Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 12, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Entitlement to the benefit of Section 10A - sales effected to other STP - Once the goods manufactured by the assessee is shown to have been exported out of India either by the assessee or by another STP Unit and foreign exchange is directly attributable to such export, then Section 10A of the Act is attracted and such exporter is entitled to benefit of deduction of such profits - HC
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The conclusion that the Assessee did not exist solely for educational purposes, but for the purposes of profit on the basis that it had advanced the aforesaid sums to Col. Satsangi and/or his family members who were involved in the affairs of the Assessee, is unwarranted. - exemption under Section 10(22)/10(23C) allowed - HC
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Whether the income of the Assessee was liable to be excluded from its total income by virtue of Section 10(22) of the Act was an issue which could not be made the subject matter of block assessment under Section 158BC, as the same is concerned only with the assessment of ‘undisclosed income’ - Held Yes - HC
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DGIT(E) was not justified in denying the Assessee approval under Section 10(23C)(vi) on the ground that the audit report had not been furnished along with the application but had been furnished by the Assessee subsequently, prior to the rejection of the application. - HC
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Denial of benefit of set off of the speculation loss - explanation to section 73 - the assessee is entitled for the set off of the impugned amount of amount of loss brought forward from assessment year 2001-02 - AT
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Claim of deduction of credit balance appearing under the head “Settlement Bargain” u/s 80IB - fluctuation of rate of exchange - amount is eligible for deduction u/s 80IB - AT
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Penalty u/s 271(1)(b) - non-compliance of notices - The assessee gave satisfactory reply expressing his inability to attend the proceedings due to illness which has not been controverted - penalty waived - AT
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Rejection of books of accounts u/s 145(3) - assesee was dealing in gems and jewellery - It is difficult to maintain the stock register in this line of business of the assessee. The number of diamond pieces is also differs on size to size and accordingly valuation of diamond jewellery varies from item to item. - rejection is not valid - AT
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Penalty u/s. 271(1)(c) - It is a misconception in the mind of assessee but he has not deliberately withheld something from the Assessing Officer. He has accounted these receipts in the next year and rather raised the dispute with regard to credit of the TDS - No penalty - AT
Customs
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Procurement of goods without valid documents – Appellant-firm has already paid duty during investigation and there is no sufficient materials available on record for imposition of penalty on partners of both firms - AT
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100% EOU - HSD had been procured from M/s. ESSAR Oils who had imported the same and cleared the same for warehousing. - Demand of differential duty - duty should have been recovered from M/s. ESSAR Oil and not from the respondent - AT
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Reduction in value of goods in subsequent MoA – At time of import, price was available on basis of MoA of agreement and there is no material placed by appellant for reduction of price in subsequent MoA - demand of differential duty alongwith interest confirmed - AT
Indian Laws
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Indirect Tax Revenue - an Increase of 32.6% has been Registered in Collections During September 2015 over the Corresponding Period in the Previous Year
Service Tax
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Assessees were given a lumpsum contract of carrying out the job in the factory premises of Amitasha Enterprises. This activity will not be covered under the category of "Manpower Supply Recruitment Services" - AT
Central Excise
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Denial of SSI Exemption - Use of third person brand name - there was scope for doubt in the mind of assessee regarding availability of SSI exemption and hence the longer limitation period of 5 years from the relevant date would not be available to the revenue - AT
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Area based exemption - a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing unit - for determination of eligibility of cylinder unit, for exemption under Notification No.50/03-CE the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. - exemption allowed - AT
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Area based exemption - the availability of more credit does not benefit an assessee in any manner and, on the contrary, reduces the refund available to him in terms of this notification. - Once the differential duty is paid through PLA, the assessee would be eligible for its self credit in PLA. - demand and levy of penalty set aside - AT
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Valuation - inclusion of freight in the transaction value - place of removal - When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer - freight not to be included - SC
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Interpretation of exemption notification - Even if there is a doubt, which was even accepted by the assessee, it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue - SC
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Ready Mix Concrete (RMC) and concrete mix (CM) - manufacturing at site - Assessee was producing RMC and the exemption notification exempts only CM and the two products are different - Benefit of exemption is not available to RMC - SC
VAT
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Valuation - Inclusion of incidental charges - interest would be chargeable from the date of the passing of the assessment order in question and not from the date of passing of assessment order in any other year by which assessing authority has taxed the incidental charges for the first time - HC
Case Laws:
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Income Tax
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2015 (10) TMI 634
Entitlement to the benefit of Section 10A - sales effected to other STP - whether it does not amount to a deemed export - ITAT denied the benefit - whether the computer software sales to M/s. Texas Instruments India Ltd. do not fall under the expression ‘export turnover’ for the purpose of deduction under Section 10A? - Held that:- If a assessee wants to claim the benefit of Section 10A, firstly he must export articles or things or computer software. Secondly, the said export may be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export should yield foreign exchange which should be brought into the country. If all these three conditions are fulfilled, then the object of enacting Section 10A is fulfilled and the assess ee would be entitled to the benefit of exemption from payment of Income Tax Act on the profits and gains derived by the Undertaking from the export. Clause 6.11 of Exim Policy dealing with entitlement for supplies from the DTA states that supplies from the DTA to EOU/EHTP/STP/BTP units will be regarded as ‘deemed export’, besides being eligible for relevant entitlements under paragraph 6.12 of the Policy. They will also be eligible for the additional entitlements mentioned therein. What is of importance is when a supply is made from DTA to STP, it does not satisfy the requirements of export as defined under the Customs Act. However, for the purpose of Exim Policy, it is treated as ‘deemed export’. Therefore, when Section 10A of the Act was introduced to give effect to the Exim Policy, the supplies made from one STP to another STP has to be treated as ‘deemed export’ because Clause 6.19 specifically provides for export through Status Holder. It provides that an EOU/EHTP/STP/BTP unit may export goods manufactured /software developed by it through other exporter or Status holder recognized under this policy or any other EOU/EHTP/STP/SEZ/BTP unit. What follows from this provision is that to be eligible for exemption from payment of income tax, export should earn foreign exchange. It does not mean that the undertaking should personally export goods manufactured / software developed by it outside the country. It m ay export out of India by itself or export out of India through any other STP Unit. Once the goods manufactured by the assessee is shown to have been exported out of India either by the assessee or by another STP Unit and foreign exchange is directly attributable to such export, then Section 10A of the Act is attracted and such exporter is entitled to benefit of deduction of such profits an d gains derived from such export from payment of income tax. Therefore, the finding of the authorities that the assessee has not directly exported the computer software outside country and because it supplied the software to another STP unit, which though exported and foreign exchange received was not treated as an export and was held to be not entitled to the benefit is unsustainable in law. The assessee is held to be entitled to deduction of such profits and gains derived from the export of the computer software - Decided in favour of assessee.
