Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 22, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Applicability of section 80IA(10) AO has also not pointed out any specific item of the eligible unit which is debited by the head office - assessee is entitled for benefit of Section-80 IA - HC
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Taxability of prize money of 1 kg. of gold won by the assessee The expression 'lottery' would involve an element of 'chance' whereas when a person is making investment in a scheme like Savings Scheme then there is no element of 'chance' nor he loses any money invested by him - HC
Customs
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Rejection of transaction value - There is no evidence of any contemporaneous imports of similar or identical goods nor is there any price available for similar goods - transaction value has to be accepted - AT
Service Tax
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Business Support service - Service of providing assured water infrastructure facility to the industries of Borai Industrial Growth Centre - prima facie the activity is not taxable - AT
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Waiver of pre deposit - Renting of equipments - right to use - appellants leased out the vacuum insulated storage tanks to the customers - Possession has been transferred - prima facie case is in favor of assessee - AT
Central Excise
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Area Based Exemption - courts cannot extend the benefit of this exemption for the period prior to the date of opting for the exemption, therefore, on merits, the case is in the Departments favour. - however decided in favor of assessee on the ground of period of limitation - AT
VAT
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Imposition of purchase tax on sugarcane - Even though the withdrawal of the sugar policy is arbitrary and has been passed without any application of mind, we are not inclined to quash the said order dated 04.06.2007 as we are of the opinion that the petitioner would get the relief even without the quashing of the order dated 04.06.2007. - HC
Case Laws:
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Income Tax
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2014 (10) TMI 549
Scope of term owner of house property u/s 27(iiib) Pre-requisites of Section 269UA(f)(i) - Whether the tenants from month to month or which are for a period not exceeding one year are excluded from the definition - Held that:- Neither the order of the Tribunal nor the order of the High Court indicate any consideration in respect of the house property named Kanti Lal House except observing that the assessee has been a tenant for a long period and that it had let out the premises - No definite finding of fact about the pre-requisites of Section 269UA(f)(i) read with explanation has been recorded either by the Tribunal or by the High Court the matter needs re-consideration for the determination of facts thus, the matter is to be remitted back to the Tribunal for fresh hearing Decided in favour of assessee.
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2014 (10) TMI 548
Income from sale of property Capital gains or business income - Whether the Tribunal was correct in holding that the income earned by the assessee on the sale of property at Airport Road should be brought to tax under the head "capital gains" and not under the head "business income" Held that:- The assessees entered into an agreement to purchase the property from its owners - Thereafter, the same property, the possession of which was taken by them along with others after paying the entire sale consideration to the owner, was sold to M/s. Intel directly by the owner of the property with these eight persons as consenting witnesses - The entire sale consideration was received by these eight members from M/s. Intel as they had paid the entire sale consideration agreed upon and payable to the owner of the property - the transaction being a solitary transaction entered into by the assessees and in the absence of any material to show that they were in the same business and they have entered into such agreement and that they have sold such properties, it is not possible to accept the contention of the Revenue that the transaction is in the nature of trade or adventure thus, the order of the Tribunal is upheld Decided against revenue.
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2014 (10) TMI 547
Validity of notice u/s 148 Failure to disclose material facts or not - Notice issued after four year - Held that:- The issuance of notice u/s 148 of the Act is beyond the period of four years from the end of the relevant AY 2006-2007 - while the AO mentioned that income had escaped assessment because of the failure on the part of the assessee to fully and truly disclose the material facts for assessment, he has not indicated as to which material fact had not been fully and truly disclosed by the assessee following the decision in M/s Swarovski India Pvt. Ltd. vs. Deputy Commissioner of Income Tax [2014 (9) TMI 4 - DELHI HIGH COURT] wherein the notice u/s 148 of the Act was quashed for being issued after the expiry of 4 years from the relevant AY wherein there was no specific mention of which material facts were not disclosed by the assessee in the course of its original assessment proceedings u/s 143(3) of the Act - there exist no grounds for re-opening the assessment after the expiry of 4 years from the relevant AY - The notice u/s 148 of the Act is based on re-appreciation of the same material on record revenue has not specifically indicated as to which material facts were not disclosed by the assessee in the course of the assessment proceedings under the Act thus, the notice dated 28.03.2013 issued by the revenue u/s 148 of the Act is liable to be quashed Decided in favour of assessee.
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2014 (10) TMI 546
Addition on account of peak investment on sale outside the books Held that:- The figures were mentioned as 74,000/- and 2,32,417/- against the dates of 9.4.1993 and 10.4.1993 represented figures in rupees and it cannot be taken as stock entry - Details in terms of weight, date and amount is mentioned - The total transaction comes to ₹ 5,16,956/- as mentioned in the orders of the lower authorities - The assessee has stated that this is regarding stock checking of ornaments on various dates from different safe almiras, so it was rightly presumed that it relates to sale, outside the books also, it is a finding of fact, thus, there is no need to interfere with the order of the Tribunal Decided against assessee. Addition of deposits of gold Held that:- The Tribunal after examining the material rightly observed that the statement of Smt. Nutan Verma recorded in the second round is not acceptable as there were various discrepancies - Sri Jai Prakash Agarwal was never produced, so, the addition was confirmed by the Tribunal the order of the Tribunal is upheld as the issue is based on finding of facts Decided against assessee. Addition corresponding to GP of sale of gold jewellery Held that:- During search operation, shortage in the stock of gold was found - The explanation given by the assessee is that the assessee and M/s SRV Enterprises, Meerut, have close business connection and said firm was 100% export unit - M/s SRV Enterprises has made entry in their stock register pertaining to the jewelry received from the assessee's firm - One of the partner has confirmed the same, but another partner who was ignorant about the event has denied the knowledge of the transaction, but fact remains that the stock was duly reflected in the books of M/s SRV Enterprises there is no reason to interfere with the order passed by the Tribunal the order of the Tribunal is upheld Decided against revenue. Addition of pawning business Held that:- During the course of search, a bunch of loose papers was seized - they were not engaged in the pawning business - only bunch of loose papers was found, the person concerned were examined by the AO and they have denied any transaction with the assessee - no material was found pertaining to the unaccounted cash or jewellery items mentioned on the loose papers - it is proved that the assessee was not engaged in the pawning business and no transaction of advance money was taken place the order of the Tribunal is upheld Decided against revenue. Addition of designed order books Held that:- After recording the statement of the assessee, the AO made an addition of ₹ 13,55,466/- as undisclosed income on this count consisting of estimated labour charges of ₹ 2,41,838/-; the profit is ₹ 8,13,628/-; and the initial unexplained investment estimated @ ₹ 3 lakhs - the Tribunal has deleted the addition by observing that all the 81 persons whose names recorded in the books were produced before the AO and on oath they supported the claim/statement made by the assessee - when persons concerned were examined by the AO and they confirmed on oath the claim made by the assessee, then there is no reason to interfere with the order passed by the Tribunal Decided against revenue.
