TMI Tax Updates - e-Newsletter
November 25, 2015

Case Laws in this Newsletter:

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

Articles

1. SERVICE TAX REFUND UNDER SERVICE TAX

   By: Dr. Sanjiv Agarwal

News

1. Text of PM’s address at India-Singapore Economic Convention

2. Review of Foreign Direct Investment (FDI) Policy on Various Sectors

3. RBI Reference Rate for US $

4. Finance Minister Shri Arun Jaitley Reviews the Financial Performance of Public Sector Banks (PSBS); asks the CEOs of PSBs to clean-up their Balance Sheet at the Earliest

Notifications

Customs

1. 53/2015 - dated 23-11-2015 - Cus

Seeks to amend Notification No. 10/2008 – Customs, dated 15th January 2008, so as to deepen the tariff concessions in respect of specified goods under the Comprehensive Economic Co-operation Agreement (CECA) between India and Singapore, when imported from Singapore

VAT - Delhi

2. No. F.3(352)Policy/VAT/2013/1062-73 - dated 23-11-2015 - DVAT

Notify that the Form DP-1 shall be submitted online by all the dealers latest by 31/12/2015. The form shall be filed by dealers registered upto 31/10/2015

Circulars / Instructions / Orders

FEMA

1. Press Note No. 12 (2015 Series) - dated 24-11-2015

Review of Foreign Direct Investment (FDI) policy on various sectors

Highlights / Catch Notes

Income Tax

• Revised Return Must Align with Original, Retains Prior Assessment Proceedings Despite Supersession.

  Case-Laws - HC : Addition of amount shown in revised return under the pressure of the department - revised return should relate back to the return originally filed, minus the omissions and wrong statements. Even if the revised return replaces the original return, the assessment proceedings leading up to the revised return do not get obliterated. - HC
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• Deferred Tax Not Recorded as Expenditure; Balance Sheet Adjustment Validates Deletion of Addition by Assessing Officer.

  Case-Laws - AT : Addition on account of deferred tax liability - The deferred tax liability was never an item of expenditure in the profit and loss account. Therefore, there is no question of excess liability. - the adjustment in question in the balance sheet item cannot have any impact on the income of the assessee is also a sound basis for deleting the addition made by the AO - AT
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• Taxpayer Qualifies for Deduction u/s 80IC; Manufacturing Process Validated by Commercial Recognition of Final Product.

  Case-Laws - AT : Deduction u/s 80IC - assessee is merely mixes various ingredients, required for final products, with the help of machineries and the final product/finish product is filled in pouches - end product is commercially known differently, therefore, the assessee is involved in manufacturing - AT
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• Franchisee Not an Agent: No TDS Required u/s 194H as Title Passes in Goods. Key Legal Clarification.

  Case-Laws - AT : TDS u/s.194H - Passing of title in the goods is important and determinative of the question whether franchisee was acting as agent or acting on a principal to principal basis of the Assessee - NO TDS - AT
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• Court Sets Aside Fee Intimations by Assessing Officer; Section 234E Levy on TDS Statements Deleted.

  Case-Laws - AT : Levy of fee u/s 234E while processing the TDS statement - the intimations issued by the Assessing Officer u/s 200A of the Act are set aside to the extent of levy of fee u/s 234E of the Act and levied fee is deleted. - AT
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• Assessing Officer's Acceptance Without Inquiry Justifies Revision u/s 263; Order Upheld for Revenue Protection.

  Case-Laws - AT : Revision u/s 263 - the acceptance of accounting entries as it is without causing enquiries by the Assessing Officer would render the order of assessment erroneous and prejudicial to the interest of revenue. - revision sustained - AT
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• Income Tax Act Sec 40A(3): Cash Deposits to Supplier's Account Challenged, Additions Deleted Based on Supplier's Ledger Evidence.

  Case-Laws - AT : Addition u/s 40A(3) - direct despot of cash in the bank account of the supplier - supplier acknowledged credited the said cash receipts in the ledger account of the assessee - ledger account has been obtained by the AO u/s 133(6) directly from the concerned supplier - Additions deleted - AT
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• Vodafone's Tax Deduction for Vouchers Challenged; Distributor Listed as Recipient, Income Not Attributable to Assessee.

  Case-Laws - AT : Additions on the basis of 26AS statement - Vodafone deducted tax at source in respect of the vouchers etc and, for whatever reasons, stated, the name of distributor as collective recipient of entire sum - since the income does not belong to assessee, addition cannot be made - AT
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• Electrical Installations in Factories Classified as Plant & Machinery, Eligible for 25% Depreciation Rate.

  Case-Laws - AT : Depreciation on Electric Installation used in factory premises to operate various Machinery & Equipments in manufacturing of POY and polyester chips - electrical fittings in the instant case should be considered as plant and machinery and hence the depreciation should be allowed at the rate of 25% to plant and machinery - AT
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• No Penalties for Cash Loan Return to Sister Concern u/ss 271D & 271E Due to Reasonable Belief.

  Case-Laws - AT : Penalty u/s 271D and 271E - Return of loan by cash to the sister concern under a bonafide belief that the transaction with sister concerns is not in violation for similar reasons in the absence of any evidence to the contrary cannot be disbelieved. - AT
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Customs

• Importing 'Bronopol' Requires Registration Committee Approval, Even for Non-Insecticidal Use, per DGFT Notification.

  Case-Laws - AT : Whether the item ‘bronopol’ imported by the appellant requires permission as per DGFT notification dated 1.1.2015 - if any insecticide is imported even for non-insecticides purpose, the permission is necessary from the Registration Committee under Department of Agriculture and Co-operation. - AT
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• Oxygen Sensors Reclassified: Now Under CTH 9031, Not Chapter Heading 9027.

  Case-Laws - AT : Classification of oxygen sensors - goods do not belong to Chapter Heading 9027. Once their classification under Chapter Heading 9027 is ruled out, they would land up under CTH 9031 as admittedly that is the only competing entry. - AT
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• Court Rules Excess Interest Refund Due: 15% Charged Instead of Correct 13% Rate.

  Case-Laws - AT : Refund - the amount of interest paid (@ 15% p.a.) was evidently more than the interest payable (@ 13% p.a.) and consequently the appellants were clearly entitled to (sought) refund of excess interest so paid - AT
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• Appellant's Re-export Obligation: Six-Month Deadline and Certification Acceptance Without Global Port Authority Verification.

  Case-Laws - AT : Re-export the containers within six months from the date of their importation - when the appellant himself certifies copies, there should be no reason to reject this evidence. It would be rather unfair to expect the appellant to get a certificate from various port authorities all over the world - AT
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• Appellant Receives Refund After Securing Sanction for Concessional Duty Rate Post-Clearing of Goods Under Pressure.

  Case-Laws - AT : Project Import - Claim of concessional rate of duty - the appellant in being pressure to complete the project in time, deposited the duty and cleared the goods. Subsequently, the appellants were received the sanction and requirement etc. - Refund of excess duty paid, allowed - AT
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Wealth-tax

• Property Used for Commercial Purposes by Tenant Exempt from Wealth Tax u/s 2(ea) of Wealth-tax Act.

  Case-Laws - AT : Exemption u/s. 2(ea) of the WT Act - even if the property is utilized for commercial purposes by the tenant, still it is outside the ambit of wealth tax and assessee would automatically fall under the exclusion Clause No. 5 of section 2(ea)(1) - AT
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Service Tax

• Dispute Over Service Tax Demand on Dealer's Margin for Authorized Service Station; Validity of Current Tax Practices Questioned.

  Case-Laws - AT : Demand of service tax - authorized service station - Amounts received by the appellant are recorded by Maruti Udyog Ltd. as well as the appellant as dealers margin and the handling charges received by the appellant from the customers are shown in the invoices as charges and value added tax is paid on such amount. - entire case of the revenue is misdirected - AT
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• Refund Claim Allowed Despite Missing Deadline for Export Notification No.41/2007-ST; Filed March 31, 2009, Deadline September 30, 2008.

  Case-Laws - AT : Refund claim - Notification No.41/2007-ST dated 06.10.2007 - export of goods - whether the appellant can get the refund of the amount having filed the refund claim on 31.03.2009 instead of 30.09.2008 - refund allowed - AT
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• Service Tax Paid Before SCN: No Need for Penalties u/ss 76, 77, 78, as per Section 73(3) Provisions.

  Case-Laws - AT : Penalty u/s 76, 77 & 78 - Payment of service tax before issuance of SCN - provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. - AT
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• Court Rules Warehousing and Reimbursable Expenses Excluded from C&F Agent Service's Taxable Value.

  Case-Laws - AT : Valuation of service - Includibility of warehousing and other reimbursables in the value of C&F agent service - demand set aside - AT
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Central Excise

• Cenvat credit denial for essential pest control services preserving business records found improper.

  Case-Laws - AT : Benefit of Cenvat credit - Pest control being an essentiality to preserve the record for carrying on the business disallowance of credit in respect of such service does not appear to be proper - AT
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• Appellant's Demand Confirmed Without Penalty; Larger Bench Decision Does Not Alter Existing Law.

  Case-Laws - AT : No doubt appellant has waited for larger bench decision but that does not alter the law. Therefore demand is confirmed - However there shall not be levy of penalty on the appellant - AT
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VAT

• High Court Upholds Purchase Tax on Interstate Stock Transfers from SEZ to DTA under TNVAT Act Section 12.

  Case-Laws - HC : Levy of purchase tax on the Inter State stock transfer effected from warehouse located in SEZ to DTA u/s 12 TNVAT - levy of purchase tax confirmed by the first respondent on the interstate stock transfer effected from warehouse located in SEZ, is perfect in order - HC
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• VAT Applies to Bitumen Emulsion: Transformation Retains Essential Characteristics for Road Construction Use.

  Case-Laws - HC : Classification - Levy of VAT - even bitumen after it is transformed into bitumen emulsion is used in the construction of roads for the qualities it has as bitumen. The characteristics of bitumen in its original form continues even after it is converted into bitumen emulsion by firing upon the raw bitumen. - HC
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Case Laws:

• Income Tax

• 2015 (11) TMI 1140
  Addition of amount shown in revised return under the pressure of the department - Whether the return filed on 30th March 1994 is a valid revised return? - whether the surrender made in that return dated 30th March 1994 can be regarded as a piece of evidence? - Held that:- In the present case, the Assessee has failed to discharge the onus of showing even prima facie that he was compelled to make a statement during the search or to file a revised return in the assessment proceedings. The record of the assessment proceedings show that adjournments were granted as and when requested by the Assessee. Apart from the fact that he was represented in the assessment proceedings by a CA or an AR, he also had sufficient time and opportunity to reflect on what had been stated by him during the search proceedings. The Court accordingly rejects the plea that the Assessee did not voluntarily make the statement attributed to him in the course of search or that he was coerced during the assessment proceedings to file the revised return. In the present case, filing of the return by the Assessee on 19th January 1993 was only by way of rectification of the defects pointed out by the AO in the notice issued under Section 139 (9) of the Act. This rectified return was related back to the original date when the return was filed on 31st August 1992. It cannot, therefore, be said that the original return was itself ‘non-est’ as contended by the Assessee. Consequently, filing of the revised return in terms of Section 139 (5) of the Act by the Assessee prior to the completion of the assessment on 31st March 1994 was within the time prescribed. Notice had already been issued in the course of the assessment proceedings to the Assessee under Section 143 (2) and Section 142 (1) of the Act. The revised return filed on 31st March 1994 was a valid return. There was no occasion, for the CIT (A) to consider the plea that the statement attributed to the Assessee, as recorded by the AO in the assessment order, was not in fact made by the Assessee or that documents tendered by the Assessee were not considered by the AO. On the contrary, the order of the CIT (A) showed that in the course of appellate proceeding, a remand report was sought from the AO on the additional grounds urged by the Assessee. The remand report of the AO has been set out in para 7.2 of the CIT (A) order. The AO has subsequently denied the contention of the Assessee that no reasonable opportunity was given to the Assessee or that the assessment was completed in a hurry. There is merit in the contention that the revised return should relate back to the return originally filed, minus the omissions and wrong statements. Even if the revised return replaces the original return, the assessment proceedings leading up to the revised return do not get obliterated. ITAT did not commit any error in relying on the statement made by the Assessee under Section 132 (4) of the Act - Decided in favour of the Revenue

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• 2015 (11) TMI 1139
  Deduction under Section 10B - ITAT not accepting the Assessee’s plea in regard to ‘customer claims’ ‘freight subsidy’ and ‘interest on fixed deposit receipts’ even while it accepted the Assessee’s case as regards ‘deemed export drawback’ qualifying for exemption - Held that:- Considering the contention of the Assessee as regards customer claims was that it had received the claim of Rs. 28,27,224 from a customer for cancelling the export order. Later on the cancelled order was completed and goods were exported to another customer. The sum received as claim from the customer was non-severable from the income of the business of the undertaking. The Court fails to appreciate as to how the ITAT could have held that this transaction did not arise from the business of the export of goods. Even as regards freight subsidy, the Assessee’s contention was that it had received the subsidy in respect of the business carried on and the said subsidy was part of the profit of the business of the undertaking. If the ITAT was prepared to consider the deemed export draw back as eligible for deduction then there was no justification for excluding the freight subsidy. Even as regards the interest on FDR, the Court has been shown a note of the balance sheet of the Assessee which clearly states that “fixed deposit receipts (including accrued interest) valuing Rs. 15,05,875 are under lien with Bank of India for facilitating the letter of credit and bank guarantee facilities.” In terms of the ratio of the decisions of this Court both in Hritnik Exports (2015 (10) TMI 1009 - DELHI HIGH COURT) and Universal Precision Screws (2015 (10) TMI 951 - DELHI HIGH COURT), the interest earned on such FDR ought to qualify for deduction under Section 10B of the Act. - Decided in favour of the Assessee.

