TMI Tax Updates - e-Newsletter
October 12, 2016

Case Laws in this Newsletter:

Income Tax Customs Central Excise CST, VAT & Sales Tax

Articles

1. GST TERMINOLOGY (PART -2)

   By: Dr. Sanjiv Agarwal

News

1. Indirect Tax Collections up to September, 2016 show an increase of 25.9% over the net Indirect Tax collections for the corresponding period last year(2015-16); Net revenue collections up to September, 2016 stood at ₹ 4.08 lakh crore which is 52.5% of the Budget Estimates of Indirect Taxes for Financial Year 2016-17

2. Launch of Enhanced Foreign Trade Data Dashboard

3. RBI Reference Rate for US $

4. Text of the Speech of Shri Arun Jaitley, Finance Minister, representing the Constituency of Bangladesh, Bhutan, India and Sri Lanka, at the 94th Meeting of the Development Committee, in Washington, D.C.

5. Text of the Speech of the Union Finance Minister Shri Arun Jaitley at the IMFC Plenary in Washington, DC on “IMF Institutional Issues”

6. Addressing the Restricted Session of the International Monetary and Finance Committee (IMFC) and the Plenary Session of IMFC in Washington D.C., the Finance Minister Shri Arun Jaitley stresses to focus on the coordinated policy actions and growth strategies;

7. Finance Minister Shri Arun Jaitley highlights the various steps like leveraging digital IDs (Aadhar),expanding access networks (PM Jan-DhanYojana) and digitizing financial benefit transfers (including Insurance and Pension Schemes), taken by the present Government leading to the tremendous progress towards achievement of the universal financial inclusion goal during the last couple of years; Also holds bilateral meetings with his counterparts from Sri Lanka, China, and Iran focusing on the areas of mutual co-operation and commonality of positions in various multilateral fora

Notifications

Income Tax

1. 92/2016 - dated 7-10-2016 - IT

Income-tax (27th Amendment) Rules, 2016

Highlights / Catch Notes

Income Tax

• High Court: Directors' Liability in Liquidation Requires Sufficient Evidence u/s 179 to Pierce Corporate Veil.

  Case-Laws - HC : Liability of directors of private company in liquidation - statutory creation of piercing of corporate veil - If the revenue wanted to apply the principle of lifting the corporate veil in the context of Section 179 of the Act, it ought to have prima-facie sufficient material to confront the assessee on the issue and should have so confronted the assessee - HC
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• Bank Liquidation Doesn't Invalidate Transactions if Taxpayer Provides Strong Evidence.

  Case-Laws - HC : Merely because bank has gone in liquidation would not be sufficient reason to doubt the bank transaction in support of which, there was ample other evidence produced by the assessee - HC
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• Audit Delay for 2007-08 Blocks 2008-09; No Penalty u/s 271B for Assessee.

  Case-Laws - AT : Penalty u/s 271B - there is some force in the argument of the assessee that without the audit of the accounts for A.Y. 2007-08 the audit of the accounts for A.Y. 2008-09 could not have been done - this is not a fit case for levy of penalty u/s. 271B - AT
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• Section 271(1)(c) Penalty Not Imposed: Taxpayer Disclosed Income in Revised Return and Paid Due Taxes.

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessment was made accepting the revised return - undisclosed income towards excess cash, excess stock and list of outstanding debtors was offered and tax was paid - no penalty - AT
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• Application Rejected: Objectives Don't Qualify as Charitable u/s 2(15), Limited to GIDC Industrial Estate Members.

  Case-Laws - AT : Application u/s 12A rejected - main objects of the assessee company are not covered under the provisions of section 2(15) of the Act and are not charitable in nature as they are confined to a special class of member industries of GIDC Industrial Estate, Panoli - AT
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Customs

• Petitioner's Non-Payment Leads to Goods Confiscation; No Legal Basis for Customs Duty Recovery.

  Case-Laws - HC : If the petitioner does not pay fine in lieu of confiscation, the remedy of the respondent is only to confiscate the goods. In such an event, there is no provision to recover the customs duty and other charges - HC
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• Appellant Liable for Mis-declaring Maximum Retail Price on Imports; Discrepancy Found in Customs Declarations.

  Case-Laws - AT : Mis-declaration of MRP at the time of import - The appellant cannot absolve themselves from the responsibility that the goods carried different MRP labels of the price then what they had declared to the customs. - AT
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Central Excise

• Appeal Deadline Extended to Next Working Day When Last Date Falls on a Sunday, as per Legal Rule.

  Case-Laws - AT : Period of limitation - where the last date of filing the appeal is being Sunday, then the next working day shall be the last date for filing the appeal. - AT
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Case Laws:

• Income Tax

• 2016 (10) TMI 367
  Liability of directors of private company in liquidation - statutory creation of piercing of corporate veil - Held that:- In the present case, the respondents have instead of confronting the petitioner with necessary material why the corporate veil should be lifted and Section 179 of the Act be applied to him, issued the notice dated 18.11.2008 and called upon the petitioner to substantiate the claim that the company is a public limited company. This fact is not even seriously in dispute. The revenue ought not to have questioned such a basic fact. If the revenue wanted to apply the principle of lifting the corporate veil in the context of Section 179 of the Act, it ought to have prima-facie sufficient material to confront the assessee on the issue and should have so confronted the assessee – petitioner calling upon him to show cause why such powers should not be invoked. Further as noted, the demand of Rs. 13.45 Crores with interest referred to in the notice has currently come down to Rs. 3.55 Crores. Under the circumstances, the impugned order is set aside leaving it open for the revenue, if it so desires, to take out fresh proceedings by issuing appropriate notice and taking further steps in accordance with law; bearing in mind observations made hereinabove. The petitions stand disposed of accordingly. It is clarified that all contentions and objections of the petitioners are kept open.

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• 2016 (10) TMI 366
  Addition made on account of unexplained cash credit /s 68 - failure to prove creditworthiness of the creditor - Held that:- The question pertains to an amount of Rs. 6.85 lacs, which the assessee claim, to have received by way of loan from one M/s.Pepilon Exports. After one round of remand, the assessee produced necessary documents such as the bank statement of Sarvoday cooperative bank of M/s.Pepilon Exports as well as that of the assessee. It was noticed that a cheque was issued by M/s.Pepilon Exports in favour of the assessee in January 1997 for the said sum of Rs. 6.85 lacs. On the same day, the amount was transferred to the account of the assessee which was also reflected in the assessee's bank statement. Commissioner of Income-tax (Appeals) and Tribunal therefore found that the entire transaction was a bank transaction. The Assessing Officer however, was of the opinion that since Sarvoday bank was in liquidation, further inquiry with the said Bank could not be made. Merely because bank has gone in liquidation would not be sufficient reason to doubt the bank transaction in support of which, there was ample other evidence produced by the assessee. - Decided in favour of assessee.

