TMI Tax Updates - e-Newsletter
November 30, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Contract for supply of smart cards on which requisite information is embedded - its nature is service contract only & not sale - no VAT - HC

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Articles

1. MAJOR AMENDMENTS IN SERVICE TAX EXEMPTIONS IN 2015

   By: Dr. Sanjiv Agarwal

2. Services Which is exempt from Service Tax (Symbiosis Society Vs. Commissioner of Central Excise, Pune III)

   By: Bimal jain

News

1. Overwhelming response received from the retail investors for Sovereign Gold Bond Scheme (SGB) ; 63,000 applications received for a total of ₹ 246.20 crore by the Banks and Post Offices for 917 kgs of gold; Number of decisions taken to improve the reach of Gold Monetisation Scheme (GMS)

2. Central Board of Direct Taxes (CBDT) Signs 11 more Unilateral Advance Pricing Agreements (APAS)

Notifications

Customs

1. 132/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai

2. 131/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Commissioner of Customs, New Delhi

3. 130/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Commissioner of Customs (Import), Raigad Maharashtra

4. 129/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Joint or Additional Commissioner of Customs, Kandla

5. 128/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Joint/Additional Commissioner of Customs, Mumbai

6. 127/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Joint/Additional Commissioner of Customs, Mumbai

7. 126/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai

8. 125/2015 - dated 24-11-2015 - Cus (NT)

Appoints the Additional Commissioner of Customs, Kolkata

Circulars / Instructions / Orders

Customs

1. F. No. 609/59/2012-DBK - dated 27-11-2015

Systems Alert for monitoring realisation of export proceeds in EDI under the BRC Module for ICES (introduced in year 2009) and the new RBI BRC Module introduced under DG (Systems) letter dated 28.8.2014

2. F. No. 528/109/2011-STO (TU) - dated 20-11-2015

Implementation of The Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order, 2009

Highlights / Catch Notes

Income Tax

• Amortization of Premium on HTM Government Securities Allowed as Deduction per RBI Norms.

  Case-Laws - AT : Disallowance of amortization of premium on investment in Government Securities Held to Maturity (HTM) - amortization on purchase of Government securities was made as per prudential norms of the RBI and same was allowable deduction - AT
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• Entities Must Register u/s 12A Prior to Seeking Approval u/s 80G(5)(vi); Simultaneous Filing Not Allowed.

  Case-Laws - AT : The right course is to first of all apply for grant of registration u/s 12A and after obtaining the same, one can apply for grant of approval u/s 80G(5)(vi) - The approach of filing both the applications simultaneously is not proper - AT
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• Court Dismisses Petition on Income Tax Assessment Reopening; Assessee Missteps on Section 148 Notice Challenge Procedures.

  Case-Laws - HC : Reopening of assessment - misconception of law - assessee has not followed the due procedure which is required to be followed for the purpose of challenging the notice under section 148 of the Act and has avoided filing return on income - petition dismissed - HC
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• High Court Rules Assessing Officer's Action Unauthorized Without Belief of Escaped Income u/s 147, Notice 148 Invalid.

  Case-Laws - HC : In the absence of having any reason to believe that income chargeable to tax has escaped assessment for the assessment years under consideration, the assumption of jurisdiction on the part of the Assessing Officer u/s 147 of the Act by issuing notice u/s 148 of the Act is clearly without any authority of law. - HC
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• Section 263 Revision: Taxation of Surrendered Income u/s 69A Deemed Inconsistent with Legal Principles by CIT.

  Case-Laws - AT : Revision u/s 263 - taxation of surrendered income u/s 69A - The assessee had surrendered income over and above the normal profits of the concern and not as income from other sources. Assessing Officer had taken a plausible view and the power exercised by learned Commissioner of Income Tax is not as per settled law - AT
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• Taxpayer's Relocation Costs Classified as Revenue Expenditure for Business Purposes, Deemed Necessary and Wholly Exclusive.

  Case-Laws - AT : Shifting expenditure incurred by the assessee is for carrying on its business operation and the same is incurred wholly and exclusively for the purpose of business and has to be treated as revenue expenditure - AT
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• Penalty Waived for Cash Transactions Due to Urgent Business Needs u/ss 271D and 271E.

  Case-Laws - AT : Penalty u/s. 271D and 271E - numerous cash deposits and repayment was made in cash - assessee has demonstrated the funds were arranged in cash on urgent requirement of the business which is in accordance with commercial expediency of assessee’s business - penalty waived - AT
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• Taxpayer's Sweat Equity Share Gain Taxed as Short-Term Capital Gain, Not Exempt u/ss 10(38) or 54EC.

  Case-Laws - AT : Taxability of the gain on the transfer of sweat equity shares allotted to the assessee - to be assessed as income on the sale of shares, as short-term capital gain or, in the alternative, as income from other sources, not liable for exemption u/s.10(38) or s. 54EC - AT
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• Court Rules TDS Must Be Deducted on Freight Payments to Agents u/s 194C; No Bill Separation Allowed.

  Case-Laws - AT : TDS u/s 194C - payment made by the assessee towards freight to Forwarding and Clearing Agents - non deduction of TDS u/s.40(a)(ia) - The Assessee cannot break-up the said bill into reimbursement and charges. - AT
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Customs

• Old Monitors Confiscated: Appellant Violates Import Policy on Restricted Items, Customs Authorities Enforce Compliance.

  Case-Laws - AT : Valuation - import of old and used monitors - restricted items - appellant fail to comply this requirement of the policy, therefore the goods were rightly confiscated - AT
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• Denial of Project Import Regulations Benefits on Cooling Bells Import Contested with Supplier and Government Clarifications.

  Case-Laws - AT : Duty demand - Import of 10 numbers cooling bells - denial of the benefit of Project Import Regulations, 1986 - the appellant produced clarification of the supplier and the Ministry of Steel, Government of India, which can not be brushed aside in such a casual manner - AT
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Service Tax

• Appellant Entitled to Cenvat Credit Despite Lack of Registration with Service Tax Department During Relevant Period.

  Case-Laws - AT : Denial of input service credit - although the appellant was not registered with the service tax department during the relevant time it has availed the services, the appellant is entitled to take Cenvat credit. - AT
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Central Excise

• Court Rejects Chewing Tobacco Exemption Claim; Branded vs. Unbranded Argument Deemed Misconceived and Untenable.

  Case-Laws - SC : Claim of exemption - chewing Tobacco - the contention proceeds on the premise that the branded goods belonging to third party only would be treated as branded and insofar as goods sold under brand name belonging to the assessee are concerned, they have to be treated as unbranded. This contention is clearly misconceived and untenable - SC
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• CESTAT clarifies Rule 6 of Cenvat Credit Rules: Applies to manufacturers with both dutiable and exempt goods, not mixed products.

  Case-Laws - SC : As per the CESTAT, Rule 6 of CCR applies only if some final product is partly exempt and partly dutiable. However, we do not find any such restriction in Rule 6 which contemplates the situation where a manufacturer produces (a) final products which are chargeable to duty, as well as (b) exempted goods. The Rule does not provide that the same final product should be partly dutiable and partly exempted. - SC
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• Duty Demand Beyond One Year Overturned Due to No Fact Suppression in Rural Factory SSI Exemption Case.

  Case-Laws - AT : SSI exemption - Extended period of limitations - the Department was aware of the location of the factory in the rural area. Thus, there is no suppression of facts with intent to evade payment of duty demand of duty beyond one year set aside - AT
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VAT

• Smart Card Supply Contract Deemed a Service, Not a Sale; Exempt from VAT Liability per Transaction Nature.

  Case-Laws - HC : Levy of VAT on smart cards - The requisite information is embedded and supplied to the department - The contract entered into between the parties for supply of smart cards is for rendering service only and there is no element of sale. - Not liable to VAT - HC
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• VAT on Batteries: Use Motorcar Component Rate, Not General Rate, Due to Primary Automotive Use.

  Case-Laws - HC : Rate of VAT - even if some parts of Battery or Battery-parts can be said to be sold for other purposes but primarily it is meant for motorcars. - general rate would not be applicable as Batery and its parts in common parlance is said to be fitted in motorcars - HC
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Case Laws:

• Income Tax

• 2015 (11) TMI 1386
  Disallowance of amortization of premium on investment in Government Securities Held to Maturity (HTM) - CIT(A) allowed claim - whether the securities under the categories of HTM are in the nature of capital asset and hence premium paid thereon is also a capital expenditure and therefore is not allowable revenue expenditure? - Held that:- As held in the case of Catholic Syrian Bank Ltd. Vs. ACIT [2013 (1) TMI 129 - ITAT COCHIN] that amortization on purchase of Government securities was made as per prudential norms of the RBI and same was allowable deduction. The issue regarding amortization of premium on investment in Government Securities Held to Maturity (HTM) has been repeatedly raised and the Tribunal has been consistently deciding the issue in favour of the assessee. No infirmity in the order of the Ld.CIT(A) deleting the addition - Decide against revenue.

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• 2015 (11) TMI 1385
  Penalty u/s 271(1)(c) - Held that:- A perusal of sub-clause (iii) of section 271(1)(c) would indicate that in case an addition is being made to the income of an assessee, and it is established that the assessee has concealed or furnished inaccurate particulars qua that addition, then apart from tax to be payable by the assessee, he would pay an amount equivalent to the tax or three times of the tax as penalty under section 271(1)(c) of the Act. Meaning thereby, the penalty would be computed equivalent to the tax sought to be evaded by the assessee on the additions made to his income for which he has held guilty of concealment of income or furnishing of inaccurate particulars of income. In the present case, the moment, assessment order has been set aside by the ITAT, the very addition on which the amount of tax sought to be evaded was to be calculated, has been extinguished. Therefore, the assessee cannot be charged with allegation that he has concealed particulars or furnished inaccurate particulars on the additions which made to his income. In the set aside assessment order, it is yet to be decided whether any addition is to be made to the income of the assessee or not. It will be in the discretion of the AO to initiate or not initiate penalty proceedings after passing the fresh assessment order. Therefore, in the present proceedings penalty is not sustainable upon the assessee. We set aside both the orders and quash the imposition of penalty. It will be in discretion of the AO to initiate or not to initiate penalty after passing fresh assessment order in pursuance of the Tribunal’s order - Decided in favour of assessee.

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• 2015 (11) TMI 1384
  Denial of approval under section 80G(5)(vi) - application in form No.10G for approval under section 80G(5)(vi) of the Act was not accompanied by a copy of registration granted under section 12AA of the Act, as per sub-rule (2) of rule 11AA of the Rules - Held that:- In the instant case, undisputedly the assessee has filed application for grant of approval under section 80G(5)(vi) of the Act without accompanying the copy of registration granted under section 12A of the Act. During the course of hearing, the ld. counsel for the assessee has admitted that the assessee has filed both the applications simultaneously and contended that the ld. Commissioner of Income-tax ought to have waited for disposal of the application for grant of registration under section 12A of the Act instead of dismissing the application for grant of approval under section 80G(5)(vi) of the Act. We do not find any force in this argument of the ld. counsel for the assessee, as the assessee was mandatorily required to file the copy of registration under section 12A of the Act along with the application for approval under section 80G(5)(vi) of the Act. If the application is not accompanied with the registration certificate under section 12A of the Act, the ld. Commissioner of Income-tax is within its jurisdiction to dismiss or reject the application for grant of approval under section 80G(5)(vi) of the Act at the threshold, as the requisite condition is not fulfilled. The ld. Commissioner of Income-tax is not under any obligation to wait for disposal of the application for registration under section 12A of the Act. The right course is to first of all apply for grant of registration under section 12A of the Act and after obtaining the same, one can apply for grant of approval under section 80G(5)(vi) of the Act. The approach of filing both the applications simultaneously is not proper and in that eventuality the ld. Commissioner of Income-tax is justified in rejecting the application for grant of approval under section 80G(5)(vi) for want of registration under section 12A - Decided against assessee.

