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TMI Tax Updates - e-Newsletter October 23, 2015 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Articles CENVAT CREDIT DISCLOSURE IN SERVICE TAX RETURN- PRACTICAL ASPECTS: PART 1 Highlights / Catch Notes Income Tax Stay of demand - writ petition - Registration under section 12A denied - the petitioner shall not be treated as an assessee in default as contemplated under section 220(6) of the Act, subject to the petitioner depositing ten per cent of the amount stated in the demand notice within a period of four weeks from today - HC Visit to Get Source Accrual of liability - where claim of damages and interest thereon is disputed by the assessee in the court of law, deduction can't be allowed for the interest claimed on such damages in the computation of business income. - AT Visit to Get Source Enhanced compensation and interest - compensation and interest thereon is sub-judice before the Hon’ble Delhi High Court - Admittedly the assessee followed mercantile system of accounting. Under these circumstances, the interest income in question cannot be brought to tax during the year. - AT Visit to Get Source Principles of mutuality - the assessee / society is under no obligation to return the funds to the contributors / members - concept of mutuality claimed by the assessee was rightly rejected by the Revenue. - AT Visit to Get Source Application u/s 12AA rejected - When the constitution of the Society authorizes receipt of money by way of funds, donations, contributions, grants, in addition to subscription and charges received by the Members, then non receipt of the amounts during the year, cannot be a ground to come to a conclusion that the concept of mutuality applies to the assessee - AT Visit to Get Source Eligibility for deduction U/s.10B - AO directed to include the interest from EEFC deposit and the other deposit in the bank account as part of the profits eligible for deduction u/s. 10B - AT Visit to Get Source Long Term Capital Gain on surrender of tenancy right - applicability of provisions of Sec. 50C - assessee is a non-resident individual - provisions of Sec. 50C are not applicable on the transfer of tenancy right. - AT Visit to Get Source Attribution of profits out of the sales made by the head office - the TPO has accepted the gross profit rate declared at 8.81%. In such a situation, acceptance of gross profit attribution of India Branch @ 20% does not inbspire confidence. - AT Visit to Get Source Disallowance of interest and remuneration paid to the partners - change in the partnership deed - If the assessee has filed the partnership deed during the assessment proceedings, then, it will be construed that the assessee has complied with the conditions of section 184. - AT Visit to Get Source Revision u/s 263 - AO while completing the assessment u/s 143(3) never applied his mind to various issues as pointed out by the CIT - revision upheld - AT Visit to Get Source Disallowance of interest paid - if the land is treated as stock-in-trade, the entire interest on the loan used to purchase the land to be treated as revenue expenditure if the loan is genuine. - AT Visit to Get Source Disallowance under S.14A read with Rule 8D - expenditure incurred towards earning of exempt income - once the expenditure claimed is disallowed, the same cannot be capitalized by the assessee. - AT Visit to Get Source Penalty u/s 271C - non deduction of tax at source u/s 194A - the case of the assessee squarely falls under the provisions of Section 273B and penalty is not leviable because assessee is able to prove that there was a reasonable cause for the said failure - AT Visit to Get Source Entitlement to deduction u/s.80IB(10) - additional receipts / income offered by the assessee against the project undertaken by the assessee u/s 132(4) - additional income is eligible for deduction - AT Visit to Get Source Customs Prohibition on working as Customs House Agent - great confidence is reposed in a CHA - when, by such malpractices, there is loss of revenue to the custom house, there is every justification for the Respondent in treating the action of the Petitioner Applicant as detrimental to the interest of the nation and accordingly, final order of revoking his licence has been passed. - HC Visit to Get Source Export of readymade garments - The object of imports being to export readymade garments but not the hanger the hanger is excludible from the benefit of draw back. - AT Visit to Get Source Central Excise Abatement of duty - manufacturing activity of Pan Masala - the communications are violative of the provisions of sub-rule (2) of rule 6 of the Pan Masala Rules, inasmuch as, the Annual Production Capacity of the petitioner’s factory has been determined without following the procedure as provided under those rules. - HC Visit to Get Source Case Laws: Income Tax 2015 (10) TMI 1904 Settlement application - whether the petitioner in each of these petitions is a related party of the respective specified person under section 245C(1)(ia)? - Held that:- Admittedly, neither M/s. Rockland Hospitals Ltd. nor any of its directors individually or their relatives individually hold any substantial interest in the applicant companies. The finding of the Settlement Commission is that there is no shareholder having substantial interest in this company i.e. there is no shareholder having more than 20% shares in the Petitioner companies. As there is no person holding substantial interest in these 3 companies, conditions mentioned in Explanation (a)(vi)(B) are not satisfied. The words used are “any director of such company” and “any relative of such director”. If the intention of the legislature of had been to cumulatively consider the shareholding of more than one directors or more than one relative of such directors to constitute substantial interest, then it would have specified so. Since the legislature has not provided for clubbing of the shareholding of different persons to determine substantial interest, the same cannot be considered. The fact that the legislature has catered for a situation of beneficial ownership of shares shows that the omission of clubbing of shareholding is not unintentional. The alleged fact that four directors of the specified person (M/s Rockland Hospitals Ltd.) hold 50% shares of the petitioner companies does not satisfy the condition. The requirement is that an individual director must hold more than 20% shares, which apparently is not the case. The further plea that the family members of Srivastava family and the Bhandari Family hold more than 20% of the shares of the specified person (M/s Rockland Hospitals Ltd.) and the petitioner companies and further that the petitioner companies have invested 100% share capital in the specified person (M/s Rockland Hospitals Ltd.)is of no avail. As elucidated hereinabove, under clause (a)(v), only if a director of the Petitioner companies had a substantial interest in the specified person (M/s Rockland Hospitals Ltd.), then, the petitioner companies, their directors and relatives of their directors qualify as related parties. Under clause (a)(vi), the petitioner companies would qualify as related parties, if the specified person (M/s Rockland Hospitals Ltd.) or any of its directors or any relative of any of its directors had a substantial interest in the petitioner companies. This is clearly not the case. Thus, we do not find any infirmity with the reasoning of the Settlement Commission. These writ petitions are also liable to be dismissed. 2015 (10) TMI 1903 Stay of demand - writ petition - Registration under section 12A denied - Assessing Officer assessed the total income of the petitioner as ₹ 48,22,54,670/- and raised a demand of ₹ 20,41,52,870/- in scrutiny assessment - stay petition submitted - Held that:- From the facts and contentions noted hereinabove, it is apparent that none of the exceptions laid down by in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, (2013 (8) TMI 458 - SUPREME COURT) interference by the High Court in exercise of powers under Article 226 of the Constitution have been made out in the facts of the present case. It is not the case of the petitioner that the impugned order has been passed in breach of the principles of natural justice or that the statutory authority has not acted in accordance with the provisions of the Act or has acted in defiance of the fundamental principles of judicial procedure. Under the circumstances, when there is an efficacious alternative statutory remedy available to the petitioner and the petitioner has already availed of the same, in the opinion of this court, no case has been made out for entertaining a writ petition against the assessment order framed under section 143(3) of the Act. Besides, the question as to whether the activities carried out by the petitioner fall within the ambit of the proviso to section 2(15) of the Act, is a mixed question of fact and law and, hence, when there is a statutory remedy available and which has been resorted to by the petitioner under the provisions of the Act, this court would be loathe to interfere in exercise of its extraordinary powers under Article 226 of the Constitution. In the opinion of this court, the decision of the Supreme Court in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, (2013 (8) TMI 458 - SUPREME COURT) referred to hereinabove would be squarely applicable to the facts of the present case and hence, this court is not inclined to entertain the petition qua the relief challenging the impugned assessment order. Whether the petitioner is entitled to any relief under section 220(6) of the Act - Held that:- On a plain reading of the orders passed by the respondents No.1 to 3 under section 220(6) of the Act, it is manifest that such orders have been passed in a mechanical and perfunctory manner without application of mind to the relevant factors for considering the question of grant of stay and as such cannot be sustained. Ordinarily, this court while setting aside the order passed under section 220(6) of the Act, would remand the matter to the concerned authority for the purpose of re-deciding the application under section 220(6) taking into consideration the relevant factors. However, having heard the learned counsel for the respective parties on the merits of the case as well as on the question of grant of stay, the court is of the view that the petitioner has made out a prima facie case for grant of stay of the demand, subject to reasonable conditions. Under the circumstances, instead of remanding the matter to the respondent authorities, the court is of the view that the ends of justice would be met if the petitioner is directed to pay an amount equal to ten per cent of the demand raised by the respondents. Having regard to the facts and circumstances of the case and the quantum of the demand raised against the petitioner, the court is of the view that the Commissioner (Appeals) should be asked to dispose of the appeal within a stipulated time frame. In the light of the above discussion, the petition partly succeeds and is, accordingly allowed to the following extent. It is ordered that the petitioner shall not be treated as an assessee in default as contemplated under section 220(6) of the Act, subject to the petitioner depositing ten per cent of the amount stated in the demand notice within a period of four weeks from today. The Commissioner (Appeals) shall dispose of the appeal preferred by the petitioner under section 246 of the Act within a period of four months from the date of receipt of a copy of this judgment. 2015 (10) TMI 1902 Incorrect notices under Sections 244 and 245 of the Income Tax Act - seeking recovery from number of income tax assessees - Held that:- At since the directions given by the Delhi High Court [2013 (3) TMI 316 - DELHI HIGH COURT] have now been complied by the Income Tax Department, it is not necessary to issue any further directions. The Delhi High Court has given the following directions :- (i) Directions given in paragraph 16 to 18 regarding maintenance of register for applications under Section 154, receipt of the said applications and their disposal. (ii) We have confirmed the interim directions given in paragraph 13 of the order dated 31st August, 2012 (see paragraphs 23 and 24 above). The said direction, we understand has been implemented. (iii) With regard to past adjustments where procedure under Section 245 has not been followed, we have issued directions in paragraphs 26 to 28. (iv) With regard to the interest under Section 244 A, we have issued directions set out in paragraphs 31 and 32 that interest should be paid when the assessee is not at fault. (v) With regard to uncommunicated intimations under Section 143(1), directions are given in paragraphs 33 and 34. (vi) With regard to unverified TDS under the heading 'U' in Form 26AS, directions have been issued in paragraph 42 for verification and correcting unmatched challans within a time period, which should be fixed by the Board keeping in mind the date of filing of return and processing of return by the assessing officer. (vii) The seventh direction / mandamus is regarding credit of TDS to an assessee when the tax deducted has been deposited with the Revenue by the deductor. Directions in this regard have been given in paragraphs 50 and 51." The Income Tax authorities shall follow these directions in case of other cities, including the city of Mumbai, in Maharashtra State. 2015 (10) TMI 1901 Deduction allowed for the interest claimed on damages while computing business income - Accrual of interest expenditure - Held that:- It is trite that entries in the books of account are not conclusive of accrual of income or deductibility of expenses. If an entry is passed in the books of account for a deduction which is otherwise not available as per law, it does not make the claim per se deductible. In the like manner, if a claim is otherwise deductible, but no entry has been passed in the books of account, then there can be no denial of such a claim. Essence of the matter is the deductibility or otherwise as per law and not the passing of entries in the books of account. In our considered opinion, entries in books are not conclusive of accrual of income or deductibility of expenses. On the contrary, it is the incurring of liability or accrual of income by means of a legally enforceable right, which decides about the deductibility of an expense or earning of income. Our view gets strength from the judgment of the Hon'ble Supreme Court in CIT vs. SMIFS Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) which reiterates similar view taken in several earlier judgments includingCIT vs. Shoorji Vallabhdas & Co. (1962 (3) TMI 6 - SUPREME Court) . As such, we jettison this contention advanced on behalf of the Revenue as a reason for sustaining the disallowance of interest. We sum up our conclusion on the point that the assessee did not incur any liability for payment of interest to Alimenta as at the end of the years under consideration. Since no legally enforceable liability existed against the assessee, the deduction has been rightly denied. Applicability of provision of section 40(a)(i) - Held that:- In this regard, we find that this provision with marginal note of - 'Amounts not deductible' - applies to disallow the otherwise allowable deductions in the computation of income of the payer under the head "Profits and gains of business or profession", if any sum chargeable to tax under the Act is payable outside India; or in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200. Conversely, if deduction is otherwise not allowable under the head 'Profits and gains of business or profession', then there cannot be any further disallowance in the computation of income for want of deduction of tax at source etc. In view of our decision as to the non-incurring of liability for interest by the assessee and the resultant nonavailability of deduction of interest in the computation of income for the years under consideration, section 40(a)(i) of the Act becomes inapplicable, as the underlying condition for its applicability, being the otherwise eligibility of deduction for expense, becomes wanting. In view of the foregoing reasons, we answer the question posted before this Special bench in negative by holding that in the facts and circumstances of the case, where claim of damages and interest thereon is disputed by the assessee in the court of law, deduction can't be allowed for the interest claimed on such damages in the computation of business income. Now the instant appeals are directed to be placed before the Division Bench for disposal having regard to the decision of the special bench on the question raised before it. 2015 (10) TMI 1900 Deemed dividend under S.2(22)(e) - Inter-Corporate Deposits (ICDs) received by the assessee from M/s. Excel Rubber Limited - CIT(A) deleted the addition - Held that:- Respectfully following the decision rendered by the coordinate bench of this Tribunal in assessee’s own case for the assessment years 2006-07 and 2010-11, we uphold the impugned order of the learned CIT(A), deleting the addition made by the Assessing Officer under S.2(22)(e) by treating the amount of ICD received by the assessee form M/s. Excel Rubber Pvt. Ltd. as deemed dividend as admittedly the assessee is not a shareholder of the lender company - Decided in favour of assessee. 2015 (10) TMI 1899 Additional depreciation - generation of power - Held that:- As decided in CIT vs. Hi Tech Arai Ltd. [2009 (9) TMI 60 - MADRAS HIGH COURT] where the assessee has set up windmill in addition to some other existing business, and is engaged in the generation of electricity, the assessee is entitled to claim additional depreciation on the same We find that the claim made by assessee on account of additional depreciation is allowable, no interference is called for in the order of CIT(A), and therefore same is upheld. The AO is directed to allow additional depreciation u/s 32(1)(iia) of the Act. All of the grounds raised by Revenue are dismissed. - Decided in favour of assessee. 2015 (10) TMI 1898 Enhanced compensation and interest - whether the AO and the Ld.CIT(A) have erred in not excluding from taxable income the disputed interest, on enhanced compensation? - Held that:- Vide Circular No.5/2001-02(F.No.142/13/2010-SO-PPL) dt. 3.6.2010, the Board explained the rationalisation of the provision by insertion of S.56(2)(viii). Income shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. There is no gainsaying that the department circulars are binding on the assessee. Admittedly the assessee followed mercantile system of accounting. Under these circumstances, the interest income in question cannot be brought to tax during the year. Thus we hold that the interest income in question cannot be brought to tax in the hands of the assessee. 