Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 15, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Whether the payment received by the applicant from the Indian company for services rendered in China is taxable in India under Article 12(4) of DTAA between India and China? - contrast with China-Pakistan tax Treaty - Held Yes - The rate of tax is 10% on the gross amount under the DTAA. - AAR
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Acquisition of agricultural land - nature of compensation - it was one transaction of acquisition, under which the land, as well as the trees, etc., had been acquired, and splitting the same into two for the purpose of taxation would be against the law. - HC
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Expenses incurred for replacing non-Y2K compliant computer with Y2K compliant computer - the expenditure was for replacement of a system within a larger system which is permissible in law - deduction allowed - HC
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Dual method of accounting for valuation of stock of sugar - The closing stock as well as the opening stock would reflect this dual system of valuation followed by the Assessee and the net tax effect would be revenue neutral - No addition - HC
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Capital Gains - the family arrangement was held to be not a transfer for the purpose of capital gains tax - the action of AO in bringing to tax the long term capital gain is illegal - AT
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Receipt of liquidated damages - Surplus in our opinion had all the features of business profit, since assessee’s adventure or foray into real estate development was only a trading or business venture - AT
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Rectification of mistake - AO has not disposed of the application filed u/s 154 by passing speaking order. - Thus, the rejection of succeeding application is not proper on the ground that these rectification applications were filed after four years from the end of the financial year in which the order was passed. - AT
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Disallownace of layout formation expenses - even though the expenditure incurred after the execution of the deed by the assessee, there existed a commitment in relation to such sale - claim of expenses allowed - AT
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Addition under S.69 - unexplained investment - Merely on the ground that confirmation letter was filed by another person, the genuineness of the transaction cannot be doubted, since there can be no doubt with regard to either identity of the creditor and his credit-worthiness, or the genuineness of the transaction - AT
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TDS u/s 194J - the payment made by the assessee to the non-resident translators would not fall within the scope of "fees for technical, managerial or consultancy service" - No TDS liability - AT
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Penalty u/s.271B - Failure to get accounts audited - reasonable cause - assessee was under a bona fide belief that the commission income for the year under consideration was less than ₹ 40 lacs; hence under that impression he has not obtained the audited accounts - penalty waived - AT
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In view of the specific stipulation in the circular that 'for returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within three months of the date of filing the returns' - Case was selected for scrutiny late - assessment u/s 143(3) is not valid - AT
Customs
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Penalty for mis-declaration and misclassification of the goods in terms of Section 111(m) of the Customs Act and under Section 112(a) of the Customs Act – Tribunal order deleting the penalty is not correct - HC
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Classification of LVDT Transducer – in present case LVDT Transducer is an AC Voltage Divider as it convert Linear displacement into Electrical Output – It cannot be potentiometer as it is not measuring resistance or voltage change - AT
Corporate Law
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Jurisdiction of CLB under Section 111A in case of Fraud – Appellants contended that sales consideration for transfer of shares has not been paid in full – Appellants advised to approach the Civil Court for relief succeeding in the same it can then approach the CLB for rectification of the Register - HC
Service Tax
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Consulting engineer services - classification - As the disputed projects are not "engineering", they were not taxable during the relevant period. - AT
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CENVAT Credit on Input Services in respect of traded goods - Applicability of sub rule (2) of Rule 6 prior to 1.4.2011 – Service rendered is of sale of vehicles and repairs of the same - appellant was under the belief that trading not being a service at all there is no requirement to maintain separate accounts - extended period of limitation cannot be invoked - AT
Central Excise
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Denial of CENVAT Credit - Motor vehicles - The JO trucks are not considered as motor vehicle as per the Section 2 (28) of the Motor Vehicles Act, 1988, since the same are used only in a factory or in any other enclosed premises. - credit allowed - AT
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Demand u/s 11D - appellant collected duty from the seller to compensate the loss of CENVAT credit not taken by them on their raw materials - demand confirmed - HC
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Conversion from 100% EOU to DTA - the goods were not clandestinely cleared but were cleared on payment of duty. It is a separate issue that there was a dispute about the rate of duty applicable on such goods - redemption find and penalty deleted - AT
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Denial of refund claim - Unjust enrichment - the show-cause notice is vague as it does not contain the gist of accusation which the assessee was required to meet or answer. Further, it is bad in law as the same is not issued under the powers - AT
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Denial of refund claim - Accumulated CENVAT Credit - The failure to debit on the date of filing the refund claim is not such a lapse that it would debar the appellants from the refund. - AT
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Duty demand - Insurance claim received against damaged gear boxes - gear box still lying in the factory - demand set aside - AT
VAT
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Introducing an award scheme for the general public 'Bill Banvao, Inaam Pao' - Delhi VAT
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Appeal dismissed for want of prosecution - the dismissal for want of prosecution simplicitor and without any adjudication on merits, is a course impermissible and unknown to the appellate power - HC
Case Laws:
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Income Tax
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2015 (10) TMI 954
Taxability of income - amount of service fee received/receivable by the applicant from Usha International Limited in terms of Agreement dated 16.11.2012 for providing services in connection with procurement of goods by Usha International Limited from vendors in China and other related services provided in China - whether is taxable in India and the applicant is liable to pay tax thereon in India? - Double Taxation Avoidance Agreement between Government of India and People‟s Republic of China - whether the payment received by the applicant from the Indian company for services rendered in China is taxable in India under Article 12(4) of DTAA between India and China? - contrast with China-Pakistan tax Treaty - Held that:- Since the applicant's counsel has sought to make a distinction between India-China DTAA and Pakistan-China DTAA, we notice that Pakistan-China DTAA refers to”provision of rendering of any managerial, technical or consultancy services‟ whereas India-China DTAA refers to”provision of services of managerial, technical or consultancy nature‟. The distinction between these two DTAAs clearly points out that the scope of”provision of services‟ as in India-China Treaty is much wider than scope of”provision of rendering of services‟ as in Pakistan-China Treaty. Based on this distinction this Authority had held in the case of Inspectorate (Shanghai) Limited that”provision of services‟ will cover the services even when these are not rendered in the other contracting state (i.e. India in this case) as long as these services are used in the other contracting state (i.e. India in this case). The ITAT Mumbai Bench in the case of Ashapura Minichem [2010 (5) TMI 523 - ITAT, MUMBAI ] had also reached at the same conclusion saying that if at all the contrast with China-Pakistan tax Treaty shows something, this contrast shows that the India-China tax Treaty intends to follow the source rule, while China-Pakistan tax Treaty gives up the source rule for fee for technical services. Appendix A to the service agreement in this case makes it very clear that the applicant had the skill, acumen and knowledge in the specialized field of evaluation of credit, organization, finance and production facility of an organization, in conducting market research, in giving expert advice for improvement of high quality of standards, advising on new development in China with regard to technology/product/process up gradation. The UIL asks for advice from the applicant and refer to the source of information provided by the applicant. The nature of these services in a specialized field mentioned in Appendix A would surely come within the ambit of the term ”consultancy services". The amount of service fees received by the applicant from UIL for providing consultancy services are taxable in India. The service fee received by the applicant is chargeable to tax to the extent of full amount received by it. Service fee received by the applicant chargeable to tax in India - whether same is chargeable to the extent of full amount received by it or only to the extent of mark up received @ 10% over and above the actual cost incurred by it in providing services in China? - Held that:- Similar issue had come up before the Authority in the case of DANFOSS Industries Private Limited (2004 (5) TMI 58 - AUTHORITY FOR ADVANCE RULINGS) wherein the thrust of the argument of the applicant was that there was no income element in the service fee and that it was only reimbursement of the cost. It was held therein by this Authority that the entire sum will be chargeable to tax and can be assessed to tax under the Act and that such sum might be income or income hidden or otherwise embedded therein and that the scheme of tax deduction by source applied not only to amount paid which would wholly bear income character such as salaries, dividends, interest on securities etc. but also to gross sums, the whole of which might not be income or profit of the recipient, such as payments to contractors and sub-contractors and the payment of insurance commission. In the case of Timken India Limited (2004 (12) TMI 12 - AUTHORITY FOR ADVANCE RULINGS ) also it was decided that entire amount was liable to be taxed in India and accordingly the applicant was obliged to withhold Income-tax at appropriate rate. We respectfully follow the same ruling in this case also. The rate of tax is 10% on the gross amount under the DTAA.
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2015 (10) TMI 953
Interest on fixed deposits representing compensation, pledged against bank guarantee given to KIADB pending resolution of dispute over title of land - whether is taxable in the respective years when such interest was credited by bank in its books as held by ITAT? - Held that:- If an amount is received by the assessee on certain conditions or by imposing any restrictions, such as of furnishing security, the assessee does not become the real owner of the money, though received in his name, or the interest that accrues thereon would not be chargeable to tax, till such dispute is resolved and the condition, or restriction, so imposed is removed or resolved.For the foregoing reasons, we decide the first question of law in favour of the assessee and against the Revenue. Part of compensation relating to trees in the agricultural land acquisition proceeding - whether is taxable as capital gains and chargeable to tax in the block period and not in the year of unconditional receipt as held by ITAT - whether the capital gains could be charged on the compensation for the standing mango and other fruit bearing trees, building, borewell and other assets on the agricultural land of the assessee, which was acquired under a notification for compulsory acquisition? - Held that:- What is to be noted in this regard is that it was acquisition of the land, along with structure, trees etc., which was made by a single transaction. It was only for the purpose of payment of compensation that valuation of the building, borewell, standing trees (which may be mango, tamarind and other fruit bearing trees) was made. While calculating the valuation of the trees, which was done by the Land Acquisition Officer of the Board, part relief had been granted by the Authorities with regard to certain kinds of trees and also the building and the borewell. But mango trees, which were approximately 12 years of age, were valued separately, and compensation on the same was treated as taxable. In this regard, since it is clear that the acquisition was for the entire land on "as is where is basis", and the land in question is agricultural land, and the valuation of the trees and other assets, were made only for the purpose of calculating compensation, therefore the amount paid to the assessee was actually for acquisition of the agricultural land, which was exempted from tax. Hence, the question of payment of capital gains on the compensation only for the mango trees, etc., cannot be justified in law. The ratio of the decision COMMISSIONER OF INCOME TAX v/s M.RAMAIAH REDDY (1984 (12) TMI 56 - KARNATAKA High Court) goes in favour of the assessee and not the Revenue. We are of the firm opinion that it was one transaction of acquisition, under which the land, as well as the trees, etc., had been acquired, and splitting the same into two for the purpose of taxation would be against the law. - Decided in favour of assessee.
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2015 (10) TMI 952
Validity of reopening of the assessment - disallowance of royalty as revenue expenditure - decision in Southern Switchgears Ltd. v. CIT [1997 (12) TMI 105 - SUPREME Court] which was rendered by the Supreme Court several years earlier on 11th December 1997 was not noticed by the AO at the time of finalization of assessment at the first instance on 31st January 2005 under Section 143(3) - Held that:- In the present case, there was no failure on the part of the Assessee to disclose the material particulars with the return originally filed. On the contrary, the AO himself replied to the audit objection pointing out that royalty was allowed to be claimed as revenue expenditure by the Assessee for the years earlier to AY 2002-03. A copy of the agreement under which royalty was being paid was provided to the Revenue. In light of the legal position after the amendment to Section 147 of the Act, as explained in CIT v. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA), the Court is of the view that, in a case where the assessment is sought to be reopened in 2009, four years after it was originally made, i.e. 2005, the mere fact that there was a judgment of the Supreme Court of 1997 which was not noticed by the AO when he framed the original assessment cannot per se constitute the only material on the basis of which the assessment could have been reopened. When on the same material, four years after the assessment year for which the original assessment is finalised, the AO seeks to reopen the assessment on the basis of a judicial precedent delivered more than eight years earlier, it would be a case of mere 'change of opinion', something clearly held impermissible by CIT v. Kelvinator of India Ltd. (supra), The threshold requirement of that the AO should, on the basis of some tangible material, conclude that there was escapement of income on account of the Assessee failing to disclose material particulars, is not fulfilled in the present case. Consequently, the reopening of the assessment was, in the facts of the present case, not justified. - Decided in favour of assessee.
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2015 (10) TMI 951
Computation of Deduction under Section 10B (1) - CIT (A) and AO treating the scrap amount as part of the domestic turnover - Assessee is engaged in the manufacture and export of Fasteners, a 100 per cent export oriented unit - ITAT allowed assessee claim - Held that:- ITAT correctly held that in terms of the judgment of the Supreme Court in CIT v. Punjab Stainless Steel Industries (2014 (5) TMI 238 - SUPREME COURT) sale of scrap is not includable in the total turnover since the Assessee was not engaged in the business of scrap. Consequently, the impugned orders of the CIT (A) and the AO treating the scrap amount as part of the domestic turnover was set aside.- Decided against revenue. Exchange rate fluctuation, the ITAT referred to the decision of the Bombay High Court in CIT v. Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT ) which held that foreign exchange fluctuations realized within the stipulated period forms part of the sale proceeds and is directly related to the export activates. It was, accordingly, held that this should be treated as income derived from export activities. Since the provisions of Section 10A and 10B are more or less similar, the ITAT rightly held that for the purposes of Section 10B, the foreign exchange fluctuation has to be considered as part of the export turnover.- Decided against revenue. Interest on the FDRs - whether the interest on the FDRs could form part of the ‘profits of the business of the undertaking’? - Held that:- In the present case, the Assessee has stated that the interest on FDRs was received on “margin kept in the bank for utilization of letter of credit and bank guarantee limits”. In those circumstances, the decision of the ITAT that such interest bears the requisite characteristic of business income and has nexus to the business activities of the Assessee cannot be faulted. In other words, interest earned on the FDRs would form part of the “profits of the business of the undertaking” for the purposes of computation of the profits derived from export by applying formula under Section 10B(4) of the Act. - Decided against revenue.
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2015 (10) TMI 950
Benefit of deduction under Section 80IB (10) - CIT initiated proceedings under Section 263 and proceeded to withdraw the deduction claimed by the Assessee under Section 80IB(10) was whether the requirement under Section 80AC, that the return had to be filed within the time prescribed under Section 139(1) of the Act, was mandatory - ITAT concluded that there was no justification for CIT to have invoked the jurisdiction Section 263 - Held that:- As far as the present case is concerned, the Court is satisfied that at the time when the CIT passed the order dated 6th February, 2012 under Section 263 of the Act there was a conflict of opinions of the various benches of the ITAT on whether 80AC was mandatory. Consequently, the ITAT was not in error in reversing the order of the CIT as far as the question of exercising jurisdiction under Section 263of the Act was concerned. No substantial question of law arises on the said issue. It is clarified that the question whether the requirement under Section 80AC of the Act is mandatory is left open for consideration in an appropriate case. - Decided against revenue.
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2015 (10) TMI 949
Interest paid on assets prior to their installation - whether can be taken as their cost of installation and permitting deduction under section 43(1)? - Held that:- The first question is covered in favour of the assessee in view of the judgment of the Supreme Court of India in Deputy Commissioner of Income-tax Vs. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] particularly the principles of law laid down in paragraphs 11, 13 and 14 thereof wherein held Interest on borrowings utilized for purchase of machines are allowed to be deducted because these machines have been used in business which is not disputed by Mrs. Soma Chatterjee, learned Advocate for the appellant. Therefore the question no.1 is answered in the affirmative, against the Revenue and in favour of the assessee. Expenses incurred for replacing non-Y2K compliant computer with Y2K compliant computer - whether can be claimed as a deduction under section 36(1)(xi)? - Held that:- From a reading of the definition of “computer system” it is evident that it is a device or collection of devices which includes input and output support devices and is capable of being used in conjunction with external files or more which contain computer programmes, electronic instructions, input data and output data. In the instant case the Tribunal, being the ultimate fact finding authority, found that “Therefore, on the basis of the facts and circumstances as brought on record, we are of the view that the capital expenditure required to replace the entire computer but within a network system should be allowed as an expenditure as was the intention of the legislation in the Finance Act, 1999 by inserting section 36(1)(xi).” Thus the expenditure was for replacement of a system within a larger system which is permissible in law. Hence, the Tribunal was justified in allowing the claim of the appellant. The judgment in CIT vs. Asian Paints Ltd. (2013 (1) TMI 768 - BOMBAY HIGH COURT) supports the stand of the respondent. - Decided in favour of the assessee.
