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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter November 27, 2015 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws News Stake Holders and General Public requested to bring-out Issues/Points by 15th December, 2015 which in their opinion require further Clarification/Guidance for proper Implementation of the Provisions of the Income Computation and Disclosure Standards (ICDS) Government extends RuPay Card usage condition to 90 days for a claim under an inbuilt accident insurance cover in case of RuPay Classic cardholders with effect from 25th November 2015; As on 20.11.2015, out of 697 claims lodged under Accidental Insurance under RuPay Debit Card in Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, 644 claims have been disposed-off. RBI Reference Rate for US $ Government decides to provide further Indirect Tax Incentives to Domestic Shipbuilding Industry Circulars / Instructions / Orders VAT - Delhi 31/2015-16 - dated 26-11-2015 Time limit for restoration of registration application FEMA 29 - dated 26-11-2015 Import of Goods into India – Evidence of Import 30 - dated 26-11-2015 Advance Remittance for Import of aircrafts /helicopters / other aviation related purchases 31 - dated 26-11-2015 Investment by Foreign Portfolio Investors (FPI) in Corporate Bonds Highlights / Catch Notes Customs Denial of import duty benefit equivalent to 2% of FOB value of exports - Focus Products Scheme [FPS] - the decision cannot be reversed at a later point of time by change of interpretation of the description of the goods by a policy circular, with retrospective effect. - HC Visit to Get Source Levy of SAD where basic customs duty and countervailing duty is exempt under Notification No. 54/2003-Cus dated 01.04.2003 on the strength of the duty-free service entitlement credit certificate - Exemption from SAD allowed - AT Visit to Get Source Service Tax Prima facie, the amount collected towards transportation of export cargo cannot be classifiable under BSS as the appellant is the CFS operator handling of both import and export cargo- AT Visit to Get Source Central Excise Denial of benefit of captive consumption Notification No.67/95-CE dt. 16-3-1995 - t appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notfn 67/95 are complied. - AT Visit to Get Source Valuation - merely because buyers are interconnected undertakings it is not sufficient to hold that the companies are related persons. - AT Visit to Get Source VAT Refund of input credit - KVAT - Bar of limitation - the assessee was a heart patient and he could not file the return in time. The law do not provide for condonation of delay for any such reasons - Refund not allowed - HC Visit to Get Source Case Laws: Income Tax 2015 (11) TMI 1286 Powers of tribunal - power to grant stay - Whether Section 254 empowers the Income Tax Appellate Tribunal to interfere in prosecution proceedings either at the stage of show cause notice or at any other stage? - Tribunal power to stay a show cause notice calling upon the assessee to show cause why prosecution be not launched - Held that:- A key to the understanding of the power to grant stay lies in the expressions “pass such orders thereon as it thinks fit” and “any proceedings relating to an appeal”, used in Section 254(1) and the proviso appended thereto. The aforesaid expressions, in our considered opinion, confine the power of a Tribunal, to pass an interim order in relation to matters pending before the Tribunal and at best to matters that are so intrinsically linked to the lis pending before the Tribunal, as to be inseparable. The exercise of power must be confined to matters that are directly and substantially in issue or matters that flow directly and substantially from the order impugned before the Tribunal but cannot be extended to matters in which the Tribunal has no jurisdiction even, though, these matters may be incidentally affected by the outcome of the appeal. We cannot read into Section 254 of the Act, any power in the Income Tax Appellate Tribunal to interfere in a prosecution under the Act, either at the stage of a show cause notice or at any other stage. The pendency of appeals regarding quantum and penalty and an appeal challenging an order passed under Section 263 would not, in our considered opinion, confer power upon the Tribunal to stay consideration of a show cause notice calling upon the assessee to show cause why prosecution be not launched. 2015 (11) TMI 1285 Sale consideration received by the assessee by transfer of shares and sale of rights entitlement of Partly Convertible Debentures (PCDs) - income from capital gains OR income from business? - Held that:- As relying on Commissioner of Income Tax Delhi-I v. M/s Abhinandan Investment Ltd. [ 2015 (11) TMI 1219 - DELHI HIGH COURT] the Assessee appears to have claimed a change in the nature of his holdings depending on the tax incidence in the year in question; in AY 1988-89 the Assessee reflected to shares of JISCO purchased in that year at below cost – treating them to be stock-in-trade and in AY 1992-93 sought to treat them as investments to avoid tax on the gains. None of the Assessee’s actions in the previous year 1991-92 indicated any change in the Assessee’s intention regarding its holding in shares and debentures. The ITAT observed that there were hardly any transactions in the past and on that basis concluded that the Assessee was in substance an investment company. However, the ITAT failed to appreciate that the Assessee had consciously held itself out as a company engaged in sale and purchase of shares; it was also assessed on the income earned from business and also claimed deduction on account of business expenses incurred by the Assessee. The shares in question were, concededly, held as stock-in-trade. All that happened in the year in question is that the Assessee sold substantial shares and renounced rights to subscribe to PCDs contrary to its stated intention of holding the same on a long term basis. In view of the above, the income received by the Assessee from sale of shares of JSL and the renunciation of rights to subscribe to the PCDs of JISCO was rightly held by the AO as business income and not income under the head capital gains. As discussed later, the Assessee could not have claimed any business income on account of renunciation of rights to subscribe to the PCDs. - Decided against the Assessee. 2015 (11) TMI 1284 Sale consideration received by the assessee by transfer of shares and sale of rights entitlement of Partly Convertible Debentures (PCDs) - income from capital gains OR income from business? - Held that:- As relying on Commissioner of Income Tax Delhi-I v. M/s Abhinandan Investment Ltd. [ 2015 (11) TMI 1219 - DELHI HIGH COURT] the Assessee appears to have claimed a change in the nature of his holdings depending on the tax incidence in the year in question; in AY 1988-89 the Assessee reflected to shares of JISCO purchased in that year at below cost – treating them to be stock-in-trade and in AY 1992-93 sought to treat them as investments to avoid tax on the gains. None of the Assessee’s actions in the previous year 1991-92 indicated any change in the Assessee’s intention regarding its holding in shares and debentures. The ITAT observed that there were hardly any transactions in the past and on that basis concluded that the Assessee was in substance an investment company. However, the ITAT failed to appreciate that the Assessee had consciously held itself out as a company engaged in sale and purchase of shares; it was also assessed on the income earned from business and also claimed deduction on account of business expenses incurred by the Assessee. The shares in question were, concededly, held as stock-in-trade. All that happened in the year in question is that the Assessee sold substantial shares and renounced rights to subscribe to PCDs contrary to its stated intention of holding the same on a long term basis. In view of the above, the income received by the Assessee from sale of shares of JSL and the renunciation of rights to subscribe to the PCDs of JISCO was rightly held by the AO as business income and not income under the head capital gains. As discussed later, the Assessee could not have claimed any business income on account of renunciation of rights to subscribe to the PCDs. - Decided against the Assessee. 2015 (11) TMI 1283 Applicability accounting Standard (AS-9) - whether the ITAT was correct in upholding the findings of the CIT (A) that Accounting Standard (AS-9) which sanctions the project completion method, was correctly applicable in the circumstances of the cases - Held that:- The brief facts are that the assessee is engaged in real estate development and derives its income from actual sale and transfer of property. For this purpose, it purchases land - including built up property - which it subsequently demolishes and develops in the layout township and after which the residential units are sold. In all previous years, the assessee had adopted AS-9, i.e., the project completion method whereby the consideration received on actual sales was shown in its books and claimed as income. Apparently, in a previous detailed order, the ITAT sanctioned this method and held it to be applicable to the business of the assessee, for AY 2006-07 and 2007-08. The CIT (A) had, for the years in question in these appeals, considered the decision of the ITAT for those years In Manish Buildwell (2011 (11) TMI 35 - DELHI HIGH COURT) it was held that it cannot be said that project completion method would result in deferment in payment of taxes which are to be assessed annually. The ITAT in these circumstances held - in relation to the assessee/respondent - that the adoption of the project completion method is an established method of accounting. In these circumstances, without there being any rationale or new development, the Revenue could not have concluded that the project completion method was not appropriate for the assessee. No substantial question of law arises for consideration. The appeals are accordingly dismissed. - Decided against revenue 2015 (11) TMI 1282 Deemed dividend u/s 2(22)(e) - CIT(A) deleted the addition - whether the payment made by the company to the assessee falls under the category of loans and advances - whether the entire amount of payment of ₹ 38,60,000/- given by the company to the assessee or the peak amount appearing in ‘Sandeep Sabharwal advance Account’?- Held that:- The assessee is also one of the Director who has received loan out of ₹ 35,13,939/-. Further ,clause 3(a) of the annexure referred to in paragraph 3 of the audit report filed by the auditor Deepak K. Kejrewal & Co., which is placed at page no. 12 of the paper book, it is one again mentioned that the company has granted interest free loan aggregating to ₹ 35,13,939.26 to two Directors covered in registrar maintaining u/s 301 of the Companies Act, 1956. We find that in Audited Statement of the company for the financial year 2005-06, there is no mention of any security deposit in respect of the property, given by the company to the assessee, who is director and covered by the persons in respect of whom entries are to be made in register maintained u/s 301 of the Companies Act. We also don’t agree with assessee that ₹ 2,27,997 was advance against salary because firstly, there was no such advance given by the company , which can be confirmed from the fact that no such advance was mentioned in Annual statement of the company, secondly, the amount was derived merely after subtraction of ₹ 20,40,000/- claimed by the assessee as security deposit and credit balance of ₹ 4,52,003 out of ₹ 27,18,692 claimed as peak of ‘Sandeep sabharwal Advance Account’. Further, even if amount was advance against salary , transaction between an employee and company cannot acquire character of business transaction. Thus we are of the opinion that the payments advanced appearing in the ‘Sandeep sabharwal Advance Account’ by the company to the assessee are purely in nature of loans or advances to the assessee and same are held to be in the nature of deemed dividend under section 2(22) of the Act. The provisions of section are very much clear in this respect and according to which , any loan and advance subject to fulfillment of conditions laid down in section, shall be treated as deemed dividend. So, once an amount is held as deemed dividend, then incremental loan amount thereafter, will only be added to the deemed dividend. Accordingly , we hold that the peak amount in the Advance Account during the year should be treated as deemed dividend, subject to availability of the accumulated profit as on the date of peak loan or advances to the assessee. Thus we direct the learned Assessing Officer to examine the peak advance amount stated by the assessee and availability of accumulated profit as on the date of peak advance and compute the deemed dividend accordingly - Decided in favour of assessee for statistical purpose. 2015 (11) TMI 1281 Penalty u/s. 271(1)(c) - defective notice - Held that:- on the facts of the present case that the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of the Hon’ble Karnataka High Court in the case of CIT & Anr. v. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee. 2015 (11) TMI 1280 Trading addition - rejection of books U/s 145(3) - CIT(A) reducing the trading addition - Held that:- The assessee has shown G.P. rate @ 13.2% on total sale of ₹ 6.86 crores as against the G.P. rate @ 13% on sale of ₹ 6.82 crores in immediate preceding year. The assessee has maintained day to day stock register of gold and silver ornaments but not maintained the stock register for diamond jewellery, this constitutes 5.6% of total turnover. The assessee had not made any purchase from URD but made purchase from customer who are bringing their old ornaments for sale at assessee’s shop and normally the jewellery is either being converted/remade or new jewellery is being purchased by them. The assessee has only finished goods, therefore, the assessee is not required to maintain stock register of unfinished stock. The assessee had followed LIFO method of closing stock since number of years and no addition had been made by the ld Assessing Officer in past on this ground and same has been followed by the assessee consistently. The Coordinate Bench had already considered the identical facts and circumstances of the case in assessee’s own case in A.Y. 2006-07 and 2007-08 and dismissed the revenue’s appeal. - Decided against revenue. disallowance of interest - CIT(A) deleted the addition - Held that:- The partners of the firm had sufficient interest free funds including profit earned during the year. Therefore, no notional interest disallowance can be made by the Assessing Officer in absence direct nexus between the interest bearing fund and interest free advances. Thus, we confirm the order of the ld CIT(A). - Decided against revenue. Addition on excessive interest payment to the persons covered by Section 40(A)(2)(b) - CIT(A) deleted the addition - Held that:- Disallowance under the provisions of Section 40A(2)b) cannot be made out of interest payment to family members without establishing excessiveness or unreasonableness of the rate of interest. The assessee paid interest to the close person covered U/s 40(A)(2)(b) of the Act @ 18% confirmed - Decided against revenue. 