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TMI Tax Updates - e-Newsletter
October 8, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
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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Income-tax (25th Amendment) Rules, 2016 - An application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and from initiation of proceedings under section 276C or section 276CC shall be made in Form No.68
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Unexplained source of huge Cash Deposit in Bank Account - assessee declared his income u/s 44AF - Whether Presumptive charge of income u/s 44AF distinguishable from arriving at chargeable income u/s 29? - Additions made by AO confirmed - HC
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CIT(A) jurisdiction to consider the status of the appellant as an AOP - True that in the earlier years, the issue was not raised. - Merely because, it was not raised, it cannot be said that the Commissioner, has no powers to decide, if the Assessing Officer, has failed to advert to the said aspect - HC
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No addition can be made u/s. 153A unless there are certain documents or material found in the search to support the view of the AO regarding low household withdrawals. - AT
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Exemption u/s 10B - sale of hardware cannot be a part of software exported by the assessee - sale of hardware cannot be a part of export turnover. - AT
Customs
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Allegation of illegal export - in the absence of any evidence to show that the money was remitted by way of Hawala, the case of over-invoicing could not be established by the Department - SC
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The petitioner cannot seek for cross examination of the officer, who gave the report - the contention raised by the petitioner that they have to be permitted to cross examine the Chemical Examiner of the Central Laboratory is a misconceived plea - HC
Service Tax
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Refund claims - period of limitation where refund claim was filed electronically within prescribed time - They later submitted in physical form all these documents with Jurisdictional officer - refund cannot be rejected on the ground of time bar - AT
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Admittedly, street lights, fountains and tubewal are not building parts in common parlance. Therefore, the management, maintenance or repair service of fountains, tubewal and street lights do classify under the management, maintenance or repair service - AT
Central Excise
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Quantification of penalty - power to tribunal to reduce the penalty u/s 11AC below the amount of confirmed duty - the Tribunal could not reduce the penalty for an amount lesser than the duty which has been upheld - SC
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Effect of the words “Subject to the provisions contained in Section 11AB” inserted in section 11AA - The contention therefore, that for applying section 11AA, all conditions provided in section 11AB must be satisfied, is devoid of any merits. - HC
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Mode and manner of refund - whether the rebate claims of the assessee(s) were to be allowed in cash or sanctioned by way of re-credit - the duty paid through actual credit or deemed credit account on the goods exported has to be refunded only in cash - HC
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Manufacture - change in tariff heading after processing - activities for processing TMT coils into TMT bars/rods after de-coiling, straightening and cutting into size does not amount to manufacturing of new marketable commodity - HC
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Entitlement of interest w.e.f. 21.8.2008 on refund of pre-deposit - whether @12% or 6% - Section 11BB - the appellant herein is entitled to payment of interest @ 12% per annum for the period after three months till the refund was granted after passing of the order by the Tribunal on 2.5.2008 - HC
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Cenvat credit of Service tax paid by the service provider is available to the service recipient under Rule 3 even if Job worker was exempt from payment of service tax - AT
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Valuation - Clearance to inter-connected undertakings - merely because the units are interconnected undertakings the same would not be a ground to reject the transaction value unless the units are related persons. - AT
VAT
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Principle of 'lifting of the corporate veil' - recovery of duty / tax from the director cannot be made merely on the basis of allegation - The test of fraudulent conduct not satisfied, so as to attract the principle of lifting of corporate veil - HC
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Valuation - cash discount = it is always open to the AO to take into consideration those documents and take a decision in the matter. - AO need not restrict himself only with regard to the C-Forms and F-Forms and if the assessee is legally entitled for any other relief then that may be considered - HC
Case Laws:
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Income Tax
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2016 (10) TMI 255
Telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign exchange - exclusion from the export turnover for the purpose of computing deduction under Section 10B - Held that:- In the instant case, the order for software and hardware are placed separately, though in the same order, for different costs. The sale invoice of software and hardware was also raised separately on different dates. The mode of payment is also different for software and hardware. Moreover, the order was not placed for supply of particular hardware and software only. The order was placed for the supply of software as well as hardware and nothing has been established on record that the said software cannot be used without hardware. In light of these facts, we are of the considered opinion that sale of hardware cannot be a part of software exported by the assessee. Thus, we have no hesitation in holding that sale of hardware cannot be a part of export turnover. So far as the other aspect is concerned, we are of the view that the Tribunal has already taken a view in the earlier order that once a sale of particular item is not considered to be part of export turnover, it cannot be considered as part of total turnover in light of the decision of Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) and the decision of the Special Bench in the case of ITO v. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] in which it has been held that whatever has been excluded from the export turnover had to be excluded from the total turnover also, since total turnover includes export turnover as well. In light of these findings, we uphold the order of the CIT(Appeals) that sale of hardware component would be excluded from the export turnover and for the recomputation of deduction u/s. 10A, the matter is restored to the Assessing Officer in the terms indicated above. - Decided partly in favour of assessee.
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2016 (10) TMI 254
Addition on account of undisclosed investment in Rolex Watch - Held that:- We find no justification to interfere with the order of the ld. CIT(A) on this issue. The clerical mistake is proved from the fact that as per Annexure A-3, the items Rolex Watch ( ₹ 4 lakhs) and Mont Blanc pen (Rs. 1 lakhs) were inventorised by the search party and surrender of additional income was made only to these items. On this Annexure, there is no mention of any purchase or conversion of jewellery. The ld. CIT(A) has also found that in the statement of affairs, drawings for undisclosed expenses already treated as income, have also been mentioned in the capital account and that under this head expense for conversion and purchase of jewellery for Sunita Beriwala at ₹ 5 lacs has separately been mentioned. We, therefore, find that the disclosure of income for ₹ 1,01,05,976/- made by the assessee at the time of search has been adhered to and the investment in Rolex Watch for ₹ 4 lacs and for Mont Blanc pen for ₹ 1 lac (total ₹ 5 lacs) has been shown as part of the undisclosed income. There being no contrary material on record, we confirm the findings reached by the ld. CIT(A) on this issue. Accordingly, ground No. 1 of the appeal of the Revenue is dismissed. Unaccounted cash payment to other family group - notings on different pages of memorandum of family settlement, sized from the residence of Sh.Vinit Beriwala, has made aforesaid addition - Held that:- No statement has been recorded of the person (s) from whose possession these documents were found. The ld. CIT(A) has categorically mentioned that there has been no addition to income in hands of either Sh. Vineet Beriwala or Sh. SS Beriwala for A.Y.2006-07 based on the narration found made on the seized papers or that they have anywhere declared the receipt of payments from the assessee. There is nothing on record to contradict the findings of the ld. CIT(A) that no cash for ₹ 7,33,50,000/- or a lesser amount found at any of the premises of Sh. Vineet Beriwala or Sh. SS Beriwala , nor any details of any investment/ expenditure having been made out of this supposed amount of ₹ 7,33,50,000/- were found in search on Sh. Vineet Beriwala or Sh. SS Beriwala. Thus there being no corroborative evidence found in search or post search investigation to substantiate the fact that the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS Beriwala during the year, the assumption of payment of cash derived from alleged paper seized cannot be supported. Therefore, ld. CIT(A) has rightly deleted the addition. The ld. CIT(A) has also recorded the findings on legal aspect of the case also, inasmuch as the alleged paper was not found from the possession of assessee and there was no corroborating evidence to show that the said papers seized from third party belong to the assessee. He has also relied on several decisions of Hon’ble Higher courts. The Revenue has not brought any material on record contrary to the findings reached by the ld. CIT(A) on this aspect also. We accordingly, do not find any justification to interfere with the findings reached by the ld. CIT(A) on this issue - Decided against revenue Addition on account of low house hold withdrawals - Held that:- The assessee’s wife has also apart from the cash drawings of ₹ 60,000/- made a separate withdrawal of ₹ 2,94,156/- as LIC premium ; ₹ 33,677/- for school fees etc. Therefore, the ld. CIT(A) has rightly observed that if the consolidated drawings of the assessee and his wife of ₹ 9,12,878/- is taken into consideration, it cannot be said that there was low household withdrawals. Besides this, the assessee has also shown drawings for undisclosed expenses, which has been treated as income for the year amounting to ₹ 34,61,000/-. Moreover, no addition can be made u/s. 153A unless there are certain documents or material found in the search to support the view of the AO regarding low household withdrawals. However, no such material is brought by the Revenue to our notice. Therefore, in our considered opinion, no case is made out by the Revenue for making addition of ₹ 1,17,428/- on account of low withdrawals. There being no contrary material from the side of Revenue, we uphold the conclusion reached by the ld. CIT(A) on this count.
