TMI Tax Updates - e-Newsletter
December 10, 2015

Case Laws in this Newsletter:

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

TMI SMS

• Non filing of partnership deed -provision of Sec. 184(2) is not mandatory & is only directory - assessee be assessed as firm not as AOP -Tri

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• Refund of SAD - appropriate VAT being NIL, appellants cannot be said to have violated the conditions of Ntf. 102/2007 - refund allowed - Tri

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Articles

1. Binding Nature of Board Circulars-Confusion Settled or Created? Or Circulars contrary to SC decisions deemed as rescinded-A good start!

   By: Pradeep Jain

2. Private company incorporation procedure: Easy to incorporate

   By: Narender Mukkisa

News

1. Indirect Tax Revenue (Provisional) Collections Increase from ₹ 44,475 Crore in November 2014 to ₹ 55,297 Crore During November 2015;

2. Generation of Employment Through DMIC

3. Steps to Revive Manufacturing Growth

4. RBI Reference Rate for US $

5. MOS (Finance): Macro-economic indicators of late have shown positive trend and the structural reforms undertaken have started contributing to the sustainable growth through participation by States; First Conference of States’ Finance Secretaries held here today attended by the Principal Secretaries/Secretaries Finance of 29 States and two UTs

6. Deliberations Between ICAI, ICSI and ICoAI on Multi-Disciplinary Partnership (MDP) Firms

Notifications

Customs

1. 59/2015 - dated 8-12-2015 - ADD

Seeks to levy definitive anti-dumping duty on Gliclazide, originating in, or exported from the Peoples Republic of China for a period of five year

2. 58/2015 - dated 8-12-2015 - ADD

Seeks to levy provisional anti-dumping duty on Methylene Chloride originating in, or exported from the Peoples Republic of China and Russia for a period not exceeding six months

Income Tax

3. 91/2015 - dated 9-12-2015 - IT

Notified Pension Fund under Section 80C(2)(xiv)

Circulars / Instructions / Orders

DGFT

1. 47/2015-20 - dated 8-12-2015

Declaration of intent under Merchandise Exports from India Scheme (MEIS)

Highlights / Catch Notes

Income Tax

• Supreme Court's 1986 Ruling on Enhanced Compensation Applies Despite Income Tax Act Section 45(5) Changes.

  Case-Laws - HC : Money received by the assessee by way of enhanced compensation/interest - the decision in CIT v. Hindustan Housing and Land Development Trust Limited (1986 (7) TMI 10 - SUPREME Court ) is to be applied despite Section 45(5) of the Act. - HC
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• Website Registration Costs: Revenue vs. Capital Expenditure Based on Intent and Purpose, Not Just Long-Term Benefits.

  Case-Laws - AT : Disallowance of website registration expenses - revenue v/s capital expenditure - Just because a particular expenditure may result in an enduring benefit would not make such an expenditure of capital nature and real intent and purpose of the expenditure has to be seen - AT
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• Partnership Firm Assessed as AOP Due to Non-Filing; Section 184(2) Not Mandatory, Assessed as 'Firm' Instead.

  Case-Laws - AT : Assessment of partnership firm as AOP - non filing of partnership deed - the provision of section 184(2) is not mandatory and is only directory as the similar language has been used u/s 80IA(7) - assessee be assessed as ‘firm’ not as ‘AOP’ - AT
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• CIT Cannot Revise Assessment u/s 263 Based on Subsequent Info if AO Lacked Original Cash Transaction Data.

  Case-Laws - AT : Revision u/s.263 - In absence of information at the time of completion of the assessment the AO could not have asked the assessee to explain the cash transactions - on the basis of a subsequent letter addressed to the AO, CIT could not have assumed jurisdiction u/s. 263 on this issue holding that the order of the AO is erroneous and prejudicial to the interest of the revenue - AT
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• Unexplained Cash Credits Under IT Act Section 68: Assessee Fails to Prove Authenticity, Income Taxed as Unexplained Income.

  Case-Laws - AT : Unexplained cash credit under section 68 - assessee has failed to establish the genuineness of the credits. - AT
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• Trust Entitled to Exemption u/s 11(1) of Income Tax Act; Deduction Based on Pre-Application Income Permitted.

  Case-Laws - AT : Calculation of the deduction u/s. 11(1)(a) - Having found that trust is entitled to exemption under s. 11(1), we are to go to the stage of income before application thereof. Thus the accumulation u/s 11(1)(a) should be allowed as claimed by the Assessee - AT
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• Sale of Transferable Development Rights is not taxable; Section 54 exemption claims deemed irrelevant.

  Case-Laws - AT : Compensation received on account of sale of TDR rights is not taxable, the other issues raised by the assessee relating to claim of exemption u/s 54 and enhancement of compensation have become redundant and not required to be adjudicated upon - AT
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Customs

• Redemption Fine and Penalty Lifted for Tyres Imported Before DGFT Restrictions of 2008 Notification No. 64(RE)/2008-2004-2009.

  Case-Laws - AT : Import of new radial tyres on a date after 24.11.2008 when imports of such tyres were restricted by DGFT in terms of Notification No. 64(RE)/20082004-2009 dated 24.11.2008 - Steps to import were taken before the imposition of restriction - Redemption fine and penalty is set aside- AT
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• Penalties under Regulation 22 of Customs Brokers Licensing Regulations, 2013 cannot apply retroactively to actions before June 21, 2013.

  Case-Laws - AT : Penalty under Regulations 22 of Customs Brokers Licensing Regulations, 2013 - provisions for imposing penalty were not in existence under the provisions of CHA LR 2004. Therefore, the same cannot be brought into effect before 21.06.2013 on which date CBLR 2013 having the provisions for imposing penalty came in to effect. - AT
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• Refund of Special Additional Duty under Notification No. 102/2007 granted; compliance with conditions affirmed despite NIL sales tax/VAT.

  Case-Laws - AT : Denial of refund of SAD - Notification No. 102/2007 dated 14.09.2007 - the appropriate sales tax or VAT being NIL the appellants cannot be said to have violated the said conditions of the said notification inasmuch as it cannot be said that they have not paid appropriate sales tax/VAT - refund allowed - AT
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Service Tax

• CENVAT Credit Denied for Service Tax on Mediclaim Insurance Premiums; Considered Voluntary Welfare Measure.

  Case-Laws - AT : Cenvat Credit - service tax paid on insurance premium - appellant would not be eligible to take CENVAT credit in respect of the Mediclaim which is in the nature of a welfare measure and voluntary - AT
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• High Court Rules Against CESTAT's Extension for Reduced Penalty Payment u/s 78(1) of Finance Act, 1994.

  Case-Laws - HC : Extension of time for making reduced penalty - CESTAT could not have permitted the Respondent to pay the reduced penalty amount in terms of the second proviso to Section 78 (1) of the Finance Act, 1994 within thirty days from the date of the impugned order of the CESTAT. - HC
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• Revenue Must Prove Service Tax Applicability; Foreign Exchange Payments Not Automatically Services in India.

  Case-Laws - AT : The onus to prove that the service tax is leviable is totally on Revenue. - the observation that “because the appellant never clarified as to why such amount was spent, it can be deduced that the payments made in foreign exchange were undoubtedly for the services received by the appellant in India in relation to the said taxable services” is completely devoid of legal basis - AT
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• Service Tax Demand on Foreign Exchange Payments for Online Services Challenged; Favorable Outcome for Assessee Likely.

  Case-Laws - AT : Demand of service tax - Global Account Manager (GAM), expenses and International Private Leased Circuit (IPCL) charges. - the amounts paid in foreign exchange which are alleged to be for ‘Online Information and Data Base Access and Retrieval Service’ - prima facie case is in favor of assessee - AT
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• Service Tax Confirmed on Complex with Over 12 Units; Valuation Relief Granted for Community Facilities.

