TMI Tax Updates - e-Newsletter
November 26, 2016

Case Laws in this Newsletter:

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

TMI SMS

• MAT computation - interest income and profit on sale of Mutual Funds would not form part of the computation of ‘book profits’ u/s 115JB

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• Fabrication of steels items e.g, trusses, purelines, beams & columns etc. at site, as per the specification, not amounting to manufacture

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Articles

1. Declaration of undisclosed Black Money – an analysis to understand success

   By: DEVKUMAR KOTHARI

News

1. Listing of Indian Insurance Companies

2. Senior Citizen Savings Schemes

3. Foreign portfolio investors (FPIs)

4. ATM operating agencies/companies by Public Sector Banks

5. Minimum Balance in Saving Accounts

6. Regulatory mechanism on Micro Finance Institutions operating in private sector

7. norms on gold monetisation scheme

8. Rating of Indian firms among the global rapid growth companies

9. Write off education loans given to the poor and middle class family students who could not get employment

10. Amendment in SARFAESI Act and DRT Act

11. Registration of non-banking financial companies

12. PPP Contracts in the Infrastructure Sector

13. Reservation Policy in Banks

14. Violation of RBI Regulations

15. Simplified investment rules to attract more domestic and foreign investment

16. Measures to effectively tackle the issue of black money

17. Systematic Investment Plans (SIPs) in Mutual Funds in India

18. Value of Currency Notes in Indian Languages

19. FDI in Defence Sector

20. Make in India 'Telecommunication Sector'- Achievement Report

21. Make in India 'Automotive Sector'- Achievement Report

22. Make in India 'Textile & Apparel' Sector'- Achievement Report

23. Draft manifest (Vessels) and Conditions of Transhipment, Transportation of Goods through Foreign Territory Regulations, 2016

24. Withdrawal of Legal Tender Status of Rs, 500 and ₹ 1000: Exchange Facility at RBI to continue

25. NITI Aayog leads initiative to convert 100% Government – Citizen Transactions to the digital platform

26. RBI Reference Rate for US $

Notifications

Customs

1. 53/2016 - dated 25-11-2016 - ADD

Seeks to levy anti-dumping duty on the imports of Low Ash Metallurgical Coke originating in or exported from Australia and People’s Republic of China for a period of five years

Circulars / Instructions / Orders

Customs

1. 56/2016 - dated 24-11-2016

Abolition of Mate receipt-regarding

2. 162/2016 - dated 23-11-2016

Implementation of Document Management System at New Custom House, Mumbai - reg.

Highlights / Catch Notes

Income Tax

• No Capital Gains Tax for Retiring Partner Receiving Cash Without Relinquishing Property Interest.

  Case-Laws - AT : Taxability of capital gains in the hands of the assessee firm - Here when the retiring partner took cash and also further cash in lieu of agreed constructed area from the stock in trade of the firm, it did not relinquishing its interest in the immovable property - in the absence of transfer, there is no capital gain tax liability - AT
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• Penalty Confirmed u/s 271(1)(c) for Misclassified Income; Agreement Deemed "Self-Serving Document" by Authorities.

  Case-Laws - AT : Penalty u/s 271(1)(c) - income from other sources - as per assessee reimbursements do not constitute the income of the assessee - the agreement constitutes ‘self-serving document’ - levy of penalty confirmed - AT
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• Interest Income and Mutual Fund Profits Excluded from 'Book Profits' in MAT u/s 115JB.

  Case-Laws - AT : MAT computation - assessee’s interest income and profit on sale of Mutual Funds would not form part of the computation of ‘book profits’ u/s 115JB - AT
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• Corpus Donations to Unregistered Trusts Not Taxable: Section 12A/12AA Not Required for Tax Exemption.

  Case-Laws - AT : Corpus donations received by the assessee-trust cannot be brought to tax despite the fact that the assessee-trust was not registered under section 12A/12AA of the Act. - AT
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• Tax Court Rules Gifts Valid Without Money Laundering Evidence if Donor's Identity, Genuineness, and Capacity Proven.

  Case-Laws - AT : In the absence of anything to show that the transaction was by way of money laundering, additions could not be made towards gifts when the assessee has discharged his burden by proving the identity, genuineness and capacity of the donor. - AT
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• Cross Objection Dismissed as Appeal Rejected; No Further Action Possible Under Current Rules.

  Case-Laws - HC : Cross Objection is not maintainable in view of the fact that the Appeal itself was rejected. - HC
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• Section 40A(3) Expenses Allowed: Cash Payments Over Rs. 20,000 Justified by Principal-Agent Relationship in Stock Purchases.

  Case-Laws - AT : Disallowance u/s 40A(3) - cash payments (in excess of ₹ 20,000 on each occasion) - purchase of its stock-in-trade (country liquor) - the relation between the assessee and vendor, both de facto and de jure, is one of "principal" and "agent" - expenses allowed - AT
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• Penalty Notice Ambiguity: Officer Didn't Specify If Penalty u/s 271(1)(c) Was for Inaccurate Income or Concealment.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - AO failed to cut the irrelevant portion of the printed Show cause notice - assessee contended that, the said notice is not clear whether it was issued for furnishing of inaccurate particulars of income or concealment of particulars of such income - No penalty - AT
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Customs

• Manual Mate Receipts for Container Cargo Phased Out Due to Customs Automation and New Message Exchange System.

  Circulars : Abolition of Mate receipt - since the advent of automation of Customs procedures, message exchange system, the manual issuance of mate receipt in the case of containerized cargo has become redundant.
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• Unaccompanied baggage lacking import license denied redemption; Section 125 prohibits unlicensed imports, confirms confiscation.

  Case-Laws - HC : Confiscation of unaccompanied baggage - Scope of redemption fine u/s 125 - it is not a bona fide baggage and such materials could not have been imported without a valid licence, it amounts to a prohibition under any other law in force - option under section 125 rightly denied - HC
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Central Excise

• Appellants' Failure to Declare Input Service Credit Utilization Leads to Extended Limitation Period for Suppression of Facts.

  Case-Laws - AT : Since the appellants have not declared in their ST3 Returns that input service credit was used in relation to trading activity. This amounts to suppression of facts and therefore, the extended period of limitation is correctly invoked - AT
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• Steel Fabrications Not Marketable: Excise Tax Demand Overturned for Custom Trusses, Beams, and Columns.

  Case-Laws - AT : Manufacture - Marketability - fabrication of various articles of steels namely, trusses, purelines, beams and columns etc. at their site, using contractors - these items are tailor made as per the requirement of the customer and therefore they can not be marketed as such - Demand set aside - AT
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• Refund Claim for Unutilized CENVAT Credit Allowed Despite Initial Filing Error; Limitation Period Considered.

  Case-Laws - AT : Refund claims of unutilized cenvat credit - export of goods - period of limitation - initially the refund claim was filed before the wrong authority - refund allowed - AT
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• CENVAT Credit Allowed for Duty Paid on Beams, Columns, and Structures Used in Manufacturing Cranes and Structures.

  Case-Laws - AT : CENVAT credit - appellants are eligible for the credit on duty paid on beams, columns, structures, fabricated columns used as inputs for manufacture of structures and cranes, which were removed on payment of appropriate duty - AT
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• Joint Liability for Duty and Penalty Deemed Unsustainable by Original Authority for Three Units' Offenses.

  Case-Laws - AT : Duty and penalty amount was jointly imposed on the three units. The amount is not quantified for individual unit for the offences committed by them. Such joint liability of duty and penalty as held by the Original Authority is not legally sustainable. - AT
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• O Ring and U Cap seals packaging ruled not manufacturing under Central Excise laws.

  Case-Laws - AT : Manufacture - O Ring & U Cap seals which were purchased by the appellant from various manufacturers and packeting the same as spares would not amount to manufacture by any stretch of imagination - AT
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• CENVAT Credit Allowed if Services Link to Manufacturing; Minor Procedural Errors Won't Affect Entitlement.

  Case-Laws - AT : CENVAT credit - once there is a nexus between the services received and the manufacturing activity undertaken by the appellant minor Procedural Lapses / Irregularities cannot be held to be any adverse effect on taking CENVAT credit. - AT
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Case Laws:

• Income Tax

• 2016 (11) TMI 1069
  Addition on account of negative stock-in-trade as at the year-end - correct head of income - Held that:- Valuation of the relevant scrips as at the year-end may be lower than the ‘cost’ as recorded in books, as where there is a decline in the market price since. The difference, or the said decline, is only a business loss, which gets absorbed in the valuation of the closing stock. No separate addition/adjustment is required to be made/effected, i.e., apart from that in respect of shortfall w.r.t. the cost stated. The exercise for both these additions is to be carried out for all the shares, and not limited to those shares reporting negative quantity as at the beginning and/or at the end of the year, which may well be positive, even as shortfall (negative stock) subsists during a part of the year. Credit in the form of closing stock in every such case (i.e., with reference and toward decline from the peak shortfall during the year, as at the yearend), shall obtain. Also, if the business income is, as contended, assessed as speculative income, the decline therein (on account of the valuation of closing stock) would again stand to be assessed under the same head/category. However, as we shall presently see, i.e., while discussing the Revenue’s appeal, the categorization of the same as speculative is without basis. Addition by way of such adjustment shall again be carried out by allowing the assessee proper opportunity of hearing, meeting its case, if any. Income from share trading - speculative business - Held that:- Share trading, as apparent from the assessee’s final accounts, i.e., income (operating) statement and balance-sheet (as at the year-end) respectively, constitutes a principal business of the assessee-company. Accordingly, and even as observed by the ld. CIT(A), we find no basis for holding the income/loss from the said activity as speculative by the AO, nor was any pointed out to us during hearing. We, therefore, have no hesitation in confirming the impugned order on this score. As regards the reallocation of the administrative expenditure, we find that both the assessee as well as the AO to have allocated the same under different activities without any basis. However, the said allocation is itself rendered of no consequence as the entire business income is to be regarded as nonspeculative. Denying the ‘claim’ for reduction in the closing stock - Held that:- The entire details were examined in the remand proceedings, to find that the revision is on account of revision in the rates of valuation of the closing stock as at the year-end. The revised statement is, in fact, in agreement with the balance-sheet as at the year-end (filed along with the original return); the assessee explaining the stock statement given earlier being as on 04.4.2011, furnished inadvertently. We, in fact, see no issue, i.e., either in principle or on facts. The assessee’s revised return (PB pg. 1) bears no claim for any reduction in stock; it adopting the same figure of profit, i.e., as obtains per the profit and loss account. We have noted that the stock-in-trade at the year-end (Rs.2,74,36,842/PB pgs. 48-57) is in agreement with the figure as per the balance-sheet (PB pg. 7). No error in the impugned revision was also pointed out to us during hearing.

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• 2016 (11) TMI 1068
  Disallowance of salary, commission and staff welfare expenses - Held that:- On seeing the peculiar facts and circumstances of the case where the salary of the employees has been disallowed merely on account of non-verification of the employees and on the basis of non-verification of the person to whom the commission was paid in cash does not seems justifiable specifically on account of the fact that the record was properly maintained by the assessee. Record of staff welfare commission has also been maintained by the assessee where the expenditure was not found in higher side. Therefore, in the said circumstances we are of the view that the disallowance to the extent of 50% towards the salary commission and staff welfare expenses is on higher side and the end of the justice would be meet if the disallowance be restricted to the extent of 25% on account of salary to the tune of Rs. 4,06,801/- and commission to the tune of Rs. 2,83,700/- and staff welfare allowance to the tune of Rs. 75,419/- - Decided against revenue Disallowance to the extent of 50% of sale promotion expenses - Held that:- Assessee furnished the reasonable details of these expenses in the form of copies of voucher and ledger account etc. Therefore, in the said circumstances, we are of the view that the disallowance to the extent of 50% towards the sale promotion expenses to the tune of Rs. 3,15,890/- is of the higher side and the end of the justice would be meet if the disallowance be restricted to the extent of 25% of the sales promotion expenses - Decided against revenue Disallowance of travelling expenses, telephone expenses, conveyance expenses, office expenses and expenses of HMV Enterprises - Held that:- There are proper entries in the ledger account books and the details have been mentioned in the vouchers. Moreover the assessee was asked to produce the documents after the lapse of seven years then in the said circumstances the vouchers and bills are not possibly produced by the assessee, therefore, in the said circumstances the CIT(A) has restricted the addition to the extent of 50%. Therefore, in the said circumstances we are of the view that the disallowance to the extent of 50% of all the expenses above mentioned are of the higher side and the end of the justice would be meet if the disallowance be restricted to the extent of 25% respectively. - Decided against revenue

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• 2016 (11) TMI 1067
  Deduction claimed under Section 80-IC(3)(ii) - carry forward and set off of losses - Held that:- From the record we found that during the year under consideration, the assessee has no unabsorbed carry forward loss in respect of eligible undertaking at Uttarakhand. Losses of earlier assessment years 2008-2009 and 2009-2010 in Uttarakhand unit had already been set off against the profit of unit at Mumbai. Thus, the undisputed facts are that assessee has claimed for the first time during the year under consideration its claim of deduction u/s. 80IC in respect of its Uttarakhand unit. Since Uttarakhand unit has no unabsorbed carry forward losses during the year under consideration, therefore, assessee has claimed deduction in respect of the entire income of the Uttarakhand unit during the year under consideration. The undisputed facts are that losses of assessment years 2008-2009 and 2009-2010 have already been set off against the income of unit at Mumbai. The said losses were not available to be carried forward and set off during the year under consideration i.e., assessment year 2010-2011 under these facts and circumstances, applying the proposition of laws discussed above as referred by learned AR, we do not find any merit in the action of lower authorities for notionally carry forward and set off of losses which have already been set off in the earlier years against the profit of eligible unit during A.Y.2010-11 under consideration.

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• 2016 (11) TMI 1066
  Validity of reopening of assessment - Held that:- AO has reviewed the assessment order which is not allowed under the Act. The ld. AO did not bring any tangible material on record to show that the income has escaped assessment. Therefore, considering the above factual position and the case law, we allow the appeal filed by the assessee.