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2015 (10) TMI 600
Income from All India Personality Enhancement and Cultural Centre for Scholars AIPECCS Society - whether exigible to tax under the Act? - whether Assessee was not functioning solely for the purposes of education and, therefore, was not eligible for exemption under Section 10(22) of the Act? - Assessee submitted that since Revenue had not challenged the order dated 4th August, 2006 passed by the Tribunal under Section 254(2) it was not open for the Revenue to impugn the same in the present appeal and as by virtue of Section 10(22) of the Act, the income of the Assessee was not chargeable to tax and, therefore, the Assessee was also not liable to file its return of income under Section 139 - assessment under Section 158BC Held that:- The expression ‘undisclosed income’ would have to be given a schematic interpretation. The provisions regarding search and seizure and assessing undisclosed income are draconian provisions; the assessment and penalties that follow the discovery of undisclosed income are also harsh. Thus, the expression ‘undisclosed income’ would have to be viewed from the stand point of an Assessee and unless it is manifest from the conduct of the Assessee that he consciously intended to conceal his income, which he otherwise believed to be taxable; the same would not to be liable to be treated as undisclosed income of an Assessee. As indicated earlier, there is no material to conclude that the Assessee acted in a manner to conceal its income or activities from the Authorities. Thus, in the facts of the present case, even if it is found that the Assessee was not entitled to benefit of Section 10(22)/10(23C) of the Act, its income as recorded in its regular books of accounts, nonetheless could not be treated as ‘undisclosed income’. In view of the aforesaid, the assessment order made by the AO under Section 158BC of the Act is not sustainable as in the absence of any undisclosed income, the question of framing a block assessment does not arise. We find no infirmity with the decision of the Tribunal in setting aside the block assessment order dated 31st January, 2001. We accept the contention advanced on behalf of the Assessee that the question whether the income of the Assessee was liable to be excluded from its total income by virtue of Section 10(22) of the Act was an issue which could not be made the subject matter of block assessment under Section 158BC, as the same is concerned only with the assessment of ‘undisclosed income’. In the facts of the present case, it is seen that the objects of the Assessee society are solely for the purposes of education and not for purpose of profit. Distribution of surpluses is prohibited. Further, in the event of dissolution of the Assessee society, its assets would have to be transferred to another institution carrying on similar activities and the same cannot be distributed to its members. The Assessee has been running three schools that are affiliated to CBSE; admittedly, this which would not be permissible in case the Assessee did not exist solely for educational purposes and/or if the Assessee was found to be pursuing the profit motive. The surpluses generated by the Assessee are necessarily to be applied towards its charitable objects.In view of the aforesaid, the exemption under Section 10(22) of the Act cannot be denied to the Assessee only for the reason that it had been generating surpluses Whether the investments made by the Assessee would disentitle the Assessee to the exemption under Section 10(22)? - Held that:- The exemption available under Section 10(22) and 10(23C) could not be denied to the Assessee on the ground that it had invested its funds contrary to Section 11(5) of the Act, as the said condition was introduced by the fifth proviso to Section 10(23C) only w.e.f. 1st April, 1999. More importantly, the Assessees who had made their investments which did not conform to Section 11(5) of the Act, were by virtue of the proviso to Section 10(23C) afforded time till 30th March, 2001 – a period of three years – to transfer their investments to permissible securities as specified under Section 11(5) of the Act. It is not disputed that the investments made by the Assessee in Consortium Finance Pvt. Ltd. were released and the funds of the Assessee were invested in a manner as specified under the provisos to Section 10(23C) read with section 11(5) of the Act. It is not disputed that bulk of the investment in BVR Plantations Ltd. amounting to ₹ 3,64,520/- was made in the financial year 1995-96. The petitioner had paid only two installments of ₹ 34,550/- each in the year 1999-2000. The Assessee had claimed that the payments made in the year 1999-2000 were only further installments of the investment already made and could not be considered as fresh investments. It is also not disputed that the funds invested by the Assessee in BVR Plantations Ltd. were unrecoverable. Thus, in our view, it cannot be disputed that the Assessee had realigned all its investments in the manner as specified under provisos to Section 10(23C) read with Section 11(5) of the Act prior to 30th March, 2001 and had complied with the provisos of Section 10(23C) of the Act. The activities of the Assessee must be viewed in the overall perspective of its nature and its principal object. It is not disputed that the surpluses generated by the Assessee could not be distributed to its members and there is also no allegation that the funds of the Assessee had been so distributed. The fact that certain advances had been made to Col. Satsangi and some of its family members who were also involved in running the school cannot be construed as diluting the predominant object of the Assessee. Seen from the overall perspective, it could hardly be disputed that the predominant activity of the Assessee was managing schools and the substratal purpose of its activities was education. Thus, in our view, the conclusion that the Assessee did not exist solely for educational purposes, but for the purposes of profit on the basis that it had advanced the aforesaid sums to Col. Satsangi and/or his family members who were involved in the affairs of the Assessee, is unwarranted.Thus, in our view, the Assessee would qualify for exemption under Section 10(22)/10(23C) of the Act. Non furnishing of audit report may be necessary for seeking approval under section 10(23C) of the Act; however, failure to file the same along with application would not be fatal to the application. And, in the event an Assessee furnishes the report/certificate, the approval as sought by the Assessee cannot be denied. Thus, in our view, DGIT(E) was not justified in denying the Assessee approval under Section 10(23C)(vi) on the ground that the audit report had not been furnished along with the application but had been furnished by the Assessee subsequently, prior to the rejection of the application. Insofar as other reasons for rejection of the Assessee’s application are concerned, in our considered view, the same are not sustainable for the reasons as discussed hereinbefore. - Decided in favour of assessee.
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2015 (10) TMI 599
Reopening of assessment - failure on the part of the assessee to disclose all material facts fully and truly for claiming deduction u/s 80HHF of the I.T. Act, on the export claimed to have been made to Star T.V. Hong Kong and other exports made apart from other issues recorded in the preceding paragraphs - assessee is aggrieved by the action of Ld. CIT in holding that reassessment order dated 24th December, 2010 passed by the AO u/s 147 / 143(3) of the Act is erroneous and prejudicial to the interest of the revenue - Held that:- A bare reading of first proviso to section 147, shows that the law merely casts a duty on the assessee to disclose fully and truly all material facts necessary for his assessment. The duty of the assessee does not extend beyond the disclosure of all material facts necessary for his assessment. It is thereafter the duty of AO to properly apply the law thereto. Even if one presumes for a moment that in proceedings u/s 143(3) of the Act, the then AO did not properly appreciate the law that income from foreign exchange fluctuation is not derived from the activities of export then assumption of jurisdiction u/s 147 is unsustainable in the instant case in view of the decision of Hon'ble Delhi High Court in the case of Purolator India Ltd. reported in [2011 (11) TMI 365 - DELHI HIGH COURT ]. Since the order of ITAT was passed on 31stMarch, 2008, the AO while recording of reasons on 31st March, 2010 could not have reasons to believe doubting factum of export. Law relating to change of opinion being not permissible for invoking proceedings u/s 147 of the Act is now well settled. Support in this regard can be derived from the decisions of Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India reported in (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) and the judgment of Delhi High Court in the case of Usha International Ltd. reported in (2012 (9) TMI 767 - DELHI HIGH COURT ). Moreover after initiating reassessment proceedings doubting factum of export the AO thereafter in the reassessment order has accepted the submission of assessee on this issue in para 3.4 and restricted his findings only on the issue of foreign exchange fluctuation gain. As far as the objection as to the factum of export and issue relating to copyright being not disclosed by the assessee fully and truly, again we find no merit in the case of AO. During the course of proceedings u/s 143(3) of the Act, the assessee had clearly declared the nature of business and items being exported by it. Once these facts were presented and considered by the AO in the proceedings u/s 143(3) of the Act, then the impugned reassessment proceedings u/s. 147 would clearly fit into the class of a change of opinion, which is not permissible under law. - Decided in favour of assessee. Revision u/s 263 - assessee has inflated export turnover by ₹ 10.73 crores equivalent to USD 30,00,000. Ld CIT has also held that assessee has not furnished FIRC's to this extend - Held that:- As in years 1997 and 1999 appellant had received advances from Star TV Hong Kong to the tune of USD 85,00,000. During the course of original assessment proceedings u/s 143(3) vide submissions dated 22nd February 2006, assessee had filed details as to how this advance was offered to tax going forward. Relevant details are also filed before us, which are placed at page 78 of the paper book. From a perusal of this it is seen that advance to the extent of USD 30,00,000 was offered to tax this year. Since adequate enquiries were conducted by the AO in original assessment proceedings hence even on merits also we find that the order of assessment u/s 147/143(3) cannot be termed as erroneous or prejudicial to the interest of revenue. In view of this discussion and respectfully following the decision of co-ordinate Bench and the decision of jurisdictional High Court in the case of assessee itself, we are of the considered view that the impugned order of ld. CIT does not stand on sound footings. Accordingly, this appeal of the assessee also deserves to be allowed
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2015 (10) TMI 598
Accrual of income - addition made in the case of interest income on non performing assets on account of method of accounting followed by the assessee - assessee has neither followed mercantile nor cash system but followed hybrid system - assessee is a cooperative society engaged in the business of banking and providing credit facilities to its members - CIT(A) delted theaddition - Held that:- In light of the pronouncement of Hon’ble High Court of Karnataka in the case of Canfin Homes (2011 (8) TMI 178 - KARNATAKA HIGH COURT) there can be no question of accrual of income on NPA and therefore even under the mercantile system of accounting, it cannot be said that income has accrued or arisen to the assessee. The fact that the Revenue has preferred SLP against the decision of the Hon’ble High Court cannot be a ground to take any different view on the issue. We therefore uphold the order of CIT(Appeals) - Decided in favour of assessee. Accrual of liability - disallowance of expenses relating to earlier years - Held that:- It is clear from the facts as it emanates from the record that announcement of schemes by NABARD happened during the previous year. Therefore accrual of liability as far as assessee is concerned is only when subvention percentage is announced by NABARD. Till such time, the assessee’s liability cannot be said to have accrued. Since liability relates to the previous year in which subvention is announced by NABARD, we are of the view that accrual of liability occurs only when the subvention percentage is announced by NABARD and it is only thereafter that the Assessee can know what is the liability on account of sub-vention that it has to bear. In that view of the matter we find no infirmity in the order of the CIT(A). We therefore confirm the order of the CIT(Appeals) - Decided in favour of assessee. Additions made on account of non-business expenditure - whether expenditure is incurred as per the directions of its controlling authority and no documentary evidence was furnished before the A.O. to prove to his satisfaction that on account of this expenditure, the assessee derived certain income or benefits? - CIT(Appeals) observed that though the expenditure is made on account of directive from NABARD, there is also commercial exigency, and the assessee could fairly establish that there was sufficient mobilization of loans and advances and deposits directly relatable to this expenditure and directed AO to delete the expenditure - Held that:- The key aspect to be seen is relationship between the expenses incurred and carrying on of the business of the assessee. If there is a benefit to the assessee, then the expenditure has to be regarded as incurred for the purpose of business of the assessee and allowed as a deduction. The Hon’ble Rajasthan High Court followed the decision of the Hon’ble Supreme Court in the case of Sasoon J. David & Co. P. Ltd. v. CIT, (1979 (5) TMI 3 - SUPREME Court ) wherein reference was made to the expression “wholly or exclusively” used in section 37(1) of the Act and was of the view that the expression used is not “necessarily”. In light of the legal position as explained in the judicial pronouncements and keeping in view the facts of the present case, we are of the view that the order of CIT(Appeals) does not call for any interference - Decided in favour of assessee. Amortization of premium paid on government securities - CIT(A) deleted the addition - Held that:- Assessee is entitled to claim this deduction and hence we allow the grounds of the assessee relating to this issue. See Catholic Syrian Bank Ltd., v. ACIT [2009 (8) TMI 858 - ITAT COCHIN ] Addition made on account of interest accrued on investments - CIT(A) deleted the addition - Held that:- In the present case, the assessee has been following the method of offering interest on securities to tax on receipt basis on maturity and the same has been accepted by the revenue in the past. In view of the aforesaid decision, we are of the view that the order of the CIT(A) does not call for any interference. Consequently, the relevant grounds of appeal raised by the revenue are dismissed.
