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TMI Tax Updates - e-Newsletter
December 15, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction u/s 80QQB - royalty - assessee has authored book on income tax problems in question answer form. - His book is on a complex issue which really needs intellect and knowledge. - It is a literary work in term of section 80QQB - Deduction allowed - AT
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Penalty u/s 271(1)(c) - surrender of income - suo motu further income declared in the returns filed u/s 153A - Explanation 5A has specific application, the contention of ld. DR. that penalty are sustainable due to the implication of word transaction mentioned in sub clause ii of explanation. 5A cannot be accepted. - AT
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Rejection of books pf accounts - estimation of net profit from civil contract receipts - A.O. is not correct in including the work in progress for the purpose of determining the gross receipts for estimation of net profit. - AT
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Addition on account of income siphoned out - benefit of section 10(23C)(iiiad) denied - AO just based his findings on the outflow without examining its ultimate use and its accounting done by the assessee. - benefit of exemption cannot be denied - AT
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Penalty imposed under section 272A(2)(k) - delay in filing TDS statements - imposition of penalty under section 272A(2)(k) is not mandatory as the provisions of section 273B is also applicable in case of imposition of penalty under section 272A(2)(k), but, at the same time, the assessee has to show reasonable cause for the default. - AT
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Deduction of tax at source u/s.195(1) in respect of refund including the interest u/s.244A - DTAA - contention of the assessee that interest on refund of tax is exempt from tax in India, rejected - AT
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Deduction on interest of housing loan u/s 24(b) -AO restricted it to 25% since 75% of the property is belongs to other co-owners - Action of AO is justified - AT
Customs
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Re-Confiscation of car from purchaser after import - confiscation of car is not sustainable - the appellant is a bona fide purchaser of the car and have no role in importation of car, no penalty is imposable on the appellant.- AT
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Demand of interest on duty paid on DTA clearances of warehoused goods - 100% EOU - clearances of the goods have been done clearly within the permitted period of three years and there is no contravention. - there is no occasion to demand interest from the appellant as there is no delay in payment of the duty. - AT
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Levy of CVD - Even if placing all the imported articles in one kit (as 'Cable jointing kits') does not amount to manufacture, whether the ratio laid down by the courts debar charging of CVD on individual articles as such when imported - AT
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Demand of differential duty - Undervaluation of goods - Merely because the value was enhanced by the Customs, the same would not become contemporaneous imports. - AT
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Valuation - Revenue having not adopted the Valuation Rules sequential-wise and having not produced any evidence of contemporaneous nature to reflect upon the lower value of the imported goods, the adoption of market price cannot be held to be a method in accordance with law - AT
Indian Laws
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Dishonoring of cheque - complaint was not filed by the payee but by the director - As per the case made out in the complaint, the transaction was a loan transaction. It is not clear whether the Company was authorized to do the business of advancing loan with interest. The possibility, of the complaint not having been filed in the name of the Company keeping this aspect in mind, therefore, cannot be ruled out. - appeal dismissed - HC
Service Tax
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Lump sum contract - specific job work of the parts on required by Tata Motors deputing their persons - the activity cannot be equated with Man Power Recruitment or Supply Services - demand of service tax set aside - AT
Central Excise
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Manufacture - activity of grading of diamonds which have been imported or received by them in respect of their colour, clarity, cut and their weight in carats - second activity undertaken is that of inscription - not amount to manufacture - not liable to excise duty - AAR
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Valuation - physician samples were given free of cost by the distributors and not by the manufacturer - What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the Show Cause Notice is clearly founded on a wrong reason - SC
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Valuation - manufacture of items of furniture on job work basis - inclusion of cost of raw materials, job-charges paid to M/s. SJA, plus drawings and design charges for the furniture items - handicraft items or not - . Issuance of show cause notice after a long gap, would clearly be time barred - SC