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2014 (10) TMI 545
Deletion of penalty u/s 271(1)(c) Inaccurate particulars furnished or not - Income from cold storage Held that:- Penalty notice was with regard to inaccurate particulars of income within the meaning of Section 271(1)(c) of the Act and was not with regard to concealment of income relying upon Dilip N.Shroff Vs. Joint Commissioner of Income Tax, Mumbai and another [2007 (5) TMI 198 - SUPREME Court] - No inaccurate details was furnished by the assessee with regard to the addition of amount of ₹ 35,03,011 - Insofar as inaccurate furnishing of details for the amount of ₹ 26,33,328/- is concerned, the amount was deleted by the Tribunal and, therefore, the question of imposing any penalty on this amount no longer survives - With regard to penalty on the amount of ₹ 35,03,011/-, the AO had added this amount as unexplained investment since the assessee could not produce any books of account - The penalty notice was with regard to furnishing of inaccurate particulars of income, which relates to furnishing of incorrect address - The penalty notice was not issued with regard to concealment of income - since the penalty notice was only confined to the furnishing of inaccurate particulars and was not with regard to concealment of income, the imposition of penalty for the unexplained deposit in Bank amounting to ₹ 35,03,011 could not be imposed - The Tribunal was justified in deleting this penalty Decided against revenue.
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2014 (10) TMI 544
Applicability of section 80IA(10) Manufacture and sale of Lamination tordials cores and transformers - Assessee was of the view that unit is located in industrially backward area therefore the profits and gains of the unit are eligible for 100% deduction u/s 80IA Held that:- As decided in CIT Vs. Delhi Press Patra Prakashan Ltd. [2013 (6) TMI 71 - DELHI HIGH COURT] - the assessee was maintaining the separate accounts for each unit as mentioned by the Tribunal, so, the assessee is entitled for the benefit u/s 80 IA and specially when the necessary condition of Section-80 IA (10) has not been fulfilled by the AO to prove that the business between the eligible units and other units are so arranged that the business transaction between them produces more profit to the eligible business - The AO has not given any adverse finding on the basis of books of account produced by the assessee - The AO has also not pointed out any specific item of the eligible unit which is debited by the head office - assessee is entitled for benefit of Section-80 IA there was no reason to interfere with the order passed by the Tribunal Decided against revenue.
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2014 (10) TMI 543
Power to transfer cases u/s 127 Request to transfer case file rejected - Jurisdiction - Held that:- The object for which the provision was enacted is for the purpose of administrative convenience the assessee sought for transfer by representation dated 12.02.2014 submitted through the assessee's representative in person on the date of hearing - as the first petitioner/assessee stating that she has permanently shifted her residence at Chennai, on the sole ground of her convenience, she seeks for transfer of the files - the assessee in default was not only the first respondent, but also her husband, Late Mr.Y.Victor as well - No returns were filed from the AY 2007-08 onwards and during the relevant period, there were several sale transactions in respect of properties situated at Tanjore which would fall within the jurisdiction of the first respondent. It is only after notices were issued u/s 148, 142(1), of the Income Tax Act, returns were filed at Chennai for the AYs 2009-10 and 2010-11, but were not filed before the first respondent - the proceedings cannot be stated to be an order either arbitrary or erroneous, more so, when the second respondent has recorded reasons - the order being a reasoned order and nothing has been placed before the Court to show that the order is either ex facie perverse or vitiated by any patent error and that the power u/s 127 of the Income Tax Act could be exercised in accordance with the Section, if proper grounds are made out - In the order reasons have been assigned for rejecting the request for transfer, which is based on the records the order for refusing to transfer the case from Tanjore to Chennai is upheld Decided against assessee.
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2014 (10) TMI 542
Maintainability of writ petition - AO rejected the request of assessee to refer the matter to DVO u/s 50C - alternative remedy - Held that:- As the purchaser, which was a Government concern, has not taken any steps u/s 47A of the Indian Stamp Act and therefore the only remedy for the assessee was u/s 50C of the Act - As regards the availability of the alternative remedy, the matter was pending before the valuation officer which had been referred by the assessing officer and without waiting for the valuation report, the assessment was completed and therefore the availability of alternative remedy would not be a bar for the court to exercise its jurisdiction under Section 226 of the Constitution of India relying upon S.Muthuraja v. Commissioner of Income Tax [2013 (8) TMI 40 - MADRAS HIGH COURT] - the assessee was the vendor of the property and the only right available to the assessee was u/s 50C(2). Valuation of property Held that:- The AO was justified in considering the case along with other issues and passing the order of assessment - The only remedy left to the petitioner is to file an appeal before the Commissioner of Income Tax (Appeals III) under Section 246 of the Act the order is upheld Decided against revenue.
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2014 (10) TMI 541
Stay application - Validity of order u/s 201(1) r..w section 201(1A) Non-compliance of section 194J and 194H - Assessee is a licensed telecom operator and provides cellular services to 22 telecom circles across India - Whether the payment of roaming charges, commission and discounts to dealers are subject to TDS as fee for technical services u/s 194J and commission and discounts to dealers u/s 194H Held that:- The matters are pending before the adjudicating authority or the appellate authority, the respondents file a comprehensive affidavit - The affidavit travels beyond what is required to be stated and dealt with - Annexures S & T are copies of the memo of appeal and the stay application which the assessee has preferred before the CIT(A) and against the assessment order - a plea of jurisdiction would be a mixed question of law and fact -The writ petition cannot be a remedy, firstly, because an appeal has already been preferred and secondly, because, there are disputes which could be termed as factual in nature the stay is granted till the disposal of the hearing Decided in favour of assessee.
