Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 3, 2015
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Extension of the date for filing the income tax returns - While it is true that the powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for exercise of such powers are shown to exist. - HC
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Nature of investment - in the nature of trade or not - Assessee had changed the treatment of the shares by treating them as investment instead of stock in trade - income tax authorities, ought to strictly scrutinise such claims as to 'regrouping' of figures appearing in the audited and signed accounts by an Assessee subsequent to such signing. - HC
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Addition u/s 68 - The funds availed by the Assessee from Richie Rich had been returned several years ago and there was no justification for the AO to insist on a fresh confirmation. - no addition under Section 68 of the Act in respect of the transaction was sustainable. - HC
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Since the interest paid to HSBC on the loan availed was in the nature of an expenditure wholly and exclusively laid out for the purpose of earning the interest income, it ought to be permitted to be netted against such 'income from other sources' in terms of Section 57 (iii) - HC
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Short term capital gain - sale of equity shares through a recognized stock exchange on which STT has been paid, is not in dispute - CIT(A) erred in not allowing the claim of assessee for taxing the short term capital gain as per the special rate specified u/s 111A of the Act. - AT
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Exemption u/s 11 - the assessee is registered as a public charitable trust and the assessee carried only religious activities and no charitable activities are carried out - No exemption - AT
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Recall the orders after expiry of four years by tribunal either on its own or on the application filed by the Revenue - In all fairness, this Tribunal ought to have issued notice to the assessee after taking the applications filed by the Revenue on record. - there is gross violation of principles of natural justice. - AT
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Penalty proceedings u/s 271(1)(c) - the issue whether interest income will fall within the "Principle of Mutuality" or not itself was debatable as there were many conflicting decisions - penalty waived - AT
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Registration under sec. 12AA denied - The assessee trust has not so far carried out any substantial activities as proclaimed by them, for want of funds - therefore, whether the activities carried on by the assessee are outside the purview of charitable activities or not. - Registration allowed - AT
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The returns of income and audit reports u/s 44AB due for e-filing by 30th September, 2015 may be filed, across the country, by 31st October, 2015 - CBDT - Previous orders withdrawn
Customs
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Denial of refund claim - we appreciate difficulty of appellant as to filing of original documents for the reason advanced by appellant and no leviability of Cess. - But we do not consider it proper to hold contrary to the bar of limitation prescribed by law relating to refund - AT
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Levy of CVD on MRP basis - After clearance form Customs, the appellants sold the goods at prices which are different from the MRP declared by them. - even if there are no machinery provisions laid down in Section 3(2) of the CTA and Section 4A(4) of the Central Excise Act, it cannot be concluded that Section 3(2) of the Customs Tariff Act will become ineffective and the law rendered otiose - AT
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Classification of calcareous stone – Exemption under Notification 103/2009-Cus – there cannot be two classification for Customs duty and for ITC (HS) purpose - Customs cannot classify goods under different entry other than 6802 29 00 in respect of goods under importation - AT
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Recovery of drawback – Demand made after lapse of seven years – All the time-limits are already over and therefore, impugned demands for recovery of erroneously sanctioned drawback is hit by time-bar - AT
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Export goods improperly – Use of false and incorrect material – Movement of goods outside Customs area cannot be liable to confiscation - Since role of appellant was only to supply goods in domestic area, therefore no penalty should have been imposed upon appellant either under Section 114(i) or under Section 114AA - AT
Service Tax
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Denial of CENVAT Credit - inclusive part of the definition of input service - Even services like advertising, market and research, which are undertaken to attract customers to buy goods of manufacturer are eligible to credit - AT
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GTA service - vide Section 68(2) read with Rule 2(l)(d)(v) in respect of certain categories of service recipients the liability to pay Service Tax has been fastened on the recipients of service in respect of 7 categories of persons - demand confirmed - AT
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Taxable service of “erection, commissioning or installation service”, when provided in relation to transmission of electricity/electrical energy would be covered by the immunity/exemption, as the case may be. - prima facie case in favour of the petitioner/appellant - AT
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Denial of CENVAT Credit - if the service tax has been paid treating the same as Business Auxiliary Service the assessee cannot be denied the benefit of service tax credit which has been paid by the service provider - AT
Central Excise
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Review petition against order previous order passed [2015 (9) TMI 403 - BOMBAY HIGH COURT] - Our conclusion may be or may not be erroneous. However, we cannot reconsider or correct the same in the garb of a review. We are not deciding an appeal and, therefore, will not be in a position to refer to the record all over again. - HC
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Classification of goods - appellant's "Polyester Hologram Excise Label" produced out of stamping foil (transfer foil) is rightly classifiable under chapter 49 of CETA and find that hologram produced by the appellants are not covered under any of the excluded items i.e. Ch.39.18, 48.14 or 48.21 of HSN of Chapter 49. - AT
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Adjustment of interest amount with the refund - Even if the interest amount was recoverable from the appellant, the appellant should at least have been intimated about the same, but from the records it appears there was no such intimation to the appellant - matter to be re-adjudicated - AT
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100% EOU - If it is not possible (because of common storage tank) for the appellants to conclusively demonstrate that duty paid diesel only was used for generating electricity supplied to the colony, it is equally impossible for the Revenue to show that it was not so used or to quantify as to how much duty free diesel out of the mixed lot was used for that purpose - AT
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Denial of CENVAT Credit - metal scrap cleared to job worker without payment of duty - Department was of the view that the metal scrap (steel scrap and brass scrap) is not in the nature of semi-finished/ semi-processed goods and as such, cannot be cleared without payment of duty under Rule 4(5)(a) to job workers for conversion into ingots - Appeal of the revenue dismissed - AT
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Valuation of goods - Pre-Delivery Inspection (PDI) charges recovered at the instance of the buyer are not includible in the assessable value and accordingly appeal filed by the revenue is required to be rejected - AT
VAT
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Denial of input tax rebate - Karnataka VAT - If the assessee is not putting forth a claim for input tax deduction in the return filed in July 2006 nor as he put forth such a claim in a revised claim which he could have filed within six months therefrom his right to claim input deduction is lost - HC
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Whether L & T 752 vibratory compactor is a 'motor vehicle' or a 'machinery' and therefore, liable to tax under the KTEG Act - Held that:- Under the Scheme of KTEG Act, Chapter II deals with levy of tax. - Held No - the contention of the Revenue that the motor vehicle is not registered, it cannot be treated as motor vehicle and has to be treated as machinery is without any substance - HC
Case Laws:
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Income Tax
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2015 (10) TMI 61
Extension of time for submission of income tax returns - inrespect of certain categories of assesses, including the companies, firms and individuals, engaged in proprietary business/profession, whose accounts are required to be audited in terms of the Income Tax Act, 1961 - Held that:- It is a domain of the Indian Government and the Central Board of Direct Taxes. We direct the Central Board of Direct Taxes to consider the representation at Annexure-‘C’ to these writ petitions dated September 15, 2015, peremptorily by September 29, 2015.
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2015 (10) TMI 60
Extension of time for filing the income tax returns - Held that:- Following the Division Bench’s order [2015 (10) TMI 61 - KARNATAKA HIGH COURT] di6spose of these petitions with a direction to the respondent No.2 to consider the representation dated 14/09/2015 (Annexure –B) in accordance with law and peremptorily by 30th September, 2015
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2015 (10) TMI 25
Electronically filing of income tax returns relevant for assessment year 2013-14 and onwards - non-extension of the date for filing the income tax returns - stand of the Board is that the period of seven weeks which is available to the petitioner and other assessees for filing online income tax returns, is sufficient and therefore, there is no reason for extending the due date for filing the income tax returns - Held that:- Clause (f) prescribes Form No. ITR-6 in the case of a company not being a company to which clause (g) applies and clause (g) prescribes Form No.ITR-7 in the case of a person including a company whether or not registered under section 25 of the Companies Act, 1956 which is required file return under the relevant sub-sections of section 139 of the Act mentioned thereunder. Not all the aforesaid classes of assessees are required to be audited under section 44AB of the Act. Therefore, it is not just assessees who are subject to tax audit under section 44AB of the Act who are affected by the non-extension of due date but assessees belonging to all the above categories who may not be subject to tax audit under section 44AB. The number of tax audits conducted by a Chartered Accountant may be limited to 60, but the total number of assessees that he deals with is not limited to 60, as a large number of assessees may belong to the categories which are not subject to tax audit under section 44AB of the Act. The Board while not extending the due date for filing return was also of the view that due date should not be extended just for the benefit of those who have remained lax till now for no valid reason in discharging their legal obligations. It may be noted that despite the fact that ordinarily the ITR Forms which should be prescribed and made available before the 1st of April of the assessment year, have in fact, been made available only on 7th August, 2015 and the assessees are given only seven weeks to file their tax returns. Therefore, laxity, if any, evidently is on the part of the authority which is responsible for the delay in making the utility for E-Filing the return being made available to the assessees. When the default lies at the end of the respondents, some grace could have been shown by the Board instead of taking a stand that such a trend may not be encouraged. Had it not been for the laxity on the part of the respondents in providing the utilities, there would not have been any cause for the petitioners to seek extension of the due date for filing tax returns. It may be noted that despite the fervent hope expressed by the court that the respondents in future may plan any change well in advance, a similar situation has prevailed in the present year also and the utilities for e-filing of income tax returns have been made available as late as on 7th August, 2015, leaving the petitioners and other assessees with less than one third of the time that is otherwise available under the statute. While it is true that the powers under section 119 of the Act are discretionary in nature and it is for the Board to exercise such powers as and when it deems fit. However, it is equally true that merely because such powers are discretionary, the Board cannot decline to exercise such powers even when the conditions for exercise of such powers are shown to exist. In the light of the above discussion, the petition partly succeeds and is accordingly allowed to the following extent. The respondent Board is hereby directed to forthwith issue requisite notification under section 119 of the Act extending the due date for e-filing of the income tax returns in relation to the assessees who are required to file return of income by 30th September, 2015 to 31st October, 2015. The respondents shall henceforth, endeavour to ensure that the forms and utilities for e-filing of income tax returns are ordinarily made available on the 1st day of April of the assessment year
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2015 (10) TMI 24
Nature of investment - in the nature of trade or not - Assessee had changed the treatment of the shares by treating them as investment instead of stock in trade - AO concluded that, , the only motive for this undue change in this year (AY 2005-06) appeared to be lowering the tax incidence and taking undue benefit of the exemption from tax on long term capital gains under Section 10(38) of the Act and concessional rate of tax @ 10% on short term capital gains under Section 111A - Held that:- It is not clear whether after the signing of the audited balance sheet as on 31st March 2004 by Directors and CA any resolution was passed by the Board of Directors of the Assessee deciding to treat as investment the shares shown therein as stock in trade. This is an important aspect which does not appear to have merited attention by the CIT (A) or even the ITAT. The Court would like to observe at this stage that it is inconceivable that after an audited balance sheet of a company for a financial year is signed by its Directors and statutory Auditors, and submitted to the statutory authorities, including the Registrar of Companies (RoC) and the income tax authorities, the figures in such balance sheet for the closing stock of shares can simply be altered subsequently by adopting the device of “regrouping” by the Assessee, even by a Board resolution. That is a process unknown to the law. Even from the point of view of principles governing statutory accounts, such change cannot be simply given effect to in the balance sheet and P&L account for a subsequent year. For instance, such a change, as was sought to be made by the Assessee in the instant case, to the value of the closing stock of shares by treating it as investment instead of stock-in-trade, would affect (and perforce necessitate changes) in the balance sheet and P&L accounts for at least two financial years. It is doubtful if this can at all be done particularly if the statutory authorities including the RoC and the income tax authorities have already been provided with (and perhaps acted upon or accepted) such signed audited accounts for a particular financial year. The authorities concerned, and in particular the income tax authorities, ought to strictly scrutinise such claims as to 'regrouping' of figures appearing in the audited and signed accounts by an Assessee subsequent to such signing. In other words, the decision regarding such change in the figures, like for e.g., the 'regrouping' of shares in the present case, if at all permissible, has to be preceded by a legally acceptable procedure adopted by the Assessee, and in any event prior to the finalization and signing of the audited balance sheet for a particular financial year. Considering that above aspects having not been examined by the ITAT, the Court sets aside the impugned order on the above issue and remands the said appeal to the ITAT for a fresh consideration keeping in view the above aspects. The ITAT is urged to call for the complete details of the records both from the AO as well as the CIT (A) and any further relevant particulars to arrive at a correct decision.
