Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 28, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Determination of cost of shares received as per family arrangement - dispute was settled by the Company Law Board as per the orders dated 25.09.1992 and 29.07.1993. Therefore, in such a settlement, there is no question of paying any extra money to other group outside the books of account - HC
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Investment allowance under section 32A(1)(2)(iii) - . The words “shall be deemed always to have included“, therefore, have to be given a limited meaning of understanding the blended flavouring concentrates as always including the synthetic essences - HC
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Manufacturing activity - products like ghee, flavoured milk, butter milk, rose milk and kova. - When once the milk was subjected to the process, in their factory, new products emerge which are altogether different from milk itself, it is nothing but manufacturing activity - HC
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Scope of “charitable purposes“. u/s. 2(15) - Because some profit has been earned by an educational institution registration u/s. 12AA cannot be denied so long as provisions of sections 11, 12 and 12AA are complied with. - AT
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Addition of unrealized rent under the head ‘Income from House property’ – Section 25AA - charged to income-tax as the income of that previous year in which such rent is realized whether or not the assessee is the owner of that property in that previous year - AT
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Determination of income of insurance business - actuarial valuation made in accordance with the Insurance Act, 1938 - actuarial valuation has to be done in accordance with the Regulations contained in erstwhile Fourth schedule Part-I and Part-II - AT
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Accrual of income - life time consultancy fee - deferment of revenue - The appellant has accounted the said advances as and when realized. The same are accounted in the years of realization. Sufficient proof in the name of balance sheet and P & L account and Form 3CD to support the case of the appellant - AT
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Validity of writing off bad-debts after the end of financial year - In the case evidence is post 31.13.2008, the assessee's claim would be valid only where the event/s enables assessment of the position as obtaining on 31.03.2008, and not otherwise. - AT
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Only because as a result of an operation (process), good quality of cane can also be identified can not lead to the conclusion the activity it is not an agricultural income - AT
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Penalty u/s 271(1)(c) - Concealment of income would have no role to play and would not lead to tax evasion therefore, penalty cannot be imposed on the basis of the disallowance or additions made under regular provision - AT
Customs
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Refund of duty - unjust enrichment - Crying fire is of no avail if one cannot show even a streak of smoke - department failed to prove its case of unjust enrichment - refund allowed - AT
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Misdeclaration of Goods - Import of steel under advance authorization scheme - non-alloy steel or alloy steel. – Notification No.21/2002 - the demand of duty is hit by limitation, seems to be on stronger wicket and needs consideration - stay granted - AT
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Import of Old machine - From the year of introduction alone it cannot be concluded that the machine is not manufactured in the previous year.Therefore, merely on presumption and assumption it cannot be said that the machine is less than 10 years old - AT
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Refund of SAD - If the appellant has cut the length of the imported coil and sold the same in the domestic market, only length can vary and not the thickness - refund denied - AT
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Duty Drawback – Benefit of 100% EOU - conversion of free shipping bills into duty draw back shipping bills - The appellant was not claiming any benefits as 100% EOU - conversion allowed - AT
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Anti dumping duty - Import of injection moulding machines - Import of 2 injection moulding machines treated as import of 3 injection moulding machines - Penalty u/s 114A and 114AA - matter remanded back with observations - AT
Service Tax
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Valuation - inclusion of cost of reimbursement of expenses - Demand was confirmed on the ground that Applicant is liable to pay Service Tax on the gross amount received as provider of clearing and forwarding agent - prima facie case is against the assessee - AT
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Construction services – nature of receipt - advance or loan - the appellant’s, have made out a prima facie case for waiver of the pre-deposit of amounts involved - AT
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Waiver of pre deposit - Job Work - Exemption for service tax - It is not in dispute that M/s. Durgapur Steel Plant discharges excise duty on the said finished wheels and axles which are cleared to Indian Railways - stay granted - AT
Central Excise
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Suo-moto Credit – when the appellant realized that he had made the payment of duty wrongly, he should have filed a refund claim in accordance with the provisions of Section 11B - taking of suo motu credit by the appellant was not in accordance with the law. - AT
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Denial of Cenvat credit – IRevenue was of the view that the appellant is not eligible for the credit of service tax paid on outward freight incurred beyond the place of removal - the appellant has made out a prima facie case in their favour for interim relief - AT
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Benefit of Notification No. 108/95 - nly objection raised by the Revenue is that certificate was not in the name of present respondents - the certificate is to be in respect of the goods that the same are required for the project - No demand - AT
VAT
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Exemption under section 5(3) of the CST Act - sale of bus bodies - penultimate sale - export of goods - When the transaction between the assessee and the exporter and the transaction between the exporter and foreign buyer are inextricably connected with each other the "same goods" theory has no application, - HC
Case Laws:
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Income Tax
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2013 (10) TMI 1087
Determination of cost of shares received as per family arrangement - Addition on account of staggering difference between the purchase and quoted price of the shares – additions made by the AO was deleted by the CIT(A) by observing that the assessee company came into existence on 13.04.1993 and the shares were purchased by the assessee in the month of May, 1993 and, therefore, the AO was wrong in adopting the market price of the shares as on 31.03.1994. – Held that:- Two groups belongs to the Oswal family and were fighting each other since long and finally, dispute was settled by the Company Law Board as per the orders dated 25.09.1992 and 29.07.1993. Therefore, in such a settlement, there is no question of paying any extra money to other group outside the books of account - AO has made the addition only on the basis of presumption, surmises and conjunctures and is not based on cogent material on record – Decided against the Revenue.
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2013 (10) TMI 1086
Addition u/s 69 of the Income Tax Act of Rs.42.50 lacs under the head 'undisclosed investments' in the purchase of land – Held that:- Money was deposited by the company in the account of Mr. Nankau, who has withdrawn the same and purchased the land. Later, the land was re-sold to the assessee's company. In the hands of the assessee's company, the source of the advance was fully explained. In fact, the land was purchased by the assessee's company through Mr. Nankau. The A.O. made the addition merely on suspicion which is not desirable in the eye of law. The money used by the company through Mr. Nankau has been fully explained in the books of account. Nobody would like to convert the white money into black money - In the present case, there is no material available on record to show that the assessee company has paid money in cash to the original seller of the land - Addition of Rs.42.5 lacs was deleted – Decided against the Revenue. Addition of Rs.10.00 lacs made by the Assessing Officer on account of unexplained loan – Held that:- M/s. L.N.Seth, HUF of the Karta and one of the Director of the assessee Company, has received the money from his minor children who had received the gift from NRE account. If the addition will have to be made, the same will have to be made in the hands of M/s. L.N.Seth, HUF, and certainly, not in the hands of the assessee company who has received the amount through banking channel from M/s L.N.Seth HUF, in whose account there was sufficient funds available - In the instant case, money has come at all the level through banking channel and creditworthiness and identity of the donors/creditors have been proved - All the three conditions, namely, identity, creditworthiness; and banking transaction have been proved in the instant case – Decided against the Revenue.