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2015 (10) TMI 948
Waiver of interest under Section 220(2) rejected - non-payment of amount, within time - Held that:- A perusal of the impugned order, which is extracted above, shows that the 1st respondent Commissioner, has not considered the grounds raised by the petitioner in the petition filed under Section 220(2A) of the Act and has passed an order bereft of reasons. The settled legal proposition is that the impugned order itself shall contain reasons justifying the decision taken and they cannot be supplemented by way of an affidavit. MOHINDER SINGH GILL v. CHIEF ELECTION COMMR. [1977 (12) TMI 138 - SUPREME COURT] The second equal relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. In as much as the impugned order is bereft of any reasons and further the same has not dealt with the contentions raised by the petitioner in his application filed under Section 220(2A) of the Act, and in view of the above facts and circumstances and the law laid down by Apex Court, the impugned order cannot be sustained and the same is hereby set aside. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 947
Reopening of assessment - Held that:- There is no whisper of the petitioner having failed to disclose fully and truly all material facts necessary for his assessment. Therefore, the necessary ingredient for inviting the provisions of Section 147 is missing. As such, the initiation of the re-assessment proceedings pertaining to assessment year 2004-05 does not have the backing of law. Consequently, the impugned notice under Section 148 and all proceedings pursuant thereto including the order disposing of the objections are set aside - Decided in favour of assessee.
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2015 (10) TMI 946
Addition towards valuation of closing stock - ITAT deleted the addition accepting the plea of the Assessee that it has been consistently following "the method of valuation of closing stock of levy sugar at its two factories at the market rate and valuation of the closing stock of the free sale sugar and Deoband unit at cost price and that of the Ramkola unit at market price" - Held that:- The Court finds that the Assessee was under a compulsion to maintain separate books for the supply of levy sugar to the Government and had consistently adopted different systems of valuation of the closing stock of levy sugar and free sale sugar manufactured at its two units. The closing stock as well as the opening stock would reflect this dual system of valuation followed by the Assessee and the net tax effect would be revenue neutral. Consequently, the Court agrees with the ITAT that there was no justification for the AO to have rejected the valuation of the closing stock of sugar as adopted by the Assessee. The addition made by the AO was rightly deleted by the ITAT. The question is answered in the affirmative i.e. in favour of the Assessee
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2015 (10) TMI 945
Transfer pricing adjustment - selection of comparable - Held that:- Exclude M/s. Accel Transmatics Ltd. (Seg) and M/s. KALS Infosystems Ltd. from the set of comparables from companies in the software development services segment of the assessee. Following the decision of the ITAT, Hyderabad Bench in the case of CES Pvt. Ltd. [2014 (4) TMI 930 - ITAT HYDERABAD] for Assessment Year 2006-07, we hold and direct that this company i.e. Infosys Technologies Ltd.,Megasoft Ltd., Tata Elxsi Ltd is to be excluded from the set of comparable companies for the software development services segment of the assessee. Maple e-Solutions Ltd., Datamatics Financial Services Ltd., Vishal Information Technologies Ltd., Asit C Mehta Financial Services Ltd., Goldstone Infratech Ltd. companies cannot be considered as a comparable for the purpose of determining the ALP in this case Apex Knowledge Solutions Pvt. Ltd.is not functionally comparable to ITES provider as it provides services such as e-publishing knowledge based services, etc. Spanco Telesystems Solutions Ltd. and Allsec Technologies Ltd. - these companies are not to be selected on various reasons, we uphold the objections of Assessee and direct the T PO/AO to work out the arithmetic mean of PLI on the balance of companies. Grounds raised by Assessee on this issue are allowed. 16.3.2 Following the aforesaid decision of the ITAT, Hyderabad Bench in the case of CES Pvt. Ltd. for Assessment Year 2006-07 (supra), for the factual reasons cited therein and also brought before us, we hold and direct that these two companies namely, Spanco and Allsec Technologies Ltd. are to be excluded from the set of comparable companies for the ITES segment of the assessee. Genisys International Corp. Ltd. company did not come to be selected in the search process of either the TPO or the assessee. That being the case, we find that the assessee has not brought on record any factual evidence to establish its claim that this company satisfies all the conditions and filters for comparability. In this view of the matter, the contentions of the assessee for inclusion of this company as a comparable are not acceptable and we, therefore, dismiss this ground raised by the assessee. Computation of deduction u/s. 10A - Held that:- Taking into consideration the decision rendered by the Hon'ble High Court of Karnataka in the case of Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT) we are of the view that it would be just and appropriate to direct the Assessing Officer that data communication charges and lease line charges incurred in foreign currency are to be excluded from both export turnover as well as total turnover while computing the deduction under Section 10A of the Act, as has been prayed by the assessee in its alternate plea. Charging of interest under Sections 234B, 234C and 234D - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court ) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. The Assessing Officer is, however, directed to recompute the interest chargeable u/s. 234B, 234C and 234D of the Act, if any, while giving effect to this order. - Decided partly in favour of assessee.
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2015 (10) TMI 944
Income from share transactions of the assessee - whether not chargeable to tax under the head ‘business income’ even though consistency, frequency and large volume were involved in the said transactions as held by CIT(A) - Held that:- Merely because there is consistency, frequency and volume in transaction of shares, the same cannot be treated as ‘business income. The intention of the assessee at the time of purchase of such shares/securities are to be seen. Since the assessee in the instant case has made purchases and sold the shares supported by actual deliveries through the Demat account and since there has not been a single transaction of short sale during the entire year, therefore, we are of the considered opinion that the income from such gain cannot be treated as ‘business income’. This view of ours is supported by plethora of decisions of the Coordinate Benches of the Tribunal and different High Courts. In this view of the matter we do not find any infirmity in the order of the CIT(A) on this issue. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed. - Decided in favour of assessee. Indexation of share application money - CIT(A) rejected the claim of the assessee for indexation of share application money on the ground that no right has been created whatsoever in the land - Held that:- Respectfully following the decision in the case of Blue Star Ltd (2007 (3) TMI 290 - ITAT BOMBAY-J) and in absence of any contrary material brought to our notice we hold that the assessee is entitled to indexation benefit on the share application money introduced in M/s. Shristi Hotels Pvt. Ltd. We accordingly set aside the order of the CIT(A) on this issue and direct the AO to allow the benefit of indexation on the share application money and determine the long term capital gain in accordance with law after giving due opportunity of bearing heard to the assessee. - Decided in favour of assessee. Benefit of indexation being share capital denied - Ld.CIT(A) while holding that the assessee could have taken such benefit, however, denied the same on the ground that no shares were transferred, therefore, the assessee is not entitled to benefit of indexation - Held that:- We find the Ld.CIT(A) was not justified on this issue. We have already held in the preceding paragraphs that assessee is entitled to benefit of indexation on account of share application money. Following the same reasonings we hold that the assessee is entitled to benefit of indexation in respect of ₹ 100/- being share capital money in M/s. SHPL. - Decided in favour of assessee. Taxability of interest amount - whether the amount has been taxed twice as interest amount has been offered by the assessee in the past years - Held that:- The Ld. Departmental Representative has no objection if the matter is restored to the file of the AO with a direction to verify the contention of the assessee that the amount has been offered to tax in the preceding years. In our opinion, if the assessee has already accounted for such income on accrual basis in the past, the same cannot be taxed again in the current year on receipt basis. However, the same needs verification at the level of the AO. In view of the above, we remit ground of appeal No.3 to the file of the AO with a direction to verify the past records and find out as to whether the assessee has offered to tax the interest amount of ₹ 13,00,828/-. The AO shall decide the issue in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly - Decided in favour of assessee for statistical purposes
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2015 (10) TMI 943
Capital Gains - transfer of property post family arrangement in name of family members as per the directions of the Court - Addition made towards Long Term Capital Gain assessable in the hands of the assessee on sale of property situated at Delhi - Held that:- A family arrangement by which each party takes a share in the property has been held as not amounting to a “conveyance of property” from a person who has the title to it to a person who has no title to it earlier. In CIT vs A.L.Ramanathan (1998 (12) TMI 36 - MADRAS High Court) the family arrangement was held to be not a transfer for the purpose of capital gains tax. Recognizing the family arrangement in the eyes of law, the action of the ld. AO in bringing to tax the long term capital gain is illegal and is hereby directed to be deleted in the hands of the assessee. - Decided in favour of assessee. Disallowance of interest paid on loans - Held that:- It is seen that the borrowed fund has been used for repaying the old borrowings by the assessee which has been duly used for the purpose of business. It is not in dispute that the original borrowings were used by the assessee for the purpose of his business. Hence, the interest paid by the assessee on borrowings which were utilized by repaying the old business borrowings is squarely allowable as deduction. Accordingly, we direct the ld. AO to allow the sum towards interest paid on loan. - Decided in favour of assessee.
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2015 (10) TMI 942
Transfer Pricing adjustment - adjustment made on account of accelerated depreciation - whether while computing margins of the comparable companies, in the facts of the present case, any adjustment could be made on account of such assets, which are not owned by the assessee - CIT(A) directed the Assessing Officer not to make the depreciation adjustment on account of un-common assets between the assessee and comparable companies Held that:- Merely because, one company does not have the said assets, it cannot be said that it had not incurred certain expenditure relatable to the same. We find that similar proposition on account of depreciation arose before the Delhi Bench of the Tribunal in EXL Service.Com (India) Pvt. Ltd. Vs. ACIT [2014 (12) TMI 894 - ITAT DELHI] wherein it was held that no adjustment is to be made on account of uncommon assets. In view thereof, we uphold the order of CIT(A) in holding that no adjustment is to be made in the hands of the comparable companies on account of assets not owned by the assessee. The learned Authorized Representative for the assessee has furnished on record an order giving appeal effect to the order of CIT(A) by Assessing Officer, vide order dated 28.02.2013, in which the margin of set of comparable companies was adopted at 15.75% as against the PLI of the assessee at 10.52% and the same has been found to be at arm's length i.e. +/- 5% range prescribed under the proviso to section 92C(2) of the Act. It may be clarified here that initially, the TPO had adopted the PLI of the assessee at 10.33%, but while computing adjustment on account of international transaction, the PLI was taken at 10.52% which is to be adopted in the hands of the assessee. In view thereof, we dismiss the grounds of appeal raised by the Revenue. In view of the concession of the learned Authorized Representative for the assessee that after giving effect to the order of CIT(A), no further adjustment is to be made in the hands of the assessee on account of an international transactions. Consequently, we dismiss the appeal filed by the assessee being academic. In view thereof, both the appeals of the assessee and the Revenue are dismissed.
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2015 (10) TMI 941
Entitlement to deduction u/s.80P(2)(a)(i) - AO was of the opinion that assessee, a Credit Cooperative Society under the Karnataka Cooperative Societies Act was hit by Section 80P(4) of the Act as in the business of giving credits and should be considered as a cooperative bank, hence disallowed the claim.- CIT(A) allowed the claim - whether assessee fell within the limitation specified in Section 80P(4)? - Held that:- It is an admitted position that assessee was bound to give interest to its members on the deposits received by it from them. Therefore, when there were no takers for the money, which assessee as a part of its objects wanted to lend, the only available choice for assessee, in order not to keep the funds idle, was to place it in banks for earning interest. As relying on case of CIT v. Tumkur Merchants Souharda Credit Cooperative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT ] it is held the money meant for lending, remaining surplus, there being no takers, if deposited in banks for earning interest, such interest income would be attributable to the business of banking carried out by the assessee. Natural corollary is that Section 80P(4) of the Act is not attracted unless the cooperative society is recognised by RBI as a cooperative bank as per the rules made under Reserve Bank of India Act. We, therefore, hold that assessee was eligible for claiming deduction u/s.80P(2)(a)(i) of the Act. We do not find it necessary to interfere with the order of the CIT (A). - Decided in favour of assessee.
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2015 (10) TMI 940
Unexplained cash credits - addition u/s 69 - CIT(A) deleted the addition - Held that:- CIT (A) only considered the confirmation along with the PAN numbers and held that the assessee’s burden had been discharged by relying on various decisions. Recently various High Courts including Hon’ble Delhi High Court in case of CIT vs. Youth Construction Pvt. Ltd. (2012 (11) TMI 595 - DELHI HIGH COURT) has held that the assessee has to establish the creditworthiness of the cash creditors. The Hon’ble Supreme Court has dismissed the SLP by considering its own decision in case of Lovely Exports in [2008 (1) TMI 575 - SUPREME COURT OF INDIA ] held that the creditworthiness in case of cash creditors is required to be established. Therefore, the ld. CIT (A) was not right in allowing the appeal on the basis of genuineness of the transaction and identity of the persons only. The third ingredient to prove the cash creditors under section 68 i.e. creditworthiness has to be established. Therefore, we set aside the order of ld. CIT (A) to the AO. The assessee is directed to cooperate with the AO and furnish the requisite details. - Decided in favour of revenue for statistical purposes.. Trading addition - assessee did not produce the books of account - CIT(A) deleted the addition on the ground that the GP rate shown during the year under consideration is better in comparison to preceding year and no addition is warranted - Held that:- Even the justification given by the assessee is not based on any evidence. Further, the ld. CIT (A) also had confirmed the disallowance of expenses on the basis of audit report under section 44AB of the IT Act which shows that assessee’s books are not reliable. As such, the finding given on GP by the ld. CIT (A) is against its own finding. Therefore, in the interests of justice, this issue is also set aside to the AO and the assessee is directed to produce the books of account. If not possible, produce the certified copy of the complete books of account from the Excise Authorities to verify the correctness and completeness of the books of account and take decision on this issue. Thus this issue is also set aside for denovo order. - Decided in favour of revenue for statistical purposes..
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2015 (10) TMI 939
Penalty u/s. 271(1)(c) - wrong claim on the sale of shares - addition of Short Term Capital on sale of shares in the income returned - Held that:- In the present case, we observe that the assessee has not furnished inaccurate particulars with respect to the purchase and sale of shares. The mistake has been committed in computing the capital gain arising from sale of shares. We are of considered view that the mistake is bonafide and unintentional. The Revenue has not denied that the details of share transactions furnished by assessee are correct. The assessee has only erred in computing capital gain from sale of shares. Thus, in view of the facts of the case it cannot be said that it is a case fit for levy of penalty u/s. 271(1)(c) of the Act. Hence, the order levying penalty is set aside and the appeal of the assessee is allowed. See Udayan Mukherjee Versus Commissioner of Income-Tax. [2005 (11) TMI 62 - CALCUTTA High Court] - Decided in favour of assessee.
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2015 (10) TMI 938
Disallowance of the deduction claimed u/s 80IB on interest received on FDR - "Income from other sources" or "income from business and profession" - AO denied the claim of deduction u/s 80IB taking the view that income earned by way of interest from FDRs cannot be treated as income from industrial undertaking, thus he treated the interest income as Income from Other sources - Held that:- Almost all the FDRs were issued in favour of the assessee by the Bank prior to the assessment year 2008-09 as it was necessary and compulsory for getting the CC Limit and L/C in favour of the suppliers. Moreover, there is no change in business and the CC limit on the FDRs continues to be utilized for the same purposes in the assessment year under consideration. Even this issue was raised for the assessment year 2006-07, however, the AO had allowed the deduction after concluding that there was nexus between the interest earned and interest paid. In the assessment year 2008-09 i.e. subject matter of the present appeal, the assessee has earned interest of ₹ 16,97,627/- and has paid the interest of ₹ 26,10,761/-. Thus there was no net interest received by the assessee. In view of the above said discussion and in view of the fact that there is no change in the circumstances for the AY 2008-09 vis-a-vis preceding years i.e. 2006-07 & 2007-08, we therefore, extend the benefit which has been extended to the assessee by the AO for the A.Y. 2006-07 for the present assessment year also. - Decided in favour of assessee.
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2015 (10) TMI 937
Income assessable under the head ‘profits /gains from business / profession’ - liquidated damages - sum of ₹ 2,50,00,000/- received by it from M/s. Prestige Estate Projects P. Ltd Held that:- There is no communication from M/s. PEP on any of the aspects mentioned in the letter. Fundamental for a valid contract is either a written or an oral agreement. Above letter is not an agreement. At the best it is only a conditional offer. Not only is there any acceptance from M/s. PEP, there is a communication dt.07.11.2012 from M/s. PEP to the AO reproduced by us in para 2 above which points to an opposite position. Thus claim of the assessee what was received by it from M/s. PEP, in excess of what was paid by it, was only a compensation in the capital field falls flat. Letter dt.31.05.2006 written by assessee to M/s. PEP also clearly show that its intent was nothing but to do the business of construction and selling land after development and construction. Thus the amount of ₹ 4.95 crores paid was nothing but an advance for acquiring the stock for its real estate development venture. Instead of getting the developed areas as desired, what assessee received was a sum of ₹ 7.45 crores from M/s. PEP. Surplus in our opinion had all the features of business profit, since assessee’s adventure or foray into real estate development was only a trading or business venture. The back ground of the transaction, where partners of assessee firm had already done similar business with M/s. PEP, corroborates this further. - Decided against assessee.
