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TMI Tax Updates - e-Newsletter
October 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
TMI SMS
Articles
News
Highlights / Catch Notes
Income Tax
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Expenditure incurred on oil solvent extraction plant - whether as the production had not commenced and therefore, it is in the nature of capital expenditure - Revenue has erred in treating the semi finished stock of the assessee as capital expenditure. - AT
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Non deduction of tax at source u/s 194J - if the business associates of the assessee (aggregator or service provider) has not deducted the TDS, there is a loss to the nation and it is the duty of such aggregators/service provider/assessee to ensure that due taxes are deducted. - AT
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Gifts made - the assessee was absolute owner of NDAW upto 24/07/2007 and transferred his 51% shares to RBE and then made the gift to NDAW, in which he still holds 49% stakes, thus, the transfer is covered by exclusion clause u/s 47(XIV) of the Act, consequently, is liable to Gift Tax - AT
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Penalty u/s 271(I)(c) - Assessee cannot be fastened with the liability of penalty without there being a clear or specific charge. Fixing a charge in a vague and casual manner is not permitted under the law. Fixing the twin charges is also not permitted under the law - AT
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Sale of premises - Long Term Capital Gain OR Business Income - assessee has rightly offered to tax income from rent as ‘Income from House Property’ but that will not change character of the asset from business trading asset ie WIP to ‘investment’ - AT
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Revision u/s 263 - CIT cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice u/s 143(2), which was beyond time had no legs to stand as the same was non est in the eyes of law. - AT
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Penalty u/s. 271(1)(c) - notice u/s. 274 of the Act in the present case does not make any reference as to whether the assessee has concealed or furnished inaccurate particulars of income, the entire penalty proceedings are held to be invalid. - AT
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Levy of interest u/s 234D - mistake in computing the interest u/s 244A has been rectified by passing the order u/s 154 and with which the assessee has no quarrel. It is not the case of Revenue that the refund has arisen due to order u/s 143(1) - Therefore, the first necessary condition for charging of interest u/s 234D is not satisfied - AT
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Exemption u/s 11 & 12 - promotion of football games - The mere fact that the appellant society had generated sponsorship funds, during the course of carrying on the ancillary objects, shall not alter the character of the main objects so long as the predominant object continues to be charitable and not to earn the profit. - AT
Customs
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Entitlement of Duty Credit Scrips under Served From India Scheme (SFIS) declared deficient – It is undisputed that brand "Castrol India" is not an Indian brand - benefit of SFIS not allowed - HC
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Revenue has sought to open assessments which had been finalised more than five years ago on grounds of mis-declaration of goods – Assessments were finalised after thorough investigation process – No justifiable reason found to recover differential duty after lapse of 5 years - SC
Service Tax
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Storage and warehousing services - nature of amount collected from auction of goods where importer failed to take the delivery - no service tax liability arises on such amount which remains balance with the assessee. - AT
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CENVAT Credit - input services - construction of dormitory adjacent to the factory premises was the necessity because of the location of the factory in a remote area - such construction activity is in relation to the business - credit allowed - AT
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Liability of Service Tax - scope of the work order indicates a specific job of welding and gas cutting to be undertaken by the appellant - appellant is required to supply only the manpower - demand set aside - AT
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Export of services - Rebate claim for the Month of March 2007 - there is a change in the provisions of Rule 3(ii) of the Export of Service with effect from 01.03.2007, which mandates the requirement of payment of the services provided, in convertible foreign exchange - Matter remanded back for verification - AT
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Refund of Service Tax claimed on inputs services – Export of goods - Exemption under Notification No.17/2009-ST requires clear classification of input services - Error in classification of input service received by appellant would disentitle refund - AT
Central Excise
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CENVAT Credit - capital goods - appellant is not required to reverse CENVAT Credit taken on the capital goods, which was procured and subsequently re-exported - AT
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When the adjudicating authority held that it is an issue of interpretation of Rule, therefore it cannot be alleged that appellant has taken cenvat credit by way of fraud, collusion, willful mis statement, suppression of fact or contravened the provisions of Act/ Rule with an intent to evade payment of duty. - AT
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Admissibility of cenvat credit - Rejected and returned goods - appellant whereas, the appellant has produced documentary evidence to show that certain process were done which amounts to manufacture and cleared on payment of duty - credit allowed - AT
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Determination of assessable value - Trade discount - by changing the nomenclature, they are only trying to mislead the department and by change of the nomenclature, service charges cannot become additional trade discoun - AT
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Denial of remission of duty - Loss of molasses due to Puncture of the drain nipple - as long as the accident is not deliberate and there is no mala fide on the part of the assessee to make the accident occur resulting in loss of the goods - remission of duty in terms of the provisions of Rule 21 allowed - AT
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Cenvat Credit - No evidence has been produced by the Revenue that duty paid inputs are directly used in the manufacture of exempted byproduct Bio Feed. - demand set aside - AT
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Whether the appellant is required to reverse the cenvat credit on account of discounts awarded to the appellant after clearance of the goods on payment of duty by the supplier? - Held No - AT
Case Laws:
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Income Tax
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2015 (10) TMI 2185
Stay of disputed outstanding demand seeked - Held that:- Since the regular appeal is not yet disposed of and since by the order passed under Section 220(6), the Assessing Officer was likely to review the conditional order, the appellant apprehends that some more levy may be imposed. The above grievance of the appellant could easily be redressed. As against the original assessment completed on 28.5.2014, the appellant did not go on appeal. They have accepted all the disallowances. Now, what is pending in appeal is only the question of penalty. The total penalty levied was ₹ 10 Crores. Out of the said amount, a sum of ₹ 5 Crores has already been deposited. Therefore, this is a fit case where the appellant is entitled to have stay till the disposal of the appeal. Thus grant the benefit of stay to the appellant till the disposal of the appeal.
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2015 (10) TMI 2184
Non deduction of TDS under Section 194LA - land so surrendered by the land owner in favour of BBMP - whether there is compulsory acquisition of land? - ITAT deleted addition - Held that:- The provisions of Section 194LA would be applicable only in case of compulsory acquisition, whereas, the lands acquired by BBMP was not by way of compulsory acquisition, but had been surrendered by the land owner under Section 14B of KTCP Act. In the present case, neither there is compulsory acquisition of the land, nor there is any process adopted for quantification or determination of value of land acquired by BBMP which is voluntarily surrendered by the land owner, for which CDRs were given to the land owner. As such, we are in agreement with the finding recorded by the Tribunal that provisions of Section 194LA of I.T. Act would not be attracted in the present case. Even otherwise, the Tribunal has rightly observed that the provisions of deducting tax at source and paying it over to the Government on behalf of the recipient of payment, is in the nature of vicarious liability. When there is neither quantification of the sum payable in terms of money nor any actual payment is made in monetary terms, it would not be fair to burden a person with the obligation of deducting tax at source and exposing him to the consequence of such default. - Decided in favour of assessee.
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2015 (10) TMI 2183
Reopening of assessment - assessee's return was assessed u/s.143(3) at ₹ 46,48,050/- out of which income from share trading amounting to ₹ 41,95,223/-was assessed as short term capital gain at special rate of ₹ 10% - Held that:- Materials produced by the petitioner either in response to the queries raised by the Assessing Officer or voluntarily, leave no manner of doubt that full details to enable the Assessing Officer to take a view whether the income of the assessee from trading of shares should be taxed as capital gain or business income, was on record. The Assessing Officer had raised multiple questions calling for documentary proof in certain cases. All these questions pertain to the assessee's declared income from sale of shares. If not strictly speaking in the sequences in which the questions were raised, nevertheless at least in the stock summary full details were laid before the Assessing Officer. If during such assessment the Assessing Officer was of the opinion that the activity carried on by the assessee was in the nature of business of buying and selling shares, he could as well have expressed such opinion in the assessment order and taxed the income accordingly. By no stretch of imagination, could it be stated that on account of failure on the part of the assessee to disclose full and true material facts, he came to erroneous conclusion and accepted the assessee's stand that the income was in the nature of capital gain. To reiterate, during the original assessment in response to various queries raised by the Assessing Officer, the assessee made full disclosures. Full facts were thus before the Assessing Officer to ascertain whether the income was in the nature of business income or capital gain. He having taken a particular view, reopening beyond the period of four years would not be permissible. - Decided in favour of assessee.
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2015 (10) TMI 2182
Addition u/s. 40(a)(ia) r.w.s. 194C - payment of demurrage to parties in India - CIT(A) deleted addition - Held that:- No specific error in the order of the Ld. CIT(A) could be pointed out by the DR. He could not bring any material on record to show that the amount were not reimbursement of expenses paid by the clearing and forwarding agents for freight to the airlines. In the absence of the same, we do not find any infirmity in the order of the Ld. CIT(A), which is hereby confirmed and the ground of appeal of the Revenue is dismissed. - Decided in favour of assessee. Addition on account of Goa VAT incentive by disallowing deduction u/s. 80IB - CIT(A) deleted addition - Held that:- Goa VAT incentive received by the assessee is directly linked with the manufacturing and sale of goods and therefore income derived from the industrial undertaking and consequently is eligible for deduction u/s. 80IB of the Act. See M/s. Diamond Tool Industries Vs. JCIT [2011 (12) TMI 534 - ITAT MUMBAI] - Decided in favour of assessee.
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2015 (10) TMI 2181
Advances received from customers who booked vehicle for purchase and consequently the advances were also adjusted against sale of vehicle - system of accounting - Held that:- There is no change of system of accounting followed by the assessee. Allowing the department to adopt a different approach altogether in this assessment year in question would create an anomalous situation as far as the assessee is concerned. The issue that the dealer receiving advance money from customers where the item is in demand and there is scarcity of supply, it many a times happen that seller receives advance money from the purchaser and as and when supply is made the advance is adjusted against sale price. This is being done by the present assessee before us also. The advance money, in the present case before us, is adjusted the sale price of the motor cycle and sale is disclosed in the return of income i.e. the trading account of the assessee. Accordingly, we find no ambiguity in the system followed by the assessee. From the details filed before us, Ld. DR could not point out the discrepancy in the same because these advances were adjusted against sales. When this was pointed out to Ld. Sr. DR, he stated that the assessee is unable to produce the PANs, names and addresses of the parties. He was specifically shown a tax/retail invoice wherein complete details were given except the PAN/Voter I. Card. In our view, PAN/Voter Identity Card is a KYC norm, which does not apply to the sale of goods under the Sale of Goods Act. In view of the above, we are of the view that the AO and CIT(A) both have erred in making and confirming this addition and accordingly, we delete the same. - Decided in favour of assessee.
