TMI Tax Updates - e-Newsletter
October 10, 2016

Case Laws in this Newsletter:

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

Articles

1. Understanding the Transitional Provisions in GST

   By: Uday Ranalkar

2. GST COUNCIL:  CONSTITUTION AND FUNCTIONING

   By: Dr. Sanjiv Agarwal

Notifications

Income Tax

1. 91/2016 - dated 6-10-2016 - IT

Income–tax ( 26th Amendment) Rules, 2016

SEZ

2. S.O. 3158(E) - dated 5-10-2016 - SEZ

Central Government notifies an additional area at Village-Matoda, Sari and Chachanvadi Vasna on National Highway 8-A, Taluk-Sanand District- Ahmedabad, in the State of Gujarat

3. S.O. 3157(E) - dated 3-10-2016 - SEZ

Central Government notifies the 1.34 hectares area at Outer Ring Road, Doddanekundi Circle, Marathalli Post, Bengaluru in the State of Karnataka and constitutes a Approval Committee

Highlights / Catch Notes

Income Tax

• Debate on Classifying Income from Share Transactions: Business Income vs. Capital Gain; Transaction Size Irrelevant.

  Case-Laws - AT : Transaction of shares - nature of income - business income or capital gain - magnitude of transactions carried out by the assessee in our view should not be very material in coming to the conclusion that income in question is income from business. - AT
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• Tax Reassessment Validated: Share Purchase Transactions Found Sham and Bogus, Confirming Tax Evasion Intent.

  Case-Laws - AT : Validity of reopening of assessment - Revenue in the instant case has come to the conclusive finding which attained finality that the transactions of purchase of shares are sham and bogus transactions camouflaged with an intention to evade taxes - AT
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• Assessee not penalized u/s 271(1)(b) due to non-receipt of notice but participated in proceedings.

  Case-Laws - AT : Though the notice u/s 142 was not received by the assessee but he has participated in the proceedings. Therefore, the assessee has reasonable cause for noncompliance and as such the penalty u/s. 271(1)(b) cannot be levied - AT
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• Court Rules PSF Charges Exempt from TDS u/s 194-I; Not Applicable for Payments on Customer's Behalf.

  Case-Laws - AT : Short deduction of TDS - TDS u/s 194C OR 194I - PSF and X-Ray charges - PSF charges paid by the assessee on behalf of its customer, did not attract the provisions of section 194-I. - AT
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• AO's Lack of Evidence on Excessive Salaries Invalidates Section 13(3) Use; Exemption u/s 11 Stands.

  Case-Laws - AT : AO has not brought anything on record to substantiate that the expenditure on salary or facilities provided to the relatives of the trustees of the assessee society were excessive having regard to fair market value of the services provided by them. - AO wrongly invoked the provisions of Section 13(3) - Exemption u/s 11 cannot be denied - AT
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• Reassessment Proceedings Invalid: Deposits Inquiry Based on AIR Info from HSBC Bank Deemed Unjustified by Court.

  Case-Laws - AT : The reassessment proceedings were completed against the assessee to explain the deposits, whereas AIR information was in respect of amount received from HSBC Bank - reassessment proceedings completed against the assessee are bad in law and invalid. - AT
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Customs

• Value Enhancement Based on NIDB Data Violates Natural Justice; Related Documents Not Provided to Appellants. Value Cannot Be Enhanced.

  Case-Laws - AT : Valuation - the case of enhancement of value are merely based on NIDB data, when such documents relating NIDB data were not even supplied to the appellants, thus not following principles of Natural Justice, value cannot be enhanced - AT
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• Negligence Insufficient for Penalties u/s 114(i) in Red Sanders Export Case Due to Broken Seal.

  Case-Laws - AT : Imposition of penalties u/s 114(i) - export of glass chimneys after verification and inspection - seal of container found broken - illegal export of Red Sanders - negligence alone is not enough for imposition of penalty - AT
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Service Tax

• Court Rules Manufacturing Agreement Not Subject to Service Tax; Bottlers Exempt from Royalty Payment Obligations.

  Case-Laws - AT : Intellectual Property Rights - whether the manufacturing/tie up based agreement entered into by the appellant-assessee with bottlers can be considered as agreement for payment of royalty by the bottlers to the appellant-assessee liable to service tax - Held No - AT
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• Refund Allowed After Proving No Unjust Enrichment; Cenvat Credit Reversed with Ledger Evidence.

  Case-Laws - AT : Refund claim - Unjust enrichment - Service recipient has reversed the cevnat credit subsequently after availing the same - copies of ledger produced - seen to have clearly established that there is no unjust enrichment - refund allowed - AT
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• Court Rules Self-Adjusted Service Tax Payment Violation; Demand for Tax on Adjusted Amount Unsustainable.

  Case-Laws - AT : Suo motu adjustment of excess payment of service tax made in October, 2008 with subsequent service liability - procedural violation - demand of service tax of the said amount is not sustainable - AT
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Central Excise

• Factory Visits by Excise Staff Don't Exempt from Duty Evasion Charges; Accountability Still Required Despite Lack of Omission Allegations.

  Case-Laws - HC : Evasion of excise duty - mere fact that the personnel of the Excise was officially posted in the factory premises and that there is no allegation of omission ipso facto does not absolve the petitioner from a charge of evasion of duty - HC
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• Central Excise Rule 9 Inapplicable: Appellants Sell Majority to Independent Buyers, Not Holding Company; No Differential Duty Demand.

  Case-Laws - AT : Demand of differential duty - Valuation - The appellants sells 98% of his finished goods to outsiders/independent buyers, and only 2% of the finished goods manufactured are sold to the holding company - provisions of rule 9 are not invokable - AT
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Case Laws:

• Income Tax

• 2016 (10) TMI 328
  Reopening of assessment - Eligibility of deduction u/s 80IB(10) - Held that:- Assessing Officer had minutely examined the petitioner's claim for deduction u/s. 80IB(10) of the Act. The question that such deduction would be available for development of a housing project was very much in mind of the Assessing Officer. In this context, we may peruse the reasons recorded by the Assessing Officer for reopening the assessment more closely. He sought to revisit the assessee's claim of deduction u/s. 80IB(10) of the Act on the grounds that the assessee was not a constructive owner of the land and that the permission from AUDA was also not obtained by the assessee. On the basis of documents on record, the Assessing Officer was of the opinion that the assessee was merely a contractor and not a developer of a housing scheme. First and foremost, only on the ground of change of opinion, the notice would be rendered invalid. Once the Assessing Officer examined the claim of deduction u/s. 80IB(10) of the Act in the original scrutiny assessment without there being anything further, it would not be open for him to contend that since a particular aspect of the deduction was not examined, he should be permitted to reopen the assessment. It is not even the case of the Revenue that during the scrutiny assessment, the assessee did not furnish true and full details in response to the queries raised by the Assessing Officer. If the element of the explanation below sub section (10) of section 80IB, as suggested by the counsel for the Revenue, was in the mind of the Assessing Officer, the same is not reflected in the reasons recorded by him. It is well settled that the notice for reopening can be supported on the strength of the reasons recorded by the Assessing Officer. It is even otherwise questionable whether with the aid of a statutory change made later on, assessment can be reopened, a question we need not finally decide in this petition. In any case, the Assessing Officer has not even relied on such explanation in the reasons recorded.- Decided in favour of assessee.

