Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 4, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset u/s 54E cannot be denied by referring to the fiction created u/s 50 - SC
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Exemption u/s 10(23C)(iiiab) - The appellant University is neither directly nor even substantially financed by the Government so as to be entitled to exemption from payment of tax under the Act - SC
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Entitlement to benefit u/s 54 - ascertaining limitation period of 2 years - consideration paid by assessee under Memorandum of Understanding dated 08.09.2003 would fully cover the consideration of capital gains portion for being eligible to claim exemption u/s 54 - HC
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There was a transfer of capital asset when the applicant assessee made its capital contribution in the form of land, shares and securities to the partnership firm - however demand of tax as capital gains set aside - HC
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Addition on account of additional income declared in the course of survey u/s 133A on oath - addition on unexplained credit - addition cannot be made only on the basis of surrender made at the time of survey. - AT
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Transfer pricing adjustments (TPA) - ALP - the assessee has transferred its business operations in India to Banca Sella S.P.A. having its branch in India. - the business transfer are not covered under Rule 10AB. - No upward adjustment can be made - AT
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Source of funds for investment made in mutual funds - when the partnership firm and its partners are seen holistically and in a combined manner with costs towards interest eliminated in contra, the investment in mutual funds generating tax free income bears the characteristic of and attributable to its own capital where no disallowance under S. 14A read with Rule 8D is warranted. - AT
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Interest paid to its partners - section 36(1)(iii) is not at all applicable for the purposes of computation of interest to partners under section 40(b) - The interest paid to partners and simultaneously getting subjected to tax in the hands of its partners is merely in the nature of contra items in the hands of the firms and partners. - AT
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TDS on GTA Services - If the assessee complies with the provisions of Section 194C(6), no disallowance u/s 40(a)(ia) of the Act is permissible, even there is violation of the provisions of Section 194C(7) of the Act. - AT
Customs
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Anti Dumping Duty - The reference price based AD duty imposed is based on analysis of various parameters, more specifically of the price behavior of the imported goods, domestic goods, dumping margin and the injury to the domestic industry. Unless it is established with positive evidence that serious error has happened in any of these analysis, no interference can be made - AT
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Enhancement of value - electric motors though imported from the same importer to which NIDB data relates to, cannot be held to be comparable on account of use of different types of cables for winding purpose - AT
Corporate Law
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Companies (Incorporation) fourth Amendment Rules, 2016 to prescribe (i) Simplified Proforma for Incorporating Company Electronically (SPICE) and (ii) Conversion of a company limited by guarantee into a company limited by shares - Notification
Service Tax
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Levy of penalty - delayed payment of service tax under reverse charge - Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. - No penalty - AT
Central Excise
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Valuation - deduction of discount - discount was given to non-performing dealers also - turnover discount was quantified at the end of calendar year, wherein dealer has sold the cars of previous year - discount was made known to dealers in advance - Demand set aside - AT
VAT
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Levy of VAT - works contract or not - providing cleaning services - The use of pesticides and chemicals was wholly incidental. There was no intention of sale of goods from the assessee to the company - NO transfer of property in goods involved - No VAT liability - HC
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Levy and collection of Entry tax - no tax can be levied on entry of goods into local areas, in terms of the impugned provisions, over the transactions, made on e-commerce portals, for personal use or consumption of individual consumer. - HC
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Imposition of penalty under Section 53(3) of AP VAT - under reporting of taxable turnover - While a bonafide error would fall within the ambit of Section 53(1) of the Act, wilful or intentional under-declaration of tax would fall within the scope of Section 53(3) - HC
Case Laws:
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Income Tax
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2016 (10) TMI 62
Entitlmnet for exemption under Section 54E - AO rejected the claim for exemption under Section 54E of the Act on the ground that the assessee had claimed depreciation on this asset and, therefore, provisions of Section 50 were applicable - Held that:- HC allowed assessee claim of deduction as relying upon its own judgment in the case of “The Commissioner of Income-tax, Mumbai City-II, Mumbai vs. ACE Builders Pvt. Ltd. [2005 (3) TMI 36 - BOMBAY High Court ]. The High Court has observed that Section 50 of the Act which is a special provision for computing the capital gains in the case of depreciable assets is not only restricted for the purposes of Section 48 or Section 49 of the Act as specifically stated therein and the said fiction created in sub-section (1) & (2) of Section 50 has limited application only in the context of mode of computation of capital gains contained in Sections 48 and 49 and would have nothing to do with the exemption that is provided in a totally different provision i.e. Section 54E of the Act. Section 48 deals with the mode of computation and Section 49 relates to cost with reference to certain mode of acquisition. Section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under Section 54E cannot be denied by referring to the fiction created under Section 50. Section 54E specifically provides that where capital gain arising on transfer of a long term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under Section 54E of the I.T. Act cannot be denied to the assessee on account of the fiction created in Section 50.
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2016 (10) TMI 61
Review petition - Exemption from payment of tax under the provisions of Section 10(23C)(iiiab) - direct grant from the Government - Purpose of University – Held that:- No case for review of judgment dated 22nd April, 2016 [2016 (4) TMI 874 - SUPREME COURT] is made out. Consequently, the review petitions are dismissed. As decided the appellant University does not satisfy the second requirement spelt out by Section 10 (23c) (iiiab) of the Act. The appellant University is neither directly nor even substantially financed by the Government so as to be entitled to exemption from payment of tax under the Act. - Decided against assessee
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2016 (10) TMI 60
Entitlement to benefit under Sec.54 - adoption of date to be taken as the basis for reckoning the period of two years prescribed under Section 54 - consideration of capital gains portion - Held that:- Facts on hand would disclose that assessee had owned a flat at Mumbai and sold the same on 04.02.2003 for a total consideration of ₹ 1,70,00,000/-. Subsequent to such sale she entered into an agreement for purchasing another property for a total consideration of ₹ 3,25,00,000/- by agreement dated 08.09.2003. Said agreement came to be entered into within six months from the date of sale i.e., 04.02.2003 and assessee had paid a total consideration of ₹ 2,40,00,000/- between April' 2003 to September' 2003. After making the payment, a registered sale deed had not been executed in favour of the assessee before completion of two years period pursuant to Memorandum of Understanding dated 08.09.2003. The consideration received by her under sale dated 04.02.2003 has been paid by the assessee for purchasing another property and reinvestment has been made within two years as contemplated under Section 54 of the Act. These facts are not in dispute. Thus, long- term capital gains computed by virtue of sale deed stood adjusted by virtue of payment made by assessee for purchasing another property under Memorandum of Understanding dated 08.09.2003. As such, Tribunal has rightly held that date of purchase was to be taken as the basis for reckoning the period of two years prescribed under Section 54 of the Act for extending the benefit flowing therefrom. In the instant case consideration paid by assessee under Memorandum of Understanding dated 08.09.2003 would fully cover the consideration of capital gains portion for being eligible to claim exemption under Section 54 of the Act. Coordinate Bench of this Court in the case of PRINCIPAL COMMISSIONER OF INCOME-TAX vs. C. GOPALASWAMY reported in [2016 (6) TMI 643 - KARNATAKA HIGH COURT] has held that utilization of capital gains in construction of residential house would suffice to claim the benefit of Section 54 of the Act. - Decided in favour of assessee and against the revenue
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2016 (10) TMI 59
Transfer of capital assets - contribution of capital asset into the firm - capital gain computation - selection of assessment year - Held that:- So far as the character of immovable property, shares and securities invested by the applicant company into the partnership firm M/s. Bajaj Trading Company as a stock in trade as contended by the applicant or capital asset as held by the Tribunal is concerned, the same need not be examined. This for the reason that applicant company has contended that even if it is assumed that what was transferred was a capital asset, yet the transaction is not exigible to capital gain tax. However, it does reserve its right to contend otherwise, in case the Court does not accept its contention that no capital gain tax is payable on its contribution of capital asset i.e. immovable property, share and securities invested in M/s. Bajaj Trading Company. Therefore, for the present, we proceed on the basis that what has been invested in the partnership firm by the applicant assessee was a capital asset in the hands of the applicant assessee. There is a transfer of a capital asset when the applicant company introduced its immovable property, shares and securities as its contribution to the capital of the partnership firm M/s. Bajaj Trading Company. See Sunil Siddharthbhai [1985 (9) TMI 7 - SUPREME Court]. No capital gain chargeable to tax arises on the amount contributed as capital into the partnership firm. This on the basis that at the relevant time, it did not give rise to receipt of any determinable consideration to the transferor as contemplated in Section 48 of the Act.In the above view, we have proceeded on the basis that the immovable property, stock and security were capital assets in the hands of the Applicant Company when introduced into the partnership firm – M/s. Bajaj Trading Company. Moreover, the Authorities have held that the partnership firm was genuine and not a colourable device. Therefore, the investment made in it, cannot be a device when seen in the light of the subsequent conduct of the partnership firm of dealing in immovable properties, stocks and securities as its stockintrade for the subsequent years. In fact, we are informed the firm continues to do so till date and is being assessed to tax as a dealer in immovable property, stocks and securities. In the circumstances, when the transaction is looked at in its entirety, the investment made cannot be said to be ruse to evade tax (see Vodafone International v/s. Union of India [2012 (1) TMI 52 - SUPREME COURT OF INDIA ]). Accordingly, we answer the question partly in the affirmative to the extent the Tribunal held that there was a transfer of capital asset when the applicant assessee made its capital contribution in the form of land, shares and securities to the partnership firm M/s. Bajaj Trading Company. However, other parts of the question namely that the transfer of capital assets resulted in capital gains, which can be subjected to capital gain tax in the subject assessment year, is answered in the negative, i.e. in favour the of the applicant assessee and against the Revenue.