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• 2015 (11) TMI 1138
  Reopening of assessment - Held that:- No whisper of the petitioner having failed to disclose fully and truly all the material facts necessary for its assessment. It is therefore clear that the necessary ingredients for invoking the provisions of Section 147 beyond the period of four years are missing. As such, the initiation of the reassessment proceedings pertaining to the assessment year 2005-06 is without the authority of law. We may also point out that the very issue which has been raised in the reasons has been considered in detail in the course of the original assessment proceedings. In fact, the reasons themselves indicate that what is sought to be done through reassessment was already available in the record of the assessment proceedings. The agreements which have been referred to in the reasons were available before the Assessing Officer and had been examined in detail by the Assessing Officer. Therefore, there is also substance in reopening of assessment - Decided in favour of assessee.

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• 2015 (11) TMI 1137
  Jurisdiction of court - Held that:- the present appeals are dismissed as this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at Alwar. See Commissioner of Income-tax Versus Motorola India Ltd. [2007 (10) TMI 384 - PUNJAB & HARYANA HIGH COURT]

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• 2015 (11) TMI 1136
  Computing deduction u/s 10A - exclusion of tele-communication charges and insurance expenditure incurred in foreign currency from the export turnover as well as the total turnover as directed by the CIT(A) - Held that:- This issue is now covered by the decision in the case of ACIT vs. Tata Elxsi [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein held there should be uniformity in the ingredients of both the numerator and the denominator of the formula, Section 10-A is a beneficial section. It is intended to provide incentives to promote exports. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Formula will be Profits of the business of the undertaking × Export turn over / (Export turnover + domestic turn over) Total Turn Over Transfer pricing adjustment - assessee has raised objections against inclusion of 4 companies viz., Infosys Ltd., Persistent Systems Ltd., Tata Elxsi and Wipro Ltd. - Held that:- Infosys Technologies Ltd. is not functionally comparable with the assessee because it owns significant intangibles as well as brands earning revenue from software products apart from software development services. Since no separate segment of SDS and software products is available, therefore, this company cannot be considered as a good comparable for the purpose of ALP in respect of international transaction of rendering SDS. Accordingly, when this company is functionally not comparable with the assessee, we decline to interfere with the impugned order of the CIT(A) directing the AO/TPO to exclude this company on the basis of turnover filter Persistent Systems Ltd. be excluded from the list of comparables as relying on 3DPLM Software Solution Ltd. v DCIT [2014 (12) TMI 612 - ITAT BANGALORE] as it is engaged in product development and product design services while the assessee is a software development services provide. Also the segmental details are not given separately. Tata Elxsi Ltd company is predominantly engaged in product designing services and not purely software development services. The details in the Annual Report show that the segment “software development services” relates to design services and are not similar to software development services performed by the assessee. Wipro Ltd. company is engaged both in software development and product development services. There is no information on the segmental bifurcation of revenue from sale of product and software services. The TPO appears to have adopted this company as a comparable without demonstrating how the company satisfies the software development sales 75% of the total revenue filter adopted by him. Another major flaw in the comparability analysis carried out by the TPO is that he adopted comparison of the consolidated financial statements of Wipro with the stand alone financials of the assessee; which is not an appropriate comparison. Also this company owns intellectual property in the form of registered patents and several pending applications for grant of patents a company owning intangibles cannot be compared to a low risk captive service provider who does not own any such intangible and hence does not have an additional advantage in the market. As the assessee in the case on hand does not own any intangibles, following the aforesaid decision of the co-ordinate bench of the Tribunal i.e. 24/7 Customer.Com Pvt. Ltd. (2013 (1) TMI 45 - ITAT BANGALORE), we hold that this company cannot be considered as a comparable to the assessee M/s.VGL Software Ltd. company was neither selected by the assessee in the TP analysis nor by the TPO while passing the TP order under section 92CA of the Act. However, the CIT(A) included the same in the list of comparables while passing the impugned order without giving any opportunity of being heard to the AO/TPO. Since comparability of this company has not been examined at the level of the TPO/AO, therefore, without going into merits of the issue of comparability, we set aside the issue of comparability of this company to the record of the AO/TPO for considering the functional and other criteria of comparability for including the said company in the list of comparables for determining the ALP in respect of international transaction of the assessee. Avani Cincom Technologies Ltd. and Celestial Biolabs Ltd. companies cannot be considered as functionally comparable with the assessee. Accordingly, we do not find any error or illegality in the order of the CIT(A) and decline to interfere with the order of the CIT(A) qua this issue. KALS Information Systems Ltd. company was developing software products and was not purely or mainly a software service provider, hence functionally dissimilar.

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• 2015 (11) TMI 1135
  Addition on account of deferred tax liability - whether such excess liability was created in order to explain the other assets - CIT(A) deleted the addition - Held that:- The impugned addition could not have been made by the AO for the reason that the deferred tax liability had not come to reduce the total income declared by the assessee in the return of income. The income declared in the return of income was the profit of the three divisions as per the profit and loss account as on 31.03.2003. The deferred tax liability was never an item of expenditure in the profit and loss account. Therefore, there is no question of excess liability. The other reason given by the CIT(A) that the adjustment in question in the balance sheet item cannot have any impact on the income of the assessee is also a sound basis for deleting the addition made by the AO. - Decided against revenue. Deductions u/s 80HHC - Held that:- The agency commission, miscellaneous receipts and adjustment of earlier years, were not treated as profits eligible for deduction u/s 80HHC of the Act by the CIT(A). In such situation we are of the view that there can be no grievance for the revenue as projected. This ground has probably been taken on misconception that the aforesaid items of receipts were also considered as profit eligible for deduction u/s 80HHC of the Act. - Decided against revenue. Computation of books profit by considering the amount claimed as deduction by the assessee u/s 80HHC or on the basis of the amount of deduction actually allowed u/ 80HHC - Held that:- If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then s. 115JB will cease to be a selfcontained code. In s. 115JB, as in s. 115JA, it has been clearly stated that the relief will be computed under s. 80HHC(3)/(3A), subject to the conditions under sub-cls. (4) and (4A) of that section. The conditions are only that the relief should be certified by the chartered accountant. Such condition is not a qualifying condition but it is a compliance condition. Therefore, one cannot rely upon the last sentence in cl. (iv) of Explanation to s. 115JB [subject to the conditions specified in sub-cls. (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department. Therefore Clause (iv) of the Explanation to s. 115JB covers full export profits of 100 per cent as "eligible profits" and the same cannot be reduced to 80 per cent by relying on s. 80HHC(1B); argument of the Department that both "eligibility" as well as "deductibility" of the profit have to be considered together for working out the deduction as mentioned in cl. (iv) has no merit. In view of the above the AO is directed to compute the books profit by considering the amount claimed as deduction by the assessee u/s 80HHC of the Act and not on the basis of the amount of deduction actually allowed u/ 80HHC of the Act.- Decided against revenue. Unascertained liability on account of gratuity - Held that:- The provision of gratuity was made by the assessee in the books of account on the basis of the report of actuarial valuation and it cannot be said that liability of the assessee on account of gratuity was unascertained liability. Therefore, the said sum cannot be added to the book profits as per clause (c) of Explanation 1 to section 115JB of the Act. - Decided against revenue. Computation of book profit from Tea Division u/s 115JB - non giving effect to Rule 8 of I.T.Rules, 1962 for agricultural income exempt u/s 10(1) - Held that:- In the case of income derived from sale of tea grown and manufactured by the seller in India, the income shall be computed as if they were income derived from business and 40% of such income shall deemed to be income liable to tax. It is thus clear from the reading of Rule 8(1) that 60% of the income computed as aforesaid is to be treated as agricultural income exempt u/s 10(1) of the Act. Since 60% of the income is exempt u/s 10(1) of the Act. The Assessee’s claim is that 60% of the income which is exempt in terms of Rule 8 of the Rules, is nothing but income exempt u/s.10(1) of the Act and hence the same should be reduced from the book profits under Explanation 1 clause (ii) listing amounts to be reduced u/s 115JB of the Act The provisions of Sec.115JB of the Act are on the same basis as that of Se.115J of the Act. There is no reason why the aforesaid principle laid down in the CBDT Circular, which is in tune with the provisions of law referred to above, should not be applied to the computation of books profits u/s.115JB of the Act. We therefore hold that the determination of books profits u/s.115JB of the Act should be worked out by the AO on the lines indicated in the Circular. We hold that the determination of books profits u/s.115JB of the Act should be worked out as done by the Assessee and in accordance with the directions laid down in the Circular referred above. - Decided in favour of assessee.

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• 2015 (11) TMI 1134
  Deduction u/s 80IC - manufacturing and sale of nutritional food supplements, agro products and veterinary feed supplements, etc. - assessee is merely mixes various ingredients, required for final products, with the help of machineries and the final product/finish product is filled in pouches - Held that:- Analyzing the processing activity done by the assessee, we find that the resultant end product is commercially known differently in the trading world, therefore, certainly it can be said that the activity of the assessee amounts to manufacture, consequently, entitled to deduction u/s 80IC of the Act, because, mixing various ingredients in a specified manner and the net result come into nutritional food supplement, agro products and veterinary food supplement amounts, which is used by the public at large for different purposes and is commercially known differently, therefore, it amounts to manufacturing. The resultant end product is outcome of combination of efforts with the help of men and machine using homogenizer. Likewise, Aloevera juice is extracted from the aloevera leaves with the help of machines and men and the end product is aloevera juice, which is outcome of various processes, therefore, whole activity of the assessee routs through various processes, thus, certainly amounts to manufacturing. The case of the assessee further find support from the decision in the case of Ramit Kumar Sharma vs DIT (IT) (2009 (1) TMI 12 - AUTHORITY FOR ADVANCE RULINGS ) wherein the assessee intend to start a tractor manufacturing industry in the state of Himachal Pradesh, wherein, the primary job was to provide, milling, tooling and grinding of surface of rear cover etc, which are important part of tractor, it was held that the activities amounts to manufacture or production of an article difference from raw castings, thus, entitled to deduction u/s 80IC of the Act. As mentioned earlier in Mrs. Delna Rustom Boyce (2009 (10) TMI 23 - AUTHORITY FOR ADVANCE RULINGS) processing, packaging and packing of fruits and vegetables were held to be eligible for deduction u/s 80IB of the Act, therefore, it can be concluded that the end product is commercially known differently, therefore, the assessee is involved in manufacturing - Decided in favour of assessee.

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• 2015 (11) TMI 1133
  TDS u/s.194H - payment in the nature of "Commission" - difference between the MRP and the price that the franchisees pay to the Assessee - CIT(A) deleted the disallowance and held that the relationship between the Assessee and its franchisee was on a principal to principal basis and was not in the nature of relationship between principal and agent - Held that:- Passing of title in the goods is important and determinative of the question whether franchisee was acting as agent or acting on a principal to principal basis of the Assessee. It is an undisputed fact that as per the terms of the agreement between the Assessee and its franchisee property in goods was to pass on delivery and the risk of ownership (in the form of the franchisee not being to sell the product or damage to the product) was that of the franchisee. When that is the factual position in the case, we are of the view that the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Mother dairy India [2012 (2) TMI 80 - DELHI HIGH COURT] was squarely applicable to the case of the Assessee. We therefore concur with the view of the CIT(A) and dismiss these appeals by the revenue. - Decided in favour of assessee.

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• 2015 (11) TMI 1132
  Levy of fee u/s 234E while processing the TDS statement - Intimation u/s 200A - Delay in filing of TDS returns - short deduction, Short Payment, and late payment and interest thereon - Held that:- Late fee for delay in filing return of tax deducted at source (TDS) u/s 234E of the Act cannot be raised while processing the TDS statement, by way of intimation u/s 200A of the Act. Thus, the intimations issued by the Assessing Officer u/s 200A of the Act are set aside to the extent of levy of fee u/s 234E of the Act and levied fee is deleted. However, the other adjustment made by the Assessing Officer in impugned intimations shall remain as such. It is clarified here that if limitation for levy of penalty u/s 234E has not expired, it is open for the Assessing Officer to pass a separate order for levy of penalty u/s 234E of the Act.