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• 2016 (10) TMI 327
  Reopening of assessment - Eligibility of deduction u/s 80IB(10) - Held that:- The entire claim of deduction was minutely scrutinised by the Assessing Officer before acceptance. Any attempt on his part now to reopen the issue would be based on change of opinion. In any case, there is not even an allegation that the assessee had not disclosed truly and fully all material facts. Since the impugned notice has been issued beyond four years from the end of relevant assessment year, this aspect would assume significance. In order to suggest that the assessee was not a developer but had acted only as works contractor, the Assessing Officer in the reasons recorded did not bring in facts on record. He merely referred to the explanation added below section 80IB(10) by the Finance Act, 2009 but with effect from 1.4.2001. This explanation provides that for removal of doubts it is declared that nothing contained in the said subsection would apply to any undertaking which executes the housing project as a works contract awarded by any person including the Government. In the opinion of the Assessing Officer, this explanation changed the very legal matrix for granting deduction under section 80IB( 10) of the Act. - Decided in favour of assessee.

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• 2016 (10) TMI 326
  Penalty under section 271(G)- existence of international transaction - Reference to TPO - Held that:- In view of the fact that the reference to the TPO has already been made after obtaining the approval of the Pr.CIT the objection raised by the petitioner may be taken before the DRP or the CIT(A) as the case may be. It is necessary, however, now to consider the nature of the order to be passed. As the provisions of the Act and of the circular have not been complied with strictly and the matter already stands referred to the TPO it is necessary to protect the petitioner in certain aspects. Normally the petitioner would have had an opportunity of contending that the transactions are not international transactions as they are not with its associated enterprises before the Assessing Officer himself. That stage having passed, it is only fair that if the petitioner chooses the DRP route or the CIT(A) route, the DRP or the CIT(A) as the case may be ought to first adjudicate the question as to whether the said transactions are international transactions or not. If they come to the conclusion that they are not international transactions, certain consequences may follow which we keep open for the petitioner to take before the DRP or the CIT(A) as the case may be. We clarify that in the event of the CIT(A) or the DRP coming to the conclusion that they are international transactions, it would not be necessary for them to stall the proceedings and they may proceed to decide them finally. The penalty proceedings under section 271(G) have been initiated on the basis that the provisions of Chapter-X and in particular Sections 92D and 92E have not been complied with. As we noted earlier the petitioner did not have an opportunity of representing its case to the effect that these transactions are not international transactions. It is only fair then that while the penalty proceedings may continue the order imposing penalty, if any, shall not be implemented till the decision of the DRP or the CIT(A) as the case may be on the preliminary issue as to whether it is an international transaction or not.

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• 2016 (10) TMI 325
  Guarantee Fee - allowable expenditure u/s 37 - Held that:- Interest on deferred payment and Guarantee commission paid to the bank are revenue expenditure and hence allowable as deduction. See Commissioner of Income-Tax Versus Sivakami Mills Limited [1997 (2) TMI 13 - SUPREME Court ] Disallowance u/s 40(a)(ia) when the same expenses have been paid by the appellant - Held that:- The assessee, however, alleges to have discovered later that it had in fact deducted the tax at source and paid the same to the government treasury. The assessee relies upon a challan in that regard and has produced the same in this appeal as Annexure A-9. The assessee sought to produce the same before the Tribunal, but the Tribunal did not permit it to do so. In our opinion, this was a fit case for the Tribunal to have exercised its powers under Rule 29 of the Appellate Tribunal Rules, 1963 requiring the production of the challan evidencing the payment of the tax deducted at source in the government treasury. All that was required was to direct the authorities to examine whether the challan was genuine and whether the amount was paid into the government treasury or not in accordance with law. The ends of justice certainly required the same. Even if the assessee had contended before the Assessing Officer and the CIT (Appeals) that the amount was not payable, it would make no difference, if, in fact, the amount had been paid. In these circumstances, question (b) is decided by quashing the order of the Tribunal refusing to allow the appellant to adduce additional evidence. On this issue, however, the Assessing Officer shall examine the challan and determine whether the requisite amount of tax was deducted at source and paid over to the government treasury or not in accordance with law. If the same has been done, the assessee shall be entitled to the deductions. If not, the disallowance shall stand.

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• 2016 (10) TMI 324
  Reopening of assessment - non deduction of tds on advertisement, rent, courier services and event expenses - violation of principles of natural justice - Held that:- The petitioner deserves no relief. Before the original assessment order dated 19.12.2012 was passed, the relevant record of the assessee had been destroyed in fire. On perusal of the profit and loss account finding the expenses shown therein, when compared with the previous assessment year to be higher, the assessing officer imposed a lump-sum deduction of Rs. 10,00,000/-. On 03.03.2014, an audit objection was raised qua the above assessment which was to the effect that as required, no TDS had been deducted by the petitioner qua expenses on advertisement, rent, courier services and event expenses. Thus, as per the provisions of Section 40(a)(ia) of the Act these expenses were liable to be disallowed and added back to the assessee's income. The Commissioner by this letter merely sought reasons from the assessing officer. He did not direct him to initiate proceedings for re-assessment. The assessing officer could have furnished reasons and reiterated his decision not to reopen the assessment. It is also important to note an aspect regarding the annotated reply. The audit objections were specifically with respect to the issue of TDS. The assessing officer's response was silent on this issue except for stating that he was informed that the record had been destroyed. He had admittedly not seen any other record pertaining to the issue. The Commissioner as a superior officer, in his administrative capacity was well within his rights to ask his subordinate to back his recommendation with reasons when the same were found lacking, especially when such recommendation was made contrary to the audit objections which contained both reasons and provisions of law. After the receipt of the above quoted letter, the assessing officer apparently now acting in a more responsible manner through a communication dated 23.09.2014 addressed to the TDS wing of the department sought the record pertaining to the deposit of TDS by the petitioner with regard to the expenses on which the petitioner was supposed to deduct TDS at the time of release of payments. The record was supplied by the TDS wing to the assessing officer through letter dated 17.10.2014 on the examination of which the assessing officer found that the petitioner had, in fact, not deducted TDS as required by law on the expenses incurred by it towards advertisement, rent, courier services and event expenses. This information which would come under “tangible material” was not before him at the time when the original assessment was made and on the basis whereof, on recording of reasons, which were later supplied to the petitioner, the re-assessment proceedings were initiated. It may be noted that at the time of framing of the original assessment, the assessing officer had sought record from the petitioner which was not produced on the ground that the same had been destroyed in a fire which took place in the premises of the petitioner. This fact would have also contributed towards the escapement of the above income from tax. The plea of violation of principles of natural justice raised on behalf of the petitioner, needs to be considered only to be rejected. It is the admitted position that the petitioner was permitted to inspect the relevant record before he filed his objections to the initiation of re-assessment proceedings. Even otherwise, the entire record, as asked for by the petitioner, was made available under the Right to Information Act, 2005. The petitioner has also not shown any prejudice on this ground. - Decided against assessee

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• 2016 (10) TMI 323
  Disallowance u/s 14A - fair and reasonable amount for the purpose of making disallowance u/s.14A - Held that:- As during the course of assessment proceedings AO noticed that assessee has earned dividend income of Rs. 1,65,924/- and claimed the same as exempt u/s. 10(34) of the Act. The AO required the assessee to furnish the details of expenditure incurred for earning this dividend income. The assessee in reply stated that no expenditure has been incurred to earn the said dividend income. The AO was not convinced with the reply of the assessee and made disallowance by making calculation by applying Rule 8D of the Rules. The Tribunal supra held that the AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D of the Rules. While holding the action of AO invoking the Rule 8D is bad under law, the Tribunal taken support from the ratio of the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd and Others v. CIT [2011 (11) TMI 267 - Delhi High Court]. The facts in the aforementioned case are clearly applicable to the facts of the case, In view of the same, we hold that the AO did not verify the accounts and claim of the assesse while applying Rule 8D and computing expenditure thereon, and, therefore, the order of the CIT-A is quashed and the grounds raised by the assesse are allowed.