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• 2016 (11) TMI 1065
  Penalty u/s. 271(1)(c) - incorrect claim of set off of unabsorbed depreciation - claim voluntarily rectified by filing Revised Computation during the assessment proceedings - Held that:- Claim was made without any personal knowledge or involvement of the assessee. There is uniformity in the averments made by both the above said persons. None of the lower authorities have deemed it necessary to cross examine either of these persons and without their cross examination lower authorities have chosen to disbelieve the averments made on oath by these persons. In our view, the approach followed by the lower authorities is neither fair nor justified. The penal provisions are quite harsh in nature, in as much as, confirmation of the penalty may lead to prosecution of the assessee. Therefore, the revenue officials are expected to observe due diligence in discharge of their legal obligations while levying or confirming the penalty. It appears that approach to the lower authorities in this case has been that since incorrect claim has been made, then penalty must be levied irrespective of the fact whether the incorrect claim was as a result of bonafide mistake or a genuine human error or otherwise. Thus, we find that penalty in this case has been wrongly levied and therefore, same is directed to be deleted. - Decided in favour of assessee.

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• 2016 (11) TMI 1064
  Taxability of capital gains in the hands of the assessee firm - retiring partner - valid transfer - Held that:- The partnership firm, that is, the assessee did not transfer any right in the capital asset or any of the asset of the partnership firm in favour of the retiring partner and neither it ceases its hold on the property of the firm. Its right in the property of the firm was still intact and has not been extinguished at all. Even the retiring partner did not acquire any right in the property, albeit it has only surrendered its right and interest in the partnership firm. Here when the retiring partner took cash and also further cash in lieu of agreed constructed area from the stock in trade of the firm, it did not relinquishing its interest in the immovable property. What it relinquished was its share in the partnership firm. Therefore, there is no transfer of a capital asset within the scope of section 45(4), because to attract Section 45(4), there should be a transfer of a capital asset from the firm to the retiring partners, by which the firms ceases to have any right in the property which is so transferred. There is no transfer of any capital asset of the assessee firm to its retiring partner and hence no capital gains chargeable to tax arises in hands of the assessee firm and section 45(4) has no application on the facts of the present case. - Decided in favour of assessee

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• 2016 (11) TMI 1063
  Capital gain - nature of land - Held that:- CIT(A) cannot take such an inconsistent stand to reject one ground and to allow another ground. This approach cannot be upheld. He has to give a specific and categorical finding as to whether the land which was purchased was an agricultural land and also continued to be an agricultural land afterwards and the nature of the land has not been changed at all. Nothing further is borne out from the record or has been brought on record as to what happened with the “development agreement” which was entered by the assessee with the developer, M/s Sai Venkata & Associates, vide development agreement dated 15.05.2007 for which the assessee has received huge amount of Rs. 2.25 crores as advance for parting away the development rights and whether the development agreement was terminated and money has been refunded to the assessee or not has not been made clear. If the assessee had incurred expenditure to develop the land which ultimately is to be developed by himself or to be handed over to the developer for the development of any real estate project, then definitely it is indicative of the intention that the assessee had some kind of an intent to enter into the business adventure. However, the impugned order is completely silent on this issue. Even if we agree that, it is an agricultural land in the light of various evidences filed, then same needs to be examined properly by the Assessing Officer or by the Ld.CIT(A) because, these evidences were not filed before the Assessing Officer and CIT(A) has refused to admit the same. Therefore, in the interest of justice, we feel this entire matter needs to be restored back to the file of the Assessing Officer to consider these evidences of land revenue records as well as Talathi Certificate to examine that at the time of sale, the land was actually an agricultural land.

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• 2016 (11) TMI 1062
  Disallowance u/s 14A - AY 2011-12 - Held that:- The expenditure factually incurred on non-taxable receipt is to be disallowed. The expenditure assumes, presumes or deemed to be incurred on nontaxable income cannot be allowed. There should be a proximate cause for disallowance, which has relationship with the exempt income. The return of investment or huge investment cannot be a proximate cause. The assessee specifically pleaded during the assessment that they have earned non-taxable income by way of dividend on the mutual funds. The assessee has invested the excess loans funds. The assessee has suo-moto disallowed the interest expenditure of Rs. 7,03,118/-. The AO merely hold that the working of the disallowance is not as per Rule 8D, and the same was upheld by Ld. CIT(A). With the above observation, we hold that the disallowance u/s 14A should be restricted to Rs. Rs. 7,03,118/- plus Rs. 65000/- on account of administrative expenses as per Rule 8D2(iii). For AY 2012-13 assessee has surplus interest free fund of Rs. 10.10 crore and made investment of Rs. 5.56 crore during the year. On specific queries, the AR of the assessee submitted that the assessee has incurred corresponding interest expenditure of Rs. 1,95,668/-. We have further seen that the fact of this appeal are at little variance to the earlier year. In the earlier year, the assessee voluntarily made the disallowance of Rs. 7,03,118/-, however, in the year under consideration, no voluntary disallowance was made. It has come on record that assessee earned dividend income on units of mutual fund. The assessee invested the borrowed fund for the investment in the mutual fund in earlier years, thus, the assessee must incurred interest on the borrowed fund. On our specific queries, the assessee submitted the corresponding interest expenditure incurred for earning the exempt income and the such interest is worked out at Rs. 1,96,668/-. Accordingly, the AO is directed to restrict the disallowance u/s 14A of the Act at Rs. 1,95,668/- plus administrative expanses of Rs. 1,70,000/- under rule 8D2(iii).

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• 2016 (11) TMI 1061
  Penalty u/s 271(1)(c) - income estimation - addition made after estimating the income of the assessee by way of net commission @ 6% to 7%. Held that:- Once it is a matter of estimation and the final income sustained after estimation of net profit is very near to the estimate of commission income shown by the assessee, then under these facts and circumstances, it cannot be held that any penalty can be levied under section 271(1)(c) either for concealment of income or for furnishing of inaccurate particulars. Once it is a case of pure estimation which has been varied by various authorities at different stages, then on such difference of opinion that to be in the matter of estimation, it cannot lead to any inference of levy of penalty. Accordingly, penalty levied by the Assessing Officer and sustained by the CIT(A) is hereby directed to be deleted in all the years. - Decided in favour of assessee.

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• 2016 (11) TMI 1060
  Revision u/s 263 - provisions of TDS u/s 40(a)(ia) application - Held that:- We find that in the impugned order, the ld.CIT(A) has not discussed about the non applicability of the provisions of section 194C and or 194J and has straightway applied the provisions of TDS u/s 40(a)(ia) of the Act. Even regarding the genuineness/requirement of the payments for assessee’s profession, the order of ld.CIT(A) is not a speaking one. In our view, the entire matter is required to be looked into afresh by the ld. CIT(A). In view of this, the impugned order of the Ld. CIT(A) is set aside and the appeal of the assessee is restored back to the file of the ld. CIT(A) to decide the same afresh after providing opportunity of being heard to the assessee. The assessee is also directed to co-operate with the ld.CIT(A) in disposing of the appeal expeditiously. The assessee is also directed to file necessary documentary evidence to prove her case. In view of this, the appeal of the assessee is allowed for statistical purposes.

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• 2016 (11) TMI 1059
  Treatment of profit arising on share transaction - business income or short term capital gain - Held that:- As decided in assessee's own case for A.Y. 2007-08 we find that it has not been disputed that the assessee has shown shares as investment right from the date of purchase and that was shown as such in the balance sheet of the assessee which was filed before the AO. In our humble opinion, the shares have to be treated as an investment and therefore any profit earned on the sale thereof is to be treated as capital gain. Findings of the Ld. CIT(A) are reversed. The AO is directed to treat the profits on sale of shares as capital gain, short term or long term as the case may be - Decided in favour of assessee

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• 2016 (11) TMI 1058
  Capital gain computation - Held that:- No valid reason to interfere with the findings given by the Ld. CIT(A) that the transfer took place in the Assessment Year prior to the Assessment Year 2004-05 and capital gains arose prior to the Assessment Year 2004-05 and therefore capital gains is not assessable during the Assessment Year 2004-05. None of the findings of the Ld. CIT(A) have been rebutted by the Revenue so as to canvas that the transfer took place in the Assessment Year 2004-05. Apparently, the possession of the property has been given prior to 2004-05 i.e. in the financial year 1996-97 relevant to Assessment Year 1997-98. All the development agreements were executed during the period 10.6.1994 to 30.10.1995 for development of the party. The possession of the property has been given on 18.9.1994 to Dattani group in respect of development agreement entered into by the assessee with Dattani Group. Taking all these facts into consideration, it is apparent that the transfer took place prior to 2004-05 therefore the Ld. CIT(A) is perfectly justified in holding that no capital gains arose in Assessment Year 2004-05. Thus, we sustain the order of the Ld. CIT(A).

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• 2016 (11) TMI 1057
  Revision u/s 263 - CIT observed that no enquiry at all was conducted by the AO - AO computed the Capital Gains u/s 50B - Held that:- In the present case the assessee had submitted a detailed explanation along with relevant details assessment order was passed by the AO, prima facie on being satisfied with the explanation of the assessee. In the present case the learned CIT has passed the order u/s 263 by concluding that the order passed by the AO is erroneous to the interests of the Revenue without providing a fulcrum for such a claim or justify such a claim has been made. As noticed from the facts of the present case that simply because the AO in his order did not make an elaborate discussion or did not call for any further details, that by itself cannot be a ground to hold the order passed by the AO to be ‘Erroneous” for lack of enquiry. From a careful perusal of the record, we have also noticed that enquiries were conducted by the AO and, therefore, in such a circumstance, the learned CIT cannot be allowed to wrongly assume jurisdiction u/s 263 of the Act under the “Guise” of AO’s failure to conduct any further enquiry. The learned CIT has passed his order on this issue on the ground that no enquiry at all was conducted by the AO. After perusal of the record, we noticed that the stand taken by CIT is incorrect. The records of assessment establishes that an enquiry was conducted by the AO and the assessee had also participated and filed reply before the AO on this issue. We are of the considered view that in the present case on the issue of computation of capital gains and depreciation, the AO has conducted enquiries and the assessee had also submitted the detailed explanations and evidently the claim was allowed by the AO on being satisfied with the explanations of the assessee. Therefore, the learned CIT in the present case has wrongly assumed jurisdiction u/s 263 of the Act on all the issues raised by the assessee - Decided in favour of assessee

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• 2016 (11) TMI 1056
  Disallowance of interest on account of interest free loan given to its associate company - Held that:- From the submission of the assessee we find that the sufficient fund was available with the assessee as discussed above to advance the money to its associate concern. The ld. DR has not brought anything contrary to the arguments of the ld. AR. Therefore, in our considered view, the authorities below should have disallowed the interest expenses rather than charging interest income on notional basis. In the instant case, the interest expense claimed by assessee but AO instead of disallowing the interest has added the interest income on notional basis which was not the dispute from the facts of the case. In this connection, we rely in the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Rungamatee Trexim (Pvt) Ltd. [2008 (12) TMI 759 - CALCUTTA HIGH COURT] Respectfully following the decision of Hon'ble jurisdictional High Court we reverse the orders of Authorities Below and we allow ground of assessee’s appeal.

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• 2016 (11) TMI 1055
  Capital gain addition - Addition of suppression of sale proceeds of flat - Held that- Had there been the case where sale price shown was lower than the stamp duty valuation, then the sale price would have been deemed to be the value assessed under the stamp duty valuation in accordance with the section 50C. However, this is not the case here as the assessee’s sale prices are evidenced by “sale agreements” placed in the paper book and is also higher than the FMV assessed. Thus, without any contrary material, we do not find any reason to uphold the reasoning and view taken by the authorities below that sale of the two flats sold subsequently should be taken at the same price on which two flats were sold 20 days earlier. Thus, the addition made by the Assessing Officer on account of short-term-capital-gain of Rs. 3,04,238/- is deleted and sale consideration shown by the assessee as per the sale agreement of the two flats, viz. flat no. 303 and 304 is to be taken as such.

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• 2016 (11) TMI 1054
  Non-refundable entrance fee received by the assessee in the instant case based on factual matrix of the case is chargeable to tax as revenue receipts in the hand of the assessee . Advance Membership fee - Held that:- Reasonable and fair estimate under these circumstances has to be made based on reasonable scientific method keeping in view business matrix and model of the assessee after study of the by-laws, rules and regulations governing the assessees’ club , memorandum and articles of association, terms and conditions for the grant of membership , terms and conditions under which advance membership fee was received by the assessee, conditions for refund of membership fee, empirical experiences and a scientific working , which need to be carried out keeping in view peculiar business model and matrix of the assessee and also with respect of the assessees’ club. We are , therefore, inclined to set aside and restore the matter to the file of the AO for de-novo determination of the issue on merits in accordance with law to work out spread/rollover of advance membership fee collected for a period of 25 years spread over period of time based on reasonable scientific method keeping in view business matrix and model of the assessee worked out after study of the above parameters as cited by us and also of any other relevant parameter having impact and bearing on computation of correct income of the assessee chargeable to tax.

