TMI Tax Updates - e-Newsletter
October 26, 2015

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise

Articles

1. Section 2(14) - recent circular - Capital gains – distance of rural agricultural land from municipal area for exemption- un-necessary litigation by revenue.

   By: DEVKUMAR KOTHARI

2. Due date for filing returns under TNVAT - is it 20th or 22nd?

   By: K. Senguttuvan

3. DISCLOSURE OF RULE 6 OF CENVAT CREDIT IN ST-3 RETURN- PRACTICAL ASPECTS: PART 3

   By: ashish chaudhary

News

1. Central Board of Excise and Customs revises limit for arrest and prosecution substantially upwards ; In cases of outright smuggling or mis-declaration of baggage, the limits regarding value of offending goods have been revised from ₹ 5 lakh to ₹ 20 lakh among others

Notifications

Companies Law

1. F. No. A-35011/29/2012-Adm.III - dated 21-10-2015 - Co. Law

Ministry of Corporate Affairs, Serious Fraud Investigation Office, Additional Director (Capital Market)/Joint Director (Capital Market) and Additional Director (Financial Transactions)/Joint Director (Financial Transactions) Group ‘A’ Post Recruitment Rules, 2015.

Income Tax

2. 85/2015 - dated 21-10-2015 - IT

CORRIGENDUM - NOTIFICATION NO. 78/2015, 12th October, 2015

3. 82/2015 - dated 19-10-2015 - IT

Corrigundum - Notification No. 69/2014 S.O. 2914(E) dated 13th November 2014

VAT - Delhi

4. No. F.3(352)/Policy/VAT/2013/929-40 - dated 21-10-2015 - DVAT

Notify that the Form DP-1 shall be submitted online by all the dealers latest by 23/11/2015. The form shall be filled by dealers registered upto 30/09/2015.

Circulars / Instructions / Orders

Service Tax

1. 1009/16/2015-CX - dated 23-10-2015

Central Excise – Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax-

2. 1010/17/2015-CX - dated 23-10-2015

Revised monetary limits for arrest in Central Excise and Service Tax

Customs

3. 26/2015 - dated 23-10-2015

Use of digital signature for submission of documents

Central Excise

4. 1009/16/2015-CX - dated 23-10-2015

Central Excise - Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax

5. 1010/17/2015-CX - dated 23-10-2015

Revised monetary limits for arrest in Central Excise and Service Tax

Highlights / Catch Notes

Income Tax

• Assessee qualifies for Section 10A deduction due to offshore-on-site development link and AE accountability.

  Case-Laws - HC : Eligibility for deduction u/s 10A - The assessee provides all relevant information and inputs to the AE on behalf of the end customer. The AE is admittedly answerable to the assessee and not the end customer. In such nature of the work which is carried on by the AE on behalf of the assessee, it cannot be said that there is no nexus between 'off-shore' development and 'on-site' development - HC
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• Court Rules Buyer is Owner Once Possession and Payment Completed, Even Without Deed of Conveyance.

  Case-Laws - HC : Attachment of immovable property - Recovery proceedings against the buyer of the property from the defaulter assessee - a person who had taken possession and made payment of the consideration was the owner though he had not obtained the deed of conveyance. - no recovery from the buyer of the property - HC
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• Court Clarifies Payment Allocation u/s 60 of Indian Contract Act: Principal or Interest?

  Case-Laws - HC : Claim of bad debts - nature of amount received on settlement - whether towards principal or interest - in view of sections 60 of the Indian Contract Act it is at the option of the person receiving money to adjust the same either against the principal or interest as it deem fit - HC
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• Penalty u/s 271(1)(c) Not Justified if Assessee Complies with Will and Family Arrangement.

  Case-Laws - AT : Penalty u/s 271(1)(c) - transfer of title - diversion of income by overriding title - Once assessee has complied with the terms of the Will and the family arrangement then, it cannot be held that at the time of filing of the return the assessee lacked genuine and bona fide belief or acted mala fidely to divert the income for evading the taxes. - AT
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• Depreciation Disallowance Unjustified for Non-TDS Deduction u/s 32; Claim Valid u/s 40(a)(ia.

  Case-Laws - AT : Disallowance of depreciation u/s 32 in respect of compensation received - Such a claim cannot be disallowed merely on the ground that assessee had not deducted TDS and therefore is to be disallowed u/s 40(a)(ia). - AT
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• Exemption Denied: Property Not Considered HUF Asset u/ss 54 and 54F of Income Tax Act.

  Case-Laws - AT : Disallowance of exemption u/s 54 & 54F - Merely because of the fact that the property purchased is recorded as the asset in the statement of affairs of HUF and the loan from ICICI bank as a liability, the same cannot be considered as HUF property as the same was never purchased by HUF - No exemption - AT
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• Section 263 Revision Invalid: Share Premium Deemed Capital Receipt, Not Taxable; AO's Inquiry Considered Sufficient.

  Case-Laws - AT : Revision u/s 263 - The share premium so received was capital receipt not liable to tax during the year under consideration. Necessary enquiries with regard to share capital so received was made by the AO - revision u/s 263 is not valid - AT
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• Income Earned Abroad by Employees Exceeding Stay Limit Not Taxable in India Under Residency Rules.

  Case-Laws - AT : Where the employee discharges his duties outside India and his stay is beyond the prescribed limit to term him resident, the income earned earned upon such discharge of duties outside India would not be within the ambit of term has accrued in India and is deemed to have accrued in India. Therefore, would not be taxable in India - AT
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Customs

• Court Orders Refund of Amount Collected Without Legal Authority Unless Show Cause Notice Issued Within Six Weeks.

  Case-Laws - HC : Collection of amount under threat without any authority of law - No demand for duty made even after lapse of two years - Amount to be refunded within 6 weeks; in case SCN issued within 6 weeks, amount need not be refunded - HC
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• Court Rules Penalty on Deceased Husband Cannot Be Recovered from Petitioner; Section 147 Does Not Support Recovery.

  Case-Laws - HC : Waiver of penalty imposed on deceased husband - Section 147 would not enable the Respondents to recover the penalty; no other section brought to notice of the Court - Penalty cannot be recovered from the petitioner - HC
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• Court Rules Statement in Rule 6 Application Doesn't Prove Erroneous Drawback Grant u/r 16 of Drawback Rules.

  Case-Laws - HC : Recovery of drawback duty under Rule 16 of Drawback Rules – Respondent assessee made a statement that no All Industry Rate of drawback fixed or existing - Merely making one statement in application filed under Rule 6 will not mean that drawback amount was erroneously granted - HC
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• Titanium Sheets Recognized as Capital Goods Under SHIS, Eligible for Benefits per Notification No. 104/2009.

  Case-Laws - AT : Clearance of goods under Status Holder Incentive Scheme – titanium sheets are capital goods covered under capital goods definition and same is eligible under SHIS scrip under Notification No. 104/2009 - AT
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• Customs House Agent Secures Importer Refund Under Regulation 2 of 1995 Regulations with Proper Authorization.

  Case-Laws - AT : Refund claim filed by CHA on behalf of importer - Regulation 2 of Customs Refund Application (Form) Regulations, 1995 provides for CHA to file refund claim on behalf of importer with proper authorization - refund allowed - AT
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Service Tax

• Appellant Challenges Service Tax Liability on Piece Rate Payment for Fabrication, Claims Payment for Items Not Worker Deployment.

  Case-Laws - AT : The appellant received consideration on piece rate basis for providing certain fabrication work by deputing workers to the factory – Appellant contends consideration received for items fabricated and not for workmen deputed - No service tax liability - AT
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• Appeal Denied: Refund Claim Review by Same Officer Invalidates Order, Case Sent Back for Reconsideration.

  Case-Laws - AT : Validity of order-in-appeal to deny the refund claim – Review order was passed by the same officer who has passed the OIO - Order-in-Appeal quashed. - matter remanded back - AT
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• Penalties u/ss 76, 77, and 78 waived as respondent showed bona fide intentions; relief granted u/s 80.

  Case-Laws - AT : Penalty u/s 76, 77 & 78 - benefit of Section 80 - Bonafides of the respondent are not in doubt. Had he been informed and known about the law, he was always willing to pay the liability of service tax; as soon as he came to know about his liability, he made the payment. - penalty waived - AT
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Central Excise

• Assessee not required to pay fixed percentage u/r 6(3) if substantial compliance via reversal is met.

  Case-Laws - AT : Denial of Input credit - Non maintenance of separate accounts - Only for the reason of non-filing or delayed filing of intimation under sub-rule (3A), as assessee cannot be required to pay the fix percentage by way of reversal under Rule 6(3), where the assessee have paid the amount by way of reversal which amounts to substantial compliance - AT
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• CENVAT Credit Denied for Retroactive Use: Cannot Apply Future Credit to Settle Past Excise Duties Under Central Excise Rules.

  Case-Laws - AT : Denial of CENVAT Credit - With effect from 18.08.2000 the appellants could not have utilised the Cenvat credit available for the subsequent period for payment of duty of the earlier period - AT
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• Artwork & Plate-Making Costs Excluded from Assessable Value if Not Used in Central Excise Valuation Process.

  Case-Laws - AT : Valuation - Inclusion of expenditure in developing the art work and plate making charges - If such plates or art work is not being used then we do not find any reason to include the expenditure so made in the assessable value - AT
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• Transfer of Unutilized SAD Credit Permitted Between Units u/r 10A from April 1, 2012.

  Case-Laws - AT : Transfer of unutilized credit of SAD from one unit to other unit as per the provisions of Rule 10A - The said Rule 10A came into effect from 01.04.2012 and the credit which was already accumulated and remained unutilized prior to the amendment rightly can be transferred after 01.04.2012. - AT
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• Special Packing Costs Excluded from Goods' Assessable Value When Provided at Customer's Request.

  Case-Laws - AT : Valuation of goods - Since cost of secondary packing not ordinarily used and given specially at the request of customer, is not includible in the assessable value, the benefit of exclusion of the cost of special packing as a secondary packing has to be allowed - AT
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• Order Confirming Demand for Wrongful Cenvat Credit Availment Deemed Unsustainable; Initial Allegations Focused on Duty Evasion.

  Case-Laws - AT : Clandestine removal of goods - the SCN is issued alleging evasion of duty and clandestine removal of goods. Whereas the order passed confirms the demand under wrongful availment of Cenvat Credit. Such an order at the outset in unsustainable - AT
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• Court Rules Tonner/Cylinder Value Excluded from Assessable Value of Liquid Chlorine in Tax Calculation.