  Case-Laws - AT : Construction of complex service - The ground plan clearly shows that the complex has more than 12 units with common community hall, common parking area, and Common Park - demand of service tax confirmed while granting appropriate relief in valuation - AT
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Case Laws:

• Income Tax

• 2015 (12) TMI 464
  Money received by the assessee by way of enhanced compensation/interest - Whether the amount of enhanced compensation received by the assessee during the relevant previous year is taxable in view of the provisions of Section 45(5)(b) of the Income Tax Act, 1961? - Held that:- The question of bringing the enhanced compensation received by the Assessee during the relevant previous year to tax for the purposes of capital gains under Section 45 (5) (b) of the Act will have to await the final decision in the appellate proceedings emanating from the order of the ADJ in the proceedings under Section 31 (2) LA Act. ITAT was incorrect in law in holding that the decision in CIT v. Hindustan Housing and Land Development Trust Limited (1986 (7) TMI 10 - SUPREME Court ) is to be applied despite Section 45(5) of the Act. The question of assessing to tax the interest received by the assessee on enhanced compensation in the same year in which the enhanced compensation is received will also have to await the final decision in the appellate proceedings emanating from the order of the ADJ in the proceedings under Section 31 (2) LA Act. Turning to the wealth tax appeals, it is seen that as held by the ITAT in the present case, amount of compensation received by the Assessee in the nature of ‘trust money’ which may be required to be returned by the Assessee in case she does not succeed in the appeal emanating from the order in the proceedings under Section 31 (2) of the LA Act. For an Assessee to be brought to tax within the ambit of the wealth tax provisions, it should be shown, as on the valuation date, to be belonging to the Assessee. In the facts of the case, the ITAT was justified in holding that the provision of WT Act did not stand attracted yet. That too will have to await the final decision in the appellate proceedings emanating from the order of the ADJ in the proceedings under Section 31 (2) LA Act.

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• 2015 (12) TMI 463
  Revision u/s 263 - whether the activity undertaken by the assessee comes within the scope and meaning of words “manufacture and production of article or thing" as used by the legislation in section 10B(2)(i) of the Act? - Held that:- Assessing Officer, in his reassessment order dated 20.2.13 passed in pursuance to the directions of Hon'ble High Court, allowed deduction us/ 10B of the Act to the assessee by holding that the activities undertaken by the assessee would amount to manufacture within the meaning of section 10B(2)(i) of the Act in the context of aforesaid proceedings undertaken by the Assessing Officer during reassessment proceedings carried out in pursuance to the order of Hon'ble High Court, we appreciate that the Assessing Officer followed directions of Hon'ble High Court in its letter and spirit and properly and deeply verified and examined the claim of the assessee on the basis of additional evidence as well as spot inspection and inquiry report of the departmental Inspector and then concluded that the activities undertaken by the assessee would amount to manufacture within the meaning of section 10(B)(2)(i) of the Act on the basis of said conclusion, the assessee’s claim for deduction u/s 10B of the Act was allowed. we observe that the Assessing Officer adopted a reasonable, correct and plausible view based on logical analysis of documentary evidence of the assessee and fortified by the Inspector’s spot and physical inspection report and the same cannot be held as unsustainable or not in accordance with the provisions of the Act. The Assessing Officer rightly held that the assessee is undertaking manufacturing activities and thus it is entitled for deduction/exemption u/s 10B of the Act. In our humble understanding, this is not a case of two possible views but the present case is the case of one acceptable and sustainable view and in this situation, it cannot be held that the CIT assumed valid jurisdiction to issue notice and to pass revisional order u/s 263 of the Act. Hence, we are inclined to hold that the CIT has no valid reason to assume jurisdiction to invoke section 263 - Decided in favour of assessee.

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• 2015 (12) TMI 462
  Revision u/s 263 - CIT held that the AO has failed to verify the correctness of loss declared by the assessee company in the construction project - Held that:- AO after discussions made additions u/s 40(a)(ia) of the Act with respect to payment made directly by the buyer M/s Silverline Enterprise to M/s Sarovar Developers Private Limited on behalf of the assessee company being out of court settlement amount without deduction of TDS which was considered by the AO as having paid towards the development of the said property which addition was finally deleted by in Vidyasagar Investments Private Limited v. The ITO for assessment year 2010-11. It was also noted by the AO that the assesssee company has made balance payment of Rs. 6,05,60,000/- to M/s Sarovar Developers Private Limited towards construction of the project after deducting TDS as per the Act. Thus, it could not be said that the AO has not considered this project, its cost of construction, sale of project and other facts and circumstances surrounding this project which is the sole project undertaken by the assessee company, while framing the assessment order dated 01-03-2013 u/s 143(3) of the Act. The AO accepted the loss sustained by the assessee company in this project to be allowed to be set off against other income of the assessee after application of mind and considering relevant material on record which was one of the plausible view taken by the AO which view cannot be considered as an erroneous view. The CIT also has not brought on record that how the view undertaken by the AO could be considered as erroneous and prejudicial to the interest of Revenue. We, therefore, hold that the order passed by the CIT u/s 263 of the Act is not sustainable in law and is hereby set aside - Decided in favour of assessee.

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• 2015 (12) TMI 461
  Eligibility for deduction u/s 80IA(4) in respect of CFS - whether CFS is an infrastructure facility under section 80IA(4)? - Held that:- The Hon'ble Jurisdictional High Court in CIT v/s Continental Warehousing Corporation Ltd.[2015 (5) TMI 656 - BOMBAY HIGH COURT] has held that CFS for the purpose of section 80IA(4) is to be considered as an inland port In fact, the Tribunal, Vizag Bench, in Gateway East India Pvt. Ltd. (2015 (12) TMI 365 - ITAT Visakhapatnam), following the decision of Container Corporation of India Ltd. v/s CIT [2012 (5) TMI 260 - DELHI HIGH COURT] held that CFS being an inland port is an infrastructure facility for the purpose of section 80IA(4). In view of the aforesaid, we have no hesitation in holding that assessee having developed, operated and maintained a CFS is eligible for deduction under section 80IA(4). On a reading of the provisions of section 80IA(4)(i)(b), as it existed from 1st April 2002, it is clear that the condition that such infrastructure facility shall be transferred to the Government, local authority or statutory body has been done away with by Finance Act, 2001 w.e.f. 1st April 2002. Therefore, the reasoning of the Assessing Officer that the assessee would not get deduction under section 80IA(4) agreement BOT / BOLT stipulating handing over the infrastructure facility to the Government is wholly without basis. Even assuming for the argument sake that such condition is applicable for the impugned assessment year, still in our view, the stand of the Department is wholly misconceived as the first appellate authority after perusing the agreement with CIDCO has given a categorical finding that CFS developed, operated and maintained by the assessee would revert back to the statutory body after expiry of lease period of 60 years. This finding of fact recorded by the first appellate authority has not at all been controverted by the Department. Thus, both the arguments of the Assessing Officer for denying assessee's claim of deduction would fail. - Decided against revenue Disallowance of interest expenditure claimed under section 36(1)(iii) - CIT(A) deleted the disallowance - Held that:- Assessing Officer has disallowed interest expenditure only on the allegation that assessee has failed to prove the fact that borrowed funds were not diverted for investing in share capital of the subsidiary. However, on a perusal of the facts and materials placed on record, it is seen that as against the investment made in the subsidiary during the relevant previous year amounting to Rs. 85.86 crore, the assessee had own interest free funds on account of share capital and reserves to the tune of Rs. 633 crore. This fact has not been controverted by the Department. Therefore, when both borrowed funds and interest free funds are available to the assessee, as per the principles laid down by the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY), the presumption would be, investment in subsidiary is from own interest free funds. In that view of the matter, we do not find any reason to interfere with the order of the first appellate authority. Moreover, on a perusal of the loan agreement with the Bank, it is very much evident that there is stipulation in the agreement that from time-to-time the bank will make inspection for ensuring utilisation of funds for the purpose for which it was taken. Therefore, when there is no allegation by the bank that borrowed funds were not utilised for the specific purpose for which it was given, the Assessing Officer cannot assume or presume that borrowed funds were utilised for making investment in the subsidiary. - Decided against revenue

