114 of the Act recorded a prima facie finding that there is no requirement of mens rea under Section 114 of the Act. The reliance upon the admission of an appeal by this Court from an order of the Tribunal at the final hearing for purposes of dispensing with predeposit is inappropriate. In fact, the Tribunal had held against the Appellant on a similar facts and, therefore, this itself would warrant a deposit. - deposit of 25% of the penalty of ₹ 7 lakhs imposed upon the Appellant is reasonable in the present facts. Thus, no substantial question of law arises for consideration - Decided against the appellant.
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2015 (1) TMI 118
Benefit of duty credit entitlement under the Served From India Scheme - Method of foreign trade - Held that:- These are not matters which ought to be brought before a Court of law. How and in what manner the foreign trade needs to be developed and regulated is essentially to be decided by the authorities under the Parliamentary statute. If they evolve any policy or take any policy decisions, then, it is equally open for them to consider as to whether cases of parties like the Petitioner would fall within or need to be protected or their rights recognized by any interpretation and made appropriately of such policy decisions. The Court must not examine these issues as not only they are intricate but essentially of a policy decision and to be taken by the executive. It is in the larger public interest and of promoting foreign trade and equally developing but regulating it that the state or the Central Government before us must take such decisions. It may be that the Director General or his colleagues are of a particular view but our anxiety is that matters and issues brought like the Petitioner before us ought to be examined by the Ministry and at the Ministry level so that any doubt or confusion with regard to interpretation of the policy are cleared and the Petitioner can then take a definite stand. Petition disposed of.
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2015 (1) TMI 117
Enhancement of penalty - Power of Tribunal u/s 129b(2) - No notice issued - Held that:- Tribunal has recorded that though notice was issued to the respondent, he has not chosen to appear before the Tribunal. Therefore, it would not lie in the mouth of the appellant to state that no notice was issued by the Tribunal before an order of enhancement is passed. Power to enhance penalty - Held that:- appellant has misconstrued the Section 129B. All that Section 129B(2) of the Act contemplates is that after passing an order under Section 129B(1) of the Act, if the Tribunal, at any time within six months from the date of such order passed under Section 129B(1) of the Act, decides to rectify any mistake apparent from the record, it shall make amendment to any order passed under Section 129B(1) of the Act and shall make such amendments if the mistake is brought to its notice by the Commissioner of Customs or the other party to the appeal. In such event, the proviso to Section 129B(2) of the Act mandates issuance of notice. In the case on hand, it is not rectification of mistake by the Tribunal. Therefore, proviso to Section 129-B of the Act does not apply to the facts of the present case. - Decided in favor of Revenue.
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2015 (1) TMI 116
Maintainability - whether decision taken under Section 129D(3) of Customs Act, 1962 beyond a period of three months from the date of communication of decision or order of adjudicating authority is barred from seeking appeal remedy in terms of Section 129A(3) of the Act - Held that:- Sub-section has prescribed that either adjudicating authority or any officer of Customs authorised in this behalf by the Commissioner of Customs may file an application before Tribunal within a month from the date of communication of the order by the Committee of Chief Commissioners to file appeal. According to the law, Revenue gets four months time to file appeal. The order sought to be appealed was communicated to the Commissioner of Customs on 4-6-2013. Revenue submitted that Review Committee reviewed the impugned order and signed the same on 29-11-2013. Thereafter Revenue filed appeal on 29-11-2013. According to the limitation prescribed, last date for filing appeal was 3-10-2013. Chronological event shows that Review Committee had not taken decision to seek appeal for nearly five months of communication of the order sought to be appealed. That handicaps Revenue to seek condonation of delay made in decision making under Section 129D(1) read with Section 129D(3) of the Act by the Committee. Without burdening the order further, in view of aforesaid chronology of events, appeal of Revenue calls for dismissal of its MA (COD), stay application and appeal - Decided against Revenue.