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2015 (10) TMI 597
Addition made in respect of lower provision for FOCA than authorized by MERC order - CIT(A) deleted the addition accepting additional evidence - Held that:- Additional evidences were relevant to the ground of appeals. It was observed by Ld. CIT(A) that these sufficient causes were unprecedented trifurcation of MSEB, voluminous records of MSEB taken over by appellant and appellant's operations spread over far and wide areas including Naxalite infected remote areas. In addition to the above it was further seen by us that the Ld. CIT(A) had called for a remand report. The Ld. AO had sent the remand report and the same was considered by the Ld. CIT(A) before passing the appellate order. Under these circumstances admission of additional evidences is justified. We derive support from the judgment of Hon'ble Delhi High Court in the case of Virgin Securities & Credits (P)(Ltd. (2011 (2) TMI 207 - DELHI HIGH COURT ). Thus, viewed from all the angles, we find that admission of additional evidences by the Ld.CIT(A) in the case of the assessee is on the basis of proper reasoning and has been done in view of principles of natural justice and the same is held to be justified and ground no.1 of the revenue's appeal is dismissed. Addition made in respect of lower provision for Fuel and Other Cost Adjustment ["FOCA"] authorized by Maharashtra Electricity Regulatory Commission - CIT deleted the addition - Held that:- The MERC order, authorizing collection of FOCA from public at higher rate, were dated 5.5.2006 and 01.6.06. Since the MERC orders were statutorily binding, therefore, appellant's argument is correct that the right to recover FOCA from public accrued only in the previous year 2006-07 i.e. A Y 2007-08 and not in the year under consideration. On the proposition "when income accrues" the appellant has correctly relied on various case laws which are in appellant's favour. Thus, in my considered opinion, the right to recover enhanced FOCA charges from public did not accrued to appellant in the year under consideration and therefore, appellant correctly accounted for FOCA on the basis of actual. Without prejudice to this argument the AO himself (in the case of M.S.P. Generation Co. Ltd.) that that since the MERC order dtd. 07.09.2006 was received 01. 26.09.06 i.e in the next assessment year, the effect of MERC order was required to be given in subsequent assessment year. The same principle applies in case of appellant and therefore, effect of MERC order dated 05.05.06 and 01.06.2006 were correctly given by appellant in next assessment year. The MERC in their order also decided and ordered that the excess FOCA charges were to be collected by the appellant from public in the bills for the months of June, July and August 2006, which were falling in the PY 2006-07 relevant to next assessment year. Thus, when the appellant was debarred from collecting the FOCA before June, 2006, how the appellant could have offered the same in the P.Y ended on 31.03.06. As per direction of MERC, such FOCA was collected by appellant and correctly offered as revenue in the next assessment year. Considering the entirety of facts and circumstances, the binding nature of MERC order, and directions of MERC, principles of accruals of income and the fact that there was no loss of revenue (since offered in next year), the addition made by A.O is hereby deleted. - Decided in favour of assessee. Write-off of capital items - CIT(A) deleted the addition - Held that:- CIT(A) has deleted the disallowance with proper reasoning and no interference is called for in the order of Ld. CIT(A). We derive support from the judgment of Hon'ble Supreme Court in the case of Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT) and judgment of Hon'ble Delhi High Court in the case of CIT vs. CIT vs. Vishnu Industrial Gases P Ltd. (2008 (5) TMI 636 - DELHI HIGH COURT ). Thus, the order of the Ld. CIT(A) on this ground is upheld Set off of brought forward/loss/unabsorbed depreciation - CIT(A) deleted the addition - Held that:- It is seen that the AO has himself allowed this claim to the assessee in subsequent years. The Ld. CIT(A) has passed speaking order and the reasoning given by Ld. CIT(A) in allowing this claim is justified and does not need any interference of our part. Further, Ld. CIT(A) has allowed this claim subject to verification by the AO to ascertain the correct fact before allowing this claim. Under these circumstances we do not find if any prejudice would be caused to the revenue. In view of the above ground no.4 of the revenue being devoid of merits is hereby dismissed. Disallowance made by the AO on account of excess provision for interest/ finance charges - Held that:- It is settled law that expenditure can be allowed against the business income only if the expense has been incurred for the purpose of the business and has been incurred during the year under consideration and that the expenditure should not be a capital nature. All these three conditions are cumulative. It is an admitted position by the assessee also that the expenditure under consideration did not pertain to the year under consideration and the same was recorded in the books of account, as a result of an error. Therefore, in view of these facts we find that the AO has rightly disallowed the claim and the Ld. CIT(A) has rightly upheld the action of AO in this regard. It is further seen by us that that ld. CIT(A) was fair enough in issuing requisite direction to the AO to allow the relief on this action in the next assessment year after verification of the claim made by the assessee. Under these circumstances we do not find anything wrong in the order of the Ld. CIT(A) on this issue and the same is upheld and this ground of the assessee is dismissed. Disallowance on account of excess provision for purchase of power - Held that:- CIT(A) was fair enough to give requisite direction to the AO to allow the relief to the assessee company in A.Y. 2007-08 after due verification. In our view the assesse should not be agrieved when appropriate direction has already been issued to allow the claim in the correct manner and in the correct year. We find the ground of the assesse is to be devoid of merits and the same is dismissed upholding the order of the Ld. CIT(A) on this issue. Disallowance on account of capitalization of interest - Held that:- DR has supported the orders of authorities below and requested for confirmation of the same. Whereas ld. Counsel of the assessee requested for allowing the claim. It is further brought to our notice that necessary rectification entries have been carried out in the books of account of the assessee in the next year. We find that the claim of the assessee was not in accordance with law. Ld. Counsel has not been able to show anything to convince that impugned interest expense can be allowed as revenue expenditure during the year under consideration. In these circumstances, we find that this claim cannot be allowed to the assessee and therefore, the order of the Ld. CIT(A) is upheld and the ground raised by the assessee is dismissed. Addition made by Ld. AO on account of recovery from temporary service communication - Held that:- DR relied upon the order of the authorities below and submitted that there was suppression of the income on the part of the assessee company and Ld. CIT(A) has rightly confirmed the addition and therefore, the order of Ld. CIT(A) should be confirmed. We have gone through the arguments of both the sides this fact has not been rebutted by Ld. Counsel then before us that the impugned amount is income of the assessee. The assessee is obliged under the law to include it in its income. Since the assessee had not done so, the AO had rightly brought this amount to tax as part of income of the year under consideration and Ld. CIT(A) has rightly confirmed the order of AO on this aspect. Ld. Counsel could not assail the findings of the Ld. CIT(A) and we do not find any error in the order of Ld. CIT(A) and the same is upheld and ground of the assessee is dismissed. Electricity duty collected and paid/adjusted by the assessee company - Whether covered under the provisions of section 43B ? - Held that:- electricity duty collected by the licensee from the consumers is so done by the licensee as an agent of the State and, hence, the same cannot be considered to a trading receipt in the hands of the licensee. It does not constitute income of the licensee and cannot be included in the licensee's income for the purpose of computation of income tax. It is not a business receipt of the licensee which the licensee collects on its own behalf in connection with its business of generating and supplying electricity. The licensee does not collect the electricity duty for its own consumption or utilization. If the licensee collects the duty but does not pay the same to the Government, the statute provides mechanism for the Government to recover the same from the licensee. Even iii a case where the licensee is unable to recover the duty but recovers the energy charges, the statutes still provides a procedure for the Government to recover the duty either from the consumer or from the licensee. This view of ours finds support from the decision of the Andhra Pradesh High Court in the case of Commissioner of Income Tax-vs.-Devatha Chandraiah (1983 (4) TMI 6 - ANDHRA PRADESH High Court ). Though the said case deals with sales tax, the principle laid down in that case supports our view. The mischief that Section 43B of the Income Tax Act intended to present, is taken care of by the provisions of the Bengal Electricity Duty Act itself.Thus, in our considered view, the assessee deserves to succeed.
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2015 (10) TMI 596
Disallowance of interest paid as non-business purpose expenditure - Held that:- The partners have withdrawn their capital, which were credited in the firm. There is no bar to withdraw their capital as they have withdrawn their capital out of the total capital invested in the firm. They have advanced these amounts to another firm i.e. M/s Raju Steel Industries on which they have charged interest and that interest income has been shown in the hands of these partners. Similarly, the partner of M/s Raju Steel Industries has withdrawn some capital from their partnership firm and advanced the money to this partnership concern. This partnership concern has paid interest to them and the interest income has been shown in their respective hands. Therefore, in our considered view, there is no loss of revenue at all. The firm is paying interest and claiming deduction in profit and loss account, on the other hand, the lenders have shown the interest income in their hands and paying due tax on that income. The rate of tax is same, therefore, in our considered view, disallowance of interest paid was not justified under Section 37(1). This is the business man who knows how to run his business activity. The assessee has run his business activities in a way which they like and was beneficial for them. If by any reason they have made some tax planning, that tax planning is also in the four corner of law, which is permissible. Therefore, for this reason also, disallowance of interest was not justified - Decided in favour of assessee. Deemed dividend - CIT(A treating that loan and interest accrued thereupon given on the assessee firm by OCAPL did not fall within the ambit of section 2(22)(e) - Held that:- The deemed dividend can be assessed only in case of person who is a shareholder of lender company and not in the hands of the person other than the shareholder. See COMMISSIONER OF INCOME TAX Versus ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT] - Decided in favour of assessee.