2015 (11) TMI 1279 Transfer pricing adjustment - selection of comprables - Held that:- In acceptance of the 7 comparables selected by the assessee, arithmetic mean of 10.37% would place the assessee in a situation where the TP adjustment would become NIL. Since we find that the comparables worked out by the assessee are acceptable and the rejection of comparables made by the assessee from out of comparables selected by the TPO are justified, we direct the TPO to pass an order accordingly taking arithmetic mean of the assessee at 10.37%. The issue on TP adjustment with respect to software development services is set aside for statistical purposes. TP adjustment in respect of marketing support services - Held that:- We accept the comparables selected by the assessee inasmuch as only one comparable selected by the TPO viz., ICC International Agencies Ltd. was pointed out by the assessee as functionally dissimilar. The arithmetic mean of other three comparables viz., Access Global Solutions Ltd., Priya International Ltd. and Empire Industries Ltd. is at 14.54%. The assessee’s NCP margin being 10%, would be within the +/- 5% range. Hence, we are of the opinion that the claim of the assessee has to be allowed. We therefore direct the TPO/AO to redo the assessment accordingly. Disallowance of deduction claimed on advances written off - Held that:- We find that the premises has been taken on lease by the assessee and interior design works were carried out for the purpose of business to create ambience. The very fact that the premises was taken on lease for 9 years with a renewal clause would not itself make it a capital expenditure, when the fact remains that the assessee had prematurely stopped the designing work of the premises and terminated the contract with M/s. Space Matrix Design Consultants P. Ltd. It was brought to our notice that the premises was sealed by the Court pursuant to the order of the Delhi High Court as the premises was not in conformity with the applicable land use laws. It is a fact that the advances were written off as the assessee was not able to operate out of the premises and hence the same is allowable as a deduction u/s. 37 of the Act. The expenditure has been incurred for the purpose of the business and in the course of business and is clearly a revenue expenditure - Decided in favour of assessee. 2015 (11) TMI 1278 Registration u/s 12A denied - Held that:- The basic principle underlined the definition of charitable purposes remains unaltered even by amendment to section 2(15) of the Act w.e.f. 1.4.2009, though the restrictive first proviso was inserted therein. In the given facts of the case, the assessee’s association’s primary purpose was to give focus o areas of education, environment and engagement (community and employee). It has through constant and well monitored support aimed towards community sustainability. Therefore, they have focused on areas of education and environment, watershed management, women empowerment through skill development initiatives, provision of drinking water, youth empowerment, medical health amps, environmental conservation program and promotion of sports and a host of extracurricular activities at local levels aimed towards community sustainability. Hence, the assessee association primary purpose was advancement of objective general public utility and it would remain charitable even if an incidental or ancillary activity or purpose of achieving the main purpose was profitable in nature. Hence the finding of the Director of Income-tax (Exemption) has mentioned in the object clause-17 under the said Incidental Objects under Part-B of the MOA at para-5 of his order stating it to be non-charitable does not disentitle the assessee for availing exemption u/s 12 of the IT Act. See India Trade Promotion Organization Vs Director General of Income-tax [2015 (1) TMI 928 - DELHI HIGH COURT] - Decided in favour of assessee. 2015 (11) TMI 1277 Disallowance of deduction under section 35D - amortization of expenditure incurred on Initial Public Offer of Equity Shares - revision u/s 263 - Held that:- Tibunal has already held, on merits as well, that the assessee is not eligible to claim deduction u/s 35D. After this order from the Tribunal in assessee’s own case, for this very assessment year, the issue under consideration i.e. allowability of claim u/s 35D, has attained ‘fait accompli’. In our considered view, this issue is no more open before us for our consideration. Ld. CIT had directed the AO in his order passed u/s 263, to make disallowance of deduction u/s 35D claimed by the assessee. The action of passing the impugned assessment order, by the AO u/s 143(3), in pursuance to revision order passed by the Ld CIT u/s 263, was merely a ministerial task, to give effect to the said revision order of Ld CIT. In fact, Ld CIT(A) has rightly upheld the impugned assessment order, without even going deep into merits. Even before us, in our considered opinion, this issue is no more open for our adjudication, especially after it has been sealed by the Tribunal in its order. The assessee may have had some legal grievances against the order passed u/s 263, but, once the same was confirmed by the Tribunal, the right forum for hearing of these grievances would be before Hon’ble High Court. The law does not permit us to go into this issue, at this stage. - Decided against assessee. 2015 (11) TMI 1276 Valuation of the assessee’s plot sold and building erected thereupon as on 01-04- 1981 - computation of long term capital gains of assessee-an HUF - Held that:- It is evident that the assessee’s registered valuer took into account file sale instances (supra) for evaluating its plots value to be ₹ 800 per sq. yd as on 01-04-1981. The plot in question measures 1032.15 sq. yd. The Assessing Officer adopted average value of two sale deeds having area of 1019 sq. yd with rate of ₹ 519.66 sq. yd executed on 03-01-1980 and the other one dated 23-03-1981 involving area of 1034.18 sq. yd with sale price of ₹ 600 sq per yd; coming to ₹ 560 per sq. yd. The other three sale instances forming part of record stand totally brushed aside without any finding to the contrary. We observe in these circumstances that both the authorities below have erred in overruling assessee’s registered valuer’s report without quoting any material or making necessary reference to the DVO. We hold in these peculiar fact that a remand order simplicitor would not be in the interest of justice. More so, when they impugned long term capital gains on both plots sold and constructed portion are of ₹ 11,63,540/- only to be assessed @ 20%. We take into account all these facts and circumstances and conclude that both the Assessing Officer as well as CIT(A) has wrongly rejected assessee’s valuation of the plot sold based on a registered valuer’s report. We accept its arguments and direct the assessing authority to adopt value of the plot sold as on 01- 04-1981 as ₹ 800/- per sq. yd. Constructed area valuation - It is to be seen that the assessee’s valuer has elaborated his findings at page 10 of the paper book in determining valuation thereof @ ₹ 1550/- per sq. yd. The lower authorities treat a sum of ₹ 500/- per sq. yd only as on 01-04-1981 to be just and proper. We find from the valuation report that this was an old construction raised in 1952 and 1967 having been renovated from time to time. We reiterate that ascertaining cost of construction; and that too from back date may not be always accurate. And it may also require some guess work. We feel it appropriate in larger interest of justice that this cost of construction @ ₹ 700/- per sq. yd would be justifiable. Ordered accordingly. The Assessing Officer shall accordingly frame the necessary computation. - Decided partly in favour of assessee. 2015 (11) TMI 1275 Addition under section 68 - CIT(A) deleted the addition - Held that:- the amount received in the bank account of the assesseerespondent as proceeds of sale of shares held as stock-in-trade and investment, cannot be held or treated as unexplained income of the assessee, which would attract addition u/s. 68 of the Act. Especially when these revenue receipts which were received against sale of stock in trade had already been credited to the P & L account and reduced from the investments, then there cannot be further addition on protective basis u/s. 68 of the Act. On the basis of foregoing discussion, we are inclined to hold that the CIT(A) rightly viewed that there was no merit in assessing the impugned amount u/s. 68 of the Act on protective basis in the hands of the assessee when the same has been included in the surrendered amount in the hands of respective assessees and the issue of substantial addition has attained finality. Hence, we are unable to see any ambiguity or impropriety and any reason to interfere with the order of CIT(A) and we uphold the same - Decided against revenue. 2015 (11) TMI 1274 Short Term Capital Gain on sale of property - assessee has not disclosed the expenses relating to sale of the above property - CIT(A) deleted the addition - Held that:- CIT(A) by erroneously relying upon the judgement cited as CIT Vs Hindustan Petroleum Ltd., (1974 (10) TMI 3 - SUPREME Court ) and CIT Vs Mithlesh Kumari, [1973 (2) TMI 11 - DELHI High Court -] extended the relief of interest paid by the assessee on the borrowed loan of ₹ 35,00,000/- used for the purchase of property in question by adding the same to the cost of acquisition, which is not permissible under law and the judgements cited as Hindustan Petroleum Ltd. and Mithlesh Kumari (supra) are not applicable to the facts and circumstances of the case. Hon’ble Supreme Court in case cited as CIT Vs Tata Iron and Steel Co. Ltd. (1997 (12) TMI 5 - SUPREME Court) discussed in preceding paras 8.3 and 8.4, held that the actual cost of acquisition is the amount paid by the assessee to acquire the asset which does not include the interest if any paid by the assessee on the loan borrowed for the purpose of purchasing such asset. So, in the light of undisputed facts and law discussed above, the cost of acquisition of property in question in the hands of the assessee as has been claimed by Shri Damodar Das Batra, father of the assessee one of the co-sharer in the property in question to the extent of 1/3rd share. So, Ld. CIT(A) has committed patent illegality by considering the cost of acquisition. We, therefore, set aside the impugned order of the Ld. CIT(A) on this issue. - Decided in favour of revenue. 2015 (11) TMI 1273 Interest levied u/s 234B - Held that:- As decided in MGB Metro Group Buying HK Ltd. case [2013 (1) TMI 453 - ITAT DELHI] the aforesaid proviso inserted by the Finance Act, 2012 is prospective in nature with no retrospective effect. The proviso was brought into operation w.e.f. 1.4.2012 whereas the AY involved are 2005-06 and 2006-07, therefore not in agreement with the DR because the said proviso is not retrospective in nature. The language used in section 209(1) is regarding payment of advance tax in the financial year, therefore, the proviso is not attracted for the impugned assessment year. As decided in DIT v. Jacabs Civil Incorporated/Mitsubishi Corpn. [2010 (8) TMI 37 - DELHI HIGH COURT] that since the assessee is not liable for advance tax, therefore, cannot be charged interest for failure to pay advance tax. Also see CIT v. Sedco Forex International Drilling Co. Ltd. [2003 (10) TMI 40 - UTTARANCHAL HIGH COURT] - Decided in favour of assessee. 2015 (11) TMI 1272 Income from long term capital Gains - sale of agricultural land - chargeability to tax - Held that:- The said agricultural land was although registered in the name of the assessee but the same was owned by the partnership firm MCS , the assessee being partner of MCS. The sale proceed of the said land was duly deposited in the bank account of the firm,MCS and the due taxes on capital gain arising from the sale of the said agricultural land being Gut no 405 in Village Bhukum , Taluka Mulshi , District Pune, Maharashtra have been duly paid to Revenue albeit by the partnership firm M/s Marine Container Services although it was technically registered in the name of the assessee. Thus, in nut shell, the assessee has brought on record cogent material to substantiate his contentions that the capital gain arising thereof from sale of the said agricultural land is chargeable to tax in the hands of the partnership firm MCS and the said firm has duly included the said capital gain in the income chargeable to tax and paid due taxes to the revenue. We have observed that no prejudice has been caused to the Revenue as the Revenue has got the due taxes although the same has been paid by the partnership firm MCS and the case of MCS was also processed by the Revenue under scrutiny u/s 143(2) read with Section 143(3) of the Act where by the assessing officer of the MCS has duly mentioned about the inclusion of afore-stated income from capital gain of ₹ 80 lacs earned by MCS in the total assessed income of MCS for assessment year 2009-10. Accordingly, we delete the addition of ₹ 76,57,948/- as made by the assessing officer and as confirmed by CIT(A). We order accordingly. Estimation of annual rental value of house property on notional basis by treating a single combined unit as two distinct properties - Held that:- We have observed that the assessee is the owner of two adjoining flats which are used for residential purposes, the assessee is entitled for exemption u/s 23 of the Act with respect to one flat while the second flat shall be chargeable to tax as per provisions of section 23 of the Act. We have also observed that the assessing officer has brought to tax income from house property on ad- hoc basis without bringing on record any cogent evidence as to the prevailing market rent in the area for which the property is reasonably expected to be let out as per mandate of Section 23 of the Act. Hence, we restore this issue to the file of the assessing officer to determine the annual lettable value being income from house property with respect to one flat based upon the cogent evidence. Needless to mention, the assessing officer shall allow the assessee a reasonable opportunity of being heard in accordance with the principles of natural justice as enshrined in the doctrine of audi alteram partem.before computing annual lettable value of one flat as per Section 23 of the Act We order accordingly. 