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2015 (10) TMI 2180
Computation of deduction u/s.10A without setting off the losses of units on which 10A has not been claimed as directed by CIT(A) - Held that:- CIT (A) had followed the jurisdictional High Court judgment in the case of CIT v. Yokogawa India Ltd [2011 (8) TMI 845 - Karnataka High Court]. Revenue's decision to move an appeal before Hon'ble Apex Court against this judgment will not be a reason not to follow this judgment. Similarly acceptance of a judgment of the High Courts or orders of this Tribunal are irrelevant since all parties are under law obliged and duty-bound to follow them. - Decided against revenue Transfer pricing adjustment - CIT(A) directing the AO to re-compute mean margin and work out the quantum of TP adjustment - CIT(A) directing the AO to consider current year data for comparable M/s Net Axis Software Services Ltd and to consider M/s. Dynacons Solutions & Systems Ltd as comparable - Held that:- If financial data for relevant previous years were available in public domain, it could be considered as good comparables. CIT(A)'s direction was only to verify this aspect. He did not limit the power of the AO / TPO to consider their comparability on their yardsticks. We are of the opinion that order of CIT (A) does not suffer from any ambiguity and was fair and appropriate in the circumstances of the case - Decided against revenue
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2015 (10) TMI 2179
Trading addition - rejection of books of accounts - CIT(A) deleted the addition - Held that:- CIT(A) simply accepted the submissions without making any verification on the huge addition made by the AO and there is no whisper in his order that on what basis he has accepted the sales and purchases without any verification and just on the submissions of made by the assessee. The valuation has not been submitted by the assessee before the AO. The gross profit figure shown by the assessee is also contradictory at every level. There was also discrepancy in the gross profit declared by the assessee in the return form. The ld. AR has also not submitted the shortage chart as well as quantity chart of last two years. The ld. AR has also not filed the copy of explanation before the Bench. He only filed the copy of the letter without date and without any signature at Serial No. 6 & 7 of the paper book. In this view of the matter, we set aside the Ground No. 1 of the assessee to the file of the AO to examine it afresh by providing reasonable opportunity of being heard to the assessee and the assessee is also directed to produce the relevant records to verify the quantity of sales and purchases as well as opening and closing stock before the AO and also to produce the books of account to verify the gross profit rate. Further it should be verified from the auditor whether he has audited the books of account or not. If yes, then the assessee's expenses for payment of auditor are also required to be verified. - Decided in favour of revenue statistical purposes. Addition u/s electricity expenses u/s 40A(3) - CIT(A) deleted the addition - Held that:- We find from the records that the assessee has paid in cash electricity bill of ₹ 80,092/- for the month of Nov. 2008 to Rajasthan State Electricity Board under the bona fide belief that the payment is made to the Government because of the business expediency and to avoid electricity connection. The ld. CIT(A) has taken into consideration the decision of Hon'ble Delhi High Court in the case of R.C. Goyal vs. CIT (2012 (12) TMI 452 - DELHI HIGH COURT) wherein it is held that cash payments made in view of the business expediency is allowable as per Section 40A(3) of the Act. Thus we do not find any infirmity in the order of the ld. CIT(A) on this issue which is sustained. - Decided against revenue. Disallowance u/s 40(a) - CIT(A) restricted part addition - Held that:- As find from the ld. CIT(A)'s order that he has confirmed the disallowance of transportation expenses to the extent of ₹ 50,364/- paid to M/s. Jai Bharat Transport Co. and deleted the remaining disallowance. We have observed that ld. CIT(A) has taken care to consider all the aspects as to disallowance transportation expenses of ₹ 4,79,532/- u/s 40(a)(ia) of the Act made by the AO. However, for confirming disallowance of ₹ 50,364/- paid to M/s. Jai Bharat Transport Co. by the ld. CIT(A), we feel that the transport company has no role except to get the commission from the truck driver for issuing bilty and it is the truck owner /driver who is paid freight by the assessee. It is also seen that individual payment to each truck owner/ driver towards the freight is less than ₹ 20,000/- in each case and it does not exceed ₹ 50,000/- in the financial year which is evident from the bilty and other records - Decided against revenue. Addition of interest expenses - non deduction of TDS - assessee had failed to submit the proof of submission of form 15G to the Department - CIT(A) deleted the addition - Held that:- As find from the records that the assessee has submitted the Form No. 15G before the AO for claiming certain interest payment without deduction of tax u/s 194A of the Act. However, the AO disallowed the same because of non-production of proof of submission of above forms to the Department at the time of framing the assessment. The ld. CIT(A) considering the order of this Bench in the case of Shyamsunder Kailash Chand vs. ITO (2010 (7) TMI 998 - ITAT JAIPUR) deleted the addition made by the AO observing that the same were available to the AO while framing the assessment. Thus in this view of the matter, we find no infirmity in the order of the ld. CIT(A) which is confirmed on this issue - Decided against revenue. Addition on short weight expenses - Held that:- We find from the records that the assessee has not furnished evidence for claiming the expenses on account of short weight expenses before the AO but the assessee has submitted the same before the ld. CIT(A) who has allowed this ground of the assessee without any verification. This issue of the assessee is directly connected with the gross profit rate. We therefore, in the interest of justice set aside this issue to the file of the AO to decide it afresh by providing reasonable opportunity of being heard to the assessee. Disallowance of salary expenses paid to Shri Lokesh Maheshwari - Held that:- We have observed from the records that the Shri Lokesh Maheshwari was the employee of the assessee. Shri Lokesh Maheshwari is assessed to tax and has filed his return of income for A.Y. 09-10 on 21.03.2011 declaring income of ₹ 1,15,800/-. The Copy of his PAN is filed in the paper at page 30. Thus, the identity of the employee is established. In view of the facts, circumstances of the case and the records available, the disallowance of ₹ 70,000/- confirmed by the ld. CIT(A) is deleted. - Decided in favour of assessee.
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2015 (10) TMI 2178
Addition towards employees' contribution to Provident Fund (E.P.F.) - amount remitted beyond the due date prescribed under the P.F. Act but before the due date of filing the return of income under sect ion 139(1) - CIT(A) deleted the addition - Held that:- This issue is directly covered in favour of the assessee by the decision of the Apex Court in Vinay Cement Limited reported in (2007 (3) TMI 346 - Supreme Court of India ), wherein it has been held that statutory item like EPF is paid before the due date of filing the return of income be allowed irrespective of the fact where the contribution related to the employee and employer . From the verification of the dates as stated in the assessment order, it is observed that the assessee had duly remitted the entire EPF dues before the due date of filing the return of income - Decided in favour of assessee. Disallowance of the Foreign Exchange loss - Held that:- It is seen from the ECB loan agreement, that the loan was utilized for general corporate purposes and not for acquisition of any fixed assets. Hence, we hold that the borrowings were utilized on Revenue Account and the provisions of section 43A of the Act were not applicable at all in the facts of the case. Based on this, it could logically be concluded that any exchange fluctuation arising out of the restatement of the said loan at the end of the year, be it gain or loss, would also fall on revenue account and hence, automatically comes under the ambit of taxation if it is a gain and allowable as an expenditure if it is a loss. This issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of CIT vs.- Woodward Governor India P. Ltd. reported in (2009 (4) TMI 4 - SUPREME COURT) to hold that the sum being the exchange loss would be allowed as deduction under section 37(1) - Decided in favour of assessee. Miscellaneous receipts - income arose from tea business - business income or income from other sources - Held that:- Items A to F [Sale of gunny bag/drums,Bazaar Rent,Road Roller Hire Charges,Land Acquisition by ONGC,Land Acquisition by Montu Nag and Hire charges of Machinery to Apeejay Tea Ltd.] were only arising out of business income and accordingly to be treated as income from business. As regards Items G to J,[Post Office Rent, Car Insurance Claim, Miscellaneous Receipt and Hire Charges of vehicle for election duty] they are to be treated as income from other sources. We direct the Assessing Officer to re-compute accordingly. - Decided partly in favour of assessee.
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2015 (10) TMI 2177
Expenditure incurred on oil solvent extraction plant - whether as the production had not commenced and therefore, it is in the nature of capital expenditure - revenue v/s capital expenditure - Held that:- As evident from the balance sheet of the assessee that the assessee had produced semi finished crude solanesol oil of 11,660 Kgs of low purity. Therefore, on completion of the balance process these semi finished goods will be converted into finished goods and available as stock in trade to the assessee for sale. Hence any expenditure incurred for producing the semi finished goods will be in the nature of revenue expenditure and has to be debited to the Profit And Loss account. Consequently the semi finished goods will also be reflect in the credit side of the Profit And Loss account as "Semi-Finished goods" and as well as in the balance sheet under the head "Current Assets. In such circumstances if this expenditure is not allowed as deduction, then to that extent profit of the assessee will be superficially inflated. Therefore, the Revenue has erred in treating the semi finished stock of the assessee as capital expenditure. Moreover from the order of the Ld. Assessing Officer it appears that he was under impression that the expenditure is incurred towards "Solvent Extraction Plant" when the fact remains that these expenditure was incurred for the production of semi finished goods viz., crude solanesol oil. Hence we hereby direct the Ld. Assessing Officer to allow the claim of the expenditure of ₹ 18,84,633/- incurred by the assessee for producing the semi finished goods viz., crude solanesol oil. - Decided in favour of assessee.
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2015 (10) TMI 2176
Rectification of order - Non deduction of tax at source u/s 194J - rectification application as incorrect finding has been recorded and directed to provide the list of such aggregators/service providers by ITAT - Held that:- Assessee was rightly directed to provide the list of such aggregators/service providers (a) Who are deducting or not deducting TDS from their Thyrocare billing, if not, (b) whether the assessee is depositing due taxes in the state exchequer. Even otherwise, it is the mandate of the constitution to levy and collect due taxes, therefore, to safeguard the interest of the assessee/Revenue, the matter was remanded back to the file of the ld. Assessing Officer to examine the facts and then decide in accordance with law after providing due opportunity to the assessee, therefore, no grievance is caused to the assessee. Even otherwise, if the business associates of the assessee (aggregator or service provider) has not deducted the TDS, there is a loss to the nation and it is the duty of such aggregators/service provider/assessee to ensure that due taxes are deducted. Collector /aggregators/TSPs are bound by the terms and conditions agreed upon with the assessee, therefore, there is a direct master agent relationship. CIT(Appeals) has not controverted the factual finding recorded by the ld. Assessing Officer and blindly followed some decisions, which are not even applicable the facts of the appeals of the assessee. Even otherwise, as mentioned earlier, no grievance will be caused to either side, if the matter is examine afresh in the light of the direction contained in the order of the Tribunal dated 31/03/2015 and discussion made in the present order, while deliberating upon the miscellaneous applications filed by the assessee as the mandate of the constitution is to levy and collect due taxes. If the conscious of the assessee is very much clear, then, its not afraid from fresh adjudication by the Assessing Officer in the light of the orders passed by the Tribunal. So far as, the contention of the ld. DR is that during hearing on 06/02/2015 and 31/03/2015, no indication was given by the Bench with respect to non-satisfactory reply by the assessee is concerned, we note that on 18/12/2014, the appeals were kept as part heard as the assessee could not reply to the query raised by the Bench. Identically, the matter was heard on 02/01/2015, 09/01/2015 and finally was heard on 13/02/2015. The submissions made by the assessee were duly considered and thereafter a decision was arrived at, therefore, the assertion of the assessee is factually incorrect. - Rectification application dismissed - Decided against assessee.