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2013 (10) TMI 1085
Powers of ITAT the Appellate Tribunal to dismiss an appeal for want of prosecution – Miscellaneous application seeking recalling of order after 4 years was also dimissed by the tribunal - Held that:- Reliance has been placed upon the judgment in the case of Chemipol vs. Union of India [2009 (9) TMI 177 - BOMBAY HIGH COURT] - Though every Court or Tribunal has an inherent power to dismiss the proceeding for non prosecution yet this inherent power is lost where the statute requires the Court or the Tribunal to hear the appeal on merits. In this case Rule 24 of the Tribunal Rules mandates the Tribunal to decide the appeal on merits even in absence of the appellant after hearing the respondents. In view of the above, Tribunal did commit an error in passing the order dated 6 December 2007 in dismissing the appeal on the ground of want of prosecution. Application of section 254(1) or section 254(2) for rectification in the order - Whether an application to set right the above error in the order dated 6 December 2007 would be an application to correct the same under Section 254(1) of the Act as contended by the petitioner or under Section 254(2) of the Act as contended by the revenue – Held that:- if there is an error apparent on the face of the record, Section 254(2) of the Act alone is applicable. Where Parliament has provided a specific provision in the Act to deal with a particular situation, it is not open to ignore the same and apply some other provision. Section 254(2) of the Act empowers the Tribunal to correct/rectify its order only within four years from the date of the order which is sought to be rectified. Is there limitation applicable, if an application is to be filed against the order, which is void – Held that:- Reliance has been placed on the Apex Court judgment in the case of Sneh Gupta v/s. Dev Sarup [2009 (2) TMI 744 - SUPREME COURT]., wherein it has been held that It is not the law that where the decree is void, no period of limitation shall be attracted at all - Therefore, in the present case also the period of four years from the date of order sought to be rectified/recalled will apply as provided in Section 254(2) of the Act. This is so even if it is assumed that the order dated 6 December 2006 is a void order - The error is in having ignored the mandate of Rule 24 of the Tribunal Rules which required the Tribunal to dispose of the matter on merits after hearing the respondents. In these circumstances, an application for rectification would lie under Section 254(2) of the Act. The recall of an order would well be a consequence of rectifying an order under Section 254(2) of the Act - No reason to interfere with the order of the Tribunal holding that Miscellaneous Application filed by the appellant is barred by limitation under Section 254(2) of the Act as it was filed beyond a period of four years from the order sought to be rectified.
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2013 (10) TMI 1084
Disallowance as expenditure which was not claimed by assessee – Held that:- Rs.1,94,51,222/- in the earlier assessment year i.e., 2003-04, was shown as expense in the profit and loss account, but it was added back in the tax computation sheet. As there was error in the profit and loss account of the last assessment year, i.e. 2003-04, as the amount was treated/shown as an expenditure, a reverse entry was made in the profit and loss account of the current assessment year i.e. 2004-05 – Decided against the Revenue.
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2013 (10) TMI 1083
Deduction u/s 80IB and 80IC - Transport subsidy - Jurisdiction to decide the case – Held that:- Impugned orders have been passed by the Tribunal situated within the territorial limits of the jurisdiction of this court, this court does have the jurisdiction to try the appeals – Moreover, Orders have been passed within the local limits of the territorial jurisdiction of this court and, hence, this court has the jurisdiction to try the appeals. Since these appeals stand on the same footing as do other appeals, which we have dismissed by the judgment in CITv. Meghalaya Steels Ltd. [2013 (7) TMI 175 - GAUHATI HIGH COURT] - Appeals dismissed - Decided against the revenue.
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2013 (10) TMI 1082
Refund certificate of the income-tax under fictitious name obtained – Charge to be framed against the wife of the main accused namely A1 – Held that:- There is a strong circumstance to presume that a prima facie case exists against the petitioner (i) as she is the wife of A1 ; (ii)several documents were seized from the residential house occupied by her along with her husband ; (iii) a cheque for Rs. 3,690 issued in the name of her company has been encashed by her, the said cheque was issued by a fictitious person ; (iv) the allegation is that she conspired along with her husband and other accused, of which some of them are employees of the Race Club to dupe the Income-tax Department for the purpose of making unlawful gain by producing bogus tax deducted at source certificates or original tax deducted at source certificates in the name of fictitious persons by opening bank accounts in the name of fictitious persons in different banks and, therefore, it can be easily held that there is prima facie case as against the petitioner at this stage. Reliance has been placed on the Apex court judgment in the case of Superintendent and Remembrancer of Legal Affairs v. Anil Kumar Bhunja [1979 (8) TMI 204 - SUPREME COURT] - Relying upon the above decision of Apex court it has been held that even on the basis of a strong suspicion founded on materials before it, the court can form a presumptive opinion regarding the existence of factual ingredients constituting the offence alleged and in that event be justified in framing the charges against the accused in respect of the commission of the offence alleged to have been committed by them. In exercise of its jurisdiction under section 228 and/or under section 482, the court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was possibility of his acquittal. The court has to consider the record and documents annexed therewith by the prosecution.
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2013 (10) TMI 1081
Whether the assessees are entitled for investment allowance under section 32A(1)(2)(iii) or they should be denied on the ground that they manufacture articles specified in item 5 of the Eleventh Schedule - Legal fiction extension beyond legitimate field – Held that:- The Explanation under consideration has to be construed as expanding description or definition of "blended flavouring concentrates" so as to include synthetic essences in any form. If the blended flavouring concentrates includes synthetic essences by fiction, it is logical that such fiction would have applied even from the date anterior to the expression of intention by Parliament. The words "shall be deemed always to have included", therefore, have to be given a limited meaning of understanding the blended flavouring concentrates as always including the synthetic essences - In so far as denying the benefit of investment allowance under section 32A(2)(iii) is concerned, it can only be with effect from April 1, 1988 – Decisions of Madras High Courts in CIT v. Black Diamond Beverages Ltd. [1992 (2) TMI 17 - CALCUTTA High Court] and CIT v. Soft Beverages P. Ltd. [2003 (12) TMI 5 - MADRAS High Court ] distinguished - Decided against the Revenue. Disallowance of interest - the question was whether there is any nexus between the monies borrowed and advances made by the assessee - ITAT did not allow the revenue to produce additional evidence and decided in favor of assessee - Whether finding of fact can be a subject matter of reference under section 256(1) or 256(2) – Held that:- In a reference under section 256, the High Court must accept the finding of fact reached by the Appellate Tribunal - If a question of fact is examined, while answering reference, the High Court would be acting in excess of jurisdiction - Every question referred to the High Court ordinarily contains a phrase ". . . in the facts and circumstances of the case" or ". . . in the circumstances of the case". This means the question of law referred to in the background of the facts found by the Appellate Tribunal and not facts which are to be fished out by the High Court at the instance of either of the parties - The Appellate Tribunal is a final fact finding authority. The High Court cannot go beyond the facts found by the Tribunal. Whether it is an assessee or the Revenue, all questions of fact have to be raised at the time of hearing of the appeal before the Tribunal and in the reference, no fresh hearing of disputed questions of fact is possible nor permissible - The view taken by the Tribunal with reference to the question of fact is final and the question of law would not arise for opinion under section 256(2) of the Act – Decided against the Revenue.
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2013 (10) TMI 1080
Whether assessee-firm is engaged in the business activity of manufacturing or producing articles or things and is entitled to investment allowance under section 32A of the Income-tax Act – Held that:- Assessee was engaged in the business of making products or things for which the raw material was milk. There is also no dispute that the assessee was employing machinery for making milk products like ghee, flavoured milk, butter milk, rose milk and kova. When once the milk was subjected to the process, in their factory, new products emerge which are altogether different from milk itself. Therefore, it cannot be said that the assessee was not in the business of manufacture or production of articles or things – Decided against the Revenue.
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2013 (10) TMI 1079
Allowance of interest expenditure claimed by the assessee – Held that:- Relying upon the judgment in the case of M/s Topaz Holdings P. Ltd [2013 (10) TMI 1066 - ITAT MUMBAI], restored the matter to the file of the ld. CIT(A) for deciding the same afresh.
