Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 24, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Can the TDS liability under GST be fixed with retrospective effect? - Goods and Services Tax - GST
Income Tax
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Entitlement for waiver of interest u/s 220(2A) - petitioner has satisfied all the three conditions as enumerated under Section 220(2A) of the Act and therefore are entitled for waiver of interest. - HC
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Assessment of income - nature of amount of interest - work could not be completed by the stipulated period and hence a dispute arose between the assessee and the Irrigation Department - interest actually received was income. - HC
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Disallowance of legal and professional charges - When the assessee company has found FIR against Directors of the company, there cannot be any dispute that the Directors were arrayed as accused in their official capacity and these expenses are certainly business expenditure - AT
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If there are any transactions between the assessee and its affiliates that would be a subject matter of transfer pricing regulation. In our view, the CIT was not justified in giving a direction for apportionment of goodwill - AT
Customs
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Levy of anti dumping duty (ADD) - In a situation where a producer sold the goods through multiple trading channel and one or more trading channel did not participate in the investigation, the DA can proceed to determine the need for fixing individual anti dumping rates based on the data provided by cooperating trading channels - AT
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Valuation - enhancement of value - value was enhanced on the ground that the similar goods were imported at higher price - there is more than two months gap in comparison of similar consignments - ejection of transaction value and refixing of such value not justified. - AT
DGFT
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Export Policy of Onions- Imposition of Minimum Export Price (MEP) - Notification
Service Tax
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Demand of service tax on fees received for offering courses of London School of Economics (University of London) resulting in issue of degree by the University of London - appellants will fall outside the purview of commercial coaching or training centre - AT
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Service of repairing of footwear - sale or service? - such activity cannot be considered purely as sale of repair materials but is an activity covered under sec 65 (105) (zzzg) under the heading ‘management, maintenance of repair service’ - AT
Central Excise
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Whether “write off” of inputs on account of damage or become unfit during the course of manufacture, can be equated to clearance of inputs as such and no reversal of credit is warranted in such situation? - credit not to be reversed - AT
Case Laws:
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Income Tax
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2017 (11) TMI 1229
Penalty u/s 271(1)(c) - Whether under Section 271(1)(c) as it stood prior to the insertion of Explanation 5, levy of penalty is automatic if return filed by the assessee under Section 153A of the Act discloses higher income than in the return filed under Section 139(1)? - Held that:- The special leave petition is dismissed. The question of law is, however, kept open. HC has held [2017 (2) TMI 1002 - DELHI HIGH COURT] Once the assessee files a revised return under Section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139.For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A.
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2017 (11) TMI 1228
Capital gain computation - rights emanating from the JDA, legal effect of non registration of JDA, its alleged repudiation etc. - pro-rata transfer of land - Transfer exigible to tax by reference to Section 2(47)(v) read with Section 53-A of the Transfer of Property Act, 1882 - HC has held [2017 (5) TMI 847 - PUNJAB AND HARYANA HIGH COURT] that no infirmity in the order of the learned CIT (Appeals) in directing the Assessing Officer to recompute the short term capital gain on the amount actual received by the assessee - Held that:- Since similar matter as in case titled 'Commissioner of Income Tax vs. Balbir Singh Maini' [2017 (10) TMI 323 - SUPREME COURT OF INDIA] was earlier dismissed by this Court on 04.10.2017, the present special leave petition is also not entertained and is dismissed accordingly. SC in aforementioned case held the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains “arose” from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. - Decided in favour of assessee.
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2017 (11) TMI 1227
Eligibility to deduction u/s 80-IA - Has the Appellate Tribunal any material or evidence on record to justify its finding that the assessee has not substantially renovated and modernised the transmission and distribution lines within the meaning of Section 80-IA? - Held that:- If we look at the scheme of Section 80-IA(2), it does not speak about the business of assessee but of “undertaking” or “enterprise”. Then, an undertaking or an enterprise alone matters for the Revenue to decide the eligibility. Significantly, section 80-IA (2), the charging provision, does not refer to “business” as such. The assessee acquired in March, 2005 certain tea estates at Munnar, as a going concern. This acquisition included the erstwhile “Devikulam Estate” from Tata Tea Limited. The plant and machinery thus acquired included the electric power distribution network-the transmission lines. The assessee produced an audited certificate that the written down value of the plant and machinery as on 01/04/2004 was ₹ 88,39,340/-. It has claimed that it spent for the assessment year 2008-09 ₹ 50.31 Lakh to renovate and modernize its transmission network. So, the amount spent is over 50% of the then existing establishment's book value. Indeed, the undertaking squarely falls under Section 80-1A(4)(iv) (c) of the Act. The renovation or modernization, admittedly, took place between 01.04.2004 and 31.03.2011. To be specific, the assessee claims that the undertaking’s renovation or modernization has brought about “substantial improvement in the 'line loss.' Substantial renovation and modernization has been done by replacement of High Tension distribution lines and installation of new CT/PT units.” Conclusion: In the above circumstances, the Assessing Officer’s disallowing under section 80-IA of the Act, as affirmed by the Appellate Authority and the Tribunal, cannot be sustained. - Decided in favour of assessee.
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2017 (11) TMI 1226
Stay petition - revenue has rejected the said petition on the ground that the petitioner has not paid 20% of the disputed tax - Held that:- Writ Petition is disposed of, with the slight modification to the impugned order (i) by permitting the 1st respondent to encash the fixed deposit of ₹ 95 lakhs together with interest accrued till the date of encashment and reckon the payment towards the disputed tax; (ii) the petitioner is directed to furnish immovable property security worth ₹ 2 Crores and such property/properties shall be free from encumbrance and the original documents should be deposited and appropriate documents should be executed in favour of the Department securing the interest of Revenue and the petitioner providing immovable property security for sum of ₹ 2 Crores, further demand of tax and penalty as claimed in the assessment orders shall remain stayed. It is represented by the learned counsel for the petitioner that the fixed deposits are in the names of the father-in-law and mother-in-law of the petitioner and the petitioner will make appropriate arrangements for them to give their No objection certificate for encashment of those fixed deposits. The above direction shall be complied with within a period of three weeks from the date of receipt of copy of this order.
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2017 (11) TMI 1225
Entitlement for waiver of interest under Section 220(2A) - Assessing Officer did not allow the mandatory interest under Section 244(1A) - proof of genuine hardship - Held that:- In the application filed by the petitioner for waiver of interest, the petitioner has specifically stated that they had succeeded before the CIT(A) in respect of the year 1977-1978 and an order was passed on 25.02.1984. However, that order was given effect to only on 30.10.1996 i.e. after twelve years and even thereafter, the Department did not pay the mandatory interest under Section 244(1A). However, this interest was paid only on 07.10.2003. Therefore, this payment which was received by the petitioner on 07.10.2003 can hardly have an impact on the present issue which pertains to the assessment for the year 1985-1986 for which the petitioner filed return of income during September, 1985. As mentioned taxes fell in Category V of Schedule II to the Acquisition Act and the last among the priority of debts as stipulated under Section 18 of the Acquisition Act. The Assessing Officer as well as the Department was well aware with the said provision and this presumption can safely be drawn on account of the conduct of the Department in not enforcing any of the demands issued and for the first time interest demand was issued on 12.12.2000 much after the Club was handed over to the Committee of Management. From 1985 onwards till 2003 the assessment was not completed. As noticed above, there were three computations with regard to carry forward loss. The petitioner cannot be stated to be wholly incorrect for claiming a carry forward loss, while they filed the return atleast they were partially right since the Department rectified the mistake suo motu and arrived at the carried forward business loss at ₹ 12.82 lakhs as against the initial quantification of ₹ 35,435/-. Thus, these factors should enure to the benefit of the petitioner. Thus, in the light of the factual position referred above, payment of interest would cause undue hardship to the petitioner. With regard to the second aspect regarding Circumstances beyond the control of the assessee the petitioner having been received interest should not cringe to pay interest is an analogy which has been wrongly cited. The petitioner is, as a matter of right, entitled for the mandatory interest. Therefore, the 1st respondent cannot state that the petitioner has become financial richer on account of that payment of interest. This receipt of interest which is statutory and mandatory can have no impact on the petitioner's claim for waiver under Section 220(2A). This power has been conferred on the 1st respondent by the Statute. The manner in which he has to consider such application has also been spelt out in the Statute and if the Court finds that the reasons recorded are not germane to facts or without taking into consideration the relevant factors or taking note of irrelevant factors are all good and sufficient grounds to interfere with the order. To state that in the interregnum tax could have been paid is a wrong conclusion without due regard to the fact that the undertaking vested with the Government from 1986 to 1996 and even during the period when it vested with the Government, the respondent Department had no priority over their claims and they were the last among the list of priorities, the respondent Department did not challenge the provisions of the Acquisition Act. Therefore, to now pin down the petitioner/assessee and direct them to pay interest will be harsh especially when the circumstances stated above clearly shows that they were beyond the control of the petitioner. Thus this Court is fully convinced that the petitioner has satisfied all the three conditions as enumerated under Section 220(2A) of the Act and therefore are entitled for waiver of interest.
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2017 (11) TMI 1224
Grant registration under Section 12AA - Held that:- Sub-Section (4) of Section 12AA will come into operation after the registration is carried out in consonance with the provisions of object of the trust not at the time of registration. In that view of the matter, registration will be given to trust and the observations made by the Tribunal are just and proper - Decided in favour of assessee
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2017 (11) TMI 1223
Property transactions in USA - addition u/s 69 - loan of US Dollar 6,59,000/- given to one Mr. Vijay Kumar Kataria, who had executed the power of attorney in favour of the assessee’s Son-in-law Sh. Mohit Mehra - protective assessment addition - Held that:- In the final charge sheet filed by the CBI there is no mention about the property transactions in USA. The charge sheet is only about booking air tickets for the appellant and his family members by some of the contractors. The CBI court in its decision passed on 26.03.2013 had stated that the appellant was not found guilty of even on this charge. Since, the assessment order was based on the FIR filed by the CBI and as the CBI itself had not found any material to pursue the matter regarding the property transaction in USA against the appellant in the charge sheet, the addition of ₹ 2,86,86,270/- is sustainable as the addition was not made on the basis of any evidence. Even on the basis of the FIR the addition can be made at best on the son in law only, who is a permanent resident of USA and assessed to tax in USA, and not on the appellant. Moreover, the appellant’s AR during the appellate proceedings had informed that the same property in USA was added in the hands of Shri Vijay Kumar Kataria, the actual purchaser of the property in USA by DCIT Central Circle-11 in his order u/s 153A passed on 27.03.2009. Since the addition of ₹ 2,86,86,270/- made by the AO in hand of the appellant is not a protective assessment and the department cannot tax the same property twice on the appellant and on the actual purchaser of property. Therefore, it is of the view that the addition made by the AO as the value of property in USA is not sustainable - Decided against revenue
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2017 (11) TMI 1222
Assessment of income - nature of amount of interest towards late payment - work could not be completed by the stipulated period and hence a dispute arose between the assessee and the Irrigation Department - as contended that the actual income as assessed by the AO is required to be taken into consideration for the current year - Held that:- However taking into account that the carry forward loss was not there and in view of the decision of the Supreme Court in Ghayshyam (2009 (7) TMI 12 - SUPREME COURT ) as reproduced herein above, we are of the view that the interest actually received was income. We restore the order of the AO and the order of CIT(A) and order of the tribunal is quashed and set aside. - Decided against the assessee.
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2017 (11) TMI 1221
Reopening of assessment - invalid notice as the notice was not preceded by valid approval based upon proper application of mind by the concerned Commissioner; secondly, it was not served in the proper manner and was rather served allegedly through affixation and Lastly the “reasons to believe” furnished are not premised upon any tangible material - Held that:- This Court notices that for the two assessment years 2008-09 and 2010-11, the judgment rendered clearly found that identical notices under Section 147/148 of the Income Tax Act, 1961 did not measure up to the standards of a valid opinion based upon tangible material, as clarified by the ruling in Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). The same logic in our opinion is applicable in the present case. Furthermore, the reference by the Revenue to the third paragraph of the “reasons to believe” in this case is of no consequence. The basic or necessary facts which led the AO to form the opinion are contained in the second paragraph of the impugned notice, i.e., the Investigation Wing’s report. The wording and rationale in the impugned notice is identical to that in the previous years’ case as well as for the AY 2010-11. The basic premise upon which the Revenue can issue a valid notice is if tangible material is unearthed after the completion of assessment - or intimation is made under Section 143 (1) in the given facts of the case. This is because of the non-obstante clause. In other words whether there is a completed assessment under Section 143 (3) or intimation under Section 143 (1), the essential pre-requisite for existence of tangible material has to be fulfilled. In the present case, clearly this pre-requisite was not fulfilled. Consequently, the impugned order cannot stand; it is hereby quashed - Decided in favour of assessee.