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Valuation - inclusion of interest and gains arising out of advance received against supplies - the overall effect of the deposit on the financial position of the company or its profitability had no direct relevance to the dispute - Transaction value as the same were market driven accepted - SC
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Manufacture - Ready Mix Concrete - RMC or MC - the matter needs to be remanded back to the Tribunal to decide the aforesaid factual aspect viz. whether the produce in question is RMC manufactured at site or is it MC as contended by the assessee - SC
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CENVAT Credit in respect of plastic crates, trolleys, welding table and welding chair - denial of CENVAT credit on the ground that the material on which credit was availed are neither inputs nor capital goods - denial is not correct - AT
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Area based exemption under Notification NO.50/03-CE dt.10.6.03 at new premises after shifting of factory - no production was undertaken by the appellant at new address on or before 31.3.10 - there is no justification to treat the appellant unit as having commenced commercial production after 31/3/10 and denying the exemption on this basis. - AT
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Valuation - Clearances of yarn for captive consumption within the factory - where the goods manufactured by an assessee are cleared for captive use as well as are sold to independent buyers, in respect of the goods cleared for the captive use, the value would be determined under Rule 8 of the Central Excise Valuation Rules, 2000 - AT
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Area Based Exemption - Declaration intending the availment the exemption notification 50/2003 was filed after 31-3-2010 - resent case is plain and simple and is governed by first principle of eligibility followed by procedural condition fulfilled by communication dated 30-3-2010 - benefit of exemption allowed - AT
VAT
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Levy of penalty under Section 10-A of the Central Sales Tax Act - Even the exports covered by Form-H, have not been taken note of by the assessing officer. They are also packing materials, which were covered against Form-H - levy of penalty set aside - HC
Case Laws:
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Income Tax
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2015 (12) TMI 708
Split Decision by the Division bench of the Apex Court - Deduction under the provisions of Section 80-IA or/and 80-IB - whether the Assessee is also entitled to the deduction in respect of the profits and gains under the provisions of Section 80HHC of the Act or whether the Assessee is entitled to deductions under the aforestated all the three Sections in respect of the same profits Hon'ble ANIL R. DAVE, J. held that:- the High Court was in error while permitting the Assessee to get benefit in respect of Section 80HHC as it did not take into account the fact that the profits in respect of which deduction was allowed under Section 80HHC had also been previously allowed under Section 80-IB. In my opinion, this is not permissible under Section 80-IB(13) read with Section 80-IA(9) because by virtue of Section 80-IB(13) provisions of Section 80-IA(9) are also applicable to Section 80-IB. - Decided in favor of revenue. Hon'ble Dipak Misra, J. held that:- the interpretation placed by the High Court of Bombay is correct and, accordingly, I dismiss the appeals preferred by the revenue and allow the appeals preferred by the assessees.
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2015 (12) TMI 707
Revision u/s 263 - Commissioner has held that the exemption under section 80IB will not admissible on the duty draw back income and interest income because it was not derived from undertaking - Held that:- In the present case, CIT issued notice after the decision of Hon'ble Supreme Court in the case of Liberty Shoes (2009 (8) TMI 63 - SUPREME COURT ) construed the meaning of expression "profits derived from industrial undertaking". The Hon'ble Supreme Court has explained the meaning of this expression and held that expression "derived" has a narrow connotation. The duty draw back has not first degree nexus with the industrial undertaking. These are being received as incentive benefits under the incentive provisions. Thus, such amount cannot be termed as "derived from industrial undertaking", and not eligible for deduction. On due consideration of all these facts and circumstances, we are of the view that the ld. Commissioner of Income Tax has appreciated the facts in right perspective while taking cognizance under section 263 of the Income Tax Act. - Decided against assessee.
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2015 (12) TMI 706
Reopening of assessment - assessee has taken up the ground that no valid notice u/s. 143(2) was served upon him - Held that:- Non-issue of notice u/s. 143(2) after filing of the return of the Assessee, by way of letter, makes the assessment order passed u/s. 143(3) r.w.s. 147 bad in law. See ITO vs. Naseman Farms Pvt. Ltd. & Ors. [2015 (4) TMI 764 - ITAT DELHI ] - Decided in favour of assessee.