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2015 (10) TMI 2175
Gifts made - whether transaction resulted into transfer of capital asset u/s 45 giving rise to capital gain? - CIT(A) confirming the application of provisions of Section 50B to the aforesaid gift made by the assessee - Held that:- Fact worth mentioning is that in the gift deed dated 31/12/2007, the signatories are the assessee on one part and in second part also the assessee and Ms. Neha Nitin Dessai (as Director of the Company), thus, the donor and the donee, as a signatory, are the same person, thus, gift to himself, under the facts available on record, is quite unjustified. Further, as per para 3 and 6(iii) of the gift deed, it is clearly mentioned that the donor was expanding his business activity to fulfill his personal dreams for creating a world class studio and with that intention, the donor (assessee), transferred the business undertaking along with asset and liabilities. The donor still retains the goodwill of his name for expansion of his business and still is de-facto owner, having 49% shares being Chairman cum MD. So far as the argument of the ld. counsel for the assessee that stamp duty of ₹ 60 lakh was paid, there is uncontroverted finding in the impugned order that the stamp duty was not paid by the donor but by the donee and the capital gain tax was not paid in lieu of this gift but for transfer of share by the assessee to RBE, thus, from this angle also, the assessee is not having a good case. Even otherwise, the provision of section 47(v) of the Act is an exclusion clause for the cases which are otherwise a transfer. Under the present set off facts, the assessee was absolute owner of NDAW upto 24/07/2007 and transferred his 51% shares to RBE and then made the gift to NDAW, in which he still holds 49% stakes, thus, the transfer is covered by exclusion clause u/s 47(XIV) of the Act, consequently, is liable to Gift Tax So far as, computation of capital gain by the Assessing Officer taking the full value of asset at ₹ 23,52,49,025/-, as per section 50B of the Act, there was no valuation in books of the assessee and the valuation made in the case of transferee, on the date of gift is ₹ 23,52,49,025/-, meaning thereby, revalued asset has been transferred and not the book valued asset. It is also noted that the assessee claimed bad debt written off as on 31/12/2007, meaning thereby, the book value of asset and liability, so transferred, has been revalued on the date of transfer in the books of the assessee, thus, the value of consideration, for the purposes of capital gain, has to be at ₹ 23,52,49,025/-. However, the transfer was effected along with liability, therefore, the net worth is to be considered for the purpose of computation of the capital gain u/s 50B of the Act, consequently, the sale consideration would be considered at ₹ 23,52,49,025/-minus liabilities transferred and valued at ₹ 22,26,07,330/-. In view of this position in long term capital gain will be at ₹ 1,26,41,695/-, thus, so far as, taxability of capital gain is concerned, we find no infirmity in the impugned order, in giving direction to the Assessing Officer. So from this angle also, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against assessee. Depreciation disallowed - not considering that a gift of running business results into succession - Held that:- The share holding was reduced to 49% and the assessee was given handsome remuneration. Even otherwise, depreciation is calculated on the written down value of the block of asset. Since, we have affirmed the stand of the ld. Commissioner of Income Tax (Appeals) that the claimed gift is a sham transaction/colorable device for the purposes of capital gains, thus, there is no question of proportionate depreciation. The fifth proviso to section 32(2) applies in case of succession of business as the assessee has transferred 51% share of NDAW on 24/12/2007 to RBE and the transfer was a sham transaction, consequently, there is no succession of business as there was no asset in the balance sheet, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against assessee. Disallowance of setting off of unabsorbed depreciation u/s 32 (2), against salary income - Held that:- Assessee sold out only part of the business of earlier years meaning thereby, the assessee discontinued his business and the same was not carried on in the current year, further part of the business was transferred by way of alleged gift, therefore, the claim of set off of unabsorbed depreciation of earlier year is not allowable as per the provisions of section 32(2) of the Act as amended w.e.f. 01/04/2002. We are also of the view that set off of unabsorbed depreciation cannot be allowed to be set off against the income from salaries, in view of section 71(2A) of the Act. - Decided against assessee. Disallowance of right off of sundry debts, which were no longer realisable in the books of the assessee - Held that:- There is uncontroverted finding in the impugned order that the assessee has gifted/transferred all his asset and liabilities to NDAB as going concern, therefore, the claim of bad debts written off on the pretext that these were written off prior to 31/12/2007 is sham and part of colorful tax planning. We also note that, as claimed by the assessee, during hearing, that asset and liabilities were transferred on 31/12/2007, thus, the sundry debtors of earlier year cannot be written off as bad debts. There is further finding that the details of bad debts ledger and journal copy also shows that these bad debts were written off on 31/12/2007 and even the book entry was passed on 31/12/2007 in the books of the assessee, whereas, such asset and liabilities were transferred on 31/12/2007. We are of the view, the written off indeed should be genuine and bona-fide debt, based on commercial expediency, thus, the decision in DIT vs Oman International Bank SAOG (2009 (2) TMI 54 - BOMBAY HIGH COURT ) supports our view. Since the entire claim of the assessee is a colorable device, therefore, we find force in the argument of the ld. DR - Decided against assessee. Disallowance of preoperative project expenses and deferred revenue expenses written off - Held that:- Totality of facts clearly indicates that these expenses are not allowable as the business was transferred as a going concern with all liabilities. Such expenditure are admissible in the year, when they were incurred as per the method of accounting. The assessee has also not brought on record to show that the claimed expenses were crystallized during the year, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against assessee.
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2015 (10) TMI 2174
Penalty u/s 271(I)(c) - disallowances of deduction u/s 80IB - Held that:- The issue with regard to deduction u/s 80IB has been sent to the file of AO by ITAT. In view of these facts, the levy of penalty with respect to this disallowance is hereby cancelled. The AO is at his liberty to initiate the penalty on this issue, after re-deciding this issue Disallowance on account of interest - Held that:- It is seen by us from the order of ITAT that this disallowance has been deleted. Thus, the whole premise of levy of penalty on this issue ceases to exist. The very basis of levy of penalty is no more in existence, thus penalty cannot remain alive any more. - Decided in favour of assessee Disallowance of deduction u/s 80 HHC - Held that:- When the AO has found that penalty was not leviable with respect to similar disallowance made for deduction u/s 80HHC in A.Y. 2003-04, then following the same yardsticks, he should not take a different stand in this year and burden the assesse with rigorous provisions of penalty. - Decided in favour of assessee AO has made disallowance on the basis of return of income filed by the assessee and audit report of the assessee. The assessee has made its claim in the profit and loss accounts and computation sheet giving complete facts and particulars. Thus, it cannot be said that there was concealment of facts. The assessee had made a claim, duly supported with the audit report from the qualified accountant. The claim was not found allowable by the AO, in his opinion. Under these facts and circumstances, Hon’ble Supreme Court in the case of Reliance Petroproducts Pvt Ltd (2010 (3) TMI 80 - SUPREME COURT), has held that it would not be a fit case for levy of penalty. Merely because the claim of the assessee was not found allowable by the AO in its opinion, it should not ipso facto give rise to an inference that there was concealment of income or furnishing of inaccurate particular of income by the assessee. The Assessee cannot be fastened with the liability of penalty without there being a clear or specific charge. Fixing a charge in a vague and casual manner is not permitted under the law. Fixing the twin charges is also not permitted under the law. - Decided in favour of assessee
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2015 (10) TMI 2173
Sale of premises - Long Term Capital Gain OR Business Income - assesse submitted that the assessee has let out this 7th floor at Span Centre since its construction and income from house property since beginning has been offered for taxation as Income from house property which has been also assessed by Revenue u/s 143(3) of the Act read with Section 143(2) of the Act for assessment year s 2004-05,2005-06 and 2006-07 - Held that:- The contention of the assessee that it hardly matters how the same is reflected in its books of accounts is erroneous as the law postulate burden on the assessee to reflect the change from stock of unsold stock to Investment . The assessee being in the business of Builders and offering the income thereof as business income, any unsold stock of flat will be presumed to be business trading asset and assessable as such. The assessee has also shown the same as trading business asset in its books of accounts as WIP from year to year till 31-3-2006. The assessee has manifested its intention to convert the said trading business asset into Investment in its books of accounts on 1-4-2006 when the book entry was passed and hence the said asset at best can be held to be Investment w.e.f. 01-04-2006. The contention of the assessee that it has shown income from rent of these unsold flats as Income from house property and hence the sale proceeds of the said flat shall be chargeable to tax as Income from Capital Gain is again erroneous. Hon ble Bombay High Court has held in the case of CIT v. Sane and Doshi Enterprises in (2015 (4) TMI 882 - BOMBAY HIGH COURT) that in case of real estate developers , income from rent from unsold stock has to be assessed to tax as Income from House Property . The assessee has also rightly offered to tax income from rent as Income from House Property but that will not change character of the asset from business trading asset ie WIP to investment unless the assessee manifest its intention by taking steps to change the character of the said asset by amending its books of accounts and also bringing the same on record with Revenue which in the instant case was done by the assessee on 01-04-2006. We, therefore, upheld the order of Assessing Officer and reverse the order of CIT(A). hence, The gain from sale of 7th Floor, Span Centre was rightly brought to tax by assessing officer as Income from business or alternatively, even if it is assumed that the assessee treatment of the said asset as investment is accepted for genuine purposes then also the same was done on 01-04-2006 and the asset was sold thereafter immediately within the assessment year 2007-08 and hence the asset was held for less than 36 months as Investment as such and the gain arising thereof on sale of such asset shall be chargeable to tax as Income from Short Term Capital Gain but the same cannot be brought to tax as Income from Long Term Capital Gain - Decided in favour of revenue. Disallowance of expenditure incurred on cost of improvement of property while computing the capital gain - CIT(A) allowed the claim - Held that:- hese assets are not towards the cost of the improvement of the property as there is no improvement in the property itself by installing Air Conditioners, Work Station, Office Tables, Working Tables, Meter Room, Electrical Fitting, Bathroom Toilet Fittings, Smoke Detectors, Pantry etc. However, since the assessee has acquired these assets during the assessment year under reference and the sale consideration of the said premises include the price towards these assets so acquired, it will be just and fair that the sale consideration of ₹ 3,14,60,000/- is reduced by this amount to arrive at the net sale consideration(after excluding recoupment of this expenditure of ₹ 5,00,000.00) so that no prejudice is caused to the assessee. We, therefore, find no reason to interfere with the order of CIT(A) and the same is hereby upheld but subject to our holding in the preceding para s that the income from sale of the flat at 7th floor, Span Centre shall be charged to tax as income from business - Decided against revenue.