  Case-Laws - AT : Valuation of goods - whether the amortized value of Tonner/Cylinder supplied to the respondent free of charge by the customer for filling the Liquid Chlorine manufactured by the respondent, is to be included in assessable value of goods Liquid Chorine cleared by the respondent to the customers. - Held No - AT
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• Cenvat Credit Allowed for Capital Goods Installed Off-Site Without Prior Intimation; Duty Paid on Finished Goods.

  Case-Laws - AT : Availment of Cenvat credit - capital goods not installed in the appellants premises but installed at other units doing Job work - No intimation, No permission from the department - finished goods were cleared from the respondent's main unit on payment of duty - credit allowed - AT
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Case Laws:

• Income Tax

• 2015 (10) TMI 2062
  Eligibility for deduction under Section 10A - income earned by the assessee through the development of the software by the Associated Enterprise - sole ground for denying the benefit of section 10A is that 'on-site' development of computer software has not been executed by the assessee itself through its own personnel - Held that:- The entire 'on-site' work has been sub-contracted to the AE. The MSA provides for the AE to work under total supervision and control of the assessee. The software to be produced by the assessee during its 'on-site' development has to be as per the specifications given by the assessee. The AE has no concern or direct dealing with the end customer. The assessee provides all relevant information and inputs to the AE on behalf of the end customer. The AE is admittedly answerable to the assessee and not the end customer. In such nature of the work which is carried on by the AE on behalf of the assessee, it cannot be said that there is no nexus between 'off-shore' development and 'on-site' development. In view of the above we are of the opinion that in the facts of the present case, the income earned by the assessee through 'on- site' development of software by the AE on behalf of the assessee, would be eligible for deduction under Section 10A of the Act - Decided in favour of the assessee.

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• 2015 (10) TMI 2061
  Attachment of immovable property - Recovery proceedings against the buyer of the property from the defaulter assessee - whether the action of the respondent in initiating the recovery proceedings by issue of notice under Section 226(3) and initiation of provisional attachment proceeding is without jurisdiction and void ab-initio since the required preconditions for initiating the proceedings under section 281B are not satisfied? - Held that:- It is relevant to refer to the decision of the Honourable Supreme Court rendered in the case of Mysore Minerals Ltd. v. CIT (1999 (9) TMI 1 - SUPREME Court) , wherein it has been held that a person who had taken possession and made payment of the consideration was the owner though he had not obtained the deed of conveyance. In the case on hand, the Petitioner, having purchased the property in question, by paying the entire sale consideration, became the absolute owner of the property in question. In the case on hand, the Petitioner has become the owner of the property in question, to put it differently the 3rd Respondent ceased to be the owner on and from 08.02.2010, when everything for transfer of the property excepting the execution and registration of conveyance was completed. Admittedly, alleged dues are recoverable from the 3rd Respondent. Under the Income-tax Act, the dues of the Revenue do not form charge on the property and this can only be recovered under the method and mode as provided under the Income-tax Act and the Rules framed thereunder. Since the 3rd Respondent failed to pay the dues to the department on time, the property in question has been attached. In the proceedings between the Department and the 3rd Respondent, the tax liability was reduced by CIT(Appeals) and the same was also paid by the 3rd Respondent. By virtue of the completion of the entire sale transaction and registration of the same, the Petitioner became the absolute owner of the property in question. While so and when the 3rd Respondent was not the owner of the property and when on the date of passing the order of attachment, the property in question did not belong to the assessee, namely, the 3rd Respondent, the attachment of the property in question, which has been in absolute possession and enjoyment of the Petitioner by virtue of the completion of the entire sale transaction, made by the 1st Respondent for the dues payable by the 3rd Respondent, is not binding on the Petitioner and hence, unsustainable and accordingly, the impugned attachment has to be lifted and consequently, the sale deed has to be released, after numbering the same. If at all the 1st Respondent can proceed on the other property of the 3rd Respondent for the tax liabilities if any payable by the 3rd Respondent. Thus the impugned attachment of the property in question is directed to be lifted forthwith and the concerned Registering Authority is directed to number the impugned sale deed executed in respect of the property in question and release the sale deed, if it is otherwise in order. However, it is open to the 1st Respondent Department to proceed against the other property of the 3rd Respondent for the tax dues if any payable by the 3rd Respondent, in accordance with law, by keeping the attachment of the other property, pending disposal of the appeal preferred by the 3rd Respondent as well as the 1st Respondent.

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• 2015 (10) TMI 2060
  Disallowance u/s. 14A - Tribunal restored back the issue of disallowance to the Assessing Officer for fresh consideration - Held that:- As decided in assessee's own case on similar issue [2015 (10) TMI 1752 - BOMBAY HIGH COURT ] the impugned order of the Tribunal has restored both the issue to the Assessing Officer i.e. with regard to the applicability of Section 14A of the Act with a direction that in case the RespondentAssessee fails to satisfy the Assessing Officer of utilization of its own funds and/or interest free funds for the purpose of making investment in the light of the order in Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY), then in that event, the disallowance be determined under Section 14A of the Act. This, undoubtedly would be on an application of a reasonable method as held by this Court in Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT). Thus, we are at a loss to understand the grievance of the revenue. No substantial question of law. - Decided against revenue. Claim of bad debts - Tribunal allowing written off amount as irrecoverable as the same has to be allowed as bad debt u/s 36 (1) (vii) r.w.s.36 (2) - Tribunal held that investment in ICDS was part of the business activity as interest accrued therefrom has been treated as business income and loss arising on such investment was allowed as business loss? - Held that:- In view of the above acceptance of the interest received as 'business income' by the revenue in the earlier years it is not open to it to now take up a plea that the amount which are written-off as 'interest not received' cannot be allowed as loss on account of business. Thus the interest not received can be written off in terms of section 36 (1) (vii) of the Act. Moreover, once the interest received on ICDs is held to be income chargeable to tax under the head 'business income' the lending on which this amount of interest was earned by the respondent has necessarily to be in the course of its activity of business and therefore allowed as business loss. The contention on behalf of the revenue that the amount received on settlement should have been first adjusted towards the principal amount and only thereafter the interest amount is not acceptable as there is nothing on record to indicate that debtors had directed the respondent to adjust the amount being repaid in a particular manner. Therefore, in view of sections 60 of the Indian Contract Act it is at the option of the person receiving money to adjust the same either against the principal or interest as it deem fit. Therefore, we find no reason to interfere with the order of the Tribunal as it does not give rise to any substantial question of law. - Decided against revenue.

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• 2015 (10) TMI 2059
  Method of accounting - Whether the ITAT has erred in law in deleting addition of Rs. 12,34,000/- and directing to follow recognized method of accounting to compute the profits in the Real Estate business when the guidance notes of 2006 of ICAI require accounting of income on percentage completion method? - Held that:- The Delhi High Court in Commissioner of Income Tax v. Manish Build Well (P) Ltd. (2011 (11) TMI 35 - DELHI HIGH COURT) noted that project completion method is one of the recognized methods of accounting. It cannot be said that the project completion method followed by the assessee would result in deferment of the payment of the taxes which are to be assessed annually under the IT Act." The assessee-respondent had been consistently following one of the recognized methods of accountancy, i.e. project completion method, for computation of its income. In the absence of any prohibition or restriction under the Act for doing so, it cannot be held that the approach of the CIT(A) and the Tribunal was erroneous or illegal in any manner so as to call for interference by this Court. - Decided in favour of assessee.

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• 2015 (10) TMI 2058
  Treatment to interest income - business income or income from other sources - ITAT allowing the B/F loss to be set off against the income which was not allowed by the AO - Held that:- even a single or isolated transaction can constitute business if it bears a clear indicia of trade, although the activity would normally be systematic and organized characterized by a course of dealing. Identical ratio was laid down by the Hon'ble Madras High Court in the case of CIT vs. R.M. Meenakshi Sundram (1994 (4) TMI 34 - MADRAS High Court). It is not necessary that in every situation the past history has to be seen because even for a past history there is a starting point. It is an admitted fact that the other members of the family are also doing the same systematic and organized activity of earning such interest income, therefore, there is no reason to deny the benefit, if any, to the present assessee. Since we have discussed the issue in detail in the preceding paras of this order, this ground of the revenue is also having no merit, therefore, dismissed Once it has been held that the income of the assessee was to be assessed under the head income from business or profession, the assessee was thus entitled to set off against carry forward losses. The Tribunal was justified in allowing the same. Even for the subsequent assessment year i.e. 2005-06, the interest income was accepted as income from business or profession. Learned counsel for the appellant has not been able to show any illegality or perversity in the findings recorded by the Tribunal. - Decided against revenue.

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• 2015 (10) TMI 2057
  Addition under Section 68 - undisclosed share application/capital money received by the Assessee - CIT(A) and ITAT delted the addition - Held that:- It is not in dispute that extensive material was produced by the Assessee in the present case to prove the identity, genuineness and creditworthiness of the companies who had subscribed to its shares. Among the materials produced were the Income Tax Returns and the PAN card details of the eight companies. Even if the Directors of these companies did not respond to the summons issued by the AO, it was not impossible for the AO to make proper enquiries to ascertain the genuineness of these entities and satisfy himself of their creditworthiness. As pointed out by the CIT(A), the AO failed to make any effort in that direction. He did not take to the logical end the half-hearted attempt at getting the Directors to appear before him. He did not even seek the assistance of the AOs of the concerned companies whose ITRs and PAN card copies had been produced. The view taken by the CIT(A) that the AO failed to come up with the material to disprove what had been produced by the Assessee is certainly a plausible view in the facts and circumstances of the case. Likewise, the view taken by the ITAT concurring with the CIT(A) on facts cannot be said to be perverse. - Decided in favour of assessee.

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• 2015 (10) TMI 2056
  Stay of demand rejected - Held that:- Since facts are more or less similar and the contentions raised before this court were also similar of in the case of Surat Urban Development Authority v. Deputy Commissioner of Income Tax (Exemptions) [2015 (10) TMI 1903 - GUJARAT HIGH COURT] a similar order is required to be passed in the present case. However, considering the fact that an amount equal to two installments has already been recovered from the petitioner which comes to about 25% of the amount demanded, no further amount is required to be directed to be deposited as condition for grant of stay. In the light of the above discussion, the petition partly succeeds and is, accordingly allowed to the following extent. Having regard to the amount already paid by the petitioner, it shall not be treated as an assessee in default as contemplated under section 220(6) of the Act till the final disposal of the appeal before the Commissioner (Appeals). 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. The petitioner shall duly cooperate in the proceedings before the appellate authority. In case the Commissioner (Appeals) is not in a position to dispose of the appeal on account of default on the part of the petitioner, it would be open for the respondents to approach this court for modification of this order.

