TMI Tax Updates - e-Newsletter
November 2, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• May this Diwali bring to all, the utmost in peace and prosperity. Wish you all a very Happy Diwali.

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Articles

1. RE-OPENING OF ACCOUNTS UNDER NEW COMPANY LAW

   By: Dr. Sanjiv Agarwal

News

1. Selection of Director, National Institute of Bank Management (NIBM), Pune

Highlights / Catch Notes

Income Tax

• High Court rules reassessment u/s 147 invalid without completion of initial assessment u/ss 142(1)(a), 143(3), or 144.

  Case-Laws - HC : Assessment u/s 147, when the assessment u/s 142(1)(a); 143(3); or 144 has not been done – Without passing the assessment order, there is no occasion to pass the re-assessment order under Section 147 of the Act - HC
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• High Court Rules Coating Titanium Electrodes as 'Manufacture' u/s 80IA, Allowing Tax Deductions for Industrial Use.

  Case-Laws - HC : Deduction u/s 80IA - Whether coating with oxides of noble metals on titanium metal electrode/anode bringing about a change in its character and user for making it fit for use in the production of chlorine and caustic soda in an electrolytic process is 'manufacture' or 'production' of 'article' or 'thing' - Held yes - HC
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• Trust Granted Income Tax Exemption u/s 11, Except for Income from Card Playing Facilities in Bar Business.

  Case-Laws - AT : Exemption available u/s 11 - business of Bar and Restaurant – the assessee trust is entitled to exemption u/s 11 for all its income except for income providing facilities of playing cards - AT
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• Lease Equalization Charges Limited to 20% of Asset's Value as per ICAI Guidance Note.

  Case-Laws - AT : Disallowance on account of lease equalization – if the annual leasing charge is equivalent to 30% of the value of leased assets, the assessee would debit its P&L account by lease equalization charges to the extent of 20% of the value of asset as per the guidance note issued by ICAI. - AT
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• Discount on Debenture Issuance Recognized as Business Expenditure Under Income Tax Rules.

  Case-Laws - AT : Allowance of discount on issue of debenture as expenditure – the same is for the business/commercial expediency and hence is allowable expenditure. - AT
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• Assessee's Cash Deposits Not Linked to Sales, Section 44AF of Income Tax Act Ruled Inapplicable.

  Case-Laws - AT : Presumptive income u/s 44AF of the Income Tax Act – No nexus had been established by the assessee with the sale transaction of their business and cash deposited. Thus, Section 44AF cannot be applied in this case - AT
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• Undisclosed Income Partially Exempt as Agricultural Income u/s 10 of Income Tax Act: 50% Exemption Granted.

  Case-Laws - AT : Whether the undisclosed income is agricultural income eligible for exemption u/s 10 of the Income Tax Act – 50% of the income treated as agriculture income - AT
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• Only Profit from Unaccounted Sales is Taxable, Not Entire Sales Amount According to Settled Legal Principle.

  Case-Laws - AT : Rate of gross profit to be adopted for unaccounted sales - It is settled law that the entire sales cannot be considered as income but only the profit embedded in it is to be considered as income - AT
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• Court Rules Affidavits Insufficient in Tax Case Due to Lack of Independent Evidence on Undisclosed Investment Income.

  Case-Laws - AT : Undisclosed income (investment) – Affidavits were nothing but self serving document hence cannot be relied upon in tax proceedings specially when there is no independent corroborative evidence - AT
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• Section 153C Investment Assessment Requires Incriminating Documents for Validity, Not Just Ad Hoc Income Disclosure.

  Case-Laws - AT : Undisclosed investment - assessment u/s 153C - Only on the basis of ad hoc bifurcation of the disclosure or surrendered income at initial stage of proceeding and in absence of any incriminating document shall not make such addition sustainable - AT
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• Trust's Charitable Status u/s 2(15) Scrutinized for Profit Motive Impact on Section 11 Benefits.

  Case-Laws - AT : Benefit u/s 11 - Object of assessee doubted - Charitable purpose u/s 2(15) - Profit motive - The intention of the trustees and the manner in which the activities of the charitable trust/institution are undertaken are highly relevant to decide the issue of applicability of proviso to section 2(15) of the Act. - AT
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Customs

• Appellant Exempt from Countervailing Duty on Pre-Packaged Glues Under 10g Due to Rule 26, Legal Metrology Rules 2011.

  Case-Laws - AT : Exemption from levy of CVD on MRP basis - The glues are pre-packaged and are sold by weight which is clearly indicated on the packages. Since the net weight is less than 10g, the appellant is exempted from declaring the RSP on the packages under Rule 26 of the Legal Metrology Rules, 2011 - AT
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• Refund Claim for Duty Abatement on Damaged Goods: Assess Damage Post-Repair u/s 22(1), Equating to Repair Costs.

  Case-Laws - AT : Refund claim - abatement of duty on damaged or deteriorated goods - section 22(1) - there is nothing wrong or unreasonable in ascertainment of damage has been done after the repairs were undertaken as equal to the cost of repair charges - AT
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Service Tax

• Company Liable for Service Tax on Freight Charges; Payment Demand and Penalty Confirmed Against Appellant.

  Case-Laws - AT : Goods Transport Service – appellant are a Private Company and, they have paid the freight charges, therefore, they were liable to pay service tax. - demand and penalty confirmed - AT
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• Cenvat Credit Utilization Approved for Output Services; No Denial for Common Account Use.

  Case-Laws - AT : Cenvat Credit - The applicants are having a common account and they have utilized the entire credit against the output services and have not utilised the credit for clearing manufactured products - availing and utilizing credit cannot be denied - AT
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• Appellant Granted Stay as Cenvat Credit Remains Unused for Two Years, Showing Cooperative Attitude in Resolution Process.

  Case-Laws - AT : Disallowance of cenvat credit on various services – the appellant has not utilized credit for the last 2 years and shown fair attitude to cooperate to dispose the appeal – Stay granted. - AT
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• Debate on Service Classification: Manpower Supply Agency vs. Employer-Employee Relationship for Service Tax Liability.

  Case-Laws - AT : Nature of services - Manpower Supply Agency Service or employer employee relationship to constitute salary - prima facie assessee is liable to pay service tax - AT
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Central Excise

• Credit on Plastic Crates Used in Beverage Manufacturing Deemed Admissible for CENVAT Credit; Stay Granted.

  Case-Laws - AT : Availability of CENVAT Credit on plastic crates – Credit availed on plastic crates used in the manufacture of beverages, is admissible - stay granted - AT
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• Transporter Penalized: Goods Confiscated and Fine Imposed for Carrying Dual Bilties Multiple Times.

  Case-Laws - AT : Confiscation of Goods – Redemption Fine – Penalty on transporter – Innocence cannot be appreciated when the offending vehicle carried two sets of bilties in 20 to 25 occasions - AT
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VAT

• Capital Investment Incentive Granted to Loss-Making Industrial Unit as Category III Mega Industrial Unit.

  Case-Laws - HC : Capital investment - petitioner's unit entitled to get capital investment incentive/subsidy as Category (III) Mega Industrial Unit i.e. loss making, existing and functional industrial unit - HC
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Case Laws:

• Income Tax

• 2013 (11) TMI 75
  Jurisdiction of assessment u/s 153C of the Income Tax Act - Whether the assessing officer was within his sphere to call upon the appellant to furnish its returns of income on the solitary reasoning that the appellant’s was also one of the members of UPDA who had made certain illegal payments to various public servants – Held that:- No books of account nor any incriminate documents pertaining to the appellant were seized when a search was conducted in the residential premises of Sri Miglani and that no books of account or documents or assets seized or requisitioned were handed over to the assessing officer having jurisdiction over the appellant – Assessee was not within his realm for initiation of proceedings u/s 153A r.w.s 153C of the Act in the case of the present appellant. Reliance has been placed on the P Srinivas Naik v. ACIT reported in [2007 (11) TMI 443 - ITAT BANGALORE], wherein it has been declared that - Documents or books of account found during the course of search and seized cannot be termed to be indicating any limited interest of the ownership of the assessee in such books of account or documents. The language used in section 153C is materially different from the language used under section 158BD. As per section 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, section 153C says that if valuable or books of account or documents belonging to other persons are seized then action under section 153C can be taken against that person. In the instant case, books of account or documents do not belong to the assessee and, therefore, the AO was not justified in initiating action under section 153A read with section 153C of the Act – In the instant case, primary condition for issue of notices under section 153C of the Income-tax Act are not satisfied and, hence, the assessing officer was not justified in initiating proceedings under section 153C of the Incometax Act for all the assessment years under dispute – Decided against the Revenue.

