Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 10, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Grant of satellite rights - the transfer in favour of the assessee is a sale and therefore, excluded from the definition of royalty under sec.9(1) explanation II (5) of the Act – thus, the Tribunal has erred in concluding that the payments made by the appellant are Royalty and not sale - HC
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Unexplained gifts - the gifts in question suffer from improbabilities which cannot be held as normal human conduct and the AO had rightly held the gifts to be non-genuine and taxed as income - AT
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Deduction u/s 80JJA - cutting and polishing of diamond is a manufacturing or production of article or thing for claiming deduction u/s 80JJAA of the Act - AT
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Claim of depreciation u/s 32 - premises was purchased on 05/03/2007 and for the purpose of “Bath Studio” the furnishing and other work were carried out from March-07 to 31st May-2007 - depreciation denied - AT
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Assessment of sale value of shares – Transaction treated as cash credits instead of LTCG – CIT(A) was justified in confirming the order of the AO by applying the test of human probabilities - AT
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Deduction u/s 35(2AB) – R&D expenses - when no show-cause notice has been issued to assessee for rejection of its application, assessee's application for approval of expenditure should be deemed to have been approved by the prescribed authority - AT
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Levy of penalty u/s 271C – Non-deduction of TDS on interest payment to partnership firm – the explanation offered by the assessee fits in the category of “reasonable cause“ in terms of sec.273B of the Act - AT
Customs
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Valuation - Import from related parties - addition of 10% under 'overheads' on the imports made from April 2006 to April 2008 is justified - loading of a nominal profit of 1% (one percent) on the declared value would be suffice instead of 10% - AT
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Restoration of appeal before tribunal - It was a clear case of either casualness or negligence on the part of the appellant in prosecuting their appeal before the Tribunal and that too with no sufficient cause necessary for recalling of the ex parte order - HC
Service Tax
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CENVAT Credit - cross utlisation of credit for the payment of service tax whereas availed in relation to manufacturing activity - prima facie case is against the assessee - AT
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Rectification of mistake - the date of raising the invoice is considered as the relevant date. The other possibility would be to consider the date of taking the credit. However, that will not further the interest of appellant but would be adverse to the interest of the appellant - Rectification denied. - AT
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Services of facilitating issue of the said GDRs - services received from abroad - services received by the appellant is covered by the scope “Banking and other financial services“ - Demand with interest and penalty confirmed - AT
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Business Auxiliary services provided by the assessee to their Singapore parent company was delivered outside India as such was used there and is covered by the provisions of Export of Service Rules and are not liable to Service Tax. - AT
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Maintainability of appeal - When the High Court has in clear terms ruled that appeal lies, the Commissioner under Article 227 of the Constitution of India, had no option, but to proceed with the hearing of the appeal on merit - HC
Central Excise
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Denial of CENVAT Credit - Manual numbering of invoices and not by franking machine - in view of the provisions of Rule 9(2) of the Cenvat Credit Rules, 2004, credit allowed - AT
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Valuation - Abatement of equalized/averaged sales tax - the deduction towards additional sales tax and octroi can be allowed on equalised basis - AT
Case Laws:
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Income Tax
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2014 (10) TMI 184
Accrual of income from demutualisation of the exchange (BSE) - each holder of the card being given 10,000 shares of BSEL in lieu of the membership card. - AO was of the view that the assessee was entitled to claim the cost of acquisition of shares being the original cost of acquisition of membership card as against the written down value of the card at had it been that claim for depreciation was allowed – Held that:- AO added the benefit to the total income of the assessee u/s 41(1) so also alternatively u/s 28(1)(iv) on protective basis - The AO himself is aware of the fact that it may be argued that the benefit will arise in the year of transfer and not in the current year - for the current year it is only demutualisation which has taken place and on that basis alone it is said that the assessee derives benefit - Nothing has been pointed out other than this fact to indicate as to how section 28 (1)(iv) is stated to be attracted. There is nothing on record save and except the fact that the exchange is now a limited company and a corporate entity - It is that corporate entity of which the assessee has become share holder/member - It is that corporate entity which is successor in title of BSE - The members/shareholders of the BSE have thus been allowed to continue with new corporate entity and with the same benefits - 10,000 shares have been allotted and without anything more would not be enough to undertake the exercise as is now stated to be undertaken - The depreciation that was claimed was disallowed and computed as benefit and which could be derived because of demutualization – Decided against revenue.
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2014 (10) TMI 183
Grant of satellite rights - Nature of transaction is sale or liable for TDS deduction u/s 194J or 194C – Disallowance of expenses u/s 40(a)(ia) – Payment made amounts to royalty or not - Business of Media and dealing in Movie/ Film Satellite Rights by taking them on Assignment basis and reassigning to the channels and derives income from salary, business and other sources - assessee furnished explanation for not deducting TDS and claimed that the purchase of film copy right is neither covered u/s 194J nor under sec.194C of the Act – Held that:- Following the decision in Mrs.K. Bhagyalakshmi vs Dy.CIT [2013 (12) TMI 1215 - MADRAS HIGH COURT] - the payment made by the assessee were not royalty, but one of sale - whether the grant of satellite rights to the assessee under an agreement for 99 years is a Royalty, within the meaning of sec.9(1)(vi) of the Act or a sale in terms of sec.26 of Copy Right Act, is the common question of law raised – the court has considered elaborately the perpetual transfer of rights for a period of 99 years in terms of Sec.26 of Copy Right Act and also the definition under clause 5 to explanation II to sec.9(1) of the Act in relation to Royalty and has come to the conclusion that the transfer in favour of the assessee is a sale and therefore, excluded from the definition of royalty under sec.9(1) explanation II (5) of the Act – thus, the Tribunal has erred in concluding that the payments made by the appellant are Royalty and not sale – Decided in favour of assessee.
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2014 (10) TMI 182
Admission of appeal – Substantial question of law - Held that:- Four grounds pleaded by the assessee does not raise any substantial question of law as they are already decided in earlier assessment year of the same assessee. Deduction u/s 80HH – Held that:- The deduction under Section 80HH will have to be abide by the order of the CIT(A) – CIT(A) has remanded the Appeal only insofar as the claim u/s 80HH is concerned - that is upheld by the ITAT - The remand is necessitated in the given facts and circumstances -The view taken and conclusion of remand and for limited purpose does not raise any substantial question of law – the order of the Tribunal is upheld – Decided against assessee.