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• 2015 (11) TMI 1131
  Revision u/s 263 - Non deduction of TDS - applicability of section 40(a)(i) on data link charges and insurance charges - Held that:- In the period under consideration as per the details in 17f of the Form 3CD Report, the assessee has debited an amount on account of data link charges and insurance charges paid/payable to parties outside India, which it has claimed as not chargeable to tax in India based on the decision of Wipro Ltd., Vs. ITO (2004 (12) TMI 304 - ITAT BANGALORE-B ) and, that therefore the provisions of sec. 40(a)(i) are not attracted in its case. - the assessing officer has neither examined and nor verified this issue nor that he has applied his mind to the matter. Passing the order of assessment is the prerogative of the assessing officer and assessee has no control over the officer for passing the order of assessment in a specific manner. However, if the examination of the specific issue is not discernable from the order of assessment, then the higher forum can go through the show cause notice, if any, issued to the assessee and the reply thereto which would indicate that though the order of assessment is silent on the issue, it must have been discussed during the assessment proceedings. No such material is available before us, even in the assessee’s reply to the show cause notice issued by the learned CIT in revisionary proceedings u/s 263. The Hon’ble Apex Court in the case of Malabar Industries Co. Vs CIT reported in [2000 (2) TMI 10 - SUPREME Court ] has observed that the acceptance of accounting entries as it is without causing enquiries by the Assessing Officer would render the order of assessment erroneous and prejudicial to the interest of revenue. In the light of the facts and circumstances of the case as discussed above, we are of the view that the learned CIT has rightly considered all these aspects before taking action u/s 263 of the Act. - Decided against assessee.

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• 2015 (11) TMI 1130
  Disallowance of professional charges - failure to produce the confirmation of the persons to whom professional charges were paid - CIT(A) allowed the claim - Held that:- As seen from the order of Ld. CIT(A), it is seen that he has given a categorical finding that out of this amount of Rs. 6.00 lakh paid by the assessee to M/s Neuro Surgery Clinic in lieu of services rendered to the assessee, the payment of Rs. 2.00 lakh was made through account payee cheque and Rs. 4.00 lakh was shown as outstanding liability, which was paid in subsequent year. He has also given a finding that the recipient M/s Neuro Surgery Clinic has duly shown the receipt on account of professional charges from the assessee in its income tax return. He has also given a finding that these expenses incurred by the assessee are incidental to his medical professional consultancy and same are allowable expenses. Ld. DR of the Revenue could not controvert these findings of Ld. CIT(A) and therefore, we find no reason to interfere in the order of Ld. CIT(A) on this issue. - Decided against revenue. Disallowance of medical pathology expenses - CIT(A) allowed the claim - Held that:- Regarding this expenditure also, categorical findings were given by Ld. CIT(A) that these expenses are incidental to assessee’s professional activities and are allowable as business expenditure and payments were made through banking channel and the recipient M/s Medical Pathology Clinic has duly disclosed the receipts of this amount in its income tax return. Since Ld. DR of the Revenue could not controvert any of these findings of Ld. CIT(A), we find no reason to interfere - Decided against revenue. Addition made on account of Repairs & maintenance - CIT(A) allowed the claim - Held that:- These are professional expenses duly supported by proper bills and vouchers and payments were made through bank account. He has also given a finding that the expenses were incurred on account of repairs and maintenance of building, which was used by the assessee for his medical professional activities. Under these facts, we do not find any reason to interfere in the order of Ld. CIT(A) - Decided against revenue. Restricting the addition @ 10% from 25% of the vehicle running expenses, car insurance and depreciation made on account of personal use by CIT(A) - Held that:- We find that 20% disallowance out of vehicle expenses was made by the AO on adhoc basis, but this fact is noted by the Ld. CIT(A) that the assessee’s wife and his son had owned two vehicles in their own names and the assessee denied using official cars for personal use. This fact is also noted by the Ld. CIT(A) that the assessee has not given any explanation in respect of non maintenance of log book of vehicle. Under these facts, Ld. CIT(A) has reduced the disallowance out of vehicle expenses from 20% made by the AO to 10% - Decided against revenue. Addition made on account of professional income - CIT(A) deleted the addition - Held that:- AO did not bring any material on record, which could prove that the assessee has violated the terms and condition of professional and technical services contract made with Sahara Hospital from which the assessee has disclosed net professional income at Rs. 1,28,81,200/-. He has also given a finding that the AO has taken the professional receipt without conducting the necessary enquiries and without bringing any material on record to justify the huge undisclosed professional receipts of Rs. 43,80,000/-. Based on these findings, Ld. CIT(A) has deleted the net income of Rs. 29,26,650/- out of professional receipt alleged by the AO of Rs. 43.80 lakh by holding that this addition is without any basis and therefore, not justified. Ld. DR of the Revenue could not controvert any of these findings of Ld. CIT(A) and could not point out that any material have been brought on record by the AO in support of this allegation that there was undisclosed personal receipt of Rs. 43.80 lakh. - Decided against revenue. Addition made treating the income from agriculture as income from other source - CIT(A) deleted the addition - Held that:- This issue has been decided by the Ld. CIT(A), on this basis that the assessee has owned agricultural land approx 10 bighas irrigated on which agricultural activities were carried out through agricultural labours. He has also noted that the assessee has shown agricultural income in earlier and later years and the same was accepted by the AO without taking any adverse inference. Noreason to interfere in the order of the Ld. CIT(A) on this issue also - Decided against revenue. Disallowance of electricity expenses - CIT(A) deleted the addition - Held that:- AO made this addition at the rate of 50% of expenses on account of electrical charges without bringing any material on record, which could prove that the electrical expenses debited and claimed by the assessee in his books included the electrical expenses of assessee’s residence. At against this, it is noted by the Ld. CIT(A) that as per assessee, two electric meters are installed separately at his residence. Considering these facts, we do not find any reason to interfere in the order of the Ld. CIT(A) on this issue also because when separate electric meters are installed at the residence of the assessee, it cannot be said that electric from official meter was used for residential purpose without bringing any adverse material on record. - Decided against revenue.

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• 2015 (11) TMI 1129
  Penalty u/s 271(1)(c) - assessee has taken excessive cost value of the land without any evidence in order to reduce its capital gain tax liability - CIT(A) deleted the penalty - Held that:- Both of the lower authorities have determined the rates of land, by adopting some basis. The AO had accepted the claim of the assessee in the original assessment order. He changed his stand in the reassessment order. Thus, there are three different opinions with respect to rates of land i.e. one – as formed by AO in original assessment order, two- as formed by the AO in reassessment order and three- as adopted by Ld CIT(A). The Tribunal has approved the opinion of the Ld CIT(A), which is again subject to review before Hon’ble High Court. In these circumstances, the element of guesswork cannot be ruled out, therein. The quantum of income determined is certainly not beyond the shadow of doubts. Under these circumstances, we have strong doubts, if it can be said that, with certainty, that there was any concealment of income or furnishing of inaccurate particulars of income on the part of the Assessee. Under the income tax law, parameters for determination of taxable income and levy of penalty are different from each other. Both should not be mixed or interchanged. The penal provisions are quasi criminal in nature, therefore these have to construed and applied strictly. Penalty can be levied by the AO, only and only, if, the AO is able to establish that case of the Assessee falls within the framework of the penal provisions, and as per the given parameters. If we examine the facts of this case, we can say that even if a duty may be enjoined on the assessee to make correct disclosure of income, but if such disclosure is based on the opinion of an expert, who is otherwise also a registered valuer, having been appointed in terms of a statutory scheme, then only because his opinion is not accepted or some other expert gives another opinion, the same by itself may not be sufficient for arriving at a conclusion that the assessee has furnished inaccurate particulars of income. Hence, in our considered opinion, penalty cannot be levied in the facts and circumstances of this case, especially when the quantification of the income itself does not have strong pillars to stand. - Decided in favour of assessee.

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• 2015 (11) TMI 1128
  Addition u/s 40A(3) - cash payment - Held that:- The purpose of section 40A(3) is only preventive and to check evasion of tax and flow of unaccounted money or to check transactions which are not genuine and may be put as camouflage to evade tax by showing fictitious or false transactions. Admittedly, this is not the case in the facts of the assessee herein. The assessee had directly deposited cash in the bank account of the supplier M/s Pickme Feeds which fact is also acknowledged by the concerned supplier by crediting the said cash receipts in the ledger account of the assessee and the same ledger account has been obtained by the Learned AO u/s 133(6) directly from the concerned supplier M/s Pickme Feeds. It is also pertinent to note that the Hon’ble Rajasthan High Court in the case of Smt.Harshila Chordia vs ITO reported in (2006 (11) TMI 117 - RAJASTHAN HIGH COURT) had held that the exceptions contained in Rule 6DD of Income Tax Rules are not exhaustive and that the said rule must be interpreted liberally. Thus we have no hesitation in deleting the addition made in the sum of Rs. 62,06,269/- u/s 40A(3) of the Act. - Decided in favour of assessee.

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• 2015 (11) TMI 1127
  Addition on account of suppressed receipts - Additions on the basis of 26AS statement - CIT(A) deleted the addition - as per OLTAS information, 26AS details and also per TDS form 16A the amount has been credited to the account of the assessee by the company - whether there is no record with the company that the payment has been made directly to the retailers? - Held that:- As evident from affidavit a copy placed the assessee has categorically stated that the impugned “amount of Rs. 58,78,256 shown in form No. 26AS was neither received by me nor receivable to me” and that “the above stated amount was directly paid by the Vodafone Essar Digilink Ltd to the retailers of the company, a complete list of which is provided by the company and placed on file”. We have further noted that vide letter dated 15.12.2011 (duly acknowledge by the office on 23.12.2011 Vodafone Digilink Ltd has given a complete break up of Rs. 58 ,78,256 and given details of the retailers to whom the related payments have been made. There is no material to come to the conclusion that assessee ever received any such coupons or payments nor the same are reflected in his books of accounts or bank statements. The fact that these payments are made by coupons and vouchers etc. can also not be put against the assessee since the assessee never received the same and there is no evidence to the contrary. Apparently, entire confusion has started from the fact that, perhaps as a measure of abundant caution, Vodafone deducted tax at source in respect of the vouchers etc and, for whatever reasons, stated, the name of distributor as collective recipient of entire sum. On these facts, in our considered view, learned CIT(A) was quite justified in deleting the impugned addition. We approve his conclusions, and decline to interfere in the matter. - Decided in favour of assessee. Addition made on account of low G.P.- discrepancies in the stock register - CIT(A) deleted the addition - Held that:- The specific discrepancy pointed out by the AO has already been explained by the assessee and the Assessing Officer has in remand proceedings, accepted the explanation. The stock re cords were produced before the AO as well, and, therefore, an adverse remark b y the tax auditor ceases to be much relevant any way. In any case, there is nothing to show incorrectness of accounts and just because gross profit rate this year is lower the books of accounts cannot be rejected. In these circumstances , the conclusions arrived at by the CIT(A) do not require to be interfered with. We approve the same and decline to interfere in the matter. - Decided in favour of assessee. Addition made on account of excessive salary - CIT(A) deleted the addition - Held that:- There is no dispute that the salary expenditure is properly supported by necessary evidences and vouchers, but yet the AO had disallowed a part of increase in salary because it was not proportionate to increase in sales. This approach proceeds on fallacious assumption that increase in an expense must correspond to increase in benefit by that increase in expenses. It is only elementary that relationship between an expense and the benefits arising from such an expense can never be so linear and static. The allowance for deduction, in any case, is not dependent on the result it prod uces. As long as expenses are supported by evidences and there is nothing to even call into question the factum of expense having been incurred, the disallowance of such expenses cannot be made for the reason that expense is excessive. In view of these discussion, as also approving the reasoning adopted by the CIT(A), we approve the conclusions arrived at by the CIT(A) - Decided in favour of assessee. Disallowance of interest u/s. 14A and interest for personal use of borrowed funds - CIT(A) deleted the addition - Held that:- CIT(A) has given a categorical finding that borrowed funds are not used for any of these purposes. No material is brought before us to controvert these findings. Accordingly, we see no reasons to disturb conclusion arrived at by the CIT (A) in respect of these disallowance. The same is the position with respect to addition on account of low drawings. The AO had estimated annual household expenses at Rs. 1,20,000 but then admittedly drawings of assessee and his wife, put together, are Rs. 1,58,000. No addition is called for in respect of this addition for low household drawings either. Similarly, disallowances on account of shop expenses, telephone expenses, sales promotion expenses and car expenses etc are purely on adhoc basis without any specific reasons. Learned CIT(A) rightly deleted the same. We approve his action on this point as well, and decline to interfere in the matter. - Decided in favour of assessee.