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• 2013 (11) TMI 74
  Determination of FMV as on 1.4.1981 - Value adopted by Valuation officer u/s 50C to be taken or the Valuation adopted in the Wealth tax act be adopted for computation of capital gains under Income Tax Act – Held that:- Report given for the Wealth tax purposes need not be considered for the Income tax purposes, particularly for computation of capital gains - Valuation reports of the department along with the Wealth tax report of Shri Umrigar are to be considered viz-a-viz the report of Shri Ganjawala. The assessee’s objection on adopting report of Shri Umrigar for the purpose of capital gains also required detailed examination of the AO - Since the issue of adoption of value under section 50C was referred to the AO by the CIT(A), this issue also required to be set aside to the file of AO. Therefore, both issue of sale consideration under section 50C(2) and cost of acquisition as on 01.04.81 for computing of capital gains should be examined by AO afresh – Decided in favor of Assessee for statistical purpose.

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• 2013 (11) TMI 73
  Assessment u/s 147, when the assessment u/s 142(1)(a); 143(3); or 144 has not been done – assessee has voluntarily filed his return under Section 139 of the Act. On 23.06.2000, a notice under Section 139(9) was issued for the removal of the defects. These defects were not removed. So, again, a notice was sent on 25.10.2002. Ultimately, the defects were removed. But, there is no reference to this effect in the assessment order passed by the AO for the assessment year under consideration. – Held that:- Without passing the assessment order, there is no occasion to pass the re-assessment order under Section 147 of the Act, as per the ratio laid down in the case of U.P. Rajya Viddyut Utpadan Nigam vs. Dupty CIT, [1993 (1) TMI 38 - ALLAHABAD High Court] – Decided against the Revenue.

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• 2013 (11) TMI 72
  Disallowance u/s 40(a)(ia) – TDS u/s 194C - ‘payable’ as on the date of the balance sheet or it can be invoked also to disallow such expenditure which became payable at any time during the relevant previous year and was actually paid within the previous year – Held that:- This case is squarely covered by the recent decision of the Division Bench of this Court in Tax Appeal No.905 of 2012 reported in [2013 (5) TMI 457 - GUJARAT HIGH COURT], disallowance is upheld – Decided in favor of Revenue.

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• 2013 (11) TMI 71
  Disallowance of deduction u/s 80IB of the Income Tax Act - whether Legal relationship between the assessee firm and the end users of the unit was that of work contract – sale of tenements - Held that:- Relying upon the case of Commissioner of Income Tax Versus Radhe Developers, reported in [2011 (12) TMI 248 - GUJARAT HIGH COURT], decided against the Revenue.

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• 2013 (11) TMI 70
  Reasons for re-opening of assessment u/s 147 of the Income tax act, after the gap of four years – Expense claimed by the assessee is not truthful – Held that:- One of the purposes of section 147, appears to us to be, to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would be travesty of justice to allow the assessee that latitude - Decision in Dalmia Pvt. Ltd [2011 (9) TMI 146 - DELHI HIGH COURT] is clearly distinguishable as that was a case where the assessee had not furnished the details despite a request having been made by the Assessing Officer. It is in that context that the court observed that if there was no disclosure and details were not furnished, there cannot be full and true disclosure. In the present case, the situation is just the opposite. The information sought by the Assessing Officer had been supplied and furnished by the petitioner and it has already been held on facts that there was a full and true disclosure on the part of the petitioner. Therefore, the said decision in Dalmia Pvt. Ltd. (supra) would also not come to the aid of the respondents – Decided in favor of Assessee.

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• 2013 (11) TMI 69
  Deduction u/s 80IA of the Income Tax Act - Whether coating with oxides of noble metals on titanium metal electrode/anode bringing about a change in its character and user for making it fit for use in the production of chlorine and caustic soda in an electrolytic process is 'manufacture' or 'production' of 'article' or 'thing' within the meaning of section 80-IA of the Income-tax Act, 1961 – Held that:- Once process undertaken by the assessee resulted in production of a "useful commercial commodity" the enquiry had to end there, and the assessee's claim allowed – Reliance has been placed upon the judgment in the case of CIT v. Oracle Software India Ltd. [2010 (1) TMI 9 - SUPREME COURT OF INDIA], wherein the court was called upon to decide as to whether a process by which blank compact discs are transformed into loaded software would constitute manufacture in the context of section 80-I of the Income-tax Act. The court employed the test of fitness. In other words, to come to the conclusion whether the process employed constitutes manufacture one would have to ascertain the efficacy of the process in rendering the commodity or an article fit for use. The Tribunal had to employ the test of fitness in ascertaining whether the process employed by the assessee rendered the free issue material supplied to it (whether referred to as titanium substrates or a titanium metal anode), fit for use in the industry. In the present case, Tribunal lost sight of the fact that a distinct new product had come into existence after it was processed by the assessee. The fact that it had a single purchaser (i.e., UHDE/IPCL) for its coated titanium substrates ought not to have come in the way of the Tribunal allowing the deduction to the assessee. As noticed above, the test is that the transformed article should be marketable. In this case, there could not have been a better evidence of marketability than the assessee's agreement with UHDE – Decided in favor of Assessee.

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• 2013 (11) TMI 68
  Determining the Arm s Length Price (ALP) - international transactions - contribution towards ICC World Cup Cricket Tournament - reimbursement of advertisement expenses received by the assessee - provisions of warranty expenses - Held that:- the issue are covered by the decision of the tribunal in M/s LG Electronics India Pvt. Ltd. [2013 (5) TMI 633 - ITAT DELHI] - LGEIL has received commensurate benefit of its 40% share contribution. - the adjustments made by the TPO/ Assessing Officer on this account has rightly been deleted by the CIT(A). Reimbursement of of advt. expenses - Held that:- the assessee s objection that TPO has no jurisdiction is not sustainable in view of M/s LG Electronics India Pvt. Ltd. [2013 (5) TMI 633 - ITAT DELHI] - opinion by asking for a remand of the issue in light of the Special Bench decision, it cannot be said that revenue is seeking to change the basis of disallowance /adjustment made by the TPO. The Special Bench has expounded various issues which have to be considered in this regard. By dwelling on them it can not be said that a change of basis of disallowance/ adjustment is being sought. - matter remanded back. Warranty expenses - mere provision and not allowable - Held that:- tribunal in M/s LG Electronics India Pvt. Ltd. [2013 (5) TMI 633 - ITAT DELHI] has accepted the case of the assessee and allowed the deduction - Once the assessee is maintain his accounts on the mercantile system, a liability accrued, though to be discharge at a future date, would be a proper deduction while working out the profits and gains of his business. - Decided in favor of assessee.