2015 (11) TMI 1271 Accrual of income - income of the assessee firm as business profit of the assessee firm made by the assessing officer by estimating profit @15% on 30% of the total cost of work-in-progress - CIT(A) deleted the addition - Held that:- The assessee firm has undertaken development of the project Neptune Infotech IT Park during the assessment year 2009-10. The assessee firm has to receive 58% of the area after construction while 42% of the constructed area is to be given to the owners of the land as per agreement with the owners of the land. The assessee firm has spent 14.11 crores till 31.03.2009 and the assessee firm received ₹ 1.85 crores as deposit from its sister concern, Ritesh Exports which was later on refunded to the tune of ₹ 20 lacs in May 2009, while the balance of ₹ 1.65 crores was credited to the partners account. The assessee firm has not sold any unit till assessment year 2011-12 while the total WIP was 28.30 crores as on 31.03.2012 whereby 90% of the project was completed while there was no sale of unit till 31.03.2012. Since the assessee firm has not sold any portion of the constructed area, no hypothetical income can be brought to tax as in fact no real income has accrued to the assessee as per the ratio of decision of Hon’ble Supreme Court in the case of CIT v. Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court) No infirmity in the order of the CIT(A) qua this issue and upheld the same. Hence, the additions of ₹ 63,52,000.00 made to income of the assessee firm as business profit of the assessee firm made by the assessing officer by estimating profit @15% on 30% of the total cost of work-in-progress is hereby deleted. - Decided in favour of assessee. 2015 (11) TMI 1270 Carry forward of excess application over income - CIT (Appeals) is not justified in denying the claim of the assessee on the ground that there is no provision for carry forward of the deficit to be regarded as application of income in the subsequent assessment years - Held that:- The income of charitable trusts is required to be computed on commercial principles. The concept of application of the income for the year in which the income has arisen is not found in Section 11(1)(a) of the Act. No limitation to the above effect is found in the language of the section. It merely requires application of the income that has arisen from the property held under trust. In this view of the matter, the principles relating to set off of losses, etc. is not of any relevance and therefore any excess application of income during the year can be regarded as application of the income of future years and can be adjusted. Therefore, in our view, the claim of the assessee for carry forward of excess application is in accordance with the judicial precedents on the issue and the same is allowable. To satisfy the requirements of section 11(2)(b) of the Act, the investment must necessarily come out of current year’s income and the investment made in the past obviously cannot satisfy the requirements for the current year. We are, therefore, inclined to follow the view taken by the co-ordinate benches of this Tribunal, inter alia, in the case of Baldwin Methodist Educational Society (2015 (10) TMI 2416 - ITAT BANGALORE), based on the view/decisions of the Hon'ble Bombay High Court in the case of Institute of Banking (2003 (7) TMI 52 - BOMBAY High Court) and the Hon'ble Gujarat High Court in the case of CIT V Shri Plot Swetamber Murti Pujak Jain Mandal reported in [1993 (11) TMI 17 - GUJARAT High Court]. In this view of the matter, the Assessing Officer is directed to allow carry forward of the excess application for the year to be adjusted from income from property held under trust of the subsequent years. - Decided in favour of assessee. 2015 (11) TMI 1269 Gain received on the transfer of the land - Short term capital gain or long term capital gain - interpretation of the expression ‘held by the assessee’ - Held that:- As on 28/4/2001, all the other acts and process of acquisition of land in question were completed except registration of the conveyance deed. Since the assessee was allotted the land in question subsequent to the open auction and was issued allotment letter dated 14/2/2001 subject to the payment of consideration which the assessee paid by 28/4/2001 therefore, the date of acquisition would be when the assessee performed his part and complied with terms and conditions of allotment. The capital gain is treated as LTCG if the said asset is held by the assessee held by the assessee for more than 36 months (3 years) as per the provisions of sec.2(42A)/2(42B) of the Act. Therefore, for the purpose of sec.2(42A) and 2(42B), land in question will be regarded to be held by the assessee from the date of allotment on 14/2/2001 subject to payment of the entire consideration within the period stipulated as per allotment conditions. See A.Suresh Rao vs. ITO [2013 (4) TMI 743 - ITAT BANGALORE] Thus the assessee was holding the land in question from the date of allotment on 14/2/2001 and consequently the capital gain arising from the sale of the property on 16/9/2014 would be LTCG. Accordingly, orders of the authorities below qua the issue are set aside and the claim of the assessee being LTCG is allowed. Since the AO as well as the CIT(A) have treated the capital gain arising from sale of the property in question as STCG, therefore, the issue of claim u/s 54F has not been examined by the authorities below. Accordingly, in the facts and circumstances and in view of our finding on the nature of capital gain, being LTCG, the AO is directed to examine and decide the claim of deduction u/s 54F. - Decided in favour of assessee. 2015 (11) TMI 1268 Eligibility of deduction u/s.80lC - CIT(A) allowed the claim - Held that:- The profits declared by the assessee on these two proprietary units located in "Baddi" Himachal Pradesh, which is exempt from taxation u/s 80(IB), is abnormal. The net profits declared for the A.Y. 2003-04, 2004-05 and 2005-06 are 56.96%, 51.75% and 52.88% for the A.Y. 2006-07 and 2007-08, the profits shot up to 79.87% and 78.47%. Such abnormal figures in these years is not explained by the assessee. It is well settled that when the assessee claims an exemption, burden lies on it, to prove that he is entitled to exemption. In this case the burden has not been discharged on the issue of quantum of exemption. The order of the First Appellate Authority, in our view is not well reasoned. The order has not given any reason as to why the A.O. was wrong on each of his conclusions. We set aside the matter to the file of the Ld.CIT(A) with a direction to pass a speaking and reasoned order on each of the observations of the Ld.A.O. - Decided in favour of revenue for statistical purposes. 2015 (11) TMI 1267 Gifts received by the assessee by way of India Resurgent bonds - Held that:- The assessee himself has admitted before the assessing officer that the alleged donors are third parties. When the donors are unrelated third parties, it would be hard to believe that they have given gifts to the assessee, who is not known to any of the donors. In that kind of situation, we are unable to comprehend as to how the donors could give the gifts out of “natural love and affection”. Hence, in our view, the tax authorities are justified in holding that the assessee has failed to prove the claim of receipt of gifts. This is further fortified by the fact that the assessee has failed to furnish any of the details that were called for by the AO. As Ld A.R pointed out that the gifts from Raju Jham and Patel Dhanlaxmiben Arvindbhai have been received in the earlier years and hence the same cannot be assessed in AY 2003-04. We are of the view that this claim of the assessee requires verification, since it is made for the first time before us. Accordingly, we modify the order of Ld CIT(A) and restore the matter relating to the gifts received from the above said two parties to the file of the AO with the direction to examine the claim of the assessee afresh. The order of Ld CIT(A) with regard to the remaining amounts is confirmed. - Decided partly in favour of assessee for statistical purposes. Computation of Long term capital gains on sale of four flats - AO did not allow deduction of 18% of sale consideration, being the share of daughters of the assessee - Held that:- We notice that the facts relating to this issue have not been properly brought on record, i.e., whether the spouse of the assessee has also contributed her own money at the time of purchase of properties or her name was included for name sake only. If the spouse of the assessee had contributed her own money, then the daughters shall have right over her properties, since the spouse of the assessee has claimed to have died intestate. In that case, the MOU entered between the assessee and her daughters have to be examined and a proper decision is required to be taken. In this regard, the Ld A.R invited our attention to the provision of Hindu Succession Act. We notice that the assessing officer has simply rejected the claim of the assessee without examining the rights of the daughters of the assessee over the properties of the assessee’s spouse. Hence, in our view, this issue requires fresh examination at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO for fresh consideration. - Decided in favour of assessee by way of remand. Rejection of claim for deduction of expenses incurred in respect of two flats located in Chennai - Held that:- Assessee failed to substantiate that the expenses were incurred in connection with the transfer of flats located in Chennai. Before Ld CIT(A) also, the assessee did not furnish any other evidence and hence the first appellate authority confirmed the rejection of the claim. Before us also, no evidence was furnished to prove the claim of the assessee that the expenses were incurred in connection with the transfer of flats located in Chennai. Further, the assessee has also failed to furnish any explanation with regard to the difference in the expenditure claim. Under these set of facts, we are of the view that the Ld CIT(A) was justified in confirming the rejection of expenditure claim. - Decided against assessee. Claim of date of purchase of flat located at Punit Tower, Mumbai - indexation benefit - CIT(A) upheld the view of the AO allowing indexation benefit from FY 1998-99 - Held that:- A.R could not contradict the finding of the Ld CIT(A) that the assessee obtained actual possession of the property only on 03-09-1998. Even otherwise, the assessee has failed to establish as to how he would be entitled to indexation benefit from FY 1997-98 merely on the basis of sale agreement. Hence, we do not find any infirmity in the decision of Ld CIT(A) on this issue.- Decided against assessee. Assessment of gifts received by the assessee by way of India millennium Deposits - Held that:- Assessee failed to furnish any explanation with regard to the occasion/reason which prompted the donor to give gifts to the assessee. We notice that the facts prevailing in the instant year in respect of India millennium deposits are identical in nature. Hence, consistent with the view taken by us in respect of India Resurgent bonds, we uphold the order of the Ld CIT(A) in confirming the assessment of gifts received by way of India millennium bonds as income of the assessee. - Decided against assessee. Assessment of interest income - AO noticed that the interest income shown in the TDS certificates was more than that offered by the assessee and hence assessed the difference amount as interest income of the assessee confirmed by CIT(A) - Held that:- If the assessee had already offered the different amount in the earlier year, the same cannot be assessed again in the current year, since double assessment of same income is not permissible. However, the claim of the assessee requires verification. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the claim of the assessee and take appropriate decision in accordance with the law.- Decided in favour of assessee by way of remand. 2015 (11) TMI 1266 Agricultural income - DR has submitted that the assessee has not filed any details in respect of purchase of seeds, fertilizers, pesticides, details of wages to labours and also submitted that no details were maintained by the assessee - Held that:- When the assessee has produced all the details as asked by the Assessing Officer and explained in detail, it is open to the Assessing Officer to disprove the details filed by the assessee. In the present case, the assessee has discharged its onus cast upon it to prove that it has been carried cultivation of paddy, casuarina. The Assessing Officer, without disproving the activities carried by the assessee, simply rejected the explanation without making any inquiry or investigation. If at all the Assessing Officer has doubted the certificate issued by the Village Administrative 2Officer, the Assessing Officer having every power to examine him under section 131 of the Act. The Assessing Officer has not done any positive ac to disprove the facts submitted by the assessee. Under these facts and circumstances,the income earned by the assessee is an agricultural income and accordingly, the same is exempt under the Income Tax Act. - Decided in favour of assessee. 