Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 6, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance u/s.43B - Tribunal erred in deleting disallowances being employees' contribution to PF account/ ESI account made by the Assessing Officer as such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) - HC
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Transfer pricing adjustment - CUP method as the Most Appropriate Method for determination of ALP for international transactions. The assessee is also directed to furnish the comparables based on independent TP study for adoption of CUP method and produce such other evidences and documents before the Learned TPO / AO to ensure quick disposal of this set aside proceedings. - AT
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Transfer pricing adjustment - TNMM has almost become the ‘default’ method for taxpayers in recent years. - As such, the TNMM often proves easier to apply than, say, the Cost Plus or RPM methods, and TNMM is less sensitive to minor differences in the products being sold. - AT
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Penalty u/s 271(1)(c) - for such lump-sum disallowance out of wages on the basis of presumption, no penalty u/s 271(1)(c) is leviable - AT
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Addition u/s 68 - cessation of liability u/s. 41(1) - there is nothing on record to show that there was either remission or cessation of liability of the assessee - AT
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Unsecured loans added as unexplained cash credit u/s. 68 - assessee has failed to prove the creditworthiness of the five loan creditors and therefore failed to substantiate the receipt of unsecured loan - AT
Customs
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Suspension of CHA License - Department appears to have taken advantage of the expressions 'suspension' appearing under Regulation 20 as well as Regulation 22 - The distinction between two Regulations is that one is a suspension pending enquiry and the other is a suspension by way of penalty. - HC
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Valuation of goods - Enhance of value - No SCN issued - Violation of principle of natural justice - enhanced value uncontested and voluntarily accepted, and accordingly payment of duty made discharges the burden of the department to establish declared value to be incorrect - AT
Corporate Law
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Sale after winding up - Deed of Assignment executed by exdirector - rights of secured creditor - The mere fact that the Official Liquidator has not yet adjudicated the claims of workmen would not disentitle them to a pari passu charge or leave a secured creditor free to deal with a security as he chooses. - HC
Service Tax
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Advertising Agency service or sponsorship service - Import of service - The service rendered by sports bodies abroad could possibly be covered under the head of 'Sale of Space or Time for Advertisement and Sponsorship Services', which became taxable with effect from 01.07.2006. However, taxable services in relation to sponsorship services specifically excluded sponsorship of sport events. - AT
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Refund - Unutilized CENVAT Credit - Export of service or not - research and analysis regarding investment was carried out in India but that services are provided to US based entity and the recipient is a US based entity - To be held as Export of services - Refund allowed - AT
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Rejection of Refund - Delivery Challan clears that transportation of Bauxite Ore was undertaken by Goods Transport Agency on behalf of assessee who is a sole proprietorship firm - no liability of pay service tax on the assessee - refund of service tax paid earlier allowed - AT
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Construction of Residential Complex Service - CBE&C has issued a clarification in 2010 and appellants had written a letter in October 2008 to CBE&C seeking clarification wherein they had given the details of agreement also. If the Board takes a view after a period of two years just before the amendment, extended period of limitation cannot be invoked - demand set aside - AT
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Refund - unutilized accumulated Cenvat credit - various input services used for export of services - the contention of the adjudicating authority that the said advisory services i.e. Banking & Other Financial Services are used in India and as such the benefit of these services is accruing in India and not outside India does not appear to be correct and it is not tenable - AT
Central Excise
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Clandestine manufacture and removal of goods - Retraction of confession statements - appellant did not want any enquiry on the duress, etc. - during second statement, the appellant did not speak of any retraction and also confirmed the contents of first statement - these retractions are of no consequence. - AT
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Option to avail full exemption or partial exemption with CENVAT Credit - appellant-assessees cannot be forced to pay duty as per serial No. 90 of Notification 4/2006 and they have option to pay the duty under other numbers, viz. 91 and 93. - AT
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Benefit of CENVAT credit - Credit availed on the basis of debit notes - There is no justification for the Revenue to take a period of 4 years to issue the show-cause notice that too without verification of the documents submitted by the appellant. - AT
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Denial of refund claim - Section 11B - unjust enrichment - Commissioner (Appeals) has made serious error in not considering the C.A. certificate as well as balance sheet in proper perspective - AT
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Availment of CENVAT Credit - duty paying document - the payment is made by the appellant and they have accounted for such demand in their books of account. - this is a sufficient proof that the appellant is recipient of the service irrespective of the fact that invoices also bearing name and address of the job worker - Credit allowed - AT
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Demand of interest on payment of differential duty - price escalation clause - when there are diversion decisions on the issue then in my view the judgment which is based on the identical facts has to prevail - demand of interest set aside - AT
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Duty demand - on the fact of such clear cut information given to the department for recredit of the amount in June 2006; the show-cause notice issued in 2011 is to be held as time barred and no suppression, misstatement is proved against the appellant. - AT
VAT
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Refund of sales tax - some price variation is there in the shape of reduction of the value - it cannot be said to be a case of reduction/discount as everything has happened after delivery which cannot be said to be price reduction or discount - HC
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Power to confiscate / detain vehicles transporting goods - irrespective of whether they were covered by a transaction of sale or purchase - when the scheme envisaged in section 49 of the KVAT Act is considered in its entirety, it cannot be said that it falls foul of the Constitutional provisions for holding it to be invalid and unconstitutional. - HC
Case Laws:
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Income Tax
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2015 (11) TMI 190
Assessment under Section 153A read with Section 144 - On the filing of the additional evidence before him, the Commissioner of Income Tax (Appeals) forwarded the paper books itself to the Assessing Officer and required the Assessing Officer to examine the new evidences/details/submissions of the assessee and to give a report - satisfaction of conditions laid down in Rule 46A of the Rules - Held that:- This is a case where the Commissioner (Appeals) has allowed the Assessing Officer adequate opportunity as provided under sub rule 3 to examine the evidence produced by the appellant. In the remand report that he has furnished apart from requesting for its rejection, the Assessing Officer did not, either dispute the genuineness of the documents nor did he ask for cross examination of the witness, or to adduce any evidence in rebuttal of the documents produced by the appellant. In other words, sub rule 3 has been fully complied with. It was thereafter, that the First Appellate Authority proceeded to adjudicate the appeal, duly taking into account the additional evidence produced by the appellant. One of the contentions raised in these appeals that having admitted the additional evidence, the Commissioner (Appeals) should have remanded the case to the Assessing Officer for his consideration cannot be accepted in the light of sub rule 4, a reading of which shows that it was open to the Commissioner (Appeals) to dispose of the appeal by himself or even to remit the matter to the Assessing Officer. If additional documents are summoned by the Commissioner (Appeals) and produced or if the additional evidence produced by the assessee are in the nature of clinching evidence leaving no further room for any doubt or controversy, it is not necessary to give an opportunity to the Assessing Officer to contradict the same. In other words, the finding of the Tribunal would suggest that in cases where documents are summoned by the Commissioner (Appeals) and in cases where the documents produced are conclusive, the principles of natural justice are excluded. We are unable to enclose these finding of the Tribunal. As held by Delhi High Court in Commissioner of Income Tax v. United Towers (I,) P. Ltd. [2007 (4) TMI 177 - DELHI HIGH COURT] Rule 46A(4) of the Rules does not specifically exclude the principles of natural justice and, therefore, these principles are to be read into the Rules. Therefore, we disprove the finding of the Tribunal.
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2015 (11) TMI 189
Disallowance on account of expenses towards salary and other perquisites of staff - ITAT deleted addition - Held that:- This court is prima facie of the opinion that if any staff is deployed at the residence of the Chairman for the purpose of looking after the basic requirements such as, cleaning of the house, attending to official guests, receiving telephones and such other sundry expenses, the same would fall within the description expended wholly for the purpose of business. However, the amount involved being not very significant, such question is left to be examined in proper appeal proceedings. Disallowance made under section 14A on account of interest expenses - ITAT deleted addition - Held that:- It is an admitted position between the parties that against the order passed by the Tribunal in relation to assessment year 2003-04, revenue had preferred appeal wherein by an order of even date this court has dismissed the ground of appeal. Under the circumstances, for the reasons stated in the above tax appeal, this appeal is also not entertained qua the said question.
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2015 (11) TMI 188
Disallowance u/s.43B - employer and employees contribution to P.F. And E.S.I. made beyond the due date - ITAT deleted the addition - Held that:- Insofar as the employer's contribution to PF and ESI is concerned, the Supreme Court in the case of Commissioner of Income Tax, Kolkata-III v. Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) has held that the proviso to section 43B of the Act which came to be introduced with effect from 1.4.2004 is retrospective in operation. The proviso to section 43B provides that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred and the evidence of such payment is furnished by the assessee along with such return. In the present case, the assessee having actually paid the amount of employer's contribution before the due date for furnishing the return of income, the Tribunal was justified in deleting the disallowance made by the assessing officer under section 43B of the Act. Insofar as the employees' contribution is concerned, this court in the case of Commissioner of Income Tax II v. Gujarat State Road Transport (2014 (1) TMI 502 - GUJARAT HIGH COURT) has held that considering section 36 (1) (va) of the Act read with sub-clause (x) of clause (24) of section (2), with respect to the sum received by the assessee from any of his employees' to which provisions of sub-clause (x) of clause (24) of section (2) apply, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36 (1) (va) of the Act. The court held that the Tribunal, therefore, erred in deleting disallowances being employees' contribution to PF account/ ESI account made by the Assessing Officer as such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds on or before the due date as per explanation to section 36 (1) (va) of the Act, that is, the due date by which the concerned assessee was required as an employer to credit the employees' contribution to the employees' account in the provident fund under the Provident Funds Act and/or to ESI fund under the ESI Act. Under the circumstances, the assessee was not entitled to deduction under section 43B for employees' contribution - Decided partly in favour of assessee
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2015 (11) TMI 187
Addition u/s.69A - reopening of assessment - assessmet u/s 153A - search initiation - Held that:- As decided in Shri Vinit Ranawat Vs. ACIT [2015 (6) TMI 608 - ITAT PUNE] presumption u/s 132(4A) is available only in respect of the person from whom the paper is seized. It could not be applied against a third party and hence, no addition could be made on the basis of the evidence found with third party. In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be used against the assessee since no incriminating documents were found with it. In the case of ACIT Vs. Lata Mangeshkar (Miss) (1973 (6) TMI 13 - BOMBAY High Court ), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The facts of the present case are covered by the decision of Lata Mangeshkar (supra). It is a settled legal position that the decision of jurisdictional High Court is binding on all authorities below it. Thus, the reliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect. The assessee from the very beginning has denied to have received any such payment from M/s. Dhariwal group through Mr. Sohan Raj Mehta and since no incriminating material was found from the residence of the assessee during the course of search and since the assessee is not dealing with M/s. Dhariwal group in his individual capacity, therefore, respectfully following the decisions cited above and in view of our reasonings given earlier, we are of the considered opinion no addition in the hands of the assessee can be made. Since it is held that the assessee has not received any amount, therefore, the question of taxing the same u/s.56(2)(vi) as held by CIT(A) does not arise. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition In the present case no corroborative evidence whatsoever was found or brought on record to show that the assessee has infact received the money. Neither the statement of Shri Sohanraj Mehta was given to the assessee nor the request of the assessee to cross examine Shri Sohanraj Mehta was provided to the assessee. - Decided in favour of assessee.