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• 2013 (11) TMI 67
  Exemption available u/s 11 of the Income Tax Act – Held that:- business of Bar and Restaurant is property held under trust for a charitable object within the meaning of section 11(4), not affected in any way by section 11(4A) of the Act. Thus, the assessee trust is entitled to exemption u/s 11 for all its income except for income providing facilities of playing cards – In the present case, assessee is entitled to exemption u/s 11 for its income except income providing facilities of playing cards and accordingly reject grounds of appeal taken by the department. Receipts for social functions, pavilion, board room and open terrace would not be eligible for exemption under section 11 of the Income-tax Act – Held that:- The activities of the assessee Club on Social Functions, Pavilion, Board Room, Terrace and Card Room were for personal purposes and are clearly not for the object of the Club. The only exception to this decision of ours is the functions organized on Independence Day, Republic Day, Diwali celebrations and likewise only. Therefore, the activities not covered by the decision of the Co-ordinate Bench would not qualify for exemption u/s 11 of the Act. In view of this, the decision of the ld. CIT(A), in respect of activities of the assessee not covered by the said decision of the Co-ordinate bench cannot be sustained. Therefore, the AO is directed to allow the expenses as per our directions on such activities of the assessee which are covered by the decision of the Hon'ble Co-ordinate Bench – Decided in favor of Assessee.

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• 2013 (11) TMI 66
  Opportunity of being heard to the assessee – Ex-parte order passed u/s 144 of the Income Tax Act – Repeatedly assessee has absented from appearance – Held that:- Though the Assessee has neither appeared before Assessing Officer or CIT(A) or before us but to meet the ends of justice, one more opportunity be granted to the Assessee to make the submissions and place the necessary material on record in support of its claim. We therefore set aside the issued to the file of CIT(A) for him to consider the submissions of the Assessee and thereafter pass a speaking order after giving reasonable opportunity of hearing to both the parties. We also direct the Assessee to suo motto appear before CIT(A) within 30 days of the receipt of this order of the Tribunal without waiting from the Revenue Department and submit all the necessary informations and also the documents so as to enable the CIT(A) to pass an appropriate order as per law as deemed fit within a reasonable time.

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• 2013 (11) TMI 65
  Adjustment for non-utilisation of capacity in an International transaction - Lower authorities to have given due effect to under capacity utilization of the assessee which has not been done TPO for adjustment for ALP determination – Held that:- Suitable adjustment for non-utilisation of capacity is to be taken in to account after considering the ALP while working out TP adjustment, this proposition has been held by co-oridnate Bench in the case of the Amdocs Business Services (P.) Ltd. [2012 (12) TMI 482 - ITAT PUNE] - Restored the issue of under capacity utilization back to the file of the Assessing Officer /TPO to decide the same afresh after giving assessee adequate opportunity of being heard.

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• 2013 (11) TMI 64
  Disallowance on account of lease equalization – Held that:- Relevant transactions are treated as finance lease and the assessee is allowed depreciation after having found him the owner of the leased assets, the depreciation allowed as per the rates prescribed in the Income Tax Act could be more than the depreciation claimed by the assessee in its books of account at the rate prescribed under the Companies Act. For example, the assessee may be entitled to claim depreciation at 100% on the leased assets in the first year itself under the income Tax Act whereas in the books of account, it might have claimed depreciation on the said leased assets under the companies Act @ 10%. In such a case, if the annual leasing charge is equivalent to 30% of the value of leased assets, the assessee would debit its P&L account by lease equalization charges to the extent of 20% of the value of asset as per the guidance note issued by ICAI. If the lease equalization charges so debited are allowed as deduction while computing the total income of the assessee under the Income tax Act in addition to 100% depreciation already allowed, the assessee will get deduction of 120% of the value of asset in the first year itself and the very purpose of adopting the concept of lease equalization based on the rationale of matching cost with the revenue would be defeated. This will result in absurdity and give misleading results. In our opinion, it is therefore necessary that while allowing deduction on account of lease equalization charges for the purpose of computing total income under the Income Tax Act, the difference between the annual lease charge of the leased assets and depreciation allowed on the said leased asset under the Income Tax Act should be taken into consideration and not the difference between the annual lease charge and depreciation claimed by the assessee in the books of account as per the Companies Act - Restored this issue to the file of the A.O. for deciding the same afresh. The assessee is directed to furnish the working of lease equalization charges based on the figures of the depreciation on the leased assets allowed as per the income Tax Act which the A.O. shall verify and allow the claim of the assessee for deduction on account of lease equalization charges based on such verification in accordance with law. - matter remanded back - decided in favor of assessee.

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• 2013 (11) TMI 63
  Allowance of discount on issue of debenture as expenditure – Held that:- Reliance has been placed on the decision of Hon’ble Rajasthan High Court in case of CIT Vs Secure Meters Ltd.[ 2008 (11) TMI 66 - HIGH COURT RAJASTHAN ], which has been upheld by Hon’ble Supreme Court - Discount on issue of debenture is expenditure for raising loan and therefore the same is allowable as business expenditure. As per the decisions of the Hon’ble Rajasthan High Court and Supreme Court (supra) it is irrelevant to consider the object with which the loan was obtained however in the case of the assessee the loan was obtained to invest in the Zero Coupon Convertible Loan advance to the sister concerns which are in the same line of business therefore, in view of the decision of Hon’ble Supreme Court in case of S. A. Builders Ltd. [2006 (12) TMI 82 - SUPREME COURT] the same is for the business/commercial expediency and hence is allowable expenditure. Disallowance u/s 14A read with rule 8D of the Income Tax Act – Held that:- Rule 8D is not applicable for the assessment year under consideration in view of Hon’ble Jurisdiction High Court in case of Godrej and Boyce Mfg. Co. Ltd. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. The authorities below have invoked section 14A on the ground that the assessee invested this money in the Zero Coupon Convertible Loans therefore the intention of the assessee was to earn dividend income. It has been brought on record by the assessee that the loans were received back by the assessee and there was no conversion of loan into shares. Even otherwise section 14A cannot be invoked on the presumption that the particular investment would be convertible into shares and in future after such conversion the assessee is going to earn dividend income – No justification in invoking section 14A for disallowance of the expenditure when the assessee has invested in the form of giving Zero Coupon Optionally Convertible Loan – Decided in favor of Assessee.

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• 2013 (11) TMI 62
  Presumptive income u/s 44AF of the Income Tax Act – Presumptive income rejected and assessment was done u/s 144 - Assessees are individual and are in retail trading business of sarees and dress materials since many years – additions of undisclosed income determined on the basis of highest peak balance on particular date of the two banks maintained by the appellant. - Held that:- The assessees claimed that they were in retail business of saree, was not found genuine by the lower authorities, as ld. A.O. issued the summons to all parties, only one party responded back. The assessees were not substantiated their claims before the lower authorities with reference to cash deposited in the bank account. The ld. CIT(A) had confirmed the addition on the basis of peak cash. No nexus had been established by the assessee with the sale transaction of their business and cash deposited. Thus, Section 44AF cannot be applied in this case - The appellants were not produced any books of accounts before the A.O. but submitted copy of the purchase and sale register – Decided against the Assessee.

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• 2013 (11) TMI 61
  Whether legal title necessary for the developer to get the benefit of deduction u/s 80IB of the Income Tax Act - Deduction u/s 80IB of the Income Tax Act – Held that:- As per the development agreement and facts of the case, the assessee had taken full responsibility for execution of the said development project. The assessee has been given full authority for execution of the said development project including development of the land and construction of residential units. The assessee had engaged professionals such as architect for designing architectural work. The assessee had also enrolled the members and collected the consideration from the buyers of the residential units. The assessee had also paid cost of the land to the Societies including stamp duty and had taken possession of the land for construction of the project. As per the decision of the Hon'ble Gujarat High Court in the case of Radhe Developers, supra, the legal title is not required for getting benefits u/s 80 IB (10) of the Act. The assessee was deemed owner of the land u/s 2 (47) of the Act. The assessee had borne all the cost of construction including materials and the receipt was not fixed for the contractor. The assessee is a developer and builder of housing project – Decided against the Revenue.