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2014 (10) TMI 540
Claim of depreciation on immovable property capital expenditure on the relevant assets has already been allowed as application of income - double deduction - Held that:- the full expenditure has been allowed in the year of acquisition of assets really means that the amount spent on acquiring the assets had been treated as application of income of the Trust in the year in which the income was spent in acquiring these assets - This does not mean that in computing of this income from those assets in subsequent years, the depreciation in respect of those assets cannot be taken into account relying upon Commissioner of Income Tax v/s Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court] - merely because a different argument is now canvassed and not in the same manner as it was canvassed before the Division Bench and not dealt with accordingly, will not enable the Revenue to submit that these binding judgments should be brushed aside - accepting the argument of Mr.Tejveer Singh would precisely amount to this act the order of the Tribunal is upheld Decided against revenue.
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2014 (10) TMI 539
Admission of additional grounds - Inherent contradiction in the order of Tribunal Held that:- The Court refrain itself from deciding the issues arising out of additional grounds on merits simply because there is inherent contradiction in the order of tribunal - If the tribunal was not inclined to admit additional grounds, then, refusal could have been based on some germane reason such as delay in raising these grounds or lack of complete material or failure of the Assessee to bring the same diligently or anything by which the assessee could be held responsible - If the additional grounds are indeed substantial and could have been raised in the opinion of the tribunal, then, it was incumbent upon the tribunal to have allowed the parties to rely on facts and material on the additional grounds and considered the contentions canvassed on that basis pass a reasoned and proper order. The approach of the Tribunal is not right, more particularly when the mistake was brought to the notice of the tribunal in the rectification proceedings, the tribunal clarifies that the observations shall not be treated as opinion on merits but shall be considered for not admitting the additional grounds - the tribunal seriously erred in refusing to admit the additional grounds - The additional grounds ought to have been considered in accordance with law - If there are materials on record and which are adequate to consider additional grounds then refusal to admit additional grounds cannot be sustained in such matters - The tribunal is the last fact finding authority and ought to be more careful - the tribunal is directed to admit the grounds or questions and permit the parties to produce material as is permissible in law Decided in favour of assessee.
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2014 (10) TMI 538
Income from shopping centre Income form house property or Profits and gains from business and profession Ownership of shopping centre - Whether the was owner of the shopping centre within the meaning of section 22 read with section 27 Held that:- The terms and conditions of the auction have been referred to the agreement pursuant thereto and a copy of which was before the authorities - The assessee is a partnership firm - It was constituted under the deed of Partnership and main object was that it shall take premises on rent and sub-let them or any of business mutually agreed by the parties from time to time - the term transfer as defined u/s 269UA (f) is in relation to any immovable property and there are two references thereto and which are to be found from the definition of the term immovable property i.e. in section 269UA (d) - the term transfer is defined in clause (f) as stated above and effect of the same may be of transferring or accepting enjoyment of the property. The income that he derives from the users or occupiers of the stalls or units in the market area is from house property - A demand notice was issued by the Corporation calling upon the assessee to pay property tax in respect of stalls - the tax liability vests with the Corporation - the understanding between the parties has been that the tax liability vests with the Corporation - the Corporation is owner of the property and for the purpose of payment of property taxes can therefore be of no assistance to the assessee - The nature of the rights derived from the Auction, the Agreement and further that the Assessee can deal with the property by inducting third parties goes to show that he is the owner within the meaning of the Income Tax Act, 1961 thus, no substantial question of law arises for consideration Decided against assessee.
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2014 (10) TMI 537
Addition made on the basis of seized document Unexplained advances addition on the basis of entries in diary - Held that:- When all the additions were considered by the ITAT and have been confirmed or considered in the case of firm M/s Ghindmal Kauromal or/and in the case of Roop Chand or/and in the case of Nanak Ram (Dropadi Devi), then the addition cannot be made again in the hands of the assessee - Though the documents were found in the custody and control of the assessee but when the assessee conveyed that either it pertains to firm or to other persons namely Nanak Ram or Roop Chand - when the documents have already been considered by the ITAT, then certainly double addition, one in the hand of the person in whose custody the documents are found and secondly in the case of the other person where substantive addition is made, is not permitted under the IT Act, even the AO had considered all these documents and the addition ,if any, was made on protective basis merely because the documents were found in the custody and control of the assessee but once the addition has been sustained in the hands of the persons to whom the documents related/belonged, the addition again cannot be made on the same documents/loose papers in the hands of the assessee and the Tribunal rightly came to the conclusion. Same addition on the basis of same document cannot be made in the hands of two persons. Revenue does not deny that protective addition was made in the case of assessee whereas substantive addition was either made in the case of M/s Ghindmal Kauromal or/and in the case of Roop Chand or/and in the case of Nanak Ram (Dropadi Devi) and when the additions have finally been sustained, then it is a finding of fact and no question of law Tribunal had rightly deleted the addition as the same cannot be or could not have been made in two hand - no substantial question of law arise for consideration Decided against the revenue.
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2014 (10) TMI 536
Addition the basis of statement recording during survey u/s 133A - Statement recorded on the basis of impounded loose papers, diaries, documents etc. Surrender of amount by assessee Held that:- Tribunal after appreciating the evidence on record and the evidence placed by the assessee, has accepted the surrender to the tune of ₹ 3 crore which was made in the return of income and is based on appreciation of evidence and it is a finding of fact - The assessee gave an explanation supported by material on record, that on the basis of the documents and whatever was un-recorded in the diary/loose papers/other unverifiable creditors, the total amount of surrender came to the tune of ₹ 2.20 crore only - even the AO has not pointed out any evidence or material entered in the loose papers or diaries or incriminating documents which could justify addition over and above of ₹ 3.00 crore or even ₹ 5.00 crore or more. The AO has not found or bothered to found or traced anything additional as a result of survey from the assessee except relying on the recorded statements at the time of survey and therefore this view found favour with the two appellate authorities that the funds are arising from the same business and have a direct nexus and the income was invested/utilized during the year - the conclusion reached by the ITAT is based on the appreciation of evidence and is reached on the basis of finding of fact - It is also a finding of fact admittedly that in AY 2007-08 despite surrender in statements of ₹ 2 crore the income was offered at ₹ 1.5 crore only thus, the Tribunal rightly came to the conclusion that the amount of ₹ 1.5 crore, which was surrendered/offered in the AY 2007-08, was also available as a fund which came to be used partly in the investment of share capital, creditors or other investments as well as other defects, unverifiable creditors etc. thus, no question of law arises for consideration Decided against revenue.