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• 2016 (11) TMI 1053
  Penalty under section 271D read with section 269SS - agricultural income receipt - Held that:- The assessee has explained that the amount was out of the proceeds of agricultural income which was deposited pertaining to the share of the family members which was deposited in the bank account held by him jointly with his son. Further, we find that the assessee had also furnished copies of affidavits wherein the wife of the assessee Sayarkunwar Deora and daughter in law of the assessee Bhuvnesh Deora have confirmed in their respective affidavits that they jointly owned land with their family members and during the year they had received their share of agricultural income which was deposited in the joint bank account of the assessee with his son Shri Narendra Bhuvnesh Deora. It is pertinent to mention here that the assessee is the husband of Sayarkunwar Deora and Shri Narendra Bhuvnesh Deora is the husband of Bhuvnesh Deora. Under the circumstances, it cannot be said that the assessee had received any loan from his family members. The nature of deposits has been duly explained. The other family members of the assessee have never admitted that they had given any loan to the assessee rather the plea is that the amount has been deposited in the joint saving bank account of the family. Penalty on account of loan from his son Shri Narendra Bhuvnesh Deora - Held that:- We find that from the record that the said account in question was jointly held by the assessee along with Shri Narendra Bhuvnesh Deora. Under these circumstances, the amount in question cannot be said to be received by the assessee as loan rather the amount in question was deposited by Shri Narendra Bhuvnesh Deora in the joint account and it cannot, in any manner, be termed as a loan to the assessee as Shri Narendra Bhuvnesh Deora himself was also the holder of the account along with the assessee. It has been pleaded that the other two ladies have also deposited the said amount in the family account who happened to be the wives of the assessee and his son (Joint account holders). Under these circumstances, it cannot be said to be a case of giving loan by the said persons to the assessee. In our view, the lower authorities were not justified in levying the impugned penalty under section 271D - Decided in favour of assessee Penalty under section 271(1)(c) - AO found certain amount deposited in the bank account of the assessee - Held that:- Undisputedly, the assessment proceedings and the penalty proceedings are separate and distinct proceedings. Merely because, the additions have been made into the income of the assessee, because of lack of evidence regarding the claim put-forth by the assessee, but that itself is not sufficient for levy of penalty under section 271(1)(c) of the Act. The additions in this case have been made not because that the AO has disproved the case of the assessee but because of the lack of evidence on the part of the assessee to prove his claim. The facts and circumstances of the case do not suggest that the claim of the assessee has been proved to be wrong or false. The factum of ownership of the agricultural land of the assessee has not been denied. Under these circumstances, we do not find it a fit case for levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee

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• 2016 (11) TMI 1052
  Penalty u/s 271(1)(c) - income from other sources - as per assessee reimbursements do not constitute the income of the assessee - Held that:- It is an undisputed fact that the assessee received the said amount of Rs. 14 lakhs from M/s. Deesha and the same was spent towards painting of the entire building spending a sum of Rs. 10,58,629/-. Some of the amount was spent for erecting the scaffolding for bearing the display boards. It is the claim of the assessee that these amounts constitute ‘reimbursements’ by M/s. Deesha and reimbursements are outside the scope of chargeability to tax. These arguments were dismissed by the Tribunal in the quantum proceedings and the Tribunal held that the assessee resorted to create agreement for self-serving and the assessee arrange itself affairs to not to bring the said receipts of Rs. 14 lakhs to tax. As noticed by the Tribunal in its order unable to understand as to how Rs. 1 lakh was received towards bimonthly rent when the BMC fees itself is exceeded the sum of Rs. 3.75 lakhs (rounded off). Further unable to appreciate the fact of M/s. Deesha reimbursed the expenditure on the painting of the entire building amounting to more than Rs. 10.5 lakhs when the scaffolding for display of the advertisement is only in the area of 80 X 120 sq ft. I am absolutely convinced on the fact that the affairs are not well so far as the accounting of the amount of Rs. 14 lakhs is concerned. Assessee is not forthcoming with all the facts in this regard. Therefore, it is of the opinion that the second agreement constitutes ‘self-serving document’. Thus the order of the CIT (A) in confirming the penalty relatable to Rs. 14 lakhs is fair and reasonable and it does not call for any interference. - Decided against assessee

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• 2016 (11) TMI 1051
  Transfer pricing adjustment - international transactions of appellant pertaining to provision of IT enabled services to its associated enterprise has resulted into a loss originally shown by the assessee at 19.16 % - Held that:- As the allocation keys for allocating indirect cost earlier adopted by the appellant was "headcount" and now also the appellant for most of the indirect expenditure has retained the same allocation key and out of indirect expenses some of the direct expenses have been identified and are allocated to a particular business segment, further when neither the remand report nor before us any infirmity was pointed out with respect to the allocation keys adopted by the appellant before CIT appeal, we see no infirmity in the order of Ld. CIT (A) in arriving at ALP of the international transaction of the appellant. Further we also reject the argument of the Ld. departmental representative that the issue may be set aside to the file of the Ld. assessing officer for verification of the correctness of allocation keys, because in the remand report Ld. assessing officer could not point out any infirmity or irrationality involved in adoption of the allocation keys suggested by the assessee further even the 1st appellate authority is also convinced about the appropriateness of the allocation key and before us the Ld. departmental representative could not point out any error in the order of the keys adopted by the assessee in the order of the Ld. that 1st appellate authority. It is also important to note that even if the business support cost is located on the basis of revenue then also PLI of the assessee is higher than the PLI of comparables. This fact also suggest that original selection of allocation keys without identifying direct cost and indirect cost and also allocation of space cost was erroneous. Further with respect to exclusion of one of the comparable namely Apex Logical data Conversions Private Limited by Ld. Transfer pricing officer without assigning any reason, the Ld. CIT (A) has included this comparable in the final set of comparable companies. Before us Ld. departmental representative could not point out any reason that why this comparable was excluded from the final list without giving any reason. The appellant has also included this comparable into its TP study report and also neither the Ld. transfer pricing officer nor Ld. departmental representative could point out that this company was functionally not comparable with the appellant we find no infirmity in the order of Ld. CIT appeal in including this comparable for the comparability analysis of the international transaction. - Decided against revenue Deduction u/s 10A - exclude expenses on telecommunication charges, subsistence for on-site employees charges, standby and callout charges, travelling expenses paid in foreign currency and LERMS for reducing them from export turnover but not adjusting total turnover - Held that:- As the issue has already been decided by the coordinate bench in the assessee s own case for assessment year 2003- 2004 wherein it has been held that though the term „total turnover” has not been defined under section 10 A of the act and items which have been excluded from export turnover in the numerator must also be extruded from total turnover in the denominator for computing deduction under section 10 A of the act. The Ld. departmental representative could not point out any infirmity in the order of Ld. CIT appeal and also could not point out any reason that why decision of the coordinate bench should not be followed by us. Therefore in view of this we are inclined to confirm the order of the Ld. CIT appeal where he followed the decision of the coordinate bench in case of assessee for the previous year and directed the assessing officer to recompute the deduction under section 10 A of the income tax act. Disallowance of 25% of the expenditure on subsistence allowance - Held that:- We reject the contention of revenue that balance 25 % expenditure is without any basis and evidence. He also held that the payment is business expenditure as it is paid by way of salary or remuneration to the employees. Similarly he set aside the disallowance for the purpose of verification of the assessing officer in case if the total amount of expenditure on subsistence allowances not related to the previous year and then to make disallowance of the expenditure to that extent, if it is related to the earlier years. Ld. departmental representative could not point out any quantification made by the Ld AO about the amount expenditure related to previous year and earlier years. Therefore when the assessment order does not mention about the vouchers and declaration which are pertaining to earlier years, then in that case that verification needs to be done by the lf AO only, hence there is no infirmity in the order of ld CIT (A) in directing ld AO to verify the claim of the assessee form that aspect and quantify the disallowance, if any. In view of this, we confirm the order of the first appellate authority deleting the disallowance of subsistence allowance expenses. - Decided against revenue Addition u/s 40A - Held that:- The provisions of section 40 A (2) (a) speaks that where any expenditure has been incurred by the assessee paid to a specified person and Ld. assessing officer forms an opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods for which the payment is made or the legitimate needs of the business of the assessee or the benefit derived by or accruing to him, then he can disallow so much of the expenditure as is considered by him to be excessive or unreasonable. In the present case we do not find any opinion of the Ld. assessing officer that how such expenditure is excessive or unreasonable. The 1st appellate authority has also deleted this addition on the same ground therefore we confirm the finding of the Ld. CIT appeal in deleting the above disallowance. TDS u/s 195 - addition of legal and professional charges expenses by holding that the said payments made to various non-resident was taxable in India invoking the provisions of section 40 (a) (ia) - Held that:- n the present case it was not the case of the ld AO that recipient of such income has any permanent establishment in India further the argument of the Ld. AR has also not been disputed that none of the services have been rendered in India. In view of this according to the article 7 of the double taxation avoidance agreement as none of the recipient is carrying on business in India through any permanent establishment same shall also not be taxable in India. Therefore we reject the contention of the revenue on this account. - Decided against revenue Addition of prior period expenses- Held that:- It is not possible to ascertain at this stage that when the bills were approved and admitted by the assessee as except the ledger accounts no details are available. Further this argument is also not considered by lower authorities. Therefore in the interest of justice we set aside this issue to the file of the Ld. assessing officer to determine when the bills have been approved and admitted by the appellant, if they are admitted by assessee in the current previous year then though they may pertain to the earlier previous year the expenses are allowable

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• 2016 (11) TMI 1050
  Addition made under DEPB entitlements - Method of accounting - cash basis or accrual of entitlement - Held that:- In the present case, the assessee had been following the said procedure consistently and has already offered the income for tax in the year of receipt from the sale of DEPB license. Considering the facts of the present case and the fact that system of accounting of DEPB entitlements on cash/ realization basis has been consistently followed year after year by the assessee in past also and more so since the DEPB entitlements receipt during financial year 2009-10 relevant to A.Y. 2010-11 are already accounted and offered for taxation in the next financial year 2010-11 relevant year 2011-12 on realization basis, therefore after taking into consideration the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s. Excel Industries Ltd., (2013 (10) TMI 324 - SUPREME COURT ), we hold that the assessee is entitled for DEPB credit in the year under consideration and therefore the additions made by the AO are hereby deleted. The AO is directed to re-compute the income in the terms of aforementioned decision. Therefore, these grounds raised by the Assessee are allowed.

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• 2016 (11) TMI 1049
  Maintainability of Cross Objection - Held that:- While there is nothing on record to assist us an ascertaining extent of delay, there is also no application that has been preferred before us as contemplated in Rule 904. As far as Rule 907 is concerned on proper reading of the said Rule it becomes evident that if the pending appeal which has been admitted or which is pending admission, what is intended is that if the pending appeal does not come up for hearing on merits and if the Respondent has filed Cross Objection, the Respondent may apply to have Cross Objection heard as if the same were Cross Appeal and although the Appeal is pending. The Rules do not enable the Respondent – Cross Objector to make such application if the Appeal is already rejected for non removal of office objections. Under High Court Rule 986, an appeal can be rejected by the Prothonotary and Senior Master if the Appellant does not remove office objections within 30 days of lodging an Appeal. In the present case it is the Court that has granted additional time to remove office objections failing which the appeal would stand rejected and it was accordingly rejected. Rule 907 does not give any right to the Appellant, over and above what is provided under Order 41 Rule 22 Sub-Rule (4). All that it does is to enable the cross objector to seek hearing of the Cross Objection as if the same were Cross Appeal, during pendency of the appeal and nothing more. In the circumstances having considered the various judgments relied upon by the Applicants and the submissions of the counsel we are of the view that present Cross Objection is not maintainable in view of the fact that the Appeal itself was rejected.

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• 2016 (11) TMI 1048
  Validity of reopening of assessment - non valid service of notice - Held that:- On the first date of notice, i.e., March 25, 2013, a notice was stated to be served by affixture upon the assessee. Though the assessee has raised objection with regard to valid service of notice but the Assessing Officer has not brought anything on record or specifically dealt with it in the assessment order. Similar objection was also raised before the Commissioner of Income-tax (Appeals) and the Commissioner of Income- tax (Appeals) has also failed to deal with the issue with regard to service of notice under section 148 of the Act. Since the onus is upon the Assessing Officer to establish valid service of notice under section 148 of the Act and he failed to do so, he cannot assume valid jurisdiction to frame the assessment under section 147 read with section 143(3) of the Act and once the reopening is not valid, the assessment framed consequent thereto deserves to be annulled. In the instant case, since a proper notice under section 148 of the Act was not served upon the assessee, the Assessing Officer could not assume jurisdiction to frame the assessment. Therefore, the assessment framed by him is bad in law - Decided in favour of assessee

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• 2016 (11) TMI 1047
  Addition u/s 41 - cessation of liability - Held that:- When the Assessing Officer was of the view that there was cessation of liability in the case on hand, it was incumbent upon him to cause necessary enquiries to be made in order to bring on record material evidence to establish the requirement for invoking the provisions of section 41(1) of the Act. The very fact that the assessee reflects these amounts as creditors in his Balance Sheet as on 31/3/2007, is an acknowledgement of his liability to these creditors and this also automatically extends the period of limitation under section 18 of the Limitation Act. Once the assessee acknowledges that the debts to creditors are outstanding in his Balance Sheet, that he is liable to pay his creditors, Revenue cannot suo-moto conclude that the creditors have remitted their liability or that the liability has otherwise ceased to exist, without bringing on record any material evidence to the contrary. In the case on hand, the creditors aggregating to Rs. 33,44,827/- continue to be reflected in the assessee’s Balance Sheet as on 31/3/2007. We are of the opinion that the Assessing Officer has not brought on record any material evidence to establish that there was cessation of liability in respect of the outstanding creditors balances represented in the assessee’s Balance Sheet as on 31/3/2007, and concur with the finding of the Ld. CIT(A) that the addition under section 41(1) of the Act as cessation of liability being unsustainable, is to be deleted. - Decided in favour of assessee.