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• 2015 (10) TMI 2055
  Penalty u/s 271(1)(c) - dis-allowance under Section 94(7) - purchase of software and treatment of revenue expenditure as capital in nature - incidental expenditure, which was found to be not supported by proof - interest on income tax as assessee has duly debited the amount to its profit and loss account, but it did not add back - Held that:- First one of them falling under Section 94(7) is more or less an error of computation. The second one relates to treatment of software expenditure as 'capital' in nature' instead of revenue as claimed. We deem it appropriate to observe that this is a highly debatable issue of perennial nature. Therefore, the assessee cannot be held to have concealed and furnished inaccurate particulars of income. The third instance of incidental expenditure is a case of 100% dis-allowance instead of that @ 20% already made. This is also a divergence of opinion and does not attract penalty. The fourth dis-allowance admittedly is of interest on income tax. The assessee has duly debited this very amount to its profit and loss account but did not add back. We quote case law of Price Water Coopers P. Ltd. Vs. C.I.T. [2012 (9) TMI 775 - SUPREME COURT] in identical circumstances and hold that this cannot be held to be an instance of concealment and furnishing of inaccurate particulars of income inviting penalty under Section 271(1)(c) - Decided in favour of assessee.

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• 2015 (10) TMI 2054
  Share transactions - short term capital gain or trading profits - Held that:- It is clear that for the purpose of evaluating the nature of transaction and intention of the assessee, predominant facts are to be taken into account. It is pertinent to note that when the assessee has given a treatment of these shares held under the investment portfolio in the books of account as investment, then, in absence of any thing contrary brought on record to disprove the primary evidence to reflect the intention of the assessee in carrying out the transaction the nature transaction being investment cannot be treated as trading. In view of the above facts and circumstances of the case, we hold that the shares held by the assessee in the investment portfolio cannot be treated as stock-in-trade and consequently the transactions are in the nature of investment and not trading. Accordingly, we set aside the orders of the authorities below and allow the claim of the assessee of STCG. - Decided in favour of assessee.

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• 2015 (10) TMI 2053
  Disallowance made u/s 14A - Held that:- The decision rendered by Hon ble Bombay High Court in the case of HDFC Bank (2014 (8) TMI 119 - BOMBAY HIGH COURT) shall apply to the facts of the instant case. Accordingly, consistent with the view taken by the co-ordinate bench in the assessee s own case in the earlier years, we hold that the interest disallowance made by the tax authorities is not called for. Accordingly, we set aside the order of ld.CIT(A) in respect of interest disallowance and direct the AO to delete the same. - Decided in favour of assessee. Disallowance of administrative expenses relating to exempted income - Held that:- We notice that the Ld CIT(A) has worked out the same as per Rule 8D(iii) of IT Rules, even though he accepted the fact that Rule 8D shall not apply to the year under consideration. However, we notice that the assessing officer has worked out the disallowance at Rs. 10.00 lakhs by considering the explanations of the assessee. Since the disallowance of administrative expenses is to be worked out on a reasonable basis as per the decision of Godrej ble Gujarat High Court has held in Navijan Roller Flour and Pulse Mills Ltd Vs. Dy. CIT [2009 (3) TMI 132 - GUJARAT HIGH COURT] that the liability accrues at the earliest point of time and the fact that the award was challenged in appeal cannot be a ground for holding that the liability had not been incurred. Accordingly by following the Hon ble Gujarat High Court (referred supra), we direct the AO to allow deduction of the arbitration award. The assessee has also raised an additional ground praying that the interest accrued thereon up to 31.3.2005 should also be allowed. However, we prefer to restore this matter to the file of the AO with the direction to examine the arbitration order and take appropriate decision in accordance with the law, after affording necessary opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Addition u/s 92CA made in respect of purchase from its Associated Enterprises - Held that:- There is no difference in the methodology adopted by AE and non-AE for determining the price. The difference has occurred due to following „financial year basis for AE, where as the non-AEs have followed calendar year basis. Since the assessee is following a particular pattern for its AEs year after year, we find merits in the contentions of the Ld A.R that the temporary price difference occurring due to fluctuations in TC/RC charges should be ignored. These submissions brings out the exact reason for the price difference and in our view, the said reasons are reasonable and need to be factored in, i.e., adjustments should be permitted, in which case it would result that the payments made to AE was at ALP. Further, it is not the case that the assessee was paying higher purchase price to its AE year after year in the months of Jan to March. In subsequent years, the assessee has gained by paying lower purchase prices. In view of the foregoing, we are of the view that the assessee should be considered as having paid the purchase price to its AE at ALP only and hence there is no necessity to make adjustments. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition. - Decided in favour of assessee. Addition u/s 92CA in respect of Corporate Guarantee fee - Held that:- Rate of 0.50% is consistently followed in many of the cases by the Tribunal. In fact, in the case of Everest Kanto Cylinder Ltd, [2015 (5) TMI 395 - BOMBAY HIGH COURT ] has determined the rate at 0.50% and the same has not been disturbed by the Hon'ble Bombay High Court. Accordingly, we modify the order of Ld CIT(A) on this issue and direct the AO to compute the addition by adopting the rate of 0.50%. Eligibility of the assessee to claim deduction u/s 80IA allowed to assessee. Since the assessee is eligible to claim deduction u/s 80IA of the Act in respect of Co-generation Plat 2, he was justified in holding that the assessee could exercise option u/s 80IA(2) of the Act. State electricity board rates has to be taken as market value for computing deduction u/s 80IA of the Act. Hence, we do not find any infirmity in the decision of Ld CIT(A) on this issue to compute deduction u/s 80IA by applying supplier/UPSEB market rate.

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• 2015 (10) TMI 2052
  Validity of reopening of assessment - Held that:- CIT(A) has given a clear finding that the assessing officer has reopened the assessment only on the basis of material facts available with him and not on account of change of opinion. Further, the observation of the AO that the assessee did not produce the relevant materials necessary for completion of assessment at the time of completion of original assessment has also been upheld by the Ld CIT(A). At the time of hearing before us, the assessee could not contradict these observations made by the Ld CIT(A). Hence, we do not find any infirmity in his decision in confirming the validity of re-opening of assessment. Addition of "Provision for Wealth tax" for computing Book Profit u/s 115JB - Held that:- It is a well settled proposition that the provisions of sec. 115JB is a complete code by itself and the additions prescribed therein only can be added to the net profit for computing the "book profit" under that section. As per clause (a) of Explanation 1 to sec. 115JB, what is required to be added to the Net profit is “the amount of income tax paid or payable, and the provision there for.” This clause provide for addition of only “income tax” and not “wealth tax”. The question as to whether the wealth tax was actually paid or a mere provision was made, in our view, is irrelevant for interpreting the above said provision. The very same issue came for consideration before the Hon ble Bombay High Court in the case of Echaj Forging Pvt Ltd (2001 (2) TMI 56 - BOMBAY High Court) and the revenue conceded before the Hon ble High Court that the wealth tax could not be added to the Net profit u/s 115J of the Act. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition of provision for wealth tax while computing book profit u/s 115JB of the Act. - Decided in favour of assessee. Addition of gain arising on re-purchase and extinguishment of debenture bonds - Applicability of section 41(1) - CIT(A) deleted the addition - Held that:- We are of the view that the Ld CIT(A) was right in law in holding that the provisions of section 41(1) cannot be applied as the amount of surplus is not on account of trading liability and accordingly he was justified in deleting the addition made by the assessing officer. Further, as per the ratio laid down in the case of ICDS (2006 (3) TMI 90 - KARNATAKA High Court) the gain realized by the assessee on re-purchase and extinguishment of debentures cannot be considered as income u/s 2(24) of the Act.- Decided in favour of assessee. Addition of Commission/surcharge paid to SUMO, Iraq Government agency on the basis of Volker Committee report - CIT(A) deleted the addition - Held that:- Consistent with the view taken by the co-ordinate bench of Tribunal in the assessee s own case for AY 2001-02, we uphold the order of Ld CIT(A) in deleting the disallowance of commission/surcharges paid to SUMO and also the transportation charges made by the AO on the basis of Volkar committee report.The facts prevailing in the instant case show that the assessee has not made any payment directly to Iraqi Government. It has paid purchase price to its supplier M/s Alcon Petroleum Ltd. The Ld CIT(A) has given a categorical finding that there is no evidence or material to support the alleged payment of illicit commission/surcharge over and above the purchase price by the assessee to the Iraq Government. Further, as per the contract signed between the assessee and M/s Alcon Petroleum Ltd, M/s Alcon has also not paid any surcharge to Iraqi Government or their agency for procuring the crude oil. Hence, we are of the view that the Ld CIT(A) was justified in deleting this addition by holding that there is no material to support this addition- Decided in favour of assessee.

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• 2015 (10) TMI 2051
  Non deduction of TDS U/S 194J - payment made for hospitality services, doctor’s fees, annual maintenance contrary payment - revenue imposed tax u/s.201(1) and also charged interest u/s.201(1A) - AO did not accept assessee’s contention regarding its liability to deduct tax u/s.194C and held that the assessee was liable to deduct tax u/s.190J - Held that:- As decided in DCIT v. Parasrampuria Synthetics Ltd [2007 (11) TMI 436 - ITAT DELHI] the persons rendering certain services has only maintained machinery or converted yarn but that knowledge is not now vested with the assessee by which itself it can do research work. In the circumstances, the amount paid cannot be considered as fees for technical services within the meaning of section 194J of the Act. After holding the assessee in default, under various provisions of Section 194, the AO has passed order u/s.154, wherein he held that in view of the decision of Hindustan Coco-cola Beverage Pvt. Ltd. [2007 (8) TMI 12 - SUPREME COURT OF INDIA] since the recipient of income have already paid the tax, the AO has deleted the tax liability so imposed, however, he has confirmed the interest thereon. Thus, even during the appellate proceedings before the CIT(A) the AO has passed rectification order under section 154 and deleted all the liability created under Section 201(1) of the I.T.Act. - Decided in favour of assessee.