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• 2015 (11) TMI 1126
  Addition u/s 68 - whether the Securities Transaction Tax (STT) has been paid on the purchase and sale of shares? - Held that:- The Revenue, on its part, has though made out a case, has not brought on record all the relevant facts. Also, it cannot be denied that the assessee is entitled to be furnished a copy of all the materials being relied upon by the Revenue toward impugning the assessee’s reliance on the said documents, and an opportunity to set up its defense. The issue to my mind is factually indeterminate. Reliance on the decisions by the tribunal in cases of other persons availing such credits; the issue being principally factual, would be of little assistance. This is stated as the ld. AR claims of about 15-20 cases by the Mumbai Benches of the tribunal in the recent months, where, under such circumstances, the appeals by the assessee are claimed to have been allowed. Why, the ld. CIT(A) has himself relied on several decisions by the tribunal, even discussing the facts thereof, where under such similar circumstances the additions have been confirmed, so that the issue in all the cases, to be decided on the facts and circumstances of each case, is with regard to the discharge or otherwise of the burden of proof on the assessee to satisfactorily explain the nature and source of the impugned credits The matter accordingly would stand to be restored to the file of the Assessing Officer for adjudication afresh, even as indicated during hearing. The assessees shall be allowed proper opportunity to state their case, as well as to meet that of the Revenue, which shall make available thereto all the materials being relied upon by it. - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 1125
  Addition on account of non capitalization of interest, loan processing fees and bank charges paid for commencement of commercial production - CIT(A) deleted the addition - Held that:- Examining the relevant accounts of the appellant and find that second unit got commenced on 01.01.2006 as per the disclosure made in the audited accounts. The appellant has capitalized interest; bank charges and other expenses pertaining to second unit (incurred upto December, 2005) upto the date of commencement of commercial production and has allocated the same to respective asset accounts after capitalizing the same. Interest and other financial expenses debited in the profit and loss account represent interest and other financial expenses in respect of first unit (i.e. old unit) for entire period of twelve months and in respect of second unit (i.e. new unit) for three months (i.e. from January, 2006 to March, 2006) only. Thus find that entire addition was made by Assessing Officer owing to non production of relevant accounts by the appellant’s counsel in the course of assessment proceedings who himself did not verify the factual position with regard to accounting treatment in the accounts leading to unwarranted disallowance. The addition made is directed to be deleted - Decided in favour of assessee. Disallowance on account of Service Tax of DG Set - CIT(A) deleted the addition - Held that:- The amount so disallowed represents annual service charges paid to Sealand Diesel P.Ltd. which is nothing but expense of recurring and routine in nature for maintenance of DG Set. The tax auditor under misconception reported service contract charges for maintenance of D.G.Set to be as service tax on DG Set leading to unwarranted addition. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any material on record, therefore, we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue - Decided in favour of assessee. Addition on account of unexplained credits in respect of deposits shown from various customers - CIT(A) deleted the addition - Held that:- CIT(A) examined the issue in his order on the basis of material available on record, such as finding given on the assessment record, submission of the assessee and remand report of the AO. The ld.CIT(A) has given a finding on each and every transaction related to credits. We find that the ld.CIT(A) has considered the material available on record and more particularly contra-accounts of the concerned parties. The Revenue has not rebutted the evidences placed by the assessee, therefore, we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue - Decided in favour of assessee. Addition on account of unexplained credits in respect of share capital and share premium - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding on fact with regard to the addition of Rs. 9 lacs that on verification of contra account with the account of party appearing in the books of account of the assessee. The ld.CIT(A) observed that the said party had maintained only one account in their books. However, it is the assessee who has treated said receipts under different heads such a dealer deposit or share capital/share premium account. Effectively, there is no unexplained receipt in the hands of the assessee. This finding of the ld.CIT(A) is not rebutted by Revenue by placing any contrary material on record, therefore, we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue, same is hereby upheld. - Decided in favour of assessee. Addition on account of excess claim of expenditure of gas purchase from ONGC Ltd. - CIT(A) deleted the addition - Held that:- We find that the ld.CIT(A) has given a finding on fact that the ONGC had recovered transportation charges on supply of gas for which due payment was made by the assessee. This finding on fact is not controverted by the Revenue by placing any material on record, therefore we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue, same is hereby upheld - Decided in favour of assessee. Disallowance of depreciation - Held that:- The assessee has not maintained any log book with regard to movement of vehicle so as to prove its use for business purpose. The first requirement for allowing the depreciation of expenditure on any assets is that the assets should be utilized for the business of the assessee. In the case in hand, the ld.CIT(A) has given a finding on fact that no evidence is placed by the assessee in support of its claim that the vehicle although registered in the name of the Direct was utilized for the purpose of business of the company. Even before this Tribunal, no such evidence is placed by the assessee.- Decided against assessee. Addition u/s 68 - Held that:- In the case in hand, the assessee has merely supplied the PAN, no confirmation or contra account were furnished. Therefore, Therefore, we do not see any reason to interfere with the finding of the ld.CIT(A) on this issue, same is hereby upheld. In respect of Globe Trade Point, the ld.CIT(A) has given a finding that the assessee had disclosed address of the party, namely Globe Trade Point. With this party, the assessee had made credit sales of Rs. 1,13,218/- in the month of Octoboer-2005 against which the assessee received Rs. 2 lacs in the month of October-2005 partly against the credit sales and partly as advance. The assessee instead of adjusting the said receipt against the credit sales accounted, the same as dealer deposit. Since in spite of giving sufficient opportunity, no contra account was furnished by the assessee, the ld.CIT(A) confirmed the addition. This finding of ld.CIT(A) that the assessee had made credit sales as well as received deposits from the concerned party, therefore in the absence of the contra account, the ld.CIT(A) was justified in sustaining the addition. - Decided against assessee.

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• 2015 (11) TMI 1124
  Registration under Section 12AA denied - depreciation claimed on the land - Held that:- registration under Section 12AA of the Act was denied to the appellant society solely on the ground that the appellant society had been claiming depreciation on the land which is not permissible under the Income Tax Act. In our considered opinion, this is not relevant consideration at the time of grant of registration. It is the issue to be examined during the course of assessment proceedings after grant of registration under Section 12AA of the Act. In this connection, it is relevant to mention that one of us (Hon’ble Accountant Member) is author of the order in the case of Paramount Public School Education Society Vs. CIT, [2015 (11) TMI 811 - ITAT DELHI] wherein it was held that the registration cannot be denied by examining the issues which are relevant for the assessments. Also we direct the ld. Commissioner of Income Tax (Exemptions), Chandigarh, to grant approval under Section 80G of the Act - Decided in favour of assessee.

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• 2015 (11) TMI 1123
  Validity of notice issued u/s. 153C - Held that:- Assessing Officer of assessee did not record any satisfaction prior to issue of notice u/s 153C. The so-called satisfaction recorded in the notice u/s 153C is totally vague. It has not specified which valuable articles/things/books of accounts/documents were found from Shri Rameshbhai B, Shah which belongs to the assessee. In the assessment order the Assessing Officer has mentioned that in the laptop of Shri Rameshbhai B. Shah the data pertaining to the assessee were found and on that basis notices u/s 153C have been issued. However, in the notice u/s 153C, wherein the Assessing Officer is claimed to have been recorded the satisfaction for issue of the notice, there is no mention about such laptop or the alleged data in such laptop which is claimed to be belonged to the assessee. In view of above, we have no hesitation to hold that the basic condition for issue of notice u/s 153C has not been satisfied. - Decided in favour of assessee.

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• 2015 (11) TMI 1122
  Rate of depreciation on Electric Installation used in factory premises to operate various Machinery & Equipments in manufacturing of POY and polyester chips - Held that:- As decided in favour of assessee's own case [2014 (12) TMI 677 - ITAT MUMBAI] held that the electrical fittings in the instant case should be considered as plant and machinery and hence the depreciation should be allowed at the rate of 25% to plant and machinery - Decided in favour of assessee. Disallowance of interest u/s 36(1)(iii) - Held that:- As decided in assessee's own case [2014 (12) TMI 677 - ITAT MUMBAI] AR submitted that the assessee had used the internal cash accruals for funding the above said projects and the availability of its own funds could be proved to the AO by showing the balance sheet of the assessee. Accordingly, he requested that this matter may be set aside to the file of the AO so that the assessee would be able to demonstrate about the availablility of its own funds, to which the Ld DR also did not object. Accordingly, we set aside the order of the Ld CIT (A) and restore this issue to the file of AO with a direction to examine this issue afresh by considering the information and explanation that may be furnished by the assessee and take appropriate decision in accordance with law Disallowance u/s 40A(2)(b) - Held that:- We direct the AO to compute the disallowance @ 6% of the aggregate purchase value of the purchases made from Arya Industries - Decided in favour of assessee in part Allowablility of the claim u/s 35D - Held that:- The assessee brought our attention to the additional ground filed before us for the first time making an alternate claim seeking relief u/s 37(1) of the Act. In this regard, Ld Representatives of both the parties mentioned that this issue raised in ground no.4 needs to be remanded to the file of the AO for fresh adjudication after admitting the said additional ground. Disallowance of alternate claim of depreciation when the rentals were not allowed - Held that:- As relying on assessee's own case [2014 (12) TMI 677 - ITAT MUMBAI] We notice it is held that the AO has denied the benefit of depreciation also on the ground that the assessee is not the owner of the asset as per the lease agreement. There is a fallacy in the said decision. Once the AO has held that this was a case of finance transaction by ignoring the lease agreement, in our view, he should not refer to the very same lease agreement to decide about the ownership. Accordingly, we are of the view that the assessee should be allowed depreciation benefit. - Decided in favour of assessee.

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• 2015 (11) TMI 1121
  Penalty u/s 271D and 271E - Held that:- Nothing has been brought on record by the Revenue to show that the assessee as a result of his business and interactions with the department in the earlier years had been made aware that accepting and repaying in cash to sister concerns in order to tide over financial emergencies were in violation of the provision of the Act. In the absence of any such evidence the plea of bonafide belief in the peculiar circumstances cannot be discarded. It is seen that the assessee has consistently canvassed that there was a bonafide belief that the amount taken from the sister concern in cash is not a violation of any provision. Return of loan by cash to the sister concern under a bonafide belief that the transaction with sister concerns is not in violation for similar reasons in the absence of any evidence to the contrary cannot be disbelieved. It is seen that the genuineness of the transactions have not been questioned despite the fact that the group company has been searched accordingly since nothing has been brought on record to canvass that reasonable cause is not constituted appeals of the assessee have to be allowed. Decision rendered in Bhalotia Engineering Works (2004 (8) TMI 66 - JHARKHAND High Court ) is entirely distinguishable on facts the impugned orders are set aside and the penalties imposed in each of these appeal is quashed. - Decided in favour of assessee.

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• 2015 (11) TMI 1120
  Unaccounted cash sales - CIT(A) deleted the addition - Held that:- There is force in the contention of learned counsel for the assessee that even if the cash sales issue is presumed to be against the assessee, then also only net profit rate could be applied on such sales and that shall be covered by the amount of Rs. 2,00,000 surrendered already by the assessee and has been assessed by the Department. We find that the Assessing Officer in the computation of assessable income has accepted the surrender of Rs. 2,00,000, which was surrendered by the assessee in its return of income. In these facts, we hold that there is no mistake in the order of the Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 7,50,000 on account of undisclosed cash sales and therefore, the ground of appeal of the Revenue is dismissed. - Decided in favour of assessee.

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• 2015 (11) TMI 1119
  Claim of depreciation - cost of the asset was allowed under section 11 - Held that:- as application income since the assessee is a charitable institution entitled for exemption under section 11. Therefore, the cost of the asset becomes nil. When the cost of the asset becomes nil, there is no question of allowing any depreciation. If the depreciation is allowed then it would amount to double deduction. The income of the charitable institution has to be computed on commercial principle in case the assessee is not claiming exemption under section 11 of the Act. The assessee can also claim depreciation in case the exemption under section 11 was denied by the Assessing Officer. Whatever may be the reasons, since the cost of the asset is nil as the cost was already allowed as application of income, this Tribunal is of the considered opinion that the assessee is not entitled for depreciation. Section 32 of the Act falls in Chapter IV under heading Computation of total income, however, section11 falls in Chapter III which provides for incomes which do not form part of the total income. Therefore, this Tribunal is of the considered opinion that the provisions of section 11 of the Act will override section 32. - Decided against assessee.

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• 2015 (11) TMI 1118
  Deduction under section 80-IB denied - CIT(A) allowed the claim - Held that:- Admittedly, the learned Commissioner of Income-tax (Appeals) has followed the order passed by the Tribunal in the assessee's own case for the assessment year- 2006-07. A perusal of the order of the Tribunal would show that the Tribunal is consistently taking the view that the deduction under section 80-IB should be allowed unit-wise and each unit is an independent unit. We notice that the learned Commissioner of Income-tax (Appeals) has followed the order of the Tribunal on this issue. - Decided against revenue.

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• 2015 (11) TMI 1117
  Taxability of borrowed service charges and the applicability treaty benefits under India-US tax treaty - Held that:- The issue has been settled under the MAP proceedings arrived at settlement between Government to Government level and therefore, honouring the same, we hold that such a borrowed services is not part of fees for technical services/fees for included services and hence not taxable in India. - Decided in favour of assessee

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• 2015 (11) TMI 1116
  Approval under section 80G denied - whether the presence of even one religious object in the deed would disentitle the assessee for approval under section 80G of the Act? - Held that:- When the expenditure does not exceed 5 per cent. of the total income for the previous year, then such a society/institution shall be deemed to be an institution to which the provisions of section 80G would apply. The Commissioner has not examined the expenditure incurred by the assessee in the previous year. Even though the assessee claims that no expenditure was incurred exceeding 5 per cent. of the total income, the Commissioner has not examined the same. Therefore, this Tribunal is of the considered opinion that the Commissioner has to re-examine the matter afresh. Accordingly, we set aside the order of the Commissioner and the entire issue is remitted to his file. The Commissioner shall re-examine the issue in the light of the provisions of section 80G(5B) and thereafter decide the same in accordance with law, after giving reasonable opportunity to the assessee. It is made clear that in case the Commissioner decides to grant approval under section 80G of the Act and the expenditure incurred by the assessee exceeded 5 per cent. of the total income in any of the previous year, then the Commissioner is at liberty to withdraw the approval for the year in which the expenditure exceeded 5 per cent. of the total income. - Decided in favour of assessee for statistical purposes.

