Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 14, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Income Tax
- 35/2016 - dated
13-10-2016
Applicability of TDS provisions of section 194-I of the Income-tax Act, 1961 on lump sum lease premium paid for acquisition of long term lease-regarding
Customs
- 25/2016 - dated
7-10-2016
Implementation of Risk Management System (RMS) in Export at ICD Tumb - reg.
- 22/2016 - dated
22-9-2016
Attention of all Importers, Exporters, Customs Brokers, Shipping lines/Agents and the members of Trade and Industries is invited to partial modification to Public Notice No.21/2016 dated 15.09.2016 issued from F. No. VIII/43-02/Cus/T/2015-Pt.l
- 12/2016 - dated
19-9-2016
Implementation of Rebate of State Levies (ROSL) Scheme
- 21/2016 - dated
15-9-2016
Attention of all Importers, Exporters, Customs Brokers, Shipping lines/Agents and the members of Trade and Industries is invited to the below mentioned Customs Notification relating to the import/export of goods under various Export Promotion Schemes
- 19/2016 - dated
14-9-2016
Public Notice in respect of Bond amount & Insurance amount to be provided by Customs Cargo Service Providers -reg.
- 15/2016 - dated
5-8-2016
Introduction of Export Transshipment Module for movement of Exports Cargo from Primary ICD/ACC to Gateway Air Site in ICES-Reg.
- 14/2016 - dated
3-8-2016
Launch of Indian Customs EDI System - (ICES – 1.5 ) for Imports and Exports, at ICD Surat Hira Bourse, 3rd floor, SAR Corporate Center, T.P.Scheme no. 03, Katargam, Surat, Gujarat – 395008– Reg.
Highlights / Catch Notes
Income Tax
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No TDS liability u/s 194-I on lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land
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Set off of loss - forfeiture of share warrants - Section 70(2)does not make any distinction between the income under the head “capital gain” on which STT was paid or STT was not paid - The word “similar computation” connotes that income should have been computed within the relevant Chapter i.e. Sec. 45 to 55A of the Act - AT
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Permanent Establishment (PE) in India - The principal i.e. the assessee was relying on the special skills and knowledge of the agent Sri V. Subramanian the Managing Director of the Indian entity by the same name and rendering similar functions. Sri V. Subramanian was acting exclusively or almost exclusively for and on behalf of the assessee during the currency of the contracts in question - PE in India established - AT
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TCS u/s 206C - the products resulted from ship breaking activity, which are re-usable. Thus, the assessee was not supposed to collect tax under section 206C - AT
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TDS u/s 192 or 194J - doctors are discharging only professional services - merely because doctors are subject to the payment of Provident Fund or other retiremental benefit, provisions of Section 194J cannot be invoked - AT
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Prior to 01.06.2015, there was no enabling provision in Section 200A for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee u/s 234E - AT
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Levy of fees u/s 234E - intimation issued under section 200A in respect of processing of TDS returns - the intimation u/s 200A has been processed prior to 01-06-2015. - AT
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Revision u/s 263 - non-deduction of TDS on salary and commission paid to directors and managers - insufficient enquiry - AO failed to take into account several aspects as highlighted by the Ld. CIT - revision proceedings sustained - AT
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Penalty u/s 271(1)(c) - the explanations which are not accepted by the Revenue does not ceases to be a bona fide explanation merely on the grounds that the same were not accepted by the Revenue. - AT
Customs
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Cost Recovery Charges - notified CFS - The appellant has achieved the bench mark performance within the initial two years - the Revenue is duty bound to examine the issue and disposed of the claim of waiver - AT
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Refund - The period of export is deemed to be extended by another six months and customs duty consequently will not be liable on the said item - duty of customs paid on the said item deserves to be refunded to the appellant within a period of four months. - AT
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Imposition of ADD - PVC paste resin - when the notification mentions and identifies the subject goods by name and specific tariff classification, any change in such parameters ought to be done within the ambit of law. - AT
Corporate Law
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Compounding of offence - delay in appointing a Woman Director - reasons furnished by applicants for 14 (fourteen) months delay are satisfactory - applicant to pay a compounding fee of ₹ 1,00,000/- - Tri
Service Tax
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Levy of service tax - security services - sovereign functions - After choosing one particular remedy the plaintiff cannot avail the other remedy as well, in respect of the same relief founded on same cause of action. - SC
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Cenvat Credit - eligible input services - When they filed the previous Writ Petition, merits of the petition was canvassed, therefore, once over again the petitioner cannot be allowed to raise the same grounds and the petitioner is estopped from doing so. - HC
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Levy of penalty - delay in payment of service tax - appellant had collected the service tax but not deposited the same it time, but deposited before issuance of show cause notice - No penalty - AT
Central Excise
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Refund - The C.A. certificate produced by the appellant clearly states that the amounts were paid by the appellant from their own funds and have not been recovered from anyone - Refund allowed - AT
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Levy of National Calamity Contingency Duty (NCCD) - POY cleared to 100% EOU is not liable to NCCD - POY cleared for captive consumption is not liable to NCCD. - AT
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Refund claim - if the transaction of debit note is not found to be incorrect on the basis of books of account of the appellant then it is established that incidence of refund amount has not been passed on to any other person - AT
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Alteration of MRP of imported goods - Deemed manufacture - pasting of stickers on the goods - imported DVD/VCD - there was no alteration in the MRP on importation. Therefore, there was no loss to revenue - Demand set aside - AT
VAT
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Inasmuch as the petitioner did not comply with this requirement of filing revised returns in respect of the tax amount not paid u/s under Section 6(2), no fault found with orders passed by the 1st respondent, cancelling the permission granted to the petitioner for payment of tax under compounded rate. - HC
Case Laws:
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Income Tax
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2016 (10) TMI 433
TCS u/s 206C(7) - Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. - Held that:- As certain items generated out of ship breaking activity might be known commercially as “scrap” but they are not waste and scrap. These items are reusable as such, and therefore, would not fall within the definition of “scrap” as envisaged in the Explanation to section 206C(1). The assessee has also contended that it was engaged in the sale of MS pipe, iron which were obtained from ship breaking industries. The assessee himself has not generated any scrap in manufacturing activity, as contemplated in the Explanation. He was a trader. Therefore, the assessee has not sold scrap as such. He has sold the products resulted from ship breaking activity, which are re-usable. Thus, the assessee was not supposed to collect tax under section 206C of the Act. The ld.AO has erred in raising the demand. Allow all appeals and delete additions.
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2016 (10) TMI 432
TDS u/s 192 or 194J - condition of engagement of doctors vis-a-vis the employee-employer relationship - professional activities - nature of payment - Held that:- Neither the AO nor the ld CIT (A) gave their finding that any of the condition contained in the contract of the Doctors mandate that there was employee-employer relationship between the assessee and them, which specifically may brings the doctors in the category of employee. The AO and the CIT(A) has not bring on record, if the doctors are subject to the payment of Provident Fund or other retiremental benefit, the AO has applied his own notion for arriving at the conclusion that there is employee-employer relationship and concluded that their existing relationship of employee-employer. We respectfully following the decision of jurisdictional High Court in case of Grant Medical Foundation (2015 (2) TMI 457 - BOMBAY HIGH COURT) held that Doctors have no relationship of employee-employer with the assessee’s Hospital. The doctors are in fact independent professional who may be receiving fixed remuneration despite fixed hours of works which may substantially regulating their application for leave and other discipline. With these observations, we hold that the doctors are discharging only professional services and the assessee is not liable to deduct tax u/s 192 of the Act. Thus, the appeal of assessee is allowed.