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2015 (10) TMI 936
Rectification of mistake - adjustment of advance tax against the seized amount and the non chargeability of interest u/s 234B and 234C of the Act - maintainability of rectification appeal as was sought after the expiry of four years from the end of the financial year in which the assessment order was passed - Held that:- Undisputedly the application for rectification dated 19.09.2006 was not disposed of by the Assessing Officer by passing any speaking order. He, however, issued I.T.N.S.-150 totaling the computation of income along with interest. It is also clear from the record that after issuance of I.T.N.S.-150, the assessee approached the Commissioner and the Chief Commissioner vide his letter dated 20.09.2006 and on 13.04.2011 with a request of adjustment of the advance tax against the seized amount. In response to these letters, the CIT(A) and CCIT has called report from the Assessing Officer in which the Assessing Officer himself has admitted that I.T.N.S.-150 was passed on 18.09.2006. But he has not produced any order passed on the application filed u/s 154 of the Act. Therefore, it has become abundantly clear from the record that the Assessing Officer has not disposed of the application dated 19.06.2006 filed u/s 154 of the Act by passing speaking order. Thus, the rejection of succeeding application is not proper on the ground that these rectification applications were filed after four years from the end of the financial year in which the order was passed. Once the assessee makes the request for the adjustment of seized amount against the advance tax, the same should be accepted and after adjusting the advance tax against the seized amount no interest u/s 234A and 234C be charged. Under these circumstances, we are of the view that CIT(A) has rightly adjudicate the issue himself and has deleted the interest charged u/s 234B and 234C having allowed the adjustment of the seized amount against the advance tax for AY 2004-05. We, therefore, do not find any infirmity in the orders of the CIT(A) and accordingly we confirm the same. - Decided against revenue.
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2015 (10) TMI 935
Disallownace of layout formation expenses - AO noticed that the assessee sold a property to Kammagondanahalli Sri Maruti Seva Samithi from which the assessee reduced the cost of acquisition, layout formation expenses and labour charges - only reason given by the AO and CIT(A) in making disallowance was that the sale deed was registered even before the expenditure was incurred and the Assessee as on the date of incurring the expenditure was not owner of the property - Held that:- The approach adopted by the Revenue authorities are unsustainable in law. But for incurring of the aforesaid expenditure the Assessee would not have been able to realize the sale consideration. It was part and parcel of the agreement that the Assessee has to incur these expenses. We are of the view that even though the expenditure incurred after the execution of the deed by the assessee, there existed a commitment in relation to such sale by plain reading of clause ‘4’ of the agreement to sale deed. It is binding on the assessee. Moreover, the payment of ₹ 1,04,25,000/- was withheld by the purchaser for completion of the layout formation. Only on completion of the layout formation expenditure, the assessee was able to recover the above said amount on 28/2/2008. The Assessing Officer was not right in holding that the right and interest on the property had been already transferred before such expenditure. There is no dispute that such expenses were incurred by the assessee. In our view, the assessee is eligible to claim the expenditure for the obligation existed even after sealing of the agreement - Decided in favour of assessee. Disallowance u/s 40A(3) - Held that:- There is no dispute that the assessee had issued an open bearer cheque to Shri Chandre Gowda for ₹ 20,00,000/-. This was a clear violation of the provisions of Sec.40A(3) of the Act and therefore the disallowance had to be made. Even though the assessee contested that the cheque was issued under special circumstances and business exigencies, in fact, the assessee had contravened the provisions of sec. 40A(3) of the Act. - Decided against assessee.
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2015 (10) TMI 934
Assessment of commission income of providing accommodation bills by the assessee - Held that:- Issue is covered with the decision of the ITAT, Ahmedabad Bench in assessee’s group case of M/s.Devi Durga Construction Vs. ACIT for Asstt.Years 2004-05 to 2007-08 in [2015 (10) TMI 791 - ITAT AHMEDABAD] wherein the Tribunal in identical facts has partly allowed the appeal of the assessee, and has directed the AO to assess the assessee by estimating the commission income of the assessee at 2.5% of the total bill amount, as against the rate of 5% applied by the CIT(A) - Decided partly in favour of assessee. Penalty under section 271(1)(c) - CIT(A) giving relief of 95% of penalty imposed - Held that:- Issue is covered with the decision of the ITAT, Ahmedabad Bench in assessee’s group case of M/s.Devi Durga Construction Vs. ACIT for Asstt.Years 2004-05 to 2007-08 in [2015 (10) TMI 791 - ITAT AHMEDABAD] wherein held only finding recorded by CIT(A) for confirming the penalty in this case was that Assessee was abating in tax evasion. The act of abatement in tax evasion for some other person could not be made the basis for levy of penalty u/s. 271(1)(c) on the Assessee. We further find that CIT(A) has passed a cryptic order. On these facts of the case, we are of the view that the impugned order could not be sustained. However in the interest of justice to both the parties, we consider that it shall be appropriate to restore the issue of penalty u/s. 271(1)(c) to the file of A.O to pass a de novo order in accordance with law after providing reasonable opportunity of hearing to the Assessee and A.O shall record a clear finding on the issue that the conditions for levy of penalty u/s. 271(1)(c) exists and proved in this case. - Decided in favour of revenue for statistical purpose.
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2015 (10) TMI 933
Addition under S.69 - unexplained investment - CIT(A) deleted part addition - Held that:- The Assessing Officer made the addition of ₹ 21,50,000 under S.69 of the Act, as the assessee could not explain the sources for the capital introduced by the assessee to his satisfaction. As for the amount of ₹ 6,50,000 claimed by the assessee to have invested from out of own funds, it comprises of (a) accumulated savings out of income from property and agriculture; and (b) contract receipts. The CIT(A) accepted the first source, since the amount represented by the same to the extent of ₹ 1,50,000 has been received from out of banking channels. As for the balance amount of ₹ 5,00,000 represented by contract receipts, in the absence of any cogent evidence, brought on record by the assessee, in support of the said claim, as the net presumed net profit/margin as available to the assessee, would not support the cause of the assessee that entire contract receipts are available for making the investment, more so, since the year under consideration was shown as the first year of contract and there was no accumulated sources of income other than the marginal incomes from the property and agricultural income. We do not find any infirmity in the view taken by the CIT(A) with regard to the own sources, by accepting the claim of the assessee partly. We accordingly reject the grounds of the assessee as well as the Revenue on this aspect, in their respective appeals. Even with regard to the amounts borrowed from mother, Smt. Anees Nadiraa and a distant relative, Shri Abdul Kareem, the reasoning given by the CIT(A) cannot be found fault with. The former being assessee’s mother, and the money having been lent from banking channels, there is no dispute with regard to either identity or genuineness of the transaction. Since the said creditor was also claimed to have been assessed to tax, the Assessing Officer ought to have verified the particulars given, if he has any doubt with regard to the credit-worthiness or genuineness of the transaction. Even with regard to other creditor, Mr.Abdul Kareem, the amount was claimed to have originated from an NRE Account with Andhra bank, and the said creditor having been away from the country, his wife, Smt. Fatima was claimed to have filed the confirmation letter on behalf of her husband. Merely on the ground that confirmation letter was filed by another person, the genuineness of the transaction cannot be doubted, since there can be no doubt with regard to either identity of the creditor and his credit-worthiness, or the genuineness of the transaction. In this view of the matter, we do not find any infirmity in the view taken by the CIT(A), while accepting the sources explained by the assessee for investing the capital, by borrowing the monies from these two persons, viz. mother and distant relative - Decided against assessee and revenue.
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2015 (10) TMI 932
Grant of approval for the purposes of Section 80G - CIT(A) denied the claim - Held that:- So far as possibility of doing any commercial activity is concerned, which is substance of learned Commissioner's rejection of application, there is nothing in Section 80 G (5) which can justify rejection of application on that basis. All that Section 80G(5)(i) states is that "where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of section 10". There are certain other fine points on this issue but there is no need to go into all those issues as undisputedly, there is no such income on the facts of this case. There may be a possibility of engaging in a commercial activity , with the help of 'community centre' the assessee is building, but this possibility, even if that be so, cannot be reason enough to decline the application for registration under section 80 G. Commissioner's action is a classic example of proceeding on the basis of surmises and conjectures and on the basis of irrelevant considerations. What Commissioner needs to do in such cases is very well elaborated upon in Rule 11 AA reproduced earlier in this order. Learned Commissioner, should, inter alia, examine (i) copy of registration granted under section 12A or copy of notification issued under section 10(23) or 10(23C); (ii) notes on activities of institution or fund since its inception or during the last three years, whichever is less; and (iii) copies of accounts of the institution or fund since its inception or during the last three years, whichever is less. In case learned Commissioner is not satisfied with such material, it is open to him to call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. In the impugned order, however, there is not even a whisper about the note on activities on the institution nor on why is the learned Commissioner not satisfied about facts set out in these notes and other information submitted by the assessee institution. Thus remit the matter to the file of the learned Commissioner for fresh adjudication - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 931
Disallowance of expenses - CIT(A) deleted the said disallowance made by the AO on the ground that there was not even single instance pointed out by the AO to show that any expenditure claimed by the assessee was either personal in nature or had no nexus with the business of the assessee - Held that:- As pointed by the AO in the assessment order, certain expenditure claimed by the assessee was incurred in cash and the same was not supported by the relevant documentary evidence. Also there was substantial increase in the expenses claimed by the assessee under certain heads as compared to the earlier year and the assessee could not offer any satisfactory explanation of such increase. Having regard to these facts of the case, we are of the view that some disallowance out of various expenses claimed by the assessee was called for and the ld. CIT(A) was not justified in deleting the entire disallowance made by the AO out of various expenses. At the same time, we find that the disallowance of ₹ 42,11,983/- made by the AO on this count was excessive and unreasonable in the facts and circumstances of the case. In our opinion, it would be fair and reasonable that disallowance of ₹ 5,00,000/- is made out of various expenses claimed by the assessee. Accordingly, we sustain the disallowance made by the AO out of various expenses to the extent of ₹ 5,00,000/- - Decided partly in favour of assessee. Disallowance of advertisement & sales promotion expenses - CIT(A) deleted the said disallowance - Held that:- This issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of this Tribunal in assessee’s own case for A.Y. 2006-07 [2012 (4) TMI 592 - ITAT MUMBAI] wherein the similar disallowance made by the AO was held to be not sustainable by the Tribunal. Thus we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the AO pertaining to advertisement & sales promotion expenses. - Decided in favour of assessee
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2015 (10) TMI 930
TDS u/s 194J - Addition under Section 40(a)(i) - fees for translation services paid to non-resident translators without deduction of tax at source - contention of the assessee is that the payment for translation services to non-residents does not fall within the ambit of "fees for technical, managerial or consultancy services" - Held that:- In the present case, the assessee is getting the translation of the text from one language to another. The only requirement for translation from one language to other is, the proficiency of the translators in both the languages, i.e. the language from which the text is to be translated, to the language in which it is to be translated. The translator is not contribution anything more to the text which is to be translated. He is not supposed to explain or elaborate the meaning of the text. Apart from the knowledge of the language, the translator is not expected to have the knowledge of applied science or the craft or the techniques in respect of the text which is to be translated. A bare perusal of Explanation 2 to Section 9(1)(vii), which explains "fees for technical service" and the dictionary meaning of the word "technical" makes it unambiguously clear that translation services rendered by the assessee are not technical services. Therefore, the payment made by the assessee to the non-resident translators would not fall within the scope of "fees for technical, managerial or consultancy service" as detailed in Explanation In our considered view, the CIT(Appeals) has travelled beyond the definition of "fees for technical service" to bring the translation services within the compass of the term "fees for technical services". In our considered opinion, the payments made by the assessee to non-residents on account of translation services do not attract the provisions of Section 194J. The disallowance made under Section 40(a)(i) is thus deleted. - Decided in favour of assessee. Invoking of the provisions of Section 115JB - Held that:- Assessee has not been able to substantiate as to how the authorities below have erred in applying the provisions of Section 115JB. - Decided against assessee.
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2015 (10) TMI 929
Addition on account of valuation of closing stock of securities - CIT(A) deleted the addition - Held that:- It has not been disputed by the Department that change in method of valuation of securities was in accordance with RBI directions and non-adherence thereto by Scheduled Banks will have attracted adversity with RBI guidelines. The Scheduled Banks cannot refuse to implement such directions. Therefore, the change in pattern of valuation in respect of impugned securities is bona fide. The Hon'ble Uttarakhand High Court in the case of CIT vs. Nainital Bank Ltd.(2007 (3) TMI 253 - UTTARANCHAL HIGH COURT) has upheld the judgment of Tribunal holding that the assessee being a banking company, the RBI guidelines were binding on it and therefore, valuation of investment on the basis of RBI guidelines was justified. In view of the above, we find no infirmity in the order of the ld. CIT(A). The assessee's pattern of valuation of securities being in accordance with RBI directions cannot be interfered with. Our view is fortified by the judgement of Hon'ble Uttarakhand High Court in the case of CIT vs. Nainital Bank Ltd. (supra). Thus the order of the ld. CIT(A) on the issue of securities is upheld. - Decided against revenue. Disallowance of expenses claimed to have been paid to various clubs - CIT(A) deleted the addition - Held that:- Apropos club fee expenses, various judicial authorities in the case of Lloyd Steel Industries Ltd. vs. ACIT [2007 (10) TMI 459 - ITAT MUMBAI ] and Gujarat State Export Corporation Ltd. vs. CIT (1993 (9) TMI 52 - GUJARAT High Court) and Otis Elevators Co. Ltd. vs. CIT (1991 (4) TMI 53 - BOMBAY High Court) have also laid down the same view i.e. payment of club fees made with a view to enable the assessee to improve its business relation and prospectus is allowable expenditure. Thus in view of the above judgements, we uphold the order of the ld. CIT(A). - Decided against revenue.
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2015 (10) TMI 928
Deduction u/sec. 36 (l)(viia) denied - CIT(A) not accepting the fact that the Branch at 'Naigaon-Juhchandra' which is a rural place has a population of only 4,679 - assessee has made a claim for deduction under section 36(1)(viia) treating the Naigaon Branch as a rural branch in the past for assessment year 2007-08 as also in subsequent assessment year; and in the assessment for assessment year 2007-08 such a claim has been allowed - assessee is a co-operative bank and in the banking business Held that:- An identical question fell for consideration of Hon'ble Kerala High Court in the case of CIT vs. Lord Krishna Bank Ltd. (2010 (10) TMI 860 - Kerala High Court) wherein held that meaning of rural area contained in the census report wherein the revenue village is treated as a unit of rural area, can be, rightly adopted . It has been further observed that the place referred to in the definition clause for the purpose of identifying the branch of a bank is rural branch with reference to its location as the revenue village and accordingly the Hon'ble High Court has rejected the finding of the Tribunal that “place” referred to in the definition is the Ward or local authority like panchayat or municipality. Thus it is clear from the above decision of the Kerala High Court that a rural branch has to be always in the rural area and the place referred can easily be taken as village. In view of the above decision the scope of definition of a place where the branch of the bank is situated cannot be extended beyond the rural unit being village as recognized in the census report. It is not the case of the AO that though the branch in question is situated in a rural village however, the entire or majority part of the advances are given to the customers belonging to the neighboring urban area so as to defeat the very purpose and object of the incentive in the shape of deduction under section 36(1)(viia) granted under the Act. In view of the above discussion we hold that Juchandra Naigaon, branch situated at village Juhchandra Naigaon is a rural branch in terms of section 36(1)(viia) of the Income tax Act and accordingly entitled for deduction under the said section. - Decided in favour of assessee.
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2015 (10) TMI 927
Unexplained investment/unexplained cash - CIT(A) deleted the addition - Held that:- Though the assessee could not produce the delivery challan, transport details and details of octroi payment in respect of returning the goods to these 9 parties however, there is no dispute on the fact that these transactions of purchase of goods and subsequently return to the parties does not involve any payment or refund of amount. We further note that the CIT(A) has given a categorical finding that the purchases made by the assessee from these parties amounting to ₹ 52,51,714/- which was claimed to have been returned was duly forming part of the closing stock as on 31/03/2009. Assessee has claimed that these purchases were returned as it was not approved by the prospective buyer of goods from the assessee therefore the credit transactions in the books of account of the assessee were neutralized by the return of the goods purchased. The assessee has also corroborated this fact of rejection of these goods by the buyers and accordingly these purchases were returned to these 9 parties by producing the copies of sales as well as sales returns. The sales during the year has been reflected by the assessee as net of sales return and consequently the goods in question were shown as part of the closing stock. We do concur with the view of the CIT(A) on this issue that the rejected lot of purchases is part of closing stock before it was returned to these parties which does not involve any payments to these parties and therefore the creditors shown in the name cannot be treated as bogus liability. Accordingly we do not find any error or illegality on the order of CIT(A). - Decided against revenue. Additional evidence considered by the CIT(A) without giving opportunity to the AO - Held that:- It is clear from the order of the CIT(A) that the additional evidence sought to be filed by the assessee was rejected by the CIT(A) and therefore, the ground No.3 raised by the revenue is not emanating from the impugned order of the CIT(A). It is manifest from the grounds raised by the revenue that the concerned officers are taking the matters so casual without even going through the impugned order and understanding the same properly. This is a case of gross negligent approach on the part of AO as well as the approving Commissioner to file the appeal against the impugned order and authorizing of the grounds of appeal. - Decided against revenue.