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2015 (11) TMI 186
Transfer pricing adjustment - whether the Comparable Uncontrolled Price (CUP) method is the most appropriate method as compared to Transactional Net Margin Method (TNMM) - Held that:- The assessee bears lesser business risk than independent comparable enterprises due to the nature of its revenue model. It is beyond any doubt that the project receipts are from KMRCL which is a Government body and hence the margins earned by the assessee is bound to be comparatively lower to reflect the lower level of business risk involved. Moreover, the comparables selected for the analysis also include companies that performs additional functions while being engaged in providing comparable services. Further the risk profiles of independent companies differ from that of assessee. The impact of these functional and risk differences definitely require to be factored while determining the ALP. We find that in the interest of justice and fair play, we deem it fit and appropriate to set aside this issue to the file of the Learned TPO / AO with a direction to adopt CUP method as the Most Appropriate Method for determination of ALP for international transactions. The assessee is also directed to furnish the comparables based on independent TP study for adoption of CUP method and produce such other evidences and documents before the Learned TPO / AO to ensure quick disposal of this set aside proceedings. We also direct the Learned TPO / AO to permit the assessee to use multiple year data and adopt the weighted average data of the financial information of the comparables and use the same for determination of ALP of the international transactions of the assessee. Decided in favour of assessee for statistical purposes.
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2015 (11) TMI 185
Transfer pricing adjustment - selection of most appropriate method - TNMM or CUP or CPM - Held that:- The prices on which the assessee has sold the same products to resident associated enterprises cannot be taken as benchmark for ascertaining the arm’s length price of its similar sale transaction with the non-resident enterprises. Once we come to the conclusion that necessary inputs for ascertaining the ALP under CUP are not available, there cannot be any occasion to apply the same. In the assessment year 2008-09, the TPO himself abandoned the CUP method and resorted to cost plus method. CPM is not a residuary method in the sense that if every other method of ascertaining the arm’s length price fails, CPM can be applied on the basis of imperfect data. If at all there is a residuary method, or what is termed as the method of last resort, it is transactional net margin method. TNMM has almost become the ‘default’ method for taxpayers in recent years.The key advantage of the TNMM is that there is often available data in the public domain about the net profits that comparable independent businesses earn from their trading activities in comparable markets with other third parties. As such, the TNMM often proves easier to apply than, say, the Cost Plus or RPM methods, and TNMM is less sensitive to minor differences in the products being sold. It is also important that the data for application of CPM, as collected by the TPO, was not in public domain and this has been done by collecting information under section 133(6). Such a data could not have been available to the assessee. All shortcomings being equal in the application of the methods of determining the ALP, as at best is the case of the authorities below, the method to be preferred is the method for which necessary inputs are available in the public domain Authorities below indeed erred in not applying the TNMM for ascertaining the arm’s length price of assessee’s transactions with the associated enterprises. We direct the AO/TPO to compute the ALP on the basis of the transactional net margin method. With these directions, we remit the matter to the file to the assessment stage for fresh determination of arm’s length price. - Decided in favour of assessee for statistical purposes.
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2015 (11) TMI 184
Transfer pricing adjustment - addition on account of AMP expenses - Held that:- AO has made the addition on account of transfer pricing in relation to expenses incurred by assessee in outbound business segment by comparing the expenses incurred by comparables in the inbound segment. We understand that two segments are materially different and require different level of expenditure for promotion of these business segments. Therefore we are of the firm view that this matter should be reconsidered by AO who would decide the issue afresh in accordance with law. - Decided in favour of assessee for statistical purposes. Addition u/s 40(a)(ia) - payment to overseas representatives without deduction of tax at source - Held that:- Hon’ble Tribunal vide its order dated 19th December 2014 had decided the issue in favour of assessee after analysis of the agreement with overseas representatives and had arrived at a conclusion that the nature of services provided by these agents were not in the nature of managerial technical or consultancy services. In the present years the agreements entered into with agents were not on record and therefore without examination of these agreements the decision as to whether the services do not fall in managerial technical or consultancy category can not be arrived at. Therefore in view of substantial justice we are of the view that the AO should examine agreements to determine the nature of services provided by agents and if the nature of services as mentioned in the agreements is similar as in the years 2007-08 and 2008-09 and the services are not in the nature of managerial technical or consultancy services then he should allow the same as the Hon’ble Delhi High Court has upheld the decision of Hon’ble Tribunal for assessment year 2007-08 and 2008-09. - Decided in favour of assessee for statistical purposes. Disallowance of advertisement & publicity charges paid to non-resident entities without tax deduction at source - Held that:- The issue of advertisement and publicity charges will also be examined by AO afresh keeping in view the terms and conditions of the agreement of Advertisement and AO will examine the nature of services rendered by such payees. Therefore the issue of advertisement of publicly expenses is restored to A.O for re-adjudication. As regards amount paid representing AMC for computer software we find that the payment is clearly for provision of technical services and therefore the payments were liable for tax deduction at source, in view of the judgment of Hon’ble Delhi High Court in the case of Havells India [2012 (5) TMI 449 - DELHI HIGH COURT ] and therefore the addition to the extent of ₹ 19,39,692/- is confirmed. In view of the above ground No. 4 in assessment year 2010-11 is partly allowed for statistical purposes and is partly dismissed. Excess depreciation on computer peripherals - Held that:- Computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60%. See Rajdhani BSES [2010 (8) TMI 58 - DELHI HIGH COURT] - Decided in favour of assessee.
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2015 (11) TMI 183
Long Term Capital Gains - whether land is agricultural and transferred without sale deed ? - CIT(A) deleted the addition - whether the land was under developed, agricultural and provisions of section 50C of the IT Act, 1961 were in-applicable? - Held that:- CIT(A) has thoroughly gone through the assessment order alongwith the Remand Report and Rejoinder to the Remand Report as well as the other evidences filed by the assessee. Ld. CIT(A) has decided the issue in favour of the assessee by respectfully following the order of Navneet Kumar Thakkar. Versus Income-tax Officer, Ward - 4. [2007 (3) TMI 317 - ITAT JODHPUR] which is clearly similar to the facts and circumstances of the present case wherein held that unless property transferred has been registered by sale deed and for that purpose value has been assessed and stamp duty has been paid by parties Sec.5OC inserted by Finance Act, 2002 with effect from 1-4-2003, cannot come into operation. It has been further held by the Hon'ble Court that in such a situation, position existing prior to Sec. 5OC would apply and onus would be upon revenue to establish that sale consideration declared by the assessee was understated with clinching evidence. The property in question has been transferred by executing an agreement which was not registered with registering authority, therefore, in our view Sec. 5OC could not have come into operation and the addition in dispute has rightly been deleted by the Ld. CIT(A) - Decided against revenue. Disallowance of car running expenses & telephone expenses - CIT(A) deleted the addition - Held that:- The car running for personal use is totally against the provision of Income Tax Act because it is made on the basis of assumption and presumption. Similarly, for telephone expenses debited to the profit and loss account are only in respect of the telephone which is situated at the business premises of the assessee. The assessee furnished full details of telephone bills and this addition was also made on the basis of assumptions and presumptions only. We also find that the AO examined the complete books of account and found no defect in the same, hence, the action of the CIT(A) for estimation of disallowances are against the principles of Income Tax Act. The assessee has furnished all the details before the AO and the AO has not given sound reason for observing ‘person use’. Therefore, both the additions were rightly deleted by the Ld. CIT(A), which does not need any interference on our part - Decided against revenue.