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2014 (10) TMI 535
Transfer of jurisdiction from regular assessment u/s 143(3) to make block assessment u/s 158BC - Non-execution of warrants of authorization Seized cash not handed over by FEMA authorities Commission earned on the distribution of compensatory payments - Held that:- The assessment u/s 158BC of the Act is a special provision and the conditions prescribed thereunder are required to be satisfied before any action for block assessment can be initiated - The assessee had not even paid the taxes due as per return filed for the block period and the AO had rightly dropped the proceedings under Chapter XIV-B of the Act - the assessment framed u/s 143(3) of the Act was in consonance with the provisions of the statute. The AO had doubted the paying capacity of Mr. Banerjee and no material had been produced to show that Mr. Banerjee had the capacity to pay the amount - The affidavit of Mr. Banerjee by itself would not be sufficient to conclude that he had the capacity to pay the amount in the absence of any supporting material to substantiate the availability of funds with him to give it to the assessee Tribunal rightly noted that no details have been placed on record as to what was the compromise between the two parties and how the deal was called off - There are variations in all the documents and in the name of the purchaser and no witness to the agreement. As regards the identity, credit worthiness and genuineness of the transaction, filing of the affidavit does not prove credit worthiness and genuineness of the transaction and it is a story which has been fabricated as a subterfuge to explain the seized cash of ₹ 16 lacs - CIT(A) rightly rejected the contention of the assessee and has rightly confirmed the action of AO thus, no substantial question of law arises for consideration Decided against assessee.
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2014 (10) TMI 534
Rectification of order u/s 154 Scope of term mistake apparent from the record - Examination of claim of deduction u/s 80HHC, 80IB Business of manufacturing and trading of garments made up and cloth - Held that:- Deduction u/s 80HHC of the Act was not allowed correctly as according to Section 80IA (9) of the Act, deduction allowable u/s 80IB of the Act was required to be reduced from the profit of business for computing deduction under Section 80HHC of the Act - Since the mistake was found to be apparent from record, notice u/s 154 of the Act was issued to the assessee and the order of rectification was passed, which was upheld by the CIT(A) and the Tribunal following the decision in Commissioner of Income Tax. Versus Smt. Aruna Luthra [2001 (8) TMI 84 - PUNJAB AND HARYANA High Court] with regard to rectification of mistake apparent on record, assessee has not been able to show any illegality or perversity in the order of the Tribunal thus, no substantial question of law arises for consideration Decided against assessee.
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2014 (10) TMI 533
Accrual of income taxable assessment year 2000-2001 or 2003-04 - business of building construction and real estate - By virtue of the sale agreement the assessee became entitled to receive nomination fees - Project completion method - Held that:- Accounting Standard (AS) 7 applies to Complete Project Method. The said system deals with accounting for construction contracts in the financial statements of enterprises undertaking such contracts i.e., by the contractors. It also applies to enterprises undertaking construction activities of the type dealt within this statement not as contractors but on their own account as a venture of a commercial nature where the enterprise has entered into agreements for sale. As per the agreement, though the assessee is carrying on the business of builder and may be contractor, his role was only to identify the purchaser - the amounts due and the constructed area due to the assessee was crystallized under the agreement dated 25.6.1998. Annexure-'1' to the agreement shows, payments received prior to the agreement and balance of payments which is to be made - But under the Mercantile System of accounting, when once the said amount accrues, it has to be offered to tax in the year of accrual - when the amount is due to the assessee, a portion of which was already paid and a portion of it is payable in the near future as per the dates prescribed, the amount mentioned in the said agreement accrued on 25.6.1998 and therefore, the amount should have been offered to tax for the AY 1999-2000. Though the parties entered into agreement in 1995, there were modifications, alterations and supplementary agreements also came to be executed - Finally, the terms between the parties were crystallized under the agreement dated 25.6.1998 - when the assessee was following Mercantile System of Accounting, he should have offered to tax the amounts accrued to him under the agreement for the assessment year 1999-2000 - the order passed by the Tribunal holding that the amount to be offered to tax for the year 2003-04 applying Accounting Standard (AS) 7 and treating the transaction as Complete Project Method is opposed to the admitted facts of the case thus, the order of the Tribunal is set aside Decided in favour of revenue.
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2014 (10) TMI 532
Taxability of prize money of 1 kg. of gold won by the assessee Lottery income u/s 115BB r.w. section 2(24)(ix) - TDS not deducted because of consumer goods Held that:- Following the decision in COMMISSIONER OF INCOME TAX-I, LUDHIANA Versus TILAK RAJ KALRA [2012 (4) TMI 123 - Punjab and Haryana High Court] - the explanation was added with effect from 1.4.2002 and there was no provision to give the explanation retrospective effect - it would not apply to the AY 1996-97 - if the prizes awarded to any person were to be included in the expression 'lottery' then there was no necessity of adding the explanation to include prize money like the one in question in the expression 'lottery'. The expression 'lottery' would involve an element of 'chance' whereas when a person is making investment in a scheme like Savings Scheme then there is no element of 'chance' nor he loses any money invested by him - the incentive prize received by the assessee on account of the coupon given to him on the strength of Small Savings Certificate would not fall within the definition of 'lottery' and would, thus, not be included in the expression 'income' thus, the order of the Tribunal is upheld Decided against revenue.
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2014 (10) TMI 531
Violation of principles of natural justice - Documents and data not properly examines - Advertisement expenses u/s 37 - Whether the Tribunal misdirected itself in law as well as on facts in upholding the order passed by the CIT u/s 263 of the Act whereby the latter had reversed the order of the AO allowing deduction u/s 37 of the Act in respect of advertisement expenses Held that:- As decided in M/s Kranti Associates Pvt. Ltd. and another v. Sh. Masood Ahmed Khan and others [2010 (9) TMI 886 - SUPREME COURT OF INDIA] - the documents and the data produced by the assessee have not been taken into consideration - the order does not satisfy the requirements as enunciated by the Apex Court thus, the order of the Tribunal is passed in violation of the principles of natural justice the matter is to be remitted back to the Tribunal for fresh decision Decided in favour of asseessee.