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• 2015 (10) TMI 2050
  Penalty u/s 271(1)(c) - transfer of title - diversion of income by overriding title - AO held that payment made to the legal heirs of the partner, Shri Pyarali Dholakia & Mrs. Pravin Dholakia cannot be allowed to be reduced from the gross consideration received, as the same belongs to the partnership and the entire amount should have been shown in the hands of the firm - whether the property belongs to the firm and the share of the legal heirs was paid to them under mutual agreement, however, tax on the amount paid to the legal heirs were erroneously deposited in the names of the heirs instead of the firm - Held that:- The main surviving partner, Mr. Mateen Dholakia (Son of late Mr. Pyarali & Mrs Pravin Dholakia), had tried to discharge his obligation as per the ‘Will’ of his parents and also by the family arrangement that out of the sale proceeds from the land originally belonging to his father, (later on converted into property of partnership firm) had to be given to his sisters. Instead of receiving the whole amount in the hands of the partnership firm and including it as its income and paying taxes thereon, and then paying to the legal heirs which would have been the correct manner, he chose to give the amount directly to the legal heirs after paying the taxes. Once assessee has complied with the terms of the Will and the family arrangement then, it cannot be held that at the time of filing of the return the assessee lacked genuine and bona fide belief or acted mala fidely to divert the income for evading the taxes. The concealment of income or furnishing of inaccurate particulars, as contemplated in clause (c) of section 271 has to be seen with reference to amount of tax sought to be evaded. Here, in case there is no tax which has been sought to be evaded, because as pointed out earlier, the assessee had paid more taxes as it has to pay taxes on the gross amount paid to the legal heirs. Thus, under the present facts and circumstances, we hold that penalty levied by the Assessing Officer and confirmed by CIT(A) is unsustainable.

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• 2015 (10) TMI 2049
  Disallowance of R that is Resale Price Method and instead by adopting TNMM as MAM by the TPO. This selection of most appropriate method of TNMM by the department has been found to be inappropriate by the Tribunal in the earlier years and assessee’s RPM has been accepted. As a result of adopting RPM as MAM, similar adjustments made in the earlier assessment years stands deleted. Thus, as a matter of judicial precedence and without there being any change of material facts and circumstances, we also direct the TPO/Assessing Officer to adopt RPM as most appropriate method for benchmarking the transaction of import of seeds to its AE and carry out comparability analysis for benchmarking the assessee’s gross margin and determined the appropriate ALP. Addition on account of fall in gross profit margin - Held that:- there are exceptional items in this year like inventory written off aggregating to Rs. 16,36,68,410/- and extra ordinary increase in sales expenses at Rs. 6,12,55,579/-. If these two factors are taken into account, then the difference/gap between the GP of the preceding year and the current year would be very low. In such a situation, the addition made by the Assessing Officer will also scale down substantially. However, in wake of letter given by the assessee before the DRP agreeing for the GP addition, we are restraining ourselves to give any finding on merits and sustain whole of the GP addition as accepted by the assessee before the DRP. To this extent, we agree with the contention of the Ld. DR that if the TP adjustments are deleted, then there would be no telescoping and the entire addition made on account of fall in gross margin will get sustained. Accordingly, we direct the Assessing Officer that in case the TP adjustments are deleted after adopting the RPM as MAM, then the entire GP addition should be sustained.

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• 2015 (10) TMI 2048
  Reopening of assessment - Loss from transactions of mutual fund units - whether a business loss which is allowed to be reduced from other business income and not capital loss - Held that:- The AO has power to reopen provided there is tangible material to come to the conclusion that there is escapement of income from assessment and reasons must have a link with the formation of the belief. In the case in hand, the original assessment was done on the basis of material produced by the assessee before the AO. No new material or information has come into the knowledge of the AO. The view taken by the AO was one of the possible views treating the income/loss on mutual funds as business loss. Such a treatment was given by the AO in the case of assessee in earlier assessment years also. No further evidence or new information has come to the knowledge of the AO for change of his opinion in this respect. Hence, the reopening on the ground that the loss from mutual funds was to be assessed as capital loss was nothing but a change of opinion that too based on surmises and conjunctures and not based on any particular material fact or circumstance which can be considered to be a deciding factor for such a treatment. Second reason regarding the applicability of amended section 94(7) is concerned, we find that the amendment brought by the said section was applicable from the assessment year 2005-06. Even the condition imposed in the said amendment is that if the assessee buys or acquires any securities or units within a period of three months prior to the record date of dividend and sells or transfers such units within a period of nine months after such date, then the loss is to be disallowed. However, we find that during the year under consideration the assessee had not sold or transferred the securities/mutual funds. The loss arrived at by the assessee was on account of diminution in the value of the stock as compared to the market value. The units were lying in the stock of the assessee at the close of the financial year. Under such circumstances, the provisions of section 94(7) were not attracted in this case. So far as the forming of reasons as to the applicability of section 94(7) for the year under consideration is concerned, the same was erroneous as the amended provisions are not applicable for the year under consideration and the reasons of the AO to believe that the income of the assessee has escaped assessment because of the applicability of section 94(7) are fallacious and are not valid and the reopening on the basis of said belief is bad in law. - Decided in favour of assessee.

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• 2015 (10) TMI 2047
  Addition on account of unexplained gift - genuineness of the transaction - Held that:- The assessee has not brought on record the bank statement of the said donor or the concerned entity owned by the said donor. Copy of the affidavit cum gift deed of Mr. J. S. Pawar is available on page No. 15 of the paper book as per which he is residing at Kent U.K. and it is stated therein that in consideration of natural love and affection, he has gifted a sum of Pounds 7,000 to the assessee but in this affidavit cum gift deed also, it is nowhere stated that he is friend or relative of the assessee. This is also not stated in the affidavit cum gift deed that the money has been transferred from the bank account of the said donor. ++ In view of this position noted by learned CIT(A) that as per the details of the transfer of the money as submitted by the assessee, it is seen that it does not give the name of remitter who is alleged donor and in fact the document states that the ordering customer is Zahrat Al Khaleej Est of Dubai. Considering all these facts, we find that the assessee has not been able to establish the identity or creditworthiness of the said donor and he also could not establish the genuineness of the transaction in the facts of the present case. In fact, as per the details provided by the assessee himself, the ordering customer is not the alleged donor but a different person of Dubai. - Decided against assessee.

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• 2015 (10) TMI 2046
  Disallowance made U/s. 40(a)(ia) - non deduction of TDS on the interest paid - said interest payments have been accounted by the payee in their Books of Accounts and payee has offered as part of their computation in the return of income. - Held that:- No reason to interfere with the well reasoned order of CIT(A) as he has considered the legal principles established by the Co-ordinate Benches and accordingly, decided the issue. Therefore, the order of CIT(A) is upheld and Revenue’s ground on this is rejected. In fact the Revenue’s ground is that second proviso is effective only from 01-04-2013 and not for the impugned assessment years. Since this issue was already considered and decided that the second proviso to Section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 01-04-2005 from the date in which sub-clause i.e., section 40(a) was inserted by Finance Act. In view of this, we find no merit in the Revenue’s contentions - Decided against revenue. Credit for Security Transactions Tax - CIT(A) allowed the claim - Held that:- There is a mistake in the direction of CIT(A) to give credit for the Security Transaction Tax as per the provisions of Section 88E. The Ld. CIT(A) failed to notice that vide sub-section 3 of Section 88E, no deduction under this section shall be allowed in or after the assessment year beginning on the first day of April, 2009. Since, the impugned assessment years are after that date, the direction of CIT(A) is not as per the provisions of law. Accordingly, the order of CIT(A) on this issue is set aside. The order of AO is therefore restored. - Decided in favour of revenue.

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• 2015 (10) TMI 2045
  Entitlement to exemption u/s.54F - Held that:- In the present case, the assessee purchased new asset on 05/10/2009 and had transferred the original asset on 8/01/2008. As per Section 54F (1) of the Act, the exemption would be available if the assessee purchased the residential house within two years after the date when transfer took place. As per the judgment of K. Ramachandra Rao case [2015 (4) TMI 620 - KARNATAKA HIGH COURT] the provisions of section 54F(4) would not be attracted in the event if the assessee has purchased or constructed the residential house within the period prescribed under section 54(1) of the Act. In the case in hand, there is no dispute with regard to the fact that the assessee had purchased within two years [the period prescribed u/s.54(F(1)] a new asset on 05/10/2009 from the date of transfer of the original asset. The Revenue has not cited or placed on record any contrary judgment by the Hon’ble Jurisdictional High Court or Hon’ble Supreme Court. Therefore, respectfully following the ratio laid down by the Hon’ble Karnataka High Court in the case of CIT vs K.Ramachandra Rao (supra), we hereby set aside the impugned order and direct the AO to re-compute the assessed income after granting the benefit of section 54F of the Act to the assessee. - Decided partly in favour of assessee for statistical purposes.

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• 2015 (10) TMI 2044
  Penalty u/s 271(1)(c) - undisclosed investment - Held that:- In the case of assessee the return under section 153A was furnished on 8.11.2007 and thereafter it was revised on 20.10.2008 and the assessment order was passed by the AO on 26.12.2008; which means that the return was revised before the completion of the assessment by AO. As regards imposition of penalty under section 271(1)(c), as decided by Hon’ble Gujarat High Court in the case of Kirit Dahyabhai Patel vs. ACIT (2015 (1) TMI 201 - GUJARAT HIGH COURT) held that penalty under section 271(1)(c) of the Act is to be levied on the income assessed over and above the income returned u/s 153A. In the case of assessee the income as shown in the revised return of income at Rs. 10,38,538/- was accepted by the AO and no other addition was made as such assessee’s case was not a fit case for the imposition of penalty under section 271(1)(c). We hereby direct the Assessing Officer to delete the penalty. - Decided in favour of assessee.

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• 2015 (10) TMI 2043
  Disallowance of exemption u/s 54 & 54F - registration of new property in the name of individual or HUF? - CIT(A) aalowed claim - Held that:- The facts of this case are squarely covered by the judgement of Vipin Malik (HUF) (2009 (8) TMI 33 - DELHI HIGH COURT) wherein it has been categorically held that when the property is not purchased with the sale proceeds of HUF property in the name of HUF itself, the assessee is not entitled for benefit of exemption u/s 54F of the Act. Since in the instant case the property was also not purchased with the sale proceeds of HUF property, the assessee is not entitled for benefit u/s 54F of the Act. Since Shri Sunil Arora and Mrs. Vaishali Arora vendee of sale deed dated 03.06.2008 of the property at Sushant Lok, Phase I, have become absolute owner in their individual capacity, they are estopped by their own act and conduct from ceremonially declaring the said property as HUF property apparently for claiming tax benefit. Merely because of the fact that part of sale proceeds of HUF property have been invested in purchasing the Sushant Lok Property, the same cannot be treated as HUF property in any manner whatsoever. Because substantial part of investment on the purchase of new property, that too in the individual name of Sunil Arora and his wife Smt. Vaishali Sunil, have been made from other sources. Merely because of the fact that the property purchased is recorded as the asset in the statement of affairs of HUF and the loan from ICICI bank as a liability, the same cannot be considered as HUF property as the same was never purchased by Sunil Arora (HUF) and the statement of affairs is a document prepared by the assessee as an afterthought to claim exemption u/s 54F of the Act. In the instant case, assessee is strictly Sunil Arora HUF when the capital gain has been invested to purchase the other property in the individual names of Sunil Arora and Vaishali Sunil to the prejudice of other members of HUF, no benefit u/s 54F can be extended. he intention of legislature to legislate Section 54 and 54F is to ensure the reinvestment of funds in residential property by the assessee itself. But in the instant case, basic condition to get the benefit of Section 54 and 54F has not been complied with as the funds raised from the sale proceeds of HUF property have been invested by the members to purchase the property in their individual names, which does not fall in the category of assessee i.e. Sunil Arora (HUF) - Decided against assessee.