2015 (10) TMI 1897 Addition on unsecured loans - CIT(A) deleted the addition admitting additional evidence - Held that:- AO had vide order sheet entry dt. 13.12.2010 asked the assessee for details and passed the order of assessment on 24.12.2010. Thus we are of the considered opinion that the First Appellate Authority has rightly admitted the application of the assessee under Rule 46A as in our view the assess was prevented from sufficient cause in filing the evidence before the A.O. during the assessment proceedings. This decision of the First Appellate Authority does not call for any interference. Addition u/s 68 correctly deleted by FAA as the assessee has already discharged the burden that lay on it by proving the identity, credit worthiness and genuineness of the transactions , and as the A.O. could not find any evidence to contradict the claim of the assessee, we uphold the order of the First Appellate Authority and delete this addition.- Decided in favour of assessee. Disallowance of "Processing fee" - CIT(A) deleted the addition - Held that:- First Appellate Authority has given a categorical finding that there was an error committed by the bank. The HDFC bank had wrongly debited processing fee to the account of M/s Research Co. Book Centre, which is a sister concern of the assessee, instead of the assessee’s bank account. This mistake was latter realised and the processing fee in question which was due and paid to HDFC bank by the assessee, was claimed as revenue expenditure. In view of the above evidences the First Appellate Authority correctly deleted the disallowance.- Decided in favour of assessee. Addition u/s 2(22)(e) - CIT(A) deleted the addition - Held that:- First Appellate Authority correctly deleted the addition for the reason that the assessee company’s business, is the same as the business of M/s Arihant Literary Works Pvt.Ltd. and M/s Researchco Book & Periodicals Pvt.Ltd. and that an advance of loan made in the ordinary course of business, does not fall within the purview of S.2(22)(e) of the Act. Further the assessee is not a registered share holder of M/s Arihant Literary Works Pvt.Ltd. or M/s Researchco Book & Periodicals Pvt. Ltd. and that the assessee is also not a benefincial owner of the shares. Under the circumstances, the decision of the First Appellate Authority does not call for any interference - Decided in favour of assessee. 2015 (10) TMI 1896 Application u/s 12AA rejected - applicability of Principles of mutuality - Held that:- A perusal of the Clauses demonstrate that the principles of mutuality are not attracted in this case, for the reason that, there is no identity between the contributor and the participant of the funds. The main object, does not lay down, that the participants are confined to the persons who are Members of the Society. The argument of the Ld.Counsel for the assessee, that Clauses 10 (rules and regulations) and Clause 12 of the MOA cannot be applied, for the reason that no such activity has taken place during the year, or that the happening of dissolution is hypothetical is not correct. When the constitution of the Society authorizes receipt of money by way of funds, donations, contributions, grants, in addition to subscription and charges received by the Members, then non receipt of the amounts during the year, cannot be a ground to come to a conclusion that the concept of mutuality applies to the assessee. Similar is my view on Clause 12 of the MOA read with Clause 18 of the Rules and Regulations in Annexure-I, lead me to a conclusion that concept of mutuality claimed by the assessee was rightly rejected by the Revenue. The Hon’ble Supreme Court in the case of Chelmesford Club (2000 (3) TMI 4 - SUPREME Court) held that “where there is identity in the character of those who contribute and of those who participate in the surplus, the fact of incorporation may be immaterial and the incorporated company may well be regarded as a mere instrument, a convenient agent for carrying out what the members might more laboriously do for themselves”. Their Lordships have laid down the three tests before the principle of mutuality can be applied. In a nutshell, these tests are: (i) the identity of the contributors to the fund and the recipients from the fund; (ii) the organization exists only for mutual benefit; (iii) the funds can be expended for mutual benefit or returned to the contributors. It is only when these tests are fulfilled that the principle of mutuality can be applied. In the present case, the assessee is under no obligation to return the funds to the contributors. - Decided against assessee. 2015 (10) TMI 1895 Unexplained cash deposits in the bank account - CIT(A) deleted 1the addition u/s 68 - Held that:- CIT(A) while deleting the addition to the extent of deposits from business has noted that considering the nature of business of Assessee, the receipts of sale proceeds by assessee in cash and the same being deposited in the bank account to be a plausible explanation. Ld. CIT(A) has also noted that Assessee had issued cheques against the cash deposits and cheques were prima faciely issued to the suppliers. With respect to the explanation of the source of deposits of ₹ 2,48,135/- being from agricultural income was also accepted by ld. CIT(A) in view of the fact that Assessee had declared agricultural income of ₹ 2,48,000/- in the return of income and the same was also accepted by the A.O. The explanation of the balance portion of cash deposits of ₹ 1,03,365/- to be out of accumulated savings was also accepted by ld. CIT(A) in view of the fact that Assessee was regularly assessed to tax. Considering the totality of the facts and in view of any contrary material placed on record by Revenue and further as to how the decision relied upon by ld. CIT(A) would not be applicable to the present case, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. - Decided in favour of assessee. 2015 (10) TMI 1894 Addition u/s 68 - CIT(A) deleted the addition - Held that:- perusal of the CIT(A)’s order as well as assessment order, there is a clear finding given by the CIT(A) that the assessee has given a detailed chart related to proceeds of sale of shares and repayment of loan during the assessment proceedings but the Assessing Officer has overlooked these evidences and made addition. We are of the view that the impugned addition was rightly deleted by the Ld. CIT(A). - Decided in favour of assessee. 2015 (10) TMI 1893 Disallowance u/s 40A(3) - assessee has filed the ledger extract of M/s Someshwara Fertilizers & Chemicals Ltd., and further argued that the AO and the CIT(A) were not justified in rejecting the books of assessee u/s 143(3) on the presumption that the entries in the books of assessee are not matching with the ledger extract of the said company i. E M/s Someshwara Fertilizers & Chemicals Ltd.- Held that:- Under these circumstances, when there is lack of clarity the entries in the books of accounts of the assessee were not matching with the entries maintained by M/s Someshwara Fertilizers & Chemicals Ltd. we set aside the issue to the Assessing Officer to take appropriate steps such as issue of summons to M/s Someshwara Fertilizers & Chemicals for clarifying this mismatch and thereafter giving a reasonable opportunity to the assessee to decide the issue in accordance with law. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1892 Eligibility for deduction U/s.10B - interest received from EEFC deposits and Bank deposits - Held that:- This issue has been decided by the Hon’ble Delhi High Court in favour of the assessee in the case of CIT vs. Indian Toners and Developers Ltd. [2008 (12) TMI 375 - DELHI HIGH COURT ] and by a series of Tribunal orders. Accordingly, we direct the Assessing Officer to include the gain from EEFC account as part of the profits eligible for deduction under section 1OA of the Act. This issue is decided in favour of the assessee. Also following the decision of the Tribunal in the case M/s.Cognizant Technology Solutions India Pvt. Ltd. Vs. ACIT [2013 (1) TMI 767 - ITAT CHENNAI ] hereby direct the Ld. Assessing Officer to include the interest from EEFC deposit and the other deposit in the bank account as part of the profits eligible for deduction u/s.10B of the Act because the nature of income earned on both the deposits are similar and the nature of deductions in Section 10A & 10B of the Act is also similar though available to assessee’s engaged in different field. Decided in favour of the assessee. 2015 (10) TMI 1891 Entitlement to exemption u/s 10(23C)(iiiad) denied - Held that:- The only activity carried on by the assessee during the year is that of construction of the school building. This fact remains undisputed by both the Taxing Authorities. Now, in ‘Commissioner of Income Tax vs. Om Sarala Babu Educational Trust’(2014 (6) TMI 377 - ALLAHABAD HIGH COURT), the assessee had taken various steps, including the construction of the building of the school. The CIT(A) allowed a similar claim u/s 10(23C)(iiiad) of the Act. This was confirmed by the Tribunal. The order of the Tribunal was confirmed by the Hon’ble High Court. No decision to the contrary has been brought to our notice. It thus cannot, on facts, be said that during the year, the assessee institution did not exist solely for educational purposes. All the other distinctions sought to be made out by the learned CIT(A) do not act detrimental to the claim of the assessee, particularly when the expenses incurred were expenses incurred only on account of bank charges and interest, books and periodicals and purchase of dresses and lease rent and nothing else. Apropos the donations too, the affidavits of the donors were simply rejected summarily, without controverting the contents thereof and without showing the donations to be sham. It is pertinent to note that the capital contribution of ₹ 10,99,500/- was accepted by both the authorities below. Moreover, the assessee has obviously correctly not claimed deprecatioin on the assets, since the school did not start functioning during the year. Thus the order under appeal is reversed. Accordingly, the assessee’s claim u/s 10(23C)(iiiad) of the Act is allowed. - Decided in favour of assessee. 2015 (10) TMI 1890 Transfer pricing adjustment - addition made by the AO on account of difference in arms length price deleted by CIT(A) - Held that:- It is clearly established that the assessee is carrying on the business activity other than as per service agreement with the principle. Therefore, the 10% markup is to be made only of ₹ 32,69,372/- in the absence of any comparable transaction. The action of the AO in making addition of ₹ 20,41,412/- is not in order. In view of above, we find that the Ld. CIT(A) has rightly deleted the addition of ₹ 20,41,412/- on this account. Therefore, we are of the view that no interference is called for in the well reasoned order passed by the Ld. CIT(A) - Decided against revenue. Disallowance u/s. 14A - CIT(A)restricted the disallowance - Held that:- Even in we consider that expenses incurred on accounting & infrastructure services and auditor's remuneration amounting to ₹ 9,98,524/- and ₹ 2,18,994/- respectively are partly connected with the earning of dividend income and investment. Such disallowance should not be more than 10% of expenses of ₹ 12,17,518/- (i.e. ₹ 1,21,752/-) when the assessee has already disallowed and capitalized in investment a sum of ₹ 3,08,710/-.) - In view of the above discussion the disallowance, we find that the Ld. CIT(A) has rightly restricted to when no director's remuneration has been claimed by the Ld. CIT(A). Therefore, we are of the view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), hence, we uphold the impugned order - Decided against revenue. 2015 (10) TMI 1889 Long Term Capital Gain on surrender of tenancy right - applicability of provisions of Sec. 50C - assessee is a non-resident individual - Held that:- Undisputedly tenancy right is a capital asset but whether transfer of such capital asset has to be looked upon in the light of the provisions of Sec. 50C of the Act. A perusal of Sec. 50C suggests that it is only for the limited purpose of computing capital gain in respect of sale of land and building, only when such sale take place Stamp duty value has to be substituted for the sale consideration, if the sale consideration is less than the stamp duty value. In our considered opinion, in case of the surrender of tenancy right, provisions of Sec. 50C would not apply. Dismissing Revenue’s appeal, we hold that provisions of Sec. 50C are not applicable on the transfer of tenancy right. As we have dismissed Revenue’s appeal, we do not find any reason for referring the matter to the DVO and adopting DVO’s valuation for the computation of Long Term Capital Gains - Decided in favour of assessee. 2015 (10) TMI 1888 Disallowance made on the component of interest under section 14A - CIT(A) deleted the disallowance in part - Held that:- No valid reason to interfere with his findings in partly deleting the disallowance made under section 14A of the Act and conclusion it is presumed that the appellant had made investments only out of the surplus funds available from the earlier years. Respectfully following the decision of the High Court of Bombay in the case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT), decision of the learned CIT(Appeals) in the appellant's own case for the A.Y. 2009-10, I am fully convinced that the AO has legally erred in making disallowance on the component of interest. AO has correctly applied the provisions of sec.14A read with Rule 8D and applied 0.5% of average investments which work out to ₹ 35,18,000/- which is reasonable and justifiable. This ground of appeal, as it relates to disallowance of 0.5% of average investments as expenditure is confirmed The Revenue also did not rebut the findings of the Commissioner of Income Tax (Appeals) with evidences. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal raised by the Revenue. As we have sustained the order of the Commissioner of Income Tax (Appeals), the cross objection filed by the assessee challenging the impugned order in sustaining the disallowance to the extent of 0.5% of average investments is also dismissed. - Decided partly in favour of assessee. 2015 (10) TMI 1887 Attribution of profits out of the sales made by the head office - CIT(A) confirming the action of AO of attributing the profit on the direct sales made in India by the Head Office of the Appellant as the profit of the Indian Branch - Held that:- Decision of the Tribunal in assessee’s own case for earlier assessment years 1999-2000 & 2000-01, wherein the coordinate bench had accepted the estimate of gross profit attribution at 10% in place of 20%. We have also perused the TP report and the computation, wherein, the TPO has accepted the gross profit rate declared at 8.81%. In such a situation, acceptance of gross profit attribution of India Branch @ 20% does not inbspire confidence.We, therefore, accept the gross profit margin declared by the assessee for the year under consideration - Decided in favour of assessee. Non-reduction of the management fees offered to tax - CIT(A) directing AO to reduce the management fee offered to tax by the Appellant in its return of income in respect of direct sales by the Head Office - Held that:- As decided in earlier AY's the fact which remains uncontroverted by the revenue authorities and the DR are that the assessee in the year under consideration was covered under the TP regulations and in those proceedings, the factum of management fee has dealt with extensively and in the process, the TPO found the receipt of management fee by the India Branch from SJMH related to services provided to both SJMI & SJMH. It is evident from the accounts submitted before the AO, because in the profit & loss account submitted, it showed the receipt of ₹ 9,60,57,310/which included ₹ 79,20,240/under the head management fee for marketing support at ₹ 79,20,240 - Decided in favour of assessee. 2015 (10) TMI 1886 Penalty u/s 271(1)(c) - Assessee has concealed the particulars of income or furnished inaccurate particulars of income in so far as its claim of Long Term Capital Loss on redemption of units of mutual funds - only ground as to why the penalty was applied against the assessee because certain claim in his return of income was not accepted by the Revenue - Held that:- The assessee company has disclosed full details and particulars of its claim of carry forward of long term capital loss in the return of income. The claim of indexation was a bona fide claim as made by the assessee in respect of units of mutual funds. There was no indexation claimed by the company in respect of bonds of Konkan Railway Corporation Ltd. It is rightly held by the Hon'ble Jurisdictional High Court in Administrator of Estate of Late E.F. Dinshaw (2015 (9) TMI 318 - BOMBAY HIGH COURT) that where all details of loss claimed by the assessee was stated in the return of income but was rejected by the Revenue, it would not amount to furnishing of inaccurate particulars or concealment of income on the part of the assessee and, therefore, penalty for concealment of income could not be levied. Similar finding also given in the decision of the Hon'ble Supreme Court in Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) wherein it has been held that merely because a claim made by the assessee is rejected by the Revenue, levying of penalty under section 271(1)(c) is not justified. - Decided in favour of assessee. 2015 (10) TMI 1885 Unaccounted sale - undisclosed income as calculated by applying GP rate - Held that:- FAA was right in holding that the amount of ₹ 25,08,740 deserves to be treated as unaccounted receipt on account of sale on which GP rate of 29.01% was applied to work out undisclosed income of ₹ 7,27,534. Ld. CIT(A) also noted that the amount of shortage in stock of physical verification of ₹ 21,958 was also included in the said amount of undisclosed income as calculated by applying GP rate. - Decided against revenue Unaccounted investment in plant and machinery - Held that:- CIT(A) rightly concluded that the assessee purchased machinery from M/s Dellantechica Ltd. and the payments were made through banking channel besides being partly financed by SBI. In absence of supporting documents as regards bank loan, hypothecation etc., the CIT(A) confirmed addition of ₹ 4,86,000 made by the AO in this regard. We further note that the CIT(A) allowed telescoping of the other investment in the fixed assets/capital and concluded that no further and separate addition is required to be made on this count since the assessee purchased this machine on 2.8.2006 in the fifth month of financial period, therefore, it can easily be inferred that sufficient amount of profit was earned by the assessee from unaccounted turnover to make investment in the aforesaid fixed asset viz. Plant and machinery, therefore, the CIT(A) was right in granting telescoping of this unaccounted investment. - Decided against revenue. 