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2014 (10) TMI 530
Notice for reopening of assessment u/s 148 Failure to disclose material facts or not Additional depreciation on windmill Held that:- Assessee had clearly shown that it had claimed additional depreciation on the windmill - there does not appear to be any failure on the part of the petitioner to disclose fully and truly all material facts - a mere wrong claim cannot be said to amount to failure to disclose fully and truly all material facts, more so, when all relevant facts were disclosed in the return of income and the documents accompanying the same - by no stretch of imagination can it be said that the assessee had failed to disclose fully and truly all material facts necessary for its assessment so as to vest in the AO the jurisdiction to reopen its assessment after the expiry of a period of four years from the end of the AY by invoking the proviso to section 147 of the Act - the reopening of assessment u/s 147 of the Act is without any authority of law - The assumption of jurisdiction on the part of the AO is without authority of law and it is not necessary to enter into the larger question as to whether or not the petitioner could have validly made such claim u/s 32(1)(iia) of the Act thus, the notice issued u/s 148 is to be set aside Decided in favour of assessee.
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Customs
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2014 (10) TMI 555
Restoration of appeal - Waiver of pre-deposit - Non appearance of assessee despite of several notices - Held that:- Registry regularly issued hearing notice at the address given in the appeal memo. Even the stay order was dispatched at the same address given in the appeal memo. In these circumstances, we find that the conduct of the appellants shows that they are not interested in expeditious disposal of these appeals. During the argument, the appellants undertook to pay an amount of ₹ 50,000 as cost. In view of the undertaking, we direct the appellants to pay a consolidated amount of ₹ 50,000 with the jurisdictional Commissioner of Customs. - ROA allowed subject to cost.
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2014 (10) TMI 554
Confiscation and seizure of goods of foreign origin - Penalty u/s 112 - whether non-allowing of cross examination as requested by Shri Vinod Agarwal, is violative the principle of natural justice - Held that:- cross examination cannot be claimed as a matter of right in departmental proceedings and each case has to be examined on its own merit. In the present case, it is not in dispute that the goods of foreign origin were recovered from the godown owned by the Appellant. As stated above, none of the mobile numbers purported to belong to Shri Vijay Bhuwania, were actually found in his name. On the contrary, the Appellant had executed lease deed for his godown with Shri Vijay Bhuwania, who did not exist. Appellants are involved in an act or omission which resulted in diversion of Nepal bound containers of the imported through Haldia Dock, their storage, re-packing and transportation of the said goods. We also find that even though Shri Vijay Bhuwania as per deed was tenant of the said godown and he stated to have been seen by Shri Lahoti and Shri Shyam Suder Singhal, but the facts mentioned about Shri Bhuwania, by them, could not lead to apprehending of Shri Bhuwania. It also appears from the statement of various persons that the Appellants were in knowledge of the activities carried at the said godown - Decided against the appellants.
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2014 (10) TMI 553
Benefit of Notification No. 30/97-Cus. - smuggling - local sale of exempted goods - import of stainless steel coils & sheets under DEEC Licences (Actual User Condition) - Confiscation of goods - Held that:- Undisputedly, the goods were seized at Mumbai on the allegation that the goods were cleared under DEEC Licence availing the benefit of Customs Notification and not paying customs duty on the goods. The proprietor of the respondents in his statement stated that the goods were purchased from various parties and from the statement the department could not bring out that he has admitted that the goods were illicitly imported. The Revenue also could not produce any evidence that the goods were illicitly imported and therefore, the onus was on the department to prove the smuggled nature of the goods which the department could not produce nor the department produce any evidence contrary to the findings of the Commissioner (Appeals). Therefore, we do not find any infirmity in the Commissioner (Appeals) order and the same is upheld - Decided against Revenue.
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2014 (10) TMI 552
Undervaluation of goods - Demand of differential duty - Held that:- As regards the e-mail offers, price/value cannot be determined on the basis of offer. As regards contemporaneous import, it is settled law and as per Valuation Rules also, when contemporaneous import are considered and country of origin is to be same, the supply quantity should be comparable and period should be as best as possible. From the statement of the proprietor, contemporaneous imports submitted would emerges as the price declared by the appellant was not allowed when contemporaneous import price was not very low. - in this case the adjudicating authority had resolved the valuation under best judgment rule. It is admitted by the adjudicating authority in the impugned order that the imports were made by other importers and contemporaneous import price available but the only reason for denial is that the grade or colour difference was not found but on these cases description is the same as shown by the appellant. Moreover no examination report has been placed by the adjudicating authority to reject the price of the contemporaneous imports. Further no evidence except the statement of the proprietor has been brought on record for flow of money by the appellant. It is settled law that when the price of the contemporaneous import is available then the least of the same is to be adopted as transaction value. We have examined all the contemporaneous imports made by other importers during the import period which shows that description as shown by the appellant and all the imports are more or less of the same value. Therefore, impugned order is not sustainable in the eyes of law - decided in favour of assessee.
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2014 (10) TMI 551
Rejection of transaction value - Held that:- at the time of import, the appellant declared the value of goods @ US 535 PMT. The goods were examined and on examination the goods were found to be as declared in the Bill of Entry. These facts are not in dispute. There is no evidence shown by the department that over and above the transaction value any price has been paid by the appellant. The only basis for enhancement of value is that as per NIDB data in Bill of Entry No. 599780, dated 6-2-2007 the price shown was @ ₹ 42,793/- PMT. The price taken is of a Bill of Entry filed in February, 2007 whereas the impugned goods have been imported by the appellant in September, 2007 and October, 2007. Therefore, the price shown in a Bill of Entry of February, 2007 cannot be relied upon. Further, we find that the standing instructions issued in the year 1999 have been applied for imports made in the year 2007. We further find that there is no basis for giving 15% discount on PLATT price for the impugned goods. There is no evidence of any contemporaneous imports of similar or identical goods nor is there any price available for similar goods. In the absence of any such evidence, the transaction value has to be accepted - Decided in favour of assessee.