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2013 (10) TMI 1078
Exercising power u/s 263 of the Income Tax Act – TDS not deposited within the due date – Disallowance u/s 40(a)(ia) of the Income Tax Act – Held that:- Reliance has been placed upon the Delhi High Court judgment in the case of CIT vs. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT], wherein it has been held that impugned amendment to section 40(a)(ia) permits remittance of TDS to the Central Government account on or before the due date of filing return of income u/s. 139(1) of the Act is retrospective in nature – In the present case, though deducted TDS before 31st March of the previous year relevant to the assessment year and paid the same in to the Central Government Account before the due date of filing of return of income, the expenditure cannot be disallowed u/s. 40(a)(ia) of the Act - There is no dispute regarding the payment of TDS amount in to the Central Government account before the due date of filing the return of income of the assessee. Being so, exercising the power u/s. 263 of the Act by the CIT on this issue is not justified – Decided in favor of Assessee.
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2013 (10) TMI 1077
Definition "charitable purposes". u/s. 2(15) of the Act - Exclusion of Element of profit – Held that:- Legislative intent disclosed in section 10(22) wherein it has been clearly provided that income of any educational institute cannot be exempted unconditionally if such institution also exists for deriving of profit. According to this provision, if any educational institution is running on commercial basis then income of such educational institution cannot be exempted from taxation. However, such institution can claim exemption u/ss. 11 and 12 as element of profit is not excluded by the Legislature. The reason is obvious because of financial affairs of such institution are well controlled by the provisions of sections 11 and 13 of the Act. Section 11 clearly provides that in order to claim exemption such institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds. Further, exemption can be denied if the provisions of section 13 are violated. Therefore, if there is any violation of either section 11 or section 13, then, the profits of such institution would be taxable. Further the fact that, only 75% of the income is to be applied for charitable purposes itself shows that element of profit is not excluded from the definition of charitable purpose for the purpose of sections 11 and 12. Because some profit has been earned by an educational institution registration u/s. 12AA cannot be denied so long as provisions of sections 11, 12 and 12AA are complied with. So long as it is established that income of the assessee society has been applied for the purpose of education in terms of section 11(2) and there is no violation of section 13, the assessee would be entitled to enjoy the benefit of registration u/s. 12AA of the Act – Reliance has been placed upon the case of M/s. Saivani Educational Society, Hyderabad [2013 (10) TMI 824 - ITAT HYDERABAD].- Appeal allowed – Decided in favor of Assessee.
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2013 (10) TMI 1076
Disallowance u/s 14A of the Income Tax Act – Held that:- Assessee had sufficient profit, capital and reserves which are more than investment made by the assessee in mutual fund, it cannot be presumed that investment in mutual fund made by the assessee were out of interest bearing borrowed funds - Hon. Supreme Court in the case of Munjal Sales Corporation vs. CIT [2008 (2) TMI 19 - Supreme Court] (SC) held that where the assessee had capital and profits more than the interest free funds advanced then it has to be presumed that such interest free advances were given out of interest free capital available with the assessee - Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] held that if there are funds available, both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest free funds were sufficient to meet the investments – Decided in favor of Assessee.
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2013 (10) TMI 1075
Addition of unrealized rent under the head ‘Income from House property’ – Held that:- Section 25AA states that where the assessee cannot realize rent from a property let to a tenant and subsequently the assessee has realized any amount in respect of such rent, the amount so realized shall be deemed to be income chargeable under the head "Income from house property " and accordingly charged to income-tax as the income of that previous year in which such rent is realized whether or not the assessee is the owner of that property in that previous year - In terms of the said section the impugned amount cannot be brought to tax in the instant year – Decided against the Revenue.
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2013 (10) TMI 1074
Application of section 69 of the Income Tax Act - Addition on account of Deposits in the bank account of Francis Joseph - Rs.3,00,000/- - Held that:- Tax authorities have not placed reliance solely on the sworn statement given by Shri Francis Joseph – They have taken into consideration the conduct of the assessee, capacity of the assessee, capacity of Shri Francis Joseph and the surrounding circumstances also in deciding this issue - Under these circumstances, the question of violation of natural justice does not arise by not providing opportunity of cross examination to the assessee - AO issued summons to Shri Francis Joseph more than one time, but the said person declined to appear before the AO, as he was scared of the assessee. Thus, it cannot be said that the AO did not offer opportunity of cross examination, but the external circumstances blocked the AO to provide such an opportunity to the assessee. It is also pertinent to note that the assessee, being brother in law of Shri Francis Joseph, could not produce him before the AO to retract the statements already given by him before DDIT. On the contrary, Shri Francis Joseph, despite the alleged threat from the assessee, has firmly stood by his statement that the impugned bank account belongs to the assessee only. Tax authorities have corroborated the statement given by Shri Francis Joseph with sufficient material and surrounding circumstances. Accordingly held that the transactions found in the bank account, except the first two transactions, belong to the assessee only – Thus, confirmed assessment of deposits found in the bank account standing in the name of Shri Francis Joseph, in the hands of the assessee. Addition u/s 68 of the Income tax act - Unexplained credit in the capital account of the firm - Rs.5,60,000/- - Amount found credited in the capital account of the assessee in the books of partnership firm - Held that:- Assessee did not claim that he received a sum of Rs.10,15,000/- on slaughter tapping and sale of trees before the AO either during original assessment proceeding or during reassessment proceeding. He has made this submission for the first time before Ld CIT(A). In any case, the assessee could not substantiate his submissions with any credible evidence. On the contrary, the Ld A.R has only presumed that the copies of agreements might be available in the assessment record - Assessee did not make any attempt to inspect the assessment record in order to find out the availablity of the three agreements – Decided against the Assessee. Addition of loan of Rs.4.00 lakhs taken from Shri George Joseph – Held that:- It is well settled proposition that the initial burden of proof is placed upon the assessee u/s 68 of the Act, i.e., the assessee has to discharge three main ingredients viz., the identity of the creditor, genuineness of transactions and credit worthiness of the creditor - Assessee has failed to prove the credit worthiness of the creditor and also the genuineness of the transaction - Ld CIT(A) was justified in confirming the addition of Rs.4.00 lakhs made u/s 68 of the Act. The Ld A.R contended that the provisions of sec. 68 cannot be invoked in the absence of credit in the books of account. However, assessee cannot use the fact of his failure to maintain the books to his advantage to raise contentions to suit his purpose – Decided against the Assessee. Addition of interest income of Rs.15,911/- - Held that:- Assessee has declared the above said interest income in cash flow statement, but it was not included in the return of income - Assessing officer did not include the above said income in the reasons recorded for re-opening of assessment - AO is very much entitled to assess the escaped income during the reassessment proceedings, which comes to his notice during the course of assessment – Decided against the Assessee. Interest u/s 234B of the Act – Held that:- Charging of interest is consequential in nature, therefore interest to be charged on the assessee – Decided against the Assessee.
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2013 (10) TMI 1073
Undisclosed investment u/s 69B of the Income Tax Act – bank account in question belong to other person - Held that:- Shri Francis Joseph has only implicated the partnership firm, i.e., the deposits were made by the assessee from out of the income relating to the partnership firm - Statement given by Shri Francis Joseph, which is placed in the paper book filed by the assessee - It is well settled proposition of law that the income is required to be assessed in the hands of right person – In the present case, assessee is the right person to be assessed – Reliance has been placed upon the judgment in the case ITO Vs. Ch. Atchiah reported in [1995 (12) TMI 1 - SUPREME Court]. - Decided against the revenue.