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• 2016 (10) TMI 365
  Penalty levied by the AO u/s.271B - not getting the accounts audited before the specified date - Held that:- We find some force in the submission of the assessee that when the accounts of the A.Y. 2007-08 was audited on 11-02-2009, it was not possible to obtain the tax audit report u/s.44AB for A.Y. 2008-09 before 30-09-2008. Although the assessee could not substantiate with evidence the sudden leaving of the old Accountant and that the new Accountant took some time to understand the job but the fact remains that the accounts for preceding assessment year were audited only on 11-02-2009. Without the closing balance of the financial year 2006-07 the opening balance of the financial year 2007-08 cannot be verified. No auditor will audit the accounts of a subsequent year without having the audited accounts of the preceding assessment year. Therefore, there is some force in the argument of the assessee that without the audit of the accounts for A.Y. 2007-08 the audit of the accounts for A.Y. 2008-09 could not have been done. Further, the AO has completed the assessment on a total income of Rs. 533,87,720/- in the order passed u/s.143(3) on 14-12-2010 which is the income declared by the assessee in the revised computation of income. Thus we are of the considered opinion that this is not a fit case for levy of penalty u/s.271B of the I.T. Act. We therefore set aside the order of the CIT(A) and direct the AO to cancel the penalty - Decided in favour of assessee.

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• 2016 (10) TMI 364
  Penalty u/s 271(1)(c) - assessment was made accepting the revised return - undisclosed income towards excess cash, excess stock and list of outstanding debtors was offered and tax was paid - Held that:- The survey was conducted on 10.7.2008, more than 3 months have been completed for the financial year 2008-09 relevant to assessment year 2009-10. During the course of survey, excess cash, excess stock and list of outstanding debtors were found which has been admitted by the assessee, but previous year has not ended so far. The assessee filed return on 30th September, 2009 within time at Rs. 2,42,212/- and paid the tax on all the disclosures made, but in computation this disclosure has not been taken & it is directly credited in the capital account of the assessee. The assessee has co-operated during the survey proceedings as well as in assessment proceedings. The ld. AO had imposed penalty on the basis of finding given for the quantum proceedings in assessment. However, quantum proceedings and penalty proceedings are separate. No investigation or additional evidence had been brought on record to show that assessee has concealed the particulars of income and concealed the income. The AO only imposed the penalty on the basis of returned income. In the case of Suresh Mittal, [2001 (6) TMI 63 - SUPREME Court ] held that no penalty can be imposed if the revised return accepted by the AO as such. A number of decisions also on this issue has confirmed that for the assessment made on returned income, no penalty can be imposed under section 271(1)(c) of the Act. Therefore, we are of the considered view that penalty confirmed by ld. CIT (A) deserves to be deleted. Accordingly we delete the penalty imposed by the AO and confirmed by ld. CIT (A). - Decided in favour of assessee.

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• 2016 (10) TMI 363
  Application u/s 12A for registration as a charitable company rejected - Held that:- We find that the objects of the assessee company speaks about to build, construct, operate and maintain water supply scheme, drainage scheme, storm water drainage scheme, gas Utility Services, Power Utility, Road Network, Rainwater harvesting, artificial recharging and other utilities of Panoli GIDC Industrial Estate for the benefit of member industries. We further observe that during the course of hearing when a question was posed to the ld. AR regarding “as to who will bear the cost of accomplishing all these objects”, then ld. AR replied that assessee company shall charge the cost of services to the member industries only. This indicates that the objects for which the assessee company is seeking registration u/s 12A, they generally come in the area of work of local authorities or the Government Department which has established the industrial estate but for the better and improved quality of services that too within the control of member industries the concept of formation of such nonprofit making company gets its origination. We further observe that the working of assessee company is for the member industries of GIDC Industrial Estate and the public at large is not coming in the picture nor is there any indication in the objects which says that any specific activity for the objects to general public utility will be carried out rather the contention of assessee is indicating about remote and dim effect on the general public will be there with the attainment of main objects but we do not find it so. Therefore, respectfully following the decision of Hon. High Court in the case of Ahmedabad Mill Owners’ Association (1975 (11) TMI 27 - GUJARAT High Court) and looking to the facts and objects of the case before us, we are of the view that main objects of the assessee company are not covered under the provisions of section 2(15) of the Act and are not charitable in nature as they are confined to a special class of member industries of GIDC Industrial Estate, Panoli. Accordingly, we find no reason to interfere with the order of ld. CIT and dismiss the appeal of assessee.

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• 2016 (10) TMI 362
  Reopening of assessment - MAT applicability - Held that:- As decided in PKM Advisory Services P. Ltd. V/s. Income-Tax Officer, [2011 (1) TMI 1105 - Gujarat High Court ] when the tax payable as per the reasons recorded is less than the tax paid by the petitioner under the assessment framed under section 143(3) of the Act, the question of any income having escaped assessment does not arise. The order recording reasons, itself indicates that in fact no income has escaped assessment and as such there is no basis for the formation of belief that income has escaped assessment. In the circumstances, the basic precondition for reopening assessment under section 147 of the Act, namely that the Assessing Officer should have reason to believe that income has escaped assessment is not satisfied. In the circumstances, the assumption of jurisdiction by the Assessing Officer by issuing notice under section 148 of the Act is without jurisdiction and as such the impugned notice under section 148 of the Act as well as all proceedings pursuant thereto cannot be sustained In case of India Gelatine And Chemicals Ltd. V/s. Assistant Commissioner of Income-Tax (No.1) [2015 (2) TMI 808 - GUJARAT HIGH COURT ] noted that loss claimed by the assessee even if was disallowed, there would be no difference in the assessee's tax liability under Section 115JA of the Act. It was therefore, observed that there was no escapement of income assessable to tax on such ground, notice of reopening was quashed. - Decided in favour of assessee

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• 2016 (10) TMI 361
  Rectification of mistake - prayer for leave to withdraw the appeal - Applicability of Income Tax Rule-8 in assessing fringe benefit tax - Held that:- The following facts in the case before us are not disputed nor are they disputable:- (a) The prayer for not pressing the appeal was made on 30th November, 2015 in ignorance of the judgement passed by the jurisdictional High Court in the case of Apeejay Tea Ltd. v. CIT reported in (2014 (7) TMI 1118 - CALCUTTA HIGH COURT )wherein held that the amount of expenditure incurred by the assessee-employer in extending fringe benefits to its employees was not solely for the purpose of business. The expenditure incurred was both for the purpose of business and for the purpose of agriculture. The submission that the expenditure on account of fringe benefits had already been taken into account was not correct. The net profit and loss of the business had to be arrived at after deducting all the expenses. Once that was done 40 per cent. of the net profit and loss had to be worked out which shall be chargeable to tax. Once this was done the expenditure on account of fringe benefits would automatically stand reduced to 40 per cent. (b) The prayer for leave to withdraw the appeal was, made, based on the earlier views taken by the Tribunal holding that Income Tax Rule-8 had no applicability in the matter of fringe benefit tax. (c) It does not appear that the learned Tribunal was alive of the fact that the jurisdictional High Court had already taken a different view. There is, as such, no doubt that the order was prayed for and passed under a mistaken belief that Income Tax Rule-8 had no applicability to the fringe benefit tax. We already have demonstrated that the mistake is apparent. True, it is that it might not have been a mistake on the part of the Tribunal but the Tribunal obviously was not aware of the judgement of the jurisdictional High Court passed on 3rd July, 2014. Had it been aware of the judgement, it would have, in fairness we believe, brought this fact to the notice of the assessee. The assessee obviously was not aware. Therefore, the prayer for leave to withdraw the appeal and the order allowing the prayer were both based on a mistake. Section 254(2) does not provide that it has to be a mistake solely on the part of the learned Tribunal. We are, as such, of the opinion that the case was covered by sub-section 2 of Section 254. In summing up, we may indicate the question which falls for consideration:- “whether the power under section 254(2) can be exercised in the case of a mistake apparent on the part of the litigant or his advisors?” For the reasons discussed above, we answer the question in the affirmative