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2015 (10) TMI 23
Validity of reopening of assessment - assessment was re-opened based on information received by the AO from the Investigation Wing that the Assessee had obtained accommodation entries from certain entry operators during the relevant period - Held that:- Once the tangible material available with the AO provides a live link with him forming a belief that income of an Assessee had escaped assessment, he would, subject to other statutory requirements, be entitled to reopen a concluded assessment. The question whether the AO has reason to believe that income has escaped assessment and is liable to be reopened under Section 147 of the Act has also to be viewed from the standpoint of the AO. Thus indisputably, in certain circumstances, such information as was received by the AO in this case may have provided the AO with a reason to believe that income of the Assessee had escaped assessment. In our view, the Tribunal erred in observing that the AO had reopened the assessment on the same material as was available during the initial assessment proceedings. In the present case it is difficult to accept that reasonable conclusion could be drawn that the Assessee had failed to disclose truly and fully all material facts necessary for its assessment. In the facts of this case, where the AO had already in the initial round examined and verified the entries in question, it would only be reasonable for the AO to examine the information received and to at least verify the same with the records of the concluded assessment proceedings. A plain examination of the same would have revealed that the Assessee had not claimed to have received any funds from Richie Rich as share capital. Further, the Assessee had also provided confirmation of the loans received as well as other details, during the said proceedings. It would also be relevant to note that the loans availed had been returned through banking channels during the period and this was also confirmed independently to the AO. In the given circumstances, the least that was required for the AO was to independently apply his mind to ascertain that the information provided was credible and sufficient for drawing a reasonable inference that the income of the Assessee had escaped assessment on account of failure on the part of the Assessee to disclose truly and fully all material facts. Clearly, the examination of facts required at the threshold to form such a belief would be more detailed if the said transaction in question had already been subjected to scrutiny during the initial assessment. It does not appear that the AO applied its mind to the material available including the records of the earlier assessment proceedings. This is also apparent from the fact that during the assessment proceedings, the AO did not confront the Assessee with any new material or examine any other evidence other than what was already available in the initial assessment period. In view of the above, we find no infirmity with the conclusion of the CIT(A) and the Tribunal that AO could not have assumed jurisdiction to reopen the assessment under Section 147/148 of the Act. Assessee produced ample evidence to indicate that the entries in question were genuine. During the initial assessment, the Assessee had filed a copy of the agreement between the Assessee and Mahan Enterprises Ltd., which indicated that certain activities of the Assessee were to be funded by Mahan Enterprises Ltd. Mahan Enterprises Ltd. had also directly filed a letter with the AO explaining an arrangement and had also confirmed that it had arranged funds for the Assessee and further, that the Assessee had also refunded sums to the extent of ₹ 1.07 crores. Indisputably, this included the amount obtained by the Assessee from Richie Rich. The Assessee also produced a copy of the Account of Richie Rich in its books, bank statements showing the transactions with Richie Rich, as well as confirmation from Richie Rich. The Assessee had also pointed out that the transaction in question had been examined during the regular assessment proceedings. The AO simply rejected the contention as non-tenable. The confirmation produced by the Assessee was faulted as not being of a current date. We are unable to find any justification for these views and, therefore, the assessment order cannot be sustained. The funds availed by the Assessee from Richie Rich had been returned several years ago and there was no justification for the AO to insist on a fresh confirmation. The Assessee had also produced the balance sheet and bank account of Richie Rich reflecting the entries. On examination of the evidence, the CIT(A) rightly came to the conclusion that no addition under Section 68 of the Act in respect of the transaction was sustainable. The Tribunal also noted the evidence and material produced by the Assessee, which remained uncontroverted, and upheld the order passed by the CIT(A) - Decided in favour of the Assessee
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2015 (10) TMI 22
Expenditure on interest claimed - whether could not be allowed in terms of Section 57 (iii) - Held that:- In the present case, the advancing of loan to SCL was a business decision taken by the Assessee out of commercial expediency. Further, the sanction letter of HSBC made it clear that the Assessee could draw loans up to the sanctioned limit as and when needed. The sanction letter also permitted the Assessee to further utilise the money borrowed to advance loans to others. The sum of ₹ 25 crores drawn by the Assessee on 24th December 2001 in terms of HSBC's sanction letter was transferred to SCL on the very same date. Without the facility of credit by the HSBC, the Assessee could not have advanced the loan to SCL. Therefore, there was a direct nexus between the earning of interest on the loan advanced by the Assessee to SCL and payment of interest to HSBC on the loan drawn in terms of the sanction letter dated 2nd August 2001. The income earned on the loan advanced to SCL was rightly offered to tax by the Assessee as 'income from other sources'. Since the interest paid to HSBC on the loan availed was in the nature of an expenditure wholly and exclusively laid out for the purpose of earning the interest income, it ought to be permitted to be netted against such 'income from other sources' in terms of Section 57 (iii). There is also merit in the contention of the Assessee that for AY 2003-04, the CIT (A) and the ITAT mechanically followed the earlier order for the AY 2002-03 although the business of the Assessee had commenced in June 2002. Since this was no longer a pre-operative phase, the interest paid to HSBC would in any event have been allowable as business expenditure under Section 36 of the Act for AY 2003-04.For the aforementioned reasons, the question framed is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. The addition made by the AO is directed to be deleted and the netting of the interest paid on the borrowed sum against the interest income earned is allowed. - Decided in favour of assessee.
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2015 (10) TMI 21
Disallowance u/s 14A read with Rule 8D - Held that:- CIT(A) has given a finding that there was no expenditure incurred by the assessee for increase in investment and when the expenses in respect of exempt income have not been incurred by the assessee, the question of disallowance u/s. 14A does not arise. In assessee’s case, increase in investment was from the funds available with the assessee and no interest has been paid, but there are certain expenditures which are incurred during the process of investment. While applying provisions under Section 14A of the Act and Rule 8D of the Income Tax Rules, these factors should be looked into. But in this case, the CIT(A) held that the Assessing Officer has not placed any material on record nor has he made any clear cut finding to prove that any expenditure had been incurred by the assessee and thus disallowance u/s. 14A read with Rule 8D is not warranted instead should have been remanded back the matter to the Assessing Officer to verify the expenditure incurred while earning the dividend income. Thus finding of the CIT(A) that the disallowance of ₹ 16,00,583 against dividend income of ₹ 96,622/- was not proper. In view of the above the matter is remanded back to the Assessing Officer for examining the expenditure incurred against the investment as against the dividend income earned by the assessee.
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2015 (10) TMI 20
Estimation of income - Trading addition made on account of gross profit - CIT(A) directing to apply a G.P. rate of 11% to the sales for working out gross profit - Held that:- Case was fixed for hearing on 24.09.2010 after about one year when the case was earlier fixed on 5.10.2009. The Ld. CIT(A) mentioned that the accountant of the assessee attended the proceeding and requested for adjournment. The said request was rejected by mentioning that the appellate proceedings were going on since May, 2008, no other reasons has been given from the noting of the ld. CIT(A), it is clear that the case was fixed for hearing in the year 2010 only once on 24.09.2010 and on the said date the accountant of the assessee appeared and a request was made for adjournment. The ld. CIT(A) has not mentioned the contents of that request, there may be some compelling reasons for seeking the adjournment but nothing is mentioned in the impugned order. It is also noticed that the case was fixed for hearing by the ld. CIT(A) on 24.09.2010 and by rejecting the request of the assessee for adjournment the impugned order was passed on 27.09.2010. In our opinion, the ld. CIT(A) has not allowed an appropriate & proper opportunity of being heard to the assessee. It is well settled that nobody should be condemned unheard as per the maxim “Audi Alteram Pertam”. Thus we deem it appropriate to set aside the impugned order and remand the case back to the file of the AO to be adjudicated afresh in accordance with law, after providing due and reasonable opportunity of being heard to the assessee. The assessee is also directed to co-operate and not to seek undue or unwarranted adjournments. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 19
Interest due to the assessee u/s. 244A denied - time taken for curing the defects in TDS certificate - Held that:- The undisputed facts are that the TDS certificates were submitted with the return of income. It is also a fact that the TDS certificate has been issued by Reserve Bank of India and various other Government agencies therefore any defect in the TDS certificate cannot be attributed to the assessee. Further, the tax deducted at source by the deductors have been deposited to the credit of the Government, therefore assessee cannot be denied interest u/s. 244A of the Act when the tax was deducted and deposited in the exchequer in time, section 244A(2) is not attracted. We draw support from the decision of the Hon'ble High Court of Bombay in the case of Larsen & Toubro (2010 (6) TMI 54 - BOMBAY HIGH COURT ). We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to allow the interest for the period 1.4.1991 to 31.3.1998.- Decided in favour of assessee. Disallowance of payment of MICR charges - non deduction of tds u/s. 194J - whether the bank was not required to deduct tax from the payments made to SBI and therefore provisions of Sec. 40(a)(ia) are not attracted? - CIT(A) allowed the claim - Held that:- We have carefully perused the orders of the authorities below. We have also the benefit of the order made u/s. 201 (1) & 201(1A) of the Act dated 23.3.2011. We have also the benefit of the copy of notification No. 56/2012(F.No. 275/53/2012-IT(B) dated 31.3.2012 wherein the CBDT has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments being clearance charges (MICR charges). In our considered opinion, since it has been admittedly proved that the recipient of the MICR charges i.e. State Bank of India has included the sum while making tax payment by it. The ratio laid down by the Hon'ble Supreme Court in the case of Hindustan Coco Cola (2007 (8) TMI 12 - SUPREME COURT OF INDIA) squarely apply. Considering the facts in totality as mentioned above, we decline to interfere with the findings of the Ld. CIT(A). - Decided in favour of assessee. Disallowance u/s 14A - CIT(A) confirming the expenditure u/s. 14A being the amount of interest allocated on a proportionate basis - Held that:- Undoubtedly, in the first round of litigation, the Tribunal has clearly held that Rule 8D is not applicable for the year under consideration, therefore, directed the AO to make some reasonable disallowance. However, we find that the AO has once again computed the disallowance as per the formula given in Rule 8D. We also find that the interest free funds available with the assessee is ₹ 1357.84 crores whereas average investments in assets earning tax free income is at ₹ 815.76 crores. This clearly shows that the assessee is having sufficient interest free funds for making the investments. The ratio laid down in the case of Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] squarely apply which has been followed by in the case of HDFC Bank (2014 (8) TMI 119 - BOMBAY HIGH COURT) which has been followed by the Tribunal in assessee's own case in A.Y. 2002-03 to 2004- 05. Thus we direct the AO to delete the impugned disallowance made u/s. 14A of the Act.- Decided in favour of assessee. Deduction u/s. 36(1)(viia) - CIT(A) allowed claim - Held that:- The assessee had not made any provision in the books of account for the assessment year 1985-86 by making supplementary entries and by revising its balance-sheet. The provision had been made in the books of the subsequent year. Therefore since the assessee had made a provision for bad and doubtful debts, its claim for deduction under section 36(1)(viia) had to be restricted to that amount. See State Bank of Patiala case [2004 (5) TMI 12 - PUNJAB AND HARYANA High Court] - we set aside the findings of the Ld. CIT(A) and confirm that of the AO - Decided against assessee. Provisions of Sec. 115JB are not applicable in the case of the assessee and accordingly ground taken by the assessee is allowed.