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• 2016 (10) TMI 322
  TDS u/s 194C - non deduction of tds on transportation charges - disallowance u/s 40(a)(ia) - Held that:- The issue is squarely covered by the decision of coordinate bench of this Tribunal, in the case of Mythri Transport Corporation vs. ACI [2009 (1) TMI 337 - ITAT VISAKHAPATNAM] wherein under similar circumstances, held that hiring of trucks and lorries cannot be called to be the work as per the definition given in explanation 3 to section 194C of the Act and consequently the assessee is not liable for deduction of TDS on payment to lorry/truck owners as per the provisions of section 194C of the Act. - Decided in favour of assessee

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• 2016 (10) TMI 321
  Addition u/ 68 - Held that:- Unless the genuineness of the source of the sum of money found credited in the assessee’s books is satisfactorily established, the assessee cannot be said to have discharged the requisite burden of proof placed on him u/s. 68. The material furnished by the assessee is thus hardly adequate for proving the genuineness (of the credit/s) and/or the capacity of the creditors. The AO, as observed by the ld. CIT(A), has also not examined or sought any further materials in the matter. We, accordingly, vacating the findings of both in relation to the credit for the balance Rs. 58.50 lacs, restore the matter back to the file of the AO to enable the assessee to, once again, establish the credit/s on the anvil of section 68 of the Act. We decide accordingly, and the Revenue gets part relief. Restriction of depreciation qua machinery installed during the first half of the relevant previous year to 50% of the normal depreciation - asset put to use less than 180 days - Held that:- Trial production could be caused only upon successful commissioning of all the different parts of the plant, stated to be a lamination plant, i.e., in the main. The trial production expenses, including wastages, would also stand to be capitalized, of which there is no reflection. In view of the foregoing, we therefore have no hesitation in upholding the inference of the additions to the machinery being put to use for less than 180 days during the relevant year and, thus, exigible to depreciation at 50% of the normal rate. The ld. CIT(A) stating that this is a non-issue as the assessee would in any case stand to avail depreciation from the year following, is neither here nor there. And, therefore, only needs to be stated to be rejected. Each year is an independent unit of assessment, and the fact in issue is if the relevant machinery had been put to use for the required period during the relevant previous year, so as to enable the assessee to its’ claim, as made, or is the same not in accordance with law. That is the only question that is required to be addressed, and the further question that if it was in fact put to use during the relevant year is admitted by both the parties. We decide accordingly, and the Revenue succeeds.

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• 2016 (10) TMI 320
  Transaction of shares - nature of income - business income or capital gain - Held that:- From the plain reading of clause (a) of the said Notification No.6/2016 dated 29.02.2016 we find that it has been instructed that if the assessee is irrespective of the period of holding treat the transaction for sale-purchase of the share as stock-in-trade then the Department shall not dispute on this matter. Accordingly, in this case, assessee has been treating the income arising from the sale-purchase of the share as STCG, therefore, lower authorities cannot dispute the same as “business income” Magnitude of the transactions do not alter the nature of the transactions. Therefore, magnitude of transactions carried out by the assessee in our view should not be very material in coming to the conclusion that income in question is income from business. Though the res judicata is not applicable but the principal of consistency will definitely apply and on that basis the claim of the assessee should be held proper. Accordingly we are inclined to reverse the order of authorities below - Decided in favour of assessee.

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• 2016 (10) TMI 319
  Change in system of accounting - bonafide change - Held that:- As decided in assessee’s own case for AY 2002-03 wherein the Tribunal, following the decision in the case of Kishan Discretionary Family Trust vs. ACIT [2007 (11) TMI 622 - ITAT AHMEDABAD] held that the assessee has right to adopt the changed system of accounting and by changing the system of accounting from mercantile to cash was a bona fide change. Respectfully following ITAT judgment in assessee’s own case [2013 (2) TMI 787 - ITAT AHMEDABAD] we uphold the order of the ld. CIT(A) in this regard. Addition made u/s 14A out of interest expenses and administrative expenses - Held that:- We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. It emerges from the record that the assessee has placed on record a revised working of the interest expenses of Nirman Soaps & Detergents Pvt Ltd and Navin Detergent Pvt Ltd, which requires to be verified at the Assessing Officer’s level alongwith other relevant facts and circumstances of the case alongwith the case law relied by the assessee in the case of UTI Bank Ltd (2013 (8) TMI 238 - GUJARAT HIGH COURT). Therefore, in the interest of substantial justice, we set aside this issue to the file of the ld. Assessing Officer with a direction to decide the same afresh in accordance with law, after providing due opportunity of being heard to the assessee. Thus, these grounds are allowed for statistical purposes.

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• 2016 (10) TMI 318
  GP addition - non-genuine and unproved purchase from the parties declared as "Hawala Operator" by the Sales Tax Department of Maharastra State - Held that:- we are of the considered opinion that end of justice will be met whereby further addition of 5% of the alleged bogus purchases of Rs. 95,25,636/- are made to income of the assessee to cover payment of commission in cash by the assessee to these bogus hawala dealers who have provided accommodation entries to the assessee by providing bogus bills whereby cash was returned to the assessee by these 20 dealers after deducting their commission in lieu of cheque given by the assessee which is corroborated by the statement / affidavits of these 9 bogus dealers. We order accordingly. Decision in the case of M/s Prakash Metals [2016 (2) TMI 888 - ITAT MUMBAI] followed - Decided partly in favor of assessee.