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• 2016 (10) TMI 360
  Reopening of assessment - claim of deduction under section 80IB(10) disallowed as assessee was not the owner of the land and the permission from AUDA was also not obtained by the assessee - Held that:- For multiple reasons on such grounds, the reopening would not be permissible. Firstly, as noted, in the original scrutiny assessment, deduction under section 80IB(10) of the Act was the main claim of the assessee which came up for scrutiny. The Assessing Officer raised several queries, asking the assessee to justify such claim, to which, the assessee gave detailed reply, producing evidence and materials on record. In that view of the matter, it would be extremely doubtful whether the Assessing Officer can later on examine another facet of the same claim, contending that such aspect was not scrutinized during the original assessment. It is not the case of the Assessing Officer that in response to the queries raised during such assessment, the assessee did not make true or proper disclosures. The reasons recorded did not rely on any material outside the record. Quite apart, the very issue on the basis of which, reopening is resorted to is squarely covered by the judgment of this Court in case of Radhe Developers (2011 (12) TMI 248 - GUJARAT HIGH COURT ) which came to be confirmed by the Supreme Court concerning this assessee and its claim of deduction under section 80IB(10) of the Act for the subsequent year. The Tribunal had allowed the assessee's appeal. Before the High Court, Revenue had argued that the case of the assessee did not fall within the facts of Radhe Developers (supra) or Shakti Corporation [2008 (11) TMI 436 - ITAT AHMEDABAD ]. Such a contention was rejected. Other grounds raised were also not accepted. Thus we find that the reasons recorded by the Assessing Officer for reopening the assessment lack validity. - Decided in favour of assessee

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• 2016 (10) TMI 359
  Deduction u/s. 80IB (10) eligibility - develpoer v/s contractor - whether some of the units exceeded the maximum permissible builtup area - whether the open space adjoining the top floor constructed area of the unit would also form part of the builtup area of the unit - Held that:- The Tribunal in the impugned judgment has referred to the terms and conditions between the assessee and the society, from which, the Tribunal culled out that entire planning, sanctioning of plan, work of construction, development of the property was done by the assessee. The assessee would enroll the members and accept payments from such members. Entire sale consideration was received by the assessee from such members. As per the agreement, the assessee had to provide the payment from construction, engage architect, engineer and site supervisor and also obtain necessary permission from AUDA. The Tribunal concluded that these conditions would show that the assessee was a developer and not a contractor. The case of the assessee would in background of such findings of the Tribunal be covered by the judgment of this Court in case of Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] wherein held assessee as entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners. Section 80(14) of the Act contains definitions for the purpose of the said section. Clause( a) thereof provides that builtup area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units. Thus, the builtup area would include inner measurements of a residential unit on the floor level added by thickness of a wall as also projections and balconies. This would however, exclude the common areas shared with other residential units. This exclusion clause of the common areas shared by other units cannot be applied in the reverse. In other words, the moment a certain area is not shared but is exclusively assigned for the use of a particular residential unit holder, would not mean that such area would automatically be included in the builtup area. In order to be part of the builtup area, the same must be part of the inner measurements of a residential unit or projection or balcony. The open terrace space on the top floor of a building would not satisfy this description. It will also not be covered in the expression balcony. Term 'balcony' has been explained in Webster's Third International Dictionary (Unabridged) as unroofed platform projecting from the wall of a building, enclosed by a parapet or railing, and usually resting on brackets or consoles. It is often used as synonyms to gallery, loggia, veranda, piazza, porch, portico, stoop etc. In the context of residential or even commercial complexes, term 'balcony' has gained a definite common parlance meaning. It usually consists of a projection from a building covered by a parapet or railing and may or may not but usually is covered from the top. This term 'balcony' certainly would not include an open terrace adjoining a bedroom or any other constructed area of a penthouse. The terrace is not a projection. - Decided against revenue

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• 2016 (10) TMI 358
  Condonation of delay in filing o return - reasons for delay - petitioner contended that the documents were misplaced in the Chartered Accountant's office - Held that:- From the materials on record, we gather that admittedly, the return filed by the petitioner was late by merely seven months. In order to explain such delay, the petitioner contended that the documents were misplaced in the Chartered Accountant's office and he, therefore, could not have filed the return in time. He further stated that his wife was suffering from “some severe illness for which she was operated on 14.02.2012 and after her recovery, I was in a position to handover an another set of documents to my Chartered Accountant's office for filing return”. The explanation offered by the petitioner cannot be accepted unless sufficiently strong reasons are shown. It would not be possible to find fault with the Revenue authorities in exercising powers under Section 119 of the Act. Routine, liberal and overindulgent approach in condoning delay would open floodgates of applications, completely throwing the tax assessment and recovery machinery out of gear. We may recall, the grounds raised by the petitioner for delay of nearly seven months were that Chartered Accountant's office lost the papers and therefore, could not file return and further, that due to the illness of his wife, he could not follow filing of return with the Chartered Accountant. A minor or a few days' delay could perhaps be explained by suggesting that the Chartered Accountant's office lost the papers. The delay was substantial. Further, in the application that the petitioner filed, he only stated that his wife had some severe illness without specifying the nature of illness, its duration and the kind of treatment needed. These aspects would be relevant since the operation that the petitioner claimed his wife underwent, took-place on 14.02.2012 i.e. long after the due date for filing the return, in the end of July of previous year. Thus, very clearly, the illness of wife had nothing to do with the petitioner's missing the date for filing the return. This additional ground, therefore, also does not in any manner, explained the delay.

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• 2016 (10) TMI 357
  Payment towards trade mark and use of expertise in the field of commerce, finance etc - capital or revenue expenditure - Held that:- This court is of the opinion that the finding with respect to tangible or non-tangible asset vesting in the assesee and whether it had or not any lasting or enduring advantage to it is more in the nature of a finding of fact. The findings are also that to use the Nitrex brand, payments were made and it was essential for the assessee to make such payments on account of nature of its business and on account of procuring knowledge for setting up the systems as well as other procedures. In the circumstances, we are of the opinion that no question of law arises on this aspect. Payments made by the assessee to its holding company Nitrex Chemicals India Ltd for the use of its trademark and for the purpose of obtaining expertise in commerce, finance, manufacturing etc. amounted to revenue expenditure instead. Excessive commission - Held that:- This issue is consistently ruled against the assessee, for all the five years. However, in both the CIT (A) and the ITAT, the revenue’s contentions were not accepted. Here, the assessee’s argument was that the commission could not be characterised as excessive because they were more customary in nature having regard to the historic relationship with M/S Asha export, its export agent. This court is of the opinion that such decisions as to the nature and quantum of commission may differ having regard to the uniqueness of each business and the relationship that it may possess with those associated with it. Unless, the revenue is able to pinpoint extraordinary features, it cannot scrutinize the commercial terms that a business takes into account in making a decision and contend that certain percentage or quantum of commission is “excessive”. Capital gains in respect of slump sale - Revenue’s contention here is that sum spent by the assessee at the time of transfer of its business undertaking to fund the ESOP Trust, cannot be characterized as permissible expenditure but rather has to be added back for the purposes of income calculations - Held that:- As is evident, the expression “expenditure incurred wholly and exclusively in connection with such transfers” is in plain terms sufficient to encompass the kind of expenditure with which this Court has to deal with in respect of determining the issue in question. ESOP was an essential term of employment for the assessee’s workforce; an ESOP Trust Fund had been created for this specific purpose. Upon the transfer of the assessee’s undertaking, the transferee disclaimed any responsibility to honor the ESOP conditions. As consequence, the funding of the ESOP became an integral part of the transfer itself.In these circumstances, the court is of the opinion that the mode of computation of capital gains had to necessarily take into consideration the ESOP funding through the trust fund by the Assessee at the stage of transfer.Therefore, the court holds that there is no infirmity in the findings of the ITAT. Disallowance under Section 14A - Held that:- We notice that the decision in the case of Maxopp Investment Ltd.Vs CIT, New Delhi (2011 (11) TMI 267 - Delhi High Court ) would apply in the circumstances. Equally for the last year i.e. year 2009-2010, the AO’s omission to record his satisfaction as to the permissibility of the deduction, which is the pre-condition for exercise of the power, persuaded us to hold that no question of law arise. Foreign exchange fluctuation - whether could be treated as capital losses rather than as revenue expenditure? - Held that:- We notice that this aspect was considered by the ITAT which observed that the ECB loan/advance was an old one and the treatment of the foreign exchange fluctuation especially in case of increase for all the previous years was taken to be on the revenue side. It is necessarily implied that the revenue accepted that the foreign exchange amounts amounted to income and proceeded to deal with it as such.This court is of the opinion that in view of the past revenue treatment, the revenue’s submissions by the appellant are unmerited. No question of law arises. Revenue appeal dismissed.