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2015 (11) TMI 182
Disallowance of 10% of purchases - CIT(A) deemed it proper to sustain the disallowance at 2% of the purchases - Held that:- No justification to interfere with the order of the CIT(A). So far as the Revenue’s appeal is concerned, the CIT(A) has already recorded that the GP as well as NP of the year under consideration is better than the preceding year which was accepted by the Revenue. Therefore, the Revenue should not be aggrieved because of reduction in the disallowance by the CIT(A). So far as the assessee’s cross-objection is concerned, the assessee itself has stated before the CIT(A) that “Without prejudice to the submission made there is a possibility of purchases from unauthorized dealers and in that case, some lumpsum disallowance may be made”. In view of above admission on the part of the assessee, the disallowance restricted at 2% of the purchases cannot be said to be unreasonable or unjustified. We, therefore, deem it proper to sustain the order of the CIT(A) and reject the Revenue’s appeal - Decided in favour of assessee in part Delay in the deposit of TDS - Addition on account of payment of job charges as per provisions of section 40(a)(ia) - Held that:- In the case under appeal before us, the TDS was deposited before the due date for filing of the return. The Assessing Officer has given the chart in page no.2 of the assessment order from which it is evident that the TDS was deposited on 30.05.2005 which was much before the due date for filing of the return. See M/s JK. CONSTRUCTION CO.case [2013 (2) TMI 54 - GUJARAT HIGH COURT] - Decided in favour of assessee. 20% disallowance out of wages u/s 40A(3)- Held that:- dmittedly, for applicability of Section 40A(3), it is essential to establish that there was payment exceeding ₹ 20,000/- in cash for the wages. In the case under consideration before us, the Assessing Officer has no where pointed out any specific item of payment, which was exceeding ₹ 20,000/-. He merely presumed that all the cash payments would be exceeding ₹ 20,000/-. The disallowance u/s 40A(3) cannot be made on the basis of presumption. As not a single payment in cash exceeding ₹ 20,000/- for wages have been pointed out; therefore, in our opinion, Section 40A(3) is not applicable. we find that in Assessment Year 2008-09 the CIT(A) while deleting the disallowance out of wages u/s 40A(3) have sustained lump-sum disallowance of ₹ 5,00,000/- out of wages and such disallowance have been accepted by the assessee. Therefore, for the sake of consistency, we sustain the disallowance out of wages at ₹ 5,00,000/-. Penalty levied u/s 271(1)(c) - CIT(A) deleted penalty - Held that:- AO disallowed 10% out of the purchases. On appeal, the same was reduced to 2% of the purchases. Thus, the disallowance was sustained on the basis of estimate only. So far as the assessee is concerned, it has produced the confirmation from all the sellers and has also produced the sales vouchers issued by them and the evidence of the payments having been made by cheque. None of these evidences produced by the assessee were found to be incorrect, false or fabricated. Merely because the seller party was not found available at the address given by them in their sale bill, some disallowance on estimate basis may be justified; but that is not sufficient to levy the penalty u/s 271(1)(c) of the Income-tax Act. None of the parties from whom the assessee has claimed to have purchased the goods denied having sold the goods to the assessee. Therefore, the purchases from those parties have not been found to be false or bogus. So far as the penalty proceedings are concerned, the assessee has duly substantiated the purchases claimed to have been made by it by producing confirmation of seller parties as well as vouchers, and details of payment made through banking channel. In the above circumstances, in our opinion, the CIT(A) rightly held that the assessee is not liable to be penalized u/s 271(1)(c), merely because part of the disallowance on account of unverifiable purchases was sustained by the CIT(A) and eventually by us. Similarly, for lump-sum disallowance out of wages, no penalty u/s 271(1)(c) is liable to be imposed. The Assessing Officer had made the disallowance u/s 40A(3) amounting to ₹ 49,94,612/-. While deciding the quantum appeal, we have given the finding that the disallowance u/s 40A(3) is not called for because there is no evidence of cash payment of ₹ 20,000/- each to any worker. Though we have sustained the lumpsum disallowance out of wages at ₹ 5,00,000/- out of total wages payment to workers of ₹ 2,49,73,063/-; however, for such lump-sum disallowance out of wages on the basis of presumption, no penalty u/s 271(1)(c) is leviable. Therefore, we uphold the order of the CIT(A) in this regard and dismiss the appeal filed by the Revenue.
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2015 (11) TMI 181
Reopening of assessment - A.O. reopening the assessment on the basis of audit objection - Held that:- In the present case, it has already been discussed that admitted facts are that there was no fresh material coming into the possession of the AO, at the time of recording of the ‘Reasons’. If there are no “new tangible materials”, then there would be no “reasons to believe”, and consequently reopening would be an impermissible review. Under these circumstances there would not arise any need to go the next stage to examine the next question, i.e., whether there was “review” or “change of opinion”. The condition with respect to availability of “new tangible material” is step anterior to the condition of no “change of opinion” or “review”. See CIT, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2015 (11) TMI 180
Non deduction of tds u/s 194LA - compensation paid to various persons for acquiring the non-agricultural land - Held that:- It is clear that the question of compulsory acquisition will arise only where the compensation cannot be determined by agreement. Sub-sec.3 & 4 will come into play only when there is a failure to determine the compensation through negotiation between State Government and the land owners. When the compensation is based on an agreement between State Government and owner of the land, no more can we say that it is a compulsory acquisition. Especially so, in view of the elucidation of law by the Hon’ble Chattisgarh High Court in the case of Naya Raipur Development Authority. Once the acquisition is not considered as compulsory, Sec.194LA of the IT Act will not be applicable. Thus, in our opinion, if the compensation paid by the assessee for acquisition of land were all through agreements similar to the one entered by the assessee with Smt.Sumitra Shivanand Keeliputti, pertinent parts of which have been re-produced by us above, then these would not fall within the definition of compulsory acquisition. However, we are of the opinion, that the acquisition whether the acquisitions for which assessee had not deducted tax at source were based on agreements similar to the one produced by the assessee before us or in other words whether in all such compensation amounts were fixed in accordance with Sec. 29(2) of the KIA Act require verification by the lower authorities. We therefore, set aside the orders of the authorities below and remit the issue back to the file of the AO for verifying the agreements to reach a conclusion whether acquisitions fell under ‘compulsory acquisition’ or not. Learned AO shall proceed as per law declared by Hon’ble Apex Court and elucidation given by Hon’ble Chattisgarh High Court which we have reproduced above. Since we have remitted the question regarding nature of acquisition back to the file of the AO, the other question as to the failure of machinery provision for applying Sec.194LA is kept open at this juncture. - Decided partly in favour of assessee for statistical purposes.
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2015 (11) TMI 179
Addition u/s 68 - cessation of liability u/s. 41(1) - whether addition u/s. 68 of the Act could not be made because, admittedly, the credits in question did not relate to the previous year relevant to AY 2009-10? - Held that:- In almost identical facts, the Hon’ble Delhi High Court in the case of Shri Vardhaman Overseas Ltd. ( 2011 (12) TMI 77 - DELHI HIGH COURT ), has clearly laid down that neither section 41(1) nor section 68 of the Act can be applied. On the applicability of section 68, we are of the view that those provisions will not apply as the balances shown in the creditors account do not arise out of any transaction during the previous year relevant to AY 2009-10. The provisions of sec. 68 are clear inasmuch as they refer to “sum found credited in the books of account of an assessee maintained for any previous year”. There is no dispute in the present case that the amounts due to the sundry creditors had been allowed in the earlier assessment years as purchase price in computing the business income of the assessee. The second question is whether by not paying them for a period of four years and above the assessee had obtained some benefit in respect of the trading liability allowed in the earlier years. The words “remission” and “cessation” are legal terms and have to be interpreted accordingly. In the present case, there is nothing on record to show that there was either remission or cessation of liability of the assessee. In fact, there is no reference either in the order of the AO or CIT(A) to the expression “remission or cessation of liability”. There is nothing on record to show any cessation or remission of liability by the creditor or even an unilateral act by the Assessee in this regard. In view of the above, we are of the view that the impugned addition cannot be sustained and the same was rightly directed to be deleted by the CIT(A). The order of the CIT(A) is therefore confirmed. - Decided in favour of assessee.
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2015 (11) TMI 178
Addition on excess stock of material found at the business premises of the assessee during the course of survey - CIT(A) deleted the addition - Held that:- The first evidence submitted by the assessee is a registration certificate in Form RC of the Central Excise Department and the second evidence submitted by the assessee is details of movement of inventory at the location viz. ‘Vipan’. Vide challan no.1761 dated 8.9.2006, Colourtex Industries Pvt. Ltd. has made a movement of Scarlet BR Press cake (Semi Finished) having quantity of 1,244 having value of ₹ 1,61,720/-. The challan was cleared on 17.7.2006. There are number of other entries whose bills were prepared on 7.7.2006 and it was cleared on 13.7.2006 etc. Object of referring these documents is for the reason to demonstrate that this premises was being actually used by Colourtex Industries Pvt. Ltd. before the survey carried at the premises. The copy of lease-deed has also been placed on record. The ld.CIT(A) has considered all these materials, and thereafter deleted the addition. AO has not applied his mind on any of the evidences or any of the explanation given by the assessee. The ld.AO has not even noted the explanation submitted by the assessee. The assessment order is just a cut-and-paste from other assessment orders. We can observe so, because, we have seen more than twenty assessment orders of this group while hearing all these appeals. Standard language has been used more specifically from page no.4 to end. Thus, if we weigh reasoning given by the AO for making addition vis-à-vis reasoning given by the ld.CIT(A) for deleting the addition in the light of the material produced in the paper book by the assessee, then, certainly scale would tilt in favour of the CIT(A). Therefore, we do not find any merit in the appeal of the Revenue. - Decided against revenue
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2015 (11) TMI 177
Considering business loss as Speculation loss - Held that:- The facts in the said decision in the case of Eastern Aviation & Industries Ltd Vs CIT [1993 (7) TMI 41 - CALCUTTA High Court ] are identical to the assessee’s case and as a result the income of the assessee from share trading is speculative in nature. - Decided against assessee. Disallowance of sub-brokerage - assessee had not explained the nature and genuineness of the brokerage, not produced evidences with respect to the services rendered and also not furnished the confirmations of the parties - Held that:- We note that confirmations from two parties namely Jaswant Shah and Ramco Financial Services were filed before the ld CIT(A) and also before us . We also note that sub-brokerage of ₹ 82,27,229/- payable to C.S. Boston (Hong Kong) Ltd has been taxed in the A.Y. 1999-00 on being offered to tax by the assessee suo motto upon denial of permission to remit the payment by the Reserve Bank of India on 20th November, 1997 . As the assessee had filed confirmations from two parties exhibited and also proved the payments having been made to the parties for services rendered by them. Likewise wise the sub-brokerage to JMSSB was paid for primary market transactions. In view of these facts and observations , we are of the view that the disallowances of ₹ 1,05,000 paid to Jaswant Shah, ₹ 1,07,125/- paid to Ramco Financial Services, ₹ 82,27,229/- C.S. Boston (Hong Kong) Ltd and ₹ 91,839/for primary market transactions paid to JMSSB were not justified as these expenses were incurred by the assessee for the purpose of business as assessee required the services of sub-brokers to carry out business in stock market Mumbai and also activities in the primary markets on behalf of its clients and thus these disallowances are hereby deleted. - Decided in favour of assessee in part. Disallowance u/s. 40A(2)(b) - Held that:- We note that the provisions of section 40A(1) begins with non abstante clause & (2) provides that where the assessee has incurred any expenditure by making the payment to any person as referred to clause( b) which is excessive , unreasonable having regard to the fair market value of that expenditure or services or goods, then so much of the expenditure as is considered excessive and unreasonable shall be disallowed by the assessing officer. In this case Rs. ₹ 86,08,898/- were paid as sub-brokerage to the persons covered by the clause (b) of section 40A(2). We further note that the assessing officer no where observed these expenses were either excessive or unreasonable and disallowed and proceeded to make the disallowance and thus the pre-conditions for disallowance u/s 40A(2b) were not satisfied. It is nowhere pointed out by both the authorities that payment is excessive or unreasonable from prevalent market rates for such services. We also note that 50% disallowance was made on purely adhoc basis which is not permissible under law by disregarding the fact that similar expenses were allowed in the earlier years. We are, therefore, of the considered view that the said disallowance /addition is not justified and therefore the same is ordered to be deleted - Decided in favour of assessee Disallowance on a/c of interest on the ground that assessee paid interest but did not charge from its director and their family members - Held that:- the net worth of the company was ₹ 4,96,56,180/-, whereas, the purchases on behalf of the related parties were worth ₹ 1,56,44,818/- which proves that assessee had sufficient and adequate own funds to finance the purchases so made for related parties. In the case of CIT Vs. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) the Honble jurisdictional High Court has held that in case the assessee has own funds besides having borrowed funds , the presumption as to the money advanced to sister concern was that the assessee has advanced out of own funds and not out borrowed funds. We, therefore,decide this issue in favour of the assessee.