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2015 (10) TMI 2172
Claim of deduction u/s 80P - interest earned on the deposits kept with bank - Held that:- Assessee’s case is squarely covered by the decision of the Coordinate Benches in assessee’s own case for AYs. 2006-07 and 2007-08 and further the decision of Hon’ble Supreme Court in the case of Totgars Co-op Sale Society Ltd (2010 (2) TMI 3 - SUPREME COURT) will not apply on the assessee due to different facts. The Revenue has not been able to bring any material on record to prove that assessee society had retained any amount out of the agricultural sale proceeds which were payable to its members and were held as a liability in the books of assessee society for short span of time and interest income have been earned by the assessee society on such surplus funds. Therefore, we are of the view that interest earned by the assessee society is eligible for deduction under section 80P(2)(c) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 2171
Disallowance u/s 14A - Held that:- Nothing contrary has been brought to the fact that assessee is a dealer in shares and profit in share business has been shown by the assessee under the head “income from business”. A.O. has not made any specific finding to support the disallowance made by him. As undoubted that assessee is a dealer in shares, trading of shares has been shown as income from business, stock in trade in shares is at ₹ 41,16,992 investment in shares not held for business are only ₹ 51,000, and dividend income earned during the year is ₹ 58,963. However, assessee has maintained same books of accounts for his business of trading in cloth, trading in shares, commission income, income from real estate and exempt income. There is no bifurcation available on record to segregate the entire expenses incurred on the type of business activities carried on and some element of cost for earning exempt income cannot be ignored in these circumstances. The assessee has demonstrated that it has carried out the business activity of sale and purchase of shares. The Revenue on the other hand could not place any contrary material on record. Therefore, in the light of decision of Jivraj Tea Ltd. vs. DCIT [2014 (9) TMI 131 - ITAT AHMEDABAD] we are of the considered view that the AO was not justified in invoking the provisions of section 14A of the Act. The dividend so earned is incidental to normal business activities of the assessee. Moreover, the AO has made disallowance of ₹ 4,04,204/- whereas the assessee has earned exempt income in the form of dividend of ₹ 58,963/-. Even assuming that some expenditure is required to be disallowed but such disallowance should not exceed the quantum of exempt income. Therefore, we hereby hold that the addition under section 14A cannot be more than the exempt income and should therefore be restricted to ₹ 58,963/-. - Decided partly in favour of assessee.
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2015 (10) TMI 2170
Unaccounted investment u/s.69 - CIT(A) deleted the addition - Held that:- CIT(A) proceeded on the assumption as if the housing loan of Rupees Ten lacs was obtained for the construction of house. No material has been placed in respect of the housing loan obtained from Central Bank of India and whether the amount was utilized for renovation of the house or construction of building is not clear. The assessee has also not placed any material with regard to presentation of house construction plan to the local authority and approval thereof to substantiate his claim that he had only purchased vacant piece of land. The assessee has placed on record affidavits of the vendor in Gujarati and the veracity of the contents needs verification at the end of the AO. Under these facts and circumstances, we are unable to accept the reasoning given by the ld.CIT(A) and hereby set aside the impugned appellate order and restore the appeal to the file of AO for de novo assessment. The assessee is hereby directed to place all the evidences relating to purchase and construction of the property in question to AO who would make further inquiries if so needed. - Decided in favour of revenue for statistical purposes.
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2015 (10) TMI 2169
Undisclosed investment - accrual of income - Held that:- In respect of amount related to VFS (India) Pvt. Ltd., the assessee has placed on record a certificate from VFS (India) Pvt. Ltd. that no amount was paid to the assessee after 1st April, 2004. However, Assessing Officer has not made enquiry from concerned VFS (India) Pvt. Ltd. and proceeded to make addition on assumption basis. In our considered view, the Assessing Officer ought to have verified from the concerned party about the veracity of the certificate which is enclosed at page 9 of paper book. Considering the signature made at the certificate enclosed one of the sundry creditor is Mr. George Thomas whose signature matches with the certificate on page 9 of the paper book. Under these facts, it can be inferred that the finding of the authorities is ill founded and cannot be sustained. As no contrary material has been placed by the Revenue and gathered any material by making enquiry in this respect, we hereby direct the Assessing Officer to delete the amount for VFS (India) Pvt. Ltd. In respect of Kuoni Travels (India) Pvt. Ltd., it cannot be inferred that no service was provided post 1st April, 2004. As it is clearly mentioned in the cancellation agreement that the service provider was rendering services till 14.10.2005 and the payments for the services rendered till 14.10.2005 was made on 1st April, 2004. The assessee has not placed any confirmation from the concerned parities clarifying the position. Under these facts, we are unable to accept the contention of the ld. Counsel for the assessee. The addition made in respect of M/s. Kuoni travels (India) Pvt. Ltd. is hereby sustained In respect of Prabhat Automation,Hon’ble Tribunal in assessee’s own case for A.Y. 2004-05 has held that the assessee had merely possessed the right thereof which is not equivalent to ownership right though the assessee is described as owner in this case, we find that the Assessing Officer had made no effort to find out whether the particular property was vacant, during year under consideration. Under these facts, we do not see any reason to sustain the finding of authorities below. Hence, the Assessing Officer is directed to delete the addition made on account of presumed income received from M/s. Prabhat Automation - Decided partly in favour of assessee.
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2015 (10) TMI 2168
Revision u/s 263 - assessee submitted that CIT(A) has failed to appreciate the fact that no notice u/s 143(2) was served before the assessment proceeding was initiated within the statutory period which is a statutory requirement and as such the entire assessment was without authority of law and as such no order as passed should have been passed rather it should have cancelled instead of setting it aside - Held that:- Admittedly the notice u/s 143(2) was issued beyond time and, therefore, the assessment order was bad in law. Ld. CIT(DR)’s submission is that assessee has not challenged the assessment order. However, since the assessee was not aggrieved with the assessment order, therefore, he did not challenge. However, nothing turns on this when we consider the issue in the backdrop of proceedings initiated u/s 263 by ld. Commissioner. The moot point for consideration is as to whether this objection can be entertained at this stage of proceeding or not. In this regard we find that the decision of Hon’ble Delhi High Court in the case of Escorts Farms Pvt. Ltd. (1989 (7) TMI 64 - DELHI High Court), which we have extensively reproduced earlier, clearly supports the assessee’s plea. However, u/s 263 the ld. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice u/s 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. - Decided in favour of assessee. - Decided in favour of assessee.
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2015 (10) TMI 2167
Validity of assessment made u/s 153C - CIT(A) annulled assessment as the seized documents do not belong to the assessee?- Held that:- In the present case, documents at pages 148-149 are the ledger accounts in the books of AR Airways (P) Ltd. Therefore, proceedings u/s 153C could be initiated as the documents belonged to assessee. Therefore, ld. CIT(A) was not justified in annulling the assessment. However, if the documents did not pertain to the year under consideration, then no 153C assessment could be made. The matter is restored back to the file of AO to find out as to which year the documents belong. - Decided in favour of revenue for statistical purposes
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2015 (10) TMI 2166
Reopening of assessment - receipt of accommodation entries - unexplained cash credit u/s 68 - Held that:- As decided in Signature Hotels (P) Ltd. Versus Income Tax Officer and Anr. [2011 (7) TMI 361 - Delhi High Court] the reassessment proceeding were initiated on the basis of information received from the Director of Income Tax (Investigation) that the petitioner had introduced money during the financial year 2002-03 as stated in the Annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assesee was the beneficiary. The reasons did not satisfy the requirements of Section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed. - Decided in favour of assessee.
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2015 (10) TMI 2165
Penalty under section 271(1)(c) - failure to include interest income on account of refund under section 244A in the income tax return - Held that:- On appeal, the assessee has filed a statement of fact, running into four lines. In the last line, it has pleaded that submissions dated 16.1.2013 has not been considered by the AO before levy of penalty. The ld.CIT(A) has also failed to take cognizance of this aspect. Assessee pleaded that neither we have been informed by issuing any notice of adjustment U/s 245 nor any amount of refund issued through Bank. It was internally adjusted against the demand of previous years which we have been informed by A.O. during proceeding. As soon as been informed regarding refund & interest thereon, we immediately agreed to add interest part in our income and requested to provide copy of refund order &demand adjustment letter. As requested to A.O during the penalty proceeding that we have not been knowledge of refund interest and also we have been not received till the date any letter of demand adjustment or refund order for the A.Y. 2007-08 & 2009-10 however he has not considered our view and ordering penalty u/s. 271(1)(c). As the ld.First Appellate Authority has not considered this specific plea of the assessee First Appellate Authority has erred in confirming the penalty - Decided in favour of assessee.
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2015 (10) TMI 2164
Penalty u/s. 271(1)(c) - validity - Held that:- In view of the fact that notice u/s. 274 of the Act in the present case does not make any reference as to whether the assessee has concealed or furnished inaccurate particulars of income, the entire penalty proceedings are held to be invalid. Penalty imposed is accordingly cancelled. - Decided in favour of assessee.
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2015 (10) TMI 2163
Levy of interest u/s 234D - excess refund given due to wrong computation of interest u/s 244A - rectification of mistake where barred by limitation - Held that:- In the case on hand, there was a mistake in computation of the refund to be granted to the assessee pursuant to the order of the Hon’ble High Court. The mistake was due to computation of interest u/s 244A of the Act payable to the assessee. This mistake in computing the interest u/s 244A of the Act has been rectified by passing the order u/s 154 of the Act on 31/3/2012, and with which the assessee has no quarrel. It is not the case of Revenue that the refund has arisen due to order u/s 143(1) of the Act. Therefore, the first necessary condition for charging of interest u/s 234D of the Act is not satisfied. Further, the refund has arisen due to an order giving effect to an appellate order, which was subsequently rectified u/s 154 of the Act, wherein the interest u/s 234D of the Act was charged. In these circumstances, the second condition that refund granted earlier becomes refundable to Revenue on regular assessment is also not satisfied.In view of the factual matrix of the case on hand, as discussed above, we are of the considered opinion that both the conditions for charging of interest u/s 234D of the Act are not satisfied. On the actual dated on which the undated order giving effect has been passed, except to observe that the documents brought on record by the learned DR clearly establish that the OGE was passed in the Fin. Year 2007-08 and, therefore, the Assessing Officer had time till 31/3/2012 to pass any rectification order. - Decided partly in favour of assessee.