2015 (10) TMI 1884 Disallowance of interest and remuneration paid to the partners - change in the partnership deed - Held that:- Hon’ble Calcutta High Court rendered in the case of CIT Vs. S.R. Baliboi & Associates [2015 (5) TMI 549 - CALCUTTA HIGH COURT] filing of the partnership deed along with return as contemplated in section 184 is a directory. If the assessee has filed the partnership deed during the assessment proceedings, then, it will be construed that the assessee has complied with the conditions of section 184. The assessee has filed the copy of new deed during the regular assessment proceedings. It is discernible from the submission made by the assessee and reproduced by the ld.CIT(A). Thus we delete the disallowance made by the ld.AO. - Decided in favour of assessee. 2015 (10) TMI 1883 Revision u/s 263 - as per CIT(A) AO failed to examine various issues regarding contracts entered into with M/s. IJM (India) Infrastructure Ltd. and Madras Cements Ltd., diesel expenses incurred by the assessee in respect of excavator, lease hire charges paid to Smt. A.Saraswathi, Pondicherry, Mr. K.S.Subbaraman, Tindivanam and Mr. S.Navaneethakrishnan, Tindivanam @ ₹ 6,00,000/- each and ₹ 1,90,25,860/- debited to income and expenditure account by the assessee in respect of hire charges paid by the assessee and the applicability of provisions of section 40(a)(ia) on such payments, excess funds flow over and above the funds available etc - Held that:- Assessing Officer neither called for any details with regard to various issues raised by the Commissioner of Income Tax in the show cause notice nor made any enquiries before allowing the claims of the assessee while completing the assessment. In the case of M/s. Malabar Industrial Co.Ltd., (2000 (2) TMI 10 - SUPREME Court ), the as held that “an incorrect assumption of facts or incorrect application of law will satisfy the requirement of the order being erroneous. Similarly, orders passed without applying the principles of natural justice or without application of mind are also erroneous”. In the instant case, the Assessing Officer while completing the assessment under section 143(3) never applied his mind to various issues as pointed out by the Commissioner of Income Tax in his order. AO has passed the assessment order allowing the claims of the assessee without calling for the details and examining them. Accordingly, we uphold the impugned order of the Commissioner of Income Tax of revision - Decided against assessee. 2015 (10) TMI 1882 Reopening of assessment - assessee had claimed loss by trading in its own shares - CIT(A) quashed reassessment proceedings - Held that:- Reassessment proceeding was initiated for re-appraisal of the facts already on record and this was clearly a case of mere change of opinion. No fresh tangible material came to Assessing Officer’s possession to justify the initiation of reassessment proceedings and the details regarding amalgamation were already on record and the quantification of long term capital gains had duly been considered by him in the original assessment. Further, it is well settled law that there should be live nexus between reasons recorded and formation of belief. In the present case the Assessing Officer formed the belief regarding escapement of income on the ground that assessee had claimed loss by trading in its own shares which was factually incorrect. Therefore, in view of the decision of the Hon’ble Supreme Court in the case of Kelvinator of India Limited reported in [2010 (1) TMI 11 - SUPREME COURT OF INDIA ], the reassessment proceedings were bad in law, which rightly cancelled by the ld. CIT(Appeals). We accordingly confirm the order of ld. CIT(Appeals) on these observations. - Decided in favour of assessee. 2015 (10) TMI 1881 Disallowance u/s 40(a)(i) - non deduction of TDS u/s.195 on commission paid to foreign agents - Held that:- If there are services rendered by non-residents, who have no permanent establishment in India or have any business connection in India, by virtue of which the payment of commission accrued or arose in India then, it is exempted, if the assessee is able to prove that the services were rendered by those non-residents at abroad. In the present case, the assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, we are not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the non-resident agent and the payments made thereof - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1880 Disallowance of interest paid - in-genuine loans - Held that:- It is already observed that the loan is not genuine in earlier assessment years. When the principal loan itself is not genuine, there is no question of allowing of any interest on such non-genuine loan. Being so, disallowance of interest on on-genuine loan is justified. Regarding the disallowance of interest on the unsecured land utilized for the purchase of land, in our opinion, the interest incurred upto the date of sale deed registration of the land to be considered as capital expenditure, if it is treated as capital asset by the assessee and to be added to the cost of the land and interest incurred after the purchase of the land to be considered as revenue expenditure. On the other hand, if the land is treated as stock-in-trade, the entire interest on the loan used to purchase the land to be treated as revenue expenditure if the loan is genuine. With this observation, we direct the AO to reconsider the issue. - Decided partly in favour of assessee. Disallowance of sub-contract expenses u/s.40(a)(ia) - AO noticed that the assessee has neither deducted any TDS as per the provisions of sections 194A and 194C of the Act, nor remitted to the Govt. of India as on 31.03~2008 - Held that:- Similar issue was considered in the case of Shri N. Palanivelu v. ITO (2015 (10) TMI 1415 - ITAT CHENNAI), wherein held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment yea in respect of these payment. However, the assessee has not brought on record, the details of outstanding expenses or schedule of sundry creditors showing whether the impugned amount is outstanding at the end of the close of the previous year relevant to the assessment year either in the name of the party or outstanding expenses. Hence, in the interest of justice,we are remitting the issue back to the file of the Assessing Officer with direction to verify the claim of the assessee and the assessee shall place necessary evidence in support of his claim. - Decided in favour of assessee by way of remand. 2015 (10) TMI 1879 Treatment to long term capital gain and short term capital gain loss - CIT(A) directing AO not to treat the long term capital gain and short term capital gain loss as speculation transactions - Held that:- No infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals) because there is no positive income available for taxation for the current year and even if, these are held to be speculative transactions, the loss was required to be set off against the profit during the year itself as per sub-section 1 to section 73. However, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that the LTCG and STCG were not speculative transactions. - Decided against revenue. Addition of the apportioned expenditure towards speculation activity - CIT(A) deleted part addition - Held that:- As we have upheld the stand of the ld. Commissioner of Income Tax (Appeals) that such gains/losses were not speculative transaction, thus, under these circumstances, allocation of expenses was not required. The Assessing Officer treated the allocation of expenses to be speculative activity of the assessee on the basis of percentage of income/profit. Ultimately, it is the turnover, which requires incurring of expenses, thus, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that the allocation of expenses was required to be made on the basis of turnover as offered by the assessee because the assessee itself considered stamp duty expenses of ₹ 1,00,729/-, transaction charges of Rs, 51,832/- and STT of ₹ 5,23,542/- as expenses, thus, we find no infirmity in directing to consider stamp duty expenses, STT and transaction charges/additional expenses pertaining to speculation activity granting part relief to the assessee. The stand of the ld. Commissioner of Income Tax (Appeals) is affirmed.- Decided against revenue. Re-work the disallowances made u/s 14A by excluding the stock in trade from the value of investments as directed by CIT(A) - Held that:- Without going into much deliberation, we note that under the facts available on record to this limited extent, we are in agreement with the ld. DR/Assessing Officer that the provision of section 14A read with Rule-8D of the Rules are applicable. The Tribunal, in the case of Dy.CIT vs Damani Estates and Finance Pvt. Ltd. (2013 (8) TMI 457 - ITAT MUMBAI) has clarified that Rule 8D shall apply qua the shares held as stock-in-trade. The Tribunal has, therefore, in effect confirmed its earlier order, passed by its Special Bench, in ITO vs Daga Capital Management Pvt. Ltd. (2008 (10) TMI 383 - ITAT MUMBAI). However, the Tribunal has clarified that the disallowance in respect of proportionate interest shall be restricted to 20% of such interest. Subject to this modification, we confirm the application of section 14A read with Rule-8D - Decided partly in favour of revenue 2015 (10) TMI 1878 Disallowance on account of depreciation - grant of subsidy by the DIC - Held that:- The basic requirement is that the cost of an asset should be made by the grant of subsidy. As against that, the Assessing Officer has mentioned that the subsidy was in the form of liability which was to be re-paid by the assessee may be after a long period of 15 years. The Assessing Officer has not examined the exact claim of subsidy pronounced by the appropriate authority as also the terms of clauses of re-payment of the subsidy granted. The first appellate authority has also not appreciated this fact although it was very much mentioned in the assessment order. Therefore, in the interest of natural justice, this issue should go back to the file of the Assessing Officer to re-examine the facts of the case after perusing the scheme under which the subsidy was granted. Resultantly, the ground is restored back for denovo consideration by the Assessing Officer and, hence, this ground may be treated as allowed for statistical purposes only. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1877 Bogus/unverifiable purchases - calculation under section 80HHC - Held that:- The issue in question may be set aside to the file of AO to decide the same afresh after the judgment rendered in the case of Anuj Kumar Varshney & Others vs. ITO (2015 (4) TMI 533 - ITAT JAIPUR) wherein held 15% of the unverifiable purchases shall be held to be income of the assessee from undisclosed sources in the relevant years. Also even there is no note in the computation in case of addition made on account of any reasons, the deduction would be allowed. - Decided in favour of assessee for statistical purposes. Deduction u/s 10AA - CIT(A) allowed the claim - Held that:- No infirmity in the order of ld. CIT (A). Inadvertent mistake in Form No. 56F cannot disentitle assessee from valid claim which is corrected in Form No. 56F (Rule 60). Therefore, we uphold the order of ld. CIT (A) on this issue. The ground of the revenue is dismissed.- Decided in favour of assessee 2015 (10) TMI 1876 Miscellaneous Applications dismissed for ex-parte for want of prosecuting these objections - Held that:- It is for assessees to make arrangements for receipt of the notices. In the absence of any compliance to the notices, Miscellaneous Applications again were dismissed ex-parte. Even as seen from the present Miscellaneous Applications, assessees' addresses have changed from Plot No. 80, Road No. 9, Jubilee Hills, Hyderabad to Fortune Monarch Hall, 3rd Floor, # 306, Plot No. 707 – 709, Jubilee Hills, Road No. 36, Hyderabad. Even for the new address now given, no communication has been filed separately. In the absence of any clear indication at what place assessees are functioning at present, It may be difficult for the registry to serve notices on the parties. Unless assessees make arrangements on its own or follow up with the registry, this forum cannot be held responsible for non-service of notices/orders. Considering the sequence of events and the fact that assessees are undergoing lot of disturbances in the business being part of Satyam Group of cases which have been investigated by various authorities and considering the submissions of assessees and facts of the case, we are of the opinion that Miscellaneous Applications filed on 27-07-2011 can be restored by recalling the order dt. 23-09-2011. However, assessee is directed to pay a cost of ₹ 1,000/- per Miscellaneous Application, as there is failure on its part in furnishing the correct addresses. Assessees herein are directed to pay cost of ₹ 1,000/- per each Miscellaneous Application, as per the rules. 2015 (10) TMI 1875 Failure to deduct tax at source - interest payable by the assessee under S.201(1A) - Held that:- We restore these matters to the file of the Assessing Officer for the limited purpose of allowing the assessee an opportunity to support and substantiate its case by producing the relevant documentary evidence to show that the concerned payees have already paid tax on the corresponding payments received from the assessee during all the four years under consideration. On verification of the said documentary evidence, the Assessing Officer shall allow appropriate relief to the assessee in the light of the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca-Cola P. Ltd. (2007 (8) TMI 12 - SUPREME COURT OF INDIA). The Assessing Officer is also directed to recompute the interest payable by the assessee under S.201(1A) as per the decision of the Hon'ble Supreme Court in the case of Hindustan Beverages Coca-Cola P. Ltd. (supra). He shall, of course, afford reasonable opportunity of hearing to assessee, before passing appropriate orders in these matters. - Decided partly in favour of assessee for statistical purposes. 2015 (10) TMI 1874 Disallowance of advances given to transporters - whether it is provision and not actual written off in books of account though advances given during the normal course of business? - Held that:- It is an undisputed fact that during the year under consideration, the Assessee had debited a sum under the head “provision for bad debts” and had claimed it as deduction. It is also an undisputed fact that the amount were not written off in the books of accounts in the year under consideration. According to Section 36(1)(vii), the Assessee can claim deduction of the amount of any bad debt or part thereof only of the portion which is written off as irrecoverable in the accounts of the Assessee subject to provisions of Section 36(2) of the Act. In the present case, since the Assessee has not written off the amount in the books of accounts, we are of the view that the amount was rightly disallowed by A.O and therefore find no reason to interfere with the order of ld. CIT(A). With respect to allowing the deduction in subsequent years, Before us, ld. A.R. has submitted that the amount which were claimed as “provision for bad debts” were in fact have been written off in subsequent years and in subsequent year, when the same have been written off in A.Y. 08-09, Assessee has not claimed the deduction in A.Y. 08-09 and therefore Assessee should not be denied the claim altogether. The aforesaid submission of the Assessee needs a factual verification. We therefore restore the issue back to the file of A.O and direct him to consider the allowability of deduction of bad debts on the facts and circumstances of the case and in accordance with law. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1873 Allowance of pre-operative expenses against the income from other sources - setting up off business losses against the income under the head 'income from other sources' - Held that:- The Assessing Officer had not determined the business losses by holding that the respondent assessee company had not commenced his business operations and he doubted the trading activities carried on by the assessee company on the ground that the trading activity allegedly had been carried as a sham since the sales were made prior to the purchase of beer. From the order of learned CIT(A), it is clear that though he accepted in principle that the respondent assessee company commenced the business operations and allowed the set off the loss so incurred against the income from other sources but he failed to examine the relevancy of the expenditure claimed on the trading account. Therefore, we restore the matter to the file of the Assessing Officer with the direction that if the expenditure claimed is directly relatable to the trading activity, the same may be allowed as a business loss which can be set off against the income from other sources. With these directions, the appeal filed by the Revenue is partly allowed for statistical purposes. 2015 (10) TMI 1872 Valuation of closing stock - CIT(A) allowing of claim of the assessee as the part value of the opening stock of finished goods on 1.04.2002 - Held that:- The figure of the value of the opening stock of finished goods of last year is not disputed. There can be no dispute on the proposition that the value of closing stock of preceding year constitutes value of opening stock of the current year. Under no circumstances there can be any difference between the value of closing stock shown in the accounts of preceding year and the value of opening stock of the current year. Though the reflection by the assessee of ₹ 33.91 lac in its P & L Appropriation account is an erroneous approach of showing the value of opening stock, which amount should have been in fact, considered in entirety in the trading account, but such an erroneous accounting treatment cannot impact the calculation of correct total income. In our considered opinion the ld. CIT(A) was justified in enhancing the value of opening stock of finished goods with ₹ 33.91 lac and thereby reducing the total income to this extent. We therefore, countenance the view taken by the ld. CIT(A) on this issue. - Decided against revenue. 