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2015 (11) TMI 176
Surplus from share transactions - business income OR capital gains - Held that:- We find that the frequency of transactions does not really matter and what is to be seen is the intention of the assessee whether he wants to penetrate into the capital market for the purpose of investment or for making speculative gains by doing day trading and dealing in futures and options. It is also seen that the Learned AO had clearly stated in his assessment order that the interest on borrowings were paid by the assessee only for trading in shares and this itself goes to prove that the assessee had clearly bifurcated his activities into two parts – one towards investment in shares out of own funds of the assessee and other towards trading in shares out of own and borrowed funds of the assessee. It is also seen that the assessee has been doing this activity consistently. It is also seen from the balance sheet filed by the assessee that the assessee had clearly classified the share transactions under the head Investments. This itself clearly proves the intention of the assessee that he is only interested in share market only as an investor and not otherwise. No hesitation to treat the assessee as an investor and direct the Learned AO to treat the gains arising out of share transactions as returned by the assessee as capital gains. - Decided in favour of assessee. Addition towards loan received from Sri Ram Niranjan Saraogi u/s 68 - Held that:- The assessee had duly discharged his onus in full in terms of section 68 of the Act by furnishing all the details and creditworthiness of the loan creditors. Nothing prevented the Learned AO from making verification of these transactions and details filed by the loan creditor with the concerned assessing officer of the loan creditor. We also find that the concerned loan creditor Sri Ram Niranjan Saraogi had got sufficient cash balance as per his books which he had deposited in his bank account and this conduct cannot be doubted with in the facts and circumstances of the case. These facts are quite evident from the cash flow statement of Sri Ram Niranjan Saraogi and Sri Naresh Kumar Bharech filed by the Learned AR before us. Hence we have no hesitation in directing the Learned AO to delete the addition made u/s 68 of the Act.- Decided in favour of assessee.
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2015 (11) TMI 175
Unsecured loans added as unexplained cash credit u/s. 68 - Held that:- AO had not taken meagre bank balances as the sole criterion for judging creditworthiness of these loan creditors but creditworthiness of the loan creditors is based on examination of all the relevant facts emanating from their I. T. Returns, Computation of total income, Balance Sheets, Bank Accounts statements recorded u/s.131 etc. The contention of the Ld. Counsel for the assessee that necessary documentary evidences in support of the claim of receipt of unsecured loan from the loan creditors were produced before the A.O. and the assessee has discharged its duty properly and therefore it was for the A.O. to verify the documents before treating the loans as not genuine is without any basis. The AO has definitely gone through the documents produced by assessee and only after thorough examination of the documents and statements recorded u/s.131 came to the conclusion that these five loan creditors are not creditworthy enough to advance the loan amounts. If the assessee has not been able to prove the creditworthiness of the loan creditors, the cash credits are liable to be treated as unexplained and added back under u/s.68 of the Act. To sum up, the creditworthiness of the loan creditors must be proved beyond doubt by the assessee to substantiate the claim of receipt of unsecured loan from them. In this case, the assessee has failed to prove the creditworthiness of the five loan creditors and therefore failed to substantiate the receipt of unsecured loan - Decided against assessee.
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2015 (11) TMI 174
Transfer pricing adjustment - DRP determining Arm’s Length Price of Sales Commission transaction of the appellant at Rs. Nil - Held that:- We are of the opinion that in the present case, the TPO has gone beyond his jurisdiction in questioning necessity to pay sales commission and in determining the value of commission paid as NIL. The assessee has placed on record the agreement according to which the commission is paid. The financial records of the assessee company to show that there has been increase in the export sales since the time the assessee has engaged the services of AE. The Revenue has not disputed the financial results and the figure of export sales furnished by the assessee. As the assessee has been able to substantiate its claim from the agreement in accordance with which the commission was paid and comparative study of increase in export sales over the years. Thus, we are of the view that the authorities below were not justified in denying the payment of sales commission by the assessee to AE. - Decided in favour of assessee. Disallowance of late payment of the ESIC - Held that:- It is an undisputed fact that the assessee has deposited employees share of contribution towards ESIC before the due date of filing return under the Act. The Hon'ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transports Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) by placing reliance on the decision of CIT Vs. Alom Extrusions Ltd. reported as (2009 (11) TMI 27 - SUPREME COURT) has held that the assessee would be entitled to deduction of contribution of employees welfare funds where the amount has been deposited before the due date of filing of return under the provisions of Income Tax Act. - Decided in favour of assessee.
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2015 (11) TMI 173
Exemption u/s 11(2) - whether 15% of accumulation of income under section 11(1)(a) of the Act is a flat deduction available to the assessee or for that purpose, whether filing of Form No.10 along with the return of income and fulfilling other formalities are a pre-condition or not? - Held that:- As per section 11(1)(a) the assessee is entitled for flat deduction without any condition or formality of filing form No.10, if income is accumulated or set apart for application of the objects of the trust in India to the extend to which the income so accumulated or set apart does not exceed 15% of the income. With regard to allowance of deduction over and above 15% of the income, for which the assessee is to satisfy the conditions laid down in section 11(2) of the Act. As per the discussion made above, the requirement of section 11(2) is that if such income is accumulated or set apart, then such income shall not be included in the total income of the previous year if such person specifies by notice in writing given to the assessing officer in prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall, in no case exceed 10 years. The money so accumulated or set apart is invested or deposited in the forms or modes specified in sub section (5) of section 11 of the Act. A regards the condition in respect of furnishing of prescribed form 10 we have given the finding that form No.10 submitted before the completion of the assessment is required to be considered if the condition as laid down in section 11(2)(a) is satisfied. However, as regard the condition (b) of section 11(2) that the money so accumulated or set apart is invested or deposited in the form or mode specified in sub section (5) of section 11 is subject to verification. We, therefore, think proper to send this issue to the file of the assessing officer with a direction to verify the said condition of clause (b) of section 11(2) of the Act as to whether the assessee has made investment in the prescribed securities or not. Accordingly, the assessing officer will decide this issue after providing opportunity of hearing to the assessee and the issue in dispute is remitted to Assessing Officer for fresh consideration. - Decided in favour of assessee for statistical purposes
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2015 (11) TMI 172
Addition u/s 68 - Assessing Officer made additions by invoking the provisions of Section 69C - Held that:- From the perusal of assessment order, it is clear that Assessing Officer has allowed purchases to the tune of ₹ 1,15,84,527/-, which were paid to various parties from whom assessee made purchases during the year. After the payment of ₹ 1,15,84,527/- outstanding balance remained to be paid on 31st March, 2007, which means that Assessing Officer has treated all these parties as genuine suppliers to whom some payments have been made during the year. If in any case, Assessing Officer had come to a conclusion that certain supplier is a bogus party, then the complete purchases made from such bogus suppliers should have been disallowed by him. In the present case, Assessing Officer has allowed the purchases to the extent they have been paid and disallowed the purchases to the extent which have not been paid. Assessing Officer ought to have appreciated the fact that assessee has submitted the ledger account of all the 11 parties for the relevant assessment year as well as for the next financial year during which balance payment of the outstanding liabilities were made through bank. Here, we can take example of one of the parties amongst the list of 11 parties in the name of M/s. Landmark Engineering from whom assessee made purchases during the year. Outstanding liability in the name of this party on 31.03.2007 stood at ₹ 53,19,523/- and this outstanding amount repaid in full by the assessee during the financial year 2007-08. As submitted by ld. A.R. that in case of other parties also the outstanding liability standing under the head ‘sundry creditors’ on 31.03.2007 have been paid in the following years by account payee cheques. Books of account have not been fully rejected, none of the parties has previously been proved as bogus, part of payments made towards the purchases have already been allowed by the Assessing Officer and no specific working has been made by the Assessing Officer to treat a particular purchase from a supplier as bogus purchase and further the outstanding purchases at the end of the year have been subsequently paid by banking channel and nothing contrary to this fact of payment by banking channel has been brought on record before us. In this situation, it is not justified on the part of Assessing Officer to treat the sundry creditors outstanding at the end of the year as unexplained and accordingly, the addition sustained by the CIT(A) is deleted and the appeal of assessee is allowed. - Decided in favour of assessee.
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2015 (11) TMI 171
Unexplained investment made by the assessee in construction of industrial shed - CIT(A) deleted part addition - Held that:- Mere valuation report is not sufficient to conclude that the assessee has made unexplained investment. From perusal of the assessment, nowhere it reveals that inspite of search, Revenue was in a position to lay its hands on any material exhibiting the unexplained investment made by the assessee, over and above one stated in the books of accounts. The ld. First appellate Authority has not adjudicated this issue, rather, gave substantial relief on the ground that the DVO has erred in determining the fair market value of the investment. We do not find any reason to interfere in the order of the CIT(A), but we uphold his order for different reason i.e. the issue is covered in favour of the assessee by the decision of the Hon’ble High Courts in CIT Vs. Sadhna Gupta [2013 (3) TMI 418 - DELHI HIGH COURT] and Commissioner of Income-tax Versus Jayendra N. Shah [2014 (11) TMI 47 - GUJARAT HIGH COURT] As far as CO filed by the assessee is concerned, we are of the view that sub-section 4 of section 253 authorises the respondent to file cross-objection on receipt of notice in appeal. The CO is required to be filed within 30 days of receipt of notice and it is to be verified in the manner akin to an appeal, but, the CO is to be filed against any part of the order impugned in the appeal. In the CO filed by the assessee, he has nowhere demonstrated his grievances against any part of the order of the CIT(A), as such, the CO is not maintainable in the present form.
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Customs
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2015 (11) TMI 204
Release of foreign currency seized earlier - refund of arrears - modification/clarification of earlier order [2014 (3) TMI 55 - BOMBAY HIGH COURT] - grant of interest on such seizure as interest on arrears of refund - Held that:- Customs Department to refund the amount of US$ 289250 in Indian rupees at the buying rate of US$ on the date of transfer by RTGS mode of transfer. Petition disposed of.