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2015 (10) TMI 2162
Exemption u/s 11 & 12 - whether assessee is involved in the promotion of football games and sports and as such it is a charitable work and the assessee is eligible for exemption u/s 11 - CIT(A) deleted the addition - Held that:- What needs to be emphasized is whether the receipt of amounts by way of sponsorship from various parties would make the activity ‘commercial’ as held by the Assessing Officer. The mere fact that the appellant society had generated sponsorship funds, during the course of carrying on the ancillary objects, shall not alter the character of the main objects so long as the predominant object continues to be charitable and not to earn the profit. Therefore, we hold that the Respondent Assessee is entitled to exemption of income under the provision of Section 11 of the Act. Further the proviso to Section 2(15) of the Act cannot be applied to the appellant society as it is not engaged in any activity which is in the nature of trade, commerce and business. Accordingly, we direct the Assessing Officer to allow the exemption under the provisions of Sec. 11 of the Act. - Decided in favour of assessee. Disallowance of depreciation - Held that:- It is observed that the Respondent Assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of trust. It is further observed that the Respondent Assessee has not claimed double deduction. The judgment of Indraprastha Cancer (2014 (11) TMI 733 - DELHI HIGH COURT) has considered the judgments of Charanjiv Charitable Trust [2014 (3) TMI 760 - DELHI HIGH COURT] and Indian Trade Promotion (2015 (8) TMI 89 - DELHI HIGH COURT) wherein decided to allow depreciation on capital asset in the computation of income apart from treatment of purchase of capital asset as application of income. - Decided in favour of assessee.
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Customs
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2015 (10) TMI 2193
Rectification of orders passed by CESTAT dated 22.11.2005 – Penalty imposed of ₹ 2,57,90,900/- - Held That:- Impugned order does not amount to rectification of earlier order, but an altogether different view is taken - Impugned order dated 05.09.2006 is set aside and earlier order dated 22.11.2005 is restored – Rectification limited to redemption fine.
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2015 (10) TMI 2192
Recovery of differential duty – Import of non-ferrous metal scrap/drones; filed clearance of goods between 1984-1988 – Differential duty and penalty demanded by Revenue; partial duty and penalty allowed by Tribunal – Appeal filed by Revenue against order of Tribunal – Held That:- Revenue has sought to open assessments which had been finalised more than five years ago on grounds of mis-declaration of goods – Assessments were finalised after thorough investigation process – No justifiable reason found to recover differential duty after lapse of 5 years – Decided against Revenue.
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2015 (10) TMI 2191
Entitlement of Duty Credit Scrips under Served From India Scheme (SFIS) declared deficient – revenue tried to disqualify the Petitioner on the basis that the brand under which the Petitioner operates is not an Indian brand. - Held That:- It is undisputed that brand "Castrol India" is not an Indian brand – Matter squarely covered in case of Naman Hotels Private Ltd. [2015 (9) TMI 564 - BOMBAY HIGH COURT] – Challenge to the deficiency letter fails – Decided in favour of Revenue.
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2015 (10) TMI 2190
Enlargement on bail in FIR – Petitioner contends that since no chargesheet filed till 90 days; he is entitled for bail – Revenue contends that petitioner is alleged of recovering tablets COLDSET from pharmaceutical unit, manufacturing the same is an offence – Further contended that fake bills were prepared and shown supply to non-existent firms – Misuse the licence granted for dealing with controlled substances thus guilty of an offence under Section 9-A of NDPS Act. Held That:- Three out of two accusations are unsustainable and cannot invite rigors of Section 37(1)(b)(ii) of NDPS Act – Permission to manufacture COLDSET tablets given by competent authority and cannot be said as baseless - No meaningful investigation done to show preparation of bills was fake except to statements of some persons who were afraid of their own complicity - Supervisory-cum-Special Investigating Team constituted by this Court to contact counterparts of drug-mafia and obtain a fresh fact-finding report within two weeks – Decide the bail of petitioner afresh – If two views are allowed, bail to petitioner be granted – Decided in favour of Petitioner.
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2015 (10) TMI 2188
Classification of goods – Crude Palmolein – Assessee classified goods under the category of edible grade with sub-heading No. 15119090 chargeable to BCD 70% - Assistant Commissioner classified the goods as Crude Palmolein (other than Edible Grade) under sub-heading 15111000 chargeable to BCD @100%, SAD 4% at Tariff rate of $532 Pmt – Held That:- Commissioner (Appeals) has granted relief to assessee by finding faults with the order of the Assistant Commissioner and referring to certain lacuna in the order – Matter stands decided against the assessee in their own case Arani Agro Oil Indus. Ltd. Vs. Commissioner of C.Ex. & Cus, Visakhapatnam [2009 (12) TMI 398 - CESTAT, BANGALORE] - Imported crude palm oil was not entitled to benefit of notification 40/2001-Cus dated 13.7.2001 – Impugned order of the Commissioner (Appeals) set aside – Decided in favour of Revenue.
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2015 (10) TMI 2187
Mis-declaration of values – Confiscation of Goods and imposition of duties, fines and penalties – Appellant imported Heavy Metal Scrap and some quantity of scrap was found to be Mixed Aluminium Auto Casting Scrap – Considering NIDB data and quantity of Mixed Aluminium Casting Scrap Tense, assessing value was increased – Goods were confiscated and duty and penalty was imposed – Held that:- issue of confiscation of goods was examined by Commissioner in detail and commissioner had set aside order of confiscation and redemption fine in respect of heavy metal scrap which conformed with declaration filed by Appellant – However, upheld confiscation of Mixed Aluminum Auto Casting Scrap as same was found un-declared and was also mis-declared in respect of values – Thus, no reasons were found to interfere with well-reasoned decision of Commissioner – Imposition of penalty under Section 112 is also justified under circumstances – Thus appeal partly allowed – Decided partly in favour of Appellant.
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2015 (10) TMI 2186
Duty free goods diverted into domestic market – Appellant showed clearance of duty-free polyester yarn to 100% EOU but said clearance was shown to have been cancelled and after that it was shown that said polyester yarn was cleared duty-free to M/s Marvel Fashions – Investigations revealed that said goods never reached their destination and were diverted – Vide impugned order penalties were imposed upon appellant – Held that:- appellants admitted that there was discrepancy in transport documents relating to supply of duty free goods – It is also established that appellant made incorrect entries in records at instance of its proprietor and in his statement he clearly admitted that he made incorrect entries – Recorded clearly establish that duty-free polyester yarn was not received by any EOU and was diverted into domestic market – Thus diverted goods became liable to confiscation and as result appellants became liable to penalty – Thus, penalties imposed are neither unreasonable nor arbitrary – Appeals dismissed – Decided against appellant.
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Service Tax
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2015 (10) TMI 2231
Availment of CENVAT Credit - Banking and Finacial Services - Whether financial advisory service rendered would fall within the definition of input service and credit of service tax taken on the same is eligible or not? - Held That:- Services received by appellants are in respect of disposal of their share holding in ING Vysya Life Insurance Co. Pvt. Ltd - Contention of appellants that services used are in relation to their business gains credence and thus same would merit inclusion in the definition of “input services” - Service Tax paid would be eligible for credit - Decided in favour of assessee.
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2015 (10) TMI 2230
Refund of Service Tax claimed on inputs services – Exemption claimed under Notification No.17/2009-ST issued under Section 93 of Finance Act, 1994 – Refund denied on grounds that service tax is chargeable under the head BAS and Support Service of Business or Commerce – Appellant contends that said services fall in the ambit of terminal handling charges. Held That:- Exemption under Notification No.17/2009-ST requires clear classification of input services - Error in classification of input service received by appellant would disentitle refund - Denial of refund of ₹ 10,154.96 does not call for interference. Refund of ₹ 4,335.29 stands denied on the ground that refund of this amount is claimed on CHA service but invoices show the service provider to be M/s Parekh Marine Agencies and services provided were by a Clearing & Forwarding Agent. Denial of refund of ₹ 4,739.92 is unsustainable as goods exported were transported by the provider of GTA service and appellant had filed transport bills which indicate vehicle number and container number matching with the exports and bill of lading. Denial of refund of ₹ 3,552/- does not appear proper as record of invoices, export invoice and other documents filed indicate that invoices are in the name of M/s Sunrise Forwarders Pvt. Ltd. and other CHA i.e. Freightaids (India) Pvt. Ltd. acting as CHA and all the other particulars disclosing rendition of the CHA also tally. Appellant entitled to refund for ₹ 1,13,114/-, ₹ 4,739.92 and ₹ 3,552/- - Denial of refund to the extent of ₹ 10,154.96 and ₹ 4,335.29 is upheld – Decided partly in favour of assessee.
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2015 (10) TMI 2229
Liability of Service Tax – Security Agency Service – SCN issued to both companies proposing demand of tax short paid by them – Penalty under Section 76 and 77 also imposed – Appellant contends that certain amount of Service Tax has been paid before issue of SCN and demand made was hit by limitation – Revenue appealed to drop demand of Service Tax in respect of services provided to SEZ units, extending of the cum-duty benefit to the appellants, and less demand due to wrong computation – Held That:- Certain details such as calculation errors, Applicable rate of duty, etc needs to be examined – Matter remanded back to Adjudicating Authority for examination without expressing any views.
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2015 (10) TMI 2228
Disallowance of CENVAT credit on medical insurance services and demand of interest alleging delay in payment of service tax on transactions with Associated Enterprises prior to 10.5.2008 – Manpower Recruitment – Appellant contends that it had to obtain insurance cover for employees who are provided temporarily to customers and they qualify as input services and they have rightly availed credit and has paid interest upon the delayed payment after 10.5.2008 upto the date of payment. Held That:- Definition of input service during the relevant period covered every conceivable service used in the business of assessee - Disallowance of credit on medical insurance services cannot be sustained – Decsion made in case of Commissioner of Service Tax, Bangalore Vs. M/s Team Lease Services (P) Ltd. [2014 (4) TMI 948 - KARNATAKA HIGH COURT] followed. Transactions with associated enterprises - Held that:- The statutory provision for demanding service tax in respect of transactions between associated enterprises, immediately upon amendment, has been introduced only w.e.f. 10.5.08. Prior to 10.5.08, neither the Finance Act, 1994 not the Service Tax Rules, 1994 contain any provision enabling demand of service tax prior to the realization of taxable services, in any circumstances. This being so, it is not legally permissible to give retrospective effect to the Explanation inserted in Rule 6 of the Service Tax Rules. - Decision in the case of CESTAT in Sify Technologies Ltd. Vs. CCE [2010 (11) TMI 232 - CESTAT, CHENNAI] followed. No liability on part of appellants to pay interest on book adjustments made prior to 10.5.2008 as appellants have deposited interest applicable after 10.5.2008 – Impugned demand of interest of ₹ 3,25,360/- is not sustainable – Decided in favour of assessee.
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2015 (10) TMI 2227
Liability of Service Tax – Period from October, 2005 to September, 2012 – Tour Operator Service and GSA Service – Appellant contends that it is not liable to pay tax on tour operator service and GSA Service does not fall under BAS and same have offices in India not abroad – Revenue contends that liability under tour operator services arise and GSA Service falls under BAS and same were given abroad – Held That:- It is not prudent that pre-deposit in respect of demand pertaining to tour operator service is ordered - GSAs had responsibility of promoting the business of appellant and booking tickets for special train run by Rajasthan Tourism which fall under the purview of BAS - Pre-deposit of ₹ 2.75 crores with proportionate interest is required to be made under Section 35F and Section 83 of the Finance Act, 1994 within six weeks – stay granted partly.