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• 2015 (11) TMI 1383
  Penalty under section 271(1)(c) - CIT(A) deleted penalty - Held that:- The assessee has given reasonable details showing confirmation by the lender, bank statement details etc. while such evidences may not prove the genuineness of the transaction to the hilt , these evidences do indeed show prima facie bonafides of the assessee. These evidences have not been found to be false, incorrect or doubtful. In these circumstances, mainly because the assessee has not been able to give details of lender’s Assessing Officer, the explanation of the assessee cannot indeed be rejected. The assessee also has a reasonable explanation for not pursuing the quantum addition in appeal as the related quantum addition is completely tax neutral. In view of these discussions, as also bearing in mind entirety of the case, we approve well reasoned conclusion arrived at by the learned CIT(A) and decline to interfere in the matter. - Decided in favour of assessee.

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• 2015 (11) TMI 1382
  TDS u/s 194I - premium for acquisition of Lease hold rights for 99 years - Held that:- Where the lease premium paid to PCNTDA was a pre-condition for entering into the lease agreement, the same not being paid consequent to the execution of the lease agreement, cannot be said to be payment in lieu of rent as envisaged under section 194 I of the Act. In addition, the assessee had paid stamp duty on the market value of the plot represented by the lease premium and the said finding of the CIT(A) having not been controverted by the learned Departmental Representative for the Revenue, we find no merit in the appeal filed by the Revenue. See Preetam Medical Foundation & Research Centre [2015 (11) TMI 872 - ITAT PUNE]- Decided in favour of assessee

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• 2015 (11) TMI 1381
  Reopening of assessment - misconception of law - Held that:- In the present case no assessment has been framed under section 143(3) of the Act, under the circumstances, the proviso to section 147 of the Act would not be attracted. On an overall view of the matter, it appears that the petitioner has proceeded on a misconception of law and not in terms of the provisions of the Act and the principles laid down by judicial pronouncements in that regard. The petitioner should have been appropriately advised to file the return of income and ask for the reasons for reopening the assessment and thereafter, to file the objections in respect thereto as laid down by the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO, (2002 (11) TMI 7 - SUPREME Court) In the present case, the petitioner has not followed the due procedure which is required to be followed for the purpose of challenging the notice under section 148 of the Act and has avoided filing return on income pursuant to the impugned notice. Besides, as noted earlier, except for a bare assertion, nothing has been pointed out on behalf of the petitioner to show as to why the second respondent lacked jurisdiction to issue the notice under section 148 of the Act. Thus no merit in any of the submissions advanced on behalf of the petitioner so as to warrant exercise of powers under Article 226 of the Constitution of India. Decided against assessee

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• 2015 (11) TMI 1380
  Reopening of assessment - whether the issuance of notice under section 148 which was issued as per provisions available as per explanation 2(c)(iii) and 2 (c)(iv) given below section 147 of the Income Tax Act ? - Held that:- The assessee remained an SSI Unit for the years under consideration. In the aforesaid premises, it is evident that the Assessing Officer has proceeded on an erroneous assumption that the respondent assessee does not meet with the requirement of an SSI unit when the record clearly points out to the contrary. Under the circumstances, it is manifest that based upon the material on record on the basis of which the Assessing Officer sought to reopen the assessment, he could not have formed the belief that the assessee did not meet with the requirements of an SSI unit and consequently could not have formed the requisite belief that income chargeable to tax has escaped assessment. In the absence of having any reason to believe that income chargeable to tax has escaped assessment for the assessment years under consideration, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act by issuing notice under section 148 of the Act is clearly without any authority of law. In the light of the above discussion, while disagreeing with the reasons recorded by the Tribunal for holding that the reopening of assessment was bad in law, for the reasons recorded hereinabove, the court is in agreement with the final conclusion arrived at by the Tribunal. - Decided in favour of assessee

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• 2015 (11) TMI 1379
  Advance Licence Benefit Receivable - whether taxable in the year under consideration ? - Held that:- The issue raised herein stands concluded in favour of the appellant-assesee by virtue of the decision of the Supreme Court rendered in The Commissioner of Income Tax vs. M/s Excel Industries Ltd reported in (2013 (10) TMI 324 - SUPREME COURT). Accordingly, the Question as framed is answered in negative in favour of the appellant-assesee and against the revenue. Computation deduction u/s 801 and 801A - Held that:- Appellant very fairly states that the issue arising herein stand concluded against the appellant-assessee by the decision of this Court in Plastiblends India Ltd versus Addl.CIT [2009 (10) TMI 39 - BOMBAY HIGH COURT]. In the above view, Question No.2 is answered in the affirmative i.e in favour of the respondent-revenue and against the appellant-assessee. Depreciation on all block of assets - Held that:- Following the decision of the Gujarat High Court in the respondent-assessee's own case [2014 (11) TMI 940 - GUJARAT HIGH COURT ] the substantial question stands answered in the negative i.e.in favour of the appellant- assessee and against the revenue

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• 2015 (11) TMI 1378
  Penalty under Sections 271(1)(b) and 27(1)(c) - undisclosed capital gain - when the petitioner being one of the co-sharer of the properties and when the proceedings initiated by the Income Tax Officer, Ward - I(1), Thanjavur was dropped as against the co-sharers, it is not justifiable on the part of the respondent to initiate action against the petitioner in respect of capital gains from the same properties - Held that:- When the properties sold are being one and the same and the sellers are also one and the same, two different yardsticks cannot be adopted. That apart, since the issue, as far as the other owners are concerned, is one and the same, the petitioner's claim alone cannot be rejected. Without considering the said aspects, the respondent has passed the impugned orders. Hence, to give a quietus to this issue, in the interest of justice, the impugned assessment orders challenged in these writ petitions are liable to be interfered with. Accordingly, the impugned orders are quashed and the matters are remitted back to the respondent for passing orders afresh on merits and in accordance with law. The said exercise shall be completed within a period of six weeks from the date of receipt of a copy of this order. The petitioner is directed to forthwith file necessary income tax returns if not filed earlier before the respondent along with the necessary documents so as to substantiate her claim.

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• 2015 (11) TMI 1377
  TDS u/s 194I - amount paid by the assessee bank (the lessee) to City Industrial Development Corporation (MMRDA) (Lessor) - whether not in the nature of rent ? - Held that:- The provisions of section 194-I are not applicable to the facts of the present appeal to deduct TDS on the lease premium paid by the assessee. The payment to MMRDA is for additional built up area and also for granting fee of FSI and such payments cannot be equated to rent, thus, we find no infirmity in the impugned orders thus, the addition made u/s 201(1) and 201(1A) of the Act was rightly deleted. We affirm the stand of the ld. Commissioner of Income Tax (Appeals) as no infirmity is found therein. - Decided against revenue.

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• 2015 (11) TMI 1376
  Mistake in quoting correct PAN of the deductee in the TDS returns - Rectification of mistake - Held that:- There has been no finding by ld. CIT(A) to show that there was any intention on the part of the deductor or deductee to furnish wrong PAN details. Therefore, we are of the view that the system is erroneous to the extent if it restricts the deductor to revise its TDS return/statement within some corners which in this case was correction of PAN details subject to change of two alfa and two numberical characters and, therefore, correction statement filed by the assessee needs to be accepted after ascertaining the correctness of the correct PAN furnished by the deductor. Accordingly, the order of CIT(A) is quashed and assessee’s ground of appeal is allowed with reference to the first first fold of contention made by the assessee. Assessee is required to deduct tax and has deducted TDS @ 2% of sum paid/credited to GETCO Ltd. but due to filing of wrong PAN of deductee it has been deemed as assessee in default and accordingly 18% of remaining TDS (20% (-) 2%) has been demanded from the assessee. Had the assessee been provided an opportunity as per the proviso of subsection (1) of section 201 of the Act referred abve then it may have filed requisite details of the deductee in form of proof of furnishing of return under section 139 of the Act, proof of taking into account such sum for computing income in such return of income of the deductee, proof of tax paid by the deductee and certificate from the Chartered Accountant to this effect that the sum on which deductor was required to deduct TDS has duly been considered in the books of account for computing income of the deductee. Therefore, we accept the second fold of contention of the assessee and hold that the matter may be restored back to the file of CIT(A) with the direction to decide the matter after providing reasonable opportunity of hearing to the assessee so that it can furnish relevant details/information as required by the above said proviso to sec.201(1) of the Act, as discussed above. - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 1375
  Revision u/s 263 - taxation of surrendered income u/s 69A - whether the surrender made by assessee can be considered as business income or can be taxed as deemed income under section 69A - Held that:- As regards surrendered income, the assessee has clearly credited the same to the Profit & Loss account over and above the normal profits of the concern. Therefore, in our opinion the Assessing Officer has taken a plausible view as the assessee had surrendered the income as business income which was separately credited to Profit and Loss account. The assessee had surrendered income over and above the normal profits of the concern and not as income from other sources. Assessing Officer had taken a plausible view and the power exercised by learned Commissioner of Income Tax is not as per settled law. - Decided in favour of assessee.