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2015 (11) TMI 203
Valuation of goods - Enhance of value - No SCN issued - Violation of principle of natural justice - Held that:- Revaluation was done based upon the NIDB data and was in no way arbitrary or unreasonable. - Duty was paid at the enhanced value without protest. This shows that the appellant s contention that they did not accept the revised transaction value is obviously untenable. By consenting to enhancement of value and thereby voluntarily forgoing the requirement for a show cause notice, the appellant made it unnecessary for Revenue to establish the valuation any further as the accepted value in effect becomes it declared transaction value requiring no further investigation or justification. In such a situation the judgement in the case of Eicher Tractors Ltd. (2000 (11) TMI 139 - SUPREME COURT OF INDIA) is of no help to the appellant. To allow the appellant to contest the accepted value is to put Revenue in an impossible situation when the goods are no longer available for inspection and Revenue rightly did not proceed further collect and compile all the evidences/basis into a show cause notice, more so because had Revenue insisted upon issuing a show cause notice, in spite of the appellant having consented to the enhanced value and requested for no show cause notice it could/would have invited allegation of harassment and delay in clearance of goods. When the show cause notice is foregone and the valuation is consented, the violation of principles of natural Justice cannot be alleged. - No merit in appeal - Decided against assessee.
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2015 (11) TMI 202
Maintainability of appeal - Scope of Sections 130 or 130A - Import of goods under DEEC scheme - demand of on unutilized items - whether the goods are covered by any exemption notification or not - Held that:- in view of the aforesaid decision in the case of Motorola India Ltd. [2011 (4) TMI 1014 - KARNATAKA HIGH COURT], this civil petition stands dismissed as not maintainable. - Decided against Revenue.
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2015 (11) TMI 201
Request for quashing provisional release letter asking it to furnish bank guarantee to the tune - Held that:- petitioner has already paid ₹ 5,00,000/- and is also ready to furnish personal/surety bond equivalent to the declared value of the goods. The respondents have not pointed out any circumstance which may raise an apprehension or presumption that the petitioner will not discharge its liability qua any amount that may be assessed at the time of final adjudication. - we quash the condition (b) requiring the appellant to furnish a bank guarantee of 10% amount of the declared FOB value. The petitioner shall furnish personal/ surety bond and undertaking that in the eventuality of any other amount found due, it would discharge its liability, without any protest or demure subject, however, to its right to file an appeal. The goods if not released, be released to the petitioner within two weeks from the date of receipt of certified copy of this order. - petitioner shall not be entitled to claim any duty draw back and the amount of ₹ 5,00,000/- deposited by him shall be adjusted in its liability in case any found due against it - Decided partly in favour of assessee.
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2015 (11) TMI 200
Provisional release of vehicle in terms of provisions contained in Section 110A of the Customs Act, 1962 - whether the condition(s) as imposed by the respondent for provisional release of the vehicle is onerous and smacks of whims of the Customs Authority - Held that:- Respondent is directed in the light of order release the vehicle of the petitioner bearing Registration No. BR-05G-7812 on execution of the bond for full seizure value of the seized vehicle and also depositing a sum of ₹ 1,00,000/- as security deposit - Appeal disposed of.
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2015 (11) TMI 199
Suspension of CHA License - Appointment of enquiry officer - Appellant contends that without even issuing show cause notice, within the period of limitation, an enquiry officer had, straightway, been appointed - Held that:- The objection of the order of suspension is completely different from the object of issuance of the show cause notice. The Regulations in this regard are very clear. Under the sub-regulation (2) of Regulation 20, a time limit of 15 days is fixed for suspending the licence from the date of receipt of a report. Under sub-regulation (3), an opportunity of hearing should be granted to the licensee within 15 days from the date of suspension. This opportunity is only in respect of suspension. The Regulation 20 also deals only with suspension. - Department appears to have taken advantage of the expressions 'suspension' appearing under Regulation 20 as well as Regulation 22. The power to order suspension under Regulation 20 is in cases where further proceedings are sought to be initiated. The suspension contemplated under Regulation 22 is by way of penalty after the enquiry. The distinction between two Regulations is that one is a suspension pending enquiry and the other is a suspension by way of penalty. - Decided against Revenue.
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2015 (11) TMI 198
Valuation of goods - Held that:- Custom Officer has rightly rejected the price of speakers imported by the appellant as declared in the Bill of Entry, applying Rule 10A of the Valuation Rules. We are also satisfied that in such an eventuality, the prices which are fixed is based on concurrent findings of facts. Therefore, we find no merit in these appeals - Decided against assessee.
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2015 (11) TMI 197
Valuation of goods - Enhancement in value of goods - Supreme Court dismissed the appeal filed by Revenue due to low tax effect against the decision [2004 (9) TMI 241 - CESTAT, NEW DELHI]. The Tribunal in impugned order held that goods in question were Acrylic off cuts, in the impugned order, there is no basis for enhancement of the value of the goods. The Revenue has not relied upon any import regarding off cuts, which shows the value of 'off cuts' to justify enhancement by the Revenue. In these circumstances, the impugned order is set aside.
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2015 (11) TMI 196
Valuation of goods - Inclusion of charges payable as technical assistance and charges for erection and commissioning of the plant - Supreme Court dismissed the appeal filed by Revenue as issue involved in these appeals is squarely covered by the judgment of this Court rendered in the case of Commissioner of Customs, Ahmedabad v. Essar Steel Ltd., [2015 (4) TMI 486 - SUPREME COURT]. The appeal was filed against the decision of Tribunal [2005 (3) TMI 612 - CESTAT, MUMBAI]; wherein Tribunal held that technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods.
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2015 (11) TMI 195
Additional evidence - Valuation - Redemption fine and penalty - Supreme Court dismissed the appeal filed by the Revenue due to insignificant tax effect - The appeal was filed against the decision of Tribunal [2005 (5) TMI 434 - CESTAT, MUMBAI]; wherein Tribunal held that import is made by an individual and not by a trader. Normally margin of profit concept applies when imports are made by traders/manufacturers who import goods on a large scale. Even otherwise the Commissioner imposed a fine ranging to 24% of CIF value. We are not aware of cases where the MOP can be more than this. The Revenue at least has not produced any evidence to that effect.
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Corporate Laws
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2015 (11) TMI 194
Sale after winding up - Deed of Assignment executed by exdirector - rights of secured creditor - whether Shashi Gopal, in his capacity as a subrogee, was entitled to sell any of the hypothecated securities without the leave of the Company Court? - whether the sale is liable to be set aside under Section 536(2) or 537(1)(b) of the Companies Act? - Held that:- After the introduction of Section 529-A which gave workers a pari passu charge along with secured creditors in mortgaged or hypothecated securities in a winding up, it is no longer open for a secured creditor to contend that it is entitled to enforce its securities without reference to or the leave of the Company Court. It was then contended on behalf of MMPL that the Official Liquidator having failed to adjudicate the claims of the workmen, no pari passu charge in their favour could be said to exist which would limit the right of the subrogee to deal with the hypothecated securities. This argument is clearly misconceived. The mere fact that the Official Liquidator has not yet adjudicated the claims of workmen would not disentitle them to a pari passu charge or leave a secured creditor free to deal with a security as he chooses. The circumstances of the present case leave little doubt that the sale itself, without the leave of the court and given the manner in which it was effected, was unlawful. Thus following Order would meet the ends of justice: a) The Deed of Assignment dated 14.03.2012 between Shashi Gopal and MMPL in respect of the hypothecated securities is set aside as illegal and void. b) MMPL shall on or before 2nd December,2015, deposit a sum of ₹ 25 lakhs with the Official Liquidator, being the difference between the amount already received by MMPL from Sony Music (₹ 1.75 crores) and the amount paid by MMPL to Shashi Gopal (₹ 1.5 crores). c) The Official Liquidator shall complete the adjudication of the claims of the workmen of the Company in Liquidation within a period of sixteen weeks from today. In doing so, the Official Liquidator shall also consider whether the claims are in fact by persons who are entitled to priority as workmen under Section 529-A of the Companies Act. He shall also verify the amounts paid by Shashi Gopal to UBI to which he is entitled to credit as a subrogee. d) On such adjudication and verification, the Official Liquidator shall place a report before this Court for a distribution pari passu of the amount so far generated from the hypothecated securities, i.e., ₹ 1.75 crores, between the workers and Shashi Gopal as subrogee. In that report, this Court shall consider the amount, if any, that Shashi Gopal would be liable to bring in to meet the amounts due to the workmen in such a distribution. e) Sony Music shall render accounts to the Official Liquidator of the revenue generated by it from the exploitation of the rights which are the subject matter of the Agreements in its favour. Any overflow which was payable to MMPL under the terms of the said Agreements shall be distributed pari passu among Shashi Gopal as a subrogee and the workmen of the Company in liquidation. f) On expiry of the tenure of the Agreements in favour of Sony Music; MMPL, Shashi Gopal and Sony Music shall hand over forthwith to the Official Liquidator all material and documents in respect of the repertoire which constitutes the hypothecated securities including but not limited to Masters, Link Agreements and publicity material. The Official Liquidator shall thereafter take steps under the directions and supervision of this Court to sell and/or license the rights which constitute the hypothecated securities. Any revenue generated by such sale/exploitation shall be distributed pari passu among Shashi Gopal and the workers of the company in liquidation. Any overflow shall be distributed in accordance with the Companies Act and the Company Court Rules.
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2015 (11) TMI 193
Amalgamation - scheme of arrangement - Held that:- Mere fact that one of the Chartered Accountants/Valuers is a statutory auditor of the transferee company does not lead to a reasonable inference that the choice of such Valuer was stage-managed by Tata Tea Ltd and a statutory auditor has an independent role to play if he has to effectively perform his part. That the imputations of bias cannot lightly be made against a professional Chartered Accountant who is expected to discharge the duties according to the obligations cast on him by the Statute and the well-established principles of professional conduct and etiquette. On a careful consideration of the Valuation report, pleadings and submissions of learned counsel for all the parties, no interference with the Valuation report is warranted and there is no need for appointing an independent Valuer, as requested by the objectors. In the light of the above noted facts and having regard to the reports submitted by the Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad and the Official Liquidator, this Court is of the opinion that the proposed composite scheme of arrangement is in conformity with the provisions of the Act and the same does not in any manner affect the interests of any of the stake holders including the public. Therefore, the proposed composite scheme of arrangement is approved and the petitioners shall, within 30 days from the date of receipt of a copy of this order, cause a certified copy of this order to be delivered to the Registrar of Companies, Telangana and Andhra Pradesh, Hyderabad for registration and take all other consequential actions in pursuance of the approval of the composite scheme of arrangement.