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2016 (10) TMI 431
Penalty u/s 271(1)(c) - tenancy rights receipts - deduction u/s 54F allowance - cost of improvements in the property - Held that:- The consent terms awarded by the Hon’ble Court of small cause both original and revised are placed at paper book page 17-28. The assessee had a belief and came out with an explanation that since 1996 the tenancy rights were converted into ownership rights since the assessee is entitled for 1000 square feet of the constructed area in newly constructed building in the same plot of land and the same shall date back to the period when the tenancy rights were granted to the father of the assessee and the assessee claimed fair market value of tenancy rights as on 01-04-1981 an allowable deduction while computing long term capital gains on surrender of tenancy rights, despite the specific provision as contained u/s 55(2)(a) of the Act, whereby the cost of acquisition in the case of tenancy right shall be taken to be Nil in case no cost is paid by the tax-payer to acquire the tenancy rights. The assessee has also produced valuation report dated 27-04-2009 valuing tenancy rights as on 01-04-1981 which is placed in paper book page 14-16 and the same was stated to be the basis for making claim of FMV as on 01-04-1981. In our considered view, based on these explanations submitted by the assessee along with documentary evidences it could not be said that these explanations were not bona fide explanations . Thus, it could not be said that the assessee set up patently wrong claim with an intention to defraud revenue although it is a different matter the claim and the explanations submitted by the assessee before Revenue did not found favour with the Revenue and in our considered view, the explanations which are not accepted by the Revenue does not ceases to be a bona fide explanation merely on the grounds that the same were not accepted by the Revenue. The assessee has acquired two garages in the same locality although in different building than the building where the residential flat was acquired by the assessee as in the building where new residential flat was located, garages were not available . This was also got verified by the Revenue by deputing inspector to verify the contentions of the assessee during quantum assessment proceedings which was found to be correct by the Revenue. The assessee had submitted that garages are part and parcel of residential house keeping in view the definition of the word ‘house’. However, the assessee was allowed deduction u/s 54F of the Act with respect to one garage only . Again,we are of the considered view, that the explanation offered by the assessee is bona fide as the house does not mean four walls and the amenities like garden, garage etc are part and parcel of the residential house in modern times. We also did not find that there is any restriction imposed by the Act on having only one garage with a residential house. The assessee was compelled to take garages in nearby building in the same locality as garages in the same building in which residential flat was acquired by the assessee were not available which was verified by the Revenue. In any case , it is not the case set up by the Revenue that the second garage was never acquired by the assessee and he has set up a ex-facie bogus claim, in-fact it is the claim set up by the assessee which did not found favour with the Revenue and in our considered view, the assessee has a prima facie good arguable case on merits on the instant disallowance made by the Revenue, it is different matter that the assessee did not challenge the quantum assessment framed by the Revenue. Thus, in our considered view the assessee came out with a bona fide explanation which did not found favour with the Revenue and the assessee on his part also chose to accept the disallowance as was made in quantum assessment and decided not to agitate the matter with the appellate authorities. Similarly, the benefit of cost of improvements in the property where tenancy rights were held by the assessee and legal expenses paid by the assessee with respect to the transfer of the tenancy rights were denied to the assessee by the AO although the claim was set up on the grounds that the improvement cost incurred by the assessee led to better realization of compensation on account of surrender of tenancy rights as well legal expenses were incurred which are inextricably linked to transfer of tenancy rights as the said matter was subjudice with the Hon’ble Court of small cause, which in our considered view is a bonafide explanation albeit did not found favour with the Revenue and the assessee on its part chose to accept the assessment in quantum and decided not to agitate the matter with the appellate authorities. Thus it is not a case where bogus claim was set up and the assessee was cornered by the Revenue and then assessee had to surrender the amount to buy peace etc. rather it is a case where a claim was set up based on bona fide belief based on expert advise which claim is neither patently wrong nor ex-facie illegal keeping in view facts and circumstances of the case , while the claim set up by the assessee did not found favour with the Revenue which the assessee chose to accept and not agitate with higher appellate authorities . The assessee did make disclosures and also backed the same with explanations during assessment proceedings which did not found favour with Revenue which in our considered view is not sufficient enough to saddle the assessee with penalty u/s 271(1)(c) of the Act. We do not find any infirmity in the well reasoned appellate order dated 26-09- 2013 passed by the ld. CIT(A) deleting the penalty levied by the AO u/s 271(1)(c) of the Act. Keeping in view the facts and circumstances of the case, we do not find any merit in the appeal of the assessee and are of the considered view that the penalty is not exigible in the instant case - Decided in favour of assessee
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2016 (10) TMI 430
Demand raised by the AO u/s 234E of the Act in the intimation processed u/s 200A - Held that:- Prior to 01.06.2015, there was no enabling provision in Section 200A of the Act for making adjustment in respect of the statement filed by the assessee with regard to tax deducted at source by levying fee under Section 234E of the Act. The Parliament for the first time enabled the Assessing Officer to make adjustment by levying fee under Section 234E of the Act with effect from 01.06.2015. Therefore, as rightly submitted by the assessee, while processing statement under Section 200A of the Act, the Assessing Officer cannot make any adjustment by levying fee under Section 234E prior to 01.06.2015. In the case before us, the intimation u/s 200A has been processed prior to 01-06-2015. - Decided in favour of assessee.
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2016 (10) TMI 429
Levy of fees u/s 234E - intimation issued under section 200A in respect of processing of TDS returns - powers with AO - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. Also has held that in the absence of enabling provision under section 200A prior to 01.06.15 such a power was not vested with the AO (TDS). In the instant cases the intimation u/s 200A has been processed prior to 01-06-2015. The impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
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2016 (10) TMI 428
Revision u/s 263 - non-deduction of TDS on salary and commission paid to directors and managers - insufficient enquiry - Held that:- The impugned order passed by AO has been considered erroneous and prejudicial to the interest of revenue on the ground that proper verification was not carried out by AO at the time of framing original assessment. In the case of insufficient enquiry, the courts have decided the issue in favour of revenue, therefore, we deem it fit that the impugned order passed by AO failed to take into account several aspects as highlighted by the Ld. CIT in his impugned order u/s. 263 of the Act. - Decided against assessee
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2016 (10) TMI 427
Addition on account of capital loss - whether the share warrant which is optional convertible into shares are capital asset as per Sec. 2(14) of the Act - Held that:- There was a binding contract between assessee and WCPM with the option to the assessee to acquire the equity share. The assessee, in the instant case, has paid only 10% of the total consideration and the balance was to be paid by assessee within the specified time. However, the market value of the share of WCPM came down drastically and assessee decided not to make further payment for the purchase of share warrant. As a result of non-payment of balance amount for the purchase of share warrant, the company forfeited the amount. In the instant case, share warrant is a capital asset within the meaning of Sec. 2(14) of the Act. From a bare reading of Sec. 2(14) of the Act and we find that share warrant is a capital asset. So the loss generated from the forfeiture of share warrant is nothing but a capital loss and chargeable under the head “capital gain”. In view of the above, the loss acquired from the forfeiture of share warrants is nothing but STCL. Hence, this loss should be allowed in favour of assessee. Therefore, we find no reason to interfere into the order of Ld. CIT(A). Adjustment of STCL based on STT paid transactions with Short Term Capital Gain (STCG for short) where Securities Transaction Tax (STT for short) was not paid - whether the transactions on which the provision of Sec. 111A of the Act is attracted is to be treated separately from other transactions of capital gains where no STT has been paid? - Held that:- We find that assessee in the instant case has incurred loss from STCL on the sale-purchase of share on which STT was paid but AO observed that there is a special rate of tax u/s 111A of the Act for charging tax in case of sale-purchase of share on which STT has been paid. Therefore, such loss was disallowed by AO to adjust the income under the same head i.e., capital gains against the income of share sales & purchase on which no STT was paid. From a plain reading of said Section 70(2) we find that said Act does not make any distinction between the income under the head “capital gain” on which STT was paid or STT was not paid. We further find that loss under the same head then set off from one source to another source is allowed if it is computed under the similar computation made for the relevant year. The word “similar computation” connotes that income should have been computed within the relevant Chapter i.e. Sec. 45 to 55A of the Act. - Decided in favour of assessee Section 14A disallowance - Held that:- We find the investments which are not capable of yielding the dividend income needs to be excluded and accordingly several courts have decided this issue in favour of assessee