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2015 (10) TMI 2226
Liability of Service Tax – Demand made for outbound tours, booking of air ticket of overseas clients, advertisement agency service, CRS/GDS and denial of abatement of 67% - Held That:- Demand in relation to outbound tours is not sustainable – Decision made in case of Cox and Kings India Ltd. [2013 (12) TMI 1024 - CESTAT NEW DELHI] followed. Demand pertaining to booking of air tickets for overseas clients not liable to service tax as clients were based abroad and payment was received in foreign exchange – Decision made in the case of B.A. Research India Ltd. [2009 (11) TMI 213 - CESTAT, AHMEDABAD] followed - Demand for advertisement agency service already remitted. Regarding CRS/GDS – Decision made in the case of Riya Tours and Travels [2010 (7) TMI 774 - BOMBAY HIGH COURT] followed wherein pre-deposit of 25% of demand pertaining to normal period of one year was ordered. Demand for denial of abatement under Notification No. 1/2006 is covered in the case of Punj Lloyd [2015 (10) TMI 2294 - CESTAT NEW DELHI] which took note of case of Nicholas Piramal (India) Ltd. [2009 (8) TMI 224 - BOMBAY HIGH COURT]. Pre-deposit of ₹ 4.5 crores would meet the requirement of Section 35F of Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 - Stay granted partly.
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2015 (10) TMI 2225
Condonation of delay - cenvat credit - Held that:- In view of assessee's own previous order we condone the delay and after allowing the stay petition, dispose of the appeal itself by following the earlier order of the Tribunal in the appellant’s own case. Accordingly, the CENVAT credit on out-door travel services and mobile phone services is allowed and in respect of canteen services, the same is remanded to the original adjudicating authority for fresh decision in terms of the directions contained in the first order - Delay condoned.
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2015 (10) TMI 2224
Waiver of Pre-deposit – valuation - Commercial or Industrial Construction Services – Held That:- the value of free supplies is not includible in the assessable value and to that extent prima-facie the appellant’s contention that it had already paid service tax on a value higher than the correct assessable value has force, although, in that situation the appellant may not be entitled to avail of cenvat credit taken on cement and steel which would make it a case of taking unauthorised cenvat credit rather than short payment of service tax. - stay granted.
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2015 (10) TMI 2223
Denial of CENVAT Credit - Outdoor catering service - held that:- The dispute in this case relates to September, 2010 to August, 2011. It is submitted on behalf of the Counsel that the respondent debited the amount availed after 1.4.2011. In a catena of decisions, outdoor catering service has been held to be qualified as input service for availing credit. The arguments advanced by the learned AR that the respondents have not stated in the reply that the expenses for outdoor catering services was borne by them and that it was not recovered from the employees does not find force for the reason that there is no such allegation raised in the show cause notice. Therefore, the arguments advanced raised by the learned AR deserves to be brushed aside. - No material irregularity to interfere with the impugned order. - Decided against Revenue.
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2015 (10) TMI 2222
Denial of Input service Credit - outward transportation service - Held that:- Commissioner (Appeals) has examined the issue and the goods have been sold by the respondent at the place of buyer i.e. on FOR destination basis. In that view, the place of removal is the place of buyers premises. Therefore, I do not find any infirmity in the impugned order. Same is upheld. - Decided against Revenue.
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2015 (10) TMI 2221
Export of services or not - rendered or delivered outside India - Denial of rebate claim of service tax paid under Notification No.11/2005-ST on custodial services provided to Foreign Institutional Clients (FII’s) located outside India – compliance of condition of Rule 3 (ii) of the Export of Service Rules, 2005 - Receipt in convertible foreign exchange. Held That:- Services rendered to Foreign Institutional Clients in respect of investments made by them in India - Services are for the companies situated abroad hence they are rendered or delivered outside India - Taxable services provided shall be treated as export of service only when order for provision of such service is made from any of his commercial establishment or office located outside India as per Rule 3(ii). - ussue for the period May 2006 to February 2007 is covered in case of Nipuna Services Ltd. (supra) [2008 (11) TMI 148 - CESTAT Bangalore] - Decided in favor of assessee. Rebate claim for the Month of March 2007 - there is a change in the provisions of Rule 3(ii) of the Export of Service with effect from 01.03.2007, which mandates the requirement of payment of the services provided, in convertible foreign exchange. - Matter remanded back for rebate claim relating to March 2007 – Decided partly in favour of assessee.
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2015 (10) TMI 2220
Liability of Service Tax - Manpower Recruitment and Supply Agency Service - Welding Job and Cleaning Services - Appellant is not contesting the liability of tax on cleaning activity service - Held That:- A perusal of the work order does not indicate that the appellant is required to supply only the manpower. On the contrary, scope of the work order indicates a specific job of welding and gas cutting to be undertaken by the appellant. Findings recorded by first appellate authority do not rely on any contrary evidence to show that the appellant had charged NTPC on mentioning hour basis - In absence of any such evidence, view undertaken by both the lower authorities needs to be set aside – Decided in favour of assessee.
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2015 (10) TMI 2219
Denial of CENVAT Credit - input services - construction of dormitory - nexus with manufacturing activity - Held that:- Though the issue involved in the said decided case was with regard to establishing the nexus between the services rendered and the business carried on by the assessee, but the phrase ‘activities relating to business’ as contained in the definition clause of input service has not been discussed therein, while arriving at the conclusion that the appellant is not entitled to cenvat credit on the construction services. The Hon’ble Bombay High Court in the case of CCE vs Ultratech Cement Ltd., reported in [2010 (10) TMI 13 - BOMBAY HIGH COURT], upon analysis of the inclusive part of the definition of “input service”, have held that the definition of input service is not restricted to services used in or in relation to manufacture of final products, but extends to all services used in relation to the business of manufacturing the final product. In the present case, construction of dormitory adjacent to the factory premises was the necessity because of the location of the factory in a remote area, where if the accommodation is not provided to the staff/workers, the continuous manufacturing activity will hamper. Further, the cost towards such construction has also been taken into consideration in the books of accounts of the appellant. Thus, I am of the opinion that such construction activity is in relation to the business of the appellant, and therefore, service tax paid for accomplishing the purpose of business, will merit consideration as ‘input service’ for the purpose of Cenvat benefit. - Impugned order is set aside - Decision in the case of assessee's own previous case followed [2015 (9) TMI 1223 - CESTAT NEW DELHI] - Decided in favour of assessee.
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2015 (10) TMI 2218
Disallowance of CENVAT Credit - Invocation of extended period of limitation - Suppression of facts - Held that:- Commissioner (Appeals) has found that the issue involved is more in the nature of interpretation of law, and the facts placed on record do not suggest any malafide intention on the part of the appellants in the matter of availment of credit of duty and therefore, the said provisions of rule 15 of the Cenvat credit rules, 2004 are not invocable in this case for the purpose of imposition of penalty. Taking note of the same the Commissioner (Appeals) has set aside the penalty imposed. This being the facts the appellants do have a strong case of limitation in their favour. On such grounds I am of the view, that the demand is barred by limitation and therefore is unsustainable. - Decided in favour of assessee.
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2015 (10) TMI 2217
Denial of CENVAT Credit - input services of Geological Consultant Service and Construction of Walls and Concrete Work - Held that:- Order of that authority reveals that services of Geological Consultant was necessary for the mine, for which, the service tax was paid to avail his services. That makes the respondents eligible to the Cenvat credit of such tax. There is no dispute to that. - So far as the second issue of Construction of Walls and Concrete Work is concerned, learned Commissioner (Appeals) has shown justification as to requirement of the construction in the mining area. Therefore, there is no difference to the finding of the authority as to the eligibility of Cenvat credit of the services above availed i.e., for construction of Wall and Concrete Flooring used in mine. - Decided against Revenue.
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2015 (10) TMI 2216
Storage and warehousing services - nature of amount collected from auction of goods where importer failed to take the delivery - The balance amount is kept back with the appellant and is returned to the importer if he approaches the appellant. Till the importer claims the balance amount the amount is shown as income in the balance sheet. It is a case of the revenue that service tax liability arises on this amount. - Held that:- Tribunal in the case of Mysore Sales International Ltd. [2010 (12) TMI 453 - CESTAT, BANGALORE], India Gateway Terminal Pvt. Ltd. - [2010 (6) TMI 464 - CESTAT, BANGALORE] had held that Boards Circular No. 11/1/2002 TRU dated 1/8/2002 will be applicable and no service tax liability arises on such amount which remains balance with the assessee. This ratio is followed by this Bench in the case of Maersk India Pvt. Ltd.,- [2012 (11) TMI 612 - Cestat, Mumbai]. We find that the facts of the case in hand are similar to the facts in the cases where this Tribunal has taken a view in favour of the appellant. - Decision of High Court of Delhi in the case of Associated Container Terminals Ltd - [2007 (11) TMI 247 - HIGH COURT OF DELHI] distinguished - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 2215
Construction service - border fencing - Held that:- Undisputedly, the issue involved in the present case centers around leviability of Service Tax on the services rendered by Appellant relating to border fencing work assigned by M/s.National Projects Construction Ltd.. This Tribunal vide Order [2015 (3) TMI 303 - CESTAT KOLKATA] has disposed of the appeals filed by other appellants on the said construction work. - Decided in favour of assessee.
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2015 (10) TMI 2214
Tour Operator Service - vehicle provided for carrying employee - Held that:- It is observed that First Appellate Authority has mainly gone by a dictionary meaning that transportation of employees is neither a pleasure trip nor a visit for special purpose to learn or look around the place visited. It is observed that when a definition of Tour is given in Section 65 (76) of the Finance Act, 1994 there is no necessity to borrow the definition given in dictionaries. Also no findings are given by the First Appellate Authority whether the vehicle provided for carrying employee confer to the criteria required under Section 2 (43) of the Motor Vehicles Act (1988) readwith Rule 128 of the Central Motor Vehicles Rules 1989. The matter is, therefore, required to be remanded back to Commissioner (Appeals) to decide the matter under denovo consideration in the light of definitions given in the Finance Act, 1994 and pass a reasoned order. - Decided in favour of Revenue.