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2015 (1) TMI 115
Classification of a floating platform SEP Samrat - Classification under CTH 8905 90 90 or under CTH 8905 20 00 - Held that:- As per the description of CTH 8905 the categories covered under this heading include goods, inter alia, dredgers, floating cranes, floating or submersible drilling or production platform etc. A plain reading of description of CTH 8905 convey that dredgers, floating cranes and floating or submersible drilling or production platforms have been treated as separately identified groups under CTH 8905. Heading CTH 8905 has been further subdivided into CTH 8905 01 00 (for dredgers), CTH 8905 20 00 (for drilling/production platforms - whether floating or submersible) and CTH 8905 90 90 (for all others including floating cranes). It is not disputed that at the time of import SEP Samrat had a 18 ton crane mounted on it and did not have drilling equipments fixed. CTH 8905 20 00 will cover only drilling/production platforms (whether floating or submersible) which has equipments required for drilling or production fitted on it. This interpretation is fortified by the HSN explanatory notes relied upon by the first appellate authority in Para 5.4 of the OIA, dated 6-8-2013. Even the certificate dated 11-6-2013, issued by Marine Consultants & Engineer Surveyors, also convey that SEP Samrat is not a drilling or production platform. In view of the above, it has to be held that SEP Samrat imported by the respondent without drilling or production capability is correctly classifiable under CTH 8905 90 90. This view is supported by the judgment of Chennai - CESTAT, in the case of C.C., Chennai v. Larsen & Toubro Ltd. (2013 (4) TMI 569 - CESTAT CHENNAI) where Jack-up-Barges without capability of drilling or production, have been held to be classifiable under CTH 8905 90 90. - Decided against Revenue.
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2015 (1) TMI 114
Refund claim - SAD - Notification 102/2007, dated 14-9-2007 - Unjust enrichment - declaration on the face of Invoice - Held that:- the invoice clearly shows that no Special Additional Duty is available as credit to the buyers of the goods. The appellant is a trader and not registered with the Central Excise department. Therefore, he cannot issue Cenvatable invoice to their buyers. Further, the claim of the appellant has been supported by a certificate issued by a C.A. certifying that SAD amount has been incurred by the appellant and has not been passed on to any customer and the said amount has been accounted in the balance sheet as ‘Receivable’ from the department. When these evidences are available on records, duty incidence cannot be passed on to the buyers. Therefore, I hold that the appellant has passed on the burden of unjust enrichment and the appellant is entitled for refund claim. In these circumstances, the impugned order is set aside and the appeal is allowed with consequential relief, if any - Decided in favour of assessee.
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Corporate Laws
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2015 (1) TMI 113
Validity of rejection of pre-bid submitted by petitioner Company - condition of tender process - Violation of the principles of natural justice or not – Held that:- The survey experience which was required to be produced was for at least five years with at least one large scale survey - the petitioner company was not included in the list of qualified bidders as the petitioner did not meet with the eligibility criteria for qualifying for technical evaluation as laid down in clause 6 of the bid documents - either through oversight or for reasons best known to the petitioner, the petitioner did not submit the required documents or proofs for establishing the prequalification criteria more particularly copies of the work order and certificate of completion to establish that petitioner No. 1 had at least 5 years working experience on large scale household surveys as well as field survey experience which was to be provided in the format given in ‘Appendix H’ - thus, the conditions for providing the eligibility criteria to qualify for the technical evaluation were not satisfied and therefore, the petitioner was not found to be eligible and qualified for technical Evaluation. A perusal of Annexure B5 to the petition which is the minutes of NFHS-4 committee for determining prequalification of field work agencies for technical evaluation makes it clear that it was mentioned therein that the petitioner company had not submitted the survey experience of at least five years with at least one large scale survey and therefore the petitioner company was disqualified - The representative of the petitioner company being was personally present and he appended his signatures on the attendance sheet - the contention of the petitioner that the completion certificate dated 26.03.2014 is required to be considered is misconceived - The requirement as per the tender documents was for last five years which was not received along with the pre-bid documents - therefore it shall not be appropriate to accept the contention of learned advocate for the petitioner – Decided against petitioner.