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2016 (10) TMI 426
Permanent Establishment (PE) in India - DTAA between India and the Swiss Confederation - Held that:- In the present case, the business of the assessee has been conducted from the address of project coordinator, Mr. V. Subramanian and all correspondences relating to prospecting of client, participation in bids, correspondence with customers, signing of contract document, execution of the project and closure of the project etc. were initiated or routed through the business address of the company as above. Mr. V. Subramanian is the Power of Attorney holder from the company for all the projects, as the assessee was non-resident. To constitute a PE, the business must be located at a single place for a reasonable length of time. The activity need not be permanent, endless or without interruptions. It may not be out of place to mention that functions performed by Sri V. Subramanian or the Indian subsidiary could not be classified as preparatory or auxiliary in character. The facts strongly indicate towards Sri V. Subramanian constituting a dependent agent / PE for reasons brought on record by the AO and as discussed in foregoing paragraphs. There were no presence of a number of principals who exercised legal and or economic control over the agent Sri V. Subramanian. The principal i.e. the assessee has failed to demonstrate this aspect when confronted by the AO. The principal i.e. the assessee was relying on the special skills and knowledge of the agent Sri V. Subramanian the Managing Director of the Indian entity by the same name and rendering similar functions. Sri V. Subramanian was acting exclusively or almost exclusively for and on behalf of the assessee during the currency of the contracts in question. To that extent it was not in furtherance of his ordinary course of business. Finally the refuge taken of Article 5(2)(j) on the short period of contracts and the interregnum does not offer any solace to the assessee either. The assessee has not demonstrated it was a mere passing, transient or casual presence for its activity in India. In view of this, we confirm the order of the lower authorities This ground is therefore dismissed. Income computation - contention of the ld. AR is that the assessee is entitled to salestax, service-tax, customs duty paid on import - Held that:- In our opinion, due deduction to be given in respect of the above components proportionate to the Indian rupees component, if it is not already given. It is also brought to our notice that the AO passed the rectification proceedings vide order dated 27.9.2012. While passing the rectification order, he has not considered all the above components properly. Accordingly, we direct the Assessing Officer to give credit to the above components subject to the provisions of section 43B of the Income-tax Act, which is relating to the income in Indian rupees component. It is needless to say that the AO shall give opportunity to the assessee before passing consequential order. With this observation, this ground of appeal of appeal is partly allowed for statistical purposes.
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2016 (10) TMI 425
Condonation of delay - reasons for delay - Held that:- There is no explanation for the delay between 21st July 2012 when the order was passed by the Gujarat High Court and 9th May 2013 when this appeal was first filed. The entire approach appears to be casual. Consequently, the Court is not inclined to condone the delay in filing the appeal. As far as the application for condoning the delay of 1021 days in re-filing is concerned the Court finds that the standard excuse that the department is putting forth in all such applications for condonation of delay in re-filing the appeal is regarding the practice directions issued by the Court pertaining to filing of soft copies of the paperbooks in tax matters. As regards this ground, sufficient advance notice had been given to the litigants and Advocates about the filing of soft copies of the paperbooks. Further, the Registry of the Court had made appropriate arrangements for scanning services at the filing counters to facilitate the making of soft copies so that the inconvenience if any caused to the Advocates and the litigants is minimised. In any event the change could not have entailed a delay of more than three years. Appellant pointed out a second reason. The change of Standing counsel for the Department. This again, does not impress the Court. It is not possible to accept that no one followed up on the filing of appeals and allowed a period of more than three years to elapse before the appeal could be re-filed. The Department has a cell in the High Court which is under the supervision of a Deputy CIT. He ought to be keeping track of the filing of appeals and should be able to know if any appeal entrusted to the panel counsel for filing has not been listed even once before the Court for a long time. The applications for condonation of the delay of 1494 days in filing the appeal and for condonation of the delay of 1021 days in re-filing the appeal are dismissed. Accordingly, the appeal is dismissed.
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2016 (10) TMI 424
Non deduction of tds - disallowance made for non monetary perquisites - Held that:- We find that the assessee had paid income-tax in respect of salary paid to WJ as per the employment agreement, that it had suo motu made a disallowance for non-monetary perquisites, that WJ had offered the disputed amounts in his return of income. Considering the fact that WJ had paid the tax on the amount in question, we are of the opinion that the order of the FAA needs no interference whatsoever, upholding his order Ground No. 1 is decided against the AO. Deletion of club membership fee - Held that:- After hearing the rival submissions we find that the Hon'ble Apex Court, in the case of United Glass Mfg. Co. Ltd. (2012 (9) TMI 914 - SUPREME COURT ), has held that club membership fees incurred by an assessee is a business expenditure and has to be allowed as per provisions of section 37 of the Act. - Decided against AO Transfer pricing adjustment - selection of comparables - Held that:- We find that the AO had made adjustment as the assessee had included loss making entities in the comparables list, that the FAA had ignored the fact that two of the five comparables were showing loss , that he emphasised on net worth of the company rather than the losses suffered by the companies, that both the companies were suffering losses for continuously three years . In our opinion the AO was justified in excluding the constant loss making entitles from the list of comparables. Therefore, reversing the order of the FAA Ground No. 3 is decided in favour of the AO.
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2016 (10) TMI 423
Applying most appropriate method for benchmarking royalty transactions - Held that:- We find that while passing the order for the last AY the TPO had held that TNMM was the most appropriate method for benchmarking, that he had made an adjustment of ₹ 1. 50 crores under the head royalty payment, that the Tribunal had decided the issue in favour of the assessee. We find that the TPO had not given any reasons for not following the TNMM as most appropriate method the year under consideration. No doubt the income tax authorities are not bound by the orders of the earlier years, but they have to pass a reasoned order for deviating from the stand taken from the earlier years. We find that the TPO has not brought on record the differences, if any, of the facts of the earlier AY. and the year under appeal. Secondly, the Tribunal has already decided the issue in favour of the assessee. Addition under the head provision for warranty (GOA-7-9) - Held that:- Since, the finding on the issue of warranty provision under normal computation of income will have bearing on the computation of book profit u/s 115JB, therefore, we remit this issue of adjustment u/s 115JB to the record of AO for decision the same as per law. Addition to the income of the assessee in respect of purchase of fixed assets - Held that:- We find that the machine purchased by the assessee was included in the WIP. In the case of Ciena India (P. )Ltd. (2015 (5) TMI 352 - ITAT DELHI) it has been clearly held that in case of purchase of fixed assets from AE it is amount of depreciation on purchase of fixed assets which will be considered for making addition and not difference between the transacted valued the ALP determined at Nil (Paragraphs 15. 1-15. 6). We hold that the FAA was not justified in making the addition of ₹ 17. 06 lakhs. He should have added only the depreciation-amont. It will affect the computation of depreciation for subsequent years. Therefore,we are of the opinion that matter should be restored back to the file of the AO for determine the depreciation and restrict the disallowance to that extent only. Effective ground of appeal, raised by the assessee,is decided in its favour, in part
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2016 (10) TMI 422
Income accrued to the assessee from sale of shares - Short term capital gains or business income - Held that:- The AO and the ld. DR have not controverted this fact that the assessee made investments in shares/securities in ING Vyasa Bank to act as portfolio investment banker and no investment has been made directly by the assessee in the nature of business adventure in the nature of trade. We may also point out that as per the ratio of the decision of the Hon'ble High Court of Delhi in the case of Radials International [2014 (5) TMI 18 - DELHI HIGH COURT] the intention of the assessee must be inferred holistically from the conduct of the assessee, circumstances of the transactions and not just from seeming motive at the time of depositing money. Their Lordships held that intention of the assessee, other crucial factors like the substantial nature of the transactions, frequency, volume etc. must be taken into account to evaluate whether the transactions are adventure in the nature of trade. Lastly, their Lordships held that the block of transactions entered into by the portfolio manager must be tested against the principles laid down, in order to evaluate whether they are investments or adventures in the nature of trade and if the transactions entered into by the assessee are through portfolio banker are not adventure in the nature of trade, then the same should be treated as investment and income accrued therefrom has to be taxed either as long term or short term capital gains. Accordingly, the sole ground raised by the assessee is allowed and the AO is directed to treat the income accrued to the assessee from sale of shares through portfolio manager as income from long term /short term capital gain.
