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TMI Tax Updates - e-Newsletter
January 8, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Income tax settlement commission does not have the power to direct a special audit under section 142(2A) in the course of settlement proceedings under Chapter XIX-A of the said Act - HC
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Disallowance of discount on sale of car to various customers - assessee had granted discount to various customers on the sale of several model of the cars traded by the assessee. These transactions cannot be held as sham or not genuine. - AT
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Disallowance u/s 40A(3) - purchasing material for old father on cash payments - assessee and his son were acting in the relationship of principal and agent and the impugned cash payments are clearly covered under exception carved out by rule 6DD(k). - AT
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TDS u/s 194J - The Samiti is required to contribute as per Section 18A of the Rajasthan Agricultural Marketing Act, 1961, which is a certain percentage of its income and is obligatory on the part of assessee. Therefore, no TDS is liable to be deducted U/s 194C and 194J of the Act. - AT
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Estimation of income done by AO at 1% of the turnover - assessee’s business profits or losses fluctuate on year to year basis. There is no need to reject the Books of Accounts which are maintained and on which defects are not pointed out so as to reject them - AT
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Once it is established that the concerned sub-contract work was actually done or executed and this fact was accepted even by the A.O. by allowing partly the sub-contract expenses, no disallowance on account of sub-contract expenses can be made on the ground that the expenses so incurred by the assessee are excessive or unreasonable - AT
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Unexplained investment u/s 69B - any investment made during the earlier years including the advances made, cannot be added as unexplained investment merely because that property was got registered during the current year - AT
Customs
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Denial of SAD exemption on the imported LPG through high sea sales - demand of SAD on the imported goods is not sustainable. - AT
DGFT
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Permission for export of Finished Leather, Wet Blue and EI Tanned Leather through ICDs. - Public Notice
Service Tax
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Rejection of VCES - Levy of penalty - wavier u/s 80 - appellant had voluntarily paid the service tax dues alongwith interest and penalty equivalent to 25% of the tax on 30.10.2012 - Rejection of their declaration for immunity of interest and penalty under VCES Scheme is also found to be proper - AT
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Levy of penalty - Waiver u/s 80 - it is seen that whatever tax is paid by the appellant is available to them as Cenvat credit. In such a situation, being a big company, we are of the view that the appellant had no intention to avoid payment of service tax which would have been available to them as Cenvat credit and non payment would not result in any financial benefit - penalty waived - AT
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Refund claim - services used for export of goods - Notification No. 41/2007-ST - it clearly appears that such conditions are only to ascertain the nexus between the services and export goods. If, with other corroborative documents, the same purpose is served as mention in the Conditions, the refund should be allowed. - AT
Central Excise
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Valuation of goods - appellant had not passed the cash discount to their customers - Cash discounts for prompt payment of price of goods on delivery, are admissible in arriving at the assessable value if they are available to all buyers - AT
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Extended period of limitation - allegation that respondent had undervalued the goods manufactured for STPL on job work basis. - When all facts are within the knowledge of the department, they ought to have immediately informed the assessee if there was any shortcoming in the declaration of price or valuation of goods. - demand set aside - AT
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100% EOU - DTA sale of textile articles - exemption from payment of CVD - The duty payable on goods produced and cleared by a 100% EOU is to be seen in terms of provisions of Section 3(1) and while calculating this duty, the CVD component is to be calculated on the basis of excise duty payable on such products produced in India. - AT
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CENVAT Credit of Free supply - MRP based valuation - manufacture of razor and razor blades - inclusion of duty free blades and availing Cenvat Credit - Equating such free supply to exempted clearance is untenable as already explained - credit allowed - AT
Case Laws:
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Income Tax
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2016 (1) TMI 256
Powers of income tax settlement commission - whether the income tax settlement commission has the power to direct a special audit under section 142 (2A) in exercise of its power vested in section 245F of the Income Tax Act, 1961? - Held that:- The exclusive jurisdiction of the settlement commission to exercise the powers and perform the functions of an income tax authority, in terms of section 245F(2) of the said Act, is to be exercised and performed for the purpose of settlement of the case under Chapter XIX-A and not for assessment under Chapter XIV. That being the case, the powers and functions which are in the exclusive jurisdiction of the settlement commission are circumscribed by the object and role which has been ascribed to the settlement commission, which is to settle the case in terms of the procedure stipulated in Chapter XIX-A. Since assessment of the type contemplated under section 143(3) is outside the purview of settlement proceedings, a special audit under section 142(2A), which is in aid of assessment, would also be beyond the scope of settlement proceedings. The other decisions referred to by the learned counsel for the revenue do not militate against the view we have taken. In sum, we hold that the income tax settlement commission does not have the power to direct a special audit under section 142(2A) in the course of settlement proceedings under Chapter XIX-A of the said Act. Consequently, the impugned order dated 26.04.2013, to the extent it directs the conduct of a special audit, is quashed. The matter be placed before the settlement commission for further consideration of the petitioners’ settlement applications in accordance with the prescribed procedure under Chapter XIX-A. The writ petition is allowed to the aforesaid extent. We are making it clear that we have not commented upon the merits of the settlement applications.
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2016 (1) TMI 255
Rejection of stay petition - Held that:- The petitioner is directed to pay 30% of the demand made by the authority concerned. Since the bank accounts of the petitioner are attached, the authority concerned is permitted to realise 30% of the demand and directed to raise the attachment forthwith made on the bank accounts of the petitioner. The second respondent Appellate Authority is directed to dispose of the appeal filed by the petitioner on merits and in accordance with law, after affording due opportunity of personal hearing to the petitioner as expeditiously as possible. Upon realisation of 30% demand as stated above, no further recovery shall be made till the disposal of the appeal by the second respondent.
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2016 (1) TMI 254
Penalty under Section 271(1)(c) - Held that:- In the instant case, there is no finding of the Assessing Officer that the details supplied by the assessee in its return was inaccurate, incorrect, erroneous or false. In the absence of any finding of this nature, the question of imposing penalty under Section 271(1)(c) on the mere making of the claim could not arise nor such imposition of penalty would be sustainable in law. In our opinion, a mere making of the claim for certain deductions by itself would not amount to furnishing inaccurate particulars regarding the income of the assessee. Commissioner of Income Tax Vs. Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) - Decided in favour of assessee.
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2016 (1) TMI 253
Treatment of capital gains as business income - Held that:- There is no dispute that in the Assessment Years 2004-05, 2006-07 & 2007-08 the STCG/LTCG have been assessed as such while making the order under section 143(3) of the Act. We also find that the facts and issues before us are identical to the facts considered in earlier assessment years. Therefore, in our considered opinion on identical set of facts when the law has not changed the Revenue Authorities should not take a different view. This is against the rule of consistency as laid down by the Hon’ble Supreme Court in the case of “Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax” [1991 (11) TMI 2 - SUPREME Court]. Treatment to all gains from PMS as income from business - Held that:- Respectfully following the decision of the Hon’ble High Court of Delhi (2014 (5) TMI 18 - DELHI HIGH COURT), we direct the AO to treat the gains under the head ‘STCG/LTCG’. - Decided in favour of assessee. Additions made by the AO by treating exempt profit on sale of agricultural land as taxable income - Held that:- Since the population of village Ramshej where the impugned land is situated is only 2929 as per the report of the Tahasildar, in our understanding of law the said land has to be treated as agricultural land outside the purview of the definition of capital asset. We accordingly set aside the finding of the Ld. CIT(A) and direct the AO to delete the addition - Decided in favour of assessee.