2015 (11) TMI 1265 Disallowance of depreciation @ 100% on the cost of erection of temporary structure - Held that:- As period of three months was given from 24.06.2009 which can be extended by the consent of parties subject to the permission that may be given by Ennore Port. The object and purpose of erection of Jetty was for temporary in nature and not as a permanent establishment. Merely because an option was given to the assessee to continue till 31.03.2010 subject to export market conditions, that does not mean that the Jetty was a permanent structure. Ultimately, the assessee has to dismantle and remove all the equipments / structures installed at Jetty at its own cost. Therefore, this Tribunal is of the considered opinion that the assessee has installed a temporary structure for the purpose of its business. This temporary structure has to be construed as “building” under Old Appendix-1 Part A (1)(4). Hence, the assessee is entitled for depreciation @ 100%. Accordingly, the orders of the lower authorities are set aside. The Assessing Officer is directed to grant depreciation @ 100% on the cost of erection of temporary structure, namely, the Jetty at Ennore Port Trust. - Decided in favour of assessee 2015 (11) TMI 1264 Transfer pricing adjustment - whether for the benchmarking of the transaction of loan, the interest rate for 6 months LIBOR + 150 Basis Points for a period for more than 5 years is appropriate or not? - Held that:- So far as the basis adopted by the TPO, we agree with the observation and finding of the CIT(A) that manner in which credit rating has been assigned to the AE is not a correct approach, because there is ‘no specific information’ with regard to the AE and making assumption of various factors for giving the credit rating actually destroys the estimation of risk assumed. Since both lender and the borrower are overseas based, therefore, it would not be appropriate to use domestic interest rate to benchmarking interest charged on account of such loan transactions. In absence of any independent study carried on by the assessee or any independent CUP rate applied by the TPO based on comparables, the approach of the CIT(A) to follow the guidelines of the Reserve Bank of India appears to be correct approach for benchmarking the ALP. The aforesaid finding of CIT(A) is thus affirmed and we do not find any reason to deviate from such a conclusion. Accordingly, the order of the CIT(A) on this score is affirmed and the grounds raised by the revenue stands dismissed. - Decided in favour of assessee. 2015 (11) TMI 1263 TCS u/s 206C - Non compliance of provisions of Section 206C - failure to deduct TDS - CIT(A) deleting order passed u/s. 201(1) and interest thereon u/s. 201(1A) - Held that:- "Waste and scrap" are one item. The “waste and Scrap" must be from manufacture or mechanical working of material which is definitely not usable as such because of breakage, cutting up, ware and to other reasons. It would mean that these waste and scrap being one item should arise from manufacture or mechanical working of material. The words waste and scrap should have nexus with manufacturing or mechanical working of materials. Therefore, the word used is "which is" definitely not usable. The word "is" as used in this definition of the scrap meant for singular item i.e. "waste and scrap". As stated above, assessee is engaged in ship breaking activity and as given to understand these items/ products in question are finished products obtained from the activity. They constitute sizable chunk of production done by ship breakers. Though such products may be commercially known as "scrap" they are definitely not "waste and scrap". The items in question are "usable as such" and therefore does not fall within the definition of scrap as given in of section 206C(1). Having said so, we restore the issue to Assessing Officer with direction to grant relief to assessee under the provision of 206C(1) of Act, with regards to only sale of scrap arising out of manufacturing activity in course of ship breaking after providing due opportunity of hearing to assessee. - Decided in favour of revenue for statistical purpose. 2015 (11) TMI 1262 MAT - whether credit u/s 90 would be given on tax liability under the provisions of Sec.115JB? - CIT(A) allowed claim - Held that:- The income on which tax has been paid abroad was included in ‘book profit’ for the purpose of Sec.115JA. It was held that once taxable income was determined either under the normal provisions of the Act or as per Sec.115JB, subsequent portion relating to computation of the tax has to be governed by the normal provision of the Act. It also held that there was no provision in the Act, debarring granting of credit for tax paid abroad in case income is computed u/s 115JA. It was further held that the assessee could not be denied the set off of tax relief against the tax liability determined u/s 115JA. - Decided against revenue 2015 (11) TMI 1261 Loss incurred in share dealing - CIT(A) allowed the set off against income from brokerage and commission - Held that:- As per the exception in Explanation to Section 73, if more than 50% of the Gross Total Income of the assessee consists of income chargeable under Four heads excluding income from business, then the provisions of Explanation to section 73 are not applicable. There is no infirmity in the order of CIT (A) on this aspect because the same is in line with the judgment of Hon’ble Allahabad High Court rendered in the case of Narain Properties Ltd. (2012 (6) TMI 38 - ALLAHABAD HIGH COURT). Thereafter, he has given a finding of fact that income from Brokerage and Commission in the present case is income from other sources and it is more than loss incurred in share dealing. Under these facts, he held that the provisions of Explanation to section 73 are not applicable in the present case. - Decided against revenue Ad hoc disallowance of Repairs & maintenance & Power & Fuel Expenses - CIT(A) restricted part addition - Held that:- as against the estimation of the A.O. that expenses of ₹ 2 Lacs under each of these two heads are not verifiable because ₹ 5 Lacs and ₹ 12 lacs are incurred in cash, the estimate of the learned CIT (A) is this that disallowance of ₹ 50,000/- under each head is reasonable. In our considered opinion, in the facts of the present case, the estimation of the AO is excessive and that of CIT (A) is reasonable and hence, on this issue also, we find no reason to interfere in the order of CIT (A). - Decided against revenue Customs 2015 (11) TMI 1236 Duty demand - non removal of goods after expiry of warehousing period - Held that:- Case is covered by the judgment of this Court in 'Kesoram Rayon v. Collector of Customs, Calcutta' [1996 (8) TMI 109 - SUPREME COURT OF INDIA]. - Commissioner directed to recalculate the interest. He may complete this exercise within one month from the date of receipt of the copy of this order and indicate the exact amount of interest which is payable by the appellant. Further, the Commissioner would be entitled to adjust the sum of ₹ 2 crores which has already been paid in this behalf. The balance amount shall be paid by the appellant within two months from the date of communication of the order by the Commissioner. On payment of the amount of interest, the Bank Guarantee furnished by the appellant shall stand discharged. - Decided against assessee. 2015 (11) TMI 1235 Clearance of 'rejects' of all wool fabrics and polywool fabrics into DTA without payment of appropriate duties of 'surcharge', 'Special Additional Customs Duty' and 'Countervailing duty' (CVT) - Held that:- No error in the view taken by the Commissioner which is upheld by the CESTAT also that Section 3 was amended retrospectively vide Notification No. 2/95-CE dated 04.01.1995 which was amended by Notification No. 38/99 dated 16.09.1999 making it prospectively. - larger Bench of the Tribunal in the case of 'Fabworth (India) Ltd. v. Commissioner of Central Excise, Nagpur' [2002 (6) TMI 60 - CEGAT, COURT NO. IV, NEW DELHI] has taken the same view which has been accepted by the Department as no appeal was preferred thereagainst. The view was reiterated in 'Modern Denim Ltd. v. Commissioner of Central Excise, Ahmedabad' [2006 (8) TMI 224 - CESTAT, MUMBAI]. - Decided against Revenue. 2015 (11) TMI 1234 Detention of Imported goods - Detention beyond the period of six (6) months without issuing a show cause notice as contemplated under Section 110(2) - Held that:- Legislature has consciously done away with the service of orders, decisions, summons and notices on the agent. The CHA, is an agent, who operates under a special contract with an importer or exporter, and in this context is authorized to perform various functions to clear the goods from customs. It is no part of the general duty cast upon the CHA to accept service of notices, summons, orders or decisions of the customs authorities, unless he has been specially authorized to do so. The CHA’s explicit and implied authority is confined to his acts, as an agent, qua transactions relating to business concerning entry or departure of conveyances or, import or export of goods at the custom stations. In case the importer or exporter, in this case the petitioner, were to enlarge his authority, a specific authorization in that behalf ought to have been issued in his favour. The scope of the duties of an agent, and in that sense, the authority of the CHA, is provided for in the definition of customs broker, in regulation 2(c) of the Customs Brokers Licensing Regulations, 2013 It is no part of the usual and ordinary duty of the CHA to accept service of orders, summons, decisions or notices issued by the custom authorities. In case CHA represents, he has such an authority, he would have to produce the same before the concerned statutory authority. In this case the respondents neither sought production of the authority nor did the CHA supply any such documents to the custom authorities, which could, in the ordinary course, have persuaded them to serve the notices on the CHAs. Therefore, in the ordinary course, the customs authorities were required to follow the provisions of Section 153 of the Act, which required the service to be effected on the importer i.e. the petitioner in this case. - There is a proviso to sub-section (3) of Section 147, which in a sense protects the agent, save and except against his wilful act, negligence or default. The proviso is indicative of the fact that where any duty is not levied, or is short levied, or is erroneously refunded, for any reason, then such duty shall not be recovered from the agent unless in the opinion of the Asstt. Commissioner of Customs or Deputy Commissioner of Customs, it cannot be recovered from the owner, importer or exporter. - if the agent is negligent or in default, or his wilful act results in any of the situation referred to above, then recovery can be made against him, as well. Prior to the amendment made in 2012, service under Section 153 could also perhaps be effected on an agent, albeit an authorized agent, not on a CHA. After the amendment it appears that the legislature has done away with the service on the agent completely, by recognizing the fact that orders, decisions passed, summons or notices issued, need to be served in the first instance on the person for whom they are intended. It is after the intended person is served, that he could take a decision as to who would thereafter be entitled or authorized to appear for him before the concerned statutory authority. The amendment in that sense lends greater clarity qua the scope of the provision. - while the order passed under the proviso to Section 110(2) is held invalid, it would not in any manner affect the investigation, which is presently underway. With the quashing of the show cause notice dated 23.01.2015, and the order of even date i.e. 23.01.2015, the position which will obtain is that the respondents will have to return the seized goods to the petitioner. This would, however, not mean that respondents cannot continue their investigation and proceed to the next step towards trial by complying with the provisions of Section 124 of the Act. - Decided in favour of Appellant. 2015 (11) TMI 1233 Challenge to summons issues - Power to issue summons - Fraudulent availment of EPCG Scheme by way of endorsing EPCG licences with unconnected exporter's shopping bills in the third party details for obtaining EODC from DGFT - Held that:- Senior intelligence officer can be construed as a gazetted customs officer as he has authority to issue summons. As per the decision of the Supreme Court reported in [2007 (3) TMI 265 - SUPREME COURT OF INDIA], the High Court should not interfere at the stage of issuance of summons. - it is only a summon, which has been issued to the petitioners directing them to appear before the authority under Section 108 of the Customs Act, 1962, to give evidence in connection with the above issue. Hence, at this stage this Court cannot make any interference. - Decided against appellant. 2015 (11) TMI 1232 Enforcement of Bank Guarantee - Denial of refund claim - Bar of limitation - Held that:- Petitioner was issued with the Export Obligation Discharge Certificate (EODC) against EPCG Licence by the office of the Joint Director General of Foreign Trade, Ministry of Commerce, Government of India, on 26.05.2003 - petitioner Company had fulfilled their export obligation and thereafter, they have also issued with Export Obligation Discharge Certificate on 26.05.2003, wherein a sum of USD 8,14,639/- has been fulfilled by the petitioner towards export obligation, which is over and above the sum stipulated as per the licence. Therefore, when the Export Obligation Discharge Certificate has been rightly issued by the DGFT, the petitioner, vide his letter dated 28.05.2003, requested the Commissioner of Customs, chennai, to release the original bank guarantee, however, the Deputy Commissioner of Customs has wrongly rejected, vide his order dated 20.08.2007, stating that the refund application has been filed beyond the limitation period of six months as stipulated in Section 27 of the Customs Act. Aggrieved by the same, when appeal was preferred, the appellate authority vide order dated 04.11.2009, confirmed the order passed by the Deputy Commissioner of Customs, by repeating the same reasons. Therefore, such reasons assigned by the original authority and appellate authority in their orders, in my view, are totally running contrary to the ratio laid down by Hon'ble Apex Court [1994 (2) TMI 57 - SUPREME COURT OF INDIA] and this Court. - it is crystal clear that the the bank guarantee cannot be regarded as equivalent to payment of duty and it is only furnished to safeguard the interest of the revenue in case of non fulfilment of export obligation. - Impugned order is set aside - Decided in favour of assessee. 