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• 2015 (12) TMI 460
  Disallowance u/s 14A - Held that:- It is uncontroverted fact that assessee did not have any exempt income during the year. Hon Delhi High court in case of Cheminvest Limited V CIT [2015 (9) TMI 238 - DELHI HIGH COURT] has held that where there is no exempt income there cannot be any disallowance u/s 14A of the Income Tax Act. Therefore respectfully following the decision of Honourable Delhi high court we reverse the order of CIT (A) confirming disallowance - Decided in favour of assessee. Disallowance being payments made under Voluntary retirement scheme - Held that:- The claim of the assessee is allowable u/s 35DDA of the act and no deduction u/s 37(1) is permitted for expenditure on voluntary retirement scheme. In none of the decision cited before us, Honourable courts were concerned about the allowability of claim of VRS expenditure u/s 35DDA of the act as well as u/s 37(1) of the act. Further all the cases cited pertains to AY prior to introduction of section 35DDA of the act except in case of CIT V KJS India Private Limited (2011 (9) TMI 667 - Delhi High Court ), however provision of section 35DDA was not brought to the notice of the court. Therefore these decisions render no help to the cause of the assessee. Thus we confirm the order of CIT (A) disallowing the claim of the assessee u/s 37(1) of the act on account of payment made under voluntary retirement scheme - Decided against assessee. Non granting adjustments of TDS - Held that:- CIT (A) is not justified in dismissing this ground of appeal. If the assessee has filed TDS certificates along with the return of income filed by the assessee and if the claim is according to the law , assessee should be granted the credit for such TDS certificate. In view of this we direct AO to grant credit of TDS certificates on merit after proper verification if the credit complies with the provision of section 199 of the Income Tax Act. - Decided in favour of assessee. Disallowance of carry forward of loss - Held that:- We direct that assessee should be allowed the carry forward of losses as shown by the return of income in view of press release of CBDT dated 22.12.2008 in No 402/92/2006-MC-(53 of 2008) where CBDT has accepted that returns filed electronically on 30.9.2008 where the acknowledgement date is 1.10.2008, shall be treated as having filed on 30.9.2008. Hence AO is directed to allow the claim of carry forward of losses as same is permissible according to the law. We reverse the finding of CIT (A) on this count.- Decided in favour of assessee. Disallowance on account of prior period expenses - Held that:- In fact there is no expenses debited by the company but there is a reversal of income by the assessee of interest income of Rs. 10,77,555/- out of interest income shown of Rs. 29,25,000/- in AY 2007-08 which was received only of Rs. 18,47,445/- and therefore the reversal of Rs. 10,77,555/- was made debiting the expenses account as tax has already been paid on the interest of Rs. 29,25,000/- in earlier years. Further an amount of bonus of Rs. 65092/- and gratuity of Rs. 1104478/- were already disallowed u/s 43B of the act. Thus no infirmity in the order of CIT (A) in deleting the disallowance - Decided against revenue Disallowance on account of loss on sales of stores and spares written off - Held that:- Identical claim of the assessee was allowed by AO himself for AY 2006-07 and Ld DR did not controverted this fact. We have perused the order of AO dated 28.3.2015 passed by AO for A Y 2006-07 where in as per Para no 12 AO has held that these expenditure are revenue in nature and allowable to the assessee. Both the parties agreed that there is no change in the facts of the case for this year also. In view of this we confirm the order of CIT (A) deleting disallowance - Decided against revenue

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• 2015 (12) TMI 459
  Entitlement for concessional benefit u/s 44BB - income of the assessee is held as FTS - Held that:- As decided in assessee's own case we hereby held that the amount representing work like drilling and exploration of well is covered by Section 44BB of the Act and as such, liable to be reckoned u/s 44BB of the Act.

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• 2015 (12) TMI 458
  Reopening of assessment - Held that:- CIT (A) had judiciously considered the issue and held the matter against the assessee because reopening was within a period of four years and various omissions and discrepancies was revealed from the assessment order based on which the Ld. Assessing Officer had initiated proceedings U/s. 147 of the Act. Therefore we hereby uphold the order of the Ld. CIT (A). - Decided against assessee. Disallowance of provision for wage arrears to staff - Held that:- CIT (A) following the decision of the Tribunal in the case of Indian Overseas Bank(IOB) for the assessment year 2005-06 [2013 (3) TMI 643 - ITAT CHENNAI] held that the adhoc provision made shall be allowed as deduction in the year of payment and not in the year provision is made. Since the Ld. CIT (A) has followed the decision of the Tribunal, we do not find it necessary to interfere with his order. Accordingly, this issue is held against the assessee. Allowing depreciation on UPS at 60% instead of 80% claimed by the assessee - Held that:- the appellant is entitled to depreciation @ 60% by treating the UPS under the category of computer. Since the Ld. CIT (A) has followed the decision of the Tribunal, we do not find it necessary to interfere with his order. Disallowance made U/s.14A read with Rule 8D - Held that:- The whole purpose of enactment of Section.14A of the Act is to disallow certain expenses which are attributable to exempt income. The assessee bank due to various statutory requirements and commercial reasons is bound to make investments in securities and equity shares etc., which earn dividend that, are exempt from income. For making such investments obviously the financial wizards employed by the assessee company has to make tremendous exercise to determine as to what securities /equity shares etc., has to be purchased by the assessee to optimize the economical functioning of the assessee. This incurs cost. A portion of this cost has to be apportioned towards the factor of exempt income whether it is earned during the year or otherwise. For determining such apportionment of cost, Income Tax Rules are framed which we find in Rule-8D. However, Rule-8D has come into effect from 24.03.2008. Therefore for the relevant assessment year, Rule-8D is not applicable. In these circumstances, Chennai Bench of the Tribunal on many occasions has held 3% of earned exempt income can be estimated for making disallowance for the purpose of Section.14A of the Act Accordingly, we hereby direct the Ld. Assessing Officer to disallow 3% of earned exempt income for making disallowance U/s.14A of the Act. Applicability of Section-115JB - Held that:- As the amendment to Section.115JB by the Finance Act, 2012 will be applicable only from the A.Y.2013-14, we uphold the claim of the assessee that provisions of section 115 JB will not be applicable to the assessee bank and set aside the assessment made U/s.115JB on the assessee company Treatment of Brokerage paid at the time of acquisition of investments in securities as revenue expenditure or capital expenditure- Held that:- Before us, the nature of investments as to whether the investment made amounts to capital expenditure or revenue expenditure is not explained by both the parties. Moreover the decision cited by the Ld. CIT (A) and the assessee were not brought to the notice of Ld. Assessing Officer therefore in the interest of justice we remit back the matter to the file of Ld. Assessing Officer for denovo consideration and to pass appropriate order as per law and merit and after duly examining the decisions cited by the assessee as well as the Ld. CIT (A). Treatment to the loss on sale of investments - CIT(A) treated as Revenue expenditure by holding the investments to be stock in trade while as the investments related to HTM category and therefore, it amount to capital loss - Held that:- While adjudicating ground No. 2B(vi) herein above we have made it clear that, before us the nature of investments as to whether the investments made amounts to capital expenditure or revenue expenditure is not explained by both the parties. Moreover the decision cited by the Ld. CIT (A) and the assessee were not brought to the notice of Ld. Assessing Officer. Hence we hereby remit back the matter to the file of Ld. A.O for fresh consideration to pass appropriate order as per law and merit and after duly examining the decisions cited by the assessee as well as the Ld. CIT (A).

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• 2015 (12) TMI 457
  Rejection of books of account - estimation of income - rejection of documents furnished by assessee - Held that:- AO chose not to examine the documents furnished by assessee but chose to place full reliance on the report given by the DDIT. We are not able to appreciate the said action of the assessing officer. When the assessee was confronted with the report given by the DDIT, in our view, the assessee can at best controvert the same by filing the documents available with it. Further, when the assessee has filed the copies of income tax returns filed by the concerned parties, the assessing officer could have very well cross verified the same. The AO could have also enforced the attendance of those parties by issuing summons to them. We are unable to understand as to why the assessing officer could not carry out those kind of examination, when they are well within his powers. Hence, in our view, the assessing officer was not justified in ignoring the evidences furnished by the assessee in order to establlish the genuineness of the parties. We notice that the Ld CIT(A) has also dismissed these documents by observing that they are cooked up documents by making general observations, i.e., without actually establishing that the above said documents were bogus in nature. It is not known as to how the copies of income tax returns could be considered to be a cooked up documents. Thus, we notice that the said observations made by the Ld CIT(A) are baseless, not supported by any evidences and are mere surmises. Hence we are unable to sustain his conclusions. We further notice that the assessee has maintained proper books of accounts. The purchases and sales recorded therein have not been found fault with, i.e., no defect has been pointed out by the assessing officer. Hence, we are of the view that there is no ground available with the assessing officer to reject the books of account. Accordingly we are of the view that the assessing officer was not justified in rejecting the books of account and consequently, in our view, the book results should have been accepted. Accordingly, we are of the view that there is no justification or proper ground warranting the estimation of profits in the assessee’s hand in all the three years under consideration. - Decided in favour of assessee.