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2016 (1) TMI 252
Penalty levied by the AO u/s 271(1)(c) - disallowance of license expenditure - CIT(A) deleted the penalty - Held that:- There is no dispute that the assessee has furnished all the particulars relating to the payment made to M/s GDS. There is also no dispute with regard to the fact that the assessee has already been using the trade mark and technical knowhow for the past several years by payment of annual royalty. By way of an amendment agreement, the assessee has agreed to make a lumpsum payment instead of annual payment. Accordingly, the assessee has entertained the view that the same is allowable as revenue expenditure. However, the AO has taken the view that the same is capital in nature, since the benefit of expenditure has spread for a period of about 50 years. The Ld A.R submitted that the view taken by the assessee finds support from the subsequent decision rendered by the Hon'ble Bombay High Court in the case of Essel Propack Ltd (2010 (3) TMI 293 - BOMBAY HIGH COURT). Before us, the assessee also placed reliance on the decisions rendered by Hon'ble Supreme Court in the case of Alembic Chemical works Co. Ltd (1989 (3) TMI 5 - SUPREME Court ); Assam Bengal Cement Vs. CIT (1954 (11) TMI 2 - SUPREME Court ), M.K. Bros Vs. CIT (1972 (8) TMI 5 - SUPREME Court ). Thus, we notice that the assessee has made a claim on the basis of certain judicial pronouncements and the same was not acceptable to the AO. Thus, the impugned issue becomes debatable issue. Accordingly, we are of the view that, merely because the claim of the assessee was not acceptable to the tax authorities, the disallowance made on that basis will not give rise to concealment of particulars of income or furnishing of inaccurate particulars of income. Accordingly, we uphold the view taken by Ld CIT(A). - Decided in favour of assessee.
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2016 (1) TMI 251
Denial of exemption claimed u/s.10B on export proceeds received after stipulated period and foreign exchange gains - Held that:- At the outset, RBI is the competent authority to give special permission in writing to the assessee to receive sale proceeds after the said date. In the present case ₹ 48,23,426/- was received in October, 2008 and February 2009, after a period of six months from the end of the previous year and the circular of the RBI is effective from 2011 onwards in respect of inward remittances and not retrospectively. Considering the above facts, we are inclined to uphold the order of the Commissioner of Income Tax (Appeals). The ld. AO also excluded from the export turnover foreign exchange gain of ₹ 2,98,953/- for the computation of deduction u/s.10B as assessee could not explain the source for foreign exchange gains attributed to units and the ld.CIT(A) has confirmed the addition. Before us, the Authorised Representative has not submitted any particulars but pleaded for consideration of foreign exchange gains for deduction u/s.10B and it is also apparent from the facts of the case that ld.AR could not substantiate his ground with any material evidence. Therefore, we are inclined to uphold the order of the ld. Commissioner of Income Tax (Appeals) on this ground also. - Decided against assessee Disallowance u/s.14A read with Rule 8D - Held that:- We find that facts and circumstances of the present case pertaining to holding and subsidiary company of two different countries, and which needs to be verified with the quantum of share holding and DTA agreement for dividend income. We are of the considered opinion that matter needs to be re-examined and set aside the issue in dispute to the file of the Assessing Officer. The Assessing Officer is directed to allow the claim after considering the satisfactory explanations and material evidence for dividend income. - Decided in favour of assessee for statistical purposes. Disallowance u/s.40(a) (ia) - Non deduction of TDS on contract payments - Held that:- the addition u/s.40a(ia) of the Act can be made if both the conditions are satisfied in respect of applicability of TDS under chapter XVII B and tax was not deducted by the assessee. In the present case, the assessee had deducted TDS at a lower rate, on perusing the case laws and decisions relied by the ld. counsel. We found that expenses are not liable to be disallowed u/s.40(a)(ia) of the Act on account of short deduction of tax at source. The assessee has further complied with both the limbs of applicability of provisions by deducting TDS on payments and depositing the same with the Government, which is not disputed by the Assessing Officer. We are of the opinion, that if any difference in strategy of taxability or nature of payment arises, in such circumstances alternatively, the Assessing Officer can treat the assessee as defaulter u/s.201 of the Act but not by invoking provisions u/s.40(a)(ia) of the Act. It is also apparent from facts of the case the assessee has deducted TDS and remitted to the treasury and we direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee. Disallowance of interior decoration works - Held that:- The expenditure incurred by the assessee is only to upkeep the business enterprises to maintain wear and tear but not to increase the productivity or manufacturing activity. The change of flooring and other connected works will only improve the brand image which is indeed required for such global company. The legal position of such expenditure when it is dismantled cannot be rebuild or used for any other purpose as held by jurisdictional Madras High Court in the case of CIT vs. Amrutanjan Finance Ltd. [2011 (8) TMI 320 - MADRAS HIGH COURT] and Thiru Arooran Sugars Ltd vs. DCIT [2013 (2) TMI 450 - Madras High Court ], were distinction has been made between capital and revenue expenditure and allowed as current repairs in the previous year. Applying the principles of law of Jurisdictional High Court. We are of the opinion that such expenditure has to treated as revenue expenditure and we direct the Assessing Officer to allow the deduction accordingly. - Decided in favour of assessee.