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• 2013 (11) TMI 60
  Whether the undisclosed income is agricultural income eligible for exemption u/s 10 of the Income Tax Act – Held that:- From the Inspector's report dated 18-12-2003 it emerges that the villagers S/Shri Khubi Ramm, Nambardar, Balak Ram, Tula Ram and Jaise Ram, who were residents of village Anangpur had confirmed that assessee has cultivated saffeda trees on 7 acres of agricultural road side land, which were sold about 4-5 years back. These confirmations do indicate that assessee in this year had sold saffeda trees and earned agriculture income. Patwari also has supported their statements and Inspector's report has not given any adverse comment about A.Y. 1998-99 rather it corroborates ld. Counsel's contention. Assessee has pleaded his inability in producing the details of agriculture income before lower authorities due to lapse of time. No additional evidence is filed before us, however, a prayer is made that the facts on record indicate the assessee having earned agriculture income, alternatively agricultural income may be estimated. In the facts and circumstances of the case, record demonstrates a fact that assessee had grown and sold saffeda trees on 7 acres of this road side land during the period relevant to A.Y. 1998-99 – 50% of the income treated as agriculture income - Decided partly in favor of Assessee.

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• 2013 (11) TMI 59
  Rate of gross profit to be adopted for unaccounted sales - During the search by the Central Excise Authorities shortage of stock was found and the same was confirmed by first appellate authority. The learned AO has considered the entire value of the unaccounted stock as sales of the assessee and the full value was considered as income – Held that:- Learned CIT(A) vide his order had directed to adopt the average GP rate of last three years on the said unaccounted sales as the income of the assessee. From the copy of the annual accounts placed on record it is seen that the assessee is having loss in the year under consideration and even in the immediately preceding assessment year i. e. no gross profits. It is settled law that the entire sales cannot be considered as income but only the profit embedded in it is to be considered as income. However, considering the peculiar circumstances of the case and the totality of the facts, lump sum addition made in the present case would meet the ends of justice - Addition be restricted to 10% of the unaccounted sales i.e. Rs.30,53,238/-- Decided partly in favor of Revenue.

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• 2013 (11) TMI 58
  Rejection of books of accounts maintained u/s 145 of the Income Tax Act - Assessee is in the business of buying minerals and selling the same after processing. There is shortfall in the GP rate during the year at 16.88% from 19.16% in the immediately preceding assessment year – Rejection of books of accounts – Held that:- Books of accounts of the assessee were regularly maintained in normal course of business, and audited by the Chartered Accountant. However, some disallowance on account of self-made vouchers with regard to some expenses claimed by the assessee was called for. Considering entire factual matrix of the case of the assessee, and the extent of expenditure claimed by the assessee, no trading addition in the GP rate is sustainable, and according, the same is deleted, and disallowance out of expenses is made at Rs.3,50,000/- (Three Lakhs Fifty Thousand Only), on account of self-made vouchers with regard to certain amount of expenses claimed by the assessee in trading results of the assessee – Decided in favor of Assessee.

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• 2013 (11) TMI 57
  Disallowance u/s 40(a)(ia) of the Income Tax Act - Payments of the tax deducted well before filing of the ‘return’ – Held that:- No material has been produced by the Revenue to rebut the findings under challenge that TDS amount had not been deposited by the assessee before filing the ‘return’ – Reliance has been placed on the judgment of case law Alum Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] – Decided in favor of Assessee.

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• 2013 (11) TMI 56
  Undisclosed income (investment) – Invocation of section 69 of the Income tax act - Observation of the AO was that as per the seized material marked as Annexure 'A-1' there was a diary and on page 01 of the said diary there was a payment of Rs.10.10 lacs with regard to land situated near Anjali Cinema. It was found that the payment was made to Sri Govind Bhai Patel - According to AO even before ADI in a statement the assessee had once again reiterated his disclosure of the said investment in the land. The assessee had objected the addition on the ground that although the payment was recorded but the said deal was cancelled in respect of the said land. Since the deal was not materialized, therefore, according to assessee the entire amount was refunded back by Mr. Patel – Held that:- As per the diary found at the time of search it was mentioned that a payment of Rs.10.10 lac was made in respect of the land, therefore, it was required to be assessed in the hands of the assessee. According to AO, there was no recording of receiving the money back from the said party. The AO has further distinguish that in respect of other parties whenever the amount was received back then an entry to that effect was recorded in the diary. The assessee had informed that the money was paid near October / November 1994, which was received back around March /April, 1995. But according to AO, till the date of search i.e. on 21.9.1995, there was no entry of receiving the money back recorded in the seized diary. In the absence of proper proof, the AO had taxed the said sum as undisclosed income in the hands of the assessee. Assessee has not furnished any evidence which can fully substantiate that in fact assessee had received the amount back from the said party. This submission being not supported by any cogent evidence, therefore, not inclined to interfere with the findings of the lower authority - In view of Section 132(4) the presumption in that whatever recorded in the seized books is truly recorded. Validity of affidavits in the taxation matters - Assessee had furnished affidavits of both those persons before the AO. In the said affidavit they have only confirmed that in total a friendly loan of Rs.8,000/- was taken for a short period from the assessee – Held that:- Affidavits were nothing but self serving document hence cannot be relied upon in tax proceedings specially when there is no independent corroborative evidence – Decided against the Assessee. Adjustment regarding the amount declared u/s 158 BC – Held that:- Regarding adjustment of Rs.5,60,000/- being the amount declared u/s 158 BC is concerned, already the claim of the assessee is that he had already declared Rs.5,60,000/- As "undisclosed income" in the return; stated to be representing investment in shares - Nature of disclosure in the said return is required to be ascertained first and if it is found correct, then the AO is free to allow the adjustment. Appropriation out of cash seized u/s 132 of the Income Tax Act – Held that:- On this issue grievance should not have been made because it pertains to administrative decision of the Revenue Authorities as prescribed u/s. 132B(1)(i) of the Act. This section prescribed that the assets seized u/s. 132 may be dealt with in the manner laid down i.e. in the event of any existing liability or the amount of liability determined on completion of assessment under Chapter XIV- B for the Block-period, then the said liability may be recovered out of such assets - AO is otherwise empowered by the Act itself to grant such adjustment against the cash seized – This ground allowed – Decided in favor of Assessee.

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• 2013 (11) TMI 55
  Undisclosed investment - assessment u/s 153C - Income found during search and seizure - CIT deleted addition - Held that:- Assessee had disclosed income in respective companies by way of change in method of accounting or say by recognizing changing the method of the income. Assessing Officer had not pinpointed any defect in this method. During the assessment proceedings as well as in the remand reports called by the CIT (A), the Assessing Officer has not quantified any concealed income. These assessees were part of the 'Sareen Group' although Shri Shravan Gupta was Director in these companies but these companies were controlled by 'Sareen Group' persons only. Overall discloser by all these persons had been made of Rs.335.66 crores. The income disclosed by these assessee companies had not been challenged on the basis of any evidence except the initial bifurcation of undisclosed income. Therefore, in our considered view, the disclosure made by Shri Shravan Gupta during the search operation and which has been further enhanced, shall not have adverse impact on income disclosed in the return of these assessees. Only on the basis of ad hoc bifurcation of the disclosure or surrendered income at initial stage of proceeding and in absence of any incriminating document shall not make such addition sustainable. Overall disclosure was of a high amount. Initial bifurcation was not based on any reliable calculation in view of changed method of recognizing income. The fact shows that these bifurcations were made on ad hoc basis only. It was not even based on any seized material. No statement u/s 132(4) of the Act recorded in these companies. Neither the authorized officer during the search operation nor Assessing Officer had worked out any concealed income supported by any document. Hence, no adverse inference can be drawn when assessee filed return of income by making income on the basis of changed method of accounting - Decided against Revenue.