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2015 (1) TMI 112
Sale of stakes in property outside India or not - Whether apart from selling the immovable properties situated within the country 'Saharas' propose to sell their stakes in three other properties situated outside the country – Held that:- SEBI contended that the Court could apart from lifting the embargo on the sale of the moveable and immovable assets in India, vacate the same qua the said three properties to enable Saharas to comply with the directions issued by this court - there is nothing on record to show that any request was made by the Saharas to the Bank of China at any stage – there is no reason to prevent Saharas from taking up the matter with the Bank of China for its permission/consent to the proposed transfer/sale/alienation of their stakes in the equity of the companies that own the properties - it was urged that the valuation reports have been prepared by reputed valuers at the instance of the Bank of China in connection with the loan transactions as a part of on-going annual exercise undertaken by the lending Bank - if that be so, Saharas would do well to obtain a confirmation from the Bank of China to the effect that the valuation reports prepared in respect of the three properties mentioned above by CBRE and JLL, have been prepared at the instance of the Bank of China and that the said valuation reports have been accepted by the Bank to be correct - this could lend re-assurance to the Court that the value/stakes held by Saharas in these properties are sought to be transferred on the basis of the true market value of the assets.
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Service Tax
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2015 (1) TMI 145
Extension of stay order - Held that:- Following decision of M/s Venkateshwara Filaments Pvt. Ltd. & Others vs. Commissioner of Central Excise and Service Tax, Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] - stay orders passed by this Tribunal are in force beyond 7.8.2014 and therefore, it would continue till the disposal of the appeals. Therefore, as held by the Tribunal, there is no need for filing any further applications for extension of the orders granting stay either fully or partially in all these cases. - Decided in favour of assesse.
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2015 (1) TMI 144
Penalty u/s 76, 77 & 78 - Business Auxiliary Service - reverse charge mechanism - Held that:- Commission paid to overseas commission agents for promoting sale of their goods is clearly covered under the Business Auxiliary Service and so the appellants are liable to pay service tax under the reverse charge mechanism with effect from 18.4.2006 in terms of Section 66A of the Finance Act, 1994. There are no pleadings to contest this aspect and therefore no further elaborate discussion on this point is required. As regards the plea that only one penalty either under Sections 76 or under Section 78 should be imposed, we notice that, as has been conceded by the ld. AR, the adjudicating authority has imposed only one penalty under Sections 78 and 76 together. Thus in effect, there is only one penalty which is equal to the adjudicated service tax liability which therefore is to be treated to have been imposed under Section 78 - penalty under Section 78 will be reduced to 25% of the adjudicated service tax liability provided the adjudicated service tax liability (along with interest) and the reduced penalty (i.e. 25% of the mandatory equal penalty) are paid within 30 days of the receipt of this order - Decided in favour of assesse.
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2015 (1) TMI 143
CENVAT credit - Bank and Financial Services and Credit Card service - nexus/proximity to the output services - exemption under Notification no. 19/2009 - Availment of credit in respect of various assets - Held that:- Issue is debatable as regards the credit availed in respect of impugned goods being item of furniture etc. like sofa, almirah etc. and further there is prima facie case in favour of the appellant as regards the other inputs services on which CENVAT credit is availed. In this view of the matter, it is just and proper to direct the appellant to make the pre-deposit of ₹ 40 lakhs and report compliance on 13.01.2015. The appellant will be entitled to adjust out of the amount of pre-deposit, the amount which they have already paid towards or in connection with the impugned demand. Subject to such compliance, the appellant shall be entitled to stay of the balance amount of tax, interest and penalty till disposal of the appeal. - partial stay granted.
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2015 (1) TMI 142
Erection, commissioning and installation - Notification No.1/2006-ST dt. 1.3.2006 - Held that:- Appellant is engaged in the manufacture of lifts. They paid central excise duty on the parts of lifts at the time of clearance from their factory. There is further activity of erection, commissioning and installation at their customer's premises. They paid service tax on a notional percentage of 15% of the contract value on erection, commissioning and installation. According to Revenue, the appellant is liable to pay service tax on 33% of the contract value as per Notification No.1/2006-ST dt. 1.3.2006. - appellant had not produced the documents in support of their contention of sale of goods. It is seen that the appellant had arrived at a notional percentage of 15% of the contract value - Matter remanded back - Decided in favour of assesse.