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2016 (1) TMI 250
Disallowance of discount on sale of car to various customers - Held that:- It is a normal practice in the business of selling new cars by the dealers of the car to grant discount in order to off-load stock and also to meet the target fixed by the manufacturers of the car. The discount is offered according to the market trends, competition by the other car manufacturers and also due various other marketing strategy and financial policies of the assessee. It is the prerogative of the assessee to decide as to how it has to conduct its business in order to survive and flourish in the market which cannot be questioned by the Revenue. The Revenue cannot dictate terms to the assessee on the issue of granting discount and making disallowance unless the genuineness of the transactions is doubted or established to be sham. In the given case before us that the assessee had granted discount to various customers on the sale of several model of the cars traded by the assessee. These transactions cannot be held as sham or not genuine. The Revenue has not brought out any convincing reasons to treat these transactions as not genuine. Therefore, we do not subscribe to the view of the Revenue for making such disallowances. - Decided in favour of assessee
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2016 (1) TMI 249
Disallowance of brokerage charges paid on purchase of land - CIT(A) restricted addtion - Held that:- The facts would show that the genuineness of the transaction; the existence of the party etc. stood accepted by the AO himself as brokerage to the extract of 2% has been allowed. However the basis for arbitrarily restricting the same based on suspicions to the extent of 2% as opposed to the claim of 2.8% duly supported by unrebutted evidences and facts on record is absent on record. In the absence of any material justifying the restriction to 2% in the facts of the case and considering the legal position thereon, of the view that the finding arrived at by the First Appellate Authority deserves to be upheld. The said order was pronounced on the date of hearing itself in the open Court. - Decided against revenue
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2016 (1) TMI 248
Disallowance u/s 40A(3) - purchasing material for old father on cash payments - Held that:- The assessee is an aged person of around 80 years and was doing business of Iron and Steel, his son was also in the same trade; both are assessed to income tax. Except drawing an assumed adverse inference due to the nonattendance of the assessee and his son in remand proceedings, existence and validity of the agreement dated 01-04-2008 has not been disputed or denied by the lower authorities with reference to material available on record and confirmation. Thus on the basis of an inference and without considering the material available on record, relationship between principal and agent has been denied. The reasons for non-attendance have been duly explained by the assessee before ld. AO being ailment of father and son which has also not been disputed. In our considered view the interpretation of the agreement indicates the son was appointed as an agent to perform the work of purchasing material for old father on cash payments. No circumstantial infirmity can be attributed if an aged person who desires to remain in gainful avocation appoints his son as an agent to render necessary help. In our considered view the agreement cannot be ignored on ifs and buts; the same clearly stipulates the relationship between the principal and agent which cannot be ruled out on implication more so when transactions are on day to day basis. The purchases and sales are not in any way doubted and fully held to be genuine by both the authorities below. Thus in view of the facts and circumstances of the case, we hold that the assessee and his son were acting in the relationship of principal and agent and the impugned cash payments are clearly covered under exception carved out by rule 6DD(k). Respectfully following the decision of Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs. ITO (2006 (11) TMI 117 - RAJASTHAN HIGH COURT ) we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee
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2016 (1) TMI 247
TDS u/s 194J - payments made by the assessee to RSAMB on account of statutory contribution, against which the assessee received professional and technical services from RSAMB - Held that:- It is found that there is no contractor-contractee relationship between the assessee and the RSAMB. The RSAMB is a parental body of Krishi Upaj Mandi Samiti. The Krishi Upaj Mandi Samiti is required to make a contribution out of its income to the marketing board and the marketing board is required to utilize these receipts on improvement of the agricultural market in the State, which is owned by the Krishi Upaj Mandi Samiti. The Marketing Board also gives aid and grant to Krishi Upaj Mandi Samiti to enable them to discharge their duties and functions satisfactorily. The CBDT Circular 741 dated 18.04.1996, Circular No. 745 dated 19.07.1996, Circular No. 22/68-ITB dated March 28/May 13, 1968 are also squarely applicable in the case of the assessee. The Samiti is required to contribute as per Section 18A of the Rajasthan Agricultural Marketing Act, 1961, which is a certain percentage of its income and is obligatory on the part of assessee. Therefore, no TDS is liable to be deducted U/s 194C and 194J of the Act. - Decided in favour of assessee.
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2016 (1) TMI 246
Disallowance of Bad Advances written off - Held that:- We are satisfied that on the facts as pleaded by the Assessee before the AO which were not controverted by the AO/CIT(A), the loss in question was incidental to the business of the Assessee. The reason assigned by the AO was that there was negligence on the part of the Assessee in not keeping proper records and this fact influenced his decision in not allowing the claim of the Assessee. In our view once the fact that the loss is incidental to Assessee’s business is accepted than the strict evidence of irrecoverability of the losses in question cannot be insisted upon. The circumstances of the case show that the Assessee made a provision in the books of accounts in the year 2000 and claimed the loss only in the year 2004. The company after review of the books of accounts and after due diligence and discussion with the statutory auditors came to the conclusion that detailed reconciliation and accounting adjustments of these advances was no longer possible due to lack of information and non-availability of old records in the year 2000 itself but waited for 4 years before writing off the loss in the year 2004-05. We are of the view in the given facts and circumstances of the case, the deduction claimed ought to have been allowed. - Decided in favour of assessee Addition on excess provision - CIT(A) deleted the addition - Held that:- Law is well settled that under the mercantile system of accounting it is only expenditure which has accrued to the Assessee during the previous year that can be allowed as a deduction. Originally the bill discounting charges were estimated at ₹ 90,39,137. On this basis the Assessee was justified in considering the expenditure on account of bill discounting charges at ₹ 90,39,137. However during the previous year relevant to AY 04-05 i.e., on 22.10.2003, it turned out that the actual liability towards bill discounting charges was only ₹ 10,29,375. Therefore in its books of accounts for the previous year, the Assessee ought to have reversed the excess provision for liability made. In other words the actual liability at ₹ 80,09,822 crystalized during the previous year relevant to AY 04-05 itself and the Assessee therefore could not have claimed over and above this sum as deduction in computing its income from business. It is a different issue that the Assessee offered to tax the sum of ₹ 10,29,375 in AY 05-06. We therefore restore the order of the AO in this regard. We however direct that the sum of ₹ 10,29,375 should be excluded from the taxable income of AY 05- 06, as not doing so would amount to double taxation of same income, which is impermissible in law. - Decided in favour of revenue Consideration of sale of property at Ghatkopar as a slum sale u/s 50B - CIT(A) directed not to be treated as slump sale - Held that:- We have perused the agreements by which the Assessee sold the property at Ghatkopar to Kalapataru Homes Ltd. It is clear from the reading of those agreements and schedule or property transferred referred to in those agreements that what was sold was land and there was neither any plant, machinery, furniture & fixtures etc. There was neither building in existence at the time when the land was sold by the Assessee. The evidence on record clearly shows that ₹ 54,80,769/- was received from M/s. Asiad Trading & Mfg. Co. Towards sale of old scrapped & junked items of plant & machinery, furniture & fixtures and stores items that were lying in the land at Ghatkopar. The value of the building that existed at one point of time prior to the transfer of the land by the Assessee during the previous year, was not subject matter nor could be subject matter of transfer by the Assessee, as the building did not exist. The findings of the AO to the contrary are without any basis and contrary to the material on record. We therefore hold that the CIT(A) was justified in his conclusions - Decided in favour of assessee
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2016 (1) TMI 245
Disallowance u/s 40(a)(ia) - payment of transport charges - Held that:- As decided in assessee's own case for the assessment year 2008-09 nature of between assessee & M/s. Sachin Cargo Movers, C&F Agent, was for reimbursement of expenses. Besides, the TDS thereon has been deducted by the agent as mentioned above. By now, it has been settled by various Courts that reimbursement of expenses are not liable for deduction u/s 40(a)(ia) of the Act. In any case the agent has deducted the TDS a fact not disputed by revenue, in this eventuality also the case laws cited by the ld. AR supports this proposition. In view thereof, we hold that the expenses paid to M/s. Sachin Cargo Movers, C&F Agent, being for reimbursement of expenses cannot be disallowed u/s 40(a)(ia) - Decided in favour of assessee. Assessee is entitled to deduction under section 10BA for this year on non duty draw back DEPB claim and ld. CIT (A) has rightly allowed the same to assessee. Delay in TDS payment on job work - Held that:- It has not been disputed that the requisite TDS was paid by assessee before due date of return. In view thereof this claim of the assessee is allowed. Increase in valuation of the closing stock - whether to be allowed in next year as increase in opening stock in next year i.e. 2010-11 - Held that:- It has not been disputed that the assessee has not claimed any benefit by increase in valuation of stock in subsequent year. Hence, the addition becomes revenue neutral. Consequently, respectfully following the decision of Hon'ble Supreme Court in the case of CIT vs. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT ) the addition being tax neutral and the assessee having not derived any benefit, the addition is deleted.