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2015 (10) TMI 18
Penalty under section 271(1)(c) - un-disclosed house property income - rental income inadvertently omitted in the original return was voluntarily offered for taxation during the course of assessment proceedings - Held that:- As during the course of assessment proceedings, the assessee realized its mistake and pointed out the same to the Assessing Officer. There was no detection of concealed income by the Revenue Authorities. The assessee voluntarily offered the rental income of ₹ 2,90,572/- for taxation and the same was accepted by the Assessing Officer in the assessment order dated 30.1.2013 passed under section 143(3) of the Act. Considering the entire facts and circumstances of the present case and also keeping in view the decision of the Hon'ble Bombay High Court in the case of CIT v. Somany Evergree Knits Ltd. [2013 (4) TMI 154 - BOMBAY HIGH COURT ] in the facts and circumstances of the present case, no penalty under section 271(1)(c) of the Act can be validly levied. Therefore, cancel the penalty levied by the Assessing Officer and confirmed by the learned CIT (Appeals). - Decided ion favour of assessee.
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2015 (10) TMI 17
Reopening of assessment - pre-received income undisclosed - Held that:- As decided in assessee’s own case for the assessment year 2008-09 the assessee was bifurcating the trading receipts of one year into five years, thereby shifting the profits of one year into five years which was not a correct method of computing the profits and gains of business. When the assessee had debited the entire cost of acquisition of rights of distribution, exploitation and exhibition of the films to the profit and loss account, there was no reason why the entire amount received by her from the lessees on account of sale of lease rights of the films should not be credited to the profit and loss account in one year. There was no estoppels in these matters and the Assessing Officer was not bound by the incorrect method of accounting followed by the assessee or even accepted by the department in earlier years. The Assessing Officer therefore correctly made addition because the whole amount had accrued to the assessee and received by her in all the accounting years. See Smt. G. Krishnammal. Versus DCIT [1997 (8) TMI 122 - ITAT MADRAS-C] - Decided against assessee.
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2015 (10) TMI 16
Short term capital gain - sale of equity shares through a recognized stock exchange on which Securities Transaction Tax (STT) - whether has been wrongly taxed at normal rate, whereas, it should be taxed at special rate of 10% as specified u/s 111A? - Held that:- Approach adopted by the income tax authorities in the present situation is quite myopic and deserves to be repelled. The statutory provision of section 111A of the Act providing for a concessional tax rate on short term capital gain arising out of sale of equity shares through a recognized stock exchange on which STT has been paid, is not in dispute. It is also not in dispute that the assessee has successfully proved before the lower authorities that he has earned the income of ₹ 4,20,550/- which deserved to be taxed in terms of section 111A of the Act. In our view, the aforesaid undisputed features does not justify the stand of the Revenue in taxing such income under the normal rate of tax. Furthermore, the non mentioning of such income in one of the columns of the income tax return is to be understood as an inadvertent mistake because in the same form of return of income, at more than one place, assessee has shown such income to be entitled for concessional rate of taxation. In the aforesaid light, in our view, the CIT(A) erred in not allowing the claim of assessee for taxing the short term capital gain as per the special rate specified u/s 111A of the Act. Accordingly, the order of CIT(A) is set aside and the Assessing Officer is directed to re-work the tax liability of the assessee after considering the short term capital gain of ₹ 4,20,550/- to be an income liable to be taxed in terms of section 111A of the Act. - Decided in favour of assessee.
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2015 (10) TMI 15
Eligibility for claiming exemption under section 11 - it was submitted that the assessee is carrying religious activities - religious activities v/s charitable activities - Held that:- The assessee has not carried any activity relating to the objects as enumerated for the purpose of which the assessee is incorporated. The assessee has not incurred single paise for the purpose of charitable activities. The assessee itself has admitted before the ld. CIT(A) that the it is a religious organization and the assessee organization has undertaken religious pilgrimage and other activities relating to the religious. Under these facts and circumstances of the case, we find that the assessee is not entitled for claiming exemption under section 11 of the Act. The assessee, in his written submission, has submitted that there was a mistake occur while filing MoA along with Form No. 10A before the ld. DIT(E) on 12.02.2004. Subsequently, on 13.03.2014, the assessee has corrected the mistake in the amended fifth clause and submitted before the ld. DIT(E), Chennai. However, we have not find any reference with regard to the correct fifth clause either from the assessment order or from the order of the ld. CIT(A). Even before us, the assessee has not filed any revised order passed by the ld. DIT(E). As on the date, as per the certificate dated 30.07.2004 vide DIT(E) No. 2(845)/03-04 issued by the ld. DIT(E), the assessee is a Public Charitable Trust under section 12AA of the Income Tax Act, 1961. The activities carried by the assessee are only religious activities. The assessee has not obtained any certificate from the DIT(E) to treat the assessee as a religious trust. Under these facts and circumstances of the case, we hold that the assessee is a ‘Public Charitable Trust’ and therefore, the activities relating to religious are not eligible for exemption under section 11 of the Act. Thus, we find no infirmity in the order passed by the ld. CIT(A). In the present case, the assessee is registered as a public charitable trust and the assessee carried only religious activities and no charitable activities are carried out. Therefore, having registered under section 12AA of the Income Tax Act, 1961 as a Public Charitable Trust, the assessee cannot claim benefit under section 11 carrying any charitable activities. For the religious activities carried by the assessee, no approval from the DIT(E) has been obtained. - Decided against assessee.
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2015 (10) TMI 14
Recall the orders after expiry of four years by tribunal either on its own or on the application filed by the Revenue - Held that:- Tribunal on its own passed an order after referring to the latter judgment of the Apex Court in Electronics Corporation of India Ltd. [2011 (2) TMI 3 - Supreme Court] recalling its earlier order and restored the appeals on file. We find from the records that the Revenue filed applications on 15.1.2013 praying for the recall of the Tribunal orders on the ground that COD clearance is no longer required in view of the judgment of the Apex Court in M/s Electronics Corporation of India vs UOI. After receiving the applications from the Revenue the same was not numbered and even taken on file. The Tribunal suddenly passed an order dated 18.4.2013 recalling all the earlier orders on its own. The immediate provocation of the Tribunal may be the applications filed by the Revenue to recall its earlier orders. Whatever may be the reason, four years period as provided u/s 254(2) for rectification has expired even on the date of filing of applications by the Revenue. In all fairness, this Tribunal ought to have issued notice to the assessee after taking the applications filed by the Revenue on record. It is unfortunate that the Tribunal has not issued any notice and suddenly passed the order. This Tribunal is of the considered opinion that when the applications filed by the Revenue were not taken on file and the Tribunal has passed the order suo motu, it cannot be considered to be a second miscellaneous petition. For all practical purposes, this is the first application filed by the assessee, therefore, the judgment of the Madras High Court in Panchu Arunachalam (supra) is not applicable to the facts of the case. Since the order was passed ex-parte without hearing either the assessee or the Revenue, this Tribunal is of the considered opinion that proviso to Rule 24 and proviso to Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963 would come into operation. One may say that Rules 24 and 25 are applicable only to appeals and not to the miscellaneous petitions, the fact remains that the order was passed by the Tribunal suo motu recalling its earlier orders therefore, for all practical purposes the order is passed without giving any opportunity to the assessee. Therefore, this Tribunal is of the considered opinion that there is gross violation of principles of natural justice. Therefore, in exercise of the powers of this Tribunal under proviso to Rule 24 and proviso to Rule 25 of Income Tax (Appellate Tribunal) Rules, the order of this Tribunal dated 18.4.2013 is recalled and the orders of this Tribunal dated 20.8.2007 and 21.1.2008 are restored. - Decided in favour of assessee.
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2015 (10) TMI 13
Disallowance under section 36(1)(vii) - provision of doubtful advance - Held that:- Assessee in fact had disallowed both the provision for doubtful debts of ₹ 31,12,318/- and provision for doubtful advances of ₹ 38,54,270/- while computing income for the assessment year 2006-07. Thus, we direct the Assessing Officer to delete the disallowance made in respect of provision for doubtful advance of ₹ 38,54,270/- as the assessee itself had disallowed the amount in its computation. Disallowance of carry forward business loss - Held that:- Commissioner of Income Tax (Appeals) in the last line of the order in para 6.2.2 stated that the ground is rejected. We think it is only an inadvertent mistake of Commissioner of Income Tax (Appeals) in rejecting the ground. Since he has already directed the Assessing Officer to verify whether business loss of assessment year 1998-99 is carried forward only upto assessment year 2006-07 or not. Thus, we restore this issue to the file of the Assessing Officer with a direction to carry out the observations/directions of the Commissioner of Income Tax (Appeals) and ascertain as to whether business loss of the assessment year 1998-99 is carried forward only upto 2006-07 and not beyond that period. - Appeal of assessee allowed partly for statistical purposes.
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2015 (10) TMI 12
Unaccounted share transactions of the assessee company - CIT(A) deleted the addition - Held that:- The A.O. had verified the accounts maintained in the name of M/s. Sandeep Stocks Pvt. Ltd. and came to the conclusion that there was no variation in the entries/transactions carried out through this account. Therefore, at the time of filing of return, the assessee company has not disclosed any additional income on account of surrender made during the course of survey. The ld. CIT (A) had thoroughly examined this issue and held that addition made by the AO was not justified simply on the basis of surrender made during the course of survey. As such no incriminating documents were found during the course of survey on which assessee can disclose additional income. Therefore, we find no infirmity with the order of ld. CIT (A). Accordingly we confirm the order of ld. CIT (A). - Decided against revenue.