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• Customs

• 2015 (11) TMI 1092
  Import of Boric Acid - Import without production of import permit - Held that:- Boric Acid is freely importable as per ITC (HS) classification 2810 0020, subject to a restriction of furnishing an import permit issued by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture. The goods are thus not notified as prohibited for imports, but import is restricted - Thus, Central Government vide Para 4.1.13 (d) has stipulated that import of “restricted” items “shall” be allowed under DFIA. In the instant case, the import of Boric Acid is against DFIA issued by DGFT. No restriction can therefore come in way of allowing import of such restricted item when import is sought against DFIA Neither the goods, Boric acid, imported for non-insecticidal use under a specific DFIA license issued by DGFT are liable to confiscation, nor is any fine or penalty imposable under the Customs Act, 1962. The Ruling of the Division Bench of Hon'ble Kerla High Court in [2015 (11) TMI 1027 - KERALA HIGH COURT], is held disguisable, as the matter before the Hon'ble High Court was with respect to import of boric acid on payment of duty, whereas in the present case, the import is against DFIA. Thus, the impugned order is set aside. - Decided in favour of assessee.

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• 2015 (11) TMI 1091
  Whether the item ‘bronopol’ imported by the appellant requires permission as per DGFT notification dated 1.1.2015 - Import for non-insecticidal purpose - Held that:- In this case the appellant filed Bill of Entry on 8.4.2015 and claimed classification of goods under Chapter 29 and when the initial query was raised in EDI, after reply to the query, the Deputy Commissioner replied that the importers require permission as per DGFT Notification dated 1.1.2015. Against the communication, the appellants preferred appeal before Commissioner (Appeals). We find that the Commissioner (Appeals) in his order has clearly brought out that the item imported bronopol is covered under Schedule to the Insecticide Act as an insecticide. There is no dispute on the fact that the item is insecticide. - it is relevant to see that the goods were imported on 8.4.2015. Any import or export is covered by Foreign Trade Policy and any notification issued by DGFT. As per the above DGFT Notification, if any insecticide is imported even for non-insecticides purpose, the permission is necessary from the Registration Committee under Department of Agriculture and Co-operation. The notification is issued under section 3 of Foreign Trade (Development & Regulation) Act, 1992 read with Foreign Trade Policy 2009 - 2014 which is come into effect from 1.1.2015. Therefore, the customs and the importer is bound by this notification issued by DGFT. - appellants are required to comply with the DGFT notification dated 1.1.2015. Therefore, we do not find any infirmity in the order passed by Commissioner (Appeals). Accordingly, the impugned order is upheld - Decided against assessee.

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• 2015 (11) TMI 1090
  Undervaluation of import of plastic chairs and CD holders - Revenue called for manufacturer's invoice from the importers, who could not produce the same. - Whether the Revenue’s reliance upon the printout retrieved from a CD recovered during search which relates to the export declaration made by the manufacturer while sending the goods to M/s. UNI Pure Ltd. UK, who is the supplier of the goods to the appellant, is a sufficient documentary evidence to enhance the value of the consignment - Held that:- No further enquiry stand made by the Revenue either from the manufacturer or from the supplier of the goods. As such the documents relating to the transactions between the manufacturer and the supplier of the goods have no relevance insofar as the appellant has imported the goods in question from the supplier. The Directors of the company in their statements recorded during the investigations have clearly deposed that they have paid their supplier an amount shown in the contract raised in the invoices and they are not aware of the manufacturer s price as also of the fact as to why the supplier has sold them the consignment at a reduced value even if, as per the Revenue, he has received the same at a higher value. - It is not proved on record that the supplier has procured the goods at that price shown in the said printout. In any case, it is only an export declaration made at Taiwan and cannot be adopted as a true value of the goods inasmuch as an exporter can enhance the value of the goods for the purpose of his own benefits which might have been available to them under the export laws of that country. There is no further evidence on record showing that the importer had paid extra amount to the supplier of the goods. Transaction value is confined to the particular transaction and in the absence of any other evidence, same has to be adopted as the assessable value. The Revenue in the present case has not produced any contemporaneous evidence and the reliance by the Revenue to another import at Chennai Port cannot be held to be contemporaneous inasmuch as the goods are not of the same country of origin. The reference to the contemporaneous import is in respect of European origin goods whereas the goods in the present case are of Taiwan origin. As such we find no reasons to doubt the transaction value declared by the appellant. The enhancement of the same based upon the some extraneous documents is neither justified nor warranted. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1088
  Revocation of CHA licence - forfeiture of whole amount of bank guarantee - illicit export of contraband were done using IECs of various firms which were either not in existence or without the knowledge of IEC holders - Held that:- The case mainly deals with failure of appellant to discharge his obligations as licensed CHA. Such failure contributed to the contrabands being exported out of country. In one specific case 30 kgs of Ketamine, prohibited under NDPS Act, was found to be exported to Canada. The plea of the appellant that the duties prescribed under the Regulations are impractical and against general business practice is not acceptable. It has been established that no verification of genuineness/existence of exporters have been made by the appellant before accepting the work of handling the consignment for documentation and clearance through customs. The failure of the appellant, apparently, is one of the contributing factors in the illicit exports Though the appellant did file electronically the shipping bill, thereafter they did not do any further work relating to the export cargo - revocation of CHA licence is too harsh a consequence for the omission of appellant as they were not involved in any act of entering and presenting the cargo and processing the document with the customs. Hence, for the failure to cross check the KYC papers, we find the forfeiture of bank guarantee of Rs. 50,000/- will be sufficient penalty. This case does not warrant revocation of CHA licence itself - Decided partly in favour of appellant.

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• 2015 (11) TMI 1087
  Violation of the provisions of the Customs House Agents Licensing Regulation, 2004 - lapse on the part of Mr. G.S. Prince who was a G card-holder of the appellant - Misdeclaration of goods - Import of second hand cars - Held that:- Mr. G.S. Prince admitted in his statement that he acted in his personal capacity and the appellant. CHA was not aware his activities in this regard. It is also seen that the appellant s statement was never recorded and there is no evidence to suggest that the appellant was aware of the activities of Mr. G.S. Prince. In this regard, we find that in respect of Appeal the CESTAT allowed the appellant s appeal [2015 (11) TMI 758 - CESTAT NEW DELHI] and set aside the penalties imposed upon it on similar grounds and on the basis of similar evidence. CESTAT in that order came to a finding that there was no evidence to prove the involvement of the appellant, that its employee had suo motu acted for his personal greed and beyond the scope of duty and therefore the employer (i.e. the appellant) cannot be penalised. - where the agent was authorised expressely or impliedly by the owner, the owner shall also be liable for the actions of agent. In the present case, no evidence has come on record that the appellant authorised Mr. G.S. Prince expressly or impliedly. - Levy of penalties set aside - Decided in favour of appellants.

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• 2015 (11) TMI 1086
  Valuation of goods - Enhancement in value of goods - Held that:- Enhancement of value has been done merely on the basis of the statements of the indenters who too spoke about value of the said goods in Malaysia. Enhancement of value merely on the basis of such statements of the indenters in the absence of any inculpatory statement of the assessee -appellant and without the support of value of any contemporaneous imports of identical / similar goods is totally unsustainable particularly when the impugned goods came from UAE and not from Malaysia. When the allegation of undervaluation is not sustainable the question of RF and penalty simply does not arise. - Decided in favour of assessee.

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• 2015 (11) TMI 1085
  Classification of oxygen sensors - Classification under CTH 9027 1000 or under 90318000 - Held that:- it is obvious that oxygen sensors are not instruments or apparatus for physical or chemical analysis as they do not do any analysis and are not capable of doing so either. Indeed, these are quite unlike polarimeters, refractomters, spectrometers, gas or smoke analysis apparatus which are mentioned as examples in the said Chapter Heading 9027. These sensors also cannot be said to be instruments and apparatus for measuring or checking viscosity, porosity, expansion surface tension or the like because what they do is nothing at all like checking viscosity porosity, expansion or surface tension. These also do not check the quantities of heat, sound or light. Thus, the impugned goods do not belong to Chapter Heading 9027. Once their classification under Chapter Heading 9027 is ruled out, they would land up under CTH 9031 as admittedly that is the only competing entry. The sensors in question are essentially a part or component of the apparatus for ascertaining the best carburettor setting as these sensors enable such apparatus to detect the oxygen levels in the exhaust gases. - opinion of U.S. Customs cited by the ld. Departmental Representative was in respect of a different product namely, "sensidyne gas detector tubes" and "gas decometer tubes", Further, the opinion of customs administration of another country is not binding on the other customs administrations. - ratio of this judgement [Pentax Engineering Pvt. Ltd. (1997 (8) TMI 249 - CEGAT, NEW DELHI)] is clearly applicable to the present case supporting the view that the impugned goods are not classifiable under CTH 90.27. - Decided in favour of assessee.

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• 2015 (11) TMI 1084
  Revocation of CHA license - Forfeiture of security - CHA violated the Provisions of Regulation 13 (a) and 13 (o) of CHALR, 2004 - CHA did not verify the antecedents of the importer while the actual importer was some one else - Held that:- The representatives of the appellant CHA firm has confirmed that he received the import documents from the person, Shri Manash Palit and was not aware about the actual importer. We however observe that the appellant’s grievance of not allowing the cross-examination and supply of the relied upon documents were not addressed positively and to this extent, the principle of natural justice has not been followed. Accordingly, we set aside the order of the Ld. Commissioner and direct him to decide the case afresh after allowing cross-examination of the persons as requested by the appellant and after supplying copy of the relied upon documents if not supplied so far - Appeal disposed of.

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• 2015 (11) TMI 1083
  Refund claim of interest paid in excess than prescribed rate - whether the appellants paid interest at a rate higher than the rate fixed by the Central Government for the period for which the interest was paid as per the directions of the Department - Held that:- Rate of interest under Section 28AB of the Act was fixed at 13% p.a. vide Notification No.76/2003-CUS(NT), dated 12.09.2003 and thus evidently the appellants paid interest in excess of what was required to be paid. - There had been no Show Cause Notice requiring the appellants to show cause as to why the interest should not be demanded/recovered from 2001. Indeed, even if it is eventually held through proper process of Show Cause/adjudication that the interest was leviable from the year 2001, the refund of interest paid in excess during the period 30.09.2003 to 29.09.2005 will have to be sanctioned and only then it can be adjusted towards the interest liability arising as a result of quasi-judicial determination that the interest was chargeable/ recoverable from the year 2001. Observation of the adjudicating authority to the effect that because the interest is recoverable from the year 2001, the Department charged interest from the appellant as per law is devoid of any basis, logic or rationale. The Department demanded interest for the period 30.09.2003 upto 29.09.2005 at the rate of 15% p.a. (which the appellants paid), while the applicable rate of interest during the period was 13% p.a. as mentioned in para 5 above. Thus the amount of interest paid (@ 15% p.a.) was evidently more than the interest payable (@ 13% p.a.) and consequently the appellants were clearly entitled to (sought) refund of excess interest so paid. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1082
  Suspension of CHA license - Evasion of CVD - Undervaluation - Held that:- there is no allegation made out against the appellant CHA firm of the active involvement in the alleged undervaluation by the said importers. Further no documents appeared to have been executed and handled by the said Faiyaz Merchant, on behalf of the appellant firm. It is further admitted fact that the suspension have been made by way of interim measure for alleged misgivings and/or action or inaction on the part of the appellant for imports prior to March, 2012, almost after 2 years and as such interim suspension, pending inquiry is bad and not called for. - there is no allegation made out against the appellant CHA firm of the active involvement in the alleged undervaluation by the said importers. Further no documents appeared to have been executed and handled by the said Faiyaz Merchant, on behalf of the appellant firm. It is further admitted fact that the suspension have been made by way of interim measure for alleged misgivings and/or action or inaction on the part of the appellant for imports prior to March, 2012, almost after 2 years and as such interim suspension, pending inquiry is bad and not called for. Interim suspension of the appellant CHA firm vide the impugned order is set aside. The Commissioner of Customs is directed to complete the inquiry proceedings expeditiously preferably within a period of 12 months from receipt of a copy of this order. The appellant CHA firm is entitled to carry on its business as CHA with immediate effect. - Decided in favour of assessee.

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• 2015 (11) TMI 1081
  Re-export the containers within six months from the date of their importation - exemption from payment of duty under Notification No. 104/94 dated 16.3.1994 - validity of evidence being computer printout showing the location of each container - whether the documents submitted by the appellant indicating the location of the containers in various ports of the world should be accepted or not as proof of re-export - Confiscation of goods - Imposition of redemption fine - Held that:- location of the container varies with time. But, the printouts indicate the location to be outside India, except in case of 11 containers. We see no reason to disbelieve the statement of the Counsel that the printout clearly indicates the present location of the containers. More so when the shipping line which deals with hundreds of containers would not be expected to manipulate the website records for a few containers for which demand of duty has been raised. We, therefore, accept the evidence provided by the learned Counsel. - when the appellant himself certifies these copies, there should be no reason to reject this evidence. It would be rather unfair to expect the appellant to get a certificate from various port authorities all over the world when Revenue has not proved that the evidence submitted is false. In this view of the matter, we reject the finding of the Commissioner. Therefore, the remand is only for the purpose of determining the duty payable on the 11 containers as well as the penalties and redemption fine, which should naturally be proportionate to the amount of duty which is payable. - Decided partly in favour of assessee.