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• 2016 (10) TMI 356
  Addition towards unaccounted sales - Held that:- Considering the observation of the Assessing Officer where it is specifically observed that the assessee has not suppressed the investment on purchases and that no evidence relating to suppression of purchases was detected by the Excise Department. In that view of the matter, in view of the direction of this court, the Tribunal has committed error in sustaining the addition of Rs. 3,78,112/- made by the Assessing Officer as confirmed in appeal by the Commissioner (Appeals). We, therefore, allow the appeal in favour of the assessee.

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• 2016 (10) TMI 355
  Nature of expenditure - revenue or capital - main ground for disallowance of the expenses by the Assessing Officer was that the said expenses were capitalized in the books of accounts of the assessee - Held that:- As decided in Ghanshyam Steel Work Ltd [2010 (5) TMI 831 - GUJARAT HIGH COURT] the so called new unit was merely an expansion of the existing business of the assessee and was not setting up of a new business and as such the expenses incurred in this regard were allowable as revenue expenses. Considering the fact that the Assessing Officer had not considered the claims of each of the items of expenditure incurred by the assessee from the angle as to whether the same were in the nature of revenue or capital expenditure, the matter has been restored to the Assessing Officer to look into the nature of the expenses and consider as to whether the same are allowable under Section 36(1)(iii) or Section 37 of the Act. Merely because the expenses have been capitalized in the books of account, the same cannot be a final wording in the tax proceedings unless these entries of books of account are in consonance with the IT provisions. - Decided in favour of the assessee and against the revenue

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• 2016 (10) TMI 354
  Eligibility to depreciation claim - Electrical installation treated as “Plant and Machinery” - Held that:- The controversy raised in this case stands settled by a Division Bench judgment of this Court in the case of Commissioner of Income tax v. Express Resorts & Hotels Ltd., [2014 (12) TMI 1256 - GUJARAT HIGH COURT] wherein it has been held that electrical installations and sanitary fittings should be regarded as “Plant” for the purpose of depreciation in scheme of Section 32 of the Act. He submitted that the Division Bench took the aforesaid view by following the decision of the Apex Court in the cases of CIT v. Taj Mahal Hotel, [1971 (8) TMI 2 - SUPREME Court ] and CIT v. Anand Theatres [2000 (5) TMI 4 - SUPREME Court ] . - Decided in favour of the assessee

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• 2016 (10) TMI 353
  Penalty u/s 271(1) - disallowance made under deeming provisions of section 94(7) - Held that:- We find that in the case of Reliance Petro product Pvt Ltd reported (2010 (3) TMI 80 - SUPREME COURT ), in which it has been held that in order to expose to the vigour of penal provision, the case is required to be strictly covered by the provisions of section 271(1)(c) of the Act. It was further held that wrong claim made by the assessee which is not accepted to the revenue cannot be subjected to the provisions of section 271(21)( c ) of the Act merely on the ground that the claim of the assessee was wrong. In this case, the assessee had made genuine claim which was found to be wrong by applying deeming provisions of section 94(8) of the Act and thus the penalty was imposed by the AO and also sustained by the ld. CIT(A). In the case of Zoom Communications P Ltd (2010 (5) TMI 34 - DELHI HIGH COURT), held that where the assessee makes a claim which is not only incorrect in law but also wholly without any basis and explanations furnished by him are not bonafide for making such claim. In that case, the penalty would be levied under section 271(1)(c) of the Act. In our opinion the case of the assessee is squarely covered by the ratio laid down in the case of Reliance Petro Products Ltd (supra). The facts of the case in Zoom Communications P Ltd (supra) are distinguishable from that of the assessee’s case, as in the case of assessee wrong claim was under bonafide belief of the accountant which was disallowed under the deeming provisions of section 94(8) of the Act and therefore, the ld.CIT(A) has wrongly relied on the decision in order to uphold the order of the AO. In view of the above discussion and legal position, we set aside the order of the ld. CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.

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• 2016 (10) TMI 352
  Addition u/s 68 - disallowance for receiving bogus accommodation entries - Held that:- It is a well settled law that addition cannot be made simply basing on some report like Report received from Investigation Wing etc. and when the assessee produces certain evidence, the onus lies on the AO to cause enquiries/ verification to demolish that evidence. However, in the present case no such attempt has been made by the AO and no enquiry or verification was ever done by him. Hence, Ld. CIT(A) has rightly deleted addition - Decided in favour of assessee.

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• 2016 (10) TMI 351
  Reopening of assessment - reasons to believe - Held that:- We are of the view that initiation of reassessment proceedings will have to be held as invalid for the reason that reasons recorded by the AO do not spell out that escapement of income was due to the assessee not fully and truly disclosing all material facts necessary for completion of assessment for the relevant assessment year. Admittedly the proviso to Sec.147 of the Act was applicable in the present case. The AO in the reasons recorded has not spelt out as to how there was a failure on the part of the assessee to fully and truly disclose all material facts. In fact there is no such allegation at all in the reasons recorded by the AO. When the original proceedings were concluded all facts with regard to increase in freight charges vis-à-vis purchases were much available before the AO. In the present case, the reasons recorded by the AO does not refer to any new material that came into his possession based on which he entertained belief that income of assessee chargeable to tax has escaped assessment. The facts with regard to the freight charges and quantum of purchases for the previous year and the earlier previous year were available with the AO when the concluded the first assessment proceedings. There is no other conclusion possible except the conclusion that the reopening of assessment is not based on tangible material which came into possession of the AO after conclusion of the original assessment proceedings. On the facts and circumstances of the present case, we are of the view that initiation of reassessment proceedings has been merely on the basis of change of opinion and in view of the law laid down by the Hon’ble Supreme Court in the case of Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ), initiation of reassessment proceedings has to be held as not proper. Before us, the ld. DR had placed strong reliance on the order of the CIT(Appeals) on the issue of validity of initiation of reassessment proceedings. - Decided in favour of assessee.