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2016 (1) TMI 244
Status of firm - copy of partnership deed has not furnished alongwith return of income which is mandatory as per Section 184(2) - Whether the certified copy of the partnership deed was required to be filed along with the return of income or whether the same could be filed before the AO before he concludes the assessment proceedings? - Held that:- Following the coordinate Bench in the case of Ishar Das Sahni & Sons vs. DCIT (2000 (5) TMI 167 - ITAT DELHI-A ), we find no infirmity in the order of the ld. CIT(A). We therefore uphold the status of the assessee as a “firm” as the assessee has complied with the provisions of Section 184(2) of the Act. Consequent thereto, the disallowance of ₹ 8,23,506/- on account of claim of interest and remunerations paid to partners doesn’t stand and the same should be allowed in the hands of the assessee taxed in the status of the firm.- Decided against revenue Disallowance on account of telephone expense - CIT(A) restricted disallowance - Held that:- The Assessing Officer disallowed telephone expenses of ₹ 81,336/-on the ground that the telephones were not in the name of the assessee. One of the mobile was in the name of Suraj Medical (Prop. Lucky Batla). Similarly, other telephones were also not in the name of assessee. The telephones were in the name of persons who were doing their own business and primary use of telephone was obviously for their own purposes. However, the disallowance has to be reasonable, thus a disallowance of ₹ 50,000/- is reasonable. - Decided against revenue
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2016 (1) TMI 243
Eligibility of deduction u/s. 54 - Held that:- As seen from the so called revised plan placed there is a cellar floor consisting of 26.37 Sq. Mtrs., which is not reported in the valuation report stated above. In order to examine the dimensions, they were stated in Sq. Mts and there is variation in design it self. The ground floor and first floor are of similar dimensions, whereas second floor is lesser than that. The ground and first floor was mentioned as 302.35 Sq. Mtrs., whereas the second floor area was shown at 231.35 Sq. Mtrs. In the valuation report the ground floor is different from first and second which are of same dimensions. Thus, there is variation in the building structure itself from the valuation report to the so called plan placed on record. Not only that, the plot area on which building was constructed as per the original sale deed is triangular in nature, whereas the present area is almost like a rectangle. From where the additional area has come in the revised plans placed on record was not explained when questioned. Therefore, as requested by assessee, only site inspection can confirm whether assessee has indeed constructed altogether a new house or only made extension to the old bulding. The variations noted above also require deeper examination physically. Therefore, AO is directed to give an opportunity to assessee, take the technical people like Valuation Officers of the department and examine whether the structure as claimed by assessee is old or new, so as to consider the eligibility of deduction u/s. 54. Undisclosed cash deposited into bank account - Unexplained investment - Held that:- There is no nexus established with reference to the sale transaction being contended by assessee. In view of this, we are unable to accept assessee’s contentions that assessee has received any consideration in cash over and above the amount, which was originally returned by assessee in the return of income. As rightly noticed by the AO, assessee in fact has filed return on 20-03-2012 belatedly when the return was due in September, 2010. The belated return itself indicate that sufficient time was taken by assessee to decide the matters. This do indicate that there is no nexus with the cash deposits in the bank a/c to that of sale consideration received by assessee which was originally disclosed in the computation of income. Since assessee has not furnished any correlation with reference to sale of property, the cash deposits made into the bank a/c are rightly considered as ‘Unexplained investment’ by the AO. Since assessee is sufficiently aged and has a grown up son practicing as a doctor and also assessee receives money from assessee’s husband who is working in Saudi and also owns properties, the facts in the case of Smt. P.K. Noorjehan (1997 (1) TMI 6 - SUPREME Court), does not apply to the fact situation in assessee’s case. It is for assessee to establish the source of funds and since there is failure on the part of assessee to explain sources of deposits, the provisions of the Act are automatically invoked. We do not see any reason to interfere with the orders of AO and CIT(A) - Decided against assessee
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2016 (1) TMI 242
Estimation of income done by AO at 1% of the turnover - CIT(A) cancelled the estimation - Held that:- The opinion that CIT(A) is correct in setting aside the estimation of income. Even though certain mistakes are pointed out by the AO, in our opinion, they are not good enough to reject the Books of Accounts. In fact as contested by assessee, many of them are considered on wrong perceptions. AO was of the opinion that the stock purchased with cartel group are entered in the stock register, whereas it was found that they were not entered in the stock register and what assessee has accounted was only its share of purchases through the cartel. There are explanations given by assessee for separate entries in different ink and how assessee has suffered losses in its manufacturing activity. With reference to purchase of goods also, since none of the transactions are there with any associate or group companies or firms, as rightly pointed out by the CIT(A) the profits earned by the third parties should not be basis for disallowing cost of purchase in assessee’s hands. Be that as it may, since assessee’s books of accounts are maintained and audited and most of the additions are made on the basis of books of accounts other than this estimation of income, we are of the opinion that Revenue has not made out proper case for rejection of books of accounts and estimating the income at 1%. Even the Revenue in Ground No. 4 accepts that percentage of estimation of income defers from year to year depending on the circumstances of the case. This also indicates that assessee’s business profits or losses also fluctuate on year to year basis. There is no need to reject the Books of Accounts which are maintained and on which defects are not pointed out so as to reject them. In view of this, we uphold the order of CIT(A) - Decided against revenue
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2016 (1) TMI 241
Disallowance for deduction under section 80IA - whether the assessee is entitled to make a new claim for deduction under section 80IA in the returns of income filed in response to notices issued under section 153A? - Held that:- Mumbai Bench of this Tribunal in the case of DCIT vs. Eversmile Construction Co. P. Ltd., ( 2014 (4) TMI 347 - ITAT MUMBAI ), wherein while dealing with a similar issue, the main features of the relevant provisions were noticed by the Tribunal and after analysing the same, it was held by the Tribunal that any deduction claimed by the assessee in the proceedings under section 153A could not be rejected simply on the ground that it was not claimed in the original assessment. This issue thus is squarely covered in favour of the assessee inter alia, by the decision of Hon’ble Bombay High Court in the case of ABG Heavy Industries Ltd., (2010 (2) TMI 108 - BOMBAY HIGH COURT ), which has been followed by the Coordinate Bench of this Tribunal in various cases and respectfully following the same, we uphold the impugned order of the Ld. CIT(A) holding that the assessee is entitled for deduction under section 80IA on merit in all the seven years under consideration. It is pertinent to note here that although this aspect of the matter relating to the assessee’s claim for deduction under section 80IA is decided by the Ld. CIT(A) vide his impugned orders in favour of the assessee in all the seven years under consideration, the department has not disputed the same for A.Ys. 2006-07, 2007-08 and 2008-09 and it is disputed only in A.Ys. 2009-10 to 2012-13. We, therefore, dismiss the grounds raised by the Revenue on this issue in its appeals for the said four years.- Decided in favour of assessee. Rejection of claim for exemption on account of agricultural income - CIT(A) deleted the addition - Held that:- On the basis of these findings recorded by him in the light of documentary evidence available on record, the Ld. CIT(A) held that the pattadar passbook relied upon by the A.O. to deny the claim of the assessee of ownership of agricultural land was irrelevant as the purpose of the same was only to facilitate taking a loan from bank and it was never a document to establish the ownership of agricultural land. He also noted that it was common practice adopted in giving agricultural lands on oral agreements and the claim of the assessee of having given its agricultural land to farmers which was duly supported by the declarations filed by the concerned farmers could not be denied merely for want of written agreement as done by the A.O. No justifiable reason to interfere with the impugned order of the Ld. CIT(A) accepting the claim of the assessee for exemption on account of agricultural income in all the four relevant years.- Decided in favour of assessee. Addition on inflation of subcontract expenses - CIT(A) deleted the addition - Held that:- held by the Ld. CIT(A), the assessee had discharged his onus to support and substantiate its claim of sub-contract expenses by establishing on evidence that the relevant work assigned to the said sub-contractors was actually executed, payments were made for the subcontract to the concerned two sub-contractors by cheque and tax was also duly deducted while making such payments. Moreover, there was no evidence brought on record by the A.O. to show that the amount of subcontract expenses allegedly inflated by the assessee had come back to it from the sub-contractors. Furthermore, as rightly pointed out by the Ld. Counsel for the assessee at the time of hearing before us, both the concerned subcontractors are not related to the assessee and once it is established that the concerned sub-contract work was actually done or executed and this fact was accepted even by the A.O. by allowing partly the sub-contract expenses, no disallowance on account of sub-contract expenses can be made on the ground that the expenses so incurred by the assessee are excessive or unreasonable. As such, considering all the facts and circumstances of the case, we find ourselves in agreement with the Ld. CIT(A) that the disallowance made by the A.O. on account of alleged inflated sub-contract expenses by the assessee in the relevant two years i.e., A.Ys. 2011-12 and 2012-13 was not sustainable either in law or on the facts of the case - Decided in favour of assessee.