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2016 (10) TMI 58
Addition on account of additional income declared in the course of survey u/s 133A on oath - addition on unexplained credit - Held that:- Assessing Officer, without discussing the case of a single creditor, rejected all of them. Learned CIT(A) has discussed all those documents from page 5 to 17 of his order. The Assessing Officer made the addition of ₹ 3,50,00,000/- as unexplained credit u/s 68 when admittedly, the sum of ₹ 3,50,00,000/- was the surrender made by the assessee during the course of survey and was not the amount of credit in the assessee’s books of account. Credit in the assessee’s books of account was only ₹ 3,09,84,715/-. Learned CIT(A) has also recorded the finding that the credit to the extent of ₹ 1,28,39,715/- was not pertaining to the year under consideration. Thus, it is evident that the Assessing Officer made the addition without considering all the facts and evidences on record merely because the assessee has surrendered the same at the time of search. We have already discussed that in view of the decision of Hon'ble Jurisdictional High Court in the case of Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT ) and of Hon’ble Apex Court in the case of S. Khader Khan Son (2013 (6) TMI 305 - SUPREME COURT ) as well the Circular of CBDT vide letter F.No.286/2/2003-IT(Inv.II) dated 10th March, 2003, the addition cannot be made only on the basis of surrender made at the time of survey. - Decided in favour of assessee
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2016 (10) TMI 57
TPA - Treatment to sale consideration - receipt in the nature of non-compete fee or slump sale - capital gain OR business income - Held that:- On perusal of the terms and provisions of software and business transfer agreements referred by the ld. Assessing Officer in the Draft assessment order and agreement of sale the consideration payable, prime facie is slump sale and such transactions cannot be considered as a non compete fee chargeable to tax. Further, the amendment of Sec. 28(va) of the Act was made to tax the non compete fee received from assessment Year 2003-04. Therefore the provision of non compete fee terminology cannot be accepted and we dismiss the ground of the Revenue and upheld the findings of the ld. DRP in treating as income from Capital Gains. Valuation method - TPA - arms length price - Held that:- the assessee has transferred its business operations in India to Banca Sella S.P.A. having its branch in India. - the business transfer are not covered under Rule 10AB. - TPO directed to eliminate the upward adjustment on Business value transferred to the Associated Enterprise. TPO adjustment on sale of software services business to the Associated Enterprise - Held that:- software services remained in India before the transfer and after transfer and both transfer took place within India and there is no evasion of tax and TPO provision are not applicable. - In respect of TPO adjustments on sale of software services business, the ld. TPO does not have powers to make upward adjustment.
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2016 (10) TMI 56
Addition u/s 14A - source of funds for investment made in mutual funds - interest paid to its partners - when loan taken from the partners would be held as own funds or borrowed funds for the purpose of Section 14A - since, interest on capital is taxable in hands of partners and disallowance will lead to double taxation in hands of partner as well as firm. - Held that:- It is clear from the above that firm and partners of the firm are not separate person under Partnership Act although separate unit of assessment for tax purposes. There cannot therefore be a relationship inferred between partner and firm as that of lender of funds (capital) and borrowal of capital from the partners, hence section 36(1)(iii) is not applicable at all. Section 40(b) is the only section governing deduction towards interest to partners. In the light of what is already noted above that firm and partners not being two separate persons, the question of borrowing capital by the firm from its partners does not arise at all and, therefore, section 36(1)(iii) is not at all applicable for the purposes of computation of interest to partners under section 40(b) of the Act. To put it differently, in view of section 40(b) of the Act, the Assessing Officer purportedly has no jurisdiction to apply the test laid down under section 36 of the Act to find out whether the capital was borrowed for the purposes of business or not. Thus, the question of allowability or otherwise of deduction does not arise except for S. 40(b) of the Act. As per the scheme of the Act, the interest paid by the firm and claimed as deduction is simultaneously susceptible to tax in the hands of its respective partners in the same manner. In the same vain, the firm is merely a compendium of its partners and its partners do not have separate legal personalities under the basic law as discussed. The interest paid to partners and simultaneously getting subjected to tax in the hands of its partners is merely in the nature of contra items in the hands of the firms and partners. Consequently interest paid to its partners cannot be treated at par with the other interest payable to outside parties. Thus, in substance, the revenue is not adversely affected at all by the claim of interest on capital employed with the firm by the partnership firm and partners put together. Thus, capital diverted in the mutual funds to generate alleged tax free income does not lead to any loss in revenue by this action of the assessee. In view of the inherent mutuality, when the partnership firm and its partners are seen holistically and in a combined manner with costs towards interest eliminated in contra, the investment in mutual funds generating tax free income bears the characteristic of and attributable to its own capital where no disallowance under S. 14A read with Rule 8D is warranted. Consequently, the plea of the assessee is merited in so far as interest attributable to partners. However, the interest payable to parties other than partners, in our view, would be subjected to provisions of Rule 8D(2)(ii) of the Rules. Similarly, in the absence of any specific plea from assessee towards disallowance under Rule 8D(3), we hold it sustainable in view of express mandate of law. The matter is accordingly remanded back to the file of the Assessing Officer for re-computation of disallowance under Rule 8D r.w.s. 14A of the Act in terms of our opinion expressed hereinabove.