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• 2016 (10) TMI 317
  Penalty u/s 271(1)(c) - interest claimed on the loan from Shri V.L.Ittiachen - as per asseessee he has received loan from non-resident Indian after obtaining necessary approval from RBI - Held that:- Since the assessee has received the money after getting necessary approval from RBI, it is not correct to say that the identity and creditworthiness of the creditor is not proved. This Tribunal is of the considered opinion that merely because an addition was made in the assessment proceedings that will not result automatically in levy of penalty u/s 271(1)(c) of the Act. The Assessing Officer has to reappreciate the material available on record. This Tribunal is of the considered opinion that there was a justification in claiming the loan amount as gift. Merely because the claim of the assessee was disallowed in the assessment proceedings, this Tribunal is of the considered opinion that it cannot be construed that the assessee has furnished inaccurate particulars in view of the judgment of the Apex Court in Reliance Petroproducts Pvt. Ltd (2010 (3) TMI 80 - SUPREME COURT ). Similarly, rental receipt was fund to be omitted in the return of income. The CIT(A) found that there was reasonable cause in not disclosing the same in the return of income. This Tribunal do not find any reason to interfere with the order of the CIT(A). Similarly, for the disallowance of interest and commission and restricting the depreciation to 15% as against the claim of 25% by the Assessing Officer cannot be construed as furnishing inaccurate particulars of income. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly the same is confirmed. Absence of notice - Held that:- From the material available on record it appears that this Tribunal by an order dated 16.2.2006 directed the assessee to file an affidavit making a categorical statement about the non-receipt of notice u/s 143(2). Even after the expiry of almost ten months, no affidavit was filed. Therefore, this Tribunal is of the considered opinion that the claim of the assessee that no notice was received cannot be accepted at this stage. Therefore, this Tribunal do not find any reason to uphold the contention of the assessee. Failure of the Assessing Officer to give adequate opportunity to the assessee - Held that:- Admittedly, the assessee received the notice issued by the Assessing Officer u/s 142(1) and one Shri G. Palanidas, Dy. G.M(Taxation) of M/s Empee Group of companies appeared before the Assessing Officer. However, he has not filed any authorization to appear on behalf of the assessee. He simply claimed that he was a loyal employee of M/s Empee Distilleries Ltd, therefore, he is appearing on behalf of his Managing Director-cum-Chairman, Shri M.P.Purushothaman. As rightly submitted by the ld. DR, when the notice was received from the Assessing Officer it is for the assessee to appear before the Assessing Officer and if he could not appear in person it is for him to make alternate arrangement. Therefore, at this stage, it may not be proper on the part of the assessee to claim that no proper opportunity was given. The assessment year under consideration is 2001-02. Remanding the matter back to the file of the Assessing Officer after a lapse of almost 15 years may not serve any purpose, therefore, this Tribunal do not find any reason to uphold the contention of the ld. Counsel for the assessee. Addition on loan non-resident Indian - Held that:- Admittedly, the assessee received a loan of Rs. 50 lakhs from Shri V.L.Ittiachen, a nonresident Indian. During the year under consideration by way of book entry, the assessee claimed that the outstanding loan of Rs. 40,60,000/- was converted into gift. Therefore, it is obvious that the creditor waived the principal amount without any consideration. Once the principal amount was waived, this Tribunal is of the considered opinion that this would form part of the income of the assessee u/s 41(1) of the Act. Therefore, the CIT(A) has rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. Unexplained cash credit - Held that:- Assessing Officer found an unsecured loan of Rs. 39,62,212/-. When there is a credit in the books of account, the assessee has to necessarily establish the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. In this case, the assessee has not filed any confirmation letter. Moreover, the details and mode of payment are not available on record. In the absence of any material to substantiate the claim of unsecured loan, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition made by the Assessing Officer. Addition of rent - whether the property tax paid by the assessee has to be allowed while computing the income from house property? - Held that:- In view of the provisions of sec. 43B of the Act, this Tribunal is of the considered opinion that the taxes has to be allowed while computing the rental income provided the same was paid during the assessment year under consideration or atleast before the due date for filing the return of income for the year under consideration. This Tribunal is of the considered opinion that property tax and water tax is allowable deduction while computing the income from house property. However, it is for the assessee to establish that the payment has actually been made. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall verify the payment of property tax and water tax. Accordingly, the orders of the lower authorities are set aside and the issue of addition of Rs. 9 lakhs is remitted back to the file of the Assessing Officer. As admitted by the assessee before the Assessing Officer, the same shall be taken as income from rent. However, the Assessing Officer shall verify whether the assessee has actually paid the property tax and water tax during the year under consideration. If the assessee produce necessary evidence to establish the actual payment of water tax and property tax during the year under consideration or before the due date for filing the return of income, the same has to be allowed. Disallowance of interest payment and payment of commission - Held that:- The assessee claimed payment of interest to the extent of Rs. 2,04,225/- and commission to the extent of Rs. 30,900/- for the year under consideration. The Assessing Officer found that similar claim was disallowed for the assessment year 1999-2000 and 2000-01. As rightly submitted by the ld. DR, the CIT(A) found that the Assessing Officer perhaps disallowed the claim of the assessee u/s 14A of the Act. The fact remains no details ae available on record with regard to the nature of payment of interest and commission. Since no details are available on record, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly the same is confirmed.

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• 2016 (10) TMI 316
  Validity of reopening of assessment - purchase and sale of shares as bogus - Held that:- There is a conclusive and final finding of fact that purchases of shares were bogus and sham as was held by the Revenue in the assessment year 2005-06 which has not been dislodged so far as the assessee accepted the said findings which became conclusive, thus the facts in the instant case are distinguishable as against the relied upon case of the assessee in Smt Aarti Mittal (2013 (11) TMI 968 - ITAT HYDERABAD ) on that ground itself. Similarly, contentions of the assessee that the Revenue has accepted the gains on sale of 1500 shares of M/s Shiv Om Investment and Consultancy Limited in the succeeding assessment year 2007- 08 as long term capital gains while processing of return u/s 143(1) of the Act is not of help to the assessee as every assessment year is separate assessment year and merely because the Revenue has not selected the case under scrutiny by issuing notice u/s 143(2) of the Act and framing detailed scrutiny u/s 143(3) of the Act instead chose to process the return u/s 143(1) of the Act without scrutiny will not entitle the assessee to get the well reasoned assessment orders and appellate orders of the learned CIT(A) dislodged in the absence of the cogent material and evidences to demolish the findings of the authorities below. The Revenue in the case of the assessee’s brother has also declared the purchase and sale of shares as bogus but brought to tax , gains arising from sale of shares as short term capital gains . This in our considered view, is also not of help as the Revenue in the instant case has come to the conclusive finding which attained finality that the transactions of purchase of shares are sham and bogus transactions camouflaged with an intention to evade taxes - Decided against assessee

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• 2016 (10) TMI 315
  Penalty u/s. 271(1)(b) - assessees have not complied with the notices issued u/s.142(1) - assessments made for several assessment years u/s.153A - Held that:- We find from the assessment orders in this group of appeals that assessments were made for several assessment years u/s.153A of the Act. The Assessing Officer in all these cases has passed the orders u/s. 143(3)/153A of the Act. In the assessment order of J.S. Walia, in para 2 the Assessing Officer has mentioned that “the authorized representative of the assessee attended by time to time and furnished written submissions with supporting documents which were perused and placed on the record. Seized books of accounts, documents and material were duly confronted to the assessee in the course of assessment proceedings. Regular books of accounts were produced and checked with the seized documents.” This shows that the assessee has made full compliance of the notices issued u/s. 142(1) though with some delay but this is not the case of noncompliance of notices. Relying upon the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. ITO [2007 (8) TMI 386 - ITAT DELHI-G ] has held that “in the absence of recording satisfaction, mere initiation of penalty will not confer jurisdiction on the Assessing Officer to levy the penalty”. It was further held that assessment having made u/s 143(3) means that subsequent compliance in the assessment proceedings was considered as good compliance and defaults committed earlier were condoned hence penalty cannot be levied u/s. 271(1)(b). We have gone through the orders of the learned CIT(A) and find that the learned CIT(A) has held that though the notice u/s 142 was not received by the assessee but he has participated in the proceedings. Therefore, the assessee has reasonable cause for noncompliance and as such the penalty cannot be levied. Moreover, the penalty has been levied without issuing show cause notice i.e. without giving specific opportunity as contemplated u/s 274 of the Act. Thus penalties deleted - Decided in favour of assessee

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• 2016 (10) TMI 314
  Short deduction of TDS - TDS u/s 194C OR 194I - PSF and X-Ray charges - AO held that the payment made by the assessee was covered by the provisions of section 194-I and treated the assessee in default for not deducting the taxed at higher rate - Held that:- Payment made by the assessee to MIAL cannot be treated rent, as per the provisions of section 194-I of the Act. There was no use of land by the assessee for both the charges collected by it. Thus, the basic ingredient i. e. use of land, plant, machinery etc. is missing and hence it can safely be held that the assessee had rightly deducted the tax at the rate of 2%, as per the provisions of section 194-C of the Act. PSF charges paid by the assessee on behalf of its customer, did not attract the provisions of section 194-I. See Jet Airways (India) case [2014 (9) TMI 650 - ITAT MUMBAI]

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• 2016 (10) TMI 313
  Disallowance u/s 14A - Held that:- The facts stated remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the ld AO had resorted to make disallowance u/s 14A of the Act on a notional basis by assuming that the borrowed funds were utilized for making investments. But from the aforesaid facts, we find that it is clearly established that the investments were purely made only out of surplus funds lying in the current account at the instance of the bankers. The disallowance of interest on notional basis is contemplated only in Rule 8D(2)(ii) which is admittedly not applicable for the year under appeal. Hence there cannot be disallowance of any interest u/s 14A of the Act. The basic premise of the ld AO that the borrowed funds were utilized for making investments and correspondingly disallowance u/s 14A of the Act is to be made, stands defeated in view of the aforesaid finding. Hence we find no infirmity in the order of the ld CIT-A in this regard. Addition made on account of valuation of closing stock of work in progress - Held that:- We find that the ld CITA had given categorical findings with regard to the treatment given by the assessee in the valuation of closing stock of work in progress as on 31.3.2007. The ld DR was not able to controvert any of the findings given by the ld CITA before us. Under these circumstances, we do not find it necessary to interfere with the order of the ld CITA in this regard. Accordingly, the ground raised by the revenue is dismissed.