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2014 (10) TMI 181
Addition on suppressed sales - Difference between closing cash in hand – Held that:- During the course of survey operation, no hard copy of the books of account were found - The assessee has maintained the accounts in the computer and from the computer, the survey team has obtained details of sales and opening & closing cash balance - CIT(A) has also extracted the details of total sales according to which the total sales as per the details was at ₹ 21,88,28,854/- in AY 2007-08 - the assessee has shown total sales of the year - The difference was considered to be the suppressed sales by the CIT(A) - CIT(A) has further added the suppressed sales computed by the AO after rejecting the books of account u/s 145(3) of the Act - the difference was considered to be suppressed sales by the CIT(A), there was no justification in enhancing the suppressed sales by the CIT(A) by making addition of the suppressed sales estimated by the AO without any basis after rejecting the books of account of the assessee - During the AY 2007-08, the total suppressed sales would only be of ₹ 5,73,69,778/-. Wherever the details are available from the computer, there is no justification in estimating the suppressed sales by the AO after rejecting the books of account - the mode of computation of suppressed sales on the basis of the material impounded during the course of survey operation is proper/correct - nothing has been brought on record by the Revenue with regard to the unexplained investment in the purchase - addition of the entire suppressed sales is not called for, only gross profit worked on the sales is required to be added to the total income of the assessee. Whether the gross profit is to be estimated or net profit is to be worked out for making the addition – Held that:- The initial gross profit is to be worked out, the other indirect expenses are to be reduced to work out the net profit - the other indirect expenses have already been booked while computing the normal income of the assessee as per books of account - the gross profit rate is to be applied - the gross profit rate was declared between 10.82% and 13.99% - Since in other years, the gross profit was declared at lesser rate, the gross profit declared by the assessee during the relevant year is to be adopted to compute the income from suppressed sales - in AY 2007-08, the gross profit rate at 14.10% is to be applied on the suppressed sales in order to compute the total income from sales outside the books of account - in AY 2008-09, the gross profit rate is to be applied at 12.02% as disclosed by the assessee to the suppressed sales in order to compute the income from sales made outside the books of account - the addition of the gross profit worked out in terms indicated above is required to be added to the total income of the assessee. Difference in closing cash balance – Held that:- The survey team has obtained sheets of cash book maintained in the computer, wherefrom different figures were noted as on 31.3.2007 and 1.4.2007 - Though the assessee has contended that it was on account of glitches in the computer, but the onus is squarely upon him to explain how such substantial amount of opening cash balance was taken on 1.4.2007 - It is for the assessee to explain as to how cash balance moves further and how much cash balance was shown in succeeding dates - In the absence of proper explanation of the assessee, difference in opening and closing cash balance is required to be added under section 68 of the Act and this addition is possible only in AY 2008-09 - But there was force in the contention of the assessee that if addition of the difference in opening and closing balance is called for, the credit of the income generated on suppressed sales is to be given therefrom and the net amount is to be added on account of difference in closing and opening cash balance, because the income generated from suppressed sales has to be taken into account while computing the opening cash balance as on 1.4.2007 - profit/income generated on suppressed sales by applying the gross profit rate be reduced from the difference in closing balance as on 31.3.2007 and to make addition of the balance amount on account of difference in closing balance and opening balance – thus, the matter is to be remitted back to the AO for re-computation – Decided in favour of assessee.
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2014 (10) TMI 180
Reopening of assessment u/s 147/148 – Change of opinion – Held that:- Assessee submitted that the original assessment was completed U/s 143(3) of the Act on 28/12/2007 i.e. after the date of survey - The original assessment proceedings, the assessee vide letter dated 07/12/2007 explained each annexure impounded in survey from the premises of the assessee and M/s Khushboo Jewellers – the AO specifically asked explanation in respect of certain specific papers in the impounded annexures – AO further examined the books of account and loose papers found in survey, completed the assessment u/s 143(3) of the Act and made addition - In the reasons recorded for reopening of the assessment, the AO had referred to six annexures - All the annexures have been enquired into and considered by the AO while framing the original assessment as evident from the assessment order. Reopening of the assessment on the basis of those very papers on the ground that they were not considered in course of assessment proceedings U/s 143(3) of the Act is factually incorrect - the reassessment proceedings initiated by the AO is bad in law and deserve to be quashed - second thought on the same material and omission to draw the correct legal presumption during the original assessment do not warrant the initiation of the proceeding u/s 147 of the Act –relying upon ITO Vs. Nawab Meer Barkat Ali Khan Bahadur [1974 (10) TMI 1 - SUPREME Court] - fresh litigation on the ground of new views or new version cannot be permitted - action u/s 147 of the Act cannot be taken on the basis of reasons to suspect or on change of opinion for which he relied upon the decision in the case of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] and cannot taken advantage of his own wrong doing through reopening the case. AO in original assessment had made specific query and specific reply was filed by the assessee in original assessment, which has been considered by the AO - after considering the reply, a detailed order has been passed by the AO – AO is not authorized to issue notice u/s 147 of the Act on reason to suspect or on change of opinion - even any wrong doing of the AO cannot be remitted through Section 147 of the Act as relied upon by the AR - only change of opinion is there and there is no tangible material before the AO to come to the conclusion that there was escapement of income from assessment –Decided against revenue.
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2014 (10) TMI 179
Unexplained gifts - Whether the CIT(A) has erred in deleting the addition made by the AO on account of unexplained gift without appreciating the facts of the case and deficiencies pointed out by the AO - Held that:- The AO has demonstratively narrated the inconsistencies, contradictions in the statements and improbabilities in the transaction of gifts - The AO found that bank accounts reflected that the gifts were immediately preceded by depositing the amount in donors respective accounts - Mere identity of donors and paper trail cannot be the conclusive factor while accepting the gifts as genuine –following the decision in Subhash Chand Verma vs. CIT [2007 (7) TMI 289 - PUNJAB AND HARYANA HIGH COURT] - the assessee failed to discharge the onus to explain the genuineness of the gifts which the AO had right/power to objectively examine and it cannot be substituted merely by a paper trail – the gift transactions are riddled with improbabilities and defy logic of normal human nature and conduct - Thus the gifts in question suffer from improbabilities which cannot be held as normal human conduct and the AO had rightly held the gifts to be non-genuine and taxed as income – thus, the order of the CIT(A) is set aside – Decided in favour of revenue.