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2016 (1) TMI 240
Unexplained investment- Held that:- is evident from the material on record that the sale consideration was at ₹ 11,40,000 which was received by the vendor. In my view mere payment of extra stamp duty to fulfil the Government norms, may not come in the line of any unexplained investment by the assessee and his brothers in purchase of property in question, unless any evidence is available with the department that the assessee and his brothers has paid any extra sum, for invoking the provisions of section 69B. In the instant case, the A.O. has made the addition on two counts i.e., (1) the sum of ₹ 3,80,000 is only an advance and (2) though, the plots were allotted in the year 2005, the registration took place in the year 2007 by paying the balance consideration. As could be seen from the allotment letter dated 30.07.2005 as well as the explanation offered by the assessee vide letter dated 07.02.2014 during the course of assessment proceedings, the registration could not take place due to mortgage of plots with the HUDA and on release of the mortgaged plots by HUDA on 31.01.2007 vide Lr.No.7676/MP2/PLG/HUDA, the registration took place on 09.03.2007. The A.O. could not produce any documentary evidence that the assessee and his brothers made unexplained investment in purchase of property. Even if at all any unexplained investment has been made by the assessee and his brothers in purchase of property, the said sum could not be brought to tax in this year as assessee purchased same in an earlier year. A.O. simply came to the conclusion that unexplained investment has been made by the assessee and his brothers in purchase of property in question in this year even though the deed itself specifies the fact of purchase in an earlier year and reasons for non-registration in that year. Even the consideration paid by assessee in advance was specified. - Decided in favour of assessee
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2016 (1) TMI 239
Assessing income from letting out of property - under the head ‘income from house property’ OR ‘income from business or profession’ - Held that:- For the assessment year 2001-02, the ITAT in its order decided the issue in favour of the Revenue by following the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Chennai Properties and Investments [2015 (5) TMI 46 - SUPREME COURT]. The very same decision of the Hon’ble Jurisdictional High Court has been reverted by the Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. v. CIT [2015 (5) TMI 46 - SUPREME COURT] thus income had to be treated as income from business and not as income from house property.- Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - Held that:- In the present case, the assessee has earned exempt dividend income of ₹ 50,611/-. The assessee has not admitted any expenses to earn the above dividend income. The Assessing Officer disallowed the expenses to the tune of ₹ 1,30,649/- by invoking section 14A r.w.r. 8D. By taking into consideration of the facts and circumstances of the present case and keeping in view of the above decision of the Hon’ble Delhi High Court in case of Joint Investments Pvt. Ltd. v. CIT [2015 (3) TMI 155 - DELHI HIGH COURT], we are of the opinion that the Assessing Officer is not justified in making excessive disallowance. Therefore, we restrict the disallowance made by the Assessing Officer to the extent of exempt income earned by the assessee and ordered accordingly. - Decided partly in favour of assessee
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2016 (1) TMI 238
Registration u/s 12AA denied - objection for refusing registration u/s 12AA is that the assessee has failed to produced the audited accounts and details about the activities - Held that:-In the present case, the main objects of the assessee-trust are only charitable objects. The assessee has distributed some books to the poor students. Simply because the details were not filed in respect of the books donated to the poor students, it cannot be said that the assessee has not carried out any charitable activities particularly when the assessee assessee is in the beginning stage of carrying on its charitable activities. Keeping in view the facts and circumstances and by following the judgment of the Hon'ble Madras High Court in M/s RJBV Vasudevan Educational & Charitable Trust( 2014 (8) TMI 207 - MADRAS HIGH COURT ), we quash the order passed by the DIT(E) and grant registration u/s 12AA of the Act to the assessee-trust. - Decided in favour of assessee
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2016 (1) TMI 237
Levy of late filing fee u/s.234E while processing the statement furnished by the assessees under Section 200A - Held that:- Similar issue was considered by this Tribunal in the case of Smt. G. Indhirani and others [2015 (7) TMI 640 - ITAT CHENNAI] wherein held Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in so far as levy of fee under Section 234E is set aside and fee levied is deleted. - Decided in favour of assessee.
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Customs
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2016 (1) TMI 275
Classification of goods - Clearance of goods without mutilation - Held that:- appellants have not disputed the classification of the goods. It is seen that appellants cleared the goods as old and used readymade garments and the goods were not mutilated. So, the demand of duty along with interest as confirmed by the Adjudicating authority is legal and proper. So, we do not find any reason to interfere the order of the Commissioner (Appeals). - Decided against assessee.
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2016 (1) TMI 274
Denial of SAD exemption on the imported LPG through high sea sales - Held that:- Appellants have imported LPG through high sea sales transactions under the Bill of Entry No. 322 dated 17.06.1998 and there is no dispute on the sale of LPG to various customers and also discharged sales tax. On identical issue the Tribunal in the case of CC, Mangalore Vs. Hindustan Petroleum Corpn. Ltd.(2006 (2) TMI 480 - CESTAT, BANGALORE), held that SAD is not leviable - Tribunal has relied on the decision of VigiromChem (P) Ltd.(2005 (8) TMI 532 - CESTAT, BANGALORE). The case on hand is identical to the above and hence by applying the above decision we hold that the demand of SAD on the imported goods is not sustainable. Accordingly, we set aside the impugned order - Decided in favour of assessee.