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2015 (10) TMI 926
Entitlement to exemption u/s.54F - Whether the CIT(Appeals) has erred in accepting the entire claim of the assessees with regard to sale of standing trees as agriculture income? - Held that:- A perusal of the assessment order shows that the Assessing Officer has partly disallowed the claim of the assessee in respect of agriculture income arising from sale of standing trees. The Assessing Officer has made partial dis-allowance merely on estimation basis. No detailed survey was conducted by the Assessing Officer although he visited the site personally with one inspector. The CIT(Appeals) in his order has given the details of the property sold by the assessees. Along with the details of agricultural land, the details of trees planted in the scheduled property is also given. The precise number of trees along with varieties is mentioned. It has been stated that 679 trees consisting of mango, teak, coconut, guava, jack, lime and sapotta are standing on the two parcels of land sold by the assessees. In view of thorough details given in the sale deed, there was no question of making any estimations by the Assessing Officer. Moreover, the Assessing Officer has not given any basis for making such estimation. Subsequently, in the remand report dt.15-05-2013, in the case of Shri S.Chokalingam, the Assessing Officer in his comments to para No.6a to 6f has stated that “sale deed executed has been promptly registered and the value of the said land and trees have been arrived based on relevant market value. Hence, the assessees claim may be accepted”. In view of specific admission in the remand report by the Assessing Officer and the detailed findings of the CIT(Appeals) on the issue, we do not find any merit in the appeals of the Revenue. - Decided against revenue. Revised computation filed by the assessees at the time of assessment without filing revised return of income - Whether the Assessing Officer can consider the revised computation of income at the time of assessment? - Held that:- Agriculture land of the assessee is clearly outside the ambit of the term ‘capital asset’. Initially, the assessees have treated the agriculture land as capital asset and accordingly claimed exemption u/s.54B/54F on account of purchase of new agriculture land/residential property. Subsequently, the assessees realized their mistake, and at the time of assessment filed revised computation by applying correct provisions of the law. The Assessing Officer rejected the revised computation. The CIT(Appeals) confirmed the findings of the Assessing Officer. The Hon'ble Supreme Court of India in the case of M/s.Goetze India Ltd., Vs. CIT reported as 284 ITR 323 has held that the Assessing Officer has no power to entertain a claim for deduction otherwise than by revised return. The Hon'ble Apex Court further made it clear that it is the power of Assessing Officer that is limited to entertain fresh claim but does not impinge the power of the Income Tax Appellate Tribunal u/s.254 of the Act. In view of the well settled law and the facts of the case, we are of considered opinion that the claim of the assessees to treat the sale proceeds of agricultural land as exempt from tax has merit. The appeals are remitted back to the Assessing Officer to consider the revised computation filed by the assessees and thereafter, decide the issue afresh in accordance with law. - Appeals of the assessees are partly allowed for statistical purposes
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2015 (10) TMI 925
Validity of reopening of the assessment - expenditure incurred by the assessee under the head software charges was of enduring in nature - Held that:- Issuing a notice under section 148 of the Act was not justified. Expenditure incurred on software cannot be held tangible material especially when it was an annual expenditure and said fact was disclosed by the assessee. We find that the assessee had made payment under the head software charges in subsequent years also and the Assessing Officer do not invoke the provisions of section 147/148. If it was a revenue expenditure for the year under appeal, same was for the subsequent years also. In our opinion there was no tangible material to reopen the assessment. Respectfully following the decision of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] we decide the effective grounds of appeal against the Assessing Officer. In our opinion order of the first appellate authority does not suffer from any legal infirmity, so, upholding it we dismiss the grounds of appeal filed by the Assessing Officer. - Decided in favour of assessee.
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2015 (10) TMI 924
Reopening of assessment - reopening of assessment was based on information of revenue audit party and not that of Assessing Officer - Held that:- The co-ordinate Bench of the Tribunal in the case of ITO vs. Object Connect India Pvt. Ltd. (2014 (2) TMI 886 - ITAT HYDERABAD) has dismissed the appeal of the Revenue on the ground that there was absolutely no fresh information provided or collected in the re-assessment proceedings In view of the ratio laid down by the Hon’ble Delhi High Court in case of Usha International [ 2012 (9) TMI 767 - DELHI HIGH COURT] and the observations of the coordinate bench in case of S. Ranjit Reddy and Others (2013 (6) TMI 424 - ITAT HYDERABAD), we are of the opinion that the CIT(A) has rightly quashed the reopening of assessment made by the Assessing Officer u/s 147 of the Act by observing that there was absolutely no fresh information provided or collected. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue on this issue - Decided in favour of assessee.
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2015 (10) TMI 923
Penalty u/s.271B - Failure to get accounts audited - Held that:- Considering the accounting of the assessee the claim of the assessee was not approved, however as far as the question of levy of penalty for non auditing of account being gross receipts have exceeded ₹ 40 lacs, we have noted that some of the commission income pertained to A.Y.2003-04 and part of the income pertained to A.Y. 2004-05 and likewise another part of the income belonged to A.Y. 2005-06. This position of segregation of income for respective years was finally settled by the Respected Co-ordinate Bench. Therefore, the argument before us was that the assessee was under a bona fide belief that the commission income for the year under consideration was less than ₹ 40 lacs; hence under that impression he has not obtained the audited accounts. On the question of bona fide of tax payers, viz-a-viz, the provision of Section 271B of IT Act a decision of Hon’ble Gujarat High Court has been cited in the case of ITO Vs. Sachinam Trust(2009 (3) TMI 186 - HIGH COURT OF GUJARAT ). Respectfully following this decision, we hereby hold that in view of the provisions of Section 273B of IT Act the assessee was prevented by a reasonable cause; hence the penalty levied u/s. 271B deserves to be deleted. - Decided in favour of assessee. Penalty u/s. 271(1)(c) - Non deduction of TDS on commission - Held that:- We are of the considered opinion that in a situation when the commission income was subject to TDS and that commission income was disclosed in the respective years following one method of accounting which was not accepted and taxed in A.Y.2004-05 on the basis of another system of accounting; then it is not fair to hold that the assessee has deliberately concealed the facts of the income for the year under consideration. For this legal proposition, we hereby place reliance upon the decision of Hon’ble Supreme Court pronounced in the case of Reliance Petro Product Pvt. Ltd., reported in (2010 (3) TMI 80 - SUPREME COURT) and reverse the findings of learned CIT(A). We hereby direct to delete the penalty.- Decided in favour of assessee.
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2015 (10) TMI 922
Computation of long term capital gains in respect of transfer of the properties - non affecting the necessary adjustments and providing set off for available exemption as challenged by assessee - Held that:- CIT(A) has decided the appeal of the assessee briefly by passing a cryptic order without giving any observations, findings and basis of conclusion in the impugned order. We further observe that from the observations of the CIT(A) in para 3.3 of the order as reproduced hereinabove, it is apparent that the CIT(A) dismissed the appeal without even analyzing the issue or recording his specific findings on the issue raised in the grounds of appeal before him. A mere glance at the impugned order reveals that the order passed by the CIT(A) is cryptic and grossly violative of one of the facets of the rules of natural justice and every judicial/quasi-judicial body/authority must pass a well-reasoned order which should reflect not only application of mind by the concerned authority to the issue/points raised before it but also adjudication of the issues/grounds raised before it. The application of mind to the material facts and arguments should manifest itself in the order. As we have already observed that the impugned order suffers from lack of reasoning and is not a speaking order on the issue for which the impugned addition was made by the AO and the impugned order is not only cryptic but it is grossly violative of principles of natural justice. In view of foregoing discussion, specially when the CIT(A) has not passed a speaking order on the issue raised by the assessee in the appeal before him, we find it just and proper to set aside the order of the CIT(A) and restore the matter to his file for deciding the appeal afresh in accordance with law after allowing sufficient opportunity of being heard to both the parties - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 921
Sharing of expenses with the holding company - non deduction of TDS u/s 194J - Disallowance of Shared Service Cost under the head Operating & Administrative Expenses - AR's argument to the effect that expenditure so reimbursed have already been made subject to deduction of tax at source in the hands of holding company when the payment was actually made - Held that:- Expenditure incurred by holding company on which tax has already been deducted at source, mere reimbursing of such expenses by the assessee to the holding company cannot be disallowed on the plea that assessee has not again deducted tax at source, otherwise it will amount to double deduction of tax in respect of very same expenditure. However, it appears that the AO has not examined this aspect of deduction of tax at source by holding company in respect of expenditure which requires deduction of tax at source under the provisions of Chapter XVII. In the interest of justice and fair-play, we restore the appeal back to the file of the AO with a direction to verify the deduction of tax at source in terms of provisions of Chapter XVII, Part B and if the AO found that taxes have already been deducted at source in respect of expenditure which requires deduction of tax at source by the holding company while making payment, no disallowance can be made with reference to such expenditure in the hands of the assessee while reimbursing the same to the holding company. - Decided in part in favour of assessee by way of remand.
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2015 (10) TMI 920
Addition being the difference between the declared income as per the statement given during the course of survey and income as per the income tax return - CIT(A) deleted the addition - Held that:- The estimated declaration of income during the course of survey was given in December 2006 for the period 1.4.2006 to 31.3.2007 i.e. much prior to close of the accounting year. No person can tell in advance in the month of December 2006 as to what exactly would be the income for the entire period of 1.4.2006 to 31.3.2007. The return of income filed by the assessee is on the basis of audited statement of accounts and not on the basis of any surrender. The books of accounts has not been rejected nor any incriminating material or evidence of undisclosed income was unearthed either during the course survey or assessment proceedings. The Assessing Officer has himself recognized that the declaration made by the assessee was not based on any surrender. The Assessing Officer has not assessed the income at ₹ 6 crores which was the estimated declaration of income during the course survey, but he has completed the assessment at ₹ 5,14,46,510/-. It is trite position of law that statement recorded during the course of survey cannot be the sole basis for making an addition especially when there is nothing incriminating material or any undisclosed income unearthed during the course of survey proceedings u/s 133A of the Act.In view of the aforesaid reasoning we are of view that the order of the CIT(A) is correct and in accordance with law and no interference is called for - Decided against revenue.
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2015 (10) TMI 919
Addition of cash credits - assessee failed to produce any confirmation letters from the farmers regarding creditworthiness and genuineness - Held that:- We find that in spite of readiness of the assessee to produce persons who wanted to purchase the agricultural lands, the AO had not examined the persons. The CIT(A) passed the appellate order ex-parte and did not go through the accounts where some of the repayments were through cheques and details of the bank statements filed before him. In these circumstances, we deem it fit to restore the matter to the file of the Assessing Officer who shall examine the evidences filed with respect to the repayments to the buyers as the sale transactions did not fructify and after going through the bank statements and examining the persons, if necessary, decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 918
Unexplained credit in the bank account - addition under section 68 - whether assessment framed under section 143(3) is contrary to the provisions of section 143(2)(ii)? - Held that:- Instruction No. 9 of 2004 dated September 20, 2004, was applicable in the present case, in view of the specific stipulation in the circular that 'for returns filed during the current financial year 2004-05, the selection of cases for scrutiny will have to be completed within three months of the date of filing the returns' and considering that the return had admittedly, been filed by the assessee on October 29, 2004, i.e., during the current financial year 2004-05. The selection for scrutiny of the assessee's case and completion of the assessment was not valid - Decided in favour of assessee.
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2015 (10) TMI 917
Disallowance u/s.14A - Held that:- The proportionate disallowance under section 14A should be limited to only interest liability and not overheads or administrative expenditure; which should be considered for disallowance under rule 8D from 2007-08 onwards. In this case, the assessment year involved is 2006-07, therefore the disallowance of administrative expenses is not justified. Hence, the AO is directed to delete the addition of ₹ 50,000/- as sustained by the ld.CIT(A). In respect of the disallowance on interest portion since the assessee was having sufficient interest-free funds, therefore the disallowance of interest part is not justified in the light oN the judgement of Hon'ble Apex Court rendered in the case of Munjal Sales Corporation vs. CIT reported at (2008 (2) TMI 19 - Supreme Court), decision of Torrent Financiers vs. ACIT [2001 (6) TMI 165 - ITAT AHMEDABAD-A] and CIT vs. Reliance Utilities & Power Ltd. reported at (2009 (1) TMI 4 - HIGH COURT BOMBAY) . Therefore, we direct the AO to delete the addition made on the interest expenses. - Decided in favour of assessee. Disallowance of depreciation on the membership of the Stock Exchange - Held that:- Under the provisions of section 32(1)(ii) depreciation is allowable on certain intangible assets such as know how, patents, copy rights and license etc. Earlier the Hon'ble High Court of Mumbai in case of Techno Shares and Stock Ltd. (2009 (9) TMI 18 - BOMBAY HIGH COURT) had held that stock exchange card was not covered under section 32(1)(ii) and therefore depreciation was not allowable. However the said judgment of the Bombay High Court has recently been considered by the Hon'ble Supreme Court [2010 (9) TMI 6 - SUPREME COURT OF INDIA ] in the same case and it was held that stock exchange card is akin to a license and therefore it is covered under section 32(1)(ii) and depreciation is allowable. We therefore respectfully following the said judgment of Hon'ble Supreme Court, set aside the order of CIT(A) and allowed the claim of the assessee - Decided in favour of assessee.
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Customs
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2015 (10) TMI 959
Penalty for mis-declaration and misclassification of the goods in terms of Section 111(m) of the Customs Act and under Section 112(a) of the Customs Act – Held That:- Admittedly the importer had paid anti-dumping duty with redemption fine. The plea apparently is only redemption fine and penalty to be set aside. In such circumstances, the Tribunal was not correct in coming to the conclusion that there is no case for misdeclaration or misclassification. On facts, it is found that it is a case of misdeclaration and duty has been admittedly paid by the importer and redemption fine also paid; hence, penalty is imposable. If the goods are liable for confiscation under Section 111(m) of the Customs Act, the consequence by way of redemption fine and penalty can be imposed and the Authorities have duly considered the improper import and levied reasonable redemption fine and penalty. – Appeal allowed and decided in favour of the Revenue.
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2015 (10) TMI 958
Jurisdiction to grant refund claim of SAD – Notification No.102/2007-Cus - whether Assistant Commissioner of Customs House and Air Cargo Complex have concurrent Jurisdiction - revenue contended that the jurisdictional Assistant Commissioner alone shall sanction and refund the claim made by the assesses. Held That:- Standing Counsel for revenue fairly submitted that the petitioner may be directed to file necessary refund claims before the jurisdictional Assistant Commissioner and on receipt of the same, the same shall be considered and to that effect necessary directions may be issued by this Court. Impugned order is set aside and quashed – Respondent directed to send original refund application to the Assistant Commissioner of Customs (Airport and Air Cargo) – Petitioner permitted to submit a copy of the refund application failing which it is open for the Respondents to pass appropriate orders – Decided in favour of the Petitioner.
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2015 (10) TMI 957
Classification of LVDT Transducer – Entry CTH 8533 40 10 or CTH 8479 89 99 – Appellant claimed classification of 91) AF 145 LVDT Transducer under CTH 8533 40 10 – However, bill of entry was assessed classifying goods under CTH 8479 89 99 – Commissioner (A) in impugned order held that items imported by importer have been correctly classified – Held that:- appellants in their Technical write-up given that “specific action of transducer is that it changes one form of energy to another – Clear that in present case LVDT Transducer is an AC Voltage Divider as it convert Linear displacement into Electrical Output – It cannot be potentiometer as it is not measuring resistance or voltage change – Impugned goods are rightly classifiable under Chapter heading No.84798999 – Submissions made also do not clearly show that imported items are potentiometers and are used for determining potential difference of electro motive force – Observation of Commissioner (A) on brochure submitted by appellants, is correct – No reason to consider appeal favourably – Appeal dismissed.
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2015 (10) TMI 956
Attempting export of prohibited goods – Packaging of goods in plastic pouches – Since tobacco products were found to be packed in plastic pouches which were no longer permissible, sample were forwarded for testing to Dy. Chief Chemist, who opined that percentage composition was 11.5% plastic and balance tobacco – Commissioner held that goods have been entered for exportation in contravention of provisions under Plastic Waste (Management and Handling) Rules, 2011 thus were liable for absolute confiscation and liable to penalty – Held that:- where tobacco products have been manufactured in 100% EOU and meant only for export, products can be packed in plastic sachet – In view of amendment in mode or packing made by Ministry of Environment & Forest, vide Notification, there was confusion as to effect of same – In view of clarification by Supreme Court, there was no contumacious conduct on part of appellant in carting in tobacco product for export packed in plastic sachet – Impugned order of confiscation and penalty set aside – Appellant entitled to refund of fine and penalty already deposited – Decided in favour of Appellant.