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2014 (10) TMI 178
Revision u/s 263 – Bar of limitation - Income offered on expenses re-imbursed and deduction on reimbursable expenses – Held that:- The assessment originally completed under S.143(3) for the year was subsequently reopened by the AO only on the issue of disallowance made u/s 43B on account of service tax payable - Following the decision in Commissioner Of Income-Tax Versus Alagendran Finance Ltd. [2007 (7) TMI 304 - SUPREME Court] - the period of limitation as provided u/s 263(2) has to be reckoned from the date of the original assessment passed u/s 143(3) and not from the date of re-assessment passed under S.143(3) read with S.147 of the Act, as the issues on which assessment was sought to be revised were not the subject matter of re-assessment made under S.143(3) read with S.147 - the order passed by the DIT u/s 263 revising the assessment passed under S.143(3) on 31.12.2008 is barred by limitation, having been passed after a period of two years form the end of the financial year in which the order u/s 143(3) sought to be revised was passed – thus, upholding the preliminary legal ground raised by the assessee, the order u/s 263 is to be held as invalid – Decided in favour of assessee.
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2014 (10) TMI 177
Deduction u/s 80JJA - Cutting and polishing of diamond does not amount to manufacture or not – Held that:- What is required to be examined is the process undertaken for conversion of raw / rough diamonds into superior or polished diamond - the assessee has duly placed on record the entire process and the stages through which the rough diamond undergoes for becoming the polished diamond, which is a separate and distinct product and has a different usage - Such a process has neither been rebutted by the Revenue nor any other counter opinion have been sought to contradict the assessee's version of the process - once the entire process of cutting and polishing of diamond have not been rebutted and also the fact that the rough and polished diamond are two distinct commodity having different usage, not only in the common parlance but also in real sense, then it has to be understood that the cutting and polishing of diamond amounts to manufacturing or production of article or thing as envisaged for the purpose of claiming deduction under section 80-IC – following the decision in M/s. Flawless Diamond (India) Ltd. Versus Addl. Commissioner of income tax [2014 (9) TMI 261 - ITAT MUMBAI] - the cutting and polishing of diamond is a manufacturing or production of article or thing for claiming deduction u/s 80JJAA of the Act – thus, the AO is directed to allow the deduction u/s 80JJAA of the Act to the assessee – Decided in favour of assessee. Liability to deduct TDS u/s 194I – Held that:- The expenses was disallowed by the AO by invoking provisions of Section 40(a)(ia) on the ground that the assessee failed to deduct tax at source on the aforesaid expenses which the assessee was liable to deduct u/s 194C or 194H of the Act as per the AO - CIT(A) found that the assessee was not liable to deduct tax thereon u/s 194C as well as 194H of the Act - no disallowance of any expense was made by the CIT(A) - disallowance made u/s 40(a)(ia) was deleted in its entirety by the CIT(A) - there remains no real grievance of the assessee – Decided against assessee. Disallowance deleted by invocation of section 40(a)(ia) – Commission paid on contract payment – Held that:- No material has been brought on record by the Revenue to show that the payment in question was made by the assessee for carrying out any work including supply of labour for any work by M/s. Tirupati Organisers Private Limited - No details of any work actually carried out by M/s. Tirupati Organisers Private Limited in consideration of the payment in question were brought on record - the finding of the CIT(A) that the payment in question was not covered by provisions of section 194C of the Act is upheld – Decided against revenue. Conveyance and traveling expenses – Held that:- CIT(A) was rightly of the view that the disallowance of expenditure was made without pointing out any defect in vouchers or completeness of the vouchers for expenses maintained by the assessee - disallowance made is unsustainable – the order of the CIT(A) is upheld – Decided against revenue.
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2014 (10) TMI 176
Reduction of profits from deduction u/s 80HHC – Computation of book profits u/s 115JB - Held that:- The AO has not allowed benefit of deduction u/s.80HHC while computing book profits as per the provisions of sec.115JB - For the purpose of 115JB, the profits of business as per the provisions of section 80HHC should be computed on book profits – following the decision in Ajanta Pharma Ltd. vs CIT [2010 (9) TMI 8 - SUPREME COURT] - for the purposes of sec. 115JB the relief will be computed as per the provisions of sec.80HHC(3)/80HHC(3A) - provisions of sec. 80HHC(1B) will not be applicable for the purposes of computation of eligible profits for sub-clause(iv) to explanation-1 to sec.115JB(2) of the I.T. Act, 1961- assessee is eligible to reduce profits as computed u/s.80HHC(3) for the purposes of computation of book profits u/s. 115JB – the AO is directed to reduce profits as computed u/s. 80HHC(3) after giving effect to the order for the purpose of sub-clause(iv) to explanation-1 to sec.115JB – Decided against revenue.
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2014 (10) TMI 175
Claim of depreciation u/s 32 - Depreciation on the Mumbai Premises purchased, possessed and owned by the company, was put to use during the year – Whether the assessee would be entitled for the depreciation as claimed despite the undisputed fact that the assessee had only purchased the building during the year under consideration and carried out certain furnishing work for the purpose of establishing the “Bath Studio” - Held that:- The assessee had purchased the premises on 05/03/2007 and for the purpose of “Bath Studio” the furnishing and other work were carried out from March-07 to 31st May-2007 – as decided in CIT vs. India Tea and Timber Trading Co. [1996 (6) TMI 83 - GAUHATI High Court] - the word “used” for business purpose should have a wider import including active as well as passive usage of the asset. Also in Commissioner Of Income-Tax, Gujarat Versus Suhrid Geigy Limited [1981 (4) TMI 79 - GUJARAT High Court] it has been held that depreciation was claimed by the assessee with effect from the date on which trail production was commenced - there was a time lag between the date when the trial production commenced and the date when the actual production commenced - the date on which the trial production commenced was irrelevant for the purposes of claiming depreciation and that it cannot be said that the company had set up its business at the point of time when the trial production had commenced - the company had not commenced its business from the standpoint of the right to claim depreciation for the user of a building or machine in the business of the assessee-company - although the assessee had purchased the building for business purpose and furnishing of the same was being carried out for actual use - the arguments of the assessee cannot be accepted – Decided against assessee. Deduction on amortization of ESOP Scheme - Deduction allowable u/s 28 r.w. section 37 or not – Held that:- The assessee has claimed business expenditure on ESPO – following the decision in Biocon Ltd. Vs. Dy.CIT [2013 (8) TMI 629 - ITAT BANGALORE] - the assessee-company was a closely held company in the previous year and as such there was no question of listing of its shares and having some market price at the time of grant of options - Ordinarily, the amount of discount on premium which is written off over the vesting period represents the market price of the shares listed on the stock exchange on the date of grant of option as reduced by the price at which option is given to the employees - since there was no availability of any market price of such shares on the date of grant of option as the company came to be listed on a stock exchange in a subsequent year – Decided in favour of assessee.
