Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 28, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Revised Draft Model GST Law - Section / Chapter Wise
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Revised Draft IGST Law - Section / Chapter Wise
Income Tax
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Unexplained credit u/s 68 - gift of Indian Millennium Deposit ("IMD‟) bond - whether proceeds of India Millennium Deposit cash not be brought to tax in the hands of appellant by invoking provisions of Section 56(2)(v)? - Held No, the same is exempt - AT
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Diversion of Revenue at Source - Reducing the business income being the share of profit of one of the members of AOP of the assessee - the computation of profit and determination of taxable income is one aspect which is different from apportionment of profit / income between the AOP members - AT
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Agricultural income - assessee could not furnish any vital evidences to establish the genuineness of the agricultural income - additions confirmed - AT
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Reopening of assessment - The words of the statute are "reason to believe" and not "reason to suspect". There can be no manner of doubt that the words" reason to believe" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds - AT
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Late filing fee u/s. 234E while passing intimation u/s. 200A - intimation u/s. 200A has been processed prior to 1.6.2015 - levy of fee set aside - AT
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Disallowance on property tax - non running business - It is not necessary that after acquiring the right upon industrial plot the assessee should immediately construct the building and to start any another unit collateral to his object - claim of expenditure allowed - AT
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Addition of interest expenses - assessee has made payment to partners as per the Partnership Deed and within the limit prescribed u/s 40(b) - claim of interest expense allowed - AT
Customs
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Clearance of goods under DEEC Scheme - import of Fourspar powder - goods warehoused and on expiry of wrehousing period, the goods were instructed to be cleared - Denial of DEEC scheme not justified - AT
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Levy of SAD - DEPB Scheme - whether the goods imported by appellants availing exemption under Notification No.34/97 - Cus. dt.7.4.1997 can claim exemption from levy of special additional duty of customs under Notification No. 34/98-Cus. dated 13.06.98 without debiting the same to the DEPB Pass book - Held No - AT
Corporate Law
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HC allowed the reduction of the petitioner company’s share capital (Securities Premium Account) against the accumulated losses in the surplus/ (deficit) head of Reserves & Surplus of the petitioner company
Indian Laws
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Unaccounted deposits to attract 50% tax, 4 yr lock-in period - However, a higher 90 per cent tax and penalty could be imposed if assessees do not declare the unaccounted cash voluntarily.
Service Tax
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100% EOU - refund claim for un-utilised CENVAT credit - back office operations - product support services - refund allowed - AT
Central Excise
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CENVAT credit - power plant is situated outside the factory of the production and power plant - appellants are entitled for credit in respect of the inputs used in fabrication of captive power plant - AT
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Entitlement to interest - Appropriation of rebate sanctioned against the rebate sanctioned earlier erroneously - appellants are eligible for interest from the date of appropriation till the date of actual payment of the refund - AT
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Utilisation of CENVAT credit account - agriculture submersible pumps - The grievance of the department is that the excess amount paid by debiting CENVAT Credit amount, instead of availing the exemption, is recoverable from under Section 11D of CEA,1944 - demand is illegal - AT
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Emergence of fatty acid & wax in the manufacturing process of refining of oil to make it edible oil - Benefit of exemption under Notification No. 115/75-CE dated 30-04-1975 allowed - AT
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CENVAT credit - services received and used in the guest house/farm house, away from the factory during the period from October 2010 to May 2011 - credit allowed - AT
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CENVAT credit - renting of motor vehicle - input services - the interpretation of the lower authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated - credit allowed - AT
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Method of Valuation - once goods are covered by notification issued under Section 4A, then irrespective of any other consideration such as whether the supply is in wholesale or in retail, provisions of Section 4 are not applicable to such goods - AT
VAT
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Recovery of sales tax arrears - Public auction - property on equity mortgage - State has got priority over the Bank dues and in the light of the statutory provisions - HC
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Validity of assessment order - cross verification of the annexures of the buyer and the seller in the intranet website of the Department - completing the assessments on the above lines is wholly unreasonable and arbitrary - HC
Case Laws:
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Income Tax
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2016 (11) TMI 1189
Revision u/s 263 - Held that:- HC order confirmed[2016 (4) TMI 173 - BOMBAY HIGH COURT]. No reason to entertain this special leave petition, which is, accordingly, dismissed. Assessing Officer not only made enquiries, but satisfied himself with the assessee's replies furnished from time to time in support of its stand, thus order passed by him cannot be termed as erroneous insofar as it is prejudicial to the interest of the Revenue. The Commissioner of Income Tax was not, therefore, justified in invoking section 263 of the Act. - Decided in favour of assessee
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2016 (11) TMI 1187
Method of accounting - recognition of additional finance charges on cash basis - interest in relation to bad or doubtful debts - Held that:- Overdue charges can be charged to tax only on cash receipt basis and not on accrual basis - Decision in the case of Commissioner of Income Tax v. Annamalai Finance Limited, [2009 (11) TMI 11 - MADRAS HIGH COURT] and CIT v. Annamalai Finance Limited, [2004 (10) TMI 51 - MADRAS High Court ] - Decided in favor of assessee. Additional finance charges to tax under Section 43D - interest in relation to bad or doubtful debts - Held that:- Section 43D of the said Act, if a close look is given, is attracted to cases of Public Financial Institutions, Scheduled Banks, State Financial Corporations, State Industrial Investment Corporations or Public Companies, which charge interest in relation to bad or doubtful debts. It is not in dispute that the assessee before us is not a Schedule Bank or the State Financial Corporation or State Industrial Investment Corporation nor viz., a Public Financial Institution, as defined clearly in Section 4A of the Indian Companies Act, 1956. The assessee does not fall in any one of those categories specified. Consequently, the assessee's case does not fall within the sweep of clause (a) of Section 43D of the Income Tax Act, 1961.
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2016 (11) TMI 1185
Deduction u/S 80HHC on counter sales made to foreign tourists - Held that:- Substantial question of law which was framed by this court while admitting the appeal has been decided in Commissioner of Income Tax-I Versus M/s. Gem Plaza [2015 (3) TMI 1027 - RAJASTHAN HIGH COURT] wherein held that the counter sale to the foreign tourists against convertible foreign exchange in India, is eligible for deduction under section 80HHC of the Income Tax Act. Review application - no substantial question of law framed by this court pertaining to 'bogus purchases'- Held that:- As already observed by us, while admitting the appeal this court considered it appropriate to frame the substantial question of law, referred to above, vide order dt.21.03.2012 and no application was filed by the appellant at the later stage for framing of additional substantial question of law, of which reference has been made by us in the present order. Since the substantial question of law, which has been framed by this court, is no more res integra in the light of the judgment, referred to while disposing of the present appeal, we find no apparent error in the order passed by us dt.07.08.2015 which may call for entertaining the instant review application.
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2016 (11) TMI 1181
Unexplained gifts - Held that:- Despite ample opportunity being afforded and calling upon the assessee as to whether there was any occasion or celebration due to which the gift was given to the assessee from the donor in the past or in further the donor had given any such gift to this assessee at the same time in the absence of any blood relationship or even remote relationship why the gift was at all made, no satisfactory explanation came forward - Decided against assessee
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2016 (11) TMI 1162
Unexplained investment in Flat - joint ownership - Held that:- In view of the fact that the plea of joint co-owner of having paid the on-money out of cash available with M/s. Ashoka Buildcon Ltd. out of disclosure made before the Settlement Commission having been accepted to the extent of ₹ 56,10,000/-, no addition is merited in the hands of assessee as the assessee’s contribution is to the extent of 50% of ₹ 56,10,000/-. Further, the assessee claims that even the parking fees of ₹ 5 lakhs is funded out of cash available with M/s. Ashoka Buildcon Ltd. and in the totality of the above said facts and circumstances, we find merit in the claim of assessee as the Assessing Officer has failed to bring on record any evidence to the contrary. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 30,55,000/- being half share of ₹ 61,10,000/-. The ground of appeal raised by the assessee are thus, allowed.
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2016 (11) TMI 1161
Grant of registration under Section 12AA - charitable activity at the stage of commencement of institution - Held that:- The law is now well-settled that while granting the registration to the charitable institution or trust, if it is at the commencement stage, the powers of CIT, with whom the application is filed by such trust/institution, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature and this well established law is supported by the decisions relied upon the learned Authorised Representative and referred to in the earlier part of the order. It has already been observed that objects of trust, which are religious, are charitable in nature. Thus, assessee also fulfils such condition. The carrying of charitable activity at the stage of commencement of institution is not relevant to decide that whether such trust/ institution is entitled for registration. So long the objects of the trust are charitable in nature, registration cannot be refused, if the trust is genuine. Therefore, we find no material on record to justify the action of the CIT vide which the assessee trust has been refused for grant of registration. - Decided in favour of assessee.
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2016 (11) TMI 1160
Unexplained cash credit - addition u/s 68 - income from other sources - Held that:- We have observed that the ld CIT(A) while disposing the appeal of the assessee, instead of examining the gift from the angel of section 68 of the Act, examined the same under section 56 of the Act. The ld CIT(A) concluded that cousin sister did not fall under the category of ‘relative’ as per explanation attached with section 56(2) (v) and therefore the impugned gift is liable to be taxed under this section. As per our opinion the case of the assessee may fall under clause (vi) instead of clause (v) of sub section (2) of secion56. Since ld CIT(A) examined the case of assessee under section 56(2) (v) of the Act, without confronting the assessee hence we deem it appropriate to restore this part of ground to the file of ld CIT(A) to consider it afresh after giving the opportunity to the assessee and pass order in accordance with law. So far as, the cash deposit in United Bank of India & in HDFC Bank are concerned, the Revenue authority has not disputed the withdrawal of cash from her bank on earlier dates. The objection of Revenue is only that cash deposit varies at different occasions and frequent cash deposit itself establishing non-genuine character of the explanation offered. However, the contention of the assessee throughout the assessment proceedings and appellate stage was that, amount was withdrawn for the expenses to be incurred for marriage of her son. We think that there cannot be any evidence about the re-schedule of marriage, though there may be evidence of solemnisation of the marriage. Further, the objection of the Revenue is that if the amount was not utilized, whole amount of withdrawal should have been deposited immediately. Neither the AO nor the CIT (A) worked out the difference of amount withdrawn and the subsequent deposit. The grounds of addition on account of unexplained cash credit when the assessee has categorically pleaded that the cash was withdrawn for specific utilization and the same was deposited is based only on hypothetication of the Revenue authorities. Thus, the addition on account of cash credit is deleted.