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2015 (10) TMI 11
Validity of re-opening of assessment u/s. 147 - addition made u/sec 2 (22)(e) - Held that:- None of the case law cited by the assessee fits to the facts and circumstances of the case in hand. In this case the additions made as deemed dividend u/s 2(22)(e) of the Act have already been confirmed by the CIT(A) in relation to base year AY 2001-02. On the date of reopening of the assessment for the year under consideration, the AO had reasonable belief that the income of the assessee for the year under consideration had escaped assessment. Hence we do not find any merit in Ground No.1 in relation to the validity of the reopening of the assessment. - Decided against assessee. Additions in relation to provision for bad debts - Held that:- The Hon'ble Supreme Court in the case of 'T.R.F. Ltd.' [2010 (2) TMI 211 - SUPREME COURT] has held that in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; it is enough if the bad debt is written off as irrevocable in the accounts of the assessee. In view of above observations, this issue is restored to the file of the AO to examine it a fresh and decide the same in the light of the decision of the Hon'ble Supreme Court (supra). - Decided in favour of assessee for statistical purposes. Addition u/s 14A made on account of disallowance of expenditure incurred in relation to earning of the exempt income - Held that:- Jurisdictional High Court in the case of "Godrej & Boyce manufacturing Co. Ltd. vs. DCIT" [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein, it has been held that the AO has to look into the working of the assessee at the time of making disallowance u/s 14A. The Hon'ble Bombay High Court in the case of "Reliance Utilities and Power Ltd." [2009 (1) TMI 4 - HIGH COURT BOMBAY ] has observed that if there are funds available with the assessee, both interest free and overdraft/loans taken, then presumption would arise that investments would be out of the interest free funds generated or available with the assessee. A similar view was taken by the Hon'ble Bombay High Court in the case of "HDFC Bank Ltd." [2014 (8) TMI 119 - BOMBAY HIGH COURT]. We find that the above contentions of the assessee have not been examined by the AO. Further, he is not having the benefit of going through the decisions of the Hon'ble Jurisdictional High Court on the issue at the time of making the assessment. We accordingly restore this issue also to the file of the AO with direction to examine the contentions of the assessee in the light of the above decisions of the Hon'ble Jurisidictional High Court and decide the issue a fresh.- Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 10
Revision u/s 263 - disallowance u/s 43B being provision made for liability on account of pension scheme - Held that:- There is a complete lack of enquiry on the part of the Assessing Officer so far as the issue of provision towards the pension scheme liability. The lack of enquiry and non application of mind itself renders the assessment order erroneous so far as prejudicial to the interest of revenue as held by the Hon'ble Supreme Court in the case of Malabar Ind. Co. Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court). Thus we are of the view that the Commissioner was justified in invoking the provisions of section 263 as there was a lack of enquiry and non application of mind on the part of the Assessing Officer while framing the assessment u/s 143(3) dated 16.12.2010. However, when the assessee in the revision proceedings has brought to the notice of Commissioner that the said claim is an allowable claim being ascertained liability based on actuarial valuation report and as per Accounting Standard 15 then the Commissioner was supposed to examine the claim on its own or ought to have directed the Assessing Officer to examine the same as there was no enquiry on this issue at the time of framing the original assessment u/s 143(3 ). The assessee has submitted that the pension scheme in question does not make any regular contribution to any fund or trust and, therefore, the liability on this account would not fall under the provisions of section 43B. Since this aspect has not been examined by the Assessing Officer, therefore, in the facts and circumstances of the case and in the interest of justice, we modify the impugned order of the Commissioner and set aside this issue to the record of Assessing Officer for proper verification and examination of claim of the assessee and then decided the same as per law by considering the decisions relied upon by the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 9
Penalty proceedings u/s 271(1)(c) - taxability of interest - "Principle of Mutuality" - CIT(A) deleted the penalty on the ground that, in the earlier years the issue of taxability of interest was decided in the favour of the assessee and it was only after the decision of Bombay High Court which was rendered on 17.06.2010, this issue was decided against the assessee - Held that:- A mere making of a claim which may not be found sustainable in law later on, cannot be held against the assessee, that he is guilty of making a false claim. It is an admitted fact that, at the time of filing of return of income the issue of taxability of interest was in the favour of the assessee by virtue of series of decisions of the Tribunal in the earlier years in assessee's own case. Not only that, there were certain High Courts decisions also which were in the favour of the assessee as pointed out by the learned counsel. Thus the issue whether interest income will fall within the "Principle of Mutuality" or not itself was debatable as there were many conflicting decisions. In this background we hold that at the time of filing return of income the assessee's claim was not only bona fide but had a foundational fact in the form of Tribunal orders. Accordingly, we hold that the Ld.CIT(A) has rightly deleted the penalty as the claim of non taxability of interest income was based on bona fide belief. - Decided in favour of assessee.
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2015 (10) TMI 8
Registration under sec. 12AA denied - whether the assessee trust are innumerable in number and idealistic in character and, therefore, such conglomeration of objects is vague that the objects could not be considered as real and practical? - Held that:- In order to cope with the priorities of the future it has to become necessary for trusts and such other institutions to state their objects in very many words encompassing all fields of charitable endeavours. It is not necessary that a trust should carry on all and every one of its stated objects. It is sufficient that a trust carries on selected number of objects stated in its charter. In the present case, out of a number of declared objects, the assessee trust may be pursuing only one or two viable objects and may advent upon other objects as and when the circumstances permit. Therefore, stating a large number of objects in the trust deed does not disentitle the assessee from claiming the status of a charitable trust. It is only sufficient to look into whether the actual activities carried on by the assessee trust are coming under any of the objects stated in its trust deed. We find that the first ground raised by the Director of Income-tax(Exemptions) may not be sustainable in law. Whether certain objects mentioned in the trust deed of the assessee, are of commercial in nature and, therefore could not be treated as activities for charitable purpose as per the proviso to sec.2(15)? - Held that:- When the assessee trust contemplates to organize milk societies for facilitating sale of milk, the underlying intention is to get good price for the milk sold by the villagers and also to encourage them to rear their own milch animals. The villagers can earn a decent livelihood by engaging themselves in rearing of milch animals and selling of milk without middlemen and exploitation, through the societies formed under the guidance of the assessee trust. This is the same case with other proposed activities like ginning, spinning, fruit processing etc., where labour of the village women-folk could be fruitfully deployed, to keep away exploitation.The economic activities in the above nature cannot be treated as activities in the nature of trade, commerce or business as contemplated in proviso to sec.2(15). Therefore, we find that the Director of Income-tax(Exemptions) has characterized the activities of the assessee trust as commercial in nature without going into the circumstances in which the activities are contemplated to be carried on by the assessee trust. The assessee trust has not so far carried out any substantial activities as proclaimed by them, for want of funds. It is stated that the trust is in the process of collecting funds to accomplish its objectives. Therefore, it is not possible now to say whether the activities carried on by the assessee are outside the purview of charitable activities or not. The conclusion of the Director of Income-tax(Exemptions)is premature. The assessee trust is qualified for registration under sec.12AA - Decided in favour of assessee.
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2015 (10) TMI 7
Addition made u/s 69C relating to marriage expenses - CIT(A) deleted the disallowance - Held that:- We notice that the ld. CIT(A) has deleted the impugned addition by placing reliance on certain case laws cited by the assessee. Under these circumstances, we do not find any reason to interfere with the order of ld. CIT(A) on this issue - Decided against revenue Disallowance of part of sale promotion expenses - CIT(A) deleted the disallowance on the reasonings that the assessee has filed all the details of expenses, copy of bills before AO and further on the reasoning that these expenses were made through account payee cheques - Held that:- AO has made adhoc disallowance of ₹ 1 lakh on the reasoning that the assessee could not furnish details to show that the gift articles purchased by him were actually distributed to its customers. The AO has also pointed out that the assessee has not maintain any register/record to substantiate the claim of distribution. We notice that the ld CIT(A) has not addressed this issue. However, distribution of gift articles to the local retailers are prevailing trade practice. Under these circumstances, we are of the view that this may ends of justice if the disallowance is restricted to 50,000/-. Accordingly, we modify the order of ld. CIT(A) and direct the AO to restrict disallowance to ₹ 50,000/-. - Decided partly in favour of revenue.
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2015 (10) TMI 6
Disallowance u/s. 54F - CIT(A) deleted the addition admitting additional evidence - Held that:- We find that Ld. D.R. has force in his contention that Ld. CIT(A) has not provided sufficient opportunity to thoroughly examine the additional evidences, which is arbitrary in the eyes of law. In our considered opinion, in the interest of natural justice, this issue requires thorough investigation at the level of the Assessing Officer. Hence, we remit the ground relating to addition made by the AO in regard to the disallowance u/s. 54F of the I.T. Act with the directions to consider the same, after giving adequate opportunity of being heard. - Decided in favour of revenue for statistical purposes. Addition on account of the business loss pertaining to the amount recovered by the police from the alleged culprits - CIT(A) deleted the addition - Held that:- It is established that the loss occurred in fraud was directly connected with business operation and incidental to carrying on of business. Hence, entire amount of business loss has to be allowed as a deduction. Therefore, we find Ld. CIT(A) has rightly deleted the addition which does not need any interference on our part, hence, we uphold the same. - Decided against revenue.
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2015 (10) TMI 5
Penalty u/s. 271(1)(c) - arrear rent receipts - Held that:- As seen that the amount received by the assessee was compensation for illegal occupation of the premises by the Ministry of Defence. The appellant has stated that there was no fraud or concealment of any income and all the facts had been disclosed truly and correctly before the authorities and the Hon’ble Courts. It has been stated that addition was made only on account of difference of interpretation between the Department and the assessee. It is seen that in the present case that there is no concealment of facts or filing of inaccurate particulars. There exist no conditions which should attract penal provisions. It is also seen that all the relevant and material facts are well within the knowledge of the department, High Courts and other authorities. It was the Ld. CIT(A) observation that this is a case where there is only a difference of interpretation and opinion. Hence, it is felt that these cases do not fall within the purview of section 271(1)(c). Hence, the penalty imposed is deleted - Decided in favour of assessee.
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2015 (10) TMI 4
Rejection of application for registration U/s 12AA - Held that:- The Assessing Officer himself satisfied on behalf of the learned CIT and recommended registration U/s 12AA of the Act. However, the learned CIT was not found satisfied with the explanation submitted by the applicant. When all the three years copies of return was with the CIT and copy of aims and objects of the trust created was also submitted before him, he should have considered these aspects to judge the genuineness of the activities before rejecting the registration U/s 12AA of the Act. He should have given a show cause notice for not finding out by him genuineness of the activities of the trust, therefore, we direct the learned CIT to reconsider the assessee’s application afresh and the assessee is also directed to cooperate with the CIT and furnish all the records for his satisfaction. Accordingly we set aside the order of the learned CIT, Alwar. - Decided in favour of assessee for statistical purposes only.
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2015 (10) TMI 3
Disallowance u/s.14A in accordance with Rule 8D - Held that:- No doubt rule 8D is not mandatory for the current year, so that the Revenue is free to invoke any method, including that prescribed u/r. 8D, in making a reasonable estimate of the amount which stands to be disallowed, either on account of interest or other indirect expenses, i.e., u/s. 14A(1), in respect of income not forming part of the total income for the current year. The hon’ble jurisdictional high court in Godrej & Boyce Mfg. Co. Ltd. vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] has abundantly clarified the law in the matter. Disallowance u/s. 14A(1) is a statutory disallowance. The onus to prove that no expenditure in relation to income, which is tax-exempt, stands incurred and, further, with reference to its accounts, is on the assessee. In view of the foregoing, we, under the circumstances, only consider it fit and proper that the matter is restored back to the file of the AO to enable the assessee to present its case in the matter. Where, for instance, the loans on which the interest liability has been suffered, are dedicated loans, i.e., toward specified business purposes, and stand utilized for the same, interest thereon would stand to be allowed under section 36(1)(iii) in full, so that no disallowance under section 14A would ensue. In the absence of such utilization being shown or established by the assessee, the presumption of all the assets being proportionately funded cannot be faulted with for the purpose of disallowance u/s.14A(1). - Decided in favour of assessee for statistical purposes. Disallowance on account of finance charges paid to the Bank towards documentation and process expenses for securing finance - . CIT(A) considered the impugned expenditure toward stamping charges on the franking of various loan documents executed in respect of Windsor Term Loan from its bank (Union Bank of India), as being a part of interest, so that having been incurred prior to the date when the asset was put to use, would stand to be capitalized in terms of the extant law, i.e., section 43(6) r/w s. 36(1)(iii) - Held that:- We are unable to appreciate the Revenue’s case in-as-much as stamping charges cannot be equated with or considered at par with the service or other charges levied by the bank in respect of money borrowed or debt incurred. The same, though may be charged by the bank, are payable to the government exchequer as stamp duty on the debt or other related (as securitization or mortgage) transaction/s. The same is only revenue expenditure, no part whereof could be capitalized as a part of the cost of the asset. The law in the matter is well-settled, reference for which may be made to the decision in the case of India Cements Ltd. vs. CIT [1965 (12) TMI 22 - SUPREME Court] also relied upon before us by the assessee. Similarly, the charges for valuation report (Rs.7,350/-) and notary (Rs.130/-) are again incidental charges incurred toward specific non-banking (financing), collateral services availed in relation to the debt transaction and, therefore, cannot be considered as part of the interest cost paid to the bank, deduction qua which is exigible u/s.36(1)(iii). The disallowance is thus misconceived and is hereby directed for deletion. - Decided in favour of assessee.