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• 2016 (11) TMI 1046
  Assessment u/s 153A - addition to income - whether any incriminating material concerning such additions was found during the course of search? - Held that:- Sh. Goyal admitted that certain incriminating documents relating to various investment companies, excess cash and jewellery was found at his residence. Admittedly there is no reference in the statement to any document found, which revealed that the assessee had wrongly claimed interest on loan taken for his house property, which was the only disallowance made in the assessment order passed under section 153A for the impugned year. Moreover, we find that the disallowance was made for want of evidence and not on the basis of any incriminating material found during search. Further we find that the statement is general with no reference to any specific document or asset found during search and the assessee has admittedly surrendered Rs. 11 crores on account of the same and paid taxes thereon. The statement therefore cannot be stated to be incriminating material for the purpose of disallowing interest on housing loan. Thus we hold that in the absence of any incriminating material found during the course of search and the assessment proceedings having not abated at the time of search, the Assessing Officer has no jurisdiction to make the addition under section 153A of the Act. - Decided in favour of assessee

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• 2016 (11) TMI 1045
  MAT computation - CIT(A)confirming the action of AO while added back interest income and income from sale of unit of Mutual Fund originally reduced from capital work in progress in computation of Book Profit u/s 115JB - Held that:- Respectfully following the decisions of the Hon'ble Apex Court in the case of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME Court] that the assessee’s interest income and profit on sale of Mutual Funds would not form part of the computation of ‘book profits’ under section 115JB of the Act and consequently reverse the decision of the authorities below. - Decided in favour of assessee

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• 2016 (11) TMI 1044
  Claim of assessee u/s. 80HHE - not having any knowledge about the development of software and the appellant firm had no previous expertise in development and export of software's - Held that:- Both the allegations of AO that no business could be carried on without having any previous knowledge for the same as well as the business proposition should come only through efforts or knowledge are baseless. The Assessing Officer has not brought on record any material fact to disbelieve the fact that technical aspect of the deal were being looked after by late Shri Deshpande. In the present age, execution of such specialised work can be completed with the help of IT professionals and therefore, it is not essential requirement of the partners to be conversant with technicalities of such job. With regard to disclosure voluntarily declared Rs. 7 Crores in his statement dated 24.03.05, which was subsequently retracted vide his affidavit dated 30.08.05 was prompted by an alleged mistaken claim u/s. 80HHE of the Act without analyzing merit of claim. It is for that reason that in the answer to question 78 Mr R.R. Chaturvedi made the disclosure. Subsequently, in consultation with Chartered accountants, when it was realized by Shri R. R. Chaturvedi that the claim made by the assessee firm was very much in accordance with law, the statement was retracted by filing an affidavit dated 30-8-05 which is forming part of paperbook page no 232 - 235. The CIT(A) has rightly accepted the justification of assessee in para 7.2 page 27 of his order by stating that "No addition could be made on the basis of such statement unless and until it is corroborated with the evidence. In other words, the retraction can be made on the basis of validity of claim. In the instant case, LNSEL is eligible to issue disclaimer certificate, as it is an exporting company. Further LNSEL claimed deduction u/s.10B of the Act on the value addition. LNSEL issued disclaimer certificate in form 10CCAG to assessee company with respect to appellant company's share in software export. The copy of Form 10CCAG is forming part of paperbook page nos. 44-60. In this regard, during the appellate proceedings, CIT(A) had corresponded with the Assessing Officer of LNSEL, Kolkata wherein he was intimated vide letter dated 10.12.2008 that there was no dispute pending with regard to the claim of deduction u/s.10B of the Act and no recourse was taken to the provision of section 147 for AYs 2000-01 to 2002-03. The source code information was already in the possession of the income tax authorities and the appellant firm was handicapped on account of the seizure from producing the relevant source code. CIT(A) in para 7.7 page 30 of his order has accepted the assessee's justification of non-furnishing of source code. Nothing prevented the Assessing Officer from verifying the contentions of the assessee as the relevant material was in the possession of the Department from the date of the search Operations itself. This fact has been completely overlooked by the Assessing Officer, which is not justified. So, CIT(A) was justified on taken favourable view. The assessee firm was never in direct touch with M/s. Aapkidukaan.com Corporation and hence to providing such information was beyond the scope of assessee firm. CIT(A) rightly held that the report of FTD does not falsify the claim of export made by LNSEL and it concerns itself more about the business activities of Aapkidukan and its existence as an entity. On both these counts the report of the FTD confirms the existence and business activities. Accordingly, it was rightly held that the point raised by Assessing Officer does not carry significance vis-à-vis the appellant, so long as the export made by LNSEL have been accepted to be genuine by Assessing Officer in its case. In view of above discussion, this object was rightly noted out by CIT(A) while granting relief to assessee. The assessing officer has also overlooked the fact that TDS was duly deducted and paid to the government account. Nothing has been brought on record to suggest that all such facts borne from the books of account were bogus or incorrect as the books of account have not been rejected. Moreover, there is nothing to show that the appellant was allowed the opportunity to cross examine the said persons as per request made during the assessment proceedings though the statement of the said persons were used against the appellant and in a way, they were used as witnesses of the department, which is not justified. - CIT(A) was justified in allowing the claim of deduction as claimed by assessee u/s.80HHE of the Act. Addition u/s 68 - Held that:- Assessee has merely stressed upon the fact that the transaction was entered through banking channels which meets the test of Section 68 of the Act. But this contention was not accepted by Revenue authorities as transactions through cheques cannot be considered to be sacrosanct in the absences of failure of assessee to prove the creditworthiness of lender as also the genuineness of transaction. The burden is on assessee to rebut the same, but assessee has not discharged the burden cast upon him in this regard to addition is question. Taking all facts and circumstances into consideration, even though transaction is through banking channel, as assessee could not prove the same with cogent evidence, so, CIT(A) was justified in confirming the same Estimation of business income - Held that:- As regards the letter to STPI, it was found evident that only certain ad hoc figures of exports were stated therein, as actual exports were done in the earlier years and the books of account did reflect the actual sales turnover which were also duly disclosed in the returns of income of the relevant assessment years and the said exports were duly accepted to be genuine in the original assessment orders. No business activity, not to speak of any export has been carried on during the relevant year. Moreover, there was no corroborative evidence to show that assessee was running any such business activity during the relevant year. Each year is independent in its facts and circumstances. Thus, not much importance can be attributed to such a declaration which also appears to have been made on estimate and ad hoc basis only with a bona fide business expediency. Accordingly, addition deleted by CIT(A) needs no interference from our side.

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• 2016 (11) TMI 1043
  Addition on account of net profit rate - estimation of income - exceptional increase in the expenditures - Held that:- Since the Assessing Officer himself has accepted the net profit rate of 24.80 per cent. for the assessment year 2008-09, there can be no reason to make addition at 3 per cent. on account of net profit rate for the year under consideration simply on the ground that such profit rate was less than 38 per cent. for the immediately preceding assessment year. AO has just mentioned that there is major increase in various heads of expenses, but, he has not pointed out as to how such increase was not commensurate with the business or was not properly justified. There cannot be any hard and fast rule of incurring similar amount of expenses or earning a similar net profit rate over the years. There should be some plausible reasons for making addition on account of profit rate. Since the Assessing Officer did not reject the books of the assessee and gave unsustainable reasons for making addition at 3 per cent. of the turnover, we are satisfied that CIT(Appeals), too, was not justified in upholding the addition on such flimsy grounds. We, therefore, order for the deletion of this addition - Decided in favour of assessee Disallowance of payment to certain vendors - Held that:- CIT(Appeals) started investigation at the instance of the assessee and, firstly, required the complete details which were not filed and then sought confirmations from 13 parties "on a random/sample basis." This does not mean that the payments made to vendors qua the remaining transactions were found to be genuine by the Assessing Officer or the learned Commissioner of Income-tax (Appeals). Since the details concerning the remaining parties were never made available to the Assessing Officer, their genuineness cannot be accepted unless the verification is made by the Assessing Officer on supply of such details by the assessee. We, therefore, direct that the entire addition of Rs. 90.86 crores will be the subject matter of examination by the Assessing Officer in fresh proceedings and such examination will not be restricted to a sum of Rs. 48.27 crores. Needless to say, the assessee will be allowed a reasonable opportunity of hearing and will be obliged to furnish necessary details as called for by the Assessing Officer to satisfy himself as to the genuineness of the vendor payments. Disallowance under section 40(a)(ia) - payments made to print/electronic media without deduction of tax at source - Held that:- Assessee has filed a request for admission of additional evidence, being, two bills of Rs. 27,000 each drawn in the name of the assessee, which were originally in the name of Cheil World Wide as the new bills could not be filed before the learned Commissioner of Income-tax (Appeals) as these were not available at the material time and the assessee could manage to obtain the same only later on. As regards the remaining sum of Rs. 1.77 lakhs, the learned authorised representative submitted that the evidence which was earlier not available now can be produced for examination. Since the details of Rs. 2.91 lakhs were not available with the assessee at the time when the learned Commissioner of Income-tax (Appeals) made enhancement, in our considered opinion, the ends of justice would meet adequately if this issue is restored to the file of the Assessing Officer for a fresh consideration and decision. Non- deduction of tax due to lower withholding certificate furnished by the vendors - Held that:- On a perusal of the details furnished before the learned Commissioner of Income-tax (Appeals)we find that the assessee, in fact, made classification of the payments to the entities as recorded by the learned Commissioner of Income-tax (Appeals). Since the assessee itself had shown TLG India Pvt. Ltd. and TLG India Pvt. Ltd. (Leo Burnett) as separate entities, the learned Commissioner of Income-tax (Appeals) could not have presumed the same to be one entity alone. However, considering the entirety of the facts and circumstances of the case, we are satisfied that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of the Assessing Officer for verifying the assessee's contention and, then, deciding it accordingly. Payments made to certain vendors on which no tax at source was deducted under section 194C - Held that:- ommissioner of Income-tax (Appeals) made the disallowance as, in his opinion, these payments were made without deduction of tax at source under section 194C of the Act. The learned authorised representative contended that the learned Commissioner of Income-tax (Appeals) did not examine the details properly inasmuch as the quid pro quo for the consideration paid did not qualify as "work" in all the cases. This contention has not been refuted by the learned Departmental representative. We are satisfied that this issue has not been properly examined and the disallowance has been made under section 40(a)(ia). Acceding to the request from both the sides, we set aside the impugned order on this score and remit the matter to the file of the Assessing Officer for a de novo adjudication of this issue. Non deduction of tds on reimbursement of expense paid to employees/vendors - Held that:- Commissioner of Income-tax (Appeals) has taken recourse to the power of enhancement on the ground that the amounts were disallowable under section 40(a)(ia), he was supposed to confine himself to that score rather than travelling beyond in examining the very deductibility or otherwise of such expenses. On going through the details of such expenses, it transpires that these are payments of revenue nature not requiring any deduction of tax at source under the relevant provisions. The learned Departmental representative also could not point out the applicability of any particular section requiring deduction of tax at source from any of such payments. Under these circumstances, we cannot sustain the disallowance under section 40(a)(ia) of the Act. Disallowance of a sum being "expense below threshold limit" - Held that:- Without going deep into the details, it is found that the assessee made payment of Rs. 16,638 in total to two parties which is less than the prescribed limit of Rs. 20,000 under section 194C requiring any deduction of tax at source. We, therefore, hold that the learned Commissioner of Income-tax (Appeals) was not justified in making the disallowance of this sum. The same is, therefore, deleted.

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• 2016 (11) TMI 1042
  Non grant of exemption u/s 11 - Held that:- As all the conditions of section 11 of the Act stand fully satisfied by the assessee cumulatively. Section 12 is not applicable to the facts of the case. Firstly, the income is derived from property held wholly for charitable purposes. Hence, the mandate as per "M. Visvesvaraya Industrial Research and Development Centre" (2012 (11) TMI 235 - BOMBAY HIGH COURT), as to whether the assessee has satisfied the conditions stipulated in section 11 stands complied, as all the three conditions regarding deriving income from property held under trust wholly for charitable purposes, application of income to charitable purposes in India and accumulation not being more than 15 per cent. of such income are satisfied. The position with regard to the other assessee remains undisputedly the same. Neither of the authorities below has challenged the financials of either of the assessees, and therefore, the requirements of section 11 of the Act, as noted, qua both the assessees, has remained unquestioned, nullifying the impugned orders on this score. On the basis of the above discussion, we hold that the learned Commissioner of Income-tax (Appeals) has erred in confirming the non- grant of exemption under section 11 of the Act to the assessee and, accordingly, none of the alternative submissions raised by the assessee requires to be adjudicated, that they having been rendered merely academic. - Decided in favour of assessee

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• 2016 (11) TMI 1041
  Taxability of Corpus donations receipt - scope of total income u/s 2(24)(iia) - unregistered trust u/s 12AA - Entitlement to exemption u/s 11 - Held that:- The Income-tax Appellate Tribunal, Chennai in Indian Society of Anaesthesiologists v. ITO in decision reported in [2014 (5) TMI 1031 - ITAT CHENNAI] held that specific funds created for fulfilling specific objectives for which these separate funds are constituted remain as capital funds as the funds can be used for fulfilling specific objectives for which these funds are constituted and hence to be treated as corpus funds and to be excluded from computation of income. The Income-tax Appellate Tribunal, Bangalore in ITO v. Vokkaligara Sangha in a decision reported in [2015 (8) TMI 920 - ITAT BANGALORE ] whereby the Tribunal held that voluntary contributions received for a specific purposes cannot be regarded as income under section 2(24)(iia) of the Act since they were capital receipts being corpus fund and tied up grants for specific purposes Corpus donations received by the assessee-trust cannot be brought to tax despite the fact that the assessee-trust was not registered under section 12A/12AA of the Act.

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• 2016 (11) TMI 1040
  Deduction u/s 80IB - Held that:- The assessee is eligible to claim deduction under section 80-IB(10) dehors the area of commercial establishment. In so far as the built-up area of residential units C-5, D-5 and 19 bungalows is concerned the issue is set aside to the Assessing Officer to decide the issue in line with the directions given by the co-ordinate Bench of the Tribunal while adjudicating the appeals in the preceding assessment years. Disallowance of deduction under section 14A read with rule 8D in respect of share of profit received by the assessee from partnership firm - Held that:- Disallowance under section 14A is with respect to expenditure incurred for earning tax-free income. The share of profits from partnership firm is exempt from tax under section 10(2A) of the Act in the hands of the partner. Therefore, it is tax-free income in the hands of the assessee. The assessee has not made any disallowance for earning tax-free income. The Assessing Officer has rightly invoked the provisions of section 14A read with rule 8D for making such disallowance. Circular No. 8 of 2014 rather clarifies the reason as to why the share of profits of a partnership firm is exempt from tax in the hands of partner. The interpretation drawn by the learned counsel for excluding share of partnership firm from scope of section 14A is not sustainable. We do not find any infirmity in the order of Commissioner of Income-tax (Appeals) in upholding the disallowance made by the Assessing Officer. Addition u/s 69 - Held that:- Addition has been made on the basis of the CIB information received. As per the contentions of the learned counsel for the assessee, the assessee neither owns the property mentioned in the information received from CIB nor has it sold any such property during the period relevant to the assessment year 2011-12. The learned counsel has also placed on record the letters from the office of the Sub-Registrar, Karveer, Kolhapur, in support of his contentions. We are of the view that this issue needs a revisit to the Assessing Officer for verification. The Assessing Officer after verification of records and the letters placed on record by the learned counsel from the office of the Sub- Registrar, Kolhapur, shall decide this issue afresh, in accordance with law.