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2016 (11) TMI 1156
Income from share transactions - business income or capital gain - Held that:- We find, the assessee continuously engaged in the buying and selling of shares and reflected the same as investment activity and not as stock-in-trade. The claim of the assessee was accepted by the Revenue Authorities in the AYs 2006-07 and 2007-08. AO disturbed the claim of the assessee in the year under consideration and treated the same as a business activity and taxed the gains under the head „income from profit and gains of business and profession‟. We have perused the orders of the Revenue Authorities cited before us with reference to the Circular No.6/2016 of the Board. Irrespective of the holding period, if the assessee treated the shares as stock-in-trade, the income arising on such shares would be treated as business income. In reverse, if the assessee treated the shares as an investment, the same should not be brought under the head "income from the business"- Decided in favour of assessee.
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2016 (11) TMI 1155
Disallowance of rent - rent has been paid by the assessee to the licensor under the head agreement of amenities - Held that:- The Licensor has confirmed the payment for extra amenities which has been produced. Further the TDS has also been deducted by the assessee to the tune of ₹ 19,250/- and the challan in this regard has also been produced. The licensor has also produced the affidavit confirming the transaction. The assessee / licensee has also produced the bank statement on record which lies. All these piece of evidences speaks about the payment to the tune of ₹ 55,000/- w.e.f December 2010 to December 2013. Thus we are of the view that the learned CIT(A) has wrongly appreciated the evidences produced before him but did not consider the relevant evidence on record, therefore we set aside the finding on this issue and allowed the payment of the rent on account of extra amenities for the period December 2010 to December 2013 - Decided in favour of assessee Disallowance of deferred revenue expenditure - whether the deferred revenue expense is required to be allowed or not? - Held that:- Matter of controversy has been adjudicated by the Hon’ble High Court of Bombay in case of Commissioner of Income Tax – 2, Mumbai V/s. Raymond Ltd. [2012 (4) TMI 127 - BOMBAY HIGH COURT] wherein it is specifically held that the preoperative expenses which are in nature of revenue is liable to be allowed in the interest of justice. In view of the said circumstances we are of the view that the learned CIT(A) has wrongly confirmed the order of Assessing Officer which is not liable to be sustainable in the eyes of law. In view of the above said law we are of the view that the CIT(A) has wrongly confirmed the order passed by the Assessing Officer, therefore, we direct the Assessing Officer to allow the deferred revenue expenses - Decided in favour of assessee Disallowance u/s.69C - All the negative cash balance was added to the income of the assessee u/s.69C - Held that:- The expenditure is in connection with the expenditure incurred by the employee of the assessee due to their exigency. All work and thereafter this expenditure was entered into the cash book without reimbursement to the said employees. However, after the reimbursement on record the entries were recorded in the account books. This contention was not discussed by the Assessing Officer as well as CIT(A). Therefore, in view of the said circumstances we are of the view that the expenditure to the tune of ₹ 58,635/- is required to be further examined in view of the accounts book / material available on record in accordance with law. Therefore, we set aside the finding of the CIT(A) on this issue and matter is hereby ordered to be restored to the Assessing Officer for re-examination of this issue by giving an opportunity of being heard to the assessee in accordance with law - Decided in favour of assessee for statistical purpose.
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2016 (11) TMI 1154
Addition on account of the income of the Goa unit assessed on the basis of the figure of the Murud unit:- Held that:- The Assessing Officer has admitted Gross Profit of 39% in Goa Resorts and 72% in Murud for the A.Y.2006-07 made u/s.143(3) of the Act. No plausible reasons have been placed on record by the Assessing Officer to which it can be assumed that in which circumstances the Gross Profit of Goa unit is not acceptable. All figures which have been mentioned in the assessment order speaks about the less profit of the Goa unit. In view of the said figures mentioned above, we are of the view that the Assessing Officer has wrongly assessed the gross / net profit of the Goa unit by comparing the profit of Murud unit. In view of the above said specific facts and circumstances, we are of the view that end of the justice would meet if the disallowance to be reduced to the extent of 50% of the above addition to the tune of ₹ 15,45,186/- Accordingly, we allow the same and the Assessing Officer is hereby directed to reduced the addition to the extent of 50% of the amount of ₹ 15,45,186/-. Accordingly, this issue has been partly allowed in favour of the assessee. Disallowance u/s.14A - Held that:- Assessing Officer did not go through the correctness of the claim. No satisfaction of any kind was recorded by the Assessing Officer. The assessee has shown the common expenses to all head of income. The provision of section 14A read with Rule 8D of the Act is applicable, therefore the CIT(A) has directed the Assessing Officer to re-compute the expenditure incurred to earn the exempt income in view of the provision contain in section 14A read with Rule 8D of the Act. We found no ground to interfere with the finding of the CIT(A), therefore, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which does not require to be interfere with at this appellate stage.
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2016 (11) TMI 1153
Assessment of income from mall operation - “income from house property” OR "business income" - Held that:- We notice that the assessee has constructed a shopping mall as per its objects for which it was incorporated and has derived income from running and maintaining the shopping mall. The activities carried on by the assessee, which are extracted above, would show that the assessee is carrying on the activities as its trading/commercial activity. As decided in PFH Mall & Retail management Vs. ITO (2007 (5) TMI 258 - ITAT CALCUTTA-A ) income from Mall operation is assessable as business income, since various services & facilities as well as other amenities similar to company’s operations are provided by the assessee. Further the activities are carried on continuously in an organized manner with a set purpose and with a view to earn profit. Thus we set aside the order passed by Ld CIT(A) on this issue and direct the AO to assess the income from Shopping Mall as business income. Disallowance made u/s 14A - Held that:- We are of the view that the claim of the assessee that the investment was made only of Share application money needs factual verification. Accordingly we restore this matter to the file of the AO with the direction to examine the factual aspects and decide this issue by following the decision rendered by the jurisdictional High Court in the case of HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY HIGH COURT). With regard to the disallowance to be made out of administrative expenses, we direct the AO to make disallowance on a reasonable basis, after considering the explanations of the assessee. The order passed by Ld CIT(A) on this issue is set aside accordingly. Disallowance of Service tax liability u/s 43B - Held that:- Since the claim of the assessee that the outstanding service tax liability has not accrued as on the last day of year, requires verification, we restore this issue to the file of the AO with the direction to examine the factual aspects and decide the issue by following the decision rendered by jurisdictional High Court in the case of Ovira Logistics P Ltd [2015 (4) TMI 684 - BOMBAY HIGH COURT]
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2016 (11) TMI 1152
Disallowance u/s.14A - Held that:- On appraisal of the order passed by the Assessing Officer we found nothing ambiguity for the application of the Rule 8D of the Act for calculation of the expenses to earn the exempt income. The Assessing Officer has assessed the expenditure in view of the facts and circumstances of the case wherein no specific expenditure has been shown to be explained to earn exempt income. Therefore, in the said circumstances the CIT(A) has rightly confirmed the order of the Assessing Officer on this issue which does not require to be interfere with at this appellate stage. Addition of income from other sources - Held that:- CIT(A) has raised the issue with regard to the ownership of the property and held that the property was owned by the firm therefore, on account of the sale of the said property the CIT(A) has treated the sale proceed as income from other sources. Anyhow, this issue has not been properly adjudicated on the basis of the ownership of the property. Utilization of land and sale of land is quite different. Accordingly the income of assessee is required to be assessed. It is not a case of double taxation when the income of the assessee was assessed on the basis of utilization and sale of land. Since the matter of controversy has not been adjudicated by the CIT(A) on the basis title, therefore, we set aside the finding of the CIT(A) in this regard and direct the Assessing Officer to decide this issue afresh in view of the said observations after giving an opportunity of being heard to the assessee in accordance with law. Accordingly, these issues are decided in favour of the assessee .
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2016 (11) TMI 1151
Allowability of deduction u/s 54 - calculation of holding period - Held that:- It is evident that the date of booking being the date where rights on the flat arose to the assessee and the same constitutes a starting date for calculating the holding period of the asset for the purpose of section 54 of the Act. Accordingly, in this case, the date 30.3.2005 should be the relevant date. AO is directed to compute the holding period accordingly. Benefit of self occupied property - Held that:- We are of the opinion that the assessee is, in principle, entitled for one self occupied property. The aspects relating to the merger of two flats into one requires detailed examination by the Assessing Officer. If the AO comes to the conclusion that the flats no.901 and 902 constitutes one functional residential unit, AO should decide accordingly and allow the entire property as self occupied property. Alternatively, if the merger of flats is not borne out of flats, assessee, in any case, is entitled to one of the two merger flats as self occupied flats. AO shall pass a speaking order on this issue after granting a reasonable opportunity of being heard to the assessee
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2016 (11) TMI 1150
TDS u/s 195 - Non deduction of tds on overseas commission - Held that:- It is not in dispute that the assessee paid the commission for the services rendered outside India which is not taxable in India. Therefore, the assessee is not under obligation to deduct the TDS u/s.40(a)(ia) of the Act. Accordingly this issue is decided in favour of the assessee.
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2016 (11) TMI 1149
Penalty levied u/s 271(1)(c) - Held that:- A.O. was not correct in coming to the conclusion that the assessee has concealed particulars of his income or furnished inaccurate particulars of income, as the undisclosed income determined by the A.O. based on the directions of the ITAT is on estimation basis. The ITAT has estimated the work in progress for the assessment year 2005-06 and re-apportioned the gross profit on equitable gross profit distribution method based on the assessee’s own book results. There is no factual difference in contract receipt admitted by the assessee and contract receipt determined by the A.O. from the MIMS project. Except preponement of recognition of revenue, there is no difference in income admitted by the assessee from the MIMS project, therefore, we are of the view that the A.O. was erred in levying penalty for concealment of particulars of income or furnished inaccurate particulars of income under the provisions of section 271(1)© of the Act, hence, we direct the A.O. to delete the penalty levied u/s 271(1)(c) of the Act for the assessment year 2003-04 to 2005-06.