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2015 (10) TMI 595
Levy of penalty u/s. 271(1)(c) - disallowance of excess cost of acquisition claimed by the assessee, while computing capital gains arising on sale of land - Held that:- In the present case, the assessee had furnished the explanation giving reasons for mistake in mentioning the amount of cost of acquisition of land. It has been stated that the mistake was bonafide. In the books of account the amount was correctly mentioned. Since, it was the first year of filing returns by using computer software, there is every possibility of committing error in transformation stage. Therefore, there was no reason to disbelieve the reasons given by the assessee. The Department has not been able to discharge the onus of establishing that the assessee had deliberately concealed the income or furnished inaccurate particulars of income. Thus, in view of the facts of the case, we accept the explanation furnished by the assessee and delete the penalty levied u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 594
Denial of benefit of set off of the speculation loss - explanation to section 73 has to be applied on year to year basis and the set off of the loss cannot be allowed in the year in case the conditions laid down in the Explanation are not satisfied, irrespective of the fact that all the other circumstances when the Explanation to Section 73 was applied in A.Y. 2001-02 and that in A.Y. 2006-07 are same - Held that:- Once the assessee is carrying on a speculation business and the profits and gains have arisen from that business during the course of the assessment year, the assessee is entitled to set off the Losses carried forward from a speculation business arising out of a previous assessment year. Thus, applying this judgment of the jurisdictional High Court, the assessee is entitled for the set off of the impugned amount of amount of loss brought forward from assessment year 2001-02. No contrary judgment has been brought to our notice by the Ld. DR. Thus, respectfully following the judgment of Hon’ble Bombay High Court in the case of Lokmat Newspapers P. Ltd [2010 (2) TMI 94 - BOMBAY HIGH COURT] we decide this issue in favour of the assessee company. Thus, the AO is directed to allow the set off the brought forward loss. - Decided in favour of assessee. Disallowance of claim of bad debts - Held that:- The only objection of the authorities below was that the impugned amount was not allowable as deduction u/s 36(1)(vii). In our considered view the impugned amount is allowable to the assessee as business loss, in any case. We derive support from the judgment of Hon’ble Bombay High Court in the case of Harshad J Choksi vs CIT [2012 (8) TMI 710 - BOMBAY HIGH COURT]. Thus we hold that bad debts is allowable to the assessee as business loss having been incurred in the normal course of trading of shares.- Decided in favour of assessee.
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2015 (10) TMI 593
Eligibility of deduction u/s. 80P - Held that:- Revenue has not placed any material on record to demonstrate that Assessee is a Co-Op. Bank and is not a Credit Co-op. Society nor has placed any contrary binding decision in its support. Assessee is eligible for deduction u/s. 80P - Decided in favour of assessee.
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2015 (10) TMI 592
Eligibility of claim for deduction u/s.80P(2)(a)(i) - Held that:- Interest earned on short-term deposits and SB account balances which were from surplus funds, could be attributable to carrying on the business of banking. However in the case before us, there is nothing on record to show whether the deposits placed by the assessee were for short-term or long term. In such circumstances, we are of the view that the issue requires a fresh look by the AO, so as to correctly consider the allowability of the claim, after assimilating the facts correctly. We therefore set aside the orders of the authorities below and remit it back to Ld. AO for consideration afresh in accordance with law. - Decided in favour of assessee for statistical purpose.
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2015 (10) TMI 591
Claim of deduction of credit balance appearing under the head “Settlement Bargain” under section 80IB - Held that:- In block assessment there was no profit under this head, therefore, reliance of this order cannot be placed in the impugned assessment year. Undisputedly, the orders are placed by the assessee for purchase of raw material and supply of raw material takes some time. When supply is effected at high seas, the rates are fluctuated and profit accrued to the assessee on account of fluctuation rates certainly reduces the cost of raw material, therefore, profit accrued thereon is certainly eligible for deduction under section 80IB of the Act. In the light of these facts, we are of the view that the credit balance accrued on account of settlement of rates is certainly eligible for deduction under section 80IB of the Act and we, therefore, find no infirmity in the order of the ld. CIT(A). Accordingly we confirm his order on this issue. - Decided against revenue. Trade liabilities written off under section 41(1) - CIT(A) deleted addition - Held that:- We find that since it is a trade liability which was not required to pay in this year and it was offered as income and deduction was claimed thereon. The Revenue has not brought out anything on record to establish that these liabilities are not trade liabilities. Therefore, we find no merit in the Revenue’s appeal on this issue. Accordingly we confirm the order of the ld. CIT(A) on this issue.- Decided against revenue.
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2015 (10) TMI 590
Unexplained cash credit - CIT(A) deleted the addition - Held that:- On a careful perusal of the orders of the lower authorities, we find that undisputedly the Inspector’s report submitted to the ADIT, Kolkata was not furnished to the assessee, therefore, the assessee could not make his comments thereon. It is also undisputed fact that the creditor was assessed to tax as his PAN and assessment order were furnished before the Assessing Officer. Moreover, the balance sheet and profit and loss account of the creditors were also furnished and from the balance sheet, it has been established that the creditors were having sufficient balance to make deposit in the assessee-company. Moreover, the assessee has received depositors through banking channel, therefore, its nature cannot be doubted. Since the assessee has placed all the relevant evidence to prove the genuineness of the transaction and creditworthiness & identity of the creditors, addition under section 68 of the Act is not called for. We have also carefully perused the judgments referred to by the assessee and we find that it has been repeatedly held that once the assessee has discharged his onus of proving the creditworthiness & identity of the creditors and genuineness of the transaction, no addition under section 68 of the Act is called for. In the light of these judicial pronouncements, we are of the view that the ld. CIT(A) has properly adjudicated the issue in the light of the given facts. Therefore, we find no infirmity in his order. Accordingly we confirm the same. - Decided in favour of assessee.
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2015 (10) TMI 589
Conversion of jumbo rolls into small sizes - whether conversion amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I? - Held that:- Hon'ble Supreme Court in M/s India Cine Agencies & Computer graphics Ltd. Versus CIT [2008 (11) TMI 15 - SUPREME COURT] held that this activity amounts to manufacture or production. Thus, we think it is not necessary to recapitulate and recite all the decision on the construction expression "manufacture". But suffice to say that core of all the decisions of the Hon'ble Supreme Court or Hon'ble High Court is to the effect that broadly manufacture is a transformation of an article, which is commercially different from the one which is converted. It is a change of one object to another for the purpose of marketability. It brings something into existence, which is different from that, which originally existed. The new product is a different commodity physically as well as commercially. The Hon'ble Court also explained broader test to determine whether manufacture is there or not, it is propounded that when a change or series of changes are brought out by application of processes which take the commodity to the point where, commercially, it cannot be regarded as the original commodity but is, instead recognized as a distinct and new article that has emerged as a result of the process. Thus, in our opinion, the moment the assessee has carried the embroidery work, the character of sari had changed. It does not remain the original grey synthetic cloth. It has its independent market and value in the market other than the grey synthetic cloth. Thus, the learned AO failed to appreciate this aspect. We further, find that the ld.First Appellate Authority has appreciated the controversy in right perspective as well as followed the order of the ITAT, wherein, it has been held that the embroidery work is an activity of manufacture. In view of the above discussion, we do not find any merit in the appeal of the Revenue. - Decided in favour of assessee.
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2015 (10) TMI 588
Disallowance of loss suffered in NCDEX transaction - Held that:- It is undisputed that NCDEX terminal was not a recognized stock exchange as per Rule 6DDB r.w.s. 43(5)(d) of the Income Tax Act, 1961 at the relevant time. Ld. CIT(A) treated the loss as speculative we find no valid reason to deviate from the same. In the interest of judicial discipline, we respectfully follow the same and uphold ld. CIT(A) order. - Decided against assessee. Penalty u/s 271(1)(b) - non-compliance of notices dated 29-07-2009 and 27-08-2009 - assessee contended that he was confined to bed on account of his illness on these dates - Held that:- The assessee gave satisfactory reply expressing his inability to attend the proceedings due to illness which has not been controverted. The assessment in question has been framed u/s 143(3) of the Act. Thus in the entirety of the facts and circumstances of the case, we hold that this is not a fit case for imposition of penalty of ₹ 10,000/- which is deleted. - Decided against Revenue.
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2015 (10) TMI 587
Unexplained investment made in house property - CIT(A) deleted the addition - Held that:- The UIT Kota had allowed to transfer this plot no. 573, Basant Vihar, Kota vide its order no. 569-70 dated 22.07.2008 by charging Urban Tax @ 25% in the name of assessee. It is proved that plot was really purchased by the assessee in 1988. However, there is no evidence regarding investment made in construction of the house as well as payment of Urban Tax @ 25% paid to the UIT, Kota. Thus this issue is set aside to the AO to reconsider this aspect. The Sale Deed registered on 16.05.2008 by Shri Gajanand Verma in favour of the assessee is mere technical formality and the AO had not brought on record any evidence that assessee had passed on any consideration in cash to her husband from unaccounted sources. Therefore, Revenue’s appeal on this account is dismissed. However, above observation required to be verified by the AO by allowing opportunity to the assessee, being the finding of last fact finding authority i.e. ITAT. The aspect of construction made on this plot and Urban tax @ 25% paid by the assessee to the UIT, Kota need to be verified after allowing reasonable opportunity of being heard to the assessee. For limited purpose, this case is set aside to the AO. - Decided partly in favour of revenue for statistical purposes.