2015 (10) TMI 1871 Profit arising out of sale of shares - AO treated it as undisclosed short term capital gain confirmed by CIT(A) - Held that:- The entire premise of the lower authorities i.e. AO and the CIT(A) for treating the assessee’s long term capital gains as short term capital gains for the reason that the payment for purchase of shares was made after dematerialization of shares. We find that the AO as well as CIT(A) admitted that these shares have been transferred in the DEMAT Account of the assessee on 03.10.2005, which is a categorical finding of the AO. Only the payment is made after the transaction of the shares to DEMAT Account on or after 03.10.2005. We find that the brokers have given contract notes for purchase of these shares dated 16.06.2004 and transferred in the name of the assessee on 23.08.2005. What is the material date for date of transaction here by way of contract note the shares were purchased on 16.06.2004 and i.e. the date to be reckoned for taking transaction of shares and if that date is taken as transfer date the shares are sold on 14.02.2006 which is more than 12 months. Once the shares are held by assessee for more than 12 months, the profit arising out of the same is to be assessed as LTCG. Accordingly, we allow the appeal of the assessee and reverse the orders of the lower authorities. The AO will assess the profit arising out of the sale of shares as LTCG. Decided in favour of assessee. 2015 (10) TMI 1870 Rectification application u/s. 154 - whether subsequent amendment to the Income-tax Act, 1961 does not constitute mistake apparent from record - disallowance u/s. 40(a)(ia) on account of Contract payments - Held that:- The undisputed fact is that the assessee has not deposited the tax deducted at source within the stipulated time. It is also an undisputed fact that Finance Act, 2010 has amended the provisions of Sec. 40(a)(ia) of the Act whereby making the provision that if the tax deducted at source is deposited with the Government on or before the due date of filing the return, the same will be allowed in the year of claim. This amendment was first considered by the Tribunal Special Bench in the case of Bharati Shipyard Ltd. Vs DCIT [2011 (9) TMI 258 - ITAT MUMBAI] wherein held that amendment to Sec. 40(a)(ia) by the Finance Act 2010 is effective from 1.4.2010 and does not have retrospective effect. Subsequent to this the Hon'ble Calcutta High Court in the case of CIT Vs Virgin Creators [2011 (11) TMI 348 - CALCUTTA HIGH COURT] has held that the amendment by the Finance Act 2010 is retrospective with effect from 1.4.2005. Subsequent to this decision of the Hon'ble Calcutta High Court, the Bombay Tribunal in the case of Piyush Mehta Vs ACIT [2012 (4) TMI 349 - ITAT MUMBAI] has held that the judgement of Calcutta High Court being the only judgement of any High Court on this subject shall prevail. As decided in ACIT Vs Saurashtra Kutch Stock Exchange Ltd. [2008 (9) TMI 11 - SUPREME COURT ] an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self evident and if it can be established, it has to be established by lengthy and complicated arguments. We do not think such an error can be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ - Decided against assessee. 2015 (10) TMI 1869 Disallowance at 25% of the purchases and all expenses including depreciation - CIT(A) deleted the addition - Held that:- Since the disallowance was made in an ex-parte assessment order, once the assessee was given an opportunity to reconcile its expenses, the Assessing Officer was satisfied with the quality of the evidence produced by the assessee. He did not find any discrepancies (as disclosed from his observation) in the purchases and commission payment shown by the assessee. Therefore, we do not find any error in the order of the CIT(A); accordingly, this ground of appeal is rejected. - Decided against revenue. Addition on estimated basis out of "commission income" - CIT(A) deleted the addition - Held that:- The commission income is verifiable from the TDS certificate and, therefore, estimate of such income at lumsum amount is not required and, therefore, the addition of ₹ 1,33,679/- is hereby deleted. - Decided against revenue. Addition u/s 68 - CIT(A) deleted the addition - Held that:- In the remand proceedings, the assessee has substantiated that this amount represents the loan taken from ICICI Bank Ltd for the purpose of vehicle. There is no unexplained credit in the account of the assessee. Ld. First Appellate Authority has deleted the addition after appreciating the remand report and the evidences produced by the assessee. Therefore, we do not find any error in the order of the CIT(A) - Decided against revenue. Addition 2015 (10) TMI 1868 Registration under section 12AA denied - Held that:- The finding of the Commissioner in this regard was that where the objects of the trust were for the benefit of a specific religious community, the same was hit by the provisions of section 13(1)(b) of the Act. In any case, where the trust is formulated for the benefit of a specific religious community i.e. Christian, in this case, the said trust cannot be said to be charitable in nature and is hit by basic provisions of section 2(15) of the Act, under which it is provided that charitable purpose would include relief to the poor, education, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other objects of general public utility. The objects of the assessee are governed by "advancement of any other objects of general public utility". Once it is for general public utility, then in case the objects of the trust are specifically for the benefit of particular religious community, then the activities carried on by such body/association cannot be said to be charitable. - Decided against assessee. 2015 (10) TMI 1867 Deduction u/s. 80IA - Exemption claimed on the sale of carbon credits in assessee's power division - Held that:- Assessee is not entitled for deduction u/s. 80-IA(1), but the said amounts are to be treated as a capital receipts not taxable as income as held by CIT(A) relying on The Commissioner of Income Tax – IV, Hyderabad Versus M/s. My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] - Decided against revenue. 2015 (10) TMI 1866 Addition on Excess Stock of Copper Scarp - Held that:- Revenue Authorities have not given any independent finding on the basis of any evidence except the documentary evidence collected by the Customs & Excise Department against which the assessee’s appeal is pending before the Custom, Excise and Service Tax Appellate Tribunal, New Delhi. In the interest of justice, we are of the view that the issue in dispute requires reconsideration/ readjudication at the level of the AO. Accordingly, we direct the AO to decide the issue in dispute afresh under the law, keeping in view of the decision of Customs, Excise & Service Tax Appellate Tribunal, New Delhi, after giving full opportunity to the assessee of being heard and to produce any evidence for substantiating its claim before the AO. We make it clear that assessee has statutory right to appeal, if so, advised, before the Competent Authority. - Decided in favour of assessee for statistical purposes. 2015 (10) TMI 1865 Reference made under section 55A to the DVO - addition on account of long term capital gain from the sale of plot - CIT(A) deleted the addition holding that the reference made to the DVO was without jurisdiction - Held that:- Similar issue came up before the Tribunal in the case of DCIT vs. Shri Dipakbhai Shankarlal Contractor, husband and co-owner of the same property. The Tribunal, wherein held that ld. CIT(A) while granting the relief to the assessee had relied on the decision of Hiraben Jayantilal Shah vs. ITO (2008 (4) TMI 292 - GUJARAT HIGH COURT) and had held that the ratio of the aforesaid decision was directly applicable to the case of Assessee. Before us, Revenue has not brought any contrary binding decision nor could controvert the findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed.” Therefore, following the above order of the Tribunal, we observed that ld. CIT(A) has rightly deleted the addition. - Decided in favour of assessee. 2015 (10) TMI 1864 Disallowance of office rent along with audit fees and filing fee - whether no business activity during the year? - Held that:- The submissions made by assessee before the Ld. CIT(A) inter alia, regarding "Corporate suit" at IFFCO Chowk under construction was valued at the year end at ₹ 1151.02 has not been controverted by the Department. All the expenses directly attributable to the project were charged to the construction work in progress account and only those administrative expenses which were necessary for maintenance of basic infrastructure of the company, were claimed by assessee in profit and loss account. Under such circumstances, I fail to understand as to how a finding has been arrived by authorities below that no business activity was carried out by assessee. The office rent claimed by assessee was a necessary business expenditure and, therefore, could not be denied to assessee. Therefore, set aside the order of Ld. CIT (A) and direct the Assessing Officer to allow the office rent also along with audit fees and filing fee and compute the income accordingly. - Decided in favour of assessee. 2015 (10) TMI 1863 Non grant of deduction u/s.80IB(10) - Held that:- It is appropriate to go through the agreements entered with the prospective buyers alongwith financial statements to see the details of investment made by assessee and decide the issue in the light of the judgment of Madras High Court in the case of Sanghvi & Doshi Enterprise [2014 (11) TMI 556 - MADRAS HIGH COURT]. Accordingly, we remit the entire issue to the file of Assessing Officer with direction to examine whether the assessee made investment by itself, executed development work and carried out civil works, deployment of technical personal, plant and machinery, technical knowhow, expertise and financial resources before handing over the completed project to the owner of the flats. If it is so, then the assessee has to be treated as developer rather than contractor. In other words, the assessee would not be denied deduction u/s.80IB(10) if the contract involves design, development, financial involvement and technical knowhow from assessee’s side itself. - Decided partly in favour of assessee for fresh consideration. 2015 (10) TMI 1862 Disallowance under S.14A read with Rule 8D - expenditure incurred towards earning of exempt income - whether the CIT(A) is correct in directing that the assessee will not be entitled to capitalize the amount of ₹ 2,41,51,811 in future and also will not be eligible for depreciation on such amount - Held that:- once the expenditure claimed is disallowed, the same cannot be capitalized by the assessee. Therefore, we do not see any serious infirmity in the irections of learned CIT(A) in this regard. However, it is seen from the record that the expenditure shown by the assessee in the balance sheet under the head ‘Applications of Fund’ is after reduction of the shown of ₹ 75,49,010. Therefore, expenditure disallowed under 14A read with Rule 8D which cannot be capitalized must be reduced by that amount. In the aforesaid facts and circumstances, we modify the order of the learned CIT(A) by directing the Assessing Officer to requantify the amount to be disallowed by taking into consideration income shown by the assessee of ₹ 75,49,010. The assessee’s appeal is accordingly allowed to that extent - Decided partly in favour of assessee. 2015 (10) TMI 1861 Calculation of depreciation - CIT(A) not directing the Assessing Officer to calculate the depreciation on the basis of written down value as on 31.3.1994 and not setting off of the loss carried forward from assessment year 1994-95 - Held that:- The written down value relevant for the assessment year 1994-95 remains the written down value of the assessment year 1995- 96 if there is a valid claim in the valid return, and the same should be considered for working out the depreciation for the assessment year 1996-97. Allowing set off of the brought forward losses, we find that this part of the ground was not attended to by the CIT(A). Therefore, we remand this issue to the file of the CIT(A) with the direction to adjudicate the same by passing a speaking order and after granting a reasonable opportunity of being heard to the assessee. - Decided partly in favour of assessee for statistical purposes. 2015 (10) TMI 1860 Disallowance of establishment expenses - Held that:- We find that considering the high turn over of the assessee at ₹ 2.33 crores of this year as against ₹ 2.23 crores in the immediately preceding year and the fall in the income from operation being nominal, with which the assessee has submitted the detailed reasoning, we hold that there was no justification for making disallowance out of establishment expenses on adhoc basis without pointing out any defect in the books of account of the assessee and the CIT(A) was not justified in sustaining the same - Decided in favour of assessee. Disallowance out of interest on account of no deduction of TDS - Held that:- Issue is covered in favour of the assessee with the decision of Delhi Tribunal in M/s. Malhotra Cables Pvt. Ltd. vs. ITO [2015 (10) TMI 1742 - ITAT DELHI] wherein held that the provision of section 40(a)(ia) of the Act shall apply only to the amount ‘payable’ as on the last day of the relevant accounting year.- Decided in favour of assessee. 2015 (10) TMI 1859 Penalty u/s 271C - non deduction of tax at source u/s 194A - CIT(A) deleted penalty levy - Held that:- No merit in the appeal of revenue. The ld. CIT(Appeals) found that in case of three of the societies, the assessee was not liable to deduct tax at source. In the case of Shri Aurobindo Society, the exemption certificate under section 80G(5)(vi) was also filed. It would, therefore, prove that assessee had a reasonable cause for failure to deduct tax at source under section 201(1) of the Act. The facts are identical in the case of State Bank of Patiala, Shimla (2015 (10) TMI 1745 - ITAT CHANDIGARH). Hon'ble Himachal Pradesh High Court dismissed departmental appeal finding no substantial question of law. These facts would clearly support the findings of ld. CIT(Appeals) that assessee had a genuine belief that it would not require to deduct tax at source. The case of the assessee, therefore, squarely falls under the provisions of Section 273B of the Act and penalty is not leviable because assessee is able to prove that there was a reasonable cause for the said failure. - Decided in favour of assessee. 2015 (10) TMI 1858 Entitlement to deduction u/s.80IB(10) - additional receipts offered by the assessee against the project undertaken by the assessee - Held that:- The issue in the present appeal is identical to the issue before Pune Bench of the Tribunal in Shri Naresh T. Wadhwani Vs. DCIT, ITA Nos.18, 19 & 20/PN/2013 (2014 (11) TMI 689 - ITAT PUNE) wherein held assessee is eligible for deduction u/s 80IB(10) of the Act even in relation to impugned additional income offered in a statement deposed u/s 132(4) of the Act during the course of search and subsequently declared in the return of income filed in response to notice u/s 153A(1)(a) of the Act and following the same parity of reasoning, we hold that the assessee is entitled to the claim of deduction under section 80IB(10) of the Act on the additional receipts offered by the assessee against the project undertaken by the assessee during the year under consideration. Thus, the grounds of appeal raised by the Revenue are dismissed. - Decided in favour of assessee. Customs 2015 (10) TMI 1981 Confiscation of seized goods - delay in issuance of SCN - Imposition of penalty - Held that:- As per the provision of section 110 of the Customs Act 1962 a show cause notice can be issued within six months from the date of the seizure of the goods. In this case admittedly on 29.03.2006 goods were detained and released to the appellant under superdinama with the direction not to dispose of the goods till further order of the concerned officer. As per the department goods were seized only on 27.05.2006. In fact, the goods were in the custody of the department since 29.03.2006. Therefore, as per section 110 of the Customs Act 1962 the show cause notice can be issued within six months from the date of detention of the goods i.e. on 29.03.2006 as held by the Hon’ble High Court of Madhya Pradesh in the case of Vilayat Hussain Vs. UOI [1987 (12) TMI 54 - HIGH COURT OF MADHYA PRADESH AT JABALPUR] - As the show cause notice has been issued beyond a period of six months from the date of detention of the goods, therefore, the show cause notice is barred by limitation. Consequently, the proceedings initiated as per the show cause notice are quashed. With these terms, I hold that the goods cannot be confiscated beyond six months from the date of detention and redemption fine and penalty is not imposable on the appellant. With these terms, impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1912 Refund of claim – Additional duty of Customs / SAD – Appellant contends that defects of application intimated to assesee almost after 2 years and adequate time not granted to appear and produce the documents – Certificate of Statutory Auditor correlating payment of ST/ VAT on imported goods with invoices of sale was not enclosed - Held That:- Defects of application should have been intimated within 10 days – Reasonable time must have been given to appear and produce documents; Respondent cannot claim to have fulfilled the requirements of the Notification, the Regulations and the Circular – matter remanded back - Decided in favour of assessee. 2015 (10) TMI 1911 Release of goods pleaded - 14,279 Kgs of cold rolled stainless steel sheets imported by extending Preferential Rate of Duty – It is the case of Petitioner that goods are not prohibited and same were imported after complying with all origin requirements – Revenue contends that petition is premature; same shall be dismissed and claim has not been negatived yet– Held That:- Petitioner shall approach the Revenue and put forth the contentions raised herein – Revenue shall consider the same and pass appropriate order within one week – Decided in favour of the Revenue. 2015 (10) TMI 1910 Rejection of application for handling hazardous cargo - Petitioner was informed that only JNPT can apply for authorization in CFS; application thus cannot be processed – Held That:- Application can be considered independent of the proceedings and the stand of the JNPT, but in terms of the Regulations; thus same be processed without being influenced by the communication in any manner within 6 weeks – Decided in favour of Petitioner. 