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2016 (10) TMI 55
TDS u/s 194C - payments made by the assessee towards Carriage Inward and Carriage Outward - non deduction of tds - Held that:- As in the context of Section 194C(1), person undertaking to do the work is the Contractor and the person so engaging the contractor is the contractee. As by virtue of the Amendment introduced by Finance Act (No.2) 2009, the distinction between a contractor and a sub-contractor has been done away with and Cl. (iii) of Explanation under 194C(7) now clarifies that "contract" shall include sub-contract. Subject to compliance with the provisions of Section 194C(6), immunity from TDS under sec. 194C(1) in relation to payments to transporters, applies transporter and non-transporter contractees alike; iv) under Sec. 194C(6), as it stood prior to the amendment in 2015, in order to get immunity from the obligation of TDS, filing of PAN of the Payee-Transporter alone is sufficient and no confirmation letter as required by the learned CIT is required. Sections 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s 40(a)(ia) read with Section 194C of the Act. If the assessee complies with the provisions of Section 194C(6), no disallowance u/s 40(a)(ia) of the Act is permissible, even there is violation of the provisions of Section 194C(7) of the Act. Consequent to our findings in the preceding paragraphs, we reach a conclusion that the authorities below are not justified in treating the expense incurred by the assessee for Carriage inward and carriage outward as disallowable under section 40(a)(ia) of the Act, and adding back ₹ 1,63,78,648/- claimed as expense towards Carriage Inward and ₹ 1,13,00,980/- claimed as expense towards Carriage Outward, and such additions shall stand deleted. - Decided in favour of assessee.
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2016 (10) TMI 54
Interest on debentures - Whether the Appellate Tribunal is right in law in holding that the interest on debentures cannot be equated with advancement of loans and thereby, not chargeable to Interest Tax under the Interest Tax Act, 1974? - Held that:- We have also taken into account the definition of the term “interest” as contained in Section 2(7) of the Interest Tax Act, 1974. On such consideration, we hold that the provisions of the said Act by virtue of the definition would have no application to the transactions in question making the Assessee liable to pay tax under the said Act. Consequently, we hold that the decision of the learned Appellate Tribunal as upheld by the High Court insofar as questions in issue are concerned would not require any interference. The appeals consequently are dismissed.
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2016 (10) TMI 53
Disallowance of claim of the assessee under section 80IB - ITAT allowed the claim - Held that:- Having heard learned counsel for the Revenue we notice that the Assessing Officer had material at his command to suggest that the two societies were situated at distance of nearly half a kilometer apart from each other, both at different locations and going by the material, at the command of the Assessing Officer were certainly not situated on a land forming common block. The Commissioner, without referring to such evidence, went by the recording of the land development permission which contained a condition that the owner would not be allowed to divide the land. Though this would be a relevant consideration it is not unknown that such conditions imposed by the Revenue authorities come in printed proforma and are in cyclostyled manner. Whether that by itself established that both the housing projects were developed on a land forming composite block building would be a matter of appreciation of materials on record which, in the present case, would also include the evidence at the command of the Assessing Officer suggesting that physically societies were situated far apart from each other. The Commissioner and the Tribunal did not advert to this evidence at all and thus, committed a serious error. Under the circumstances, let the matter be re-examined by the Appellate Commissioner, for which purpose, both the impugned orders are set aside and the appeals are placed back for fresh consideration and disposal in accordance with law before the Commissioner (Appeals).
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2016 (10) TMI 52
Maintainability of the revision petition before the Commissioner u/s 264 - Held that:- If the contention of the petitioner is that the question of quantum addition was not part of appeal proceedings before the Commissioner and the Tribunal, the assessee had no reason to wait for the outcome of such proceedings. His contention that he was under a bonafide belief that he would succeed in such proceedings, is therefore, not in consonance with his averment that such issue never formed part of the subject matter of the appeal proceedings. On the other hand, if the assessee was following the appeal route as is contended while explaining the delay, there was no reason why such appeal should have been withdrawn. Further, even after withdrawal of the appeal from the Tribunal on 19.02.2009, the petitioner filed the revision petition nearly 10 months later on 19.12.2009. This further period of delay is nowhere explained except for the petitioner stating in general that it required to collect documents and orders. The Commissioner was therefore justified in not condoning the delay. The question of maintainability of the revision petition before the Commissioner is a contentious issue and we would reserve answer to such a question for a better case. In the present petition, we are not inclined to enter into this arena since we have already held that the revision petition was barred by limitation and unexplained delay. There is an additional reason why we are not inclined to examine this aspect and it is this. In the revision petition, the petitioner has stated virtually no grounds why the order of assessment on the question of quantum additions requires interference. As noted, the petitioner gave a written concession that a certain sum be added by way of undisclosed income. To resile from this concession, all that the petitioner stated in the revision petition was that such concession was made to buy peace and at the relevant time, required evidence could not be located and submitted. Nothing is brought on record to suggest what such relevant evidence the petitioner now has, on the basis of which, such concession could be withdrawn. Learned counsel for the petitioner however, submitted that the maintainability of the revision petition be examined and the merits be left open for the Commissioner to judge. In a writ petition, where we are considering grant of discretionary relief, we refuse to be bound down by the plain parameters of the order under challenge. When we found that even if the revision petition was maintainable, the petitioner had raised virtually no acceptable grounds for setting aside the order of assessment, we would not remand the proceedings to the Commissioner to complete an empty formality.
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2016 (10) TMI 51
Reopening of assessment - Disallowance u/s 40(a)(ia) - late deposit of TDS - Held that:- We have noticed in the order of assessment, to the extent the Assessing Officer wanted to, disallowed the expenditure on the assessee's failure to deposit the tax deducted at source. He, however, did not disturb the assessee's claim of expenditure of foreign commission though apparently no tax was deducted at source on such commission. Only on this ground, the notice must fail. Prima-facie, we also feel the requirement of deducting tax at source itself in the present case is hugely doubtful. There is nothing on record to suggest that the foreign agents had any establishment in India or in any manner the income accrued or arose in India. Even when the petitioner raised such an objection before the Assessing Officer, he rejected the objection without dealing with the specific contention. Be that as it may, on the question of change of opinion, we are convinced that impugned notice cannot survive. The same is, therefore, set aside. Petition is allowed and disposed of.
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2016 (10) TMI 50
Reopening of assessment - seeking to quash the ex part best judgment assessment - Held that:- On a perusal of the impugned orders, it is seen that notice under Section 148 of the Income Tax Act, 1961 (IT Act) has been received by the petitioner, and he has filed objections, and thereafter, his Authorized representative, who is a Chartered Accountant, appeared before the Assessing Officer, and only after hearing him, the assessment has been completed. Therefore, if the petitioner is aggrieved by the impugned orders, he has to file Appeal before the Appellate Authority, and no grounds have been made out to bypass such remedy. After the above order was dictated, the learned counsel appearing for the petitioner submitted that the petitioner may be granted liberty to file Appeal before the Appellate Authority. The said submission is placed on record. Writ Petitions dismissed as not maintainable.