2015 (11) TMI 1231 Confiscation of the goods - import of medical equipments by Diagnostic Centre - benefit of Notification 64/88 - Seizure of duty free equipment - Held that:- The import must be in consonance with the notification and of the goods permitted thereunder so also of the description set out therein. The further conditions are imposed and in larger public interest. The exemption itself is granted in public interest and with an intention to obtain medical equipment which may be state of the Art and ultra modern for proper and correct diagnosis and treatment of complicated medical ailments. The poor and down trodden section of the society also requires medical aid. Therefore such medical aid with the assistance of these equipments should be extended and with that purpose and object the conditions have been imposed. The fulfillment of these conditions have to be monitored and that is the duty of the customs authority. In these circumstances and the additional doubt created by the view taken by the Tribunal that even a Diagnostic Centre would qualify for exemption that in this case the Tribunal did not uphold the Commissioner’s view and set aside the adjudication order. We do not find anything erroneous or patently illegal in such a course. It is not perverse either. Given the peculiar facts and circumstances and the long time gap, the Tribunal has taken this view. We do not think that setting aside of the confiscation order and imposition of penalty, in these circumstances, really gives rise to any substantial question of law. - Decided against Revenue. 2015 (11) TMI 1230 Waiver of pre deposit - Denial of duty drawback claim - Imposition of penalty - Held that:- Though substantially the Tribunal has directed only 1/3rd or 1/4th of the penalty amount to be deposited as a pre-condition for entertaining the appeals and though in normal circumstances, we would not interfere with such an order, the cases on hand falls under a different category. The appeals filed by the appellants are pending from 2007 before the Tribunal. A period of eight years have gone. Therefore, there is no point in the fight over the pre-deposit condition, prolonging the appeals. Admittedly, the department has recovered the entire duty drawback amount of ₹ 12,22,953/-. Even if the appeals are eventually dismissed by CESTAT, the only amounts to be recovered from the appellants would be the penalty amounts. - we allow the appeals and set aside the pre-deposit condition imposed by the CESTAT. - Decided in favour of assessee. 2015 (11) TMI 1229 Denial of import duty benefit equivalent to 2% of FOB value of exports - Focus Products Scheme [FPS] - Held that:- The exporter, on reliance of the earlier interpretation and enforcement of the policy made exportation of the said goods with the expectation of earning duty benefits, which were earned on previous occasions. On that basis he exported goods on this occasion too. He thereby altered his position. All of a sudden, enforcement of this notification with retrospective effect deprived him of this duty legitimately earned. This is plainly unjust. - an administrative action should have finality. When goods are legitimately exported under the existing policy duty is earned. The Government takes a decision in clearing particular exports, which results in earning of this duty benefit. This decision at that point of time is to be taken as final in normal circumstances and cannot be reversed at a later point of time by change of interpretation of the description of the goods by a policy circular, with retrospective effect. - respondent authorities are restrained by an order of injunction from denying any duty benefit to the writ petitioners earned by virtue of export of goods understood by the parties as Technical Textiles, before 21st October, 2011 - Decided in favour of assessee. 2015 (11) TMI 1228 Waiver of pre deposit - Classification of coal - Bituminous Coal or Steam Coal - Held that:- Bangalore Bench of the Tribunal took a particular view and later on Chennai Bench disagreed with it. The referral order of Chennai Bench is also extensively referred in the memo of appeal before us and a copy of the same is annexed at Pages 278 to 294 of the paper book. The issue involved is classification of coal imported by Appellants and whether that is bituminous coal falling under Customs Tariff Notification CTH27011200 as claimed by the Department or steam coal falling under Notification CTH27011920 as claimed by the Appellants - there are rival contentions and equally differing views of the Benches of the Tribunal, then, all the more this was not a case for imposition of any condition of pre-deposit. The waiver application should have been granted without imposing any conditions. If the larger Bench of the Tribunal is to resolve the matter, then all the more, without expressing any opinion on the merits of the controversy, so also on the point whether mere reference to larger Bench should necessarily result in total waiver and unconditional stay, we are of the view that interest of justice will be served if each of these appeals are allowed. The impugned orders of the Tribunal are quashed and set aside - Decided in favour of assessee. 2015 (11) TMI 1227 Bail Application - Attempt to smuggle gold - Held that:- applicant is entitled to be released on bail. - applicant Arvinder Pal Singh be released on bail in the case crime number on his furnishing a personal bond and two reliable sureties of the like amount to the satisfaction of the court concerned subject to certain additional conditions - Decided conditionally in favour of Appellant. 2015 (11) TMI 1226 Valuation - Enhancement in value of goods - claim of benefit of preferential rate of duty - denial of the benefit of Notification No. 321/76-Cus dated 2.8.1976 - Held that:- From the documents, we find that the adjudicating authority has compared the incomparable. The certificate of origin is issued by PIC showing the date of invoice as 12.3.1984 whereas the invoice submitted with the Bill of Entry is issued by the exporter i.e. M/s. Transicom Burma and will naturally be of a later date i.e. on 28.3.1984. On proper appreciation of the documents as well as the fact that the notification No. 321/76 does not require the COO to be issued by any designated authority, in our view the two certificates of origin indicating the COO as Burma cannot be discarded. - Bill of Lading itself says that freight is prepaid. The L/C which would have been definite proof could not be furnished by the appellant after a gap of almost 20 years. In any case Revenue has not submitted any evidence to show that freight and insurance were paid separately. Revenue s case is based on technicalities on account of so called discrepancies some of which we have clarified in the para above. Revenue s case is that the COO issued from Singapore does not indicate the invoice number. Departure date i.e. 28.3.1984 indicated in the COO issued at Singapore tallies with the date of invoice issued by M/s. Transicom. The adjudicating authority has also stated that whereas the COO issued at Singapore shows the weight of the consignment as 203.26 MT. the COO issued by PIC at Burma indicates the weight as 219.6 MTs. We observe that the very same COO issued at Burma indicates total gross weight -219.6 MT total net weight 203.3 MT. It is clear that the authorities below did not compare documents properly. Otherwise they would have been able to reconcile the discrepancies. Another discrepancy pointed out by the adjudicating authority is in the invoices submitted along with the Bill of Entry and the invoice submitted later. Although, they bear the same number and date, the first invoice does not indicate CIF basis whereas the other copy indicates CIF basis. It appears that when the appellant were asked to submit whether shipment is on FOB or CIF basis, they have added CIF on the copy of the invoice submitted later. - there is sufficient co-relation between various documents to support the view that the invoice is on CIF basis. Revenue has not been able to verify from the Bank through which L/C was negotiated to prove otherwise. Therefore the declared value merits acceptance and the benefit of notification No. 321/76 is admissible. Consequently, the duty demand is set aside - Decided in favour of assessee. 2015 (11) TMI 1225 Levy of SAD where basic customs duty and countervailing duty is exempt under Notification No. 54/2003-Cus dated 01.04.2003 on the strength of the duty-free service entitlement credit certificate. - Held that:- Only condition for exemption from SAD in Notification 20/2006-Cus is that the goods should be exempt from payment of basic customs duty and countervailing duty (leviable under section 3 (1) of the Customs Tariff Act, 1975) the above quoted language of the exemption notification no where states that the exemption should be unconditional. It is a fact that vide Notification No.54/2003-Cus, basic customs duty and countervailing duty [under Section 3 (1) of the Customs Tariff Act, 1975] were exempted during the relevant period. - fact remains that during the relevant period the impugned goods were fully exempt from basic custom duty as well as CVD [leviable under section 3 (1) of Customs Tariff Act, 1975] and consequently, they (i.e., the impugned goods) were entitled to the benefit of Notification No.20/2006 - Cus. Indeed in a similar set of circumstances in the case of Gujarat Ambuja Exports Ltd. Vs. Union of India (2013 (6) TMI 536 - GUJARAT HIGH COURT), Gujarat High Court held that the import goods were entitled to the benefit of Notification No.20/2006-Cust when they (import goods) were exempt from duty under notification No. 45/2002-Cus when imported under DEPB scheme (where the duty is debited to the duty entitlement pass book). The ratio of this judgement is clearly applicable to the present case. - Matter remanded back - Decided in favour of assessee. Corporate Laws 2015 (11) TMI 1220 Interpretation of the term `annual turnover' - stand of the appellants is that the SAT has mis-interpreted the Explanation to paragraph 3 to hold that the "turnover" for purpose of fee will not be the value of the stocks under transaction but only the value of brokerage earned by the stock brokers like the respondent - Held that:- On a careful analysis of the Explanation occurring after paragraph 3 of Schedule III and the definition of `annual turnover' contained therein as also the reasonings in the impugned order we are constrained to hold that the SAT has erred in limiting the annual turnover of the respondent only to the amount of brokerage earned by it. The earning by way of brokerage represents only the part of price of securities received by the stock broker on his own account. The other and more significant part of the `annual turnover' as per the Explanation is the aggregate of the sale and purchase prices of securities, received or receivable by the stock broker on account of his clients in respect of sale and purchase or dealing in securities during the financial year. The view taken by the SAT that since in the wholesale debt market segment the broker has a limited role as per the RBI circular and since the broker does not receive the sale or purchase price because the payment is directly made to the seller, the broker will be saved from inclusion of the sale and purchase prices in his annual turnover, suffers from an apparent error. The error lies in not appreciating that the component of aggregate of sale and purchase prices which is receivable by the stock broker even on account of his clients is included in the annual turnover. Such sale and purchase price receivable by the stock broker on account of his clients, under the directions of the RBI through the circular dated June 20, 1992 presently goes directly to the seller but it is of no significance. Even if such sale and purchase price had actually been received by the stock broker not on his own account but on account of his clients, it could not belong to the broker and had to be passed on to the seller because such amount was receivable clearly on account of his clients in contradistinction to any part of sale and purchase price received or receivable by the stock broker on his own account. Thus viewed, the annual turnover of the stock broker as per the Explanation must include the value of entire transaction for the purpose of computing the registration fee as per Schedule III of the Regulations. In no case the term 'annual turnover' can be so interpreted as to mean only the amount earned by the stock broker by way of brokerage. So far as defence of the respondent that in the wholesale debt market segment, at least prior to 2003, the SEBI was required only to 'monitor' and not to 'regulate' such market cannot cut any ice because the provisions relating to registration fee by the SEBI have already been held valid and in the present proceedings there is no challenge to the relevant provisions including those in Schedule III of the Regulations. As already noted, in the case of B.S.E. Brokers' Forum [2001 (2) TMI 957 - SUPREME COURT OF INDIA ] this Court directed the SEBI to incorporate the relevant recommendations of the Bhatt Committee in the Regulations and as a result the rate of fee on Government securities etc. dealt in the wholesale debt market was lowered and pegged at 1/10th in comparison to fees payable by the stock brokers in other segment. Thus impugned order passed by the SAT as erroneous in law. It is accordingly set aside. Appeal allowed Service Tax 2015 (11) TMI 1260 Waiver of pre deposit - Stay of recovery of demanded service tax - Held that:- applicant had made out a strong case for full waiver of pre-deposit. The sequence of transactions involved in transfer of money in this case indicate the absence service provider-service recipient relationship between the applicant and the foreign bank or intermediary. As such we find full waiver of demanded service tax and penalties is justified in this case. Accordingly we order the stay of recovery of tax amount along with penalties in this case till disposal of the appeal. - Stay granted. 