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2015 (10) TMI 2
Addition towards cash found at the time of survey - Held that:- There is no dispute that the amount belongs to assessee and was found in the course of survey. It was the contention of assessee that the sources are withdrawals from bank accounts and firm’s accounts but no such evidence was furnished either before A.O. or before appellate authority. Even before us, except making the arguments, no evidence has been furnished. In the absence of any supporting contentions, we are of the opinion that the authorities are justified in confirming the addition. - Decided against assessee. Addition towards unexplained withdrawals - Held that:- Assessee could not substantiate by way of any confirmation or account copies of the so-called withdrawals from the firms. By a separate order, we have also dealt with the appeal in the case of M/s. Ramaswamy & Sons which is supposed to have been advanced ₹ 1 lakh to assessee. In that case, there are no books of accounts and assessments have been completed on estimation basis as that assessee has not even filed return. In the absence of any evidence with reference to confirmation of amounts received as credits, the amount of ₹ 2,50,000 was rightly confirmed by Ld. CIT(A). We see no reason to interfere with the order - Decided against assessee. Claim of exemption under section 10(37) - Held that:- Capital gains is exempt in the case of assessee being an individual arising from the transfer of ‘agricultural land’ where such transfer is by way of ‘compulsory acquisition’ under any law as per Sec. {10(37)(iii)}. There is nothing on record to indicate that the land which is acquired by HUDA as stated by assessee was ‘agricultural land’ under the definition of the I.T. Act, even though the land may be used for agricultural purposes. Since, assessee himself offered the capital gain. A.O. had no occasion to examine this issue, whether the land in question is exigible to capital gains or not. Before the Ld. CIT(A) when assessee has raised as an additional ground, he should have examined the facts required and should have adjudicated the same on legal principles as it goes to the root of the matter whether capital gains can be offered or not. Since the Ld. CIT(A) rejected without adjudicating the same/examining the same, we are of the opinion that assessee should be given an opportunity to explain whether the capital gains offered in the return of income is correct or not. Therefore, in the interest of justice, we are of the opinion that this matter is to be re-examined by A.O. after obtaining necessary information/evidence or facts for establishing that the land in question is ‘agricultural land’ as per the definition of the I.T. Act and the same is compulsorily acquired by HUDA and provisions of section 10(37) are applicable. Assessee is directed to file necessary evidence before A.O. in order to examine the issue. - Decided in favour of assessee for statistical purposes.
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2015 (10) TMI 1
Addition on account of interest free advances made by the assessee to its subsidiary company - CIT(A) deleted the addition u/s 36(1)(iii) - Held that:- The Assessing Officer during the year under consideration had computed the disallowance under section 36 (1) (iii) of the Act on account of interest free advances made by the assessee to its subsidiary whereas it had claimed interest expenditure in its Profit & Loss Account. The plea of the assessee before us was that the said advances were made to its subsidiary company which had been acquired in furtherance of his business need. The plea of the assessee is that the said advance having been made during the course of carrying on of his business does not merit any disallowance of interest because of business exigency. We further find that similar issue arose before the Tribunal in assessee's own case relating to assessment year 2005-06 and 2006-07 wherein the Tribunal vide separate orders dated 29.07.2009 and 28.02.2011 had allowed the claim of the assessee upholding the order of Commissioner of Income Tax (Appeals). In view thereof, as the facts and circumstances are identical to the facts and circumstances in preceding years, we uphold the order of Commissioner of Income Tax (Appeals). However, the issue decided vide present ground of appeal shall not be a precedent used by any other assessee - Decided against revenue. Addition made under section 40A(2)(a) - CIT(A) deleted the addition - Held that:- The ld. DR for the revenue has failed to controvert the findings of the Commissioner of Income Tax (Appeals) and in view thereof, we find no merit in the addition made by the Assessing Officer especially where the assessee had compared the purchase rates in respect of the items purchased from sister concern with the purchase rates of items purchased from independent parties and the tabulated details reflect the same to be on the lower side. Upholding the order of Commissioner of Income Tax (Appeals), we reject ground of appeal raised by the revenue.- Decided against revenue. Addition paid on account of bank charges - CIT(A) deleted the addition - Held that:- The facts and circumstances and the issue raised vide present ground of appeal is identical to the issue before the Tribunal in assessee's own case and following the same parity of reasoning, we uphold the order of Commissioner of Income Tax (Appeals) in allowing the relief of ₹ 22,41,628/- being bank charges paid for renewal of the working capital facilities availed by the assessee - Decided against revenue. Disallowance of building repair and maintenance - CIT(A) deleted the addition - Held that:- The Commissioner of Income Tax (Appeals) allowed the claim of the assessee holding the said expenditure to be revenue in nature. We find that the Assessing Officer has not doubted the genuineness of the said expenditure and the only issue raised by the Assessing Officer was whether the said expenditure was capital or revenue in nature. The nature of the expenditure incurred by the assessee towards maintenance of an existing asset is an expenditure towards repair and maintenance and is revenue in nature. Upholding the order of Commissioner of Income Tax (Appeals), we dismiss ground of appeal raised by the revenue.- Decided against revenue.
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Customs
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2015 (10) TMI 34
Benefit of Notification No.12/2012 - Misdeclaration - Steam Coal or Bituminous Coal - Bar of limitation - Held that:- The use of the expression shipping bills by the Commissioner cannot be considered to be a typographical error and the same reflects upon non-application of mind by the Commissioner. Further it is not the assessee who is seeking re-assessment of the Bills of Entry. It is the Revenue who initiated proceedings against the assessee by way of issuance of a show-cause notice. If the Bills of Entry, according to the Revenue, cannot be re-assessed, then the original assessment which was in favour of the assessee is required to be adopted - Tribunal having remanded the matter for confirmation of demand for the period falling within the limitation, it was not open to the adjudicating authority to go beyond such directions. As such once again, we are constrained to set aside the impugned order and remand the matter to the adjudicating authority for reconsideration of the issue only for the period falling within the limitation as also not to impose any penalty. Demand which falls within the limitation period, the appellant has made an alternative ground claiming benefit under Notifications No.127/2011-Cus. and No.64/2012-Cus. which provide concessional rate of duty in respect of imports from Indonesia. Though the appellants have produced documentary evidences to show that the imports are from Indonesia but the same were not accepted by the Commissioner on the ground that the appellant has not produced the originals. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 33
Denial of refund claim - Bar of limitation - Held that:- There is a mode of claim of refund prescribed by law. We do appreciate the difficulties of the appellant as to prevention to produce original document in support of claim of refund. But we fail to understand why appellant did not keep its refund claim alive before the adjudicating authority as and when shipment was made when as early as in 1999 it was aware that there arose liability towards Cess under the above Act till that was declared by the High Court of Madras in the judgement reported in [2008 (7) TMI 117 - HIGH COURT MADRAS] as not leviable. Therefore, it can be said that all on a sudden 513 shipping bills shall not entitle the appellant to refund which is barred by limitation. Therefore, on that count, appellant fails to succeed - appellant has no claim to get the refund against all these shipping bills. However, we appreciate difficulty of appellant as to filing of original documents for the reason advanced by appellant and no leviability of Cess. But we do not consider it proper to hold contrary to the bar of limitation prescribed by law relating to refund. - Decided in favour of assessee.
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2015 (10) TMI 32
Levy of CVD on MRP basis - Determination of correct RSP - Confiscation of goods - whether the goods cleared in the past under Bills of Entry as detailed in Annexure 1 to the show cause notice need re-determination of RSP and their leviability to confiscation - Enhancement of penalty - Held that:- Goods are imported in package form and leviable to duty on RSP based assessment as stickers of higher MRP were found affixed on seized goods in the godowns. For not declaring the MRP correctly, the goods are liable to confiscation under Section 111(m) and duty is required to be paid on the basis of MRP declared in the price list. The fact that a certificate is produced from the CA much later to the effect that goods were sold at lower prices makes no material difference because the MRP declared in the price list and the stickers is higher and the partner admitted at the time of import that they are selling the goods at the list price. The proviso to Section 3(2) of Customs Tariff Act unambiguously states that in the case of such goods, the retail sale price has to be declared on the package as required under the Standards of Weights and Measures Act (SWM). The retail sale price is required to be declared in the case of imported goods which are specified under Section 4(A)(1) of the Central Excise Act. And the retail price which the respondent was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). The goods also being notified under Notification No. 49/08-CE; therefore both the conditions specified in proviso to Section 3(2) of the CTA are met and goods will be leviable to RSP based assessment. Rule 6(1) of the SWM(PC) Rules, states that (i) Every package shall bear their own owned label securely affixed thereto defined plain and conspicuous declaration made in accordance with the provisions of this Chapter as to (a) name and address of the manufacturer (f) the retail sale price of the package. In the case of goods seized from the container as well as goods found in the godown, "the respondent have violated the provisions of the SWM(PC) Rules read with Section 3(2) of the CTA requiring importer to affix the label at the time of import. As those labels were not affixed as well as fact that RSP was not declared on the goods makes the goods liable to confiscation under Section 111(d) of the Customs Act and leviable to duty on MRP basis. Retail price which the appellant was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). The facts in the case of ABB (supra) are different. There the facts were that the goods, namely electrical items, were cleared without declaring the RSP, and actually the goods were cleared by paying CVD in terms of Section 4 of the Central Excise Act, 1944 by misclassifying the goods. In the present case the facts are different. Here the MRP was wrongly declared in the Bill of Entry. After clearance form Customs, the appellants sold the goods at prices which are different from the MRP declared by them. - even if there are no machinery provisions laid down in Section 3(2) of the CTA and Section 4A(4) of the Central Excise Act, it cannot be concluded that Section 3(2) of the Customs Tariff Act will become ineffective and the law rendered otiose. - Decided in favour of Revenue.
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2015 (10) TMI 31
Classification of calcareous stone – Exemption under Notification 103/2009-Cus – Confiscation of improperly imported goods – Adjudicating authority vide impugned order held that goods imported by appellant would be classifiable under Customs Tariff Heading 6802 2900 however, denied benefit of exemption Notification 103/2009-Cus and ordered confiscation of said goods under Section 111(d) of Customs Act, 1962 – Held that:- Goods were falling under 6802 29 00 under Customs Tariff, ITC (HS) Policy relating to corresponding entry was free under EXIM code 6802 29 00 and there was no value restrictions attached to goods – Therefore, there was no policy restriction at time of import either as to value or on account of other reasons – From provisions of policy, it was evident that classification under Indian Customs Tariff and ITC (HS) were aligned completely with each other –If that be so, Customs cannot classify goods under different entry other than 6802 29 00 in respect of goods under importation – In view of factual and legal position, it was clear that there cannot be two classification for Customs duty and for ITC (HS) purpose – Question of goods being liable to confiscation under Section 111(d) also would not arise – Decided in favour of Assesse.
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2015 (10) TMI 30
Recovery of drawback – Demand made after lapse of seven years – Vide impugned order, adjudicating authority ordered for recovery of drawback amount under Rule 16 of Customs & Central Excise Duty Drawback Rules, 1995 – Claim for drawback for amount in respect of four shipping bills have been rejected and exported goods were held liable to confiscation and penalty was imposed – It was alleged that show cause notice was issued after lapse of more than five years and therefore, demands are unsustainable – Held that:- From records, it is seen that demands for recovery of erroneously sanctioned drawback has been made after lapse of more than seven years – High Court in case of Dadri Inorganics Pvt. Ltd. [2010 (8) TMI 320 - GUJARAT HIGH COURT] held that in absence of any period of limitation, it is required that every authority is required to exercise power within reasonable period – Reasonable period prescribed in Customs Act is one year, where there is no wilful misstatement, collusion, suppression, etc. and five years if any of these elements are present – Both these time-limits are already over and therefore, impugned demands for recovery of erroneously sanctioned drawback is hit by time-bar – Liability to penalty without attracting any time limit is matter which needs deeper and careful consideration – Revenue restrained from going ahead with attachment of property, during pendency of appeals –Unconditional waiver from pre-deposit of dues also granted.