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• 2015 (12) TMI 456
  Unaccounted funds - addition made in the hands of the partnership firm - CIT(A) directed AO to delete the protective addition made on the basis of entries found in the loose papers - Held that:- The addition have been made on protective basis to safeguard the interest of the Revenue. The Ld. CIT(A) found that the additions cannot be made in the hands of the partnership firm and therefore the additions were deleted. We do not find any reason to interfere with the findings of the Ld. CIT(A). The appeal filed by the Revenue is accordingly dismissed. - Decided in favour of assessee.

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• 2015 (12) TMI 455
  Disallowance of website registration expenses - revenue v/s capital expenditure - Held that:- Just because a particular expenditure may result in an enduring benefit would not make such an expenditure of capital nature and real intent and purpose of the expenditure has to be seen, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) considering the nature of expenditure as revenue in nature. See CIT Versus INDIAN VISIT. COM PVT. LTD [2008 (9) TMI 8 - DELHI HIGH COURT ] - Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - CIT(A)deleted the addition - Held that:- We are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) to the extent that Rule 8D of the Rules is not applicable being the assessment year involved is 2007-08. So far as, reasonableness of addition made u/s 14A of the Act is concerned, in view of the decision from Hon’ble jurisdictional High Court in Godrej & Boyce Mfg. Company Ltd. vs CIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) where their lordship while approving the theory of apportioning expenditure between taxable and nontaxable income speaks about reasonable and fair basis to be followed in making the disallowance u/s 14A of the Act, we note that there is uncontroverted finding in para 6.11 of the impugned order that there is no borrowing by the assessee during the year. The Assessing Officer is directed to make the disallowance in the light of the aforesaid decision from Hon’ble jurisdictional High Court. Decided in favour of revenue for statistical purposes

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• 2015 (12) TMI 454
  Assessment of partnership firm as AOP - non filing of partnership deed - Held that:- The copy of the partnership deed should be filed alongwith the return but in case it was not filed alongwith the return, the AO should have asked the assessee to file the copy of the partnership deed. When the assessee filed the same before the ld. CIT(A), the ld. CIT(A) must have accepted the same, enclosing the copy of the partnership deed. Thus it is merely technical requirement so that the Revenue must have aware of that a partnership has genuinely been constituted. Therefore, in the interest of justice and in view of the fact that the provision of section 184(2) is not mandatory and is only directory as the similar language has been used u/s 80IA(7) set aside the order of the ld. CIT(A) on this issue and held that the assessee be assessed as ‘firm’ not as ‘AOP’. - Decided in favour of assessee. Disallowance of remuneration and interest to the partners in accordance with the partnership deed - Held that:- The remuneration and interest to the partner was disallowed by the AO as the assessee has been assessed as AOP not as a firm. Since while disposing off the ground No. 1 to 5, as already held that the assessee be assessed in the status of the firm accordingly direct the AO to allow interest and salary to the partners subject to the compliance of the conditions as stipulated u/s 40(b) of the Act. - Decided in favour of assessee. Estimation of the profit in the case of assessee by applying the proviso to section 44AD - Held that:- It is an undisputed fact that the assessee failed to produce the bills and vouchers to prove the genuinity of the expenses although the assessee has produced the books of account. This is also the fact that in the case of sub-contractor the margin of the profit is less as the margin in respect of contractor is being shared between the main contractor and the sub-contractor. The assessee has submitted a copy of order dated 11.05.2011 of the ld. CIT(A) in which he has estimated the profit rate @ 5% of the total receipt. In the absence of any cogent material being brought on record from either of the side it is appropriate that the gross profit in respect of a sub-contractor be estimated @ 4% - Decided partly in favour of assessee.

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• 2015 (12) TMI 453
  Penalty u/s. 271(1)(c) - disallowance of deduction u/s. 80IA(4) - CIT(A) deleted the penalty - Held that:- Claim made by the assessee at the time of filing of return was a bonafide claim and based upon one of the possible views, as per law prevailing at the time of filing of return. With the objective of bringing its return in line with the amended law, as per the amendment made in section 80IA(4), the assessee had filed its revised computation of income during the course of assessment proceedings, withdrawing the claim of deduction u/s. 80-IA. Under these circumstances, the A.O. had held that the assesse had furnished inaccurate particulars of income by claiming deduction u/s 80-lA(4), and thereby concealed its income, and thus penalty was levied. In our considered view, it was neither a case of furnishing of inaccurate particulars of income nor that of concealment of income. The facts of the present case are squarely covered by the decision of CIT vs Hindustan Electro Graphite Ltd [2000 (3) TMI 2 - SUPREME Court ] because the return was filed on 29.11.2006, before the amendment was made by the Finance Act, 2007 and approved by the Hon'ble President of India on 12.5.2007, with retrospective effect from 1.4.2000. Moreover, on the basis of retrospective amendment, the assessee had revised its computation during the assessment proceedings and withdrawn the deduction claimed u/s 80IA(4). Thus it was not a fit case for levying penalty u/s. 271(1)(c), thus no interference is called for in the order of Ld CIT(A) in deleting the penalty levied - Decided against revenue

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• 2015 (12) TMI 452
  TDS u/s. 194C - Disallowance u/s 40(a)(ia) - repairs and maintenance - CIT(A) deleted disallowance - Held that:- We find that a sum pertains to purchase of electrical items for which obviously no deduction of tax at source is warranted and hence no disallowance u/s 40(a)(ia) of the Act could be invoked on the same. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard - Decided in favour of assessee. TDS u/s. 194C - Disallowance u/s 40(a)(ia) - printing charges - CIT(A) delted disallowance - Held that:- We find that a sum pertains to purchase of diaries for business directory for which obviously no deduction of tax at source is warranted and hence no disallowance u/s 40(a)(ia) of the Act could be invoked on the same. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard - Decided in favour of assessee. Addition u/s 68 - Held that:- We find that the assessee had given the names and addresses of the parties from whom loans were received by him together with the confirmations and PAN details of those parties. However, we find that the Learned AO had doubted the creditworthiness of the parties who had advanced monies to the assessee. We find that the entire loans have been received only by account payee cheques which fact is not disputed by the revenue. We find that the assessee had filed confirmations from all the five parties. However, in respect of confirmation from last three parties namely Babcock Engineering Services, Ms. Nitasha Shah and Nevada Udyog, the same were filed before the Learned AO after the completion of assessment. Hence obviously the same were not available for verification by the Learned AO. In respect of confirmation filed from first two parties filed before the Learned AO, no verification was carried out on the same by him. Hence we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the Learned AO and verify the veracity of the confirmations filed by the assessee from the five parties and decide this issue afresh uninfluenced by earlier decision after giving adequate opportunity of being heard to the assessee. The assesee is given liberty to adduce fresh evidences and documents to support his contentions. - Decided in favour of assessee for statistical purposes. Addition under the head ‘Business Promotion Expenses’ - CIT(A) deleted addition - Held that:- We find that the Learned CITA had deleted the addition after obtaining the remand report from the Learned AO in this regard. We also find from the remand report, no adverse remarks were made by the Learned AO with regard to the subject mentioned business promotion expenses. The revenue had not refuted the findings of the Learned CITA that the said expenditure were incurred wholly and exclusively only for the business purposes of the assessee. In view of these facts and circumstances, we hold that the order of the Learned CITA in this regard does not require any interference - Decided in favour of assessee.