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2016 (10) TMI 49
Unexplained loan - Variation in the copies of Capital Account partner as produced in the court and copies of account filed with the Income-tax Department - failure to to produce books of accounts - Held that:- We have gone through the order of the Commissioner and find therein no proper analyses of the statements of the persons who were said to have loaned money to the assessee through its finance division. One of the persons whose statement was considered by the Commissioner was Harish Kumar son of Dharam Pal, who is stated to have “not categorically denied the transaction”. How such a vague statement could support the defence set up by the assessee, is cause of wonder for us. Sher Singh son of Bishan Dass, is stated to have confirmed answers to questions No.7 and 8. The Commissioner's order nowhere refers to questions No.7 and 8 and, therefore, it is impossible to conclude as to what was confirmed by Sher Singh. Kuldip Singh son of Onkar Singh is said to have confirmed answers to questions No.4 and 5 and Dinesh Kumar son of Onkar Singh is said to have confirmed questions No.6 and 7. In their cases also it has nowhere been discussed by the Commissioner as to what were the questions in their cases. As per the statements of said Kapil Kumar and Ramesh Kumar, they did not loan any money to the assessee or its finance division. This contradicts the assessee's stand that this fact has also been ignored by the Commissioner. The statements of the other persons who allegedly had given loans to the assessee through its finance division have also not been considered the way they deserved to be. It is thus clear that the order of the Commissioner lacks consideration of material and crucial facts. The Commissioner further goes on to hold that the transactions have “more or less been unequivocally confirmed.” This finding of his is not only self-contradictory but also against the record. The order of the Tribunal does not clarify the matter either. No discussion is found therein with regard to the above-referred statements of the alleged creditors of the assessee-firm. It was observed that the imprest account “does not necessarily” form part of capital account. Reliance was placed on the statement of Surinder Mahajan, a partner of the assessee without comparing the same with the statements of the alleged creditors. After simply finding fault with the assessing officer for having not found the source of repayment of the said amount of ₹ 1,70,00,000/- and having failed to find out about the finality of proceedings before the civil court, the Tribunal gave its stamp of approval to the order of the Commissioner without considering the matter in the correct perspective The Tribunal, which is the final fact finding authority, failed to properly analyse the evidence on record and without appropriate reasons confirmed the order of the Commissioner with regard to the deletion of ₹ 1,70,00,000/- from the income of the assessee. In view of the above, the order of the Tribunal is found to be perverse. While setting aside the order of the Tribunal, we remit the matter to the Tribunal for a fresh decision on merits. - Decided in favour of revenue
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2016 (10) TMI 48
Depreciation on the assets - AO had treated the transactions as that of finance and not of leasing - Held that:- All relevant judgment in issue were considered in ICDS (2013 (1) TMI 344 - SUPREME COURT ), this Court is of the opinion that there is no ground to depart from the reasoning in The Commissioner of Income Tax v. M/s. Escort Finance Ltd [2013 (11) TMI 1667 - DELHI HIGH COURT] . The question of law framed is answered against the revenue.
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2016 (10) TMI 47
Sale of land - whether the land sold by the assessee is an agricultural land and situated beyond 8 Kms from the Corporation municipal limit, therefore, the capital gain arising from the sale of the aforesaid land is exempt from capital gain tax? - Held that:- Though the assessee has submitted that the documents to prove that the distance between agricultural land and municipal limit was more than 8 Kms, the assessing officer has only relied on the report of the Inspector of Income-Tax. Though the assessing officer has sought for clarifications from the Inspector of Survey and Land Records Maintenance, Coimbatore, regarding the place, where the Corporation limits ends, as to whether, Gopalkrishna Mills/city bakery or beyond Ramakrishna Mills at LGB Nagar Pirivu - Gowtham tower or Aishwarya bakery or Jayam medicals, which has also been responded, stating that the distance between the municipal limits and the agricultural lands, is 9.13 Kms., the assessing officer has totally ignored the report of the Inspector of Survey and Land Records Maintenance, Coimbatore. As rightly contended by the respondent, revenue department and survey authorities are competent to measure the land and issue appropriate certificates, and the same cannot be ignored by the assessing officer, by relying on the report of the investigation wing. In such matters, it would be appropriate, to take the assistance of the survey authorities, to arrive at the conclusion. On the facts and circumstances of this case, we also wish to state that in the matter giving weightage to the evidence adduced in this regard, report of the departmental inspector vis-a-vis certificates of the revenue authorities, produced before the assessing officer, the latter should be given weightage and accepted, unless the contrary is proved. - Decided in favour of assessee
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2016 (10) TMI 46
Charitable trust - commercial activities - Held that:- The term “charitable purpose” includes advancement of any other object of general public utility. Proviso to section 2(15) however provides that such purpose will not be charitable purpose if it involves carrying on any activity of nature of trade or business or any activity rendering any service in relation to the said commercial business, for a cess or fees or any other consideration irrespective of the nature of use or application, or retention of the income from such activity. This sub-section however carries a further proviso which provides that the proviso will not apply to aggregate value of receipts from the activities referred to thereunder is 25 per cent or less in the previous year. In other words, so long as the aggregate value is less than 25 per cent, the exclusion clause contained in the first proviso would not activate. Surely, at the time of application for registration, when the applicant institute has not even commenced its activities, it would not be possible to apply this proviso and the question of their applicability would arise at a later stage while actually granting exemption. As the Tribunal held that the institute was engaged in the object of general public utility, we do not see any error in such view. - Decided against revenue
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2016 (10) TMI 45
Estimation of income on booking receipts - Commissioner in his revisional order added profit at the estimated rate of 8 per cent - Tribunal noted booking receipts were only worth ₹ 22.42 crores (rounded off) on which the assessee had already offered tax at the rate of 8 per cent and Commissioner was factually wrong in making further additions on this score - Held that:- Irrespective of the error of the Commissioner in referring to the said figure, we notice that the respondent assessee was in the business of development of construction project in which booking profit on the basis of project completion method is a well recognised principle of accountancy. It is not pointed out to say that in the earlier orders, the assessee had taken a different yardstick or though taken the same measure of project completion project, the department had objected to the same. - Decided against revenue
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2016 (10) TMI 44
Branding Expenses paid to a company established in the United Kingdom - existence of permanent establishment in India - Held that:- The assessee is engaged in the business of purchase and sale of foreign currencies and also inward and outward money transfer business. As a large number of Indians are living in United Kingdom, the company has engaged M/s. Muthoot global Transfers Pvt. Ltd., UK for the wide publicity for Muthoot Brand and to create awareness among them the forex and money transfer services provided by them through a large network of branches and franchise all over India. The company has reimbursed to M/s. Muthoot Global Transfers Pvt. Ltd., UK towards expenses incurred by them for the above mentioned activities, as per invoice issued by them. By our order of even date in the case of another group company Muthoot Exchange (P) Ltd., Kochi we have held that the said company is not liable to deduct tax on the payment made under the head branding expenses. Following the findings in the said order in the case of that assessee and also in our considered view the same principles apply. Accordingly, we hereby delete the disallowance. Further we also hold that there is no jurisdiction in disallowing being the provisions made in the accounts especially when the assessee has been consistently adopting mercantile system of accounting. - Decided in favour of assessee. Addition being the F.M. Radio License fee paid by the assessee - Held that:- By a scheme of demerger the F.M. Radio License neither to be exploited by the assessee was transferred to another company by name of M/s. Muthoot Broadcasting (P) Ltd. For a period of 9 months, during this financial year the assessee has exploited the license and has included the income thereof. This has been mentioned by the Assessing Officer at page 5, para 5 of assessment order. The reason stated by the assessee for demerger was that the assessee company approached SEBI for public issue and as per their requirement this radio business was to be demerged from the company. Up to a period of 9 months, since the license has been exploited and income thereof taken into account, we are of the considered view that once income of a particular business carried on by the assessee is taken into account the expenses attributable to earn such income should also be taken into account. The fact being so, we hereby delete the addition made - Decided in favour of assessee. Disallowance representing gold loan which has become bad during the year - Held that:- Respectfully following the guidelines of RBI, we are of the considered view that the assessee company is entitled to claim the loss in this regard. Thus all the grounds of the assessee are allowed Disallowance of staff welfare expenditure relating to staff welfare scheme - Held that:- The “staff welfare scheme” is a collective name given by the assessee in respect of such contributions, which means that the assessee should be in a position to furnish the name wise break up details of the outstanding balance. In our view, the collective name “Staff welfare scheme” is akin to the collective name “Sundry creditors”. Accordingly the “Staff welfare scheme” can only be taken as a liability (Creditors) account, i.e., the amount payable to each of the employees who have contributed to the said scheme. Instead of keeping the account in each of the employee name, the assessee has aggregated them and shown as under a collective name. The Ld CIT(A) has noted that the assessee pays the accumulated amount outstanding in the name of the retiring employees along with the interest accrued there on at the time of retirement. It is also submitted that the assessee is deducting TDS from such interest payments. It is only possible to identify the accumulated balance in the name of each of the employee and pay the same only if the sub-ledger of the “Staff welfare scheme” is available. Hence, in our view, the “Staff welfare scheme a/c” can only be taken as a creditor account and not as welfare scheme account as defined in sec. 2(24)(x) of the Act. Accordingly, we agree with the final decision reached by the Ld CIT(A) on this issue. - Decided in favour of assessee. Amount realized from borrowings on sale of gold in public auction - Held that:- It is common knowledge that in any auction the value which would be realized would be much less than the market value. The revenue has not made a case that the assessee has realized interest/arrears of interest on the auction. The Ld. CIT(A) in para 10.3 at page 18 of her appellate order has come to the finding that the gold loans and stagnant advances which were not recoverable for long, the gold was put to auction to recover the value of loan. Since the sale proceeds of such gold ornaments would basically go to reduce the principal amount of loan and any interest realizable on that. Such amount would be basically repayment of loan and hence the same cannot be treated as income of the assessee. In view of this , we uphold the findings of the Ld. CIT(A) on this issue also.- Decided in favour of assessee.