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2016 (10) TMI 253
CIT(A) jurisdiction to consider the status of the appellant as an AOP - disallow of remuneration as interest to the partners - Held that:- As rightly pointed out by Ms.T.C.A.Sangeetha, learned counsel for the appellant, contradictions in the statement of the Commissioner of Income Tax, Appeals-4, Chennai from the above two paragraphs extracted supra, is apparent. Though at one stage, the Commissioner of Income Tax, Appeals-4, Chennai makes a prima facie statement, regarding the status of the appellant as an AOP, in the sur rejoinder dated 15.01.2016, the appellate authority has stated that there is no predetermination of the issue, and that it has not been concluded yet. Whether the impugned show cause notice dated 6.11.2015, has to be set aside, on the grounds of jurisdiction, or to allow the Commissioner of Income Tax, Appeals to decide the status of the assessee. The authority, in his affidavit on oath has stated that, the issue is yet to be decided. True that in the earlier years, the issue was not raised. Merely because, it was not raised, it cannot be said that the Commissioner, has no powers to decide, if the Assessing Officer, has failed to advert to the said aspect. On this aspect, we are of the considered view, that it is only a show cause notice and it is always open to the appellant to respond. While considering the scope and powers of the appellate authority, under the Income Tax Act, 1961, courts have consistently held that the power of the first appellate authority are coteminous with that of the Assessing Officer and that the appellate authority can do what the Assessing Officer ought to have done and also direct the latter to do what he has failed. Appeal is also continuation of original proceedings and unless some fetters are placed upon the powers of the appellate authority by express words, the appellate authority can exercise all the powers as that of the original authority. If the Assessing Officer, has erred in concluding the status of the assessee as a firm, it cannot be said the Commissioner of Appeals, has no jurisdiction to go into the issue. In the light of the averments on oath, in the sur rejoinder, made before this court, and on the facts and circumstances of the case, we are of the considered view that the Commissioner of Income Tax, Appeals-4, Chenai, without being influenced by any of the observations made in the impugned show cause notice dated 6.11.2015, should decide the status of the assessee, with reference to the satutory provisions, and decisions relied on, and simultaneously, consider the explanation, materials and supporting documents, if any to be filed by the appellant, in response to the show cause notice and accordingly answer, as to whether disallowance should be made or not, depending upon the answer on the first issue. Writ Appeal is disposed of in the above terms. However, there shall be no order as to cost. Consequently, the connected civil miscellaneous petition is closed. Inasmuch as the matter pertains to adjudication, where the appellant is required to be heard in person and evidence, if any, to be recorded, an outer limit of six weeks time is fixed. Taking note of the above, appellant is directed to submit the reply/objections, within such time, to be fixed by the Commissioner of Income Tax, Appeals, and the respondent is directed to pass orders, at the earliest, notwithstanding the outer limit fixed by this court. Appellant is directed to extend cooperation and not to protract the proceedings, except, for bonafide cause. It is made clear that if for any bonafide or genuine reasons, the respondent is not in a position to pass orders, within the time frame fixed by this court, contempt proceedings shall not be entertained.
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2016 (10) TMI 252
Unexplained source of huge Cash Deposit in Bank Account - assessee declared his income u/s 44AF - Whether Presumptive charge of income u/s 44AF distinguishable from arriving at chargeable income u/s 29 - Tribunal decided the issues raised before it against the assessee - Held that:- AS held by ITAT that when the assessing officer had sought from the assessee the source of the cash deposits to the tune of ₹ 18,31,500/- made by him in his bank account, virtually no documentary proof regarding purchases/sale of furniture was submitted by him. Photocopies of only a few of the bills which were produced pertained to the current year only. The names of the parties from whom the assessee had purchased the material were not disclosed. The Tribunal noted that throughout the year, on different dates the assessee had made deposits of identical amounts of ₹ 49,500/- and it was only at the fag end of the financial year i.e. on 02.02.2008 and 13.02.2008 that the assessee had made withdrawals of ₹ 1,50,000/- and ₹ 2,00,000/-. The assessee was also found to have failed to prove any purchases made by him from his withdrawals especially when these withdrawals were made only in February, 2008 i.e. at the fag end of the financial year. The Tribunal further noted that in his return, the assessee had shown sales of ₹ 18,82,800/- with net profit of ₹ 1,08,000/- and with this low profit margin, without making purchases no sale could have possibly been effected by the assessee. Thus, the cash deposited by the assessee in his bank account was not believed to be from sales effected by him. The assessee's plea that he usually purchased furniture on credit basis was also considered and rejected as no evidence of making any purchases on credit had been filed by him before any of the authorities. The assessee was also found to have established no nexus with the receipts/turn over and the deposited cash in his bank account. Link evidence to show that the sales were directly related to the cash deposits made by him in his bank account, was also found missing by the Tribunal. In view of the afore-referred facts, the Tribunal held that the assessee's case was distinguishable from Surinder Pal Anand's case ( 2010 (6) TMI 404 - Punjab and Haryana High Court ). Accordingly, the appeal of the revenue was allowed and the addition made by the assessing officer was restored.