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2017 (11) TMI 1220
Disallowance u/s 14A - non recording of the satisfaction by the Assessing Officer - Held that:- When the pre-requisite condition for making disallowance u/s 14A, being the recording of the satisfaction by the Assessing Officer not accepting the correctness of the assessee’s claim, was lacking, the ld. CIT(A) should not have come to the stage of computation of the amount of disallowance. As the jurisdictional condition for making disallowance u/s 14A was wanting, the ld. CIT(A) ought to have deleted the entire addition instead of restricting it to a lower level. The Revenue appears to have accepted the ld. CIT(A)’s order on the question of not recording of satisfaction by the AO inasmuch as nothing has been brought to our notice by the ld. DR to demonstrate that the Department has preferred any appeal on this score before the tribunal. The picture which, therefore, emerges is that the Assessing Officer did not record any satisfaction as stipulated in subsection (2) of section 14A and as the sequitur, the disallowance u/s 14A could not have been made - Decided in favour of assessee Deferred revenue expenditure addition - deduction written off during the year - CIT-A following the view taken in earlier years in the assessee’s own case held that the assessee should have claimed deduction at 1/10th of the expenditure for the present year and the next two year - Held that:- CIT(A) followed the view taken by him in the assessee’s own case for two preceding years. There is nothing on record to suggest that such a view has been altered in the further appeal. The assessee’s contention about bringing temporary structure into place during the year warranting full deduction, is not backed by any evidence whatsoever. In the given circumstances, we uphold the view taken by the ld. CIT(A) on this score. This ground is not allowed.
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2017 (11) TMI 1219
Proceedings under section 153A - addition u/s 68 - as per assessee no incriminating material was found during the course of search about the cash credits of which additions have been made - Held that:- As during the course of search, no incriminating material was found in respect of assessment years under appeals so as to make additions of unexplained cash credits under section 153A of the I.T. Act. The A.O. made additions of unexplained cash credits in all the assessment years under appeals without there being recovery of any incriminating material found during the course of search. All the original returns had already been filed prior to the search and the last date of issue of notice under section 143(2) had already expired on the date of search. Therefore, on the date of search on 22nd March, 2010, no assessments were pending for assessment years under appeals. In the facts and circumstances of the case, it is clear that A.O. was not justified in invoking the provisions of Section 153A of the Act against the assessee. Direction under section 150(1) should be issued for taxing this amount under section 148 as submitted by DR? - Held that:- We are afraid to accept this contention of the Ld. D.R. because it is the sole prerogative of the A.O. to initiate re-assessment proceedings after satisfying the conditions of Section 148 and recording the reasons for the same. The jurisdiction of the A.O. cannot be ushered-up in the present proceedings. Since the appeals have already been allowed in favour of the assessee, therefore, what remedy is available to the Revenue for proceeding further against the assessee cannot be raised in the present proceedings. The scope of the proceeding cannot be enlarged to give a different colour to proceed against the assessee. Once assessment orders have been set aside under section 153A of the I.T. Act and additions have been deleted, Revenue is at liberty to take any action as per Law, if so, advised in accordance with Law. Therefore, no direction is required under section 150(1) of the I.T. Act. - Decided against revenue
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2017 (11) TMI 1218
Assessment u/s 153A - proof of incriminating material found in search - Held that:- The financial year in which the return is furnished would end on 31st March, 2012. Therefore, no notice under section 143(2) could be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. In this case, such date would expire on 30th September, 2012. Therefore, on the date of search on 23.11.2012 no assessment was pending against the assessee and assessment had already completed under the Act. Since no incriminating material was found or recovered during the course of search so as to make addition of share application money therefore, the issue is covered in favour of the assessee by the judgment of the jurisdictional High Court in the case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) and Meeta Gutgutia (2017 (5) TMI 1224 - DELHI HIGH COURT ). Therefore, the invocation of Section 153A by the A.O. for assessment year under appeal was without any legal basis as there was no incriminating material found in respect of assessment year under appeal. - Decided in favour of assessee.
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2017 (11) TMI 1217
Disallowance of legal and professional charges - Held that:- So far as amount paid as legal and professional fee to M/s. Luthura & Luthra undisputedly the assessee has filed its submission dated 17.01.2014 along with bills and the assessee has duly explained before the ld. CIT (A) that these legal expenses were incurred to settle a police complaint filed against the Director, Shri Sandeep Murthy by some of its investors against the Director and the company in their official capacity. It is also brought on record by the assessee company that the allegations in the complaints were of criminal breach of trust by one Shri Rabi Singh against Shri Sandeep Murthy and Shri Ram Sriram. When the assessee company has found FIR against Directors of the company, there cannot be any dispute that the Directors were arrayed as accused in their official capacity and these expenses are certainly business expenditure and ld. CIT (A) has rightly and validly allowed the same by deleting the addition. So far as an addition under the head ‘legal and professional expenses’ paid to M/s. Insight Alpha for private phone consultations is concerned, ld. CIT (A) while deleting the same relied upon one consultancy agreement entered into between the assessee company and M/s. Insight Alpha effective from 12.11.2010, recital of the agreement (supra) as reproduced by ld. CIT (A) in para 8.4 of the impugned order is comprehensive enough to prove that the amount has been charged as hourly consulting charges necessary for the business of assessee company as an investment consultancy company. Moreover, assessee company has produced invoice before AO which has been duly examined by the ld. CIT (A) in the light of the agreement (supra). Moreover, when genuineness of these expenses have not been disputed by the AO, we find no illegality or perversity in deletion of addition of ₹ 5,46,000/- by ld. CIT (A). So ground no.1 is determined against the Revenue. Disallowance of entertainment expenses - Held that:- The assessee company produced two invoices, namely, invoice dated 21.12.2010 whereupon guest name is not legible and another invoice dated 24.11.2010 whereupon Function at Dome has been written before the AO. First of all, ld. CIT (A) has not given the date of Annual Day allegedly celebrated by the assessee company nor he has got clarified from the assessee company as to why the two invoices one dated 21.12.2010 and another dated 24.11.2010 have been raised when it is also not explained by the assessee company before the AO as well as ld. CIT (A) if the Annual Day function took placed on 21.12.2010 and 24.11.2010 or two Annual Day functions were organized. At least invoices relied upon by the assessee company were required to be in the name of the assessee company with legible name of the, so both the bills relied upon by the assessee company cannot be connected with the assessee company or its business. - Decided in favour of revenue Disallowance out of travelling expenses - no supporting document or any submission by the assessee company has been filed to substantiate the purpose of these visits - Held that:- Assessee company explained that Shri Ajit who has availed of the air travel services is the representative of Murugun Capital and Shri Ram is the representative of Sherpalo Mauritius LLC from whom the assessee company is charging cost plus 17% and 15% respectively for entire travelling expenses. So when the travelling expenses have been incurred by the assessee company on behalf of the associated company with 17% and 15% markup over and above the total expenditure, for which vouchers as well as email communications have been produced, the ld. CIT(A) has rightly and validly deleted the addition - Decided against the Revenue
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2017 (11) TMI 1216
Interest on PDC - Held that:- It is an admitted fact that the assessee is a part of BPTP Group and similar additions were made in respect of many group entities. Some matters were disposed of by the Tribunal also We upheld the findings of the Ld. CIT (A) and dismiss the grounds of appeals of both assessee and the Ld. CIT (A) on the aspect of interest on PDCs and set aside the issue relating to the payments made in addition to the agreement amount to the file of Ld. AO for verification as to whether the assessee has claimed the payment of as an expenditure while computing its business income. If no deduction is claimed, then the question of any disallowance would not arise. If the deduction is claimed, then the Assessing Officer would work out the disallowance as directed by the CIT(A). Disallowance u/s 40(A)(3) - Held that:- As perused the orders in the group company’s cases and it is held in both M/s IAG Promoters and Developers Pvt. Ltd. and Westland Developers P. Ltd. that when the payments are not claimed as expense no disallowance arises. We, therefore, hold that disallowance u/s 40(A)(3) is not sustainable and the same has to be deleted.
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2017 (11) TMI 1215
Revision u/s 263 - directions issued by the CIT to treat return filed under section 139(1) as invalid and therefore cannot be revised under section 139(5) - Held that:- The assessee have got their accounts audited on 28th May 2012 which is within the time limits specified under section 166 read with section 210 of the Companies Act, 1956 and till that time the tax audit could not have been done. The assessee also filed detailed legal submissions on the validity of the revised return and relied upon various decisions of the High Court and the Tribunal in its submissions. Furthermore, the assessee in its return uploaded on 30th September 2011 had in columns relating to audit information stated that the audit was done on 29th September 2011 when, in fact, it was not so. The assessee has explained the reason why this was done. The reason being unless this column was filled up the return could not have been uploaded which would have resulted into the claim of carry forward of loss being lost. The site of the revenue requiring c-filing did not have the mechanism of uploading the return it a particular column is not filled. This reason has not been controverted by the revenue till today. It was under these circumstances that the assessee was compelled to fill a wrong date which was subsequently rectified in the revised return along with the actual date of audit along with other reasons mentioned by the assessee for revising the return. In the light of these facts it cannot be said that the issue of validity of revised return has not been examined by the AO in the course of the assessment proceedings. The AO had raised a specific query which was followed by a detailed response of the assessee and since same was accepted after due application of mind same did not find place in the assessment order. Therefore in our view the jurisdiction exercised by the CIT on the issue of validity of revised return cannot be upheld. In view of above, the CIT was not justified in exercising jurisdiction under section 263 of the Act on this issue. Goodwill acquired should be apportioned between the appellant and the international affiliates of the appellant - Held that:- The Hon’ble Delhi High Court in the case of Maruti Suzuki [2015 (12) TMI 634 - DELHI HIGH COURT ] while dealing with transfer pricing adjustment on AMP expenses incurred by Indian company has negative the contention that such expenses, in the absence of any understanding with AE empower the revenue to make adjustment. It is also important to note that if there are any transactions between the assessee and its affiliates that would be a subject matter of transfer pricing regulation. In our view, the CIT was not justified in giving a direction for apportionment of goodwill and the said direction is without any material or any basis and therefore the directions given by the CIT on apportionment of goodwill between the assessee company and its affiliates are contrary to law and hence such a finding is quashed. Wrong claim of non-compete fees being allowed as revenue expenditure - Held that:- The issue of non-compete fees was examined by the AO and accepted in the course of the assessment proceedings and therefore the CIT was not justified in exercising jurisdiction oil issue. Furthermore, the AO has accepted one of the possible views and such an action cannot be treated by CIT as erroneous and prejudicial to the interest of the revenue. In this connection we are supported by the decision of the Supreme Court in the case of Malabar Industrial Company Ltd. [2000 (2) TMI 10 - SUPREME Court] and Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] Assessee appeal allowed.
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2017 (11) TMI 1214
Denying registration under section 12AA(1)(b)(ii) read with section 12A - proof of genuineness of the society and charitable purposes - Held that:- The society is established for the purposes of spreading of education in the field of anesthesia. Anesthesia is a special filed for medical science and education in specialized medical field to evaluate the benefit of this research at much higher number of poor patients also and to do research and to develop knowledge on anesthesiologist means to held the large number of patients who undergo treatment in various hospitals. It was argued before us, that charitable purposes include education and said trust is doing work of education by conducting research and development, publishing the journals, books etc. in the field of anesthesiology medical science. Even going by the aims and objectives above reproduced, we are of the view that there is no whisper that assessee trust is not for general public or it is for any special community. It is also evident that this year the receipt of donation is only ₹ 1,25,000/- as on 31-03-2016. According to us, the newly inserted proviso to section 2(15) of the Act will not apply in respect of the first three limbs of section 2(15) of the Act i.e. relief for the poor, education or medical relief. Consequently, where the purpose of the trust or institution is relief for the poor, education or medical relief, it will constitute as charitable purpose even if it incidentally involves for carrying commercial activities. Accordingly, we are of the view that this society requires to register under section 12A of the Act as none of the authorities have doubted the genuineness of the society or there is any clause violated the proviso to section 2(15) - Decided in favour of assessee.