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2015 (10) TMI 29
Export goods improperly – Use of false and incorrect material – Confiscation and imposition of penalty – Appellant was implicated for payment of penalty, for attempting export of goods by mis-declaration, only on statement made by one Pradeep Dhond – As per his statement appellant has supplied lead acetate to him which was attempted to be exported by using IEC of some other firm – Held that:- It was clear from investigation and records that Pradeep was exporter of mis-declared goods – Role of appellant was that he has supplied Lead Acetate to him but said goods were delivered in domestic area and not in Customs area – After appellant sold goods to Pradeep, appellant thereafter was not concerned with said goods – Section 114(i) can be imposed on person whose act renders goods liable for confiscation – Movement of goods outside Customs area cannot be liable to confiscation – Therefore, even if it was accepted that appellant supplied goods but at place outside Customs area, said goods was not liable to confiscation – Hence, penalty upon Appellant was not sustainable – Since role of appellant was only to supply goods in domestic area, therefore no penalty should have been imposed upon appellant either under Section 114(i) or under Section 114AA – Thus, penalties imposed upon the appellant are unsustainable – Decided in favour of Appellant.
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2015 (10) TMI 28
Demand of differential duty - Confiscation of goods - Imposition of redemption fine - Misdeclaration of goods - Held that:- Appellants declared the goods imported as PVC coated fabrics. Samples were taken and sent for examination and in the report of the Textile Committee there is a specific opinion that the goods in question is neither laminated, nor impregnated. In view of this test report, we find no infirmity in the impugned order, whereby the lower authority held that the goods were misdeclared and we find no infirmity whereby the demand of differential duty and the goods were held to be liable for confiscation. - Commissioner (Appeals) has taken a view that once goods have been cleared under Section 47 of the Customs Act, 1962 the same cannot be confiscated except in pursuance of an order passed in Revision under Section 129D of the Customs Act, 1962 - merit found in the contention of the Revenue that the impugned order whereby the Commissioner (Appeals) set aside confiscation is not sustainable - Decided in favour of Revenue.
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PMLA
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2015 (10) TMI 27
Jurisdiction of authority - Freezing of bank accounts - violation of Articles 3 and 19(1)(g) of the Constitution of India - Held that:- There is no apparent connection between the issues before the Apex Court qua allotment of Coal Block and the one involved before this Court. The petitioner has not even started the mining and the same has been cancelled already. Neither the respondents are parties before the Apex Court nor the issues similar. Thus, the objection raised by the respondents is rejected - Division Bench has agreed with the exercise of power during the course of investigation. As there is no dispute on the power of the respondents to investigate, the ratio laid down therein would apply to the case on hand. In other words, the exercise of power by the respondents is well within their jurisdiction while discharging duties as an Investigation Officer. Therefore, the distinction sought to be made by the learned Senior Counsel appearing for the petitioner cannot be accepted. A specific statement has been made that the trust and retention accounts duly monitored by the lenders at the time of release. A further statement has been made that fixed deposits have been created only to augment interest. The need for releasing the amounts has also been reiterated from time to time. Unfortunately, these factors have not been taken into consideration by the respondents. The respondents have treated the power exercisable for investigation with the one available under Section 5 of the Act by an officer other than him. There is no explanation as to why the investigation has prolonged. There is no sufficient material to hold that the continuity of the orders impugned would be necessary for investigation. Admittedly, the power under Section 5 of the Act has not been invoked so far. Strangulating the petitioner would benefit none. When the exercise of power is for a specified purpose, it cannot be used otherwise. - Court is of the considered view that though the power is available to the respondents to pass the orders impugned, its continued exercise in the given case cannot be sustained in the eye of law. More over even under Section 5 of the Act, the provisional attachment can be in force only for a period of 180 days and not beyond. Issue being one of the continued existence of orders meant to be used sparingly for a temporary period, the rigour of Section 68 of the Act would not apply to the case on hand. We should also bear in mind the fact that these orders have been passed unilaterally without even affording an opportunity to the petitioner neither indicating the reasons nor the application of mind. Therefore, the respondents ought to have done a complete review by taking into consideration of the entire materials. - Impugned order is set aside - Decided in favour of Appellant.
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Service Tax
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2015 (10) TMI 59
Waiver of pre deposit - Valuation - payment of service tax on Net basis - Business Auxiliary Service - Held that:- Service tax was required to be paid by the appellant on the entire amount of commission received by the appellant under BAS. However, appellant paid service tax on the net commission retained by it as there was some confusion in this regard at that time. - there were indeed doubts (about whether service tax was to be paid on the entire commission received or on the net commission retained by DSA/DMA) of such a degree that CBEC thought it fit to clarify the matter.Therefore, prima facie extended period may not be invocable.In this case, the Show Cause Notice was issued on 31.07.2007 and the period of demand is as stated earlier July, 2003 to December, 2004. In these circumstances, appellant has an arguable case with regard to the demand being time barred. - Stay granted.
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2015 (10) TMI 58
Waiver of pre deposit - Demand of service tax - appellant was of the view that it was not liable to service tax since LICHFL was remitting service tax on full value and therefore on the principles of revenue neutrality, there was no liability for the appellant to remit service tax as that would be available to LICHFL as CENVAT credit. - Held that:- Entitlement to credit is predicated on the basis of such a facility provided under CENVAT Credit Rules, 2004. These Rules constitute a policy choice of the State. The entitlement of LICHFL to avail CENVAT credit depends upon provisions of the Rules, whether credit could be taken and the conditions upon which CENVAT credit may be availed under the Rules. The liability of the appellant to remit service tax for having provided BAS is clear and beyond dispute. Such liability is not eclipsed on the premise that had the appellant remitted service tax, LICHFL could have taken credit of the same. The whole schemata of taxation at the level of each taxable event would be rendered otiose and inoperative on application of the concept of revenue neutrality as a clog on the liability to service tax. - Revenue neutrality may conceptually arise if the liability to tax and the entitlement to credit inheres in the same entity and in respect of identical taxable event. - Partial stay granted.
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2015 (10) TMI 57
Waiver of pre deposit - Demand of service tax - Interest u/s 75 - Penalty u/s 77 & 78 - Business Auxiliary Service - Held that:- Concept of revenue neutrality pleaded in the above illustrative transaction to be creative and attractive at first blush but wholly unacceptable as a normative principle. Entitlement to credit is predicated on the basis of such a facility provided under CENVAT Credit Rules, 2004. These Rules constitute a policy choice of the State. The entitlement of LICHFL to avail CENVAT credit depends upon provisions of the Rules, whether credit could be taken and the conditions upon which CENVAT credit may be availed under the Rules. The liability of the appellant to remit service tax for having provided BAS is clear and beyond dispute. Such liability is not eclipsed on the premise that had the appellant remitted service tax, LICHFL could have taken credit of the same. The whole schemata of taxation at the level of each taxable event would be rendered otiose and inoperative on application of the concept of revenue neutrality as a clog on the liability to service tax. - none warrant to apply this concept to legitimise an inference of immunity to tax of the appellant even for the normal period of limitation. Since the Interim Orders referred to above have applied the concept of revenue neutrality to grant waiver of pre-deposit, for the nonce we follow those decisions in respect of the extended period and the liability of the appellant for extended period but not for the normal period of limitation. - Partial stay granted.
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2015 (10) TMI 56
Advertising agency services - Valuation - Inclusion of media costs - Held that:- adjudicating authority has incorrectly appreciated the fact that the service tax liability sought to be recovered from the appellant is in respect of outdoor campaign. It was not in dispute that the hoardings/bill boards and media costs and the advertisement published in print and electronic media were abroad i.e. London, New York and Paris. If that be so, the advertisement campaign has to be looked into as to who is the service recipient and service provider. In the case in hand it is not in dispute is that the media costs were incurred by the appellant beyond the territorial waters of India and the ratio of judgement of Cox and Kings (2013 (12) TMI 1024 - CESTAT NEW DELHI) would be directly applicable. - media costs incurred by the appellant were in respect of bill boards, hoardings and conveyance abroad - Impugned order is set aside - Decided in favour of assessee.
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2015 (10) TMI 55
Waiver of pre deposit - Commercial or Industrial Construction Service - 67% abatement - Held that:- Work done for the UP Jal Nigam would not be covered under CICS, prima facie the same would be the case with regard to the work done for Delhi Jal Board. The appellant has an arguable case for the work done for Haryana Urban Development Authority relating to construction of 50 MLD main sewage pumping station for supplying treated water to residential localities. However construction of effluent treatment plant for recycling of treated waste water supplied to industrial units in Karnataka Industrial Area would prima facie fall under CICS. There is also force in the contention of the appellant that the demand in respect of first Show Cause Notice for the period October, 2005 to March, 2010 involve supply of goods and therefore 67% abatement was available to it. - a pre-deposit of ₹ 25 lakhs with proportionate interest would meet the requirements of section 35F Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Partial stay granted.
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2015 (10) TMI 54
Denial of CENVAT Credit - Held that:- As delivery charges are included in selling price, relying on Karnataka High Court judgment in case of Commr of C.Ex & ST vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT ] wherein, the full bench of CESTAT held that the expression "activities relating to business' admittedly covers transportation upto the customers place and therefore, credit cannot be denied. The expression 'such as' is purely illustrative. The expression means "for example" or "of a kind that". The usage of the words "such as" after the expression "activities relating to business" in the inclusive part of the definition, therefore, further support the view that the definition of the term "input services" would not be restricted to services specified thereafter. It is also noted that the transportation of goods to customer's premise is an activity relating to business. It is an integral part of business of manufacturer, to transport and deliver the goods manufactured. Even services like advertising, market and research, which are undertaken to attract customers to buy goods of manufacturer are eligible to credit. - Decided in favour of assessee.
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2015 (10) TMI 53
GTA service - reverse charge - penalties under Sections 77 and 78 - benefit under Notification No. 34/2004-S.T., dated 3-12-2004 - Held that:- Under Section 65(50b), Goods Transport Agency means ‘any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called’. Section 65(105(zzp) defines taxable service as ‘service provided or to be provided to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage’. From these legal definitions it is clear that any person (including individuals) who provides service in relation to transport of goods by road is liable to Service Tax. There is no exclusion of individual truck owners from the purview of Service Tax levy under the law. However, vide Section 68(2) read with Rule 2(l)(d)(v) in respect of certain categories of service recipients the liability to pay Service Tax has been fastened on the recipients of service in respect of 7 categories of persons. In the case before us, the appellant has not been able to lead any evidence to the effect that in respect of the consideration received for which Service Tax demand has been confirmed, the services were rendered to persons specified in Rule 2(l)(d)(v). Therefore, the appellant cannot take the plea that they are not liable to pay Service Tax on the services rendered by them. - Decided in favour of assessee.
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2015 (10) TMI 52
Waiver of pre-deposit - Recovery of interest and penalty under Sections 76 and 78 - erection, commissioning or installation service - Held that:- Notification No. 45/2010-S.T., dated 20-7-2010 has granted immunity from service tax in respect of all services relating to transmission and distribution of electricity provided during the specified period relating to transmission of electricity upto 21-2-2010 and in relation to distribution of electricity upto 21-6-2010. Notification No. 11/2010-S.T., dated 27-2-2010 exempted taxable services provided for transmission of electricity from the whole of the service tax leviable thereon, prospectively. Similarly, Notification No. 32/2010-S.T., dated 22-6-2010 granted exemption to taxable service provided to any person, by a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003, for distribution of electricity, from the whole of service tax leviable thereon, prospectively. - taxable service of “erection, commissioning or installation service”, when provided in relation to transmission of electricity/electrical energy would be covered by the immunity/exemption, as the case may be. - prima facie case in favour of the petitioner/appellant - Stay granted.