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2014 (10) TMI 174
Assessment of sale value of shares – Transaction treated as cash credits instead of LTCG – Held that:- The assessee has claimed to have purchased the impugned shares through Off market transaction – CIT(A) rightly was of the view that the transactions of the assessee in shares of Prime Capital Market were not genuine – Relying upon Sumati Dayal Versus Commissioner of Income-Tax [1995 (3) TMI 3 - SUPREME Court] - the assessee has adopted the methodology of acquiring the Long Term Capital Gains in order to convert her black money into white - The purchase price was not paid by cheque, but it was claimed to have been adjusted against the speculation profit claimed to have been made by the assessee - the assessee could not produce the copies of share certificates and copies of share transfer forms - The transaction of purchase of shares could not be cross verified - The shares of M/s Prime Capital Markets Ltd was declared as “Penny Stock” by SEBI and the broker Sanju Kabra, through whom the shares were sold by the assessee was indicted for manipulating the prices of penny stock shares - the tax authorities have rightly applied the test of human probabilities to examine the claim of purchase and sale of shares made by the assessee - The claim of making speculation gains on the reasoning that speculation transactions could not have been entered into by the assessee therein without paying margin money to the broker - the claim of purchase of shares was rejected by the Tribunal and consequently the claim of sale of shares was also rejected - CIT(A) was justified in confirming the order of the AO by applying the test of human probabilities – Decided against assessee.
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2014 (10) TMI 173
Reassessment - Reasons recorded shows income escaped or not – Held that:- CIT(A) recorded that the reasons do not show any income chargeable to tax that has escaped assessment and while completing the assessment, no addition for any income escaping assessment has been made - The addition made is in respect of estimation of income by rejecting the books of accounts - once the AO accepts the objection of the assessee and does not assess the income which was the basis of the notice, it is not open to him to assess income under some other issue independently - the addition was made in respect of estimation of income by rejecting the books of account – following the decision in CIT Versus Jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] - once the AO accepts the objection of the assessee and does not assess the income which was the basis of the notice u/ 148, it is not open to him to assess income under some other issue independently - if no addition is made in respect of those issues as per which the reopening was made, no different addition can be made in such a situation - the only addition made by the AO by estimating the sales of the assessee and by applying net profit rate of 2.5% whereas in the reasons recorded by the AO for reopening the assessment, the basis of reopening was that in course of search conducted by CBI, cash of around ₹ 79.95 lac and FDR of ₹ 74 lac were found – there was no reason to interfere in the order of CIT(A) – Decided against revenue. Undisclosed investment in FDRs – Held that:- The assessment was completed by the AO u/s 143(3)/144 of the Act because required evidences were not produced by the assessee before the AO in spite of providing sufficient opportunities - CIT(A) has estimated the net profit rate at 0.8% on the basis of profit rate of earlier years i.e. AY 2007-08, 2008-09 and 2009-10 but CIT(A) has not obtained any remand report and the matter should go to CIT(A) for a fresh decision after obtaining remand report from the AO - the order of CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of revenue. Estimation of net profit from business – Applicability of section 44AF – Addition u/s 68 - Held that:- The CIT(A) has decided the issue without obtaining any remand report from the AO - an addition was made by the AO u/s 68 of the Act - CIT(A) has held that the AO is not justified in invoking the provisions of section 68 of the Act because the amount was found credited in the bank account of the assessee and not in the books of account of the assessee - the nature and source of deposit in the bank account of the assessee is to be examined with reference to section 69 of the Act - CIT(A) has noted various dates of deposit of amount in the bank account - the assessee received maturity proceeds from ICICI Prudential Life Insurance in respect of investment of each in three financial years i.e. AYs 2004-05, 2005-06 and 2006-07 - these facts were never brought by the assessee before the AO - CIT(A) has also noted that the assessee has filed extract of cash book maintained for its business activities and he has given a finding that the deposits in the bank account are out of cash available as per cash book - This cash book was not produced before the AO – the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of revenue.
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2014 (10) TMI 172
Levy of penalty u/s 271(1)(c) – Explanation of payment to four persons made or not – Held that:- No penalty on account of concealment and/or furnishing inaccurate particulars of income u/s 271(1)(c) could be levied, while, where not so, the provision of Explanation (1B) would stand attracted - The onus to rebut the statutory presumption of Explanation (1A) and Explanation (1B), which puts the burden of substantiating its case on the assessee, failing which it would be deemed to have concealed and/or furnished inaccurate, particulars of income – following the decision in CIT v. Atul Mohan Bindal [2009 (8) TMI 44 - SUPREME COURT] - where the disallowance leading to the variation between the assessed and returned incomes is u/s. 40(a)(ia), being independent of the provision where-under the same (disallowance) is effected - the question of levy or otherwise of penalty would have to be necessarily examined w.r.t. the assessee’s case for the claim of expenditure in view of non-obstante clause of s.40(a)(ia), as indeed would be the case for any other provision. There is no iota of evidence on record to exhibit the services having been rendered by the different payees, and toward which the payments have ostensibly been made – it cannot be considered as an argument in favour of the assessee having made a claim for expenditure, which on facts stands proved and/or established, which would amount to turning the A.O.’s observation/argument on its head, much less of the assessee having thus proved the expenditure in terms of section 37(1), so that the only detriment to its allowability is the non-deduction of tax at source - The assessee’s claim, made before us, that the only reason for the disallowance, or its sustenance, is invocation or applicability of section 40(a)(ia) is without basis in facts. The assessee has claimed the impugned sum as expenditure u/s. 37(1) r/w s. 40(a)(ia) by depositing TDS, ostensibly as commission, for AY 2010-11, thereby debunking its claims, both qua share of profit and diversion by overriding title - The ‘acceptance’ of its’ claim for A.Y. 2010-11 by the Revenue would be of no consequence - A return processed u/s.143(1) cannot be regarded as an acceptance of the assessee’s return, the provision, w.e.f. 01.06.1999, does not even entitle the Revenue to make any prima facie adjustment to an assessee’s return - the levy of penalty u/s. 271(1)(c) of the Act as sustainable in law – Decided against assessee.