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• 2016 (10) TMI 350
  Registration under section 12AA - Held that:- We find that the assessee temple is registered with the Endowments Department under section 6(c)(ii) of the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987. Section 6 of the Act provides for preparation and publication of list of charitable and religious institutions and Endowments on the basis of the income. Clause-(c) and sub-clause (ii) thereof, provides for religious institutions and Endowments other than Mutts not falling under Clause- (a) or Clause-(b) of section-6 of the Act. The religious institutions and Endowments are defined under subsections 22 and 23 of Section-2 of the said Act. The above definitions clearly demonstrate that such religious institutions or Endowments are for the purpose of any service or charity for the public. Therefore, any institution registered under section 6 of the A.P. Charitable and Hindu Religious Institutions and Endowments Act is deemed to be carrying on the charitable and religious activities. The certificate of registration therefore, establishes that the ‘Temple’ is a religious and charitable institution. The Hon’ble Madhya Pradesh High Court in the case of Laxminarayan Maharaj & Another vs. CIT (1983 (9) TMI 50 - MADHYA PRADESH High Court ) has held that when a Trust is not created under an instrument i.e., “the document evidencing the creation of the Trust”, the evidential document cannot be limited to documents which directly prove the creation of the trust and that all documents which afford a logical basis of inferring creation of the trust can be described to be “documents evidencing the creation of the trust” within the meaning of Rule 17A(a). In the case before us, since the certificate of registration with Endowments Department of the Government of A.P. is a document evidencing the creation of the Trust, we are of the opinion that the CIT(E) has erred in rejecting the application of the assessee for nonfiling of the Trust Deed. In view of the same, we deem it fit and proper to set aside the order of the CIT(E) and remand the same to his file for re-consideration of the assessee’s application for registration under section 12AA by taking the certificate of registration with the Endowments Department as evidence of creation of trust. Decided in favour of assessee for statistical purposes.

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• 2016 (10) TMI 349
  Interest on deposit received from banks - CIT(A) confirming the assessment to income of the interest on deposit received from banks out of surplus funds from the defined agency activities on behalf of the Govt. of Kerala in setting up of Vizhinjam International Seaport at Vizhinjam in Thiruvananthapuram - Held that:- The assessee is only an extended arm/wing of the Government set up wholly and exclusively for undertaking certain sub-sovereign functions on behalf of the Government of Kerala for the public utility project involving providing support/assistance for setting up a deep sea international seaport and therefore, is not engaged in any business activities involving a profit motive. In the assessee’s case, Govt. orders as stated clearly stipulated the activities that have to be undertaken by the assessee and neither the grant nor the interest can be used for any purpose. The Ld. CIT(A) has hypothetically visualized that assessee is having own activities not undertaken on behalf of the Government unrelated to project which is only a illusory figment of imagination. This is so as the assessee’s only objective was to undertake smooth and efficient rendering of agency services entrusted by the Government and hence treating interest income as separate income or own income of the assessee not earned or received for implementation of the project is only a coloured and misdirected application of mind by the Ld. CIT(A) as there is no such own income or own activity All the receipts and income are on behalf of the GoK for implementation of the project. The following decisions of other High Courts in similar or identical situations and also of various Income Tax Appellate Tribunals passed relying on the above decision of Hon’ble Karnataka High Court in Karnataka Urban Infrastructure Development and Finance Corporation reported in (2009 (1) TMI 243 - KARNATAKA HIGH COURT )also fortify and strengthen the assessee’s case for exemption of income tax on interest income earned from investment of surplus funds. - Decided in favour of assessee.

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• 2016 (10) TMI 348
  Validity of reopening of assessment - procedures to be followed - Held that:- It is settled proposition of law on the point that the Assessing Officer is bound to first decide the objections of the assessee against notice 148, communicate the same to the assessee and allow the assessee reasonable time to challenge the order of the Assessing Officer deciding the objections thereafter, the Assessing Officer may pass the reassessment/assessment. However this was not done by the Assessing Officer in the case of the assessee and decided the objection under Section 148 of the Act by a composite assessment order dt.31.12.2008 which is in gross violation of law in the case of GKN Driveshafts [2002 (11) TMI 7 - SUPREME Court ] - Decided in favour of assessee

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• 2016 (10) TMI 347
  Gain arising from sale of shares - capital gain or business income - Held that:- There is categorical finding that the Department had been accepting the stand that the assessee was consistently investing in shares and the capital gains, offered by the assessee was assessed either as long term gain or short term gain while passing order u/s 143(3) of the Act. Identical was the situation for A.Ys.2005-06 and 2006-07 framed u/s 143(3) of the Act and the same were found exempted u/s 10(38) of the Act. These findings of the ld. Commissioner of Income Tax (Appeals) as well as of this Tribunal were not contradicted before us, thus, in the absence of any contrary material, on the principle of consistency, the Department is not expected to take a Uturn and assess the income as business income. So far as the contention of the ld. DR and also the observation of the ld. Commissioner of Income Tax (Appeals) that there was a profit motive, we are not impressed by this submission, because, every investor invest the money for gain and not for loss. In the basis of principle of judicial discipline, consistency has to be followed and once in a particular year, if any view is taken, in the absence of any contrary material, no contrary view is to be taken as finality to the litigation is also a principle which has to be followed. Before us, no contrary facts or any adverse material was brought on record by the Revenue, therefore, on the principle of consistency also, the assessee is having a good case in her favour. - Decided in favour of assessee.

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• 2016 (10) TMI 346
  Trading addition - rejection of books of account - Held that:- Whatever defects pointed out by the Assessing Officer is not justified, the rejection of books of account U/s 145(3) of the Act. The assessee’s manufacturing processes are so complexed that at every stage, the size, length and width of products changed and also the number of process in the manufacturing of handmade papers but the assessee has maintained proper purchase, sale and other expenses on the basis of bill/vouchers. - Decide against revenue

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• 2016 (10) TMI 345
  Disallowance u/s 14A r.w.r 8D -- Held that:- AO invoked provisions of Rule 8D of Income Tax Rules, 1962 for making and estimating disallowance. Therefore the basis of disallowance was not correct and bad in law as Rule 8D applies from asstt. year 2008- 09 onwards. Thus we inclined to hold that no material has been brought on record by the AO to show that the interest expenditure was incurred for the purpose of investment earning exempt income. At the same time, we also observed that the Ld. DR could not controvert this factual position that there is no expenditure on interest and there is some interest income shown by the assesse in both the years. As we have already noted that Rule 8D of Income Tax Rules is not applicable for asstt. year 2006-07 and 2007-08 which was wrongly applied by the AO for estimating this amount. The AO has not controverted the ratio adopted by assessee in making suo moto disallowance i.e ratio of dividend income to total income. Therefore, we decline to accept basis adopted by the AO for making disallowances. Per contra, at the same time we are in full agreement with the conclusion of the Ld. CIT(A) wherein he restricted the disallowance u/s 14A of the Act to the ratio of the dividend income to total income of the assessee during the relevant financial period. Hence we are unable to see any valid reason to interfere with the conclusion of the first appellate authority on this issue and thus we uphold the same. It is also relevant to mention here that the facts and circumstances of asstt. year 2006-07 and 2007-08 and quite similar therefore, our conclusion based on the facts and asstt. year 2006-07 would apply mutatis mutandis to asstt. year 2007-08 also. - Decided against revenue