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2016 (10) TMI 421
Disallowance u/s 14A - Held that:- On perusal of the orders, we find that by invoking the provisions of section 14A r.w.r 8D, the AO has not at all commented on the disallowance of ₹ 2,50,000/- which was made by the assessee suo mottu for earning exempt income. We are of the considered opinion that invoking the provisions of section 14A r.w.r 8D without recording the satisfaction by the AO is wrong and accordingly the order of the ld.CIT(A) by upholding the action of AO cannot be sustained. We find that in the case of Kalyani Steels Ltd (2014 (2) TMI 661 - ITAT PUNE), the co-ordinate Bench of the Tribunal has held that non recording satisfaction with regard to the correctness of the claim of the assessee which is a mandatory requirement in terms of section 14A of the Act r.w.r 8D to compute the impugned disallowance is untenable in law. In the assessee’s case also, we find that no satisfaction has been recorded as regard the invoking of the provisions of section 14A r.w.r 8D, and therefore application of section 14A r.w.r.8D is not correct as the necessary satisfaction in terms of section 14A(2) of the Act has not been recorded. Following the ratio laid down in the decision of the Tribunal (supra), we set aside the order of the ld.CIT(A) and direct the AO to delete the addition. This ground is allowed. Disallowance while computing the book profit u/s 115JB of the Act. Since the issue regarding disallowance made u/s 14A r.w.r.8D has been allowed by us, the issue raised in ground no.2 is also allowed in favour of the assessee by directing the AO to delete the addition made u/s 115JB of the Act.
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2016 (10) TMI 420
Addition u/s 68 - unsecured loans - bogus bills for purchases - Held that:- Tribunal has reached the findings that the assessee has duly proved the genuineness of transaction, creditworthiness and identity of the creditor by producing the Principal Officer of the company and also by filing the details of the company like banks statement, audited account of the lender. Same records were produced and the Principal Officer was also produced and his statement was also recorded by the AO. We find that the identical issue of addition u/s 68 was decided in the assessee own case in the AY 2007-08. Therefore, respectfully following the decision of the co-ordinate bench of the Tribunal we set aside the order of ld. CIT(A) and direct the AO to delete the addition - Decided in favour of assessee.
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2016 (10) TMI 419
Grant of exemption u/s 80G denied - denial of claim for want of registration under section 12AA - Held that:- We find merit in the submission of the ld. Counsel for the assessee that the objects of the assessee of clause (a) and (d) are for establishment of hospitals and colleges. We also find that as per clause 16 of the Trust Deed, no income or part of income or assets of the Trust Fund can be applied or transferred for any purposes other than charitable purposes. Keeping this clause in view, we hereby set aside the order of ld. CIT and direct him to consider the application of the assessee for registration u/s 12AA of the Act. The application for granting exemption under section 80G of the Act was denied for want of registration under section 12AA. Since we have restored the issue of registration for consideration afresh, the issue of exemption is also restored the file of the ld. CIT for decision afresh.
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2016 (10) TMI 418
Block assessment proceedings u/s 158BD - addition u/s 68 - double additions - Held that:- We find that the entire credits of ₹ 2,65,30,000/- in the bank accounts of four persons have already been added in the block assessment proceedings u/s 158BD of the Act dated 30.11.2006 in the hands of the assessee, in addition to adding the commission income thereon @ 1% amounting to ₹ 2,65,300/-. We also find that in the said block assessment order, the ld AO had given a categorical finding that the assessee is only providing accommodation entries and receiving only commission income thereon @ 1% . Moreover, the ld AO had also observed in the block assessment order supra that the ultimate beneficiary of all these bank transactions are only UIC group and not the assessee. These facts were not controverted by the revenue before us. Under these circumstances, we hold that there is no need to make any addition towards cash credit or commission income up to 07.05.2002 in the regular assessment proceedings for the Asst Year 2003-04 as it would only result in double addition. Hence, the addition u/s 68 of the Act is directed to be deleted. Accordingly, the ground No. 2 raised by the assessee is allowed. However, since the bank transactions upto the date of search i.e 7.5.2002 have been considered in the block assessment proceedings u/s 158BD of the Act and commission income thereon is taxed in the block assessment, the commission income from 8.5.2002 to 31.3.2003 needs to be taxed in the similar way. We deem it fit and appropriate to direct the ld AO accordingly to meet the ends of justice. - Decided partly in favour of assessee
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2016 (10) TMI 417
Revision u/s 263 - erroneous order - genuineness of the unsecured loan - Held that:- In the instant case, the Ld. CIT has not established anywhere in the impugned order that the assessment order of the AO is erroneous as well as prejudicial to the interests of the revenue. The non-compliance with the statutory prescription as evident from the impugned order is a serious infirmity vitiating the validity of the proceedings. In a situation where the Assessing Authority as an adjudicator decides an issue and renders a wrong decision which is unsustainable in law. It can be corrected by the Commissioner in exercise of revisionary power. In such cases, the Ld. CIT has to come to the conclusion and himself decide that the order is erroneous by conducting appropriate enquiry if required and necessary before the order u/s. 263 of the Act is passed. In such cases, the order of the Assessing Authority will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The jurisdictional precondition stipulated is that the Ld. CIT must come to the conclusion that the order is erroneous and is unsustainable in law. The finding of an "error" is the condition precedent for proceedings u/s. 263 of the Act which is palpably missing in his order and accordingly, the specious conclusion of the Ld. CIT without laying down any basis therefore is totally contrary to law. Therefore, the conditions precedent for invoking the provisions of sec 263 of the Act not having been satisfied, the action of the Ld. CIT of assuming jurisdiction there under is in contravention of the settled position in this regard. In view of above, we hold that the order passed by the ld. CIT is not sustainable in the law and accordingly we reverse the same. Hence the grounds of appeal of the assessee are allowed.