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2014 (10) TMI 171
Condonation of delay - Delay of 396 days – Managing director of company undergone a surgery – Held that:- The MD of assessee-company was suffering from a serious disease pertaining to heart problem and ultimately had to undergo open heart surgery - such lapse on the part of the MD is understandable - A person recuperating from a disease like heart problem must be still under some stress and strain and for that reason many official acts and deeds required to be done quite possibly might have escaped his attention – as decided in N BALAKRISHNAN Versus M. KRISHNAMURTHY [1998 (9) TMI 602 - SUPREME COURT OF INDIA] - every lapse on the part of a litigant cannot be a reason enough to turn down his plea and shut the door against him unless the explanation smack of mala-fides or it is put forth as part of a dilatory strategy - there exists a genuine cause for not preferring the appeal in time by the assessee – thus, this is a fit case for delay to be condoned – delay condoned. Deduction u/s 35(2AB) – R&D expenses - Manufacturing and sale of pesticides, bio-fertilisers and organic manures – Whether non-availability of the approval in the prescribed form for the relevant assessment year could disentitle the assessee of deduction u/s. 35(2AB) or not - Held that:- Following the decision in ACIT Versus Meco Instruments P. Ltd. [2010 (8) TMI 484 - ITAT, MUMBAI] - Expenses were incurred by assessee towards R & D activity as AO himself has allowed 100% of the amount as deduction - once the R & D facility is approved, the entire expenditure incurred for R & D facility has to be allowed towards weighted deduction u/s. 35(2AB) of the Act - assessee's R & D facility having been approved by the prescribed authority and there being no dispute to the fact that assessee has incurred the expenditure towards R & D activities, the deduction claimed u/s. 35(2AB) by the assessee cannot be denied merely on the ground that prescribed authority has not submitted report in Form 3CL - when no show-cause notice has been issued to assessee for rejection of its application, assessee's application for approval of expenditure should be deemed to have been approved by the prescribed authority – thus, the AO is directed to allow weighted deduction u/s. 35(2AB) – Decided in favour of assessee. Deduction u/s. 80JJA – Held that:- AO has allocated R & D expenditure to both organic and nonorganic manure segments on the sole consideration that the other expenses are allocated to both the segments - it is the claim of assessee that R & D expenditure is only confined to non-organic segment - Considering the nature of dispute and also the fact that assessee needs to establish its claim by producing adequate evidence, the matter is to be remitted back to the AO for re-consideration – Decided in favour of assessee.
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2014 (10) TMI 170
Levy of penalty u/s 271C – Non-deduction of TDS on interest payment to partnership firm – Levy of interest u/s 201(1) and 201(1A) - Revenue was of the view that the assessee had to deduct tax u/s 194A in respect of interest paid to the partnership firm in which the assessee is a partner - Held that:- following the decision in Thomas Muthoot Versus Joint Commissioner of Income-tax (TDS), Trivandrum [2013 (12) TMI 298 - ITAT COCHIN] - the assesees being individuals, have paid interest to the partnership firm, in which they are partners - the partner and firms re not two legal entities and further in view of the exemption provided in sec.194A in respect of interest credited or paid by a partnership firm to its partners, the assessees were under the belief that they are not liable to deduct tax at source - the assessees cannot be altogether be discounted with as untenable, since the issue that the TDS provisions shall not apply to the payment made by a partner to the partnership firm is a debatable one. The belief entertained by the assessees that they were not liable to deduct tax at source on the interest paid by them to the partnership firm in which they are partners, can be considered as a "reasonable cause" in view of the legal position existing between a partner and the partnership firm - the partners and partnership firm are not two different legal entities, though they are two different taxable entities - the partnership firm, which received interest from the assessees have duly included the same in its return of income filed before the department and the said partnership firm was not liable to pay any tax, since it declared loss - no loss is caused to the revenue - the explanation offered by the assessee fits in the category of "reasonable cause" in terms of sec.273B of the Act – thus, the order of the CIT(A) is set aside and the AO is directed to delete the penalty levied u/s 271C of the Act in the hands of both the assessees – Decided in favour of assessee.
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Customs
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2014 (10) TMI 186
Valuation - Import from related parties - loading of overhead and profit margin - STPI unit for development of software and Information Technology Enabled Software and export thereof - Held that:- For the shipments made from April 2006 to April 2008, the appellants have admitted that their supplier has not made any addition of overheads in the invoice price. - in terms of Valuation Rules, for determining the correct transaction value of the goods supplied by the related person, addition of overheads and other charges are essential to arrive at the transaction value. The lower authority by taking into various factors has ordered for loading only a nominal 10% which appears to be well within the provisions of the Rules. Considering the fact that for the post-2008 imports, the percentage of overheads as arrived by the supplier from 5% to a maximum of 38%, whereas the lower authorities has ordered for only 10% which is just and reasonable. Accordingly, we are of the considered view that addition of 10% under 'overheads' on the imports made from April 2006 to April 2008 is justified. Loading of profit margin - Held that:- As regards loading of 10% profit in the invoice price, on perusal of records and the findings of the adjudicating authority, we find that the lower authority has not brought out any reasons for arriving the quantum at 10% towards profit margin. - although there is no dispute on the fact that both the supplier and the appellants are related persons in terms of Rule 2 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, M/s.Google Inc. USA are not selling the goods and buying for trading purpose but being a principal company of the appellant, they have procured the goods on the global basis for supply to their own affiliated group companies located across the world. In terms of the Valuation Rules, notional profit element shall be added to the invoice price for arriving at the transaction value - the loading of 10% profit margin on the invoice value appears to be on the higher side. - since the appellant is a STPA unit and also taking into the fact that the imports made by the appellant from the supplier i.e. Google Inc. is only for the purpose of development of software and export and also taking into consideration the principal supplier has not sold these goods to any third party but supplied to their affiliated companies only, loading of a nominal profit of 1% (one percent) on the declared value would be suffice. - Decided partly in favour of assessee.
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2014 (10) TMI 185
Restoration of appeal before tribunal - whether Tribunal was justified in dismissing the application made by the appellant (assessee) for recalling of the earlier orders passed by the Tribunal while dismissing their appeal for want of prosecution - Held that:- Mere perusal of the afore quoted order would go to show that the appellant has no case and we are unable to find any error in aforementioned finding of the Tribunal. In fact the appeal does not involve any substantial question of law as is required to be made out under Section 130 ibid. The Tribunal was therefore right in dismissing their application - When on successive occasions, the appellant did not appear and nor took interest in prosecution of their appeal, the Tribunal had no option but to dismiss the appeal for want of prosecution. No one prevented the appellant from prosecuting their appeal as and when listed before the Tribunal. It was thus a clear case of either casualness or negligence on the part of the appellant in prosecuting their appeal before the Tribunal and that too with no sufficient cause necessary for recalling of the ex parte order. In this view of the matter, no further indulgence could then be claimed either before the Tribunal or before this Court in this appeal by the appellant and when claimed, it was rightly declined by the Tribunal and we concur with the same - it was not a case where appellant was not afforded any opportunity of being heard whereas it was a case where the appellant despite grant of adequate opportunity, failed to avail of it - Decided against the assessee.