2015 (11) TMI 1259 Waiver of pre deposit - commercial or industrial construction service - benefit of Notification No. 1/2006-ST - Inclusion of value of free supply material - Held that:- No service tax was payable for the service rendered under works contracts prior to 1.6.2007. However, the amount deposited by it during the said period had been recovered from the customers and therefore the appellant is not entitled to refund thereof. Consequently the appellant cannot count it towards any pre-deposit - during period after 1.6.2007, at some point, the appellant started paying duty under Composition Scheme for works contract service which during the relevant period did not disallow availment of Cenvat credit in respect of input service. As regards the contention that there is no basis to infer that it has recovered an amount of ₹ 1,41,91,440/- towards service tax but deposited only ₹ 71,57,079/-, we find that primary adjudicating authority has taken into account the contention of the appellant and gave a finding as to how those figures were correctly worked out. It has observed that while the appellant started paying service tax under Composition Scheme for works contract service, it continued to recover higher amount of service tax by charging service tax from the customer at 33% of the value. Thus It is clear that as against recovery of ₹ 1,41,91,440/- towards service tax it only deposited ₹ 71,57,079/- and retained ₹ 70,34,361/-. Further the challans under which this amount is claimed to have been deposited do not bear any link with the impugned demand nor did the appellant claim so before the lower authorities. - Partial stay granted. 2015 (11) TMI 1258 Denial of refund claim - Technical Testing and Analysis Service - Held that:- After considering the amount itself and the grounds on limitation, we find that the impugned order is liable to upheld on limitation without going into merit - we upheld the impugned order on limitation. The appeal filed by the Revenue is rejected - Decided against Revenue. 2015 (11) TMI 1257 Waiver of pre deposit - Demand of service tax - Business Auxiliary Service - Held that:- Prima-facie, collection of tax cannot be said to be a service provided by Government. Therefore, the demand relating to the commission received by the appellant for collection of sales tax on behalf of the Government would not fall under BAS as defined in Section 65(19) of the Finance Act, 1994, because the appellant did not provide promotion or marketing of service provided by the client, nor did it provides customer care on behalf of the client. It also did not provide any relation to procurement of goods or services which were inputs for the client or provision of service on behalf of the client. It has been held by the Supreme Court in the case of D. K. Trivedi & Sons vs. State of Gujarat - [1986 (3) TMI 328 - Supreme court of india] that royalty is a tax and therefore the above reasoning given in respect of collection of sales tax applies to the component of demand pertaining to commission received for collection of royalty on mines for onward remittance to the State of Rajasthan. - appellant has a good case for waiver of pre-deposit, Accordingly, we waive the requirement of pre-deposit and stay recovery of the impugned liability during pendency of the appeal. - Stay granted. 2015 (11) TMI 1256 Waiver of pre deposit - Goods Transport Agency service - Held that:- Since the issue involved in the present appeal is squarely covered by the decision of this Tribunal cited [2015 (10) TMI 857 - CESTAT ALLAHABAD], in appellant's own case, following the Tribunal's decision, we quash the impugned order by holding that the appellant is not liable to service tax, interest and penalty under the category of Goods Transport Agency - Decided in favour of assessee. 2015 (11) TMI 1255 Denial of refund claim - Bar of limitation - Unjust enrichment - Held that:- Impugned order however rejects refund on the ground that the assessee failed to disclose the amount of refund claimed by it in its financial records, in its books of accounts and failed to furnish original financial records to verify its claim and therefore appellant failed to establish that the liability of the excess amount pre-deposited was not passed on and therefore there was no unjust enrichment. This is wholly fallacious reason. Both the authorities concede the position that appellant pre-deposited ₹ 21,38,874/- against its assessed service tax liability of ₹ 15,69,823/- apart from the interest thereon. In the circumstances, the excess amount deposited by the appellant, if refundable under law would be the amount receivable by it, particularly as the appellate authority found in favour of the assessee on the point of limitation. - Decided in favour of assessee. 2015 (11) TMI 1254 CENVAT Credit - whether the appellant is eligible for Cenvat credit of service tax paid on 'Outdoor Catering Service' and for the service provided to their employees for transportation by buses - Held that:- As regards the 'Outdoor Catering Service', the issue is covered by decision of the Hon'ble High Court of Mumbai in the case of Commissioner of Central Excise, Nagapur vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT ]. The authorized representative also submits that they have already reversed proportionate credit attributable to the amount recovered from their employees for providing 'outdoor catering service'. In view of above, the appellant is eligible for Cenvat credit of service tax paid on 'outdoor catering service' also - impugned order is set aside - Decided in favour of assessee. 2015 (11) TMI 1253 Refund claim - Unutilized CENVAT Credit - Export of service - Rule 5 of the Cenvat Credit Rules, 2004 read with Notification Nos. 4/2006-CE (NT) and 5/2006-CE(NT) dated 14.03.2006 - primary Authority rejected the refund claim partly on the ground that support services of business or commerce which the assessee had provided to its overseas associated enterprises and for which it had received remuneration in foreign exchange, was not used outside India but within the Indian territory - Held that:- Admittedly, remuneration for services rendered by the assessee to overseas entities was received in convertible foreign exchange. The recipient of the service is located outside India, undisputedly - since the benefit of services provided to the foreign recipient accrue economic benefit to the overseas entity, the transactions fall within the ambit of export of services, used outside India. Applying the ratio to the present case, the interface provided by the assessee to synergize activities of the overseas entities and Indian call centres would be export of services. Since this service accrues to the benefit of the overseas entity and is therefore to be considered as having been used outside India and for the benefit of the overseas entity. - Decided in favour of assessee. 2015 (11) TMI 1252 Penalty under Section 77 and 78 - commissioning and installation service - Manpower Requirement Agency Services - Held that:- appellant had neither charged service tax in its bills nor the same was paid by the principal. Further the stand taken by the appellant that the default was only due to lack of knowledge and there was no contumacious conduct and/or suppression with intent to evade Service Tax, have not been found untrue in the impugned order. Under the facts and circumstances, I hold that the appellant is entitled to the benefit under Section 73(3) of the Finance Act as the tax and interest had been paid under proper intimation. In this view of the matter the penalty retained under Section 78 and Section 77 are set aside. The appellant will be entitled to refund of the excess tax deposited and will also be entitled to refund of the proportionate interest on the excess deposit of tax and penalty if any deposited. - Decided in favour of assessee. 2015 (11) TMI 1251 Disallowance of CENVAT Credit - Various services - Held that:- These services are Vehicle Maintenance Service, Group Health Insurance Service, Garden Maintenance and Entertainment Service. As per the submission of the Learned Counsel and the recorded facts in the Order-in-Original, I find that Vehicle Maintenance Services are in respect of vehicles used by the appellant for their factory staff. Therefore, in my view it is clearly covered under the definition of input service as same is used in the relation of the production of the appellant. Group Health Insurance is provided to the factory workers and staff, who are directly engaged in the production activity. As regard Garden Maintenance Service, the Garden is maintained in the factory under the statutory obligation, under the factory Act. This Tribunal in various judgments allowed the Cenvat credit in respect of Garden Maintenance. As regard Entertainment Service, this is hotel service used for conducting meeting among management staff, union leaders and workers for important issues of factory. In my view, this service has nexus with the production activity of the appellant's factory. - Cenvat credit is admissible - Decided in favour of assessee. 2015 (11) TMI 1250 Denial of CENVAT Credit - GTA service - Held that:- Tribunal on the identical issue in the case of Kohinoor Biscuit Products (2015 (6) TMI 126 - CESTAT NEW DELHI) held that goods cleared from the job worker premises to the principal manufacturers’ depot and the cenvat credit on the service tax paid on the GTA services availed for transportation of the goods from the factory to the manufacturer to the depot of the Parle Biscuits has been correctly denied and cenvat credit demand has been upheld alongwith interest - respondent is not eligible to avail cenvat credit on GTA Services in respect of the supply of finished goods on the depots, cannot be treated as “place of removal” for the manufacturer, unless the sales are on FOR destination basis and the demand would be quantified accordingly - Appeal disposed of. 2015 (11) TMI 1249 Waiver of pre deposit - Business Support Service - Cargo handling service - transportation of export cargo from CFS to port of shipment in relation to exports - Held that:- Appellants are approved by the Commerce Ministry as CFS at Tiruppur by Public Notice No.8/95 dt. 9.5.1995 as container freight terminal. Section 65 of Finance Act covers all cargo handling service of loading, unloading, packing and unpacking of cargo and includes cargo handling services provided for freight station. Section 65 (23) clearly excludes handling of export cargo or passenger baggage or mere transportation of goods. The activities relating to export cargo not chargeable to service tax. Adjudicating authority has not disputed the fact that transportation charges received by the appellant is towards transportation of export cargo from the client from CFS to port of loading. In the present case amount collected towards transportation of export cargo cannot be classifiable under BSS as the appellant is the CFS operator handling of both import and export cargo. Therefore, prima facie appellants have made out a case for total waiver of predeposit. - Stay granted. Central Excise 2015 (11) TMI 1248 Denial of SSI exemption benefit under Notifications No.16/97-CE, dt.01.04.97, 8/98-CE, dt.02.06.1998, 8/99-CE, dt.28.02.1999 and 8/2000-CE, dt.01.03.2000 - Held that:- Central Excise officers visited the Appellant s factory on 22.08.2000 and resumed the files containing invoices, Note Books and also recorded the statements of the employees and Directors of the Appellant Company. The Central Excise officers also visited several transport companies and recovered the L.Rs. and Dispatch Registers and recorded the statements of the employees of the transport companies. The Appellants deposited the amount of ₹ 75,000.00 at the instance of the Central Excise officers. Subsequently, the Appellants filed refund claim of ₹ 75,000.00. - it appears that the Central Excise officers prepared the statements of the clearance of the goods on the basis of dispatch registers and the L.Rs. recovered from the office of Transport Companies and recorded the statements of the employees of the transport companies. The Appellants requested the Adjudicating authority to supply the copy of documents recovered from the premises of transporters as referred in the annexures to the Show Cause Notice and the cross examination of the employees of transporters, which was rejected. The Commissioner (Appeals), by earlier order dt.14.12.2005, remanded the matter to the Adjudicating authority for denovo Adjudication order. Despite the order of the Commissioner (Appeals) in 2005, the Adjudicating authority had not supplied the relied upon document as recovered from the premises of the third party and also denied the opportunity of cross examination. By the impugned order, Commissioner (Appeals) proceeded on the basis of the statements of the employees of the Appellant, who was maintaining Note Book. But, the said Note Book is not the basis of demand of duty. So, there is no material on record, on the basis of which, it could justify the clandestine removal of goods. So, the demand of duty alongwith interest and imposition of penalty cannot be sustained. - impugned order is set aside - Decided in favour of assessee. 