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2013 (10) TMI 1072
Determination of income of insurance business - actuarial valuation made in accordance with the Insurance Act, 1938 - Held that:- the 'actuarial valuation made in accordance with the Insurance Act, 1938' do mean that the actuarial valuation done in accordance with the Insurance Act, 1938. - actuarial valuation has to be done in accordance with the Regulations contained in erstwhile Fourth schedule Part-I and Part-II - following the decision in ICICI PRUDENTIAL INSURANCE CO LTD [2012 (11) TMI 13 - ITAT MUMBAI] followed - Decided in favor of assessee. Whether treatment given to negative reserves by actuary cannot be disturbed by the AO - If an insurer had two policies, one with a reserve of 100 and the other with a reserve of10, it might think of its liabilities at100 rather than 90 to take into account the eventuality in case the second policy lapsed. This process is called eliminating negative reserves – Held that:- Assessing Officer has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r. w. s. 44 of the I. T. Act. The principle laid down by the Hon'ble Supreme Court in LIC vs. CIT [1963 (12) TMI 5 - SUPREME Court] about the power of the Assessing Officer also restricted the scope and adjustment by the AO – Decided against the Revenue. Loss from pension income to be adjusted from the business income – Exemption u/s 10(23AAB) – Held that:- Reliance has been placed upon the case of Life Insurance Corporation of India [2011 (8) TMI 47 - BOMBAY HIGH COURT], wherein it has been held that The fact that the income from such fund has been exempted under section 10(23AAB) with effect from April 1, 1997, does not mean that the pension fund ceases to be insurance business, so as to fall outside the purview of the insurance busi- ness covered under section 44 of the Income-tax Act, 1961 - pension fund like the Jeevan Suraksha Fund would continue to be governed by the provisions of section 44 of the Income-tax Act, 1961, irrespective of the fact that the income from such fund are exempted, or not. Therefore, while determining the surplus from the insurance business, the actuary was justified in taking into consideration the loss incurred under the Jeevan Suraksha Fund. The object of inserting section 10(23AAB) was to enable the assessee to offer attractive terms to the contributors. Thus, the object of inserting section 10 (23 AAB) was not with a view to treat the pension fund like the Jeevan Suraksha Fund outside the purview of insurance business but to promote the insurance business by exempting the income from such fund – Decided in favor of Assessee. Disallowance u/s 14A of the Income tax in Insurance Business – Held that:- Provisions of section 14A of the Act did not apply to the assessee carrying of insurance business. As the assessee is engaged in the business of Life Insurance so provisions of section 14A r. w. r 8D of Rules (supra) cannot be applied in its case - Sec. 14A contemplates an exception for deductions as allowable under the Act are those contained under ss. 28 to 43B of the Act. Sec. 44 creates special application of these provisions in the cases of insurance companies – Decided in favor of Assessee.
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2013 (10) TMI 1071
Accrual of income - Addition on account of advance received from the patients by the doctor-assessee - The facts of the case are that the assessee is a doctor by profession. He is a surgeon specialized in liver transplant. In the case of a liver transplant patient, regular consultancy and check up for several years is required. During the year under consideration, the assessee has received the sum of Rs. 69,29,500/- from patients which was accounted for as advance from patients – Held that:- The scheme of life time consultancy has been perused in detail. The name is only life time, whereas services are meant for a period of 48 months post surgery with a period of 12 months immediately after the surgery as free of charge, meaning there by the amount of advance would have to be exhausted with in a period of three years from surgery or else would have to be returned in case of non utilization of the same or in case of death of the patient. The appellant has done exactly the same. The appellant has accounted the said advances as and when realized. The same are accounted in the years of realization. Sufficient proof in the name of balance sheet and P & L account and Form 3CD to support the case of the appellant has been filed, which is enough proof to accept that what has been received as advance under the life time consultancy fee is only to be taxed as income when services to that effect are offered. Till then the amount remains a liability in the books of the appellant. Considering the details filed it is found that the advance need not be booked at the time of receipt nor it is a registration charge. The appellant has strictly followed the principles of mercantile system of accounting. Appellant has correctly followed the principles of mercantile system of accounting and the amount of advance received during the year cannot be booked as income – Decided against the Revenue.
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2013 (10) TMI 1070
Validity of writing off bad-debts after the end of financial year - Whether the decision by the management of the debt/s becoming bad, though made subsequent to 31.03.2008, is based on evidence/s or event/s prior or subsequent thereto – Held that:- In the case evidence is post 31.13.2008, the assessee's claim would be valid only where the event/s enables assessment of the position as obtaining on 31.03.2008, and not otherwise. The nature of the events or the account behavior post the year-end (31.03.2008) would, therefore, require being examined to see if they have in any manner influenced the decision for the impugned write off. A decision guided by the said event/s, being after the year-end, could only be recognized after its occurring, while where it is reflective of a state of affairs as at the year-end, the entry would relate back to the year- end. Reliance in this context is drawn to Accounting Standard (AS) 4 [Contingencies and Events occurring after the Balance-Sheet date] issued by the ICAI, also relied upon by the assessee. Where there are no such circumstances, so that the decision for write off is based on the events up to the relevant year-end (31.03.2008), the fact of passing the entries after the said date, becomes irrelevant. Matter being essentially factual, is accordingly restored to the file of the first appellate authority to decide the same in light of our foregoing observations, by issuing definite findings of fact, and after hearing the parties, including on the satisfaction of s. 36(2) (qua the claim for bad debts).
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2013 (10) TMI 1069
Suppressed valuation of bagasse - CIT deleted disalloance - Held that:- in the instances given by the assessee during the assessment proceedings there are some instances of lower yield also as compared with that of assessee, which the AO has ignored. The submission of the assessee during the preceding years that certain portion of preceding March month were also taken into account in the concerned year have not been considered by the authorities below. AO has also not given any finding on the assessee's contention that production of baggase and its consumption into the boiler is a continuous process and it is not practically possible to maintain any stock record in this regard. AO has not addressed this also - Matter remitted back. Income from Business or agriculture income - Net cane nursery farm income - Held that:- it is not disputed that income from cane nursery was on account of growing of cane and sale thereof. This is admittedly an agricultural income. Only because as a result of this operation, good quality of cane can also be identified can not lead to the conclusion the activity it is not an agricultural income - Decided against Revenue. Disallowance u/s 36(1)(va) - Employees contribution towards EPF - amount for the month of June,2007, August, 2007, September, 2007, December, 2007, January, 2008, February, 2008 and March, 2008 received from employees as contribution towards Provident Fund on or before due date specified under Employee's Provident Fund Act/Rule - Held that:- The deductions made from the employees' salary for employees provident fund has been paid before the due date of filing of return. It is clear from the table submitted before the Assessing Officer which has been reproduced in its order. Proof of payment was also submitted along with the return of income - CIT (A) has allowed the relief in Uttaranchal jurisdiction when such payments were made before due date of filing return of income and such relief has been finally upheld by the ITAT. Considering these facts and amendment in Act by Finance Act, 2003 w.e.f. 01.04.2004 and various case laws - Decided against Revenue.
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2013 (10) TMI 1068
Penalty u/s 271(1)(c) - Recasting of deduction u/s 80IB - Held that:- The AO in the assessment made u/s 144/147 of the Act on 31.2.2009 reduced the claim u/s 80IB of the Act by Rs.233,67,497/- and thereafter levied penalty u/s 271(1)(c) of the Act on the assessee for furnishing of inaccurate particulars of income being 100% of the tax sought to be evaded amounting to Rs.85,50,751/- which was deleted by the ld.CIT(A) on appeal filed by the assessee. The ld. CIT(A) observed that deduction u/s 80IB of the Act was claimed by the assessee because the return of income for A.Yr.2005-06 was filed by the assesee in 2005. The deduction u/s 80IB of the Act was claimed by the assessee on the basis of relief granted to the assessee in A.Yr.2004-05 by the ld. CIT(A) - where the income computed in accordance with the normal procedure is less than the income determined by local fiction, namely, the book profits u/s 115JB of the Act and the income of the assessee is assessed u/s 115JB of the Act and not under the normal provision, the tax is paid on the income assessed u/s 115JB of the Act. Concealment of income would have no role to play and would not lead to tax evasion therefore, penalty cannot be imposed on the basis of the disallowance or additions made under regular provision - Following decision of CIT vs Nalwa Sons Investment Limited [2010 (8) TMI 40 - DELHI HIGH COURT] - Decided against Revenue.