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• 2016 (10) TMI 344
  Addition of undisclosed interest income - mismatch between the interest shown in the TDS Certificates with the interest income shown in the books of accounts - Held that:- We find that the assessee has shown interest income from Canara Bank at Rs. 70,14,087/- and interest from HFC Bank at Rs. 42,05,468/-, whereas in the TDS Certificates issued by both these Banks, the interest paid/credited in the account of the assessee was shown at Rs. 74,82,545/- and at Rs. 43,15,909/- respectively from Canara Bank and HDFC Bank. On account of this variation, the difference figure of Rs. 5,78,899/- originated which the ld.AO has added to the income of the assessee. We further observed that appellant has given detailed working before lower authorities showing the reconcilement of interest income from both the case and HDFC bank and has commenced the reconcilement statement by showing the amount of interests credited in the books of account and has arrived to the interest income comparing TDS Certificates. However, it seems that there was no occasion for the assessee to produce necessary ledger account for AY 2005-06 in which the impugned interest amount of Rs. 5,78,899/- has been disclosed and offered to tax. Under these circumstances, it would be justified if this issue is remitted back to the file of ld.AO. There is no objection on the part of the Revenue in this regard. Accordingly, we remit this issue to the file of AO who will provide reasonable opportunity of being heard to the assessee. Needless to say that the assessee will furnish complete details and evidence, if any for FAY 2005-06, i.e. for AY 2006-07 to establish that the income of Rs. 5,78,899/- has formed part of total income. Thus, this ground of assessee’s appeal is allowed for statistical purposes. TDS u/s 194I - Non deduction of tds on Rent expenses - nature of payment - bifurcation of payment - Held that:- Payment to ACBPL does not fall under the Rent expenses because ACBPL is a business developer appointed by the assessee and as per the agreement ACBPL is providing multiple services relating to stock market and working on behalf of the assessee and more so, most of the expense incurred on the office premises of ACBPL are reimbursed by the assessee. Certainly, such kind of arrangement does not fall within the ambit of rent expenses and, therefore, assessee has rightly deducted TDS by bifurcating the payments made to ACBPL under the head brokerage, fees for providing technical services and reimbursement of expense and has duly deducted TDS on all these payments under the correct provisions of Income Tax Act. Similarly, payment incurred on lease line expenses and V-Set charges also do not fall under the category of rent expenses because the machineries and equipments used for providing these services are shared by many stock-brokers and, therefore, the assessee has rightly deducted TDS u/s.194-C. We are, therefore, of the view that the ld.AO erred in observing that the assessee has not deducted TDS u/s.194-I of the Act on the payments as the assessee has deducted and deposited TDS under the correct provisions of the Act, i.e. u/s.194-J & 194-C respectively and, therefore, no disallowance is called u/s.40(a)(ia) of the Act. Addition u/s 14A - Held that:- We observe that the assessee possessed interest-free funds as on 31/03/2007 of Rs. 21.55crores and investments as on 31/3/2007 stood at Rs. 2.47crores which shows that assessee had sufficient interest-free funds for application in the investments and, therefore, following the judgement of CIT vs. Torrent Power Ltd. (2014 (6) TMI 185 - GUJARAT HIGH COURT ), wherein it has been held that no disallowance of interest expenses is called for u/s.14A of the Act , if the assessee possesses sufficient interest-free funds to cover up the investments made and, therefore, we find no reason to make any disallowance towards interest expenses deemed to have been applied for investments. Further, we also observe that Rule-8 r.w.s. section 14A of the Act came into existence from 01/04/2008 and certainly it was not applicable to the assessee for AY 2007-08 and also no satisfaction has been made by the ld.AO by extracting necessary details from the books of account of assessee to prove that any specific expenditure has been incurred for earning dividend income. However, looking to the totality of the fact of the present case, wherein the assessee has earned dividend income of Rs. 14,53,085/- and also observing that in various judgements it has been held that disallowance u/s.14A of the Act should not exceed the exempt income earned by the assessee and looking to the fact that one cannot ignore that some elements of expenditure ought to have been incurred for earning exempt income and also making regular investments during the year as observed by us from the financial statements of the assessee that lot of transactions have taken place in the investment account. We are, therefore, of the view that out of the disallowance confirmed by the ld.CIT(A) of Rs. 1,69,229/-, we hereby delete the proportionate disallowance of interest at Rs. 23,929/- and confirm Rs. 1,45,300/- as disallowance u/s.4A of the Act. Accordingly, ground of assessee’s and Revenue’s appeal are partly allowed. Transaction of shares - STCG v/s business income -.AO for treating the STCG as business income meaning thereby not allowing the benefit of exemption of tax on LTCG and benefit of special rate of tax with STCG - Held that:- As the appellant has separately maintained the details of investments and equity shares and has been able to show the transactions of capital gain and investments distinctively from the other business activity carried out during the year and, accordingly, capital gain offered by assessee as a LTCG and STCG should have been accepted by the lower authorities and, therefore, the ld.CIT(A) has erred in accepting the view of ld.AO for treating STCG and LTCG capital gain as business income Addition on account of claim of bad debts - Held that:- Respectfully following the judgement of the Hon’ble High Court of Mumbai in the case of CIT vs. Shreyas S. Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT ], we upheld the decision of the ld.CIT(A) and applying the facts of the case, we find that inc the case of assessee who is a share-broker was providing services to NIFCL upto FY 2000-01 and was regularly earning income from brokerage which is verifiable from the ledger account of NIFCL appearing at page Nos.181 to 191 of the paper-book of the assessee and out of this outstanding balance, after a lapse of eight years, the assessee has transferred Rs. 12 lacs to the bad debts account and these facts has not been controverted by the Revenue by placing any contrary material. Therefore, we are of the opinion that the ld.CIT(A) has rightly deleted the addition by allowing the claim of bad debts of Rs. 12 lacs and, therefore, no interference is called for with the order of the ld.CIT(A) TDS u/s 194J - rent expenditure - V-set charges to NSE/BSE for connectivity and internet expenses - Held that:- Payment made to M/s.Ashwin Chinubhai Broking Pvt.Ltd. on account of office management and maintenance expenses do not fall under the head of rent expenditure and the assessee has rightly deducted TDS u/s.194-J of the Act and, similarly, payment paid towards V-set charges to NSE/BSE for connectivity and internet expenses are subject to TDS u/s.194-C of the Act and assessee has rightly deducted TDS u/s.194-C and, therefore, ld.AO was not correct in observing of the payment as rent expenditure (subject to TDS u/s.194-I of the Act). Disallowance u/s.40(a)(ia) on reimbursement of expenses - Held that:- No disallowance is called for u/s.40(a)(ia) of the Act on reimbursement of expenses as the obligation to deduct the TDS on payment of the expenditure are to be complied with the agent to admit payment on its behalf. See CIT vs. Gujarat Narmada Valley Fertilizers Co.Ltd [2014 (4) TMI 235 - GUJARAT HIGH COURT] Disallowance of bad debts - Held that:- An amount of Rs. 64,000/- has been paid to Aneel Bhargavbhai Lalcha on 24/08/2007, eventhough an outstanding amount of Rs. 1,04,210/- was due to be received on 01/04/2007. This facts shows that there was no dealing of assessee with this impugned parties for purchase of sale and shares in order to earn brokerage income, rather assessee himself has advanced money to this party. We are, therefore, of the view that the facts of the case in the year under appeal, are not the same to the facts dealt by us while adjudicating the appeal for AY 2007-08 and we are of the view that the ld.AR has rightly disallowed the claim of bad debts of Rs. 2,89,121/- and, accordingly, we allow the ground of the Revenue Whether the revised computation income can be accepted by the AO during the course of assessment proceedings or not - Held that:- As decided in ACIT Ahmedabad vs. Amrapali Capital & Financial Services Ltd [2015 (6) TMI 713 - ITAT AHMEDABAD] the CIT(A) has accepted the assessee's revised computation as per section 55(2)(ab) of the Act. The Assessing Officer had refused the very relief by quoting the case law of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court ) and also the fact that the time limit for filing revised return had already elapsed. This is not the Revenue's case that the assessee is not otherwise entitled for the relief in question under the provisions of the Act in seeking the impugned recomputation. It only contends that once there was no time left for filing a revised return, the impugned relief ought not to have been granted. A perusal of the case law hereinabove itself clarifies that the same does not impinge upon the jurisdiction of appellate authorities under the Act. Therefore, we refuse to agree with the Revenue's mere technical plea and affirm the CIT(A) findings under challenge.