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2016 (11) TMI 1148
Capital gains computation by adopting NAV @ ₹ 202 per share - balance amount taxable under unexplained income under the head ‘income from other sources’ - Held that:- On perusal of share purchase agreement dated 06-03- 2007 and 07-04-2007 will reveal that persuant to these agreement, the assessee and his family members have agreed to shift the offices of their companies and concerns from IBI house by 30-4-2007 , clause 4.6 of the agreement dated 06-3-2007(page 65/paper book). Nothing incriminating has been brought on record by the Revenue and conjectures and surmises has no place while computing and bringing to tax income of the tax-payer within the chargeability to tax under the provisions and scheme of the Act . The Revenue has also accepted the capital gains based on actual sale consideration in the case of Mr Satish Amritlal Shah while framing assessment u/s 143(3) of the Act for the assessment year 2007-08 in the hands of Mr Satish Amritlal Shah wherein the said Mr. Satish Amritlal Shah also sold 1665 equity shares of BEC Industrial Investment Company Private Limited to BAT Enterprises Limited @ ₹ 1195 per share vide share purchase agreement dated 06-03- 2007 . The Revenue has also accepted the purchase of equity shares of BEC Industrial Investment Company Private Limited @ ₹ 1195/- per share from the assessee and his family members vide share purchase agreement dated 06-03-2007 in the hands of BAT Enterprises Limited while framing assessment u/s 143(3) of the Act for the assessment year 2007-08 of BAT Enterprises Limited. The assessment orders are placed in the file w.r.t. Mr. Satish Amritlal Shah and BAT Enterprises Limited for the assessment year 2007-08. Thus no reasons to interfere in the working of capital gains furnished by the assessee computed in the manner by taking actual sale consideration @ ₹ 1195 per equity shares of BEC Industrial Investment Company Private Limited as full value of consideration as contemplated u/s. 48 of the Act. As such we set aside the orders of the ld. CIT(A) and the AO computing capital gains by adopting NAV @ ₹ 202 per share and bringing to tax balance amount of ₹ 20,25,720/- as unexplained income under the head ‘income from other sources’ which in our considered view cannot be sustained in the eyes of law. - Decided in favour of assessee
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2016 (11) TMI 1146
Disallowance of claim made u/s 80IB - Held that:- As in the case of assessee for Asst. Year 2004-05, we observe that the assessee should be allowed deduction u/s 80IB(10) even when the assessee is not the owner of the land but owns rights and responsibilities with the land owner puts the assessee as de facto owner of the land and development of the project is not merely of works contractors.
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2016 (11) TMI 1145
Levy of penalty u/s 221(1) - failure to pay due taxed before filing of the return - Held that:- In the case on hand, is that the assessee did not pay due taxed before filing of the return of income for A.Y. 2012-13; wherein the tax liability to be paid under section 140A(3) of the Act was determined by the assessee himself at ₹ 2,44,943/-. In the light of the submissions of the assessee put forth before the authorities below and the facts on record, we concur with the view of the learned CIT(A) that the assessee has failed to establish with any material evidence that it was due to circumstances beyond his control and due to financial crunch that he was prevented from paying the determined/admitted tax liability of ₹ 2,44,943/-. We also find that, as observed by the learned CIT(A), the AO had levied the said penalty only after issue of show cause notice, affording the assessee opportunity of being heard in the matter; which is in accordance with the procedure laid down in the Act. In our view, on an appreciation of the orders of the authorities below, we find that the assessee, except for putting forth claims, has failed to discharge the onus upon him to prove the existence of good and sufficient reasons that prevented him from paying the said taxes - levy of penalty confirmed.
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2016 (11) TMI 1144
Addition to income on assessment u/s 153A - abatement of assessment - Held that:- In the case where the assessment has abated, the Assessing Officer can make additions in the assessment, even if no incriminating has been found. But in other cases it is held that the assessment u/s. 153A can be made on the basis of the incriminating material which in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search. In the present case, the assessment had been completed under summary scheme u/s. 143(1) and time limit for issue of notice u/s. 143(2) expired before the date of search. Therefore, there was no assessment pending in this case and in such a case there was no assessment pending in this case and in such a case there was no question of abatement. On the other hand learned Departmental Representative could not counter or rebut the contentions raised by learned AR and learned Departmental Representative could not differentiate the Judgments cited and relied upon by learned AR. Therefore considering the factual position as well as settled legal position, we hold that the additions could be made only on the incriminating material found during search and since no incriminating material found during search therefore additions made were unsustainable in the eyes of law. Accordingly we delete the additions - Decided in favour of assessee
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2016 (11) TMI 1143
Penalty levied u/s.271(1)(c) - disallowing sub-brokerage payment - Held that:- Mere suspicions, surmises and 'no evidence' should not form basis for adjudicating any matter where strong evidence against the assessee is not available with the Revenue. In the instant case, the assessee has been able to substantiate its transactions with the payee parties and has also provided confirmations. The Revenue, on the other hand, has no evidence to substantiate its claim as regards the alleged dubiousness of the appellant's sub-brokerage expenses. In view of the above discussion, we do not find any merit for the penalty so imposed by AO.- Decided against revenue
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2016 (11) TMI 1125
Reopening of assessment - income under the head ‘Capital Gains’ arising from the relinquishment of tenancy rights - Held that:- Undisputedly, no new fact or information had come to the knowledge of the AO to form belief that the income in this case had escaped assessment. As noted above, the AO had formed the belief stating that on examination of records, it was observed by him that the assessee was not the tenant for which he had disclosed long term capital gains on account of compensation received for relinquishment of tenancy rights. However, it is also a fact on the file that specific queries were raised by the AO vide letter dated 07.09.06 regarding the tenancy rights of the assessee in the property and the assessee was asked to explain since when the property was in his possession as tenant and also to produce the copy of deed of relinquishment of tenancy rights. The assessee has also proved on the file that the factum of assessee being tenant in the property was not an afterthought version or a colourable device rather in the wealth tax return for the assessment year 1990-91 i.e. prior to the signing of the deed of relinquishment of right/development rights in the year 1995, the assessee was very much shown as a tenant in the property in question. The AO, during the original scrutiny assessment proceedings under section 143(3) of the Act, had thoroughly examined the issue, put the queries to the assessee and thereafter had allowed the claim of the assessee. Without any new fact or information coming into his knowledge and without stating any specific reason merely saying that from the records it is observed that the assessee was not tenant, in our view, is nothing but the change of opinion on the part of the AO. The reasons to believe must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding escapement of income. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". There can be no manner of doubt that the words" reason to believe" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. - Decided against revenue
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2016 (11) TMI 1124
Late filing fee u/s. 234E while passing intimation u/s. 200A - intimation u/s. 200A has been processed prior to 1.6.2015 - Held that:- Assessing Officer has exceeded his jurisdiction in levying fee under Section 234E while processing the statement and make adjustment under Section 200A of the Act. Therefore, the impugned intimation of the lower authorities levying fee under Section 234E of the Act cannot be sustained in law. However, it is made clear that it is open to the Assessing Officer to pass a separate order under Section 234E of the Act levying fee provided the limitation for such a levy has not expired. Accordingly, the intimation under Section 200A as confirmed by the CIT(Appeals) in sofar as levy of fee under Section 234E is set aside and fee levied is deleted. See case of M/s. Kash Realtors Pvt. Ltd & Others [2016 (8) TMI 63 - ITAT MUMBAI ]
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2016 (11) TMI 1123
Disallowance of notional interest - interest free loan given to wholly owned subsidiaries - Held that:- CIT(A) was of the correct view that the Assessing Officer has wrongly declined the interest on the interest free loan to APIC Ltd. for the A.Y.2001-02, 2002-03 and 2005-06 because the said loan was for the business purpose. Similarly the assessee company advanced interest free loan of ₹ 100,02,00,000/- to TIMI Ltd. so as to enable it to liquidate loans it had taken from its old shareholders. M/s. TIMI Ltd. was the owner of assessee’s corporate office and assessee had taken the office on rent. Assessee charged interest up to 10.09.2001, the date when TIMI Ltd. became its subsidiary to meet with the requirements of RBI regulations and when TIMI Ltd. became its subsidiary it stopped charging interest. The Assessing Officer disallowed the interest on account of interest free loan given to TIMI Ltd. to the tune of ₹ 10,00,20,000/- but the CIT(A) has allowed the same in view of the law settled by the Mumbai High Court in case CIT Vs. Reliance Utilities and Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT ] and Supreme Court in the case of S.A.Builders Ltd. V/s. CIT [2006 (12) TMI 82 - SUPREME COURT ] and Hero Cycles P. Ltd. Vs. Commissioner of Income Tax [2015 (11) TMI 1314 - SUPREME COURT OF INDIA]- Decided in favour of assessee Disallowance on property tax - non running business - Held that:- It is not in dispute that the assessee company can purchase the property for the business purpose. The important documents has been filed by the assessee company which lies at page 25 of the paper book in which the lesser MIDC has leased out the land to the lessee M/s. Asian Paints Ltd. and in view of the said receipt the assessee paid an amount of ₹ 60,87,581/- and assessee paid property tax to the tune of ₹ 60,87,581/- during the relevant assessment year which has been declined on the ground of that the assessee did not do the business. The receipt lies at page 25 of the paper book also speaks about the purpose in which the purpose has been written for factory. Moreover, the allotted land was in nature of industrial land in MIDC area, Turbhe, Navi Mumbai. It is not a case where new factory has been established by the assessee. The company of the assessee is old and acquired the industrial plot whose money, only property tax has been paid to the tune of ₹ 60,87,581/-. It is not necessary that after acquiring the right upon industrial plot the assessee should immediately construct the building and to start any another unit collateral to his object. The companies are working in accordance with its object. The incorporation date of the company is 29.12.1955. Thus Assessing Officer is hereby directed to allow the property tax for the relevant assessment year - Decided in favour of assessee
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2016 (11) TMI 1122
Contribution for common infrastructure facility in power evacuation - nature of expenditure - revenue or capital expenditure - Held that:- We have gone through the assessment order and noticed that at page 2 of the assessment order in Para 4.1 the assessee has made a claim regarding payment in respect to infrastructure facility of common power evacuation of ₹ 37.50 lacs to Suzlon Energy Ltd. We find that these facts are very much available on record of the AO as well as the CIT (A). The only issue which is to be considered is as to whether these facts need verification and the issue is to be set aside to the file of the AO. Hence, we admit the additional grounds of appeal and set aside the issue to the file of the AO for deciding the issue after allowing reasonable opportunity of being heard to the assessee. This issue of the assessee’s appeal is allowed for statistical purpose. Depreciation on civil work foundation and deprecation on erection of HT lines - Held that:- We are of the considered opinion that the civil work foundation, erection of HT Lines and Switchgear etc. are integral part of Windmill and it cannot be viewed separately from Plant & Machinery. Accordingly, we are in agreement with the arguments of the learned Counsel for the assessee that the civil work for foundation is integral part of the Plant & Machinery and it cannot be viewed separately from Plant & Machinery for which foundation is laid. Similarly, HT Lines and Switchgear etc. are also integral part of Windmill and hence, eligible for higher rate of depreciation i.e. rate applicable on Windmill. We direct the AO accordingly Addition of interest expenses disallowed - Held that:- We find that there is no dispute that the assessee had a Windmill installed in earlier year also and was producing power. Installation of Windmill in this year is only expansion of existing business and not a new business. It is also a fact that the loan taken from Shri V. R. Venketachalam of ₹ 5 Crores has been used for purchase of Windmill for expansion of business and hence, allowable as business expenditure u/s 36(1) (iii) of the Act. We are also of the view that the assessee has made payment to partners as per the Partnership Deed and within the limit prescribed u/s 40(b) of the Act. Hence, we delete the addition and allow this issue of the assessee’s appeal.