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• 2013 (11) TMI 54
  Benefit u/s 11 - Object of assessee doubted - Charitable purpose u/s 2(15) - Profit motive - Held that:- assessee trust was registered with Charity Commissioner and the copy of the certificate issued by the Charity Commissioner has been filed in the compilation before us. The Commissioner of Income-tax, Gujarat has registered the assessee-trust under Section 12A. The Joint Commissioner of Sales-Tax (Legal) vide its order dated 2.9.2006 has noted that the activities of the assessee-trust are also not business like, but are allied activities to meet the objectives of the trust, and hence as per the exception in notification (notification section 2(10)), the applicant cannot be considered as trade - for the applicability of proviso to section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfillment of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15) of the Act - aims and objects of the assessee-trust are admittedly charitable in nature, and was granted registration by the Charity Commissioner as well as by the Commissioner of Income-Tax (Exemption) under Section 12A of the Act. The assessee has carried out its activities for the fulfillment of its object of breeding the cattle and to improve the quality of the cows and oxen and had sold semen, fodder, milk etc. and in the process some profit was earned by the assessee-trust, which is incidental in nature. The activities undertaken by the assessee-trust for the fulfillment of its charitable objects on non-commercial lines are not hit by the proviso to section 2(15) of the Act. For the applicability of newly inserted proviso to section 2(15) of the Act, the objects of the trust, the purpose and manner of activities of the Trust, whether to make profit or whether the profit earned was incidental to the activities of the trust, overall facts and circumstances in its entirety, the volume of the profit received by the trust, and whether the activities of the trust were conducted in a way to fulfill its object of the trust, which have essentially to be charitable in nature, and the intention of the trustees, all have to be considered to arrive at a just and fair conclusion. In fact the cases where profit making is the object should be distinguished from the cases, where, although the objects of the trust are wholly charitable, but some profit was made out of the activities undertaken by the Trust for the purpose of achieving the objects of the general public utility. The objective of the proviso to section 2(15) is to deny exemption to such assessee who are engaged in business activities in the garb of charitable purpose. It shall however not effect the cases of charitable institutions, which are carrying on charitable activities genuinely and the facts of the each case has to be seen to decide whether the proviso to section 2(15) is applicable to the facts of the case of the assessee. Mere selling some product at a profit will not ipso facto hit the assessee by applying the proviso to section 2(15) and deny the exemption available under Section 11 of the Act. The intention of the trustees and the manner in which the activities of the charitable trust/institution are undertaken are highly relevant to decide the issue of applicability of proviso to section 2(15) of the Act. If the interest on investment received by the assessee during the year amounting to 26,15,060/- is taken away from the income side of the assessee, there is a net excess of expenditure over the income during the relevant period, and it cannot be said that the assessee has carried out its activities in the advancement of its charitable objects in a way to earn profit on commercial line. Even if at the end of the accounting year, there is some profit received by the assessee while conducting the charitable objects of the Trust, the same shall be merely incidental in nature and shall not attract the applicability of proviso to section 2(15) of the Act. There is no material/evidence brought on record by the Revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the Trust Deed of the assessee - proviso to section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 of the Act for the relevant assessment year - Decided in favour of assessee.

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• Customs

• 2013 (11) TMI 94
  Jurisdiction of Tribunal u/s 129(1) – issue related to duty drawback - Held that:- The first proviso to Section 129A (1) of the Customs Act, 1962 provides that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order passed by the Commissioner (Appeals) under Section 128 A of the Act, relates to payment of drawback as provided under Chapter and the Rules made there under - the order was passed by the Commissioner (Appeals) relates to the drawback claim and therefore this Tribunal shall have no jurisdiction to decide the matter - the appeal along with the stay application is dismissed as non-maintainable – Decided against Assessee.

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• 2013 (11) TMI 93
  Waiver of pre deposit and Stay of recovery - Held that:- payment of Rs.3 crores stands against the outstanding demand of over Rs.13 crores. It is based on the Hon’ble High Court’s stay order that the learned counsel has proposed to pre-deposit Rs.1.6 crores against the outstanding duty dues amounting to Rs.6.4 crores - Prima facie case not in favour of assessee - Stay granted partly.

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• 2013 (11) TMI 92
  Recall of order - Rectification of mistake - Held that:- final order on merits cannot be reviewed by this Bench as it is appealable. As the final order is not one of dismissal of appeal for default of the appellants, there is no scope for restoration of the appeals. As no apparent mistake of fact or law in the final order has been pointed out by the appellants, there is no room for any rectification either. From the prayers made by the appellants in these applications, it appears that, on the one hand, they seek restoration of the appeals and, on the other, they pray for rectification of error. In other words, each of these applications is a blend of ROA & ROM. Either way, these applications cannot be allowed and hence dismissed - Decided against assessee.

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• 2013 (11) TMI 91
  Exemption from levy of CVD on MRP basis - Rule 26 of the Legal Metrology (packaged Commodity) Rules, 2011 - Revenue denied exemption the basis that products imported by the appellant namely, Fevistick/Gluestick etc. are sold not on weight basis but on number basis and, therefore, the provisions of rule 26 of Rules, 2011 would not apply - Held that:- As per the declarations made, net weight is declared as 5g or 8g as the case may be for the adhesives contained in the packages. The commercial invoices and the packing list in respect of the said import also bears the declaration - Fevistick - 5g/Fevistick - 8g as the case may be, which is also the description declared in the Bills of Entry. The goods are in semi-solid form and, therefore, in terms of Section 5 of the Legal Metrology Act, 2009 read with rule 12 of the Legal Metrology Rules, 2011, the description of the quantity has to be made in terms of unit of mass, which the appellant has done in the instant case. There is also no dispute of the fact that the item imported is a pre-packaged commodity as defined under Section 2(l) of the Legal Metrology Act, 2009. If that be so, under rule 26 of the Legal Metrology Rules, 2011, there is no requirement of declaring the RSP on the package of the commodity. In other words, there is no statutory requirement of declaring the RSP of the product in respect of the product under importation. If that be so, the assessment of CVD under Section 3 of the Customs Tariff Act, 1975 has to be done on the basis of the transaction value and not on the basis of RSP as claimed by the department. The glues are pre-packaged and are sold by weight which is clearly indicated on the packages. Since the net weight is less than 10g, the appellant is exempted from declaring the RSP on the packages under Rule 26 of the Legal Metrology Rules, 2011. Since the appellant is statutorily exempted from declaring the RSP on the packages, the assessment of CVD has to be done on the basis of transaction price and not on the basis of RSP - Following decision of Commissioner of Central Excise, Chennai Vs. Anabond Ltd. [2008 (7) TMI 728 - CESTAT, CHENNAI], Bharat Cosmetics Vs. Commissioner of Central Excise, Thane [2007 (2) TMI 372 - CESTAT, MUMBAI] and Sarvotham Care Ltd. Vs. Commissioner of Central Excise, Hyderabad [2013 (4) TMI 505 - CESTAT BANGALORE] - Decided in favour of assessee.

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• 2013 (11) TMI 90
  Rectification of mistake - Date of communication of the order-in-original - Held that:- If there was a presumption under Section 153 of the Act against the appellant, an effective opportunity of rebuttal was given to them and we satisfied ourselves that, instead of rebuttal, there was a consensus between the appellant and the department regarding the date of communication of the order-in-original to the appellant. Proceeding on this basis, this bench upheld the impugned order and dismissed the assessee s appeal. No mistake whatsoever, let alone an apparent mistake, is found in the final order passed by this bench. Appellant has made an attempt to add facts and materials to their case through the ROM application and the documents filed therewith. Such facts and materials can hardly constitute the record of the case for the purpose of subsection 2 of section 129B of the Act. We have come across additional evidence in the form of two affidavits but such additional evidence cannot be taken into account under subsection 2 of Section 129B ibid. In answer to a query from the bench, the learned counsel for the appellant has failed to show us documentary evidence of a copy of the order-in-original having been received on 19.1.2009 from the Commissioner s office. The appellant could not adduce such evidence before the Commissioner (Appeals) either. In other words, the appellant has failed to rebut the aforesaid presumption at successive appellate stages. The ROM application appears to be a desperate attempt - Decided against assessee.