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2013 (10) TMI 1067
Allowability of liabilities towards interest expenditure – Assessee made a claim of interest on the basis of the stand taken by the Custodian that the Assessee has to pay interest @ 18% per annum - Held that:- reliance has been placed upon the judgment in the case of Hitesh Mehta [2013 (9) TMI 1110 - ITAT MUMBAI]. – Interest expenditure is allowed – Decided in favor of Assessee. Levy of interest u/s 234A, 234B, 234C of the Income Tax Act – Held that:- Relying upon the judgment in the case of CIT vs. Divine Holdings Pvt. Ltd[2012 (4) TMI 100 - BOMBAY HIGH COURT], it has been held that levy of interest u/s. 234A, 234B and 234C is mandatory – Decided against the Revenue.
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2013 (10) TMI 1066
Allowability of liabilities towards interest expenditure – Held that:- In view of the fact that the present assessee is also linked to the group assessee connected with the similar set of facts and issues as that of the present assessee – Also, reliance has been placed upon the judgment in the case of Hitesh Mehta [2013 (10) TMI 1065 - ITAT MUMBAI]. – Interest expenditure is allowed – Decided in favor of Assessee.
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2013 (10) TMI 1065
Disallowance of interest as expense – Held that:- Not allowing the provisions of interest claimed by the assessee is that the books of accounts produced by the assessee during the assessment proceedings has been held to be unreliable - Issue is set aside to the file of the Ld.CIT(A) to adjudicate afresh on merits in respect of the issue pertaining to the rejection/reliability of the books of accounts produced by the assessee after giving due opportunity of being heard to the assessee – Decided in favor of Assessee for statistical purpose.
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Customs
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2013 (10) TMI 1107
Refund of duty - unjust enrichment - The case of the department is that the lower authorities while deciding the question of unjust enrichment have not taken into consideration the fact that during 2001 if the amount receivable was Rs.1411.0 lakhs whereas during 2003 the amount receivable was Rs.496.0 lakhs. The grievance of the department is that the respondent has not shown the breakup of Rs.496.0 lakhs and has also not shown that the said amount covered the amount of Rs.13,09,506/- which was to be refunded. - Held that:- If the department had any doubt in this regard nothing prevented them to investigate and establish that the amount of Rs.13,09,506/- is not covered in Rs.496.0 lakhs. Since the department has not taken any step before or after filing the appeal to find out whether Rs.13,09,506/- lakhs was covered/not covered under Rs.496.0 lakhs. Crying fire is of no avail if one cannot show even a streak of smoke. In these circumstances, I do not find any reason to interfere with the concurrent findings of the lower authorities. Therefore, the learned Commissioner (Appeals) order is upheld - Decided against Revenue.
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2013 (10) TMI 1106
Misdeclaration of Goods - Import of steel under advance authorization scheme - non-alloy steel or alloy steel. – Notification No.21/2002 – Classification of Goods - Waiver of Pre-deposit - The main appellant had mis-declared the description of the goods imported by them in order to avail in-eligible benefit of Notification No.21/2002 and also by mis-classifying the imported product under Chapter 7208 – Held that:- It can be seen from the records that the appellant had been making these declarations on various Bills of Entry and the details as given in invoice, were matching with the declaration made by the appellant - Based upon such declaration, it was to be noted that the appellant had not kept back any information from the Department and hence the claim of the appellant that the demand of duty is hit by limitation, seems to be on stronger wicket and needs consideration - Be that as it may, it was also undisputed that the item SAW pipes manufactured by the appellant had to conform to standard of American Petroleum Industry i.e. API and it should be manufactured only out of grade of stainless steel as indicated therein – the appellant had made out a case for waiver of pre-deposit the amounts involved - Applications for waiver of pre-deposit of amounts involved were allowed and recovery stayed till the disposal of appeals – Stay granted.
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2013 (10) TMI 1105
Stay application - Clasification of 61683.178 MT of imported cargo declared as 'Qatar LSC Crude Oil'- under 27090000 or under 27101990 - Held that:- On careful examination of the said reports/opinions given by the Chemical Examiner, Kandla, it is seen that the said test reports/opinions made by the Kandla, Laboratory are not the conclusive opinion on the clasification of the cargo imported by the appellant. Further in view of the report dated 8/10/1999, of the Harmonized System Committee of World Customs Organization, on classification of 'Gas Condensates' also the chemical composition and physical characteristics of gas condensate of CTH 27.09 and similar synthetic products of CTH 27.10 are very similar and over-lapping. It is further expressed by the committee in this report that there is no practical way of distinguishing between the two groups of product. Appellant has reasonably explained with the help of contracts, value of comparable goods, journals and other literature available on the subject that imported cargo is Qatar Low Sulphur Condensate (crude oil). The assessments of the imported cargo were also finalized by the assessing officer on 25/02/2010 after receipt of the first test report from Chemical Examiner, Kandla. The order finalizing the provisional assessments has not been appealed against by the Revenue. Appellants have, therefore, made out a prima-facie case for complete waiver of confirmed duties and penalties - Stay gtranted.
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2013 (10) TMI 1104
Import of Old machine - import of one set of used Noritsu Minilab system consisting of one Printer Processor Model QSS 2211V and one Film Processor Model QSF 430L with standard accessories with a declared value of US $7000 - Under valuation of property - Held that:- The value in this case has been loaded on the basis that on physical appearance the machine appears to be less than 10 years old and the residual life is more than 5 years. Undisputedly, the examination was carried out by the officers present in the dock and the same has been accepted without any corroboratory evidence.We further find that in the letter of the respondent dated 6.3.2003, it is clearly mentioned that the year of manufacture is 1995. From the year of introduction alone it cannot be concluded that the machine is not manufactured in the previous year.Therefore, merely on presumption and assumption it cannot be said that the machine is less than 10 years old - Decided against Revenue.
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2013 (10) TMI 1103
Application for amendment in B/E - in the bill of entry only one Painting was mentioned whereas two paintings were imported - Redemption of confiscation on payment of penalty - Discrepancy in bill of entry - difference of opinion - Held that:- matter referred to larger bench with the following questions:- Whether on the facts and circumstances of the case denial of amendment to Bill of Entry was justified and imposing of redemption fine is sustainable and penalty reducible to Rs.1,00,000 /- (Rs. One Lakh) as held by Hon'ble Member (Technical). - or - Whether on the facts and circumstances of the case upholding Order-in-Appeal is maintainable rejecting the appeal of revenue as held by Hon'ble Member (Judicial).
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2013 (10) TMI 1102
Import of Assorted Thickness Cold Rolled Steel Coils - Refund claim towards the SAD paid - Held that:- bill of entry shows the description as “assorted thickness cold rolled steel coils” and the size is given as 0.60mm and 1.0mm. Only the length of the coil varies from 1000mm to 1050mm. If the appellant has cut the length of the imported coil and sold the same in the domestic market, only length can vary and not the thickness. The thickness of the imported goods are 0.6mm, 1.0mm or 1.8mm/2.0mm, whereas the goods sold in the domestic market shows the thickness to be 0.60mm, 0.70mm, 0.80mm, 0.90mm, 1.20mm and 1.50mm. Thus there is a mismatch between the goods imported and the goods sold in the domestic market. Therefore, lower authorities are right in coming to the conclusion that the appellant has not led any documentary evidence in support of his refund claim that the goods which are sold in the domestic market on which he had paid VAT are the same as those imported - Decided against assessee.