2015 (10) TMI 1909 Prohibition on working as Customs House Agent - Allowed unauthorized persons to handle customs clearance work; cleared consignments of pharmaceuticals and drugs, without import licence - Petitioner contended that impugned order has been passed without jurisdiction - Held That:- great confidence is reposed in a CHA. Any misuse of such position by the CHA will have far reaching consequences in the transaction of business by the customs house officials. Therefore, when, by such malpractices, there is loss of revenue to the custom house, there is every justification for the Respondent in treating the action of the Petitioner Applicant as detrimental to the interest of the nation and accordingly, final order of revoking his licence has been passed. No evidence given by Petitioner to show that they fulfilled their obligations under the said provisions of Act, Rules and Regulations - Petitioner not only failed to advise their client to comply with provisions of Act, but also failed to bring the matter to notice of Assistant Commissioner of Customs/Deputy Commissioner of Customs and never tried to verify the antecedents of importer and relied upon third parties; thus failed to act in a bona fide manner – Impugned order is sustainable – Decided in favour of Revenue. 2015 (10) TMI 1908 Export of readymade garments - whether the hangers exported along with garments are entitled to benefit of draw-back? - Held That:- The object of imports being to export readymade garments but not the hanger the hanger is excludible from the benefit of draw back. - Appellant liable to return back the drawback claimed - Redemption fine reduced to ₹ 50,000/- - No penalty charged on importer as the case involves interpretation of law - Decided in favour of assessee. 2015 (10) TMI 1907 Suspension of license of CHA - Pending proceedings under Regulation 22 of CHALR, 2004 - Time limit to complete the proceedings i.e. 9 months, is not complied with - Revenue wants time ascertain the factual position - Held That:- None of the time limits as mentioned in CHALR 2004 hes been adhered to by Department - Impugned order is set aside - Department is at liberty to continue the enquiry - Decided in favour of assessee. 2015 (10) TMI 1906 Application for rectification - Conversion of order of re-export to Home Consumption - Foreign supplier refused to accept goods and petitioner has paid entire amount; heavy demmurage charges already incurred - Revenue contended that Tribunal having passed the order have become functus officio and cannot change the order at this stage - Appellant made two alternative prayers; one for re-export and other for home consumption, tribunal has accepted the former; thus no rectification required - Held That:- Tribunal has no jurisdiction to review its own order - Order passed cannot be held to be a mistake on records - Decided in favour of Revenue. Corporate Laws 2015 (10) TMI 1905 Penalty imposed under Section 15C of SEBI Act, 1992 - Appellant failed to obtain SCORES Authentication within stipulated time and redress investor grievance - Appellant obliged with the same after receiving SCN - Contended by Appellant is that company was dormant from past 7 years, was in poor financial condition and it was virtually impossible to hire a Company Secretary - No loss caused to the investors; penalty to be set aside. Held That:- Appellant being a listed company is bound to comply with the directions of SEBI and redress investor grievances - No investor loss caused can be the ground to set aside penalty imposed - Penalty cannot be said as unreasonable and harsh as same is imposed after considering all mitigating factors - Appeal dismissed - Decided in favour of Respondent. Service Tax 2015 (10) TMI 1933 Refund claim - service tax on GTA service was paid without availing of the exemption Notification No.32/04-ST dt.03.12.2004 - unjust enrichment - Held that:- Refund was originally allowed by the adjudicating authority and on an appeal filed by the Revenue, Commissioner (Appeals) reversed the said order on two grounds. First on the ground of time bar, the refund applicant stand filed on 31.1.07 for the period January, 2005 to November, 2006. Admittedly the service tax in question was not paid by the appellant under protest, neither the assessments were provisional, in which case the limitation would apply. Inasmuch the refund stand filed after the normal period of limitation of one year, and only a part amount would fall within the limitation period, I hold that the refund amount beyond the period of limitation is not admissible to the appellants on the said ground - Service Tax was paid by the appellant on the GTA service so received by them, on reverse charge basis. Normally it is the service provider, who has to pay the Service Tax. As a recipient of the services, when it is the obligation of the appellant to discharge the service tax, the question of recovering the same from the service provider does not arise. As such, I hold that appellant succeed on the issue of unjust enrichment. - Matter remanded back - Decided in favour of assessee. 2015 (10) TMI 1930 Condonation of delay on grounds of being bed-ridden – Whether the delay was unintentional and demand of entire duty as pre-deposit is justified and Section 5 is applicable or not? – Held That:- Appellant could not show any reason for non-compliance of order demanding deposit of duty; thus intervening in the decision of Tribunal is not justified – Found no merit in appeal – Decided in favour of Revenue. 2015 (10) TMI 1929 Denial of CENVAT Credit - maintenance of main road, residential colony electrical maintenance, residential telephone - Held that:- So far as maintenance of STP is concerned, it was a requirement of the Pollution Control Board to set up the plant for affluent treatment and water which being scarce may be made free from pollution for reuse thereof without being used for human consumption. Pollution Control Board permits set up of such plant for effective utilization of the water resource which cannot be ignored. Therefore, it cannot be said that the STP is not the integral part of the factory as well manufacturing activity to manufacture caustic soda. Removal of effluence being one of the requirement of effective utilization of water for the factory through recycling process, denial of CENVAT credit for the maintenance of STP would be unreasonable. Therefore, appellant succeeds on this point and respective CENVAT credit claimed on such count is allowed. So far as the maintenance of main road, residential colony electrical maintenance, residential telephone at Kodaikanal, painting of office building are concerned, there is no nexus thereof to the manufacturing operation for which the appellant is not entitled to CENVAT credit on the service tax paid to avail such services - So far as the maintenance of the windmill is concerned, a windmill owner generating power at the source of wind may not have factory at the same place. Therefore, they exchange power generated by them with the Electricity Board at the point of generation for getting equivalent power at their place of manufacture. - Decided partly in favour of assessee. 2015 (10) TMI 1928 Waiver of levy of penalty u/s 76, 77 & 78 on the ground that the levy of penalty against the appellant on Mandap Keeper Service is concerned that would cause unreasonable hardship to the appellant. - Held That:- Adjudicating authority considered existence of reasonable cause to exonerate the appellant from levy of penalty – Found no deliberate intention to cause evasion; no penalty should be levied – Adjudication order restored and decided in favour of the Appellant. 2015 (10) TMI 1927 Claim of CENVAT Credit - input service of rent used for providing Services of Motor Vehicles - revenue contents that part of the total area taken on lease was used for activities other than taxable services and proposed to reverse proportionate credit - Held That:- Taking into consideration of the leased area used for providing taxable service, the relevant service tax paid in respect of lease rent for that area should be allowed as Cenvat credit. - Rule 6(3) shall not apply - Applied when there is use of common input without maintenance of account - No suspicion shall deny the CENVAT credit suffered on rent paid – Appeal allowed and no penalty charged – Decided in favour of Appellant. 2015 (10) TMI 1926 Denial of CENVAT Credit - Credit on service tax on freight charges for outward transportation from the place of removal - Held that:- Karnataka High Court in the case of Commissioner of Central Excise & S.T., LTU, Bangalore vs. ABB Limited - [2011 (3) TMI 248 - KARNATAKA HIGH COURT] held that input service credit on transportation of the goods from the place of removal, prior to 01.4.2008 is admissible. The Hon'ble Gujarat High Court in the case of Commissioner of Central Excise & Customs vs. Parth Poly Wooven Pvt. Limited- [2011 (4) TMI 975 - GUJARAT HIGH COURT] also supported the view of the Hon'ble Karnataka High Court. Learned Authorised Representative for the Revenue relied upon the decision of the Hon'ble Calcutta High Court in the case of CCE, Kolkata -VI vs. Vesuvious India Limited - [2013 (12) TMI 1025 - CALCUTTA HIGH COURT]. It is seen that the Hon'ble High Court in that case had granted interim stay. - Decided against Revenue. 2015 (10) TMI 1925 Waiver of pre deposit - Construction service of flats and commercial complex - Held that:- The present fact is that even individual flats sold on the basis of construction agreement are covered under the levy of service tax from that day. However, Commercial or Industrial Construction Services remains the same and the construction of a mall was clearly covered by the service even prior to 1.7.2010 and the appellant did not pay service tax even for that period. - On going through the balance sheet and the records produced by the appellant, we find that the financial difficulty appears to be correct. - Partial stay granted. Central Excise 2015 (10) TMI 1980 Utilization of CENVAT Credit - GTA Service - Imposition of penalty - Held that:- Soon after being pointed out by the CERA audit, the appellant had discharged the Service Tax on GTA services availed through TR-6 challan and also the interest on such amount of service tax. On going through the orders of the adjudicating authority as well as the ld. Commissioner (Appeals), I do not find any reasoning/ observation whereby it could be inferred that the appellant had deliberately defied the provisions of law in discharging the service tax. On the other hand, now it is a settled position of law that the liability for payment of service tax towards GTA service under the relevant provisions could be discharged from the CENVAT Credit account. In the result, imposition of penalty on the Appellant is devoid of merit, accordingly the order impugned to the extent of imposition of penalty is set aside. - Decided in favour of assessee. 2015 (10) TMI 1979 Waiver of pre deposit - Clandestine removal of goods - Held that:- During visit of the Central Excise officers on 21/09/2005, 7 chits were found against which 85MT of cement was shown to have been cleared. Main appellant also paid the duty with respect to 85MT of Cement. It is further observed from para 5.30 of the Order-in-Original dated-10/01/2013 that certain invoices/challans issued by the main appellant were also recovered suggesting use of separate set of invoices for effecting clandestine removals. In addition to the above, Revenue has brought other corroboration on record the veracity of which has to be gone into detail which can be only done during the course of final hearing. Main appellant has not made out a prima facie case of complete waiver and is required to be put up to certain conditions. It is accordingly, ordered that main appellant should pre-deposit an amount of ₹ 20.00 Lakhs within a period of eight weeks - Partial stay granted. 2015 (10) TMI 1978 Waiver of pre deposit - penalty imposed under Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 - demand of cenvat credit - Place of removal - Held that:- Prima-facie, we find that the dispute rests on the interpretation of the expression "place of removal", which is covered by the decision of the Larger Bench of this Tribunal in the case of Honest Bio-vet Pvt. Ltd. (2014 (11) TMI 579 - CESTAT AHMEDABAD). While deciding the case in the context of eligibility of remission from duty liability on destruction of the goods in port area - Applicant could able to make out a prima-facie case for total waiver of pre deposit of dues adjudged. Accordingly, the requirement of pre-deposit of all dues adjudged is waived and its recovery stayed during pendency of appeal - Stay granted. 2015 (10) TMI 1977 Valuation - Determination of duty payable - Held that:- issue is no more res-integra, in view of the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. vs. Commissioner of Central Excise, Raigad [2007 (2) TMI 5 - CESTAT, MUMBAI], which was followed by this Bench in the case of Jay Corporation vs. Commissioner of Central Excise & Service Tax, Daman [2014 (4) TMI 1080 - CESTAT AHMEDABAD]. - Rule 8 of valuation Rules provides the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. In the present case, the appellants sold the goods partly and therefore, Rule 8 as it stood during the relevant period would not be applicable. We have noticed that the Rule 8 of the valuation was amended, by Notification No. 14/2015-CE (NT) Dated 22.11.2013. - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1976 Denial of CENVAT Credit - input service - GTA - held that:- When the claim of the respondent was that it satisfies the requirement of the circular, it should have produced the document before learned Commissioner (Appeals) for examination. But that was not done. Therefore, that Authority has directed lower authority to verify relevant evidence for the period Apr.06 to Mar.07. Therefore, his order does not appear to be incorrect. Accordingly, subject to carrying out of the direction of the learned Commissioner (Appeals) his finding does not call for interference. - Decided against Revenue. 2015 (10) TMI 1975 Denial of CENVAT Credit - Duty levied on raw material - Imposition of penalty - Held that:- Decision in the case of CCE, Hyderabad vs. Deepthi Formulations Pvt.Ltd. [2013 (3) TMI 547 - CESTAT BANGALORE] followed - No infirmity in the impugned order that calls for interference - Decided against Revenue. 2015 (10) TMI 1974 Denial of CENVAT Credit - Manufacture - Held that:- when the CENVAT credit availed on the inputs stand utilized for payment of duty on the final product, there would be no requirement of reversal of the said credit even if the activity undertaken by the assessee does not amount to manufacture. By following the decision [2014 (9) TMI 974 - CESTAT NEW DELHI], we set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1973 Denial of excess availed CENVAT Credit - discrepancy happened is on account of placement of decimal in the figures of duty reflected in the invoices - Imposition of penalty - Held that:- Admittedly penalty is to be imposed in case an assessee acts with malafide intention and in a deliberate and contemptuous conduct. No doubt appellant had taken excess credit but the explanation offered by them is that this is on account of inadvertent mistake on the part of clerk responsible for maintaining records inasmuch as the same has occurred on account of change of place of the decimal in the figures of the credit. The appellants have paid interest to the extent of ₹ 3,81,412/-; which is penal in character. The observations of Commissioner (Appeals) that if not pointed out by the audit, the same would have gone unnoticed, do not attribute to the allegation of malafide to the appellant. In the absence of any evidence to show that there was malafide on the part of the assessee, I find that there is no justification for imposition of penalty upon the assessee. - Decided in favour of assessee. 2015 (10) TMI 1972 Duty demand - failure to discharge the monthly payment of duty for the months March 2012 to June 2012 - Contravened the provisions of Rule 8 (3A) of Central Excise Rules 2002 - Held that:- Gujarat High Court in the case of Indsur Global Ltd Vs Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT] held that Rule 8 (3A) of Central Excise Rules 2002 is unconstitutional. - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1971 Denial of CENVAT Credit - whether Cenvat credit is admissible for bought out items like; Nuts, Bolts and Washer cleared along with the finished excisable goods i.e. tower parts which are used for erection of non-excisable Towers at site outside the factory premises of the appellant; under Cenvat Credit Rules, 2004 - Held that:- The attitude of the appellants indicate that they are not interested in pursuing their case by not being present during hearings fixed for the purpose. On merits it is observed that items on which credit has been availed have not been established to be used either in or in relation to the manufacturing activities in the factory of the appellant. The items claimed to be inputs do not satisfy the definition of ‘inputs’ given under Rule 2 of the Cenvat Credit Rules, 2004. On merits order passed by the first appellate authority are correct and is required to be upheld. - appeals filed by the appellant are dismissed on merits as well as for non-prosecution - Decided against assessee. 2015 (10) TMI 1970 Denial of CENVAT Credit - 100% EOU - DTA Clearances - procurement of goods duty free under Notification No. 1/95-C.E., dated 1-3-1995/Notification No. 22/2003-C.E., dated 31-3-2005 - Held that:- C.B.E. & C. Circulars do not have the legal force of statutory Rules or Notifications nor can they alter the scope thereof. It is seen that as per Rule 3 of the Cenvat Credit Rules, 100% EOUs are fully eligible to take Cenvat credit of duty paid on inputs used in or in relation to the manufacture of final products because this rule does not make any exception as regards 100% EOUs. Notification No. 18/2004-C.E. (N.T.), dated 6-9-2004 did not in any way affect the eligibility of the EOU for taking Cenvat credit; it only allowed them the facility to pay duty either by debit to the PLA or by debit to the Cenvat credit account. Prior to 6-9-2004, the EOUs could only pay duty through the PLA, Thus, the eligibility of EOUs for taking Cenvat credit of duty paid on the inputs received is in no way related to the issuance of Notification No. 18/2004-C.E. (N.T.). - it does not necessarily mean that an EOU has to either procure all their goods duty free or procure all their goods on payment of duty. The sentence “Some EOU’s have to procure their raw materials on payment of duty also” contained in the said para makes it clear that EOUs can procure their raw material either duty free or on payment of duty. Be that as it may, the legal position is clear that the 100% EOU’s are eligible to take Cenvat credit of duty paid on the raw material procured by them for use in or in relation to the manufacture of their final product. Seen in this light the Board circular stating that the EOU’s have been allowed to avail Cenvat credit can only mean that now they can utilise the same. - Decided in favour of assessee. 