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PMLA
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2015 (11) TMI 192
Offences under the Prevention of Money-Laundering Act, 2002 corresponding to Sections 420/467/ 120B of the Indian Penal Code - Held that:- Case has been registered in the Court of the Chief Judicial Magistrate, South and West at Namchi, against 11 (eleven) persons connected with the Petitioner-University in various capacities based on a charge-sheet submitted by the Sikkim Police for offences under Sections 420/467/471/ 201/120B IPC. - On a careful examination of the charge-sheet filed by the Sikkim Police in the Court of the Chief Judicial Magistrate, South & West Sikkim at Namchi and the ECIR which is being sought to be quashed, I have no hesitation to hold that this is not a case where, on a bare perusal of the ECIR, no offence has been made out. To the contrary, from what have been alluded to earlier, prima facie there are sufficient materials to constitute offences under the PMLA. Undeniably the persons named were associated with the Petitioner-University in various capacities and concededly the charges against them in the criminal trial fall within the 'scheduled offences' under the PMLA. Thus, reference to the case of State of Haryana and Others vs. Ch. Bhajan Lal and Others : AIR 1992 SC 604, exhorting this Court to exercise its powers under Section 482 Cr.P.C. to quash the ECIR and the cognate action of attachment under Sub-Section (1) of Section 5 of the PMLA, in my considered opinion, is mis-directed and unsustainable. - there is also an effective alternative remedy provided under Section 8 of the PMLA followed by the provision of appeal under Section 26 thereof. - No reason to interfere with the proceedings instituted by the Respondents - Decided against the appellant.
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Service Tax
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2015 (11) TMI 227
Advertising Agency service or sponsorship service - Import of service - agreements with various sports bodies located abroad and not having office in India - whether the service received by the appellant under various agreements fell under advertising agency service - Held that:- A perusal of the rights granted to the appellant under the sponsorship agreements reveals that these are agreements for sponsorship of various sports events and not for receiving advertising agency service. - Merely because there is a mention of expression advertising material and the same is defined in the agreement, it cannot be said that GCC has provided advertising agency service to the appellant. The service rendered by sports bodies abroad could possibly be covered under the head of 'Sale of Space or Time for Advertisement and Sponsorship Services', which became taxable with effect from 01.07.2006. However, taxable services in relation to sponsorship services specifically excluded sponsorship of sport events. As such, it is clear that what is being taxed is planning and expertise involved in making, preparing display or exhibiting the advertisement and not simply providing of a place or space to the advertiser. The expression display or exhibit does not mean the physical act of display and exhibit, but relates to the services rendered, as an expert body, to the client, for the purposes of display or exhibit. The same may involve the expertise of the provider of the services to advise the client as to in which manner, the advertisement should be displayed i.e. whether in the newspaper or on TV channel or by way of hoardings or a audio/video advertisement in air or any other medium or at what point of time the same should be exhibited. We find that no such expert services are being provided by the appellant in the present case. They are merely canvassing their clients to make utilize of the space available with them for the purposes of advertisement of their product during the course of matches, which are going to be telecasted and by which they can popularize their products. As such, the activities amount to sale of space and not as regards advertisement. - there was no Advertising Agency Service received by the appellant from abroad except in respect of dealer advertisements - Demand set aside - Decided in favour of assessee.
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2015 (11) TMI 226
Refund - Unutilized CENVAT Credit - Export of service or not - research and analysis regarding investment was carried out in India but that services are provided to US based entity and the recipient is a US based entity - Held that:- Services were carried out in India but the recipient is outside India and, therefore, the services provided by Indian entity deemed to be used by the person located outside India and, therefore, it satisfies the terms used outside India as provided under the Export of Service Rules. Therefore, following the ratio of the above judgments and coupled with facts of this case, it is absolutely undisputed that the appellant has provided the services from India and the same was used outside India. Accordingly it qualifies as export of services and refund is admissible. - original sanctioning authority has rightly sanctioned the refund claim holding that the services provided by the appellant is export of services. Hence the impugned order passed by the Commissioner (Appeals) is not sustainable and the same is set aside - Decided in favour of assessee.
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2015 (11) TMI 225
Commercial and Industrial Construction Services - Benefit of Notification No.1/2006-ST - CENVAT Credit - Held that:- CENVAT credit availed by the appellant of the service tax paid by the service providers for the services rendered prior to 01.03.2006 cannot be faulted with as availment of CENVAT credit by service recipient is subject to the condition that payment for such service rendered as the provisions. Undisputedly, in this case the appellant had paid the service providers / settled the service provider s bill subsequently from March 2006 for the service rendered prior to 01.03.2006 and has correctly claimed the legitimate CENVAT credit available. - issue involved in this case is being a question of interpretation, penal provisions need not be invoked and appellant be visited with any penalties. The penalties imposed by the adjudicating authority is also liable to be set aside - Decided in favour of assessee.
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2015 (11) TMI 224
Denial of refund claim - Notification 6/2010-ST dated 27/02/2010 - Export of service - Held that:- onsite services rendered by the appellants abroad would qualify for being termed as export of service. - Appellant-assessee had exported the services, received the payment in convertible foreign exchange. We find that, on the factual matrix, the refund is liable to be sanctioned to the appellant-assessee as this bench, in the appellant-assessee’s own case [2013 (4) TMI 104 - CESTAT MUMBAI] - In view of the affirmation of the Tribunal s judgment by the Hon’ble High Court [2014 (9) TMI 567 - BOMBAY HIGH COURT], we find that the impugned order to the extent it rejects the refund claim filed by the appellant-assessee is incorrect and unsustainable. The same is set aside - Decided in favour of assessee.
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2015 (11) TMI 223
Benefit of exemption Notification No. 13/2003-ST dated 20.6.2003 - Commission Agent service - Held that:- commission was paid on principal to principal and case to case basis, depending upon various factors and quantum of commission is depending on such sale or purchase by the customer from the principal. It is categorically stated that they received commission only on sale of materials and payment is received from the customer. Notification No. 13/2003-ST extended the exemption to Business Auxiliary Services provided by a Commission Agent from service tax leviable thereon, under Section 66(2) of the Finance Act, 1994. Explanation to the said notification clarifies that Commission Agent is one who causes sale or purchase of goods on behalf of another person for a consideration, which is based on the quantum of such sale or purchase. - Respondent was already registered with the Service Tax authorities and availing the benefit of exemption notification 13/2003-ST and therefore, it was within the knowledge of the Respondent that this exemption notification was amended by Notification No. 08/2004-ST dated 09.7.2004. It is noted that they have started paying service tax from 10.09.2004 but there is no reason as to why they were not paying service tax from 09.7.2004. We have also noticed that respondent had not filed monthly ST-3 returns during the period 01.7.2003 to 09.09.2004. The adjudicating authority observed that Respondent suppressed the material fact regarding receipt of Commission regarding the services provided by them, in our view, it is sufficient to construe suppression of fact with intent to evade payment of tax. Hence, extended period of limitation would be invoked - demand of service tax alongwith interest for the period 09.7.2004 to 09.09.2004 is upheld - Decided in favour of Revenue.
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2015 (11) TMI 222
Export of Service - Whether during the period 1.7.2003 to 31.3.2007, services rendered , if any, by appellant under Technology Transfer Agreement with Lubrizol Corporation USA is taxable under ‘Business Auxiliary Services’ if any, is amounting to export of services or not? - Held That:- There is no dispute as to that appellant is receiving an amount of 3% of sales value of sales effected by Lubrizol corporation USA in India directly by bidding in various tenders - Assuming that appellant has rendered service of sales and promotion on cells of Lubrizol Corporation in India, then seal services have to be considered to be export of services - Decision made in case SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT] and Paul Merchant Ltd.vs. CCE, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] followed - export of services is non taxable - Decided in favour of assessee.
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2015 (11) TMI 221
Denial of refund claim - whether the time period extended for filing the refund claim by Notification 32/2008-ST is applicable in this case or otherwise - Held that:- Same issue arose and Tribunal [2011 (7) TMI 748 - CESTAT, MUMBAI] went into great detail as to what will be the effect of the substitution of words as indicated in Notification 32/2008-ST for increasing the period of filing the refund claim from ‘60 days’ to ‘6 months’. - Bench has not held that amendment Notification 32/2008 will not be applicable and the period of ‘60 days’ will be applicable for the period in question. On perusal of the Judgment we find that the Bench has not given any reasoning to hold so while the Tribunal’s judgement in the case of Essar Steel (2010 (9) TMI 334 - CESTAT, AHMEDABAD) is a detailed one. In our view the detailed reasoning given in the judgement in Essar Steel will hold field and has to be followed. - impugned order is incorrect and is liable to be set aside - Decided in favour of assessee.
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2015 (11) TMI 220
Rejection of Refund - Export of Bauxite ore - Goods Transport Agency - Revenue contends that there are no rules or notification objecting payment of service tax by a proprietorship concern on behalf of transport agency to whom they pay freight charges and assessee has correctly paid the tax on their behalf while assessee states that being sole proprietorship concern they are not liable to pay service tax for Goods Transport Agency Service either as consignor or consignee - Revenue further contended that granting of refund will amount to unjust unrichment and first appellate authority has erred in their observation. Held That:- Delivery Challan clears that transportation of Bauxite Ore was undertaken by Goods Transport Agency on behalf of assessee who is a sole proprietorship firm - CBEC in Circular No.79/9/2004-ST clears that person making payment towards freight would be liable to pay service tax in case consignor or consignee of goods transported falls in one of category mentioned therein - Assessee does not fall in any such category - Impugned order of first appellate authority is correct - Decided in favour of assessee.