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• 2015 (12) TMI 451
  Undisclosed cash element in sale of plot - non providing opportunity to cross examine the witness - Held that:- Hon’ble Bombay High Court in the case of M/s.R.W. Promotions Pvt. Ltd [2015 (7) TMI 782 - BOMBAY HIGH COURT] while deciding an identical issue where opportunity to cross examine the witness whose statement was relied upon by the revenue was not allowed had held that denial of such cross examination is breach of principles of natural justice. Accordingly, the order of the Tribunal was set aside to the file of the AO with a direction to decide the issue afresh after giving due opportunity to the assessee to cross examine the witness. Since in the instant case also opportunity to cross examine the witness was not granted despite specific request made by the assessee, therefore, respectfully following the decision of the jurisdictional High Court cited (Supra) we restore the issue to the file of the AO with a direction to give an we restore the issue to the file of the AO with a direction to give an opportunity to the assessee to cross examine Shri Rakesh Agarwal. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2015 (12) TMI 450
  Revision u/s.263 - as per CIT(A) instead of showing the entire sale proceeds the assessee has shown only 50% of the sale proceeds as his income which the AO failed to verify and the AO has not made proper enquiries regarding the cash received amounting from M/s. Krupa Land Ltd. against sale of land - Held that:- We find from the various agreements and deeds of conveyance that the assessee has entered into transactions with different parties along with Shri Sunil Tukaram Patil either as a purchase or as a seller or as a consenting party. The name of the assessee as well as Shri Sunil Tukaram Patil appear in all the documents relating to land deals mentioned by the Ld.CIT. Therefore, it is incorrect to say that the entire profit should have been shown by the assessee instead of showing 50%. We find all these documents were filed before the AO who testchecked the same and has accepted the income shown by the assessee being 50% share in such land deals. Therefore, it cannot be said that there was non-application of mind and that the order is erroneous. The assessment order in this case was passed on 18-11-2011. The assessment record was called for during the course of hearing. It was revealed that the JCIT vide letter dated 02-02-2012 addressed to the AO has intimated for appropriate action u/s.147 in the case of the assessee on account of receipt of unaccounted income in cash in respect of land deals with M/s. Krupa Land Ltd. in A.Y. 2008-09 and 2009- 10. A copy of the letter addressed by the JCIT to the AO was filed by the Ld. Departmental Representative at the time of hearing which is placed on record. Therefore, at the time of passing of the assessment order the AO was not in possession of the letter received from JCIT (OSD) Central Circle-39, Mumbai. In absence of any such information at the time of completion of the assessment the AO could not have asked the assessee to explain the cash transactions, if any with M/s. Krupa Land Ltd. Therefore, on the basis of a subsequent letter addressed to the AO after completion of the assessment the Ld.CIT could not have assumed jurisdiction u/s.263 on this issue holding that the order of the AO is erroneous and prejudicial to the interest of the revenue. In view of the above, we are of the considered opinion that the Ld.CIT has wrongly assumed jurisdiction u/s.263 which is not correct under the facts and circumstances of the case. We therefore set aside the order passed u/s.263 by the Ld.CIT. - Decided in favour of assessee.

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• 2015 (12) TMI 449
  Unexplained cash credit under section 68 - Held that:- As is evident, during the relevant previous year, as per assessee's books of account, there is a credit entry showing cash receipt of Rs. 1,03,000 from Shri Hemnani. However, concerned person when confronted by the Assessing Officer admitted of having paid amount of Rs. 48,000, and denied of having paid the balance amount of Rs. 55,000. In support of such claim, he also produced the account copy in the name of the assessee in his books of account as per which the amount paid to him was Rs. 48,000. Though the assessee has claimed that as per his books of account, the amount received in cash from Shri Hemnani, was Rs. 1,03,000, such entries in assessee's books of account without any other corroborative evidence, cannot be considered to be genuine or authentic. It is to be noted in the course of remand proceedings, the Assessing Officer has specifically called upon the assessee to furnish any documentary evidence in support of cash received of Rs. 1,03,000, however, the assessee admitted before the Assessing Officer that he will not be able to furnish any evidence. Thus, when Shri Hemnani, himself stated before the Assessing Officer that he has paid only Rs. 48,000 in cash to the assessee and which is also as per his books of account, the claim of the assessee that he has received Rs. 1,03,000 from the creditor cannot be accepted. In these circumstances, we agree with the learned Commissioner (Appeals) that the credit for the balance amount of Rs. 55,000, as appearing in the name of Shri Hemnani, has to be treated as unexplained cash credit under section 68 of the Act. - Decided against assessee Addition of an amount claimed to have been received from Shri Premji Maroo and Shri Jaideep Patel, respectively - Held that:- Assessee failed to produce any substantive evidence to show that there is in fact any outstanding liability due to the assessee admitted by these two persons or show any correspondence by the assessee with the concerned persons demanding payment of outstanding liability. Thus, in absence of any corroborative evidence to prove the fact that the credits appearing in books of account in relation to the concerned persons are genuine, assessee's claim of having received cash payment cannot be believed on mere face value. Therefore, the assessee having failed to establish the genuineness of the credits, the amounts in question have been rightly treated as unexplained credit of the assessee. As far as the principle laid down in the decision cited by the learned Counsel for the assessee, though we respectfully agree with the principle laid down therein, but those principles cannot be applied to each and every case without examining the relevant facts. As far as the present assessee is concerned, the facts on record clearly demonstrate that the assessee has failed to establish the genuineness of the credits. That being the case, we do not find any reason to interfere with the order of the learned Commissioner (Appeals) on this issue. - Decided against assessee

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• 2015 (12) TMI 448
  Calculation of the deduction u/s. 11(1)(a) - e accumulation @ of 15% on net receipts by the AO compared to the calculation on gross receipts by the assessee - Held that:- The accumulation u/s 11(1)(a) of the Act should be allowed as claimed by the Assessee as relying on case of Jyothy Charitable Trust [2015 (11) TMI 1295 - ITAT BANGALORE] wherein held this issue is no longer res integra and has been decided by the Special Bench Mumbai in the case of Bai Sonabai Hirji Agiary Trust [2004 (9) TMI 300 - ITAT BOMBAY-E] any expenditure which is in the shape of application of income is not to be taken into account. Having found that trust is entitled to exemption under s. 11(1), we are to go to the stage of income before application thereof. Thus the accumulation u/s 11(1)(a) of the Act should be allowed as claimed by the Assessee - Decided in favour of assessee.

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• 2015 (12) TMI 447
  Disallowance of exemption claimed on amount received from developer towards transfer of development rights (in short "TDR") - Held that:- There is no dispute to the fact that the TDR rights accrued to the assessee under the Development Control Rules, 1991. It is further evident, instead of utilising the TDR rights himself, the assessee decided to transfer such rights to the developer for construction. However, there is no two opinion with regard to the fact that as far as the acquisition of development rights under Development Control Rules, 1991, is concerned, there is no cost to the assessee. Therefore, the issue to be decided is whether capital gain can be computed in respect of capital asset which has no cost of acquisition.In the absence of cost of acquisition of TDR rights, amount received on sale of such TDR rights cannot be subjected to long term capital gain as the computation provisions contained under section 48 of the Act, cannot be worked out. Compensation received on account of sale of TDR rights is not taxable, the other issues raised by the assessee relating to claim of exemption under section 54 of the Act and enhancement of compensation have become redundant and not required to be adjudicated upon. - Decided partly in favour of assessee.

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• 2015 (12) TMI 446
  Penalty u/s.271(1)(c) - survey action was conducted at the premises of the assessee wherein assessee admitted to the introduction of share capital - Revenue’s contention is that, in case, the survey would have not been carried out at the premises of the assessee, it might have not included this amount into its return of income - Held that:- In the present case, the assessee had filed its return of income before the due date of filing and including the amount on which penalty has been levied, admittedly, prior to initiation of assessment proceedings. The assessee has included the amount into the return of income, therefore, in our considered view, the assessee cannot be held guilty of concealing the particulars of income. - Decided in favour of assessee

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• 2015 (12) TMI 445
  Addition on net profit on account of alleged fake cash sales - CIT(A) deleted the addition - Held that:- In AY 2009-10 assessee has not provided any relevant details on which AO could have made any inquiry of cash sales in contradistinction to facts of AY 2008-09 where assessee has provided the relevant details available with it including C forms issued by the parties. Therefore, for this year AO was handicapped in absence of any details and made addition of net profit u/s 68. Ld CIT (A) has deleted the addition based on his order for AY 2008-09 without appreciating that as compared to AY 2008-09 where assessee has furnished relevant details in AY 2009-10 assessee has not furnished any details except the amount of cash sales. Further, in this year there is no finding whether even CIT (A) has examined the sales and verified the books as he has done in AY 2008- 09.Therefore, in our opinion, CIT (A) has committed an error in deleting the addition for AY 2009-10 following his order in case of assessee for AY 2008-09 in absence of any details of cash sales and in absence of any inquiry made by CIT (A). Therefore, in the interest of justice, we set aside the appeal of AY 2009-10 back to the file of AO with a direction to inquire, verify, and deal with cash sales recorded by the assessee in accordance with law after affording sufficient and necessary opportunity of hearing to the assessee. - Decided in favour of revenue for statistical purposes.