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• 2016 (10) TMI 312
  Addition u/s 41 - unexplained difference in account - cessation of trading liability (in respect of which the assessee had at any time in the past claimed and been allowed deduction - Held that:- prima facie suggestive or indicative of a liability, that by itself could not be conclusive of the matter, particularly considering that we have found the assessee’s books of account as not reflecting the actual state of affairs. Similarly, the non write off of the debt by KRL, which may be hopeful of recovery, would also not conclude or be determinative of the matter. The principal question, despite legal obligation, i.e., assuming so, is: Does the assessee intend of pay the same? Going by the assessee’s conduct, it does not. Or else it would not have stopped paying KRL, which appears to be for long, compelling it to charge delayed payment charges and, finally, invoke the bank guarantee in its’ favour. A good part of the amount outstanding stands paid directly by a customer. Why? The supplier (KRL), it needs to be borne in mind, is selling a licensed item (through registered dealers), and recovers, as a matter of policy, payment of goods in advance (refer Ground # 2 before the ld. CIT(A), reproduced at pg. 1 of the impugned order), i.e., does not extend any credit to its’ customers. It is for these reasons that we regard the establishment of intent by the assessee as relevant; the creditor having already, as it appears, exhausted the bank guarantee issued in its’ favour. How would the assessee establish its intent to pay the said amount, as implied by its’ holding out the same as a subsisting liability, we cannot predicate, being in fact a matter of evidence. Does the company have any means to recover except, of course, by initiating a legal process? Has it done so at any time? When does the same get barred by time? Has any part of liability been discharged subsequent to 31.3.2008? These and other related questions arise, on the basis of answers to all of which only would it be possible to say if there has occurred, or not so, a cessation of liability qua the said balance amount of Rs. 7.63 lacs, i.e., as on 31.3.2008. The matter is, in view of the foregoing, restored to the file of the AO for proper determination, to be decided after allowing a reasonable opportunity to the assessee to present its’ case before him, issuing definite findings of fact, in accordance with law. We may clarify that we may not be construed as having issued any finding in the matter, but as having only analyzed the facts and circumstances with reference to the assessment of the (whole or any part of the) said credit balance appearing in the assessee’s books of account as income under the Act.

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• 2016 (10) TMI 311
  Validity of reopening u/s 147/148 - denial of exemption u/s 11 - violation of provisions of Section 13(3) - non charitable activities - Held that:- The present case, it is an admitted fact that the relatives of the trustees were appointed as Principal, Vice- Principal and Administrative Director. However, their appointments were not illegal as the same were done by following the proper procedure, an advertisement was published in the National Newspaper for the post of Principal and Vice-Principal. In response to the said advertisement, the applications were received from the eligible person and after a proper scrutiny, those persons who fulfilled the requisite qualification and having the experience, persons were called for an interview. The Selection Board who conducted the interview included, two nominees of the Education Department of the Government and selection was done on merit. The remuneration paid was in accordance with the pay scale fixed by the Directorate of Education for the similar post. It is not the case of the AO that the remuneration paid was in excess of what may be reasonably paid for such services. It is also not the case that the expenses relating to telephone etc. were not incurred for furtherance of the objectives of the assessee society. In the present case, the AO has observed that the development charges were not shown in the income and expenditure account and reopen the assessment on the said basis. This observation of the AO was factually incorrect because the assessee had shown the development charges in its books of account which is evident from the various copies of the ledger account furnished by the assessee to the AO vide letter dated 19.12.2011 which are placed at page nos. 282 to 305 of the assessee’s paper book. The assessee also furnished copies of the journal vouchers in respect of tuition fees and development fees along with student wise details which are placed at page nos. 306 to 314 of the assessee’s paper book. In the present case, the AO has not brought anything on record to substantiate that the expenditure on salary or facilities provided to the relatives of the trustees of the assessee society were excessive having regard to fair market value of the services provided by them. Therefore, the AO wrongly invoked the provisions of Section 13(3) of the Act and the ld. CIT(A) was not justified in confirming the action of the AO. We, therefore, set aside the impugned order and direct the AO to allow the exemption u/s 11 of the Act to the assessee. Since we have decided the Ground in favour of the assessee on merits, therefore, no findings are being given on the issue relating to the reopening u/s 147 of the Act raised by the assessee vide . - Decided in favour of assessee.

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• 2016 (10) TMI 310
  Reopening of assessment - Assessing Officer after receiving certain information through AIR data issued notice under section 148 of the Act - Held that:- The Assessing Officer in the present case has failed to provide the copy of reasons recorded for reopening of the assessment to the assessee and in view thereof, remedy available with the assessee to object to the reasons recorded for reopening of the assessment and duty of the Assessing Officer to deal with the said objections could not be taken care of. In view of the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Trends Electronics (2015 (9) TMI 1119 - BOMBAY HIGH COURT ), the reassessment order passed in the case of assessee is bad in law. Even otherwise, the Assessing Officer had completed reassessment proceedings against the assessee on the basis that the reasons were recorded in respect of deposit of sum of Rs. 2,29,806/- on 31.03.2007 in savings bank account with HSBC Bank. The assessee was asked to explain the same. However, the exact reasons recorded for reopening the assessment are at variance i.e. information was received from DIT(Systems) in respect of Rs. 2,29,806/- being received from HSBC Bank. The reassessment proceedings were completed against the assessee to explain the deposit of Rs. 2,29,806/- on 31.03.2007, whereas AIR information was in respect of amount received from HSBC Bank. On this ground also, reassessment proceedings completed against the assessee are bad in law and invalid. - Decided in favour of assessee

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• Customs

• 2016 (10) TMI 297
  Implementation of order passed by Commissioner of Customs (Appeals) dated 30.06.2015 - redemption fine imposed Rs. 2,50,000/-, subsequently reduced to Rs. 1,50,000/- confiscation of gold from a Indian citizen - assorted gold jewellery - no stay obtained by the Department to implement the order - Held that: - as on date there is no order of stay granted by the Revisional Authority. Therefore, the Department bound to implement the order passed by the first respondent. However, the Court inclined to grant some time to the Department to move an application for stay before the Revisional Authority, if they so desire. The Department granted 45 days time to move a stay application before the Revisional Authority and if they fail to secure any stay or appropriate interim orders, on the expiry of the 45th day, the respondents shall release the gold subject to the petitioner paying the redemption fine of Rs. 1,50,000/- and such release shall be only for re-export and not for clearance. The petitioner shall also file a bond securing the interest of Revenue, in the event they succeed before the Revisional Authority. - petition allowed - decided in favor of Department on fulfilling specified requirements.