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2015 (10) TMI 51
Denial of CENVAT Credit - whether appellant is eligible for the benefit of Cenvat credit of service tax paid on sales commission paid by them to their agents - Held that:- Even though department has not filed appeal, the fact remains that even if appeals are filed by the department, Commissioner (Appeals) has held in favour of the appellant. Further I also find considerable force in the argument that the lower authorities have travelled beyond the show cause notice while deciding the issue. In the show cause notice the proposal was to deny the Cenvat credit on the ground that the said service was not an input service used directly or indirectly in the manufacture of final products. However the lower authorities have taken a view that the activity undertaken by the commission agents was only sales and not sales promotion. In my opinion by doing so the lower authorities have travelled beyond the show cause notice and reliance of the learned CA on the decision in the case of Salasar Copper v. CCE, Vapi reported in [2012 (6) TMI 25 - CESTAT, AHMEDABAD] is appropriate. - according to the definition of ‘input service’, the words ‘up to the place of removal’ has been used only in respect of few input services in the definition i.e. in respect of transportation and storage of the goods. Therefore this restrictive clause cannot be applied to all the cases. Therefore if the service tax has been paid treating the same as Business Auxiliary Service the assessee cannot be denied the benefit of service tax credit which has been paid by the service provider. - Decided in favour of assessee.
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2015 (10) TMI 50
Courier service - Whether the activity of transporting the goods from door-to-door internationally by the appellants is covered by the ‘courier service’ definition and appellant is liable to pay service tax or not - Held that:- Commissioner should have considered what is the meaning of ‘time-sensitive’ and whether the appellant’s activities does amount to transportation of time-sensitive documents, goods or articles. In fact, not even a single customer has been contacted to know whether any customer felt that the activities undertaken by appellants are transportation of time-sensitive documents, goods or articles. No investigations have been conducted or verification of activities has been conducted. However, it is too late now for conducting such investigations. In any case, we consider that it was necessary for the Commissioner to examine the activity undertaken by them and the definition of ‘courier service’ and coming to the conclusion as to whether the activities of the appellants where they are not paying service tax would amount to transportation of time-sensitive documents, goods or articles as provided in the definition of ‘courier service’. - Matter remanded back - Decided in favour of assessee.
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Central Excise
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2015 (10) TMI 45
Denial of refund claim - Refund of supervision charges - Held that:- The supervision charges as contemplated under Rule 4(4) of the Rules of 2002 read with the trade notice dated 29.10.2002 is not for the clearance or storage of sugar as and when it happens in the godowns, but, the supervision charges is for the duration of the period when the godown is in the physical control of the respondents where the sugar is stored. - So long as the sugar is stored in godown outside the factory premises the same remains under the physical control of the respondents and the petitioner is required to pay the supervision charges on cost recovery basis. In the instant case, the godown was hired for the period 12.2.2002 to 22.2.2003 and, for this period, the supervision charges @ ₹ 21,532/- per month was required to be paid, which the petitioner had paid. The question of refund, therefore, does not arise. - Decided against assessee.
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2015 (10) TMI 44
Review petition against order previous order passed [2015 (9) TMI 403 - BOMBAY HIGH COURT] - Contradictory judgments [2015 (1) TMI 673 - BOMBAY HIGH COURT] and [2015 (9) TMI 403 - BOMBAY HIGH COURT] - Applicability of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 - Court earlier held that exempted goods (tractors) can be exported under Bond/Undertaking-1 in terms of Rule 19 of the Central Excise Rules, 2002 and that by virtue of Rule 6(6)(v) of the Cenvat Credit Rules, 2004, the provisions of Rule 6(1) and 6(3) are not applicable in respect of excisable goods cleared with payment of duty for export under bond. However, in the judgment/order under review, this Court has held that Rule 6(6)(v) will not assist the review petitioners. Held that:- We have held in paragraph 75 that the conclusions therein rendered by a Division Bench of this Court was for the purpose of dealing with the essential controversy and whether in respect of exempted goods cleared for export and inputs in respect of which are dutiable, their clearance by giving Bond under Rule 19 of the Cenvat Credit Rules, 2002, is permissible. We have reached our own conclusions as to why the judgment in the case of Repro India Ltd. cannot be of any assistance to the assessees - Our conclusion may be or may not be erroneous. However, we cannot reconsider or correct the same in the garb of a review. We are not deciding an appeal and, therefore, will not be in a position to refer to the record all over again. While dismissing the assessee’s appeals and writ petitions, we have given our reasons and it is during the course of recording them that we referred to the contentions of the petitioners herein. We referred to all the judgments cited by them. We have, independent of those judgments, held that the petitioners’ writ petitions and appeals cannot be allowed. - However, in the case of M/s. Sharp Menthol India Ltd. this sub-rule has been held to be referring to “exempted goods”. That is why we have given somewhat detailed attention to the conclusions reached in M/s. Sharp Menthol India Ltd. in paragraphs 80 to 83 of the judgment under review. That was to caution everybody concerned about its applicability. In paragraph 84 we have concluded that all matters arose firstly before the amendment to the Central Excise Act, 1944 by which sub-section (1A) was inserted in Section 5A of the same. We have also reached the conclusion that Cenvat credit cannot be availed of in case of such inputs or input services which are in relation to exempted goods and exempted services. Therefore, what is excisable and dutiable and what is exempted has been noted by us. It is for that reason as well we have denied relief to the review petitioners. - Decided against Petitioners.
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2015 (10) TMI 43
Denial of SSI Exemption - whether the respondent was entitled to the benefit under the Notification No. 1/93-C.E., dated 28-2-1993 - Reopening of assessment u/s 11A - Held that:- as long as an assessee has manufactured the goods, the mere fact that he used the trade or brand name of another individual does not make any difference. This may take in its fold the case of assignment of the trade mark. Even otherwise what becomes essential is the activity of manufacture of the product, than mere usage of brand name. - respondent clearly pleaded that it has the proper assignment to use the brand name. The fact that it has got the assignment from the UK company was made clear in the returns of classification. The authority, who processed them was satisfied about this. There must be clinching evidence for reopening the case under Section 11A of the Act. The mere fact that a different view is possible on the same set of facts cannot be a ground to exercise power under that provision. There is no dispute that it has manufactured the product by itself. The Tribunal followed the judgment of the Supreme Court [2003 (8) TMI 49 - SUPREME COURT OF INDIA] and we do not find any basis to interfere with the same. - Decided against Revenue.
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2015 (10) TMI 42
Classification of goods - classification of hologram under Chapter 39 or Chapter 49 of CETA - Held that:- As per HSN Note (2) of Chapter 49 the security holograms the product in question where the primary use is of security and self-adhesive is only incidental and therefore rightly falls under chapter 49 as a product of 'printing industry'. By respectfully following both the Hon'ble Apex Court decisions (2015 (4) TMI 357 - SUPREME COURT), (later decision is of appellant's own case) we hold that appellant's "Polyester Hologram Excise Label" produced out of stamping foil (transfer foil) is rightly classifiable under chapter 49 of CETA and find that hologram produced by the appellants are not covered under any of the excluded items i.e. Ch.39.18, 48.14 or 48.21 of HSN of Chapter 49. - excise duty demand confirmed on the Hologram classified under 39199090 is liable to be set aside. Consequently penalties imposed on the main appellant as well as on the other appellants are also liable to be set aside. - Decided in favour of assessee.
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2015 (10) TMI 41
Waiver of pre deposit - Classification of goods - Held that:- First appellate authority has not decided the case on merits regarding classification of the goods manufactured and exported by the appellant on payment of duty. Department also accepted the payment of duty and also sanctioned rebate claims on the goods which now are proposed to be chargeable to NIL rate of duty. In the interest of justice Order dated 18.12.2009, passed by the first appellate authority is set aside and the case is remanded to the first appellate authority to first decide the issue of classification of impugned goods on merits without insisting for any pre-deposit. - Matter remanded back - Decided in favour of assessee.
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2015 (10) TMI 40
Rebate / Refund claim - Deduction / adjustment of interest amount with the refund - Held that:- Department while sanctioning rebate claim in respect of exports to the appellant has adjusted an amount of ₹ 8,08,190/- on the ground that this amount represents the interest under Section 11AB on the differential duty paid by the appellant under Section 11A(2B) on the differential amount received by them on account of retrospective price variation. Under Section 11 of the Central Excise Act, 1944, in respect of duty and any other sums of any kind payable to the Central Government under any provision of this Act or the Rules made thereunder, the officer empowered by the Board to levy such duty or require the payment of such sum, may deduct the amount so payable from any money belong to the person from whom such sums may be recoverable. Thus for invoking Section 11, there must be some amount which is recoverable from an assessee and if this amount is not being paid, the same can be adjusted from any amount payable to the assessee. But it goes without saying that if according to the Department, any amount is recoverable from the assessee, the assessee has to be intimated about the same. - Even if the interest amount of ₹ 8,08,190/- was recoverable from the appellant, the appellant should at least have been intimated about the same, but from the records it appears there was no such intimation to the appellant. In view of this, the impugned order is not sustainable. The same is set aside - Decided in favour of assessee.
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2015 (10) TMI 39
100% EOU - Duty demand - They procured diesel duty free as well as on payment of duty and claimed that the electricity generated by using duty paid diesel would have been more than the quantity of electricity supplied to the colony. - Invocation of extended period of limitation - Held that:- Appellants had duly intimated Revenue that they would be supplying electricity to their residential colony w.e.f 1-1-2000. They had been procuring (importing) duty paid diesel also and their use of such diesel, it is not disputed by Revenue, would have produced more electricity than the quantity of electricity supplied to the colony for which they had even installed a separate meter. The show cause notice does not bring out as to what they wilfully misstated/suppressed with the intention to evade. - while issuing second and third show cause notices involving same/similar facts, suppression/wilful misstatement could not be alleged. Further the appellants were not unjustified in thinking that as the total duty paid diesel used by them would have generated more electricity than the quantity supplied to their residential colony, they were complying with condition of Notification No. 1/95-C.E./22/2003-C.E. In the case of Gopal Zarda Udhyog v. Commissioner of CCE, Delhi - [2005 (9) TMI 83 - SUPREME COURT OF INDIA] - the Supreme Court observed that mere failure or negligence on the part of the manufacturer does not attract the extended period. In case of CCE v. Chempher Drugs Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA], Supreme Court held that something positive other than mere inaction or failure on the assessee’s part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. - Thus, the allegation of wilfull misstatement/suppression of fact is clearly not sustainable. If it is not possible (because of common storage tank) for the appellants to conclusively demonstrate that duty paid diesel only was used for generating electricity supplied to the colony, it is equally impossible for the Revenue to show that it was not so used or to quantify as to how much duty free diesel out of the mixed lot was used for that purpose. What is being stated here is that such approach of the department is shylockian, untenable and falls in the category of ludicrous hair-splitting. Incidentally, similar demand, against the appellants for a different period was set aside by CESTAT - [2009 (12) TMI 784 - CESTAT NEW DELHI] - Decided in favour of assessee.