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• Customs

• 2015 (12) TMI 432
  Waiver of pre deposit - 'bituminous coal' - denial of the benefit of Notification No. 12/2012-Cus. Dated 17/03/2012 - Classification of coal - Held that:- As per the explanatory Note 2 to Chapter 27, 'bituminous coal' means coal having a volatile matter limit (on a dry, mineral-matter-free basis) exceeding 14% and a calorific value limit (on a moist, mineral-matter-free basis) equal to or greater than 5833 kcal/kg. Any coal satisfying the above definition would merit classification as ‘bituminous coal’ under CTH 2701 12 notwithstanding the fact that the goods may be known otherwise in the commercial/trade parlance. As held by the hon’ble apex Court in the case of Indo International Industries vs. Commissioner Of Sales Tax, Uttar Pradesh [1981 (3) TMI 77 - SUPREME COURT OF INDIA] if any term or expression has been defined in the enactment, then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted. In the present case, since the Customs Tariff defines bituminous coal by means of certain specifications and if those specifications are satisfied, the goods will have to be classified as bituminous coal only and not otherwise. - Partial stay granted.

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• 2015 (12) TMI 431
  Import of new radial tyres on a date after 24.11.2008 when imports of such tyres were restricted by DGFT in terms of Notification No. 64(RE)/20082004-2009 dated 24.11.2008 - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- There was a proforma invoice of 13-10-2008 in response to which part payment of US $.14,300/- was sent on 18.11.2008 which was prior to the imposition of restriction on 24.11.2008. Thus there is certainly substantial force in the contention of the ld. Consultant that all this amounts to concrete steps taken prior to 24.11.2008 for the import of the impugned goods because the appellant would not have been in a position to back out without the risk of losing money. In these set of circumstances, we agree with the appellant that making part payment against a proforma invoice would constitute concrete steps for import of impugned goods and as these steps were taken prior to 24.11.2008, the ratio of CESTAT judgement in the case of P.T. Impex Pvt. Ltd. (2015 (4) TMI 642 - PUNJAB & HARYANA HIGH COURT) would be applicable. - Redemption fine and penalty is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 430
  Penalty under Regulations 22 of Customs Brokers Licensing Regulations, 2013 - Held that:- cause for which the appellant is sought to be penalised, took place on 16.11.2011 and at that point of time, CHALR 2004 were in force. A perusal of the same reveals that the said Regulations provide for suspension of license, prohibition etc. under Regulations 20/ 21 etc. It is noticed that there is no provision for imposing a penalty under CHALR 2004. The same was superseded by CBLR 2013 under which a specific provision for imposing penalty has been brought into effect vide Regulation 22, with effect from 21.6.2013. We find that the CBLR 2013 was issued in suppression of CHALR 2004 and it is specifically stated that it is made, except as respect things done or omitted to be done before such supersession. Therefore, what did not exist before promulgation of CLBR 2013, cannot be brought into existence on a date prior to such promulgation by virtue of having such a provision in the new CBLR 2013. Such provisions of CBLR 2013 can be effective only from the effective date of the notification which brought the CBLR 2013 into existence. - provisions for imposing penalty were not in existence under the provisions of CHA LR 2004. Therefore, the same cannot be brought into effect before 21.06.2013 on which date CBLR 2013 having the provisions for imposing penalty came in to effect. We find force in our findings from the decision of the Hon’ble Bombay High Court in the case of Greatship (India) Limited vs. Commissioner of Service Tax, Mumbai (2015 (4) TMI 1006 - BOMBAY HIGH COURT) - impugned order cannot be sustained - Decide din favour of assessee.

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• 2015 (12) TMI 429
  Levy of anti dumping duty - Notification No.138/2002 dated 10.12.2002 read with customs Notification No. 128/2010 dated 21.12.2001 - Held that:- as per the test report of Electronics Regional Test Laboratory (ERTL), Kolkata, it is confirmed that the imported goods are CFL and originated from China and are chargeable to ADD. We also find that the Commissioner (Appeals) has in the impugned order already given a relief and waived both the fine and penalty. Accordingly, we find that there is no irregularity in the impugned order and the same is upheld - Decided against Assessee.

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• 2015 (12) TMI 428
  Denial the benefit of exemption Notification No. 22/99-Cus - SAD - appellant has availed Modvat Credit under Rule 57A of Central Excise Rules, 1944 - Held that:- There is no dispute that the goods imported by the appellant have been sold under various sales invoices to various customers. - Certificate issued by the Superintendent dated 15.01.2002 certifies that the appellant is engaged in the trading activity. They have neither availed the Modvat Credit under Rule 57A nor have they passed on the Modvat Credit under Rule 57G of Central Excise Rules, 1944. - reason for denial of exemption Notification No. 22/99 - Decided against assessee.

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• 2015 (12) TMI 427
  Denial of refund of SAD - appellants did not pay any sales tax/ VAT on the goods - Held that:- Notification No. 102/2007 dated 14.09.2007 as amended allowed refund of SAD subject to the condition that "the importer shall pay appropriate sales tax or VAT, as the case may be". In the present case, the appropriate sales tax or VAT being NIL the appellants cannot be said to have violated the said conditions of the said notification inasmuch as it cannot be said that they have not paid appropriate sales tax/VAT. - It is evident from the clarification of CBEC that even if VAT / Sales tax was less than 4%, the appellant was entitled to refund of SAD which was 4% so long as VAT/sales tax was paid. In other words, so long as appropriate VAT/ Sales tax was paid, SAD refund was admissible even if the appropriate sales tax/ VAT was less than SAD; if the sales tax / VAT was NIL, so be it. In other words what is required in terms of the said notification is payment of appropriate sales tax/ VAT regardless of the rate thereof. It logically follows that if the appropriate rate of sales tax/ VAT was NIL then the appropriate sales tax/ VAT paid will also be NIL - impugned order is not sustainable - Impugned order is set aside - Decided in favour of assessee.

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• Corporate Laws

• 2015 (12) TMI 421
  Possession of plant - whether the Company Law Board (“CLB”) inter alia granted ingress to Respondent No. 2 Mr. Rajinder Kumar Malhotra (“RKM”) into Plant No. 2 of the Respondent No. 1 – Vidyut Metallics Pvt. Ltd. (“VMPL”), which is in possession and control of SPCPL since the year 2010/11, without SPCPL being a party to the proceedings pending before the CLB? - Held that:- SPCPL has failed to even prima facie establish that it is in possession of Plant No. 2 pursuant to the BTA/Supplemental BTA since 30th December, 2010/18th March, 2011, no question arises of the impugned Order dated 2nd February, 2015 being in violation of natural justice qua SPCPL or of the Order having dispossessed SPCPL. As correctly submitted by Mr. Chinoy, a mere bald allegation made by the ex-Directors for the first time before the CLB on 2nd February, 2015, or the allegation of possession subsequently made by SPCPL in the present Appeal cannot affect the jurisdiction of the CLB to pass the Order dated 2nd February, 2015 or require the CLB to join SPCPL as a party or hear SPCPL or adjudicate upon such an oral allegation. On 2nd February, 2015 the allegation that pursuant to the BTA dated 30th December, 2010, SPCPL was in possession of Plant No. 2 was orally made on behalf of Vyas and Chaudhari. Significantly no such allegation was made by Rakesh who admittedly controls SPCPL, who was a party Respondent before the CLB and who was represented by the same Advocates. Again from the record of the proceedings it was clear that though by an Order dated 9th February, 2012, CLB had restrained the Respondents, which included Rakesh and the ex-Directors, Vyas and Chaudhari from disposing off, encumbering the assets of VMPL and the very same Order was continued by this Court whilst dismissing the Appeals filed by Rakesh in August, 2014, at no stage had Rakesh (who admittedly controlled SPCPL) and the ex-Directors Vyas and Chaudhari submitted before the CLB or before this Court or before the Hon'ble Supreme Court that the said Order dated 9th February, 2012 ought not to have been passed since allegedly all the assets including Plant No. 2 of VMPL are in possession and/or control of SPCPL from 30th December, 2010/18th March, 2011. Even after Rakesh failed to obtain a stay from the Hon'ble Supreme Court on removal of Vyas and Chaudhari as Directors of SPCPL, Rakesh and the ex-Directors, as stated hereinabove, refused to accept that Vyas and Chaudhari had ceased to be the Directors of VMPL and that consequently they were required to hand over the assets of VMPL to the new Directors. Extensive correspondence was thereupon exchanged by and between the Advocates for RKM/ VMPL and the Advocates for Rakesh/ex-Directors Vyas and Chaudhari. However, in none of the letters it was contended on behalf of Rakesh, Vyas and Chaudhari that all the assets of VMPL are transferred to SPCPL or are in possession and control of SPCPL. Moreover, the oral allegation made before the CLB was directly contrary to the statements made on oath, more particularly the statement made by Rakesh himself before the UK Court that amongst others, Plant No. 2 of VMPL is in possession and control of VMPL. I therefore see no infirmity in the Order passed by the CLB dated 2nd February, 2015 and in my view the same falls squarely within the powers/jurisdiction under Section 403 of the Act as it in effect directs the removed/ex-Directors of VMPL to hand over charge of the Company's properties and assets to its newly appointed Directors/present management. None of the submissions made on behalf of SPCPL in support of its case that the Company Law Board ought not to have passed the impugned order dated 2nd February, 2015 can be accepted and the same are hereby rejected. Also in view of the past conduct on the part of Rakesh (who admittedly controls SPCPL) and the ex-Directors Vyas and Chaudhari of refusing to abide by the Orders passed by the CLB/this Court even after the Hon'ble Supreme Court in the SLP filed by Rakesh had specifically declined to stay the same, the CLB was completely justified in directing police assistance which was required to maintain peace and order at the time of implementation of its Order by VMPL/RKM.