2015 (10) TMI 1969 Benefit of Notification No. 85/95-C.E., dated 18-5-1995 - Held that:- Supreme Court in the case of Markfed Vanaspati & Allied Indus. (2003 (4) TMI 98 - SUPREME COURT OF INDIA) has held that spent earth remained earth even after the processing and therefore no duty is leviable on spent earth. It is also seen that in the case of Maheshwari Solvent Extraction Ltd. (2013 (7) TMI 51 - CESTAT MUMBAI), the Hon’ble CESTAT held that impurities consisting of gums, waxes and fatty acids are eligible for the benefit of Notification No. 89/95-CE. Similarly, in the case of CCE, Hyderabad v. Shree Siddhi Vinayaka Agro Extractions P. Ltd. - [2009 (8) TMI 1138 - CESTAT BANGALORE]. the Hon’ble CESTAT held that soap stock and wax emerging during process of manufacture of vegetable refined oil is waste and not a by-product and is therefore, eligible for the benefit of Notification No. 89/95. - issue is no longer res integra - Decided in favour of assessee. 2015 (10) TMI 1968 Recovery of interest - whether interest is recoverable with reference to the date of clearance of goods in cases where as a result of price escalation clause the prices are revised upward subsequent to the date of clearance of the respective goods - held that:- merely because the differential amount of duty is ascertained subsequent to the date of clearance, the due date of payment of duty never stands changed or extended and it would always relate to the date of removal of goods. Further, the Hon’ble Court held that the expression FOR under Rule 7(4) of Central Excise Rules, 2002 refers to the month for which the amount is determined pursuant to the finalisation of price and hence interest liability would commence from the month succeeding the day on which the duty was due and payable in relation to the goods cleared. The Hon’ble Supreme Court in that case followed its earlier decision in the case of SKF India Limited - [2009 (7) TMI 6 - SUPREME COURT ]. As regards the judgment of Karnataka High Court in the case of BHEL (2010 (4) TMI 439 - KARNATAKA HIGH COURT ), it is to state that Hon’ble Bombay High Court in case of Gammon India Limited v. Commissioner of Customs & Excise, Nagpur - [2013 (6) TMI 559 - BOMBAY HIGH COURT] has held that dismissal of SLP against the said Karnataka High Court judgment in case of BHEL (supra) was not sufficient to ignore the binding Supreme Court judgment in the case of SKF India Limited (supra) endorsed again by the Supreme Court in the case of International Auto Limited (2010 (1) TMI 151 - SUPREME COURT OF INDIA). While following the judgment of the Hon’ble Supreme Court in the case of SKF India Limited and International Auto Limited (supra) Bombay High Court clearly held that the judgment of Karnataka High Court does not reflect the good law in this regard as the SLP against that order was not dismissed by Supreme Court on merit. - Decided against assessee. 2015 (10) TMI 1967 Denial of CENVAT Credit - Various service - Held that:- Services involved in the present case are already held by the Hon'ble Gujarat High Court(2010 (5) TMI 483 - GUJARAT HIGH COURT ), to be eligible for CENVAT credit in respect of the goods exported by the assessee and the Hon'ble Gujarat High Court has confirmed the CESTAT order passed by the Ahmedabad Bench in that case. In the case of Export of goods 'port' is the 'place of removal'. Following the decision of the Hon'ble Gujarat High Court, I allow the appeal with consequential benefits. - in spite of stay order granted by this Tribunal, the Deputy Commissioner of Central Excise & Customs, Alibagh Division, Raigad has adjusted the total duty amount plus penalty plus interest involved in the aforesaid appeal against the appellant's duly sanctioned rebate claim for export of goods. - concerned authority directed to refund the adjusted amount with interest, as per Rules - Decided in favour of assessee. 2015 (10) TMI 1966 Denial of CENVAT Credit - Capital goods - Held that:- Revenue has filed this appeal basically on the ground that the said decision of CESTAT in the case of CCE, Trichy v. India Cements Ltd., (2004 (5) TMI 441 - CESTAT, CHENNAI) does not hold good as the said decision has already been stayed by Hon’ble Madras High Court vide its orders dated 6-4-2005 (Interim Stay) and 20-9-2005 (stay made absolute) in the matter of C.M.A. No. 392-395/2005 [2011 (8) TMI 399 - MADRAS HIGH COURT ] (filed by CCE, Trichy against the Tribunal’s order in question. - decision of the Tribunal in the case of CCE, Trichy v. India Cements Ltd., (supra) had only been stayed and not been set aside by any competent Court. In any case, that case of CCE, Trichy v. India Cements Ltd., has since been decided Hon’ble Madras High Court upholding the Tribunal’s decision. Consequently the very basis of the Revenue’s appeal collapses. - Decided against Revenue. 2015 (10) TMI 1965 Waiver of pre deposit - Classification of goods - Held that:-Canopies ‘manufactured’ by the appellants have no walls or windows and therefore would not fall under Chapter heading 94.06. As the impugned demand has been confirmed classifying the canopies under the said heading, we allow the stay petition, waive the pre-deposit of the impugned duty, fine and penalties and stay their recoveries during the pendency of the appeals. - Stay granted. 2015 (10) TMI 1964 Exemption under notification no.10/96-CE dated 23.07.1996 - Held that:- The benefit of the said notification is being denied to the appellant on the sole ground that their final product is Animal Feed Supplement and as such, the notification will not apply to them - At this prima facie stage, we find that the issue is covered by the Larger Bench s decision in the case of Tetragon Chemie (P) Ltd. Vs. CCE, Bangalore reported in [1998 (9) TMI 390 - CEGAT, NEW DELHI] upheld by the Hon ble Supreme Court in the case of CCE, Bangalore Vs. Tetragon Chemie (P) Ltd reported in [2001 (7) TMI 127 - SUPREME COURT OF INDIA]. We also take note of the other identical decisions of the Tribunal and are of the view that the appellant has good prima facie case on merits. - Stay granted. 2015 (10) TMI 1963 Waiver of pre deposit - penalty imposed under Rule 18 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determinations And Collection of Duty) Rules, 2010 read with Section 11AC of Central Excise Act, 1944 - Held that:- as the Notification and also the Board’s Circular dated 24-1-2014 are specific, therefore, it would be difficult to appreciate that if a single track machine is capable of producing the quantify of goods that could be manufactured by a double track machine, therefore, the single track machine be treated as double track machine, for the purpose of determination of rate of duty under the said Rules. In the result, the Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Consequently all dues adjudged is waived and its recovery stayed during pendency of the Appeal. - Stay granted. 2015 (10) TMI 1962 Benefit of Notification No. 101/66 - principal ingredients is less than 5% - Letter dated 3-2-1986 was issued to the appellant to deny the benefit of the said notification and thereafter another letter was issued on 21-5-1986 clarifying that the final decision will be taken at the time of adjudication of the case. The Revenue has proceeded on the premise that as the letter dated 21-5-1986 have not been challenged by the appellant; hence not entitled for the benefit of the said notification although the test reports are in their favour - Held that:- As per letter dated 21-5-1986, which itself states that the final decision will be taken at the time of adjudication of the case. It means the issue is to be decided during the course of adjudication. Therefore, the appellants were not required to challenge the said order/letter and while adjudicating the case adjudicating authority has considered the fact that principal ingredients is less than 5%. Therefore, the appellants are entitled for benefit of Notification No. 101/66 ibid which has not been controverted by the Revenue in their appeal. The ld. Commissioner (Appeals) in the impugned order has not appreciated these facts, therefore, we do not find any merit in the impugned order same is set aside - Decided in favour of assessee. 2015 (10) TMI 1961 Denial of CENVAT Credit - Invoices not in the name of assessee - Held that:- While the appellant during April 2009 and May 2009 have availed the Cenvat credit, in question, on the basis of invoices issued by M/s. M.R. Builders, Ludhiana, the invoices are in the name of M/s. R.I. Agri Engineers Pvt. Ltd., Village Bhama Kalan, Machhiwara and not in the name of the appellant i.e. M/s. AMA India Enterprises (P) Limited, Machhiwara Road, Bhama Kalan, Machhiwara. It is seen that the appellant under their letter dated 9-4-2009 addressed to the Assistant Commissioner had intimated about change of their name from M/s. R.I. Agri Engineers Pvt. Ltd. to M/s. AMA India Enterprises (P) Ltd. Beside this, there is also a letter dated 18-2-2010 of Superintendent (Technical) addressed to the appellant company - M/s. AMA India Enterprises (P) Ltd., informing them that they have been granted the permission under Rule 10 of the Cenvat Credit Rules, 2004 to transfer the Cenvat credit in balance in the name of old unit to their new unit. This leaves no doubt that M/s. AMA India Enterprises (P) Ltd., and M/s. R.I. Agri Engineers Pvt. Ltd. are one and the same and M/s. AMA India Enterprises (P) Ltd.” is the new name of “M/s. R.I. Agri Engineers Pvt. Ltd.” In view of this, the denial of Cenvat credit to the appellant is incorrect - Decided in favour of assessee. 2015 (10) TMI 1960 Imposition of penalty - Non submission of ER-1 returns electronically - Held that:- There is no dispute that since April, 2010 onwards in terms of the provisions of Central Excise Rules, monthly ER-1 returns were required to be filed electronically and accordingly failure to file electronically would attract penalty under Rule 27. There is no dispute that throughout during April, 2010 to December, 2010 period, the monthly returns were filed manually in time, but due to systems problem, the appellant could not file the returns electronically. From the observations of the Commissioner (Appeals) in Para 5 of the order, it is clear that there was some systems error which was rectified only in January, 2011. Thus, it is clear that non-filing of ER-1 returns electronically during April, 2010 to December, 2010 was due to systems error which was rectified in January, 2011 and therefore for this period, the appellant cannot be blamed for not filing the ER-1 returns electronically. - throughout during the period from April, 2010 to December, 2010, the returns had been filed manually and in time and just because the returns for this period could not be filed electronically in time due to systems error and were filed electronically only in July, 2011, it would not be correct to impose penalty on them under Rule 27. In view of this, the impugned order is not sustainable. The same is set aside - Decided in favour of assessee. 2015 (10) TMI 1959 Denial of CENVAT Credit - Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 - Held that:- Initially credit of ₹ 84,783/- had been taken in respect of certain chemicals for generation of steam and while a part of the steam was used within the factory, the remaining quantity of steam was being sold out. The steam is exempt from duty. Rule 6(3) would come into picture only if common Cenvat credit availed inputs have been used in or in relation to the manufacture of dutiable final products as well as exempted final products and in accordance with the provisions of Rule 6(2) of the Rules, separate accounts and inventories of the inputs used for the manufacture of dutiable as well as exempted final products have not been maintained. In this case, though the initially credit was taken on the chemicals used for generation of steam, the same was subsequently reversed on 19-1-2005 and this fact is not disputed. Once the credit taken is reversed without using the same, the provisions of Rule 6(2) of the Cenvat Credit Rules would not be applicable. If the provisions of Rule 6(2) are not applicable, Rule 6(3) would also be inapplicable. The entire duty demand under Rule 6(3) of the Rules is without any basis. The impugned order is, therefore, set aside. - Decided in favour of assessee. 2015 (10) TMI 1958 Valuation of goods - DTA Clearances - Notification No. 8/97-C.E. - 100% EOU - Held that:- Quality of materials supplied to these three buyers is different. There is also no allegation that the job work was undertaken within the factory. Goods have to be assessed in the form in which they are cleared from the factory. In this case, there is no allegation by the Revenue and no evidence brought up to show that price is not ex-factory as far as the rejected slabs are concerned. When the place of removal is factory and no additional consideration is collected in connection with the same, there is no justification for addition of job work charges charged by the appellants to the three customers for undertaking works such as edge cutting, sizing, rounding, etc. In view of the above, we do not find any merit in the impugned order and accordingly the same is set aside - Decided in favour of assessee. 2015 (10) TMI 1957 Waiver of pre deposit - CENVAT Credit - Goods imported under advance license - Held that:- Cenvat credit under Cenvat Credit Rules, 2004 is admissible to the recipient of the goods if the same are received under a duty paying document. It is the case of the Revenue that appellant was aware of the fact that no duty was paid with respect to the raw materials used in the manufacture of the finished goods received by the appellant - General Manager (Commercial) of the appellant specifically stated that the firm was not aware from which account DIPL (Unit-II) has paid the duty, whether PLA or Cenvat and that they have only received the duty paid invoices on the strength of which Cenvat credit was taken. Prima facie, appellant has made out a case for waiver of the confirmed dues and penalties as no evidence has been brought on record to the effect that there was an express knowledge on the part of the appellant regarding the inputs received being made out of duty free raw materials imported by DIPL (Unit-I). The relevant records are required to be seen in depth for arriving at a final conclusion which can be done only at the time of final hearing. It is accordingly ordered that there will be a stay on the recovery of the confirmed dues and penalties till the disposal of appeal. - Stay granted. 2015 (10) TMI 1956 Provisional clearances - Unjust enrichment - whether with the settlement of the prices on the lower side, subsequent to clearance of the goods, in terms of the provisional assessments, will the bar of unjust enrichment will apply or not - Held that:- provisions of unjust enrichment will not apply when the goods stand cleared on payment of duty at the higher assessable value, which is subsequently finalized at lower rate in terms of the provisional clearances. The Commissioner (Appeals) has given a finding of fact that the appellant had issued credit notes to their buyers, M/s. Coal India Ltd., who have adjusted the differences from the outstanding payments of the assessee. If that be so, it cannot be said that the respondent have recovered the excess duty amount from their customers so as to be hit by the bar of unjust enrichment. Accordingly, we find no infirmity in the impugned order of the Commissioner (Appeals). - Decided against Revenue. 2015 (10) TMI 1955 SSI Exemption - benefit of small scale Notification 08/02-EX, dated 1-3-2002 - Concessional rate of duty - Clearance of exempted goods - Held that:- Revenue has placed on record report from the Deputy Commissioner clarifying that the total value of the branded goods during the period 2001-2002 was to the tune of ₹ 84,56,451/-, relatable to Tariff Heading 5509, though as per the appellant the total clearances of the branded goods, including clearances under Chapter Heading 5509 would be to the tune of ₹ 1.40 crores. Without going into the said factual aspect, we find that even if the branded goods clearances to the tune of ₹ 84,56,451/-, as reported by the Revenue, are taken into account, the total clearances of the previous year would not exceed ₹ 3 lakhs. If that be so, the appellant have complied with the eligibility criteria for availment of the notification during the subsequent financial year and would be entitled to the benefit of the same. Accordingly, we set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1954 Duty demand - CENVAT Credit - Clandestine clearance of goods - held that:- goods were not actually weighed and shortages were recorded on the basis of the average weight per ingot determined by multiplying the sample with total number of ingots. - there is no evidence of clandestine removal of the goods. The appellant’s representative had only accepted the shortages and there is no inculpatory statement admitting clandestine removal of the such alleged short found goods. - By following the decision of the Hon’ble High Court [2011 (8) TMI 896 - ALLAHABAD HIGH COURT], I set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1953 Condonation of delay - Restoration of appeal - Appeal dismissed as non maintainable - Held that:- The last provision of Rule 11 gives power to the Tribunal to restore appeal/application on sufficient cause being shown. Case of the Revenue is that even if sufficient cause is shown the memorandum of appeal cannot be restored on an application filed after three months from the date of rejection in the light of case laws mentioned in Para 3 above. It is noted that for filing an appeal also, Tribunal has the power to condone the delay in filing the appeal and admit an appeal so filed belatedly if sufficient cause is shown. In the present case also due to non-availability of copy of the show cause notice the applicant could not rectify the defect. In the interest of justice, the delay in filing restoration applications is condoned as the defects have now been removed. - Appeal restored. 