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2015 (1) TMI 141
CENVAT Credit - Interest u/s 11AB - Penalty u/s 11AC - Invoices in name of other unit - Held that:- The appellant in this case have nine units where the same product is manufactured. Therefore, the doubt of nexus of input and output products will not arise. Ld. Counsel has also shown a particular invoice issued by a CHA in the name of the Head Office. It is quite natural that the service provided by a CHA would be in the name of the Head Office where clearance of goods through Customs will be centralized. I agree that a doubt has never been raised regarding the actual receipt of the services. The only basis for denying credit has been that invoices are either in the name of another unit of the appellant or in the name of their Head Office. The judgments cited above touch upon the issue at hand in support of the case of the appellant. There being no allegation of the service have not been received, the credit stands to be allowed. - Decided in favour of assessee.
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2015 (1) TMI 140
Initiation of recovery proceedings - Held that:- Since the appeal and stay petition are pending before this Tribunal, the department is restrained from initiating any recovery proceedings against the appellant till such time the stay petition is heard and disposed of. - Decided in favour of assessee.
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2015 (1) TMI 139
Waiver of pre deposit - Commercial or industrial construction service - Held that:- As a corollary of the ratio of judgment of the Karnataka High Court in ACC Limited [2011 (8) TMI 1037 - KARNATAKA HIGH COURT], prima facie, Service Tax on that activity which constitutes sale is not liable to Service Tax. Waiver of pre-deposit and stay all further proceedings pursuant to the impugned order, pending the appeal is granted. - Stay granted.
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2015 (1) TMI 138
Business Support Service - Whether M/s Railtel Corporation of India Ltd. is liable to pay Service Tax on 13% fees received by them in respect of contracts relating to laying of Optical Fibre Cables under the head “Business Support Service” - Held that:- Prima facie we find that 13% fees received by them is part of the works contract cost for laying Optical Fibre Cables and laying of Optical Fibre Cables under the category of works contract is not liable to Service Tax if it is in respect of railways. In this case, prima facie, we find that laying of Optical Fibre Cables has to be treated as “works contract” in respect of railways and therefore the fees received by the appellant has to be treated as part of .the works contract cost. Therefore, prima facie, it may not be appropriate to classify the service as “Business Support Service” for levy of Service Tax. Since we have found a prima facie case in favour of the appellant, there will be stay against recovery of the dues during the pendency of the appeal - Stay granted.
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2015 (1) TMI 137
Demand of Service Tax - Quantum of tax - Held that:- There is no clear indication as to what amount of Service Tax liability is confirmed against all these services separately. In the absence of such confirmation separately, we are of the view that the issue needs reconsideration by the adjudicating authority. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 136
Waiver of pre-deposit of tax - Commercial or Industrial Construction Service - Held that:- Trusts are collecting fees for their activities. Thus, it is not clear as to whether the trusts are non-profitable organizations - Partial stay granted.
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Central Excise
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2015 (1) TMI 131
Production capacity based duty - Whether the Appellate Tribunal is correct in allowing the appeal of the respondent on the ground that the ACP Rules were suffering from the vice of illegality and unconstitutionality right from the day on which they were made and the determination of ACP by the Commissioner and the procedure laid down for matters such as determination of duty liability, collection of duty, abatement, etc., were all futile exercises - Held that:- substantial question of law does not survive at this point of time, as the Rules under which demand has been made, namely, Hot Air Stenter Independent Textile Processors ACP Determination Rules, 1998 issued under Notification 42 of 1998 dated 10.12.1998 has been struck down by this Court in the case of Beauty Dyers V. Union of India reported in [2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS] - Since the issue has already been decided by this Court in the manner stated above, pending review is not a ground to keep this appeal pending on the file of this Court. Accordingly, the questions of law are academic, since the Rule under which demand has been made has been struck down. - Decided against Revenue.