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Service Tax
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2014 (10) TMI 206
Denial of CENVAT Credit - cross utlisation of credit for the payment of service tax whereas availed in relation to manufacturing activity - input services - Renting of Immovable Property Service - Held that:- It is a basic principle of Cenvat credit that there has to be a nexus between the input and input service and the output and output service. Only in respect of input and input service which go into the manufacture of output or which are used in or in relation to rendering of output service, credit can be taken. This is what Rule 3 of the CENVAT Credit Rules, 2004 stipulates. If there is no nexus between the input and input service and the output or output service, credit cannot be taken or utilised. In the present case, it is not in dispute that the credit was earned in respect of input/input service which were used in or in relation to the manufacturing activity of the appellant. The same has no nexus with the rendering of the output service of renting of immovable property in Mumbai. Therefore, the utilisation of the Cenvat credit for payment of service tax on renting of immovable property at Mumbai is not clearly permissible in law. Therefore, the appellant has not made out a prima facie case for waiver of dues - Partial stay granted.
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2014 (10) TMI 205
Renting of Immovable Property - recovery of service tax from the tenants - appellant submits that the tenant of the appellant is a party challenging the service tax levy of Renting of Immovable Property in Retailer Association of India and in terms of the Supreme Court order the tenant has executed surety bond for the 50% of the service tax demand confirmed and, therefore, stay be granted. - Held that:- On perusal of the surety bond executed, it is seen that it is not in the surety bond format which has to be accepted in favour of the President of the India through the jurisdictional Asst. Commissioner. The bond has to be signed in the presence of the competent authority who has to accept the same. Inasmuch as it has not been done, we direct the appellant to inform the tenant to execute the bond in the proper format before the competent authority who shall accept the same, after considering the credit worthiness of the surety - Matter listed for further hearing.
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2014 (10) TMI 204
Waiver of pre deposit - commercial or industrial Construction Service - Held that:- Nagpur Improvement Trust gets flats constructed for renting out to low income group or slum dwellers, it would be construction of complex by a person directly engaging the service of another person and such complex is intended for personal use. Such complexes are specially excluded from the scope of the levy. Therefore, as far as the demand of service tax in respect of residential complex built for Nagpur Improvement Trust and Ramtek Municipal Council is concerned, the appellant has made out a prima facie case for grant of stay. - in respect of construction of meditation centre for Nagpur Municipal Corporation, prima facie it appears that the said activity cannot be considered as a Commercial or Industrial Construction Service. Thus, out of a total of ₹ 7,14,903/-, service tax liability would accrue mainly in respect of construction of tourist centre for MTDC and liability in this regard would be approx. ₹ 85,000 - Partial stay granted.
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2014 (10) TMI 203
Rectification of mistake - Applicable date / relevant date for refund application - Held that:- Notification 5/2006 itself prescribes time limit as prescribed under Section 11B of the Central Excise Act. In view of the said position, the facts of Vodafone Cellular case are entirely different from the present case. Moreover, in the said judgment, this Tribunal has held that a time limit of one year would be applicable from the date of payment of service tax while in the present case, time limit has been specified in the Notification itself. The only issue is the relevant date. In the present case, the appellant is not required to pay any duty and, therefore, the concept of payment of duty becomes irrelevant. It is in these circumstances that the date of raising the invoice is considered as the relevant date. The other possibility would be to consider the date of taking the credit. However, that will not further the interest of appellant but would be adverse to the interest of the appellant - Rectification denied.
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2014 (10) TMI 202
CENVAT Credit - whether the appellant should pay the amount of ₹ 7,78,245/- with interest or should it be sent back for verification - Held that:- Assuming that the entire amount is payable, it would show that the appellants have already reversed the entire amount of CENVAT credit in dispute in this case. Only interest would be payable on the insurance service. It was also submitted that the reversal took place within about three years from the date of availment of the credit. Therefore, the interest cannot be more than ₹ 4 lakhs whereas after taking the insurance service amount assuming the whole amount is inadmissible there would be still more than ₹ 12 lakhs available which has already been reversed but admissible. Assessee would like to end the litigation totally and therefore they would not request for recredit of the CENVAT credit taken by them and in view of the fact that interest payable would be substantially less than the amount of credit admissible, the whole issue can be settled by taking a view that the entire demand is not sustainable but no further credit or debit is required to be made by the appellant - appellant would neither be entitled for CENVAT credit nor would be liable to pay any further amount - Decided partly in favour of assessee.
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2014 (10) TMI 201
Underwriting service or Merchant Banking Services - services of facilitating issue of the said GDRs - services received from abroad - Revenue is demanding the Service Tax as "Merchant Banking Services" listed at (iii) under the category of "Banking and other Financial Services" under Section 65 (12) of the Finance Act, 1994 while the appellant claims the service to be "underwriting service" under Section 65 (105) (z) and 65 (117) of the Finance Act, 1994. - Held that:- It is evident that for purposes of Finance Act, 1994, "Underwriting" means an agreement with or without conditions to subscribe to the securities of a body corporate when the existing shareholders of such body corporate or the public do not subscribe to the securities offered to them. Thus in our view first and foremost condition is that securities are offered to the public or existing shareholders. The next requirement is an agreement to subscribe to the securities when the public or existing shareholders do not subscribe to the securities offered to them. This agreement is to be between the body corporate (whose securities are offered for sale) and the underwriter. Thus in brief, underwriting service as per Finance Act, 1994, would imply an agreement to subscribe the unsubscribed securities which were offered for sale to public or existing shareholders. Appellant has issued and sold the GDRs to Joint Lead Manager who in turn would resell, all or a portion of the offered GDRs by making an offering to the subsequent purchasers. This is not what is envisaged in "underwriting" as defined under Finance Act, 1994. What is envisaged is to make offer to public or existing shareholders, whatever is not subscribed that has to be purchased/subscribed in terms of an agreement by a person i.e. underwriter. Thus the 'Joint Lead Manager' who purchased GDR's cannot be considered as underwriter providing underwriting service. Even the agreement dated 23.07.2007 is titled as "Purchase Agreement". We therefore hold that services provided by M/s Citi and M/s Goldman Sach Ltd. are not underwriting service within the meaning of Finance Act, 1994. Since the issue whether the service provided by the service provider can be considered as underwriting service within the meaning of Finance Act, 1994 was neither raised nor discussed in the case of M/s Jubiliant Life Science Ltd. [2013 (5) TMI 393 - CESTAT NEW DELHI], the same does not help the cause of appellant. The said judgement has to be considered as per incuriam. A perusal of provisions of banking and other financial services, do not indicate that for charging Service Tax, merchant bankers or body corporate or commercial concern is required to be registered with SEBI. As long as the said service is being provided. Service Tax will be chargeable. Further, a perusal of the said definition indicates that services received by the appellant from M/s Citi and M/s Goldman Sach Ltd. will get covered by the scope of the service. We therefore hold that services received by the appellant is covered by the scope "Banking and other financial services" - Decided against the assessee. Extended period of limitation - Held that:- In this case GDR's were issued in July, 2007 and these would be available in Balance Sheets of 2007-08 which will normally be available after Sept. 2008. Even this Balance Sheet is not required to be submitted to the Range Supdt. /Asst. Commissioner. We also note that demand notice is issued on 13.01.2009. What is required is whether details were mentioned in the ST-3 returns filed and if so, when? Clearly, no such details were mentioned in ST-3 returns. Department was also not informed about the service received and the payment made thereon in connection with issue of G.D.R. Even the ST-3 returns are self assessed by the appellants. - Since there was suppression of facts, we hold that extended period is correctly invoked. Demand with interest and penalty confirmed. - Decided against assessee.