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• 2015 (11) TMI 1374
  Expenditure incurred towards product and development expenditure - revenue v/s capital expenditure - CIT(A) treated as revenue - Held that:- Admittedly, the assessee is engaged in the business of manufacture and sale of highway axles and components for tractors, earth moving equipment etc. Since the market is very competitive one, the assessee has to come out with new features in the products to remain in the field. Therefore, it is a necessity for the assessee for constant upgradation of the original product already manufactured and sold by it. The Hon’ble Gujarat High Court in the case of Gujarat Small scale Industries Corporation (1981 (7) TMI 8 - GUJARAT High Court) has held that expenses incurred after the manufacture of a product but before marketing it in order to test its quality and suitability for marketing is revenue expenditure in nature . Further, the amount incurred by the assessee on account of product development expenses in the facts and circumstances of the case is very negligible for which it cannot be considered as capital in nature. In view of the above and in view of the detailed reasoning given by the Ld.CIT(A), we find no infirmity in the order of the CIT(A) on this issue - Decided against revenue Expenditure incurred towards shifting of its manufacturing operations - revenue v/s capital expenditure - CIT(A) treated as revenue - Held that:- Shifting expenditure incurred by the assessee is for carrying on its business operation and the same is incurred wholly and exclusively for the purpose of business and has to be treated as revenue expenditure. In this view of the matter we uphold the order of the CIT(A) on this issue and the ground raised by the revenue is dismissed.- Decided against revenue Disallowance made on the issue of provision for warranty - CIT(A) allowed the claim - Held that:- No infirmity in the order of the CIT(A) deleting such addition. Admittedly, the AO following his order for earlier years in assessee’s own case, disallowed warranty provision made during the year. We find the Tribunal in assessee’s own case for A.Y. 2006-07 has deleted such disallowance. Since the issue has already been decided by the Tribunal in favour of the assessee, therefore, in absence of any contrary material brought to our notice against the order of the Tribunal in assessee’s own case, on this issue, we find no infirmity in the order of the CIT(A) deleting such addition - Decided against revenue

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• 2015 (11) TMI 1373
  Validity of assessment order u/s 153C - Held that:- No material was found during the course of search operation. What was available with the Revenue is the computer statement of depositors which was found during the course of survey operation u/s 133A of the Act. Even assuming that the material found during the course of survey operation can be a basis for making a block assessment, this Tribunal is of the considered opinion that the details of deposits were very much before the Assessing Officer in the returns of income filed by the assessee in the regular course before the date of search. Therefore, in the absence of any further material with regard to non-genuineness of the deposits, this Tribunal is of the considered opinion that the concluded assessments for the assessment years 2001-02 to 2004-05 cannot be reopened. In view of the above discussion, this Tribunal is of the considered opinion that the assessment proceedings initiated by the Assessing Officer u/s 153C of the Act in the absence of any material found during the course of search operation cannot be justified. Accordingly, the orders of the lower authorities are set aside for assessment years 2001-02 to 2004-05. Now coming to the assessment proceedings for the assessment years 2005-06 and 2006-07, the assessee fled the return of income on 10.10.2005 for the assessment year 2005-06. The time limit for issuing notice u/s 143(2) for the assessment year 2005-06 is available upto 30.9.2006. In fact, the search operation was conducted on 4.7.2006. For the assessment year 2006-07, the due date for filing return of income has not expired and the assessee filed the return of income after the search on 31.10.2006. Therefore, for the assessment years 2005-06 and 2006-07, the assessment proceedings are pending, hence, the proceedings initiated by the Assessing Officer u/s 153C are valid for the assessment years 2005-06 and 2006-07. Un-genuine receipts - Held that:- The genuineness of the deposits made in assessment year 2001-02 cannot be examined in assessment year 2005-06 since the assessment proceedings were not pending on the date of search operation. Therefore, even assuming that the deposits are not genuine, this Tribunal is of the considered opinion that that cannot be a reason for making any addition for the assessment year 2005-06 and 2006-07, therefore, the Assessing Officer is not justified in following his observation for the assessment year 2001-02. The Assessing Officer is expected to make independent enquiry for the assessment years 2005-06 and 2006-07. Admittedly, the deposits were received in the earlier assessment years and the same were carried forward for the assessment years 2005-06 and 2006-07 and the assessee has also offered a sum of Rs. 55 lakhs in respect of fresh deposits received during the year under consideration. Therefore, this Tribunal is of the considered opinion that no further addition is required in respect of such deposits for the assessment years 2005-06 and 2006-07. The CIT(A) computed the peak deposit by computing the difference between the earlier deposits and the current deposits. For assessment year 2005-06 the peak credit computed by the CIT(A) is NIL. Therefore, this Tribunal is of the considered opinion that there is no justification for making any addition for the assessment year 2005-06. Now coming to assessment year 2006-07, the CIT(A) computed the peak credit at NIL. The Assessing Officer says that a sum of Rs. 50 lakhs was admitted by the assessee as undisclosed deposits. The CIT(A) rejected the claim of the assessee to set off the peak credit of Rs. 40,74,441/- for assessment year 2001-02. Since this Tribunal find that there cannot be any block assessment for assessment year 2001-02 u/s 153C of the Act, the income offered by the assessee has to be set off. Therefore, this Tribunal is of the considered opinion that no further addition is called for assessment year 2006-07 also. In view of the above discussion, we are unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1372
  Addition on account of capital gains on account of transfer of the land - whether the land sold was situated at a distance of 10Kms from the nearest Avadi Municipality based on the VAO's certificate ? - main argument of the Department is that the land sold by the assessee is a capital asset, as it is situated within the distance of 8 kms. from the nearest Municipality limit (Avadi) - Held that:- Tehsildar is the competent authority to issue certificate, which is to be accepted. Further, the distance of agricultural land has to be measured in terms of the approach by road and not by a straight-line distance on horizontal plane or as per crow’s flight as held by the Punjab & Haryana High Court in the case of CIT vs. Satinder Pal Singh (2010 (1) TMI 752 - Punjab and Haryana High Court). In view of this, the AO has no material to prove the contention of the assessee that the distance of the land as on date of sale has to be held more than 8 kms. from the nearest Municipality, is not correct. Therefore, the assessee has to prove one essential condition that the land owned by him or her is situated at a distance more than 8 kms. from the nearest Municipality, which was proved by the assessee. To sum up, in our opinion, the distance has to be measured in terms of the approach by road and not by a straight-line distance on horizontal plane or as per crow’s flight. Further, the assessee has also proved that the land was situated at a distance more than 8 kms. from the nearest Avadi Municipality. Measurement of aerially distance came into force with effect from 1.4.2014 under sec. 2(14)(iii)(b) of the Act and it cannot be applied to the present assessment year 2009-10. Regarding carrying out of agricultural activities in the said land, there is an evidence in the form of lease deed between the assessee (and other family members) and M/s. Vel Horticultures leasing the land for agricultural operations, the leasing company claimed agricultural income which had been accepted in the scrutiny assessment as noted by the CIT(Appeals) in his order, which was not controverted by the ld. DR. As such it cannot be denied that the land in question was an agricultural land situated at a distance more than 8 kms. from the nearest Municipality (Avadi).Therefore, there is no merit in the argument of the ld. DR and we are inclined to dismiss the appeals of the Revenue. - Decided in favour of assessee

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• 2015 (11) TMI 1371
  Disallowance of increase in share capital and unsecured loans - CIT(A) deleted the addition - Held that:- The addition in the facts of the present case as far as increase in share capital is concerned was obviously limited to that portion of the source of increase in share capital which was found to be not genuine. The fact that the increase in share capital was over and above the addition is thus not relevant as its genuineness is not questioned by the AO. Thus that portion of the increase in share capital has necessarily to be excluded. Similarly if unsecured loans have not been explained, the addition on facts is warranted. It is further seen that the conclusion that in 2007-08 assessment year, amounts was repaid does not elaborate what is the evidence considered for arriving at the said conclusion since the impugned order is silent as the evidence taken into consideration the same cannot be sustained. The attempts of the ITAT to serve notice upon the assessee having failed has resulted that the assessee is also not in a position to throw light on these crucial aspects. Accordingly in view of the above reasons, the impugned order is set aside and the issues are restored back to the file to the CIT(A) with the direction to pass a speaking order in accordance with and if need to obtain a Remand Report from the AO after giving the assessee a reasonable opportunity of being heard. Since the facts, the circumstances and the grounds are identical in all the years except for the differences in amounts therefore, for similar reasons these appeals are also restored back after setting aside the finding arrived at in the respective impugned orders again back to the file to the CIT(A) with the direction to decide the same in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided in favour of revenue for statistical purposes

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• 2015 (11) TMI 1370
  Penalty u/s. 271D and 271E - numerous cash deposits and repayment was made in cash - CIT(A) deleted the penalty - Held that:- There is nothing to indicate that the amount received and repayment is a loan or unaccounted for. It is entered in the accounts duly maintained by both. In fact, the purpose for which the said amount was received is also clear from the material on record and therefore, there is nothing to indicate that this amount is paid as loan or deposit. Find considerable cogency in the assessee’s submission that in the absence of such material on record keeping in mind the relationship between the parties the nature of transaction coupled with the fact that the assessee was undergoing a financial difficulty. Also find that the case law relied upon by the Ld. DR is based on different facts i.e. there is no material to show the real exigency to take cash loan. However, in the case laws cited by the Ld. Counsel of the assessee there was definite sufficient cause to establish the real exigency of taking the cash loans. CIT(A) has rightly observed that assessee has demonstrated the funds were arranged in cash on urgent requirement of the business which is in accordance with commercial expediency of assessee’s business which was being closed during the year as the remaining stock of cloth was being sold to clear the outstanding of the business by paying the outstanding creditors and as a result, the assessee has undergone a financial crisis, hence, Ld. CIT(A) has rightly deleted the penalty in dispute. In view of above, find no infirmity in the impugned order passed by the Ld. CIT(A) - Decided against revenue

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• 2015 (11) TMI 1369
  Disallowance u/s 14A - Held that:- The disallowance u/s.14A of the Act can be made only, if the expenditure is related to investment wherefrom the exempt income is earned. In the present case, the ld.CIT(A) has not considered the submissions of the assessee that investments have been out of interest-free fund, for commercial expediency and the dividend income has been offered for tax. Therefore, we are unable to confirm the finding of ld.CIT(A). In the light of above discussion, we hereby direct the AO to delete the addition - Decided in favour of assessee. Disallowance of 14 % interest being amount advanced to Shreenidhi Textiles by holding that there is difference between commercial expediency and humanitarian consideration - Held that:- The contention of the assessee is that the advance was given out of interest-free funds. It is also contended that similar advances were made during the AY 2007-08, in that year no such disallowance was made. This contention was not made before the ld.CIT(A). Therefore, in our considered view, the contention of the ld.counsel for the assessee that had it sufficient interest-free funds and the advance was given out of interest-free funds requires verification at the end of the AO and, accordingly, we hereby set aside the order of the authorities below and restore this issue to the file of AO to verify whether the advance was out of interest-free funds available with the assessee or not. In case, the AO finds that the assessee was having sufficient interest-free funds, he should also delete the disallowance made in respect of advances given to Shree Nidhi Textiles. - Decided in favour of assessee for statistical purposes.