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Corporate Laws
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2015 (10) TMI 955
Jurisdiction of CLB under Section 111A in case of Fraud – Appellants contended that sales consideration for transfer of shares has not been paid in full – Date of transfer of shares given by the Respondents clashes at different instances – Appellant further contends that they did not cease to be the members – Respondents contend that the appellants have played fraud against them with regard to share transfer – Further holds that the Civil Court alone has the jurisdiction to enquire into allegations of fraud – Respondents states further that the petition filed by appellants on the basis of the continued membership is contrary to the record. Held That:- Jurisdiction of the CLB is summary in nature in case of allegations such as fraud - Proper remedy is to first approach the Civil Court before approaching the CLB with an application under Section 111A - Disputes raised by the appellants are not confined to rectification – Appellants advised to approach the Civil Court for relief succeeding in the same it can then approach the CLB for rectification of the Register – Decided in favour of the Respondents.
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Service Tax
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2015 (10) TMI 982
Refusal to condone delay – Appeal under Section 35G of Central Excice Act, 1944 – Copy of order not received in time – Appellant contends that 50% of tax has already been deposited; delay in filing would provide no gain - Department contends the copy of order was sent by registered post; deemed to have been received by Appellant – Held That:- Appeal is allowed and Tribunal is directed to dispose of the same – Decided in favour of the Appellant.
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2015 (10) TMI 981
Condonation of delay in filing the application - Delay of 375 days – Copy of order not filed due to medical condition of the consultant – Tribunal held that delay in filing is due to negligence and inaction on the part of the Appellant – Held That:- Consultant of appellant having suffered from certain medical ailments, which cannot be stated as negligence and inaction - Delay in filing the appeal should be condoned – Appeal allowed in favour of the Appellant.
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2015 (10) TMI 980
Consulting engineer services - classification - appellant contends that NEERI, being a registered society, is not within the ambit of taxable service which is restricted to service rendered by engineering firms. - revenue contended that they have rendered service in the category of "scientific or technical consultancy" - revenue has almost entirely relied upon the entry in Wikipedia on the subject of environmental engineer Held That:- it is amply evident that the disputed projects do not involve engineering. Levying of tax on the consideration received for the disputed projects on the ground that these arise from rendering "consulting engineer" service is, therefore, not sustainable. The appellant has admitted these to be scientific and technical studies. We find that the appellant has registered itself as "scientific and technical consultants" with effect from 4 th January 2002 shortly after this service was made taxable and has discharged tax liability on the projects admitted as "engineering consulting". As the disputed projects are not "engineering", they were not taxable during the relevant period. – Decided in favour of the Appellant.
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2015 (10) TMI 979
Disallowance of CENVAT Credit on Input Services – Service rendered is of sale of vehicles and repairs of the same - Appellant contended that they were not in obligation to maintain separate accounts as per Rule 6(2) as trading is not a service at all and there was no suppression of facts or willful mis-statement to evade duty. Held That:- Trading activity not being a service at all, the appellant is not required to maintain separate accounts as per sub rule (2) of Rule 6 prior to 1.4.2011. So the view of department that the appellant is not entitled to credit for want of maintaining separate account is not correct. At the same time, credit cannot be allowed against trading as it is not either a service falling under Finance Act 1994, manufacture under the Central Excise Act, 1944. Therefore that portion of the input service availed for trading is not admissible. - Decision made in the case of Orion Appliances Ltd. Vs. Commissioner of Service Tax, Ahmedabad [2010 (5) TMI 85 - CESTAT, AHMEDABAD] followed. Extended period of limitation - the issue reveals an interpretational issue - appellant was under the belief that trading not being a service at all there is no requirement to maintain separate accounts. - There is no suppression or wilful misstatement with intention to evade payment of duty thus extended period is not invokable – Decided in favour of the Appellant.
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2015 (10) TMI 978
Extension of stay - Assessee contends that appeals has not come up for disposal for no fault of theirs - Held that:- In the light of the judgement of CESTAT [2014 (12) TMI 227 - CESTAT AHMEDABAD] and as the stay in the present case was in force beyond 07.08.2014 the same would continue till the disposal of the appeal - Stay granted.
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2015 (10) TMI 977
Condonation of delay - Inordinate delay of 563 days - Held that:- Appellant seeks condonation of delay of 563 days in filing appeal before the first appellate authority. In our considered view this application cannot be made before the Bench. Be that as it may the first appellate authority has dismissed the appeal for belated filing of appeal before him, as it is settled law that he cannot condone beyond the period which could be done by him as per statute. We do not find anything wrong with the order passed by the first appellate authority as the law is clearly settled by the Hon’ble Apex Court in the case of Singh Enterprises v. CCE [2007 (12) TMI 11 - SUPREME COURT OF INDIA]. - Condonation denied.
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2015 (10) TMI 976
Waiver of pre deposit - Held that:- adjudicating authority in para 6 as recorded that the appellant had appeared for personal hearing before him on 28.05.2012 and sought an adjournment as also two months time for filing reply. Despite such a specific request from the appellant made before him, the adjudicating authority passed an order without waiting for the reply from the appellant. We notice that the adjudicating authority has passed an order on 28.10.2013. In our view, he could have waited for the reply or reminded appellant to file reply. He has recorded that the noticee has been given three opportunities of personal hearing; on this point also we find that appellant seems to have appeared before the lower authority on 28.05.2012 while the opportunities which were granted to them seem to be on 24.05.2012, 08.08.2012 and 23.08.2012. In our view, the impugned order has not considered the request of the appellant in its proper perspective and has been passed without considering an effective reply. However, we also find that the appellant has been non-co-operative with the adjudicating authority, in as much despite giving an undertaking that they will file reply within two months they have not done so. - Partial stay granted.
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2015 (10) TMI 975
Waiver of pre dpeosit - Cenvat Credit - Held that:- appellant has reversed the amount under CENVAT account. Both sides agreed that the amount has been paid. We consider the same amount has been debited in CENVAT account in compliance with the provision to Section 35F of the Central Excise Act, 1944. - stay application disposed of.
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Central Excise
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2015 (10) TMI 985
Clandestine removal of goods - manufacturing of carbon black - excess weight over and above weight of packing material - excess weight over and above standard excess weight - Duty demand u/s 11A - Penalty imposed under Rule 209A - tribunal observed that, matter was remanded only to ascertain the trade practice of over-filling bags in respect of carbon black, but the appellants could not bring any material to show that such a trade practice did exist in respect of carbon black. Held that:- It is not the case of the respondents / revenue that the report of investigation conducted by the department with one of the purchasers, namely, M/s Modi Tyres, who confirmed that no excess amount was paid for the excess quantity, was not on record. In the Order in Original passed pursuant to the remand direction, the Adjudicating Authority could neither place any evidence nor could record any finding that any excess amount for the excess quantity of carbon black was received by the appellants. The Adjudicating Authority merely referred to certain opinions or statements that it was possible to fill the exact weight since packing process was automatic but it completely overlooked the fact that the appellants themselves had stated that they were over-filling a little quantity of carbon black in excess of the standard weight so that there may not be any complaint from the purchasers for receiving lesser quantity of carbon black which sticks with the packing bags. This factual aspect of non-receipt of any additional consideration had neither been denied nor could be disproved by the respondents. The Tribunal completely ignored its own observation recorded in para-7 of its first final order dated 19.10.2000 that where the assessment is linked to value, the realisation of the price is the same even if packed quantity is slightly more than the quantity projected then this would not have any revenue significance. - impugned Final Order of the Tribunal dated 19.10.2004 cannot be sustained and is hereby set aside. To do justice, the matter is remitted back to the Tribunal - Decided in favour of assessee.
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2015 (10) TMI 984
Reversal of CENVAT Credit - whether at the time of opting for area based exemption under notification no. 50/2003-CE the appellant is required to reverse Cenvat Credit attributable to inputs / input contained in work-in-progress or finished good lying in their factory is required to reverse or not - Held that:- at the time when appellant took Cenvat Credit on the inputs / capital goods their final product was dutiable and later on they opted for availing exemption under notification no. 50/2003. Therefore, they are not required to reverse Cenvat Credit on input / inputs contained in work-in-progress / finished goods lying in their factory. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 983
Denial of CENVAT Credit - denial on the sole ground that the said trucks are motor vehicle on which cenvat credit is available only to the specified service provider and not to the manufacturer of the excisable goods - Held that:- On perusal of the definition of 'input' contained in Rule 2 (k) of the Rules, it reveals that the manufacturer is permitted to take cenvat credit on all goods used in the factory for manufacture of the final product. The goods on which cenvat credit is not permissible has been clearly spelt out in the exclusion clause of the definition of 'input'. The JO trucks are not considered as motor vehicle as per the Section 2 (28) of the Motor Vehicles Act, 1988, since the same are used only in a factory or in any other enclosed premises. With regard to concrete sleepers used for laying railway lines within the factory premises, I am of the considered opinion that the said item is not falling under the exclusion clause of the definition of input and as such by nature of its use and its participation in the manufacture/ production of the excisable goods, the same should be considered as input for the purpose of taking cenvat credit. - process of handling/lifting/pumping/transportation of raw materials also a process in or in relation to manufacture, if integrally connected with further operations leading to manufacture of goods. - No substance in the impugned order, and as such, the same is set aside - Decided in favour of assessee.
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2015 (10) TMI 971
Denial of CENVAT Credit - Maintainability of appeal - Held that:- Before returning the appeal to the petitioner, the petitioner has not been called upon to explain on the maintainability of the appeal before the Commissioner (Appeals-I). It is also important to note that even if the appeal preferred by the petitioner before the Commissioner is not maintainable, the authority ought to have passed a reasoned order that too after giving a reasonable opportunity of hearing to the petitioner. Hence, the petition is accepted. - matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 970
Demand u/s 11D - appellant collected duty from the seller to compensate the loss of CENVAT credit not taken by them on their raw materials - held that:- this is not a case where the appellant had actually collected duty of excise so as to warrant the invocation of section 11D(1) of the Act. According to the learned counsel, the appellant did not collect any amount of excise duty, but, what the original authority himself indicated in his notice was the credit of modvat . Therefore, relying upon the decision of the Bombay High Court in VIRAJ IMPO & EXPO LTD. v. COMMISSIONER OF CENTRAL EXCISE, THANE-II (2005 (9) TMI 206 - CESTAT, MUMBAI), the learned counsel contended that the modvat credit cannot be treated as equivalent to the collection of excise duty - Again towards the end of the same paragraph, the original authority recorded a finding that once the appellant had collected duty on exempted goods, the amount collected by them representing excise duty is required to be deposited in the Government Account as per section 11D - question as to whether the appellant actually collected duty of excise from the sellers, warranting invocation of section 11D or where the appellant merely claimed modvat credit which was reversed after the issue of credit notes becomes a question of fact. Even the original authority which passed the order in favour of the appellant, has recorded a finding into which we shall not go in an appeal. - Decided against assessee.
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2015 (10) TMI 969
Condonation of delay - Delay of 76 days - Held that:- Perused the order impugned in the present appeal. It appears from the impugned order dated 9/4/2014 and particular observation made in para 4 of the application that though the ground was raised with regard to the illness of mother of employee, no evidence in support of such submission were produced before the Tribunal. However, considering the delay i.e. 76 days, we are of the opinion that it would be in the interest of justice that let appeal be heard on merits. However, with imposing reasonable costs. - The orders of Customs, Excise and Service Tax Appellate Tribunal and Commissioner of Central Excise & Customs, Vadodara are hereby quashed and set aside - Delay condoned conditionally.
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2015 (10) TMI 968
Clandestine removal of goods - Penalty under Rule 26 - Evasion of duty - Insufficient evidences - Trading activity - Violation of principle of natural justice - Difference of opinion - Majority order - Held that:- no credence can be paid to the capacity determined in 1999 under the compounded levy scheme. Capacity was not determined during the period in question. Duty is to be demanded from the appellant for clandestine clearances based upon available evidences. - While it is true that the appellant, Gautam Enterprises and Shiv Parvati Enterprises were doing some trading activities, however, the appellant has not been able to produce any tabulation or any record or any details even from record No. 23, 24, 26 or any other record that the total quantity of MS ingots purchased clandestinely were traded. In view of this position, it cannot be presumed that the whole of MS ingots which were clandestinely cleared and purchased were used for trading activity. Clandestine purchase of MS ingots was not from one source but from number of sources and at times through brokers. Suppliers of MS ingots as also brokers had confirmed the correctness of the information indicated in the diaries recovered from the appellant's office in Mumbai. It is also noted that majority of the supplier of MS ingots in turn have paid the duty for the clandestinely cleared MS ingots to the present appellant. In such a situation, in my considered view, as far as the purchase of clandestinely cleared MS ingots is concerned, there can be no doubt and is proved. - The diaries recovered from Shri Faruk Shaikh indicated the purchase of clandestinely cleared MS bars during the period 2005-06 and 2006-07 (upto December 2006 i.e. the time of search). It was found that the diary contained precise information about the date, quantity and rate etc. It was also found that the said diaries contained the information of both types of clearances i.e .with bill and without bills. The Revenue has demanded the duty on the goods cleared without bill. In his statements during investigation, Shri Faruk Shaikh has admitted the details. It is also important to note that Shri Faruk Shaikh along with the diaries was apprehended during the search at the appellant's factory itself. All the MS bars which are shown as cleared without bills from the appellant's unit, were in reality cleared from the appellant's unit without payment of duty and the duty on the same is required to be confirmed. The quantity indicated for 2005-06 is 188.78 MT. During 2006-07 upto June, the same is 81.700 MT and from July to December 2006, the quantity is 352.770 MT. Duty, interest and penalties for clandestine clearance for these clearances is required to be computed. The second part of the demand is based upon the statement of various buyers of the appellant company - as far as these clearances are concerned, since these are based upon documentary evidence along with the statements and the documentary evidence has been recovered from the appellant's own office and the appellant has admitted the details in these records, the same are required to be confirmed and the appellant is liable to pay duty, interest and consequential penalty on the same. These will be required to be recomputed by original authority. Personal penalties will also be required to be proportionately redetermined including the clearance through Shri Farukh Shaikh. - evidences collected by the investigation team during the course of investigation are sufficient to prove the charge of clandestine removal - The remaining demand is not sustainable for want of evidence. The details written in the documents were very precise which includes dates, supplier's name, broker's name, exact quantity, rate etc. In most of the statements, all that was done was to explain or confirm the details already indicated in the document and the case of the Revenue is based upon such document. Even if we ignore the statements, the only conclusion from the documents particularly regarding procurement of clandestinely cleared goods will be what has been proposed by the Revenue. Only in respect of some of the buyers of MS bars, though in the statements they have accepted purchase of clandestinely cleared MS bars, but Revenue has failed to point out the corresponding entries in record No. 23, 24 and 26 and as mentioned with reference to point No. 2 of the difference of opinion, the demand in respect of the same cannot be upheld. - adequate opportunity was given and further cross-examination was not requested especially on the last date of hearing by the advocate and also relying his decision on the case of Surjit Singh Chhabra (1996 (10) TMI 106 - SUPREME COURT OF INDIA). I do not think that there has been any violation of the principles of natural justice in the present facts and circumstances of the case. - Decided against assessee.