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2016 (11) TMI 1121
Unexplained credit u/s 68 - gift of Indian Millennium Deposit ("IMD‟) bond - whether proceeds of India Millennium Deposit cash not be brought to tax in the hands of appellant by invoking provisions of Section 56(2)(v)? - Held that:- We accept this gift as genuine because the identity and the creditworthiness of the donor have been established on record. The reason for making this gift is also stated and its genuinity stands proved. Entire evidences, which have been referred to above like the declaration of gift, affidavit of donor, direct letter sent to AO, statement on oath both of donor and the donee, proof of source of the draft with further evidence, inter alia, go to prove the claim of the assessee. Therefore, we delete the impugned addition and allow this appeal.Entire evidences, which have been referred to above like the declaration of gift, affidavit of donor, direct letter sent to AO, statement on oath both of donor and the donee, proof of source with further evidence, inter alia, go to prove the claim of the assessee. Therefore, we delete the impugned addition. Further, gift in question does not fall within the ambit of Section 56(2)(v) of the Act and same is exempt See case of Nilesh Jhaveri (HUF) [2016 (8) TMI 775 - ITAT MUMBAI ] - Decided in favour of assessee
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2016 (11) TMI 1120
Diversion of Revenue at Source - Reducing the business income being the share of profit of one of the members of AOP of the assessee - Held that:- Assessee has computed the profit of the AOP firm purely on commercial principles after deducting the cost of land and construction expenses from the amount of sales / revenue and accordingly net profit was shown under the head “Income from business” upon which deduction u/s 80IB(10) has been claimed. In our considered view, the computation of profit and determination of taxable income is one aspect which is different from apportionment of profit / income between the AOP members. It appears that Assessing Officer had mixed up these two independent actions which led to whole confusion and avoidable litigation. Thus, we find that the Tribunal had correctly appreciated the whole issue in the preceding years and the same has also got affirmation from the Hon’ble High Court. Thus, viewed from any angle, the action of the lower authorities in re-computing the income was not justified and, therefore, the same is hereby reversed. Interest on FDR received on account of the funds to be used by the proposed society - Held that:- here was no clarity on facts with regard to transferring of impugned Security Deposit amount to the Society by the assessee in entirety. In fact, from the arguments of the Ld. DR it transpires that this is the only objection left to be addressed as per final stand of the Revenue. Thus, in all fairness to both the parties, we find it appropriate to send this issue back to the Assessing Officer for verification of these facts. The assessee shall bring on record all requisite evidences to demonstrate that the impugned amounts received by way of deposits from the customers along with the amount of interest credited by the bank thereon have been transferred to the concerned Society. In case, any amount has been appropriated by the assessee in violation of the agreement or in violation of the regulations of MOFA, then corresponding amount of interest thereon can be brought to tax in the hands of the assessee. Thus, with these directions, this issue is sent back to the file of the Assessing Officer. The Assessing Officer shall give adequate opportunity of hearing to the assessee before deciding this ground afresh. Deduction u/s 80IB(10) - Held that:- CIT vs Sarkar Builders & Ors (2015 (5) TMI 555 - SUPREME COURT ) wherein it has been inter alia held that where housing project was sanctioned before the amendment but has been completed after April 1, 2005, when the amended provisions came into operation, the assessee would be entitled to deduction u/s 80IB (10) and conditions mentioned in clause (d) would not apply. It has been stated that assessee’s project was approved prior to the said date which has not been disputed by the Revenue. - Decided against revenue
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2016 (11) TMI 1119
Applicability of section 50C - Held that:- We are of the considered view that the ld. CIT(A) has rightly come to the conclusion that section 50C of the Act states that value assessed by stamp duty Valuation Authority shall for the purpose of section 48 be deemed to be full value of consideration received or accruing as a result of such transfer. Thus by deeming provisions, sale consideration shall be deemed to be as value assessed by stamp duty valuation authority. Ld. CIT(A) has also appreciated that the validity of this section 50C has already been upheld by Hon’ble High Courts including that of Hon’ble High Court of Madras and Hon’ble High Court of Bombay. Ld. CIT(A) has duly considered the submissions of assessee that section 50C is not applicable in the case of assessee and that the sale consideration shown in sale agreement should be accepted as true and fair consideration of the property. Thus we are of the considered view that the AO as well as CIT(A) were correct in applying section 50C in the facts and circumstances of the present case Nature of income - agricultural income - Held that:- CIT(A) while considering the said issue has granted sufficient time to the assessee to substantiate his arguments by supporting documentary evidence/proof but even inspite of availing opportunities the assessee could not furnish any vital evidences to establish the genuineness of the agricultural income. Therefore in absence of such evidences it cannot be held that the impugned income was an agricultural income. We have carefully gone through the orders passed by CIT(A) and found that the assessee has not produced any document in support of his arguments and no new circumstance has been brought on record before us in order to controvert or rebut the findings recorded by the learned CIT (A). Moreover, there are no reasons for us to deviate from the findings recorded by the learned CIT (A). Therefore, we are of the considered view that the findings recoded by the learned CIT (A) are judicious and are well reasoned.
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Customs
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2016 (11) TMI 1147
Confiscation of imported goods - second hand machine - requirement of licence for import and clearance of the same - Held that: - Even though the part of the second hand machine were imported at JNPT, Nahva Sheva and part imported at New Customs House, Mumbai Port that will not make both the consignment as separate consignment. In terms of Interpretation Rule 2(a), if complete machine is presented unassembled or disassembled, it has to be classified under classification of particular machine and not as parts. In the present case even though the second hand machine has been imported and cleared from two different ports but both consignments put together comprises of one second hand machine which in my view covered in this Rule 2(a) of General Rules for Interpretations therefore the present consignment has to be classified under classification of machine and not as a part, if it is so then no licence is required for clearance of such goods. The adjudicating authority in his findings has contended that since goods were imported at different port and different time therefore it has to be assessed differently in the form as presented at respective port. I do not agree with the Adjudicating authority on this point for the reason that irrespective whether it is imported at different date at different port but it is undisputed that both the consignment put together comprises of single machine and it is observed that in the present case common purchase order which is complete into two invoices, purchase order value as well as invoices value tallies, even the time of import also not much different because at Nhava Sheva the Bill of Entry was filed on 4/5/2006 and at New Custom House, Mumbai the present Bill of Entry was filed on 22/5/2006 therefore irrespective of fact that both the consignment were imported on different port at different time will not change the classification of a whole machine. Consignment in the present appeal is nothing but part and parcel of the machine as a whole and could not be classified and assessed as independent part hence no licence is required, accordingly confiscation is set aside. Appeal is allowed
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2016 (11) TMI 1141
Imposition of penalty u/s 112 of Customs Act - CHA - fraudulent activities - Held that: - there is no direct evidence on record showing that Unisons Clearing Pvt. Ltd. which is a CHA firm, was directly involved in the fraudulently activity of importers. The adjudicating authority has observed that neither importer knew the appellant nor the appellant has signed any document and it was only their employees who were creating the problem and the mischief. In the absence of any direct involvement of the appellant, showing that they were aiding and abetting and associated with the importer, the imposition of penalty upon by them cannot be sustained - penalties set aside - appeal allowed - decided in favor of assessee.
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2016 (11) TMI 1140
Mis-declaration of declared weight of cargo - confiscation of the imported goods - redemption fine and imposition of penalty - Held that: - It is also observed that the packing list mentions the carton weight and net weight. We do not find any infirmity in the impugned orders of the lower authorities. However, we find that there is no allegation of malafide on the part of the appellants. We find that in the facts and circumstances of the instant case, imposition of penalty is too harsh a measure. We, therefore set-aside the penalties imposed on the appellants - impugned orders are upheld with the above modification of penalty clause - appeal disposed off.
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2016 (11) TMI 1139
Demand of interest - N/N. 110/95 dt. 05.06.1995 - EPCG Scheme - non-fulfilment of export obligation within the stipulated time - Held that: - The learned Commissioner (Appeals) held that interest liability is unsustainable as time-barred, but the respondent has not cared to comply with the statutory obligation. The interest liability accrues from the date of duty liability. I also find from the decision relied by Revenue in the grounds of appeal in the case of NCS Sugars Ltd. Vs CC Visakhapatnam [2010 (10) TMI 301 - CESTAT, BANGALORE] holding that duty demanded cannot be claimed time-barred since the appellant had executed a bond undertaking to meet such liability in case of its failure to fulfill the conditions of the Notification No.43/02-Cus. dt.10.04.2002 therein - appeal allowed - decided in favor of Revenue.
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2016 (11) TMI 1138
Mis-declaration/suppression of imported goods - Slack Wax and Residue Wax - High Sea Sales - whether the ground that declared value does not reflect the transaction value and the value was grossly undervalued to evade Customs duty justified? - Held that: - I find that learned Commissioner (Appeals) after taking into overall facts and circumstances of the case has reduced the penalties imposed on the appellants which is reasonable and needs no further interference. The impugned order is upheld and both the appeals are dismissed.
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2016 (11) TMI 1137
Refund claim - principles of unjust enrichment - Held that: - it is not clear firstly the material cost shown as ₹ 23,535/-. No bifurcation of assessable value plus duty was given. Secondly no supporting of other elements such as freight, warranty spares, sales tax, dealer scheme, etc. was given. In the absence of any documentary evidence, it is difficult to ascertain whether the excess paid CVD for which refund was sought for is included in the price of the product or otherwise, which is necessary to establish whether the incidence of duty was passed on or otherwise. In this situation, the matter needs to be remanded to the original adjudicating authority. The appellant has to provide the supporting documentary evidence to the adjudicating authority who shall pass a denovo adjudication order after verification of the same - appeal allowed by way of remand.
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2016 (11) TMI 1136
Technology transfer agreement - valuation - royalty - related party transaction - Held that: - the assessable value can be enhanced under Customs Valuation Rules, 2007 only if any amount of royalty has been paid by the appellant to the Haver Germany as a condition of sale of goods imported. If no royalty is paid then the entire exercise of determining the includability or otherwise of the royalty become infructuous. Considering the assertion of the learned Counsel that no royalty whatsoever has been paid, we set aside the impugned order and direct the finalization of assessment after due verification of the facts. If for any reason it is found that any royalty has been paid by the appellant to Haver Germany, the Revenue is free to approach the Tribunal for relief - appeal disposed off.