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• 2015 (11) TMI 1080
  Denial of refund claim - Project Import - Claim of concessional rate of duty - the appellant in being pressure to complete the project in time, deposited the duty and cleared the goods. Subsequently, the appellants were received the sanction and requirement etc., preferred the claim of refund for the excess duty paid - Held that:- Commissioner (Appeals) failed to exercise jurisdiction against same. The learned Commissioner (Appeals) has only raised the doubt which are in the nature of summarize and has not brought out any finding on record, on which setting aside of the orders sanctioning refund can be justified. Therefore, the impugned order of the Commissioner (Appeals) is set aside. Accordingly, the appeal of the assessee is allowed and appeal of the Revenue is dismissed. It is also held that less charge memo dated 7.2.2005 is clearly time barred. - Decided in favour of assessee.

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• Corporate Laws

• 2015 (11) TMI 1075
  Permanent Injunction - plaintiffs have sought inter alia an interim order restraining the defendants from proceeding any further with the Rights Issue under the impugned Letter of Offer dated 14th September, 2015 in any manner during the pendency of the suit - whether on the date of filing of the suit, the plaintiffs were entitled for injunction or not? - Held that:- There is no force in the submission of the plaintiff that they cannot go to the Company Law Board as the shareholding is less than 10% as the appealable remedy lies before SEBI where no shareholding limit is needed to seek redressal of the alleged grievances raised by the plaintiff. The allegation of false misrepresentation and fraud as alleged if any ought to have come in the picture after 31st March, 2015 when the process was started first time. The grievance of the plaintiffs still can be raised by the plaintiffs. But it is doubtful that at this stage the said claim is decided when the shares have already been allotted once the plaintiffs either were not interested since the year 2011 and from September, 2013 when their names were not shown and still they did not take any steps. There is no force in the submissions. Learned Senior Counsel has argued that most of the issues/objections raised by the plaintiffs are of technical in nature which could have been taken by the plaintiffs before SEBI, if they had. The same cannot be determined after completion of entire process particularly in the interim application. The plaintiffs had enough time to raise the same before appropriate authority and not before this Court at this stage. The plaintiff was at least aware from September 2013 about its non inclusion as part of Promoter & Promoter Company of defendant No.1 in the shareholding pattern filed by Defendant No.1 with the stock exchange. The defendant No.1 then in every quarterly shareholding pattern filed the Plaintiff has not been shown as part of Promoter or Promoter Company of defendant No.1. The aforesaid shareholding pattern has been available on the website of Stock Exchanges since 2013 but no objection was raised. The Resolution approving the rights issue was passed on 31st March, 2015. Thereafter, the said resolution was put up for vote to the shareholders by a postal ballet and the plaintiff chose not to cast its vote. The plaintiff was aware as far back as June 2015 about the terms of the offer when the same was put on the website of SEBI. Even as per plaintiff’s own averment it was aware of the offer in the second or third week of September but despite the same chose to file the Suit only in second week of October, 2015 knowing fully well that the closing date of the rights issue is 14th October, 2015. With regard to objection raised on behalf of the plaintiff that the object for which the rights issue is being made is not justifiable i.e. repayment of loans of Promoter and Promoter Companies and it was argued that some of these loans are not even due till 2017, it was submitted that the object of the letter of offer was set out in the Board Resolution dated 31st March, 2015. The said Resolution was put up for voting by postal ballot to the shareholders. In the postal ballot form sent to shareholders the object of the letter of offer is clearly disclosed at page 175 of the documents filed with the reply. The postal ballot form was sent to the plaintiff at page 181 of documents filed with reply. The plaintiff chose not to vote. 99.97% of the valid votes cast on the resolution by the shareholders voted in favour of the said resolution. Report of postal ballots is filed. SEBI raised a query on the object of the issue vide its interim observations dated 23rd June, 2015. The same was duly replied to by defendant No.1 vide its reply dated 6th July, 2015. Subsequently, SEBI noted compliance vide its letter dated 7th September, 2015. The plaintiff has also not disclosed that an application had been filed on 5th October, 2015 before the High Court of Calcutta in the Testamentary proceedings pending there with regards to the estate of Late Smt. Priyamvada Devi Birla. The said application is listed for 27th November, 2015. Letter of offer was issued and dispatched to the shareholders by defendant No.2 from Mumbai and submitted with SEBI by defendant No.4 in Mumbai and submitted by defendant No.1 to the stock exchanges from Satna, Madhya Pradesh. Thus, no part of cause of action to file the present suit arose within the territorial jurisdiction of this Court. Assuming though denying that any part of cause of action arose in Delhi, even then in view of the categorical jurisdiction clause, only the Courts in Madhya Pradesh would have jurisdiction to entertain the suit, assuming the same is maintainable. The present case does not fall in any of the exceptions carved out in the case of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors., (1998 (10) TMI 510 - SUPREME COURT) namely enforcement of any fundamental rights or violation of principles of natural justice or where proceedings are without jurisdiction or vires of an act is challenged. No prima facie case is made out by the plaintiffs. The balance of convenience also lies in favour of the defendants. If any order is passed, the defendants would suffer irreparable loss and injury. Third parties right has already been created. The plaintiffs are not entitled to an injunction as prayed for. However, the plaintiffs are at liberty to take appropriate remedy by amending the plaint by seeking the declaration to become promoter or part of promoters group of the company and to seek damages as per law. The same would be decided as per its merit.

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• Service Tax

• 2015 (11) TMI 1143
  Waiver of pre deposit - Construction of complex services - Held that:- Appellant constructed independent houses in a specified area for the Rajasthan Housing Board and other housing development organisations. A ld. Division Bench of this Tribunal in Macro Marvel Projects Ltd. Vs. CST, Chennai - [2008 (9) TMI 80 - CESTAT, CHENNAI] ruled that construction of independent houses, even if they are more than 12 in number would not amount to construction of residential complex, falling within the ambit of construction of complex service defined in Section 65 (91a) of Act. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1114
  Demand of service tax - authorized service station - whether the amount received by the appellant from Maruti Udyog Ltd. as dealers margin for can be considered as an amount received for free servicing undertaken by the appellant on behalf of Maruti Udyog Ltd. and the handling charges which have been recovered by the appellant from their customers would be includable in the taxable value for recovery of service tax - Held that:- Amounts received by the appellant are recorded by Maruti Udyog Ltd. as well as the appellant as dealers margin and the handling charges received by the appellant from the customers are shown in the invoices as charges and value added tax is paid on such amount. - entire case of the revenue is misdirected, in as much is the very same issue was in the case before the Tribunal in the case of Jabalpur Motors Ltd. (2015 (1) TMI 1140 - CESTAT NEW DELHI) - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1113
  Extension of stay order - Power of Tribunal to extend stay beyond the period of 365 days - Held that:- power to grant stay although not expressly provided in the Statute (either before 06.08.2014 or with effect therefrom) it was and continues to be an inherent power of the Tribunal - section did not grant any power to grant stay; it only sought to put fetters on the power of the Tribunal to grant stay beyond a certain period. Consequently its abolition can only have an effect that fetters which the said sub-section sought to place on the Tribunal with regard to the duration beyond which CESTAT could not grant stay no longer exist. In other words, with the abolition of Section 35C(2A) ibid with effect from 06.08.2014, the power of the Tribunal with regard to grant of stay in no way got attenuated. Even during the existence of sub-section 35C(2A) of the Act (i.e. prior to 06.08.2014), the Tribunal in the case of Halidram India Pvt. Ltd. Vs. CCE, Delhi [2014 (10) TMI 724 - CESTAT NEW DELHI (LB)] held that the Tribunal had power to extend the stay beyond the period of 365 days in cases where appellant was ready and willing to pursue the appeal, but the Tribunal owing to the older pendency was unable to take up the appeal - Stay extended.

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• 2015 (11) TMI 1112
  Refund claim - Notification No.41/2007-ST dated 06.10.2007 - export of goods - whether the appellant can get the refund of the amount having filed the refund claim on 31.03.2009 instead of 30.09.2008 - Held that:- There is no dispute as to the fact that the appellant had exported the goods and had utilized the services of the service provider for such exports. It is also not in dispute that appellant is eligible for the refund of the amount of service tax paid by the service providers. First appellate authority has correctly recorded the fact that it is settled principle as to Rules and Notifications are issued from to time to supplement the provisions of main Act and grant of relief of refund of service tax paid on services used in export of goods has to be sanctioned to the respondent when conditions prescribed in the main Act are fulfilled. Main conditions as laid down in the act are fulfilled i.e. there has to be export of goods and the service tax liability has to be paid to the service provider and the same must have been used for the export of the goods which conditions are fulfilled by the respondent. - impugned order is correct and legal and does not require any interference. - Decided against Revenue.

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• 2015 (11) TMI 1111
  Delay in payment of service tax - Penalty u/s 76, 77 & 78 - Architect Services - Payment of tax with interest before issuance of SCN - Held that:- As the proposed tax amount in the show-cause notice under both the head Rs. 25,00,640/-, thus the ground of the Revenue fails that the same part of the amount paid after issue of show-cause notice. Further as per the chart, all the payments made latest by 4.4.2009, which is prior to issue of show-cause notice dated 28.7.2009. Thus, I hold that the appeal of the Revenue is erroneous and in mistake of facts and fit to be dismissed. - Decided against revenue.

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• 2015 (11) TMI 1110
  Non payment of service tax collected - Custom House Agent service - C & F service - Penalty u/s 76 & 78 - Held that:- Appellants have claimed that they were collecting amounts for various services such as obtaining space certificate, getting Port Health Officer report, getting warehousing licence, getting extension of warehousing licence, attending warehouse clearances, miscellaneous expenses, supervision expenses, miscellaneous DEPB expense etc. To a specific query from the Bench, learned counsel fairly agreed that for these amounts, the appellant do not have bills and he also could not specifically confirm that these were in the nature of reimbursement of actual expenses incurred by the appellant as a CHA so that the same can be considered as expenses incurred by a pure agent. In the absence of any evidence to show that these were reimbursable expenses and covered by bills and evidences to show that this was actual reimbursement of expenses, it would not be appropriate to consider the claim that the same cannot be charged to service tax. Therefore we consider that service tax of Rs. 8,43,226/- with interest liable to be paid on these amounts has to be upheld as demanded. The appellants do not undertake the responsibility of clearing and forwarding but have undertaken certain activities which we cannot consider as part of C&F agency service. Therefore, we consider that demand for Rs. 16,924/- also cannot be sustained. Penalty has been imposed under Section 76 as well as Section 78 of Finance Act, 1994. It is settled law that penalties under Sections 76 and 78 both cannot be imposed. Therefore we consider that penalty under Section 78 equal to the service tax demand upheld by us would meet ends of justice and penalty under Section 76 need not be imposed

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• 2015 (11) TMI 1109
  Denial of refund claim - Notification No.41/2007-ST dated 06.10.2007 - Bar of limitation - Held that:- The exemption is administered by way of refund i.e. the service provider at the first stage has to pay the service tax attributable to the taxable services and thereafter has to file the refund application. In this context para 2 (e) of the said Notification is relevant, which provides that the claim for refund shall be filed on a quarterly basis, within 60 days from the end of the relevant quarter during which the said goods have been exported. In the present case, it is admitted fact on record that the export took place during the period July to September, 2008 and the refund application was filed by the appellant on 10.12.2010. As per the requirement of he said Notification, since the refund application has not been filed within the specified time limit prescribed therein, the same, in my opinion, is barred by limitation of time - No infirmity in the impugned order passed by the Jurisdictional Central Excise Commissioner - Decided against assessee.

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• 2015 (11) TMI 1108
  Waiver of pre deposit - Business Support Services - SSI Benefit - Held that:- The applicants admitted the classification and duty liability under BPS for July, 2010 but disputed valuation. On perusal of the 2011 year agreement, it is seen that schedule1/1A (1) agreement mentions 10% of the player fee relates to sponsorship and brand promotion. However, no such specific clause exists in the earlier agreements pertaining to demand period. We also find that in the subsequent demand raised by the department No.62/2012 dated 22.10.12 the demand restricted to only 10% of the player fee. The valuation dispute and claim of SSI benefit will be considered at the time of final hearing. - Therefore by taking into consideration of the pre-deposit already made by the appellants other than Sl. No. 2,4 and 6 made before the Commissioner (Appeals), which is sufficient and the balance amount of dues shall be waived and its recovery stayed in the disposal of the appeals - Partial stay granted.

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• 2015 (11) TMI 1107
  Penalty u/s 76, 77 & 78 - Benefit u/s 73(3) - Payment of service tax before issuance of SCN - Held that:- Appellant has deposited the entire dues alongwith interest on 02/02/2010, immediately on being pointed out by the Revenue. It is also appearing from the records that the appellant has intimated to the department about payment particulars vide their letter dated 14/05/2010 & the same was acknowledged by the department and also wrote a letter to the Commissioner, Central Excise Nagpur for waiver from penalties and not to issue any show-cause notice. - if the assessee has discharged the service tax liability on his own ascertainment or on the basis of ascertainment by the Central Excise Officers and informs the Central Excise Officer of payment of such service tax then, no notice under sub-section (1) of Section 73 in respect of the amount so paid shall be served. In the instant case, the appellant discharged the tax liability for the period 2007-08 to 2009-10 along with interest on 02/02/2010 - provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. - Decided in favour of assessee.