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2015 (10) TMI 967
Duty demand - Conversion from 100% EOU to DTA - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- Dispute has arisen about the duty chargeable on the goods which were cleared during the period when the unit had made an application for conversion from EOU to DTA and in-principle approval for the same was given but the unit had not been converted to normal DTA unit as per the procedural formalities which include payment of customs and excise duty on capital goods, raw material, work in progress etc. Since the EOU had not been debonded and converted into DTA unit, the appellant was required to pay the duty as per clause (ii) of proviso to Section 3(1) of the Central Excise Act. In fact, the learned counsel for the appellant had agreed to the fact that the duty is required to be paid as per the said clause. Thus in the case of DTA clearances from a 100% EOU, the value is required to be determined in accordance with the provisions of the Customs Act, 1962. Section 14 of the Customs Act deals with valuation of the goods. In the case of import, the value of the goods is CIF value and it is the transaction value between the foreign supplier and a buyer in India. Thus for clearance of goods from 100% EOU to DTA, one has to ascertain the CIF value of similar goods being imported. We find that in this particular case, the appellant has not indicated any such CIF value. They have indicated certain values and on that they have added the duty which is applicable to the normal DTA units and thus arrived at the selling price. As mentioned earlier, the correct method in the present case will be to know the CIF value of the similar goods being imported and take that as the assessable value. An amount of penalty has been imposed under Section 114A of the Customs Act. We find that it is not a case of import but it is a case of clearance from a unit located in India. The penalty can be imposed under Section 11AC of the Central Excise Act and not under Section 114A of the Customs Act. However, we note that in the show cause notice, both the sections were invoked. Moreover, the two sections are pari materia and exactly same. In these circumstances, we do not consider that the mention of Section 114A is fatal to the case. However, we observe that the penalty under Section 11AC can only be imposed if the ingredients provided under the said section are satisfied. The ingredients provided under Section 11AC are fraud, collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or the Rules made thereunder with intent to evade payment of duty. - appellant indeed has offered to provide the bank guarantee for the differential disputed amount of duty. This only proves that the appellant genuinely believed that the duty would be applicable as is applicable to normal DTA unit. We also note that in the present case, the appellant had received the in-principle approval for debonding or conversion of unit from EOU to DTA. Under the circumstances, we do not consider it to be a fit case for imposition of penalty under Section 11AC of the Central Excise Act. Accordingly the penalty imposed is set aside. Goods which have been seized are not the same goods which were cleared from appellant No.1 but have already been processed. Further, the goods were not clandestinely cleared but were cleared on payment of duty. It is a separate issue that there was a dispute about the rate of duty applicable on such goods between appellant No.1 and the Revenue. We also agree with the learned counsel for the appellant that the Commissioner (Appeals) has misdirected himself into trying to invoke Section 120 of the Customs Act, 1962, which was not at all in the case, show cause notice or by the original authority. The confiscation of the goods is set aside and accordingly the redemption fine is also set aside. - Appeal disposed of.
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2015 (10) TMI 966
Denial of refund claim - Unjust enrichment - validity of SCN - refund of excess amount pursuant to finalization of provisional assessment - Held that:- Adjudicating authority has recorded categorical findings in favour of the assessee both in law and on facts. Further, we find that satisfaction to bar of unjust enrichment was recorded in detail in the order dated 31/03/2003. Further, we find that the show-cause notice given is vague and no mistake have been pointed out in the order-in-original dated 31/03/2003 granting refund. Thus, we hold that the show-cause notice is vague as it does not contain the gist of accusation which the assessee was required to meet or answer. Further, it is bad in law as the same is not issued under the powers vested with the Commissioner under Section 35E (2) of the Act - Decided against Revenue.
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2015 (10) TMI 965
Waiver of pre deposit - Section 35F - Debit made in CENVAT Credit account - Mandatory pre deposit - Held that:- The entire dispute in the case relates to the incorrectness of the utilisation of the amount used from CENVAT account. The order of the Commissioner clearly does not recognize the payments made through said account and orders payment in cash. In view of the fact that the Rule 8(3A) as well as the order of the Commissioner clearly distinguishing between the payment in cash with payment through CENVAT, the same can not be equated. - appeal is therefore liable to be dismissed as non maintainable for lack of compliance of requirement of Section 35F - However, in the interest of justice, we grant four weeks time to pay 7.5% of the disputed amount and report compliance on 20.10.2015. Case law pf PMT [[2015 (10) TMI 975 - CESTAT MUMBAI] ] relied upon by assessee distinguishable.
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2015 (10) TMI 964
Denial of SSi Exemption - Benefit of Notification 175/86 - Use of other's brand name - Held that:- Even though M/s. VPL has taken the provisional SSI certificate but manufacturing facility had not come into existence; It was only that the land was purchased and they were in the process of establishing the manufacturing unit. During investigation from the statement of the officials of M/s. VPL it is clear that the appellant was aware of the fact that M/s. VPL has no manufacturing facility. It is not in dispute that during the period in question M/s. VPL was not having manufacturing facility and has not commenced the commercial production. Hence goods manufactured by the appellant in the brand name of M/s. VPL would not be eligible for the benefit of Notification 175/86. - During the intervening period, if a view is taken that the goods produced by such a unit will not be eligible for SSI benefit the same would have caused undue hardship to such SSI unit. In the present case, the goods have not been produced by M/s. VPL but by the appellant. In our considered view, the said clarifications of Circular: B-21/15/ 86-TRU, dated 3-4-1987 and Circular No. 46/90-CX.8, dated 11-7-1990 are not relevant. In the present circumstances, what is to be seen is M/s. VPL is a functional SSI unit and eligible for the benefit of Notification 175/86. - Decided against assessee.
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2015 (10) TMI 963
Denial of CENVAT Credit - whether the appellant is required to be saddled with the duty liability of CENVAT Credit of an amount of ₹ 2,33,311/-, interest thereof and equivalent amount of penalty on the appellant - Held that:- The intention of the appellant is very clear inasmuch as he has reversed the amount of CENVAT Credit attributable to the inputs cleared to their sister by raising duty paying invoice is the only conclusion that can be reached. I find that appellant is saddled with the duty liability of CENVAT Credit when the appellant has not taken CENVAT Credit of the duty paid on quantity which has been cleared to the sister concern. The entire issue is raised an afooting that there is mis-matching of the description by the lower authorities. Both the lower authorities have overlooked the description in its correct perspective, as the invoices which has been raised by the appellant for clearing to their sister concern indicates that the dimension in “inches” while when the goods were imported and the Bill of Entry indicates the description in “mm”. On casual conversion of the dimensions in Bill of Entry and on the invoice I find that there is no difference. - impugned order is incorrect and is liable to be set aside - Decided in favour of assessee.
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2015 (10) TMI 962
Clandestine removal of goods - Evasion of duty - Held that:- In this case, nothing incriminating have been found from the appellant. Moreover, the statement recorded after almost 4 years also does not reveal anything incriminating against the appellant. No investigation was conducted at the end of buyers when the appellant categorically stated that they are not arranging the transport of the goods and only buyers are arranging the transport of goods. In these circumstances, demand is not sustainable merely on the basis of entries made in the transporters register without any corroborative evidence. - As Revenue has failed to produce any corroborative evidence in support of their allegation and relying on the decisions discussed hereinabove, I hold that allegation of clandestine removal of goods is not sustainable against the appellant. Consequently, demand of duty along with interest and imposition of penalty are set aside. - Decided in favour of assessee.
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2015 (10) TMI 961
Denial of MODVAT Credit - Notification No. 11/95-CE (NT) dated 16.03.1995 - held that:- Sub-rule 2 of Rule 57Q clearly provide that other than those capital goods in respect of which credit of duty allowable under earlier Rule or Notification prior to 16.03.1995, shall be allowed if such goods received in their factory even before 16.03.1995. In the present case, there is no dispute that the respondent received the capital goods prior to 16.3.1995, hence they are eligible to avail cenvat credit - Commissioner (Appeals) has given a detailed finding in respect of limitation. Revenue has not seriously disputed this in the grounds of appeal. I agree with the findings of the Commissioner (Appeals). - No reason to interfere the order of the Commissioner (Appeals) - Decided against Revenue.
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2015 (10) TMI 960
Denial of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of invoices - Held that:- In respect of Date on which M/s. RRB Chemicals obtained registration as registered dealer, the only objection of the Department is that M/s. RRB Chemicals were issuing invoices regarding sale of the G.P. sheets to M/s. AMPL without actually unloading of the goods in their premises and were actually dispatching the goods to M/s. AMPL. In this case also, it is not the case of the Department that M/s. AMPL did not receive the consignments of G.P. sheets covered under the invoices issued by RRB Chemicals. Rather it is the Department's case that M/s. AMPL were receiving the consignments of G.P. sheets directly from ACCIL under the invoices of the RRB Chemicals. When the receipt of the goods by AMPL which are covered under the invoices issued by RRB Chemicals is not denied, it would not be correct to deny the Cenvat credit to M/s. AMPL and impose penalty on them as well as on M/s. RRB Chemicals. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 916
Denial of exemption claim - Whether the respondent a100% EOU at the material time, are required to pay NCCD @ ₹ 50/- per MT under Section 134 of Finance Act 2003, at the time of importation of the Crude Oil on the ground that the said NCCD has not been exempted by Notification No. 52/2003 dtd 31.3.2003 - Held that:- Case is squarely covered by the decision of the Tribunal in the respondent’s own case [2011 (3) TMI 833 - CESTAT, AHMEDABAD]. In view of that, we do find any reason to interfere the order of the Commissioner (Appeal). - Decided against Revenue.
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2015 (10) TMI 915
Imposition of penalty u/r 26 - Issue of bogus invoices - Held that:- On plain reading of the provisions it is clear that any person who is dealing with the excisable goods in any manner is liable to be penalized under Rule 26 of the Central Excise Rules, 2002. As per the allegation alleged against the appellants it is clear that appellants were not dealing with excisable goods and only issuing the invoices. - To impose penalty the person who is issuing the invoices without delivering the goods the provisions under Rule 26 ibid has been introduced w.e.f. 1-3-2007. Admittedly, during the period when the appellants have issued invoices the said provisions was not there. Therefore, penalty under Rule 26 of the Central Excise Rules, 2002 is not imposable on the appellants under the old provisions relating to the impugned period. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 914
Restoration of appeal - whether making thread amounts to manufacture and is chargeable to duty - held that:- The question of application for advance ruling arises only when an eligible person wants the authority’s decision on some question relating to rate/levy of duty, valuation, etc., and the absence of assessment order against him, he cannot approach the Tribunal or any High Court. But when there is an adverse order of commissioner against an assessee, the only course left before him is to file an appeal before the Tribunal which the Tribunal is bound to decide on merits. Since the order impugned in this appeal clearly affects the appellant adversely, and the appellant has good and valid reason to be aggrieved with this order and under Section 35B any person aggrieved by an order passed by Commissioner as an adjudicating authority or the Commissioner (Appeals), can file appeal to Tribunal, the order dated 8-1-2014 dismissing the appeal on the ground that the impugned order does not adversely affect him, suffers from a mistake apparent from record - Appeal restored.
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2015 (10) TMI 913
Demand of interest - Invocation of extended period of limitation - whether the respondent is entitled to adjust the abated amount in their duty liability for the month of February, 2011 or not - Held that:- The adjustment of abated amount against the duty liability for the month of February, 2011 was intimated by the respondent to the department well within time and department has not taken any action thereon. Further, the liability of duty against the respondent is as per Section 3A(3) of Central Excise Act, 1944 read with Pan Masala Packing Machine Rules, 2008. On going through the above said provisions, there is no procedure for filing the abatement claim and same cannot be utilized without prior sanction of the departmental officers. The amount of abatement is not in dispute when the respondent applied for adjustment on 2-2-2011 the claim of abatement if at all required by the revenue to be sanctioned the same was to be sanctioned immediately but same has not been done. Moreover, when there is a short payment of duty for the month of February, 2011, no show cause notice for demand of duty has been issued to the respondent. Therefore, demand of interest is not sustainable. - Admittedly, in this case the fact of adjustment of abetment amount to duty against the duty liability for the month of February, 2011 was in the knowledge of the department. Therefore, show cause notice cannot be issued by invoking extended period of limitation. Admittedly, in this case show cause notice has been issued by invoking extended period of limitation. - Decided against Revenue.
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2015 (10) TMI 912
Debonding of EOU - The precise contention of the appellant is that the finished goods and inputs lying in stock at the time of de-bonding have suffered CVD for which the finished goods shall not be dutiable further - Adjustment of CVD - extended period of limitation - Held that:- When the goods were finished goods and that suffered duty on debonding and when the appellant discharged excise duty liability on clearance of those finished goods claim of set off of additional duty of customs paid upon debonding does not appear to be unreasonable since such additional duty of customs was not refunded to the appellant in terms of section 3 of Customs Tariff Act, 1975. No doubt, the finished goods were not inputs, but in absence of refund of additional duty of customs to the appellant, adjusting that against ultimate excise duty liability would not defeat the spirit of law since no set off would result in abnormal and excessive taxation which is not permitted by law - when all the details were furnished to the Department, there was no case under the proviso to section 11A of the Central Excise Act, 1944 and proceeding was time barred. This ground also appears to be sound as verifiable from record to set aside the proceeding holding that the proviso to section 11A of the Central Excise Act, 1944 is not applicable in absence of intention to cause evasion - Decided in favour of assessee.
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2015 (10) TMI 911
Penalty under Rule 173GG of Central Excise Rules, 1944 - Mens Rea - Held that:- Without foundation in the original show cause notice to levy penalty under Rule 173GG, right to defense cannot be denied. No one can be held deterrently violating the principles of natural justice. The most interesting feature of this appeal is that there was disproportionate penalty of ₹ 1,70,000/- for the default of payment of duty of ₹ 7,235/-. It is settled principle of law that the object of the rule is certainly to safeguard Revenue, but mens-rea is basic element to judge imposition of penalty to prevent disproportionality taking into the gravity of the breach committed into consideration. Blanket levy of penalty of ₹ 1,70,000/- is therefore considered to be disproportionate looking to the gravity of the matter since duty default was ₹ 7,235 - Without mens rea, if penalty is levied that becomes arbitrary and it affects the fundamental rights. Therefore, rule making authority being subordinate to legislation no scope is provided to that authority to prescribe any disproportionate penalty. This ground is alone enough to set aside the penalty imposed. - element of mens rea was also recognized by the Hon’ble Kerala High Court in the case of Superintendent of Central Excise Vs. Sance Pharmaceuticals [2009 (1) TMI 288 - HIGH COURT OF KERALA AT ERNAKULAM] - Decided in favour of assessee.
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2015 (10) TMI 910
Imposition of penalty under Rule 209A - Held that:- In the first case, a penalty of ₹ 5 lakhs each was imposed on Shri Shrikant Sitaram Maniyar and the present appellant. The present appellant being the chief executive officer cannot absolve himself of the responsibility. We have also gone through the said judgment of the Tribunal and keeping in view the fact that the penalty on Shri Shrikant Sitaram Maniyar was reduced to ₹ 2 lakhs, we reduce the penalty on the present appellant to ₹ 1,75,000/-. Barring this modification in penalty, the appeal is dismissed. - decided against assessee.
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2015 (10) TMI 909
Denial of CENVAT Credit - Duty passed on to buyer - Held that:- The law relating to CENVAT credit removes cascading effect. When there is no controversy on the imported goods being sold and such goods suffered customs duty as well as the seller was identifiable and the principal being Indian Potash Ltd. a registered importer, there should not be controversy to grant CENVAT credit in the hands of the respondent. Therefore, both appeals of Revenue fail for which that is dismissed. - Decided against Revenue.
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2015 (10) TMI 908
Valuation - Inclusion of amount pertaining to debit notes and testing - Held that:- Issue is already decided by the Larger Bench of this Tribunal in the case of CCE, Raipur vs. Bhaskar Ispat Pvt. Ltd. reported in [2004 (3) TMI 102 - CESTAT, NEW DELHI]. We also note that the amount corresponding to the debit notes is nothing but the amount the respondent-assessee has paid to the third party as per the direction of the customer. Thus the said amount has nothing to do with the transaction value - In view of the above position and keeping in view the decision of the Larger Bench in the case of Bhaskar Ispat Pvt. Ltd. (2004 (3) TMI 102 - CESTAT, NEW DELHI), the appeal filed by the Revenue is dismissed - Decided against Revenue.
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2015 (10) TMI 907
Duty demand - finished goods ethyl acetate cleared for Job work - Job worker pays the duty on denatured ethyl alcohol manufacturing by him including the cost of ethyl acetate - appellant takes the credit on duty paid by the job worker after receipt of goods - Held that:- Issue involved has been decided in appellants own case reported in [2007 (7) TMI 491 - CESTAT, MUMBAI] which has been upheld by the Hon’ble Bombay High Court. - Decided in favour of assessee.
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2015 (10) TMI 906
Denial of CENVAT Credit - whether appellant is eligible to the Cenvat credit on the inputs claimed to have been used in the manufacture of capital goods, construction of the plant as well as installation of machinery etc. - Held that:- From the time of passing adjudication order, law has undergone development on the subject. Therefore, appellant deserves an opportunity of hearing for decision on the claims in respect of the items of input appearing in the Adjudication order. If there are some other items also, which were claimed by the appellant subject to use in manufacture of capital goods or claimed as Cenvat credit that deserves hearing afresh - appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing for readjudication afresh on the issues involved as emerged from the show-cause notice - Appellant is entitled to a fair opportunity of hearing on all issues both on facts and law as well as the evidence - matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 905
Denial of exemption of Notification No. 6/2002 dated 1.3.2002 - Imposition of penalty - Held that:- there is no dispute on the classification of the goods and the adjudicating authority in para 21.04 of his order has clearly confirmed that the appellant has complied with the conditions of Sl. No. 217 which stipulates that the chassis must be duty paid. In view of the settled legal position by the decisions of the Hon’ble Supreme Court in the above referred cases, appellants are eligible for the exemption under Sl. No. 217 of Notification No. 6/2002 dated 1.3.2002. The demand is liable to be set aside. Since the appellants are eligible for nil rate of duty, question of imposition of penalty does not arise on both the appellants - Decided in favour of assessee.