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2015 (10) TMI 2213
Denial of refund claim - Bar of limitation - Whether respondents were eligible to refund @2% of FOB value on Commission Agent Service or 10% of FOB value as a result of amending Notification No. 33/2008-ST dated 07/12/2008, carried out in Notification No. 41/2007-ST dated 06/10/2007 - Held that:- As per Notification No. 41/2007-ST dated 06/10/2007 before its amendment, a refund equivalent to 2% of FOB value of the commission was admissible. As a result of amendment to Notification No. 41/2007-ST, as a result of Notification No. 33/2008-ST, made the refund admissible @ 10% from 2% admissible earlier. Commissioner (Appeals) has held that amendment in the rate of refund admissible w.e.f. 07/12/2008 will have retrospective on the analogy of CBEC File No. 137/84/2008-CX dated 12/03/2009 CBEC where it has been clarified that the benefit of amendment made in Notification No. 41/2007-ST, regarding extending of time limit for filing refund claim, can be given retrospectively. It has thus been held by the First Appellate Authority that if one amendment to Notification No. 41/2007-ST can be given retrospective effect then admissibility of refund @ 10% by an amendment with effect from 07/12/2008, should also be given retrospective effect. - as any amendment to a notification will have only prospective effect unless specifically made retrospective by the appropriate authority. No notification can be given retrospective by an executive instruction. - Decided in favour of Revenue.
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2015 (10) TMI 2212
Denial of refund claim - Notification No.41/2007-ST dated 6.10.2007 - Held that:- Notification No.41/207-ST authorises refund of service tax paid on the value of inputs for goods exported subject to ceiling of 2% on the FOB value, in respect of BAS. Review Commissioners as well as sole ground of appeal by Revenue proceeds on the premise that the assessee had paid service tax on 3% of the FOB value of export goods (in excess of ceiling limit prescribed in Notification NO.41/2007-ST). Neither in the show cause notice, the primary adjudication order, the impugned order of the ld. Appellate Commissioner nor in the order of the Review Commissioner or even the memorandum of appeal is there brought out a scintilla of material/evidence/documentary substantiation for the factual assertion (recorded for the first time in this appeal) to support Revenues assertion that assessee had paid service tax on 3% of the FOB value of exported goods. This factual assertion in the grounds of appeal is unsubstantiated by any probative material which enables a finding of fact to be recorded by the Tribunal. - Decided against Revenue.
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2015 (10) TMI 2211
Denial of Input service credit - construction services - Held that:- In the appellant s case [2012 (11) TMI 994 - CESTAT, NEW DELHI] it is the statutory requirement of the Uttar Pradesh Factories Act 1948 to provide shelter, rest room, lunch room, etc. to the employees within the factory and appellant has provided only these services to their employees within the factory premises and in appellant s own case for the earlier periods on the identical services this Tribunal has allowed Cenvat Credit to the appellant. Therefore, following the earlier decision in appellant s own case to maintain judicial discipline, I allow Cenvat credit to the appellant. - Impugned order is set aside - Decided in favour of assessee.
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Central Excise
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2015 (10) TMI 2210
Reversal of CENVAT Credit - Whether the appellant is required to reverse the cenvat credit on account of discounts awarded to the appellant after clearance of the goods on payment of duty by the supplier or not - Held that:- Whatever duty has been paid by the supplier, credit of the same has been taken by the appellant. Further, from the facts, it is also clear that the supplier of the goods have not claimed the refund of the excess duty paid by the supplier on account of reducing the excess value of the goods in question on whom the appellant has taken the cenvat credit, therefore, the CBEC Circular No.877/15/2008-CX dated 17.11.2008 clarifies that situation - as the supplier of the goods i.e. M/s. Tata Steels Ltd. has not claimed any refund of the excess duty paid by them, in that circumstance, the appellant has correctly taken the cenvat credit. With these observations, we do not find any merit in the impugned order. The same is set aside - Decided in favour of assessee.
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2015 (10) TMI 2209
Denial of CENVAT Credit - appellant never manufactured/cleared any MTC - variation of description of goods and their value stated in the Bill of Entry and the invoices - Held that:- It is seen from records that appellants have explained in their reply to the show cause notice that the inputs imported were stock transferred under proper invoices to their sister concern at Palwal Unit. Department has no case that appellant's Palwal Unit is not manufacturing/clearing MTC. So, also there is no case that these inputs were diverted or alienated in any manner. I find that authorities below ought to have accepted the explanation offered by appellant which was supported by documents of stock transfer. In the invoices, being stock transfer, the sale value included all taxes and 10% margin of profit. That therefore, the assessable value in the Bill of Entry is less than the sale value shown in the invoice. A comparable table showing the value in Bill of Entry and value in sale invoice is given. - allegation that value of inputs in invoices did not match with that in Bill of Entry, is baseless. The other allegation is that the inputs stated in these documents did not match description-wise. In the Bill of Entry, the description is given as "gear box". In the sale invoice it is described as a slew gear box, Hoist gear box. Again in Bill of Entry, the description is slewing Ring whereas in the invoice, the description is slew Ring, S-Ring CBE-1200. I cannot agree with the contention of the Respondents that these are major discrepancies on which the benefit of credit can be denied. I do not find any markable variation in the description of inputs in these documents. - No wilful mis-statement or suppression with intention to evade duty is established against the appellants. In such circumstances the extended period is not invokable. The demand is therefore time barred. - Decided in favour of assessee.
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2015 (10) TMI 2208
Cenvat Credit - No dutiable input used in clearance of Exempted finished goods - Whether appellant is required to pay amounts at a particular rate on the value of exempted goods (Bio Feed) cleared by the appellants under provisions of Rule 6 of the Cenvat Credit Rules, 2004 - Held that:- As per the argument made by the appellant Bio Feed is made from the waste generated in the manufacturing of products like Calcium Gluconate, Enzymes, Flavours, which are cleared on payment of duty. No evidence has been produced by the Revenue that duty paid inputs are directly used in the manufacture of exempted byproduct Bio Feed. In the absence of any such corroborative evidence, duty paid inputs used by the appellant will be deemed to have been used in the manufacture of dutiable goods Calcium Gluconate, Enzymes, Flavours etc., manufactured by the appellant and cleared on payment of duty. Accordingly, it is held that the present appeal is covered by the ratio laid down by Supreme Court in the case of Union of India vs Hindustan Zinc Ltd. (2014 (5) TMI 253 - SUPREME COURT) and order dated 09.01.2013 passed by Gujarat High Court in the case of Commissioner of Central Excise & Customs, vs Anil Products Ltd.(2013 (10) TMI 798 - GUJARAT HIGH COURT ). - Decided in favour of assessee.
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2015 (10) TMI 2207
CENVAT Credit - Whether Cenvat Credit lying in their Cenvat Credit account lapse as per Rule 571-1(7) ibid on 01.03.2000 that when their product became exempted under notification no. 7/2000 dated 01.03.2000 or not - Held that:- On plain reading of the said Rule if goods are exempted under notification based on value of clearance in financial year, in that case as per Rule 57H(7) the Cenvat Credit lying in their Cenvat Credit account shall lapse. But in the case in hand, the final product of the appellant became exempted under notification no.07/2000 dated 01.03.2000 wholly and same is not on the basis of the value or quantity of clearance by the appellant. Therefore, we hold that provisions of Rule 57H(7) ibid are not applicable to the facts of the case. Therefore, Cenvat Credit of ₹ 5,67,97,164/- shall not lapse - Consequently, the demand will also no sustain. - Decided in favour of assessee.
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2015 (10) TMI 2206
Denial of remission of duty - Appellants were storing molasses in the steel tanks erected - Puncture of the drain nipple - Held that:- There is no dispute about the bursting of the drain nipple attached to the storage tank and the consequent loss of molasses. The only issue required to be decided is to whether such rupture could have been avoided by the appellant or not. The drain nipple had bursted due to the high static pressure exerted on it by the stored molasses resulting in loss of the molasses. Needless to say that all accidents occur on account of lack of precautions of the personnel responsible for avoiding such incidents and nobody indulges in such accidents purposely. If such a strict measure is adopted, there would be no accident at all. It may be that the appellant were thinking of changing the nipple and before the same could be done, it led to the accident. As is famous saying Nobody invites accident. If such a restrictive construction is made applicable to the provisions of Rule 21 of CENVAT Credit Rules, the same would make the said rule inoperable and redundant. No assessee would cause loss of its own final product for the reason of not paying the excise duty. As such, I am of the view that as long as the accident is not deliberate and there is no mala fide on the part of the assessee to make the accident occur resulting in loss of the goods, the assessee would be entitled to the remission of duty in terms of the provisions of Rule 21. As such, I am of the view that the appellant is entitled to the remission of duty. - Decided in favour of assessee.
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2015 (10) TMI 2205
Manufacture and captive consumption of HR Strips - demand of duty denying the exemption under notification 67/95 dated 16.03.1995 - Imposition of penalty and interest - Held that:- Where duty is demanded the appellant were required to pay a sum of ₹ 6,67,400/- whereas they are entitled for deemed credit during the period is ₹ 7,09,817/-. Therefore, the appellant have entitled more credit than the payment of duty. Moreover, appellant has paid excess duty of ₹ 17,640/- during the impugned period as per the calculations. In these circumstances, we hold that interest is not payable by the appellant. Further, in the absence of any mensrea on the part of the appellant penalty is not imposable which is evident that after allowing deemed credit to the appellants, appellant has paid duty in excess. Therefore, malafides were not proved against the appellant. In these circumstances, penalty is also not imposable - Demand of interest and penalty are not sustainable on the appellant - Decided in favour of favour of assessee.
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2015 (10) TMI 2204
Clandestine removal of sponge iron manufactured and cleared without payment of duty - Held that:- It is the grievance of the appellant they had requested for cross examination of certain witnesses during the course of adjudication proceeding, but the same has been denied by the adjudicating without any valid reason. We find from the records that the cross-examination request of witnesses though had been advanced by the appellant before the adjudicating authority, but they have not substantiated the need for the cross examination of the respective witnesses whose examination would be necessary for the purpose of their defense. In any case, it cannot be denied that in the event the appellant could make out a case for cross examination , such an opportunity cannot be denied to them as it would amount to violation of principle of natural justice - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 2203
Condonation of delay - Power of commissioner to condone delay - inordinate delay of 15 months - Held that:- High Court has directed learned Commissioner (Appeals) to decide the application for Condonation of delay on merits.The provisions of section 35(1) of Central Excise Act, 1944 restrict the time limit for learned Commissioner (Appeals) to entertain the appeal within two months and which can extend to period of 30 days which is sufficient time as shown to make appeal before him causing delay as per the statute before the Commissioner (Appeals). Commissioner (Appeals) is restricted not to entertain any appeal filed beyond three months and said fact has been affirmed by Hon’ble Apex Court in the case of Singh Enterprises (2007 (12) TMI 11 - SUPREME COURT OF INDIA). - Same view has been taken by the Division Bench of Allahabad High Court in the case of Doaba Rollling Mills (P) Ltd. (2004 (2) TMI 77 - HIGH COURT OF JUDICATURE AT ALLAHABAD) and Modi Distillery (2007 (5) TMI 252 - HIGH COURT OF JUDICATURE AT ALLAHABAD). Therefore, learned Commissioner (Appeals) have no power to entertain any appeal which is filed beyond the period prescribed under section 35(1) of Central Excise Act, 1944. - Decided against assessee.