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2015 (10) TMI 586
Rejection of books of accounts u/s 145(3) - assesee was dealing in gems and jewellery - CIT(A) applying GP rate of 20.00% as against 19.20% declared by the assessee - Held that:- The assesee was dealing in gems and jewellery including gold jewellery. The 24 carat gold is converted into 22 carat, 20 carat, 18 carat and 16 carat. Similarly, valuation of diamond jewellery depends on clarity, size of diamond, colour. It is difficult to maintain the stock register in this line of business of the assessee. The number of diamond pieces is also differs on size to size and accordingly valuation of diamond jewellery varies from item to item. As relying on case of Malani Ramjivan Jagannath vs. ACIT (2006 (10) TMI 145 - RAJASTHAN HIGH COURT) decision on fall in GP and non-maintenance of stock register support the assessee’s case. Therefore, we reverse the order of ld. CIT (A). It is not necessary that where books were rejected certain addition is required to be made to the income of the assessee as held in case of Gotton Lime Khaniz Udyog, (2001 (7) TMI 19 - RAJASTHAN High Court). - Decided in favour of assessee.
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2015 (10) TMI 585
Claim for deduction u/s. 10B allowed without setting off the brought forward losses - CIT(A) allowed claim of assessee as relying on case of Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] - Held that:- As already seen, in Yokogawa India Ltd. (supra), it was held that even after s. 10A/10B were converted into a “deduction” provision w.e.f 1.4.2001, the benefit of relief u/s 10A/10B is in the nature of “exemption” with reference to “commercial profits” and that as the income of the s. 10A unit has to be excluded at source itself before arriving at the gross total income, the question of setting off the loss of the current year’s or the brought forward business loss (and unabsorbed depreciation) against the s. 10A profits does not arise. Therefore the decision of the Hon’ble Karnataka High Court in the case of Himatasingike Seide (2006 (8) TMI 125 - KARNATAKA High Court) will not apply to the facts of the present case. In view of the aforesaid decision of the Hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (supra), we are of the view that there is no merit in this appeal by the Revenue. - Decided against revenue
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2015 (10) TMI 584
Penalty u/s. 271(1)(c) - CIT(A) deleted the addition - Held that:- Assessing Officer was unable to bring any evidence indicating that the explanation offered by the assessee was not bonafide or false. It is a difference of opinion between the Assessing Officer and the assessee. The assessee was of the view that since he will receive the receipts for the month of March in April, therefore, he will raise bill in the month of April and account the receipts in the next month. It is a misconception in the mind of assessee but he has not deliberately withheld something from the Assessing Officer. He has accounted these receipts in the next year and rather raised the dispute with regard to credit of the TDS. The next item is an addition on an estimate basis. Again, a debatable point, there is no concrete material on the record which demonstrates that assessee has deliberately concealed the particulars of income or furnished inaccurate particulars. The Ld. First Appellate Authority has righty deleted the penalty. - Decided in favour of assessee.
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2015 (10) TMI 583
Disallowance of discounting charges/ interest - FAA held that the assessee was not entitled to claim interest as loan was diverted to sister concern without charging interest - Held that:- While deciding the appeal for assessment year 1998-99 [2015 (10) TMI 581 - ITAT MUMBAI] the Tribunal decided the issue stating that first letter of the assessee in the fresh proceedings by which it furnished Fund flow statement, Balance sheet and profit and loss account for the year in question and for the earlier year, details of discount charges paid, statement of account, parties in support of receipt payment of discounting charges, copies of account of parties tracing the original funds, user of funds and repayment of charges with discounting charges etc. Another letter was filed before the Assessing Officer producing complete books of account, details of finance charges paid with bifurcation of parties and rate of interest and a copy of assessment order passed by the A. O. for the preceding year in which similar deduction was allowed. The present assessment order was passed by the AO after filing of the above referred documents by the assessee. It is surprising that the Assessing Officer did not make a whisper, in the assessment order of such details having been filed by the assessee - What to talk of adversely commenting, the A. 0. even did not bother to incorporate or discuss such facts in the assessment order. On the appreciation of the entire material /evidence placed by the assessee before the A. O. in the fresh round of proceedings, the learned CIT(A) has recorded a categorical finding that these expenses were incurred during the course of business. Apart from relying on the assessment order, the learned Departmental Representative could not controvert the findings given by the learned CIT(A) in support of the grant of deduction. We, therefore, uphold the impugned order in deleting the said addition. Also see case of Delta International & East West Corporation and other group concerns wherein the Tribunal had decided the identical issue in favour of the assessee[2013 (10) TMI 919 - ITAT MUMBAI] - Decided against revenue.
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2015 (10) TMI 582
Unaccounted deposits - unexplained income - main reason on which the addition has been sustained is to the effect that the assessee could not give proper explanation as to how an amount of ₹ 6.00 lacs was lying at home more so assessee being an old aged person, it did not meet the preponderance of probabilities - Held that:- has been made mainly relying on the fact that the assessee was an old person and living alone and there was a time gap of 10 months for keeping the cash at home which was not possible on preponderance of probabilities. It may be mentioned that assessee while explaining the low house hold withdrawals assessee had already submitted before the lower authorities that he was living in a joint family of two sons. With these facts on record, there was no reason for the lower authorities to hold that the assessee was living alone which could be the reason for any adverse inference that cash in hand could not be retained by the assessee for 10 months. There is no factual basis in the presumption drawn by the AO and the ld. CIT(A), besides the assessee may be aged but remained active in his business affairs. Consequently we see no justification in addition of ₹ 6 lacs more so when the facts about cash books, cash flow and receipt of cheque of ₹ 13 lacs from M/s. S.G. Fiscal have not been controverted. In view thereof, we are unable to uphold the addition of ₹ 6.00 lacs which is deleted. - Decided in favour of assessee. Low house hold withdrawals - Held that:- The assessee is an active person, earning from two partnership firms. It has been contended that his two sons have borne the house hold expenses and have sufficient withdrawals. There is no evidence on record to demonstrate that quantum of withdrawals by two sons and statement to the fact that their father did not contribute any house hold expenses. Beside the size of their family and extent of house hold withdrawals have no evidence on record to hold that assessee's version is correct. Thus in these facts and circumstances of the case assessee’s explanation is not corroborated by any iota of evidence. In view thereof, we hold that an addition of ₹ 1.00 lac on account of house hold withdrawals has rightly been made by the lower authorities which is upheld. - Decided against assessee.
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2015 (10) TMI 581
Addition on account of discount charges made by A.O. - CIT(A) deleted the addition - Held that:- The issue of discounting charges have been extensively deliberated upon by the Tribunal in the group cases and it had dismissed the appeals filed by the AO.s for the AY.1997-98 stating Assessing Officer simply repeated the assessment and first appellate authority's order without discussing anything new about the matter on which the Tribunal gave direction.He simply noticed that the assessee did not produce any additional evidence to co-relate the financing charges with the business expenditure.As against that, the learned AR invited our attention towards various details furnished before the Assessing Officer during the course of such fresh proceedings. First letter of the assessee in the fresh proceedings is dated 05.09.2006 by which it furnished Fund flow statement, Balance sheet and profit and loss account for the year in question and for the earlier year,details of discount charges paid,statement of account, parties in support of receipt payment of discounting charges, copies of account of parties tracing the original funds, user of funds and repayment of charges with discounting charges etc. Another letter was filed before the Assessing Officer on 24.11.2006 producing complete books of account, details of finance charges paid with bifurcation of parties and rate of interest and a copy of assessment order passed by the A.O. for the preceding year in which similar deduction was allowed.The present assessment order was passed by the AO on 18.12.2006 after filing of the above referred documents by the assessee.It is surprising that the Assessing Officer did not make a whisper, in the assessment order of such details having been filed by the assessee What to talk of adversely commenting ,the A.0.even did not bother to incorporate or discuss such facts in the assessment order. This fact has been elaborately considered by the learned CIT(A), the discussion on which has been made in par as 1.10 to 1.14 of the impugned order. On the appreciation of the entire material /evidence placed by the assessee before the A.O. in the fresh round of proceedings,the learned CIT(A) has recorded a categorical finding that these expenses were incurred during the course of business. Apart from relying on the assessment order, the learned Departmental Representative could not controvert the findings given by the learned CIT(A)in support of the grant of deduction. We, therefore, uphold the impugned order in deleting the said addition - Decided against revenue.
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2015 (10) TMI 580
Unexplained investment in Innova Car - CIT(A) deleted the addition - Held that:- Since inception the assessee’s stand was that the investment in the car was duly disclosed as per the books of account and nothing pertained to the year under consideration. The books of account and the information in respect of repayment was very much part of the assessment record, has vehemently argued before us. We, therefore, approve the factual finding of learned CIT(A) and find no force in the argument of learned DR. - Decided against revenue. Unexplained cash credits (deposit received) - CIT(A) deleted the addition - Held that:- No infirmity in the verdict of learned CIT(A). The assessee has disclosed not only the names of the tenants who have made the deposits but also their PAN information; therefore, it was not fair on the part of the AO to hold that the amount in question was not proved in terms of Section 68 of IT Act. Resultantly, we hereby confirm the findings of learned CIT(A) and dismiss this ground of the Revenue. - Decided against revenue.
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2015 (10) TMI 579
Penalty u/s 271(1)(c) - addition relating to gross profit and selling and administrative expenses - Held that:- The income of the assessee was determined by applying the gross profit rate and by making the disallowance out of the expenses on estimate basis. The learned CIT(A) also sustained the addition on estimate basis, so it cannot be said that the assessee concealed the income or furnished inaccurate particulars of income. Penalty u/s 271(1)(c) of the Act was not leviable to the facts of the present case. In that view of the matter, the penalty levied by the AO and sustained by the learned CIT(A) u/s 271(1)(c) of the Act is deleted. - Decided in favour of assessee.