2015 (10) TMI 1952 Condonation of delay - Delay of 16 days - Held that:- First appellate authority has dismissed the appeals filed by the appellant belatedly by 16 days. It is undisputed fact that the first appellate authority has powers to condone the delay of 16 days in filing the appeal. It is seen from the impugned order that the advocates/consultant of the appellant had categorically stated that the error in filing appeal, belatedly, is of the advocate and the clerk handling the issue. In our view, mistake or an error in the office of the advocate cannot be held against the appellant and can be the reason for condoning the delay. In our view, the first appellate authority should have condoned the delay and heard the appeal on merits. Suffice to say, that an appellate authority should try to dispose of appeal on merits, we set aside the impugned order after condoning the delay in filing the appeal before the first appellate authority, with the direction to restore the appeal and the stay petition to their original number and dispose of the same on merits after following the principles of natural justice. - Matter remanded back - Decided in favour of assessee. 2015 (10) TMI 1951 Waiver of pre deposit - DTA Clearances - Held that:- Appellant had correctly followed the procedure, as mandated in statutory provisions. We find that the reliance placed by the ld. Departmental Representative on the provisions of the Rule 3(5A) of the Cenvat Credit Rules, 2004 seems to be inappropriate for the reason that the said rule was inserted/substituted in Cenvat Credit Rules, 2004 on 17-3-2013 which would mean that on the date of clearances the said rule was not in existence. - Impugned order is set aside - Decided in favour of assessee. 2015 (10) TMI 1950 Extension of stay order - Recovery of duty - Matter adjourned on date of hearing - Held that:- we grant the extension of stay order and direct the Revenue not to proceed ahead with the recovery, by rejecting the learned DR’s contention that there is no stay order in operation as the same is deemed to have been vacated on 20-6-2013. Such type of technicality and procedural objections often raised by the Revenue are not appreciated and have to be rejected at the outset itself inasmuch as non-availability of Bench on 20-6-2013 and the subsequent reservation of order and non-passing of Final order even after the matter has been heard is not in the hands of appellant who cannot be blamed for the same. - Stay granted. 2015 (10) TMI 1949 Valuation - whether the cheque discounting charges are includible in the assessable value or not - Held that:- The cheque discounting charges are charged by the bank for discounting of cheques to cover for delay in realization of payments by up-country buyers. This is nothing but interest on receivable which in terms of the Apex Court judgment in case of Government of India Vs. Madras Rubber Factory Ltd., reported in [1995 (5) TMI 28 - SUPREME COURT OF INDIA] is not includible in the assessable value. We also find that the Apex Court in case of CCE, New Delhi Vs. Vikram Detergent Ltd. (2001 (1) TMI 84 - SUPREME COURT OF INDIA) has held that bank charges are not includible in assessable value and Review petition against this judgments was dismissed by the Apex Court vide judgment reported in [2001 (3) TMI 1027 - SUPREME COURT] Hon’ble Bombay High Court in case of Raymond Woolen Mills Ltd. Vs. Union of India, reported in [1991 (7) TMI 94 - HIGH COURT OF JUDICATURE AT BOMBAY] has also taken the same view. In view of this, the impugned order holding in cheque discounting charges charged by the Revenue are not includible for the assessable value, is not sustainable. The same is set aside - Decided in favour of assessee. 2015 (10) TMI 1948 Denial of CENVAT Credit - Capital goods - Held that:- All the items are used in the manufacturing of capital goods which are ultimately used in the manufacturing of final product. Therefore, as per the definition of inputs under Rule 2(k) of Cenvat Credit Rules, 2004, wherein it has been stated that any input which is used in the manufacturing of final product, directly or indirectly is entitled for input credit. As all the items are used by the respondent indirectly by way of capital goods in manufacturing of final product, therefore the respondents are entitled for input credit - Decided against Revenue. 2015 (10) TMI 1947 Duty demand - Shortage of goods - Held that:- Tribunal in the case of M/s. Tejwal Dyestuff Industries v. CCE, Ahmedabad [2007 (6) TMI 351 - CESTAT, AHMEDABAD] has observed that the Revenue Officers, after recording of confessional statement believes that the same has put an end to the investigations and does not carry the matter for further investigation. Though the confessionals statement may be the starting point of investigations but in view of the other evidence available on record and in the absence of the other evidence indicating, clandestine removal, the same cannot be made the sole basis for deciding against the assessee. To the same effect is the decision of the Hon’ble Delhi High Court in the case of Commissioner of Income Tax v. Dhingra Metal Works [2010 (10) TMI 29 - DELHI HIGH COURT] laying down that though an admission is extremely important piece of evidence, it cannot be said to be conclusive. - No merits in appeal - Decided in favour of assessee. 2015 (10) TMI 1946 Denial of refund claim - Refund of excess amount paid - Unjust enrichment - Held that:- In earlier round of litigation, the Commissioner (Appeals) held that the excess amount paid by the respondent during the course of investigation under protest is not part of the show cause notice. Therefore, the amount retained by the Revenue is without any authority of law. Therefore the provisions of Section 11B of the Central Excise Act, 1944 is not applicable. The said finding has not been challenged by the Revenue and same has attained finality. The rejection of refund claim on the ground of unjust enrichment is not sustainable as provisions of Section 11B are not relevant to the facts of this case. Admittedly, the earlier order of the Commissioner (Appeals) dated 16-11-2004 has not been challenged by the department. Therefore, in this case, the excess amount retained by the revenue which was paid by the respondent during the course of investigation under protest is without any authority of law. Therefore, the provisions of Section 11B of the Central Excise Act, 1944 are not applicable. In these circumstances, bar of unjust enrichment is not applicable to the facts. - decided against Revenue. 2015 (10) TMI 1945 Valuation of goods - deductions on account of turnover discount and interest on receivables - Held that:- interest on receivable already stands accepted by the Tribunal as an admissible deduction. The Revenue’s contention that such interest was not actually reimbursed to the customer cannot be appreciated inasmuch as there is no question of reimbursement of interest to the customer. In any case, Tribunal having allowed the said deduction and the Revenue having not challenged the earlier order of the Tribunal before higher authority is debarred from taking the said ground now. - issue relates to bona fide interpretation of law. Merely because the assessee’s stand in respect of their claim of deduction on account of commission to selling denial has not been accepted by the Tribunal, the same would not call for any penal action against them. - Decided against Revenue. 2015 (10) TMI 1944 Waiver of pre deposit - Held that:- Appellant has made out a prima facie case for waiver of pre-deposit of the amounts involved on the ground that the appellant has been charged with payment of Central Excise duty on recovered Toluene. On perusal of the records, we find that the appellant has sent the waste that arises during the manufacturing of Ciprofloxacin HCL, wherein the Toluene is used as a solvent. The said waste solvent is sent for distillation and recovered Toluene is received back in the premises of the appellant or directly sent to the job worker for manufacturing of another product. In our view, the recovered Toluene which is being utilized for manufacture of Quinine Sulphate, prima facie, cannot be considered as liable for duty as the same is recovered. At this juncture, we find that the appellant has made out a prima facie case for waiver of the pre-deposit of the amounts involved. - Stay granted. 2015 (10) TMI 1943 Disallowance of cenvat credit - applicability of Rule 9A(1) - Held that:- As per Rule 9A(1) of the Rules, an assessee can take Cenvat credit on the basis of documentary evidence to ascertain how much credit is available. It is not in dispute that respondent has produced documentary evidence to avail Cenvat credit. Therefore, Notification 35/2003 is not applicable to the facts of this case as same is applicable where the assessee is taking credit without any documents. Therefore, the said Notification suggests the formula how the amount of Cenvat credit is to be calculated. As in this case, the respondent has taken the Cenvat credit on the basis of documentary evidences as per Rule 9A(1) of the Rules. The provisions of Notification No. 30/2003 are not applicable to the facts of this case. Therefore, I do not find any infirmity in the impugned order - Decided against revenue. 2015 (10) TMI 1942 Denial of CENVAT Credit - Manufacture - Held that:- It is a case where relying on the Meltex (I) P. Ltd. (2004 (2) TMI 387 - SUPREME COURT OF INDIA), it was held that the activity undertaken by the respondent does not amount to manufacture. Therefore, impugned proceedings have taken place. It is not in doubt that the respondent has cleared the goods after processing of the inputs on payment of duty. Therefore, relying on Ajinkya Enterprises - [2013 (6) TMI 610 - CESTAT MUMBAI], which has been affirmed by the Hon’ble High Court in [2012 (7) TMI 141 - BOMBAY HIGH COURT] wherein it was held that if duty has been paid on clearances if activity does not amount to manufacture, the duty paid shall amount to reversal of Cenvat credit availed on the inputs. Therefore, in this case also, duty has been paid on the clearances; therefore, respondents are entitled to take Cenvat credit. - No infirmity in impugned order - Decided against revenue. 2015 (10) TMI 1941 Denial of CENVAT Credit - only objection of the Revenue is that M/s. Suren Metal was registered at their Gurgaon address whereas they were dispatching the goods from their Vasant Kunj office - Held that:- The inputs being sent by the registered dealer were under the cover of proper invoices, were duty paid and were actually received by M/s. Aravali and used by them in the manufacture of their final product. As such, merely because M/s. Suren Metal issued invoices and dispatched the goods directly from Vasant Kunj office, instead of doing so from their registered premises at Gurgaon cannot be held to be a ground for denial of credit to M/s. Aravali who actually received the inputs under the cover of proper invoices issued by Suren Metals. - Revenue during the course of investigation, recorded statement of various owners/drivers of the trucks as also of transport agencies. Though all of them deposed to the effect that they have actually loaded the goods from Vasant Kunj and delivered the same at Bahadurgarh factory of M/s. Aravali. One proprietor of M/s. Sharma Transport Service, Shri Ram Prakash Sharma denied such movement in respect of 5 invoices. For the balance invoices, he accepted the transportation of the goods from Vasant Kunj to Bahadurgarh. Shri Ramchander owner of the trucks involved, also denied having transported the goods - There is no other alternative source, shown by the Revenue for procurement of said inputs. As such, I find that the Revenue cannot build up its case on the oral submission of transporter, driver or owner of the truck without producing any other corroboratory evidence to substantiate the allegation. - No merit in impugned order - Decided in favour of assessee. 2015 (10) TMI 1940 CENVAT Credit - Whether the appellant is entitled to take credit without receiving the inputs. Admittedly in this case, only invoices were moving between manufacturers, registered dealers, etc. without any movement of goods. - Held that:- According to sub-rule (5) of Rule 9 of Cenvat Credit Rules, the manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information recording the value, duty paid, Cenvat credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding admissibility of the Cenvat credit shall lie upon the manufacturer or provider of output service taking such credit. The only way the burden of proof can be discharged is to show that the invoices are in accordance with law, inputs have been received, accounted for and have suffered duty. The appellants are able to show only invoice and nothing else. When the burden of proof is clearly on the assessee and when he fails to discharge the same, there is no other option but to make the assessee to reverse the credit or if the credit is not available, to make the payment. In this view of the matter, we find that appellant has failed to make out prima facie case for waiver. - Partial stay granted. 2015 (10) TMI 1939 CENVAT Credit - whether the appellant is entitled to avail Cenvat credit of duty paid on Cement and Steel Pars, which stand used for the construction of Silo, used for the storage of cement bags - Held that:- No merits in the above distinction sought to be made by the learned DR. Storage facilities whether for storing of liquid or storing of solid goods remains storing facilities only and once such storage is essential and is required for smooth running of the factory, the construction of the same has to be held in connection with business activity and the materials used in the construction of the same cannot be denied the Cenvat credit. As such, by following the above decisions, I find no merits of the impugned orders of authorities below. Accordingly, the same are set aside - Decided in favour of assessee. 2015 (10) TMI 1938 Denial of refund claim - Section 11B - Bar of limitation - Held that:- amount deposited by the appellant in the year 1997 was in dispute and the same has been attained finality by the order, dated 31-10-2001 and the refund claim has been filed on 3-12-2001. Therefore, the refund claim filed by the appellant in consequence to the order, dated 31-10-2001 is within time as prescribed under Section 11B of the Central Excise Act, 1944. Therefore, the impugned order deserves no merit and the same is set aside. - Decided in favour of assessee. 2015 (10) TMI 1937 Benefit of SSI Exemption - Clubbing of clearance - Held that:- For all purposes the holding company would be having more than 50% of the shares of the subsidiary company and in this case admittedly 100% of the shares are held by the holding company. When 100% of the shares are held, interest is paid on the loan or not does not really make a difference for the transaction between the two. Because in any case the holding company would have to bear the entire amount or profit or loss, whatever be the result of the activity of the subsidiary. - decision of the original adjudicating authority is logical and correct and has been rightly upheld. - Decided against Revenue. 2015 (10) TMI 1936 Duty demand - Shortage of goods - Confiscation of goods - CENVAT Credit - Held that:- The provisions of Rule 15 of the Central Excise Rules, 2002 under which the excess found raw-materials have been seized are not applicable in as much as the same relate to the inputs on which credit has been wrongly availed. As such, I set aside the confiscation of excess found raw-materials and imposition of penalty on the said ground. But for confirmation of total duty of ₹ 2,39,973 as not contested - Appeal disposed of. 2015 (10) TMI 1935 Duty demand - Shortage of goods - Imposition of penalty - held that:- As such it is clear from the above that the Commissioner (Appeals) has given a clear finding that there are no clandestine removal. However, he has applied the said finding only for the purpose of penalty, whereas the same can be equally applicable for the purpose of confirmation of demand on the findings of clandestine removal. Accordingly, I set aside the demand confirmed against the appellants - Decided in favour of assessee. 2015 (10) TMI 1934 Duty demand - Clandestine removal of goods - Held that:- It is well settled law that the allegations of clandestine removal, being serious allegations, are required to be discharged by the Revenue by production of sufficient and relatable evidences. The same cannot be upheld on the basis of doubts or assumptions and presumptions. I find that the evidence in the present case is insufficient and does not lead to inevitable conclusion of clandestine removal. Accordingly, I set aside the impugned order - Decided in favour of assessee. 2015 (10) TMI 1932 MODVAT Credit - Goods received after few days - Credit reversed before SCN - Held that:- Larger Bench of the Tribunal in the case of Machino Montell [2004 (4) TMI 101 - CESTAT, NEW DELHI] stands reversed by the Hon’ble High Court but nevertheless I am of the view that it is not the case of the mala fide on the part of the respondents so as to impose any penalty upon them. Admittedly, the mistake was detected by the assessee himself and in any case, the Cenvat credit was available to them and the only issue is timing of availment of such credit. The assessee has also deposited the interest involved on such wrongly availment of credit. As such, I agree with the Commissioner (Appeals) that this being not a case of any mala fide, imposition of penalty upon the respondents is not justified. Accordingly, Revenue’s appeal is rejected. - Decided against Revenue. 