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2016 (10) TMI 251
Disallowance of interest - addition u/s 36(1)(iii) - whether transactions are arising out of ‘commercial expediency’ & ‘business exigencies’Held that:- Tribunal upheld the Assessing Officer’s finding that the unsecured loans of ₹ 588.79 lacs were not available to the assessee. It is difficult to understand the basis for this finding as the Tribunal has not considered the assessee’s records which the assessee contends indicate the contrary. The assessee contends that the amounts have been received by him by cheque from persons who are on assessee’s records. Having said that, we must point out that the assessee’s balance-sheet is not very clear in this regard. The amount of about ₹ 5.38 crores is shown as against the name of M/s Garg Infrastructure Private Limited under the heading “Other Liabilities”. It is for the assessee to explain that it really is nothing but an interest free loan. If it is an interest free loan, it would make all the difference to the assessee’s case. It is not very clear whether this was so stated to the CIT (Appeals) and to the Tribunal or not. In the facts and circumstance of this case, the ends of justice, however, would be met by affording the appellant an opportunity of having the matter re-heard before the Tribunal.The matter is remanded to the Tribunal for a fresh decision after affording the appellant an opportunity of being heard.
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2016 (10) TMI 250
TDS u/s 194C - tds liability on reimbursement expenditure - Held that:- A bare reading of Section 194C of the Act would indicate that it does not cover reimbursement of expenditure incurred separately not as a part of the consideration for the work done by the agent / contractor. Further the view taken by the CIT(A) as well as by the impugned order of the Tribunal on facts that the payments made to the agent for the freight paid by it on the respondent assessee's behalf was in fact, reimbursement of expenses. This is so evidenced by Airlines bills which show the respondent assessee as the person responsible to make the payment. This finding of fact by two Authorities is not shown to be perverse.Tribunal was justified in holding that the reimbursement expenditure is not liable to the TDS u/s 194C - Decided against revenue
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2016 (10) TMI 249
Disallowance of expenditure at 5% of exempted income under Section 14A - Held that:- We find that the impugned order of the Tribunal has not disturbed the order of the Commissioner of Income Tax (Appeals), who while applying the test of reasonable disallowance, disallowed the expenditure at 5% of the exempted income. This was by following the decision of the Tribunal in M/s. VIP Industries Ltd. vs. DCIT. [2010 (9) TMI 1097 - ITAT MUMBAI ]. Thus, the disallowance under Section 14A of the Act is reasonable in the absence of the Revenue showing the same to be perverse. Disallowance u/s. 40(a)(ia) - whether amount of 'reimbursement' does not fall under any of the categories specified u/s. 40(a)(ia)? - Held that:- In the present case, the impugned order of the Tribunal prima facie proceeds on the basis that it is an undisputed position that the amount paid by the Respondent Assessee to M/s. Mafatlal Industries was in the nature of reimbursement of expenses. This without considering the grievance of the Revenue that the amount paid to M/s. Mafatlal Industries Ltd. is not reimbursement of expenses. We were inclined to restore this issue to the Tribunal for fresh consideration. However, the Counsel for the Revenue resisted a remand at this stage and expressed a view that at the final hearing he would be able to succeed before this Court without a remand. Appeal admitted on question :- Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified by holding that amount of 'reimbursement' does not fall under any of the categories specified u/s. 40(a)(ia) of the I.T. Act, without considering the findings of the CIT(A) that the payment made on the service rendered to the assessee was not reimbursement in nature?
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2016 (10) TMI 248
Deduction u/s 10B - Tribunal holding that export incentives would come within the purview of profit derived from the export of articles or things of a 100% Export Oriented Undertaking within the meaning of Section 10B - Held that:- Both the authorities have rightly come to the conclusion by considering the decision of Calcutta High Court in case of Chloride India Ltd [2001 (12) TMI 34 - CALCUTTA High Court] is in complete agreement with the conclusions arrived at by the authorities below. Accordingly, both the appeals are dismissed. The issue raised in these appeals is answered in favour of the assessee
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2016 (10) TMI 247
Exclusion of excise duty at the time of valuing closing stock at the end of accounting - Held that:- Taking into consideration the view taken by this court in the case of Assistant Commissioner of Income-tax v. Narmada Chematur Petrochemicals Ltd. (2010 (8) TMI 263 - Gujarat High Court ) we are of the view that the Tribunal has not committed any error in excluding the excise duty at the time of valuation of the closing stock. In that view of the matter, we answer the issue in favour of the assessee
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2016 (10) TMI 246
Penalty imposed u/s 271(1)(c) - additions made on account of attribution of business profits to assessee’s alleged PE in India - Held that:- The issue in respect of additions made on account of attribution of business profits to assessee’s alleged PE in India has been restored back to the file of AO. Therefore, the ld. CIT(A) has rightly observed that the ld. AO should have himself modified the penalty order by deleting the amount of penalty imposed upon the assessee in respect of such additions which have been sent back to the AO for fresh adjudication, as per provisions of section 275(1A) of the Act. Moreover, the penalty deleted by ld. CIT(A) on this count has not been challenged by the Revenue in any of the grounds of appeal before us. We, therefore, need not to address much on this part of penalty deleted by the ld. CIT(A). Deletion of penalty with respect to addition on account of FTS, we further do not find any good reason to interfere with the order of ld. CIT(A). It is borne out on record that the assessee had made true and complete disclosure in its return of income that it was following cash system of accounting with respect to FTS. Further there was no concealment of income. The penalty is imposed keeping in view the tax sought to be evaded. In the instant case the assessee had duly offered the income pertaining to the invoices raised by it during the year in subsequent years as and when the fee was received by assessee from M/s. ONGC and hence, there was no loss to the Revenue or evasion of tax. The issue whether income from FTS is taxable on accrual basis or cash basis is a debatable issue and therefore, where two views are possible, penalty is not leviable if the assessee has adopted one of the two possible views. In this context, the reliance placed by assessee in catena of decisions goes to support the case of the assessee. It is notable that every addition/adjustment does not entail penalty u/s. 271(1)(c) of the Act unless it is proved that the assessee has concealed the particulars of income or has furnished inaccurate particulars of such income. Hon’ble jurisdictional High Court has held, in the case of CIT vs Globe Sales Corporation [2005 (1) TMI 697 - DELHI HIGH COURT ] that merely because certain additions/ adjustments are made in the assessment, it does not necessarily follow that penalty is to be levied. In the instant case, there is no an iota of evidence to prove that the assessee has concealed or furnished inaccurate particulars of income on FTS. However, the dispute was with respect to method of accounting adopted by the assessee and that applied by the department. Hon’ble Delhi High court in Devsons Pvt. Ltd vs CIT [ 2010 (11) TMI 84 - DELHI HIGH COURT ] held that merely because tax department does not concur with the stand adopted by the assessee, it will not be enough reason to hold that assessee is guilty of concealment of income or of furnishing inaccurate details. Even if the claim of the assessee was found wrong upto the stage of Tribunal, such incorrect claim in the return, in the peculiar facts of the present case, cannot be said to prove furnishing of inaccurate particulars of income where the assessee had furnished complete details in respect of the claim so made in the return of income itself. For this, we stand fortified by the decision in CIT vs. Reliance Petroproduct (P) Ltd.,(2010 (3) TMI 80 - SUPREME COURT ). Therefore, for want of any contrary material brought on record, we are not inclined to interfere with the order of the ld. CIT(A) in deleting the penalty imposed against the assessee.- Decided in favour of assessee.