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• 2016 (11) TMI 1039
  Undisclosed gifts - Held that:- We are of the view that in the absence of anything to show that the transaction was by way of money laundering, additions could not be made towards gifts when the assessee has discharged his burden by proving the identity, genuineness and capacity of the donor. We further opined that gifts are normally made by relatives through natural love and affection and do not necessarily require any particular occasion. In the present case on hand, the assessee has discharged his burden by furnishing necessary details before the Assessing Officer. The Assessing Officer has summoned the donor and the donor has personally appeared before the Assessing Officer and admitted that he had given gifts to his brother. Under these circumstances, we are of the view that the Assessing Officer was not correct in coming to the conclusion that the assessee has not discharged genuineness of the transactions and capacity of the donor. Therefore, we direct the Assessing Officer to delete the additions made towards alleged gifts of Rs. 15 lakhs for the assessment year 2009-10, Rs. 22,90,000 for the assessment year 2010-11 and Rs. 43,00,789 for the assessment year 2011-12. In respect of the remaining amount of Rs. 21,16,611 for the assessment year 2011-12, we deem it appropriate to send the issue to the file of the Assessing Officer and direct the Assessing Officer to verify the claims made by the assessee with regard to sources of Rs. 21,16,611 and take appropriate decision in accordance with law.

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• 2016 (11) TMI 1038
  Disallowance of purchases and renovation expenses - Held that:- Assessee has not been able to of fer any satisfactory explanation as regards the failure of the assesese to substantiate the claims made on account of additional purchases and renovation expenses in the revised return/accounts during the course of remand proceedings before the Assessing Officer except stating that the case of the assessee was not properly represented before the Assessing Officer during the course of remand proceedings. It is also observed that specific and pertinent questions were raised by the Assessing Officer in respect of claims made by the assessee in the revised accounts/return on account of additional purchases and renovation expenses and no explanation whatsoever was offered by the assessee to reply or clarify the same. No infirmity in the impugned order of the ld. CIT(Appeals) confirming the additions made by the Assessing Officer on account of additional purchases and renovation expenses as claimed in the revised return/accounts by treating the same as bogus -Decided against assessee Addition on account of sundry creditors written back by way of enhancement - contention raised by the assessee that the addition was already made by AO on account of sundry creditors written back on substantive basis to give effect to the order of the ld. CIT(Appeals) assed in the case of the assessee for A.Y. 2000-01 - double addition - Held that:- Although this position clearly evident from the relevant two orders passed by the Assessing Officer (copies placed at page nos. 1 and 3 of the paper book) is not disputed by the ld. D.R. , he has submitted that the Assessing Officer may be given opportunity to verify this aspect. Since the ld. counsel for the assessee has not raised any objection in this regard, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying the grievance of the assessee of double addition

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• 2016 (11) TMI 1037
  Penalty u/s 271AAA - Held that:- As in course of search in the sworn statement recorded under section 132(4) of the Act, has admitted the undisclosed income, and clearly stated the manner in which the undisclosed income (within the meaning of Explanation (a)(i) of Section 271AAA) was derived and substantiated in statement recorded in course of search. Subsequently, the assessee paid tax, together with interest in respect of the undisclosed income and filed return of income, which stand accepted in assessment u/s 143(3) of the Act. On perusal of the above, it is seen that assessee has offered for tax his undisclosed income (Rs. 2,71,91,880/-) including jewellery. Penalty deleted - Decided in favour of assessee

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• 2016 (11) TMI 1036
  Calculation of long-term capital gain - adoption of cost of acquisition - land was inherited by the assessee along with other co-owners - Held that:- There is no merit in the submissions of the learned Departmental representative that the same facts were there earlier, which have not been contradicted by the assessee in the subsequent proceedings. The assessee in the subsequent proceedings has been able to satisfy that in the case of co-owner, Shri Birender Singh Gill, the cost of acquisition as on April 1, 1981 have been accepted by the Revenue Department at Rs. 5500 per sq. yard in respect of the same property, which was sold through two different sale deeds. Therefore, the Revenue authorities should not have ignored the directions given by the Tribunal earlier. Considering the above we set side the orders of the authorities below and direct the Assessing Officer to adopt the cost of acquisition of land under consideration as on April 1, 1981 in a sum of Rs. 5500 per sq. yard as against Rs. 600 adopted by the authorities below for the purpose of calculation of long-term capital gain.

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• 2016 (11) TMI 1035
  Addition made on account of cash found at the time of search - Held that:- The Revenue authorities were duty bound to consider the aspect of source of cash claimed to be out of the withdrawal from banks and other means. It is noted from the perusal of the orders of the lower authorities that the assessee had submitted that total amounts of withdrawals during the last seven years by the assessee's family stood at Rs. 127.25 lakhs. Thus amount of cash found at the time of search of Rs. 6,36,900 is easily explained and covered therein. The apprehension of the lower authorities that there were huge expenses, other household expenses and marriage expenses which might have been made from these withdrawals is certainly not out of context but no evidences were found during the course of search indicating that entire withdrawals were exhausted in meeting household, marriage and other expenses. Thus assessee has duly explained the availability of cash found at the time of search out of the cash available on account of withdrawals made by the assessee and his family members in the current year as well as during the last seven years - Decided in favour of assessee Addition on account of unexplained investment in gold ornaments and diamond jewellery - Held that:- law does not permit to make entire addition on account of difference found in the jewellery recovered and the jewellery disclosed in wealth-tax returns/ books of account, in the hands of the assessee only. Under these circumstances, we find it appropriate to send this issue back to the file of the Assessing Officer with the direction that the Assessing Officer is permitted to make addition only with respect to the jewellery found from the assessee that too only for the amount which remains unexplained. The assessee is free to submit requisite details and documentary evidences to explain the source of the jewellery found from his possession. The assessee is also free to submit before the Assessing Officer, copies of judgments and Central Board of Direct Taxes circular which have been relied on before us to explain the jewellery found from its possession

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• 2016 (11) TMI 1034
  Disallowance made under section 40A(3) - cash payments (in excess of Rs. 20,000 on each occasion) - purchase of its stock-in-trade (country liquor) - Held that:- The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorised retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its authorised wholesaler licensee (agent), both de facto and de jure, is one of "principal" and "agent". We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in rule 6DD(k) of the Rules. We find that the assessee had made payments only to the customer of State Bank of India and not to State Bank of India. Hence the assessee's case does not fall under the exception provided in rule 6DD(a) of the Rules. We hold from the aforesaid findings that the assessee's case falls under the exceptions provided in rule 6DD(b) and rule 6DD(k) of the Rules. We have no hesitation in deleting the disallowance made under section 40A(3) of the Act in all the years under appeal. - Decided in favour of assessee.

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• 2016 (11) TMI 1033
  Disallowance of trip expenditure - quantification of expenses - Held that:- Quantification of disallowance does not involve any question of law. It is dependent upon the facts and circumstances in a particular year. The Revenue authorities have quantified the disallowance at Rs. 3,48,870 on an analysis of the details of the expenditure produced by the assessee. Once an estimated opinion is being taken by an authority, then, that opinion ought not to be intervened by the higher appellate authority unless it is demonstrated that such opinion is based on consideration of irrelevant material. No such facts have been brought to my notice. Therefore, do not see any justification for interfering in the order of the learned Commissioner of Income-tax (Appeals) as far as confirmation of disallowance of Rs. 3,48,870 is concerned. - Decided against assessee Disallowance of traveling expenditure - Held that:- In the case of Sayaji Iron and Engg. Co. v. CIT [2001 (7) TMI 70 - GUJARAT High Court] disallowance was made out of the telephone expenditure under the belief that such facility might have been used by the employees of the company for personal purpose. Here in the present case, the learned Assessing Officer has brought on record that no business visit was required to be undertaken at Goa, and therefore, the expenditure cannot be debited in the accounts of the assessee. - Decided against assessee

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• 2016 (11) TMI 1032
  Surrender made by the assessee in statement u/s 132(4) - Held that:- The Authorized Officer has referred to the two statements of Sh. Abhay Gupta recorded on 18.4.2006 and 3.5.2006, as statements u/s 132[4]. The ld. AR has placed on record a copy of panchnama drawn in the case of the assessee, which records the date of commencement of search as 22.3.2006 and the date of completion of search as 23.3.2006. It was submitted that this was the only panchnama drawn in the case of the assessee. The ld. DR has not placed before us a copy of any other panchnama of a later date drawn in the name of the assessee. This shows that both the statements of Sh. Abhay Gupta, which have been claimed as made u/s 132[4] were, in fact, recorded after the conclusion of search. As such, these statements cannot be even characterized as statements u/s 132(4) so as to be given any evidentiary value. In view of the foregoing discussion, we are satisfied that the ld. CIT(A) was not justified in sustaining the addition of Rs. 10 lac by relying on his finding given in the case of M/s Assam Supari Traders and M/s Balaji Perfumes, the facts of which are entirely different from that of the assessee under consideration. It is further noticed that the other two brothers of the assessee, on whose behalf a similar surrender of Rs. 10.00 each was made, also did not offer such income in their respective returns of income. The AO made additions of the income surrendered but not declared. However, the concerned CIT(A) deleted such additions. The appeals filed by the Revenue against such deletions have been dismissed by the tribunal due to low tax effect.We want to clarify beyond doubt that the validity or otherwise of the retraction of statements made by Sh. Abhay Gupta has neither been considered nor decided by us in this order, as the same is not relevant in so far as the instant addition of Rs. 10.00 lac, made in the hands of the assessee, is concerned. No finding given in this order in respect of the deletion of the addition has any significance or relevance with the additions made in the case of the above referred two concerns, whose appeals are pending before the tribunal. Income arising from the estimation of household expenses - Held that:- It is observed that the AO for earlier years made an estimation of household expenses @ Rs. 20,000/- per month. The assessee appealed against such estimation of income before the CIT(A) and the tribunal, but without any success. A copy of such tribunal order upholding the addition made on the basis of estimation of household expenses at this level is available on record. Considering the totality of the facts and circumstances of the instant case, we are satisfied that it would be in the fitness of things, if the estimation of household expenses for this year is restricted to Rs. 22,000/- per month as against Rs. 25,000/- made by the AO. The addition is sustained pro tanto. This ground is partly allowed. Penalty u/s 271(1)(c) - Held that:- It is observed that the bedrock for the imposition of the extant penalties on the additions of Rs. 10 lac and Rs. 15 lac, does not survive anymore as the additions have been deleted by us hereinabove. In that view of the matter, there remains no basis for the confirmation of the instant penalties. As regards the confirmation of additions towards the estimate of household expenses, we find that the AO simply made an estimate of household expenses without there being any evidence backing such an estimate, which has been partly accepted. The Hon’ble Delhi High Court in CIT vs. Aero Traders P. Ltd. (2010 (1) TMI 32 - DELHI HIGH COURT ) has held that no penalty u/s 271(1)(c) can be levied when income is determined on estimate basis.As the penalty on account of low household withdrawals is simply on the basis of an estimate made by the AO, which has been partly reduced, we are satisfied that no penalty can be levied on the basis of such an estimate of household expenses.

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• 2016 (11) TMI 1031
  Existence of international transaction - tpa - interest free loans given to AE - Held that:- If the tax payer claims it is an interest free loan as a share holding activity, to be utilized by the AE for acquiring and increasing its portfolio and on utilization and fulfilling the internal and external requirements by way of permissions and procedures of the regulatory authority etc. it is to be converted into equity and that too at a premium then it is the correctness of this claim which is to be specifically addressed and decided. Merely because it is shown as an international transaction itself will not decide the claim. The consistent objection posed by the assessee that the act of advancing interest free loan as “quasi equity” for the stated purpose was supported by documents and hence not an “international transaction”, cannot be ignored on the specious plea that disclosure was made by the tax payer in its Form 3CEB There is nothing on record to support the conclusion that the interest free loan must necessarily be deemed to be an interest earning activity and not an activity to capitalize the opportunity cost for investing in new territories. We hold that for the tax authorities to consider re-characterizing the transaction the tax authorities must necessarily demonstrate that the transaction as claimed and documented is a sham or on the basis of facts and evidences is at a substantial variance with the stated form. In the absence of any such exercise the tax authorities are entering at their peril in the realm of arbitrariness. In the facts of the present case there is not even a whisper of a suggestion that it was a bogus transaction, as admittedly shares have been allotted. There is nothing in the provisions of the Act which empowers the tax authorities to insist that the interest free loan towards its AE for capitalization the opportunity of cost of entering in new territories must necessarily by modified and re-characterized into a loan simplicitor and considered to be an activity for earning interest. The tax authorities must bring on record facts and evidences impacting the veracity of the claim of the assessee and demonstrate the hollowness of the assessee’s claim. No such exercise has been done to counter the consistent claim of the assessee demonstrated by facts on record that the intention was to capitalize the opportunity cost and not to encash the opportunity to best utilize the available funds. - Decided in favour of assessee Disallowance u/s 14A - Held that:- Considering the judicial precedent cited and in the absence of any rebuttal on the material facts that these constituted strategic investments for the assessee, we direct the AO to examine the correctness of the computation placed on record by the assessee which as per the calculation sheet at page 19 is shown to be working out to Rs. 91,021/-, when it is compared with the suo moto disallowance of Rs. 2,28,777/- made by the assessee we find no further disallowance on facts is warranted. The fact of suo moto disallowance is evident from the second last page of the AO itself. Accordingly, we hold no further disallowance need be made subject to the verification of the calculation placed on record.

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• 2016 (11) TMI 1030
  Penalty u/s. 271(1)(c) - AO failed to cut the irrelevant portion of the printed Show cause notice - assessee contended that, the said notice is not clear whether it was issued for furnishing of inaccurate particulars of income or concealment of particulars of such income - Held that:- In the present case the AO failed to strike out the irrelevant portion in the said show cause notice, respectfully following the order above, we cancel the penalty levied u/s. 271(1)(c) by the Assessing Officer as confirmed by the CIT-(A) for both the assessment years under consideration. Having held that the notice issued by the AO U/Sec 274 r/w Sec 271(1)(c) of the Act during the course of penalty proceedings is not in conformity with the relevant provisions of the Act, we are of the view that Section 292B can not come to the rescue of the Revenue and the reliance of the Ld.DR on the said provision is clearly misplaced. Therefore, preliminary issue as raised by the assessee by way of additional ground for both the assessment years 2006-07 & 2007-08 are allowed, in view of the same the other grounds raised requires no adjudication, therefore, all are dismissed.