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2015 (1) TMI 130
Recall of order - Revenue contended that the previous order [2013 (6) TMI 391 - CESTAT NEW DELHI] was passed on the strength of documents which on later enquiry were found to be fraudulent - Held that:- It is axiomatic and a principle which is well established that the power of review, of a judicial or quasi-judicial order should be expressly and legislatively conferred. Section 35C(2) of the Act does provide but not an uncanalised and unrestricted power of review/rectification. Grant of the power (of rectification) is subject to a specified limitation period and is authorised to be exercised in clearly specified circumstances, namely for rectification of a mistake apparent from the record. - These applications by Revenue fall outside the ambit of the rectification power consecrated to us qua the express legislative grant under Section 35C(2) of the Act. Revenue does not plead nor establish before us that order dated 15.2,2013 is vitiated on account of any fraudulent document which was the basis for the conclusion as to illegality of invoking the extended period of limitation. Revenue's contention is that the declarations dated 14.4.2003 and 12.4.2004 (relevant to financial years 2003-04 and 2004-05) were never filed by assessee. This assertion is predicated on the fact that originals of these declarations are not currently available in Revenue records. Inference that the assessee did not file these declarations is based on the singular fact that there are overwritings/ interpolations in the receipt register of 2003-04, as opined by the Forensic Consultant. On the basis of this opinion, Revenue seamlessly proceeds to conclude that the interpolations were the product of a collaborative effort of some unknown officers of the Department, at the behest of or in connivance with the assessee. There is no interconnecting evidentiary material furnished for this ethereal leap to the conclusion. Nothing is placed before us to establish whether any departmental officer was found guilty of interpolations of the receipt register. No inculpatory statement was recorded from the assessee to support any conclusion as to its participation in tampering of Government records; No officer in-charge of pursuing the case of Revenue during 2006 to 2013 (pendency of the appeal), has been proceeded against for failing to rebut assessee's pleadings or to verify existence of the declarations in official records. - Revenue failed even by date to establish perpetration of any fraud by the assessee, on the basis of which these appeals were allegedly allowed; and failed to establish that the assessee had not submitted the declarations on 14.4.2003 and 12.4.2004 - Revenue failed to establish fraud as the factor vitiating our earlier order dated 15.2.2013 - Decided in favour of assessee.
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2015 (1) TMI 129
Utilization of CENVAT Credit - credit availed during the next period utilized for duty of the previous period - one-to-one correlation - Held that:- When there is no one to one correlation between the output and the input for the purpose of utilization of CENVAT credit and in the absence of specific provision denying the utilization of CENVAT credit during the default period, in case of default by the appellant in monthly payment, utilization of CENVAT credit during the next month for payment of duty relating to the previous month cannot be faulted with. Needless to say the interest is liable to be paid and appellants have apparently paid the interest for delayed payment next month. At best it can be said that availment of CENVAT credit in the subsequent month is a procedural violation since strictly going by the law, credit could not have been used. - Utilization of credit allowed. As regards penalty, there is no doubt that there is a default in making payment on monthly basis. Further the benefit of BIFR decision also in my opinion is not applicable to the assessee. This is because while BIFR had allowed them to pay the principal in installment over a period of 7 years and had waived interest and penalty, the appellants have chosen to pay the entire amount and take the CENVAT credit back in 2008 itself. Therefore appellants themselves have not availed the benefit extended by BIFR which apparently is due to the fact that by that time BIFR passed the order extending the benefit, the financial position of the appellant had improved and they were in a position to pay the amount. Similarly for payment of interest also, no waiver was available. Since the appellants have not availed the order of the BIFR as regards principal, obvious conclusion is that there was no need for the same. The principal and interest and statutory liability and the same crystallised in the year 2008 and the same was discharged. Therefore I do not think that the benefit of waiver of penalty in terms of BIFR order can be extended to the appellant. - However, penalty reduced - Decided partly in favour of assesse.