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2017 (11) TMI 1213
Penalty u/s 271(1)(c) - surrendered income - Held that:- AO made the addition merely on the ground that the surrender was not to his satisfaction rather proceeded to estimate the disallowance @ 0.25%. When the assessee company has produced account books before the AO during assessment proceedings, AO was required to compute the income on the basis of documentary evidence and not on the basis of estimation. But the AO proceeded to guesswork the additional income on the basis of some defects in the account books and on the ground that the income offered is not adequate. In the given circumstances, we are of the considered view that there is no question of furnishing of inaccurate particulars to attract the provisions contained u/s 271(1)(c) of the Act. - Decided in favour of assessee. Penalty u/s 271AAA - assessee company has surrendered income u/s 132 (4), paid taxes along with interest which the assessee company has disclosed in profit & loss account under the head ‘other income' - Held that:- AO has not put any specific query to the assessee to further specify the manner in which such income was derived and to substantiate the manner in which such income was derived. Furthermore AO has nowhere recorded any finding in the assessment order that it is undisclosed income of the assessee sufficient to attract the provisions contained u/s 271AAA. Coordinate Bench while dealing with the identical issue in case cited as Neerat Singal vs. ACIT – (2013 (6) TMI 762 - ITAT DELHI) also held that the AO was not justified in imposing penalty u/s 271AAA when authorized officer has not raised any query during course of recording of statement u/s 132 (4) about the manner in which the undisclosed income has been derived and about its substantiation. There is no illegality or perversity in the findings returned by ld. CIT (A) in deleting the penalty imposed u/s 271AAA - Decided in favour of assessee.
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2017 (11) TMI 1212
Benefit of deduction u/s. 80IB(10) - denial of claim in respect of aforesaid row house on the ground that built up area of the said house including terrace is more than 1500 sq. ft. - deduction u/s. 80IB(10) on pro-rata basis in respect of eligible units - Held that:- In the present case the ‘terrace’ which is subject matter of dispute is over car parking and open to the sky. The Co-ordinate Bench in the case of Shri Naresh T. Wadhwani Vs. DCIT [2014 (11) TMI 689 - ITAT PUNE ] has held that the area of terrace is not to be included while computing ‘built up area’. Thus, in view of the facts of the case and the decision referred above, we are of considered view that the area of terrace is not to be included in the total built up area. After excluding the area of terrace the built up area of house in question is less than 1500 sq. ft. Hence, the assessee is eligible for claiming deduction u/s. 80IB(10) in respect of row house as well. Accordingly, the solitary issue raised by the assessee in appeal is allowed. Resultantly, the appeal of assessee is allowed.
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2017 (11) TMI 1211
Capital gain tax - amount received by the assessee in terms of family settlement agreement - amount realized on surrender of occupancy right - Held that:- Admittedly in the case before us the assessee’s father late Mansukhlal M. Parekh was living in the said property since 1972 and the assessee, her brother and sister were also residing in that flat after the demise of her father till the settlement deed was effected. The property is not under any tenancy agreement. Assessee’s father nor the assessee were paying any rent nor any agreement has been entered into for tenancy of the property. The assessee entered into family settlement deed and by way of this family settlement the company sold the property and since assessee was under possession of the property lumpsum amount was paid for surrendering her possessory rights over the property. Therefore, since amount has been received by the assessee as part of family arrangement, in view of the above decisions there would not be any transfer of asset and it does not give rise to liability of capital gains tax. Therefore, in view of what is discussed above we hold that the amount received by the assessee in terms of family settlement agreement cannot be treated on account of transfer of capital asset and cannot be chargeable to tax under the head capital gains. Appeal of the assessee is allowed.
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2017 (11) TMI 1210
Unexplained unsecured loans - Held that:- The assessee has submitted all the evidences including the confirmation of the creditors. This is not a case where the creditors have not given confirmations rather they have duly confirmed to giving loan to the assessee, the loans were received and returned through banking channels. The assessee has also submitted copies of bank accounts. The lender has not deposited cash into bank account. The assessee has duly discharged the onus with regard to identity of the lender, credit worthiness of the party and all supporting evidences as required u/s. 68 of the I.T.Act. - Decided in favour of assessee.
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2017 (11) TMI 1209
Disallowance of write off of rental deposit - Held that:- None of the judgments is helping the assessee and the assessee is not able to establish that the deposit in question has become recoverable in the present year and therefore, we find no reason to interfere in the order of CIT(A). - Decided against assessee.
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2017 (11) TMI 1208
Disallowance of portion of the interest expenditure - Held that:- Since the advances given by the assessee to the two concerns were for the purpose of business of land aggregation for its infrastructure development project in Navi Mumbai, and thus a part of the interest expenditure relatable to such deployment of funds could not be disallowed u/s 36(1)(iii) of the Act. Thus, having regard to the above discussion, the partial interest expenditure disallowed by the lower authorities is not justified, and is hereby directed to be deleted. There is no claim by the bank of recovering any penal interest. In our considered opinion, the plea of the assessee with regard to the disallowance of penal interest is not without merit. Ostensibly, if there is no claim/recovery by the bank of penal interest, the question of any disallowance of the same would not arise. So however, since the said fact involves a factual appreciation, we direct the Assessing Officer to verify as to whether the penal interest has been paid to the bank or not. If it is found that no penal interest of ₹ 5,40,00,000/- has been paid to the bank, no disallowance would be warranted and the entire expenditure of interest would be allowable u/s 36(1)(iii) of the Act in view of our aforesaid discussion. If his finding is to the contrary, the Assessing Officer shall be free to decide the allowability as per law, after hearing the assessee. Therefore, for this limited purpose, the matter is remanded back to the file of the Assessing Officer. Since we have held that the interest expenditure is allowable, as a consequence, the expenditure incurred by the assessee in respect of loan processing charges deserves to be allowed Disallowance sustained u/s 14A - Held that:- Factually, the investments during the year which have yielded the exempt income are very much the same, which were held by the assessee in the earlier assessment year. Therefore, once no interest expenditure has been found to be relatable to such investments in the past, then, in the instant year it is inconceivable as to how certain interest expenditure can be attributable to the same. Even otherwise, we find that the interest expenditure debited by the assessee in its Profit & Loss Account is majorly on account of loan raised from Central Bank of India, which we have already discussed in the earlier paras and the balance of the expenditure on car loan and on late payment of TDS. None of the aforesaid elements of interest expenditure can be said to be relatable to the exempt income. It is quite well-settled that interest expenditure which are directly attributable to the taxable income cannot form a part of the interest expenditure which is considered for disallowance as per Rule 8D(2)(ii) of the Rules. Considering the entirety of facts and circumstances of the case, in our view, no disallowance in terms of Rule 8D(2)(ii) of the Rules is merited out of interest expenditure. Thus, on this aspect, assessee succeeds. Disallowance out of overheads/administrative expenditure as per Rule 8D(2)(iii) the only plea of the assessee is that the investments which have not yielded the exempt income be excluded while computing the disallowance. The said plea of the assessee is supported by the judgement of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. Commissioner of Income Tax (2015 (9) TMI 238 - DELHI HIGH COURT). On this aspect, we direct the Assessing Officer to recompute the disallowance as per Rule 8D(2)(iii) of the Rules after excluding the investments which have not yielded the exempt income during the year.
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2017 (11) TMI 1207
Addition of cash deposits in the bank account while applying the peak credit theory - Held that:- Though the assessing officer made the addition of cash deposits in the bank account while applying the peak credit theory, the Ld.CIT(A) has neither conducted the necessary enquiry nor given any opportunity to the assessing officer to find out the true and correct nature of the receipts. The conduct of the account shows that withdrawals were made after substantial gap of credit and in between the assessee has withdrawn small amounts also on certain occasions. The account shows that the amounts withdrawn are not available to the assessee for redeposit. The assessee has withdrawn the amounts in quick succession which shows that the amounts are not available to the assessee for making any deposits of the same. Therefore, it is necessary to ascertain the true nature of the receipts, names of the persons from whom the advances were received and names and addresses of the persons to whom the advances were paid. In the absence of any such information, the entire deposits required to be brought to tax since the assessee neither established that it has carried on the business nor established the source of the credit. the assessee has neither established the fact that he is carrying on business and the sources of the credit. Though the assessee had offered the income on estimation basis ranging from 5% to 8% on turnover, the Ld.CIT(A) has not considered the same at the time of disposing the appeal. During the appeal hearing also the assessee could not furnish any details with regard to the sources of deposit and the destination of payment. No evidence was filed by the assessee to establish that he is carrying on the business. Therefore, we are of the considered opinion that the matter should be remitted back to the file of the assessing officer with a direction to ascertain the true nature of the receipts and payments - Decided in favour of revenue for statistical purposes. Claim of deduction u/s 54F - as per AO assessee had acquired the commercial property - Held that:- As per the development agreement, the assessee has acquired the residential flat but given it to NRI academy for running the school. The assessing officer was of the view that the assessee had acquired the commercial property but not the residential property and using it for commercial purpose. It is not ascertainable from the information whether the flat in question was residential or not and require further verification at the level of assessing officer. Therefore we remit the matter back to the file of the assessing officer to make further verifications of the impugned property and give finding whether the property given for rent to the school is residential property with all amenities like kitchen etc.. or not and decide the issue afresh on merits. The appeal of the revenue is allowed for statistical purposes. Unexplained cash balance - Disallowance of opening cash balance - Held that:- Though the assessee stated to have opening cash balance of ₹ 14,90,000/- there was no evidence to establish the cash balance available with the assessee. As rightly stated by the CIT(A), the assessee has not furnished the return of income for the earlier years and in the absence of any evidence to show that the cash balance was available and suffered to tax the same required to be brought to tax. Mere claim of availability of sufficient opening balance without supporting evidence is not acceptable. Ld.CIT(A) relied on the decision of Hon’ble Madras High Court in the case of Sri C.Pakirisamy Vs. ACIT [2008 (12) TMI 190 - MADRAS HIGH COURT 3] and confirmed the addition. During the appeal proceedings before us also, the assessee has not placed any evidence to show that there was sufficient cash balance available with the assessee. - Decided against assessee.