2015 (10) TMI 1931 Denial of cenvat credit - Reclassification of goods - final product was exempted from duty - On being pointed out for wrong availment, assessee revered the credit by debiting in their RG 23A Part-2 - held that:- Classification issued was decided by the Dy. Commissioner of Central Excise in 23.6.2002 whereas the SCN of denial of cenvat credit was decided by the Addl. Commissioner subsequently on 31.03.2003. Though the appellants contended before the adjudicating authority which was recorded at para -20 of the OIO that the final product has been already re-classified under ch. 5205.11 and chargeable to duty and the appellants are eligible for modvat credit, the same was not considered by the adjudicating authority. We also find that the appellants reversed the entire ineligible credit on 28.02.2001 through RG23-part-2. We also find that when the duty was confirmed on the final products on account of change of classification, the appellants again paid the duty on 30.03.2004. We find that the appellants initially availed the credit when the final product was exempted but when the department re-classified the product Covered spandex yarn form ch. 5205.90 to ch. 5205.11, the final product becomes chargeable to duty, and the appellants eligible for cenvat credit on the inputs used in the said final product. Once the department demanded duty on the final products at a later date by changing classification the appellants are eligible for modvat credit on the inputs. Appellants are eligible for input credit of ₹ 21,85,955/- availed on the inputs Lycra Spandex yarn from the date of availing credit used in the manufacture of Covered spandex yarn, classified under Ch. 5205.11 as the final product is no more exempted and becomes dutiable. However, we find that the appellants have utilized the credit of ₹ 90,663/- when the final product was not dutiable till the classification was decided under ch. 5205.11, therefore they are liable for penalty under Rule 25. - Decided partly in favour of assessee. 2015 (10) TMI 1922 Valuation - related person - Short payment of duty - revenue neutral exercise since the recipient is able to avail Cenvat Credit - Held that:- present case are similar to the facts of the assessee’s own case in [2015 (10) TMI 1845 - GUJARAT HIGH COURT], except for the fact that in the facts of the said case, against the order-in-original, the petitioner had approached the Appellate Commissioner, whereas in the facts of the present case, the petitioner has directly challenged the order-in-original without approaching the Appellate Commissioner. - It is an admitted position that except for the above fact, all facts in both the petitions are identical. Under the circumstances, it is not necessary to reproduce the facts and contentions in detail - Following the same - Decided in favour of assessee. 2015 (10) TMI 1921 Abatement of duty - manufacturing activity of Pan Masala - Demand of duty without following the procedure - Lack of Jurisdiction - alternative statutory remedy - Held that:- In the facts of the present case, the writ petition has been filed alleging violation of the principles of natural justice as well as on the ground that the impugned communications are wholly without jurisdiction. Under the circumstances, the existence of an alternative remedy would not preclude this court from entertaining the present petition having regard to the facts and circumstances of the case and the reliefs prayed for in the present petition. On a bare perusal of the communications / letters, it is apparent that prior to issuance thereof, no inquiry whatsoever has been carried out by the Deputy Commissioner of Central Excise as envisaged under sub-rule (2) of rule 6 of the Pan Masala Rules and that the impugned communications are based solely upon the instructions of the Additional Director, DGCEI, Delhi. Clearly therefore, the impugned communications are violative of the provisions of sub-rule (2) of rule 6 of the Pan Masala Rules, inasmuch as, the Annual Production Capacity of the petitioner’s factory has been determined without following the procedure as provided under those rules. In case the duty paid by the petitioners for the months of March 2015 to June 2015 was short-paid, the respondent authorities were required to resort to the provisions of section 11A of the Central Excise Act and without following the procedure as prescribed thereunder, could not have sought to recover the differential rate of duty by the impugned communications. In fact, the impugned communications do not refer to any provision of law under which the same have been issued. Whereas the subject under which the impugned communications have been issued is fixation of Annual Production Capacity of the Pouch Packing Machines, by the impugned communications, the petitioner has been called upon to pay the differential duty with interest for the months of March 2015 to June 2015. Evidently, therefore, the impugned communications suffer from various infirmities, inasmuch as, the same are in breach of the principles of natural justice as no opportunity of hearing has been given to the petitioner prior to revising the Annual Production Capacity of the petitioner; due procedure as prescribed under sub-rule (2) of rule 6 of the Pan Masala Rules has not been followed for the purpose of re-determining the Annual Production Capacity of the petitioner’s Pouch Packing Machines; the procedure as prescribed under section 11A of the Central Excise Act has not been followed while seeking to recover the differential amount of duty by the impugned communications. Under the circumstances, the impugned communications being contrary to the provisions of law, as well as being in breach of the principles of natural justice, cannot be sustained. - Decided in favour of assessee. 2015 (10) TMI 1920 Demand of Differential duty - Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- Appellants were issued with SCN alleging suppression of facts for the subsequent period after the above OIO dt. 30.3.2007. Once the department has accepted the RTP price determined by the appellants in the above order, there is no justification for invoking the suppression for imposition of penalty. Further considering the period involved relates to the transitional period when all the oil industry, PSUs switched over to different mechanism of payment of excise duty on the petroleum products from ware house to the Refinery itself and also considering the fact that there was no sale of CBFS as it is captively consumed by IOCL there is no suppression of facts with an intent to evade excise duty. In order to invoke suppression of facts for imposition of penalty under Section 11AC, there should be mens rea as settled by the Hon ble Supreme Court in the case of Uniworth Textiles Ltd. Vs CCE Raipur - [2013 (1) TMI 616 - SUPREME COURT. Whereas in the present case Revenue has not come out with any evidence on allegation of suppression of facts, whereas it is established beyond doubt that appellants have clearly informed the facts to the department on 19.10.2004 which is on record. - there is no justification for invoking Section 11AC for imposition of equal penalty liable for imposition of penalty under Section 11AC - Decided in favour of assessee. 2015 (10) TMI 1919 CENVAT Credit - Credit on CVD - 100% EOU - whether the BCD should be the rate as specified in tariff or the basic custom duty which was payable by the 100% EOU - Held that:- A combined reading of the Notification as also the proviso, it will be seen that there is no intention to restrict the CENVAT credit under the CENVAT Credit Rules but the intention is to permit the CENVAT only on the countervailing duty portion. Notification 23/2006 does not reduce the rate of basic customs duty but the quantum is reduced by 75%. In the proviso, taking into account this aspect, the words used are BCD/400. It is very clear that the term BCD in the second proviso implies the basic custom duty applicable on the goods by a normal importer from abroad. This duty rate may be tariff rate or an effective rate as per unconditional exemption Notification. - credit taken by the appellant is correct - Decided in favour of assessee. 2015 (10) TMI 1918 CENVAT Credit - non maintenance of separate accounts of raw materials used for dutiable and exempted finished goods - clearance of the exempted finished goods - Held that:- There is no finding of the lower authorities that they have reversed the credit used on the exempted finished goods as contended by the appellants . We find that, in view of the retrospective amendment of Rule 6 (3) (b) of Cenvat Credit Rules by Finance Act, 2010, the appellants were entitled to reverse the proportionate Cenvat credit attributable to the quantum of input used in or in relation to manufacture of exempted final product. - Revenue raised the minor discrepancies on the reversal of the credit with the statement submitted by the appellant. In our considered view, the Adjudicating Authority should examine the reversal of credit. - Decided in favour of assessee. 2015 (10) TMI 1917 Rectification of mistake - error in determination of demand of duty - benefit of reduced penalty was not extended - Held that:- RTO verification was done only in respect of vehicle number GJ 12 X 9569, which was demonstrated from records that the said registration number was incorrect producing supporting documents like Form 45A, Tax Invoices, and other documents, like PUC Certificate, Insurance Certificate etc., and we find it so. Since the vehicle No. which were informed to the RTO are in doubt, in our view the confirmation of demand of ₹ 4,28,435/- also wrongly based upon only the report received from RTO. In view of this, we find that there is error apparent on record, accordingly after recording herein above mentioned findings, we set aside the demand of ₹ 4,28,435/- and consequent interest, penalties on such amount. Adjudicating Authority had not. extended the benefit of reduced penalty of 25% of the confirmed demand as per the provisions of Sec. 11AC of the Central Excise Act, 1944. Ld Counsel was correct in stating that Hon’ble High court of Gujarat in the case of C.C.E & C, Surat v. Bhagyoday Silk Industries - [2010 (2) TMI 971 - GUJARAT HIGH COURT] has laid down the law that the benefit of reduced penalty can be extended for the first time by the Tribunal. Respectfully following the judicial pronouncement of the Higher Court, we extend the benefit of reduced penalty of 25% on the confirmed amount of ₹ 12,43,869/- and direct the appellant to pay the said reduced penalty within 30 days of the receipt of this order. - Appeal disposed of. 2015 (10) TMI 1916 Clearance of goods meant for mega power plant - - Held that:- Duty exemption is provided by Notification No. 6/2006-C.E., dated 1-3-2006 from duties of Customs and the additional duty leviable under the First Schedule of the Customs Tariff Act, 1975 and Section 3 of the Customs Act, 1962, respectively, in respect of goods imported into India which are required for setting up any Mega Power Project i.e. an interstate thermal power plant of a capacity of 1000 MW or more or an interstate hydel power plant of a capacity of 500 MW, subject inter alia to condition No. 86 of the Notification; namely if an officer not below the rank of Joint Secretary to the Govt. of India in the Ministry of Power issues the necessary certificate - The assessee cleared the goods meant for power plants whose combined production capacity was in excess of 1000 MW but comprised of units producing power of different capacities, of 250 to 500 MWs, as the case may be. The adjudication orders concluded that a single unit manufacturing 1000 MW would alone be entitled to the exemption benefits. - Decided in favour of assessee. 2015 (10) TMI 1915 CENVAT Credit - Nil balance of credit at the time of transfer of business - Rule 10 of CCR - whether the applicant is eligible to avail transfer of credit under Rule 10 of Cenvat Credit Rules, 2004 and whether they are required to reverse the Cenvat credit on the value of closing stock of raw materials and semi-finished goods - Held that:- prima facie, the reversal of the Cenvat credit on the value of closing stock of raw materials and semi-finished goods is not supported by Rule 10 of Cenvat Credit Rules. - Applicant made out a prima facie case for waiver of pre-deposit of balance amount of duty along with interest and penalty. Accordingly, pre-deposit of balance amount of duty along with interest and penalty is waived till disposal of the appeal. - Stay granted. 2015 (10) TMI 1914 Duty demand - Shortage of goods - Clandestine removal of goods - Held that:- Entire case of the Revenue is based upon the alleged shortages detected at the time of their visit. Even if the Revenue's contention that there was proper physical verification as against the appellants claim to the contrary, is accepted even then, I find that shortages in MS scrap is around 4.848 MT as against stock of 227.900 MT and shortage in CTD bars is to the tune of 33.900 MT as against the stock of 194.400 MT. Keeping in view the nature of goods, such shortages are minor and are bound to happen in an industry of the like kind. Apart from the shortages there is no evidence to show that goods in question have been cleared clandestinely. The Tribunal has, in a number of cases, has held that shortages alone cannot lead to the finding of clandestine removal. One such reference can be made to the Tribunal’s decision in the case of In on Creation v. CCE, Thane [2012 (10) TMI 2 - CESTAT, MUMBAI]. As such, there is no justification for confirmation of demand or for imposition of penalty upon the appellant on the said count. - here is virtually no evidence to reflect that the appellant did not enter their goods on their statutory records with any mala fide intention. Similarly, shortage of scrap would not call for any confirmation of demand against them. As such, I find no justification for confirmation of the same. - Decided in favour of assessee. 2015 (10) TMI 1913 Denial of exemption claim - whether appellant is required to produce a certificate from the appropriate authority as per condition No. 29(c) of Serial No. 214 under Notification No. 21/2002-Cus., dated 1-3-2002 for availing the Central Excise exemption against Serial No. 91 (Condition No. 19) of Notification No. 6/2006-C.E., dated 1-3-2006 when materials are procured indigenously - Held that:- It is observed from the Condition No. 19 of Notification No. 6/2006-C.E., dated 1-3-2006 that there is no mention of Notification No. 21/2002-Cus., dated 1-3-2002 in the language of Condition No. 19. If such a certificate is not issued by DG, Hydrocarbons, as per Notification No. 21/2002-Cus., then it will be discriminatory for a domestic manufacturer to procure duty free goods under International Competitive Bidding. Appellant has also made a statement that no other manufacturer placed similarly and supplying goods to ONGC has been issued any such show cause notice. Learned AR also could not confirm whether other similarly placed manufacturers supplying goods to ONGC under Notification No. 6/2006-C.E., have been issued show cause notice on the same issue or not. In view of the above observations appellant has made out a prima facie case for complete waiver of the confirmed dues and penalties - Stay granted. CST, VAT & Sales Tax 2015 (10) TMI 1924 Condonation of delay - No satisfactory explanation for condonation - Held that:- Order of the 2nd respondent, in the delay condonation application preferred by the petitioner, does not reflect a consideration of the facts relevant for consideration of the issue of condonation of delay in second appeal, under a statutory scheme of litigation. The parameters for exercise of discretion, in cases involving condonation of delay, have been laid down by the Supreme Court in a number of decisions wherein it is stated that, normally when a claim made by an applicant is legally sustainable, the delay must be condoned. It is also mandated that, when substantial justice and technicalities are pitted against each other, then the cause of substantial justice deserves to be preferred. There are cases where the conduct of a party must also be gone into, and where it is established that the conduct of the litigant party is not such as would indicate that he was negligent or callous in pursuing the matter before the Forum, and further, the delay was not so huge as would cause substantial prejudice or harm to the opposite side, the situation would normally call for a condonation of the delay. - 2nd respondent has not considered the application for condonation of delay filed by the appellant in accordance with the decisions laid down by the Supreme Court [2015 (1) TMI 1053 - SUPREME COURT]. Accordingly, I quash Exts.P17 and P18 orders and direct the 2nd respondent, to restore the appeals, stay applications and the delay condonation applications to file, and consider the applications filed for condonation of delay afresh within a period of two months - Delay condoned. 2015 (10) TMI 1923 Demand of interest - Samadhan Yojna - Composition Fee / Scheme under UPTT - Held that:- Initially, the composition fee consisted of one per cent of the total contract amount; the only restriction was that the contractor could not avail of the composition fee of one per cent and had to pay the tax as provided under the Act, if the inter-state purchase of raw material exceeded five per cent of the contract amount. There is no dispute that it exceeded five per cent. If things stood so and there were no further development, the revisionist would become liable under the original Circular to be taxed in terms of the said provision; but, there is a subsequent development in the form of an amendment, which is sought to be traced under Section 7D of the Act, which provided for composition fee being paid and, as per the said provision, which came out on 28.10.2003, with retrospective effect and, as far as these cases are concerned, covering the assessment years in question, if three per cent is paid in place of one per cent, the regular provision of the assessment would not be applicable, if the inter-state purchase exceeded more than five per cent of the contract amount. Therefore, even if the inter-state purchase of the raw material made by the revisionist exceeded five per cent, if the revisionist exercised the option to pay three per cent composition fee, then, that would put an end his tax liability for the period. - Therefore, in place of the tax, which he would have had to pay under the earlier scheme, in view of his inter-state purchase having exceeded five per cent, as he had opted to pay three per cent and which he could possibly do only after 28.10.2003, it cannot be mulcted with interest for the period prior to 28.10.2003. Tribunal has not correctly appreciated the effect of the order dated 28.10.2003. The Tribunal, in fact, found that the order dated 28.10.2003 is retrospective and, therefore, the terms of the order dated 28.10.2003 must be given full effect. We would think that the first appellate authority has correctly understood the legal position. It is also relevant to mention here that the Circular dated 28.10.2003 does not provide for payment of interest for the period prior to its date. - Decided in favour of assessee.
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