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• 2013 (11) TMI 89
  Waiver of penalty - Mis-declaration of the Cigarette Filter Rods under the garb of sketch pen ink filler - Held that:- when there was a mis-declaration of the Cigarette Filter Rods under the garb of sketch pen ink filler 66 MM long (Ink Pads). It clearly comes out from the adjudication order to appreciate that there was a proper application of mind by the adjudicating authority. The evidence before the authority was as appearing in the order. It was a clear admission of the mis-declaration and no scope was left for Revenue to grant any waiver from penalty. - stay denined. Enhancement of penalty imposed less then minimum prescribed - Held that:- Contumacious conduct of the appellant warranted imposition of penalty to the equal amount of the duty. We surprise how Adjudicating Authority was lenient to impose penalty of Rs.85,000/- while redemption fine was Rs.1,50,000/- and duty element was 1,62,083 - Notice is hereby issued to the appellant to show cause as to why penalty under section 112A of Customs Act shall not be enhanced to the extent of the duty element.

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• 2013 (11) TMI 88
  Refund claim - abatement of duty on damaged or deteriorated goods - section 22(1) - Goods were imported and duty paid as per value assessed - Later on goods found to defective - ascertaining value of damanage - Held that:- Law provides that duty shall be charged on a proportionate basis - only option available is ascertainment by the proper officer, which the proper officer did not do. Subsequently the goods were exported by the appellant for repairs abroad and brought back and the lower appellate authority held that the repaid charges +cost of transportation to and fro including insurance can be considered as extent of damage and accordingly, he allowed the refund of the duty paid on the repair charges + freight charges. The ascertainment of damage has been done after the repairs were undertaken as equal to the cost of repair charges. Therefore, there is nothing wrong or unreasonable in the findings of the lower appellate authority. So long as Revenue has received the duty on the full value without any abatement towards damage, the Revenue cannot have any cause for grievance - Decided against Revenue.

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• Corporate Laws

• 2013 (11) TMI 87
  Sanction of the Scheme of Amalgamation - Held that:- In view of the approval accorded by the shareholders of the Petitioner Transferor Company as well as the Transferee Company by giving their consent to the Scheme in writing and the Court waiving the convening and holding of the meetings of the shareholders and the creditors of the Petitioner Transferor Company by order dated 5th December, 2012; representation/reports filed by the RD and the OL to the proposed Scheme and the reply Affidavit in response to the reports of the RD and the OL filed by the Petitioner Transferor Company there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under Sections 391 and 394 of the Act. The Petitioner Transferor Company will comply with the statutory requirements in accordance with law - The certified copy of the order shall be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of Sections 391 and 394 of the Act and in terms of the Scheme, the whole of the undertaking, business, properties, assets, rights and powers of the Petitioner Transferor Company be transferred to and vest in the Transferee Company as a going concern without any further act or deed. Similarly, in terms of the Scheme, all the liabilities, duties and obligations of the Petitioner Transferor Company be transferred to and vest in the Transferee Company without any further act or deed. Upon the Scheme coming into effect, the Petitioner Transferor Company shall stand dissolved without winding up - Petition allowed.

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• Service Tax

• 2013 (11) TMI 105
  Goods Transport Service – Duty Liability - Revenue found that the firm was receiving the services from various transporters under the category of ‘Goods Transport Agency Service’ but had not paid any service tax – Held that:- There is no dispute with regard to the liability of Service Tax - Rule 2(1)(d)(v) of the Service Tax Rules, 1994 clearly defines that the person who pays or is liable to pay the freight will pay the service tax - the appellant are a Private Company and, they have paid the freight charges, therefore, they were liable to pay service tax. Penalty u/s 77 and 78 – Held that:- The appellant suppressed the fact of payment made to transporters with intent to evade payment of service tax - therefore they are liable for penal action under Section 76 and 78 of the Finance Act, 1994. Simultaneous Penalty u/s 76 and 78 - Whether penalty u/s 76 and 78 both can be imposed simultaneously – Held that:- Following Assistant Commissioner, Central Excise Vs. Krishna Poduval [2005 (10) TMI 279 - Kerala High Court] - the penalty can certainly be imposed on erring persons under both the Section 76 and 78, especially since the ingredients of the two offences are distinct and separate - there was no reason to interfere with order – Decided against Assessee.

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• 2013 (11) TMI 104
  Cenvat Credit and Penalty u/s 15(3)/15(4) of the CC Rules, 2004 r.w. Section 78 of the Finance Act - manufacturing activity and providing Business Auxiliary Services – Whether the Applicant are entitled to utilize the Credit availed on inputs, capital goods and input services, while discharging their liability towards the service tax on Business Auxiliary Service – Waiver of Pre-deposit - Held that:- The applicants are having a common account and they have utilized the entire credit against the output services and have not utilised the credit for clearing manufactured products - As per provisions of Cenvat Credit Rules, no where it is specified that if an assessee is engaged in both activities i.e. manufacturing and providing services, the assessee has to maintain separate cenvat credit account of input/output service – Relying upon CCE, Chandigarh vs. Nahar Industrial Enterprises Ltd. [2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT] - Prima facie, the availing of credit or its utilization cannot be denied - the applicants have made out a strong case in their favour – the entire demand of cenvat credit along with interest and penalty granted – Stay granted.

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• 2013 (11) TMI 103
  Waiver of pre-deposit of CENVAT Credit - ST on GTA services - Penalty u/s 76 and 77 of Chapter V of the Finance act - Eligibility of Abatement under Notification No.34/2004 - Revenue was of the view that the assessee had failed to produce necessary evidences on the consignment notes that the GTA service provider did not avail the benefit of the said Notification No.12/2003-ST and also CENVAT Credit – Held that:- The Applicant had deposited 25% of the Service Tax amount demanded - they had already placed the details of vouchers and made a categorical statement that there is only one GTA service provider from whom they had received services - the Applicant could able to make out a prima facie case for total waiver – thus Pre-deposit of the balance dues waived and its recovery stayed during pendency of the Appeal – Stay granted.

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• 2013 (11) TMI 102
  Disallowance of cenvat credit on various services – Waiver of Pre-deposit – Held that:- The authority has made efforts to justify stand of the demand - Taking into account the undertaking of the appellant that Rs. 1.25 crore credit shall not be utilized till disposal of appeal there shall be waiver of pre-deposit - the appellant has not utilized credit for the last 2 years and shown fair attitude to cooperate to dispose the appeal – Stay granted.

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• 2013 (11) TMI 101
  Waiver of pre deposit - Section 35F - Held that:- appellant had been directed to make pre-deposit of entire service tax demand confirmed along with interest. The said order does not record any reason for order the pre-deposit except that the appellant had not led any evidence that ordering pre-deposit would cause financial hardship. As held by the Hon'ble High Court of Bombay in the case of CEAT Ltd. [1999 (4) TMI 81 - HIGH COURT OF BOMBAY] & Velcord Textiles [1999 (2) TMI 77 - HIGH COURT OF JUDICATURE AT BOMBAY] and also as clarified by the CBE&C in Circular dated 06/04/2000, the appellate authority has to record a finding and pass a speaking order while considering stay applications - these directions have not been followed. Therefore, the matter has to go back to the lower appellate authority for consideration afresh. Accordingly, we remand the case back to the Commissioner (Appeals) to pass either a speaking order on pre-deposit to be made by the appellants or pass the order on merits on the points raised in the appeal - Decided in favour of assessee.

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• 2013 (11) TMI 100
  Condonation of delay - Held that:- In view of the ad-hoc exemption order no. 1/1/2011 dated 01/07/2011 exempting Security Agency Service rendered by the appellant, there is no tax liability on the appellant. Accordingly, we condone the delay in filing the appeal and also allow the appeal by extending the exemption granted by the Government - Decided in favour of assessee.