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Customs
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2015 (10) TMI 606
Issue regarding establishment of Central Excise and Customs Tribunal on a permanent basis in Allahabad - Registrar CESTAT intimated that Red building in the office of the Central Excise building campus has been temporarily provided to the Tribunal for their functioning - One of the gates on Stanley Road is lying closed, which is under the control of the Income Tax Department for efficient functioning and if the same is opened it will be easy to access the Red Building – Registrar CESTAT is directed to approach the Chief Commissioner of Income Tax, Allahabad for the purpose of giving access to the Red building from Stanley Road – Copy of order forwarded to necessary Authorities.
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2015 (10) TMI 605
Dispute of personal hearing before Final Assessment - Petition filed on principles of natural injustice - Petitioner contends that a demand should precede a final assessment or any show cause notice is issued – Further contends that principles of natural justice have been violated and opportunity of being heard to the Petitioner must be given - Petitioner appeals the quashing and setting aside the impugned communications – Respondents contend that there is no merit in the Writ Petition – Further holds that bill of entry was filed and provisional assessment was made – Bond was executed demanding the differential duty and SCN was issued thereafter the assessment was finalised based on the documents available. Held That:- It is evident that neither there is any record of personal hearing nor there is a further record of a finalisation of the assessment and its communication to the Petitioner - Writ Petition succeeds and demand notice is quashed and set aside clarifying that in the event an order is passed in pursuance of SCN and after hearing the Petitioner, the Revenue can proceed to recover the tax or amounts due – Decided in favour of the Petitioner.
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2015 (10) TMI 604
Procurement of goods without valid documents – Confiscation of goods – Show cause notice was issued and Adjudicating Authority confiscated seized imported goods and imposed duties and penalty as goods were procured without payment of duty and valid documents – Appellant challenges order of confiscation on grounds that seized goods were not prohibited goods – Held that:- appellants had not disputed receipt of imported POY without any documents – Hence, demand of interest under Section 28AB of Act is justified – Admittedly, appellants received imported POY, without any documents in violation of various provisions under Import/Export Exim Policy and Customs Act therefore confiscation of goods is justified – Appellant-firm has already paid duty during investigation and there is no sufficient materials available on record for imposition of penalty on partners of both firms – Therefore impugned order is modified in so far as demand of duty alongwith interest upheld, penalty and redemption fines imposed are reduced – Decided partly in favour of Assesse.
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2015 (10) TMI 603
100% EOU - HSD had been procured from M/s. ESSAR Oils who had imported the same and cleared the same for warehousing. - Denial of exemption claim - Demand of differential duty - Levy of additional duty of customs - Invocation of larger period of limitation - Held that:- duty should have been recovered from M/s. ESSAR Oil and not from the respondent - irrespective of whether the additional customs duty leviable under section 116 of the Finance Act, 1994 is recoverable from the respondent or not, the demand is time barred - Issue stands decided in the favour of the respondent by the Tribunal' s judgment in the case of STI India Limited Vs. CCE- Indore reported in [2007 (10) TMI 482 - CESTAT, NEW DELHI] and also by Larger Bench Judgment in the case of Paras Feb International Vs. Commissioner of Central Excise Kandla reported in [2010 (6) TMI 184 - CESTAT, NEW DELHI] - Decided against Revenue.
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2015 (10) TMI 602
Reduction in value of goods in subsequent MoA – Demand of differential duty – Value as vessel was reduced as subsequent MoA, after conducting survey – Adjudicating Authority assessed Bill of Entry on amount available at time of importation and confirmed demand of differential duty alongwith interest – Commissioner (A) upheld adjudicating order and dismissed appeal filed by appellant – Held that:- value available at time of importation is US $ 9,54,044/- as per MoA therefore there is no reason available for reduction of price in subsequent MoA –Hence, Adjudicating Authority rightly determined value of as per first MoA – At time of import, price was available on basis of MoA of agreement and there is no material placed by appellant for reduction of price in subsequent MoA – In view of discussions, no reason found to interfere with order of Commissioner(A) – Decided against Assesse.
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Corporate Laws
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2015 (10) TMI 601
Approval of the Scheme of Amalgamation under Section 391 to 394 – Petitioner appeals for the sanction of the Scheme of Amalgamation – No objection has been received to the Scheme of Amalgamation from any party apart from the Regional Director who held that the Companies have not filed the due Balance Sheets – Petitioner undertakes to submit consolidated balance sheet – Held That:- Sanction was granted to the Scheme of Amalgamation under Sections 391 and 394 of the Companies Act, 1956 - Petitioner will comply with the statutory requirements along with the filing of the certified copies to the ROC within 30 days - Petitioner shall deposit cost of ₹ 50,000/- in the Common Pool Fund of the Official Liquidator – Decided in favour of the Petitioner.
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Service Tax
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2015 (10) TMI 632
Waiver of Pre-deposit – Services rendered for erection of telecommunication towers and repair and maintenance of existing towers for various telecommunication companies - Dispute arises with regards to the quantum of pre-deposit - Appellant contended that pre-deposit as directed by the Commissioner (Appeals) was unfair and excessive, still deposited some amount – Revenue held amount as directed by the Commissioner (Appeals) was reasonable and justified - Held That:- appellant has already deposited a sum of ₹ 5 lacs - Ends of justice would be met if the Commissioner (Appeals) is directed to hear the appeal on merits without insisting for pre-deposit of the remaining amount – Partial stay granted.
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2015 (10) TMI 631
Condonation of delay - Inordinate delay of 12 days - Contravention of Section 68, 69 and 70 of the Finance Act - Delay due to marriage of the son of the Chief Executive Officer - held that:- person, who approaches court beyond the period of limitation, has to come up with a genuine reason for the delay. The age old theory that every day's delay has to be explained meticulously is not to be followed like an Euclid's theorem. The reasons stated by the appellant in the applications for condonation of delay are not disputed as false or frivolous. The appellant does not appear to be a limited company for the Tribunal to draw an inference that there are other officers to take care of the affairs. When a proprietary concern or a partnership firm is the appellant, it is but natural for such concerns or firms to rely upon individual leadership to take any major decision. Therefore, we are of the considered view that the refusal to condone the delay of 12 days especially when the appellant has nothing to gain out of the delay is not proper. - Delay condoned.
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2015 (10) TMI 630
Denial of CENVAT Credit - reversal of credit in respect of trading of vehicles - extended period of limitation - Held that:- The allegation in the show cause notice is that appellant has suppressed the fact that appellant is an authorized dealer of General Motors. Infact the fact has been recorded by this Tribunal in order passed by this Tribunal in appellants own case vide order dated 4.11.11 reported in wherein it has been recorded that appellant is an authorised dealer of vehicle manufactured by M/s. General Motors. This observation has been made by this Tribunal on 4.11.2011 in appeal which has been arisen out of order in original dated 28.12.10 which means that before 2010, it was in the knowledge of department that appellant who is an authorised dealer of M/s. General Motors for selling the vehicle. Therefore, allegation against the appellant that they have suppressed the fact that they are authorized dealer of General Motors is not correct. Admittedly, show cause notice was issued by invoking the extended period of limitation. In these circumstances, show cause notice cannot be issued to the appellant by invoking the extended period of limitation. Therefore, the demand in the impugned order has been confirmed by invoking the extended period of limitation which is not sustainable. Consequently, impugned order is set aside. - Decided in favour of assessee.
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2015 (10) TMI 629
Manpower Recruitment and Supply Agency Services - lumpsum contract of carrying out the job in the factory premises - Held that:- Activity carried out by the Appellants is part and parcel of the manufacturing activity of Transmission Line Tower, M/s. Amitasha Enterprises Pvt. Ltd. have also admittedly factored in the above expenses incurred towards the activities of the appellants, in their cost of production on which appropriate duty was paid at the time of its clearances from their factory. As pleaded by the appellants, under such circumstances, demanding service tax again on the amount on which Central Excise duty is being paid by M/s. Amitasha Enterprises Pvt. Ltd. is nothing but double taxation. In view of the above legal position, I hold that the case law [2009 (10) TMI 182 - CESTAT, BANGALORE] is squarely applicable in the instance case and therefore the impugned Order-in-Original is liable to be quashed. - assessees were given a lumpsum contract of carrying out the job in the factory premises of Amitasha Enterprises. This activity will not be covered under the category of "Manpower Supply Recruitment Services" - Decided against Revenue.
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2015 (10) TMI 628
Availment of cenvat credit on Goods Transport Agency Service - Held that:- Issue stands settled by the decision of Hon'ble Madras High Court. In the case of Cheran Spinners Ltd., the Tribunal has allowed the credit which was challenged by Revenue before Hon'ble Madras High Court. The Hon'ble High Court has dismissed the C.M.A. and upheld the Tribunal's order vide [2013 (8) TMI 215 - MADRAS HIGH COURT]. - High Court in the above order has considered all the issues including Board's circular dt. 3.10.2005 relied by the Revenue. By respectfully following the decision of Hon'ble High court (supra), I hold that there is no infirmity in the order passed by Commissioner (Appeals). Accordingly, both the impugned orders are upheld - Decided against Revenue.
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2015 (10) TMI 627
Demand of Service Tax – GTA service - reverse charge - appellant has been taking a stand that the amounts paid by them as inward freight was paid to owners of individual trucks and not to Goods Transport Agency – Held That:- there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency. - Contention of the Appellant is not controverted by Revenue in any way - Impugned order is unsustainable and is set aside –Decision in the case of Nandganj Sihori Sugar Co. Ltd.[2014 (5) TMI 138 - CESTAT NEW DELHI] followed - Decided in favour of the Appellant.