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• 2015 (11) TMI 1368
  Addition of NSE penalty - CIT(A) deleted the addition - Held that:- CIT(A) follows case law of ITO vs. GDB Share and Stock Broking Services Ltd. [2003 (8) TMI 169 - ITAT CALCUTTA-C] in deciding the very issue in assessee’s favour. The Revenue fails to point out any distinction on facts or law before us. It does not quote any case law to the contrary. This first ground accordingly fails. - Decided against revenue Section 36(1)(iii) interest disallowance - CIT(A) deleted the addition - Held that:- It transpires from the case file that assessee’s interest free funds as on 31.03.2008 read a figure of Rs. 1,25,83,17,835/- in the nature of share capital, reserves and surplus etc. It files tribunal’s order in its own case for AY 2004-05 decided on 19.12.2008 deciding the very issue in its favour in identical circumstances. We follow suit in these facts and reject this Revenue’s ground as well.- Decided against revenue Bad debt disallowance - CIT(A) deleted the addition - Held that:- Sale/purchase price of shares had been credited in the respective accounts. The CIT(A) follows special bench decision of DCIT vs. Shreyas S. Morakhia [2010 (7) TMI 455 - ITAT MUMBAI] that value of the share transacted by a broker-assessee on behalf of the concerned client is very much allowable as bad debts. The Revenue fails to rebut this legal position.- Decided against revenue Brokerage rebate disallowance - CIT(A) deleted the addition - Held that:- Assessee’s gross brokerage income is of Rs. 59,23,26,790/-. The corresponding brokerage refund figure in question is @ 0.59% of this gross income. The relevant segments are cash and F respectively. Pages 93 to 102 contain list of assessee’s clients alongwith codes and amounts refunded in all cases. The Revenue is unable to rebut correctness thereof. We hold in these facts that assessee’s claim of brokerage rebate in question does not lack genuineness element. It has come on record that it is in stock broking business. It has accordingly offered the impugned rebate of Rs. 34,67,507/- in business expediency. We do not find any ground to interfere with the lower appellate findings under challenge. - Decided against revenue Section 14A disallowance - Held that:- When there is no net interest expenditure upon setting off interest credited to P&L account, no part of interest debited is to be disallowed as attributable to earning of exempt income. The Revenue does not point out any exception thereto. We accordingly delete the interest disallowance under Rule 8D(2)(ii) of Rs. 13,81,198/- (supra). Coming to administrative expenses disallowance of Rs. 1,68,877/- under Rule 8D(2)(iii), the assessee fails to dispute correctness thereof since the impugned assessment year is 2008- 09. This latter disallowance figure is confirmed. - Decided partly in favour of assessee. Disallowance of provision made for leave encashment u/s 43B(f) - Held that:- . The assessee submits to have paid leave encashment of Rs. 19,439/- as on 04.09.2008 and Rs. 19,661/- on 24.09.2008. There is no dispute about the above stated facts as well as the legal background of the issue. We follow the hon’ble apex court Bharat Earth Movers vs. CIT, [2000 (8) TMI 4 - SUPREME Court ]order in these facts and direct the assessing authority in the same terms as indicated therein. - Decided in favour of assessee for statistical purposes.. Disallowance of depreciation on Ahmedabad Stock Exchange card - Held that:- co-ordinate bench of the tribunal in case of assessee’s sister concern’s case M/s. Edelweiss Stock Broking Ltd. [2015 (10) TMI 917 - ITAT AHMEDABAD] grants identical depreciation relief. We also draw support therefrom for allowing the impugned depreciation claimed. This ground is accepted. - Decided in favour of assessee. Disallowance u/section 40(a)(ia) - non-deduction of TDS qua payments made of NSE lease line charges, NSE VSAT charges and MTNL expenses - Held that:- In recent decision of CIT vs. Ansal Landmark Townships Pvt Ltd, (2015 (9) TMI 79 - DELHI HIGH COURT) held that when a deductor-assessee is not an assessee in default u/s 201(1), it is deemed that it has deducted and paid the tax on such sums on the date of filing of return of income by the concerned payee as referred in the above stated proviso. We accordingly remit this issue back to the Assessing Officer for carrying out necessary verification regarding related payments having been taken into account by the concerned payees in computing their income. The assessee’s other arguments disputing applicability of TDS provision shall be readjudicated as per law. - Decided in favour of assessee for statistical purposes..

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• 2015 (11) TMI 1367
  Taxability of the gain on the transfer of sweat equity shares allotted to the assessee - Revenue seeks to bring the entire gain to tax as short-term capital gain, the assessee concedes it to be income by way of capital gains, albeit long term in nature and, accordingly, exempt u/s.10(38) of the Act. The Revenue’s alternate claims are of the income being assessable as speculation income u/s. 43(5) or even as income from other sources u/s. 56 - Held that:- In essence and substance though the co-ordinate Bench in the assessee’s own case for A.Y. 1998-999 express the same opinion, i.e., that the rights to the assessee, undoubtedly a capital asset, vests on the exercise of the option/s by the assessee, and not at any time earlier, who, at best, could be considered as having held the shares for a single day. In fact, it states this in the alternative, observing that the assessee did not become the owner of the shares at any point of time. This is also precisely what the A.O. states in the alternative (as did the assessing authority in that case). The shares were not intended to be held in-as-much as the payment of cost, a precondition for their acquisition, could not be made. The assessee’s account was accordingly settled, for all intents and purposes, otherwise than through delivery, yielding speculative gain, assessable u/s. 43(5), and which could itself fall under any head of income, including ‘capital gains’. Thus we confirm the assessment of income on the sale of shares, as short-term capital gain or, in the alternative, as income from other sources, not liable for exemption u/s.10(38) or s. 54EC of the Act. We decide accordingly. - Decided against assessee.

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• 2015 (11) TMI 1366
  Penalty u/s 271(1)(c) - Held that:- The company of this stature can have a mensrea of concealing the particulars of income for a meager sum of Rs. 3 lacs even when all the conditions required for a genuine transaction of commission payments have been brought on record by the assessee company except the agency contract agreement stamp paper, which was purchased on 8th July, 2012 and the clause mentioning the existence of oral agreement between the principal and agent was missing, which could have regularized the service contract w.e.f. 24.11.2001. For this single mistake, it will not be justified to treat the assessee in default and to impose penalty Section 271(1)(c) of the Act refers to the situation whether the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income, which in the case of assessee doesn’t seem to apply because assessee has given complete particulars of his income and expenditure and has paid the commission by banking channel and deducted tax at source and out of the total commission expenditure of Rs. 64,77,790/-, Assessing Officer has already allowed the claim of commission of Rs. 61,77,790/- and nothing contrary to the type of services and payment to the agent has been brought before us and therefore, in these circumstances, we do not find any reason to sustain the penalty imposed u/s.271(1)(c) of the Act at Rs. 1,07,100/- on the assessee and therefore, we delete the same and allow the ground of assessee. - Decided in favour of assessee.

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• 2015 (11) TMI 1365
  Transfer pricing adjustment - selection of comparable - Held that:- Perusing the said para 10 of the DRP”s order for the AY 2009-2010 find merit in the argument of the Ld Counsels for the assessee that the AO should consider the said comparable (Arraycom Ltd) without any adjustments. Accordingly, this part of the ground is allowed in favour of the assessee. We have perused the calculations furnished in Annexures 1A and 2A for the proposition that assessee is within the allowed margin of (+)/(-) 5% if the above issues are decided in assessee”s favour. We have held that Arraycom Limited should be allowed as comparable without adjustments and the case of Shyam Telecom Limited should be considered in favour of the assessee, therefore, in principle, both the arguments of the assessee are approved for the reasons given in the above paragraphs of this order. However, the figures given by the assessee in the said Annexures 1A and 2A are required to be verified. For this purpose, we remand this issue to the file of the AO for verification considering the above discussion. Granting of the depreciation u/s 32 on the goodwill being an intangible asset - Held that:- The additional ground is legal in nature and the same is required to be adjudicated as per the ratio of Supreme Court laid down in the case of Smifs Securities Limited [2012 (8) TMI 713 - SUPREME COURT (SC)] wherein it was held that the Goodwill constitutes an “asset” under Explanation 3(b) to section 32(1) of the Act. - Decided in favour of the assessee. Depreciation in respect of the capitalized software expenditure - Held that:- AO is directed to grant depreciation as per the relevant rules in respect of the software expenditure capitalized by the Revenue which is the subject matter of dispute raised in ground no.9. - Decided in favour of the assessee.

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• 2015 (11) TMI 1364
  Addition of outstanding balance due to M/s Ganesh overseas u/s 41(1) - Held that:- The existence of M/s Ganesh Overseas cannot be doubted, as it has a PAN number and it has been dealing with the assessee in the earlier F.Ys 2002-03 and 2003-04. This fact has been recorded by the Ld.CIT(A) in para 4.2 of his order. The amounts are received through account payee cheques and the assessee has sold DEPB licenses to the above party. Under these circumstances the addition u/s 41(1) cannot be made As regards the other amounts, confirmation letters have been filed by the assesee and the addition cannot be made merely on the ground that a letter posted by the A.O. to the assessee, has been returned unserved. The PAN number of the proprietor M/s Ganesh Overseas, has been furnished by the assessee. The A.O. could have made enquiries on the existence of the party from the concerned A.O. In any event, the assessee has not explained the difference. The facts have not been brought out clearly by the assessee. The reconciliation statement of the difference in opening balances have not been furnished. The A.O. has also not properly brought out the facts on this issue. Hence we deem it fit to set aside the matter to the file of the Ld.A.O. for fresh adjudication in accordance with law. Addition on outstanding balance of sundry creditors as income of assessee u/s 41(1) - Held that:- The Ld.CIT(A) sustained the addition on the ground that the assessee had not furnished any evidence to support the credit balances . Applying the propositions laid down in CIT vs. Auto Kashyap India Pvt.Ltd. (2010 (4) TMI 53 - DELHI HIGH COURT), the disallowance has to be deleted, as there is no writing off of the liability by the creditors. In the result this ground of the assessee is allowed. Disallowance of salary paid to the wife of Shri Anil Khanna, partner of the firm - disallowance made u/s 40A(i)(a) - Held that:- Salary paid to the General Manager was only Rs. 1,20,000/-. Smt. Ballu Khanna was paid Rs. 1,80,000/-, though she is only a graduate and this was her first employment. Hence, her qualifications and work experience to justify the payment of salary of Rs. 1,80,000/- could not be brought on record by the appellant. Hence in agreement with the findings of the AO that the payment of salary is excessive having regard to the fair market value of the services for which the payment is made. Accordingly, the disallowance is upheld. - Decided against assessee.

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• 2015 (11) TMI 1363
  TDS u/s 194A - Site Restoration Account - Held that:- Following the decision of coordinate bench of the ITAT in the case of the assessee itself [2014 (7) TMI 905 - ITAT DELHI] we hold that Site Restoration Account is not a term deposit for a fixed period and therefore in view of clause (vii) to section 194A(3), provision of section 194A are not applicable and the assessee was not liable for deducting tax at source on the interest credited in SRA. - Decided in favour of assessee

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• 2015 (11) TMI 1362
  Disallowance of 10% of the value of purchases - the suppliers did not respond to the notices issued by the AO - CIT(A) deleted the addition - Held that:- CIT(A) has followed the decision rendered in the case of Nikunj Eximp Enterprises Pvt Ltd (2013 (1) TMI 88 - BOMBAY HIGH COURT) to grant relief in respect of this addition wherein held that merely because the suppliers have not appeared before the AO or the CIT(A), one cannot conclude that the purchases were not made by the respondent assessee. In the instant case also, the AO has made the impugned addition only for the reason that the suppliers did not respond to the notices issued by him. No other material was brought on record by him. Hence, the reasoning given by the AO does not justify the addition made by him. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting this addition. - Decided in favour of assessee. Disallowance of labour charges - CIT(A) deleted the addition - Held that:- We notice that the assessee has furnished the details of labour charges before the AO, but the assessing officer did not examine the same with the reasoning that the same was filed at the fag end of the assessment. Before Ld CIT(A) has submitted that the assessee had deducted tax at source against those payments. During the course of hearing, the Ld A.R carried us through the various details furnished before the AO. Thus, we notice that the assessee has furnished the relevant details, but the assessing officer has made the impugned disallowance without finding fault with those details. Hence, we are of the view that the Ld CIT(A) was justified in deleting this addition also. - Decided in favour of assessee. Addition of sundry creditors balances - additions made for the reasoning that the assessee did not furnish confirmation letters obtained from them - CIT(A) deleted the addition - Held that:- CIT(A) has taken the view that the assessing officer has made this addition on surmises and conjectures. The Ld A.R submitted before us that the assessee had provided the addresses of all the sundry creditors and the assessee could not furnish the confirmation letters only for want of time. Accordingly he contended that the assessing officer was not justified in drawing adverse inferences without finding fault with the account books of the assessee. We find merit in the said contentions. Admittedly, the assessee was not given sufficient time to furnish the confirmation letters. Even otherwise, it is stated that two of the three parties are having running accounts with the assessee. The third party has been fully paid in the succeeding year by way of cheques. Thus AO was not justified in drawing adverse inferences against the assessee without bringing any other material on record. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting this addition also.- Decided in favour of assessee.