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2013 (10) TMI 1101
Duty Drawback – Benefit of 100% EOU - conversion of free shipping bills into duty draw back shipping bills - Whether the period when the appellant discharged its duty liability on 4.3.08 and when the NOC was issued on 18.3.08 would confer the status of 100% EOU on the appellant or not – Held that:- NOC is issued based upon the fact of discharge of entire duty liability by a 100% EOU - if the appellant would not have discharged the entire duty on 4.3.08, the Revenue officer would not have issued No Objection Certificate - the issuance of NOC which is only a procedural formality would relate back to the date of payment of duty liability by the assessee - it can be fairly concluded that when the appellant discharged its duty liability as a 100% EOU on 4.3.08, it become disentitled to claim any benefit of 100% EOU - Conversely the benefit which are available to the DTA unit would become available to the assessee - assessee was entitled to file shipping bills under the drawback claim. The appellant was not claiming any benefits as 100% EOU, having discharged its entire duty liability on 4.3.08, but the fact that all procedural requirement of stuffing containers etc. in the appellants factory under the supervision of Customs authorities was being followed as is clear from the recording made by the Commissioner - the fact that exported goods were in accordance with the declaration, cannot be doubted – order set aside - conversion of free shipping bills into duty draw back shipping bills allowed – Decided in favour of Appellant.
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2013 (10) TMI 1100
Anti dumping duty - Import of injection moulding machines - Import of 2 injection moulding machines treated as import of 3 injection moulding machines - Penalty u/s 114A and 114AA - Commissioner set aside penalty - Held that:- all the parts of both the Bills of Entry would show that the respondents imported parts of three injection moulding machines of model numbers PS-TECH 1300, PS-TECH 1600 and PS-TECH 2200 from M/s. Ningo Beston Mechanical Technology Co. Ltd., China. The case of the Revenue on the basis of e-mail communications, examination of the parts of machines along with statements, the bifurcation of imports is for the purpose of evading payment of anti-dumping duty - Commissioner (Appeals) merely proceeded on the basis of Chartered Engineer's certificate and the fact that the respondent was registered with the Central Excise authorities. It is observed that even after clubbing of the imported goods under both the Bills of Entry, the full and complete set of machine did not emerge. It has not considered the case of the Revenue about the application of Rule 2(a) of the General Interpretative Rules and other Notes of Chapter as stated in the show-cause notice - It is settled principles of law that while passing the order the authority must record the reasons, links between the materials on which certain conclusion are based and the actual conclusion. Recording of the reasons without considering the submissions of the parties is vague. Reasons must be adequate and proper, it must be sufficient, clear, explicit and based on the materials on records. In the present case, both the authorities below did not consider the materials on record insofar as the allegations in the show-cause notice and the submissions of the importer - matter remanded back - Decided in favour of Revenue.
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Corporate Laws
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2013 (10) TMI 1099
Compromise and Arrangement u/s 391 to 394 of Companies Act – Scheme of Arrangement - Held that:- In view of the approval accorded by the shareholders and creditors of the petitioner companies, representations/reports filed by the Regional Director and the Official Liquidator attached with this Court to the proposed scheme of arrangement, there appeared to be no impediment to the grant of sanction to the scheme of arrangement - sanction was granted to the scheme of arrangement under sections 391 to 394 of the Companies Act, 1956. In terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 and in terms of the scheme, the whole or part of the undertaken, the property, rights and powers of the transfer or companies be transferred to and vest in the transferee companies without any further act or deed - all the liabilities and dues of the transfer or companies be transferred to the transferee company without any further act or deed - Upon the scheme coming into effect, the transfer or company shall stand dissolved without winding up - It was, however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law, or permission/compliance with any other requirement which may be specifically required under any law - The statement is accepted.
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Service Tax
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2013 (10) TMI 1115
Valuation - inclusion of cost of reimbursement of expenses - Demand was confirmed on the ground that Applicant is liable to pay Service Tax on the gross amount received as provider of clearing and forwarding agent. - The contention of Applicant is that they are liable to pay Service Tax only on remuneration received and amount which is reimbursed by the principal are not to be taken into consideration for the purpose of levy of Service Tax as C & F Agent - Held that:- In the agreement there is specific Clause that the present Applicants are not entitled for any reimbursement or any monetary benefit for the work rendered under the agreement. - Prima facie we are of the view that the decisions relied upon by the Applicants are not applicable to the facts of the present case in view of the specific Clause in the agreement. Further we find that in the monthly returns the receipt of reimbursements is not reflected by the Applicant therefore prima fade we find it is not a case for total waiver of the amount of Service Tax - Following decision of S.D.Business Enterprise Pvt. Ltd. Vs. Commr. of Service Tax, Kolkata [2009 (6) TMI 405 - CESTAT, KOLKATA] - stay granted partly.
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2013 (10) TMI 1114
Job Work - Exemption from service tax - Business auxiliary services - CENVAT credit – Waiver of Pre-deposit – Held that:- The Applicant received the axles and wheels from M/s. Durgapur Steel Plant for machining work under the provisions of CENVAT Credit Rules - It is not in dispute that after carrying out necessary process, the axles and wheels were returned to M/s. Durgapur Steel Plant who ultimately discharged the duty on the said axles and wheels – Following Mohata Coal Company (P) Ltd. [2013 (10) TMI 1109 - CESTAT KOLKATA] - the Applicant could able to make out a prima facie case for total waiver of all dues - predeposit all dues was waived and its recovery stayed during pendency of the Appeal - Stay Granted.
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2013 (10) TMI 1113
Finance Charges - Application for Early Disposal - There is a total demand of service tax along with interest and penalties for the period on the amount collected by the applicant as finance charges for pre-closure/foreclosure of hire purchase on leasing transaction – Held that:- The Tribunal in the case of Housing & Dev. Corporation Ltd. (HUDCO) Vs CST Ahmedabad [2011 (11) TMI 95 - CESTAT, AHMEDABAD] decided the appeal and held that service tax would be leviable on pre-payment of loan or foreclosure charges - service tax is leviable on foreclosure or pre-payment charges and in Indusind bank Ltd. Vs CST Chennai [2009 (9) TMI 48 - CESTAT, CHENNAI ] directed pre-deposit of 50% of tax - The applicant failed to make out a prima facie case for waiver of predeposit of entire amount of tax along with interest and penalties – Appellant was directed to pre-deposit the amount and upon such submission rest of the duty to be stayed – partial stay granted.
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2013 (10) TMI 1112
Construction services – nature of receipt - advance or loan - Waiver of Pre-deposit - Held that:- The issue involved in the case is taxability of the amount received as an advance and the TDS deducted by various authorities - major portion of the amount is regarding Service Tax liability on the amount received by the appellant as loan - M/s J.R. Construction has very clearly stated that the said amount is indicated in the books of account as Unsecured Loan - If that be so, prima facie, loans cannot be considered as amount received as an advance and taxable under the provisions of Finance Act, 1994 - the appellant’s, have made out a prima facie case for waiver of the pre-deposit of amounts involved - Accordingly, the application for waiver of pre-deposit of amounts involved is allowed and recovery stayed till the disposal of appeal – Stay granted.
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2013 (10) TMI 1111
Duty Liability on Various Services rendered by Indian Railway - Revenue was of the view that the assessee is liable to pay service tax which arises on them for providing various services like Sale of space and time for advertisement, Renting of immovable property, Supply of Tangible Goods, Mandap Keeper services - Held that:- special provisions have been made under Section 99 of Finance Act, 1994 and amendment brought in by Finance Act, 2013 which indicated that no Service Tax liability arises on Indian Railways - Since the legislature itself has passed an Act that no Service Tax liability arises on the Indian Railways for rendering the services during the period prior to October 2012 - Since all the demands of Service Tax in these cases are prior to October 2012 – order set aside – Decided in favour of Assessee.