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Central Excise
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2015 (10) TMI 624
Fraudulent availment of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of raw material - Held that:- department has been able to safely establish fraudulent activities of appellant. The recovery of 19 invoices together with the discovery of the fact that there were no goods corresponding to such invoices in the godown and no sales invoices were issued for sale of such goods alongwith statement of Shri Happy Gupta, and other vehicle owners/drivers establish the case of the department regarding fake invoices. Moreover, it has to be stated that the appellant has not replied to the SCN even after getting ample opportunity. These contentions in defence are raised only at appellate stage. There is actually no defence raised at the primary adjudication level. - No infirmity in the impugned order - Decided against assessee.
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2015 (10) TMI 623
Denial of SSI Exemption - Use of third person brand name - Held that:- Appellants were using the brand name belonging to other persons M/s. Inder Rubber Industries were using the brand name "Exide Super" while the brand name "Excide" belongs to M/s. Exide Industries Ltd. and also the brand name "Boxer" belonging to M/s. Bajaj Auto, M/s. Exide Rubber Industries were using the brand name "Exide" belonging to M/s. Exide Industries Ltd. The goods being manufactured by the brand name owners were different from the goods being manufactured by the appellants on which these brand names were being used. In this factual background, in view of the Apex Court's judgment in the case of ACE Auto Comp. Ltd. (2010 (12) TMI 25 - Supreme Court of India) and Mahaan Dairies (2004 (2) TMI 73 - SUPREME COURT OF INDIA), the benefit of SSI exemption would not be available. - Therefore, the Commissioner (Appeals)'s order denying the SSI exemption to the appellant has to be upheld. However, as regards the question of limitation is concerned, we find that during the period of dispute, there were a series of judgments of the Tribunal and also Larger Bench of the Tribunal in the case of Fine Industries (2002 (10) TMI 114 - CEGAT, COURT NO. II, NEW DELHI), wherein it was held that use by an assessee of the brand name belonging to another person would not result in denial of SSI exemption, if the goods being manufactured by the assessee are different from the goods being manufactured by the brand name owner and in respect of which the brand name is registered. In view of this, we hold that there was scope for doubt in the mind of assessee regarding availability of SSI exemption and hence, in view of the Apex Court judgement in the case of Continental Foundation Joint Venture Vs.CCE reported in [2007 (8) TMI 11 - SUPREME COURT OF INDIA], the longer limitation period of 5 years from the relevant date would not be available and for the same reason, there would be no justification for imposition of penalty on the appellant under Section 11 AC. While the Commissioner (Appeals)'s order denying the SSI exemption is upheld, the duty demand would be confined only to normal limitation period. The imposition of penalty under Section 11 AC is also set aside - Decided partly in favour of assessee.
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2015 (10) TMI 622
Area based exemption - Denial of exemption claim - expansion of installed capacity in respect of conductor unit - Held that:- The Conductor unit had been set up during Octo.2002 to December, 2002 period and there is no dispute that during this period a total 3000 metres had been manufactured out of which only 300 metres were cleared on payment of duty. However, production during Jan.2003 to March, 2003 increased to 46137 metres and during April, 03 to June, 2003 the same increased to 4,42100 metres. The appellant intimated to the Range Superintendent in their letter dated 7.11.2003 about commencing commercial production of ACSR conductors with effect from 1.4.2003. The process of commissioning of a manufacturing plant starts after completion of erection installation. During commissioning, various machinery is run on trial/test basis and if the production is not of the desired quantity and if the desired quality, the necessary adjustments are made. The running of a plant during its commissioning is only a trial run meant to make the necessary adjustments in the machinery and calibrate them to optimise their productivity. Commercial Production starts only when the commissioning i.e. trial run is complete. Though during trial run, there may be some production and the manufacturer may have sold the same, the plant cannot be said to have commenced commercial production during that phase. The plant can be treated as having commenced commercial production only after completion of trial run i.e. commissioning. The only ground on which the exemption is sought to be denied, is that expansion of 25% or more of installed capacity should have been in both units i.e. in conductor unit also. In our view, this ground for denial of exemption to cylinders unit is totally incorrect as, as held by apex court in the case of Reckitt Colman of India Ltd. (1997 (4) TMI 79 - SUPREME COURT OF INDIA) each section or part of a factory manufacturing a different commodity has to be treated as separate manufacturing unit. - a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing unit and each section or part of the factory would be independently eligible for exemption, as the duty exemption under Notification No.50/03-CE is unit-wise and not factory wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/03-CE the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. In view of this, the impugned order denying benefit of exemption in respect of cylinder unit is also not correct. - impugned order is not correct and the same is set aside. - Decided in favour of assessee.
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2015 (10) TMI 621
Denial of CENVAT Credit - Capital goods - whether the welding electrodes used in the maintenance of machine etc., the CENVAT Credit on the same is allowable or not - Held that:- From very plain reading of the definition of input as given under Rule 2(k), it is evident that even goods used in relation to, directly or indirectly, in the process of manufacture like, lubricating oils, greases, cutting oils, coolants, accessories of the final products, qualify as input for the purpose of manufacture of the end product. It is undisputed fact that without the use of machinery, there cannot be manufacture, unless the machinery is in ready condition i.e. ready for use, no manufacture of cement can take place. Accordingly, the welding electrodes used for repair and maintenance of plant and machinery are indirectly used in manufacture of cement. Accordingly, I hold that the same qualifies for definition of input and the assessee is entitled to take CENVAT Credit on the same. - Manufacture of the capital goods and their repair and maintenance are synonymous terms which are required for manufacture of the end product. It is evident from the definition of input that whatever is used and assists in the process of manufacture, qualify as inputs within the meaning of input under Rule 2(k). - Impugned order is set aside - Decided In favour of assessee.
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2015 (10) TMI 620
Area based exemption - Availment of exemption under notification no. 56/02-CE - quantum of exemption to the assessee in terms of refund/self credit in PLA - Held that:- As per the scheme of this notification, if during a particular month the assessee pays more duty through cenvat credit to that extent, the duty payment through PLA will get reduced and he will get less refund and if the entire duty in respect of the goods cleared during a particular month is paid through cenvat credit, the quantum of refund available would be nil. - Thus, the availability of more credit does not benefit an assessee in any manner and, on the contrary, reduces the refund available to him in terms of this notification. Appellant availed and utilized higher cenvat credit during December, 2006 and March 2007, they paid lesser duty through PLA and to that extent, they got lesser quantum amount of self credit. - Therefore, once this excess cenvat credit, to which they were not entitled, is denied, their entitlement to pay duty through PLA would increase by the same amount and this is what they have done. Once the duty of ₹ 51,40,745/- is paid through PLA, the assessee would be eligible for its self credit in PLA. In view of this, we hold that there was no justification for confirmation of demand of ₹ 51,07,031/- against the appellant and imposition of penalty of equal amount on them. Moreover, when in this case the Assistant Commissioner by an order passed on 17.02.2009 had denied the self credit of ₹ 51,07,031, there was absolutely no justification for the Commissioner to pass another order confirming the demand for the same account and also imposing penalty. - When neither the duty demand of ₹ 51,07,031/- nor the penalty of equal amount under Section 11AC is sustainable, there is no question of recovery of penalty by adjusting it from refund for subsequent merits - Decided in favour of assessee.
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2015 (10) TMI 619
Maintainability of appeal - Authorization of signatories not done - held that:- authorisation stands signed only by one Commissioner Shri Prashant Kumar, CCE, Ghaziabad. There are no signatories of CCE, Noida, appearing in the said authorisation. As such, the authorisation has to be held as bad in terms of Section 35B(2) of the Central Excise Act, 1944. - appeal has been filed on the basis of the said defective authorisation, the appeal is disposed of as non-maintainable. - Decided against Revenue.
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2015 (10) TMI 618
Determination of rent - Held that:- Court in exercise of writ jurisdiction cannot examine as to the rate of rent to be fixed in respect of premises which is in occupation of the respondents. If petitioner is aggrieved by non-compliance of contractual obligation by the respondents, it is for the petitioner to approach civil court for redressal of his grievance. Even otherwise, under the Karnataka Rent Act, 1999, a provision is made for fixation of standard rent by the Controller at the request of parties. Petitioner without exhausting these remedies, has approached this Court invoking extraordinary jurisdiction. As such, prayer sought for by the petitioner cannot be granted. - Decided against Appellant.
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2015 (10) TMI 617
Waiver of pre deposit - Appeal dismissed for non compliance of pre deposit order - Held that:- To entertain the present appeal, there has to be a substantial question of law which apparently is absent so far as Annexure A10 impugned order. In the absence of any order on merits by the appellate authority, we fail to understand how we could entertain the present appeal. It is for the appellant to file an application before the appellate authority bringing to the notice that they had sufficient reasons for non-appearance on the date of hearing when impugned order at Annexure A10 came to be made. - Decided against Assessee.
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2015 (10) TMI 616
Eligibility for CENVAT Credit - 'Plastic Crates' - Capital goods or inputs - appellants had taken Cenvat credit on the goods 'Plastic Crates' falling under Chapter 3923.90 during the months of September 2001 to May 2002 - Held that:- appeals are covered by the unreported decision of the Division Bench of this Court in the case of M/s. P.K.P.N. Shipping Mills (P) Ltd. v. The Commissioner of Central Excise, Salem and Another in [2013 (3) TMI 345 - MADRAS HIGH COURT]. - Decided in favour of assessee.