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2016 (10) TMI 245
Disallowance of interest paid u/s. 36(1)(iii) - whether entire expansion has been carried out from own funds and hence no part of interest is disallowable? - Held that:- We find from the perusal of the audited accounts of the company that the assessee has received ₹ 1,25,00,000/- towards share capital during the previous year relevant to the assessment year 2005-06.and the capital WIP increased from ₹ 14,88,029 to ₹ 1,54,94,775 in the same year. We also noticed that there was increase of only ₹ 25,56,048/- in the WIP in the A. Y. 2006-07 and no increase in the capital WIP in the A. Y. 2007-08. It is evident from the above stated facts and circumstances that the assessee company has its own substantial funds in the form of share capital, reserves and surplus which were used for purchase of fixed assets. The lower authorities has not established that assessee company purchased the fixed assets out of the non-interest bearing funds. In view of above stated facts and findings the addition sustained by the Ld. CIT(A) is not justified, accordingly we allow this ground of appeal of the assessee. Addition on under invoicing of sale of scrap - Held that:- Flat rate of ₹ 8000 per MT of scrap adopted by the Assessing Officer to compute the unaccounted income is not correct. He stated that the ratio of cash part of the consideration in sale of scrap has been found to be 15% as mentioned in the statement of the Managing Director recorded on 19-02-2008. The Ld. Commissioner of Income Tax(A) further stated that as per schedule 2 of the audited accounts of the assessee the total income from scrap sale is ₹ 20,66,760/- and he determined the unaccounted cash received @ 15% at ₹ 310014/-. The Ld. Commissioner of Income Tax (A) accordingly restricted the addition to ₹ 3,10,014/-. The Ld. counsel contended that the statement on the basis of which the addition was made not relevant to the year under consideration. On the other hand, the ld. Departmental representative relied on the order of the lower authorities. We have heard both the sides and perused the material on record. We find The Ld. Commissioner of Income Tax(A) has correctly sustained the addition up to ₹ 3,10,014/- out of the total addition of ₹ 14,96,000/- made by the assessing Officer on the basis of unaccounted cash received @ 15% on scrap sale after taking into account the prevailing practice in the business of the assessee. In view of the above stated facts and circumstances, we uphold the addition sustained in the order of the Ld. Commissioner of Income Tax(A). This ground of appeal of the assessee is rejected.
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2016 (10) TMI 244
Revision u/s 263 - exemption u/s 54 - Held that:- We find that the assessee purchased flat vide agreement dated 20.4.2004 after making payment of ₹ 16 lakhs being purchase consideration by means of two cheque drawn on HSBC Bank M G Road, Mumbai the details whereof have already been mentioned above and also taken over the physical possession of the flat simultaneously. We further noted that the first agreement which was executed on the plain paper was reduced on non judicial stamp paper on 13.5.2004. The letter filed by the AR at page 16 which was acknowledged by the office of AO on 25.10.2010 and the AO after considering this agreement came to the conclusion that the assessee has held the flat for more than 36 months and accordingly resultant capital gain on sale of the said flat being LTCG as claimed by the assessee and allowed the exemption u/s 54 of the Act . Thereafter we noted that the ld. CIT(A) by exercising the revisionary powers u/s 263 issued show notice dated 13.3.2013 to the assessee on the ground that the sale of flat had resulted into to STCG as it was held for a period of less than 36 months by taking the date of purchase of the fat as 13.5.2004 which is second agreement which was executed on Non-Judicial Stamp Paper and observed that deduction 54 of the Act was wrongly allowed to the assessee and held that this has resulted into under assessment of ₹ 21 lakhs thereby passing an assessment order being erroneous and prejudicial to the interest of revenue and set aside the order of AO for limited purposes to pass appropriate order after examining all the facts of the case. In this case, we find that the by considering the date of purchase of the first agreement on which the flat was sold and the possession was taken ,the AO has taken the possible view that the flat was purchased on 20.4.2004 as is apparent from the facts as discussed above. The assessee has made LTCG of ₹ 21 lakhs on the sale of flat which was claimed exempt u/s 54 of the Act and was allowed by the AO after considering various documents placed before him during the course of assessment proceedings. In our opinion, no prejudice is called to the revenue and the order passed by the AO is neither erroneous nor prejudicial to the interest of the revneue as the AO has taken a correct view on the basis of documents furnished by the aseseee. Accordingly, we set aside the order of Commissioner passed u/s 263 of the Act by allowing the appeal of the assessee.
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2016 (10) TMI 243
Unsecured cash credit - Held that:- A bare reading of section 68 would show that there has to be credit of amounts in the books maintained by the assessee during the previous year and the assessee either offers no explanation or the explanation offered by the assessee about the nature and source of such credit, in the opinion of Assessing Officer, is not satisfactory. It is only in such circumstances the sum so credited may be charged to Income Tax as the income of assessee. In other words, for making addition u/s. 68 of the Act, the assessee should have received cash. In the present case the stand of the assessee is that Shri S.S. Dhage and Shri B.M. Gaikwad are shown as creditors as they had rendered services and the assessee was to make payment to the aforesaid persons for the services rendered. A perusal of the assessment order shows that the Assessing Officer has made addition without quoting any section in the assessment order. In first appeal the Commissioner of Income Tax (Appeals) clarified that the addition has been made u/s. 68 of the Act. The addition made in respect of outstanding expenses payable to Shri S.S. Dhage and Shri B.M. Gaikwad cannot be made u/s. 68 of the Act. The provisions of section 68 are not attracted where services are received by the assessee and an entry is made in the books crediting liability in account of person from whom services are received. In view of the facts of the case and the provisions of section 68 of the Act, the additions confirmed by the Commissioner of Income Tax (Appeals) u/s. 68 of the Act are not sustainable. Accordingly, the findings of Commissioner of Income Tax (Appeals) on this issue are set aside - Decided in favour of assessee.
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Customs
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2016 (10) TMI 268
Review application - maintainability - scope of the court to review an order - appeal decided under misconception that the seized consignment was opened only when the nature of goods was taken up by the Custom Officers, whereas the consignment was, admittedly, already opened by the Trade Tax Officer on 21.06.2007 - Held that: - the decision in the case of Union of India Vs. Sandur Manganese and Iron Ores Limited and others [2013 (4) TMI 736 - SUPREME COURT] relied upon where it was held that review proceedings have to be strictly confined to the ambit and scope of Order 47 Rule 1 CPC. No error in the order under review - petition dismissed - decided against petitioner.