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2014 (10) TMI 200
Business auxiliary service - Market promotion in India - Export of services or not - Difference of opinion - majority order - whether the appellant, who is subsidiary company and had entered in the market development agreement with foreign principal located at Singapore is liable to Service tax on the services so rendered by them to its principal company - Held that:- Appellants is admittedly covered under the definition of business auxiliary services. The said services are being provided by the appellant to its principal company, which is located at Singapore - services provided by the agents and some agencies being delivery of money to the intended beneficiary of the customer of the western units abroad, which may be located in India and the services provided being business auxiliary services is also to the western unit who is recipient of services and consumers of services, it has to be held that services were being exported in terms of Export of Services Rule 2005 and not liable to Service Tax. Disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As such, the services are being provided by the appellant to Singapore Recipient company and to be used by them at Singapore, may be for the purpose of the sale of their product in India, have to be held as export of services. Business auxiliary services of promotion of market in India for foreign principal made in terms of agreement dated 1.7.2005 amount to Export of Services and the Hon’ble Supreme Court decision in the case of State of Kerala and Others vs. The Cochin Coal Company Ltd. [1960 (10) TMI 57 - SUPREME COURT OF INDIA] as also Burmah Shell Oil Storage and Distributing Co. of India Ltd. vs. Commercial Tax Officers [1960 (9) TMI 70 - SUPREME COURT OF INDIA] explaining the meaning of export is not relevant inasmuch as the same deals with the export of goods and not export of services - Business Auxiliary services provided by the assessee to their Singapore parent company was delivered outside India as such was used there and is covered by the provisions of Export of Service Rules and are not liable to Service Tax. Principal of equivalence between the taxation of goods and taxation of services, as laid down by the Hon’ble Supreme Court in the case of All India Federation of Tax Practitioners [2007 (8) TMI 1 - Supreme Court] as also the principals of destination based consumption Tax were in the context of Constitutional Authority of levy of Service Tax on certain services and the issue of Export of Service in terms of Export of Service Rules was not the subject matter of said decision. The Export of Service Rules, 2005, being destination based consumption tax are in accordance with the declaration of law by the Hon’ble Supreme Court. Having held that services involved were export of services, the same are not liable to be sustained against the appellants - Decided in favour of assessee.
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2014 (10) TMI 199
Maintainability of appeal - Held that:- Commissioner (Appeals) should not have expressed an opinion different from the order of the High Court: In spite of the directions of the High Court, the Commissioner (Appeals) refused to decide the appeal. The Commissioner should not have expressed the opinion differently to that of the opinion given by this Court. When the High Court has in clear terms ruled that appeal lies, the Commissioner under Article 227 of the Constitution of India, had no option, but to proceed with the hearing of the appeal on merit. Perhaps, this aspect escaped the notice of Commissioner - matter restored before commissioner - Decided in favour of petitioner.
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Central Excise
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2014 (10) TMI 196
Denial of benefit of exemption under Notification No. 4/2006-CE dated 01.03.2006 - applicant supplied cement free of cost for construction work within the applicant's factory premises - appellant contended that notification would apply even if there is no sale. - Held that:- ‘retail sale price’ means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumers. Prima facie, there is no sale in this case. Hence, the applicant failed to make out a prima facie case in their favour. - Partial stay granted.
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2014 (10) TMI 195
Denial of CENVAT Credit - Manual numbering of invoices - Held that:- only discrepancy pointed out is that the invoices are numbered by hand and not by franking machine. There is no other discrepancy pointed out. Thus, in view of the provisions of Rule 9(2) of the Cenvat Credit Rules, 2004 and also following the ruling in the case of Pepsico India Holding Pvt. Ltd. (2012 (7) TMI 53 - CESTAT, MUMBAI), CENVAT Credit is allowable to the appellant - Decided in favour of assessee.
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2014 (10) TMI 194
Application under Section 35F - Whether the Revenue can file application before the Tribunal, seeking stay of operation of the order passed by the Commissioner (Appeals) - Held that:- there is no provision exist that an application can be filed, especially by the Revenue department, seeking stay of operation of the impugned order till disposal of appeal by the appellate authorities. Filing of such application has no legal sanctity because, neither any duty demand has been confirmed nor any penalty imposed in the adjudication order against the Revenue department. Hence, in my considered opinion, in absence of any specific provisions contained in the Central Excise statute, the department is precluded in filing the application, seeking stay of operation of the impugned order. Further, I find that the application for stay has been filed under Section 35 of the Act, which deals with filing of appeals before the Commissioner (Appeals). There is no reference in the said Section for filing the stay application before the Appellate Tribunal. - Decided against Revenue.