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2016 (10) TMI 43
Penalty u/s. 271(1)(c) - Addition on Legal and professional charges and Cost of investment written off - Held that:- In the present case the legal and professional fee paid to various professionals was duly disclosed in the books of account and the same have been paid by cheques to the consultants. Tax was also deducted at sources on such payments. The bills of the legal consultants were also produced before the AO. Therefore, there being complete disclosure of these expenditures before the AO, no penalty could be imposed against the assessee on the basis of disallowance of the same, in view of various decisions relied upon by the assessee as noted above. Similarly, regarding the written off investments it is not in dispute that the appellant company purchased shares of Modi Creata Promotion Ltd. during the F.Y. 2001-02, and liquidation of the said company was approved by the High Court. The relevant papers are placed on record. In presence of these circumstances, the entire amount invested, is said to have been written off in the books of account, as the said amount was not expected to be recovered. The factum of investment and its write off was also completely disclosed before the AO in the financial statement furnished by assessee. However, on disallowance of this claim of assessee, it is not justified to hold that the appellant has concealed the particulars of income or has furnished inaccurate particulars of such income entailing penalty u/s. 271(1)(c) of the Act as held in several decisions relied by the assessee. In view of what has been discussed above, we come to the conclusion that the ld. Authorities below are not justified to impose or confirm the penalty against the assessee u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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Customs
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2016 (10) TMI 81
Method for quantification for calculation of Anti Dumping Duty - cold rolled flat products of stainless steel of specified dimension - import from Korea R P, E U and USA - provisions of Rule 4 (d) of Anti Dumping rules - landed value - assessable value - AD duty fixed as amount equal to the difference between a fixed reference price and the landed value of the subject goods - Held that: - Rule 4 (d) recommended the amount of AD duty equal to the margin of dumping or less which if levied, would remove the injury to the domestic industry, and the date of commencement of such duty. The reference price based AD duty imposed is based on analysis of various parameters, more specifically of the price behavior of the imported goods, domestic goods, dumping margin and the injury to the domestic industry. Unless it is established with positive evidence that serious error has happened in any of these analysis, Tribunal will not be interfering with the finding of the Designated Authority as the finding of the Designated Authority were based on material facts and the same cannot be overturned based on purported subjective grievance of the appellant - appeal dismissed - decided against petitioner.
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2016 (10) TMI 80
Enhancement of value of the current imported goods - demand of duty in respect of earlier imports - imposition of penalty - electric motors of assorted KW - import from China - variation in the price declared - the entire case of the Revenue is based upon the value adopted from NIDB data - Held that: - electric motors though imported from the same importer to which NIDB data relates to, cannot be held to be comparable on account of use of different types of cables for winding purpose. It may be observed that one manufacturer can manufacture the same goods but different qualities, attracting different prices. As such, for comparing the value of one product of the same manufacturer with the other product manufactured by him, it has to be stablished that both types of goods were identical. In the absence of any such efforts made by the Revenue to establish the comparable nature for the imported goods with the other the import, enhancement cannot be upheld. Revenue has not produced an evidence that there was any additional flow back of money to the foreign supplier to whom all the payments were made through ICICI Bank - no evidence on record to reject the transaction value, in which case the value has to be adopted as the correct value. Enhancement of value, demand of duty and imposition of penalty not justified - appeal allowed - decided against Revenue.
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2016 (10) TMI 75
100% EOU - demand of Additional Customs duty of ₹ 2/- per liter imposed by Section 116 of the Finance Act, 1999 - High Speed Diesel Oil - exemption Notification No. 52/2003-Cus dated 31.3.2003 - whether appellant being 100% EOU will be liable to pay ADD as demanded? - Held that: - the decision in the case of PARAS FAB INTERNATIONAL Versus COMMISSIONER OF C. EX., KANDLA [2010 (6) TMI 184 - CESTAT, NEW DELHI] has been relied upon where it was held that the entire premises of 100% EOU is a bonded warehouse. Neither the scheme of the Act nor the provisions contained in the Manual require filing of ex-bond bills of entry or payment of duty before taking the imported goods for manufacturing in bond nor there is any provision to treat such goods as deemed to have been removed for the purpose of Customs Act, 1962. The Notification No. 59/99 dated 11.5.1999 exempts high speed diesel oil, falling under heading No. 27.10 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1976), when imported into India, from so much of the additional duty leviable thereon under sub-section (1) of section 3 of the said Customs Tariff Act, as is equivalent to the additional duty of excise leviable on high speed diesel oil under section 133 read with Second Schedule of the Finance Act, 1999 (27 of 1999). - the High Speed Diesel is exempted from payment of the additional duty levied under Section 116 of the Finance Act, 1999. Appeal disposed off - decided in favor of appellant.
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2016 (10) TMI 74
100% EOU - STP unit - Refund claim - denial of depreciation on the equipments used in the export of software after de-bonding of warehouse - recovery of duty on full value of the equipment - STP units - permission to import duty free infrastructural facility equipments vide notification No. 153/93-Cus dated 13-08-1993 - 100% EOU Bonded Warehouse - is the Department justified in demanding duty on the original value of the equipment, without allowing depreciation on the ground that said Notification No. 153/93-Cus does not have any specific provision for allowing Depreciation? - Held that: - the decision in the case of Kumar Housing Corporation Ltd Vs CCE Pune-III [2014 (12) TMI 895 - CESTAT MUMBAI] relied upon. Notifications 52/2003-Cus did take cognizance of the early obsolescence of capital goods related to software technology and in fact, extended depreciation at attractive terms. But just because No.153/21993 Cus is bereft of such a provision, it would not mean that capital goods imported by appellant in 2006, when cleared to DTA five years thence, in 2011, can be denied depreciation from originally imported value. The CBEC have issued a number of circulars clarifying the grant of deprecation on debonding of capital goods from EOU/EPZ/EHTP/STP units. Boards circular No.305/52/85-FTP dated 15-04-21987 prescribed the method for calculating the depreciation on capital goods permitted to be taken outside the units and the overall limit of depreciation was fixed at 70%. Subsequently the rates were revised. Appellant eligible for the depreciation as prescribed by the CBEC Circular applicable at the time of debonding - refund claim allowed - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 70
Imposition of Anti Dumping Duty - sunset review - Nylon Monofilament Yarn - landed price upon import - imported from China PR, Chinese Taipei, Malaysia, Indonesia, Thailand and Korea RP - proviso B clause of the Notification No. 3/2012 - CUS (ADD) dated 03/1/2012 provides for exemption to certain class of subject goods if their landed price is above a particular bench mark price - Held that: - Proviso B group, carries a bench mark landed price of 5.17 US $. The bench mark price was fixed at ₹ 172/- k.g. for all types of categories. Later, the same was enhanced to 4.24 US $ and 5.17 US $ for two distinct groups for purpose of exemption. After assessing various factors like, volume effect of dumped imports, demand, market share, price effect, price suppression/depression and economic parameters affecting the DI, the DA concluded that the subject goods are entering the Indian market at dumped prices and dumping margin is significant - appeal dismissed - decided against appellant.