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• 2015 (11) TMI 1106
  Demand of service tax - maintenance and repair service - Scope of service - Held that:- It is evident that only service provided by the appellant under a maintenance contract or agreement was liable to service tax w.e.f. 1.7.2003. - it was only w.e.f. 16.6.2005 that a maintenance or repair service provided under a contract or agreement (as different from a maintenance contract or agreement) became taxable. The service recipients have certified that the contracts with the appellants were repair contracts and not maintenance contracts. - The show cause notice in this case was issued on 6.12.2006. The fact that the appellant started paying service tax w.e.f. 16.6.2005 after the definition of maintenance or repair service was amended shows their bona fides. Even if the contracts under which the service was rendered were to be interpreted by some as maintenance contracts, the fact remains that it cannot be said to be unreasonable on the part of the appellant to think that these were not maintenance contracts and the fact that it started paying service tax with effect from 16.6.2005 when the words maintenance contract was substituted by the word contract lends credence to the appellants contention regarding their bonafide belief - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1105
  Denial of CENVAT Credit - Banking and other Financial Services - Some of the services are partially exempted vide Notification No. 29/2005-Service Tax dated 22.2.2004 read with Valuation Rules - Held that:- issue is full covered by Josts Engineering (2013 (8) TMI 463 - CESTAT MUMBAI) and also in the case of Nagar Urban Co-operative Bank Ltd. (2014 (7) TMI 117 - CESTAT MUMBAI). I find that the appellants case is squarely covered as in earlier order[2015 (11) TMI 952 - CESTAT MUMBAI]. Further, the aforementioned ruling was not available before the adjudicating authority at the time of passing of the impugned order and these rulings were pronounced subsequently. In this view of matter and after recording the finding that the appellants case are covered by these two rulings, I remand the matter back to the adjudicating authority with a direction to verify the amount of CENVAT Credit reversed. If the same is found to be short then the appellant may be allowed an opportunity to reverse the balance amount alongwith interest. It is also held that the Banking and other Financial Service, which are the output service of the appellant are not fully exempted and accordingly, do not fall under the category of exempt service as defined under Rule 2(e) of the CENVAT Credit Rules, 2004. - Matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 1104
  Valuation of service - Includibility of warehousing and other reimbursables in the value of C&F agent service - Held that:- Madras High Court in the case of CCE, Chennai Vs. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT] held that reimbursable expenses received by the assessee need not be added to the taxable value relating to clearing and forwarding agents service and that the receipt is for reimbursing expenditure incurred for the purpose and the mere act of reimbursement per se would not justify the contention of Revenue that the same was having the character of the remuneration or commission for the purpose of Rule 6(8) of Service Tax Rules, 1994. It is also seen that the Supreme Court has dismissed the Civil Appeal No. 171/2009 filed by C.C.E. against CESTAT Final Order [2008 (6) TMI 78 - CESTAT AHMEDABAD] in the case of Reliance Industries Ltd. Vs. CCE which allowed assessee’s appeal and held that expenses incurred on account of reimbursable expenses shall not be includible in the taxable value (Service Tax Review 15 Sept. 2011 page 70). The reimbursable expenses in this case related to travelling expenses of a consulting engineer. In the wake of these judicial pronouncements, the CESTAT Larger Bench judgement in case of Shri Bhagavathy Traders (2011 (8) TMI 430 - CESTAT, BANGALORE) which had distinguished CESTAT judgement in case of Sangamitra Services Agency (2007 (7) TMI 33 - CESTAT, CHENNAI) has since been overtaken by Madras High Court judgement in the case of Sangamitra Service Agency (supra) and the judgement in case of Reliance Industries Ltd. (supra). - Decided in favour of assessee.

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• 2015 (11) TMI 1089
  Levy of penalty - Failure to file ST-3 Returns - Suppression of value - Evasion of service tax - appellant has discharged the Service Tax liability and interest thereof on being pointed out - Held that:- the responsible officials of the appellant were aware to the fact that the difference between the amounts of Service Tax paid and Service Tax collected was credited to the profit and loss account as commission to show more profit. On the face of such categorical admission and standing by it in the cross-examination by the Internal Auditor of the company, we find no reason to interfere in the impugned order, which imposed penalty under various Sections of the Finance Act, 1994. - levy of penalty confirmed - Decided against Assessee.

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• Central Excise

• 2015 (11) TMI 1103
  Benefit of Cenvat credit - man-power supply service - Pest Control Service - Held that:- Canteen being an integral part of the factory and maintenance of such canteen being an obligation under the Factories Act, man-power supply to the canteen is not out of the scope of utlisation of the man-power in the integrated activity of the factory. Pest control being an essentiality to preserve the record for carrying on the business disallowance of credit in respect of such service does not appear to be proper. Therefore, learned Commissioner (Appeals) has rightly allowed appeal of respondent.

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• 2015 (11) TMI 1102
  Denial of Cenvat Credit - various vehicles/equipments like forklift, tempo, cars etc. - Held that:- Commissioner (Appeals) observed that the said vehicle might have been used for purpose other than what is claimed by the appellant. I do not find any material that the said vehicle was used outside of the factory, and the credit cannot be denied on the basis of assumption and presumption. Taking interest into account of the amount of duty and the facts of the case, the impugned order is set-aside - Decided in favour of assessee.

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• 2015 (11) TMI 1101
  Duty demand - Invocation of extended period of limitation - Held that:- Ground of limitation a question of law, can be raised before the Appellate authority. It appears from the records that the demand was raised beyond the period of 5 years. However, this is a matter of fact, which is required to be examined by the lower authorities. - Adjudicating authority is directed to examine as to whether the demand of duty was raised beyond the period of 5 years - Matter remanded back - Decided in favour of assessee.

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• 2015 (11) TMI 1100
  Whether the finished goods of the appellant was input of the EOU and such input consumed to manufacture final goods - Held that:- When there was plea that accumulated credits were not possible to be utilised, such imposability should have been examined by the learned Commissioner (Appeals). He has failed to do so. Hon'ble Gujarat High Court in the case of Commissioner of Central Excise & Customs Vs NBM Industries reported in [2011 (9) TMI 360 - GUJARAT HIGH COURT] has held that the input used in the manufacture of goods cleared by DTA unit to 100% EOU entitles the DTA to the refund of the Cenvat credit accumulated not possible to be utilized. - Decided in favour of assessee.

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• 2015 (11) TMI 1099
  Valuation - inclusion of amortized cost of moulds - inclusion of interest element to the assessable value - inclusion of insurance, clearing and forwarding and transportation cost - Held that:- so far as allegation of non inclusion of insurance, clearing and forwarding and transportation cost is concerned, the adjudication proceeding was finally heard on 22.12.2004. Thereafter on 15.6.2005, report of chartered accountant was obtained by the Commissioner contending that CVD and C&F, transportation from port to buyer s premises had not been included in the cost of moulds and dies. Non inclusion thereof gave rise to demand of Rs. 37,466/-. It is difficult to agree with the learned adjudicating authority on such demand since report from Chartered Accountant was obtained after hearing was concluded and not confronted to the appellant for rebuttal. - Law being well settled there should be inclusion of amortized cost. No doubt appellant has waited for larger bench decision but that does not alter the law. Therefore demand of Rs. 5,39,775/- is confirmed. - adjudication has travelled and time has also been crossed due to difference in the decisions of the Tribunal, there shall not be levy of penalty on the appellant in respect of duty demand of Rs. 5,39,775/-. Upon re-adjudication, penalty if any leviable against demand of Rs. 11,88,368/- shall be considered by the ld.Adjudicating Authority. - Decided partly in favour of assessee.

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• 2015 (11) TMI 1098
  Clandestine removal of goods - Shortage of goods found - Commissioner set aside penalty but confirmed duty - Held that:- Impugned order is self-contradictory. The appellate authority has held in favour of the appellant while setting aside the penalty but has upheld the confirmation of demand on the same allegation of clandestine removal. The two portions of the order, i.e., upholding the demand on clandestine activity and setting aside the penalty by holding that there is no clandestine activity, cannot go hand in hand. - Impugned order set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1097
  Availment of CENVAT Credit - returned goods - no intimation about receipt of such rejected goods was given in form D-3 and no separate records were maintained in terms of the provisions of Rule 16 of Central Excise Rules, 2002 - Held that:- admittedly returned goods were entered in the form of RG-23 as also rejected goods receipt register and stand properly accounted for. Revenue has not rebutted the finding of fact by Commissioner (Appeals), in which case it has to be held that non-filing of D-3 intimation cannot be adopted for denial of substantive benefits, otherwise available. As such, I find no infirmity in the impugned order of Commissioner (Appeals) and the appeal is accordingly rejected. - Decided against Revenue.

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• 2015 (11) TMI 1096
  Denial of CENVAT Credit - Bogus invoices - Issue of invoices without actual receipt of goods - Held that:- entire case of the Revenue is based upon the investigations conducted at the end of the manufacturing unit of M/s. Aggarwal Steel Rolling Mills & Metal Industries. Admittedly, the said manufacturer was also clearing the scrap or the defective goods, etc., to some extent. There is nothing on record to show that the goods were not actually received by the present appellant, which stands duly reflected by them in their RG-23 Part A register and stand utilised by them in the manufacture of their final product. Further, as seen from the impugned order of the Commissioner (Appeals), he has observed that there is circumstantial evidence available on record to indicate that the defective rounds produced by the manufacturer were not scrap. Such circumstantial evidence referred by the Commissioner (Appeals) is the fact that the original manufacturing unit has shown more clearance of defective rounds than the prime quality rounds. There is otherwise no evidence to show that such excess cleared defective rounds were received by the present appellant. They may have received defective goods/scrap, which was admittedly defective and was capable of melting in the furnace. In the absence of any evidence to the contrary. I find that the denial of Cenvat credit on the basis of the investigations conducted at the third party end cannot be adopted as the sole basis for denial of credit. - Decided in favour of assessee.

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• 2015 (11) TMI 1095
  Refund claim - Reduction in penalty imposed - Certain rebates were sanctioned to the appellant and the penalty of Rs. 5 lakhs imposed upon them by the adjudicating authority was adjusted against the same - Held that:- When it is the department itself, who adjusted the sanctioned refund claim against the penalty amount, due to be paid by the assessee, it has to be treated as pre-deposit, which are subject to outcome of final order of the appellate authority. Revenue cannot take the benefit of its own actions i.e. first adjusting the outstanding dues against the sanctioned claims and then to say that same were not pre-deposits. - As regards the reliance on provisions of Section 11B(5)(ec), it is seen that same was introduced with effect from 11-5-2007, as such, would not be applicable to the refunds arising out of the order dated 24-2-2006. In any case, I find that the same does not apply to the refund of penalty as held by the Tribunal in the case of CCE, Mumbai v. Fibre Foils Ltd. [2000 (7) TMI 437 - CEGAT, MUMBAI] laying down that in any case the limitation provided in terms of Section 11B applies to refund of duty and not refund of penalty. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1094
  Denial of CENVAT Credit - Non maintenance of separate accounts - exempted goods - held that:- Exemption has not been denied and if an assessee feels that it is not in a position to maintain separate accounts, the law provides a choice for paying the amount specified in Rules which has been paid. That being the position, prima facie, the department could not have taken a view that appellant should have availed exemption in total and not taken the Cenvat credit. The choice is available in the Rules and that should have been allowed. The only consideration that seems to have weighed in the minds of lower authorities when proceedings were initiated and orders were being passed is the fact that Cenvat credit availed by the appellant is more than the tax paid by them. It is not the case of the department that credit was taken wrongly. It is not the case of the department that exemption was availed wrongly. The department seems to be saying that exemption should have been availed and appellant should have maintained separate records or appellant should not have availed the exemption at all. In the absence of any logical or statutory provisions, supporting the stand taken by Revenue, the impugned order cannot be sustained. Accordingly, the appeal is allowed with consequential relief - Decided in favour of assessee.

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• 2015 (11) TMI 1093
  Clandestine removal of goods - excess of final product as also the raw material were found - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- There are admittedly, no inventories on record indicating as to how such huge and heavy material was weighed by the Department in 24 hours so as to arrive at the alleged excesses. There is also nothing in the panchnama to indicate so. Further the appellants, vide their letter dated 7-2-2005, written after a period of three days of the visit of the officers clarified each and everything. There is also nothing on record to show that the said goods were not entered in their records with any intention to remove the same clandestinely. As such, I find no justification for confiscation of the goods or imposition of penalty. The same is accordingly set aside. - As regards duty confirmed, the goods after its release have to be entered into the statutory records and cleared on payment of duty, if not having been already cleared. - Appeal disposed of.

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• CST, VAT & Sales Tax

• 2015 (11) TMI 1142
  Validity of assessment order - Violation of principle of natural justice - Best judgment assessment - Held that:- a mere perusal of order would indicate that after serving a notice to the petitioner, intimating him of the proposal to complete the assessment for the assessment year on best judgment basis, the respondent assessing authority proceeded to pass orders on the very next day, thereby rendering the very purpose of the notice meaningless. Ext. P4 order is vitiated by a non-compliance with the rules of natural justice and I quash the same. The respondent assessing authority shall complete the assessment in relation to the petitioner afresh, after affording him an opportunity of hearing in accordance with the directions in this judgment. The fresh order of assessment shall be passed within a period of one month from the date of receipt of a copy of this judgment. - Decided in favour of assessee.