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2015 (10) TMI 38
Denial of CENVAT Credit - metal scrap cleared to job worker without payment of duty - Department was of the view that the metal scrap (steel scrap and brass scrap) is not in the nature of semi-finished/semi-processed goods and as such, cannot be cleared without payment of duty under Rule 4(5)(a) to job workers for conversion into ingots - Held that:- even if, the scrap had been cleared on payment of duty, the job workers would have been taken its Cenvat credit and thereafter, would have cleared ingots on payment of duty by utilizing the Cenvat credit and the respondent would have taken the Cenvat credit of the duty paid by the job workers and as such, this would be a revenue neutral situation. In view of the above circumstances, this is not a case which calls for imposition of penalty on the Director and Authorised Signatory under Rule 26 of the Central Excise Rules, which is attracted only when a person is concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner dealing with any excisable goods which he knew or had reason to believe are liable for confiscation and this is not a case where the above elements are present. Therefore, even on merits, penalty on the respondent under Rule 26 of the Central Excise Rules, 1944 is not called for. - Decided in favour of assessee
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2015 (10) TMI 37
Classification of goods - shapes and sections of non-alloy steel - Classification under Heading 7308.90 or under Chapter 7216.90 - Held that:- Board has only clarified that 7308 explicitly covers plates, rods, angles, shapes and sections, tubes and the like, prepared for use in structurals of iron and steel. As stated earlier, the impugned goods were not “prepared for use” in structurals. Although Board’s clarification is not binding on quasi judicial authorities for deciding classification, it is referred to here to indicate that even the said Board’s circular does not support the contention of Revenue. Indeed the issue is fully covered by the judgement of CESTAT in the case of CCE v. Tube Investment of India Ltd. (1993 (11) TMI 134 - CEGAT, NEW DELHI) - Decided against Revenue.
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2015 (10) TMI 36
Clandestine manufacture and clearance of goods - Corroborative evidence in the form of excess / unaccounted raw materials found in the factory premises of the main appellant - Imposition of penalty - Held that:- Appellant was not working during the relevant periods when the credit on the basis of certain invoices was taken. Appellants case that there is a contraction in the statements is not relevant to know whether such invoices were accompanied by the inputs to the factory premises of the main appellant or only the documents were received for taking Cenvat Credit. Under both the situations, Cenvat Credit taken by the appellant was not admissible. There is no evidence brought by the appellant on record that any inputs were cleared to other job workers for doing certain processes. Lower authorities have, therefore, correctly upheld that Cenvat Credit of ₹ 3,35,142/- is not admissible to the main appellant. The argument taken by the appellant that no further investigation was carried out by the revenue is not correct because the statement dt. 23.09.2009 of Shri Hariom Barisal, General Manager of the main appellant is after the OIA passed by the Commissioner (Appeals) with respect to the proceedings on confiscation of excess goods found in appellants factory premises and even after the order dt. 21.07.2009 passed by this bench. It i,& also observed from paragraph no.22.3.3 of the 010 dt. 28.03.2011 that another statement dt. 23.03.2009 of Shri K.S. Dahiya, Works Manager of the main appellant has also being recorded during which he has admitted the contents of the Panchnama and the earlier statement. In view of the above observations, penalties imposed upon the main appellant and Shri K.S. Dahiya, Works Manager of the main appellant, are justified. Therefore, appeals filed by the appellants with respect to Cenvat Credit and imposition of penalties relating to improper utilization of Cenvat Credit are justified. - Decided against assessee.
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2015 (10) TMI 35
Valuation of goods - Whether PDI charges incurred only at the instance of the buyer are required to be added to the assessable value under Section 4 of the Central Excise Act, 1944 or not - Held that:- The first appellate authority has rejected revenue’s appeal on the ground that as per Larger Bench judgment in the case of Bhaskar Ispat Pvt. Ltd. (2004 (3) TMI 102 - CESTAT, NEW DELHI) PDI charges at the option exercised by the buyer are not required to be included in the assessable value. It is also observed that this issue is no more res integra as this very bench in the case of CCE, Ahmedabad-II v. Johnson Pumps (I) Ltd. (2009 (9) TMI 474 - CESTAT, AHMEDABAD) - issue before the Larger Bench, in the case of Maruti Suzuki India Ltd. (2010 (8) TMI 49 - CESTAT, NEW DELHI) was only on inspection done on compulsory PDI done in all cases by the appellant in that case. It was not the case before the Larger Bench that PDI inspections were done at the instance of the buyer. In view of the interpretation made by this bench in the case of CCE, Ahmedabad-II v. Johnson Pumps (I) Ltd. (2009 (9) TMI 474 - CESTAT, AHMEDABAD) PDI charges recovered at the instance of the buyer are not includible in the assessable value and accordingly appeal filed by the revenue is required to be rejected - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (10) TMI 49
Refusal to accept manual returns - E-filing of returns under the Haryana Value Added Tax Act, 2003 - Held that:- respondents, on having instructions, states that the respondents are undoubtedly encouraging e-filing of the tax returns, but that the respondents are not at least for this quarter refusing to accept the manual returns. They intend issuing a notification. - Appeal disposed of.
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2015 (10) TMI 48
Determination of taxable turnover - inclusion of the exempted sales value - Held that:- Despite the fact that the 1970 Act underwent substantial amendments in 1976, 1980, 1999 and 2002, the Legislature did not introduce a section exclusively providing for definitions of words and expressions. It is true that the Tamil Nadu Additional Sales Tax Act, 1970 did not contain a provision that expressly stipulated that the words and expressions contained therein would have the same meaning as assigned to them in the Tamil Nadu General Sales Tax Act, 1959. It must be remembered that the charging Section 2 as it was originally enacted in 1970, spoke only about total turnover. It was only in 1976 that the expression 'total turnover' was changed to 'taxable turnover'. But, neither of these expressions have been defined in the 1970 Act. Once it is seen that the Tamil Nadu Additional Sales Tax Act, 1970 does not contain a provision for definitions, once it is seen that under Section 2(1)(b) of the Tamil Nadu Additional Sales Tax Act, 1970, the provisions of the 1959 Act are made applicable to the additional sales tax payable under the 1970 Act and once it is seen that even for the purposes of assessment, levy of penalty, appeals and revisions, the assessees as well as the Department may have to take recourse only to the 1959 Act, it follows as a corollary that the Tamil Nadu Additional Sales Tax Act, 1970 does not have independent legs to stand on its own. - in the absence of a definition of the expression 'taxable turnover' in the Tamil Nadu Additional Sales Tax Act, 1970, there is no other alternative except to rely upon the definition of the same expression available in Section 2(p) of the Tamil Nadu General Sales Tax Act, 1959. This is permissible both on account of Section 2(1)(b) of the 1970 Act and also on fundamental principles of statutory interpretation. A comparison between the two notifications would reveal something interesting. While the notification for exemption in respect of tax payable under the Tamil Nadu General Sales Tax Act, 1959 was issued in exercise of the powers conferred by Section 17(1) of the 1959 Act, the notification for exemption in respect of additional sales tax payable under the 1970 Act was also issued in exercise of the powers conferred by Section 17(1) of the 1959 Act read with Section 2(1)(b) of the 1970 Act. This is in view of the fact that the Tamil Nadu Additional Sales Tax Act, 1970 does not contain a separate provision for grant of exemption. Therefore, even the notification for exemption from payment of additional sales tax under the 1970 Act had to be issued only under Section 17(1) of the 1959 Act. The Government was able to invoke Section 17(1) of the 1959 Act, only by virtue of Section 2(1)(b) of the 1970 Act. - Tribunal committed an error of law in treating the exempted sales effected by the petitioners to M/s.Hyundai Motors India Limited, as part of the 'taxable turnover' of the petitioner for the purposes of Tamil Nadu Additional Sales Tax Act, 1970. Consequently, the levy of penalty was wrong and the second question has also to be answered in favour of the petitioner - Decided in favour of assessee.
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2015 (10) TMI 47
Denial of input tax rebate - Karnataka VAT - Whether the assessee is entitled to claim input-tax rebate beyond the period of 6 months in a return filed for the said period on the ground that he has omitted to put forth the claim in the return filed for the relevant period - Held that:- Output tax is a tax payable by any dealer on sale of goods made by him in the course of his business. Input tax is a tax collected by the registered dealer or payable under this Act on the sale to him of any goods for use in the course of his business. Sub-section (3) of section 10 provides for calculating the net tax payable by the registered dealer. It provides that, the net tax payable by a registered dealer in respect of each tax period shall be the amount of out put tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accord ance with the provisions of this Act. Therefore, it is clear the word "in that period" specifies the period during which input tax is paid and output tax is payable and the same has to be accounted in accordance with the provisions of the Act. Sub-section (4) makes it clear that, for the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with section 29. Assessee paid input tax for the month of June 2006. In the returns filed in July 2006 he did not put forth any claim. He also did not file any revised return within 6 months putting forth the said claim. That is the period prescribed under law under section 35(1) and 35 (4) of the Act. It is only in the return filed in the month of February 2007, after the expiry of the aforesaid period, he put forth the said claim. There fore, the assessing authority as well as the first appellate authority rightly held that the claim for input tax rebate put forth for the first time in February 2007 for the period of June 2006 cannot be allowed. - If the assessee is not putting forth a claim for input tax deduction in the return filed in July 2006 nor as he put forth such a claim in a revised claim which he could have filed within six months therefrom his right to claim input deduction is lost. He cannot for the first time in the returns filed in February 2007 put forth a claim for input tax deduction as the said return was not related to the tax period during which the input tax was paid. In that view of the matter, the Tribunal has not applied its mind to the afore said provision and ignoring the mandate of law has allowed the said deduction erroneously. Therefore, the said finding recorded by the Tribunal cannot be sustained and accordingly it is hereby set aside. - Decided in favour of Revenue.
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2015 (10) TMI 46
Levy of tax under the provisions of the Karnataka Tax on Entry of Goods Act, 1979 - Classification of product - Whether L & T 752 vibratory compactor is a 'motor vehicle' or a 'machinery' and therefore, liable to tax under the KTEG Act - Held that:- Under the Scheme of KTEG Act, Chapter II deals with levy of tax. Section 3 is the charging section. It provides that, the tax shall be levied on entry of any goods specified in the First Schedule into a local area for consumption, use or sale therein. Chapter IIA deals with levy of tax on motor vehicles exclusively. Section 4A is the definition section which defines what a "motor vehicle" is under section 4A(d). Section 4B is the charging section in so far as motor vehicles are concerned. It starts with a non obstante clause. It provides that, notwithstanding anything contained in section 3, there shall be levied and collected a tax on the purchase value of a motor vehicle on entry of which is effected into a local area for use or sale therein and which is liable for registration or assignment of a new registration mark in the State under the Motor Vehicles Act, 1988. The rate at which tax is levied on such motor vehicle is at the rate specified in the notification to be issued. Understanding of the Government is that tax is leviable under section 4B, on all earth movers, dippers and bulldozers and the like and not under section 3. The Revenue relies on the Notification No. FD 11 CET 2002(1) dated March 30, 2002 where the tax is levied under section 3 of the KST Act on machinery (all kinds and parts and accessories thereof but excluding agricultural machinery). If we read these two notifications, keeping side by side, the understanding of the State is earth movers, dumpers, dippers, bulldozers and the like and adopted for uses on road do not fall within the meaning of the word machinery (all kinds). - the contention of the Revenue that the motor vehicle is not registered, it cannot be treated as motor vehicle and has to be treated as machinery is without any substance. - Decided against Revenue.
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Wealth tax
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2015 (10) TMI 26
Levy of penalty u/s 18(1)(c) of the Wealth Tax Act 1957 - assessee had shown motor car in the depreciation schedule but did not file the wealth tax - Held that:- Assessee has filed returns prior to notices issued u/s. 17 of the Act. We noted that the return in each of the A.Ys has been filed by the assessee subsequent to due date and return filed by the assessee cannot even regarded to be belated return as per the provision of Wealth Tax Act. In view of these facts, we do not find any infirmity or illegal in the order of CIT(A) who confirmed the penalty in each of the case. It is not the case of the assessee that the assessee was not aware of about this provision of Wealth Tax Act as the assessee was not earlier been assessed to Wealth Tax Act and it was merely a technical venial. - Decided against assessee.
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