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2016 (11) TMI 1117
Levy of SAD - DEPB Scheme - whether the goods imported by appellants availing exemption under Notification No.34/97 - Cus. dt.7.4.1997 can claim exemption from levy of special additional duty of customs under Notification No. 34/98-Cus. dated 13.06.98 without debiting the same to the DEPB Pass book and without fulfilling condition prescribed by Para 2 of the Notification No.34/97 when claim of exemption is made under Sl.No.13 of the Notification No.34/98? - Held that: - nonfulfillment of three conditions prescribed by para-2 of the N/N. 34/97-Cus. Dt.7.4.1997 denies the grant of N/N. 34/98-Cus. Dated 13.7.98. It may be stated that the phrase “subject to the conditions, if any, specified in the said notification in relation to such goods: - appearing under Sl.No.13 of the N/N. 34/98-Cus. dated 13.7.1998 is neither surplusage nor otios. Grant of exemption from special additional duty of customs was permitted debiting the duty element in DEPB Pass Book. The Circular No.49/98.Cus. dated 20.7.1998 issued by CBE&C explained the position more elaborately and manner of debit entry is explained therein by a mathematical example In absence of any logical reason shown by appellant, its plea that the phrase “subject to the conditions if any, specified in the said Notifications in relation to such goods:” appearing under Sl.No.13 of the Table appended to the Notification No.34/98 was redundant or surplusage, is misconceived. The conditions of notification No.34/97 applies The grant of N/N. 34/98-Cus. Dated 13.6.98 being subject to the conditions of N/N. 34/97-Cus dated 7.4.97, both the appeals fail.
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2016 (11) TMI 1116
Clearance of goods under DEEC Scheme - import of Fourspar powder - goods warehoused and on expiry of wrehousing period, the goods were instructed to be cleared - denial of DEEC scheme - Held that: - reliance placed on the decision of the case of the case of M/s. KLJ Plastics Limited vs. Commissioner of Customs, Chennai [1999 (11) TMI 286 - CEGAT, MADRAS] where it was held that the DEEC scheme does not disentitle them from its benefit merely because bond period has expired. The DEEC scheme and the provisions relating to storage of goods under Customs Bond are originating from two different statutes and are independent of each other. The DEEC scheme cannot be used to override the provisions of Customs Act, 1962, with respect to expiry of bond period. Though an advance licence issued after bonding of goods could be used to de-bond them, as per para 7.17 of the Hand Book ibid, the EXIM policy nowhere says that this could be done even after the Bonding period has expired. Therefore, that situation is to be dealt with only under the provisions of Customs Act, 1962. Denial of DEEC scheme not justified - appeal dismissed - decided against appellant.
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Corporate Laws
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2016 (11) TMI 1165
Enhancement of time for repayment u/s 74 - rights of the applicants to seek recovery of their dues - Held that:- Seeing the sentiments of the agitated depositors, and with a view to secure whatever asset could be salvaged, this Bench has accepted the Undertaking of the respondents that the six parcels of land in Kochi, Hyderabad, Chennai and Maharashtra offered in the present proceedings would be sold, and the proceeds would be deposited in IDBI Bank, A/c No. 0110102000026309 maintained with IDBI Bank Limited at E-29, PVR Road, Saket, New Delhi-110017 and shall be used only to liquidate the liability towards the present applicants. This would be without prejudice to the rights of the applicants to seek recovery of their dues from any other tangible assets of the R1 Company or take recourse to any other remedy available under law. It is being made abundantly clear that the Undertaking given by the respondents to liquidate the assets would in no way be their defence in the prosecution initiated under section 74(3) of the Companies Act, 2013 or in any other Court of law. As observed earlier during the proceedings, that though the parcels of land offered are mere sops which are either of little value or are unsaleable, but have been taken to secure and salvage the depositors' interest at least to that extent. The agitated depositors also apprehend that the directors of R1 Company may escape the boundaries of the country and they may have little to realise their hard earned money. The office of the ROC may take appropriate steps. Though tardy, prosecution under section 74 (3) of the is stated to have started. Respondents have submitted, as directed, the photocopies of their passports. In addition, they have filed their Affidavits giving their individual assets and the statements of their JVs, Subsidiaries and Associates. It was observed in some financial statements on record that some of the alleged loans to the subsidiaries etc. had been written off. It would be beyond the scope of this Bench to look into this aspect. The documents submitted shall be handed over to the RoC to investigate the allegations of siphoning off or diverting money on account of which the applicants are unable to retrieve their deposits. All documents be handed over by the Bench Officer to the office of the RoC under acknowledgement of Receipt.
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2016 (11) TMI 1134
Reduction of the share premium account - special resolution passed by the requisite majority of its equity shareholders - Held that:- From the facts of the case on record it is quite clear that the adjustment of the consolidated loss of the petitioner company as on 31-3-2015 as against the surplus in its Securities Premium Account also as on 31-3-2015 will not cause any prejudice to any creditor of the company or entail reduction in the value of its shares. The decision to adjust the consolidated loss with surplus/ (deficit) in Securities Premium Account is purely a commercial decision with the approval by the Shareholders with the required majority by way of a special resolution. It is in consonance with the Articles of Association of the petitioner company. There is no outflow of any fund or assets of the petitioner company nor any disability resultantly obtains to the company’s working in its day to day business, or otherwise, from the reduction of the share capital) (securities premium account). The adjustment sought by the petitioner company only facilitates reflecting of the correct financial statement of the affairs of the company to its benefit in the market place. Consequently, we allow this petition and confirm the reduction of the petitioner company’s share capital (Securities Premium Account) against the accumulated losses in the surplus/ (deficit) head of Reserves & Surplus of the petitioner company in terms of the special resolution passed by the requisite majority of the equity shareholders of the petitioner company through postal ballot and e-voting on 16-1-2016. I would also approve the form of Minutes under Section 103(1) of the Act of 1956 as set out in para 20 of the petition which is proposed to file with the ROC (Jaipur). The procedure prescribed in Section 101(2) of the Act of 1956 is dispensed with as also is dispensed with is the formalities of the words "And Reduced" while describing capital structure of petitioner company while confirming the approved reduction of share capital (Securities Premium Account).
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PMLA
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2016 (11) TMI 1114
Refund claim - interest on delayed payment - Held that:- We are of the opinion that the sum of ₹ 10,00,000/- has been refunded to the petitioner during the pendency of this writ petition. The order passed by the Appellate Tribunal clearly records at para 14 that no penalty could have been imposed on the Bank. The penalty imposed on the Bank has been set aside. Once that penalty has been set aside, then, if no further proceedings were initiated by the respondents, the amount paid by the petitioner's predecessor should have been refunded to the petitioner within a reasonable time. That was not refunded, forcing the petitioner to file a writ petition. Even if we do not agree with Mr. Patil that the employees were parties to the Bank's Appeal and therefore the direction of the Appellate Tribunal must enure to the benefit of these officers, still, we find that the Union of India took considerable time to refund the amount of ₹ 10,00,000/-. That should have been done within a reasonable time. To that extent, there is merit in the submission of Mr. Patil that if that amount was not refundable at all and on the grounds now urged, namely, unjust enrichment, then, there was no occasion for the respondents to have honoured the Tribunal's order after such a considerable delay. The fact that ₹ 10,00,000/- have been refunded and in terms of the submissions made in para 7 of the affidavit in reply, then, the defence of unjust enrichment and the principle in that behalf is not applicable, nor the same has been invoked by the respondents. The steps to refund the amount of ₹ 10,00,000/- in pursuance of the Tribunal's order passed as early as on 21-12-2010 having been taken belatedly and lawful and legitimate sum or demand was held back, that we are of the opinion that principles of equity, fairness and justice would be served if we direct the respondents to pay interest on this sum of ₹ 10,00,000/- at the rate of 8% p.a. from 1-3-2015 till actual payment/realisation. The amount of interest at such rate be computed and the same be released in favour of the petitioner as expeditiously as possible and within a period of six weeks from the date of receipt of a copy of this order
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Service Tax
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2016 (11) TMI 1159
Cenvat credit - process of heat treatment - job work - as the appellants are clearing their final product on payment of service tax as also without payment of service tax, they are entitled to use only 20% of the credit so availed - whether the only objection of the Revenue is the appellants should not have taken the Cenvat credit on its own and should have filed refund claim, justified? - Held that: - From the letter dtd. 30.06.09, I find that a proper intimation was given to the Asstt. Commissioner and the said letter also discloses the discussion between the appellant and the Asstt. Commissioner. It is also written in the said letter that Asstt. Commissioner was kind enough to permit the appellants to take the credit. Revenue is not disputing that the said letter was filed by the appellants. If that be so, the permission of the Asstt. Commissioner is deemed to have been granted during the personal discussion between the appellant and the Asstt. Commissioner. I find no reasons to direct the appellants to deposit any part of demand or the penalty imposed - I have already held the Asstt. Commissioner having granted the permission during discussion amounts to grant of permission by the Revenue for claiming the refund. In any case, taking of credit back on deposit of tax amount in cash is only a book adjustment and Revenue is not disputing that such re-credit was available to the appellants otherwise on merits - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1158
Demand - GTA service - Rule 2(d) of Service Tax Rules 1994 - Held that: - the person who pays or liable to pay freight either himself or through his agent for the transportation of such goods, and satisfy the conditions prescribed in (a) to (g) of Clause (v), are liable to discharge the Service Tax. In the present case, there is no dispute of the fact that the freight charge was initially paid by the consignor but later recovered it from the appellant by issuing debit note - the liability rests on the consignors as they had discharged the freight charges. In the result, I do not find any merit in the impugned order - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1157
Levy of penalty - service tax not discharged in time - BAS - Non-registration of appellant - Held that: - reliance placed on the decision of the case of the case of CCE&ST LTU, Bangalore Vs. Addecco Flexione Workforce Solutions Ltd. [2011 (9) TMI 114 - KARNATAKA HIGH COURT] where it was held that The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid. The imposition of penalty in the present case is unsustainable - appeal allowed - decided in the favor of appellant.
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2016 (11) TMI 1142
Demand - whether the appellant is eligible for cum-tax benefit - TV/Radio programme production service - Section 73(3) of the Finance Act, 1994 - Held that: - On perusal of the ledger account produced by the appellant and comparing with the invoices, it is noted that the appellant has received amount as stated in the invoices. This reveals that the appellant has not collected any separate amount as service tax. Therefore the case of the appellant that the amount collected included the service tax portion also needs 'to be analysed. view thereof} the matter needs to be remanded to the original authority to consider the issue whether the appellant is eligible for cum-tax benefit on the three invoices referred above. The appellant is at liberty to furnish any further evidence to establish his case which shall be considered by the adjudicating authority. the result, impugned order is set aside and remanded for denovo adjudication - appeal allowed by way of remand.