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• 2013 (11) TMI 99
  Demand - Services of Goods Transport Agency - Amount involved in this case is small, i.e. Rs.68,530/- and we do not want to differ from the earlier stay order passed by the Tribunal and therefore we grant waiver of predeposit of dues arising from the impugned order and stay its collection during the pendency of the appeal - Following decision of Andal Motors Vs. CCE [2009 (1) TMI 118 - CESTAT CHENNAI] and A1 Chemicals Vs. CCE [2009 (6) TMI 99 - CESTAT, CHENNAI] - stay granted.

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• 2013 (11) TMI 98
  Cenvat credit - GTA service - Held that:- Prima facie that the applicant failed to furnish the consignment notes with the prescribed declarations for claiming the exemption under Notification No. 32/2004-ST dated 03.12.2004. The applicant has failed to make out a prima facie case against them and therefore they are required to pay service tax along with interest and penalty. Accordingly, we direct the applicants to deposit an amount of Rs.50,000/- within a period of six weeks. - stay granted partly.

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• 2013 (11) TMI 97
  Service of trenching and laying of PLB pipes and cables for BSNL at various places - Commercial or industrial construction service - Held that:- for the purpose of waiver of pre-deposit and stay, the appellant has made out a prima facie case that the service rendered by them is not classifiable under ‘commercial or industrial construction service’. What is required to be examined in this case is whether the service tax liability arises if both sides agree that the service is liable to service tax or an independent authority can still decide the service is liable to service tax. Prima facie, in our opinion, the dispute can be raised even at a later stage. - appellant have made out a prima facie case in their favour on merits - stay granted.

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• 2013 (11) TMI 96
  Nature of services - Manpower Supply Agency Service or employer employee relationship to constitute salary - Waiver of pre deposit - Held that:- agreement is very clear which talks about the supply of labourer on contract basis from independent contractor. The said contract also talks about skilled, semi-skilled and unskilled workers. On perusal of the terms of the contract, we find that the contract is very clear as to discharge of service tax liability, professional tax liability etc. is on the contractor. We are unable to understand as to why the appellant had not billed the service recipient the service tax liability of such amount. We are of the view that appellant has not made out a prima-facie case for complete waiver of pre-deposit of the amounts involved. - stay granted partly

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• Central Excise

• 2013 (11) TMI 86
  Cenvat Credit on Goods Transport Service – Waiver of Pre-deposit – Extended Period of Limitation – Held that:- The show cause notice issued invoked the extended period of limitation which is, prima-facie unsustainable for the reason that the Revenue authorities, on an identical issue has issued a show cause notice invoking the extended period, in that case also for reversing the amount of cenvat credit taken during the period 2005-06 - To that extent, prima facie, appellants contention seems to be on strong grounds. Within the limitation period, some liability arises for which the issue needs to be gone into detail as to what would be place of removal in the contract and whether the appellant was responsible for the goods cleared and delivered to their purchasers - All these issues need deeper consideration and can be considered at the time of final disposal of appeal - the appellant has not made out a case of complete waiver of pre-deposit of the amounts involved inasmuch as the same is within the limitation period - the appellant is directed to further deposit an amount of Rupees twenty lakhs – upon such submission rest of the depsoits to be waived till the disposal – Partial stay granted.

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• 2013 (11) TMI 85
  Availability of CENVAT Credit on plastic crates – Waiver of CENVAT Credit and Penalty under Rule 13/15 of the CC Rules - Held that:- The Applicant had availed the CENVAT Credit on plastic crates used in or in relation to the manufacture of beverages in their factory - Following Lumbini Beverages Pvt. Ltd. vs. CCE, Patna [2012 (6) TMI 310 - CESTAT, KOLKATA]CENVAT Credit availed on plastic crates used in the manufacture of beverages, is admissible - the Applicant are able to make out prima facie case for total waiver of the dues - all dues waived and its recovery stayed during pendency of the Appeals - Stay granted.

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• 2013 (11) TMI 84
  Rectification of Mistake - Power to Review its own order – Held that:- The appeal was heard at length and both sides had advanced their arguments and also the order was dictated in the presence of both sides in the open Court - the point raised by the applicant seeking rectification of the order, is not an error apparent on the face of the record, but goes to the very root of the matter and the Tribunal does not have any power to review its own order - Following CCEx., Belarpur Vs. RDC Concrete (India) Pvt. Ltd. [2011 (8) TMI 25 - SUPREME COURT OF INDIA] - The point now raised by the applicant if considered, then it would result in discussing the issues again and deciding the matter afresh - such power to review the order, is not vested with this Tribunal - the point raised by the applicant, being not an error apparent on the face of the record, cannot be rectified - the miscellaneous application for rectification of mistake being devoid of merit - Decided against Assessee.

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• 2013 (11) TMI 83
  Rectification of Mistake – Held that:- The confirmation of duty has set aside whereas both the Members, after declaration of law on the point, remanded the matter to the lower authorities for computation of clearances - confiscation of 36 air-conditioners was required to be set aside inasmuch as there was a seizure of total 60 air-conditioners out of which the confiscation of 24 air-conditioners stand upheld by the Majority order - the mistakes has been rectified – Rectification of Mistake application filed by the Revenue is allowed – Decided in favour of Revenue.

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• 2013 (11) TMI 82
  Confiscation of Goods – Redemption Fine – Penalty on transporter – Held that:- Innocence cannot be appreciated when the offending vehicle carried two sets of bilties in 20 to 25 occasions as is revealed from adjudication order - fictitious bills were issued - no goods were consigned to them which is coming out of adjudication order - truck carrying unaccounted goods should be confiscated - There shall be no interference to this decision. But while confiscating the truck he has provisionally released the same imposing fine without recording life of the truck and year of manufacture - mechanical imposition of redemption fine cannot be justified - It would, be proper to impose a fine which is nearly 15% of the value of truck - there shall be waiver of penalty imposed on Shri Tapeshwer Singh – Redemption fine reduced – Decided partly in favour of Assessee.

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• 2013 (11) TMI 81
  Clandestine Removal - Removal of goods from the factory without payment of duty – Held that:- The duty against the same item duty was confirmed in some cases and dropped in other cases, without assigning reasons - The Commissioner in the order has observed that the allegation of clandestine removal cannot solely be on the basis of the records but also depends various other factors - Prima facie the reasoning has been recorded by the Commissioner while confirming the demand of clandestine removal against the applicant discarding their plea of trading of all items cleared/removed to the site - it is a case of appreciation of evidences adduced by the applicant and scrutinized by the adjudicating authority, an exercise which could be well examined at the time of disposal of the appeal. Waiver of Pre-deposit - Prima facie the Applicant could not make out case for total waiver of dues - the Applicant No.1 M/s Nampa Steel directed to deposit an amount of pre-deposit – upon such submission the balance dues against both the applicants would stand waived and recovery stayed during the pendency of the appeals – Partial stay granted.

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• 2013 (11) TMI 80
  Waiver of Pre-deposit - Clandestine Removal of Goods – Held that:- Applicant No. 1 has suppressed the production and has clandestinely removed the suppressed production of matches without payment of duty - they have cleared illicitly mechanized dipped bundles without payment of duty - Applicant No. 2 & 3 have admitted the clandestine removal of the goods - applicant No. 1 has already deposited a sum of Rs. 8 lakhs - Applicant No. 1 directed to pre-deposit Rs. 2,00,000 and Applicant No. 2 & 3 to pre-deposit Rs.25,000 - Upon such deposit, pre-deposit of the balance dues stand waived and recovery stayed during the pendency of the appeals – Partial stay granted.

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• 2013 (11) TMI 79
  Rectification of Mistake – Held that:- The prayer made by the Department was to allow the appeal and the assessee was represented by their counsel - When the order was dictated in the court and having been present during the relevant time, at this stage pointing out that there is a mistake is not correct - The assessee has a remedy in the form of an appeal before the Hon’ble High Court and if this is considered as a mistake and an attempt is made to rectify, it would be amount to review of the order of this Tribunal which the Tribunal has no powers to do - The application for rectification of mistake is rejected – Decided against Assessee.