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• 2015 (10) TMI 2042
  Revision u/s 263 - as per CIT(A) nature of the premium received on share capital was revenue in nature, therefore, chargeable to tax - provisions of Section 78 were applicable to the share premium - whether since the nature of receipt has not been explained, the premium amount credited in the books of account is chargeable to tax u/s.68 of the Act? - Held that:- It is the wisdom of person applying for share to determine whether to buy the shares at a premium or not. Revenue cannot stand in the way of person opting to buy share at a premium insofar as sources of funds are not in dispute. Even with respect to requirement of Section 78, the assessee has fulfilled all the prescribed formalities under the Companies Act, 1956 by filing requisite Form No.2 along with Annexures. The Registrar of companies has accepted the issue of shares at premium and no adverse view has been adopted in this regard. Thus, the nature of “cash credit” was also evident as per the documentary evidence placed on record. So far as nature of receipt on account of share capital and premium thereon is concerned, both are in the nature of capital receipt and not in the nature of income. The CIT has tried to invoke section 68 to see that share premium is income of the assessee with respect to amendment brought by the Finance Act, 2012. However, the amendment in Section 68 was brought by the Finance Act, 2012 w.e.f1-4-2013, therefore, there is no reason to treat the share premium as income during the assessment year 2010-11 under consideration. Thus, CIT was not correct in invoking amended provisions during the year under consideration. AO has called for financial details of the companies and also examined the parties in order to satisfy himself about the genuineness of the transaction and source of money. Thus, after examining the evidences available on record, the AO has accepted the claim of assessee regarding receipt of share capital at premium. The Commissioner has not found any fault with the details and records that the AO has not conducted the proper enquiry. When the entire record was available with the Commissioner, he ought to have given a concluding finding that the view taken by the AO is contrary to the law as well as facts emerging from the records. However, the Commissioner has not given any such finding and restore the matter to the record of the AO which is not permissible as per provisions of Section 263 when the AO has conducted the enquiry and allowed the claim of the assessee on the basis of the examination of the record. We have also found that assessee company has filed bank statement of these companies showing the transaction of payment of share premium. Even as per verdict of the Hon’ble Supreme Court in the case of Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] , if the department has any doubt regarding such share capital, the department is at liberty to have investigated/reopened the case of such share applicants. Thus we can conclude that share capital received by the assessee at premium was genuine, not only source of the fund but also genuineness of the transaction was duly established. The share premium so received was capital receipt not liable to tax during the year under consideration. Necessary enquiries with regard to share capital so received was made by the AO. Accordingly, there is no merit in the order passed by the CIT u/s.263 of the I.T.Act. - Decided in favour of assessee.

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• 2015 (10) TMI 2041
  Disallowance u/s 14A of interest expenses - Held that:- Undisputedly, the investments made by the assessee are in its subsidiary companies and associated companies which are special purpose vehicle formed to execute specific projects. Undoubtedly, the investments in subsidiary/associate companies are done on account of business expediency in order to carry on the business of the assessee. Accordingly, the investments can be seen in the light of strategic in nature and inextricably linked with the main business operation of the assessee. The Tribunal in the case of J.M. Financial Ltd. (2014 (4) TMI 752 - ITAT MUMBAI ) had considered similar facts and finally decided the issue in favour of the assessee - Thus direct the AO to delete the disallowance on account of interest expenses - Decided against revenue. Disallowance of other expenses - Held that:- The assessee has also received income from business auxiliary services amounting to Rs. 1.15 lakhs. In our considered opinion, the balance expenditure of Rs. 29,62,421/- may be considered for earning the income from auxiliary services. However, at the same time we find that some reasonable disallowance ought to be attributed for which 2% of the dividend income should meet the ends of justice. We, accordingly direct the AO to restrict the disallowance to 2% of dividend income. Decided partly in favour of assessee. Disallowance in interest expenses u/s. 37 - Held that:- The assessee has made investments in subsidiary companies and associate companies which are special purpose vehicles formed to execute specific projects. Thus, the allegation of the AO that assessee has diverted and applied borrowed funds in non-business activities do not hold any water. The Hon’ble High Court of Madras in the case of CIT Vs Spencer & Co. Ltd. [2014 (2) TMI 237 - MADRAS HIGH COURT] have held that the interest on borrowed capital were investments in shares utilizing borrowed capital for strategic business purposes in companies promoted as special purpose to strengthen and promote assessee’s existing business interest was allowable. A similar view was taken by the Hon’ble High Court of Madras in the case of RPG Transmissions Ltd in [2014 (2) TMI 238 - MADRAS HIGH COURT]. Respectfully following the decisions of the Hon’ble High Court (supra), in the light of identical facts of the case in hand, we do not find any reason for the disallowance - Decided against revenue. Non-granting of tax credit for TDS - Held that:- The credit for the tax has been denied only because the same is not reflected in Form No. 26AS. However, in our considered opinion, the Revenue is obliged to grant the assessee the credit for the TDS for which it is able to satisfactorily proves to the AO, the factum of deduction of tax at source and its deposit to the credit of the Central Government. We restore this issue to the file of the AO. The AO is accordingly directed to allow the assessee credit for the TDS after verifying the TDS certificate. - Decided in favour of assessee for statistical purposes.

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• 2015 (10) TMI 2040
  Penalty under sec. 271(1)(c) - Held that:- The additions have been confirmed upto to the stage of the Tribunal; however, the appeals against the quantum are pending for adjudication before the Hon ble High Court of Gujarat. There is no dispute with regard to the fact that at both stages, i.e., quantum as well as penalty proceedings, the assessee remained absent. However, before the CIT(A), in penalty proceedings, the assessee had filed the evidences which have been considered at length and has given a finding that the appellant has failed to discharge its onus of proving the identity of these persons, genuineness of transactions and creditworthiness; therefore, on merit none of the creditors are allowable. We have given our thoughtful consideration to the facts of the case. One of the grounds admitted by the Hon ble Jurisdictional High Court is with regard to the service of notice u/s 148 which goes to the very root of the reopening of assessment proceedings. Therefore, under these facts, we hereby set aside the orders of the authorities below on the issue of levying penalty. The Assessing Officer is directed to decide the issue afresh after the outcome of the question Nos. 4 6 admitted by the Hon ble jurisdictional High Court i.e. (4) Whether in the facts and circumstances of the case, learned ITAT has erred in law in not appreciating the fact that, admittedly notice u/s 148 dated 29.05.2001 was served on different address than shown in the return and is not valid service? (6) Whether in the facts and circumstances of the case, learned ITAT has erred in law in not appreciating the facts that, there is no tangible material for AY 1994-95 vide notice dated 29.05.2001 which is beyond 4 years from end of the relevant AY and the said notice is bad in law?

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• 2015 (10) TMI 2039
  Non deduction of tax from salary paid to foreign sales personnel - Held that:- Where the employee discharges his duties outside India and his stay is beyond the prescribed limit to term him resident, the income earned earned upon such discharge of duties outside India would not be within the ambit of term has accrued in India and is deemed to have accrued in India. Therefore, would not be taxable in India. Admittedly, if any income which is not taxable in India, would not be liable for tax. In the case in hand, admittedly two of the employees of th appellant worked outside India and were NRI. Therefore, in the light of judgment of Hon’ble Karntaka High Court in the case of DIT (Int.Taxn.) Vs. Prahlad Vijendra Rao (2010 (11) TMI 803 - Karnataka High Court), the amount of salary paid to such employees would not be taxable in India. The Revenue has not brought to our notice any contrary binding precedent. Therefore, the disallowance of expenditure towards payment of salaries to remaining two employees, is hereby deleted - Decided in favour of assessee. Disallowance of bad debts written off - Held that:- There is no dispute with regard to the finding that the payment were made in the regular course of business. There is no finding of the authorities below that the payment were not related to the business of the assessee. Under these facts, except in the case of QCS, where the assessee itself has admitted that no invoice was issued, the authorities below were not justified in disallowing the claim of the assessee. Therefore, we hereby direct the AO to delete the disallowance except in the case of QCS. The disallowance to the extent of Rs. 1,52,837/- is confirmed and rest of the amount is deleted. - Decided partly in favour of assessee.

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• 2015 (10) TMI 2038
  Sale value of DEPB - computation of deduction u/s 80HHC - whether only Profits on Sale of Licenses are to be treated as income of the Appellant? - Held that:- As decided in Topman Exports [2012 (2) TMI 100 - SUPREME COURT OF INDIA] DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – The AO is directed to recalculate the claim made by the assessee in light of the decision of the Hon’ble Apex Court. - Decided in favor of assessee. Disallowance of deduction of 10% of export incentive from the indirect cost at the time of calculation of deduction u/s. 80HHC - Held that:- We find that the assessee had made an appeal before the FAA and he had rejected the claim following the judgment of Goetz India (2006 (3) TMI 75 - SUPREME Court). In the case of Pruthvi Brokers and Share Holders (P) Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ), the Hon'ble Bombay High Court has clearly held that the appellate authorities can admit new claim made by an assessee even if same was not made before the AO, that in case of the AO the claim could be made by filing a revised return only.As the FAA did not have the benefit of the judgment of the Pruthvi Brokers(supra),so,in the interest of justice we are restoring back the matter to the file of the FAA to decide the issue afresh in light of the decision of Surendra Engg. Corpn. (2002 (12) TMI 199 - ITAT BOMBAY-H). He is directed to afford a reasonable opportunity of hearing to the assessee. Ground No.3 of the appeal is allowed in part. - Decided partly in favour of assessee.

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• Customs

• 2015 (10) TMI 2090
  Challenge to chargeabiity of duty and reduction in redemption fine and penalty - It was observed that chargeability of duty was neither raised nor argued and only plea raised during arguments in the appeal was one for reduction of redemption fine and penalty - Held That:- Appellant cannot be allowed to retract from their admitted statements - Orders passed by Tribunal dismissing the appeal and rectification application do not suffer any error of jurisdiction or of law - Decided in favour of Revenue.