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2016 (11) TMI 1118
100% EOU - refund claim for un-utilised CENVAT credit - back office operations - product support - technology infrastructure and design services - alleged input services do not have nexus with the output services - Held that: - reliance placed on the decision of the case of M/s Reliance Industries Ltd [2016 (8) TMI 123 - CESTAT MUMBAI] where it was held that all these services are eligible for credit. Therefore, the rejection of refund on the ground that the input services do not have nexus with the output service, is not legal or proper. The second ground for rejection is that the appellant has not established one-to-one correlation with the input services and the exports. The Board vide letter DOF.No.334/1/2012-TRU, dated 16-03- 2012 has stated and clarified that the new scheme of refund does not require the correlation between exports and input services used in such exports. The rejection of refund is unjustifiable - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (11) TMI 1179
CENVAT credit - M.S. Channels, Beams, Joists, Rounds, Seats, Angles, Plates, etc. - whether denial of credit on the ground that these items were used for the fabrication or manufacture of items, which have become immovable structures, justified? - Held that: - The Tribunal in a recent case of the M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI] held that the structural items used in the fabrication of support structures would qualify to be considered as parts of relevant machinery and fall within the ambit of capital goods in terms of Rule 2(a) of the Cenvat Credit Rules, 2004. The amendment carried out in Rule 2(a) to exclude cement, angles, channels, CTD, TMT bars and other items used for construction of factory sheds, building, or laying of foundation or making of structures for support of capital goods cannot be held to be retrospective. Time bar - Held that: - the issue involved in the present dispute is one of interpretation of the provisions of Cenvat Credit Rules and various other legal principles. Admittedly, certain contrary views have been taken by the various judicial bodies. In such situation, we find that invoking longer period of demand on the ground of fraud, suppression, willful misstatement, etc. is not tenable. Hence, on the question of time bar also, the present demand is not sustainable. Denial of credit not sustainable - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1178
CENVAT credit - outward transportation of spare parts - whether the denial of CENVAT credit on the ground that the services of outward transportation does not qualify as an input service in terms of Rule 2(l)(ii) of CCR, 2004 as the same is not used directly or indirectly in or in relation to the manufacture of final products, justified? - Held that: - Cenvat credit on outward transportation has been rightly availed by the appellants in terms of Board s Circular No. 97/8/2007-S.T. dated 23.8.2007, once the conditions in the aforesaid Circular are satisfied, credit on outward transportation is to be allowed - reliance placed on the decision of the case of Commissioner of C.Ex., Rohtak vs. Haryana Sheet Glass Ltd. [2013 (10) TMI 1163 - PUNJAB & HARYANA HIGH COURT] where it was held that in view of Circular No. 97/6/2007-ST, dated 23-8-2007, credit is admissible if ownership of goods remain with seller till delivery of goods at customer’s doorstep – since sales is based on basis of “FOR destination”, transit insurance and freight charges are borne by appellant, so credit is admissible on outward freight. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1177
Levy of duty - Manufacture - complete food tray as served to the passengers on board the aircraft - Held that: - the issue is squarely covered by the decision of this Bench in the case of Taj Sats Air Catering Ltd. Vs. CCE, Delhi-II [2016 (3) TMI 777 - CESTAT NEW DELHI] where it was held that Out of Food preparations as contained in the food tray served to the passengers on board, admittedly, the appellants did prepare dal, roti, rice, curry etc. and supplied the same in trays and bowls covered with aluminium foil. However, these are not the items on which Central Excise duty is sought to be demanded. The Central Excise duty was said to be demanded on the full value of the final complete food tray as served to the passengers on board the aircraft. There is nothing in the impugned order which will substantiate and support the claim of the Revenue on the taxability of such complete food tray on whole value. As such we find that the demand is not sustainable on this ground. Excise duty not leviable - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1176
Rectification of mistake - Section 35C (2) of the Central Excise Act, 1944 - Held that: - we do not find any error, much less any error apparent from records. The Tribunal has only very limited power to rectify any mistake apparent from the records under the provisions of Section 35C (2) of the Central Excise Act, 1944. The Tribunal does not have any powers of Review - power to rectify a mistake should be exercised when the mistake is a patent one and should be quite obvious. A different view cannot be taken in an ROM application which would amount to review / recall of the earlier order and substitute it by a different order, which could not be done by way of ROM application - ROM application not maintainable - dismissed.
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2016 (11) TMI 1175
CENVAT credit - availment of credit of service tax paid on the construction services availed by M/s. Tech textile, 100% EOU, is not available to the assessee and as such, they are required to return the same back - Held that: - Though the construction services have been held to be a Cenvitable service but it is the construction of the manufacturer s own factory premises which would be Cenvitable for him and not the construction of another unit, which may be belonging to the same group of industries. The fact that the appellant s account and the 100% units accounts are being maintained under a common balance sheet would not change the scenario in as much as the input service definition includes those inputs which are used by the manufacturer in or in relation to the manufacturer and in relation to their own final product. The 100% unit was a separately registered unit, there is a separate set of procedure required to be followed by a 100% EOU. Time bar - Held that: - the credit availed related to their 100% EOU was not declared by the appellant and came in the knowledge of the department at the time of scrutiny of the ER-1 filed by them. The fact that ER-1 is required to be filed on quarterly basis and the said fact has come to the notice of the Revenue while scrutinizing ER-1 return, even the issuance of show cause notice in 2013 is not justified. As the facts are not clear, I deem it fit to remand the matter to the original Adjudicating Authority for deciding the issue on limitation after examining all the documentary evidence including the ER-1 and after affording an opportunity to hear the assesee. It may be mentioned that the said issue of limitation has not been adverted to by the undersigned and the assessee is within his rights to contest the same before the Adjudicating Authority - appeal disposed off by way of remand.
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2016 (11) TMI 1174
Maintainability of appeal - amount involved is ₹ 58,862/- only - second proviso to Section 35B of the Central Excise Act, 1944 - Held that: - this is a fit case to invoke the provisions of Section 35B of the Central Excise Act, 1944 and dismiss the appeal on the said ground, leaving the issues open - appeal dismissed as not maintainable.
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2016 (11) TMI 1173
Pre-deposit - Section 35F (iii) - Maintainability of appeal - Held that: - as clarity in this respect was lacking, according to the appellants, and it was set to rest only recently by the decision in ASR Multimetral Pvt. Limited [2016 (10) TMI 946 - CESTAT AHMEDABAD], we find it would be fair to grant liberty to the appellants to make the payment of 10% within two weeks from the date of receipt of this order and submit proof of the same to the Registry, in which case the appeals will stand restored - appeal not maintainable and is disposed off.
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2016 (11) TMI 1172
Clandestine removal of goods - Held that: - billty books and challans resumed from transporter M/s BFC are not relied for issue of show cause notice and it is claimed by Revenue that Annexure-A to the show cause notice was prepared on the basis of billty books and challans resumed from transporter. Annexure-A indicates that 9403 number of bags of Gutkha were cleared through M/s BFC in the guise of Pashu Ahaar. The statements as stated above of the witnesses which were dealing with goods in BFC have categorically stated during their cross-examination that Gutkha was never booked in the guise of Pashu Ahaar. Therefore, we hold that there is no evidences to establish that 9403 bags of Gutkha was manufactured by M/s P & J Aromatics - We hold that Revenue could not establish that on the basis of information given by Railway Authorities, M/s P & J Aromatics manufactured 40553 bags of Gutkha and cleared the same without payment of duty. We also find that Raw materials cannot be confiscated under Rule 25 of Central Excise Rules, 2002. We therefore, modify the impugned Order-in-Original by setting aside the confirmation of demand of ₹ 13,06,19,045/- and setting aside the penalty of ₹ 13,06,19,045/- and setting aside the order for recovery of interest on ₹ 13,06,19,045/- and setting aside the penalty of ₹ 50 lakh on Shri Praveen Kumar Singhal and setting aside penalty of ₹ 20 lakh on Shri Yogendra Kumar Singhal and setting aside the confiscation of 31.6kg and 1282.4kg of Jeet brand lamination and confiscation of Jeet brand lamination and outer valued of ₹ 7,61,875/- and HDPE outer valued at ₹ 9,600/- and confiscation of 6417kgs of Jeet brand lamination & outer valued at ₹ 8,39,500/-. Appeal partly allowed - decided in favor of appellant.
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2016 (11) TMI 1171
Demand - Oxygen gas which is supplied for industrial as well as medical purpose - whether the Appellant has availed CENVAT Credit on inputs viz. valves used in the oxygen cylinders cleared to industrial consumers and for medical purposes? - Held that: - It is not in dispute that oxygen cleared to industrial consumer is dutiable and for medical purposes is exempted from payment of duty. I find that even though a Chartered Engineer’s certificate has been enclosed with their reply to the Show Cause Notice claiming that the CENVAT Credit on valves used in cylinders carrying oxygen for medical purposes, but the same has not been considered by the authorities below. Therefore, it is prudent to remand the matter to the Adjudicating authority for verification of all evidences produced by the Appellant - appeal allowed by way of remand.
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2016 (11) TMI 1170
CENVAT credit - rent paid in maintenance of their guest house - input services - Held that: - providing of service at guest house cannot be considered to be an input service and eligible to CENVAT Credit in view of the judgment of Hon'ble Gujarat High Court in the case of CCE Vs Gujarat Heavy Chemicals Ltd [2011 (5) TMI 132 - GUJARAT HIGH COURT]. However, I find that while imposing penalty under Rule 15(2) of CCR,2004 both the authorities below had not allowed the option to discharge 25% of the penalty subject to fulfillment of the conditions laid down under Sec.11AC of CEA,1944. Thus, the Appellant are entitled to discharge 25% of the penalty imposed on them, subject to fulfillment of conditions laid down under Sec.11AC of CEA,1944 in view of the decision of the Honble Gujrat High Court in the case of CCE Vs Harish Silk Mills [2010 (2) TMI 494 - GUJARAT HIGH COURT]. The matter is accordingly remanded to the Adjudicating Authority to ascertain the eligibility to pay 25% penalty - appeal allowed - matter on remand.
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2016 (11) TMI 1169
CENVAT credit - garden maintenance service - Held that: - I find that the issue is covered by the decision of Hon'ble Madras High Court in the case of Rane Trw Steering Systems Ltd [2015 (4) TMI 704 - MADRAS HIGH COURT], where the credit was allowed - Consequently, the impugned order being devoid of merit, accordingly is set aside and the appeal is allowed with consequential relief, if any, as per law.