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• Customs

• 2016 (11) TMI 1083
  Validity of order passed by Settlement Commission - the Bill of Entry filed before the issuance of the SCN - violation of condition as set out in 1st Proviso to section 127B(1) of the Customs Act, 1962 - Held that: - reliance placed in the decision of the case of M/s Auto Creaters v/s Union of India and others [2016 (11) TMI 855 - BOMBAY HIGH COURT], where it was already held that Condition No.(iii) was complied with by the said M/s Auto Creaters. As the facts in these Writ Petitions are almost identical to the one filed by M/s. Auto Creaters, these Writ Petitions also succeed and are allowed in terms of prayer clause (b). Rule is made absolute in the aforesaid terms. The Settlement Applications filed by the Petitioners are restored to the file of Respondent No.4 for a de novo consideration - petition disposed off.

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• 2016 (11) TMI 1082
  Confiscation of unaccompanied baggage - the petitioner brought in a few items of food articles entrusted by some of his family members which were seized at the airport - different items in 21 cartons - Scope of redemption fine u/s 125 - The only contention urged is that since the goods are not prohibited goods, the appellate authority ought to have granted the petitioner an option to redeem the goods on payment of fine - Held that: - When the statutory authority considered the relevant aspects and forms an opinion that it is not a bonafide baggage and has observed that such baggage is prohibited, I am of the view that there is justification on the part of the appellate authority to have not exercised the power to grant option in favour of the petitioner - In view of my finding that it is not a bona fide baggage and such materials could not have been imported without a valid licence, it amounts to a prohibition under any other law in force - option under section 125 rightly denied - petition dismissed - decided against Petitioner.

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• 2016 (11) TMI 1081
  Release of bank guarantee - Held that: - the Bank Guarantee has worked itself out and after 16.1.2015, the Bank Guarantee has not been renewed as it has expired and it is a lapsed document. Nevertheless, unless and until the second respondent, issues necessary communication to the fourth respondent, the Bank Guarantee will not be released. In other words, the petitioner would not be in a position to deal with the Securities, which he has placed at the disposal of the fourth respondent Bank to enable the petitioner to furnish a Bank Guarantee for Rs. 85 lakhs. Whether the petitioner would be entitled to a direction for provisional release of the subsequent cargo? - Held that: - the goods were imported and Bill of Entry was filed in 2011. Though the High Court of Delhi issued directions to consider the petitioner s application for provisional release within a period of four weeks from 13.12.2012, the order was not complied with by the Department. The adjudication of the show cause notice has taken almost three years and the order-in-original was passed on 16.12.2015. Thus, the petitioner s case is that the goods cannot be marketed and have to be destroyed and in fact their latest representation to the second respondent on 25.1.2016, was for destruction of goods lying in the Godown - considering the peculiar facts and circumstances of the case and taking note of the fact that already the adjudication proceedings has been completed and Order-in-original has been passed, the question of directing the second respondent to grant provisional release of the goods, is not maintainable. Therefore, only option available for the petitioner is to move the CESTAT for appropriate interim relief. Liberty is granted to the petitioner to file an Interim Application before the CESTAT in the pending Appeal for appropriate interim relief for release of goods. Considering the hard facts and the time taken for the Department to adjudicate the matter, this court is of the view that the CESTAT may consider the petitioner s application for interim relief as expeditiously as possible, preferably, within a period of six weeks - petition disposed off.

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• Corporate Laws

• 2016 (11) TMI 1073
  Scheme of Amalgamation - Held that:- The reports confirm that the affairs of the Transferor Companies are not conducted in a manner prejudicial to the interest of their members or to the public interest. Besides, the Official Liquidator has requested this Court to direct the petitioner Transferor Companies to preserve their books of accounts, papers and records and not to dispose of the records without the prior permission of Central Government under Section 396A of the Companies Act, 1956. The Official Liquidator has also sought directions for making due compliance of the statutory liabilities. Scheme is hereby sanctioned. It is, however, directed that the petitioner Transferor Companies shall preserve their books of accounts, papers and record and shall not dispose of the records without the prior permission of the Central Government under Section 396A of the Companies Act, 1956. It is further observed that the sanction of this Scheme shall not absolve the Transferor Companies from any statutory liability, if any.

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• 2016 (11) TMI 1072
  Winding up petition - Held that:- None has appeared for hearing following the admission. The respondent company is under an undischarged debt of the petitioner company having neglected to discharge its admitted debt as reflected in its balance sheet despite a statutory notice and is thus deemed to be insolvent. No dispute what of bonafide dispute obtains. The respondent company Golden Future Fertilizer Limited is directed to be wound up. The Official Liquidator is appointed as Liquidator of the respondent company under Section 448 of the 1956 Act. He shall take steps to take possession of the immovable and movable assets of the respondent company, if not so already done. The Directors of the respondent company are directed to file statement of affairs of the respondent company before the Official Liquidator as statutorily required. The citation of winding up of the respondent company be published by the petitioner in two news papers i.e. The Times of India (English) Delhi Edition and Dainik Bhaskar (Hindi) Jaipur Edition in terms of Rule 24 of the Companies (Courts) Rules, 1959.

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• Service Tax

• 2016 (11) TMI 1113
  Tax evasion - non-registration and non-submission of returns - maintenance or repair service - Imposition of penalties - benefit u/s 80 invoked - Held that: - It emerges that the lower appellate authority has properly analysed the issue at hand and given a well reasoned finding and conclusion that penalties could be waived under Section 80 ibid, therefore I do not find any legal infirmity in the orders of the lower appellate authority. He has also conducted denovo proceedings in the matter as directed in earlier Tribunal order dated 21.10.2010 - penalties waived - appeal dismissed - decided against Department.

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• 2016 (11) TMI 1112
  Demand - With effect from 1.6.2007, the appellant got registered under work contract service and paying service tax on the amount of services provided by them except for the services provided in the State of Jammu and Kashmir. It was alleged that the appellant had provided taxable services during period from 1.6.2007 to March, 2010-11 - Held that: - I hold that for the period post 1.6.2007, if any unpaid demand is found against the appellant under the category of 'work contract service,' the same shall be payable by the appellant. Further, the services provided in the State of Jammu & Kashmir post 1.6.2007, no service tax is payable. The matter is remanded back to the adjudicating authority for calculation of the demand and thereafter issue a demand notice to the appellant within 30 days from the receipt of this order. If there is any outstanding demand, the same shall be payable by the appellant alongwith interest and penalty to the extent of 25% of the service tax payable - appeal allowed by way of remand.

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• 2016 (11) TMI 1111
  Classification of services - storage and warehousing services, supply of manpower, Rent-a cab Services - classifiable under Cargo Handling Services or GTA services - Held that: - At this preliminary stage, we do not think that the appellant has made out a prima facie case for full waiver of pre-deposit. We therefore direct the appellant to deposit 25% of the tax demand which in our view would suffice the pre-deposit envisaged under section 35F for considering the stay application. The appellant is directed to deposit 25% of tax demanded (Rs. 20,45,779/-) within a period of 4 weeks and report compliance on or before 21.9.2016; on failures to deposit or report compliance, the appeal will stand dismissed for non-compliance without further notice.

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• 2016 (11) TMI 1110
  Levy of tax - operator of COCO retail outlets of M/s Bharat Petroleum Dealers - Business Auxiliary Service - Held that: - It is submitted by the appellant in the grounds of appeal that, if the reimbursable expenses are taken into consideration then, the demand of service tax would be much below the threshold level. Taking into consideration this ground submitted by the appellant as well as the fact that the department has withdrawn their contest on the demand, interest, penalty and appeal filed by department having been dismissed, the appeal No.ST/27877/2013 filed by assessee is allowed - decided in favor of assessee and against Department.

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• 2016 (11) TMI 1109
  Imposition of interest and penalty - Section 35F of the Act - pre-deposit - Held that: - where the duty and penalty are under dispute 7.5% of only duty amount has to be deposited in order to file the appeal before this Tribunal. In case only penalty is under dispute then 7.5% of the penalty amount is required to be deposited, in the present case there is a dispute of interest and penalty. As per the plain reading of the Section 35F of the Act, in the present case also only 10% of the penalty is required to be deposited for filing an appeal which the applicant have already deposited. As regards the contention of the ld. AR that 7.5% of interest should also be deposited, I completely disagree with this contention for the reason that Section 35F of the Act, does not envisage for deposit of 7.5% or as the case may be 10% of interest amount. Therefore, in my considered view the applicant is not required to deposit any amount towards interest. The applicant have deposited 10% of the penalty amount therefore, the appeal is liable to be admitted. In this situation, there is no need of filing any stay application. The appeal is admitted. The stay application is dismissed as infructuous.

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• 2016 (11) TMI 1108
  Penalty - Construction of a ‘jetty’ - bonafide belief - Service Tax liability with interest having been discharged - Held that: - the appellant had declared receipt of payment and claimed the said payment as received for exempted services, there could be a bonafide belief that tax liability does not arise - No penalty - Decided in favor of the assessee.

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• 2016 (11) TMI 1107
  Whether the appellant are liable to pay service tax on GTA service from cash or from their Cenvat Credit account or otherwise for the period prior to 1.3.2008? - Held that: - From the Explanation, which was inserted vide Notification No. 28/2012-CE(NT) dt. 20.6.2012 (w.e.f.1.7.2012), the utilization of Cenvat Credit has been barred for payment of service tax by the service recipient where the service tax is payable under reverse charge mechanism. This bar was not existing at the relevant time that is during the period October, 2007 to February 2007 involved in the present case. In view of the above, the impugned order is not sustainable, hence the same is set aside. The appeal is allowed.

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• Central Excise

• 2016 (11) TMI 1106
  Cenvat credit relating to common input services - Large Tax Payer Unit - Input Service Distributor - trading activity - Held that: - the Tribunal has come to the conclusion that as regards the issue as to whether trading activity can be called as a service, it is quite clear that since the trading activity is nothing but purchase and sales and is covered under sale tax law, it may not be appropriate to call it a service. Therefore, it has to be held that trading activity cannot be called a service and therefore, it cannot be considered as an exempted service also. It is pertinent to note that the trading activity has been specifically covered as exempted service with effect from 1.4.2011. This amendment in the definition in Rule 2(e) was brought into effect on 1.4.2011 and as per the learned A.R., this amendment is only a clarification and is applicable prospectively. Further this issue whether the appellant is entitled to take Cenvat credit with regard to common input service attributable to trading activity has been recently considered by the Hon’ble High Court of Madras in the case of M/s F L Smidth Pvt. Ltd. Vs. C.C.E. [2014 (12) TMI 699 - MADRAS HIGH COURT] where in it was held that On an understanding of the Rule 2(l) of the Cenvat Credit Rules, there is no manner of doubt that input service means goods which is used by the manufacturer directly or indirectly in relation to the manufacturing of final product and clearance of final product from the place of removal. In the present case, the Department has allowed cenvat credit in respect of the value of goods amounting to Rs. 5.41 crores and denied for the balance. We find no error in such determination, which is in consonance with Rule 2(l) of the Cenvat Credit Rules. There is no infirmity in the impugned orders whereby the Commissioner (Appeals) has denied the Cenvat credit of common input services attributable to trading activity by holding that the trading activity is exempted service even prior to 1.4.2011. Further, as far as invoking extended period of limitation and imposition of mandatory penalty, I am of the considered view that since the appellants have not declared in their ST3 Returns that input service credit was used in relation to trading activity. This amounts to suppression of facts and therefore, the extended period of limitation is correctly invoked as the appellants are following the self assessment procedure and are taking credit on their own. CENAVT credit not allowed - extended period of limitation invoked - appeal disposed off - decided against appellant-assessee.

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• 2016 (11) TMI 1105
  CENVAT credit - forged documents - imposition of penalty - Held that: - I find that the credit wrongly availed by the assessee on the basis of the invoice, in the name of their Kalamb unit was otherwise available to their Kalamb unit. To err is human and in as much as the error is on the part of the employee responsible for making entries in RG-23 (a) part II, who had recently joined, I conclude that there was no malafide intention on the part of the assessee so as to impose penalty upon them - Similarly in respect of availment of credit on the basis of Bill of Entry the same was available to them on receipt of the goods. As such it is only a question of time of availament of credit and such pre mature availment has not benefitted the assessee in as much as the credit availed was not put to use on account of already overflowing credit available with the assessee. This act of the appellant cannot be held to be a malafide intention so as to invoke the penal provisions against them. I find no justifiable reasons to impose penalty on the appellant. Accordingly, the same is set aside - appeal allowed - decided in favor of appellant.

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• 2016 (11) TMI 1104
  CENVAT Credit - whether the Department's view that the capital goods of the co-generation plant including those capital goods which were outside the factory like the transformer, etc., were not eligible for capital goods CENVAT Credit inasmuch as, such equipment did not take part in the processing of sugar/molasses which are dutiable final products, is justified? - Held that: - this matter needs to be remanded back to the original authority with a direction to verify whether the appellants have been receiving the power from the State Grid from time to time and where the same was used in the production of sugar. Since this finding has not come in the impugned order as well as in Order-in-Original, therefore, I remand the case back to the original authority with the direction to verify these facts on the basis of documents produced by the appellant. The original authority shall decide the matter within a period of three months from the receipt of copy of this order and also afford an opportunity to the appellant to produce the documents, if any, and thereafter pass a reasoned order - appeal allowed by way of remand.