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2015 (1) TMI 128
Whether the fuel and ash handling system manufactured by the appellant are eligible for exemption under Notification No.6/2002-CE dt. 1.3.2002 - in the nature of non-conventional energy device/system as specified or not - Held that:- Notification No. 6/2002-CE dt. 1.3.2002 grants exemption at Sr. No. 237 to non-conventional energy device/system specified in List-9 attached to the Notification - Sr. No. 21 of List-9 grants exemption to parts consumed within the factory of production of such parts. The appellant has taken the plea that the fuel ash handling system manufactured by them feeds biomass/bagasse to the boiler which generates steam. The steam from the boiler is conveyed to the steam generator which generates electricity. It is quite clear that the ash handling system only feeds the boiler with the biomass. By no stretch of imagination can this system be called waste conversion device that produces energy. What produces energy is the steam turbine generator or atmost, the boiler and the steam generator taken together. The word which is used at Sr. No. 16 of List-9 is "Device". The word used is not "Plant" in which case the ash handling system could be considered as part of the plant. - Exemption denied. Whether the demand of duty is justified in view of the fact that Annexure 'I' granting exemption was issued by Assistant Commissioner having jurisdiction over M/s. BCML to the Assistant Commissioner having jurisdiction over the appellants factory - Held that:- The appellants have dispatched their goods namely fuel and ash handling system under a series of invoices over a period of time and have stated that the A.R. 3A documents supporting the invoices were received back duly acknowledged and with duly completed re-warehousing certificates countersigned by the Central Excise authorities at the end of M/s. BCML. Such copies of A.R. 3As duly certified after re-warehousing were continuously submitted to their Superintendent of Range-V, Pune. It is to be noted that these facts are not disputed by Revenue. It is also stated by the Ld. Consultant that Annexure-I is still "live" and has not been cancelled by the Central Excise authorities. The Commissioner (Appeals) in her order acknowledges that the Annexure has been signed by the AC/DC Central Excise but has not raised the question of cancellation of Annexure 'I'. In fact the Commissioner (Appeals) states that Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule 2001 procedure is not applicable but at the same time does not go into the question of validity of Annexure-I or the cancellation of Annexure-I. It is, not understood how the show cause notice could be issued demanding duty without proceedings from the time of issue of show cause notice to adjudication to the Commissioner (Appeals) order, the Annexure-I is proposed to be cancelled. Annexure-I which clearly granted exemption to the appellants has not been cancelled. Therefore, the demand of duty against the appellants and imposition of penalty is not legal - Decided partly in favour of assessee.
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2015 (1) TMI 127
Denial of refund claim - Unjust enrichment - amount deposited during investigation - and amount of pre-deposit - Held that:- Ruling of the Hon'ble Apex Court in the case of Sahakari Khand Udyog Mandal (2005 (3) TMI 116 - SUPREME COURT OF INDIA) is not applicable in the facts of this case, the facts being totally different and there is no finding in this case that the appellant have collected the disputed amount from anybody. Secondly, I find that so far the amount of ₹ 6 lakhs deposited during the investigation is concerned, the said amount was paid under protest and also relying on the ruling of this Tribunal in the case of Plas Pack Industries (2004 (2) TMI 125 - CESTAT, MUMBAI) wherein it was held that bar of unjust enrichment is not attracted. So far the amount of ₹ 4 lakhs deposited as pre-deposit under Section 35G of the Act following the Hon'ble Bombay High Court's decision in the case of Suvidhe Ltd. (1996 (2) TMI 136 - HIGH COURT OF JUDICATURE AT BOMBAY), I hold that the doctrine of unjust enrichment is not attracted on the said amount. - order of the Commissioner (Appeals) as cryptic and non-speaking as there is no finding recorded and there is failure to exercise his power, as the Commissioner (Appeals) has failed to make any enquiry regarding the ground of unjust enrichment alleged by the Revenue. - Refund allowed - Decided in favour of assesse.
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2015 (1) TMI 126
Confiscation of goods - Discrepancy in the weight of goods mentioned in the invoice - Statement of Shri Roop Chand, authorised representative was recorded and it was explained by him that the difference of 5 MT is on account of wrong recording of weight by the computerised slip. He explained that the weight was wrongly taken as 22.310 MT instead of 27.310 MT which is due to mis-print in the figure of computer kanta in gross weight - Held that:- Discrepancy in the weight of the ingots was explained by authorised representative, immediately after the seizure. The same occurred on account of misleading of the computerised weight, which can be on account of a human error. As such, by extending the benefit of doubt I set aside the impugned order in so far the same relates to confiscation of goods and truck and the imposition of penalty on the appellant - Decided in favour of assesse.