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2016 (10) TMI 267
Genuineness of the certificate of origin of goods - country of origin of the goods - Malaysia or China? - The question, as to whether the first respondent was justified in disbelieving, or ignoring the certificate issued by the Malay Chamber of Commerce, and if he had to disbelieve the same, whether the Operational Certification Procedure had to be adhered to, and whether the first respondent could have issued the show cause notice for all the seven containers, when even as per the averment made in the notice states that only three containers have originated from China, are all factual issues, which have to be agitated before the Authority. Held that: - Nevertheless, if the importer raises the issue relating to the genuineness of the certificate and the validity and its efficacy, by way of filing reply to the show cause notice, then, it goes without saying that the Adjudicating Authority should consider that issue as first issue, because, it has an effect on the entire adjudication. Assuming that the Authority is satisfied with the certificate produced by the petitioner, then the Authority need not proceed further with the other proposals in the show cause notice. Requirement of adherence with the Operational Certification Procedures - Held that: - All the issues, raised by the petitioner, can very well be agitated by way of reply to the show cause notice, and the Court will be inclined to direct the Adjudicating Authority to consider the issues raised by the petitioner. Petition disposed off.
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2016 (10) TMI 266
Principles of natural justice - maintainability of a petition when an alternative remedy of appeal available - writ jurisdiction - voluntary statement under Section 108 of the Customs Act, 1962 - Held that: - The petitioner being well aware of the proceedings had chosen not to participate therein. The plea of breach of principles of natural justice is therefore, not available to the petitioner. The petitioner has not established that, any fundamental right of the petitioner has been infringed by the Custom Authorities or that, any of the grounds on which a writ petition is maintainable despite availability of an alternative remedy has happened warranting the High Court to intervene - impugned order appealable under Section 129 (e) of the Customs Act, 1962 - writ petition not maintainable - petition disposed off - decided against petitioner.
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2016 (10) TMI 265
Jurisdiction of Assessing Officer - validity of order of assessment - requirement on the part of custom authorities to serve notice under Section 28 of the Customs Act, 1962 prior to assessing the liability of the petitioner - statutory remedy of appeal available to petitioner to file appeal within the prescribed time limit - Held that: - The alleged non-issuance of notice under Section 28 itself does not vitiate the entire proceedings. It cannot be said that the assessing officer is acting without jurisdiction by not issuing an appropriate notice under Section 28 of the Act of 1962 in determining the liability of an assessee. The petitioner had ample opportunity to have such alleged irregularity corrected in a statutory appeal. The petitioner did not file the same within the time prescribed. A litigant who has allowed his alternative statutory remedy to go bye without affording any reasonable explanation for the same, should not be allowed to file a writ petition to assail such action - writ petition dismissed - decided against petitioner.
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2016 (10) TMI 264
Allegation of illegal export - export of ready made garments after fulfilling all the legal requirements - entire remittance from exports received by the respondents - whether remittances by way of Hawala was carried on by the assessee and whether the assessee was engaged in illegal exports? - CESTAT held assessee to be genuine and no Hawala transactions involved - Held that: - the entire material placed before CESTAT has been discussed and on that basis, a finding of fact is arrived at to the extent that the allegations of flow back of the remittances by way of Hawala could not be proved by the Department. It is further recorded by the CESTAT that the invoices etc. which were raised of particular amounts were duly checked by the Department at the time when the exports were being made. However, the entire amount as reflected in the said invoices was received by the respondents - in the absence of any evidence to show that the money was remitted by way of Hawala, the case of over-invoicing could not be established by the Department - no infirmity in the order of CESTAT - appeal dismissed - decided in favor of assessee.
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2016 (10) TMI 263
Pre-meditation of Commissioner of Customs - the Commissioner of Customs already made up his mind to revoke the licence of the petitioner - Regulation 20 of the Regulations:- Procedure for revoking licence or imposing penalty - Held that: - Perusal of the show cause notice dated 31.08.2016 does not create an impression that there is any pre-meditated determination by the Commissioner of Customs. The Commissioner of Customs has put the petitioner to notice and has given an opportunity to the petitioner to produce evidence and also complies with the principles of natural justice in as much as it offers an opportunity of a personal hearing Inquiry report - inquiry not conducted - appointment of an inquiry officer - Held that: - In terms of Regulation 20(1) Regulations, the Commissioner of Customs is to appoint a Deputy Commissioner of Customs or Assistant Commissioner of Customs, who is subordinate authority to the Commissioner of Customs - contention of the petitioner that the higher authority has appointed a junior authority as an inquiry officer, also not sustainable. Petition dismissed - decided against petitioner.
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2016 (10) TMI 262
Maintainability - alternative remedy of appeal - invocation with the jurisdiction of the court under Article 226 of the Constitution of India - Held that: - the decision in the case of Nivaram Pharma Private Limited vs. The Customs Excise and Gold (Control), Appellate Tribunal, South Regional Bench Madras and Ors [2005 (3) TMI 160 - MADRAS HIGH COURT] relied upon where it was held that when an alternative and equally efficacious remedy is open to a litigant, he should be required to pursue that remedy and not invoke the special jurisdiction of the High Court to issue a prerogative Writ. It will be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution, unless there are good grounds to do otherwise. Principles of natural justice - cross examination of certain officers and persons in an enquiry - Held that: - the decision in the case of Thilagarathinam Match Works Vs. Commissioner of Central Excise, Tirunelveli [2013 (11) TMI 535 - MADRAS HIGH COURT] relied upon where the officer, who submitted the test report was not examined by the Department nor he is a witness nor any statement has been recorded from him. In fact, the report can be treated as a public record and the contents of the report are a proof to themselves. In such circumstances, the petitioner cannot seek for cross examination of the officer, who gave the report - the contention raised by the petitioner that they have to be permitted to cross examine the Chemical Examiner of the Central Laboratory is a misconceived plea - rejection of request of cross examination of the petitioner upheld. Appellant entitled to appeal - petition dismissed - decided against petitioner.
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Corporate Laws
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2016 (10) TMI 257
Scheme of Demerger embodied in the petition is sanctioned by this Court so as to be binding With effect from 1st April 2016 which is the appointed date, on the petitionerCompany and all their members and creditors and all other persons concerned pursuant to the provisions of Sections 391 to 394 of the Companies Act, 1956. That the petitionerCompany shall Within 30 days after the date signing of this order or Within such other time as may be permitted by this Honourable Court cause a certified copy of the order to be delivered to the Registrar of Companies, Gujarat at Ahmedabad for registration under Section 391 of the Companies Act, 1956. That any parties to the Scheme of Demerger and/ or any person or persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the arrangement embodied in the Scheme of Demerger as sanctioned herein. This Court doth further order for payment of ₹ 10,000 as costs in each of this petition awardable to Mr. Devang Vyas, learned Additional Solicitor General of India.
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2016 (10) TMI 256
Composite Scheme of Arrangement - Held that:- The observations made by the Regional Director having been addressed, in the opinion of this Court, there does not appear to be any impediment to the grant of sanction to the Composite Scheme of Arrangement, in as much as from the material on record and on perusal of the Scheme, the scheme appears to be fair and reasonable and is not violative of any of public policy. The arrangement under the proposed scheme appears to be in the interest of the Petitioner Transferee Company and its members and creditors and, therefore deserves to be sanctioned. Accordingly, the Scheme as proposed by the Petitioner Company is hereby sanctioned. The same shall be binding upon all the equity shareholders, preference shareholders, secured creditors, unsecured creditors of the Petitioner Companies and all other agencies, departments and authorities of the Central, State and any other local authorities. It is clarified that the implementation of the present order shall be subject to the proceedings filed by the Transferor Company before the High Court of Punjab and Haryana at Chandigarh. The petition is disposed of accordingly
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Service Tax
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2016 (10) TMI 283
Waiver of penalty u/s 80 - Penalty waived by the AO set aside by the Commissioner in exercise of revisionary powers u/s 84 - Held that:- the Hon’ble High Court of Karnataka in the case of Motor World (2012 (6) TMI 69 - KARNATAKA HIGH COURT) has held that when the assessing authority, in its discretion has held that no penalty is leviable, by virtue of Section 80 of the Act, the revisional authority cannot invoke its jurisdiction and impose penalty for the first time - Decided in favor of assessee.