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• 2015 (10) TMI 2089
  Denial of refund claim - Section 28(1)(b) of the Customs Act, 1962 - Held that:- As no demand is made for any amount against the petitioner, I find no justification for continued retention of the amount of Rupees Two Crores. It is unnecessary to examine the submission of the petitioner that Rupees Tw o Crores was collected under threat. Learned counsel for the respondents submits that the amount of Rupees Two Crores is lying in deposit with respondent no.1. As there is no legal justification for continued retention of the aforesaid amount of Rs. 2 crores, I direct respondent no.1 to refund the amount of Rupees Two Crores to the petitioner, expeditiously and in any event, within six weeks. - there is none ed for respondent no.1 to refund the amount of Rupees Two Crores and it shall be treated as deposit towards duty - Petition disposed of.

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• 2015 (10) TMI 2088
  Challenging the constitutional validity of Notification No.96/2009-Customs - Imports are exempted under Advance Authorisation from the whole of the additional duty, safeguard duty and anti-dumping duty; Safeguard duty not exempted - Revenue contends that petition is premature as only SCN issued - Held That:- Adjudicating authority ought to apply notification in light of Office Memorandum dated 31 May 2013 - Affidavit-in-reply to be filed on behalf of Respondent within 2 months - Liberty given to Petitioner to move the Court as and when necessary - Decided in favour of assessee.

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• 2015 (10) TMI 2087
  Waiver of penalty imposed on deceased husband - Mis-declaration of imports - Revenue could not show any provision by which the amount of penalty could have been recovered and from the wife of deceased - Held That:- Communications addressed to petitioner are not legally tenable - Section 147 would not enable the Respondents to recover the penalty; no other section brought to notice of the Court - Penalty cannot be recovered from the petitioner; communications are quashed and set aside - Decided in favour of Petitioner.

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• 2015 (10) TMI 2086
  Issuance of writ to direct Respondent not to torture or man handle the petitioner during investigation – Petitioner contends that lawyer be present at a visible distance during investigation while Revenue agrees with the same adding further that lawyer shall not be present within a hearing range - Held That;- It would be appropriate to allow the lawyer of petitioner to remain present within sight but not within the hearing range; same would not create any interference in investigation – Direction issued for maintaining transparency in the interrogation – Decided in favour of Petitioner.

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• 2015 (10) TMI 2085
  Recovery of drawback duty under Rule 16 of Drawback Rules – IC Engines exported - Petitioner contends that claims were under Rule 6(1)(a) and All Industry Rates of drawback for products under heading 8408 are not fixed – Goods if not eligible for drawback; order in original should not have been confirmed and authorities have erred in law - Held That:- Respondent assessee made a statement that no All Industry Rate of drawback fixed or existing - Merely making one statement in application filed under Rule 6 will not mean that drawback amount was erroneously granted; no amount should be demanded - Order of revisional authority cannot be termed as perverse or vitiated by any error of law; no material irregularity which could be termed as resulting in manifest injustice – Decided against the Revenue.

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• 2015 (10) TMI 2084
  Denial of refund claim - Refund granted by Tribunal's previous order - Held that:- if the Revenue is unable to obtain a stay within 3 months then refund should be granted. In the present case, it is admitted position that the Hon'ble Supreme Court has not granted the stay. In such situation, the respondent is bound to follow the Board's Circular - following the Board Circular dt. 8.12.2004, the respondent should have implemented the Tribunal's order immediately on completion of 3 moths and refund along with interest should have been disposed of - Decided in favour of assessee.

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• 2015 (10) TMI 2083
  Utilisation of Excess credit limit, under DEPB – Denial of benefit of exemption Notification No. 45/2002-Cus – Importer imported consignment of Crude Palm Oil and cleared goods on basis of Telegraphic Release Advice (TRA), issued vide Customs House and Duty Entitlement Pass Book (DEPB) Licenses – During investigation DRI found that importer had utilised excess credit, in violation of condition of DEPB License – Adjudicating authority denied benefit of exemption Notification No. 45/2002-Cus and confirmed demand of duty, interest and imposed penalty – Held that:- objective of DEPB is to neutralise incidence of customs duty on import content of export product – Purpose to grant duty credit against export product is to allow neutralise incidence of Customs duty on import content of export product – Therefore, restriction to use DEPB credit is not beyond Policy and notification – Hence, demand of duty alongwith interest on importer is sustainable – Appellant purchased DEPB from open market and restriction of use was categorically mentioned therein – Lapse on part of Customs authorities to mention same on TRAs, would not waive penal consequences on importer – Hence, imposition of penalty on importer is warranted – Appeal filed by importer dismissed – Decided against Importer. There is no evidence available on record that Custom House Agents was aware of alleged irregularity – Adjudicating authority observed that appellant has breached conditions of CHA Regulation, 2004 – Hence, imposition of penalty on CHAs is not warranted – In view of discussion, demand of duty along with interest and penalty on importer upheld – However penalty imposed on CHA set-aside – Appeal filed by CHAs allowed – Decided in favour of CHAs.

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• 2015 (10) TMI 2082
  Clearance of goods under Status Holder Incentive Scheme – Benefit of Notification No. 104/2009 – Appellants imported titanium sheets for clearance under Status Holder Incentive Scheme (SHIS) claiming benefit of Notification No. 104/2009 – Adjudicating authority denied benefit of notification on ground that titanium sheets are not capital goods but confirmed amount under section 28(2) of Customs Act, 1962 – Commissioner set aside order of adjudicating authority and allowed appeal of respondent – Held that:- licensing authority had issued EPCG licenses to appellant for import of said product – It is evident that list of items given in list include titanium sheets, titanium rod, titanium tube/pipe etc. under EPCG licence – No dispute on fact that appellant is actual user and imported goods are used in chemical industry – In respect of import of capital goods they are governed by FTP and once licensing authorities include any item as capital goods, same is to be allowed by customs – Therefore, lower authority in impugned order rightly held titanium sheets are capital goods covered under capital goods definition and same is eligible under SHIS scrip under Notification No. 104/2009 – Therefore, impugned titanium sheets imported under SHIS are eligible for exemption – Decided in favour of Assesse.

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• 2015 (10) TMI 2081
  Refund claim filed by CHA on behalf of importer - Revenue contended that CHA could not file the refund and rejection as such was proper - Held That:- Regulation 2 of Customs Refund Application (Form) Regulations, 1995 provides for CHA to file refund claim on behalf of importer with proper authorization - Provision of regulation cannot be taken against Section 27; if at all against shall be challenged before the Hon'ble High Court or Supreme Court and not before the Tribunal - Found no merit in appeal - Decided against the Revenue.

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• Service Tax

• 2015 (10) TMI 2102
  Liability of Service Tax – Work Contract prior to period of 1.6.2007 and after 1.6.2007 - Same has invoked longer period of limitation and SCN was issued after the issuance of first show-cause notice – Held That:- Matter remanded back to Commissioner (A) – Matter to be decided in reference to the case of Nizam Sugar Factory vs. CCE [2006 (4) TMI 127 - SUPREME COURT OF INDIA] – Appeal Disposed of.

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• 2015 (10) TMI 2101
  Manpower Recruitment or Supply Agency service – The appellant received consideration on piece rate basis for providing certain fabrication work by deputing workers to the factory – Appellant contends consideration received for items fabricated and not for workmen deputed – Appellant states that activity in issue does not fall within the ambit of the Manpower Recruitment or Supply Agency Service – Appeal allowed in the light of the law and Impugned order is unsustainable – Decided in favour of the assessee.

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• 2015 (10) TMI 2100
  Denial of CENVAT Credit - Sales Commission - Bar of limitation - Held that:- the demand of service tax of Commission Agent is required to be upheld on merit, but, it is not sustainable for the extended period of limitation. Regarding the demand of service tax on construction service for Residential Colony and Decoration charges, the appellant immediately reversed the credit as pointed out by the audit.There is no material available on record, the malafide of the appellant. The Tribunal in the case of CCE, Allahabad vs. Kisan Sahkari Chini Mills Limited - [2008 (4) TMI 607 - CESTAT, NEW DELHI ], on the identical situation, set-aside the penalty. In the present case, the penalty is imposed under Section 11AC of the Central Excise Act, which cannot be sustained in the facts and circumstances of the case, as there is no suppression of fact with intent to evade payment of tax. - denial of CENVAT credit alongwith interest and penalty is set-aside on limitation - Decided in favour of assessee.

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• 2015 (10) TMI 2099
  Waiver of Penalty under Section 77 & 78 of Finance Act, 1994 – Appellant contested that penalty cannot be imposed under Section 78 of the said Act and entire service tax & interest was paid before the issue of SCN – Appellant had no intention to evade payment of service tax for imposing Section 78 penalty – Revenue admitted that entire tax was paid before the issue of SCN – Revenue stated further that imposing penalty under Section 77, intention to evade payment of service tax, is not required – Held That:- No intention to evade payment of service tax can be attributed on the part of the Appellant - Ingredient contained in Section 78 are not satisfied – Appeal allowed – Decided in favour of the assessee.

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• 2015 (10) TMI 2098
  Imposition of Service Tax- Services of outbound tours - Revenue appeals against the adjudication order to the extent service tax demand on outbound tours was dropped pursuant to SCN – Held That:- Immunity to levy service tax on outbound tours is no longer res integra - Revenue has no merits - Decision in the case of Cox & Kings Ltd. [2013 (12) TMI 1024 - CESTAT NEW DELHI] followed – Appeal accordingly dismissed against the Revenue.

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• 2015 (10) TMI 2097
  Imposition of Penalty under Section 76 of Finance Act, 1994 – Revenue contends that ld. Appellate Commissioner erred in dropping penalty under Section 76 – Held That:- There is discretion in the adjudicating to eschew levy of penalty under Section 76 where penalty under Section 78 is imposed – Decided against the Revenue.

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• 2015 (10) TMI 2096
  Validity of order-in-appeal to deny the refund claim – Review order was passed by the same officer who has passed the OIO - Held That:- Exercise of appellate jurisdiction by the same officer who passed the review order and had recorded therein a clear conclusion that the primary order was unsustainable is a clear travesty of established principles of natural justice, of that great principles that none should be judge in his own cause nor, one who has pre-judged on issue should sit in judgement as an appellate authority. The impugned order is in exercise of an appellate power, which requires an independent, unprejudiced exercise of mind, which is not available in the facts and circumstances of the case. - Order-in-Appeal quashed. The appropriate appellate Commissioner may however hear and dispose of the appeal afresh, pursuant to the Review Order dated 27.04.2010, in accordance with law. – Decided partly in favor of assessee.