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2015 (10) TMI 2202
Determination of assessable value - Trade discount - Held that:- Service charges do not appear to be a trade discount for the simple reason that in the same invoice there is a discount with the name trade discount. The learned counsel for the appellant, in spite of 2-3 adjournments, has not been able to bring out any evidence whatsoever to support his contention that deduction due to service charges are nothing but trade discount. In the absence of any documentary evidence, we are unable to accede to the contention. - department raised this objection that the appellants changed the nomenclature to additional trade discount. To our mind, by changing the nomenclature, they are only trying to mislead the department and by change of the nomenclature, service charges cannot become additional trade discount. In view of this position, in our view, even after 1.9.1999, the said deduction has to be considered as deduction towards service charges. - Decided against assessee.
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2015 (10) TMI 2201
Admissibility of cenvat credit - Rejected and returned goods - Held that:- On the basis of audit it was observed that appellant has not followed the procedure and conditions laid down in Rule 16(2) and 16(3) of the Central Excise Rules, 2002. It was also mentioned in the show cause notice that appellant did not maintain any records/ registers for rejected and returned goods as provided under Rule 16 of Central Excise Rules, 2002. However, it is observed from RG 23A Pt.I maintained by the appellant that entries have been made in this register regarding receipt of rejected goods in spite of the fact that no record has been specified under Rule 16 to be maintained by an assessee. The documents on the basis of which CENVAT credit is taken is also available with the appellant. The records maintained by the appellant is showing the issue slips for remanufacture of the goods and end products are duly entered in the stock registered and cleared on payment of duty - There is no evidence on record that no process was carried out on the rejected goods received by the appellant whereas, the appellant has produced documentary evidence to show that certain process were done which amounts to manufacture and cleared on payment of duty. - CENVAT credit on rejected and returned goods was correctly availed by the appellant. - Decided in favour of assessee.
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2015 (10) TMI 2200
Denial of CENVAT Credit - whether CENVAT credit of services of Para medical staff availed by the appellant for providing medical facilities to its employees in the factory is admissible or not, when such services are required to be provided statutorily under the Factories Act, 1948 - Held that:- The ratio laid down by the relied upon case laws [2015 (10) TMI 1693 - CESTAT AHMEDABAD] and [2011 (4) TMI 1122 - KARNATAKA HIGH COURT] support the view that Cenvat Credit with respect to medical facilities provided statutorily under the Factories Act 1948 will be admissible - Decided in favour of assessee.
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2015 (10) TMI 2199
Denial of CENVAT Credit - Bogus invoices - Non existence of supplier of goods - Held that:- Goods were supplied by various merchant manufacturers for processing, on job charge basis and the goods were supplied to them accompanied with Central Excise invoice. They processed the goods and which were taken by the merchant manufacturers. He also stated that they received job charges for the processing of the grey fabrics. It is categorically stated that they received job charges by cheque from the various merchant manufacturers. It is seen that in 2005, the Central Excise Officers found that the suppliers of the Grey fabrics were not in existence. We find that the Dy Commissioner, C&CE Div IV, Surat by his letter dtd 4.12.2008 in response to query under RTI application had forwarded to copy of the CE Registration Certificate of the suppliers. Thus, it is clearly evident that the suppliers were in existence during the material period. - Decision in the case of M/s Prayagraj Dyeing and Printing Mills Pvt Ltd (2013 (5) TMI 705 - GUJARAT HIGH COURT) followed - Decided in favour of assessee.
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2015 (10) TMI 2198
Denial of CENVAT Credit - input services availed prior to commencement of manufacturing activity - cargo handling service - distribution of credit - Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- Rule 7 of Cenvat Credit Rules, 2004 deals with the manner of distribution of cenvat credit by ISD - there are two restrictions under the said Rule that the cenvat credit cannot be distributed more than the service tax paid and credit should be used by a manufacturing unit of excisable goods. Further, Rule 3 of the Cenvat Credit Rules provides that manufacturer of the final products shall be allowed to take Cenvat Credit. Sub rule 4 of Rule 3 of Cenvat Credit Rules, also state that cenvat credit can be utilized for payment of excise duty on final product. - A plain reading of both the Rules clarifies that there is no restriction to the effect that if any assessee avail cenvat credit on procurement of inputs (prior to start of manufacture), is not entitled to take cenvat credit. Infact, without procuring inputs, or some inputs service, assessee cannot start manufacturing activity. Therefore, it cannot be said that an assessee who is a manufacturer of excisable goods is to be denied the cenvat credit of duty paid on inputs or input service availed prior to start of manufacturing activity. When the adjudicating authority held that it is an issue of interpretation of Rule, therefore it cannot be alleged that appellant has taken cenvat credit by way of fraud, collusion, willful mis statement, suppression of fact or contravened the provisions of Act/ Rule with an intent to evade payment of duty. Further, in the impugned order, Commissioner (Appeals) has himself has recorded that the appellant has stated that show cause notice is barred by limitation because there was no suppression on their part - It is correct that assessee should have known all the Rules / provisions of Rules, Act but there are omission on the part of the appellant for invoking extended period of limitation which is absent in this case. Therefore, extended period of limitation, is also not invokable in the facts of this case. In these circumstances, I hold that the appellant is having the case on merits as well as on limitation. Therefore, I set aside the impugned order - Decided in favour of assessee.
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2015 (10) TMI 2197
Denial of Cenvat Credit - Duty paid through PLA - Rule 8(3A) - Held that:- As Rule 8(3A) of Central Excise Rules, 2002 has been declared unconstitutional, consequently proceedings against the appellant are not sustainable. Further I find that appellant has contravened the provisions of Central Excise Rules, 2002, therefore, general penalty under Rule 27 of Central Excise Rules, 2002 is imposable. Therefore, I impose penalty under Rule 27 of Central Excise Rules, 2002 on the main appellant i.e. M/s. Space Telelink Ltd. of ₹ 5,000. Further, I hold that the Managing Director has not contravened, penalty on Managing Director are set aside. - Relying on Decision of Indsur Global Ltd. [2014 (12) TMI 585 - GUJARAT HIGH COURT] - Decided partly in favour of assessee.
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2015 (10) TMI 2196
Clandestine removal of inputs and finished goods - Shortage of goods founds - Held that:- Shortage of MS scrap is correct as they have been sold by the appellant the scrap in the local market to various individual traders without preparing any bills. With respect to shortage of SS Slabs, it was stated by Shri Mohammed Kaizer, Director, that they have cleared the goods without preparing any bills. On a specific question asked by the investigating officer as to whom the scrap and finished goods were sold, the appellant was not able to give the records for such sale. In the absence of addresses of the persons to whom the scrap and the finished goods were sold, investigating authorities cannot be faulted to carry out further investigation of the buyers. Shortage of raw materials, admitted by the appellant in spite of the fact that certain MS Scrap was under process on the day of visit of the Central Excise officers indicates that the main appellant was in the practice of receiving raw materials unscrupulously and using the same in the manufacture of finished goods removed of clandestinely. Inspite of some MS Scrap in process and lying near the furnace, in his statement the Director of the main appellant did not claim that raw materials in stock was incorrectly taken by the Dept. Officers. The statements taken by the investigators are not retracted. Therefore, taking a stand during appeal proceeding that stock taking of the raw-materials was done incorrectly is not sustainable. So far as duty liability on the clandestinely removed SS Flats is concerned Adjudicating Authority should rework out the duty liability after allowing the benefit of cum-duty benefit and intimate the same to the appellant. After reworking of duty liability with respect to finished SS Plates, main appellant will be eligible to exercise 25% option of reduced penalty, if the duty is paid along with interest and penalty within one month from the receipt of such communication from the Adjudicating Authority. So far as imposition of penalties upon the other appellants is concerned, it is observed that they were involved in the clandestine removal of raw-materials and the finished goods. Therefore, the penalty imposed by the Adjudicating Authority upon the appellants is justified and has been correctly upheld by the first Appellate Authority - Decided partly in favour of assessee.
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2015 (10) TMI 2195
Evasion of duty - Clandestine removal of goods - Whether the case of clandestine removal can be held to be established on the basis of statement dated 12.09.2006 of Shri Rajesh R. Patel, Excise Executive and Authorised Signatory of the appellant - Held that:- There is no other corroborative evidence or statement given by any other person to substantiate that there was any clandestine removal on the part of the appellant. It has been rightly pointed out by the learned advocated appearing on behalf of the appellant that this statement only talks about payment of an amount voluntarily made in good faith with a scope to explain the shortages. By a letter dated 16.09.2006 appellant, within a week s time of Panchnama, explained the department that there was no shortages as several materials are lying spread over everywhere in the factory premises, which are rejected as well as returned goods. No verification was made during investigation with respect to the claim made by the appellant. During subsequent investigation conducted, by recording statement dated 11.08.2009 of Shri S.R.B. Nair, Chief Operating Officer and Director of the appellant, also explains the case of the appellant that there was no shortage of finished goods. - there is even no confessional statement of the appellant, because the very first statement at 12.09.2006 convey that duty was paid voluntary in good faith with a scope to explain shortages later. Rather the shortages detected during the visit of the officers of Central Excise were intimated as non-existing by a letter within a week from the date of visit. To reject the appellant's claim of no shortage of finished goods, a verification ought to have been done immediately. Shortages were alleged to be that of chemicals when the shortage where it was not found admitted but a statement was given that the shortage will be explained later and the same was explained by the appellant during subsequent investigations. In the absence of any other independent corroborative evidence and after perusal of the case records it is to be held that shortages and clandestine removal of the finished goods are not established and are solely based on presumptions and assumptions. - Decided in favour of assessee.
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2015 (10) TMI 2194
Denial of CENVAT credit - Bogus invoices - Issue of invoices without actual supply of goods - Held that:- The main party M/s Deepak Processors has not filed any appeal against the said OIO. It is observed that M/s. Deepak Proceessors availed CENVAT credit without receipt of goods. Subsequently, rebate claims of ₹ 24,21,201/- filed by M/s Deepak Processors were also rejected by the Adjudicating Authority under Section 11 B of the Central Excise Act, 1944. It is also not correct that penalty against the appellant is solely based upon his statement because Shri Awadh Narayan Singh proprietor of M/s Deepak Processors in his statement Dated 29.04.2008 has also admitted that CENVAT credit was availed on fraudulent documents without receipt of goods. Adjudicating Authority after going through all the relying upon documents and statements have come to the conclusion that M/s Sai Textiles, Surat has issued invoices without physically transacting in goods and passed on only CENVAT credit to M/s Deepak Processors. - Decided against assessee.
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2015 (10) TMI 2189
CENVAT Credit - capital goods - later on re-exported the said capital goods and got their EPCG licence cancelled - Held that:- appellant is not required to reverse CENVAT Credit taken on the capital goods, which was procured and subsequently re-exported - In view of the consistent stand of Tribunal [2014 (9) TMI 864 - CESTAT MUMBAI], which is also in accordance with the Board Circular dated 29.08.2000 - Decided against Revenue.
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