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2017 (11) TMI 1206
Benefit of deduction u/s.54B - alternate claim u/s.54F - Whether assessees are the owners? - Held that:- Assessees purchased the land at Survey no 75/1 in the year 2000 along with his wife with 50% share in it. Shri Kuldeep Singh was the previous owner of these lands. In the year 2006, Assessee and his wife sold the said land which gave rise to the impugned capital gains. These are undisputed facts. Therefore, the ownership of the property is undisputed and the Assessee along with his wife are the owners of it. Of course, the entries in the revenue’s records, which shows Shri Kuldeep Singh as owner or cultivator, created unnecessary suspicion in the mind of the AO, who took an adverse view in the matter and against the assessees. These observations demonstrate, how poorly and casually, the revenue’s records are maintained by the revenue’s authorities of the State Government. Otherwise, we perused the title deeds of land at S.No.75/1 and the correction deed and found the name of the assessees appeared in the title deeds. Therefore, the ownership of the lands vests with assessee and his wife only. Whether assessees are the cultivators? - We have already discussed that the 7/12 extracts are the creation of Revenue Officers/Talati etc., and the assessees have no role in maintenance of the records. Considering the fact lands at S.No. 75/1 is the possession of the Assessee since the year 2000 along with the undisputed fact that the assessees never leased the lands to Shri Kuldeep Singh, we are of the opinion that all is not well with records maintained by the MRO/Talati etc., It is likely that the Shri Kuldeep Singh, being the previous owner-cum-cultivator on records, continues to be shown by the Revenue authorities as the cultivator erroneously even after he sold the lands to the assessees. Otherwise, it is not possible that Shri Kuldeepsingh cultivated the land of the assessee legally. Thus, from this point of view, the said records of the revenue are not fool-proof so far as the 7/12 extracts of lands at S.No. 75/1, are concerned. Therefore, it is not possible that the Assessees are not the cultivators at the relevant point of time and, therefore, Shri Kuldeep Singh is the cultivator in the said lands. Hence, we dismiss the conclusions drawn by the AO on this issue and agree with the CIT(A) on this issue. As such, there was action u/s.132 of the Act on the assessees and it did not result in any incriminating material against the assessees on this claim u/s.54B of the Act. Whether there was agricultural activity on the said land in the 2 A.Ys prior to the date of transfer of lands in 2006? - The original 7/12 extract gathered by the AO indicate ‘barrenness’ of the lands at S.No.75/1 and therefore, according to AO, the assessees would not have grown crops in A.Yrs 2004-05 and 2005-06. However, assessees filed revised 7/12 extract, which were issued by the revenue authorities after incorporating corrections and on complying with the due process of rules relating to rectification. This revised one indicates growing of dry crops such as Maize, Bajra etc., in the AYs 2004-05 and 2005-06. Of course, the revenue picks up holes in the said 7/12 extracts too by stating that there are some problems with the process of drawing panchanama, panchas etc. AO has exceeded his jurisdiction in suspecting the ‘revised extract’ which has the basis of the records maintained by the State Govt. It is on record that AO failed to continue to investigate the matter by taking it up with the District Collector to bring the issue to the logical conclusion. Therefore, while rejecting the claim of assessees, the reliance of the AO entirely on the said 7/12 extracts, which suffer from patent imperfections. In our view, the AO has unfairly denied the benefits of deduction u/s 54B of the Act and the same is not sustainable Focusing on the purchase of Gut No.73, it is the legal requirement that the assessee must purchase the Gut No.73. Both assessees, with 50% share, paid the total consideration of ₹ 1,54,75,000/- and obtained the possession of the land at Gut No.73. From the legal point of view, the assessees purchased the said lands. Act of registration and the furnishing of title deeds is a matter of documentation and it is matter of time. Therefore, the assessee should be held as purchased the land at Gut No.73 for the purpose of section 54B of the Act. On this reasoning, Ld.CIT(A) allowed the arguments of the assessees It is requirement of the law of section 54B of the Act that the Assessees should have utilized the gains for purchase of any other lands for being used for agricultural purposes. On all these conditions, the CIT(A) examined and held that the assessees met all the conditions legally. In our view, the order of CIT(A) constitutes a possible view and the same constitutes a fair and reasonable order and therefore we affirm the same.- Decided against revenue Allowability of alternate claim u/s.54F - The claim is made as an alternative ground to claim u/s.54B of the Act. However, AO dismissed the same on the ground of Assessee’s failure to discharge onus with respect to furnishing of evidences in support of investment of gains in construction of the residential house. Assessee filed a certificate from Architect only. During the assessment proceedings, AO rejected the said certificate of the Architect cum builder of the said house. However, CIT(A) allowed the claim of the assessee as per his discussion in page 10 of his order. Before us, the AR relied on the respective orders of the AO or the CIT(A) as the case may be. On hearing the parties, we find the adjudication of this issue becomes a necessity only when the relief under the provisions relating to section 54B of the Act, is denied. Therefore, considering the relief granted by us for the detailed reasons given in the paragraphs above, we are of the opinion that the adjudication this ground constitute an academic exercise only. Therefore, we proceed to dismiss the same as an academic Agricultural income allowable to the assessee - Held that:- AO examined the Gut wise details and also the Agricultural Income on the strength of the receipts available with the AO. He, accordingly arrived at a scientific output of ₹ 4,46,358/- as net Agricultural Income out of his exercise and the balance of (Rs.9,05,000/- - ₹ 4,46,358/-) is added as income of the assessee. The order of the AO is more analytical and credible on this issue and it has a basis of documents in the form of agricultural receipts. Therefore, we are of the view that the orders of the AO in both the cases on this issue is fair and reasonable. To that extent, the orders of the CIT(A) stand reversed on this issue of Agricultural income for the reasons given above.
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2017 (11) TMI 1205
Eligibility of deduction 10A - Held that:- Identical issue came before this hon'ble Tribunal for the assessment years 2008-09 and 2009-10 in the own case of the assessee the assessee there is no dispute that it is a call centre engaged in managing accounts receivable and recovery. The calls are made by the "predictive dialer software" and after the call the inputs of the relevant information obtained from the data of the US financial institution is made in real time system which is transmitted to the customer outside India electronically using the internet system. In view of the explanation of the assessee, it is evident that customised electronic data is being transmitted outside India electronically. Assessing Officer has also mentioned that the assessee is using the internet lines for telephone calls to its international customer rather than traditional telephone lines. This observation also supports that the activities of the assessee are in the nature of call centre and therefore in our considered opinion, the assessee is entitled for deduction under section 10A of the Act. In prior assessment years, the Assessing Officer has accepted the claim of the assessee and deductions have been allowed. In the year under consideration, there is no change in the business activity of the assessee, thus, in our view, the principle of consistency also demand that this deduction should be allowed to the assessee.
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2017 (11) TMI 1204
Addition u/s 69C on account of bogus purchases - profit estimation - Held that:- There is no basis on the part of the Ld. CIT(A) of estimating the profit rate by adopting the gross profit rate @ 7.86% in the case of a transaction in which the genuineness is not proved by the assessee. In view of the above, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment in the light of our observation hereinbefore after giving opportunity to the assessee to cross-examine the concerned parties. We also direct the assessee to file the relevant documents/evidence before the AO. Needless to say the AO would give reasonable opportunity of being heard to the assessee before finalizing the assessment order.In the result the appeal is allowed for statistical purposes.
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2017 (11) TMI 1203
Block assessment - Validity of proceeding under section 158BD - no satisfaction recorded in the case of the searched person by AO before issue of notice - stages of satisfaction recording - Held that:- In the case of Calcutta Knitwears (2014 (4) TMI 33 - SUPREME COURT ) the hon'ble Supreme Court has held that recording of a satisfaction note is a pre-requisite and such satisfaction note must be prepared by the Assessing Officer of the searched person before he transmits the record to the other Assessing Officer who has jurisdiction over the other person under section 158BD of the Act. However, as held by the hon'ble Supreme Court, the satisfaction note in the case of the searched person can be prepared at three stages ; firstly, at the time of initiation of proceedings against the searched person under section 158BC of the Act ; secondly, in the course of assessment proceedings under section 158BC of the Act, and thirdly, immediately after the assessment proceedings are completed under section 158BC of the Act in the case of the searched person. In the facts of the present case, undisputedly, the Assessing Officer in the course of assessment proceedings of the searched person viz Ms. Hoor C. Jhurani, has recorded a satisfaction for initiation of proceedings under section 158BD of the Act in case of the assessee. It is also evident from the facts on record, before issuance of notice under section 158BD of the Act to the assessee, the Assessing Officer has recorded satisfaction under the said provision. Notably, assessment proceedings of both persons were continuing simultaneously before the Assessing Officer. Therefore the conditions of section 158BD stands satisfied. Therefore, the additional ground No. 1, raised by the assessee must fail Addition made on the basis of the credit entries in the bank account - Held that:- When the Assessing Officer is making addition only on the basis of a bank account then both credit and debit entries have to be considered and the assessee deserves an opportunity to explain debit and credit entries. It appears from the order of the learned Commissioner (Appeals) that the assessee has contended that the debit entries appearing in the bank account represent expenditures incurred by the assessee. In our considered opinion, the assessee deserves an opportunity to explain both credit and debit entries in the bank account with supporting evidence. In this context, we must observe, if the Assessing Officer relies on any seized/ adverse material he must confront them to the assessee and provide copies of the same if already not provided to the assessee. The Assessing Officer must also afford a reasonable opportunity of being heard to the assessee in the matter. Additional ground No. 2, is allowed for statistical purposes.
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2017 (11) TMI 1202
TDS u/s 195 - non deduction tds on professional charges to one, M/s. Proskauer Rose LLP, USA, stated to be a law firm - payment admittedly is for representing the assessee (and one or more of its US affiliates, referred to collectively as the "clients") for the purpose of bidding on and potentially acquiring the business and assets of Qual Teq, Inc. - Held that:- Without doubt, the services rendered by the payee firm are in the nature of professional services covered under article 15. The income arising shall therefore be liable to be subject to tax only in the Contracting State, i.e., of which the payee, rendering services, is a resident, USA, in the instant case. The exceptions, being with regard to the 90 day stay in the other Contracting State (India) as well as a fixed base thereat, are clearly not applicable in the present case. As such, article 15 shall operate to exclude withholding tax, even where, on account of the asset/s (to be) acquired being brought to India, makes the relevant income as accruing or arising in India. As such, either way, no tax is deductible under section 195 on the impugned payment, so that the same could not be disallowed for non- deduction thereof under section 40(a)(i) of the Act. - Decided in favour of assessee.
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2017 (11) TMI 1201
Unexplained cash deposits in the bank account - Held that:- Where any sum is found credited in the books maintained by the assessee, the primary requirements, which should be satisfied cumulatively by the assessee in such cases is identification of the person, creditworthiness of that person and the genuineness of the transaction which has not been satisfied in the instant case. The explanation offered and material submitted by the assessee in support of its explanation is not wholesome, credible and verifiable. These requirements have been examined in the instant case having regard to the human probabilities and normal course of human conduct and we find that the explanation offered by the assessee at this stage does not passes this muster and the initial onus cast on the assessee has not been satisfied. In the instant case, the Assessing Officer has also carried out necessary verification and has rightly brought to tax the unexplained cash deposits found deposited in the bank account. We have also gone through the various decisions cited by the learned authorised representative and we find that the same have been rendered in the peculiar facts and are thus distinguishable and does not support the case of the assessee. - Decided against assessee. Unexplained cheques issued - Held that:- The learned Commissioner of Income-tax (Appeals) has given a finding that Shravan Kumar's bank account itself was opened on April 6, 2012 and therefore he could not have given cheques to the appellant in 2008. In response, the assessee has submitted that these cheques were made available and not issued by Shri Shravan Kumar. It was further contended that since Shravan Kumar was onward selling the land to other persons, he obtained two cheques of the above sums from those parties directly in the name of the appellant, so that his obligation of getting the cheques cleared in favour of sellers of land could be fulfilled. In our view, these are merely contentions and not supported by any credible evidence that cheques were issued by ultimate buyers directly in favour of the assessee. Further, in view of the detailed reasoning given in respect of ground No. 1 above, we affirm the order of the learned Commissioner of Income-tax (Appeals) to the extent of ₹ 15 lakhs. Regarding ₹ 1,10,491 which is claimed to be brokerage income and already offered in the return of income, the matter is set aside to the file of the Assessing Officer to examine the same and where it is found to be correct, allow the necessary relief to the assessee as the amount already offered cannot be brought to tax again. The ground of appeal of the assessee is accordingly disposed of. Capital gain computation - purchase through power of attorney - Held that:- Instead of entire sale consideration, only gain on sale of land should be brought to tax in the hands of the assessee as purchase through power of attorney has been claimed to have been executed on May 19, 2007 falling in the assessment year 2008-09. The matter is accordingly set aside to the file of the Assessing Officer for determination of quantum of capital gains which can be brought to tax as per law. The ground of the assessee is disposed of accordingly. Addition of gift received - Held that:- As per section 56(vii)(a), a gift of money without consideration from the wife's brother cannot be brought to tax as income in the hands of the assessee and an affidavit in this regard has been filed during the course of assessment proceedings. However, the contents of the confirmation/affidavit are not on record which can help determine the creditworthiness and genuineness of the transaction by way of gift as claimed. We accordingly confirm the order of the learned Commissioner of Income-tax (Appeals). At the same time, on a perusal of the assessment order, we find that there is no separate addition made by the Assessing Officer and the amount of ₹ 2 lakhs is part of unexplained cash deposit of ₹ 63,38,820 which has already been confirmed as discussed in ground No. 1 supra. In the light of the same, there would not be any separate addition on this account.