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2015 (11) TMI 219
Construction of Residential Complex Service - whether the appellant is liable to pay service tax in respect of the complex built for ITC - Invocation of extended period of limitation - Held that:- From the definition it is quite clear that if the complex is constructed by a person directly engaging any other person for design or planning or layout and such complex is intended for personal use as per the definition, service tax is not attracted. Personal use has been defined as permitting the complex for use as residence by another person on rent or without consideration. In this case what emerges is that ITC intended to provide the accommodation built to their own employees. Therefore it is covered by the definition of personal use in the explanation. If the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. It is quite clear that CBE&C also has clarified that in cases like this, service tax need not be paid by the builder/developer who has constructed the complex. If the builder/developer constructs the complex himself, there would be no liability of service tax at all. Further in this case it was different totally, the appellant, has engaged sub-contractors and therefore rightly all the sub-contractors have paid the service tax. In such a situation in our opinion, there is no liability on the appellant to pay the service tax. Appellant could have entertained a bonafide belief and therefore extended period could not have been invoked. CBE&C has issued a clarification in 2010 and appellants had written a letter in October 2008 to CBE&C seeking clarification wherein they had given the details of agreement also. If the Board takes a view after a period of two years just before the amendment and also if that view is applicable to the facts of this case before us, we cannot find fault with the appellant for entertaining such a belief that they are not liable to pay tax. Since the entire demand is beyond the normal period of limitation, the appellants succeed on the ground of limitation also. - Decided in favour of assessee.
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2015 (11) TMI 218
Denial of refund claim - unutilized accumulated Cenvat credit - various input services used for export of services - Rule 5 of Cenvat Credit Rules, 2004 read with Notification 5/2006 CE(N.T.) dated 14/3/2006 - Held that:- The Appellants have claimed the refund of the untilized Cenvat credit earned on account of payment of Service tax on various input services such as, support service of business of commerce, Telecommunication service, renting of immovable property, manpower recruitment sercie, management, maintenance and repair service, air travel service, management of business consultant service, courier services and rent-a-cab service, house keeping/cleaning Services, pest control etc. These input services appeared to have been used for providing output service exported. In order to zero rate the exports, Rule 5 of Cenvat Credit Rules, 2004 provides that such accumulated credit can be refunded to the exporter subject to fulfillment of the stipulated conditions. Notifications No. 5/2006-CE(N.T.) dated 14/3/2006 provides the conditions, safeguards and limitation for obtaining refund of such credit. In view of the above, the contention of the adjudicating authority that the said advisory services i.e. Banking & Other Financial Services are used in India and as such the benefit of these services is accruing in India and not outside India does not appear to be correct and it is not tenable. - refund allowed - Decided in favour of Assessee.
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Central Excise
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2015 (11) TMI 214
Clandestine manufacture and removal of goods - Retraction of confession statements - Violation of principle of natural justice - Denial of cross examination - Held that:- contents of the statements provides lot of details and such details can be known only to the person who is involved in day to day activities of organisation and not to officers. Further in the retraction letter it is not specified what portion of a statement was incorrect. We also note that the so called retraction letter were posted to DGCEI Delhi and not to any officer in Mumbai. This itself shows that appellant No.2 did not want any enquiry on the duress, etc. Further during second statement, the appellant No.2 did not speak of any retraction and also confirmed the contents of first statement. Under the circumstances, we are of the view that these retractions are of no consequence. Even if relied upon the statements of the appellant No.3, 4 & 5 are ignored, case against appellant No.1 & 2 will stand based upon documents and statement of appellant No.2. Similarly, documents recovered from appellant No.3 s office is sufficient to impose penalty on appellant No.3. Statements of appellant No.4 & 5 along with documents recovered are sufficient for imposition of penalty on them. - denial of cross examination of co-noticees/accused does not result in violation of natural justice and cannot be insisted on as a matter of right by them. Otherwise each of accused can claim right against testimonial compulsion under Article 20 (3) of Constitution of India and thereby by their joint effort bring about failure of natural justice. - However, imposed penalty is reduced - Decided partly in favour of assessee.
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2015 (11) TMI 213
Denial of CENVAT Credit - Clandestine removal - Shortage of goods - Bogus invoices - Non receipt of actual goods - Held that:- there is no dispute that the entire shortage found in the physical stock taken by the officers is less than 5%. The director of the assessee/company also stated that the difference in stock is only due to the accounting method and not due to the clandestine removal. - shortage in the range of +/- 5 % should be ignored and it is not justified to confirmed demand on this count. I find that aforesaid judgment is squarely applicable in the present case. Accordingly, following the ratio of the above judgment, I drop the demand in respect of shortage found in the physical stock and consequently penalties commensurate to the duty of such shortage also not sustainable. As regard the duty on debit note, the assesse admittedly paid the duty and not contested. In my considered view, the penalties related to duty on debit note is also not maintainable as there is no suppression of facts on the part of the assessee in respect of non payment of duty on debit note, therefore the department s appeal which is limited to penalties on shortage and debit note does not survive and the same is dismissed. Cenvat Credit - Non receipt of Inputs / raw material - Since the Cenvat Credit was fraudulently availed without receipt of the input the penalties is unavoidably imposable, hence the same is also maintained. I dropped the part of the duty in respect of shortage of material, therefore Shri. Sanjay Agarwal, Director of the assessee/company deserves reduction of penalty, therefore I reduce penalty from ₹ 5 lakhs to ₹ 3 lakhs on Shri. Sanjay Agarwal. In view of my above discussion appeals of the assessees and Shri. Sanjay Agarwal is partly allowed - Decided partly in favour of assessee.
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2015 (11) TMI 212
Remission of duty - Goods destroyed in fire - Held that:- No reasonable opportunity has been extended to the Appellants before their application for remission of duty, on the goods available in the factory premises and destroyed by the devastating fire on 22.11.2009, had been rejected. The argument of the department is that no separate hearing is required to be allowed as the Appellants were heard on 02.02.2012 in respect of demand notices, involving similar facts, is unacceptable for the simple reason that in the said Demand Notices, there has been no reference to the remission application. In any case, the requirement of the observation of the principles of natural justice cannot be dispensed with before rejecting the remission application as both the proceedings are treated separately by the Department. - remission application be taken afresh after affording an opportunity to the Appellants to place necessary evidences and defend their case effectively. After deciding their remission application afresh, the adjudicating authority would proceed with the adjudication of demand notices issued for recovery of duty. It is made clear that all issues are kept open and both sides are at liberty to produce evidences in their support. In the result, the impugned Orders are set aside - Matter remanded back - Decided in favour of assessee.
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2015 (11) TMI 211
Suo moto reversal of credit before issuance of SCN - Interest u/s 11AB - Imposition of penalty - Held that:- It come to the notice regarding the short payment, non payment of duty during the audit of the appellant s record as a result appellant suo moto paid the entire duty and not contesting the same. The Revenue has not issued any show cause notice for demand of duty and appropriation of the amount already paid by the appellant. - under this section duty is determined by the Central Excise Officers after considering representation made by the person on whom notice is served under subsection(1). In the present case neither any notice was issued under Section 11A(1) nor Central Excise Officers has determined the duty short paid / not paid under subsection (2) of Section 11A as is evident from the proceedings that no show cause notice under Section 11A(1) was issued nor any adjudication in respect of short payment or non payment of duty has been made, therefore ingredients required under Section 11AC inasmuch as issuance of show cause notice under Section 11A(1) and determination of duty under Section 11A(2) was not carried out by the department, therefore penalty under Section 11AC could not have been imposed. - penalty under Rule 173Q, I find that since the appellant has not paid duty or availed Cenvat Credit wrongly they have contravened provision of Central Excise Rules, therefore, they are liable to penalty under Rule, 173Q, hence penalty of ₹ 10,000/- imposed under Rule 173Q is hereby upheld. As regard the interest, since there is admitted wrong availment of Credit and though the same was paid on pointing out by the audit officer but paid only belatedly, the same attract interest unavoidably. From the date of availement of Modvat credit and not from the utilization of wrong availement of credit. Following the ratio of the Hon' ble Supreme Court decision in the case of Ind-swift, I upheld the demand of interest as provided under Seciton 11AB at the relevant time - Interest under Section 11AB as confirmed - penalty imposed under Rule 173Q is upheld - However, Penalty under Section 11AC is dropped - Decided partly in favour of assessee.
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2015 (11) TMI 210
Option to avail full exemption or partial exemption with CENVAT Credit - Manufacture of Paper and paperboard or articles - duty under Notification 4/2006 dated 1.3.2006 - Revenue's contention is that their goods are covered by serial No. 90 - Held that:- serial No. 90 has two conditions. The first condition limits exemption for goods cleared for home consumption from a factory in any financial year upto first clearances of an aggregate quantity not exceeding 3500 MT. Further, there is another condition about non-availment of Notification 8/2003. In our view, in view of the above mentioned two conditions, it cannot be said that serial No. 90 provides absolute exemption to paper and paper board or articles made therefrom manufactured, starting from the stage of pulp, in a factory, and such pulp contains not less than 75% by weight of pulp made form materials other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags. - appellant-assessees cannot be forced to pay duty as per serial No. 90 of Notification 4/2006 and they have option to pay the duty under other numbers, viz. 91 and 93. Since we have taken the view that the appellant cannot be forced to pay the duty under nil rate vide serial no. 90, the other aspects raised in all the show cause notices as also the Revenue's appeal fall flat. - Decided in favour of assessee.