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• 2016 (10) TMI 296
  Implementation of order passed by Commissioner of Customs (Appeals) dated 23.12.2015 - redemption fine reduced to Rs. 13,00,000/- and penalty reduced from Rs. 6,00,000/- to Rs. 1,50,000/- imposed on confiscation of gold bars from a Singapore citizen - no stay obtained by the Department to implement the order - Held that: - as on date there is no order of stay granted by the Revisional Authority. Therefore, the Department bound to implement the order passed by the first respondent. However, the Court inclined to grant some time to the Department to move an application for stay before the Revisional Authority, if they so desire. The Department granted 45 days time to move a stay application before the Revisional Authority and if they fail to secure any stay or appropriate interim orders, on the expiry of the 45th day, the respondents shall release the gold subject to the petitioner paying the redemption fine of Rs. 6,00,000/- and the reduced penalty of Rs. 1,50,000/- and such release shall be only for re-export and not for clearance. The petitioner shall also file a bond securing the interest of Revenue, in the event they succeed before the Revisional Authority. - petition allowed - decided in favor of Department on fulfilling specified requirements.

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• 2016 (10) TMI 295
  Confiscation of Foreign currency u/s 113 of the Customs Act, read with the provisions of Foreign Exchange Management Act, 1999 - imposition of redemption fine of Rs. 1,70,000/- and penalty of Rs. 1,20,000/- - US Dollars - Oman Riyals - whether the quantum of redemption fine and penalty imposed justified? - Held that: - redemption fine of Rs. 1,70,000/- is imposed, as contained in Ext.P9 order, but the personal penalty imposed shall stand reduced to Rs. 50,000/-. The excess amount, if any paid by the petitioner pursuant to the orders impugned in the writ petition, shall be refunded to the petitioner within a period of two months - petition disposed off - decided partly in favor of petitioner.

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• 2016 (10) TMI 294
  Provisional release of goods - valuation - assessable value - rejection of Declared value - confiscation of imported goods - imposition of redemption fine and penalty u/s 112(a) of the Customs Act 1962 - earth moving equipment - of Japanese origin - As per Rule 10((1)(b) of the Customs Valuation (Determination of Prices of Imported Goods) Rules 1988, the importer or his agent shall furnish the invoices of the manufacturer or producer of imported goods, in cases where goods are imported from or through a person other than the manufacturer producer. The goods are declared as of Japanese origin, neither the country of origin certificate were produced nor manufacturer's invoice produced to substantiate the invoice price. There is a vast difference between the invoice value and the manufacturer's price list value. In spite of the order by the Hon ble High Court, the goods were not released and the same were subsequently auctioned without issuing the notice to the appellant. The appellant prayed for compensation - Held that: - compensation granted by the Hon ble High Court is under the writ jurisdiction of the Hon ble High Court which is a constitutional court whereas the Tribunal does not have the power to grant compensation in such cases - compensation cannot be granted. Mis-declaration on the part of appellant proved - Penalty imposed on the appellant held to be on higher side and the penalty now reduced to Rs. 25,000/- - appeal rejected on other grounds - decided against appellant.

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• 2016 (10) TMI 293
  Valuation - Polished Porcelain Tiles - enhancement of value solely on the basis of NIDB data - comparison of imported goods with identical goods - Held that: - if the value of contemporaneous imports in case of identical goods are not available it is the responsibility of the Revenue to compare with the really comparable imports. The comparison made using NIDB Data is for different Ports and when the appellants are buying the subject goods directly from the manufacturer, value in such goods has to be lower than the imports made from the traders. The appellants mention that the quantities purchased by them have been very high, when compared with the quantities shown in the NIDB Data. When the appellants are importing regularly at Cochin Port, and import 80-100 containers per month, the said importers definitely can negotiate to import at better/ lower price from the manufacturer supplier. - the case of enhancement of value are merely based on NIDB data, when such documents relating NIDB data were not even supplied to the appellants, thus not following principles of Natural Justice - Customs did not have justifiable evidence to reject the invoice values of the subject imports. The decision in the case of Commissioner of Customs, New Delhi Vs. DM International [2013 (5) TMI 549 - CESTAT NEW DELHI] relied upon where it was held that NIDB data cannot be made the basis for enhancement of value. Enhancement of value not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 292
  Imposition of penalties u/s 114(i) of the Customs Act, 1962 - export of glass chimneys after verification and inspection - seal of container found broken - illegal export of Red Sanders were sought to be done under the cover of the appellant's documents of export - Held that: - Penalties u/s 114 are imposable upon the person who in relation to any goods does omits to do any act which would render such goods liable to be confiscated under Section 113 or abetted doing or omission of such act. There is also nothing in the Customs Act, 1962, that the exporter is required to monitor the movement of the container till it is exported. It is not coming out of the case records as to what the appellants omitted to do which lead to this abetment to the offence. That there is no evidence on record to indicate that the appellants had knowledge of the contraband being sent in the container. Some negligence in not monitoring the export consignment can only be attributed on the part of the appellants. But the same will not make the appellant a party to attempt to export of contraband goods. The decision in the case of Air India-vs.- Commr.of Customs, Mumbai [2000 (5) TMI 858 - CEGAT, MUMBAI] relied upon where it was held that negligence alone is not enough for imposition of penalty. Imposition of penalties not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 291
  Demand of SAD - Refined Paraffin Wax - claim of exemptions by filing declarations - exemption under Notification No.56/98-Cus dated 13/06/98 - credit under Rule 57A of the Central Excise Rules, 1944 - whether the denial of exemption from SAD justified on the ground that the appellant has applied for exemption from SAD and MODVAT simultaneously and simultaneous exemption is not allowed? - Held that: - Both the declarations are independent and filed for different purposes. It is also observed that neither in the original order nor in the impugned order any reason given to show that the appellant has got double benefits. The appellant has not violated any provision and availed double benefits - exemption of SAD cannot be denied - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2016 (10) TMI 285
  Scheme of arrangement of demerger - Held that:- Observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed and hence do not survive. This court has come to the conclusion that the present scheme of arrangement is in the interest of its shareholders and creditors as well as in the public interest and the same deserves to be sanctioned. Prayers in terms of paragraph 19 (a) of the Co. Petition No. 317 of 2016 for the Demerged Company and paragraph 22 (a) of the Co. Petition No. 318 of 2016 for the Resulting Company are hereby granted. The petitions are disposed of accordingly. So far as the costs to be paid to the Central Govt. Standing Counsel is concerned, quantify the same at Rs. 7,500/per petition. The same may be paid to the learned Standing Counsel appearing for the Central Govt. The petitioner companies are further directed to lodge a copy of this order, the detailed schedule of immovable assets of the Demerged Undertaking of the Demerged Company viz. Manufacturing Division of Amazon Textiles Private Limited and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order. The Petitioner companies are directed to file a copy of this order alongwith a copy of the scheme with the concerned Registrar of Companies, electronically, along with INC28 in addition to physical copy as per relevant provisions of the Act.

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• 2016 (10) TMI 284
  Scheme of amalgamation - Held that:- Pursuant to the report of the Official Liquidator, it is ordered that the petitionerCompany shall preserve its books of accounts, papers and records and not dispose of the records without prior permission of Central Government as per the provisions of Section 396(A) of the Companies Act, 1956 and shall not be absolved from any statutory liability. It is ordered that the scheme necessarily contains the clause 11(a) and 11(b) and hence observations as made in the common affidavit of the Regional Director is misplaced one and the Transferee petitioner explained and clarified the issues in the affidavit. Considering the above, it is ordered that the scheme at Exhibit “C” to the petitions is hereby sanctioned and the prayers as prayed in all the Company Petitions are allowed. The petitioners are directed to pay the fees of Rs. 7,500/for each petitions to Mr. Devang Vyas, learned Assistant Solicitor General and petitioner of Transferor Companies are directed to pay the fees of Rs. 7,500/each to the Official Liquidator.