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2016 (11) TMI 1168
Demand of differential duty - Capital goods cleared as such - whether on clearance of the capital goods after being put to use for more than six years, the CENVAT credit availed at the time of its receipt, should be reversed or the duty on the depreciated value of the capital goods as on the date of clearance from the factory be required to be paid? - Held that: - the CBEC Circulars issued from time to time, clarified that the depreciated value be considered for recovery of the CENVAT credit on the clearance of the capital goods, after being put to use - the matter needs to be remanded to the adjudicating authority to re-determine the quantum of credit required to reversed in the light of Board’s Circular. Period of limitation - Held that: - The aspect of limitation though considered by adjudicating authority but not addressed by the Ld. Commissioner (Appeals) in the impugned order. On a query from the bench about the claim of the respondent that whether they have disclosed all the facts to the department, the ld. Consultant for Respondent submits they may be allowed a chance to place necessary evidences during the remand proceeding before the adjudicating authority and requested that all issues be kept open. Appeal allowed by way of remand.
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2016 (11) TMI 1167
CENVAT credit - input services - various Insurance services - Held that: - I find that undisputedly the insurance policies have been taken by the Appellant in relation to stock of raw materials, semi-finished goods/finished goods, packing material, consumables as is evident from the policies enclosed as Annexure ‘A’ to the present appeal memorandum. The said policies are availed by the Appellant has a definite nexus with business of manufacture of finished goods. I find the same view has been expressed by the Tribunal in the aforesaid two judgments cited by the learned Advocate for the Appellant. In the result, the impugned Order is devoid of merit - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1166
CENVAT credit - various input services - Held that: - I find that these services on which the CENVAT Credit had been denied to the Appellant, are considered by this Tribunal in various judgments, also in the judgment of Hon'ble Bombay High Court in Ultratech Cement Ltd case [2010 (10) TMI 13 - BOMBAY HIGH COURT] and Hon'ble Gujarat High Court in Cadila Healthcare Ltd case [2013 (1) TMI 304 - GUJARAT HIGH COURT], and decided in favour of the Assessee, observing that all these services viz. Environmental Consultancy charges, Third Party Safety charges, Energy Audit Report charges had nexus with the manufacturing activity, accordingly satisfy the definition of input service as prescribed under Rule 2(l) of CENVAT Credit Rules, 2004. Also, the charges relating to Annual Subscription to Sugar Manufacturers’ Association has been allowed by this Tribunal in the case of Shree Sayan Vibhag Sahakari Udyog Mandli Ltd Vs. CCE [2016 (11) TMI 1070 - CESTAT AHMEDABAD]. Thus, the impugned order is set aside being devoid of merit - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1164
MODVAT credit - credit lying unutilized in DTA units on the date of conversion of the unit into an EOU - Circular No. 77/99-Cus dt. 18/11/1999 - Held that: - The issue that poses for consideration is no longer res integra as pointed out by the learned counsel for the appellant. In the case of Sun Pharmaceuticals India Ltd. Vs. CCE, Pondicherry [2009 (5) TMI 849 - CESTAT CHENNAI], the Tribunal has held that It is clarified that if the DTA unit has availed of the modvat credit on plant, machinery and equipment and also utilized such credit for payment of duty on goods manufactured and cleared before its conversion into EOU/EHTP/STP, the same is not required to be demanded on its conversion into EOU/EHTP/STP. However, if the Modvat credit so availed of is lying in balance flux: as unutilized on the date of conversion into EOU/EHTP/STP, it would lapse on conversion of DTA unit into EOU/EHTP/STP unit and cannot be utilized after such conversion. Appeal dismissed - decided against Department.
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2016 (11) TMI 1163
Benefit of N/N. 14/2002-CE dated 01.03.2002 - Man made Processed Knitted Fabrics classifiable under Tariff sub Heading No. 6002.93 of Central Excise Tariff Act, 1985 - Held that: - in this case benefit of exemption Notification have been denied on the premises that as per Notification No. 14/2002-CE, the exemption is available on production of documents evidencing payment of duty thereon, but as per explanation to the exemption notifications creates a legal fiction, specifying that for the purpose of conditions of this notification, textile yarn or fabrics shall be deemed to have been duty paid even in the absence of production of documents evidencing payment of duty thereon, as no duty is payable on Textile Fabric. Therefore, the appellant is not required to produce duty paying documents - reliance placed on the decision of the case of M/s Sports & Leisure Apparel Ltd. [2016 (8) TMI 128 - SUPREME COURT] where it was held that when Explanation II states that the duty shall be deemed to have been paid even without production of documents evidencing payment of duty thereon, it was clearly meant that no duty was required to be paid by the manufacturers of knitted garments. Such an intention is clearly reflected in the Government's own Budgetary Notes extracted above. We, thus, hold that Explanation II to the said exemption Notification Nos. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion. The appellant is not required to produce the evidence payment of duty on Textile Fabrication and benefit of Notification No. 14/2002-CE is available to the appellants. - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1135
Recovery of duty with interest - SSI exemption - wrongful availment of benefit of N/N. 8/2001-CE, dt.01.03.2001, 8/2002-CE, dt.01.04.2002, and 8/2003-CE, dt.01.04.2003 by not including the value of another unit viz. M/s Ridhi Sidhi Enterprises, which has been situated in the same premises being one and the same unit - Held that: - the learned Commissioner (Appeals) mostly took shelter of the case laws in forming an opinion and the evidences collected by the Revenue in the form of statements and other financial documents, have not been analysed/examined to ascertain whether there is an inter se relationship between the two units, their financial transactions, day to day management etc. In the result, we are of the opinion that the impugned order cannot be sustained. Accordingly, we set aside the impugned order and remand the case to the learned Commissioner (Appeals), to re-assess the evidences as brought out on record and also referred to specifically in the grounds of appeal and thereafter apply the principle of law to the said evidences while considering the eligibility of SSI exemption Notification No.8/2003-CE, dt.01.03.2003 to the Respondent - appeal allowed by way of remand.
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2016 (11) TMI 1131
CENVAT credit - strips, angles, channels, plates, beam etc - whether the denial of cenvat credit on the ground that power plant is situated outside the factory of the production and power plant, Induction Furnace etc. are immovable properties and are not goods, justified? - Held that: - reliance placed on the appellant's own case HIRA POWER & STEEL LTD. Versus COMMISSIONER OF C. EX., RAIPUR [2008 (3) TMI 225 - CESTAT NEW DELHI] where the benefit, in the same set of facts, was allowed for the inputs used in fabrication of captive power plant situated adjacent to the factory of production. It was observed by the Tribunal that the appellant submitted the revised site plan and are entitled for credit in respect of inputs used in fabrication of power plant. Therefore, the appellants are entitled for credit in respect of the inputs used in fabrication of captive power plant. Regarding the issue related to angles, channels, plates used for fabrication of various capital goods, it appears that the issue is squarely covered by the decision of the Tribunal in the case of SKS Ispat and Power Ltd. vs. CCE, Raipur [2016 (10) TMI 479 - CESTAT NEW DELHI]. The issue regarding dumper and parts thereof, the assessee is using dumper for raw material handling and transportation of raw material within the plant. The dumpers are owned by the appellant. In the case of M/s Aditya Cement vs. CCE, Jaipur [2016 (9) TMI 1127 - CESTAT NEW DELHI] the issue was decided in favour of the assessee. CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1130
Utilisation of CENVAT credit account - agriculture submersible pumps - Held that: - There is no dispute of the fact that the entire amount collected has been deposited with the Dept,.albeit by debiting their CENVAT Credit account and the said fact has been acknowledged in the show cause Notice as well as in the impugned order. The grievance of the department is that the excess amount paid by debiting CENVAT Credit amount, instead of availing the exemption, is recoverable from under Section 11D of CEA,1944. As submitted by the Ld. Advocate, the issue is squarely covered by the judgment of Hon’ble Rajasthan High Court in the case of UOI Vs Shivam Metals [2013 (6) TMI 145 - RAJASTHAN HIGH COURT] where it was held that Recovery order issued by the Department on the basis of Section 11D of the Act was absolutely illegal and is liable to be quashed. Appeal allowed - decided in favor of assessee.
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2016 (11) TMI 1129
Emergence of fatty acid & wax - manufacture - wastage - Interpretation of exemption notification - Whether the appellant engaged in the manufacture of Rice Bran Oil & Solvent Extraction Industry and further refined the same to make it edible oil in which process two bye-products/waste products arise, namely, fatty acid & wax? - Whether the appellant is entitled to exemption on fatty acid and waxes under Notification No. 115/75-CE dated 30-04-1975? - Held that: - we find that in view of the law clarified by the Hon’ble Supreme Court in the case of Bombay Oil Industries Ltd. Versus Commissioner of Central Excise [1997 (2) TMI 119 - SUPREME COURT OF INDIA], Oil Mill & Solvent Extraction Industry are eligible for exemption under Notification No. 115/75-C.E. dated 30-04-1975 - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1128
CENVAT credit - services received and used in the guest house/farm house, away from the factory during the period from October 2010 to May 2011 - Held that: - providing of service at guest house which situated away from the factory premises cannot be considered to be an input service and eligible to CENVAT Credit in view of the judgment of Hon'ble Gujarat High Court in the case of CCE Vs Gujarat Heavy Chemicals Ltd [2011 (5) TMI 132 - GUJARAT HIGH COURT]. However, imposition of penalty equal to the CENVAT credit availed, under Rule 15(1) of CENVAT Credit Rules 2004 is too harsh. Accordingly, considering the circumstances and in the interest of justice the penalty is reduced to ₹ 50,000/- - appeal allowed - decided partly in favor of assessee.
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2016 (11) TMI 1127
Entitlement to interest - Appropriation of rebate sanctioned against the rebate sanctioned earlier erroneously - Held that: - the issue whether the appellant is eligible for the rebate of ₹ 21,18,36,117/- has attained finality and said rebate for the earlier period has already been sanctioned and paid to the appellant. It is brought out form the Order-in-Appeal passed by the Commissioner (Appeal) that the appropriation was erroneous. On such findings, the claim of the appellant for the interest from the date of appropriation is not without basis. Further, the issue stands squarely covered by the decisions laid by the Supreme Court in Ranbaxy. Lab. Ltd. [2011 (10) TMI 16 - Supreme Court of India] Following the same, I hold that the appellants are eligible for interest from the date of appropriation till the date of actual payment of the refund - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1126
CENVAT credit - renting of motor vehicle - input service - transport of its employees - Held that: - A person who is receiving the input services of renting of immovable property, can never avail cenvat credit of duty paid on the motor vehicles and as such motor vehicle can never be a capital good to the recipient of the said services. The motor vehicle will always be a capital good or otherwise for the person who is providing the services. For service provider falling under the category of renting of motor vehicle the motor vehicle would always be a capital good. As such the expression- “which is not a capital good appearing in the said exclusion clause would require examination vis-a-vis the service provider and not vis-a-vis the services recipient.” As such the interpretation of the lower authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated in as much as motor vehicles are admittedly capital goods in terms of the Rule 2 (A) of Cenvat Credit Rules - the appellant would be entitled to the Cenvat Credit on service tax paid on the said services - appeal allowed - decided in favor of appellant.