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2015 (10) TMI 904
Disallowance of Cenvat credit - Bright bars - Manufacturing activity - Held that:- The credit on Bright bars used by the appellant for the manufacture of finished goods, is sought to be denied on the ground that Bright bars are not a commodity subject to excise duty as no process of manufacture is involved in the transformation of round bars into Bright bars. The short question involved is whether the appellants are entitled to credit on the duty paid on Bright bars used as inputs. According to Department the manufacturer who supplied the bright bars was not liable to pay duty on these items as no process of manufacture was involved and therefore the appellant cannot avail credit on these items. The payment of duty on bright bars by the appellant is not disputed. So also there is no dispute that bright bars where used by the appellant to manufacture their final product. Again there is no case that the inputs supplied were not covered by valid document prescribed under the Cenvat Credit Rules, for availing credit. The benefit of credit is sought to be denied on the ground that on the end of the supplier these goods were not excisable goods. - If the supplier who supplied the goods is allowed credit even though the finished product is not an excisable commodity I cannot find any reason to deny the credit to the appellants who have received the goods by paying the duty. In CCE, Hyderabad vs. Deepthi Formulations Ltd [2013 (3) TMI 547 - CESTAT BANGALORE] the Tribunal has taken the view that when the input is received in the factory and used in or in relation to manufacture of final product and payment of duty is evidenced by the invoices the credit cannot be denied. - Decided in favour of assessee.
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2015 (10) TMI 903
Determination of the assessable value of manufactured goods sold from the depots - held that:- Tribunal has earlier remanded the case to the adjudicating authority for de novo adjudication on the basis of evidences on record. Consequently, after discussing in detail each and every element of discounts/expenses, applying the principle of law laid down in this regard, dropped substantial amount of demand after re-determining the assessable value of the goods sold from the depots. However, we are constrained to note that the Ld. Commissioner (Appeals) while accepting the Revenue's appeal and setting aside the order-in-original, failed to record any reason in support of his conclusion. Needless to mention that an order without reason is bad in law and cannot be sustained. - matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 902
Disallowance of CENVAT Credit - Bright bars - denial on the ground that Bright bars are not a commodity subject to excise duty as no process of manufacture is involved in the transformation of round bars into Bright bars - Held that:- Duty was being collected upon bright bars and credit was being availed on such goods. A further trade notice dated 16/06/2004 was issued as clarification to trade notice No. 18/2003 stating that there is no process of manufacture. The demand is raised for the period after 16.6.2004. It is discussed by the Commissioner (Appeals) that the issue was contentious and involved interpretation and therefore protective demands were issued during that time. It is seen that the cases were kept pending in the call books after issuance of show cause notices. Thereafter the matter has been adjudicated and order passed after many years. This goes to show that the Department itself was under much confusion as to whether excise duty is to be collected or not on bright bars. - when the input is received in the factory and used in or in relation to manufacture of final product and payment of duty is evidenced by the invoices the credit cannot be denied. The question whether the input is a result of a process of manufacture is irrelevant - Decided in favour of assessee.
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2015 (10) TMI 901
Denial of CENVAT Credit - Delay in payment of duty - Debit made in CENVAT Credit and PLA account - Held that:- Ratio laid down by Hon'ble Gujrat High Court's case in the case of Shreeji Surface Coatings Pvt. Ltd. [2014 (12) TMI 656 - GUJARAT HIGH COURT] is applicable to the facts of the case. In these circumstances, the applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the appeal. - Stay granted.
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2015 (10) TMI 900
Waiver of pre deposit - Manufacturing activity or trading activity - whether the applicant was engaged in the manufacture of the goods or undertake only the activity of trading - Held that:- Evidences could be considered in detail only at the time of disposal of the appeal. At this stage, considering the financial hardship expressed and other aspects of the case and the interest of Revenue, it would be appropriate to direct the applicant to deposit ₹ 25.00 Lakhs, which is less than seven and half per cent of the total duty confirmed within a period of Eight weeks from today and on deposit of the said amount, balance dues adjudged would stand waived and its recovery stayed during the pendency of the appeal. - Partial stay granted.
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2015 (10) TMI 899
Waiver of pre deposit - Clandestine manufacture and clearance of goods - Penalty u/s 11AC - Held that:- The case of the appellant for stay was mainly based on the ground that quantum of clandestine clearances and duty calculation is not correct as the statements of the directors were duly retracted at the earliest possible occasion. Learned A.R. on the other hand made the bench go through para-10 of the Order-in-Original dated-16/09/2013 to argue that duplication in duty calculation was found to the extent of only ₹ 8.40 Lakh. It is observed that Adjudicating Authority has given detailed reasonings for confirmation of the clandestine activities and duty. Prima facie, appellant has not made out a case for complete waive of the confirmed dues. - partial stay granted.
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2015 (10) TMI 898
Denial of SSi Exemption - Penalty u/s 11AC - Held that:- Prima-facie, there is an evidence of existence of M/s WAE. In any event, as the appellants are not contesting on merit, there is no need to go into the facts of the case. In overall consideration of facts and circumstance of the case, as the appellant already paid the duty alongwith interest and penalty under Section 11AC of the Act, during investigation, imposition of penalty on Shri Bhargavbhai H Jain is not warranted. It is seen that that Adjudicating authority already imposed penalty under Section 11AC of the Act and therefore, the penalty of ₹ 50,000/- under Rule 173Q on M/s NHPL is not justified. The Learned Counsel submits that the appellant is entitled to get the benefits of cum-duty benefit - impugned order in so far as the demand of duty alongwith interest and imposition of penalty of ₹ 1,50,000/- under Section 11AC on M/s NHPL is upheld. Penalty imposed under Rule 173Q on NHPL is set aside. The penalty imposed on the other appellants are set aside - Decided in favour of assessee.
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2015 (10) TMI 897
Eligibility of CENVAT Credit on various items namely angles, channels, beams, plates etc. - Held that:- Entire dispute centers around the eligibility of CENVAT Credit on various items namely angles, channels, beams, plates etc. which the Revenue alleged to have been used for fabrication of supporting structures, whereas the claim of the appellant was that all these items were used in the fabrication of parts and components of machineries, which satisfy the definition of capital goods laid down under rule 2(a) of CENVAT Credit Rules, 2004, accordingly eligible to the CENVAT Credit. We find that the issues raised rests on determination of facts on the basis of evidences adduced by both sides which has not been properly carried out, a fact not disputed by both sides. In the result, it is prudent to remand the matter to the adjudicating authority, to decide all the issues afresh taking into consideration the evidences on record and the evidences that would be produced by the appellant during the course of adjudication proceeding. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 896
Extension of stay order - Held that:- Tribunal in the case of M/s Haldiram India Pvt.Ltd. & others Vs Commissioner, Central Excise & Service Tax - [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)], held that the Stay Order passed by the Tribunal may be extended after considering the necessary facts as it would authorize the exercise of discretion by the Tribunal for grant of such extension. - Appeal was not taken for hearing by the Tribunal as there is huge pendency of the appeals. It is noted that lot of appeals have already been listed and therefore it is difficult to take up the appeal hearing at this stage. - Stay extended.
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2015 (10) TMI 895
Imposition of National Calamity Contingent Duty - Imposition of interest and penalty - Held that:- There is no dispute about the fact that for the pre-budget stock in respect of manufactured goods which have been manufactured before 01.03.2003, NCCD would not be applicable. However, we find that admitted position even from the appellant's side is that the vehicles were not fully finished but substantially finished. It is seen that it is important that the road test are carried on the vehicles before it can be taken on road and released for sale. Similarly, it is an admitted position certain work remains to be done on these vehicles in as much as certain items were yet to be fixed. Under these circumstances, in our view, the motor vehicles cannot be considered as manufactured as on 28.02.2003 and therefore NCCD would be chargeable. In view of the above position, demand is upheld on merits. We also find that equivalent amount of penalty has been imposed under Rule 25 of the Central Excise Rules, 2002. In the facts and circumstances of the case, in our considered view, this is not a fit case for imposition of penalty and we accordingly set aside the penalty imposed under rule 25. Interest under Section 11AB is upheld.- Decided partly in favour of assessee.
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2015 (10) TMI 894
Denial of CENVAT Credit - Rejection of PSC Sleepers claiming the same as input meant to be used in or in relation to the manufacture of their finished goods - Held that:- On going through the impugned order, I find that the ld. Commissioner (Appeals) while upholding the Order-in-Original, has held that a little portion of the said PSC sleepers used in the manufacture of Pig Iron and S.G. Inserts, cannot make it eligible to call as input and eligible to Cenvat credit. I do not find any merit in the said observation inasmuch as the definition of input and other conditions laid down under the Cenvat Credit Rules, 2004, makes it abundantly clear that to be eligible to cenvat credit, the input must be used in or in relation to the manufacture of finished goods. Once the inputs has been used in or in relation to the manufacture of finished products, the Appelalnts are eligible to the credit. There is no allegation in the show cause notice nor any finding in the impugned order that the wires and inserts retrieved/extracted out of breaking of the rejected PSC Sleepers, had not been used in or in relation to the manufacture of Pig Iron and S.G. Inserts and the same were cleared without payment of duty. In these premises, therefore, I do not find any merit in the impugned order - Decided in favour of assessee.
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2015 (10) TMI 893
Denial of refund claim - Reduction in rate of duty - Held that:- Commissioner (Appeals) has rightly relied High Court's order in the case of CCE Vs Addison & Co.(2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS). Revenue's grounds is not on excisability or manufacture of beetle nut only on the refund allowed by the LAA. On merits, we find that it is not a refund which is arising out of any excess payment arising out of any dispute on value or quantity of discount etc. but on account of reduction of rate of duty on bettle nut powder vide Notification 35/98 dt.24.11.98 where the rate of duty was revised from 18% to 15% on the beetle nut powder which came into effect from 24.11.98. By virtue of this notification, appellants were required to pay duty @ 15% instead of 18%. When the rate of duty was reduced on 24.11.98 applicable rate was only 15%. The amount paid in excess of 15% between 24.11.98 and 30.11.98 is not duty and not due to the Government and the same is liable to be refunded to the respondent. The Hon'ble High Court [Sic] in the case of Sunrise Engineers Vs CCE Jaipur (2015 (4) TMI 122 - SUPREME COURT) clearly held that on account of reduction of rate of duty by any subsequent notification, appellants are rightly eligible for refund and also held that no unjust enrichment clause would be applicable. - Decided against Revenue.
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2015 (10) TMI 892
Waiver of pre deposit - Denial fo SSi Exemption - whether the appellant was within his rights to raise alternative plea of classification issue of printed stationery as falling under Chapter 49, even though the said plea was not raised by them prior to issuance of the show-cause notice - held that:- The entire idea of adjudication is to come to a fair conclusion. Even if the appellant had adopted the classification of the said printed stationery as falling under Chapter 48 prior to the proceedings initiated against them, they were well within their rights to challenge the said classification when the proceedings were for differential demand, which was raised against them. As such, we agree with the learned Commissioner(Appeals) to that effect and set aside the order of the original adjudicating authority and remand the matter to him for considering of said submission of the appellant and to re-adjudicate the matter accordingly. - Decided in favour of assessee.
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2015 (10) TMI 891
Waiver of pre deposit - penalty imposed under Rule 15(2) of CCR, 2004 read with Section 11AC of Central Excise Act, 1944 - Denial on the ground that since the process of galvanization does not result into manufacture as defined under Section 2(f) of Central Excise Act, 1944, therefore, the CENVAT Credit availed on the input Full hard CR coil was not admissible - Held that:- Issue is covered by the judgement of the Hon’ble Delhi High Court in SRV Print Packs case (2011 (9) TMI 140 - DELHI HIGH COURT) wherein the Hon’ble Court dispensed with the condition of pre-deposit and allowed the petition filed by the petitioner therein. In view of the said decision, we are of the considered opinion that the Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. - Stay granted.
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2015 (10) TMI 890
Waiver of pre dpeosit - clandestine manufacture and removal of excisable goods - Penalty u/s 11AC - Held that:- Evidences have been brought on records by the investigation that there were clandestine manufacture and clearance of excisable goods in the form of shortage of finished good stocks and also from the private records maintained in the factory premises alongwith the statements of the concerned persons. On perusal of the case records, we find that the appellant has not made out a prima facie case for complete waiver of the confirmed dues and penalties. It is accordingly ordered that the appellant shall pre-deposit a amount - Subject to the payment of the above amount, there will be a stay on recovery of the remaining amount of duty, interest and penalties imposed - Stay granted.
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2015 (10) TMI 889
Waiver of pre deposit - Determination of assessable value - Revenue contends that assessable value of gear box ought to be determined under Sec. 4(1)(b) of CEA,1944 read with Rule 10 (a) and with Rule 8 of the Central Excise Valuation Rules, 2000 - Held that:- Appellant has placed the opinion of M/s. Mani & Co., the Cost Accountant, in their support. It is also contended that on reference of the said opinion to A.D. (Cost), by the Department, more or less the said opinion was accepted. Countering the argument of the Revenue, the Ld. advocate for the applicant categorically submits that they have not incurred any packing cost in transferring the finished goods from the applicant company to the holding company. Needless to emphasize, the includibility or otherwise of these elements of cost also rests on appreciation of evidences. In these premises, all these aspects need to be scrutinized in detail which would be possible at the time of disposal of the appeal. At this stage, in our view, the applicant could able to make out a prima facie case for waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the appeal. - Stay granted.
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2015 (10) TMI 888
Penalty under Rule 173 Q - Quantum of penalty - Held that:- The authorities below have confirmed the penalty on the ground that the vehicle numbers indicated in the invoices were not capable of transporting such a huge quantity of goods and the transactions were mere paper transactions only. However, no investigation has been done at the consignees end regarding receipt of goods by them. Further, no investigation has been done at the consigners end to ascertain as to whether the goods have actually been supplied to the appellant or not. In absence of proper investigation of the matter, I am of the view that the imposition of equal amount of penalty is not just and proper. Further, considering the fact that in the precedent decisions this Tribunal has taken a lenient view in identical set of facts and reduced the quantum of penalty amount, I am of the view that the penalty can be reduced in this case also - Decided partly in favour of assessee.
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2015 (10) TMI 887
Denial of CENVAT Credit - whether appellant is eligible to the Cenvat credit on the inputs claimed to have been used in the manufacture of capital goods, construction of the plant as well as installation of machinery etc. - Held that:- Since the appellant is granted an opportunity to argue on the principal issue of Cenvat credit and capital goods credit, other issues involved in the Adjudication may also be kept open for decision by Adjudicating Authority while he hears the matter afresh - appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing for readjudication afresh on the issues involved as emerged from the show-cause notice. - Matter remanded back - Appeal disposed of.
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2015 (10) TMI 886
CENVAT Credit - reversal of credit for removal of inputs as such for warranty replacement - Revenue is claiming that the value should be taken as 115% or the price at which such warranty replacement parts have been sold by them from their warehouses - Held that:- circular dated 1.7.2002 has been amended vide Circular No. 813/10/2005-CX dated 25.4.2005 as also Circular No.816/13/2005-CX dated 16.6.2005. We also note that exactly same issue has come up in appellants own case in the case reported in [2014 (12) TMI 410 - CESTAT MUMBAI]. - In appellants own case this Tribunal has allowed the appeal - Respectfully following the same judgment decided in favour of assessee.
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2015 (10) TMI 885
Demand of differential duty - Denial of concessional rate of duty - Availment of Credit on inputs - Held that:- Appellant's own case for the earlier period this Tribunal vide order dated 11.02.2005 and 17.09.2010 have allowed the appeals - Decided in favour of assessee.
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2015 (10) TMI 884
Denial of CENVAT Credit - manufacturer of aerated water, soda water and mineral water - Held that:- Appellant is manufacturer of aerated water not glass bottles and these glass bottles have been broken during the packing of the aerated water which is scrap generated during the manufacturing of final product i.e. aerated water. Therefore, we hold that appellant is not manufacturing broken glass bottles which is merely a scrap. Therefore relying on the appellant's own case for the earlier period we hold that appellant is not entitled to pay duty on broken glass water. Consequently, impugned order is set aside. - Decided against Revenue.
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2015 (10) TMI 883
Rectification of mistake - CENVAT Credit - Held that:- As regards the CENVAT credit availed on the basis of certificates of service providers, the ld. Counsel has shown us letter dt. 13.11.2009 submitted in reply to the show cause notice dt. 19.10.2007. It clearly indicates that the letters obtained from the service providers were submitted under the said letter dt. 13.01.2009. Further, this letter is shown received by Shri S.N.Bhagwat, Inspector of Central Excise (Adjudication), Thane-I, Commissionerate. Therefore, it appears that the Commissioner has filed this ROM without caring to see his own records. Reasons such as date of issue of certificate not being mentioned cannot be a reason to deny the substantial benefit. It was for the authorities to verify whether the services were received and actually utilized. - Certificates having been produced earlier, there is no ground to deny the CENVAT credit which was sought to be availed on the basis of these certificates. - Rectification denied.