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2016 (10) TMI 282
Refund claim - C&F charges - goods exported earlier at which time there was no eligibility for refund, and refund application was submitted on a subsequent date by which time refund became eligible - Held that:- it is found that the issue in contention here has been examined in detail by the Tribunal in the appellant s own case [2013 (9) TMI 144 - CESTAT AHMEDABAD], and in the case of East India Minerals Ltd vs. Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar [2012 (8) TMI 22 - CESTAT, KOLKATA]. The Tribunal has also examined the issue in WNS Global Services (P) Ltd. [2008 (1) TMI 94 - CESTAT, MUMBAI]. The decision in the WNS Global Services (P) Ltd. Case (supra) was upheld by the Hon’ble High Court of Bombay [2011 (2) TMI 503 - BOMBAY HIGH COURT]. The decision of the Tribunal in the case of Gujarat Ambuja Export Ltd. [2015 (11) TMI 239 - CESTAT MUMBAI] has not examined that the issue in contention in detail. Therefore, the contention of the Revenue cannot be accepted. We find that the issue is settled in favour of the appellants by the above decisions, especially by the decision in their own case. The Hon’ble jurisdictional High Court of Gujarat in the case of Mundra Port & Special Economic Zone Ltd. [2010 (5) TMI 483 - GUJARAT HIGH COURT] has laid down the principle that the earlier decision by the Tribunal in their own case, on the same issue which has reached finality would be binding. At this juncture, the appellants fairly submits that in relation to the refund of C&F charges would not be eligible to the appellants, as the provisions enabling refund of the same was made effective from 01.04.2008 only, whereas the instant refund claim is for a period prior to the said date. - Appeal disposed of
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2016 (10) TMI 281
Refund claims - period of limitation where refund claim was filed electronically - unutilized cenvat credit on various input services - Notification No. 5/2006-CE (NT) dated 14/3/06 - time barred as the physical copies of the claims were received much later than the prescribed time limit - Held that:- it is found that the findings of the lower Authorities are contrary to the Board instruction as well as trade notice issued by the Jurisdictional Commissioner. The Tribunal had occasion to examine similar issue in NSC Pearson India Pvt. Ltd. vs. CC, CE & ST, Noida [2015 (3) TMI 439 - CESTAT NEW DELHI], Transcend MT. Services Pvt. Ltd. vs. CST [2015 (3) TMI 599 - CESTAT NEW DELHI] and The Design Consortium vs. CCE, Delhi-II [2015 (9) TMI 534 - CESTAT NEW DELHI]. It has been held that the time period should be reckoned from the date of electronic filing of the claim. It is also noted that in various decisions, the Tribunal as well as Hon'ble High Court held that if any documents were called for or omitted to be filed alongwith the original claim the filing of all documents later cannot be considered for reckoning the date for calculating time bar. It is the date of filing of initial claim which is to be considered as relevant date. We have noted that the appellants have filed the claim for refund as well as 11 supporting documents alongwith the claim electronically. Hence, it cannot be alleged that the appellants submitted only a simple claim without any supporting document alongwith the claim. They later submitted in physical form all these documents with Jurisdictional officer. Therefore, we find no merit in the findings of the lower Authorities regarding time bar of the claim. Accordingly, we set aside the impugned order and direct the Original Authority to process the claim for sanction considering the date of electronic filing as the relevant date. - Decided in favour of appellant
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2016 (10) TMI 280
Valuation - Service tax liability - Business Auxiliary Service - Commission received for marketing the loan of the banks/financial institutions - an amount of ₹ 28,27,901/- has been added to the taxable value which is a loan amount received from ICICI bank and not the commission - appellant submitted that there is a error committed by the ICICI bank by adding the loan amount in the commission and an amount of ₹ 2,41,231/- was not received during the impugned period and as such not liable to service tax - Held that:- the factual claims made by the appellant requires to be considered by the Original Authority in order to arrive at the correct quantum cf service tax. As such, we set aside the impugned order and remand the matter to the Original Authority for re-adjudication after taking into consideration the material evidence filed by the appellants in support of their various claims. - Appeal allowed by way of remand
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2016 (10) TMI 279
Service tax liability - management, maintenance or repair services for maintaining tubewal, street lights and fountains by Municipal Council, Nangal - Held that:- it is found that as per section 98(1) of the Finance Act, 1994 the exemption has been granted in respect of, management, maintenance or repair service to non commercial government building. Therefore, the issue is before us for consideration is that whether Tubewal, Street lights or Fountains do qualify as government building or not. Admittedly, building has not been defined under CEA, Rules or Notification therein. Admittedly, street lights, fountains and tubewal are not building parts in common parlance. Therefore, the management, maintenance or repair service of fountains, tubewal and street lights do classify under the management, maintenance or repair service. - Decided against the appellant
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Central Excise
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2016 (10) TMI 277
Quantification of penalty - power to tribunal to reduce the penalty u/s 11AC below the amount of confirmed duty - Held that:- on the basis of language of Section 11AC of the Act, the submission of the revenue is meritorious. - the Tribunal could not reduce the penalty for an amount lesser than the duty which has been upheld. The duty in respect of two demands comes to ₹ 40,44,720/-. Therefore, going by the provisions of Section 11AC of the Act, the penalty should also have been ₹ 40,44,720/- and not ₹ 20 lakhs. - Decided in favour of Revenue
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2016 (10) TMI 276
Demand of interest - whether the petitioner's liability was to pay interest under section 11AA or section 11AB of the Act and if it was under the former, such liability would relate to the date of clearances - Held that:- the statute while creating a new provision for charging interest granted a moratorium of three months in cases where duty had remained unpaid on the date of introduction of the interest provision. If the duty is paid within such period, there would be no interest liability. If even after completion of three months from introduction of the provision, the duty remained unpaid, the liability to pay interest would commence from such date. So, if we accept the contention of petitioner, the case of the petitioner would fall neither in the main body of section 11AA since in his submission the interest liability would not apply to past cases, nor would be covered under the proviso since in his case, the determination under subsection(2) of section 11A took place after the introduction of section 11AA. Surely, the legislature cannot be attributed the intention to bring about such an incongruent result. This in our opinion would be a strong indication that by necessary implication section 11AA was meant to apply to all cases where the duty remained unpaid after introduction of section 11AA to the statute. In cases where whether the liability to pay the duty arose before or after the introduction of section 11AA but determination took place after the said date, the liability to pay interest would arise under the main body of the section. In cases where the liability as well as determination both took place before the introduction of section 11AA, such cases would be covered under the proviso and liability to pay interest would commence after the end of three months from the date of introduction of section 11AA to the Act. Significantly, in neither case, the interest liability would be for a period prior to introduction of section 11AA. This provision therefore has retroactive applicability. Effect of the words “Subject to the provisions contained in Section 11AB” inserted in section 11AA - Held that:- by providing that section 11AA would be subject to section 11AB, the legislature made it amply clear that those cases of unpaid duty by the reason of fraud, willful misstatement, etc. would be covered by section 11AB only and in a case which is covered by section 11AB, section 11AA would yield to the said provision. The contention therefore, that for applying section 11AA, all conditions provided in section 11AB must be satisfied, is devoid of any merits. The absurd results this contention would lead are plain to see. If for application of section 11AA, all the conditions of section 11AB are to be satisfied, section 11AA would have no independent existence and no purpose of enactment. Surely, the legislature cannot be seen to have framed two different provisions but both covering only one situation. - Decided against the appellant