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Service Tax
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2014 (10) TMI 569
Valuation of service - Inclusion of cost of spare parts or accessories or consumable such as lubricants and coolants provided/used during servicing of the vehicles - Authorized Service Station service - Held that:- Board Circular No. 96/7/2007-ST dated 23.08.2007 states that service tax is not leviable on the transaction treated as sale of goods and subjected to levy of sales of sales tax/VAT. It is seen that as recorded by the Commissioner (Appeals), respondents were able to establish that amount on which the impugned service tax has been demanded actually pertain to the sale of spare parts/accessories/consumables like lubricants etc. by showing copies of the VAT assessment orders for the financial years 2006-2007 & 2007-2008. It would clearly entitle them to the benefit of Notification No. 12/2003-ST. Indeed even the provisions of Section 67 lay down that the value for the purpose of levy of service tax is the gross amount charge for taxable service - Decided against Revenue.
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2014 (10) TMI 568
Valuation of the taxable service - inclusion of value of free supply - construction of commercial or industrial complex - abatement of 67% - exemption under Notification No. 15/2004-ST dated 10.09.2004, Notification No. 1/2006-ST dated 01.03.2006 or Notification No. 18/2005-ST dated 07.06.2005 - Held that:- adjudicating order in its discussion and finding portion has not devoted even a single line to discuss the includibility of the value of free supplies in the assessable value for the purpose of granting 67% abatement under the aforesaid notifications. However, this omission loses its significance considerably as the impugned Order-in-Appeal has discussed this issue - In view of the law relating the free supplies having now been settled by the CESTAT Larger Bench in the case of Bhayana Builders [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], it is deemed appropriate to remand the case to the original adjudicating authority for de novo adjudication. Accordingly we set aside the impugned order and remand the case to the original adjudicating authority for adjudicating the same afresh in view of, and in accordance with the judgment of CESTAT Larger Bench in the case of Bhayana Builders (supra) after giving the appellants an opportunity of being heard - Decided in favour of asessee.
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2014 (10) TMI 567
Waiver of pre deposit - Business Support service - Service of providing assured water infrastructure facility to the industries of Borai Industrial Growth Centre - Held that:- during the concession period the appellants will own, operate and maintain the project and sell water to the corporation on agreed terms. Thus, the amounts received by the appellants are the sale proceeds of water and are not for rendering any service. Thus, prima facie, their activity does not fall under the category of Business Support Service. prima facie the appellants have made out a good case for waiver of pre-deposit. Therefore we waive the pre-deposit and order stay of recovery of impugned service tax, interest and penalty during the pendency of the appeal. - Stay granted.
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2014 (10) TMI 566
Waiver of pre deposit - Renting of equipments - right to use - appellants leased out the vacuum insulated storage tanks to the customers - Assessee paid VAT on the lease/rent received by them - Held that:- Possession has been transferred and one of the requirements of the definition of supply of tangible goods service is that possession and effective control should not have been transferred. If the possession is not transferred, the liability for any damage would be on the supplier. Another point according to the learned AR supports the case of the Revenue is the fact that appellant can have free access at all times to the equipment in buyer's premises. If the effective control and possession are with the appellants, then there is no need for this clause at all. If effective control is with the appellant then there is no need to have a clause in the agreement empowering them to have access to the premises to take care of the equipment. The discussion above would show that appellant has made out a case prima facie on merit. Accordingly, there shall be waiver of pre-deposit of the adjudged dues and stay against recovery for a period of 180 days - stay granted.
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2014 (10) TMI 565
Condonation of delay - Inordinate delay of 175 days - Held that:- There is no dispute as to the fact that the appellant made Sanjayraj Hotels & Resorts has received the impugned order in August 2013. We also find that the entire explanation given by the Ld Counsel and as mentioned on the ground seeking condonation of delay is that Director of the Company being a political personality could not find time to attend to the impugned order and also that the levy has been declared as unconstitutional by the Honble high Court of Gujarat. Perusal of the records indicates that before the Adjudicating authority, appellants were represented by authorised signatories of the appellant. It is also noticed that for verifications to arrive quantum of service tax liability of contract, summons were issued to the appellant who had specifically recorded and stated that authorised representative of the appellant will appear and give detailed explanation. The said authorised representative was summoned and statements were recorded. Subsequently, show cause notice was issued to the appellant who did not reply nor did he participate in the adjudication proceedings. On receipt of the adjudication order, an appeal to the first appellate authority was filed belatedly 15 days, which was condoned by the first appellate authority. In the entire case records, it transpires that the appellant had been taking the issue very lightly. appellant has not made out a case for condoning the delay in filing the appeal before the Tribunal - Condonation denied.
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2014 (10) TMI 564
CENVAT Credit - Credit availed on various services - Held that:- In respect of exports, the place of removal is port and therefore the services cannot be said to have been obtained after the removal of the goods. Moreover it is also not correct to say that credit of duty paid on all services received after removal of the goods are not eligible. The definition itself clearly provides that certain services are included in the definition of input services and the inclusive definition has been provided to take care of such situation. Having regard to the nature of services received, amount involved and the definition of input services, I consider that appellant is eligible for the credit of duty paid by them - Decided in favour of assessee.
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2014 (10) TMI 563
Denial of refund claim - Unjust enrichment - whether the refund granted to the respondents would result in unjust enrichment or not - Held that:- The fact that the contract with the customer was inclusive of all the taxes and any change in the tax amount would not make any effect on the contracted value, is not being disputed by the Revenue. If that be so, it has to be held that the tax variation, being not a part of the contracted value, would not result in any unjust enrichment of the assessee - Decided against Revenue.
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2014 (10) TMI 562
Cenvat credit of Service Tax paid - Receipt of payment for sales promotion activity - overriding commission to be treated as expenditure incurred after the removal of the goods from the factory - Held that:- LPG stoves manufactured by the appellant are sold through the dealers of Indane gas of Indian Oil Corporation Ltd. for permitting the appellant to sell the stoves through the Indian Oil Corporation dealers of LPG gas and for allowing the appellant to put the logo indane and logo of the appellant on the stove as well as on publicity material and for stating that LPG stoves are recommended by Indane, the appellants have paid some consideration and the receiver has discharged the Service Tax obligation treating it as Business Auxiliary Service. Memorandum of Understanding is very clear and clearly shows that what is undertaken by Indian Oil Corporation Ltd. is in reality a sales promotion activity and therefore appellant has made out a prima facie case for eligibility of Cenvat credit availed by them. Accordingly there shall be complete waiver of pre-deposit and stay against recovery during the pendency of appeal - Stay granted.