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2016 (10) TMI 69
Imposition of Anti Dumping Duty - Pentaerythritol - imported from European Union, except Sweden - Customs Tariff (Identification, Assessment and Collection of Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - Customs Notification dated 20.06.2012 - Held that: - It is seen that the increase in demand is higher than the increase in production/ sales of the D.I. In spite of improvements in production, sales and capacity utilization, the price parameters of D.I. have significantly deteriorated during the POI. It is brought out in the final findings that the profitability of D.I. improved in 2007-2008 as a result of A.D. duty imposed on imports from other dumped sources. The return on investment should be adopted based on consistent practice followed by the D.A. and the claim made by D.I. There is no legal basis to adopt the resale price of related party in India for calculation price under cutting and injury margin. The landed price is to be as per Section 9(A)(1b). The data for different period cannot be compared. The significant adverse impact of dumped imports may be established in terms of any one or more parameters listed as per the A.D. Rules. Appeal dismissed - decided against appellant.
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Service Tax
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2016 (10) TMI 82
Levy of penalty - delayed payment of service tax under reverse charge - on account of oversight, the appellant omitted to consider an expenditure during the relevant year - service tax was paid as per the observation of the Audit Party - Held that:- the contention of the appellant that he bonafide believed that he is not liable to pay service tax but during the audit, the audit party informed him that he is liable to pay service tax, then he immediately paid the entire service tax along with interest. Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. Consequently, in my opinion, the imposition of penalty under Section 78 of the Act is not justified and bad in law. - No penalty - Decided in favor of assessee.
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2016 (10) TMI 63
Refund claim - service tax paid on input service credit taken during the period October 2012 to December 2012 - denial of refund on renting of immovable property service on account of non-registration of the premises - Held that:- in the case of KLA Tencor Software Private Limited Vs CST, Chennai [2016 (6) TMI 447 - CESTAT CHENNAI], it was held that registration is not a mandatory condition to avail refund under the Notifications prescribed by placing reliance on the ruling of mPortal Wireless Solutions Private Limited Vs CST, Bangalore []2011 (9) TMI 450 - KARNATAKA HIGH COURT]. Therefore, the refund of CENVAT Credit on renting of immovable property is allowed, by following the ruling of Karnataka High Court. Refund claim - denial of refund claim on the ground of imitation of time - Held that:- Commissioner (Appeals) dealt the limitation issue in depth and passed a detailed order and held that inasmuch as the refund is related to Cenvat credit taken during the given period and the same shall be taken till the last day of the given period, namely the quarter, the claim for refund can only be filed after the last date of the respective quarter and the relevant date is the date of export and are entitled in terms of Notification No. 27/2012 dated 18.06.2012 read with Section 11 B of CEA, 1944, and the refund claim is not hit by limitation. As per Rule 5 of CCR, 2004, in case of export of services, export is complete only when foreign exchange is received in India. This aspect has not been brought out by both the authorities below. Hence, the matter is remanded to the adjudicating authority with the direction to verify the date of receipt of foreign exchange received in India to determine the relevant date of export to decide the limitation aspect. - Appeal disposed of
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Central Excise
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2016 (10) TMI 79
Valuation - deduction of discount - discount was given to non-performing dealers also - turnover discount was quantified at the end of calendar year, wherein dealer has sold the cars of previous year - discount was made known to dealers in advance - Held that:- the impugned order is not sustainable in respect of all the three points; as regards of extending the discount to non performing dealers, the denial of deduction of such discount from the assessable value seems to be incorrect, as there is no reason for disallowing the same. It is an admitted fact that the discount is extended to non performing dealers also and that it has been passed on. We agree with the appellant that by extending such discount it will encourage the dealers to work more efficiently and get orders for cars which will benefit the dealers as well as the appellant. Adjustment of excess payment of duty to short payment of duty on the finalisation of provisional assessment - unjust enrichment - Held that:- in the appellant's own case, as reported at [2014 (12) TMI 158 - CESTAT MUMBAI] the Tribunal has held that the discount which are extended by credit notes are also eligible for deduction. Also the same view has taken by Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE, LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT] which was followed by the Principal Bench of Tribunal in the case of CCE Vs BSL Ltd. [2014 (9) TMI 771 - CESTAT NEW DELHI]. Therefore, in view of the authoritative jurisdictional pronouncement, we have to hold that the excess payment of duty to the short payment of duty on finalisation of provisional assessment is to be allowed. Duty liability - turnover discount extended - Held that:- it is seen from circular of appellant that this turnover discount specifically states that the said discount is available to all the dealers beginning on the first day of calendar year and ends on the last day of such calendar year. Only reason given by the lower authorities for rejecting the contention that the dealer has not sold the cars manufactured and cleared to him by the appellant of the same calendar year. We find no merits in this argument as the turnover discount is an advancely intimated discount without any qualification as to which cars are to be sold to be eligible for Turnover Discount; the circular only states that to be eligible for Turnover Discount specific number of cars need to be sold in a calendar year. In such a factual position, we are of the view that the deduction claimed by the appellant on the turnover discount is legitimate and needs to be extended to him. We agree with the appellant that the issue is now squarely covered by the decision of Tribunal in the various cases. Therefore, in view of the authoritative jurisdictional pronouncement, we hold that the impugned orders are not sustainable and liable to be set aside. - Decided in favour of appellant
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2016 (10) TMI 73
Recovery of suo moto cenvat credit alongwith imposition of penalty - Cenvat credit availed without any duty paying documents or specific order to avail the credit - Held that:- the appellant has categorically submits that they have not filed any refund claim pursuance to the order of the Tribunal 26.2.2006 as they already taken the sue motto credit. Since, for the duty liability involving the same period two proceedings were initiated and it has been held in the refund proceeding that the Appellant are eligible to the refund and the Appellant claims that no refund has claimed pursuant to the CESTAT Order as they had already taken suo motto credit of the refund amount in their CENVAT Credit account, therefore, the disposal of the present case is automatic. Therefore, the impugned order is set aside. - Appeal disposed of
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2016 (10) TMI 72
Period of limitation - recovery of interest - late payment of duty - Section 11AB of Central Excise Act, 1944 - assembly/manufacture of Heat Exchangers on job work basis - Held that:- it is found that the first instalment against the duty liability was discharged by the appellant on 09.7.2008 and the final instalment was paid on 31.3.2009 against the total outstanding amount of ₹ 1,80,33,487/-. The Hon’ble Delhi High Court in the case of Hindustan Insecticides Ltd (supra) observed that the recovery of interest should be made within the reasonable time ie., the period prescribed for recovery of duty under Section 11A of Central Excise Act, 1944. Hence, in the present case also the interest on the outstanding amount is recoverable within the period prescribed under Section 11A of the Act. Therefore, the matter is remanded to the Adjudicating Authority for re-computation of the interest taking into consideration of the normal period prescribed under Section 11A of the Central Excise Act, 1944. Imposition of penalty - Rue 25 of the Central Excise Rules 2002 - Held that:- it is found that the appellant was registered with the Central Excise Dept., and they had cleared the manufactured goods on payment of substantial amount of duty while executing first stage of the contract, but failed to discharge duty in executing the 2nd stage of the contract by manufacturing the Heat Exchangers. Even though no suppression has been alleged in the notice, however, the manufactured goods had been cleared from the factory without payment of duty and following the procedure prescribed under relevant provisions of Central Excise Act and the Rules made there under, hence, penal provision is definitely attracted as it is a settled principle of law that for imposition of penalty mens rea need not invariably present. However, I find that the imposition of penalty of ₹ 45,08,372/- is too harsh in the present circumstance, hence, penalty of ₹ 1,00,000/- shall meet the ends of justice. - Appeal disposed of