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2016 (10) TMI 275
Mode and manner of refund - whether the rebate claims of the assessee(s) were to be allowed in cash or sanctioned by way of re-credit - manufacture and export of cotton yarn and woven fabrics, both for domestic market as well as for export - by Notification No.30/2004-CE, the assessee(s) were granted total exemption from payment of duty on the products manufactured by them subject to the condition that no credit is taken on the inputs consumed in the manufacture of the final product - assessee(s) had not availed Cenvat Credit on the inputs use. Held that:- it may be noticed that the Central Board of Excise and Customs (for short ‘Board’) has issued Circular No.687 dated 03.01.2003 wherein it has been clarified that the duty paid through the actual credit or deemed credit account on the goods exported must be refunded in cash. In view of the exposition of law, it is evidently clear that the circular issued by the Board cannot be assailed by the petitioner herein. Further, there can be no dispute that in terms of the said circular, there was no discretion vested with the sanctioning authority to give the refund of the duty on goods exported through credit accounts, rather the duty paid through actual credit or deemed credit account on the goods exported has to be refunded only in cash. - Decided against the Revenue
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2016 (10) TMI 274
Manufacture - change in tariff heading after processing - activities for processing TMT coils into TMT bars/rods after de-coiling, straightening and cutting into size - Held that:- no error has been committed by the Customs, Excise and Service Tax Appellate Tribunal - conversion of TMT coils into TMT bars and TMT rods is not manufacturing at all, even if, these two items are mentioned under different Sub-Headings of the Central Excise Tariff Act, 1985 - merely because there is value addition, it does not mean that manufacture has taken place. Whether the activities for processing TMT coils into TMT bars / rods after de-coiling, straightening and cutting into size amounts to manufacturing process - Held that:- to ascertain as to whether the manufacturing process has taken place or not, a test is to be applied, whether change or series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity, but, instead is recognized as a new and distinct article that has emerged as a result of processes then a manufacture can be said to have taken place. This is the test to be applied for arriving at a conclusion whether the process applied upon the product amounts to manufacturing or not. It has been held by the Hon'ble Delhi High Court in the case of Faridabad Iron & Steel Trader Association Vs. Union of India [2003 (11) TMI 107 - HIGH COURT OF DELHI] that while examining justifiability of Excise Duty we must clearly comprehend that Excise Duty can be imposed on the manufacture of goods produced in India and that also on the bringing into existence a new substances known to the market. In view of the settled position of law crystallized by the various judgments, we have no difficulty in clearly arriving at the conclusion that mere cutting or slitting of steel sheets does not amount to manufacture because the identity of the product remains unchanged. The steel folded in coil remains steel even after cutting. No new, different and distinct article emerges having distinct name, character and use. Therefore, mere cutting and slitting would not amount to manufacture. We are also clearly of the view that merely because of change in tariff item, the good does not become excisable. Therefore, by following the same, the activities for processing TMT coils into TMT bars / rods after de-coiling, straightening and cutting into size does not amounts to manufacturing process. - Decided against the Revenue
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2016 (10) TMI 273
Entitlement of interest w.e.f. 21.8.2008 on refund - whether @12% or 6% in terms of Section 11BB of the Act - amount of pre-deposit made by the assessee - amount is not refunded within three months from the date of passing of the order - Held that:- part of the amount, was refunded to the appellant in January, 2009, whereas remaining part of the amount was refunded in April, 2009. As per the circular of the Government of India, Ministry of Finance No. 275/37/2K-CX.8A dated 2.1.2002, in case the amount is not refunded within three months from the date of passing of the order, the assessee is entitled to interest. No formal application is required to be filed. A simple letter is sufficient for the same. The application in the present case was filed by the appellant on 22.5.2008. There is error in the date noticed in the order passed by the authority for filing the application as 21.10.2008. Hon'ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd.[2004 (12) TMI 90 - SUPREME COURT OF INDIA] allowed the refund along with interest @ 12% per annum. Therefore, the appellant herein is entitled to payment of interest @ 12% per annum for the period after three months till the refund was granted after passing of the order by the Tribunal on 2.5.2008. - Appeal disposed of
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2016 (10) TMI 272
Job work - manufacture of excisable goods falling under Chapter 90 of Central Excise Tariff Act, 1985 - the job workers were paying the service tax and the Appellant was availing Credit of the service tax paid by the job worker - job worker was exempted from payment of service tax under Notification No.8/2005-ST, dt.01.03.2005 - whether the reversal of credit and imposition of penalty justified on the ground that job worker was exempted from payment of service tax? Held that: - the decision in the case of Commissioner of Central Excise & Customs, Aurangabad Versus Laxmi Metal Pressing Works (P.) Ltd. [2009 (10) TMI 181 - CESTAT, MUMBAI] apply where it was held that a notification issued under Section 93 would exempt a provider of taxable service from payment of Service tax leviable under Section 66. Where such exemption is available, it can be said that Service tax is not payable. But that would not detract from the settled legal position that Cenvat credit of Service tax paid by the service provider is available to the service recipient under Rule 3. Reversal of credit and imposition of penalty not justified - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 271
Valuation - Clearance to inter-connected undertakings - CTD bars - TMT bars - wire rod - demand of differential duty - rejection of transaction value for excise purposes - Held that: - merely because the units are interconnected undertakings the same would not be a ground to reject the transaction value unless the units are related persons. The goods cleared by the appellants to the interconnected undertakings are to be assessed on transaction value under Section 4(1)(a) of the Act treating them as if they are not related person. Also held that if the goods were partly sold to related person and partly to independent buyers transaction value under Section 4(1)(a) are to be applied without application of valuation Rules. The department’s attempt for changing the assessment practice to change to costing method to arrive at a value is without any basis - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 270
Maintainability - SSI Exemption - Valuation of goods and rate of duty - Corrugated Boxes not been exported but cleared for Home Consumption to manufacturers, who had further used the same in packing in the goods exported by them - Respondent submitted that identical issue subsequently came up for consideration in Madras High Court in Commissioner of C. Ex., Chennai-II versus Vadapalani Press [2015 (1) TMI 318 - MADRAS HIGH COURT] where in a case involving identical facts requiring interpretation of notification No. 8/2002-C.E., dated 1-3-2002, it was opined that the issue involved being regarding valuation of goods and the rate of duty, the appeal was not maintainable before the High Court- Held that:- appellant did not dispute the factual position especially the fact that Madras High Court opined that appeal before the High Court under similar circumstances requiring interpretation of notification granting SSI exemption limit was not maintainable as the issue was related to valuation of goods and the rate of duty. Therefore, by following the view expressed by Madras High Court, we find that the present appeals are not maintainable before this Court. - Decided against the Revenue