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2015 (11) TMI 209
Benefit of CENVAT credit - Credit availed on the basis of debit notes - Non production of valid documents - Invocation of extended period of limitation - Held that:- Appellants were directed by the audit team to produce the relevant invoices before the range authorities, which action gets completed by April 2006. In spite of that, show-cause notice stands issued after a gap of around 4 years, that too without making any reference to the fact of filing of invoices and the verification of the same by the Range Superintendent. The notice is issued on the sole ground that the said invoices were not produced before the audit team. Needless to say that the appellant s Range authorities were under a duty to verify the said invoices and to extend the benefit to the assessee, based upon the same. In any case, the observations of the appellate authority that the registration number does not stand mentioned in the said invoices, cannot be adopted by the Revenue as an excuse to deny the credit, especially in the absence of any allegation, much less with any allegation to the effect that service tax does not stand paid by the service provider and service does not stand received by the appellant. As such, I find no reasons to deny the credit to the appellant. There is no justification for the Revenue to take a period of 4 years to issue the show-cause notice that too without verification of the documents submitted by the appellant. The credit was being availed by the assessee by reflecting the same in the monthly returns which were being regularly filed by the appellant. In such a scenario, no mala fide intention, with any intent to evade, suppress or mis-state the facts can be attributed to the appellant so as to invoke longer period of limitation. I accordingly hold that the demand being raised after normal period of limitation is barred. - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 208
Denial of refund claim - Section 11B - unjust enrichment - held that:- from the original order that appellant have submitted C.A. Certificate as well as their balance sheet. The original authority has verified the said documents and came to the conclusion that the amount of refund has been shown as receivable under the head of “loans and advances”, the same has been certified by the Chartered Accountant. From the said records, I do not find any reason that what else is required to establish that incidence of duty has not been passed on to any other person. - has verified and dealt with C.A. Certificate and balance sheet of the appellant and did not find any discrepancy in such documents and relying the same held that incident of duty has not been passed on to any other person, whereas in the findings of the Commissioner (Appeals), he stated that C.A. Certificate was not understood whereas C.A. Certificate is clearly based on the balance sheet. Moreover Ld. Commissioner has not discussed anything as regard amount shown receivable under the head of loan and advances which is conclusive evidence of proof of not passing of incidence of duty. Therefore the Commissioner (Appeals) has made serious error in not considering the C.A. certificate as well as balance sheet in proper perspective. Therefore impugned order suffers with serious infirmity - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 207
Availment of CENVAT Credit - invoices for the input service which were invoiced not in the name of the appellant but to the Divisions of L&T - interest under Section 11AB - penalty under Section 11AC - Held that:- whole case is revolving only on the aspect that invoices of services are not bearing the address of the appellant. However the name of the appellant is indeed mentioned in the invoices. I think on that basis alone it was wrongly concluded by the lower authority that in absence of address it cannot be ascertained that the services provided and covered under the input services invoices were meant for the appellant. I observed that name of the appellant is clearly mentioned on the invoices alongwith name and the address of the job worker i.e. M/s. R&C, SBS Marg, Mulund has also mentioned - even though if there is doubt about service recipient due to reason that address of the appellant is not appearing on the invoices, by corroboration of the books of account and payment particulars made against the said invoices, it can be ascertained that service recipient is the appellant and nobody else. However these facts of accounting of bills in the books of account of the appellant and accounting of payment made by the appellant to the service recipient were not verified by the lower authority. In my considered view the matter deserves to be remand to the original authority for this limited purpose. I am of the considered view if it is found that against the disputed invoices, the payment is made by the appellant and they have accounted for such demand in their books of account. This is a sufficient proof that the appellant is recipient of the service irrespective of the fact that invoices also bearing name and address of the job worker. - Matter remanded back - Decided in favour of assesee.
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2015 (11) TMI 206
Demand of interest on payment of differential duty - price escalation clause - Supplementary invoices - diversion decisions on the issue - Held that:- in case of Bharat Heavy Electricals Ltd. (2010 (4) TMI 439 - KARNATAKA HIGH COURT ), the facts are absolutely identical to the facts of the present case. As the supply made to the railways and the prices at the time of clearances is not decided due to the reason that the price index which is published periodically and not available on day to day basis. The finalization of price takes place only after publication of RBI price index as per escalation and de-escalation clause. The supplementary invoices are raised subsequent to the clearance of the goods only after RBI publication of the price index therefore payment of excise duty is not made at the time of clearance of goods. In all other cases which was relied upon by the Revenue facts are different. Therefore when there are diversion decisions on the issue then in my view the judgment which is based on the identical facts has to prevail. In this position, following the ratio of Hon'ble Karnataka High Court in the case of Bharat Heavy Electricals Ltd. (supra) which has been upheld by the apex court [2010 (12) TMI 1144 - SUPREME COURT], I am of the view that interest on difference arising due to the price escalation as per the RBI price index the interest on duty is not chargeable, therefore impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 205
Duty demand - Availment of Cenvat credit - Bar of limitation - Held that:- except for one letter dated 17.08.2005 from the Superintendent of Central Excise directing the appellant to produce original copy of RG23A part II, no other information was sought. I also find from the records in response to the letter dated 17.08.2005, appellant informed the Range officer that original RG23A part II was lying with them only. Despite so many correspondence entered into with the departmental authorities, the appellant by letter dated 30.05.2006 informed the Asst. Commissioner of Central Excise, Rasayani Division that they are taking recredit of the amount and did so by entry no. 940 dated 12.06.2006. It is not in dispute that the monthly excise return of June 2006 was filed with the Range authorities in time indicating therein the Cenvat credit availed by the appellant. - despite such clear intimation and information from the appellant s side in May 2006, revenue authorities issued a show-cause notice on 25.03.2011 invoking the extended period for seeking reversal of the amount of ₹ 3,94,950/- which, in my view, is blatantly time barred. The allegations in the show-cause notice are also very bland inasmuch it only said that the assessee deliberately suppressed the fact of recredit which is in contravention of Rule 3 of CENVAT Credit Rules, 2004. - on the fact of such clear cut information given to the department for recredit of the amount in June 2006; the show-cause notice issued in 2011 is to be held as time barred and no suppression, misstatement is proved against the appellant. - impugned order is set aside on the point of limitation itself - Decided in favour fo assessee.
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CST, VAT & Sales Tax
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2015 (11) TMI 217
Denial of Refund claim - Order of attachment - Seizure of bank accounts - on-line application for claiming provisional refund not filed - Held that:- With a view to ensure that no prejudice is caused to the case of either party by any observation made by this court at a stage when the assessment proceedings are pending before the competent authority, this court is not inclined to enter into any discussion on the merits of the case. Suffice it to state that having regard to the short duration that the petitioner has been in this business in the State of Gujarat; the material gathered by the respondents (the veracity and evidentiary value of which is yet to be assessed); as well as considering the fact that the petitioner does not have any immovable property in the State of Gujarat, to secure the interest of the Government revenue, the court is of the view that the interests of justice would best be served if while permitting the attachment to continue, the respondent authorities are directed to frame the assessment within a stipulated time frame. Under the circumstances, the court is not inclined to interfere with the provisional attachment made by the respondent at this stage. - Petition disposed of.
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2015 (11) TMI 216
Refund of sales tax - excess payment of tax - reduction in the purchase value from ₹ 682/- to ₹ 645/- per cylinder - Held that:- In normal parlance, discount can be said to be a bargain in between purchaser and seller whereas the present case cannot be said to be a case of discount or bargain as the purchaser, on the basis of the expert committee report, has reduced the value on its own and voluntarily which was duly accepted/admitted by the assessee and not challenged anywhere. Therefore, in my view, it cannot be said to be a case of discount. Ld. counsel for the assessee has relied upon certain judgments, which are prima-facie dealing with the cases where the seller allowed discount to the purchaser and the courts, in such circumstances, came to the conclusion that, it being a discount, the discounted value is required to be adopted. I may consider a case where the purchaser accepts goods and after delivery is taken, it is noticed that the quality is not upto the mark and the goods needs to be returned back and after mutual discussion, some price variation is there in the shape of reduction of the value, then in my view, it cannot be said to be a case of reduction/discount as everything has happened after delivery which cannot be said to be price reduction or discount. In subsequent bills the amount was reduced by the purchaser on final settlement, then in that case, it was an inter-se dispute in between the assessee as well as the Oil Companies but in so far as the claim that sales tax was required to be paid on the lower value of ₹ 645/- per cylinder, in my view, cannot be said to be correct on the part of the assessee. - Decided against assessee.
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2015 (11) TMI 215
Constituional validity of section 49 of the KVAT Act, 2003 - power to confiscate / detain vehicles transporting goods - irrespective of whether they were covered by a transaction of sale or purchase - preventive measures - Ultra Vires of legislative competence of the State Legislature and ultra vires articles 14, 19 and 21 of the Constitution of India - Held that:- Provisions of section 49 of the KVAT Act, which are essentially for the purposes of ensuring that there is no activity of smuggling, and thereby an attempted evasion of tax that is due under the KVAT Act, in respect of notified goods, is in the nature of a machinery provision under a legislation that is intended to levy a tax on the sale or purchase of goods. The said provision is intended to ensure that the charge is effective and that no amount, that is due under the Act, escapes an assessment to tax under the Act. Being in the nature of a machinery provision that is intended to further the objects of main enactment, the provision itself has to be seen as one that is incidental or ancillary to the power of the State Legislature to enact a legislation for levy of tax on sale or purchase of goods. The challenge against the validity of the said provision on this ground must necessarily fail. Provisions of section 49 of the KVAT Act, cannot be struck down as unreasonable, arbitrary or violative of article 301 of the Constitution of India. The provision provides ample safeguards for ensuring compliance with the rules of natural justice and also ensures that the person proceeded against is given ample opportunity to show cause against the proposed detention and subsequent confiscation. The defects that had been pointed out in the erstwhile provisions of section 30C of the KGST Act were removed by the Legislature while enacting the new provision under section 49 of the KVAT Act. The prescription with regard to the value of the goods, for the purposes of attracting the definition of smuggling, has also been provided under rule 66 of the KVAT Rules. In that view of the matter, when the scheme envisaged in section 49 of the KVAT Act is considered in its entirety, it cannot be said that it falls foul of the Constitutional provisions for holding it to be invalid and unconstitutional. The challenge against the constitutional validity of the said provision, therefore, fails and is repelled. - Decided against assessee.
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Indian Laws
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2015 (11) TMI 191
Violation of Sections 12A and 24 of the SEBI Act - Attachment of property - Prevention of money laundering - Freezing of bank accounts - Held that:- On a reading of the order of adjudicating authority it is apparently clear that the applicability of the 2002 Act has not been addressed and no finding given in respect thereof. This, therefore, is contrary to the order dated 28th July, 2014 passed by the Appeal Court in AST 345 of 2014 with ASTA 246 of 2014. As the merits of the case has been considered, and a finding given in respect thereof, this, therefore, renders the order dated 10th September, 2014 bad and liable to be set aside. - Impugned order is set aside. Correctness of the letter dated 19th September, 2014 - In the instant case to quash the letter dated 19th September, 2014 will give rise to a situation likely to do injustice to the debenture holders, therefore, no interference is called for with the letter dated 19th September, 2014. At this stage to form any opinion on the applicability of the 2002 Act would amount to usurping the power of the adjudicating authority. Needless to mention that investigation will continue and in the event the same is completed before a decision is taken by the adjudicating authority, let no effect be given to the order to be passed till the decision of the adjudicating authority. - The object of the 2002 Act is to prevent money laundering and confiscation of property derived from such money laundering or proceeds of crime. It is only in furtherance of the object of the 2002 Act that the letter dated 19th September, 2014 has been issued so that mischief if any is suppressed and the object of the legislature advanced. - Petition disposed of.
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