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2015 (10) TMI 882
Denial of refund claim - Accumulated CENVAT Credit - Held that:- If the refund can be granted to the appellant's when they have debited the amount not on the date of filing refund claim but on a later date - Held that:- It is seen that the conditions prescribed in the notification having met although on a later date. The failure to debit on the date of filing the refund claim is not such a lapse that it would debar the appellants from the refund. On the day of debiting the CENVAT account they have fulfilled the conditions of the notification. In that event they become entitled to refund on that date. In view of above the impugned order is set aside, the appeal is allowed with consequential benefit. The matter is remanded for the limited matter of verification of arithmetical accuracy of refund. The same is directed to be completed within a period of 30 days from the receipt of this order and refund issued. - Decided in favour of assessee.
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2015 (10) TMI 881
Waiver of pre deposit - Penalty u/s 11AC - held that:- billets were not sold by the Applicants but transferred from their depot to their convergent agent, who used them for manufacture of wire rods. Since the impugned goods were not sold, they paid the duty on the said billets by determining the value as per CAS-4. - convergent agent was eligible to take credit of the duty paid by the Applicants and therefore, this exercise is revenue neutral. It is also noticed that for the subsequent period, the Department is assessing the impugned goods under provisional assessment on the value declared by the Applicants. In view of facts and circumstances of the case stated as above, we are of the opinion that the Applicant has been made out a prima-facie case for total waiver of predeposit of dues adjudged. Accordingly, the requirement of predeposit of all dues adjudged is waived and its recovery is stayed during pendency of appeal. - Stay granted.
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2015 (10) TMI 880
Duty demand - Imposition of penalty - CENVAT Credit - electro deposition coating - Held that:- Bumpers and grills are more certainly of commercial use in themselves whether the process of electro deposotion coating applied or not. As the issue has been settled by the Hon'ble Apex Court that if input after electro deposition coating has been cleared by reversing Cenvat Credit as such in that case appellant is not required to pay any duty thereon, and the reversal of Cenvat Credit is sufficient. In these terms, we hold that the reversal made by the appellant at the time of clearing these inputs as such is sufficient. Therefore, demand as per the impugned order are not sustainable. - impugned order is set aside. - Decided in favour of assessee.
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2015 (10) TMI 879
Denial of transfer of Cenvat Credit unutilized lying in the account of M/s. Maruti Suzuki India Ltd. which was merged with Maruti Suzuki Udyog Ltd. - Held that:- As there is no ban on availment of Cenvat Credit of one unit if input service pertains to both the units prior to 2012, therefore, we follow the decision of Doshion Ltd. [2012 (10) TMI 952 - CESTAT AHMEDABAD] and hold that appellant is not required to reverse Cenvat Credit on ₹ 56,41,18,612/-. We further find that Cenvat Credit of ₹ 8,57,44,621/- is also denied on account of merger of Maruti Suzuki India Ltd. with Maruti Udyog Ltd. Since, both the units have been merged, therefore, appellant is entitled to transfer Cenvat Credit lying unutilized in the Cenvat Credit account of the unit merged with the main unit. Therefore, appellant is entitled to take Cenvat Credit to the extent of ₹ 8,57,44,621/- in terms of Rule 10 of the Cenvat Credit Rules 2004. - No merit in impugned order - Decided in favour of assessee.
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2015 (10) TMI 878
Denial of CENVAT Credit - Invocation of extended period of limitation - whether CENVAT credit on items like Angles, channels, joints, HR Sheets, Plates, CRSS sheets in coils, CTD and Round bars loose etc., will be admissible to the appellant or not - Held that:- Extended period cannot be invoked in a situation when conflicting views were available on a subject, which was finally settled by Larger Bench of CESTAT in the case of Vandana Global Ltd. vs Commissioner of Central Excise, Raipur (supra) in the year 2010. The period involved in the present case is 2007-08 and 2008-09 whereas Show Cause Notice has been issued on 16.07.2011, which is clearly time barred as extended period of five years, cannot be invoked in this case. - Decided in favour of assessee.
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2015 (10) TMI 877
Denial of CENVAT Credit - Non maintenance of separate accounts - contravention of the provision of Rule 6 of the CENVAT Credit Rules, 2004 - Invocation of extended period of limitation -held that:- When the audit objection was raised they have already reversed the CENVAT Credit attributable to coal handling charges which was ultimately used for generation of steam, which was used for generation of electricity, which was ultimately used for manufacture of final exempted product along with interest. In that circumstances, the show cause notice was not required to be issued. Ld. counsel for the appellant has also contested the issue of limitation to say that when periodical audits were conducted, extended period of limitation is not invokable. But he fairly conceded that if reversal of CENVAT Credit along with interest is found to be sufficient in that case, he will not contest the issue of limitation. As observed hereinabove, we hold that the CENVAT Credit reversed by the appellant along with interest is sufficient in this matter as per the Finance Act, 2010 and the show cause notice was not required to be issued. Therefore, impugned proceedings against the appellant are set aside - Decided in favour of assessee.
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2015 (10) TMI 876
Non maintenance of separate accounts - Contravention of Rule 6(3) of the Cenvat Credit Rules - held that:- appellant submitted that the appellant is not manufacturing exempted goods, but the Ayurvedic Medicines are being cleared under Notification No. 1/2011-CE dated 1.3.2011 on payment of concessional/notified rate of duty. That there is no manufacture of exempted goods. Tough this was specifically urged in the appeal filed before the Commissioner (Appeals) it was not considered. Further that concessional rate of duty is availed only when Cenvat Credit has not been availed. The consultant submitted that common inputs or input services were not used as alleged in the Show Cause Notice - it is necessary to set aside the impugned order and remand the matter to the original adjudicating authority - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 875
Classification of goods - Classification under Central Excise Tariff heading 7325.10 or 8437.00 - Held that:- After solidification and cooling the cast iron plates are taken out of moulds and cleaned, brushed and battled. That after cleaning of Cast Iron Plates the same are sent to emery machine industries and does not need any subsequent machining. From the above report reproduced in the order of the First Appellate Authority it is correctly held that the CI plates for emery machinery was classifiable under heading 8437 of the CETA, 1985. If the manufacturing unit is lying closed at the moment then the case of the Revenue cannot be decided in their favour because it is the responsibility of the Department to establish, with documentary evidence, that the claim made by the manufacturing unit is not acceptable or that other finishing activities were required to be done on cast iron plates for emery machinery. - Decided against Revenue.
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2015 (10) TMI 874
Remission of duty - Destruction of molasses - Held that:- Appellant is a State Controlled manufacturing unit engaged in the manufacture of sugar with molasses as its by-product - once remission on the same goods was allowed, there can be no case for confirmation of the demand on the quantity destroyed for which remission has already been granted. - Decided in favour of assessee.
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2015 (10) TMI 873
Demand of 10% of the value of exempted goods in terms of provisions of Rule 6(3) of Cenvat Credit Rules, 2004 - Held that:- As the appellant has complied with the conditions of section 68-73 of the Finance Act 2010 and reversed Cenvat Credit along with interest attributable to the final exempted goods, the said reversal is sufficient and appellant is not required to pay 10% of the value of the exempted goods. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 872
Duty demand - non maintenance of separate account - Manufacture of dutiable as well as exempted goods - by-products - Held that:- Proceedings were initiated against the appellant for the earlier period making the same allegations which were upheld by the lower authorities. The matter came up before Tribunal, and vide their order dated 4.11.2008 reported as Narmada Gelatines Ltd. Vs. CCE, Bhopal [2008 (11) TMI 75 - CESTAT NEW DELHI], it was held that di-calcium phosphate and enriched di-calcium phosphate are by products which emerged during the process of manufacture of gelatine their final product. As such, the provisions of Rule 6(3)(b) are not applicable. Apart from the above, learned advocate also draws our attention to Mumbai High Court decision in Rallis India Ltd. Vs. Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] wherein in similar circumstances, the same products were held to be by-product, thus not attracting the legal provisions for payment of same as 10% of value of final products. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 871
Duty demand - Clearance of HDPE Pipes - Held that:- When appellant is paying 10% of the value of HDEP pipes used for manufacturing of sprinkler system, the appellant is not required to pay an amount equal to 10% of the value of sprinkler system. Therefore, we hold that appellant is not required to pay an amount equal to 10% of the value of sprinkle system as they have paid 10% of the amount of HDEP pipes used in the manufacture of sprinkle system. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 870
Penalty under Rule 13 of the Cenvat Credit Rules, 2002 readwith Rule 25 of the Central Excise Rules, 2002 - whether penalty under Rule 13 of the Cenvat Credit Rules, 2002 can be imposed less than ₹ 10,000/-, as imposed by the Adjudicating Authority and upheld by Commissioner (Appeals) - held that:- From the above provisions of Rule 13 and Rule 25 of CCR and CER respectively it transpires that while imposing penalty the same should not exceed the duty on the excisable goods in respect of which any contravention has been committed or ten thousand rupees, whichever is greater. Accordingly, minimum penalty prescribed under the above provisions is ₹ 10,000/-. Accordingly, it is held that the penalty of ₹ 1,000/-; imposed by the Adjudicating Authority under Rule 13 of the Cenvat Credit Rules, 2002, readwith Rule 25 of the Central Excise Rules, 2002, and upheld by Commissioner (Appeals); was not correct. In view of the above, we set aside the orders passed by the lower authorities and allow the appeal filed by the Revenue by enhancing the penalty to ₹ 10,000/-. - Decided in favour of Revenue.
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2015 (10) TMI 869
Validity of impugned order - Held that:- Tribunal wherein this Tribunal has directed the Adjudicating Authority to give opportunity of inspecting the documents and also personal hearing. Although the order of this Tribunal dated 22/4/2002 was complied with by the ld. Adjudicating Authority but appellant could not avail the opportunities of inspection of records and could not file defence reply but in the interest of justice, a last chance is given to the appellant to inspect the records by appearing before the Adjudicating Authority between 15th July, 2015 to 17th July, 2015 and thereafter if they wish to file defence reply, the same is to be filed before 31st July, 2015 and thereafter, the Adjudicating Authority shall fix a date of personal hearing in the month of August, 2015 and shall pass an appropriate order in accordance with law. - Matter remanded back - decided in favour of assessee.
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2015 (10) TMI 868
CENVAT Credit - whether appellant is eligible to the Cenvat credit on inputs and capital goods credit in respect of the goods used in the construction of the plant as well as installation of machinery etc. - Held that:- Since the appellant is granted an opportunity to argue on the principal issue of Cenvat credit and capital goods credit, other issues involved in the Adjudication may also be kept open for decision by Adjudicating Authority, hearing the appellant afresh. In view of fair submission of the appellant and also development of the law, appellant is directed to make an application to the Adjudication authority within a month of receipt of this order to fix the hearing on readjudication of the matter afresh on the issues involved as emerged from the show-cause notice. Appellant is entitled to a fair opportunity of hearing of all issues both on facts and law as well as the evidence. Upon hearing and framing the issue properly, learned Adjudicating authority shall pass a reasoned and speaking order - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 867
Removal of inputs as such - Whether the appellant are required to pay duty on 115% of the value of cost of inputs cleared to the sister unit under the provision of Rule 57AB(b) read with Notification No. 27/2000 CE(NT) dated 31.3.2000 during the period 1.4.2000 to 28.2.2001 or not - Held that:- As the Larger Bench of this Tribunal [2005 (9) TMI 340 - CESTAT, NEW DELHI] has held that reversal of Cenvat Credit availed on inputs is sufficient if the goods have been cleared as such, therefore, we hold that appellant are not required to pay duty on 115% of the value of inputs cleared to their sister concern. Consequently, the demands are not sustainable. - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 866
Duty demand - SSi Exemption - Use of other brand name - Held that:- As in the connected case [2015 (2) TMI 704 - CESTAT NEW DELHI] , matter has already been remanded the matter back to the adjudicating authority for denovo adjudication after affording the cross examination of the dealers whose statement have been relied upon, therefore, in these matters also Revenues contention cannot be considered at this stage. Therefore, we set aside the impugned orders and remand the matters back to the adjudicating authority for denovo adjudication after affording the cross examination of the dealers whose statement have been relied upon in the show cause notice and thereafter pass an appropriate order in accordance with the law. - Decided in favour of Revenue.
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2015 (10) TMI 865
Duty demand - Insurance claim received against damaged gear boxes - gear box still lying in the factory - Held that:- As per Section 4 of the Central Excise Act, 1944 an assessee is required to pay duty of the sale of the goods or deemed to be sale of the goods manufactured by them and the same shall be transaction value. In this case, sale did not take place. It is not a case of deemed sale, as appellant is not the manufacturer of gear box.When the transaction is not covered under Section 4 of the Central Excise Act, 1944, we hold that the appellant is not required to pay duty on the amount of insurance claim for damaged gear box. - Decided in favour of assessee.
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2015 (10) TMI 864
Denial of CENVAT Credit - credit of Additional Duties of Excise (textile and textile articles) - Held that:- Initially the respondent was manufacturing cotton yarn and man-made yarn. By Notification No. 30/2004-CE, their final product became exempt, therefore, under wrong impression reverse cenvat credit on inputs or finished goods which was not required to be reversed.Therefore, they utilise cenvat credit of additional duty of excise (textile and textile articles) for reversal of cenvat credit for packing material. In fact, during that period, respondent was not required to reverse the credit, therefore, question of utilisation of additional duty of excise (textile and textile articles) does not arise - when respondent was not required to reverse the cenvat credit on packing material at the time their final product became exempt, therefore, utilized additional duty of excise (T&T) for payment of duty does not arise - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (10) TMI 974
Validity of impugned order - Appeal dismissed for want of prosecution - Held that:- Tribunal was requested to correct its order and on the ground that it causes prejudice. There as well the Tribunal found that despite several opportunities, no evidence could be produced with regard to the destruction of books of accounts in floods and that plea, therefore, is not substantiated. Surely, this is not a case where the judgment of the Supreme Court in the case "Balaji Steel ReRolling Mills" (2014 (11) TMI 531 - SUPREME COURT) would come to the aid or assistance of the petitioner. Once the dismissal of the appeal by the Appellate Authority is not for want of prosecution or for want of attendance but by dealing with the merits of the matter including the claim that there are no records available because of destruction by floods, then, the principle in "Balaji Steel ReRolling Mills" (supra) can have no application. That was a case where the Hon'ble Supreme Court found that the dismissal for want of prosecution simplicitor and without any adjudication on merits, is a course impermissible and unknown to the appellate power under the Income Tax Act,1961, the Central Excise Act,1944 and which are pari materia provisions. This judgment of the Hon'ble Supreme Court and equally our orders following it, cannot have any application to the facts and circumstances of the present case. It is distinguishable. - Decided against assessee.
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2015 (10) TMI 973
Denial of exemption claim - Whether exemption from tax granted on the sale and purchase of water pumps and/or diesel engines having capacity up to 10 horse power (HP) under Notification No. F.4(1)FD/TaxDiv/2000-361 dated June 19, 2000 under section 15 of the Rajasthan Sales Tax Act, 1994 (hereinafter "the Act of 1994") was general or conditional in nature - Held that:- a different view cannot be taken in this revision petition directed against the decision of the Rajasthan Tax Board as the decision of the Rajasthan Tax Board Jaipur on the same issue has attained finality. The honourable Supreme Court in the case of Municipal Corporation of City of Thane v. Vidyut Metallics Ltd. [2007 (9) TMI 399 - SUPREME COURT OF INDIA] has held that even though each assessment year in respect of tax liability is an independent event as against other year, yet if the nature and character of the transaction remains the same, the character of the transaction earlier by the orders of the court binds in subsequent year with regard to the nature and character of the subsequent similar transaction. The same position has also been recognized albeit impliedly by the honourable Supreme Court in the case of Southern Sea Foods Limited v. Joint Commissioner of Income-tax, Chennai [2009 (3) TMI 988 - SUPREME COURT]. - court cannot take a contrary view in respect of a similar transaction/exemption in another year even in the best case scenario for the Revenue-lest contradictory orders in respect of the same transaction (in nature and character) qua different years pertaining to the same assessee are passed. - Decided against Revenue.
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2015 (10) TMI 972
Denial of refund claim - Approval of partial refund - Held that:- State submitted that in so far as Annexure P.12 is concerned, whereby rectification order dated 6.11.2013 has been passed creating liability against the petitioner, has been withdrawn. She further stated that the amount shall be refunded to the petitioner within 15 days from the date of receipt of a certified copy of this order. She, however, prayed that the State be allowed to take proceedings under Section 17 for reassessment or under Section 34 of the Haryana VAT Act for revision of the assessment order. - Petition disposed of.
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