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Central Excise
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2014 (10) TMI 560
CENVAT Credit - Exemption of fruit pulp - Held that:- credit taken on Inputs & packing materials viz. metal containers/cans lying in stock and contained in final products lying in stock - Even though final product may be exempt from payment of excise, the assessee cannot be asked to reverse the MODVAT/CENVAT credit already taken by it - A right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs, that right would continue until the facility available thereto gets worked out or until those goods existed - Decided against Revenue.
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2014 (10) TMI 559
Area Based Exemption - whether the non-filing of declaration in terms of notification would result in denial of benefit of notification - assessee filed the declaration on 14.3.2008. - difference of opinion - Majority order - Exemption notification No. 50/2003-CE - Bar of limitation - Held that:- the condition regarding filing of declaration in the prescribed format as prescribed in the first para of the Exemption Notification has been prescribed to prevent the mis-use this exemption and to enable the Jurisdictional Central Excise Officers to detect well in time if an assessee is wrongly availing of the exemption whether deliberately or otherwise. - the Appellant Company is not eligible for exemption for the period prior to 14.03.08. Moreover when the notification itself provide that the option for exemption shall courts cannot extend the benefit of this exemption for the period prior to the date of opting for the exemption, therefore, on merits, the case is in the Departments favour. Demand is barred by limitation having been raised by show cause notice dated 31.3.11 for the period 20.5.2006 to 13.3.2008 invoking the extended period of limitation. In terms of section 11 A of the Central Excise Act, 1944, the extended period is available to the Revenue in case duties have not been paid by reason of fraud, suppression or any willful mis-statement with intent to avail payment of duty. When the appellant was not required to pay any duty, if they would have exercised their option in writing, where is the question of malafide intention to evade payment of duty. Otherwise also we find that investigations were made by the Revenue with the appellants authorised representative, immediately after filing of declaration by them on 14.3.08, even then the show cause notice was issued in 2011. We find no justification for the same and agree with the learned advocate that the demand is wholly barred by limitation. The same is accordingly set aside along with setting aside of the penalties imposed upon both the appellants. - Decided in favour of assessee.
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2014 (10) TMI 558
Denial of the benefit of duty exemption - Notification 21/2002-Cus dated 01/03/2002 - "instruments and implants for severely physically handicapped patients and joint replacements and spinal implants including bone cement. - goods on which respondent claimed the exemption are Depth gauges, Impactors, Hammers, etc. - Held that:- Exemption covers both instruments and implants. The argument of the Revenue that instruments should also be implanted does not flow from the wordings of the entry. So long as the instruments are for severely physically handicapped patients or for joint replacements or they are in the nature of spinal instruments these would be eligible for the benefit of the said exemption. Therefore, the argument of the Revenue that the instruments should also be implanted cannot be sustained in law. However, we observe that the instruments should be for severely physically handicapped patients or for joint replacements or spinal instruments. From the product literature and write-up submitted by the respondent-assessee, it is not clear that these are for severely handicapped patients'. To establish this fact expert opinion is required and, therefore the respondent-assesssee should be given an opportunity to lead expert opinion on the matter so as to establish their claim for exemption. The expert opinion can be by way of affidavits of leading orthopaedic surgeons or from hospital rendering such services. - Matter remanded back - Decided in favour of Revenue.
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2014 (10) TMI 557
Benefit of CENVAT Credit - manufacture of exempted and dutiable finished products - contravention of the provisions of Rule 57AD of the erstwhile Rules - Held that:- In the case of Burn Standard Co. Ltd. (2013 (2) TMI 35 - Madras High Court) the period of dispute was Apr.'08 to Dec.'08 under Rule 6 of the Cenvat Credit Rules. The Tribunal set aside the order and allowed the appeal by remanding the matter to the adjudicating authority to decide the matter afresh in the light of retrospective amendment to the Rules along with application filed by the assessee under Section 73 of the Finance Act, 2010. In the present case the period of dispute is March, 2000 to Jan.'01 under Rule 57CC/57AD of the erstwhile Central Excise Rules, 1944 and Revenue had not disputed the reversal of credit of ₹ 11,342/- in their grounds of appeal. - Decided against Revenue.
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2014 (10) TMI 556
Reversal of CENVAT Credit - Assessee contends that excess amount of Cenvat Credit reversed by the appellant, where lesser Cenvat Credit was required to be reversed at the time of clearance of inputs as such, is required to be adjusted while calculating the correct demand of reversal of Cenvat Credit - Held that:- On the issue of reversal of Cenvat on inputs at the time of their clearance as such appellant is not agitating the issue on merits. However, it is the case of the appellant that excess Cenvat Credit reversed by the appellant should be adjusted against the short payment made. Prima facie, there is substance in the argument made by the A.R. that getting refund of excess Cenvat Credit reversal on cenvatable invoices is a separate proceedings and cannot be adjusted against short reversal. Appellant has, therefore, not made out a case for waiver of interest with respect to the confirmed demands and are required to be put to certain conditions. Accordingly, appellant is directed to deposit an amount of ₹ 60,000/- within eight weeks - Partial stay granted.