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2016 (10) TMI 416
Penalty imposed u/s. 271(1)(c) - validity of notice - Held that:- In the present case, the notice dt: 27-12-2010 issued to Assessee by the AO U/Sec 274 r/w 271 of the Act does not show on which ground the penalty is sought to be imposed, hold that the order dt: 24-06-2011 levying penalty is not valid. See CIT & Anr. v. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] - Decided in favour of assessee
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2016 (10) TMI 415
Levy of Penalty u/s. 271(1) (c) - validity of notice - Held that:- In the present case, the notice dt. 30-3-2005 issued to Assessee by the AO U/Sec 274 r/w 271 of the Act does not show on which ground the penalty is sought to be imposed, therefore we hold that the order dt: 30-3-2012 levying penalty is not valid. See CIT & Anr. v. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] - Decided in favour of assessee
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2016 (10) TMI 414
Unexplained cash credits - rental advance received - Held that:- Admittedly, there is no dispute over Cenotaph Road property acquired by the assessee. It is the submission of the assessee that cash deposit of ₹.5,00,000/- relates to rental advance received from the previous owner for letting out the property on rent. He also submits that the rental advance paid by the tenant earlier was held in credit by the previous owner and once the property was acquired by the assessee, the rental advance received by the previous owner was directly deposited in cash into assessee’s bank account. If the above amount was deposited by the previous owner of the property, what prevented the assessee to furnish the details of his PAN, identity, address, etc. before the Assessing Officer for verification. The copy of the rental agreement filed by the assessee cannot be accepted as a valid document since the rental agreement in the twenty Rupees non-judicial stamp paper does not contain valid details such as PAN number of two tenants or the rental agreement was notarised by Registered Notary or it is registered document. As in the document, it was mentioned that the amount of ₹.5,00,000/- towards rental advance shall be payable by the tenants to the owner of the property, but no evidence has been filed by the assessee before any of the authorities. Not only that the assessee has not furnished any details about the PAN number, identity of the tenants, etc. In the absence of any valid evidence, the submissions of the assessee are not acceptable. In the written submission dated 13.10.2015 before the ld. CIT(A), the assessee has also submitted that no independent enquiry was made by the Assessing Officer. Without giving any details about the tenants, it is not possible for the Assessing Officer or the ld. CIT(A) to make enquiry or order the Assessing Officer to make enquiry. Hence the submission is vague. In the written submission dated 13.10.2015 before the ld. CIT(A) at para 3.9, the assessee submits that “there is no need for him to provide any documentary evidence to show the receipt of ₹.6,00,000/- so long the previous owner of the Cenatoph Road property did not contradict the payment of ₹.6,00,000/- to the assessee or the Assessing Officer has any information to that effect which he has chosen to bring upon record in support of the assessment order”, appears to be contrary to the rental agreement, wherein, it was mentioned that the tenants have paid the rental advance/payable to the owner of the property Shri Selvam, the assessee. In view of the above fact and circumstances, we are of the opinion that the addition made by the Assessing Officer was rightly confirmed by the ld. CIT(A) and accordingly, the ground raised by the assessee is dismissed.
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Customs
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2016 (10) TMI 446
Cost Recovery Charges - notified CFS - CBEC instruction dated 14.12.95 read with circular No.52/97Cus dated 17.10.97, a CFS is required to deposit in advance cost recovery charges i.e. charges of the custom official posted at port - Whether the appellant can be held responsible for non payment of cost recovery charges when no calculation was made by the Revenue? - Held that: - it is fact on record that cost recovery charges are to be calculated by the Revenue, the appellant cannot pay cost recovery charges without calculation of demand of cost recovery charges payable by the appellant - in the absence of any calculation of the demand made by the revenue, the appellant cannot be responsible for non payment of cost recovery charges. Whether the appellant is entitled for exemption from payment of cost recovery charges for March 2010 or not? - Held that: - as per CBEC circular dated 12.9.05, if CFS achieved bench mark performance during the previous years, it is entitled for waiver of charges. The appellant has achieved the bench mark performance within the initial two years - the Revenue is duty bound to examine the issue and disposed of the claim of waiver failing which the Revenue cannot continue to demand of cost recovery charges from the appellant. Appeal allowed - decided in favor of appellant.
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2016 (10) TMI 445
Revocation of CHA licence - forfeiture of security deposit - readymade garments - DEPB benefits - violation of the provisions of Regulation 18 (a), (d) (o) and Regulation 19 (8) of Custom House Agent Licencing Regulation (CHALR), 2004 - time limit prescribed for following the procedures - Held that: - the time limits prescribed under the Regulations are to be followed mandatorily in exercising the powers. The decision in the case of Atharva Global Logistics vs. CC, New Delhi [2016 (2) TMI 10 - CESTAT NEW DELHI] apply. In view of the legal position of mandatory nature of the time limits prescribed under the Regulation, the proceedings have not been held within the frame of time limit (total 270 days) as prescribed under Regulation 22 of CHALR, 2004 - CHA licence restored - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 444
Imposition of ADD - PVC paste resin - imported from E.U. - classification of goods after sunset review - whether imposition of ADD on the basis of eight digit classification and the inconsistency emanating thereafter in identifying the subject goods with reference to such classification maintainable? - Held that: - when the notification mentions and identifies the subject goods by name and specific tariff classification, any change in such parameters ought to be done within the ambit of law. In the present impugned findings as well as the consequent Customs Notification dated 03.07.2013, the subject goods have been identified by name as well as by classification heading upto four digit only. In other words, heading 3904 Poly Vinyl Chloride Paste Resin have been subjected to AD duty as per the rates specified therein. Admittedly, the present findings and the Customs Notification has no room for ambiguity. The matter relating to eight digit classification and the inconsistency emanating thereafter is no more a point of dispute or relevant in the present appeal proceedings. The Tribunal remanded the matter to the DA for a fresh consideration and the appellants have been given liberty to raise all the issues before the DA. Upon such direction and complying the same, the present findings were issued, as such no merit found in the appeal on this issue. Injury margin and quantification of AD duty - Held that: - the import of subject goods increased significantly and in direct consequence thereof the domestic industry lost market share. The DI lost sales volume and there is undercutting of prices. The DI was prevented from increasing the prices in line with increase in cost of production due to availability of low priced dumped import goods. It is concluded that the deterioration in profits, return on capital are apparently as a result of dumped imports - the levy of AD duty justified - appeal dismissed - decided against appellant.
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2016 (10) TMI 443
Imposition of Anti Dumping Duty - Methylene Chloride - imported from E.U., USA and Korea RP - Notification No. 24/2014-Cus. (ADD) dated 21.05.2014 of Ministry of Finance - costing of subject product in the DI - by-product or joint product? - chloroform and carbon tetrachloride (CTC) which is co-produced alongwith the subject goods should have been treated as a co-product and not as a by-product - Held that: - simultaneous emergence of a product does not make it a joint product or a co-product for cost accounting purposes. For this, one has to consider the economic importance of various co-produced products. CTC contributes only 5% of sales realisation when compare to the other two main products which contribute 50% and 45% in sales realisation. Any legal provision or specific cost accounting standards could not be pointed out applying to the relevant time to treat the CTC as a joint product. The CTC is a hazardous product governed by Montreal Protocol for strict control of manufacture and further usage. ADD rightly imposed - appeal rejected - decided against appellant.
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2016 (10) TMI 442
Rejection of refund claim - two consignments of test and measuring equipment - ATA Carnet facility provided under the Notification No 157/1990-Cus - benefit of Notification available if goods exported within a period of six months from the date of importation - clause-4 in its further Proviso says that the said period of six months can be extended by a further period not exceeding six months - whether the refund will be granted on first consignment which was exported within a period of one year from the date of import? - Held that: - the decision in the case of Federation of I.C.C. & Industry Vs UOI [2013 (6) TMI 371 - DELHI HIGH COURT] relied upon. The period of export is deemed to be extended by another six months and customs duty consequently will not be liable on the said item - duty of customs paid on the said item deserves to be refunded to the appellant within a period of four months. Whether the refund granted to the 2nd consignment of test and measuring equipment exported after the period of one year? - Held that: - the period of export could be extended only by a further period not exceeding six months as per the further proviso to clause-5 of the Notification No. 157/90 Cus. - no scope of providing any relief of refund of duty of customs to the appellant. For first consignment, refund allowed. For second consignment, refund claim rejected - appeal disposed off - decided partly in favor of appellant.