2015 (11) TMI 1247 Denial of benefit of captive consumption Notification No.67/95-CE dt. 16-3-1995 - denial of exemption only on the ground that Sulphuric Acid (H2SO4) is a final product cleared at 'Nil' rate and held that since oxygen is captively used in the manufacture of Copper Anode (dutiable) and Sulphuric Acid (exempted) they are not eligible for Notfn 67/95 - Held that:- Sulphuric acid is cleared as by-product as explained in the preceding paragraphs and the final product is only copper anode and not sulphuric acid. The waste gas which emerges out out of process of purification of copper concentrate in Sulphur Dioxide which is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum. This Oleum is dissolved in water to get purest form of Sulphuric Acid. It is pertinent to state that under the Environment (Protection) Rules, 1986 vide sub-rule (2) of Schedule I and as per Sl.No.21 of the Schedule I of the Environment Rules, it is mandatory for the appellant to prevent emission of oxides of sulphur in Smelter and Convertor of copper and it stipulates that waste gases are to be utilized in the manufacture of Sulphuric Acid so as to prevent emission of Sulphur Dioxide. - as per Notfn 67/95, both input oxygen and the final products are rightly covered in the Table of the Notification. Proviso (vi) of the notification stipulates that this notification is applicable provided appellant complied with Rule (6) of CCR 2001. The only condition is that Sub-Rule (2) of Rule 6 of CCR is required to be complied with. In the present case, as per sub-rule (2), appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notfn 67/95 are complied. Following the Apex Court decision in the case of UOI Vs Hindustan Zinc Ltd. (2005 (2) TMI 119 - SUPREME COURT OF INDIA), we hold that appellants are eligible for benefit of Notfn 67/95 and the duty demand on the quantity of oxygen so used in the manufacture of sulphuric acid, is liable to be set aside. - Decided in favour of assessee. 2015 (11) TMI 1246 Waiver of pre deposit - Whether the products, in question, Tinidazole Intravenous Infusion (Tinipidi), Metroidazole Sodium Chloride Injection, Metronidazole Injection with Dextrose, Ciprofloxacin Injection with Dextrose,Ciprofloxacin Injection with Sodium Chloride, and Mannitol Injection, all of which contain antibiotics in saline or glucose medium and other medicaments and are meant for Intravenous infusion are covered for duty exemption by the entry no.56 of the notification no.3/2001-CE dated 1.3.2001 which covered, Intravenous Fluids which are used for sugar, electrolyte and fluid replenishment Held that:- Irrespective of the evidence of Dr. Vivek Sullere, w.e.f. 1.3.2001 the duty exemption would be restricted only to those Intravenous Fluids, which are used for sugar, electrolyte and fluid replenishment and the same would not be available to those Intravenous Fluids, which are meant for some other purposes. It is well settled law that the exemption notifications have to be construed strictly and this was one of the observations in the Apex Court’s judgement dated 31.03.2009 while remanding the matter to the Tribunal. Thus, it cannot be said that the appellant have prima facie case in their favour. The undue hardship is determined on the basis as to whether the assessee has prima facie case in his favour and if so, to what extent. The Revenue s interest have to be safeguarded keeping in view the factors which are in favour of the Revenue. At this stage, ld. Counsel for the Appellant pleaded that the appellant in their stay application have also pleaded financial hardships as on account of their inability to re-pay the bank debts, their case was referred to Corporate Debt Reconstructing Cell of the Banks which have formulated re-habilitation package. He also pleaded that this factor may also be taken into account while considering the stay application. However, irrespective of the plea of financial hardships, since the issue involved in this case stands decided by the Tribunal against the Appellant in its judgement in case of Ives Drugs (India) Ltd. , Venus Remedies Ltd. & Ors. (2010 (10) TMI 649 - CESTAT, NEW DELHI) and this judgement has been upheld by Hon’ble Punjab & Haryana High Courts, this is not a case for total unconditional waiver from the requirement of pre-deposit and the Appellant have to be put to certain conditions of pre-deposit to safeguard the interests of the Revenue. - Partial stay granted. 2015 (11) TMI 1245 Denial of SSI Exemption - Use of other's brand name - Seizure of goods - Imposition of redemption fine and penalty - Held that:- Appellant were manufacturing the brake linings using brand name-TVS and Rane and also brake linings using their brand or other brands which are not owned by any particular person or unbranded brake linings. The Commissioner in the impugned order has denied SSI Exemption in respect of only brake linings cleared under the brand names-TVS and Rane. However, the value of the goods whether sold under the brand name TVS and Rane or sold under other brand names or sold without any brand has not been determined on the basis of the price declared in the invoices. In this regard, the Commissioner in respect of the brake linings bearing brand name TVS and Rane has adopted the price at which the brand name owners were selling the same goods and the value of the goods of other brand or unbranded goods has been determined on the basis of the quotations given by the three traders M/s. Masu International, M/s. Serbestos Auto International and M/s. Minocha Metals (P) ltd. It is not the department s case against the appellant that the appellant had any agreement with TVS and Rane for manufacture of brake linings as per their standards and specifications and could use their brand name. The appellant were obviously using the brand name TVS and Rane on certain brake linings manufactured by them unauthorisedly and thus, the brake linings with the brand name TVS and Rane cleared by them have to be treated as duplicate brake linings. In view of these circumstances, in our view, there is no justification to value these brake linings at the price at which such brake linings were being sold by the brand name owners. The actual production of RPM has been determined on the basis of three registers recovered from the premises of RPM. The department, however, based on the statement of Shri Pradeep Kumar Goel and his factory Supervisor Shri Satender Kumar has taken the stand that this production has been recorded in the terms of sets, each set being of eight brake linings, while the appellants stand is that the production in these registers is not in sets but the numbers mentioned are the number of brake linings not of the sets of brake linings. There is nothing in the registers from which it can be inferred that the production recorded therein is in terms of sets. Though initially Shri Pradeep Kumar Goel had given the statement that the production recorded is in sets, this statement has been retracted by him. Though Shri Satender Kumar, Supervisor working in the RPM s factory had stated that the production has been recorded in sets., in our view without his cross-examination, his statement cannot be accepted at face value when his statement is not corroborated by any other evidence. - Production recorded in the three registers recovered from the premises of RPM is in terms of sets of brake linings is not sustainable and accordingly, the production recorded in these registers is to be treated as production of that many brake linings not of the sets of brake linings - Impugned order is set aside and the matter is remanded to Commissioner for re-quantification of the duty liability in terms of our observations in this order - Decided in favour of assessee. 2015 (11) TMI 1244 Denial of Cenvat Crredit - Bogus invoices - Issue of invoices without actual receipt of goods - Held that:- M/s. Agarwal Metal Co. / Works is a manufacturer of brass strips/ circles and supplying the same to the Registered dealers, namely, M/s. AMCo. & AMCorpn. against duty paid invoices. Thereafter, these AMCo. & AMCorpn. are supplying the goods to manufacturer buyers and description was shown in the invoices as brass sheets instead of brass circles / strips. Apart from this evidence, no other corroborative evidence has been produced by the Revenue to allege that manufacturer buyers have received the invoices only but have not received the goods against these invoices. No investigation has been done at the end of transporter or check post to ascertain the facts against the impugned invoices, the manufacturer buyers had received goods or not. Moreover, no other corroborative evidence has been produced by the Revenue from where these goods i.e. brass sheets procured by manufacturer buyers. In the absence of any corroborative evidence, the Cenvat credit to manufacturer buyer cannot be denied. Cenvat credit cannot be denied to manufacturer buyers. Further, in the case of Delhi Control Service this Tribunal (2013 (8) TMI 921 - CESTAT NEW DELHI) has taken the same view. With these observations, the orders of denial of Cenvat credit to manufacturer buyers and consequently demand of duty along with interest are not sustainable. Therefore, the penalties on manufacturer buyers are not imposable. As in some cases, some amount has been paid by M/s. AMCo. & AMCorpn. during the course of investigation, that amount cannot be claimed by manufacturer buyer / M/s. AMCo. & AMCorpn. as refund, consequent to this order. As demand of duty against manufacturer buyers is not sustainable, consequently, penalties on manufacturer buyers cannot be imposed. - Decided in favour of assessee. 2015 (11) TMI 1243 Evasion of duty - Clandestine clearance of goods - Imposition of penalty u/s 11AC - Held that:- The final statements were recorded after showing the details and appellant No 1 and 2 have admitted of having clandestinely cleared goods without recording in the statutory records. It is well settled position in law that whatever has been admitted need not be proved. The admission of clandestinely clearance was admitted and continue to be admitted till date. The argument that Revenue has not produced any direct evidences is therefore irrelevant in the present facts and circumstances. In fact, appellant No. 1 have also deposited part of the duty during investigation. Under the facts and circumstances of the present case, we do not have any doubt whatsoever about clandestine clearance of the goods its’s quantity or the value. - penalty under Section 11AC is imposable on the Appellant No. 1 as this is a case of suppression of fact with willful intention to evade payment of duty. We also note that appellant No. 2 has submitted that penalty cannot be imposed on him being partner of appellant No. 1 and penalty has been imposed on the appellant No 1. We find from the order that on appellant No. 1 penalty imposed is under Section 11AC of the Central Excise Act, 1944, while in case of appellant no. 2 penalty has been imposed under Rule 26 of Central Excise Rules, 2002. Purpose of Rule 26 and Section 11AC are different. - No merit in appeal - Decided partly against assessee. 2015 (11) TMI 1242 Denial of CENVAT credit - Endorsement of Invoices - Invoices of “Furnace Oil” issued by three different suppliers, on the ground that the invoices are not permitted to be endorsed and CENVAT credit is not admissible on such endorsed invoices - Held that:- Input i.e. Furnace Oil’ was supplied to the unit of M/s Vipras Corporation Ltd. which was taken over by the appellant and they were carrying out manufacturing activity when received the input along with invoices which were raised in favour of M/s Vipras Corporation Ltd. The input supplied was received by the appellant and used in their manufacture. From the Books of Account of the appellant, it is found that all the 19 invoices in question were against purchase of ‘Furnace Oil’ in appellant’s Books of Account. It is also not in dispute that the amount of all 19 invoices paid only by the appellant to the supplier. From these facts, it is clear that the buyer of the goods is the appellant and for this reason M/s Vipras Corporation Ltd. endorsed the invoices in favour of the appellant, it is also fact that M/s Vipras Corporation Ltd. is sister concern of the appellant. - invoice was endorsed by the sister concern of the appellant and the premises of which the goods were consigned is under the possession of the appellant - appellant is entitled to CENVAT credit - Decided in favour of assessee. 2015 (11) TMI 1241 Valuation - sale to interconnected units - Discharge of excise duty under Rule 8 and 9 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 - Penalty u/s 11AC - Held that:- Appellant have admitted that the three buyers companies are their interconnected undertakings. However merely because buyers are interconnected undertakings it is not sufficient to hold that the companies are related persons. - transaction value can be rejected only when the buyers are related in the sense in clause (ii), (iii) or (iv) of Section of 4(3) (b) or buyer is holding company or subsidiary company of the assessee. It was made further clear that while dealing with transaction between interconnected undertaking, if the relationship as described in clause (ii), (iii) or (iv) does not exist and buyers also not holding or subsidiary then for assessment purpose they will not be considered related. Transaction value of the goods between appellant and these three interconnected undertaking is correct valuation and the same cannot be disturbed, therefore value as provided under Rule 8 is not applicable in the present case. - When for the same goods transaction value is available i.e. transaction value at which the goods are sold to independent buyers, then there is no scope of any notional value such as valuation in terms of Rule 8 or otherwise. For this reason also valuation of Rule 8 cannot be applied in the present case. - appellant have correctly valued their goods sold to their three interconnected undertakings, therefore the impugned order is not sustainable and deserve to be set aside - Decided in favour of assessee. 2015 (11) TMI 1240 Denial of SSI Exemption - whether or not the main appellant manufactured and cleared cables using another person's brand name - Held that:- Even if it is conceded that such manufacture on the brand name of Deelux Premium is due to an error in the supply of print block, the appellant cannot escape the consequences of such error resulting in duty liability. Other than this, there is no direct or corroborative evidence to establish that the appellant manufactured and cleared cables with brand name of 'Deelux Premium' during the whole of period of demand. On the contrary there are evidence, both documentary and through statement, that the appellant did manufacture cables with their brand name "DEELUX" during the impugned period. - we are unable to subscribe to the view that all the cables manufactured by the appellant during the impugned period are with brand name of another person, in the absence of any documentary/corroborative evidence to that effect. We find the confirmation of demand substantially relying on the statements of various people which were retracted later cannot be sustained, as the basic requirement of establishing the veracity of these statements by cross-examination has not been done. Brand name of DEELUX has been in the use of the appellant for many years before coming into existence of Deelux Cable & Wire Pvt. Ltd. having different brand name Deefux Premium. In fact both the brand names were sought to be registered on the same day. However, the brand name 'DEELUX' is yet to be registered. Though the word "DEELUX" is an invented word, the brand name of M/s Deelux Cable & Wire Pvt. Ltd. is known as Deelux Premium. It is relevant to note that the name of both the units have this invented word and as such it cannot be said that the usage of word 'Deelux' is a part representative of 'Deelux Premium' and as such it established a link to that brand. - reasoning given by the Original Authority on this account is not justified. - Order is not sustainable - Decided partly in favour of assessee. 