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• Service Tax

• 2015 (12) TMI 444
  Cenvat Credit - service tax paid on insurance premium towards Mediclaim paid by the appellant claimed as Input Service Credit - Held that:- basic logic adopted by the High Courts and the Tribunal is that if the inputs/ input services are taken or provided in pursuance of statutory requirements, then the assessees are duty bound to observe the same and hence credit of duty/service tax paid on such inputs/ input services would be eligible. However, when such inputs/ input services are taken by the employees or offered to the employees as ‘welfare measure’ and is voluntary in nature, the same cannot be held to have any nexus with the ‘Output Service’. Therefore, in such scenario, CENVAT credit of the duty/ service tax on such inputs/ input services would not be available to the assessees. We find fort in the decision of this very Bench of the Tribunal in the case of M/s. One Advertising & Communication Services Limited vs. Commissioner of Service Tax, Ahmedabad - [2012 (5) TMI 219 - CESTAT, AHMEDABAD] - appellant would not be eligible to take CENVAT credit in respect of the Mediclaim which is in the nature of a welfare measure and voluntary, in the instant case. Therefore, we uphold the order of the Commissioner (Appeals) in the said respect. - However, penalty is set aside - Decided partly in favour of assessee.

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• 2015 (12) TMI 443
  Extension of time for making reduced penalty - Was the CESTAT justified in granting to the Respondent the benefit of payment of reduced penalty to the extent of 25% in terms of the 3rd proviso to Section 78 (1) of the Finance Act 1994 (as it stood prior to its substitution by the Finance Act 2015) within 30 days from the date of the order of the CESTAT - Held that:- It appears to the Court that the very object of extending to an Assessee the option of availing the benefit of payment of reduced penalty in terms of the second proviso to Section 78 (1) of the Finance Act 1994 was to provide an incentive for prompt payment of the service tax and interest that is due. When an Assessee does not wish to contest the service tax liability or even when it wishes to contest such liability, but is prepared to pay upfront the service tax and interest without prejudice to its rights and contentions, the statute provides an option of payment of reduced penalty to the extent of 25% of the service tax. This is, of course, subject to payment of not only the service tax and interest but also the reduced penalty within 30 days of the “communication of the order” of the adjudicating authority. The SCN issued to an Assessee invariably mentions the statutory provisions under which the demand for service tax, interest and penalty is proposed to be raised. There can be no question, therefore, of the Assessee being unaware of the provisions of the statute. It is also very likely that in the adjudication proceedings the Assessee, who invariably has an authorised representative to put across its case to the adjudicating authority, will make a reference to the statutory provisions. In particular if the submission relates to penalty it is unlikely that an Assessee will not even refer to the relevant statutory provisions. The question of an Assessee, therefore, pleading ignorance of the law governing the adjudication proceedings cannot arise. There is no statutory requirement that the adjudication order itself should remind the Assessee of the option available of paying a reduced penalty in terms of the second and third proviso to Section 78 (1) of the Finance Act 1994. In the instant case, the CESTAT could not have permitted the Respondent to pay the reduced penalty amount in terms of the second proviso to Section 78 (1) of the Finance Act, 1994 within thirty days from the date of the impugned order of the CESTAT. Such a direction was contrary to the third proviso to Section 78 (1) of the Finance Act, 1994 and therefore legally unsustainable. - CESTAT could not have, in terms of the third proviso to Section 78 (1) of the Finance Act, 1994 (as it stood prior to its substitution by the Finance Act 2015) read with Section 83 thereof, extend the time for the Respondent to pay the reduced penalty within 30 days from the date of the order of the CESTAT. - Decided in favour of Revenue.

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• 2015 (12) TMI 442
  Demand of service tax - Business Auxiliary service - Car rental service and Service tax on foreign exchange currency - Held that:- Adjudicating authority has confirmed service tax demand on crate rentals under Business Auxiliary Service (BAS). The appellant has contended that the supply of crates amounted to deemed sale, which was liable to VAT/sales tax as the effective control and possession of the goods were transferred by the appellant. It is seen that Customs, Excise and Service Tax commissionerate, Thane-I, vide Order-in-Original No.93/BR-93/ Th-I/2012, dated 28.02.2012 confirmed the demand of central excise duty on amount collected as crate rental holding that the same was includible in the assessable value for the purpose of central excise duty. Hyderabad Commissionerate vide its Order-in-Original No.31/2011/Hyd-III/Adjn-ST, dated 15.12.2011 has dropped a similar service tax demand on crate rental. The onus to prove that the service tax is leviable is totally on Revenue. Similarly, the observation of the adjudicating authority that “because the appellant never clarified as to why such amount was spent, it can be deduced that the payments made in foreign exchange were undoubtedly for the services received by the appellant in India in relation to the said taxable services” is completely devoid of legal basis because it is Revenue which is required to establish that the amount of foreign exchange spent was for receiving taxable service from abroad. Further, the observation of the adjudicating authority that the appellant never clarified as to why such amount was spent is also not correct as the appellant gave details of the foreign exchange expenses and the purposes thereof. The observation of the adjudicating authority that, “hence it is invariably admitted and stand proved that there is a direct nexus between the said expenditure and the taxable service” is factually incorrect because the appellant never so admitted. While Revenue may not be required to prove the case with mathematical precision, it does not mean that Revenue can simply presume that all the foreign exchange payments were for obtaining taxable services from abroad and abdicate its responsibility to establish the case on the principle of preponderance of probability (though admittedly not with mathematical precision). Demand of service tax and penalty is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 441
  Demand of service tax - Global Account Manager (GAM), expenses and International Private Leased Circuit (IPCL) charges. - the amounts paid in foreign exchange which are alleged to be for ‘Online Information and Data Base Access and Retrieval Service’ - Held that:- As regards levy of service tax on the amount paid am IPCL charges which are the appellants share of the expenses incurred by their holding company on setting up and maintaining a Private Leased Circuit linking the holding company with all its subsidiary companies all over the world including the appellant, the Board vide its Circular dt. 19.12.11 has clarified that while this service is specifically covered by the Telecommunication service, it would not attract service tax, as the same has not been provided by Telegraph Authority, andas per section 65(105)(zzzx) read with section 65[109a(iv)], this service would be taxable only when the same has been provided by the Telegraph Authority. This circular also clarifies that this service cannot be classified as Business Support Service. The correctness or otherwise of the Board Circular can be examined only at the stage of final hearing. Accordingly we hold that in respect of service tax demand on IPCL charges, the appellant have strong prima facie case in their favour. As regards the service tax on GAM expenses being paid by the appellant to their holding company, we find force in the appellants’ contention that this service is of the nature of ‘Operational or Administrative Assistance in any manne’ which was brought within the definition of ‘Business Support Service’ as given under section 65(104c) w.e.f. 01.05.11. Accordingly during period prior to 01.05.11, prima facie, this service would not be taxable as Business Support Service. As regards the service tax demand of Rs. 33,64,008/- on alleged receipt of online information and Data Base and Access Retrieval Service, prima facie we are of the view that no evidence in this regard have been produced by the Department. - appellant has strong prima facie case in their favour. As regards alleged short payment of service tax of Rs. 1,71,456/- in April 07, the Appellant plea is that this amount of service tax had been paid without waiting for receipt of consideration towards service. Prima facie, the Appellant s plea appears to be correct -appellant have been able to establish prima facie case in their favour - Stay granted.