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2013 (10) TMI 1110
Denial of CENVAT credit – Renting of Immovable Property Service – Held that:- Following Navaratna S.G. Highway Prop. (P.) Ltd. Vs. CST, Ahmedabad [2012 (7) TMI 316 - CESTAT, AHMEDABAD] - Credit of duty paid on inputs is available when the inputs are used for providing an 'output service'. In the case of 'input service', the definition includes input services used by a provider of taxable service for providing an output service - the entire amount of service tax with interest has been deposited on renting of immovable property service, this is a fit case for waiver of predeposit - Accordingly, there shall be waiver of predeposit of balance dues and stay against recovery during the pendency of appeal – Stay granted.
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2013 (10) TMI 1109
Waiver of pre deposit - Job Work - Exemption for service tax - business auxiliary service - Penalty u/s 78 - Held that:- Forged axles and wheels were received by the applicants against Annexure-II Challans as prescribed under Rule 4(5)(a) of CENVAT Credit Rules, 2004 for carrying out the process on job work basis. The applicant carried out the necessary processes of machining, like grinding, cutting and drilling etc. as per the direction of the principal raw material supplier M/s. Durgapur Steel Plant. After carrying out such processes these goods were returned to the raw material supplier i.e. M/s. Durgapur Steel Plant, where further processes viz. ultrasonic testing, painting etc. were carried out so as to make the wheels and axles marketable. It is not in dispute that M/s. Durgapur Steel Plant discharges excise duty on the said finished wheels and axles which are cleared to Indian Railways. In these circumstances, we find that the applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and recovery thereof stayed during pendency of the Appeal - Stay granted.
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Central Excise
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2013 (10) TMI 1098
Waiver of Pre-deposit – Appeal u/s35F – Held that:- It is for the appellant to establish undue hardship and the mere fact that the demand of duty and penalty may appear to be excessive, is irrelevant if the appellant has not been able to establish “undue hardship” - The expression “undue hardship” relates not only to the economic wellbeing of the appellant but also to the merits of the case, thus, requiring the CESTAT to also prima-facie appraise the merits and record an opinion for or against the appellant - An appellate forum cannot where the opinion recorded does not suffer from the aforesaid defects, impose its own perception of the merits of the case whatever be the nature of “undue hardship”. The appellant has not pleaded any financial hardship or financial distress in support of its plea of “undue hardship” and has mainly confined its pleadings to the merits of the demand raised by the revenue - A perusal of the orders passed by the Assessing Officer and the Appellate Authority do not enable us to record an emphatic finding in favour of the appellant that duty demanded and penalty levied are illegal or could not have been imposed. The question whether the duty was levied merely as the appellant and its partner surrendered income to the Income Tax Department, is a matter to be considered and decided after appraisal of the entire voluminous record - The appellant surrendered substantial unaccounted income to the Income Tax Authorities - The duty levied and penalty are based upon this disclosure, documents seized and inventories prepared by the Income Tax Department - affirming with the opinion recorded by the CESTAT, there is no reason to vary the order to grant any further relief to the appellant – Decided against Petitioner.
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2013 (10) TMI 1097
Waiver of Pre-deposit of duty and Penalty – Committee of Disputes – Held that:- The application dismissed in the ground that SAIL had not produced the requisite Committee of Disputes clearance – Held that:- The orders of the Supreme Court which required CoD clearance having been recalled, the learned Tribunal patently erred in dismissing the said application and the appeal on the purported ground that SAIL had not produced evidence of having applied for clearance from the CoD or on the ground that SAIL had not produced any clearance from the CoD. A principle of law is applicable to all cases, irrespective of stage of pendency because it is assumed that what is enunciated by the Supreme Court is, the law from the inception unless, of course, the Supreme Court expressly indicates that the decision would have prospective effect - the appeal was filed before 17th February, 2011 when the Constitution Bench judgment of the Supreme Court recalling the earlier orders was pronounced - The orders whereby clearance was required having been recalled, the appeal and the stay application could not have been dismissed on the ground of want of clearance or want of an application for clearance – order set aside – matter restored before the CESTAT.
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2013 (10) TMI 1096
Jurisdiction of the Tribunal - Rebate of Excise Duty – Proceedings u/s 11 – Held that:- An order of the Commissioner (Appeals) sanctioning rebate of excise duty on export of goods is not appealable before this Tribunal in terms of section 35B (1)(b) of the Central Excise Act, 1944 - Relying upon National Fertilizers Ltd. vs. Commissioner of Central Excise, Ludhiana [2007 (9) TMI 128 - CESTAT, NEW DELHI ] proceedings under section 11 of the Central Excise Act, 1944 or under section 142 of the Customs Act, 1962 are not maintainable before this Tribunal - the appeals are not maintainable before this Tribunal – Decided against Petitioner.
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2013 (10) TMI 1095
Refund Claim u/s 11B – Suo-moto Credit – Held that:- The payment made has to be considered as voluntarily paid - when the appellant realized that he had made the payment of duty wrongly, he should have filed a refund claim in accordance with the provisions of Section 11B - The payment was made in July 2001 and re-credit has taken in November, 2002 - One year time for filing the refund claim from the date of payment had already lapsed - to overcome the provisions of time bar, the appellant resorted to taking suo motu credit - There is no provision in Central Excise law for taking suo motu credit – Following BDH INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I [2008 (7) TMI 78 - CESTAT MUMBAI] - taking of suo motu credit by the appellant was not in accordance with the law. CCE Versus M/s HARI CHAND SHRI GOPAL [2010 (11) TMI 13 - SUPREME COURT OF INDIA] - a provision for exemption, concession or exception, as the case may be, has to be construed strictly and if the exemption is available only on complying with certain conditions, the conditions have to be complied with - detailed procedures have been laid down in Chapter X of the Rules, so as to curb the diversion and mis-utilization of goods which are otherwise excisable and the plea of substantial compliance or intended use therefore has to be rejected – order set aside – Penalty upheld – Decided in favour of Revenue.
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2013 (10) TMI 1094
Denial of Cenvat credit – Input service - Interest under Rule 14 of CE Rules r.w. Section 11A – Waiver of Pre-deposit - Revenue was of the view that the appellant is not eligible for the credit of service tax paid on outward freight incurred beyond the place of removal – Held that:- The amendment made in the definition of input service relating to outward freight, cenvat credit would not be available in respect of outward freight services, in appellant's own case in respect of their Hinjewadi Unit, the benefit of credit on outward freight services has been extended for the period after 1-4-2008 - the order has been accepted by the Revenue and no appeal appears to have been filed, the same benefit cannot be denied to the Chakan unit of the appellant - the appellant has made out a prima facie case in their favour for interim relief - unconditional waiver from pre-deposit granted against the appellant till the disposal – Stay granted.
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2013 (10) TMI 1093
Waiver of Pre-deposit - Exemption under Notification No.108/95 - Penalty under Rule 25 the Central Excise Rules – Held that:- It is the case of the Department that the Applicant’s name did not figure in the Project Authority’s Certificate issued by Kolkata Environmental Improvement Project (KEIP), but it is also not in dispute that the pipes meant for the said project against the contract had been supplied by the Applicant for construction of sewerage and drainage for Borough-XIV Lot-3, as is evident from a certificate issued by the main contractor in favour of the Applicant - after going through the relevant invoice, prima facie, the project reference had been mentioned while clearing the goods to the project as supplied to the main contractor - the Applicant could able to make out a prima facie case for total waiver of the pre-deposit of the dues during pendency of the Appeal – Pre-deposit of all dues waived and its recovery stayed during pendency of the Appeal - Stay granted.