2015 (11) TMI 1239 Duty demand - Clandestine clearances of the goods - Held that:- The statement of the buyer is corroborative with the records maintained by the buyer in their factory. The Central Excise officers seized a note book from the premises of the buyer maintained by their accountant. They have also seized daily reports from the premises of the buyer. The entire demand of duty was calculated on the basis of the seized records recovered from the premises of the buyer - no material recovered from the premises of the appellant company. The cross examination of the buyer and broker are not allowed and therefore, the contention of the Learned Authorised Representative cannot be accepted. The Learned Authorised Representative strongly relied upon the decision of the Tribunal in the case of Shalini Steel Pvt Ltd Vs CCE, Hyderabad - [2010 (3) TMI 700 - CESTAT, BANGALORE]. In that case, the Central Excise officers recovered various documents from the premises of assessee, which was not seriously disputed by the assessee. In this contest, the Tribunal observed that the value of documents could not be lost in absence of cross examination of the employee. The said case law could not be applicable in the present case. - impugned order cannot be sustained and it is set aside - Decided in favour of assessee. 2015 (11) TMI 1238 Rectification of mistake - Tribunal has not discussed Assessee's points and also not countered their case laws - Held that:- Tribunal can rectify any mistake apparent on record in the said order. Appellant claiming to reconsider the citations and also to draw findings on their contention amounts to seeking revisit the facts and findings of the Tribunal's order dt. 20.11.2014 which amounts to review of the order and there is no power vested with Tribunal to review its order. Appellant's relied High Court and Supreme Court case laws referred to above which are distinguishable to the facts of the present case whereas the Tribunal had discussed the issue in detail and also relied Supreme Court case laws. - any decision on debatable point of law cannot be treated as ‘mistake apparent from record’. - we do not find any apparent and manifest mistake in the Tribunals final order so as to exercise the powers to recall or modify the final order - Rectification denied. 2015 (11) TMI 1237 Confiscation of goods - Evasion of duty - Clandestine removal of goods - Held that:- Appellant factory was having an average stock of two crore bottles. As per the finding in the Order-in-Original, the shortages found by the Revenue is 11,61,269 bottles and excess worked out as 3,64,682 bottles. Thus, the net shortage is 7,90,387, as worked out by Revenue. For calculation purpose rounding off to 8 lakh bottles, in view of the average stock of 2 crore bottles, the shortage worked out is about 4%. I hold that this is a normal percentage of discrepancy in the nature of business of the appellant. Further, I take notice of the fact that the stock taking had been started at 6.30 pm on 15.2.1990 which was continued throughout the night in poor lighting condition and again the same was continued on 16.2.1990 and was continued in the morning of 17.2.1990. Thus, the mistakes or errors in stock taking cannot be ruled out, and as such, the shortage and/or excess pointed out by the Revenue cannot be held to be perfect. Thus, I hold that the shortages or excess found is the normal variation in stock taking for which no adverse intention is called for. Accordingly, I allow the appeal and set aside the impugned order. - Decided in favour of assessee. CST, VAT & Sales Tax 2015 (11) TMI 1224 Levy of penalty - Non filing of monthly and annual returns - Tax paid after being pointed out by Department - Held that:- Where certain items which are not included in the turnover are discovered from the dealer's own account books and the assessing authority includes these items in the dealer's turnover, the assessment cannot be regarded as based on best judgment and penalty cannot be levied in respect of such items. As far as the case in hand is concerned, when there is no intention for evading of payment of tax and when the entire turnover is very much reflected in the books of accounts, there is no reason for levying penalty. This Court in the case reported in [2001 (10) TMI 1100 - MADRAS HIGH COURT] (Appollo Saline Pharmaceuticals (P) Ltd., vs. Commercial Tax Officer (FAC) and others), has held that levy of penalty without considering the bona fides of the petitioner could not be sustained. - the petitioner is entitled to succeed. - Decided in favour of assessee. 2015 (11) TMI 1223 Seizure of trucks along with goods - several details on the transit Form 405 did not match with the details on the sales invoice of the goods that the truck was carrying - Held that:- goods have been detained on the Ahmedabad-Baroda Express Highway and not at any check-post or barrier, as contemplated under sub-section (1) of section 68 of the Act. It is the case of the respondent that the Additional Commissioner of Enforcement has directed the Deputy Commissioner of Enforcement to position mobile check-posts. However, on a plain reading of sub-section (1) of section 68 of the Act, it is evident that the check-post or barrier as contemplated for the purposes of section 68 is a check-post directed to be set up or a barrier directed to be erected by the State by notification in that regard in the Official Gazette. The Additional Commissioner of Enforcement is not empowered under subsection (1) of section 68 of the Act to direct setting up of the check-posts or erect barriers. Under the circumstances, the mobile check posts set up by the second respondent pursuant to the directions issued by the Additional Commissioner, Enforcement cannot be any stretch of imagination be said to be a check-post or barrier as envisaged under section 68 of the Act. Clearly, therefore, the second respondent was not empowered to take any action under section 68(4) of the Act. Under the circumstances, the detention of the truck in question together with the goods by the second respondent in exercise of the powers under sub-section (4) of section 68 of the Act is clearly without any authority of law. A perusal of the impugned seizure memo shows that the truck had not been detained by reason of any of the eventualities contemplated under sub-section (4) of section 68, but for the purpose of verification of the tax liability. Under the circumstances, the entire action of the second respondent in detaining the truck in question together with the goods is on all counts, without any authority of law. Consequently, the impugned seizure memo being without any authority of law cannot be sustained. - Decided in favour of assessee. 2015 (11) TMI 1222 Eligibility of input tax credit - Held that:- No provision in the APVAT Act to compute input-tax credit division wise; and the Advance Ruling is not applicable to the present case in view of the judgment rendered by the A.P. High Court in Maxwroth Plywoods Private Limited [2010 (9) TMI 994 - ANDHRA PRADESH HIGH COURT]. The tax revision case, preferred by the State of Andhra Pradesh against the said order of the STAT, was dismissed by a Division Bench of this court in State of A.P. v. Cavinkare (P) Ltd. (2013 (7) TMI 929 - High Court Of Andhra Pradesh). - In the absence of any statutory provision, restricting input-tax credit only to the output tax payable in a particular division, the respondents were not justified in holding that the petitioner was not entitled to claim adjustment of the input-tax credit with the output tax payable in their other divisions - Impugned order is set aside - Matter remanded back - Decided in favour of assessee. 2015 (11) TMI 1221 Refund claim - Bar of limitation - belated filing of return under KVAT - whether the Tribunal was justified in directing refund of input tax - Held that:- Sub-section (4) of section 10 of the Act provides how the net tax to be paid or refunded, is to be calculated. It provides, the first condition to be fulfilled is a tax invoice or a debit note or credit note, in relation to a sale ought to have been issued in accordance with section 29. Secondly, the return is to be filed as provided under section 35(1), i.e., a return VAT 100 within 20 days or 15 days after the end of preceding month showing the input tax as well as the output tax and the credit which is claimed. However, if there are incorrect statement in the said return, an opportunity is given to such assessee to file a revised return in the prescribed form within a period of 6 months from the end of the relevant tax period, subject to the permission being granted by the prescribed authority. If return is not filed within the aforesaid time, then the question of calculating the refund would not arise. In the instant case, admittedly the returns for the period from April 2005 to February 2007 were filed only on January 16, 2010. In fact, the reason given for delay in filing such return was, the assessee was a heart patient and he could not file the return in time. The law do not provide for condonation of delay for any such reasons - Therefore the order passed by the Tribunal is contrary to the statutory provisions and cannot be sustained. - Decided in favour of Revenue. Indian Laws 2015 (11) TMI 1289 Validity of the Town Development Scheme, namely, Kamal Vihar Township Development Scheme - Held that:- The Scheme was finalised on 26.5.2010, by which date, no land had been acquired by Respondent No. 2- RDA nor any piece of land vested in it. Plots are being earmarked only on paper and such on paper allotment of plots have been done by Respondent No. 2- RDA. Therefore, we are of the opinion that due to the change in the scope of the project, Respondent No. 2- RDA was required to seek sanction for the project from the Central Government. The same has not been done. Therefore, the KVTDS scheme has also failed to obtain the environmental clearance requirement which is the mandatory requirement in law for initiating any project by the RDA. A faulty town development scheme prepared through incompetent authorities with blatant violation of legal and environmental procedure cannot be the reason for deprivation of constitutional rights of the appellants. 2015 (11) TMI 1288 SLP against the order of HC where the High Court was pleased to cancel an Environment and Monument Improvement/Preservation and Tourism Development Project at Jaipur by declaring it as illegal which was awarded to the petitioner/appellant Jal Mahal Resorts Private Limited via global tender floated in 2003 and finally granted in 2005 after all requisite approvals as per the petitioner/appellant under the Environmental Law including Environment Impact Assessment under the Environment Protection Act and the Notifications issued thereunder of the Rajasthan Pollution Control Board. However, in view of the cancellation of the project, the High Court has directed immediate dismantling and removal of the entire project and diversion of the two drains which was done to purify waters of a man made artificial water body and detritus. Held that:- The judgment and order of the High Court thus stands quashed and set aside to the extent by which the lease deed has been cancelled except an area of 13 bighas 17 biswas equivalent to 8.65 acres and the balance disputed area claimed to be lake bed comprising 14.15 acres shall be notionally treated as part of the lease deed but the same shall remain a construction free zone where neither the State Government of Rajasthan nor the appellant-lessee/Jal Mahal Resorts Pvt. Ltd. shall have the right to raise any construction on this area as the same shall remain exclusively for the use of public promenade / walkway free of charge. 2015 (11) TMI 1287 Generation of Electricity - Power Purchase Agreement (PPA) - Whether the appellant was entitled to avail rebate of 2.5 % on the part payment of the monthly invoice within 5 business days from the date of the presentation of the monthly invoice. - Held that:- the appellant has illegally arrogated to itself the right to adjudicate by unilaterally assuming the jurisdiction not available to it. It was required to comply with Article 10 of the PPA which provides for Compensation Payment and Billing. We are also not able to accept the submission of Mr. Nariman that invoices could not be paid in full as they were only estimated invoices. It is true that reconciliation is to be done annually but the payment is to be made on monthly basis. This cannot even be disputed by the appellant in the face of its claim for rebate at the rate of 2.5% for having made part payment of the invoice amount within 5 days. We also do not find any merit in the submission that any prejudice has been caused to the appellant by the delayed submission of annual invoice by the respondents. The late payment clause only captures the principle that a person denied the benefit of money, that ought to have been paid on due dates should get compensated on the same basis as his bank would charge him for funds lent together with a deterrent of 0.5% in order to prevent delays. It is submitted by Mr. Salve and Mr. Bhushan that bankers of the respondents have applied quarterly compounding or monthly compounding for cash credits during different periods on the basis of RBI norms. Article 10.6 of the PPA has followed the norms of the bank. This can not be said to be unfair as the same principle would also apply to the appellants.
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