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• 2015 (11) TMI 1361
  TDS u/s 194C - breaking-up the bill into reimbursement and charges - payment made by the assessee towards freight to Forwarding and Clearing Agents - non deduction of TDS u/s.40(a)(ia) - Held that:- The bills raised are clear-cut bills raised on the Assessees herein and they do contain the break-up of the various heads but nowhere is there a claim of reimbursement. Further, when a bill is raised by a Clearing and Forwarding agent on an Assessee, the bills is a consolidated bill. The Assessee cannot break-up the said bill into reimbursement and charges. This is because the Assessee is not in any way entitled to quantify the income of the Clearing and Forwarding agent. What is the commission of the Clearing and Forwarding agent from the airlines is not known to the Assessee. Similar is the case in respect of other expenses also. In these circumstances, the claim of the Assessee that the expenses are reimbursement and consequently are not liable for TDS would not be a ground for non-deduction of TDS. Further, in the Assessees' own case for the earlier assessment year, on identical facts the co-ordinate bench of this Triunal had already taken decision and no change in facts have also been brought to the attention of the Tribunal. In fact, both the ld. DR and the ld. AR on behalf of the Assessees admit that the facts remain the same. - Decided in favour of revenue

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• 2015 (11) TMI 1360
  Disallowance of loss in respect of valuation of closing stock - change in the method of valuation of stock of shares - CIT(A) deleted the addition - Held that:- It is a basic principle for accounting that the valuation of stock in trade has to be done "at cost or market price, whichever is lower" and the same is in consonance with other important accounting principle that anticipated loss is required to be considered, while drawing the final accounts. In the present case, the assessee however was earlier following the method of valuing the stock of shares at cost which, in my opinion, was not correct method followed by the assessee, as the shares represented its stock in trade. As per the advice of the statutory auditors, which was duly supported by the relevant guidelines issued by the RBI as well as Accounting Standard-2 issued by the ICAI, the assessee, therefore, changed the method of valuation of stock of shares from "at cost" to "either cost or market price whichever lower" and since the new method adopted by the assessee was more proper and correct and the same was consistently followed by the assessee in the subsequent years, I am of the opinion that there was no justification on the part of the AO to reject the same merely because it had resulted in loss. CIT(A) appreciated all the relevant facts of the case in proper perspective and allowed the claim of the assessee for loss as a result of change in the method of valuation of closing stock, which was fully justified. No justifiable reason to interfere with the order of the ld. CIT(A) giving relief to the assessee on this issue. - Decided against revenue.

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• 2015 (11) TMI 1359
  Rental income derived by exploiting the stock in trade/work-in-progress - CIT(A) treated it as income from house property - Held that:- The issue is exactly identical and covered in favour of the assessee by the coordinate bench decision in assessee's own case for AYs 2004-05 and 2005-06 wherein held that considering the period for which the flats have been let out, as per the agreement, it could not be said that the said flats have been let out only for a short period. We are of the considered view that the assessee has let out those flats as an owner to exploit the income from those flats as owner of the assets.Accordingly, we hold that the rental income realized by the assessee is the income from house property and is to be assessed under the head "income from house property". Therefore, we uphold the orders of the Ld. CIT(A) by rejecting the grounds of appeal taken by the Department - Decided in favour of assessee. Interest & finance charges - revenue v/s capital expenditure - Held that:- As the facts relating to the issue in hand are raised before CIT(A) for the first time and this can be verified by the AO in case bench feels so. We deem it fit and appropriate in the interest of natural justice and fair play to set aside this issue to the file of AO to consider the fresh submissions made by the assessee before the CIT(A) for the first time and decide the issue in accordance with law.

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• Customs

• 2015 (11) TMI 1403
  Confiscation of goods - Identity of owner of gold and source not known - Held that:- Shri Shyam Lal Pal was intercepted on 02.06.1999 outside the Railways Station, Bikaner carrying 10 gold biscuits and 3 pieces of gold who stated that he is an employee of Shri Gopal Chand alias Gopal Sita for delivery of the said gold to Shri Shyam Sunder Soni. When Shri Gopal was interrogated he revealed that he has purchased the said gold from the appellant before me who on interrogation revealed that he has purchased the gold from Shri R K International, Chandni Chowk, Delhi against an invoice and showed all the documents for procurement of gold through proper channel. When the appellant has been able to show the source of procurement by proper channel and on payment thereof. In these circumstances, the order of this Tribunal dated 13.05.2005 held that Shri Shyam Lal Pal, Gopal Chand alias Gopal Sita and Shyam Sunder Soni are not the owner of the impugned goods. In those circumstances, only the appellant is the owner of the impugned goods. - there is no dispute regarding the identity of the appellant as well as ownership thereof, further, the appellant has been able to establish the proper source of the procurement of the impugned goods. In that circumstances, I hold that impugned goods are not liable for confiscation - Decided in favour of assessee.

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• 2015 (11) TMI 1402
  Denial of CVD exemption - detention certificate for waiver of demurrage charges for delay - Violation of principle of natural justice - Revenue submits that Commissioner (Appeals) has no powers to direct to issue detention order and also to direct that amount should be recovered from the officials and paid to the respondent-importer as part of the action contemplated in Board's instructions dt. 13.2.2012 and Circular No.42/2001-Cus. dt. 31.7.2001. - Held that:- Respondents have filed appeals claiming benefit of exemption notification against Bills of Entry and claimed for detention certificate. Prima facie , we find that Commissioner (Appeals) has passed the present orders without giving any opportunity of hearing from the department's side view whether the department has considered their letter and denied issue of detention certificate. Though respondent claimed benefit of exemption notification, the appellate authority has not decided the main issue on admissibility of exemption notification but only directed the assessing group to issue a speaking order. Instead, he directed the Commissioner of Customs, to forward the case to DG Vigilance for fixing responsibility on the officials - prima facie , the Commissioner (Appeals) order is not in conformity with law - order of Commissioner (Appeals) stayed - Revenue's stay applications are allowed.

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• 2015 (11) TMI 1401
  Confiscation of goods - Proper authorization for import of rough marble blocks not taken - Contravention of Section 3 of Foreign Trade (Development and Regulations) Act, 1992 read with Section 11(2) (V) of Custom Act, 1962 - Held that:- there are some contrary judgments, also as relied upon by the Revenue wherein this Tribunal without reducing the penalty upheld the fine and penalty confirmed by the lower authority. However we observed that the facts of the import of rough marble blocks are more or less identical and in the case of Stoneman Marble Industries, Honble Supreme Court upheld the order of the Tribunal wherein redemption fine was fixed at 20% and penalty at 5% of CIF value. As regard contrary judgments of this Tribunal, in none of the case, judgment of Stoneman Marble Industries was considered. Therefore following judicial discipline, the ratio of the Apex Court judgment in case of Stoneman Marble Industries shall prevail over the other Tribunal judgments. Therefore following the ratio of the Stoneman Marble Industries case we reduce redemption fine of Rs. 16 Lakhs to 20% of CIF value and penalty of Rs. 6 lakhs is reduced 5% of the CIF value. - Decided partly in favour of assessee.

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• 2015 (11) TMI 1400
  Denial of refund claim - Reassessment in terms of Section 17 (4) of the Customs Act - Provisional assessment - Held that:- Once an assessment is kept open, and resultantly provisional, the same would be provisional for all the aspects. It cannot be said that the assessment was finalized vis-a-vis a legal issue of addition of export duty in the assessable value and was provisional for the other aspects. Such assessment has been rightly held to be not a final assessment by the Commissioner (Appeals). - refund cannot be filed directly without putting a challenge to the assessment order are not directly applicable to the facts of the present case. The same relate to a situation where there was a lis between the assessee and the Revenue and that lis stands finally adjudicated in the adjudication order. When the order of assessment itself says that the same is open to reassessment, the assessee can admittedly file the refund claim by praying for reassessment of the order, which the Assistant Commissioner has himself allowed. The non-challenge to such an order, before filing the refund claim, would not act as rebuttal to the assessee’s claim. - no justifiable reason to interfere in the impugned order of Commissioner (Appeals). - issue of inclusion of export duty in the assessable value of the final product to be exported is not in dispute and also stands settled by the Board’s Circular dated 10.11.2008. As such we agree with the appellate authority that the differential excess duty paid by the respondent is required to be refunded to them. - Decided against Revenue.

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• 2015 (11) TMI 1399
  Confiscation of vessel - whether there was a deliberate attempt to export the old and used vessel in the garb of a new one - respondent stated that only a Free Shipping Bill had been filed. They only wrote to Assistant Commissioner for Drawback Registration and later withdrew their request. - Imposition of penalty - Duty drawback claim - Mis-declaration - Held that:- Under Drawback Rules, old and used goods are ineligible for drawback. This report of Superintendent which is countersigned by the Assistant Commissioner on 19.12.2012 is written on the respondent s request letter of 14.12.2012. But the A.C. did not order any action such as seizure of the vessel. It appears that the vessel was seized initially for failure to pay Central Excise duty. However, we understand that the non-payment of Central Excise duty is a matter of separate proceedings under the Central Excise Act. This seizure by Central Excise authorities was effected on 26.12.2012. Till this time there was no proposal to seize the vessel for attempt to export which would have made it liable for confiscation under Section 113h(ii). If indeed there was a deliberate attempt to export the vessel by fraudulently mis-declaring it as a new vessel, the question arises why Customs did not find it appropriate to seize the vessel. There is no offence committed if exporter makes preparation to claim drawback by preparing the job card to expedite matters. Viewed legally, we find that the only Shipping Bill with the Customs was the Free Shipping Bill. Regulation 4 of the Regulations clearly states that Shipping Bill shall be deemed to have been filed when, after entry of Electronic Declaration in the EDI System, a number is generated for the said declaration. We find in the present case the number was not generated. Moreover Revenue has not been able to Ray hands on any documents such as log-book that indicate that appellant had deliberately concealed the fact that the vessel is old and made coastal runs. - Decided against the revenue.