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2017 (11) TMI 1200
Computation of long-term capital gain earned - Departmental Valuation Officer did not give proper opportunity to the assessee before giving his report and the grievance in this regard is projected in the additional grounds of appeal raised before the Tribunal - conflicting decisions on the issue - Held that:- As decided in the case of Sundeep Kumar Bafna v. State of Maharashtra [2015 (8) TMI 724 - SUPREME COURT] wherein the hon'ble Supreme Court took the view that a decision or judgment can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co- equal or larger Bench and when High Courts encounter two or more mutually irreconcilable decisions of the Supreme Court cited at the Bar, the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam. The reference made in the present case to the Departmental Valuation Officer by the Assessing Officer has to be regarded as invalid. We therefore hold that reference by the Assessing Officer to the Departmental Valuation Officer under section 55A for valuation of fair market value of the property as on April 1, 1981 is not valid for the reason that the Assessing Officer was of the view that the fair market value declared by the assessee as per the Government registered valuer's report was more than the fair market value whereas in law the Assessing Officer could make a reference only when he is of the opinion that the value so claimed is less than the fair market value as on April 1, 1981. Since determination of the fair market value as on 1st April, 1981 was based on the report of the Departmental Valuation Officer, the same is held invalid. Consequently, estimation of the fair market value of the property as on 1st April, 1981 as made by the assessee is directed to be accepted. Thus the reference to the Departmental Valuation Officer is invalid and hence the long-term capital gain computed by the assessee has to be accepted - Decided in favour of assessee. Retrospectivity of the second proviso to Section 40(a) (ia) - TDS u/s 194H - sum in question paid to the other clubs - disallowance can be made under section 40(a)(ia) for non deduction on TDS - Held that:- considered the submissions of the learned counsel for the assessee and the learned Departmental representative and are of the view that on both the aspects pleaded by the learned counsel for the assessee, the assessee did not have an opportunity of taking this plea before the Revenue authorities. In the interest of justice we deem it fit and proper to set aside the order of the Commissioner of Income-tax (Appeals) on this issue and remand the issue for fresh consideration on two aspects pleaded by the learned counsel for the assessee before us. As per the second proviso to section 40(a)(ia) of the Act read with the proviso to section 201(1) of the Act inserted by the Finance Act, 2012 with effect from April 1, 2013 and July 1, 2012 respectively, if it is established that the person to whom made the payments made are disallowed under section 40(a)(ia) of the Act has furnished return of income under section 139 of the Act and has also taken into account the sum received from the assessee in computing in such return of income and if he had paid tax on the income declared by him on such income and furnished the certificate to the above effect to the accountant in Form No. 26A, then the assessee cannot be deemed to be an assessee in default under section 201(1) of the Act and no disallowance under section 40(a)(ia) of the Act should be made. As where two views are possible, the view in favour of the assessee has to be preferred. We therefore adopt the view taken by the hon'ble Delhi High Court in the case of Ansal Land Mark Township (2015 (9) TMI 79 - DELHI HIGH COURT ) which is favourable to the assessee. Accordingly the appeal of the Revenue is treated as allowed for statistical purposes.
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2017 (11) TMI 1199
Applicability of section 35E - compensation paid for usage of land for the purpose of mining to the land owner - assessee-company entered into a lease agreement with the Government of Rajasthan for the purpose of mining in the year 2000 - Whether the provisions of section 37(1) would then get excluded as the latter covers expenditure other than expenditure described in sections 30 to 36 of the Act? - Held that:- For applicability of section 35E, both the nature and period of incurrence of the expenditure are relevant. In the instant case, it is not in dispute that the year under consideration is not the year when the commercial production has started. The assessee has entered into lease agreement with the Government of Rajasthan way back in the year 2000 and thereafter, it has started commercial production and reported revenues to tax. In view of the same, given that the expenditure under consideration has been incurred much after the start of the commercial production, one of the conditions for invoking section 35E are not satisfied. We therefore need not examine the second condition regarding nature of the expenditure as the same would be purely academic in nature. The provisions of section 35E are therefore not applicable in the instant case. Therefore, the applicability of provisions of section 37(1) cannot be excluded merely on account of the fact that the expenditure is covered under section 35E of the Act. Given that the piece of land falls within the mining area in respect of which the assessee has an existing right to carry on its mining operations and the fact that the assessee wishes to carry on the mining area in that area, the assessee was required to pay compensation to the land owner so that the latter does not obstruct or challenge the carrying of the mining activity underneath the surface of land which belongs to him. The payment is for the purposes of removing the disability or obstruction and to facilitate the carrying on its business. No fresh rights have been acquired by the assessee by virtue of paying the said compensation. The assessee was already having a right to carry on the mining operations. The fact that land stand mutated in the name of the Government of Rajasthan post-surrender by Shri Ranga also shows that the land or the surface rights therein have not being acquired by the assessee. In light of above discussions and respectfully following the decision of the hon'ble Supreme Court in case of Bikaner Gypsums Ltd. [1990 (10) TMI 2 - SUPREME Court] the assessee deserve to succeed in the instant case. The Assessing Officer is therefore directed to allow the claim of deduction of ₹ 35,00,000 under section 37(1) of the Act. - Decided in favour of assessee.
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2017 (11) TMI 1198
Deduction under section 80-IA - Non serving the notice to the Assessing Officer as required by the provision of sub-sections (1) and (2) of section 250, thus denial of natural justice - Held that:- The claim of the assessee for deduction under section 80-IA was allowed by the CIT(Appeals) initially in the assessment year 2006-07 without serving the notice to the Assessing Officer as required by the provision of sub-sections (1) and (2) of section 250 and there was thus a denial of natural justice to the Revenue as found by the Tribunal. The Tribunal accordingly held that the order passed by the Assessing Officer and the learned Commissioner of Income-tax (Appeals) for assessment year 2006-07 giving relief to the assessee on the issue of deduction under section 80-IA was in violation of the principles of natural justice and the matter was accordingly set aside by the Tribunal to the learned Commissioner of Income-tax (Appeals) with a direction to give the Assessing Officer proper and sufficient opportunity of being heard and to decide the issue afresh in accordance with law. Since the order passed by the learned Commissioner of Income-tax (Appeals) for the assessment year 2006-07 was followed by him to give relief to the assessee on the issue of deduction under section 80-IA for the assessment years 2004-05, 2005-06, 2007-08 and 2008-09, the orders of the learned Commissioner of Income- tax (Appeals) for the said years were also set aside by the Tribunal with a direction to the learned Commissioner of Income-tax (Appeals) to decide the matter afresh after deciding the appeal of the assessee for the assessment year 2006-07. When the opportunity given to him by the learned Commissioner of Income-tax (Appeals) in the second round as per the direction of the Tribunal was availed of by the Assessing Officer by submitting a remand report putting forth the case of the Revenue on the issue and the rejoinder was also filed by the assessee in response to the said remand report, we are of the view that the action of the learned Commissioner of Income-tax (Appeals) in allowing the claim of the assessee for deduction under section 80-IA by simply relying on the order of the learned Commissioner of Income-tax (Appeals) dated October 30, 2009 passed by his predecessor in the first round, which was set aside by the Tribunal and without applying his mind to the issues raised by the Assessing Officer in the remand report and without making any discussion whatsoever thereon is totally untenable as the same has not only ignored the clear direction given by the Tribunal but has also defeated the very purpose for which the matter was remitted back to the Tribunal by the learned Commissioner of Income-tax (Appeals). We, therefore, set aside the impugned orders of the learned Commissioner of Income-tax (Appeals) for the assessment years 2004-05 to 2008-09 as well as that of 2009-10 and remit the matter back to the learned Commissioner of Income-tax (Appeals) for deciding the same afresh Penalty for late safety arrangement - allowable business expenditure - Held that:- The penalty for late safety arrangement imposed on the assessee is not an expenditure incurred by the assessee for any purpose, which is an offence and which is prohibited by law and the same not being covered by Explanation 1 to section 37, we find no infirmity in the impugned order of the learned Commissioner of Income-tax (Appeals) allowing the same as business expenditure of the assessee. - Decided in favour of assessee.
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2017 (11) TMI 1197
Addition of bogus purchases - profit element embedded in these purchase transactions - Held that:- We are of the considered opinion that there could be no sale without purchases. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. On the other hand, the assessee could not produce confirmations from the alleged bogus suppliers and further notices sent u/s 133(6) were returned back undelivered in both the cases. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against bogus purchases. We estimate the same @5% since the goods in question were subjected to VAT rate of 1%. Accordingly, we sustain the addition to the extent of 5% of bogus purchases of ₹ 47,45,081/- which comes to ₹ 2,37,254/-. - Decided partly in favour of revenue
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2017 (11) TMI 1196
TDS u/s 194A - interest payment was made to the bank - non deduction of tds - Held that:- In the assessee's case, as on the date of payment there was no loan out standing against the assessee in Corporation Bank and Bank of India. The term loans were outstanding in the name of M/s. Uniply Industries Ltd., and the assessee has made the payments in either to the bank directly to M/s. Uniply Industries Ltd., towards the term loan installments of the bank loans which was inclusive of interest. Since the bank loan was not given to the assessee and no loan was outstanding against the assessee, the asses see is not covered by the exception in section 194A and the same is not tenable. Payment to the bank was a reimbursement of bank interest in which case also the provisions of TDS 194A is not applicable - Held that:- Since the assessee has taken the wind mills from M/s. Uniply Industries Ltd., it is obligation on the part of the assessee to make the payments since the ownership vests with the assessee-company by the memorandum of understanding. The SEPC has entered into the memorandum of understanding dated July 10, 2008 with M/s. Uniply Industries Ltd. for purchase of wind mills on behalf of its associates concern M/s. Clarion Wind Farm Pvt. Ltd. Though the memorandum of understanding entered with M/s. SEPCL and M/s. Uniply Industries Ltd., there were no purchase agreements documents between SEPC/Uniply Industries and the assessee-company. The assessee has not submitted the documents related to the registration of the wind mills in the name of the assessee-company. For a query from the Bench, the learned authorised representative accepted that the sale of wind mills, attracts sales tax but no sales tax assessment or payment details have been furnished by the assessee. No evidence has been furnished with regard to not claiming the interest by M/s. Uniply. These issues were not verified with the Assessing Officer. Unless the assessee establishes that the assessee has purchased the wind mills from M/s. Uniply Industries Ltd. and the documentation relating to transfer of property to the assessee have been completed and registered before the end of the financial year, the question reimbursement of expenses and the interest expenditure does not arise. Therefore, we set aside the orders of the lower authorities and remit the matter back to the file of the Assessing Officer to verify the facts
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2017 (11) TMI 1195
Penalty under section 271(1)(c) - voluntary disclosure in good faith to buy piece and avoid litigation - Held that:- In the instant case, in the course of search which has been initiated under section 132 on September 30, 2010 the assessee has admitted and offered to tax ₹ 25,00,000 for the financial year 2009-10. The said admission is based on the seized document identified as AS-1 page 5 found in the course of search conducted against Shri D. D. Modi on August 24, 2009 wherein "25,000 Govind Ji Lashkari" was noted. Therefore, the assessee is found to be the owner of income of ₹ 25 lakhs based on the said entry in the documents so seized and he claims that such entry represents his income for the financial year 2009-10. Further, the financial year 2009-10 has ended on March 31, 2010 much before the date of search which happened on September 30, 2010. In the return of income furnished under section 139(1) on July 31, 2010 for the such financial year 2009-10, such income has not been disclosed. Such income has been disclosed subsequently in the revised return filed under section 139(5) on December 27, 2010 and thereafter, in the return filed pursuance to issuance of notice under 153A on June 21, 2011. No specific arguments have been taken by the learned authorised representative to dispute the applicability of Explanation 5A in the instant case. In light of these undisputed facts, the provisions of Explanation 5A are clearly attracted in the instant case. We are unable to subscribe to the view that in the instant case since there was voluntary disclosure in good faith to buy piece and avoid litigation, the same should not be a basis for levy of penalty as subscribing to such a view would make Explanation 5A otiose which has been specifically invoked in the instant case. Whether for the purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessment made under section 153A, the original return of income filed under section 139 cannot be considered? - Held that:- The said issue is no more rest integra. Considering the non obstante clause under section 153A which excludes the application of section 139, the return filed pursuant to notice under section 153A takes the place of the original return for the purposes of all the provisions of the Act including levy of penalty under section 271(1)(c) of the Act. In the instant case, there is no dispute in this regard as the Assessing Officer has not compared the income returned under section 139(1) and income returned under section 153A. Even the learned Commissioner of Income-tax (Appeals) has accepted the same where he states that the provisions of sections 153A, 153B and 153C are a complete code for assessment wherein the search and seizure has been initiated after May 31, 2003 and complete detachment of assessment proceedings under section 143 or 147 from search proceedings under section 153A of the Act. The said contention therefore does not support the case of the assessee. In the instant case, it is no doubt true that the returned income under section 153A has been accepted (except for an amount of ₹ 1,97,178) and assessed as such by the Assessing Officer. What is how ever relevant to examine is the difference between the amount of income assessed and amount of income in respect of which particulars have been deemed to have been concealed invoking the provisions of Explanation 5A. In the instant case, the particulars which have been deemed to have been concealed amounts to ₹ 25 lakhs and on such amount, the penalty has been rightly levied by the Assessing Officer. Therefore, this contention of the learned authorised representative does not support the assessee. Coming to the levy of penalty on the addition of ₹ 1,97,178 is concerned, we find that the Assessing Officer has applied the same analogy as applied in the case of surrender of ₹ 25 lakhs and invoked Explanation 5A to levy the penalty. We are of the view that the addition is based on purely estimated basis where the Assessing Officer has worked out interest income on the said loan amount of ₹ 25 lakhs advanced to Shri D. D. Modi, and there is no material to support either the charging of interest or the rate at which such interest has been charged which has been found during the course of search. In the result, it cannot be said to be a case of concealment of income and the penalty to this extent stand deleted. - Decided partly in favour of assessee.