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2016 (10) TMI 441
Non-fulfillment of export obligation - denial of exemption from duty under section 25 of Customs Act, 1962 - import of second hand rotary sizer - Export Promotion Capital Goods (EPCG) licence with eligibility for concessional rate of duty of 10% - conditions to be fulfilled under notification no. 28/1997 dated 1st April 1997 - failure to comply with installation of machinery so as to fulfill export obligation - whether is is justified to hold that usage to which the imported goods were to be subjected, remained unfulfilled and appellant liable to action under the Customs Act, 1962? Held that: - the Directorate General of Foreign Trade has, in exercise of its original and exclusive statutory jurisdiction, amended the terms of the licence to waive the condition of installation. With waiver of that condition, the requirement of installation had been done away with and, hence, the scope of contravening that condition was eliminated. - the impugned order based on a non-existent condition set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2016 (10) TMI 437
Violation of the section 295 of the Companies Act, 1956 - Held that:- As not in dispute that the Applicants have admitted violation of the section 295 of the Companies Act, 1956 and have come forward voluntarily to the Tribunal by seeking permission to compound the violation by paying the fine as prescribed under the Act. We hold that the facts and circumstances of the case justify exercising powers conferred upon the Tribunal under the Companies Act in permitting the applicants to compound the violations in question. In view of the above facts and circumstances of the case and in the interest of justice, we are inclined to permit the applicants to compound the violation as mentioned above by paying the compounding fee. We direct the 14 applicants to pay ₹ 50,000/- (Rupees Fifty Thousand only) each and deposit the same with the authorities within two weeks. Further we also direct the applicants to ensure compliance of Section 295 within four weeks from the date of receipt of the Order and report the compliance.
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2016 (10) TMI 436
Compounding of offence - delay in appointing a Woman Director - Company Law Board/NCLT jurisdiction and power to compound offences - Held that:- The Tribunal can exercise its jurisdiction under Section 621A of Companies Act, 1956 or its corresponding Section 441 of Companies Act, 2013. Though the applicant has filed the Application under Section 621A of the Companies Act, 1956, later he has mentioned Section 441 of the Companies Act, 2013 in their Affidavit dated 16th August, 2016. Hence, we are considering the merits of the present case. It is not in dispute that the Applicant Company has violated provisions of Section 149 of the Companies Act, 2013 with respect to the appointment of Woman Director as one of the Board of Directors. Subsequently, the Company has appointed a Woman Director namely Ms. Keerti Chetan Desai at the Board meeting held on 01.03.2016. It has also filed form DIR- 12 with RoC on 02.3.2016 i.e., with the delay of 14 (fourteen) months. The applicants have replied only on 26.09.2015 to the show cause issued to them by RoC vide Ref No. RAP&TG/TBR/009561/2015/SCN/l 054, dated 10.08.2015. The Company has requested the RoC to exonerate them as the financial position of Company was not in good state. The Applicants have filed this application for compounding of offence in question after initiating prosecution. We are satisfied with the reasons furnished by applicants for 14 (fourteen) months delay in complying with the provision of Companies Act for appointing a Woman Director. Hence, we are inclined to permit the applicants to compound the offence in question by taking a lenient view as prayed by the applicants. Accordingly, we dispose off the application by directing first applicant to pay a compounding fee of ₹ 1,00,000/- (Rupees One Lakh Only) and Applicants No. 2 to 4 ₹ 50,000/- (Rupees Fifty Thousand Only) each and deposit the same with the authorities within three weeks. After the receipt of compounding fee, the Registrar of Companies is directed to bring about the compounding of offence to the notice of the Learned Special Judge for Economic offences-cum-VIII AMSJ Court, Hyderabad for passing appropriate orders.
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Service Tax
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2016 (10) TMI 462
Levy of service tax - security services - sovereign functions - providing/deploying additional police force at various Banks/Institutions/Organisations or at various events - work of character verification and providing security as per the provisions of Sections 11 and 46 of the Rajasthan Police Act, 2007 for the purpose of maintaining law and order situation - Held that:- Against the order passed by the Assessing Officer, the plaintiff had even preferred an appeal before the Commissioner, Central Excise, Jaipur, which appeal was dismissed by the Commissioner. Not only this, against the order of the Commissioner, the plaintiff has filed statutory appeal before the Customs Excise & Service Tax Appellate Tribunal (CESTAT), which is pending consideration by the CESTAT. Even if we presume that the suit was maintainable, at the same time the plaintiff also had remedy of filing the statutory appeals etc. by agitating the matter under the Finance Act. It chose to avail the remedy under the Finance Act. The Doctrine of Election would, therefore, become applicable in a case like this. After choosing one particular remedy the plaintiff cannot avail the other remedy as well, in respect of the same relief founded on same cause of action. The plaint is, therefore, rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908. - Decided against the petitioner.
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2016 (10) TMI 461
Cenvat Credit - eligible input services - Delay in filing appeal before Commissioner (appeals) - Maintainability of writ petition - Held that:- the service rendered by AHPL to the petitioner in the capacity of full-fledged Operator of the Hotel and arranging catering, rooms and thereby promoting hospitality service of the Five Star Hotel comparable standards. Secondly, service rendered by AHPL cannot be allowed as eligible input service for the petitioner so as to provide the relief in terms of Rule 6(5) of the Cenvat Credit Rules. The findings rendered by the second respondent is perfectly justified and valid. The present challenge to the order-in-original passed in 2010, has to necessarily fail. This conclusion is supported by the following reasons. Firstly as set out in the preceding paragraphs, the petitioner had exercised the option of filing an appeal, but they were not diligent in prosecuting the matter by filing the appeal within the period of limitation. Admittedly, the appeal was filed beyond the condonable limit. When they filed the previous Writ Petition, merits of the petition was canvassed, therefore, once over again the petitioner cannot be allowed to raise the same grounds and the petitioner is estopped from doing so. Writ petition dismissed - Decided against the assessee.
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2016 (10) TMI 460
Business auxiliary services (BAS) - activity of intermediary between Bank and their prospective clients who required a loan for the purchase of a motor vehicle - Held that:- the appellant is entitled to the benefit of Notification 25/2004 and eligible for both (d) as well as (e) Clause and they were not liable to pay service tax prior to 10.09.2004. Further the period in dispute in this case is July 2003 to September 2004. Therefore in our view the period of dispute is covered under the exemption Notification and the appellants are entitled to the benefit of the said Notification and consequently are not liable to pay service tax. - Decided in favor of assessee.
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2016 (10) TMI 459
GTA service - eligibility to avail abatement of 75% of the value of the GTA Services as provided in Notification No. 32/2004-ST dated 03.12.2004 - subject to the condition that the no CENVAT Credit had been availed and benefit of Notification No. 12/2003-S.T., dated 20-6-2003 - Held that:- the certificates issued by the GTA separately can also be considered as sufficient compliance of the said provisions. - Decided in favor of assessee.
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2016 (10) TMI 458
Levy of penalty - delay in payment of service tax - appellant had collected the service tax but not deposited the same it time, but deposited before issuance of show cause notice - Held that:- the decision of the Hon'ble High Court [2016 (2) TMI 174 - GUJARAT HIGH COURT] has been given in circumstances where the appellant had not filed the requisite periodical returns and the fact of non-payment of service tax came to light only on the result of special investigation. In the instant case, appellant has been filing regular returns and therefore there could not have been any specific intention to evade duty. In these circumstances, the decision of the Hon'ble High Court of Gujarat is distinguishable. - Relying on the decision of the Tribunal in Vista Infotech (2009 (8) TMI 289 - CESTAT, BANGALORE) we hold that the penalty under Section 78 is unwarranted and the same is set aside. - However, penalty under Section 77 is upheld. Decided partly in favor of assessee.