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• Service Tax

• 2016 (10) TMI 309
  Service tax liability - Intellectual Property Rights - whether the manufacturing/tie up based agreement entered into by the appellant-assessee with bottlers can be considered as agreement for payment of royalty by the bottlers to the appellant-assessee liable to service tax as held by the impugned order - Held that:- on careful perusal of the terms of both agreements, we find that there are substantial material differences and the tie up agreement cannot be considered for service tax liability under the category of royalty payment. We find that though the lower authority noted the contents of both Board's circular dated 27.10.2008 to the effect that tie up based agreements are not covered the IPR services for service tax, he proceeded to record that in the present case manufacturing agreement are essentially same as royalty based agreement except for difference of methodology used for calculation of royalty. We also find that the lower authorities fell in error in appreciating the provisions of the terms of contract vis-a-vis the position categorically clarified by the Board on 27.10.2008 and 30.10.2009. - No service tax liability - Decided in favour of appellant

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• 2016 (10) TMI 308
  Refund claim - Unjust enrichment - Service recipient has reversed the cevnat credit subsequently after availing the same - copies of ledger produced - service tax was on security services provided to school / education institution - Notification No. 25/2012-S.T., dated 20th June, 2012 - Held that:- the appellant had produced the ledgers maintained by the recipient of services, M/s. Ashok Hall Girl’s Residential School vide the entry dated 28-3-2014 in the ledger, which clearly records debit of Rs. 2,48,600/- earlier credited to the appellant towards Service Tax. Thus the component of Service Tax earlier borne by the service recipient and passed on by the appellant, stood reversed by the school and stood debited from the consideration due to the appellant from the school. In the circumstances, the appellant is seen to have clearly established that there is no unjust enrichment. Since unjust enrichment was the sole ground for denial of refund and that is not found to exist in the facts and circumstances of this case, the appellant is entitled to refund. - Decided in favour of appellant

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• 2016 (10) TMI 307
  Suo motu adjustment of excess payment of service tax made in October, 2008 with subsequent service liability - procedural violation - Demand alongwith interest and penalty -Held that:- there is no dispute that the appellants have paid excess service tax during the period from April, 2008 to September, 2008. Therefore, they are eligible for getting back the excess amount paid, either by way of refund or by adjustment. The appellants choose to re-adjust the same suo motu. It is apparent that they have not followed the procedures in this regard. However, the fact remains that they were entitled for the amount. Therefore, demand of service tax of the said amount is not sustainable. Consequently, imposition of equivalent penalty under Section 78 is also not sustainable. However in the fitness of things, it would be appropriate that the appellants are given a warning that they should follow the procedures in such respects and Revenue will be at liberty to quote this warning in case of any further violations by the appellants in such respects. - Appeal disposed of

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• Central Excise

• 2016 (10) TMI 306
  Evasion of excise duty - Validity of adjudication order - violation of principles of natural justice - documents which have been relied upon by the department in the adjudicating process were not made available to the petitioner despite requests thereof being made - adjudicating authority has placed reliance on the evidence of the co-accused who is an accomplice - deponent was not allowed to be cross-examined - Held that:- the forensic report is discussed in the writ petition. It relates to forgery of invoices. The department had referred to the copies of the official invoices and copies of the forged invoices to the Government Examiner of Questioned Documents, Directorate of Forensic Sciences, Ministry of Home Affairs for their opinion and report. The report is available to the petitioner, at least after the impugned order. Nothing has been placed on record to suggest that the report of the forensic expert is wrong. In the present case it is not merely the forensic report but the conspectus of the facts and the documents that were taken into consideration by the adjudicating authority. Period of limitation - Held that:- the impugned order finds that, the petitioner is guilty of suppressing documents during investigation and evasion of payment of appropriate duty on excisable goods. Nothing in Section 11A of the Central Excise Act permits the Court to come to a different finding, in conspectus of the facts of the present case, that the claim of the department is barred under Section 11A. The impugned order narrates as to how the petitioner had gone about their business of concealing and suppressing the transactions from the department. It was discovered at a later stage. The mechanism by the petitioner for concealment and evasion used was so well-organised that it had evaded the notice of the personnel posted at the factory premises of the petitioner. Therefore the mere fact that the personnel of the Excise was officially posted in the factory premises and that there is no allegation of omission ipso facto does not absolve the petitioner from a charge of evasion of duty. - Decided against the petitioner

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• 2016 (10) TMI 305
  Conversion of DTA unit to EOU - reversal of cenvat credit u/r 3(5) of Cenvat Credit Rules, 2004 - inputs, consumables, work-in-progress on the day of conversion - goods having not manufactured or used in DTA unit and the same also could not have been procured under CT-3 certificate in terms of Notification No. 22/2003 - whether demand of duty and penalty justified on the ground that upon conversion of DTA to EOU the goods lying in that portion of converted unit would amount to removal of these goods and thereby attract the reversal of credit in terms of Rule 3(5) of Cenvat Credit Rules, 2004? - Reference made to the case of Privi Organics Ltd. vs. CCE, Raigad [2015 (10) TMI 287 - CESTAT MUMBAI]. Held that: - A part of DTA unit was converted to EOU and as such there is no evidence of any physical removal of any of the credit availed items as held in the appellant's own case [2016 (8) TMI 346 - CESTAT NEW DELHI] and the issue was decided in favor of appellant. The decision of the case Privi Organics Ltd. not applicable to the present case as during that time the 100% EOU were outside the credit scheme. Credit available on conversion - demand of duty and penalty not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 304
  Demand of differential duty - Valuation - interconnected undertakings u/s 2 (9) of MRTP Act 1969 - rule 9 of the Central Excise valuation Rules 2000 - related persons - sale of goods - Holding-Subsidiary relationship - valuation - Transaction Value as per Section 4 of the 'Central Excise Act, 1944 - Held that: - The law is well settled in as much the transaction value can be rejected only if both the units have mutual interest in business of each other. While holding company may have an interest in the subsidiary company, subsidiary company may not have any interest in the holding company. The rule contemplates that entire production needs to be sold through the holding Company. The appellants sells 98% of his finished goods to outsiders/independent buyers, and only 2% of the finished goods manufactured are sold to the holding company - provisions of rule 9 are not invokable - demand of duty, interest and penalties not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 303
  Valuation - suppression of assessable value - demand of excise duty on suppressed amount - separate billing for the installation of the FRP bodies - FRP cleared on payment of duty - whether there was any difference between the assessable value of FRP bodies cleared by the appellant to vehicle manufacturer and the assessable value of the FRP bodies which are installed in the factory premises? - Held that: - no difference found in the assessable value. In the absence of any depression in the assessable value of the FRP bodies installed in the factory premises as against the FRP bodies sold, demand of central excise duty on the installation charges received by the appellant not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 302
  Denial of CENVAT credit - capital goods cleared without payment of duty - Held that: - the respondent has cleared the capital goods under Rule 4(5)(a) of Cenvat Credit Rules, 2004 and received back in the factory. The documentary evidence to that effect has been filed by the respondents on 28.10.2015 before the adjudicating authority and the same has not been considered but the same has been considered by the Commissioner (Appeals) - credit allowed. Inputs and input service used for manufacturing of job work goods - Held that: - As the principal manufacturer is discharging duty liability on job work goods, the respondent is entitled to take credit on inputs and input service. Capital goods- moulds and dies ultimately used for manufacturing dutiable products - Held that: - the decision in the case of BHARAT FORGE LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2003 (10) TMI 175 - CESTAT, MUMBAI] relied upon where CBEC circular dated 3-4-2000 referred in which the Board has clarified that Cenvat credit should not be denied if the inputs are used in the intermediate of the final products even if the intermediate is exempt from payment of duty - credit allowed on capital goods which are used for manufacture of dutiable goods. Security services received in the factory - Held that: - as per Rule (2(l) of Cenvat Credit Rules, 2004 as held by the Hon'ble Bombay High Court in the case of CCE, Nagpur Versus Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT] the respondent has credit correctly on security services. Appeal allowed - decided against Revenue.