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• 2015 (11) TMI 1141
  Penalty u/s 78 of the RST Act - Upon checking of goods viz. zink ingots on the ground that ST-18A Form was not accompanying the goods in transit - Held that:- The position of law with regard to the imposition of penalty under Section 78 (5) of the Act is that there is no requirement in law for Revenue to establish mens rea on the part of assessee in these penalty proceedings under Section 78 (5) of the Act, has been settled by the catena of judgments of the Hon'ble Supreme Court and has been reiterated by the Full Bench of this Court in a recent case decided upon a reference in the case of ACTO Vs. Indian Oil Corporation Ltd. (2015 (11) TMI 1078 - RAJASTHAN HIGH COURT) - matter deserves to be remanded back - Decided in favour of Revenue.

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• 2015 (11) TMI 1079
  Levy of purchase tax on the Inter State stock transfer effected from warehouse located in SEZ to DTA u/s 12 of the Tamil Nadu Value Added Tax Act, 2006 - whether the petitioner company, being a SEZ unit, is entitled to exemption from levy of purchase tax on the interstate stock transfer effected from warehouse located in SEZ - Held that:- The petitioner company sent a proposal for setting up a unit in the Nokia Special Economic Zone by making an application dated 17.2.2011 to MEPZ Special Economic Zone, which accorded approval for the same by proceedings, dated 7.3.2011 subject to the provisions of the Special Economic Zones Act, 2005 and the rules and orders made thereunder for undertaking authorized operations, namely, trading and warehousing services for mobile phone handsets and mobile phone parts and accessories. Thus, the petitioner company became a part of larger scheme of operation by the NOKIA group in the State. The above said approval dated 7.3.2011 is subject to various terms and conditions both in regard to the export of the goods/services as well as clearances and supply of goods/services in the domestic tariff area. It is explicit that if any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties. Further, it is also relevant to extract Section 15 of the TNSEZ Act, which deals with domestic clearances by Units - if the goods are removed from SEZ to the domestic tariff area, such transaction is liable to sales tax. The supply of goods by the dealer of Domestic tariff area to SEZ unit is treated as export of the dealer and import of the SEZ unit vice versa the sale of goods by SEZ unit to a dealer of Domestic tariff area will be import of the dealer and export of the SEZ unit. Thus all sales effected by SEZ unit to a dealer situated anywhere in India is export sales of SEZ unit because SEZ territory is deemed to be a foreign territory. The petitioner cleared the goods from SEZ unit to domestic tariff area and such removal of goods claimed as branch transfers under Section 6(A) of the CST Act, exempt from tax, however, such domestic tariff area clearances consequently attract provisions of Section 15 of TNSEZ Act. Therefore, Section 2(1(b) of the TNVAT Act stands attracted justifying levy of purchase tax. - proposal for levy of purchase tax on the entire purchase effected from SEZ to SEZ, viz., Tvl.Nokia India Private Limited to the petitioner (Tvl.Nokia India Sales Private Limited) has been dropped, however, considering the fact that the petitioner effected stock transfer to other states having imported the goods from outside India to its warehouse located in SEZ area, which is nothing but domestic tariff area sales and such transaction is liable to sales tax, as if the goods are imported goods and in terms of Section 15 of the TNSEZ Act, the first respondent has confirmed the liability of purchase tax under Section 12 of the TNVAT Act at 14.5%. It is very deplorable to note that being a SEZ unit, having availed the hospitality and resources of the State of Tamil Nadu, the petitioner had diverted significant part of the turnover to other States by effecting interstate stock transfers which would not only defeat the very object of the SEZ Policy but also would have a considerable impact both on the revenue and economic growth of State of Tamil Nadu. In order to avoid these kind of repercussions, Section 15 has been brought into TNSEZ Act, which specifically insists that any goods removed from SEZ to domestic tariff area, shall be chargeable to tax. Further, Section 30 of the SEZ Act also provides specifically that any goods removed from a SEZ area to Domestic Tariff area shall be liable for import duty as is leviable on import of such goods as per the provision of Custom Tariff Act. - petitioner had accepted the terms prescribed in the approved letter dated 7.3.2011 for its setting up in SEZ unit, of which, one of the conditions is that the petitioner can supply/sell the goods or services in the domestic tariff area in terms of the provisions of the Special Economic Zones Act, 2005 and rules and orders made thereunder. Therefore, levy of purchase tax confirmed by the first respondent on the interstate stock transfer effected from warehouse located in SEZ by the petitioner, in my opinion, is perfect in order. - Decided against assessee.

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• 2015 (11) TMI 1078
  Penalty u/s 78(5) - Whether the mens rea is required to be proved - Decision of larger bench - violation of sub-section (2) of Section 78 - Establishment of check-post and inspection of goods while in movement - Rajasthan Sales Tax Act, 1994 - Held that:- There is dichotomy between contravention of Section 78(2) of the Act, which invites strict civil liability on the assessee and the evasion of tax. When a statement of import/export is not filed before the AO, it results in evasion of tax, however, when the goods in movement are carried without the declaration Form ST 18-A/18-C, then strict liability comes in, in the form of Section 78(5) of the Act. Breach of Section 78(2) imposes strict liability under Section 78(5) because as explained, goods in movement cannot be carried without Form ST 18-A/18-C. - The penalty imposed under Section 78(5), is a civil liability. Willful breach is not an essential ingredient for attracting the civil liability as in the case of prosecution. Section 78(2) is a mandatory provision. If the declaration Form ST 18-A/18-C does not support the goods in movement because it is left blank, then in that event Section 78(5) provides for imposition of monetary penalty for non-compliance. In the case of RST Act, 1994, hearing is only to find out whether the assessee had contravened Section 78(2) of the RST Act, 1994, and not to find out evasion of tax which function is not assigned to the officer at the check-post, but to the Assessment Officer in the assessment proceedings. In the circumstances, the Supreme Court, without any doubt or ambiguity, held that mens rea is not an essential element in the matter of imposition of penalty under Section 78(5) of the RST, 1994. - on a complaint being made against such person by the assessing authority, or any other competent officer after having obtained sanction from the Deputy Commissioner(Administration) having jurisdiction, he shall, on conviction by a Judicial Magistrate having jurisdiction, be punishable with simple imprisonment for a term, which may extend to six months, and with fine, not exceeding rupees five thousand, and for the offences covered under clauses(b), (c), (f), or (g) of Section 71(1) of the RST Act, 1994, with a minimum sentence of simple imprisonment of three months. In such case, mens rea would be required as the offences disclosed under Section 71(1) are criminal in nature, and that in such case, the Judicial Magistrate will be required to convict a person, and impose a sentence of imprisonment and/or fine. In such case, on a defence taken that a person was not of guilty mind, will require proof of guilty mind namely the mens rea as a necessary ingredient for conviction, sentence and fine. The violations enumerated in clauses (b), (c) and (d) of Section 10, may not necessarily result in prosecution with the possible imposition of sentence of imprisonment, as an alternative is provided in respect of these violations in Section 10-A. The word 'false' under Section 10(b), has two distinct and well-recognised meanings, namely (i)intentionally or knowingly or negligently untrue, or (ii) untrue by mistake or accident, or honestly after the exercise of reasonable care. A thing is called 'false' when it is done, or made with knowledge, actual or constructive, that it is untrue or illegal, or it is said to be done falsely when the meaning is that the party is in fault for its error. The use of the expression 'falsely represents', is indicative of the fact that the offence under Section 10(b) of the Act comes into existence only where a dealer acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct. Therefore, in proceedings for levy of penalty under Section 10-A of the Act, the burden will be on the Revenue to prove the existence of circumstances constituting the said offence. In the light of the language employed in Section 10-A and the nature of penalty contemplated therein, it cannot be held that all types of omissions or commissions in the use of Form C will be embraced in the expression “false representation”. Thus, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A of the Act. It is only when a person despite giving such an opportunity, is not able to produce the document and/or declaration forms completed in all respects, when the goods enters or leaves the nearest check-post of the State, or the documents are found to be false or forged, after enquiry, that a penalty may be imposed, which is a civil liability for compliance of the provisions of the Act for the purposes of checking the evasion of tax. It is thus not correct to submit that penalty for submission of false or forged document or declaration, necessarily involves adjudication, for which mens rea is relevant, and is a necessary ingredient. The requirement of mens rea is not relevant for the purpose of determining the liability for penalty, in terms of Section 78(5) of the RST Act, 1994 - The mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub-section (5) of Section 78, on proving violation of sub-section(2) of Section 78 of the RST Act, 1994. - Decided against the assessee.

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• 2015 (11) TMI 1077
  Classification - Levy of tax on turnover of bitumen emulsion - Levy of penalty when there was confusion about its taxability - Held that:- The Supreme Court in the case of Commissioner of Sales Tax, U.P. -vs- Lal Kunwa Stone Crusher (P) Ltd. reported in [2000 (3) TMI 58 - SUPREME COURT OF INDIA] and Divisional Deputy Commissioner of Sales Tax -vs- Bherhaghat Mineral Industries reported in [1998 (8) TMI 87 - SUPREME Court] was of the opinion that, entry "stone" is wide enough to include its various forms, such as boulders, small stones, chips, etc. It was of the opinion that "stone" even after it is crushed or broken, would continue to be "stone" though it may be named as "boulder", "small stone", "chips", "gitti", etc. Therefore, even bitumen after it is transformed into bitumen emulsion is used in the construction of roads for the qualities it has as bitumen. The characteristics of bitumen in its original form continues even after it is converted into bitumen emulsion by firing upon the raw bitumen. Both the products are used for road and construction and maintenance, water proofing, soil stabilization, etc. The bitumen asphalt and bitumen emulsion are used as binder in road construction and maintenance. In that view of the matter, the orders passed by the revisional authorities holding that bitumen emulsion is also liable to tax at 5% is just and proper and do not call for interference. First appellate authority was also of the view, as bitumen emulsion is not specifically mentioned in the Notification and bitumen emulsion is different from bitumen, there is no tax liability. In other words, the authorities within the Department are also not clear about the taxability of bitumen emulsion. Under these circumstances, if the tax was not paid, believing it to be not taxable, question of imposing penalty would not arise. Now that the authorities have taken a consistent stand, which is now approved by us, the tax is payable. If tax is not paid, the assessee is not liable to pay penalty. Hence, it is open to the authorities to invoke Section 8 of the Act, if they choose to recover any interest for delayed payment. - Decided partly in favour of assessee.

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• 2015 (11) TMI 1076
  Levy of interest on differential amount arising due to final assessment - Whether section 12(1B) is attracted to the assessment order passed under section 12(3) of the Act - Held that:- When a dealer files a return, states what is the tax payable, but he fails to make payment of the said tax or makes short payment, then he is liable to pay interest on the tax due under the Act. After the filing of the return, if the assessing authority is satisfied that any return submitted under sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof by virtue of the power conferred on him under sub-section (2) of section 12 of the Act. However, if no return is submitted by the dealer under sub-section (1) before the date prescribed or specified in that behalf, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment, recording the reasons for such assessment. On such assessment if it is found that the dealer is due in any amount of tax, then he shall issue notice to the dealer in form 6 calling upon the dealer to pay the tax as finally assessed within 21 days from the date of service of notice on such dealer. If the amount is not paid within 21 days from the date of service of notice, then under section 13 he is liable to pay interest on such difference in the tax finally assessed. - section 12(1B) is attracted when there is a default in payment of tax due under the Act from the dealer. It has no application to the interest payable in terms of final assessment. Therefore, in this case the order passed under section 12(1B) of the Act levying interest at the rate of two per cent. per month on the difference in the amount is unsustainable - Decided in favour of assessee.

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• Wealth tax

• 2015 (11) TMI 1115
  Exemption u/s. 2(ea) of the WT Act - whether the Learned CITA is justified in deleting the value of factory shed and godown of Rs. 8,64,76,000/- for wealth tax purposes - Held that:- assessee had derived rental income by letting out its godown cum factory shed to M/s Hindustan Lever Ltd for more than 300 days in the previous year. Any property used for residential or commercial purposes would apparently come under the definition of assets as defined in section 2(ea) of the Act subject to some exclusions contemplated therein. The 4th exclusion provides that if the residential property is let out for a minimum period of 300 days in a year then it is outside the ambit of taxable asset for the purpose of wealth tax. It is undisputed and indisputable that the subject mentioned property is a commercial property and not a residential property. Hence we hold that the assessee’s case does not fall under the exclusion Clause No. 4 of section 2(ea)(1) of the Act. - tenant M/s Hindustan Lever Ltd also had utilized the property for their commercial purposes. We hold that even if the property is utilized for commercial purposes by the tenant, still it is outside the ambit of wealth tax and assessee would automatically fall under the exclusion Clause No. 5 of section 2(ea)(1) of the Act. We find that this issue is covered by the coordinate bench of the tribunal in the case of ACWT vs Merino Exports P Ltd in [2012 (9) TMI 948 - ITAT KOLKATA] - Decided against Revenue.

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