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2016 (10) TMI 457
Jurisdiction to raise the demand of service tax - the construction work carried in Punjab and Himachal Pradesh - The contention of the appellant is that they are registered with the Service Tax Commissioner, Panchkula which has jurisdiction over them and having no jurisdiction over the construction at site. - Held that:- The appellant is providing services of construction with material and the amount and the material supplied cannot be vivisected. In that circumstance, the demand pertained to the period prior to 1.6.2007 in view of the decision of the Apex Court in the case of Larsen & Toubro Ltd. (2015 (8) TMI 749 - SUPREME COURT) For the services post 1.6.2007, the appellant is ready to pay service tax on the composite contract value which ,is permissible under the work contract. Therefore, we direct the appellant to make payment of 2% plus other levy in terms of cess payable alongwith interest by the appellant within 30 days from today. On such payment the service tax liability alongwith interest shall be met out. - As the issue involved is interpretation, no penalty is imposable on the appellant. Decided partly in favor of assessee.
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Central Excise
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2016 (10) TMI 456
Refund claim - clearance of final product by way of stock transfer - period from April 1994 to September 1996 - ground of limitation - Held that: - The refund claim was filed by the appellant on 23.9.2005 and the amount was also not paid under protest. The refund claim filed on 23.9.2005 i.e. beyond the limitation period as provided under Section 11B of the Central Excise Act, 1944 - appeal rejected. Refund claim filed for the period 29.9.1996 to 24.10.1996 - unjust enrichment - Held that: - The C.A. certificate produced by the appellant clearly states that the amounts were paid by the appellant from their own funds and have not been recovered from anyone. The Chartered Accountant has categorically recorded that the amounts paid in the case in hand in this period has not been recovered from anyone - refund claim rightly rejected. Appeal disposed off - decided against appellant.
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2016 (10) TMI 455
NCCD u/s 136 of the Finance Act, 2001 - goods cleared to 100% - Partially Oriented Yarn (POY) - Notification No. 46/2003-CE dated 17.05.2003 which exempted goods falling under Chapter No. 54.02 of the Central Excise Tariff Act, 1985 - whether the appellant is eligible to get exemption of NCCD on goods cleared to 100% EOU? - Held that: - the Tribunal held that the issue is no more res integra and followed the decision in the case of Filatex India Ltd. Vs. CCE & ST [2014 (11) TMI 72 - CESTAT AHMEDABAD] where it was held that POY cleared to 100% EOU is not liable to NCCD. POY cleared for captive consumption - the decision in the case of M/s Chiripal Industries Ltd. Vs. Commissioner of Central Excise and Service Tax, Ahmedabad [2015 (6) TMI 45 - CESTAT AHMEDABAD] relied upon where it was held that POY cleared for captive consumption is not liable to NCCD. Appeal allowed - NCCD not levied - decided in favor of appellant.
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2016 (10) TMI 454
Refund claim - debit note - unjust enrichment - Held that:- there was prearrangement between appellant as a job worker and recipient of the goods i.e. principal that on settlement of the issue of duty on the job work goods, the duty so paid and recovered shall be returned by the appellant to the principal. It is also fact that the principal who is recipient of the goods has issued debit note towards amount of excise duty subsequent to the settlement of the issue. This fact has been certified by the C.A. by way of certificate that whatever duty was paid by the appellant was returned in the form of debit note issued by the principal to the appellant. If this transaction is correct then there is no reason to say that incidence of duty paid by the appellant has been passed on to either to the principal or to any other person. I failed to understand if the duty paid by the appellant and initially recovered but subsequently duty was returned back to the recipient of the goods, how the said amount can be recovered from any other person unless until it is proved by the department on the basis of tangible evidence. By applying the various judgments, I am of the view that both the lower authorities wrongly credited refund amount into consumer welfare fund. As I stated above, if the transaction of debit note is not found to be incorrect on the basis of books of account of the appellant then it is established that incidence of refund amount has not been passed on to any other person. - Appeal disposed of by way of remand
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2016 (10) TMI 453
Alteration of MRP of imported goods - Deemed manufacture - seizure of China imported DVD/VCD players on which stickers were pasted after 01.03.2003 - Central Excise Authorities held that pasting of stickers on the goods amounted to manufacture and respondents were not registered as manufacturer with effect from 01.03.2003 - Held that:- the respondent had imported goods, they had paid CVD on the basis of MRP declared before importation, there was no alteration in the MRP on importation. Therefore, there was no loss to revenue. Therefore, we do not find any reason to interfere with impugned order. - Decided against the Revenue
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2016 (10) TMI 452
Rejection of refund claim partly - Rule 5 of CCR - non-payment of interest on the refund - Cocoa powder / Cocoa Butter - 'manufacture' - labeling/repacking of Cocoa Butter and other products at Taloja Factory which amounting to manufacture in terms of Note 3 of Chapter 18 of the First Schedule to the Tariff Act read with Section 2 (f) of the Central Excise Act, 1944 - refund granted subsequently - whether for the purpose of calculation of interest the relevant date will be calculated the date the revised refund claims or the date of original refund claims? - Held that: - the original refund applications were complete in all respects and the refund was rejected purely on its merits that the activity does not amount to manufacture. The rejection of refund was not on the ground that it was incomplete or that all the relevant documents were not submitted by the Petitioner. Once an application for refund has been made and the same is granted within a period of three months of receipt of such application, there would be no liability to pay interest. However, if the refund is granted after the expiry of the period of three months from the date of receipt of the application, then interest would also be payable on the amount of refund granted, from the date immediately after the expiry of three months from the date of receipt of such application, till the date of refund. The Petitioner would be entitled to interest on the sum of ₹ 44,46,42,651/- from the date immediately after expiry of three months from the date of receipt of the original refund applications till the date of receipt of the refund amount. The Petitioner entitled to a refund of ₹ 1,66,59,749/- being the remaining amount of the refund claim. The Petitioner directed to debit the Cenvat balance of ₹ 46,64,152/- from its Cenvat account - matter remanded for calculating and paying the interest as well as the refund of ₹ 1,66,59,749/- - petition allowed - decided in favor of petitioner.
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2016 (10) TMI 451
Cigarettes - levy of duty - removal of goods - in house testing - whether the cigarettes drawn from the manufacturing line or the store for the purpose of testing in the in house laboratory which is situated within the factory premises, amounts to removal for the purpose of levy of duty? - Held that: - the decision in the case of Manali Petrochemical Vs. CCE [2003 (12) TMI 177 - CESTAT, CHENNAI] apply, where it was held that where the manufactured goods were used for testing in R&D Lab within the factory compound, the same does not amount to removal for the purpose of levy of duty. No duty payable on the quantity used for testing within the factory, in the R&D Lab of the assessee within the factory premises - appeal allowed - decided in favor of assessee.
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2016 (10) TMI 450
Dis-allowance of CENVAT credit - input services, integrally connected with manufacturing activity - courier services - security services outside the factory - association membership services - information systems consultancy - banking services - rent for another plant or same manufacturer - software development - services received in R&D centre - royalty services - ISO Certification services - invoice not produced - Registration number of service provider not indicated in the invoice - Held that: - no manufacture can be carried out without the very essential services of insurance, hiring of space supported by rent payment, man-power and the like nature apart from other services as above, availed. When the records were examined there is no specific evidence to the contrary comes out to prove that those services were no way irrelevant or dispensable to carry out manufacturing activity - CENVAT credit allowed. The decision in the case of Ramala Sahkari Chini Mills Ltd., U.P. Vs Commissioner of Central Excise, Meerut-I [2016 (2) TMI 902 - SUPREME COURT] relied upon where it was held that the activity, which is integrally connected and contributory to the output as well as output services and inextricably linked, there cannot be denial of Cenvat credit. Guest House Services - service tax paid on rent paid - Held that: - Appellant is liable to discharge the tax liability with interest - CENVAT credit not allowed - equal amount of penalty of the tax liability imposed. Appeal disposed off - decided partly in favor of appellant.