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• Customs

• 2016 (10) TMI 335
  Restriction of import - refurbished / reconditioned spares of capital goods - goods examined by Custom Officers and by an independent Government approved Chartered Engineer. The Chartered Engineer after examining the goods declared them as refurbished / re-conditioned goods having a minimum residual life of more than 80% of the new data graphics tubes and estimated residual life of subject goods is about five years - is the import of refurbished / reconditioned spares of capital goods restricted and the confiscation and penalty imposed on the goods justified? - Held that: - the refurbished / reconditioned spares of capital goods are freely importable subject to the condition specified in para 2.33 of handbook of Procedures volume 1. As per the said condition, the second hand refurbished / reconditioned spare of capital goods other than those personal computer / personal laptops are freely importable on production of Chartered Engineer certificate that such spares have at least 80% of the residual life of the original spare. Admittedly such a certificate is available on record and there is no dispute about the same. Whether the import of refurbished data graphic display tubes resticted on the basis that specific import authorization from DGFT in terms of Sl. No. I(a)(i) of para 2.17 of Foreign Trade Policy (2009-2014) not produced? Held that: - the goods mentioned against the items at Sl. No. B1110 of the Schedule 3 relating to waste electrical or electronic assembly can be imported with permission from Ministry of Environment and Forest - such permission stands granted by the Ministry of Environment and Forest, vide their certificate dated 17.06.2013 - import not restricted. Appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 334
  Demand of customs duty on confiscated goods - Hospital - import of Echo Cardiography system - exemption as per Notification No.64/1988 dated 01/03/1988 - non-compliance of condition as mentioned in N/N. 64/1988 - whether the petitioner was justified in holding that when the equipment imported by the petitioner is confiscated and when the petitioner has not chosen the option to redeem the equipment, there is no reason to impose a further obligation to pay duty. The contention is that under Sec.125 of the Act, the authority can pass only alternative orders - Either confiscation with penalty under Section 111(o) and 112(a) of the Customs Act or confiscation under Section 111(o) with an option to pay fine with payment of duty in respect of goods in lieu of confiscation. Held that: - A perusal of the provisions of Chapter XIV would indicate that there is no specific provision to impose duty, if the goods are confiscated. The liability to pay customs duty arises only when fine is imposed in lieu of confiscation. Though such an order can be passed, if the petitioner does not pay fine in lieu of confiscation, the remedy of the respondent is only to confiscate the goods. In such an event, there is no provision to recover the customs duty and other charges. The decision in the case of Fortis Hospital Ltd. v. Commr. of Custom [2015 (4) TMI 348 - SUPREME COURT] apply. The equipment could be confiscated as the petitioner is not availing the option of payment of redemption fine - demand of customs duty when the equipment is confiscated is not permissible by law - petition allowed - decided in favor of petitioner.

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• 2016 (10) TMI 333
  Mis-declaration of MRP at the time of import - demand of differential duty - import of toilet soaps - declared RSP per piece Rs. 5/- - replacement of the labels/stickers - Held that: - there has been a clear facilitation and association with the activities of post-import sale of the goods at higher prices by affixing higher price (MRP) labels on the goods on the part of the appellant-importer. The importer has been in active knowledge and they rather facilitated the sale of the goods to be made at the higher price (MRP) than the price (MRP/RSP) they had declared to the customs. The appellant cannot absolve themselves from the responsibility that the goods carried different MRP labels of the price then what they had declared to the customs. The argument of the appellant that the wholesale distributor / dealer, who sold the goods at higher price causing short-payment of CVD is to be taken as deemed manufacture and differential duty should be charged from wholesaler/distributor, cannot cut much ice, when they themselves have through out been involved and in the full active knowledge of the fact that the goods were being sold at the higher price (MRP) than what they had declared to the customs. The decision in the case of PLANET SPORTS PVT. LTD. Versus COMMISSIONER OF CUSTOMS, NEW DELHI [2004 (10) TMI 209 - CESTAT, NEW DELHI] relied upon where it was held that it was incumbent upon the importer to declare the MRP at which the imported goods were to be sold and not any other price and demand of duty, confiscation and penalty were upheld. The demand of differential duty upheld - penalty reduced to Rs. 6,97,212/- - appeal disposed off - decided against appellant, with modification in the amount of penalty.

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• 2016 (10) TMI 332
  Monetary limit for filing appeal - maintainability - instructions dated 17.12.2015 issued by the CBEC in exercise of the powers conferred by Section 35R of the Central Excise Act, 1944 - monetary limit has been enhanced to Rs. 10 Lakhs below which appeal shall not be filed in the Tribunal - Board vide letter dated 1.1.2016 clarified that the said instructions will apply to all pending appeals in CESTAT. Also the decision in the case of COMMISSIONER OF C. EX., BANGALORE-III Versus PRESSCOM PRODUCTS [2011 (3) TMI 726 - KARNATAKA HIGH COURT] followed where it was held that the litigation policy containing monetary limit for filing appeals will apply to pending appeals also - appeal dismissed as the revenue involved is less than Rs. 10,00,000/- - decided against Revenue.

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• 2016 (10) TMI 331
  Confiscation of consignment under section 111(d) and (m) of the Customs Act, 1962 - option to pay redemption fine under section 125 of the Customs Act, 1962 - imposition of penalty under section 112(a) of the Customs Act, 1962 - star export house - export of manufactured tyres - license under Advance Authorization Scheme - import of natural rubber etc - mis-declaration of goods imported - testing of consignments - whether here is a case of mis-declaration of goods and malafide intention of importer involved so as to justify the confiscation and imposition of redemption fine and penalty? Held that: - where several containers are imported of the same raw material, over a period of time, some discrepancy found in two or three containers, it cannot be said that there is any mala fide or mis-declaration on the part of the importer. Further, the appellant have taken all precautions before the importation and have given proper description of the Goods to be imported in the purchase order. The consignment was also accompanied by test report from a duly authorized laboratory in the country of exporter. No case of mis-declaration - appellant allowed to re-export the goods under dispute - confiscation, redemption fine and penalty set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2016 (10) TMI 343
  Period of limitation - the appellant had received the order of the adjudicating authority on 17.12.2008 and the appeal was to be filed within 60 days before the Commissioner (Appeals), i.e. on or before 15.2.2009, but the same has been filed on 16.2.2009 - last day of filing appeal i.e. 15.2.2009 being Sunday, the appeal filed on 16.2.2009 - whether the appellant was justified in holding that the last day of filing appeal being Sunday the appeal filed on next day is not hit by limitation bar? - Held that: - the statutory period for the appeal as per Section 35(1) ibid expires on 15.2.2009, which was a Sunday. Section 10 of the General Clauses Act, 1897 deals with the situation where the last date of filing the appeal is being Sunday, then the next working day shall be the last date for filing the appeal. As the last date of filing the appeal was 15.2.2009 being Sunday, the appeal would have to be filed by 16.2.2009. As the appeal has been filed on 16.2.2009, the appeal is filed within the period of limitation of 60 days and the delay is condonable - matter remanded back to the Commissioner (Appeals) to pass order on merits after giving an opportunity of being heard to the appellant - appeal disposed off.