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Service Tax
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2016 (1) TMI 262
Rejection of VCES - Levy of penalty - wavier u/s 80 - appellant had voluntarily paid the service tax dues alongwith interest and penalty equivalent to 25% of the tax on 30.10.2012 - the appellant filed the declaration under VCES Scheme for immunity of interest and penalty before the designated authority, which was rejected. - Held that:- Rejection of their declaration for immunity of interest and penalty under VCES Scheme is also found to be proper, as the said Scheme was introduced w.e.f. 10.05.2013 only, and it pertained to tax dues pending as on 01.03.2013 only. It is observed that the Commissioner (Appeals) has considered the plea of the appellant for waiving the penalty under Section 80. Delayed payment was not due to any bonafide confusion occurring in the prevalent statue and related provisions were quite crystal clear. So their request for waiver of penalty does not survive at all as they also failed to give any reasonable cause. No relief granted to appellant - Decided against the assessee.
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2016 (1) TMI 261
Import of services - Intellectual Property of Services - appellant contended that, the service provider did not have any premises in India. The Appellant, therefore, contends that no Service Tax is payable in the instant case - Held that:- Adjudicating authority has not considered the issue of Section 66A and also the issue of striking down of the provisions of Explanation to Section 65(105) of Finance Act, 1994. He has also not considered the Board's Circular dt.26.09.2011. It is also observed that the payment of ₹ 1,57,087.00 had been made by the Appellant during the period 01.04.2006 to 30.06.2006, whereas it is not clear from the facts when the related services were rendered. All these issues and other related issues have to be examined by the Adjudicating authority. Therefore, we are constrained to remand the matter back to the Adjudicating authority. - Matter remanded back to be decided afresh.
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2016 (1) TMI 260
Levy of penalty - Waiver u/s 80 - appellant is not disputing the leviability of service tax. - Import of services - service of merchant banking in relation to external commercial borrowings (ECB) and Global Depository Receipts (GDR) - Held that:- t the appellant paid the service tax on 18.12.2007 whereas the show cause notice was issued on 11.08.2008 and adjudicated on 18.08.2011. The prompt payment of service tax even before the issue of show cause notice shows the genuineness of the appellant. It is a case of bonafide belief of the appellant that service tax was not payable. Even the interest was paid soon after the passing of the adjudication order. Most importantly, it is seen that whatever tax is paid by the appellant is available to them as Cenvat credit. In such a situation, being a big company, we are of the view that the appellant had no intention to avoid payment of service tax which would have been available to them as Cenvat credit and non payment would not result in any financial benefit. The case deserves waiver of penalty under section 80 of the Finance Act and we order so. - Penalty waived - Decided in favor of assessee.
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2016 (1) TMI 259
Refund claim - services used for export of goods - Notification No. 41/2007-ST - General Insurance Service, Goods Transport Agency Service, Port Service (Terminal Handling Charges), Custom House Agent Service, Technical Certification & Inspection Service and Storage & Warehousing Service. - nexus of input services on which refund was sought for - Held that:- one or other documents either on the basis of reference of documents or identity of the goods, it clearly establish the correlation between the input services and export goods, if that is so, then this procedural condition even if not complied with scrupulously, refund cannot be rejected. The conditions prescribed in the Notification are directory and not mandatory. Moreover from all the conditions, it clearly appears that such conditions are only to ascertain the nexus between the services and export goods. If, with other corroborative documents, the same purpose is served as mention in the Conditions, the refund should be allowed. Ld. Commissioner (Appeals) proceeded only on the ground that conditions prescribed in the Notification were not complied with, but he has not verified other corroborative documents by which nexus is otherwise established. - matter remanded back to the Original Adjudicating Authority to pass a denovo adjudication order considering our above observations.
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2016 (1) TMI 258
Levy of penalty - appellant sought to get clarification about the order of tribunal [2014 (3) TMI 1008 - CESTAT MUMBAI] regarding penalty - it was submitted that, the contention of adjudicating authority on demand of service tax was upheld by the Tribunal, therefore they did not want to repeat arguments on merits before the Tribunal in later cases and only advanced their arguments on the issue of penalty - Franchisee Services - Held that:- Para 4 of Tribunal order dt. 26.3.2014 only seeks to convey that as the case had been decided on merits by the Tribunal in its first order dt. 29.11.2006, the appellant did not want to repeat the arguments on merits. The fact that they did contest on merits is evident from the appeal filed by them which gives detailed grounds for contesting the appeal on merits. Para 4 of the order is intended to state that, during the hearing their contention on merits were not sought to be repeated.
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Central Excise
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2016 (1) TMI 273
Duty demand - Under-valuation - Imposition of penalty - Held that:- Commissioner (Appeals) has observed that assessee has informed about the merger of the units, and has submitted periodical returns, clarification and price declarations to the department. After 01/4/2000 the submission of classification and price declaration was dispensed with by the amendment brought forth in Rule 173B and 173C of erstwhile Central Excise Rules. The conclusion of the Commissioner (Appeals) in para 21 of the impugned order is that therefore, after 01/4/2000 the assessee failed to submit price declaration in respect of goods cleared to sister concern and other buyers and have suppressed the facts of comparable value. We are not able to agree with this conclusion arrived by the lower authority. It is seen from records that alongwith the declarations the appellants had enclosed copy of agreement dated 25/10/1999 entered between assessee and sister unit M/s Aksh India Ltd. The goods were supplied as per this agreement and they were filing monthly returns also. Further it is seen that the Hon'ble High Court has granted order of merger with effect from 01/04/2000. In such circumstances, we do not find any evidence to establish conscious with holding of information or suppression of facts on the part of the assessee with intention to evade payment of duty. Therefore the notice issued invoking the extended period is therefore not sustainable. In view thereof, the impugned order is liable to be set aside - Decided in favour assessee.
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2016 (1) TMI 272
Valuation of goods - appellant had not passed the cash discount to their customers but deducted the quantum of cash discount from the assessable value at the time of clearance - Held that:- Issue is no more res integra as Tribunal in the case of Purolator India Ltd. vs. Commissioner of Central Excise, Delhi - [2004 (11) TMI 208 - CESTAT, NEW DELHI] had considered similar issue and it was held against the assessee therein on the ground that the cash discount which is not passed on is to be included in the assessable value. Aggrieved by such order, the assessee therein took up the matter in Civil Appeal before the Apex Court. The Hon'ble Apex Court in their judgment dated 25.8.2015 as reported at - set aside the order of the Tribunal in so far as it rejected the contention on the cash discount - impugned order is unsustainable and liable to be set aside Cash discounts for prompt payment of price of goods on delivery, are admissible in arriving at the assessable value if they are available to all buyers. - Decided in favour of assessee.
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2016 (1) TMI 271
Denial of refund claim - Unjust enrichment - finalisation of provisional assessment - Held that:- In view of the decision of the Larger Bench of the Tribunal in the case of Panasonic Battery India Co. Ltd (2013 (9) TMI 652 - CESTAT AHMEDABAD ), unjust enrichment will not be applicable prior to 25.06.1999. The refund claim for the period on or after 25.06.1999 is required to be considered in the light of the decision of Hon'ble Gujarat High Court [2008 (10) TMI 597 - GUJARAT HIGH COURT]. - refund claim on finalization of provisional assessment under Rule 9B of the erstwhile Rules, 1944 for the period prior to 25.06.1999 cannot be rejected on the ground of unjust enrichment. Accordingly, we set aside the impugned order to the extent of rejection of refund claim of ₹ 1,01,37,561.00. We allow the refund claim for the period prior to 25.06.1999 - Matter remanded back - Decided partly in favour of assessee.