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2015 (10) TMI 615
Maintainability of appeal - Classification of goods - Held that:- ince the issue relates to classification of product, appeal will lie before the Honourable Supreme Court and this appeal is not maintainable. - Decided against Revenue.
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2015 (10) TMI 614
Aluminium structurals - Manufacture - demand of excise duty- assessee was awarded the works for structural glazing/aluminium joinery - High Court dismissed the appeal filed by assessee as being not pressed since a rectification was is passed in the case but the same was not brought to notice of the court. The appeal was filed against the order of Tribunal [2012 (8) TMI 690 - CESTAT, BANGALORE]; wherein tribunal held that entire process of fixing the glazing system is done by fixing the aluminium section on the brackets and by sticking the glass using silicon. For this reason, semi-unitized glazing system is internationally known as sticking glazing system.
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2015 (10) TMI 613
Valuation - inclusion of freight in the transaction value - place of removal - Whether, by virtue of a transit insurance policy in the name of the manufacturer, excise duty is liable to be recovered on freight charges incurred for transportation of goods from the factory gate to the buyer's premises, treating the buyer's premises as the place of removal - Held that:- As has been seen in the present case all prices were ex-works , like the facts in Escorts JCB's case [ 2002 (10) TMI 96 - SUPREME COURT] . Goods were cleared from the factory on payment of the appropriate sales tax by the assessee itself, thereby indicating that it had sold the goods manufactured by it at the factory gate. Sales were made against Letters of Credit and bank discounting facilities, sometimes in advance. Invoices were prepared only at the factory directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment is wholly distinguishable. Similarly in Commissioner Central Excise, Mumbai-III v. M/s. Emco Ltd [ 2015 (8) TMI 200 - SUPREME COURT] , this Court re-stated its decision in the Roofit Industries' case [ 2015 (4) TMI 857 - SUPREME COURT] but remanded the case to the Tribunal to determine whether on facts the factory gate of the assessee was the place of removal of excisable goods. This case again is wholly distinguishable on facts on the same lines as the Roofit Industries case. Decided against Revenue.
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2015 (10) TMI 612
Ready Mix Concrete (RMC) and concrete mix (CM) - manufacturing at site - the basic thrust of argument is that CM and RMC are one and the same thing. - Captive consumption - Exemption under Notification No. 4/1997-CE dated March 01, 1997 - Held that:- the case which is now sought to be set up by the assessee, namely, CM and RMC are one and the same product, was never the case of the assessee. On the contrary, in reply dated June 12, 1998 to the letter dated May 18, 1998 issued by the Assistant Commissioner of Central Excise, Anantpur, the explanation given by the assessee was that the product produced at the site is only concrete mix, which is different from RMC; and that RMC cannot be manufactured at the site of construction; that chemicals/retarders are not used in site mix concrete. - the assessee itself proceeded on the basis that what was manufactured was RMC. It is the process of mixing the concrete that differentiates between CM and RMC. - Assessee installed two batching plants and one stone crusher at site in their cement plant to produce RMC. The batching plants were of fully automatic version. Concrete mix obtained from these batching plants was delivered into a transit mixer mounted on a self propelled chassis for delivery at the site of construction is in a plastic condition requiring no further treatment before being placed in the position in which it is to set and harden. The prepared chassis which was mounted was to ensure that when the concrete mix is taken to the actual place of construction, it keeps rotating. It is also significant to mention that for producing the concrete mix, material used was cement, aggregates, chemically analysed water and admixtures, namely, retarders and plasticizers. As the L&T was constructing cement plant of a very high quality, it needed concrete also of a superior quality and to produce that aforesaid sophisticated and modernised process was adopted. - adjudicating authority brought out the differences between Ready Mix Concrete and CM which is conventionally produced. In this backdrop, the only question is as to whether RMC manufactured and used at site would be covered by notification. Answer has to be in the negative inasmuch as Notification No. 4 dated March 01, 1997 exempts only 'Concrete Mix' and not 'Ready Made Mixed Concrete' and we have already held that RMC is not the same as CM. - Decided against the assessee. Assessee was producing RMC and the exemption notification exempts only CM and the two products are different. Even if there is a doubt, which was even accepted by the assessee, since we are dealing with the exemption notification it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue. - Decided in favor of revenue.
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2015 (10) TMI 611
Valuation of goods - Inclusion of interest on advance received - Supreme dismissed the appeal filed by Revenue holding that advance received by the respondent herein from M/s. Jindal Iron and Steel Company has not influenced the price which was charged during the period in question. Appeal was filed against the decision of Tribunal [2005 (4) TMI 219 - CESTAT, BANGALORE] wherein Tribunal held that price at which the goods have been sold to M/s. JISCO prior to the receipt of advance and after regularization of the advance, more or less remained the same. price at which goods were sold to M/s. JISCO depended on the prices at which their competitors sold similar goods to them.
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2015 (10) TMI 610
Review petition - Valuation of goods - Demand of duty - Period of Limitation - Suppression of facts - Inclusion of sales tax collected in the assessable value of goods - Whether the assessee was entitled to claim deduction under Section 4(4)(d)(ii) of the Act in respect of full amount of sales tax payable at the rate of 2% - Held that:- There is a delay of 191 days in filing these Review Petitions and we do not find any justifiable reason to condone this huge delay. Even on merits, we have perused the Review Petitions and record of the Civil Appeals and are convinced that the order, of which review has been sought, does not suffer from any error apparent warranting its reconsideration. - Decided against Revenue.
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2015 (10) TMI 609
Rectification of mistake - Bar of limitation - Service of order on an unauthorised representative - Supreme Court found no reason to entertain this Special Leave Petition, which is, accordingly dismissed. The appral was filed against the decision of High Court [2014 (1) TMI 1215 - ALLAHABAD HIGH COURT]; wherein high Court held that service was effected on an authorised representative and the order of the Tribunal does not suffer from any error - The Commissioner (Appeals) was correct in holding that he could not have condoned a delay beyond the period of thirty days under the proviso to Section 35(1).
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2015 (10) TMI 608
SSI exemption - extended period on limitation – clubbing of clearance – Dummy unit - Supreme Court after hearing the parties dismissed the appeal on the ground of delay as well as on merits. The appeal was filed by the Revenue against the decision of Tribunal [2012 (10) TMI 454 - CESTAT, AHMEDABAD]; wherein tribunal held that case against assessee has not been proved by the authorities with requisite evidence - clubbing of two units cannot be made on the premise that the assessee sold/cleared their entire production to other units - mere fact of management, control or grant of interest free loan is not sufficient to hold the units as a dummy unit in the absence of any money flow back and/or profit sharing and total control on another unit - Allegation of wilful mis-statement and suppression of facts justifying the extended period of limitation for making the duty demand cannot be sustained.
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2015 (10) TMI 607
Waiver of the pre-deposit ordered by CESTAT - Pan Masala unit run without registration - Rule 17 (2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 i.e; the deeming clause of the period for operating the machines will be applicable unless evidence to the contrary proves to the satisfaction of the Central excise Officers that the machines were used in the previous financial year as well – Supreme Court after hearing the partied dismissed the appeal filed by the assessee against the decision of High Court [2013 (12) TMI 76 - ALLAHABAD HIGH COURT] but by extending the time period to make the deposit. In the impugned order High Court held that there was no prima facie fault in the reasoning given by the Tribunal that the deeming provision will be applicable unless evidence to the contrary is provided to the satisfaction of the Central Excise Officer. - the petitioner has been given substantial relief both in depositing the excise duty as well as the penalty and there is no reason to interfere.
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CST, VAT & Sales Tax
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2015 (10) TMI 626
Payment of tax on compounding basis - Section 5A - petitioner failed to comply with the monthly payment of the instalments fixed under the compounding scheme - Held that:- On a perusal of Section 5A of the Kerala Tax on Luxuries Act, it is evident that, the scheme of compounding that is envisaged therein is a code in itself. There are provisions which deal with the manner in which the compounding application is to be filed by the assessee and processed by the department. The provisions of Section 5A also deal with the determination by the assessing authority of the monthly instalment of tax that is required to be paid by an assessee under the scheme. Section 5 A (6) which is relevant for the purposes of the instant case, states that, if the tax determined is not paid as specified in Sub Section 5, it shall be recovered along with penalty in accordance with the provisions of the Act. - while it would be open to the Revenue Department to proceed against the petitioner for recovery of the defaulted instalments under the scheme of compounding under Section 5A of the Act, their action in completing a regular assessment under Section 6 of the Kerala Tax on Luxuries Act is clearly illegal - The amounts, if any, remitted by the petitioners pursuant to the orders that have been quashed in these writ petitions shall be adjusted towards any liability flowing from the default of the petitioners under the scheme of compounding under Section 5A of the Act. - Appeal disposed of.
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2015 (10) TMI 625
Valuation - Inclusion of incidental charges - Determination of taxable turnover - Held that:- Primary issue that arises for consideration relates to the date from which the interest would be chargeable, i.e., whether interest is leviable from the date of assessment order in question or from the date of assessment order by which assessing authority has taxed the incidental charges for the first time for any assessment year. Again, it was not dis puted that the issue stands concluded by the judgment of the honourable apex court in J. K. Synthetics Ltd. v. Commercial Taxes Officer [1994 (5) TMI 233 - SUPREME COURT ] wherein it has been held that the interest is payable by the dealer from the date of the passing of the assessment order. Accordingly, it is held that the interest would be chargeable from the date of the passing of the assessment order in question and not from the date of passing of assessment order in any other year by which assessing authority has taxed the incidental charges for the first time. - Appeal disposed of.
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