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• 2016 (11) TMI 1103
  SEZ - Refund claim - Scientific or Technical Consultancy Service - Chartered Accountants Service - Held that: - the learned Commissioner (Appeals) has also observed that during the personal hearing, the assessee produced the list of services approved by the Development Commissioner and in the amended list of services, Scientific or Technical Consultancy Service and Chartered Accountants Service are added to the certified list of services in Annexure III and therefore, the learned Commissioner (Appeals) has allowed the benefit of refund of service tax paid by the assessee on Scientific or Technical Consultancy Service and Chartered Accountants Service . Similarly, the learned Commissioner (Appeals) has allowed the refund of Education Cess and Higher Education Cess on the basis of Board s Circular No. 134/3/2011-ST dated 08.4.2011. After considering the submission of the learned A.R. and the facts on record, I do not find any infirmity in the impugned order passed by the Commissioner (Appeals) - refund allowed - appeal dismissed - decided against Revenue.

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• 2016 (11) TMI 1102
  Manufacture - Marketability - fabrication of various articles of steels namely, trusses, purelines, beams and columns etc. at their site, using contractors - Held that: - The items which go into the erection of the whole factory shed have been erected piece by piece out of duty paid steel plates/ angles/ channels etc. Further, if these are dismantled they will only turn into waste and scrap. Further such structural would not be capable of being subjected to the same use in a different location for a different customer. Since, during the process of dismantling these items considerable damage would be done to them. Further, these items are tailor made as per the requirement of the customer and therefore they can not be marketed as such. Hence, the items Trusses, Purelines, beams and columns are not excisable to duty. An essential question for levy of excise duty i.e. marketability is again answered in negative - appeal rejected - decided against Revenue.

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• 2016 (11) TMI 1101
  Refund claims - period of limitation - initially the refund claim was filed before the wrong authority - non-utilisation of Input Service Tax credit lying in balance on account of export of finished goods - Held that: - the issue is no more res integra being settled by the Hon’ble Gujarat High Court in the case of Commissioner of Central Excise Vs. AIA Engg Ltd. [2010 (9) TMI 555 - GUJARAT HIGH COURT] where it was held that The Tribunal has also reiterated that the original refund claim was filed within time before wrong authority - As such, subsequent refiling of refund claim beyond the limitation period should not be held against the assessee. The refund claim is not time barred - appeal allowed - decided in favor of appellant.

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• 2016 (11) TMI 1100
  Demand - clandestine removal of goods - confiscation - no case is made out against the Appellant M/s Shivani Detergent and consequently, the demand and penalty against them are not sustainable. I also find that the lower authorities have ordered confiscation of the goods valued at Rs. 1,23,000/-, which were found in excess and imposed redemption fine of Rs. 5,000/-. I find that no evidence is forthcoming from the records, which can show that there was any attempt made by the Appellant firm to clear the said goods clandestinely or that such excess goods were kept unaccounted, with a view to clear them clandestinely. Further, there is no acceptance by any person that the goods were kept unaccounted, with intention to clear the same without payment of duty. I, therefore, hold that the goods are not liable for confiscation. Since I have held that the demand of duty as well as the confiscation of goods are not sustainable, penalties against M/s Shivani Detergent, Director Shri Naresh Bagani and Shri Mahesh Karambelkar are also not sustainable. Appeal allowed - decided in favor of assessee.

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• 2016 (11) TMI 1099
  Denial of CENVAT credit - subject goods have been used for manufacturing supporting structures - Held that: - The matter stands covered by the Tribunal s order in the appellant's own cases M/s. Monnet Ispat & Energy Ltd. Versus Commissioner of Central Excise, Raipur [2016 (1) TMI 917 - CESTAT NEW DELHI] where it was held that the allegation in the show cause notice that steel items used by the appellant are neither components nor spares nor accessories is not sustainable. Applying the principle of “user test” laid down by the Hon’ble Supreme Court in Jawahar Mills case (2001 (7) TMI 118 - SUPREME COURT OF INDIA ) the angles, beams and channels used in the making and fabrication of these capital goods are found eligible for Cenvat credit. CENVAT credit allowed - appeal allowed - decided in favor of appellant.

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• 2016 (11) TMI 1098
  Denial of CENVAT credit - MS Angles, Channels, Plates, Rounds, HR Sheets etc - neither inputs nor capital goods - Held that: - the above items are not supporting structures of Plant & Machinery or for laying foundation and hence the findings of the adjudicating authority that, these are not goods being embedded to the earth are in the nature of immovable goods and are not goods or excisable goods in terms of CBEC Circular No. 58/1/2002-CX dated 15/01/2002 is not proper. From the Cenvat credit details, I find that, they have availed Cenvat credit amounting to Rs. 30,32,830/- on account of various structural steel items used for manufacture of Hopper, Kiln, Kiln inlet house, Conveyor System, etc. for Sponge Iron and accordingly, they are entitled for Cenvat credit amount to Rs. 30,32,830/- availed on various structural steel items” Whether the goods are inputs or not? - Held that: - These goods are more in the nature plant/ machinery embedded to earth or supporting structures rendering assistance in the manufacture of finished goods. Reliance was placed on the Tribunal s decision in Vandana Global Ltd. vs. CCE, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)]. It was further contended that the respondent never engaged the fabrication of various capital goods as claimed in their monthly returns. No accounts were maintained. These structural items are capable of being used in construction of shades etc. The Revenue argued that the certificate given by Chartered Engineer is not adequate to support the claim of the respondent for credit. Appeal dismissed - decided against Revenue.

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• 2016 (11) TMI 1097
  CENVAT credit - structural steel used in the manufacture of final products cleared on payment of duty - rail, railway track materials and JO trucks - whether the appellants are eligible for the credit on duty paid on beams, columns, structures, fabricated columns used as inputs for manufacture of structures and cranes, which were removed on payment of appropriate duty? - the appellants could not produce relevant details with supporting documents in support of their claim for availment of cenvat credit - Held that: - Considering the detailed documents submitted by the appellant regarding duty paid clearances of the goods manufactured /fabricated in their factory using these M.S. Items and also the Department's view taken in the order mentioned above in the appellant's own case for the subsequent period, we find no justification for denial of credit on these items in the impugned orders. Regarding cenvat credit on rails, MBC concrete sleepers used in railway line, as mentioned above, the credit has been allowed to the appellant in subsequent orders. Reference can also be made to the order dated 25.02.2010 of the Commissioner (Appeals) in the appellant's own case, where credit has been allowed on railway, MBC concrete sleepers as inputs. Similarly, credit has been allowed on beams, angles, columns and rails used in the manufacture of capital goods, which are cleared on payment of duty. Admissibility of credit on JO trucks - Held that: - admittedly, the said trucks were used for transportation of raw materials within the factory premises. We have perused the technical write up and photographs of the said JO trucks. These are four wheeled industrial platform truck for horizontal movement of heavy material upto 2 MTs. These are basically material handling equipments operated within the premises of the factory. We note that the credit on such JO truck has been allowed by the Tribunal in the appellant's own case vide Final Order No.51754/2016 dated 5.5.2016. The said order also allowed cenvat credit in respect of railway track materials following the decision in the appellant's own case vide Final Order No.52840 of 2015 dated 9.9.2015. For JO trucks, reliance was placed on earlier decision in the appellant s own case vide Final Order No.52994 of 2015 dated 8.3.2015. The matter of eligibility of credit on various iron and steel items, railway track material, JO truck were subject of many earlier proceedings and the appellants have orders from the Tribunal admitting their eligibility. Considering these settled issues in favour of the appellant, we find that the impugned orders cannot be sustained. Accordingly, the impugned orders are set aside and the appeals are allowed.

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• 2016 (11) TMI 1096
  SSI exemption - clubbing of clearances - Held that: - It is clear that the Original Authority had passed a lengthy order examining various evidences gathered during the investigation by the Department. We have perused the findings recorded in the said impugned order. We note that the Original Authority has recorded that the appellants agreed for clubbing of the clearances of ANG and DGW for the purpose of duty liability. However, it appears that they have disputed the clubbing of turnover of NGPC in the total turnover for the said purpose. After detailed discussion, the Original Authority concluded that based on the evidences that the transactions made by the three entities viz. ANG, DGW and NGPC are to be treated as a single entity for the purpose of SSI exemption. Here, we note that there is no clear finding as to what is the legal status of these three units, which of them are dummy units and which are genuine manufacturing units. This is necessary in order to fix the duty liability on a legally sustainable basis. In fact as noted above, the confirmation of duty demand is not against any particular assessee. The order simply states that an amount of Rs. 45,32,926/- is confirmed. Further, a penalty of equivalent amount was jointly imposed on the three units. The amount is not quantified for individual unit for the offences committed by them. Such joint liability of duty and penalty as held by the Original Authority is not legally sustainable. The order lacks legal clarity and has to be set aside on this ground alone. Appeal allowed by way of remand.

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• 2016 (11) TMI 1095
  Area based exemption - Eligibility to the benefit of Notification No.39/2001-CE, dt.31.07.2001 - installation of plant and machinery prior to and after 31.12.2005 - Held that: - the issue has been settled by Hon'ble Gujarat High Court in the case of SAURASHTRA FERROUS PVT. LTD. Versus UNION OF INDIA [2015 (1) TMI 539 - GUJARAT HIGH COURT], where it was held that if, the unit/plant and machineries have been commissioned/installed (Fully) prior to 31-12-2005, the petitioner may be entitled to the benefits contained in the aforesaid Notification, on manufacture/production of cast iron articles for a period of five years from the date of commencement of the first commercial production of such goods on such unit. Therefore, in the interest of justice, it is prudent to remit the matter to the Adjudicating authority to decide the refund claims afresh in accordance with the principle of law laid down in the aforesaid decision of the Hon'ble Gujarat High Court and the observations recorded by the learned Commissioner (Appeals) in the impugned order - a reasonable of opportunity of hearing granted to the Appellant - appeal disposed off by way of remand.

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• 2016 (11) TMI 1094
  Pre-deposit - relief under Rule 41 of the CESTAT (Procedure) Rules, 1982 - if the deposit made under Section 35F can be considered as duty payment against the clearance of goods made earlier - Held that: - the law treats the pre-deposits differently from the duty. In these circumstances it cannot be said that more than 100% duty has been deposited. - application is dismissed.

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• 2016 (11) TMI 1093
  Recovery of duty - wrong availment of the benefit of N/N. 4/97-CE dt.01.03.1997 - N/N. 4/1997-CE, dt.01.03.1997 allows concessional rate of duty subject to fulfillment of condition, that is, appropriate rate of duty of excise or additional duty leviable under the Customs Act has been paid on the yarn - failure to provide the evidence to the effect that appropriate duty was paid on the input yarn as required - Held that: - the learned Advocate for the Appellant claims to be in possession of the evidences, which in our opinion, should be verified and both sides agree for such a course of action. In the result, we set aside the impugned order and remit the matter to the original Adjudicating authority to decide the issues afresh in the light of the evidences on record, the evidences that would be produced by the Appellant and also the principle of law settled in this regard. All issues are kept open. The appeal is allowed by way of remand.

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• 2016 (11) TMI 1092
  CENVAT credit - iron and steel products - Held that: - I find from the impugned order that the Commissioner (Appeals) proceeded on the basis of evidence namely, Technical write-up of goods manufactured by the Respondent. It is stated that the disputed inputs were used in the manufacture of components, parts of Over Head Cranes (EOT), Sleeper Moulds, Furnace, Cooling Tower etc. The inputs in question have been used as capital goods, formed an integral part of the machine or machinery - On perusal of the grounds of appeal of the Revenue, I find that they have not disputed the evidences relied upon by the Commissioner (Appeals), in arriving at the conclusion that the Respondent shall be eligible for cenvat credit on the disputed goods - appeal dismissed - decided against Revenue.

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• 2016 (11) TMI 1091
  Manufacture - whether packeting of pre-determined quantity of various O Ring & U Cap seals in plastic bags would amount to manufacture or otherwise? - Clandestine removal - during the period June 1999 to March 2004, appellant had cleared Seal kits for Pneumatic Cylinders & valves without Central Excise duty - Held that: - we find that the said invoice, as raised by the supplier, clearly indicates that the O Ring & U Cap seals are manufactured and cleared while the invoice raised by the appellant indicate the same as Seal kits which indicate that there are miscellaneous bought out spare items and were constituted items for particular valve. The question of considering this packeting as manufacture does not arise as the O Ring & U Cap seals were already marketable when the supplier/manufacturer had manufactured the same and cleared to appellant. Subsequent packeting of pre-determined quantity of these in a plastic bag has not made the products further marketable. In the absence of any note to the chapter that packeting of pre-determined quantity would amount to manufacture, this activity in our view cannot be considered as a manufacturing activity. O Ring & U Cap seals which were purchased by the appellant from various manufacturers and packeting the same as spares would not amount to manufacture by any stretch of imagination - appeal allowed.

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• 2016 (11) TMI 1090
  Rectification of error - The 1st error which seems to be occurred is that after Paragraph 7, in the order dated 31-8-2015, it is mentioned as “(Dictated in Court)” which should be “(Operative portion pronounced in the open Court)”. This part of the order dated 31-8-2015 needs to be rectified and the phrase “(Dictated in Court)” shall be replaced by phrase “(Operative portion of the order pronounced in open Court)” - The 2nd error which sought to be rectified is that the cause title dated 31-8-2015 indicates that the respondent is Commissioner of Central Excise, Mumbai while it should be CCE Pune III - Held that: - we do find that the respondent is CCE Pune III which seems to be an inadvertent typographical error. Accordingly, we rectify the same and indicate that the respondent in Final Order No. A/3154/2015/EB, dated 31-8-2015 will be “CCE Pune III” - Rectification of Mistake is disposed of

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• 2016 (11) TMI 1089
  ITC - output transportation services - whether the respondents are entitled to take Cenvat credit on outward transportation services when the goods are sold on FOR destination or not? - place of removal - Held that: - Admittedly, when goods are sold on FOR basis, the place of removal is the destination of the goods. Therefore, upto that place, whatever services availed by the assessee is entitled to take Cenvat credit. Admittedly, in this case, goods have been sold on FOR destination basis and transportation charges have been paid by the respondent themselves. Goods were insured and ownership of the goods remained with the respondent till delivery of the goods were made to the customer. In these circumstances, I find that decision in this case of Vesuvious India Ltd. [2013 (12) TMI 1025 - CALCUTTA HIGH COURT] relied on by the appellant is not applicable to the facts of this case to say that services have been availed upto the place of removal of the goods. Assessee is entitled to take Cenvat credit - appeal dismissed - decided against Revenue.