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2016 (1) TMI 270
Condonation of delay - Delay of 266 days - Held that:- delay has been explained by the applicant, stating that the applicant had a severe financial hardship and had to pledge the jewellery with the bank to raise the amount of pre-deposit as per the provisions of section 35F of the Central Excise Act, 1944. On perusal of the records, we do find so. In our considered view, though applicant has specifically not stated any other grounds in the application for condonation of delay, we also find that the issue of severe financial hardship may have contributed to delay in filing appeal. In our view the right of the appellant for statutory appeal should not be abrogated, due to delay in filing the appeal and that too for an acceptable reason - Delay condoned.
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2016 (1) TMI 269
Benefit of SSI exemption Notification No. 8/2000-CE dated 01.03.2001 - clubbing the clearance value of their Banglore unit with the clearance value of Daman unit - Imposition of penalty - Held that:- There is no dispute that the clearance value of Bangalore Unit would be clubbed with the assessee's Daman Units. The appellant had not disclosed this fact with the Department. The representative of the assessee company admitted in their statements before the investigating officers. The contention of the Learned Advocate is that the demand is barred by limitation, cannot be accepted. So, the demand of duty alongwith interest and imposition of penalty under Section 11 AC of the Central Excise Act, 1944 are justified. We allow an option to the assessee company to pay penalty 25% of the duty alongwith entire amount of duty and interest within 30 days from the date of communication of this order. The penalty on the Director, Shri Sachin Modi, is reduced to ₹ 15,000.00. The penalty imposed on Shri Parimal Naik, Factory manager is set-aside - Decided partly in favour of assessee.
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2016 (1) TMI 268
Availment of CENVAT Credit - Non maintenance of separate account - Held that:- There is no finding of the lower authorities that they have reversed the credit used on the exempted finished goods as contended by the appellants. We find that, in view of the retrospective amendment of Rule 6 (3) (b) of Cenvat Credit Rules by Finance Act, 2010, the appellants were entitled to reverse the proportionate Cenvat credit attributable to the quantum of input used in or in relation to manufacture of exempted final product. This issue is settled by the decisions of the Tribunal [2015 (10) TMI 2325 - CESTAT NEW DELHI] and the High Court [2011 (2) TMI 575 - GUJARAT HIGH COURT] - minor discrepancies on the reversal of the credit with the statement submitted by the appellant. In our considered view, the Adjudicating Authority should examine the reversal of credit - Decided in favour of assessee.
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2016 (1) TMI 267
Duty demand - Clandestine removal of goods - Shortage of goods found - Revenue contends that job work register and challans were not reliable as facts of removal to job work was not corroborated by the party during verification - Held that:- There is no such Committee or review/authorization. In 2009 by moving miscellaneous application, the Revenue wanted to regularize the original appeal filed by the Commissioner as if authorized by the Committee of Commissioners which took decision on 12.02.2009 only. We find that the misc. application filed by the Revenue has not been categorically allowed by this Tribunal. In fact, it was disposed of with an observation that such application is infructuous and does not call for any order. The reason being that at the time of consideration of an application for condonation of delay filed by the Revenue, no objection was taken on this aspect by the respondent. - appeal has not been filed in terms of the amended provisions of Section 35 F and Section 35 E. The impugned order has not been reviewed for a decision to file an appeal by the Committee of Commissioners as per the provisions applicable during the time - no reason to interfere with the order of the ld. Commissioner (Appeals) on merits. - Decided against Revenue.
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2016 (1) TMI 266
Valuation - Section 4 or 4A - respondents are engaged in the manufacture of branded chewing tobacco liable to central excise duty - Held that:- The wholesale packages are defined under Rule 2(x) of Standards of Weight and Measures (Packaged Commodities) Rules, 1977. The Tribunal further examined the definition for 'multiple piece package' under Rule 2(j) and 'retail package' under Rule 2(p) of the said rules. Since packages under which the products were sold by the respondent clearly fall within the exemption provided under Rule 34(1) (b) of the said rules, the Tribunal in the said decision held that section 4A has no application. We find that the facts of the present are similar to the one discussed above. Accordingly, we find that there is no reason to interfere with the impugned order. - Decided against Revenue.
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2016 (1) TMI 265
Extended period of limitation - allegation that respondent had undervalued the goods manufactured for STPL on job work basis. - facts were known to the department - whether the Commissioner was right in holding that the demand is barred by limitation - Held that:- Price so declared was highly undervalued and that therefore extended period is invokable. On perusal of the Order-in-Original, it is seen that though the respondent assessee had raised the plea of limitation, the adjudicating authority has failed to consider the same, There is no discussion as to whether there was suppression on the part of assessee. In the impugned order, the Commissioner has taken note of the fact that the price declared by the assessee was not objected by the Department. It is seen that the respondent submitted price list in form 2C along with covering letter dated 3.4.2001 to the jurisdictional Superintendent informing that the respondent will be receiving Zinc Die Cast scrap from STPL, respondent intends to take credit of duty on it, manufacture the Zinc Oxide and clear the same to M/s.Videocon Narmada Glass (A division of Videocon International Ltd.) under brand name 'STPL' and will be paying duty on value declared by STPL @ 67/- per kg. The respondent then also filed declaration dated 4.4.2001 under 173B of Central Excise Rules, 1944 declaring intention to manufacture branded goods for STPL and to pay full duty without availing exemption under Notification No.9/2001-CE, On entering into further contracts with STPL the Respondent has vide letters dated 24.5.2001 and 1.8.2001 informed the department of the manufacture of goods for STPL on job work basis and declared the price. Respondent has informed the department about the payment of duty on the basis of price declared by STPL. On such score, the show cause notice dated 21.10.2005 is time barred, When all facts are within the knowledge of the department, they ought to have immediately informed the assessee if there was any shortcoming in the declaration of price or valuation of goods. We therefore are of the considered view that the impugned order calls for no interference. The same is sustained. - Decided against Revenue.