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2015 (1) TMI 125
Maintainability of appeal - Order received in form of letter - Held that:- Since the communication is in the form of a letter, same cannot be considered to be an order, required to be challenged before Commissioner (Appeals). Each and every communication/letter of the Revenue officer cannot be treated as an order. As such, I fully agree with the Commissioner (Appeals) that the said letter of Additional Commissioner is not an order required to be challenged before Commissioner (Appeals). - Letters, lower authorities have demanded interest on the confirmed demands. The appellant is at liberty to approach the department/proper officer for issuance of show cause notice for confirmation of demand and for proper adjudication of the same in terms of law declared by the Hon’ble Delhi High Court in the case of Kwality Ice Cream v. Union of India reported as [2012 (1) TMI 88 - Delhi High Court]. - Decided against Assesse.
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2015 (1) TMI 124
Denial of refund claim - Bar of limitation - Declaration for availing cevant credit on capital goods was not filed timely - Held that:- In this case it is not disputed the appellant has not filed a declaration. The only reason for denial of credit is that the declaration filed is late and no application for condonation of delay has been filed. By Circular No. 441/7/1999-CX, dated 23-2-1999 it has been clarified by the Board that credit cannot be denied on account of merely procedural lapse. In this case, it is not in dispute that the appellant has not filed proper declaration to avail Cenvat credit and duty has not been paid. In these circumstances, although there is a procedural lapse in non-filing of reasons for causing the delay in filing the declaration, that does not amount to that they are not entitled to take credit. In these circumstances, the appellant is entitled to take credit on these capital goods. Consequently, the reversal of the credit was not required. If at all amount has been reversed, in that case the appellant is entitled to refund claim. - Decided in favour of assesse.
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2015 (1) TMI 123
Refund claim - Unjust enrichment - Duty paid under protest - Issue decided in favour of assessee by Tribunal - Refund barred by limitation - Held that:- On perusal of the record, this Tribunal held that the respondent are not required to pay duty on notional interest for the advances received from the buyers on 17-10-2003 and refund claim was filed on 1-12-2003 and same was filed within time as issue has been settled by the Tribunal on 17-10-2003. As per the decision of the Hon’ble Supreme Court in the case of MRF Ltd. [2004 (1) TMI 79 - SUPREME COURT OF INDIA] wherein the Hon’ble Apex Court held that time limit for refund claim starts from the date when the issue has been settled. Therefore, I hold that refund claim filed by the respondent was within time. Further, I find the issue of unjust enrichment has been examined by the Commissioner (Appeals) and has held that the Chartered Accountant certificate has been produced and gate passes and invoices produced by the respondent to prove that duty has been paid under protest and has not been recovered from the buyers. I hold that the respondent is also able to pass the bar of unjust enrichment. - Decided against Revenue.
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2015 (1) TMI 122
Refund claim - Amount deposited during the course of investigation - Authorities rejected claim as premature - Held that:- In the case of Nelco Ltd. (2001 (1) TMI 102 - HIGH COURT OF JUDICATURE AT BOMBAY), the Hon’ble High Court of Bombay has held that in case of remand matter, Revenue is not entitled to hold on to the amount deposited by the assessee during the course of investigation as pre-deposit. The said view has been affirmed by the Hon’ble Apex Court. Therefore, I hold that the refund claim filed by the appellant is not premature and lower authorities is required to refund the amount of pre-deposit made by the appellant immediately. In these circumstances, I set aside the impugned order - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (1) TMI 135
Refund of the Purchase tax - Sales tax paid on purchase of raw materials by it from M/s Tata Motors Limited - Payment of interest upon the refund amount – Whether the declaration that petitioner's right to claim refund of Purchase tax is not dependent upon issuance of Excess Demand Notice under Section 42 of the Bihar Finances Act, 1981 – Held that:- The petitioner contended that they have purchased tax i.e. sales tax on purchase of raw materials to the respondent State - already refund applications are preferred by the petitioner for different years before the Joint Commissioner of Commercial Taxes (Administration) has raised certain objections which have also been replied by the petitioner - the petitioner may be sure in succeeding the refund applications pending before respondent no. 2 and howsoever tall may be the claim of the petitioner, but respondent no. 2 has yet to decide these refund applications - Respondent no. 2 is directed to decide the refund applications preferred by the petitioner for different years at the earliest, as expeditiously as possible and practicable, preferably within a period of twelve weeks from the date of receipt of a copy of the order of this Court.