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2013 (10) TMI 1092
Activity Manufacture or Not – SSI Exemption Notification No. 08/02 and 08/03 - Waiver of Pre-deposit - Revenue was of the view that transferring the oil from bulk to retail packs and affixing the brand name of the customer would result into manufacture under Section 2(f) of the Central Excise Act, 1944 r.w Note 4 of Chapter 15(2003-04, 2004-05) of the First Schedule to the Central Excise Tariff Act, 1985 – Held that:- Prima facie the Appellant are engaged in the process of re-packing of refine edible oil from bulk to retail packs and affixing the brand name of the customer - the Applicant, though claimed SSI exemption, but the same was not considered by the lower authorities - The issue whether packing/repacking would amount to manufacture, is a debatable one and the ld. Commissioner (Appeals) is directed to decide the issue on merits - while remanding the matter to the ld. Commissioner (Appeals), the Appellant should be put to terms - In these circumstances, the Appellant is directed to deposit 25% of the duty - a reasonable opportunity of hearing be granted to the Appellant - all issues are kept open - Appeal allowed by way of remand.
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2013 (10) TMI 1091
Benefit of Notification No. 108/95 - Revenue was of the view that the assesse did not submit the documentary evidence for availing the benefit of exemption notification – Held that:- As per the benefit of Notification no. 108/95, the project has to be proved by the Government of India and certificate from the specified officer is required in respect of the goods that the same are required for the execution of the said project - Both the authorities below held that applicant produced the necessary certificate that the goods in question are required for the project by the Government of India - only objection raised by the Revenue is that certificate was not in the name of present respondents - the certificate is to be in respect of the goods that the same are required for the project - the respondents has produced necessary certificate, which is accepted by the authorities below that goods in question are for the project approved by the Government of India – there was no merit in the appeal – Decided against Revenue.
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2013 (10) TMI 1090
Essential Characteristics - Whether the machinery items supplied by the appellants are having the essential characteristic of lift assembled together – Held that:- A panel is appointed to examine the characteristics - The panel shall examine various materials supplied by the appellants for installation of lift along with the drawings and documents available with them - On inspection of those documents, the panel shall decide whether the various items of lift machinery manufactured by the appellants are having essential characteristics of lift if assembled.
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2013 (10) TMI 1089
Reversal of CENVAT credit – Waiver of Pre-deposit - Whether the appellant is required to pay 5%/10% of the value of the chilli seeds which are taken out from the chilli before commencement of manufacture of oleoresin and de oiled cake which emerges after the oleoresin is extracted from chili – Held that:- Chilli seeds emerge before the manufacturing process of oleoresin commences and therefore the appellant may not be required to reverse input credit - As regards the input service, the appellant has already reversed the proportionate amount of CENVAT credit –Following Rallies India Ltd. vs. UOI [2008 (12) TMI 46 - HIGH COURT BOMBAY] - As regards de oiled cakes, there is no dispute that it is a waste or by-product which emerges during the course of manufacture of oleoresin and it cannot be avoided - As regards the credit of Rs.3 lakhs, in any case the credit was available to the appellant - the amount already reversed by the appellant is sufficient and therefore, there shall be waiver of pre-deposit and stay against recovery during the pendency of appeal - Stay granted.
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2013 (10) TMI 1088
Interpretation of eligibility of CENVAT Credit – CENVAT Credit on MS Angles, MS Channels & Joists, HR Plates, HR Coils etc. during the period from May, 2005 to June, 2009 - Waiver of Pre-deposit – Held that:- Following Vandana Global Ltd. vs. CCEX, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - This Tribunal has been taking a consistent view by allowing stay petition of the assessee where extended period of limitation is involved but directed predeposit, wherever demand is for normal period of limitation - the Applicant are directed to make amount as pre-deposit – upon such submission the balance dues would stand waived and its recovery stayed during pendency of the Appeal - Partial Stay granted.
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CST, VAT & Sales Tax
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2013 (10) TMI 1116
Exemption under section 5(3) of the CST Act - sale of bus bodies - penultimate sale - export of goods - nexus - Held that:- If the penultimate sale effected in favour of the exporter is inextricably connected with the export of goods outside the territory of India - communication between the foreign buyer and the exporter reveals that the foreign buyer wanted the bus bodies to be manufactured by the assessee under the specifications stipulated by the foreign buyer. The bus bodies constructed and manufactured by the assessee could not be of any use in the local market, but were specifically manufactured to suit the specifications and requirements of the foreign buyer. In the purchase order placed on the assessee by the exporter, it is specifically indicated that the bus bodies have to be manufactured in accordance with the specifications provided by the foreign buyer, failure to do so might result in cancellation of the export order. The assessee in this case has succeeded in showing that the sale of bus bodies have occasioned the export of goods. When the transaction between the assessee and the exporter and the transaction between the exporter and foreign buyer are inextricably connected with each other, in our view, the "same goods" theory has no application, assessee is entitled to exemption under section 5(3) of the CST Act - Decided in favour of assessee.
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Indian Laws
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2013 (10) TMI 1108
Qualification of person to be appointed as Information Commissioners - Validity of provisions of RTI - Whether provisions of Sections 12(5), 12(6), 15(5) and 15(6) of the Right to Information Act, 2005 are ultra vires the Constitution - Held that:- Under Order XL of the Supreme Court Rules, 1966 this Court can review its judgment or order on the ground of error apparent on the face of record and on an application for review can reverse or modify its decision on the ground of mistake of law or fact. As the judgment under review suffers from mistake of law, we allow the Review Petitions, recall the directions and declarations in the judgment under review and dispose of Writ Petition (C) No. 210 of 2012 with the following declarations and directions: (i) We declare that Sections 12(5) and 15(5) of the Act are not ultra vires the Constitution. (ii) We declare that Sections 12(6) and 15(6) of the Act do not debar a Member of Parliament or Member of the Legislature of any State or Union Territory, as the case may be, or a person holding any other office of profit or connected with any political party or carrying on any business or pursuing any profession from being considered for appointment as Chief Information Commissioner or Information Commissioner, but after such person is appointed as Chief Information Commissioner or Information Commissioner, he has to discontinue as Member of Parliament or Member of the Legislature of any State or Union Territory, or discontinue to hold any other office of profit or remain connected with any political party or carry on any business or pursue any profession during the period he functions as Chief Information Commissioner or Information Commissioner. (iii) We direct that only persons of eminence in public life with wide knowledge and experience in the fields mentioned in Sections 12(5) and 15(5) of the Act be considered for appointment as Information Commissioner and Chief Information Commissioner. (iv) We further direct that persons of eminence in public life with wide knowledge and experience in all the fields mentioned in Sections 12(5) and 15(5) of the Act, namely, law, science and technology, social service, management, journalism, mass media or administration and governance, be considered by the Committees under Sections 12(3) and 15(3) of the Act for appointment as Chief Information Commissioner or Information Commissioners. (v) We further direct that the Committees under Sections 12(3) and 15(3) of the Act while making recommendations to the President or to the Governor, as the case may be, for appointment of Chief Information Commissioner and Information Commissioners must mention against the name of each candidate recommended, the facts to indicate his eminence in public life, his knowledge in the particular field and his experience in the particular field and these facts must be accessible to the citizens as part of their right to information under the Act after the appointment is made. (vi) We also direct that wherever Chief Information Commissioner is of the opinion that intricate questions of law will have to be decided in a matter coming up before the Information Commission, he will ensure that the matter is heard by an Information Commissioner who has wide knowledge and experience in the field of law.
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