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• 2016 (10) TMI 342
  Validity of order passed by Settlement Commission u/s 32F of the Central Excise Act, 1944 - interference under Article 226 of the Constitution of India - allowance of cenvat credit before the closure of the factory - clandestine removal of goods - Held that: - A writ court is not a First Appellate Court where the facts are to be re-apprised to find out whether another view can be taken on the facts established. The Settlement Commission has considered the relevant facts and has arrived at a finding as recorded in the impugned order. Such finding has not been demonstrated to be perverse. The jurisdiction of the Settlement Commission to pass the impugned order has also not been questioned - no interference required with the order of Settlement Commission - petition dismissed - decided against Revenue.

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• 2016 (10) TMI 341
  CENVAT credit - manufacturer of vanaspati oil - The Authorities have refused to give the Cenvat credit on the plea that the regulations have subsequently been changed. - reference made to the decision of the Hon’ble Court in Rasoi Ltd. Vs. Union of India [2004 (6) TMI 46 - HIGH COURT AT CALCUTTA] - whether the petitioners be allowed to invoke the rights vested in them in terms of the earlier notification? - Held that: - The petitioners herein are similarly situated and circumstanced as that of Rasoi Ltd., the decision in the case apply. The petitioners are entitled to invoke the rights vested in them in accordance with the notification issued earlier by the parties. Viewed from such perspective the impugned order as well as the show cause notices cannot stand in the manner and form as they stand today. The impugned order as well as the show cause notices set aside - CENVAT credit allowed - petition allowed - decided in favor of petitioner.

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• 2016 (10) TMI 340
  100% EOU - demand of Education Cess and Secondary and Higher Education Cess - DTA clearances - Whether education cess and S&H cess are chargeable on DTA clearance made by 100% EOU even if such cesses were added while calculating the aggregate duties of customs payable under the Customs Act or any other law in force at the time imported or like goods? - Held that: - the decision in the case of KUMAR ARCH TECH PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II [2013 (4) TMI 482 - CESTAT NEW DELHI] apply where it was held by the Larger Bench after going through the provisions of Section 91, 93 & 94 of the Finance Act, that the education cess and S&H cess would be chargeable only once under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 on the sum of basic customs duty and Additional customs duty. Education Cess and Secondary and Higher Education Cess not to be recovered from the 100% EOU for the DTA clearance effect by them - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 339
  Condonation of delay of 17 years for filing appeal before Tribunal - recovery proceedings in progress - approach to Settlement Commission - provision in the statute which permitted the appellant to withdraw the appeal and go before the Settlement Commission - having invoked jurisdiction of another fora, whether the delay in filing appeal before Tribunal can be condoned? - Held that: - Action of appellant in withdrawal of an appeal after disposal of stay petition, would amount to seeking remedies elsewhere i.e. before Settlement Commission. This action of appellant indicates he has preferred to invoke jurisdiction of another fora, hence no case is made out for condonation of delay. Further, having invoked jurisdiction of Settlement Commission and obtained an order which is affirmed by Hon’ble High Court, which has become final, now cannot plead for condonation of delay in filing this appeal. Appellant should have followed up the issue with the Central Excise Officer - delay cannot be condoned - appeal dismissed - decided against appellant.

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• 2016 (10) TMI 338
  CENVAT credit - inputs received from 100% EOU - Special Additional Duty - Notification No.23/2003-CE dt. 31/03/2003 states that a formula was fixed for taking the CENVAT credit on the goods received from the 100% EOU and it is restricted to 50% of the actual amount of duty paid on the inputs - for Special Additional Duty of Customs, the CENVAT credit on the goods cannot be allowed - whether the demand raised on the appellant for availing excess 50% of CENVAT credit on inputs received from 100% EOU and for availing credit on special additional duty justified? - Held that: - the appellants had not availed the benefit of Notification No.23/2003-CE dated 31.03.2003 and that therefore the demand is not sustainable. The issue involved is covered by the the case of CCE, Chennai vs Jumbo Bags Ltd. [2011 (11) TMI 565 - CESTAT CHENNAI] where it was held that in respect of supplies for which no exemption has been availed, the appellants are correct in taking credit of the entire amount of duty equivalent to the excise duty and cess. Demand unsustainable - appeal allowed - decided in favor of appellant.

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• 2016 (10) TMI 337
  Demand of duty with interest and penalty - denial of benefit of exemption under Notification No. 50/2003-CE dated 10.06.2003 - exemption claimed on the ground that substantial expansion in the installed capacity by more than 25% - Held that: - Tribunal held that the appellants are entitled for benefit of exemption Notification No. 50/2003-CE ibid, the impugned orders demanding duty, interest and penalty deserves no merits - no demand sustainable against the appellants - appeal allowed - decided in favor of appellants.

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• 2016 (10) TMI 336
  Dis-allowance of Modvat credit under Section 57Q of Central Excise Rule, 1944 - allowance of part of credit and dis-allowance of part of credit by adjudicating authority - matter on appeal before Commissioner (Appeals), who gave a different view - appeal filed by Revenue on Review order - Held that: - the appeal is hit by the doctrine of merger. Vide the first Order-in-Appeal passed by the Commissioner (Appeals) dated 22/12/2016, the Order-in-Original merged with the same. In Revenue matters, the power of the first appellate authority is co-extensive with that of the adjudicating authority. Thus, the filing of the appeal subsequently by the Revenue before the Commissioner (Appeals) disputing the amount of Rs. 16,08,586/- was also hit by doctrine of merger - appeal dismissed as hit by doctrine of merger - cross-objections dismissed.

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• CST, VAT & Sales Tax

• 2016 (10) TMI 330
  Validity of the order of assessment made by enforcement wing officials - notice issued to petitioner on the basis of field audit report to revise the turnover for the relevant years - due to ill health the petitioner did not submit his reply and he enclosed a medical certificate issued by the Orthopaedic Surgeon stating that he was advised complete bed rest from 05.04.2016 to 30.06.2016 and prayed for opportunity of being heard - whether the appellant be granted the opportunity of being heard? - Held that: - the petitioner afforded an opportunity to put forth his objections, subject to certain conditions. The petitioner directed to pay 15% of the tax demanded for both the assessment years within a period of three weeks and treat the impugned assessment orders as show cause notices and at liberty to file his objections. In the event, the petitioner does not comply with the conditions of payment of 15% of the tax demanded for both the assessment years within the three weeks period stipulated by the Court, the benefit of the order will not enure to the petitioner and the writ petition will be dismissed automatically. However, it is open to the petitioner to invoke the appellate remedy provided under the Act, as against the impugned orders of assessment. Petition disposed off - decided in favor of petitioner.

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• 2016 (10) TMI 329
  Delay condoned in filing appeal - delay in filing appeal due to the reason that writ petitions were filed in this Court which ultimately came to be decided on 18th February, 2016 - questions of law raised for consideration - On account of the fact that the Appellant has claimed refund in the return, no coercive measures for enforcement of demand arising from the impugned order shall be taken against the Appellant during the pendency of the appeal - application disposed off.

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