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2015 (1) TMI 134
Validity of requirement to deposit 10% of total value of seized goods in cash and 30% by way of bank guarantee – Seizure of truck on account of non-furnishing of documents – Held that:- After some argument, applicant as well as revenue agreed that the applicant shall furnish security to the extent of ₹ 2 lakhs only in cash and the remaining security of 30% in the form of personal guarantee of the proprietor of the applicant firm – thus, the order of the Tribunal dated 11.12.2014 is modified and it is provided that the goods shall be released in favour of the applicant on furnishing cash security of ₹ 2 lakhs only in lump sum and the security for the remaining amount of 30% by way of personal guarantee of the proprietor of the applicant firm – Decided partly in favour of petitioner.
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2015 (1) TMI 133
Correctness of the condition of pre-deposit imposed by the Appellate Authority - Waiver of pre-deposit by Tribunal under Gujarat Value Added Tax - Held that:- In ANILKUMAR Versus STATE OF GUJARAT [2014 (4) TMI 730 - GUJARAT HIGH COURT] it has been held that the Tribunal committed serious error in examining the appellant’s grievances on the merits of the order of assessment - the Appellate Commissioner exercised such powers and required the appellant to deposit 25% of the amount confirmed by the adjudicating authority - when the appellant failed to fulfill such requirement, his appeal came to be dismissed - the appellant had preferred appeal before the Tribunal - The scope of the appeal before the Tribunal had to be limited to the question of finding out whether the order passed by the Commissioner insisting on the appellant depositing certain amount by way of pre deposit was valid or not and resultantly, his decision to reject such an appeal for noncompliance with such requirement was correct or no - there was no prayer for setting aside the appellate order of imposing condition and subsequently, dismissing his appeal when he failed to fulfill such condition - the Tribunal could have either permitted the appellant to suitably amend the prayer or if the appellant was not willing to do so, dismiss his appeal as not maintainable - the Tribunal could not have bypassed the FAA and statutory requirement of pre-deposit, unless it was waived by an order in writing – thus, the order of the Tribunal is reversed – Decided in favour of revenue.
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2015 (1) TMI 132
Process amounts to manufacture or not - Whether transformation of noncommercial underground raw water into packaged drinking water amounted to "manufacture" as defined u/s 2(30) of the Assam Value Added Tax Act, 2003 and u/s 2(22) of the Assam General Sales Tax Act, 1993 or not – Held that:- Following the decision in Ujagar Prints v. Union of India [1989 (1) TMI 122 - SUPREME Court] -while the principle for determining whether a process amounts to "manufacturing" or not, is well-known, namely, when a distinct and new article emerges as a result of the process, it can be held that manufacturing is involved, there are border line cases where either conclusion can be reached - only such processes amount to manufacture as have impact on identity, nature and character of goods and not every process which may bring about some change in quality. The prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes - The principles are clear - But difficulties arise in their application in individual cases - There might be borderline cases where either conclusion with equal justification be reached - Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture'- though the raw water is subjected to the process of purification, it continues to be water - Its character and use remains the same though quality has been improved - It cannot be held that a new and distinct commercial commodity has emerged on account of the process undertaken - every process which may bring about some change cannot be treated to be manufacturing - The identity of the original commodity must be lost and instead a new identity must merge – thus, there is no ground to interfere in the order - Decided against petitioner.
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