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2016 (10) TMI 71
Recovery of Cenvat credit - returned goods cleared as scrap - Rule 16 - Held that:- the Appellant had received in their factory the defective duty paid goods for remaking, refining, reconditioning etc. It is not in dispute that the certain quantity of such defective goods were remade/reconditioned and cleared on payment of appropriate duty. However, the major portion of the returned goods was scrapped and cleared from the factory after payment of duty on the transaction value of the scrap. It is the contention of the Department that the conversion of printed/unprinted corrugated boxes into scrap cannot be considered as a process of manufacture. Hence, the credit availed under Rule 16(1) is required to be reversed. I do not find any discrepancy in the observation of the learned Commissioner (Appeals) in this regard, in as much as the provisions of the said Rules are specific. In the present case, it cannot be said that the process by which the defective goods are converted into scrap, should be considered as manufacture within the definition of manufacture as laid down under Section 2(l) of Central Excise Act, 1944. Therefore, on merit, the Appellant has no case. Period of limitation - Held that:- appellant has meticulously maintained the Form V registers and filed D-3 intimation with the Department about receipt of the defective materials in their factory. Also, in the said register, it is maintained invoice-wise and clearance of scrap is also reflected. Also, in the monthly returns, the Appellant had indicated that the clearances of defective materials on payment of duty by making a remark as “material resupplied against D-3”. Therefore, in my opinion, all the facts are disclosed to the Department. therefore, I do not find merit in the impugned order on the aspect of limitation. - Decided in favour of appellant
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2016 (10) TMI 68
Modvat credit - capital goods being used for manufacture of float glass which is not commencing production - capital goods were received into factory and central excise duty was paid on them - capital goods were utilized for the manufacture of final products - C.B.E.C. Circular No. 277/111/96-CX dated 02-12-1996 categorically specified that the restriction in said Rule 57Q was introduced only from 01-01-1996 that the credit is admissible only after installation/utilization of capital goods and in respect of factories in existence such credit is admissible immediately after the receipt of the goods. Held that:- it is found that the present case is based only on the understanding of Revenue that the Modvat credit paid on capital goods brought into the factory for manufacture of float glass was not admissible to assessee till such time the manufacture of float glass did not commenced. The said issue has been clarified by C.B.E.C. through said circular dated 02-12-1996. We find that the said circular is squarely applicable in the present case. We therefore set aside both the impugned Orders-in-Original and impugned Order-in-Appeal. - Decided in favour of appellant
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2016 (10) TMI 67
Clandestine removal of goods - shortage of finished goods of 69.93 MT of MS ingots - power consumption for one MT of MS ingots varies from 990 units to 3703 units per MT - manufacturing of MS ingots on the basis of consumption of electricity - Demand and imposition of penalties - Held that:- Clandestine removal of goods - Demand alongwith interest and penalties - excess electricity consumption - on the basis of excess electricity consumption, the appellant is manufacturing excess quantity of finished goods which have been removed clandestinely on the basis of Dr. N.K. Batra, Professor of IIT, Kanpur - Held that:- the charge against the appellant has been dropped on the ground that on the basis of report of DR. N.K. Batra, Professor IIT, Kanpur is not acceptable as held by Hon ble Apex Court in the case of R A Casting [2011 (1) TMI 1302 - Supreme Court of India]. Such charge of clandestine manufacture of goods and clandestine removal of the goods has already been held by the ld. Commissioner as not sustainable in the facts of this case. Therefore, demand is also not sustainable as the same has been confirmed on account of clandestine manufacture and clandestine removal of goods. Further, we find that in the Show Cause Notice although it is discussed that certain katcha slips were found during the course of investigation for purchase of scrap on the basis of these slips, no demand of duty is proposed. As there is no duty demand in the Show Cause Notice, therefore, we hold that demand is not required to be confirmed against the appellant, therefore same is set aside. As demand has been set aside, consequently the demand of interest and imposition of penalty on this count is also set aside. Clandestine removal of goods - finished goods of 69.93 MT of MS ingots were found short - Imposition of penalties - conclusion was drawn by the department that as they have paid the duty therefore these goods have been removed clandestinely - Held that:- there are charges on the appellants that goods have been removed clandestinely by the appellants but the charges of clandestine removal have been dropped and therefore, in these circumstances, it cannot be held that goods have been cleared clandestinely. Although the appellants has paid the duty that might be to settle the issue at that stage, but from the records it is not coming out that the charge of clandestine removal has been proved with any supportive evidence except the goods were found short during the course of investigation. Therefore, when the appellant has paid the duty but there is no demand of interest proposed, in these circumstances we hold that charge of clandestine removal stands unapproved. Therefore, question of imposing penalty does not arise on the appellant. As the appellant is not contesting demand of duty therefore appellant cannot claim refund thereof in consequence of this order. In the result, impugned order qua demand of duty along with interest and imposition of penalty on the main appellant and penalties on co-appellant is set aside. - Decided in favour of appellant
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2016 (10) TMI 66
Reversal of cenvat credit - Rule 6(3) of Cenvat Credit Rules, 2004 - electricity generated out of Bagasse - consideration received by appellant for supply of electricity to the State Grid of Electricity - Held that:- the issue has been finally decided by the Hon'ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] wherein the Hon'ble Supreme Court of India have held that Bagasse is only an agricultural waste and residue and there cannot be any Excise duty on Bagasse. The Hon'ble Supreme Court has further ruled that Cenvat credit in respect of electricity was denied only on the premises that Bagasse attracts Excise duty and consequently Rule 6 of Cenvat Credit is applicable and the Hon'ble Supreme Court has found such action to be erroneous. Therefore, by following the same the impugned orders are set aside. - Decided in favour of appellant
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2016 (10) TMI 65
Cenvat demand alongwith interest - Cenvat credit irregularly availed on Ethanol from April, 2011 to March, 2012 - Held that:- the issue is now fully covered in favour of the appellants. It is also noted that even in the case of Asian Colour Coated Ispat Ltd V/s CCE Delhi [2014 (9) TMI 974 - CESTAT NEW DELHI], where originally there was difference of opinion between two members of the Tribunal, as per majority decision it was held that CENVAT Credit cannot be denied to an assessee on the ground that manufacturer of final product was not required to pay duty by utilising the credit, as the activity at his end did not amount to manufacture. The said decision was later followed in Aurobindo Pharma Ltd V/s Commissioner of CE, Cus and ST Hyderabad-I [2015 (12) TMI 1399 - CESTAT BANGALORE]. Therefore, by relying on the Tribunal judgment in the case of Neuland Laboratories Ltd. Vs. CCE Hyderabad-I [2013 (11) TMI 1339 - CESTAT BANGALORE] which was appealed by Department before High Court and Hon'ble A.P. High Court had dismissed the same reported in [2015 (10) TMI 1036 - ANDHRA PRADESH HIGH COURT] and the same has attained finality upto Hon'ble Supreme court, it is seen that Commissioner (Appeals), in the appellant's own case, for different period July 2006 to May 2011, has allowed the appeals on identical issue. - Decided in favour of appellant