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• 2015 (11) TMI 1398
  Classification of the ships/vessel, brought in for breaking up along with surplus fuel - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- An opinion/clarification issued by Joint DGFT has to be considered as a clarification issued by DGFT & will be binding on the customs so far as ITC restrictions are concerned under Foreign Trade Policy. However, the same clarification issued by DGFT may not be binding on the Customs for the classification of the same goods under the Customs Tariff Act which is the sole domain of the Customs Authorities. However, so far as classification of the ships/vessel, brought in for breaking up along with surplus fuel, will have to be considered classifiable under Heading 89.08 of the Import Policy as an integral part of the vessel/ship, as per opinion given by DGFT under F. No. IPC/4/5(684)/97/82/PC-2(A), dated 26-6-2013. As the imports under ITC (HS) 89.08 are free without any restrictions, therefore, such MGO/HSD contained in the vessels brought in for breaking up, cannot be held as liable for confiscation under Section 111(d) of the Customs Act, 1962 and no penalties upon the appellants are imposable in the present appeals under Section 112(a) of the Customs Act, 1962. It is also relevant to mention that no ITC action is taken by the Revenue when an ocean-going vessel is converted into coastal-run vessel and only duties are paid on the fuel used during the coastal run. - Decided in favour of assessee.

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• 2015 (11) TMI 1397
  Valuation - import of old and used monitors - restricted items - Confiscation of goods - Imposition of redemption fine and penalty - Misdeclaration of goods - Held that:- As per the facts of the case, the appellant has mis-declared the description of the goods and on examination; the imported monitors were found to be used and old. As per the Exim Policy import of old and used items can be made only on the import licence. The appellant fail to comply this requirement of the policy, therefore the goods were rightly confiscated. However, we find that the value of the goods declared and enhanced by the Customs Authority is not much different. The enhancement is only to the tune of Rs. 94,682/- which is not significant. Redemption fine and penalty is reduced - Decided partly in favour of assessee.

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• 2015 (11) TMI 1396
  Denial of benefit of exemption Notification to the goods imported before the issue of public notice dated 18/5/2011 which were ex-bonded after the issue of public notice - removal of condition of Actual user - Held that:- The exemption is available subject to the condition that rate of duty shall apply such quantity of imports for which importer hold tariff rate quota allocation certificate issued by the custom facilitation committee in the DGFT in accordance with the procedure as may be specified.. We find that licence number under which the goods were ex-bonded No. 0550002311 issued to the respondent for release Tariff Rate Quota for the year 2011-12. - If there was any mis-representation it was for the licencing authority to take steps on that behalf. We find that in the present case that there is not even iota on doubt that there was mis-representation on the part of the respondent. Similarly in the case of Autolight (India) Ltd.(2003 (4) TMI 119 - HIGH COURT OF JUDICATURE AT BOMBAY), it was held by the Hon ble Mumbai High Court that custom authorities cannot be sit in pin over the decision of licencing authority. In view of the matter we find nothing miss and held that the licence without actual user stipulation is authority for the --- by the clearance of the subject goods. - no hesitation in rejected the appeal of the Revenue. - Decided against revenue.

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• 2015 (11) TMI 1395
  Penalty u/s 112 for abetment - the facts stated to have been admitted by the appellant were retracted - Held that:- Penalties were imposed under section 112(a) of the Customs Act. In order to penalize any person under this provision of law, it has to be found that, by way of some commission or omission or of abetment of such commission/ omission of another person, he rendered imported goods liable for confiscation under section 111 of the Act. On a scrutiny of the relevant show-cause notices, we find that goods which were allegedly smuggled into India were proposed to be confiscated under various provisions of section 111, but neither of the lower authorities has brought out anything to connect any of such goods with the appellant. The 'finding' against the appellant has to be discerned from para 18 of the Orders-in-Original. However, no finding relevant to section 112(a) of the Customs Act is so discernible. As regards the Orders-in-Appeal, the state of affairs is worse inasmuch as the appellant has been held liable for penalty merely on the basis of his statement dated 29.5.2003. We have perused this statement also, but we have not found any material therein which would show that, by some commission / omission or abetment, he rendered any of the goods in question liable for confiscation under section111. It is also pertinent to note that his involvement in relation to the imports in question is through one Shri Jamal. Shri Jamal's statement, however, does not contain any material to indicate that the appellant filed the relevant Bills of Entry or did anything in relation thereto. - Department failed to bring out any contravention of commission / omission or abetment, it rendered the imported goods liable to confiscation under section 111, therefore, no penalty is imposable under section 112 - Decided in favour of appellant.

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• 2015 (11) TMI 1394
  Confiscation of goods - Import of second hand or defective goods - Imposition of redemption fine and penalty - Held that:- Appellant have imported the consignment in question in compliance with the DGFT Public Notice No. 16/200409 dated 15.10.2004. Further the inspection certificate was also available on record which escaped the attention of the learned Commissioner leading to an erroneous conclusion. Thus, the appeal is allowed. The impugned order is set aside. The appellant is entitled to consequential relief in accordance with law. The adjudicating authority is directed to grant refund of the redemption fine and penalty deposited by the appellant as per Rules, preferably within a period of 60 days from the date of receipt of a copy of this order. - Decided in favour of assessee.

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• 2015 (11) TMI 1393
  Claim interest on delayed refund - refund amount is in the nature of duty or not - Held that:- Though the appellant made the payment of the impugned amount at the time of investigation, the said payment was confirmed as duty vide order dated 1-5-1996 and the said payment was appropriated towards duty demand. Therefore there is no doubt on the pint that what has been paid by the appellant has been adjusted towards duty and it is not a mere pre-deposit as canvassed by the revenue. - it is seen that the appellant had filed refund applications dated 12-9-1994 claiming a total refund of Rs. 30,53,905/-. Therefore, the provisions of Section 27A of the Customs Act, 1962 is clearly attracted and the said section provides for grant of interest on the expiry of three months from the date of refund application till the date of grant of refund irrespective of when the order for refund was actually passed. The ratio of the judgment of the Hon'ble Apex Court in the case of Ranbaxy Laboratories cited [2011 (10) TMI 16 - Supreme Court of India] and of the Hon'ble High Court of Bombay in Voltas (2004 (9) TMI 116 - HIGH COURT OF JUDICATURE AT BOMBAY) would apply to the facts of the case. However, since Section 27A of the Customs Act itself came into force only in May, 1995 and the appellant has claimed the interest for the period from 1-12-1995 onwards, we are of the view that the appellant is rightly entitled for interest at the applicable rates from 1-12-1995 onwards till the date of actual payment of refund - Decided in favour of assessee.

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• 2015 (11) TMI 1392
  Duty demand - Import of 10 numbers cooling bells - denial of the benefit of Project Import Regulations, 1986 - Held that:- 10 Cooling Bells are technically similar in nature of 12 Cooling water+greasing ventilateur extra Kool. The supplier by letter dated 07.3.2005 clarified that the 24 cooling bells delivered includes 10 cooling bells for HNX Batch Annealing Facility items 753; as Cooling water+greasing ventilateur extra kool. The clarification of the supplier is matching with the description of the license - adjudicating authority had observed that there is distinct use of these items, which is not based on any authority. On the other hand, the appellant produced clarification of the supplier and the Ministry of Steel, Government of India, which can not be brushed aside in such a casual manner. In our considered view, the Revenue can not dispute the clarification of the supplier and the Ministry of Steel, Govt. of India, unless there is any contrary material is available and therefore, such clarifications are required to be accepted. Hence the demand of duty alongwith interest and penalty cannot be sustained. - Decided in favour of assessee.

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• Corporate Laws

• 2015 (11) TMI 1387
  Reduction the penalty payable by the Respondent, Roofit Industries Ltd., under Section 15A of the Securities And Exchange Board of India Act, 1992 (SEBI Act) from Rs. 1 crore to Rs. 60,000 - Held that:- On an analysis of the language in the 1961 Act, it is clear that the Legislature intended for non-compliance with the obligation of making a Return to be considered an infraction as long as the default continued. The facts before us are significantly different. The amendment to Section 15A did not indicate that the amended Section would apply to penalties imposed after 29.10.2002. The amendment was merely made with effect from that date, indicating that the change would be applicable for failures occurring after that date. The date on which the failure occurred was thus relevant for deciding the applicable law, not the date on which the penalty was imposed. The relevant version of the Act for us to consider would therefore be that before 29.10.2002, the language of which did not indicate a legislative intent to consider the default a continuing one. As in Deokaran Nenshi, the default was clearly complete on the failure to submit the requisite information by the date set by the Appellant, i.e. 16.9.2002. Had the Respondent furnished the information sought by the Appellant by that date, undoubtedly there would have been no culpability against it. Thus the penalty first became applicable under the pre-amendment Section, which imposed "a penalty not exceeding one lakh fifty thousand rupees for each such failure". The intention of the Section as it then stood was clearly not to consider it a continuing default. Such an intention can be read into the provision as it currently stands, as it imposes a penalty for each day for which the breach continues, but this was not the case prior to 29.10.2002. Facially, this was the reason and necessity for the amendment. As the failure herein was complete on 16.9.2002, the penalty to be imposed on the Respondent in C.A. No. 1364-65 of 2015 and on each of the Respondents in the connected Appeals is Rs. 1.5 lakhs. The impugned judgment of the SAT is set aside and the Appeals are allowed in these terms. The interim stay order dated 18.2.2005 is vacated.

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• Service Tax

• 2015 (11) TMI 1425
  Waiver of pre deposit - Mandatory pre deposit - Section 35F - Held that:- Supreme Court in the case of Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and Ors. [1953 (2) TMI 35 - SUPREME COURT OF INDIA] was considering the provisions of Central Provinces and Berar Sales Tax Act, 1947 - provisions of section 35F would not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of Finance Act 2014 was not made while amending the relevant provisions in the Sales Tax Act. In the absence of any specific provisions regarding applicability of the amendment to the cases pending before the date of amendment, Hon’ble Supreme Court considered the issue and interpreted the provisions. In the present case, the legislative intention clearly comes out from that second proviso and the section is very clear and provides that the amendment would not apply only to the stay applications and appeals pending before any appellate authority which means that any stay applications/ appeals filed on or after 06.08.2014, the amended section would be applicable. - contention of both the appellants that they are not liable to make mandatory penalty of 7.5%/10% as directed in the provisions of Section 35F cannot be accepted. However in the interest of justice, both the appellants are required to be given time to make the payment - Decided partly in favour of assessee.

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• 2015 (11) TMI 1424
  Levy of Penalty u/s 77 & 78 - - Site Preparation and clearance service - Assessee did not file ST-3 returns - Held that:- Service tax for the period of April, 2010 to September, 2010 was paid by the appellant alongwith interest on 14/3/2011 and intimated to the department by filing the ST 3 returns on the same day is not under dispute. Though the audit has pointed out the delay payment of service tax in the month of April 2011 but the appellant had deposited service tax admittedly without any contest much before the issuance of show cause notice. Therefore in my considered view the case of the appellant squarely covered under provision under Section 73(3) of Finance Act, 1994 - the appellant is entitle for waiver of penalty imposed under section 77 and 78, therefore the said penalties are dropped - Decided in favour of assessee.