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2016 (10) TMI 269
Availing SSI exemption and export of duty - differential duty - appellant exported the goods, on which no duty, as such, was payable and he could claim exemption and in case, any duty was paid, the same was refundable in totality - appellant, by mistake, paid the duty even on the exported goods at the same rate the duty for home consumption was leviable - Held that:- for technical violation that the appellant, in case, was to pay duty on the export consignment, which was ultimately refunded to him, the same should have been at the normal rate, which was @16% and as the duty was paid @ 9.6%, he had violated the provisions and as a consequence, demand was raised. The fact that the entire transactions were revenue neutral is not in dispute, as whatever duty appellant would have paid on the export consignment, the same was refundable to the appellant. When the appellant paid the duty @ 9.6%, the refund was also granted at the same rate. There was no difference as such. The effect of the transactions being revenue neutral, the action taken by the Department in raising demand of the differential duty, which, in fact, was not leviable at all, was totally uncalled for. - Decided in favour of assessee
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CST, VAT & Sales Tax
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2016 (10) TMI 261
Validity of order of Revised assessment - valuation - cash discount - sales return - whether the respondents were justified in refusing to consider the issue of cash discount and sales return, as there was no specific direction to the said effect in the earlier writ petition - Held that: - the Assessing Authority, being a statutory authority, have the power to redo the assessment, moreso, when the Court directed to redo the matter. Thus, if the petitioner has made a statement with regard to the sales return and cash discount and produced the necessary documents, it is always open to the assessing officer to take into consideration those documents and take a decision in the matter. The respondent need not restrict himself only with regard to the C-Forms and F-Forms and if the petitioner is legally entitled for any other relief then that may be considered. Respondent directed to redo the assessment on the issues of Sales Return, Cash Discount and return of stock transferred goods, after affording an opportunity of personal hearing to the petitioner - petition allowed.
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2016 (10) TMI 260
Principle of 'lifting of the corporate veil' - recovery of duty - discharge of duties and functions as a Director of the Company - management of affairs of the company - whether the recovery of duty from the revisionist justified on the strength of the principles of lifting of corporate veil and after going through the facts and circumstances of the case? - Held that: - the said doctrine is liable to be invoked in a case where it is found that the corporate personality or structure itself is used as a camouflage or a vehicle to evade payment of tax and perpetrate fraud upon the revenue. It is only an allegation that, the revisionist had failed to faithfully and dutifully discharge his duties and functions as a Director and that his conduct of the business of the Company was irresponsible. He had failed to obtain requisite forms as a result of which the dues of the company continued to mount. - This does not in the opinion of this Court satisfy the test of fraudulent conduct, so as to attract the principle of lifting of corporate veil While no recoveries for the dues of the assessee can be executed against the revisionist, it shall be open to the department to move against the assets, moveable or immoveable, of the assessee in accordance with law - revision allowed - decided in favor of revisionist.
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2016 (10) TMI 259
Evasion of Entry tax - detention of goods - imposition of penalty u/s 51(7)(c)of that PVAT Act - two consignments originating from two consignors meant for two different consignees in the same vehicle - purchase of goods by the appellant on concessional rate of tax against form 'C' - entry tax for one consignment duly deposited and delay in submission of entry tax on other consignment - whether the deposit of tax was made duly and no evasion of tax involved? - Held that: - The appellant claimed that the amount was transferred in the account of the agent before 11.00 AM, however, it was reflected in his account late. The fact was got verified by the first appellate authority from the banker of the appellant and it was revealed that the amount was deposited in cash at 12.27 PM. Still further, the amount deposited in the account of the so-called agent was ₹ 42,500/-, whereas the amount of tax due on both the consignments, which was to be deposited at the barrier, was ₹ 43,170/-, hence, even the amount also did not tally. Further, if the agent could deposit the amount of tax for one consignment before the amount was deposited by the appellant in his accounts, he could very well deposit the same for the second consignment as well. The process for deposit of money started only after the goods were detained and were in the process of verification to create evidence - evasion of entry tax established - imposition of penalty justified - appeal dismissed - decided against appellant.
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2016 (10) TMI 258
Denial of exemption from payment of sales tax - Industrial Policy, 1982 - blending and packing of Tea - Eligibilty Certificate - Held that: - tea is not to be included in “raw material” and therefore, no exemption could have been claimed by the Appellant Company in respect of ‘tea’ as a raw material for purchase as well as sale of tea. Certificate of Authorisation - Held that: - no certificate of authorisation, as provided under the Act, had ever been granted to the appellant-Company - the appellant not entitled to any sales tax exemption. Reliance placed upon the decision in the case of COMMISSIONER OF INCOME TAX, KERALA Versus TARA AGENCIES [2007 (7) TMI 4 - SUPREME COURT OF INDIA] where it was held that the appellant was not in the business of ‘manufacturing’ tea but was merely blending and packing tea, which does not amount to ‘manufacturing’ of tea. Appeal dismissed - decided against appellant.
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Wealth tax
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2016 (10) TMI 278
Asset for the purpose of wealth tax - whether house property which has been let out to a tenant would be outside the ambit of wealth tax under section 2(ea)(i)(v) of the Wealth Tax Act? - Held that:- Considering the submission of assessee that the memorandum explaining the provision in the finance No.2 Bill, 1998 under the head “incentives proposed under the Wealth Tax Act”, it is clarified that wealth tax is not levied on productive assets. In view of this logic, it is very much clear that wealth tax would also not be levied on such house property from which the assessee is getting rent and the same has been let out by the assessee for a period of 300 days or more. With regard to 1st ground raised by the assessee and assumption of jurisdiction, we find from the records that the ld. AO had not rightly invoked the reopening proceedings as his reason to believe that the wealth tax has escaped assessment from house property belonging to the assessee is not correct. Hence, ground no.1 raised by the assessee is allowed. Commercial complex - whether it is an asset? - Held that:- We hold that the subject mentioned property is a commercial complex and is a productive asset deriving rental income of ₹ 15,00,000/- per annum. It is well settled from the Memorandum explaining the provisions in the Finance No. 2, 1998 under the head "incentives proposed under the wealth tax act" that wealth tax is not to be levied on productive assets. We hold that the subject mentioned property shall be exempt u/s 2(ea)(v) of the Act and therefore outside the ambit of taxable wealth. Accordingly, the ground no.2 raised by the assessee in this regard for both the assessment years are allowed.
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