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2016 (10) TMI 64
Job-work - Demand alongwith interest and penalty - differential duty - revision of assessable value, in spite of increase in cost of raw materials - Held that:- it is seen that in the impugned order it has been held that the transactions between appellant and buyer is on principal to principal basis. The appellants contention that they are selling the paints on principal to principal basis and sale prices are arrived at after taking into account various cost of production for manufacturing the product was held as correct. The issue has been analysed by the Tribunal in their own case reported in [2010 (9) TMI 315 - CESTAT, BANGALORE] where it was categorically held that the conclusion of lower authority that the relationship between appellant and Sigma is that of job worker and principal manufacturer is incorrect. Therefore, by following the same, we hold that the demand is not sustainable. - Decided in favour of appellnat
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CST, VAT & Sales Tax
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2016 (10) TMI 85
Works contract for pest control at SEZ - sale and supply of goods as per Section 2(13) and 2(23) of the Value Added Tax Act, 2003 - registered in the category of cleaning activity service - taxation of pesticides and chemicals used in the cleaning and pest control activity under the VAT Act - 'sale' under section 2(23) of the Act - whether execution of the works contract for pest control amount to transfer of property in goods and exigible to VAT? - Held that: - this was a contract for carrying out the pest control service which would require special know-how and use of pesticides in recommended measures. The concentration of the pesticides, the amount of usage, the places to be applied and all other relevant aspects would be a matter of considerable technical expertise. The use of the pesticides in the process was wholly incidental. The dominant purpose was to provide a composite pest control and rodent control service. The use of pesticides and chemicals was wholly incidental. There was no intention of sale of goods from the assessee to the company. Similar issue decided in the case of Pest Control India Ltd. v. Union of India and others [1989 (9) TMI 356 - PATNA HIGH COURT]. NO transfer of property in goods involved - No VAT liability - appeal dismissed - decided against Revenue.
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2016 (10) TMI 84
Levy and collection of Entry tax - transaction using E-commerce portal - business of providing logistics and delivery services to various individual buyers - goods purchased meant for personal use and not for re-sale - CST - Bihar Tax on Entry of Goods into Local Areas for consumption, Use or Sale Therein Act, 1993 - Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein (Amendment) Act, 2001 - conduct of trade, commerce and intercourse as contained in Chapter XIII of the Constitution of India - whether tax can be levied on entry of goods in local areas? Held that: - no tax can be levied on entry of goods into local areas, in terms of the impugned provisions, over the transactions, made on e-commerce portals, for personal use or consumption of individual consumer. The impugned provisions of the Bihar Finance Act, 2015 (Bihar Act 9 of 2015), amending the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 and the Rules made thereunder and Notifications S.O. 176 & 18 both, dated 20.01.2016, are declared as ultra vires to the Constitution and are accordingly quashed. The impugned provisions as contained in Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 held to be discriminatory and violative of Article 304(a) of the Constitution of India read with Article 303 of Constitution of India. Petition allowed - decided in favor of petitioner.
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2016 (10) TMI 83
Imposition of penalty under Section 53(3) of the A.P. Value Added Tax Act, 2005 - milling of paddy - sale of rice - difference between turnover reported in the returns and turnover reported in the audited books of accounts - alternative remedy of appeal - under-declaration of tax - Sections 53(1) and 53(3) of the Act - is imposition of penalty justified was there any wilful attempt to avoid tax? - Held that: - The distinction between Sections 53(1) and 53(3) of the Act is the dealers intent. While a bonafide error would fall within the ambit of Section 53(1) of the Act, wilful or intentional under-declaration of tax would fall within the scope of Section 53(3) of the Act. The respondents were justified, in imposing penalty under Section 53(3) of the Act on their coming to the conclusion that the under-declaration of tax by the dealer was with wilful intent - no reason to interfere with the impugned order, passed by the Appellate Deputy Commissioner, in proceedings under Article 226 of the Constitution of India - petition dismissed - decided against petitioner.
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2016 (10) TMI 78
Provisional release of goods - seizure of goods and trucks transported - machinery transported from Jaisalmer to Amreli - declaration in Form No. 403 - will the provisional release of goods be allowed, on non-declaration of form. 403, keeping in view the costly and sophisticated nature of machinery? - Held that: - No useful purpose would be served in allowing the machinery and the vehicles to remain idle in open at Tharad since 14.08.2016. Subject to appropriate conditions which would also safeguard the interest of the authorities, the goods released for further movement - The petitioner shall deposit a sum of ₹ 50 lacs with the State authorities subject to final assessment and further right of appeal - The petitioner shall give an undertaking to cooperate with such assessment proceedings and to pay any further tax, interest or penalty, if found finally due and payable pursuant to such orders of assessment subject to further appeal - assessment not to be delayed unreasonably by the authorities - goods and trucks released on fulfillment of above conditions - petition disposed off - decided in favor of petitioner.
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2016 (10) TMI 77
Partial exemption of sales tax - sales tax rate reduced to 3% on sale of All types of four wheeler and three wheeler, Commercial Motor Vehicles, that is to say Trucks, Buses, Mini Buses and pickup vans and their chassis but excluding Auto rickshaws - notification dated 13.6.1989 issued by the State Government in exercise of powers under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 - sale of A.P.I. three wheeler chasis complete with the speedometer, spare wheel rims without tyre and tube with wind screen glass by the respondent - Whether the chasis of three wheeler vehicle sold by the respondent falls within the purview of notification dated 6.4.1989 issued by the State Government in exercise of powers under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958? Held that: - the Board itself has found that the respondent has not sold auto rickshaw but has sold the chasis of three wheeler and, therefore, the Board itself has answered the aforesaid question in favour of the respondent. If the respondent has sold the chassis of three wheeler vehicle, the same would fall within the purview of notification dated 13.6.1989 - appeal dismissed - decided in favor of respondent.
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2016 (10) TMI 76
Revision of assessment - powers conferred on the revisional authority under Section 32 of the TNGST Act, 1959 - assessment for the year 1995-96 - no revision of assessment for the said year - the issue involved is squarely covered by the judgment of the Hon'ble Division Bench of the Court in the case of Mohan Breweries and Distilleries Limited v. Commercial Tax Officer, Porur Assessment Circle, Chennai and others [2004 (9) TMI 617 - MADRAS HIGH COURT] and it was contended that on identical facts, the Hon'ble Division Bench set aside the demands. The subject matter in issue is covered by the order passed by the Hon'ble Division Bench and the matter is pending before the Hon'ble Supreme Court. Therefore, it would be appropriate for the Revenue to await the decision in the case of Mohan Breweries and Distilleries Limited, which is now pending before the Hon'ble Supreme Court. Writ petition allowed - matters remitted back to the assessing officer for fresh consideration, who shall await the decision of the appeal filed by the Revenue as against the judgment of the Hon'ble Division Bench of the Court in the case of Mohan Breweries and Distilleries Limited and in the event of action being initiated, the petitioner herein will not be entitled to plead limitation as against such action initiated by the Revenue in the light of the proviso to Section 32 (2) of the Act - decided in favor petitioner.
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