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• 2015 (11) TMI 1423
  Penalty u/s 78 - Commercial Construction service - Notification No. 1/2006 ST dated 1/3/2006 - Held that:- Since on the issue on merit there were conflicting views and finally issue was decided by the Larger Bench of this Tribunal there is reasonable cause of non-payment of service tax on the abatement amount. Therefore in my considered view Ld. Commissioner (Appeals) has rightly waived the penalty under Section 78 invoking Section 80 of Finance Act, 1944 - Commissioner(Appeals) has correctly invoked Section 80 and waived the penalty of Section 78 - Decided against Revenue.

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• 2015 (11) TMI 1422
  Denial of input service credit - discrepancy in the document on the strength of which Cenvat Credit - Rule 9(2) of Cenvat Credit Rules, 2004 - Appellants has taken Cenvat Credit on the documents which are not correct documents under Cenvat Credit Rules, 2004 - Held that:- as per rule 9(2) of Cenvat Credit Rules, appellant is not entitled to take Cenvat Credit on the strength of these facts - in the case of Music Broadcast Pvt. Ltd., Cenvat credit is sought to be denied by the learned Commissioner (Appeals) on the premise that appellant was not registered at the time of issuance of invoices, I find that said issue has been dealt by the Tribunal in the case of Imagination technologies India P. Ltd [2011 (4) TMI 406 - CESTAT, MUMBAI] - following the precedent decision of this Tribunal, although the appellant was not registered with the service tax department during the relevant time it has availed the services, the appellant is entitled to take Cenvat credit. - neither in the show cause notice nor in the impugned order, it has been disputed that appellant has not availed inputs service and has not paid service tax. - appellant is entitled to take Cenvat credit - Decided in favour of assessee.

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• 2015 (11) TMI 1421
  Interest on delayed refund - Held that:- Interest on delayed refund is payable under section 11BB of the Central Excise Act, 1944 on expiry of the period of three months from the date of receipt of application under section 11BB ibid and not from the date of order of refund or appellate order allowing such refund. - Supreme Court is the law of land and the same is to be followed by all the Courts of India as per Article 141 of Constitution of India, which provides that the law declared by Supreme Court shall be binding on all courts within the territory of India. Thus, following the decision of the Hon ble Supreme Court in the case of Ranbaxy Laboratories (2011 (10) TMI 16 - Supreme Court of India ), I hold that appellant is entitled to claim the interest for the period after three months from 2.8.2006 till 5.12.2012 - Decided in favour of assessee.

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• 2015 (11) TMI 1420
  Services of Erection, Commissioning and Installation Services - Denial of benefit of Notification No.45/2010 ST dt. 20.07.2010 - Held that:- Assessee-Appellant were undisputedly engaged in providing service relating to transmission and distribution of electricity. The claim of the Appellant-assessee is that by virtue of Notification No.45/2010 ST dt. 20.07.2010, no service tax is required to be paid by them for the period in dispute which is prior to 21.06.2010. - Notification has been interpreted by this Tribunal in the case of M.P.Power Transmission Co. Ltd. (2011 (2) TMI 982 - CESTAT, NEW DELHI ) and later in the case of Noida Power Co.Ltd. Vs. Commissioner of C.Ex. Noida [2013 (8) TMI 746 - CESTAT NEW DELHI] and the issue was decided in favour of the assessees - Besides, in view of the clarification issued by the Board, the Appellant are eligible to the benefit of the said Notification. In the result, the impugned Order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1419
  Denial of refund claim - Notification No. 17/2009 ST dated 7/7/2009 - Commission Agent Services - Held that:- Commissioner(Appeals) has relied upon the Board Circular No. 1320/01/2010 ST dated 19-01-2010, which is squarely applicable in the present case. - As per the said Circular refund otherwise admissible under Rule 5 of Cenvat Credit Rules, 2004. There is no dispute regarding nexus between services and export made by respondent. I therefore do not find any infirmity in the impugned order. - Decided against Revenue.

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• 2015 (11) TMI 1418
  Condonation of delay - delay of 291 days - Held that:- The medical certificate when discloses that the appellant was under treatment from 1.2.2013 that does not reveal after 23.11.2012 whether the appellant had any knowledge before his treatment started. It is also curious to notice that 21 days before expiry of the period of filing of the appeal the appellant was under treatment. Added to this, it is further noticeable that when the appellant was discharged from the hospital on 15.8.2013, there were no steps taken by him till 11.12.2013 which was the date of filing of appeal. - The cause stated in the application does not appeal to common sense when there were no steps taken before or after expiry of the limitation. The wide gap of four months from the date of discharge from treatment till date of filing of the appeal does not satisfy the reason of delay. In such circumstances, the plea of loss of the impugned order for a temporary period and discovery thereof after a span of time is untenable. Tribunal has experienced frequently the plea of leaving of an employee soon after an impugned order is received by a litigant and sudden discovery thereof after some time to seek delay condonation. - Condonation denied.

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• 2015 (11) TMI 1417
  Levy of Penalty u/s 76, 77 & 78 - Assessee did not declare the facts in their ST-3 returns nor paid the service tax - whether in applying the provisions of Section 78 proviso, the amount of service tax to be considered for calculation of 25% of penalty should exclude the service tax paid before issue of show cause notice - Held that:- The appellant was aware of the obligations under the Service Tax law because initially he had taken registration from the department but had surrendered the same in April 2008 on the belief that the gross receipts were less than the registration limit. This plea cannot be a bonaflde belief because it has come on record that during the year 2007-08 he had realized an amount of Rs. 19,90,000/-. The mistaken belief now expressed by him, therefore, has no basis. - The receipts for the years 2007-08 and 2008-09 were recovered from him in the form of computerized sheets to which there is no denial. - Decided against assessee.

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• 2015 (11) TMI 1416
  Waiver of pre deposit - mandatory pe-deposit - Scientific or Technical services - Penalty u/s 77 & 78 - Held that:- Appellants are the manufacturer of 'Bulk Drugs and formulations falling under chapter heading 29 and 30 of the first schedule to teh CETA, 1985. They have entered into an agreement with their Principal Company Actavis Elizabeth LLC, USA for development of new products. Once the contract is approved, the commercial production of new products would be carried out by the appellants in India. Therefore, prima facie, the appellants are not made out a case for waiver of pre-deposit. In this regard, the Hon'ble High Court of Rajasthan (2015 (6) TMI 110 - RAJASTHAN HIGH COURT) held that the amendment of Section 35F of Central Excise Act, 1944 for mandatory deposit of 7.5% or 10% applies for the earlier period prior to 06.08.2014. In view of the above, the appellant is directed to make pre-deposit of an amount - Partial stay granted.

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• 2015 (11) TMI 1415
  Denial of refund claim - use of Technical Testing Services in export of goods - Held that:- there is no doubt that the said service was used in relation to exported goods and such testing was required to be done as per the written agreement with the buyers and also the said service is duly covered under Notification No.41/2007-ST, dated 06.10.2007 and therefore we fail to comprehend the ground on which the Revenue considered this amount of refund to be inadmissible. As regards the refund of Rs. 87331, we find that the invoices have been raised by Mumbai Port trust which clearly show the amount of service tax therein and the name of the respondent is also duly mentioned therein. Port services are specifically covered under Notification No.41/2007-ST, dated 06.10.2007. The judgement of CESTAT in the case of Velji P & Sons (2007 (8) TMI 35 - CESTAT, AHMEDABAD) is of no help to Revenue when the invoices themselves have been issued by Mumbai Port Trust and show the amount of service tax therein because the said judgement nowhere states that the refund of service tax paid under Port Services is not admissible as per Notification No,41/2007-ST. No infirmity in the impugned order - Decided against Revenue.

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• Central Excise

• 2015 (11) TMI 1414
  Claim of exemption on clearance of product known as "Crane Gutkha" which is containing chewing Tobacco - Whether branded or not - Benefit of Exemption Notification No. 08/2001 CE dated 01.03.2001 - Held that:- the goods of the assessee are preparations containing chewing Tobacco. Thus, the only question is as to whether branded or unbranded preparations in order to qualify for exemption under the aforesaid Notification, the assessee has to prove that goods are unbranded. We have already pointed out above that the assessee is selling these goods under the brand name "Crane Gutkha". However, the contention of the learned counsel for the assessee is that since this is the home brand name that brand name belongs to the assessee itself which has to be treated as unbranded. This contention proceeds on the premise that the branded goods belonging to third party only would be treated as branded and insofar as goods sold under brand name belonging to the assessee are concerned, they have to be treated as unbranded. This contention is clearly misconceived and untenable. - judgment of the Tribunal is unsustainable in law and is liable to be set aside. Thus, holding that the assessee is not entitled to any exemption under the aforesaid Notification - Decided in favour of Revenue.

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• 2015 (11) TMI 1413
  Manufacture - dutiability of the intermediary product 'Clinker' - captive consumption - whether the product "Clinker" is covered by the Exemption Notification No. 67/1995 - Held that:- Clinker is used as input for production of Cement and Cement is exempted from the excise duty. Therefore, by virtue of this proviso insofar as Clinker is concerned, Exemption Notification would not apply. However, the matter does not end here inasmuch as the proviso itself is not applicable under certain circumstances as mentioned therein, viz., in respect of those goods which are cleared under six circumstances. We are concerned here with clause (vi) which states that if goods are cleared by a manufacturer of dutiable and exempted final products after discharging the obligation prescribed in Rule 6 of the CENVAT Credit Rules, 2001, then proviso would not apply. The case set up by the appellant therefore, was that since the exempted goods ('Cement') is cleared by the appellant who is a manufacturer of (a) 'dutiable final products' ('Clinker') and (b) 'exempted final products' ('Cement') after discharging the "obligation" prescribed in Rule 6 of the CENVAT Credit Rules, 2001, clause (vi) of the notification applies. Applicability of Rule 6 of Cenvat Credit Rules - Held that:- As per the CESTAT, Rule 6 applies only if some final product is partly exempt and partly dutiable. However, we do not find any such restriction in Rule 6 which contemplates the situation where a manufacturer produces (a) final products which are chargeable to duty, as well as (b) exempted goods. The Rule does not provide that the same final product should be partly dutiable and partly exempted. On the contrary, this Rule relates to taking of CENVAT Credit in respect of 'inputs'. Reversal of Cenvat Credit - Rule 6 is not applicable as such in its totality since taking of CENVAT credit is not in issue in these cases. On the other hand, relevance of this Rule is only to the extent of 'obligation' contained in the said Rule which is to be discharged. A plain reading of clause (vi) of the notification would show that it only contemplates a situation where 'a manufacturer manufactures both dutiable as well as exempt final products'. There may be different final products manufactured by the same manufacturer. The final products may be made out of the same product or out of different products. Clause (vi) does not contemplate that the manufacturer should manufacture only 'one final product' or that if he manufactures only one product that product itself should be both dutiable and exempted. The basis adopted by the CESTAT that the 'same final product' should be partly dutiable and partly exempt, is neither a requirement of clause (vi) nor a requirement of Rule 6. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1412
  Rate of duty - Valuation of goods - applicability of Notification No.14/2002-CE dated 01.03.2002 - Held that:- in the light of the provisions of section 35G read with section 35L of the Central Excise Act, 1944 these appeals are not maintainable before this court - Decided against Revenue.