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• 2013 (11) TMI 78
  Waiver of Pre-deposit of Interest – availing depreciation while availing cencat credit - capital goods - The original authority disallowed the credit and also allowed to re-credit the same as they have filed the revised return - Relying upon Yee Kay Technocrat (P) Ltd. Vs. CCE [2011 (1) TMI 544 - CESTAT, NEW DELHI] - Prima facie they have to pay interest for the period - the applicant is directed to deposit a sum of Rs.30,000 towards interest - Upon such deposit, pre-deposit of the balance interest and penalty would be waived and recovery stayed during the pendency of the appeal – Partial stay granted.

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• 2013 (11) TMI 77
  Waiver of Pre-deposit – Cenvat credit - Credit of Education cess denied on the ground that as per Rule 3(7)(a) of CCR, an assessee receiving goods from EOU can avail credit of BED only - Revenue was of the view that the assessee has availed cenvat credit of the amount of CVD paid by 100% EOU - Held that:- A non-obstante clause is used where contrary provisions exist, not on all the provision contained – Rule 3(7)(b) & 3(1) are applicable to all so credit of education cess is admissible - Following M/s TURBO ENERGY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE (LTU), CHENNAI [2013 (10) TMI 802 - CESTAT CHENNAI] - Even after the insertion of proviso in Rule 3(7) of Cenvat Credit Rules, formula remains the same for discharge of CVD under the Rules - the appellant has made out a prima facie case for the waiver of pre-deposit of the amounts involved - Application for the waiver of pre-deposit of the amounts involved is allowed and recovery stayed till the disposal of appeal – Stay granted.

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• 2013 (11) TMI 76
  Waiver of pre-deposit of Cenvat Credit – duty payment document - Held that:- The admissibility of Cenvat Credit on capital goods viz. Continuous Mixture and on Thermostat had been settled by this Tribunal vide its Order dated 16.02.2010 - The case was remanded to the adjudicating authority to verify the claim of the appellant - Prima facie, there was not any Invoice No.133 dated 19.04.1995, even though it has been referred to in the Annexure ‘A’ to the show cause notice - in absence of Invoice No.133 dated 19.04.1995 placed before this Tribunal, by Revenue, prima facie, it would be difficult to accept that there is an Invoice No.133 dated 19.04.1995 which is different from the Bill of Entry dated 19.04.1995 as claimed by the Applicant. The applicant has made a categorical statement that there is no Invoice No.133 dated 19.04.1995 and they have availed credit on the Bill of Entry dated 19.04.1995 - There may not be any Invoice No.133 dated 19.04.1995 - the applicant are able to make a prima facie case for total waiver of pre-deposit of Cenvat Credit and accordingly the pre-deposit of Cenvat Credit is waived and its recovery stayed during pendency of the Appeal - in the event the department could able to locate and produce Invoice No.133 dated 19.04.1995, in contrast to the claim made by the Applicant the department may approach this Tribunal for appropriate direction - Stay granted.

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• CST, VAT & Sales Tax

• 2013 (11) TMI 107
  Capital investment - Whether petitioner is eligible for incentive/subsidy as existing functional industrial unit or loss making, existing and functional industrial unit - Held that:- crucial date for qualification to get sales tax and other incentives as category (II) or Category III unit is the date of information to the State Government regarding expansion / diversification / modernization. It is specifically mentioned in Clause 8 to Annexure-1 of the Industrial Policy that in order to qualify for sales tax and other incentives, a unit should undertake expansion/diversification/modernization and should sent prior intimation before undertaking expansion/ diversification/ modernization programme to concern officer of Industry Department. Order as contained in memo no.1885 dated 16.06.2003 also laid down the guidelines and it is mentioned that proposal from Industrial Units will be processed according to the said guideline. Thus, for categorising an industrial unit, which is undertaking expansion/ diversification/ modernization, it is necessary to see whether on the date of intimation, said unit is a loss making unit or is a profit making unit. Thus, if on the date of intimation the industrial unit is a loss making existing and functional unit from last two years, then the same falls under Category (III) of the Mega Industrial Unit - the action of the State Government in changing the status of the petitioner's unit from loss making unit to profit making unit is not correct, because on the date of intimation for expansion/diversification/ modernization, petitioner's unit was a loss making unit, because it incur cash losses since last five years. Thus, I hold that petitioner's unit entitled to get capital investment incentive/subsidy as Category (III) Mega Industrial Unit i.e. loss making, existing and functional industrial unit - Decided against Revenue. Tax relief - Sale of clinker or sale of clinker - Whether plea of the State Government that petitioner is entitled to get tax relief only on the sale of clinker and not on the sale of cement is sustainable - Held that:- final product of the petitioner's unit at Chaibasa is cement, manufactured from clinker. Under the aforesaid circumstance, contention of the State Government that petitioner is entitled to incentive on the amount paid to the State Government as sales tax on the sale of clinker and not on the sales of cement is hereby rejected . Accordingly, I concluded that petitioner is entitled to get capital investment subsidy on the amount paid to the State Government as incremental sales tax on the sale of clinker and cement - Decided against Revenue. Whether petitioner is entitled to get capital investment subsidy on the amount paid to the State Government as additional incremental sales tax on the sale of cement produced both by the Chaibasa and Sindri units or only by Chaibasa Unit - Held that:- petitioner is knowing that according to industrial policy only those units are entitled to get incentive on payment of sales tax, which undertake expansion/ diversification/ modernization. From perusal of Annexure-9, it is clear that the State Government had written to the petitioner to clarify as to how it claims subsidy on the amount paid as additional sales tax to the State Government on the sale of cement by Sindri unit because it is the Chaibasa Clinker Plant which undertaken expansion/diversification/ modernization eligible for incentive and not the Sindri Grinding Pant. It appears that petitioner gave its reply to the aforesaid letter. Under the said circumstance, right to fair hearing before taking a decision for negativing the promise had been given to the petitioner - since the promise to pay aforesaid incentive on the sales tax to the Sindri Unit is against the Industrial Policy, petitioner can not claim the same on the basis of principle of legitimate expectation. Accordingly, aforesaid contention raised on behalf of the petitioner is hereby rejected - Decided against Revenue.

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• 2013 (11) TMI 106
  Works Contract - Whether activity of construction / development by a Builder would constitute Work Contract in certain circumstances - Held that:- Construction of flats on its own can not be tanable as work contract under U.P.T.T. where the right title and interest in the construction continue to remain with the developer mere payment term would not alter the nature of transaction - particular unit is not resold but retained by the Appellants, there would be no works contract to that extent. But so long as there is no termination the construction is for and on behalf of purchaser. Therefore, it remains a works contract within the meaning of the term as defined under the said Act. It must be clarified that if the agreement is entered into after the flat or unit is already constructed, then there would be no works contract. - matter remanded back for reconsideration in view of Larsen & Toubro Limited & Another Versus State of Karnataka & Another [2013 (9) TMI 853 - SUPREME COURT] - Decided against the assessee.

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• Indian Laws

• 2013 (11) TMI 95
  Jurisdiction of court - whether the Court within the jurisdiction whereof, the complainant had presented the dishonoured cheque (issued by an accused), had the jurisdiction to entertain a petition filed under Section 138 of the Negotiable Instruments Act - Held that:- No doubt Section 138 of the Act does not require that the notice should be given only by 'post' therefore, uphold the conviction of the offence under Section 138 of the Act, but we set aside the sentence awarded by the High Court for enabling the trial court to pass orders on the question of sentence and the compensation, if any payable - High Court erred in concluding that the courts at Delhi, did not have the jurisdiction to try the petition filed by the appellant under Section 138 of the Negotiable Instruments Act. The impugned order dated 27.4.2012 passed by the High Court is accordingly liable to be set aside - Decided in favour of Appellant.

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