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• 2015 (10) TMI 2095
  Classification of service - Design, engineering, procurement, construction and commissioning of two storage tanks and re-classification of LNG - Revenue contended that services would fall in category of Consulting Engineers Services - Appellant contended that entire service was undertaken prior to 1.06.2007; services do not fall in any other category except works contract - Held That:- In light of the case of Hon'ble Apex Court Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT], contentions of Appellant are correct - Impugned order incorrect and liable to be set aside.

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• 2015 (10) TMI 2094
  Penalty u/s 76, 77 as soon as he came to know about his liability, he made the payment. The facts on records go in favour of the respondents and this is a situation where provisions of Section 80 of Finance Act 1994 would be applicable. There is no proper justification and substance in the appeal of the appellant. Therefore, the appeal is hereby rejected - Decided against Revenue.

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• 2015 (10) TMI 2093
  Excess utilisation of CENVAT Credit of 20% of the service tax – Rule 6(3)(c) of CENVAT Credit Rules, 2004 – Appellant contends that only interest can be charged; penalty cannot be imposed – Revenue imposed interest as well as penalty apart from the demand of tax. Held That:- there is no clarity on the fact in respect of the demand - Matter remanded back to Adjudicating Authority – Proper opportunity of hearing given and issue to be examined at length – Appeal allowed in favour of the Appellant.

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• 2015 (10) TMI 2092
  Import of services - Service Tax demanded under category of “Consulting Engineering Service”- Revenue challenges the order of the Commissioner (Appeals) stating that services of foreign firm is not covered under the definition of Consulting Engineers Service – Held That:- Service Tax liability on any taxable service provided by a non-resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.04.2006, i.e. the date of enactment of Section 66A of the Finance Act, 1994 – Contentions of the Revenue rejected and decided in favour of the Respondent.

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• 2015 (10) TMI 2091
  Waiver of Service Tax Liability – Demand for Service Tax made under the head ‘Goods Transport Operator’ – Revenue issued SCN in context of the same under the provisions of Section 158 of the Finance Act, 2003 – Held That:- Impugned order is set aside and the appeal is allowed – Decision made in the case of Commissioner of Central Excise, Vadodara Vs Eimco Elecon Ltd [2010 (7) TMI 477 - GUJARAT HIGH COURT] followed – Decided in favour of the Appellant.

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• Central Excise

• 2015 (10) TMI 2080
  Denial of abatement claim - Closure of production - Pan Masala Packing Machines - whether the assessee/appellant has intimated the Assistant Commissioner three days prior to the closure of production - Held that:- There is no dispute that the Fax No. belongs to the concerned Central Excise office to which intimation has to be sent. When the officers have gone to the premises of the factory on 3.09.2013 itself to seal the machines, they had no case that they had received the intimation only on 3.09.2013 and not on 30.08.2013. Surprisingly, the primary adjudicating authority has categorically held that intimation dated 30.08.2013 was received. Rule 10 does not provide the manner in which the intimation has to be send. The Commissioner (Appeals) has no definite case that the intimation was not received. Looking at the Transaction Report, he assumes that the intimation has not been received as it is not clear from its status as to whether the fax is successfully transmitted or not. These conclusions are merely based on assumptions and presumptions. The Fax report along with statement of Panchnama and the totality of facts establish that appellant has given the intimation on 30.08.2013. When the appellant has given intimation three days prior to the date of closure, the denial of refund/abatement is unjustified. The same has to be allowed. - Decided in favour of assessee.

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• 2015 (10) TMI 2079
  100% EOU - diversion of the duty free raw material in the open market without payment of duty - Penalty under Rule 26 - Held that:- Adjudicating authority had fixed personal hearing on different dates 06.02.2007, 20.02.2007 & 27.02.2007. At the request of the learned Advocate of the Appellant the personal hearing was again fixed on 21.03.2007, 24.04.2007 and 14.05.2007. So, sufficient opportunities of hearing were allowed to present their case. There is no violation of principles of natural justice. That the Adjudicating authority proceeded on the basis of documents and corroborative evidences found at the residence of the Appellant and imposed penalty on the basis of these documents. It is seen from the records that Shri Pawan Kumar Bansal, Partner of the firm is directly involved in selling of the duty free material in the market. There is a force in the submission of the learned Advocate that penalty cannot be imposed on both partnership firm and the partner. - considering the submission of learned Advocate that the Appellant is a mere broker, the quantum of penalty is excessive. In our considered view, as the penalty was imposed on the partner, and therefore, the imposition of penalty on the firm is not warranted. - Penalty imposed is reduced - Decided partly in favour of assessee.

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• 2015 (10) TMI 2078
  Denial of Input credit - Non maintenance of separate accounts - Held that:- Requirement of Rule 6(3), wherein on assessee does not maintain separate records of inputs consumed in the manufacture of duty paid and exempted output, the assessee is required either pay an amount at the fixed percentage (10%/6%) of value of the exempted goods/services or pay an amount as determined under sub-rule (3A). Sub-rule (3A) provides for reversal of proportionate amount attributable to the inputs consumed in the manufacture and clearance of goods without payment of duty. Further sub-rule (3A) provides for filing of an intimation by the assessee giving details as-the name, address, registration number, number of manufactured goods, date from which the option under the clause is exercised or proposed to be exercised, description of dutiable and exempted output and Cenvat Credit of inputs and input services lying in the balance as on date as exercising the option. Only for the reason of non-filing or delayed filing of intimation under sub-rule (3A), as assessee cannot be required to pay the fix percentage by way of reversal under Rule 6(3), where the assessee have paid the amount by way of reversal which amounts to substantial compliance. It is further admitted fact that the assessee has intimated the fact of reversal by making categorical mention in the ER-1 returns. I hold that the appellant had made substantial compliance of sub-rule (3A) of Rule 6 of Cenvat Credit Rules. - Decided in favour of assessee.

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• 2015 (10) TMI 2077
  Denial of CENVAT Credit - Held that:- With effect from 18.08.2000 the appellants could not have utilised the Cenvat credit available for the subsequent period for payment of duty of the earlier period. - In the case of Hindalco Industries Ltd. (2013 (12) TMI 698 - CESTAT MUMBAI), we find that the payment related to the fortnight i.e. 1.08.2000 to 15.08.2000 i.e. the fortnight was for the period prior to the amendment of the Rule 57AB, which is not the case here. The present case is relating to payment of duty relating to fortnight after the said Notification. - Appellant is required to pay the amount confirmed in the original order in cash. Appellant will however, be free to take credit of the equal amount in their records for future clearances. Keeping in view the overall facts of the case, penalty imposed under Rule 173C(1) is set aside - Decided partly in favour of assessee.

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• 2015 (10) TMI 2076
  Rectification of mistake - Appeal dismissed as below the monetary limit - Held that:- It is very clear from the provision of Section 35B - that any of the amount i.e. either duty, or penalty or fine involved in a particular case is less than Rs. 50,000/- can be disposed of as per the discretion provided under proviso to Section 35B(1). - there is no stage prescribed under the law for exercising the discretion by the Tribunal for disposing of the appeal in terms of proviso to Section 35B(1) - though the amount is less than threshold limit provided in the law but appeal was entertained on merit. However these judgments do not become precedence, the discretionary power provided in proviso under Section 35B(1) can be exercised by the bench depending upon the facts and circumstances of the case. In view of my above discussion, I do not find any apparent mistake in the order - Decided against assessee.

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• 2015 (10) TMI 2075
  Duty demand - EOU clearances - Appellants were required to pay duty on clearance from the warehouses at the time of such clearance from the warehouse - Held that:- Regarding the clearance of goods to EOU from the warehouse it is seen that the issue is squarely covered by the decision of Tribunal in the appellants own case (2007 (10) TMI 513 - CESTAT, CHENNAI). In the said decision it has been held that clearances to EOU availing full exemption can be made from stock available in the warehouses even after withdrawal of facility under rule 20. The decision cited by the learned AR in case of IBP (2009 (5) TMI 279 - CESTAT, KOLKATA) also supports the view in so much as duty liability is concerned the same arises on the due date of payment of duty as per rule 8 of Central Excise rules, on the 5th of the next month. Relying on the decision of Tribunal in the case of IOL (2007 (10) TMI 513 - CESTAT, CHENNAI) the appeal is allowed in respect of clearances made to EOU availing full exemption from duty. Regarding the interest on duty paid on clearance of goods from the warehouse in subsequent months, it is noticed that both, the decision cited by the revenue and as well as appellants, support the appellants case. In both the decision is it has been held that the clearances from the warehouses after withdrawal of the facility under the Rule 20 will be governed in terms of the rule 8 of Central Excise rules, in so much as the same will be payable on the 5th of next month. Once it is recognised that the duty liability after withdrawal of the benefit of Rule 20 will be governed by the Central Excise rules as a clearance from warehouse, in terms of Rule 8 of Central Excise rules, the question of payment of interest does not arise. Moreover of Central Excise rules only permitted clearance from the factory to the warehouse without payment of duty. After withdrawal of the facility, the clearance from the factory to the warehouse without payment of duty can be stopped. It does not change the treatment which has to be given to the goods already cleared in terms said rules and lying in the warehouse. Those goods will continue to be governed by the terms under which the same were cleared from the factory. - Decide din favour of assessee.

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• 2015 (10) TMI 2074
  Manufacture - Marketability - process of colour fixation by applying Sodium Silicate - cotton fabric - Denial of exemption claim - Notification No 6/2000-CE dtd 1.3.2000 - held that:- Authorised Representative submitted that the process would not mere colour fixation and it would be dyeing of the fabric. But, the certificate issued by the ATIRA, would supported the case of appellant. We have also noticed that the appellant disputed marketability of the product. The Learned Authorised Representative for the Revenue also countered the application for additional evidences filed the appellant by producing the evidences in the nature of invoices of the other units. Hence, in our considered view, the Adjudicating authority should examine the matter on merit as well as marketability on the basis of the evidences produced both sides. - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 2073
  Reversal of CENVAT Credit - removal of inputs as such - determination of amount to be reversed - transaction value - Held that:- Show cause notice was issued for the extended period of limitation.There are various Board Circulars on this issue, which was decided by the Larger Bench of the Tribunal in the case M/s Eicher Tractors (2005 (9) TMI 340 - CESTAT, NEW DELHI), as distinguished in the decision of M/s National Engg India Ltd Vs CCE Jaipur I - [2010 (4) TMI 674 - CESTAT, NEW DELHI]. Recently, the Tribunal in the case of M/s Panasonic AVC Networks India Co Ltd (2013 (11) TMI 980 - CESTAT NEW DELHI) passed order on the identical issue following the decision of the Larger Bench which was upheld by the Hon’ble High Court. Thus, the appellant acted on bonafide belief and the demand of duty alongwith interest for the extended period of limitation cannot be invoked. The Learned Advocate submits that the entire demand is barred by limitation. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 2072
  Denial of CENVAT Credit - Manufacture of capital goods - Held that:- Tribunal failed to appreciate this contention and disallowed the credit. Presently, the credit is claimed as inputs used for manufacturing capital goods and not as capital goods. - CENVAT Scheme is a beneficial legislation and should be given as wider meaning as possible. Inputs mean anything, i.e., put into the stream of manufacture. In the instant case, the contention of appellant is that the Sections, Shapes, Channels, Angles were used for fabrication of moulds. That moulds being specifically mentioned in the definition of capital goods, these items which were used for manufacture of moulds are eligible for credit. It is also the case of appellant that TMT Bar was used for stirring the metal and by its use becomes a constituent of the final product. The requirement of stirring rod in the process of manufacture is undeniable. To establish their contention, the appellants have produced a Chartered Engineer Certificate along with photographs showing the steps of manufacture/fabrication of moulds. This certificate explains the use of the impugned items in manufacture of moulds and also use of such moulds in the appellants industry. - as already stated moulds being specified as capital goods, the inputs used for manufacture of capital goods are eligible for credit. - Decided in favour of assessee.