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2017 (11) TMI 1194
Eligibility for deduction u/s.80IC - whether the assessee is carrying on any manufacturing activity at Dehradun unit? - Held that:- The expenses debited in the Profit & Loss A/c which are re-produced for the AY 2010-11 and 2011-12 clearly indicates that no substantial manufacturing activity was carried out by the assessee from the Dehradun unit. Out of the total expenses incurred on power ₹ 28,50,372/- the Chennai unit has accounted for a sum of ₹ 28,04,127/- and Dehradun unit is ₹ 46,245/- which clearly shows no manufacturing activity is being done at Dehradun unit. Similarly other production expenses accounted for in Dehradun unit were meager or nominal compared to Chennai unit, though the assessee is declaring huge sales from the Dehardun unit and compared to Chennai unit. Therefore we are of the considered opinion that the assessee is not carrying on any manufacturing activity in Dehradun Unit and the Hon’ble ITAT’s Order in the assessee’s own case for the AYs 2007-08 & 2008-09 is squarely applicable. Since we do not find any difference in the facts of the case we hold that the assessee is not carrying on substantial manufacturing activity in Dehradun unit and not entitled for deduction u/s.80IC and uphold the orders of the Ld.CIT(A). - Decided against assessee.
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2017 (11) TMI 1164
Levy of Penalty u/s 271(1)(c) - assessing the long term capital gains on sale of landed property - invalid notice - non-striking of the irrelevant column - Held that:- From the notice issued by the AO, it is observed that the assessing officer had issued the notice for concealment of income or for furnishing of inaccurate particulars. As per the notice, the assessing officer was not sure of which limb of the offence he sought the explanation from the assessee, whether it was for the concealment of income or for furnishing of inaccurate particulars. Unless the notice issued u/s 271(1)(c) is valid the penalty order cannot be held to be valid. The assessing officer did not strike off the irrelevant column in the notice and made known the assessee whether the penalty was initiated for the concealment of income or for furnishing the inaccurate particulars. In the assessment order also the AO simply recorded that the penalty proceedings u/s 271(1)(c) are initiated separately. Neither in the assessment order nor in the penalty notice, the assessing officer has put the assessee on notice for which offence, the penalty u/s 271 was initiated - Decided in favour of assessee.
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Customs
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2017 (11) TMI 1193
Revocation of CHA License - the decision in the case of Commissioner of Customs Versus M/s Naresh Kumar Meena [2017 (11) TMI 1159 - RAJASTHAN HIGH COURT] contested, where it was held that The view taken by the Tribunal is required to be reversed in view of the licence which was granted by the competent authority to particular person with a particular purpose to be utilized by the same in sub-delegation to any person is required to be deprecated - Held that: - Permission to bring on record additional documents is granted - issue notice - In the meantime, there shall be stay of the order of the High Court as held in the above mentioned case.
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2017 (11) TMI 1192
Benefit of N/N. 25/99-Cus dated 28.02.99 - case of Revenue is that the imported plates were not parts of switches and units were not entitled for the said exemption - whether or not the show cause notice and an adjudication proceedings are valid on the question of jurisdiction as contested by the appellant? - Held that: - The present proceedings are for the period preceding the period covered by the show cause notice issued by the DRI. This show cause notice dated 13.12.2013 was issued to cover the period from 16.06.2006 to 13.11.2007, which is well beyond 5 years period that could not be covered under a demand invoking Section 28. It would appear that two separate proceedings were initiated against the appellant, one under Section 28 for the permissible period of 5 years and another subsequent one invoking Rule 8 for the period beyond 5 years on the ground that Rule 8 did not provide for any time limit - such dual approach by the Revenue is not legally sustainable. It is apparent and clear that show cause notice issued by the DRI correctly invoked the jurisdiction of the proper Customs Authority in charge of assessment to apply the provisions of Section 28 of the Act. It is not open to the Revenue to resort to Rule 8 to demand and recover customs duty for earlier period, beyond five years. The demand proceedings in the present case is not under Section 28 of the Customs Act. This is under Rule 8 of 1996 Rules. In respect of this appellant, a five year demand on the very same issue has been issued invoking Section 28. The notice was made answerable to the jurisdictional customs officer at the port of import. In such situtation, we note that another proceedings, for earlier period, cannot be initiated invoking Rule 8 by the central excise officer. In the present proceedings, the central excise officer did not exercise his powers, if any, under Section 28 of the Customs Act. Such powers were admittedly available with the Assessing Officer of Customs at the port of import. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1191
ADD - fixation of separate rate of AD duty - Linear Alkyl Benzene (LAB) - import from China PR, Iran and Qatar - The main thrust of the argument by these appellants is that the DA did not obtain complete details of full value chain in transactions. The investigation is not proper as individual dumping margin could not have been arrived at in the absence of full transaction details and consequently the weighted average could not be arrived at properly. Held that: - where the trader/exporter fails to provide requisite sales information and if the sales by such trader/exporter is insignificant when compared to cooperative exporting/trading channels, then the DA can recommend individual duty rate for the participating trading channels which comprise the bulk of sales to India. We note in a situation where a producer sold the goods through multiple trading channel and one or more trading channel did not participate in the investigation, the DA can proceed to determine the need for fixing individual anti dumping rates based on the data provided by cooperating trading channels. We note such practice has indeed been followed regularly by the DA in various investigations - appeal dismissed. Regarding delay in initiation of investigation it is clear that the DA found it appropriate to call for updated information from the petitioners for the period of investigation chosen for the case and thereafter issued the questionnaire with updated data. Sufficient time of 40 days was given to all the interested parties to filed questionnaire response and to provide other information to defend their interest. It is clear that the DA ensured that all interested parties get adequate opportunity to defend their interest. The DA is required to examine injury in both the parameters of volume and price. It is clearly recorded that all parameters of injury need not show deterioration. It is the cumulative assessment of effect of such imports which is appropriate to determine the injury. In this regard both volume effect and price effect of imports have been dealt with elaborately by the DA - The volume and price of imports from third countries, developments in technology, export performance of the DI and productivity of the DI has been examined by the DA. It is apparent that decline in profits, cash profits and return on capital employed for the DI, is so high that the said decline cannot be attributed to decline in productivity. As such, we find no merit in the contention of the appellant in this regard. Regarding difference in molecular weight between the imported and domestic LAB, it is recorded that the difference in weight of molecular is a result of difference in raw materials or processes. Apparently this has no impact on injury analysis. Appeal dismissed - decided against appellant.
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2017 (11) TMI 1190
Penalty u/s 112 (a) of the CA, 1962 - mis-declaration of imported goods - Held that: - A careful consideration of the narration recorded in the impugned order clearly brings out the role of each one of the appellant in the mis-declaration and improper import of the impugned goods in the name of M/s Bharat Medical Devices Pvt. Ltd. who upon investigation were established to be not connected to the import at all - Section 112 (a) states that any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act shall be liable to penalty of specified quantum mentioned therein. In the present case, the evidences analyzed in the impugned order clearly bring out the role of each one of the appellant in the importation of impugned consignments which is rightly held to be liable for confiscation - While the appellants roles in the case were established, considering the fact that there is no evidence that they have gained substantially through these impugned acts/omissions, we find it fit and proper to reduce the penalty to ₹ 5 lakhs each on the appellants. Appeal allowed in part.
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2017 (11) TMI 1189
Valuation - enhancement of value - value was enhanced on the ground that the similar goods were imported at higher price - It would appear that the appellant’s failure to submit copy of the contract, manufacturer’s price list, details of negotiated price are the reasons for rejecting the transaction value - Held that: - the appellant has rightly objected to such enhancement on the ground that the contemporaneous value should be comparable on various parameters. There is no finding as to how the contemporaneous value has been accepted based on true comparison - The appellant’s contention that their product is unbranded and the product, with which it is compared, is branded again carries much weight - also there is more than two months gap in comparison of similar consignments. The admitted fact is the price of impugned goods are highly flexible and varied even in a short period - rejection of transaction value and refixing of such value not justified. The impugned order failed to justify with factual and legal basis for enhancing value as ordered by the Revenue - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1188
Confiscation of aircraft taken on lease - redemption fine - penalty - The department is of the view that duty is payable retrospectively w.e.f. 20.2.2008 when the lease agreement was entered into by M/s. Futura Travels for the aircraft. Held that: - The aircraft imported by EIHL on 21.10.2007 stands exported on 14.4.2008, within the period of six months as per the provisions of Rule 58(6) ibid. There is nothing on record to show that EIHL has filed any application to register the aircraft in India. Hence we are convinced that EIHL cannot be held liable for contravention of Rule 58(6) ibid. Consequently there is no justification to order confiscation of the aircraft and demand of customs duty from EIHL. FTL imported the same aircraft in Mumbai. Hence Commissioner(Cus) Delhi does not have the jurisdiction to demand customs duty from FTL. There is also no basis for raising duty demands jointly and severally from two legal persons. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 1187
Revocation of CHA License - forfeiture of security deposit - scope if inquiry report - Held that: - the fact remains that the inquiry which is conducted as per the requirement of the Regulation has recommended only imposition of the penalty. Such inquiry report was made available, without any further comments to the appellant, for their representation. Accordingly, the appellant filed their representation. It is clear that the revocation order, as done in the impugned proceedings, is beyond the recommendation given by the inquiry officer - there is a clear violation of principles of natural justice. It is necessary to put the appellant to notice regarding proposed rejection of the inquiry report and proposed enhancement of penal action, including revocation - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1186
N/N. 12/2012 - manufacture of gold bars of purity of 99.5% and above - Held that: - it has been held by the adjudicating authority that the goods seized are manufactured out of the goods imported by the appellant. Therefore, as goods imported has been used for intended purpose, in that circumstances, the appellant has complied with the condition of the N/N. 12/2012 - demand set aside. Neither during the investigation nor at the time of transportation the goods, the appellants were carrying proper documents for transportation of the said goods. As the appellant is not maintaining the proper records of the imported goods including sl. number, date etc. and not maintaining the record of intended use of the said goods, in that circumstances, the goods are liable for confiscation in terms of Section 111(o) of the Customs Act, 1962. Appeal allowed in part.
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2017 (11) TMI 1185
100% EOU - N/N. 53/97-Customs and 1/95-CE. - Since the appellants did not fulfill the conditions of export for duty free procurement of capital goods and other items, the jurisdictional Commissioner initiated proceedings against them to demand and recover the customs duty/excise duty forgone in terms of the above notifications - Held that: - The prime condition is that they have to manufacture and export the products from their units. They have not exported any product. After repeated extension of LOP, the same was terminated w.e.f. 1.4.2013. In fact the licensing authority, the Development Commissioner, Noida, categorically recorded the developments from the date of issue of LOP in 1995 and concluded that the appellants failed to fulfill the terms of the LOP and there is a violation of the FTDR read with FTP 2009-2014. As such, the violation of EXIM Policy and non-fulfilment of export conditions is clearly an admitted fact. Appellant was specifically asked as to the process of fresh adjudication based on all facts now in the knowledge of the appellant than can be completed by the Original Authority - Matter remanded for fresh consideration - appeal allowed by way of remand.