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• 2016 (11) TMI 1088
  Refund claim - Rule 5 of Cenvat Credit Rules, 2004 - Held that: - I find that appellant had filed a refund claim of Rs. 12,00,148/- and the claim was sanctioned for an amount of Rs. 7,91,248/-. The claim pertains to October, 2009 to December, 2009 and the new claim also pertains to exactly the same period. I find that the Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 in clause (2) prohibits filing of more than one refund claim in any quarter in a calendar year. Moreover, the earlier order-in-original dated 20-5-2010 has attained finality as the same has not been challenged by the respondents. It is not open to respondents to raise the issue afresh by filing a new refund claim - appeal allowed - decided in favor of Revenue.

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• 2016 (11) TMI 1087
  Recovery of Cenvat Credit - Captive consumption - manufacture of dies - job work - whether recovery of Cenvat Credit availed on the inputs used for the manufacture of dies and for the purpose of job work on the ground that the job work activities were exempted under N/N.214/86-CE dated 25/03/86, justified? - Held that: - reliance placed on the decision of the case Sterlite Industries (I) Ltd., [2004 (12) TMI 108 - CESTAT, MUMBAI] where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Recovery of CENVAT credit not sustained - appeal allowed - decided against Revenue.

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• 2016 (11) TMI 1086
  CENVAT credit - return goods / rejected goods - Polyethylene film and bags falling under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. - Whether the reversal of CENVAT credit on the ground that the appellant was not in a position to show as to what kind of material has been crushed or reprocessed and whether it is from the scrap generated during the course of manufacture of finished goods or the goods rejected from the customers, justified? - Held that: - I find that the said assertion is without any basis as at no such assertion has been made either in the order-in-original or in the appeal before the Commissioner (Appeals). The appeal before the Commissioner (Appeals) has been made only on the ground that the rejected goods were not identified as generated out of the material returned under Rule 16 of the Central Excise Rules - the order of the Commissioner (Appeals) not sustainable and is set aside - matter remanded for fresh adjudication after considering the cross objection raised by the appellant - appeal disposed off.

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• 2016 (11) TMI 1085
  Denial of CENVAT credit - input services - clearing and forwarding agent service - Held that: - the service falls within the definition of input services. The same has also attract nexus with the activity of manufacture and thus the same is admissible. In so far as use of clearing and forwarding services for the purpose of export of goods is concerned the CBEC vide Circular No.999-6-16-CX dated 28/02/2015 has clarified that for the purpose of export the place of removal would be the part of clearance - In view of the aforesaid circular the credit of service tax paid on services of clearing and forwarding agency cannot be denied. Insurance service on finished goods in transit - Held that: - reliance placed on the decision of the case of UOI Vs. Raipur Rotocast Ltd. [2015 (3) TMI 743 - CHHATTISGARH HIGH COURT] where it was held that service tax paid on the transit insurance, group personal accidental policy and group health guard policy of company staff would be admissible as credit as the said sservices would fall within the definition of input service - the credit of insurance on finished goods in transit would be admissible. Maintenance and repair service for vehicle - vehicle does not belongs to the Managing Director of the company but it belongs to the company itself - Held that: - reliance placed on the decision of the case of Bharat Fritz Werner Ltd., Vs. CCE, Bangalore [2011 (2) TMI 1276 - CESTAT, BANGALORE] where the credit of service tax paid on the repair/maintenance of the vehicles used by the executives involved in production, marketing, administration and fianci at factory and branch offices was allowed. - the credit of service tax paid on the vehicles belonging to the company and used by the Managing Director cannot be denied. Appeal allowed.

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• 2016 (11) TMI 1084
  Valuation - bulk packs - secondary packages - multi-piece packing - declaration of RSP - content of packaged commodity less than ten grams and ten mililitres - Standards of Weights & Measures (Packaged Commodity) Rules, 1977 - Held that: - there is no finding that the secondary packing containing the ‘glue sticks’ and ‘correction pens’ had retail selling price declared on them. Nor is there any allegation that the said goods were displayed for sale to the ultimate consumer in the secondary packing. Consequently, the packages are not ‘multi-piece packages’ as it was, apparently, not the intent of the manufacturer to sell the goods to the ultimate consumer in the secondary packing. And as retail selling price is not declared on the secondary packages, section 4A of Central Excise Act, 1944 is not applicable. The pieces inside the secondary packing are, apparently, intended for sale only as individual pieces at the last point of sale to the ultimate consumer. Having considered the argument of Revenue that the secondary packing containing individual packaged commodities are ‘multi-piece’ packing and found them to be not so but packing not intended for sale to the ultimate consumer and having accepted the claim for exemption from ambit of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 owing to the individual packages being less than the prescribed threshold, we uphold the impugned order and dismiss the appeal of Revenue. Cross-objection is also disposed off.

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• 2016 (11) TMI 1070
  CENVAT credit - Whether the appellant are eligible to CENVAT credit on the service tax paid in relation to Membership fee of Federation of Gujarat Sugar manufacturer Association? - Held that: - I find that the issue is covered by the decision of this Tribunal on similar issue in favour of the assesse-appellant, in the case of Shree Kamrej Vibhag Sahakari Khand Udyog Mandali Limited vs. CCE, Surat [2015 (10) TMI 1233 - CESTAT AHMEDABAD] where it was held that CENVAT credit has been a rightly claimed by the appellant as the activities provided are in relation to manufacturing the products of the appellant. So far as taking of CENVAT credit after registration for the earlier period is concerned, it is relevant to mention that once there is a nexus between the services received and the manufacturing activity undertaken by the appellant minor Procedural Lapses / Irregularities cannot be held to be any adverse effect on taking CENVAT credit. CENVAT credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2016 (11) TMI 1080
  Recovery of any alleged Sales Tax dues - discharge certificate - sale of property - The SARFAESI Act - The SARFAESI Act is an Act which enables regulation of securitisation and reconstruction of financial assets and enforcement of security interest or matters incidental thereto - Held that: - the Petitioners, having no knowledge (either actual or constructive) of the dues of the Sales Tax Authorities before they purchased the said property, the Sale Tax Authorities cannot recover their dues from the Petitioners by enforcing their charge against the said property. The Sales Tax Authorities cannot recover the dues of the Defaulter Company from the Petitioners (save and except to the extent of Rs. 18,38,709/-) by enforcing their charge under Section 38C of the BST Act on the said property. However, it is clarified that our order and direction does not mean that the Sales Tax Authorities cannot proceed against the Defaulter Company - Equally, we must clarify that we have not entered into any controversy regarding the priority the Sales Tax Authorities may have on the sale proceeds received from the sale of the said property to the Petitioners. The priority, if any, of the Sales Tax Authorities is not in issue before us, and therefore, we should not be understood to have rendered any finding in that regard. The issue of priorities between the Sales Tax Authorities and Respondent Nos.1 and 2 shall be decided in appropriate proceedings before the appropriate forum and in accordance with law. Petition disposed off - decided in favor of petitioner.

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• 2016 (11) TMI 1079
  Interpretation of the Schedule Entries C-II-17 and C-II-46A appended to the Bombay Sales Tax Act, 1959 - hard-anodised utensils - whether Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sale invoice dated 12.01.1995 is a heat-resistent cookware under the Schedule Entry C-II- 46A and hence does not get covered by the Schedule Entry C-II-17? - Held that: - if cookware, serveware and kitchenware (which would obviously include utensils) is heat resistant or non-stick by virtue of any coating (whether formed, applied or treated), on the utensils, then the same would clearly fall within Schedule Entries C-II-46A (heat resistant) or C-II- 46B (non-stick) [before amendment], and C-II-26 [after amendment], as the case may be. Therefore, they cannot be classified under Schedule Entries C-II-17 (before amendment) or C-II-24 (after amendment). This is the clear intention of the Legislature in classifying different products in different Entries. Whether the Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sales invoice dated 06.02.1996 falls under Schedule Entry C-II-26 and hence would not get covered by the Schedule Entry C-II-24? - Held that: - satilon coating is a hard anodizing coating which is not brushed or sprayed on. It is an integral part of the metal built up molecule to the thickness of more than 50 microns, under very carefully controlled conditions, through electrolysis. Satilon forms an extremely stable surface that is nontoxic, non-staining and non-reactive with foods. It is a naturally dark grey colour. No pigment is added. Satilon does not tarnish, stays looking new for years and makes the utensil non-stick. It will not scratch, is highly abrasion resistant and is 2.4 times harder than stainless steel - the products of the Applicant cannot be classified under Schedule Entry C-II-17 (prior to amendment) and CII- 24 (after amendment). We have no hesitation in holding that the products of the Applicant sold under its invoice dated 12th January, 1995 would fall under Schedule Entry C-II-46B and the Applicant’s products sold under its invoice 6th February, 1996 would fall under Schedule Entry C-II-26. The Sales Tax References are answered in the aforesaid terms.

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• 2016 (11) TMI 1078
  Condonation of delay - Held that: - We find no reasonable explanation for the delay, particularly for the period immediately after obtaining the copy of the judgment, which was received on 02.02.2013, except the vague allegations contained in paragraphs 4 & 5. The question of translation of the documents comes at much later stage. We are not impressed by the reasons for delay - Application for condonation of delay dismissed.

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• 2016 (11) TMI 1077
  Imposition of penalty - against the tax liability imposed, an appeal is already pending before the appellate authority and the appellate authority has stayed recovery of the tax amount as assessed, at this stage, initiation of the penalty proceedings is not permissible - Held that: - the fact remains that at the stage, when only a show-cause notice is issued for imposing penalty, the appeal itself may not be maintainable but without going into this aspect of the matter and keeping in view the orders passed in various cases, identical in nature, interest of justice would be met if further proceedings into the show-cause notice Annexure P-7 is directed to be kept in abeyance and liberty is granted to the department to proceed in accordance to law after the appellate proceedings come to an end, the department shall have liberty to initiate penalty proceedings, for the present, directing the respondents that the notice Annexure P-7 shall be kept in abeyance till decision on the appeal which is pending before the appellate authority, we dispose of this writ petition - petition disposed off.

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• 2016 (11) TMI 1076
  Works contract - applicability of the provisions of M.P. VAT Act, 2002 on works contract - Held that: - The legal question with regard to imposition of liability only with effect from the date the agreement is entered into is a question legal in nature based on the law laid down in the case of Larsen & Toubro Ltd. [2013 (9) TMI 853 - SUPREME COURT] and this aspect of the matter has to be considered. That apart, finding the order identical in nature, not to be a speaking order without disclosing any reason, similar order has been quashed by this Court in W.P. No.1767/2014 and in certain other cases. Order impugned Annexure P/2 and all consequential action thereto stands quashed and the matter remanded back to the Assessing Officer for reconsideration keeping in view the observations made herein above. The petitioner shall appear before the Assessing Officer on 22nd August, 2016 and on the same being done, the Assessing Officer shall proceed in accordance with law - petition allowed - decided in favor of petitioner.

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• 2016 (11) TMI 1075
  Imposition of VAT and Entry Tax under the VAT Act, 2002 and Central Sales Tax - Article 226 of the Constitution - pre-deposit not made - Held that: - there are substantial and cogent material available on record to show that petitioner's Company has been declared as sick industry, there is an order passed by the Board under the SICA and even in the matter of recovery of sales tax certain prohibition has been imposed by the Board. Taking note of all the circumstances, it is a fit case where the condition of pre deposit amount can be waived and the appeal directed to be decided on merit, as material are available on record to show that petitioner would suffer irreparable loss resulting in injustice to them in case the appeal is not decided on merit. Accordingly, looking to the financial condition of the petitioner, we allow this petition, direct for waiver of pre deposit amount and direct the Appellate Authority to proceed after hearing all concern - Appeals are restored to its original file and petitioner's appearing before the Appellate Authority along with certified copy of this order, the Appellate Authority shall proceed to decide the appeal in accordance to law on merit. Petition allowed - decided in favor of petitioner.

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• 2016 (11) TMI 1074
  Deduction in respect of the branch transfers in absence of declarations - whether branch transfers to be treated as inter-State sales liable to Central Sales Tax? - rectification of mistake - revisional authority ought to have exercised its powers under section 71 of the MPCT Act to rectify the mistake within the statutory period and if within one year the order has not been rectified, then petitioner is entitled to get it rectified in its term of the said application - Held that: - the contention of the petitioner is liable to be rejected on the ground that sub-section (2) of section (1) has specifically provided that rectification is limited for correcting any clerical or arithmetical mistake or any error arising therein from any accidental slip or omission. The application for rectification which the petitioner has filed as Annexure P/16 is nothing but in the nature of appeal or revision in which the petitioner wants to recall the order dated 27.08.2013 which is beyond the scope of section 71 of the MPCT Act, 1994, therefore, there is no substance in the argument of the petitioner that by virtue of sub-section (2) if the application has not been decided within the specified time, the petitioner shall be entitled to have the order rectified in accordance with his application - The scope of section 71 cannot be enlarged to the extent of reviving or recalling the entire order on merit. The scope is very limited only to correct the mistakes or any error arising therein for accidental slip or omission - petition dismissed - decided against petitioner.

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• Indian Laws

• 2016 (11) TMI 1071
  E-auction and sale of immovable properties of a defaulting debtor - Held that:- The petitioner company has an alternative remedy under Section 17 of the Act of 2002 as amended effective 1-9-2016. The petitioner shall be free to file an application before the Debt Recovery Tribunal challenging the public notice dated 11-7-2016 or any other order/ notice issued by the respondent bank. The application under Section 17 of the Act of 2002 if filed by the petitioner company within three weeks from today be decided on merits. As the petitioner company is enjoying protection of this court effective interim order dated 26-8-2016 passed prior to amendment of Section 17 of the Act of 2002 on 1-9- 2016, the said interim protection shall continue for the benefit of the petitioner company for a period of three weeks from the date of this order. It is however made clear that this extended interim protection granted by this court is in the special facts of the case and will not influence any order interim or otherwise to be passed by the Debt Recovery Tribunal in the application under Section 17 of the Act of 2002 against the impugned public notice dated 11-7-2016. All orders both interim and final be passed by the Debt Recovery Tribunal in its wisdom only on merits of the case with reference to facts and law applicable.

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