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• 2016 (10) TMI 301
  Recovery of amount taken as credit of Education Cess and Secondary and Higher Secondary Education Cess - self credit taken on the basis of Exemption Notification No. 56/2002-CE, dt. 14.11.2002 - claim for exemption in respect of education cess and S&H cess rejected and order for recovery passed by Assistant Commissioner, which was paid by the appellant within five days of the order - subsequent SCN issued for demand of the same - is the subsequent SCN issued for demand of Education Cess and S&H Cess tenable? - Held that: - recovery of the same amount along with interest would amount to double jeopardy. The same amount which had been already been paid by the appellant in pursuance of Assistant Commissioner's order, cannot be demanded again by initiating fresh proceedings - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 300
  Denial of CENVAT credit - demand of duty alongwith interest and penalty - manufacturer of copper wire/rods/circles - investigation at the end of First Stage Dealer and at the end of appellant - supply of goods and issue of cenvatable invoices to avail inadmissible credit - Held that: - the appellant has been able to prove on the basis of evidence such as octroi receipt of the transporter, sales tax check post etc. to prove the goods accompanied with invoices have been received by them in the factory and the payment has been made through account payee cheque and no flow back of money has been taken place. Moreover the goods have been used for manufacture of final products cleared on payment of duty. The Revenue has not come up with any contrary evidence to controvert the evidence produced by the appellant. The decision in the case of COMMISSIONER OF CENTRAL EXCISE Versus GARIMA ENTERPRISES [2009 (1) TMI 230 - PUNJAB & HARYANA HIGH COURT] relied upon and held that the credit cannot be denied to the appellant on the basis of evidence produced by them - denial of CENVAT credit not justified - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 299
  Demand of Central Excise Duty on inputs - pinion shaft and reck jaws - job work - inputs received on job work challan from factory of principal to appellant’s premises - whether the value of inputs needs to be included as inputs received were not for job work but for fitment in the final products? - Held that: - the central excise duty is paid on the entire value of the inputs along with final product despatched from the appellant’s factory premises. The decision in the case of INTERNATIONAL AUTO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, BIHAR [2005 (3) TMI 132 - SUPREME COURT OF INDIA] relied upon where the issue of discharge of duty on the inputs supplied by the final product manufactured is settled in favour of the assessee - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 298
  Reopening of order passed by Settlement Commission - order of settlement or adjudication order? - whether the order passed by the Settlement commission can be reopened? - Held that: - the order passed by the Settlement Commission is not an adjudication order and as per section 127J of the Customs Act, 1962 is an order of settlement between the department and the assessee and it cannot be reopened. The decision of the Hon'ble High Court of Bombay in Indorama Synthetics (India) Ltd. vs. UOI [2013 (1) TMI 100 - BOMBAY HIGH COURT] apply where it was held that the order of the Settlement Commission is not an adjudication order and is settlement of the case. Availing of cenvat credit on the amounts settled before the Settlement Commission is not barred by any provision of the Cenvat Credit Rules, 2004 - no reason found to interfere in the reasoned order passed by the first appellate authority - appeal rejected - decided against appellant.

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• CST, VAT & Sales Tax

• 2016 (10) TMI 290
  Imposition of tax - Sec. 53(2)(a) of the M.P. VAT Act, 2002 - whether by virtue of Entry No.18 to Schedule-I of the M.P. Commercial Tax Act, 1994 or Entry No.47 to Schedule-I of the M.P. VAT Act, 2002, the manufactured product i.e. IMFL or Rectified Spirit being an excisable article is liable to be taxed under the Commercial TaxAct, 1994 or the VAT Act, 2002? - Held that: - the decision in the case of Gwalior Alcobrew Pvt. Ltd. Vs. State of M.P. & Others [2016 (9) TMI 355 - MADHYA PRADESH HIGH COURT] apply where it was held that foreign liquor manufactured in the State of M.P. and exported to other State is an excisable article and even though it is exempted from payment of excise duty but being an excisable good on which the State Government may levy excise duty under the Excise Act, recovery of Commercial tax or VAT tax is not permissible. Amendment brought about in Entry No.47 to Schedule-I of the VAT Act vide notification issued on 1.4.2013. However, in the present appeal as the assessment year is prior to 1.4.2013, the principles laid down in the case of Gwalior Alcobrew Pvt. Ltd. will apply - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 289
  Restoration of appeal - quantum of pre-deposit amount - Held that: - the pre-deposit requirement as modified by the Tribunal is barely 10% of the principal tax ignoring the penalty component. The Tribunal has perused the materials on record and come to the conclusion that no further relaxation can be granted - appeal restored on the condition that the appellant satisfies the pre-deposit requirement as provided by the Tribunal latest by 31.12.2016 - appeal dismissed.

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• 2016 (10) TMI 288
  Imposition of condition of deposit of 50% of the tax and grant of stay regarding the rest 50% - whether the amounts, which are allegedly shown separately in the invoice as transaction charges, are to be included in the turnover or not? - question of law framed by revisionist - Held that: - the revisionist, in regard to the interim order passed by the Tribunal refusing to interfere with the interim order of conditional stay granted by the First Appellate Authority, has not made out any substantial question of law - revision dismissed - decided against revisionist.

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• 2016 (10) TMI 287
  Validity of order of Assessment - opportunity of being heard to the petitioner - Held that: - the order passed by the Appellate Assistant Commissioner dated 30.08.2012, calls for interference and consequently, W.P.No.16057 of 2013, has to be allowed. The Assessing Officer misconstrued the scope of remand, misconstrued the effect of the payment of the tax made by the petitioner as per the direction of the Hon'ble Division Bench resulting in an erroneous order. Therefore, unless and until, the defect is cured at the hands of the Assessing Officer, no purpose would be served in directing the Appellate Authority to consider the appeal petition inspite of this Court having come to a conclusion that the Appellate Authority's order dated 30.08.2012, is not sustainable. Therefore, necessarily, the assessment has to be redone and for which purpose, the matter requires to be remanded to the Assessing Officer. Matter remanded to the Assessing Officer, for fresh consideration, who shall afford an opportunity of personal hearing to the petitioner, hear the objections of the petitioner on all issues and redo the assessment in accordance with law - petition allowed - decided in favor of petitioner.

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• 2016 (10) TMI 286
  Detention of trucks - imposition of penalty in terms of sub section (5) of Section 68 of the Gujarat Value Added Tax Act - penalty imposable upto 150% of the tax - at Dahod check-post for production of wrong Form No. 403 - opportunity of being heard - Held that: - petitioner to deposit such penalty at one and half times the tax liability which will remain in the nature of deposit with the department. The amount deposited under these directions would be adjusted towards the final liability ascertained - petitioner also to submit correct form no. 403. Detention of trucks at Kaprada check-post - power of Department to detain goods in terms of Section 45 of provisional attachment - Held that: - penalty levied under sub section (5) of Section 68 of the VAT Act. Petitioner to pay Rs. 50,000/- towards penalty which will be adjusted with the amount of penalty ascertained. Petitioner also to deposit outstanding tax liabilities. Immediate release of truck granted - petition disposed off - decided in favor of petitioner.

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