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CST, VAT & Sales Tax
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2014 (10) TMI 561
Imposition of purchase tax on sugarcane - Tax exemption - principle of promissory estoppel and legitimate expectation - Held that:- The petitioner, upon the assurances and promises contained in the sugar industry promotion policy, 2004 and the steps taken by the government to provide employment and in furtherance to the notification issued under Section 14 of the Act, decided to make investment in the sugar industry in the State of Uttar Pradesh. Based on the eligibility certificates, the petitioner claimed exemption from purchase tax on cane which was duly granted. In addition to the aforesaid, the petitioner was given benefit which the petitioner availed of under other statutes as per the sugar policy such as exemption from entry tax for sale of non-levy sugar produce by the petitioner, exemption from U.P.Trade Tax on sale of molasses, exemption from administrative charges on molasses, reimbursement of charges of cane transportation, reimbursement of additional cost on transport of sugarcane etc. The aforesaid exemption was duly availed of by the petitioner in terms of the sugar policy. Petitioner made a huge investment in the State of U.P. under a promise to it that it would be granted an exemption from payment of purchase tax, etc. under various statutes for a period of 10 years. The petitioner was granted an eligibility certificate. Exemption was also availed of by the petitioner. Consequently, it is not open for the State Government to resile from its promise and deprive the petitioner the benefit of the tax exemption in view of the substantial investments made by the petitioner. We find that the State Government was also benefited by the investment made by the petitioner in the form of industrial development in the State and increase in employment which is in the larger interest of the State. Consequently, the impugned action on the part of the respondents is patently unreasonable, arbitrary and violative of Article 14 of the Constitution. The exemption granted by the State Government was availed of by the petitioner. The State Government, at this stage, cannot resile and contend that since the policy has been discontinued, the exemption would no longer be made available to the petitioner. Having acted on the promise made by the State Government , the action of the respondent in issuing the demand notice on the ground that no further exemption would be granted is wholly arbitrary and cannot be sustained. The petitioner has been benefited by the promise made by the State Government. The petitioner has been granted exemption which the petitioner availed of in the past. The petitioner should be permitted to continue to enjoy the exemption till the remainder of the period as per the original promise. This is part of the legitimate expectation which is reasonable and which has to be given due weight failing which the action of the respondents in denying the exemption would be unreasonable and arbitrary. The petitioner has a legitimate expectation of being treated in a certain way on account of the promise made by the State Government. It is no longer open to the successive Government to take a contradictory stand without supporting it with any documentary evidence. The State Government may be relieved from the liability to carry out its promise on the ground of necessity or expediency. The burden to prove such ground is upon the State Government. The standard of proof required to discharge such burden is strict, heavy and rigorous which the State Government has failed miserably. The State Government has failed to show the material by which action was taken to withdraw the sugar policy. Consequently, we are of the opinion that the principle of promissory estoppel is fully attracted. - notifications are still existing and are in force. The sugar policy may have been revoked but the notifications issued under the statutes still continues to be operative. The benefit accrued under a notification is still available to the petitioner and can be availed of since the same has not been withdrawn. The exemption from purchase tax on purchase of sugarcane was granted to the petitioner company vide notification no. 502/S.Chi.U.Ana-1-06-2528-2004 dated 16.05.2006 issued under Section 14(1) of the Act, which are still in existence and is operative. Thus, the respondent State is bound to provide exemption and benefit of purchase tax to the petitioner. Even though the withdrawal of the sugar policy is arbitrary and has been passed without any application of mind, we are not inclined to quash the said order dated 04.06.2007 as we are of the opinion that the petitioner would get the relief even without the quashing of the order dated 04.06.2007. The impugned demand notices demanding payment of sugarcane purchase tax from all the petitioner's existing units are quashed. The petitioners are entitled for the incentive/remission/exemption etc. as per the sugar policy and the notifications issued under the statutes for the remaining period. In so far as Maqsudapur unit is concerned, the petitioner will produce necessary documents before the State Government, in support of their claim which would be examined by the State Government or its Committee constituted for this purpose and pass appropriate orders for exemption/remission, etc. or otherwise within six weeks thereafter. - Decided in favour of assessee.
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Indian Laws
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2014 (10) TMI 550
Validity of Arbitral award - High court set aside order holding that Arbitrator had not recorded his findings as required under Clause 70 of the General Conditions of Contract - Held that:- Clause 70 makes a clear distinction between findings on each individual item of dispute on the one hand and the sum, if any, awarded in regard to the same on the other. That the Arbitrator had made his award in regard to each item of dispute raised by the appellant before it, is evident from a reading of the award. The question is whether the Arbitrator had recorded his findings on each such items. The High Court has, as noted above, answered that question in the negative; and set aside the award holding that the expression findings must include the reasons for the ultimate conclusion arrived at by the Arbitrator. That view was assailed by learned counsel for the appellant who contended that the expression findings should not imply the process of reasoning adopted by the Arbitrator for recording his conclusions. A finding howsoever cryptic would, according to the submission of the learned counsel for the appellant, satisfy the requirement of Clause 70 for otherwise the Clause would have been differently worded so as to make it mandatory for the Arbitrator to make what is called a speaking award giving reasons for the conclusions arrived at by him. Court declared that Government and their instrumentalities should - as a matter of policy and public interest - if not as a compulsion of law, ensure that whenever they enter into an agreement for resolution of disputes by way of private arbitrations, the requirement of speaking awards is expressly stipulated and ensured. Any laxity in that behalf might lend itself and perhaps justify the legitimate criticism that government failed to provide against possible prejudice to public interest. The predominant use of the expression is in relation to determination by a Judge, Jury, Administrative Agency, Arbitrator or a Referee. The determination is described either as a finding, decision or conclusion; upon disputed facts. It is also described as a determination of a fact supported by evidence on the record. It is interchangeably used as a conclusion or decision a term used by the legal profession and by Courts. In Build India Construction System (2002 (5) TMI 842 - SUPREME COURT) this Court noted in no uncertain terms that the validity of the award had not been specifically questioned on the ground of its having been given in breach of any obligation of the Arbitrator to give reasons as spelled out by the arbitration clause. The judgment of the learned Single Judge did not show, observed this Court, that such a plea was urged before him. The objection petition filed to challenge the award was also found by this Court to be vague and general hence insufficient to give rise to an effective challenge to the award on the ground of it being non-speaking. The plea regarding the Award being non-speaking was raised for the first time before the Division bench in appeal. This Court in that backdrop held that the Division Bench fell in error in entertaining and upholding such a plea at such a late stage. Consequent upon the orders passed by the High Court the Arbitrator shall conclude the proceedings in terms of the provisions of the Arbitration Act of 1940 expeditiously. We further make it clear that in case the Arbitrator already nominated is for any reason unable to take up the assignment the respondents shall within six weeks from today appoint a substitute Arbitrator who shall then enter upon the reference and conclude the proceedings as early as possible. - Decided against appellant.
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