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Corporate Laws
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2017 (11) TMI 1184
Corporate insolvency process - respondent bank informed the applicant that the amount available in the current account of the corporate debtor is not an asset of the corporate debtor inasmuch as the dues of the corporate debtor in the books of respondent bank exceeds the amount available in the balance in the current account and therefore, they exercised the rights of set off and appropriated the amount towards the dues payable to the bank. Held that:- It is not required to discuss the matter so minutely in the present case because any amount lying in the current account of the corporate debtor has to be placed at the disposal of the resolution professional without any scope of an adjustment in the manner, the respondent has tried to do. With regard to the opening of the current account in the Hosur branch, which was not to the knowledge of the bank itself, especially the Rajiv Circle Branch, New Delhi because of the mischief committed by the corporate debtor, it is contended that the corporate debtor added the word M/S. before its name while opening the current account in the Hosur branch and provided different Id code with the introduction of a local trader and that is why the current account could be opened in the Hosur branch, which otherwise could not have been done. For the aforesaid mystery, it is for the bank to take appropriate action by holding an enquiry, but from the current account, which the bank itself says that it had no prior knowledge, there was no scope of set off after appointment of the interim resolution professional. In view of the above, the application filed by the resolution professional is partly allowed and the respondent bank is directed to deposit the amount, which was lying in the credit of the current account of corporate debtor in Hosur branch as on 29.08.2017 in the account of the corporate debtor maintained in the Corporation Bank after leaving an amount of ₹ 60,000/- in the account of the corporate debtor as per letter dated 01.09.2017 Annexure A-11 (Colly) already sent by the applicant to the respondent. The applicant/resolution professional is further at liberty to take appropriate proceedings against the key managerial persons, who had issued the cheques for withdrawal of the huge amount even after the appointment of the resolution professional and the respondent to hold an enquiry into the alleged mischief committed by the Corporate Debtor and take further steps as may be necessary.
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2017 (11) TMI 1183
Oppression and mismanagement - application to the Company Law Board for appropriate relief qua oppression - Held that:- removal of directors - The Company Law Board gave a specific finding bringing the case under Sections 397 and 398 of the Act, thus exercised the powers under Section 402 of the Act. There is no dispute on the memorandum of understanding entered into. It has been entered into by the second appellant on behalf of the first appellant. The fact that it has been given effect to is not in dispute through the shares allotted and as seen from the subsequent documents including the correspondence with the bank. Therefore, it is not open to the appellants to contend that it was purely an agreement between the second appellant and the first respondent. Similarly, the transaction is not a pure and simple money transaction. If that is the case, there was no need to remove the Directors and reduced the shares through the meetings conducted without respondents 1 and 2. All these aspects have been considered at length by the Company Law Board. This Court does not find any perversity in the decision arrived at. Having found that the appellants are still holding 51% of the shares and having the company run by the family members, the Company Law Board rightly granted the relief. The appellants could not produce any document to show that due procedure has been followed in conducting the meetings. In fact, as rightly found by the Company Law Board, there was no need for such a meeting at all. There was no consideration passed. Obviously, the attempt was to cripple and curtail the activities of respondents 1 and 2 qua the company. The findings have been rendered only on facts. When such is the position, as rightly submitted by the learned senior counsel for the respondents, appeal is liable to be dismissed for want of existence of a question of law. When once the appellants are unable to frame a question of law and convince the Court of its existence, the appeal becomes not maintainable. In other words, this Court can go into the appeals only on satisfying the existence of question of law and thereafter answers it. In such view of the matter, this Court does not find any question of law involved, warranting interference.
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Service Tax
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2017 (11) TMI 1230
Commercial Training and Coaching service - fees received for offering courses of London School of Economics (University of London) resulting in issue of degree by the University of London - Fee received for coaching provided for Business English and Personality Development - scope of service - difference of opinion - majority order. Held that: - On the first issue, regarding courses offered by the appellant resulting in the degrees/diplomas awarded by University of London, I find that these degrees/diplomas are to be considered as recognized by the law for the time being in force - It is a well known fact that the colleges in India provide courses resulting in degrees or diplomas but the said degree and diplomas are issued by the University or the main Institute to which these colleges are affiliated. If it is to be held that as the degree is not issued by the college which is providing course, the college should be considered as a “commercial trainee or coaching centre”, subjected to service tax, such interpretation will result in absurd consequences. Admittedly, the degree or diplomas are issued by the Universities or the main organization to which the college or an institute or a centre is affiliated - the degree or diploma being issued by University of London can be considered at par while interpreting the scope of commercial training or coaching centre. Whether such a degree or diploma is recognized by law for the time being in force? - Held that: - the department has been taking consistently a view that when an educational institute is affiliated to a university/institution awarding a degree recognized by law, then the said institute is not a commercial training or coaching centre. Reference can be made to circular No.26/2003- 28.08.2012 and 26.02.2010 of the Board. Admittedly, the appellants were providing course resulting in the award of B.Tech, BBA, MBA of Allahabad Agricultural Institute (deemed university). No demand for Service Tax has been made in respect of these courses. Even on this ground, the appellants can not be considered as commercial coaching or training centre - Apart from the fact that the appellants will fall outside the purview of commercial coaching or training centre, I find that the Business English Course and Personality Development course offered by the appellants will be covered by exemption notification No.9/2003 ST. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1182
Service of repairing of footwear - sale or service? - appellant claim is that they were paying VAT on the full amount of income so generated and that they have supplied the material wherever necessary to complete the repairing service - Department, however, took the view that the activity undertaken by the appellant was in the nature of service covered under the heading 'management, maintenance or repair service' - Held that: - such activity cannot be considered purely as sale of repair materials but is an activity covered under sec 65 (105) (zzzg) under the heading ‘management, maintenance of repair service’ - demand upheld. Benefit of N/N. 12/2003–ST dated 1/3/2006 - the benefit is available only subject to satisfaction of conditions specified therein. One of the conditions is that the assessee should be in possession of documentary evidence indicating of value of goods/materials sold along with the provision of service. Further, no Cenvat Credit of duty in respect of such goods and materials should have been availed - Held that: - the appellant has failed to substantiate that they have fulfilled these conditions. They have also not placed any evidence to justify the benefit of notification - benefit rightly denied. Appeal dismissed - decided against appellant.
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2017 (11) TMI 1181
Renting of Immovable Property Service - shops let out on the chemist - interest - penalty - Held that: - The claim of the appellant is that they have paid a sum of ₹ 8,54,4009/- towards interest. The ld. AR disputed that the said amount is not towards interest. In that circumstances, the matters needs examination at the end of the adjudicating authority to ascertain the fact from the records whether the appellant paid service tax along with interest for the intervening period or not? - matter on remand. Penalty - Held that: - the appellant had paid service tax on the direction of the Hon’ble High Court of Punjab and Haryana and the matters is pending before the Hon’ble Apex Court whether the levy of the service tax can be made against the appellant under the category of renting of immovable property service - no penalty is imposable on the appellant, therefore, by extending benefit of Section 80 of the Finance Act, 1994, the penalty imposed on the appellant in impugned order is set aside. Appeal allowed by way of remand.
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Central Excise
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2017 (11) TMI 1180
Search and seizure proceedings - Whether on the facts and in totality of the circumstances of the case and in law, the entire search & seizure proceeding was illegal and unauthorised for want of compliance of the mandatory provisions contained in section 82 of the Act of 1994? - Held that: - the decision in the case of Supreme Court in case of R.M. Malkani vs. State of Maharashtra [1972 (9) TMI 150 - SUPREME COURT OF INDIA] referred, where it was held that a document which was procured by improper or even by illegal means could not bar its admissibility provided its relevance and genuineness were proved. The matter is required to be remitted back to the first authority - appeal allowed by way of remand.
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2017 (11) TMI 1179
Rectification of mistake - CENVAT/MODVAT credit - inputs used in manufacture of Aluminum Slugs and Containers - denial on the ground that it were only paper transactions and that the appellants willfully suppressed the facts - Held that: - Law is well settled. When a Court or a Tribunal records that a particular submission was made across the bar, the correctness of the recording as to what transpired before the Court or Tribunal cannot be gone into by a higher forum in Appeal or Revision. If it is recorded that a particular submission was canvassed, it is a recording of what transpired before the concerned Court or Tribunal. Unless what is recorded is corrected by the same Court or Tribunal, the Higher forum which deals with an appeal or a revision will have to proceed on the footing that the factual statements recorded in the impugned judgment are correct. Sub Section (2) of Section 35C gives a specific remedy to a party to appeal to apply for rectifying mistakes apparent from the record. As in the order passed in the rectification application, the main issue canvassed in the rectification application has not been gone into, it is not open for us to adopt inferential process and decide whether the said points set out in the rectification application were urged before the Appellate Tribunal - the Tribunal has committed an error by not considering the specific case made out in the rectification application as especially when in the impugned judgment in the appeal, the gist of the submissions made by the parties have not been specifically incorporated. To avoid possibility of any prejudice to the appellant, it will be appropriate if by setting aside the impugned judgment and order, the Appellate Tribunal is directed to hear the appeal afresh - appeal allowed in part - part matter on remand.
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2017 (11) TMI 1178
Valuation - includibility - value of chassis supplied free of cost by the telecom company - classification of goods - Held that: - the Adjudicating Authority fell into serious error in ordering classification under 7308. It is obvious that the goods which are being cleared are motor vehicles on which Telescopic Towers have been mounted. These goods are appropriately classified under heading 8705 as special purpose motor vehicles. The appellant has also claimed that they will be entitled to nil rate of duty in terms of serial no 50 of the N/N. 6/2006-CE dated 01/03/2006 - Held that: - In the absence of any clear finding by the authority below whether the above condition is satisfied by the appellant, we remand the matter to the Original Authority for the limited purpose of verification of the conditions attached to notification - matter on remand. Appeal allowed by way of remand.
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2017 (11) TMI 1177
Clandestine removal - discrepancy in figures between ER-1, ER-4 and ER-6 returns - Held that: - Revenue has not undertaken any investigation to see whether such raw materials have actually been received in the factory, used in the manufactured finished goods and cleared clandestinely - Clandestine clearance is a serious charge and Revenue is required to establish the same on the basis of tangible evidence - demand set aside. The second part of the demand to the tune of ₹ 9,96,385/- has been made for the quarter ending June, 2008 on the basis of allegation that the cost of production in CAS-4 certificates was wrongly worked-out since production figures had been taken wrongly - Held that: - Since the entire goods cleared from the Santoor unit is received by their own Abu Road unit, no malafide intention is manifest in the discrepancies seen in the returns - since clearances have been made from one unit to the other of the same company, the principle of revenue neutrality will come into play which is a settled position of law. Any duty paid in Santoor unit will be available as credit in the Abu Road unit. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1176
SSI Exemption - dummy unit - mutuality of interest - Revenue’s case is that two units BM and KA are in effect, one unit only and the second unit KA has been opened only for the purpose of wrongly availing SSI exemption separately for both units - clandestine removal - Held that: - KA with its own manufacturing facility cannot be held as a dummy of BM especially in view of separate sales tax assessments in the name of BM as well as KA. Both the units also had separate Income Tax, Sales Tax and Central Excise registrations and were also fling returns separately - there is no valid ground for clubbing the turnover of both the units. Clandestine removal - Revenue’s case is that BM as Involved in clandestine clearance of goods as evidenced by certain kaccha parchies recovered from the residence of Sh SB Goyal - Held that: - Clandestine clearance is a very serious charge and is required to be established by Revenue on the basis of tangible evidence - In the present case, absolutely no investigation has been carried out either at the end of the buyers who have allegedly purchased the finished goods or at the end of the suppliers who might have supplied the additional quantity of raw materials which would have been necessary to produce the goods allegedly clandestinely. The kaccha parchies have been linked to the manufacturer only through the statement of Sh SB Goyal which stands retracted. In the absence of any other corroboration evidence, this piece of evidence cannot be used to demand duty against the appellant - demand set aside. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1175
Reversal of CENVAT credit - inputs written off - clearance of inputs without use in the manufacturing process - whether “write off” of inputs on account of damage or become unfit during the course of manufacture, can be equated to clearance of inputs as such and no reversal of credit is warranted in such situation? - Held that: - identical issue decided in assessee's own case Force Motors Ltd. Versus CC, CCE & ST, Indore [2017 (5) TMI 813 - CESTAT NEW DELHI], where it was held that Once it is recognized and established that the inputs have been put to intended purpose, it is not relevant whether some of them get damaged or rejected during the course of manufacture. Such damaged input/rejection resulting in scrapping of such inputs will have no impact on the credit availed on them - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1174
Refund of amount deposited - In order to avail the course of appellate remedy appellant deposited the amounts confirmed and preferred an appeal before the First Appellate Authority - Held that: - During the pendency of the proceedings, they had deposited the duty liability interest and part of the amount as penalty. On successful litigation on before the Hon’ble High Court of Delhi, they rightfully claimed the amount paid/deposited by them with the authorities. In my view, the First Appellate Authority was correct in coming to a conclusion that the amounts which were deposited by the appellant are refundable. It is settled law that amount paid on the insistence of the Revenue and the matter is successfully contested in higher judicial forum it has to be considered that the assessee has deposited the amount under protest. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 1173
Refund of excess duty paid on the component of Sales Tax paid - rejection on the ground that as the Sales Tax has been paid after completion of the contract and the same is not inclusive in the contract, therefore, they have to bear the amount of Sales Tax and whatever duly have been paid by them at the time of clearance of goods is correctly paid - unjust enrichment - Held that: - As there is difference of opinion between both the Members, therefore, matter is place before the Hon'ble President to appoint third Member to decide the issues - matter referred to third member.