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• 2015 (11) TMI 1411
  Clandestine removal - documents recovered broker of final product of assessee - statement recorded from broker was retracted and broker could not be produced for cross-examination by the assessee - High Court dismissed the appeal filed by Revenue against the decision of Tribunal [2010 (3) TMI 700 - CESTAT, BANGALORE]; wherein tribunal held that statement could not be used to find evasion. High Court dismissed the appeal by holding that Court has dismissed an appeal previously. Hence, this appeal is also dismissed.

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• 2015 (11) TMI 1410
  Imposition of penalty - contravention of the provisions of Rule 8(3) of the Central Excise Rules, 2002 by not paying the duty by due date as specified under Rule 8(1) of the Central Excise Rules, 2002 - whether the default committed by the respondent under Rule 8 warrants penalty under Rule 25 as held by the Additional Commissioner, or Rule 27 as held by the Commissioner (Appeals) - Held that:- In view of the law cited by the learned Commissioner (Appeals) in his order, I am of the considered opinion that the default committed by the appellant is not such so as to attract penalty under Section 11AC and Rule 25 of the Central Excise Rules, 2002. Further, the penalty imposed on the respondent under Rule 25 is perfectly in accordance with law and I uphold the decision of the Commissioner (Appeals) - Decided against Revenue.

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• 2015 (11) TMI 1409
  SSI exemption benefit under Notification No.8/2001, 8/2002 and 8/2003 - clearance of the goods on their own account and paid duty in respect of clearance of the goods bearing brand name of the loan licensee - Invocation of extended period of limitation - Held that:- Appellant had disclosed the location of the factory, clearance of goods on payment of duty separately in the ER-1 return. In any event, the Appellant cleared the goods bearing brand name of the loan licensee and declared in their ER-1 return. So, the Department was aware of the location of the factory in the rural area. Thus, there is no suppression of facts with intent to evade payment of duty. We also find that the decision of the Tribunal in the case of Pharmanza (India) (2009 (1) TMI 556 - CESTAT, AHMEDABAD) is squarely applicable in the present case. - demand of duty for the extended period of limitation cannot be sustained and the Adjudicating authority rightly dropped the demand for the extended period of limitation. The demand of duty with interest for the normal period of limitation is upheld. - Adjudicating authority directed to requantify the demand for the normal period of limitation as contended by the Assessee - Appeal disposed of.

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• 2015 (11) TMI 1408
  Reversal of CENVAT Credit - GTA service - Whether the appellant is required to reverse credit availed on GTA services on HR coils cleared as per Rule 3(5) of Cenvat Credit Rules, 2004 - Held that:- Decision of the Tribunal in the case of Lacto Cosmetics (Vapi) Pvt.Ltd. (2012 (12) TMI 642 - CESTAT AHMEDABAD ) as well as the decision of Punjab & Haryana High Court in the case of CCE, Chandigarh-I vs.Punjab Steels (2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT). The decision of the Tribunal in the case of Lacto Cosmetics (Vapi) Pvt.Ltd. is per incuriam and is not applicable to the facts of this case. With these terms, the appellant is not required to reverse credit on GTA services as per Rule 3(5) of Cenvat Credit Rules, 2004. Accordingly, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (11) TMI 1407
  CENVAT Credit - Relevant documents - whether respondent is entitled to take Cenvat credit on the strength of the attested copy of Bill of Entry or not - Held that:- There is no dispute that duty has been paid by the respondent themselves and goods have been received by them. Therefore, Cenvat Credit cannot be denied to the appellant. Moreover if there is no dispute on the bills of entry same can be verified from the Revenue’s record. - infirmity with the impugned order. Same is upheld - Decided against Revenue.

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• 2015 (11) TMI 1406
  CENVAT Credit - whether the appellant is eligible for the benefit of CENVAT credit of Rs. 1,20,542/- for the period from October 2006 to November 2010 in respect of welding electrodes which were used for maintenance and repair of plant and machinery - Held that:- Since the Hon'ble Supreme Court [2010 (11) TMI 34 - SUPREME COURT OF INDIA] has referred the issue to the Larger Bench in view of the fact that there were contrary views earlier, the demand relating to extended period cannot be sustained. In this case, the show cause notice was issued on 23.12.2010 whereas the period for the demand relates to 1st October 2006 to November 2010. The entire demand is beyond the normal period of limitation and in view of the fact that there were several decisions in favour of the assessee during the period and matter has been referred to Larger Bench by the Hon'ble Supreme Court, the appellant succeeds on limitation itself. - Decided in favour of assessee.

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• 2015 (11) TMI 1405
  Admissibility of cenvat credit - House Keeping and Gardening Services - Held that:- In view of the settled preposition of law, as per the relied upon judgments [2010 (1) TMI 301 - CESTAT, BANGALORE], [2011 (4) TMI 1122 - KARNATAKA HIGH COURT] & [2013 (6) TMI 618 - ITAT DELHI] cenvat credit of Housekeeping Service and Gardening Services is admissible to the appellant - Decided in favour of assessee.

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• 2015 (11) TMI 1404
  Denial of CENVAT Credit - Capital goods - Improper documents - Held that:- Importer has filed declaration before the Revenue authorities that the goods entered in the bill of entry have been transferred to the appellant. Moreover, the invoice has been issued in favour of the appellant for transfer of the goods for the appellant. Therefore, I hold that the appellant has correctly taken the credit on the strength of document showing duty paying character of the goods. As the duty paid on the goods has not been disputed - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (11) TMI 1391
  Levy of VAT on smart cards - Contract for sale or contract for service and labour - The assessee had purchased ID Smart cards for transport department - Assessee contended that the use of smart card for printing data and delivering the same to the transport department is incidental - They are the property of the transport department and were never considered as the property of the assessee. - Held that:- The smart card is only a media through which the particulars of each driver is embedded by virtue of the software which the assessee has developed. There is no transfer of intellectual property when the smart card is handed over to the department. The intellectuality is used to render the services by way of supply of smart cards after the same is purchased as a blank smart card. The requisite information is embedded and supplied to the department. The use of smart cards for printing data and delivering the same to the transport department is incidental. An article or commodity or a material must be something which can ordinarily come to the market to be bought and sold. It must have a distinctive name, character or use. Thereafter it should satisfy the test of abstraction transmission, transfer, delivery, storage and possession, etc. The essential test to be satisfied before an article is said to be 'goods' is the test of marketability. In the market, the said goods is to be known as a commodity which is useful to a customer. In other words it should be known to the market as goods. That is, such goods must be bought and sold in the market. Therefore, an article or commodity or a material must be something which can ordinarily come to the market to be bought and sold. It must have a distinctive name, character or use. Thereafter it should satisfy the test of abstraction transmission, transfer, delivery, storage and possession, etc. The smart cards supplied to the department are not commercial commodities. The same cannot be sold to any other person. The smart cards, which are produced by the petitioner, have no utility or value to any other person than the department who paid for the service rendered by the petitioner. The material purchased and utilized in preparation of photo-identity cards is incidental. Another important aspect is that the smart cards also contained the official logo of the Government of Karnataka along with key management microchip. The same cannot be used or sold by the petitioner to any other person. As such, it was a special kind of job and delicate in nature which is predominant in the transaction and not the value of the materials which are used in executing the job. The smart cards are not the commodities saleable in open market. It fetches no commercial value in the open market. Hence, supply of smart cards to RTO cannot be held as sale. It is a contract for labour and service. The contract entered into between the parties for supply of smart cards is for rendering service only and there is no element of sale. - Not liable to VAT - Decided in favour of assessee.

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• 2015 (11) TMI 1390
  Rate of tax - Levy of tax on sale of Battery-parts - claim of the assessee was that rate of tax is to be levied treating it to be on the rate applicable on motor-parts - Held that:- even if some parts of Battery or Battery-parts can be said to be sold for other purposes but primarily it is meant for motorcars. - general rate would not be applicable as Batery and its parts in common parlance is said to be fitted in motorcars. In the case of Commissioner of Sales Tax, Maharashtra State, Bombay v. Acme Mfg. Co. Ltd. [1990 (3) TMI 327 - BOMBAY HIGH COURT], the questions before the Bombay High Court was whether perkins inlet and exhaust valves sold by the assessee were components of diesel engine or not, and whether particular rate is applicable or not? The Bombay High Court, after analysing the material on record came to the conclusion and opined that the diesel engines of which valves were manufactured by the assessee are component parts used in the manufacture of trucks i.e. a motor-vehicles. - Further decision in the case of Bits & Bites [2011 (3) TMI 1516 - RAJASTHAN HIGH COURT] followed. - Decided against Revenue.

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• 2015 (11) TMI 1389
  Application for rectification - Imposition of tax including penalty under Sections 61 and 55 of the Rajasthan Value Added Tax Act, 2003 - Held that:- it may be observed that the order rejecting the rectification application cannot be faulted because the order dated 07.03.2014 with respect to which rectification application was filed, because the cited judgment in CTO Circle-B, Udaipur Vs. M/s Rajesh R Bhosle (New Delhi) was of the Tax Board itself and not of the jurisdictional High Court or the Supreme Court. Besides the demand of tax was not based on the information procured only from Internet. Department also claimed to have procured the required information also from M/s Maruti Suzuki India Limited. The Tax Board cannot therefore be held to have committed any illegality in rejecting the application for rectification. - The findings recorded by the Tax Board need not be interfered with, but if the Tax Board was persuaded to remand the matter to the CTO for deciding all the issues afresh rather than on one and single issue on which the matter was remanded by the Deputy Commissioner (Appeals) - Decided partly in favour of assessee.

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• 2015 (11) TMI 1388
  Quashing of garnishee notice - Recover of sales tax from forest Department - Held that:- Section 17 merely requires a person, from whom money is due to the dealer, to make payment, of the amount referred to in the notice, to the Commercial Tax Department. On payment, the said person is entitled to claim discharge of their liability to the dealer for a like sum. However the notice, under section 17(1) of the Act, can be issued by the assessing authority only if any amount is due from the dealer towards arrears of tax, interest, penalty or fee. The premise, underlying a notice issued under section 17(1), is that the dealer is in arrears of sales tax, interest or penalty. In the present case the dealer is the Forest Department of the Government of A. P. which supplied bamboo to the petitioner. - The impugned notice does not even refer to any assessment orders having been passed against the Forest Department of the Government of Andhra Pradesh. While the Commercial Tax Department has not even chosen to file a counter-affidavit, the Forest Department has not denied the petitioner's assertion that no assessment orders were passed by the Commercial Tax Department against the Forest Department of the Government of Andhra Pradesh. The impugned notice relates to arrears of tax, allegedly due from the Forest Department, under the APGST Act for the years 1991-92 to 2004- 05 - in case the Forest Department of the Government of Andhra Pradesh demands payment of sales tax on the bamboo cuts supplied by them, it is always open to the petitioner to challenge such orders in appropriate legal proceedings. - Petition disposed of.

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