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2016 (1) TMI 264
100% EOU - DTA sale of textile articles - exemption from payment of CVD under Notification No. 30/04 dated 9.7.2004 issued under Section 5A(1) of the Central Excise Act - whether the proviso to Section 5A(1) will be applicable in the present case while considering application of Notifications 29/2004 and 30/2004 - Held that:- There has been total mis-appreciation of this provision of law. Section 5A(1) only grants power to exempt excise duty leviable under Section 3(1) of the Central Excise Act. The proviso to section 5A(1) is only to state that even if there is exemption from Central Excise duty under section 3(1) on any goods produced in India, it will not imply that the exemption from Central Excise duty will also be automatically available on goods produced and cleared by a 100% EOU. It is quite obvious from this proviso that, by virtue of exemption under Section 5A(1), goods produced by a 100% EOU do not get automatically exempted. This is so because the duty payable by a 100% EOU is equal to the aggregate of customs duties. - The duty payable on goods produced and cleared by a 100% EOU is to be seen in terms of provisions of Section 3(1) and while calculating this duty, the CVD component is to be calculated on the basis of excise duty payable on such products produced in India. And if such duty payable is a concessional rate of duty in terms of a Notification, the same notification will apply for calculating CVD on goods produced and cleared by a 100% EOU. The findings of the Commissioner (Appeals) on this issue are not very clear. However, in view of our analysis, we agree with his conclusion that the proviso to section 5A(1) of the Central Excise Act is only applicable to the implementation of main Section 3(1). In the case of goods imported by a 100% EOU, the condition cannot be applied nor can it be enforced. The Revenue's appeal itself says that this condition is for indigenous manufacturer. This condition is obviously not applicable to goods imported. Therefore, we see no reason to deny the benefit of this notification. Reliance is placed on Hon'ble Supreme Court judgment in the case of SRF Ltd. v. CC [2015 (4) TMI 561 - SUPREME COURT]. In a similar situation and in the context of similar circumstances of Notification No. 6/2002, the Apex Court held that the assessee were entitled to the exemption from payment of CVD in terms of Notification No. 6/2002 as no credit could be availed nor was availed in respect of the imported goods. - Decided against Revenue.
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2016 (1) TMI 263
CENVAT Credit of Free supply - MRP based valuation - manufacture of razor and razor blades - inclusion of duty free blades and availing Cenvat Credit - Held that:- There is no dispute regarding valuation of final products cleared. There is no allegation of short payment of duty on account of non-inclusion of free supplied blades in the valuation of final products viz. razor blade combo packed together. Still, the department went ahead and denied the credit on the blades under the provisions of Rule 6(1) of the Cenvat Credit Rules, 2004. It is clear that Rule 6(1) will apply in respect of the inputs used in or in relation to the manufacture of exempted goods. Now, it would appear that the department equated the supposed "free" blades with exempted goods. Otherwise, Rule 6(1) has no relevance. Calling a free supplied good as exempted goods is legally unsustainable - there is no under-valuation or short payment of duty on the final products cleared, which includes the free supplied blades. Equating such free supply to exempted clearance is untenable as already explained. As such, the provisions of Rule 6 of the Cenvat Credit Rules, 2004 has no application here. - Impugned order is unsustainable - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2016 (1) TMI 280
Input Tax Credit - levy of penalty - TNVAT - gross violation of principles of natural justice without conducting - The petitioner herein filed a petition under Section 84 of the TNVAT Act to the respondent on 5.11.2015 stating that the revised order has been passed by mistake of law and mistake of fact of incorrect adoption of amount of ITC reversed and hence, it is liable to be rectified under Section 84 of the Act and requested the respondent to issue a revised order. - Held that:- After elaborate arguments, learned counsel for the petitioner submitted that it would be suffice if the petitioner is given an opportunity for production of all the documents for the purpose of quantifying the actual taxes to be paid, it would meet the ends of justice.
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2016 (1) TMI 279
PVAT - validity of exparte assessment - documents were impounded - violation of principles of natural justice without affording an opportunity - Held that:- There is force in the submissions of learned counsel for the petitioner, because the impugned order dated 12.6.2015 was passed exparte without supplying the copies of the impounded documents to the petitioner to enable it to submit its effective reply, explaining the entries in the same, despite the fact that it was obligatory upon the respondents under Section 46 of 2005 Act. The concerned Officer could not have legally kept the impounded documents beyond the maximum period of 60 days. In the instant case, the premises of the petitioner was inspected on 22.5.2012, on which date, the documents were impounded. The petitioner was asked to submit its reply and to explain impounded documents which was not possible for it, without seeing them. The concerned Officer of the respondents ought to have supplied the copies of the impounded documents, before asking the petitioner to submit its reply and to explain the same. Accordingly, the order is quashed. The matter is remitted back to the assessing authority to pass a fresh order in accordance with law. - Decided in favor of assessee.
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2016 (1) TMI 278
Validity of assessment order - Bar of limitation - Held that:- Extended period of limitation up to six months is given from the date of receipt by the assessing authority of the order vacating the stay. - proviso to Section 21(6) of the Act clearly indicates that the period of limitation starts from the date of the receipt of the order by the assessing authority and not from the date of knowledge of the order. This is apparently clear from the plain and explicit language provided in the proviso to Section 21(6) of the Act. Similar view was held by this Court in Sri Cement Ltd. Vs. State of U.P. and others, [2013 (6) TMI 197 - ALLAHABAD HIGH COURT]. - Decided against assessee.
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2016 (1) TMI 277
Manufacture of finished leather - Demand of differential ITC - reversal of ITC under Section 19(2)(V) of the TNVAT Act - Held that:- Originally considering the transactions relating to CST for the assessment year 2012-13, an oder of assessment came to be passed, granting the relief as prayed for. Subsequently, the same turnover and the corresponding purchases relating to Form C declarations were sought to be brought in for the assessment year 2012-13 relating to TNVAT Act, as taxable turnover. Concluding that the refund claim made out in respect of the transactions related to C forms is not eligible, the respondent sought to include the same for the purpose of reversal of ITC, invoking Section 19(2)(V) of the TNVAT Act for the assessment year 2012-13 and passed the impugned order dated 30.04.2015, reversing ITC to the tune of ₹ 2,69,629/- for the said period. During the said assessment period, viz., 2012-13, there is no power vested with the respondent to reverse the ITC, since the amended provision of Section 19(2)(V) of the TNVAT Act, 2006 by Act 28 of 2013 came into effect only from 11.11.2013. Hence, to this extent, the impugned assessment order needs interference. Admittedly, the explanation of the petitioner dated 16.02.2015 is also not considered by the respondent. - Matter remanded back - Decided in favour of assessee.
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2016 (1) TMI 276
Revision of assessment - Non perusal of books of accounts - Held that:- For the assessment year 2007-2008, notice was issued in the year 2013. Immediately, on receipt of the notice, the petitioner filed reply and personal hearing was conducted by one officer and after a period of two years, the assessment order came to be passed by a different officer, which has been challenged before this Court in W.P.No.19518 of 2015. This Court, for the same petitioner and on the same set of facts, earlier considered the claim of the petitioner and set aside the impugned order on the ground that the order came to be passed by a different officer, after a period two years - admittedly, the assessment order for the year 2008-2009 came to be passed after a period of two years, without providing opportunity of personal hearing. - Court finds it appropriate to give yet another opportunity to the petitioner. Hence the impugned order is set aside and the matter is remanded back to the respondent for passing fresh order - Decided in favour of assessee.
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Wealth tax
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2016 (1) TMI 257
Levy of penalty for concealment of wealth - Assessee responded that notice u/s 17 of the Act was merely issued due to change in opinion from the assessment records and does not attract the penalty provisions. - It was his submission that in the situation that prevailed as on the due date for filing the return of income the assessee was under bona fide belief that there was no requirement for filing wealth tax return and therefore no adverse inference of concealment of wealth can be drawn against the assessee. - Held that:- in the given facts and circumstances of the case it cannot be said that the Assessee concealed particulars of wealth as is the charge sought to be made out by the Revenue. - no penalty ought to have been levied on the Assessee u/s.18(1)( c) of the Act. - Decided in favor of assessee.
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