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2016 (10) TMI 449
Clandestine removal of goods - manufacture of winding wires - search conducted in the premises of appellant - demand of duty - denial of CENVAT credit - imposition of penalties - dispute in RUD 22 - requirement of various documents to arrive at the truth - Held that: - no evidence been brought on record to allege clandestinely removal. It is well settled law that following parameters are essentially required to be proved for arriving at a conclusion of alleged clandestine removal: (i) That excess raw material was received, (ii) incidence of actual removal of finished goods, (iii) identification of the alleged buyers of finished goods, (iv) Factum of transportation of raw material as well as finished goods clandestinely, (v) Receipt of sale proceeds through cheque or cash, (vi) Use of excess electricity, (vii) Statements of buyers with some details of illicit manufacture and clearance of finished goods, (viii) Link between the private/internal records with the actual manufacture of the finished goods. None of the above parameters are fulfilled and therefore the impugned order qua demanding duty of ₹ 93,13,644/- is not correct. Denial of credit of ₹ 16,27,231/- on the ground that only invoices have been received in the factory and not the goods have been received - Held that: - To find out truth whether the goods have been accompanied with the invoices or not the statement of the transporter is required but no statement of the transporter has been recorded by the revenue. The allegation of the appellant that the statement of Shri Manjeet Singh obtained under duress is required to be addressed by the adjudicating authority. Therefore, the impugned order lacks merits. Demand of duty, denial of CENVAT credit and imposition of penalties set aside - matter remanded - appeal allowed.
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2016 (10) TMI 448
Interest on delayed refund - whether the interest on delayed refund to the appellant is to be paid from the expiry of three months from the date of fling of refund claim or from the date of order of refund made - refund application was submitted on 20.05.2002 and refund was sanctioned on 29.12.2005 - Held that:- the Hon'ble Supreme Court has ruled that respondent has to pay interest under Section 11BB of Central Excise Act, 1944, from the date of expiry of three months from the date of receipt of refund application and not on the expiry of said period from the date on which order or refund is made. The date of expiry of three months in the present case is 21.8.2002. - Interest on refund allowed - Decided in favour of appellant.
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2016 (10) TMI 447
Valuation - Whether the appellants, who have cleared their products and also rendered the commissioning and installation services vide separate contract and/or work order, are liable to pay Central Excise Duty on these charges, having already paid Service Tax on the same - Held that:- for the installation activity, there is separate contract between the parties and the appellant had received the installation and commissioning charges on which Service Tax has been paid by the appellant and accepted by Revenue. Accordingly, by respectfully following the ruling of the Hon’ble Supreme Court in the case of CCE, Mumbai Vs Official Liquidator For Brimco Plastic Machinery P. Ltd. [2015 (10) TMI 2281 - SUPREME COURT], the appellant is not liable to par Central excise duty again. - Decided in favour of appellant with consequential relief
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CST, VAT & Sales Tax
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2016 (10) TMI 440
Cancellation of option to pay tax under compounded rate under Section 8(C) of the Kerala Value Added Tax Act - compounding of offence of non-payment of tax in terms of Section 74 of the KVAT Act - option of filing a revised return within three months from the date of the compounding order under Section 22(10) of the KVAT Act - whether cancellation of the option to pay under compounded rate justified? - Held that: - the first communication by the petitioner to the respondents, bringing to their notice the fact of non filing of returns and seeking a permission to file revised returns in accordance with Section 22 (10) of the KVAT Act, was made only through Exts.P5 series of letters dated 10.12.2015. This was admittedly beyond the period of three months, that is granted under Section 22(10) of the KVAT Act. Inasmuch as the petitioner did not comply with this requirement of filing revised returns in respect of the tax amount not paid under Section 6(2), no fault found with orders passed by the 1st respondent, cancelling the permission granted to the petitioner for payment of tax under compounded rate. Completion of assessment as per best judgement basis under Section 25(1) of the KVAT Act - Held that: - the respondent assessing authority would have to consider the specific claim of the petitioner for the grant of input tax credit/rebate of taxes paid under Sections 6(1) and 6(2) of the KVAT Act, and also give credit to the payments effected by the petitioner, while paying tax on compounded basis before the passing of Exts.P7 series of orders, while completing the assessments pursuant to Exts.P8 series of notices. Proceedings to be completed after giving the petitioner two weeks time and personal hearing to be granted to petitioner. Petition allowed - decided in favor of petitioner.
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2016 (10) TMI 439
Condonation of delay - Kerala Value Added Tax Act - validity of justification offered by the petitioner for the delay - Held that: - the decision in the case of M/s. S.F. DYES REP. BY ITS PARTNER RAVINDRA ARORA. Versus THE AGRL. INCOME TAX AND COMMERCIAL TAX OFFICER and others [2015 (3) TMI 1217 - KERALA HIGH COURT] has been relied upon. The appellate authority has not considered the application for condonation of delay filed by the petitioner, in accordance with the principles laid down by this court and the Supreme Court. - appeal and delay condonation application restored - delay condonation application to be filed and considered within a period of two months - petition disposed off - decided in favor of petitioner.
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2016 (10) TMI 438
Direction to grant refund as per the refund order already passed and no action taken - certain queries raised by the Deputy Commissioner (CT) - statutory powers of Deputy Commissioner (CT) - are the queries raised by Deputy Commissioner (CT) legal and acceptable? - Held that: - the power of suo motu revision has been conferred on the Joint Commissioner of Commercial Taxes. The procedure adopted by the respondent as well as the Deputy Commissioner of Commercial Taxes is wholly illegal - respondent directed to effect refund of the tax, as per the refund order - petition allowed - decided in favor of petitioner.
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Indian Laws
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2016 (10) TMI 435
Criminal liability on the Directors - Held that:- Vicarious criminal liability on the Directors could only be fastened if they were in-charge and responsible for the conduct of the business of the company. As noted above in the complaint filed, the averments that the three petitioners herein were the Director, In-charge and responsible for the day-to-day affairs and conduct of the business of Webtech has clearly been made. Considering the fact that the averments in the complaint are within the four corners of the principle laid down by the Supreme Court in the decision of National Small Industries (2010 (2) TMI 590 - SUPREME COURT OF INDIA ) and it is not shown that the petitioners were not Directors at the time when the offence was committed, find no reason to quash the order summoning the petitioners.
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2016 (10) TMI 434
Compounding the offences - forgery of any documents - Held that:- It is undisputed fact that Central Excise Act and Rules provides for compounding the offences so also section 320 of Cr.PC. It is also undisputed fact that once main offence is compounded then there is catana of judgments by Supreme Court that when the department has compounded the offences then there is no reason to continue the criminal proceedings, more particularly when offences are either in the form of breach of rules or technical offences. In the present case, though some documents are alleged to be forged practically there is no forgery of any documents. It is submitted by the petitioners that, in fact an advance appreciation of work by the Company as per project report happens as per fixed schedule was disclosed. However for one reason or another if such time schedule could not be adhered to either during installation or during production it may not amount to committing offence of forgery, since there is no means rea and practically there is no financial benefit accrued by any of the petitioners. It is held as under: if the Court arrives at only opinion, there is no evidence against the accused, the Court shall not put accused to harassment by asking him to face a trial. In view of above facts and circumstances, the revision applications are allowed. Thereby impugned order dated 20.01.2010 charge-sheet to proceed further against petitioners are hereby quashed and set aside which results into discharging the petitioners from the offences registered against them pursuant to complaint no. RC/20(A) /2008/GNR and charges leveled against them in CBI Special case No. 3/2010. Amongst the accused at present we are concerned with accused no. 3 as petitioner no. 2 in revision petition no. 594/2016 whereas accused no.5 as petitioner no. 2 in Revision petition no. 627/2016 accused no. 8 as petitioner no. 2 in Revision petition no. 627/2016 accused no. 9 as petitioner no. 3 in Revision petition no. 627/2016 whereas petitioner in revision petition no. 716/2016 is accused no. 1. Complaint is already quashed and accused no. 2 whereas it is abated so far as accused no. 14.
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