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• 2015 (12) TMI 440
  Demand of service tax - Courier Agency Services - exemption under ‘Export of Service’ - Held that:- appellant collected the consignment from their customers to deliver to the recipient in abroad. They have also collected gross value from the customers to deliver the article to the recipient in abroad. This fact has not been disputed by the department. Hence, the decision of the Tribunal in the case of TNT India Pvt. Limited vs. Commissioner of Service Tax, Bangalore (2007 (5) TMI 11 - CESTAT,BANGALORE), would be applicable in the present case. - impugned order cannot be sustained - Decided in favour of assessee.

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• 2015 (12) TMI 439
  Demand of service tax - construction of complex service - section 65(30a)/(105) (zzzh) - penalty under section 78 - Held that:- The ground plan clearly shows that the complex has more than 12 units. The ground plan also clearly shows and states that it has common community hall, common parking area, and Common Park. We have seen photographs of the complex which make it evident that the complex has buildings having more than 12 residential units. Thus the complex constructed clearly satisfies the definitions of residential complex given in section 65 (91a) ibid and the service of construction of complex (defined in section 65 (30a)/105)/(zzzh) - impugned service clearly gets covered under construction of complex service liable to service tax. However, as conceded by learned DR, the demand has to be worked out on the amount of Rs. 8,80,52,533/- after giving 67% abatement without adding the value of free supplies in the light of the judgment in the case of Bhayana Builders Pvt. Ltd. Vs. CST, Delhi- [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)]. As regards cum- tax benefit, learned DR opposed it on the ground that the amount received was not inclusive of service tax. In this regard, it is to be mentioned that Haryana Housing Board is not liable to pay any amount towards service tax in respect of the present case. This inference is supported by the fact that subsequent contracts with Haryana Housing Board clearly make provision for payment of service tax separately. In the circumstances, we are of the view that in view of clear provision of section 67 (2) ibid cum tax benefit is to be extended to the appellant. - Decided partly in favour of assessee.

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• 2015 (12) TMI 438
  Waiver of pre deposit - Business Support Service - Held that:- for the previous period the demands were also confirmed on the same ground which was subject matter of appeal [2014 (6) TMI 731 - CESTAT MUMBAI] set aside the demands. - present demand is set aside after waiving the pre-deposit of the dues. - Decided in favour of assessee.

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• 2015 (12) TMI 437
  CENVAT Credit - installation of ‘Kaccha Sheds’ used for storage of raw materials, etc., used in the manufacture of the finished goods - Held that:- As per the definition of ‘input services’ given in Rule 2(l) applicable at the relevant time all services availed within the factory in or in relation to manufacture were entitled for Cenvat credit. Prima facie, appellant has made out a case for complete waiver from pre-deposit of the amounts confirmed. Accordingly, it is ordered that there will be stay on the recoveries of the confirmed demands and penalties till the disposal of this appeal. - Stay granted.

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• 2015 (12) TMI 436
  Waiver of pre deposit - Non compliance with pre deposit order - Held that:- Tribunal had directed the appellant to deposit an amount of Rs. 1 crore and report compliance on 11.11.2013. When the matter was called today there is neither any representation on behalf of the appellant nor there is a compliance report for having complied with the Stay Order - Appeal dismissed for non compliance - Decided against assessee.

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• 2015 (12) TMI 435
  Valuation - Inclusion of reimbursable expenses - Held that:- This point is settled by the judgments of Hon'ble High Court of Delhi in the case of Intercontinental Consultants & Technocrats Pvt.Ltd. (2012 (12) TMI 150 - DELHI HIGH COURT) and Hon'ble High Court of Madras in the case of Sangamitra Services Agency (2013 (7) TMI 862 - MADRAS HIGH COURT), which holds the issue in favour of the assessee. Accordingly, respectfully following these judgments, we set aside the impugned order - Decided in favour of assessee.

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• 2015 (12) TMI 434
  Demand of service tax - site formation and clearance services - Held that: Tribunal has observed that keeping in view the disputed nature of services and interpretation of the scope of the service, it is a fit case to waive the penalty under Section 80 of the Finance Act, 1994 - we uphold the confirmation of demands and set aside the penalties in terms of the declaration of law in the case of National Mining Co. Ltd. vs. CCE, Dibrugarh referred (2007 (10) TMI 227 - CESTAT, KOLKATA ). - Decided partly in favour of assessee.

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• 2015 (12) TMI 433
  CENVAT Credit - Service Tax paid on insurance premium - Held that:- Counsel does not appear to be out of the ambit of the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004, in absence of any factual dispute of revenue. - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (12) TMI 426
  Seizure of truck together with goods - truck did not possess trip sheet or the log book, as required under section 68 of the Act - Held that:- A perusal of the order impugned seizure memo dated 19.10.2015, issued under sections 68 and 69 of the Gujarat Value Added Tax, 2003 reveals that according to the second respondent the tax liability of the petitioner is required to be examined under the provisions of the Act as the petitioner has an office at Ahmedabad and engages employees for fitting the designs and providing material to fulfill the contract. From the facts as emerging from the record it appears that no condition of any penalty has been imposed upon the petitioner for release of the goods. It appears that the respondents only want to verify the actual facts of the case in view of the discrepancy of the truck number and also to examine the tax liability of the petitioner under the Act. In the opinion of this Court, the respondents are not in any manner prohibited from carrying out such verification in accordance with law, however, for that purpose, it is not necessary to detain the truck along with the goods in question. Under the circumstances, the petition deserves to be allowed with liberty to the respondents to examine the tax liability of the petitioner, if any, under the provisions of the Act. - Decided in favour of assessee.

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• 2015 (12) TMI 425
  Validity of impugned notice - before passing the said orders, the petitioner was not afforded an opportunity to produce the records as contemplated in Section 22 of the Kerala Value Added Tax Act - Held that:- While passing assessment orders, the 1st respondent Assessing Officer did not comply with the provisions of Sections 22 to 25 in the matter of service of notices to the petitioner as also affording the petitioner an opportunity of being heard. In the decision of this Court in Shamon's case [2015 (11) TMI 1142 - KERALA HIGH COURT], this Court has clearly indicated the procedure that has to be followed by an Assessing Officer before resorting to an assessment on best judgment basis. - Assessing officer did not comply with the procedure that is required to be followed before completing an assessment on best judgment basis - Petition disposed of.

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• 2015 (12) TMI 424
  Detention of the truck along with the goods - Held that:- petitioner has deposited a sum of Rs. 1,50,000/- with the respondent authorities in terms of the directions issued by this court by the order dated 10.9.2015. It was further submitted that the truck in question together with the goods has crossed the border of Gujarat into Maharashtra and, therefore, the apprehension of the respondent authorities no longer survives. - Petition disposed of.

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• 2015 (12) TMI 423
  Stay application - Recovery proceedings - Enforcement of bank guarantee - Held that:- Petitioner has paid 25% of the disputed tax for the respective assessment years at the time of filing the appeals. Further, as directed by the Appellate authority, the petitioner also made payment of another 25% of the disputed amount. Further, the petitioner has also furnished bank guarantees for the balance tax amount and penalty wherever applicable for all the assessment years and they are still in force till March 2016. However, according to the learned counsel for the petitioner, the extension of stay petitions filed by the petitioner were not heard. In the meantime, on 08.10.2015, the 1st respondent herein issued a notice directing the petitioner to produce stay orders for the assessment years in question, in the absence of which, recovery action will be initiated. Since the revenue of the department is very much safeguarded by remitting 50% of the disputed tax for all the assessment years as well as furnishing bank guarantee for the remaining 50% of the disputed tax and penalty wherever applicable, which are still in force till March 2016, this Court is of the view that till final orders are passed in the appeals, the recovery proceedings shall be kept in abeyance. - Stay granted.

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• 2015 (12) TMI 422
  Exemption from payment of advance tax - recovery of any tax under the Punjab Value Added Tax Act, 2005 - Held that:- It is neither speaking nor has been passed after affording an opportunity of hearing to the petitioner. Further, it was noticed that after verifying all aspects of the case, as per notification dated 15.11.2013, the petitioner was not eligible for exemption from payment of advance tax. Once respondent No.4 was holding that the petitioner was found not eligible for exemption from payment of advance tax, the same required to be specifically dealt with by respondent No.4 by passing a speaking order and after affording an opportunity of hearing to him. - petitioner shall be entitled to lead any evidence to substantiate his claim before the concerned authority. - Petition disposed of.

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