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2016 (11) TMI 1115
Valuation - assessable value u/s 4A of Central Excise Act, 1944 - appellant statutorily required to affix MRP on the individual package since such package was not exempted under Clause A of Sub-rule 2 of Rule 34 of Weights & Measures Act, 1977 and if the goods in question are excluded under Rule 34 of Standards of Weights & Measures (Packaged Commodities) Rules, 1977, then only they are out of the operation of Section 4A ibid - Held that: - sub-section (1) of Section 4A of Central Excise Act, 1944, provides that provisions of sub-section (2) of said Section 4A shall apply only to such specified goods in respect of which Central Government has issued a notification specifying them under the provisions of sub-section (1) of said Section 4A. Sub-section (2) of Section 4A ibid provided that in respect of such goods which are specified under said sub-section (1), the value for the purpose of assessment of duty shall be deemed to be retail sale price declared on such goods less such amount of abatement allowed by notification issued in the official gazette and for such goods anything contained in Section 4 ibid shall not be applicable. So, once goods are covered by notification issued under Section 4A, then irrespective of any other consideration such as whether the supply is in wholesale or in retail, provisions of Section 4 are not applicable to such goods. The Notification No. 5/2001 dated 01-03-2001 was issued under Section 4A ibid and Electric fans were covered at Serial No. 55 of said notification. Therefore, provisions of Section 4 was not applicable for arriving at assessable value in respect of Electric fans during the period covered by Show Cause Notice related to appeals in hand. We, therefore, hold that both the Show Cause Notices relevant to the appeals in hand were issued without authority of law and with wrong interpretation of the provisions of Section 4 and 4A of Central Excise Act, 1944 - appeal allowed.
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CST, VAT & Sales Tax
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2016 (11) TMI 1188
Release of detained goods - the Electronic KK Forms and other documents produced by the petitioner / Transporter, shows that the dealer in West Bengal, has raised a Sale Invoice towards the sale of goods to the dealer in Bangalore and that the import was made at the Chennai Port ended / terminated in the State of Tamil Nadu and the movement of goods commenced / originated from the State of Tamil Nadu - state who can levy the tax - genuineness of transactions - Held that: - Considering the fact that even in the impugned detention notice, the respondent does not disbelieve that the movement of goods commenced / originated from the State of Tamil Nadu, thereby showing that the respondent is aware of the fact that the goods have moved from the State of Tamil Nadu to the State of Karnataka, this Court is of the view that an appropriate condition can be imposed to enable the petitioner to get release of the goods, leaving it open to the petitioner to raise all the issues before the concerned Joint Commissioner - the writ petition stands disposed of by directing the petitioner to remit a sum of ₹ 50,000/- [Rupees fifty thousand only] towards the pending liability and if the same is remitted, the respondent shall forthwith release the goods along with the vehicle and the petitioner is given two weeks time to file a revision before the Joint Commissioner concerned challenging the compounding notice and the payment made by the petitioner pursuant to the order passed by this Court, will be subject to the orders to be passed by the Revisional Authority.
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2016 (11) TMI 1184
Review of the order dated 29.04.2016 - petitioner has filed the petition seeking direction against the revisional authority to comply with the mandatory provision of Section 71(2) of Madhya Pradesh Commercial Tax Act, 1994 and rectify the revision order in terms of the petitioner's application - scope of review - Held that: - the scope of review is very limited. Review is not as same as appeal. If the petitioner is aggrieved by the order, he has a remedy to challenge the same by way of SLP before the Hon'ble Supreme Court. The scope of review comes from Section 114 and Order 47 Rule of the CPC - we do not find any merit in the review petition to allow - review petition dismissed.
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2016 (11) TMI 1183
Validity of assessment order - ex-parte assessment order - assessment order passed without granting time to petitioner - principles of natural justice - Held that: - we are of the considered view that as statutory remedy of appeal and second appeal are available in the facts and circumstances of the case, we are not inclined to interfere in this matter, granting liberty to the petitioner to take recourse available of filing an appeal, writ petition is disposed of. In case appeal is filed within a period of 30 days from the date of receipt of certified copy of this order, learned Tribunal shall proceed on merits in accordance with law and shall not reject the appeal on the ground of delay - petition disposed off.
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2016 (11) TMI 1182
Attachment of bank property - interim stay restored to petitioner on application - Held that: - Keeping in view the circumstances of the case and the fact that the appeal is pending before the appellate authority, we direct that on the petitioner filing a certified copy of this order alongwith a detailed representation before the appellate authority, ventilating the grievance as are raised in the writ petition, the appellate authority shall consider the same and pass an appropriate order on the same within a period of 7 days of its presentation - petition disposed off - decided in favor of petitioner.
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2016 (11) TMI 1180
Imposition of VAT - ‘inter-state sale’ treated as ‘intra-state sale’ - Held that: - if the goods moved in the course of ‘inter-state’ movement and reaches the buyer in satisfaction of a contract of a purchase and there is a nexus between the movement of goods and the contract entered into, for which the movement of the goods takes place, then such a sale is deemed to be in the course of inter-state trade or commerce, and based on the contract of sale as is provided in the contract. The Assessing Officer has not discharged the statutory function properly and has passed an order of assessment imposing liability on the petitioner without adverting to consider relevant factual aspects and legal question, as are indicated hereinabove. Infact the learned Assessing Officer should have gone into the contract in detail, analysed it and then recorded a finding as to whether the sale in question or the transaction is an ‘inter-state sale’ or ‘intra-state sale’. This having not been done, we are of the considered view that this petition should be allowed and matter remanded back to the Assessing Officer for reconsideration. Appeal allowed by way of remand.
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2016 (11) TMI 1133
Validity of assessment order - Liability of cross verification of the annexures of the buyer and the seller in the intranet website of the Department - Levy of tax on payment of excise duty and penalty thereon on the same - Held that: - it is seen that the respondent referred to the document and the details furnished by the petitioner, but curiously enough confirmed the proposal by stating that the monthly returns filed by the other end dealer are not only sufficient proof to authenticate the purchase and sale transaction and that the genuineness and correctness could be proved by furnishing original purchase and sales bill, payment made for the transaction by bank statement, transportation details, loading and unloading charges paid to the cooly, stock register extract, delivery challans received and issued reconciling the stock register, etc. - t this juncture, this Court would point out that the above observations made by the respondent in the impugned assessment orders, were not forming part of the pre-revision notice. In other words, these details were not called for from the petitioner while issuing the pre-revision notice. Therefore, if the respondent had any doubts with regard to the documents produced by the petitioner or the details furnished by them or if, in his opinion, they are insufficient, the Assessing Officer should have issued a notice to the dealer and called upon them to produce the documents. However, completing the assessments on the above lines is wholly unreasonable and arbitrary. Therefore, finding on the said issue calls for interference. Matters are remanded back to the respondent for fresh consideration - petition allowed by way of remand.
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2016 (11) TMI 1132
Public auction - property on equity mortgage - sales tax arrears - Held that: - as per section 42[2] of the Tamil Nadu Value Added Tax Act, 2002, any tax assessed or amount due under the Act from a dealer or a person, have priority over all other claims against the property of the said dealer or person and the analogous provision under the Tamil Nadu General Sales Tax Act, vis-a-vis, the SARFAESI Act - the State has got priority over the Bank dues. Whether the petitioner claims to be the bona fide purchaser? - Held that: - The Bank, after receipt of the communication of the Sales Tax Authorities, calling upon them to pay the sales tax arrears, also took a stand that their dues will prevail over the sales tax arrears and even in the Auction-Sale proceedings [the contents of which have been extracted in paragraph 4 of this order], the Bank had clearly given assurance that they will take care of the sales tax issue and in the light of the said assurance only, the petitioner has paid the entire bid amount and requested the respondents 3 and 4 to execute the Sale Deed free of all encumbrances which include the sales tax arrears. However, the Bank, in their impugned communications dated 25.10.2010 and 24.11.2010, had made a turn around stating that the request/demand made by the petitioner cannot be acted upon as he has purchased the properties knowing pretty well about the attachment from the Sales Tax Department and they are prepared to execute the Sale Deed, subject to the incorporation of the clause regarding sales tax arrears. In the considered opinion of the Court, the stand taken by the respondents 3 and 4 is wholly untenable as the borrower submitted his bid subject to the clearance of the sales tax arrears/dues by them and the communication and the reply dated 10.03.2010 and 15.04.2010 sent by the Axis Bank to the Commercial Tax Authority would also indicate that they have taken a consistent stand that their claim will have priority over the sales tax arrears and even in the Auction Sale proceedings also, a positive assurance has been given to the borrower that the said issue will be taken care of by the Bank. Therefore, the respondents 3 and 4 cannot resile from that promise or undertaking. The respondents 3 and 4 - M/s.Axis Bank, is at liberty to execute the Sale Deed in favour of the petitioner in respect of the auction property free of all encumbrances which include the sales tax arrears claimed by the respondents 1 and 2 ; or in the alternative, refund the sale consideration with or without interest to the petitioner and in the event of the amount being refunded without interest, the petitioner / auction purchaser is at liberty to invoke the common law remedy and recover the same - petition disposed off - decided in favor of petitioner.
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Indian Laws
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2016 (11) TMI 1186
Treatment to plot of land as commercial - payment of stamp duty - Held that:- Indisputably, there cannot be any access to Plot-A & it is only possible through Plot-B and if Plot-A is treated as commercial, we find no reason to still treat Plot-B from where there is an access alone to Plot-A, where the petrol pump has been installed and operational, not to be considered as commercial and that was a reason which initially prevailed upon the Collector (Stamps) and to the Rajasthan Tax Board and so also before the ld.Single Judge of this Court and merely because there was a separate description in the conveyance deed submitted before the Sub-Registrar (Stamps), no inference can be drawn in treating Plot-B in dispute as agricultural land for all practical purposes and taking into consideration the finding of fact, which has come on record and more particularly when no documentary evidence has been placed by the appellant on record in rebuttal the finding of fact remains uncontroverted that Plot-B is abutting to the State Highway No.30 and Plot-A, on which actually a petrol pump is installed, cannot be put to use and access only from Plot-B that is abutting to the State Highway No.30 and once this finding has been confirmed with supportive evidence on record, in our considered view, no error has been committed by the competent authority and confirmed by the Rajasthan Tax Board and so also by the ld.Single Judge of this court which needs any further interference in the intra-court appeal.
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