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2014 (10) TMI 193
Penalty under Section 11AC(1)(a) - Held that:- appellant is neither disputing the duty amount or interest or 25% of penalty. We have examined the provisions of Section 11AC (c) which are to the effect that where duty determined under sub-Section (10) of Section 11A and the interest payable under Section 11AA is paid within 30 days of the date of communication of the order of the Central Excise officer, the amount of penalty liable to be paid by such person ‘shall’ be 25% of the duty so determined. As such, the said provision provides lowering of the penalty to 25% in the cases the entire deposits are made within 30 days. Admittedly, the said deposits stand made by the appellant within a period of 30 days of passing of the order in which case the penalty shall stand reduced to 25%. Accordingly, we hold that the appellant are not required to pay the balance 75% of the penalty - Decided in favour of assessee.
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2014 (10) TMI 192
Waiver of pre deposit - Cenvat Credit - input services - outdoor catering service - Manpower recruitment service - Held that:- At the time of hearing both sides were advised to give written submission within two weeks. Written submissions from Revenue have since been received on 6.6.2014. No written submissions have been received from Shri Rakesh Bhola, ld.Advocate of the appellant - prima facie case is in favour of the Revenue and require pre-deposit for hearing the appeal - Partial stay granted.
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2014 (10) TMI 191
Denial of CENVAT Credit - Clearance of Bagasse - Held that:- Tribunal in the case of M/s.Subramaniya Siva Co-operative Sugar Mills Ltd. Vs CCE Salem vide [2013 (10) TMI 990 - CESTAT CHENNAI] granted unconditional stay on the identical issue holding that Bagasse, press-mud are not excisable goods and therefore Rule 6 (3) of the Central Excise Rules would not apply - Madras High Court in the case of CCE Salem Vs Burn Standard Co. Ltd. - [2013 (2) TMI 35 - Madras High Court] dismissed the Revenue's appeal for a period prior to amendment of Section 2(d) of Central Excise Act, 1944. We find that the said case is related to denial of cenvat credit on furnace oil used as common input in dutiable and exempted products. In the present case, the Tribunal consistently viewed that 'Bagasse' is not an excisable product and therefore Rule 6(3A) would not apply. - we waive predeposit of duty along with interest and penalty and stay its recovery till disposal of the appeal - Stay granted.
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2014 (10) TMI 190
Valuation - Abatement of equalized/averaged sales tax - Whether the appellants are eligible for abatement of equalized / averaged sales tax from transaction value under Section 4 of the Central Excise Act - Held that:- There is no dispute about the eligibility for deduction on account of octroi and additional sales tax. The original authority has accepted this in principle. He has disallowed the deduction only based on the grounds that the Respondent have claimed the same on a weighted average basis as mentioned earlier. The Commissioner (Appeals) have allowed the deduction without specifically giving a finding on each of the above three grounds raised by the original authority. We are of the considered view that in the given facts and circumstances of the case, the deduction towards additional sales tax and octroi can be allowed on equalised basis - Following decision of assessee's own previous case - appellants are entitled to claim the abatement of equalized sales tax from the transaction value - Decided in favour of assessee.
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2014 (10) TMI 189
Benefit of Notification No.67/95-CE dt.16.3.95 - Held that:- Notification No.67/95 makes no special exemption in respect of 'exports', perhaps, for the reason that exports are not treated as 'exempted goods'. The SEZ Act defines 'Export' - to include supplies to SEZ from the Domestic Tariff Area. exports to SEZ will not fall under the category of 'exempted goods' and the pre-deposit was waived in that case. Hence, following the ratio of these two cited decisions, I waive the requirement of pre-deposit in this case also pending disposal of the appeal - Following decision of assessee's own previous case - Stay granted.
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2014 (10) TMI 188
Exemption benefit under Notification No.22/2003-CE, dated 31.03.2003 - receipt of the inputs without payment of Central Excise duty under CT-3 Certificate - Held that:- Main contention of the applicant is that they have cleared the final products ‘Warp Rings’, after value addition on payment of duty of ₹ 13,70,551/-. In any event, if the applicant paid duty on the inputs, they could have availed Cenvat credit on the clearances of the final products. The learned Authorised Representative on behalf of the Revenue submits that they have mis-declared the description of the final products as valve. They camouflaged of clearances of Warp Rings, which is originally displayed as a textile weaving machinery parts as manufactured by them - Prima facie, applicant procured inputs without payment of duty under CT-3 Certificate and used in the manufacture of the final products and cleared on payment of duty. It is seen that the applicant paid duty on the clearance of the finished goods, more than the amount as demanded herein - Stay granted.
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2014 (10) TMI 187
Denial of CENVAT Credit - Non production of relevant documents - Held that:- G-23A part-I & part-II records were maintained during the relevant period by the Appellant. However, we agree with the Ld.A.R. for the Revenue that these aspects needs scrutiny by the adjudicating authority before taking a call on the admissibility of CENVAT Credit to the Appellant during the said period. Accordingly, after setting aside the impugned order we remit the case to the Ld.Commissioner for deciding the issue afresh taking into consideration the evidences produced before this Tribunal and also evidences that would be produced by the Appellants in support of their claim that they have correctly availed CENVAT Credit by maintaining proper accounts during the period in dispute. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (10) TMI 198
Transfer of liability - The petitioner's contention is that the business was transferred in the name of the 4th respondent, who is his daughter, at the time of her marriage. Thereafter the business was conducted by the 4th respondent and her husband; hence the petitioner has no liability - Held that:- The State has also filed a counter affidavit, wherein it is stated that an amount of ₹ 55,190/- and collection charges of ₹ 2,822/- were with respect to a demand raised in another revenue recovery proceedings, numbered as RRC 98/2000-01, of the assessment year 1993-94. The present recovery is stated to be on the assessment for the years 1987-88, 1994-95 and the penalty imposed for the year 1993-94. The petitioner also does not have a case that prior to the years in which the assessment has been completed and penalty imposed; the petitioner had complied with the statutory formalities for transfer of registration in the name of his daughter. Exhibit P1, which is said to be a settlement made in the name of the 4th respondent, is of no consequence with respect to the liability under the KGST Act. - Decided against assessee.
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2014 (10) TMI 197
Extension of time for filing reply - Time granted on telephonic conversation - Order passed in violation of principle of natural justice - Held that:- Necessarily when e-mail communications are relied on, at the first instance, there would be certain start up problems, which has to be looked at in a practical manner. However, the Assessing Officer in the present case cannot be faulted for concluding the proceedings, since the Assessing Officer did not receive the reply and the assessee also did not turn up for availing an opportunity for hearing. But, looking at the practical aspects, it is only proper that Exhibit P4 is set aside only for the reason that the petitioner's objections were not considered at all; for whatever reasons, even if the Assessing Officer cannot be faulted. Decided in favour of assessee.
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