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2017 (11) TMI 1172
Clandestine removal - availing Cenvat credit without bringing inputs in their factory - 102.970 MTs of finished goods - documents seized from the transporter - Held that: - No investigation has been conducted at the end of M/s. Anupam Ispat Udyog to ascertain the truth. In that circumstances, merely mentioning AIU on the documents seized from the transporter, the demand of duty cannot be demanded from the appellant - demand set aside. 114.830 MTs of finished goods - clearance of goods against parallel invoices - Held that: - no investigation was conducted at the end of the buyer or the transporter to ascertain the fact whether on the strength parallel invoices, any goods have been transported or not? - also, the parallel invoices are copy of each other. Therefore, it cannot be alleged that the appellant is clearing the goods on the strength of parallel invoices - demand set aside. Demand confirmed on the strength of debit notes - Held that: - In the absence of any positive evidence on record by the Revenue, the demand on the basis of this allegation is not sustainable - demand set aside. Demand confirmed on the basis of the records seized from transporter viz. M/s. Super Handling Company showing the goods has been cleared without duty paying documents - Held that: - seized documents neither showing the date of goods sold nor the date has been mentioned to whom the goods has been sent and the appellant had not admitted those documents no enquiry has been conducted from M/s. Super Handling Company where these goods have been delivered or whether these goods have been loaded from the factory of the appellant without cover of invoice - demand set aside. Demand confirmed on the basis of the production shown in private records but not recorded in RG-1 register - Held that: - no effort has been made by the Revenue for correlation of the payments made to the four labour contractors and merely on the basis of the 3rd party evidence, the demand against the appellant is not sustainable - demand set aside. Demand confirmed on account of excess finished goods found and detected shortage of inputs at the time of stock taking during the search - Held that: - There is no weighment detail has been produced by the Revenue how the weighment has been done. The weighment has been done on the basis of eye estimation and on eye estimation, the shortage or excess of goods cannot be determined - demand set aside. Demand confirmed on the basis of debit notes on which duty has not been paid - Held that: - the debit notes have been issued for payment of interest. Revenue sought to include the payment of interest in the assessable value. The said issue has not been disputed by the ld. Counsel for the appellant being the issue of valuation - demand confirmed. Demand confirmed on account of invoices issued to consignee for availing Modvat credit without supply of inputs - Held that: - no investigation has been conducted at the end of Bhilai Steel Plant to ascertain the fact whether they have sold the goods to the appellant through the truck in question or from the transporter whether they have changed the truck during the transportation. In that circumstances, the Cenvat credit cannot be denied to the appellant - demand set aside. Demand confirmed for removal of inputs without reversal of credit - Held that: - on going through the documents placed before me, it is not coming out whether G stands for gross weight or not. If G stands for particular truck as gross weight then for the other trucks, why it is not mentioned as G - demand confirmed. Demand confirmed for removal of MS flat cuttings without payment of duty for the said demand - Held that: - As the appellant is not contesting. Therefore, the said demand of ₹ 1,629/- is confirmed. Denial of CENVAT credit - denial on the ground that during the visit, the raw material was not found in the factory premises of the appellant - Held that: - the appellant has used the said raw material in manufacturing of their final goods. In that circumstances, the Cenvat credit cannot be denied to the appellant in the absence of any contrary evidence, therefore, Cenvat credit is allowed to the appellant - credit allowed - penalty also set aside. Appeal allowed in part.
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2017 (11) TMI 1171
Compensation for deteriorated goods, which were seized by the Revenue - failure to release the goods, despite request made by appellant - Held that: - Admittedly, the seized goods are the property of the Revenue and under superdginama has to be given for keeping the goods in safe custody - Moreover, in this case the goods were seized on 11.11.2004 and the appellant had requested to release the goods on 23.11.2004, but no response was given to the request made by the appellant in releasing of the said goods, despite the goods of perishable in nature. In that circumstances, Revenue is responsible of the said goods as despite request made by the appellant failed to release the goods which were not liable to be seized as per the final of this Tribunal. As goods have become obsolete in the custody of the Revenue, who was the owner of the said goods, therefore, the appellant is required to be compensated. - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1170
GTA services - Freight charges - reverse charge mechanism - N/N. 35/2004-ST dt. 31.12.2004 - Held that: - the documents now submitted before the Tribunal to establish the link between the Service Tax deposited by service provider and the appellant were not submitted before the adjudicating authority and the same require to be examined in the first instance by the adjudicating authority - It would therefore be in the interest of justice that these documents which have been submitted before the Tribunal are produced before the Ld. adjudicating authority, who will examine them and decide the case afresh - appeal allowed by way of remand.
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2017 (11) TMI 1169
CENVAT credit - GTA service - whether the appellant is entitle for Cenvat credit on input service distributor's invoice issued by their regional office in respect of GTA service? - Held that: - amended Rule 7 w.e.f. 17-3-2012 vide N/N. 18/12-CE(N.T.) dated 17-3-2012 which is effective from 1-4-2012 as per clause (d) the credit of service tax attributable to service used in more than unit shall be distributed on pro rata basis on the basis of the turnover of the concerned unit to the sum total of the turnover of all the units to which the service related - appellant is entitle only to the extent of credit of service tax attributed to the turnover of their unit. The facts were not verified - the adjudicating authority needs to examine proportionate credit in terms of Rule 7 - appeal allowed by way of remand.
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2017 (11) TMI 1168
Revocation of registration - whether the Ld. Commissioner (Appeals) have rightly upheld the revocation of registration of the appellant along with penalty of ₹ 5000/- under Rule 26(2) of CER, 2002? - Held that: - from the amended registration certificate issued to the appellant dated 15 December 2015, the Registration-status matter have been regularized by the department. Thus, the order of cancelling of registration vide order dated 23 December, 2015, is erroneous and fit to be set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1167
CENVAT credit - In remand proceedings, it was held that the appellant is failed to prove that they have received the goods, in that circumstances, the Cenvat Credit was denied - Held that: - As per the directions of this Tribunal in the earlier round of litigation, the appellant was required to prove that the goods were duly received by them and used in manufacture of excisable goods. Admittedly the appellant had failed to produce the evidence for receipt of the goods in question. In that circumstances, I do not find any infirmity in the impugned order - appeal dismissed - decided against appellant.
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2017 (11) TMI 1166
Valuation - includibility - Board's Circular No.58/1/2002-CX. Dated 15.1.2002 - Revenue felt that the material supplied charges for the job work done by M/s.JVR at site should be included in the value of the air brake equipment supplied by the appellant - Held that: - since the process admittedly was in the nature of job work and the benefit of N/N. 214/86-CE was not availed by the job worker, the duty leviable, if any, had to be paid by the job worker and not by the appellant - Further, since the pipe fittings were not an input for the final product viz. Air Brake Equipment, the appellant appropriately did not avail the Movat Credit on the same - Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1165
Liability of duty - Recovery of amortized cost - contention of the main appellant is that they have not recovered the amortized cost from the buyers and it is evident from the invoices issued by them - Held that: - the appellant has produced sample invoices before us showing the facts but it is required to be ascertained from the records of the appellant whether they have recovered amortized cost twice from the buyers. For that purpose, by setting aside the impugned order, the matter is remanded back to the adjudicating authority to verify the fact that whether the appellant has recovered the amortized cost twice from the buyers or not? - matter on remand. Penalty on co-appellants - confiscation - pattern/dies for which onetime payment has been made - Held that: - no duty is to be demanded on the onetime payment made by the co-appellants on account of pattern and dies which were used captively for manufacturing of castings by the main appellant under N/N. 67/1995 - no penalty is imposable on the co-appellants. Appeal allowed in part and part matter on remand.
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CST, VAT & Sales Tax
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2017 (11) TMI 1163
Jurisdiction - Article 226 of the Constitution of India - alternative remedy of appeal - Held that: - contentions, on a plain reading of it, itself would show that, contentions are on merits and not on jurisdictional issue alone - In a case where the contentions urged have been dealt with and answered, it is neither permissible for the litigant to thereafter seek liberty of this Court to be relegated to pursue statutory remedies and thereby to get the whole judgment itself nullified - appeal dismissed - decided against appellant.
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2017 (11) TMI 1162
Validity of assessment order - rectification petition - alternative remedy of appeal - section 84 of TNVAT Act - Held that: - the orders of assessment dated 18.07.2016, were sought to be rectified by filing applications under Section 84 of the TNVAT Act, 2006 and finding that there is no error apparent on the face of the record, said petitions have been dismissed on 30.09.2016. Assessment orders merges with the orders passed in the rectification petitions. When the petitioner/appellant is aware of the dismissal of the rectification petitions, it is not known as to how, the petitioner/appellant, has not chosen to challenge the subsequent orders. An order under rectification petition can be challenged only by way of a revision under Section 54 of the Act. Despite the same, exercising discretion in favour of the appellant, writ Court has granted liberty to file the appeal - When the writ Court has relegated the said issue to be adjudicated before the competent authority, if any appeal is filed, finding to be record by us on the above, would amount to transgressing the powers of the appellate authority to address both on facts and Law. Direction of the writ Court, cannot be said to be erroneous. When subject matter is relegated to the concerned forum or the authorities concerned, as the case may be, writ Court is not bound to record a finding either on fact or law. In such a view of the matter, contentions to the counter are not tenable. On more than one occasion, the Hon'ble Supreme Court as well as this Court, consistently held that writ against the assessment orders, ought not to be interfered with, when there is an effective and alternative remedy under the taxation statute. When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation - The High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. Appeal dismissed - decided against appellant.
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2017 (11) TMI 1161
Reopening of assessment - imposing higher rate of tax - whether reopening of assessments are justified, when assesment are complete and tax has been already paid - Held that: - the issue involved in this writ petition is squarely covered by the decision of the Division Bench of this Court in the case of The Commissioner of Commercial Taxes, Chennai and another V. M/s.Sundek India Ltd. [2015 (9) TMI 45 - MADRAS HIGH COURT], where it was held that assessments in respect of respondent / assessee having been completed pursuant to order passed by Special Tribunal and tax at rate of 10% was also collected, Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification - the SCN is without jurisdiction - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 1160
Exemption from tax - purchases of mentha oil - notification dated 12 February 1999 - denial on the ground that it was not the ultimate exporter of the goods and unless it were established that the manufacturer and ultimate exporter are one and the same, the benefit flowing from the said notification would not be available - Held that: - A plain reading of the terms of the notification establishes that the primary issue which must govern the grant of exemption is the export of the manufactured goods. The notification neither mandates nor provides that the manufacturer himself export the goods out of India. As is evident from a plain reading of "Condition (i)", the emphasis is on the manufactured goods being exported and not that the actual manufacturer export the goods. The crucial test, therefore, is whether the manufactured goods have ultimately been exported out of India. In view thereof, the Court finds that the reasoning which weighed with the Department to deny relief to the revisionist on this score cannot be sustained. Admittedly the assessee was not the ultimate exporter of the goods. In order to succeed, therefore, it would be incumbent upon him to establish that the transactions fall within the ambit of Section 5 (3) of CST Act 1956. This issue as to whether the manufactured goods have moved in the course of export cannot be determined on the basis of the notification dated 12 February 1999 since this would principally have to be answered with reference to the provisions encapsulated in section 5. Appeal allowed by way of remand.
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