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• 2015 (10) TMI 2071
  Valuation - Inclusion of amount recovered by such debit notes - Determination of assessable value - Held that:- Tribunal has directed that it will be appropriate for the adjudicating authority to re-examine the matter in terms of Rule 6 and give an appropriate finding and the matter was remanded for the said purpose. We find from the impugned order that it is not disputed that there was no sale of goods between the Thane unit and Ennore unit. It is also noted in the order that the goods AE-1 and AE-2 were not sold to any independent buyer. Under the circumstances, in our view, the only method to find out the value will be based upon cost of production. We find in the present case the appellant has submitted some certificates during the adjudication. However, these have not been examined by the Commissioner or by the costing expert i.e. Assistant Director (Cost) with reference to the relevant circulars of the Board available at that point of time. - Impugned order set aside - matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 2070
  Valuation - Determination of assessable value - Inclusion of expenditure in developing the art work and plate making charges - Held that:- As explained by the ld. counsel for the appellant that normally they are not charging their customers separately for the art work and development of plates, as these are essential part of printing process and the expenditure done on the items gets included in the charges they collect from their customer for printing or for manufacture of final products. We also note that the art work and development of plate is not being done by themselves but by some other person. If such plates or art work is not being used then we do not find any reason to include the expenditure so made in the assessable value. - Decided in favour of assessee.

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• 2015 (10) TMI 2069
  Transfer of unutilized credit of SAD from one unit to other unit as per the provisions of Rule 10A - Held that:- impugned order has dealt the issue in detail and came to the conclusion and held that there is no dispute on the eligibility of transfer of unutilized credit under Rule 10A of CCR and held that the appellants complied the conditions of the notification. Only ground on which it was denied is that whether such transfer of credit can be only after 01.07.2012 i.e. at the beginning of the quarter as stipulated in the notification. We find that Rule 10A which is self-contained provision introduced for transfer of credit of AED (SAD) and it has prospective effect. Once it is came into effect from 01.04.2012, transfer of unutilized credit from one unit to other unit is automatically permissible and the Rule also specifies that such transfer should takes place at the end of the quarter, which is in our opinion has prospective effect and only permissible at the end of a quarter. In the present case, as seen from the records, unit-II which was defunct and the credit remained unutilized was correctly transferred on 31.05.2012, immediately after introduction of Rule on 01.04.2012, as they are eligible to transfer the same from 01.07.2012. Even though they have transferred the credit on 31.05.2012, they have not utilized the entire credit and only Rs. 2.5 Crores was utilized before 01.07.2012. The said Rule 10A came into effect from 01.04.2012 and the credit which was already accumulated and remained unutilized prior to the amendment rightly can be transferred after 01.04.2012. In view of the above, we hold that the appellants are eligible for transfer of unutilized credit from unit-II to Unit-I and the transfer of the credit done by the appellant is in conformity with the provisions of Rule 10A, which was specifically introduced only for this purpose relating transfer of unutilized credit availed on SAD (AED). - Decided in favour of assessee.

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• 2015 (10) TMI 2068
  Valuation of goods - Non inclusion of packing material - Held that:- special packing provided by them to the buyer is in the nature of secondary packing not includable in the assessable value. In order in appeal the Commissioner has observed that cost of all packing is includable in assessable value. - Since the nature of the special packing, claim to be secondary packing by the appellants, has not been disputed in the order in appeal, it has to be treated as secondary packing. - Since cost of secondary packing not ordinarily used and given specially at the request of customer, is not includible in the assessable value, the benefit of exclusion of the cost of special packing as a secondary packing has to be allowed to the appellant in terms of Section 4 of the Central Excise Act. - Decided in favour of assessee.

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• 2015 (10) TMI 2067
  Clandestine removal of goods - Non maintenance of proper accounts - Held that:- he officers do not have a case that there was any irregularity in the accounts maintained by the appellants. According to appellants they paid the duty only because the officers assured them that there would be no action against them and that they could apply for refund. The facts presented by the case reveal that after making the appellants pay the duty, the payment of duty has been taken as the basis for issuing the Show Cause Notice. There is no iota of evidence to establish that the appellants had in any manner connived with VWPPL. Only because they had taken one consignment from VWPPL they have been put into the whole ordeal. The learned counsel for appellants submitted that the appellants have a good reputation and maintain records and pay duty. There has been no instance of allegations. That even though the amount involved may be small, it affects their reputation. These submissions do have substance. Further, the SCN is issued alleging evasion of duty and clandestine removal of goods. Whereas the order passed confirms the demand under wrongful availment of Cenvat Credit. Such an order at the outset in unsustainable. The first appellate authority ought to have considered these aspects without putting the appellant to further hardships of litigation. I find that the appellants have been able to establish a case in their favour. - Decided in favour of assessee.

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• 2015 (10) TMI 2066
  Admissibility of cenvat credit - Various services - Held that:- In regard to the outdoor catering, the Hon’ble High Court of Madras in the case of M/s. Turbo Energy Ltd. (2015 (3) TMI 632 - MADRAS HIGH COURT), in various CMAs allowed the assessees CMA and rejected the Revenue miscellaneous petitions and held that the outdoor catering service is eligible for cenvat credit. In regard to the Xerox machine and subscription charge, insurance charges, etc., we find that all these are related to the manufacture of final products, the Hon’ble Allahabad High Court in the case of HCL Technologies (2014 (11) TMI 663 - ALLAHABAD HIGH COURT), dismissed the revenue appeal and upheld the Tribunal order allowing the subscription of magazines. In the present case, the appellants have subscribed to the Indian Institute of Welding, Kolkata. This Tribunal in the case of Axles India Ltd. (2015 (1) TMI 505 - CESTAT CHENNAI), wherein the issue inclusive definition of Rule 2 (l) of CCR and relied various High Court decisions and rejected the Revenue appeal. By following the ratio referred above, we hold that the appellants are eligible for cenvat credit for all the services. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (10) TMI 2065
  Valuation - Inclusion of amount of sales tax retained - Held that:- During the relevant period there was CBEC Circular dated 30.06.2000 which provides that any amount of concession on sales tax retained by the respondent is not required to be added in the assessable value and there are certain judicial pronouncements of this Tribunal holding the same view in the case of Kinetic Engineering Ltd. (2012 (6) TMI 168 - CESTAT, MUMBAI) and Life Long India Pvt. Ltd. Vs. CCE Delhi-[2012 (3) TMI 349 - CESTAT NEW DELHI]. As there were view taken by the CBEC Circular and this Tribunal in favour of the respondent which has been negated by the Hon'ble Apex Court in the decision cited before us today. In these circumstances, we hold that extended period of limitation is not invokable. Consequently, demand pertaining to the extended period of limitation which is sought to be demanded from the respondent are set aside. Consequently, the penalties on the respondents are not imposable. - Matter remanded back - Decided in favour of assessee.

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• 2015 (10) TMI 2064
  Valuation of goods - whether the amortized value of Tonner/Cylinder supplied to the respondent free of charge by the customer for filling the Liquid Chlorine manufactured by the respondent, is to be included in assessable value of goods Liquid Chorine cleared by the respondent to the customers. - Held that:- Commissioner (Appeals), in the impugned order had observed that the respondent while clearing Liquid chlorine manufactured by them to their customers in the tonners/cylinders supplied by the later and there is no allegations/findings that the conditions laid down under Section 4(1)(a) of the Central Excise Act 1944 had not been satisfied. Hence, that the ground taken by the Revenue in the appeal can not be sustained. The revenue also not placed any material on such allegations before the Tribunal. - Tribunal in the case of M/s Grasim Industries Ltd (2003 (12) TMI 101 - CESTAT, NEW DELHI) had referred the decision of the Hon’ble Supreme Court in the case of M/s Grasim Industries Ltd [2009 (7) TMI 155 - SUPREME COURT OF INDIA] . In the case of TCP Ltd (2007 (7) TMI 199 - CESTAT, CHENNAI) the issue involved is the inclusion of the packing charges in the assessable value of the cylinder supplied by the buyers, which is similar to in the present appeal. - No reason to interfere the orders of the Commissioner (Appeals). - Decided against Revenue.

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• 2015 (10) TMI 2063
  Availment of Cenvat credit - capital goods not installed in the appellants premises but installed at other units doing Job work - No intimation, No permission from the department - Held that:- Lower Authority has relied on the Supreme Court's decision in the case of M/s. Vikram Cements [2006 (2) TMI 1 - Supreme court]. There is no dispute on the fact that the respondents were discharged the central excise duty on the finished goods which were cleared by the main unit. The impugned order clearly brought out the fact that both the units were carrying out the job work and no finished goods were cleared from the unregistered units. The Hon'ble High Court in the case of HabasitIakoka Pvt. Ltd. (2011 (2) TMI 1345 - MADRAS HIGH COURT) on identical issue allowed cenvat credit on the capital goods installed in unregistered premises and used in the manufacture of the final product. - Ratio of the above decision squarely applicable to the present case as the capital goods were installed in the adjacent unregistered premises and used for job work of main unit and finished goods were cleared from the respondent's main unit on payment of duty. By respectfully following the decision of the Hon'ble High Court above, I do not find any infirmity in the order of the Commissioner (Appeals) in allowing the credit on the capital goods. Accordingly, the impugned order upheld - Decided against Revenue.

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