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2015 (12) TMI 705
Addition made on the ground of undisclosed investment u/s. 69 - CIT(A) deleted the addition - Held that:- We find that this deposit of security was made by assessee ten years’ back and this fact has been admitted by AO as well as CIT(A). Once the deposit is not made in the relevant assessment year, the same cannot be added. The deposit can be added only in the year when it first time introduced. Accordingly, we confirm the order of CIT(A) deleting the addition. - Decided against revenue Addition made on the ground of undisclosed purchase - AO made addition only for the reason that in the P&L Account purchases of gold bar of 24 Kt. is not reflected and in the absence of such purchases of gold bar from Senco Gold, gold bar of 24 Kt. in stock is not feasible - CIT(A) deleted the addition - Held that:- The assessee accepts old gold ornaments from customers and adjusted the same with purchase bills. Actually bills are raised only in the net quantity of gold items sold to customers. Hence, stock of gold ornaments is automatically adjusted with respect to quantity of gold lying with the assessee, and hence, entire stock is not readily sellable to customers as it includes old gold ornaments. This stock of old gold ornaments was given to Senco Gold, Kolkata for adjustment with purchases of fresh ornaments from Senco Gold make. In this way, Senco Gold, Kolkata accepted old gold ornaments from assessee but customers while adjusting old gold ornaments with their new purchases would not only give the ornaments of Senco Gold but also of other parties. Finally, assessee has to convert this old gold ornaments of other make into 24 Kt. gold of Senco Gold except the same is converting to 22 Kt. of gold ornaments to 24 Kt. of gold has no financial implication and the same is shown as purchases. Accordingly, the entire undisclosed purchases are nothing but return of goods which was converted into 24 Kt. standard gold bars supplied to the assessee by the franchiser. In view of the above discussion and facts of the case, we are inclined to accept the contention of the assessee and hence, the order of CIT(A) on this issue is confirmed.- Decided against revenue Addition made on the ground of income from other sources - CIT(A) deleted the addition - Held that:-Originally, the assessee declared these amounts to be received in cash as per old ledger register. Subsequently, the assessee filed new ledger account and explained that the advance nearly 90% are received through account payee cheques and other are in cash. Ld. Counsel for the assessee admitted that this is unintentional mistake in showing all the transactions in cash and this mistake has occurred due to copy paste in computer. The assessee before the AO offered that the advances received through bank can be examined from bank statement and other details. He filed complete details before the AO but the AO has not accepted the explanation of the assessee and added entire advance of ₹ 22,86,958/- which were outstanding as on 31.03.2009. We find that the assessee before the lower authorities filed complete details in respect of advances received by cheques and cash. In view of the above facts and circumstances, we find that the CIT(A) has rightly deleted the addition - Decided against revenue
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2015 (12) TMI 704
Claim of deduction u/s 54F - AO denied the claim of deduction on the ground that the assessee owned more than one residential house on the date of sale of the original asset - Held that:- As regards the denial of claim u/s 54F on the ground that the assessee did not deposit the sale proceeds in the capital gain account as per the provisions of subsec.( 4) of sec.54F, we note that this issue is now settled by the decisions of Fatima Bai vs. ITO reported in (2008 (10) TMI 563 - KARNATAKA HIGH COURT) and in the case of Smt.Vrinda P.Issac (2012 (8) TMI 608 - KARNATAKA HIGH COURT) wherein held if the assessee has utilised the entire capital gain by purchase of a house or construction of the new house within the stipulated period, the benefit of sec.54F cannot be denied.Accordingly, if the assessee has constructed the new house and utilised the sale proceeds and capital gain within the period of limitation as provided u/s 54F, then the claim of the assessee u/s 54F cannot be denied. As regards the objections of the authorities below in respect of the assessee owning more than two residential houses and utilisation of the sale proceeds for construction of new house, we find that the assessee has produced relevant record in support of the claim along with affidavit. Prima facie it appears that the residential house at Kilpauk, Chennai was demolished on 18/5/2007 and thereafter, construction was completed by 2/9/2009 as per the certificate issued by the Corporation of Chennai. Further, the assessee has also produced the certificate of Chartered Engineer, confirmation letter issued by the demolisher of the property as well as bank account details along with details of the contractor who has carried out the construction work. Since these evidences were not examined by the authorities below, therefore, in the facts and circumstances of the case as well as in the interest of justice, we admit the additional evidence and set aside the issue to the record of the AO to verify the additional evidence filed by the assessee in support of the claim and then decide the issue as per law and in the light of the observations made by us. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 703
Deduction u/s 80IC - as per revenue deduction u/s 80IC can only be allowed after arriving at the gross total income by combining the income of both the units i.e. Noida unit and Roorkee unit and excess deduction claimed by the assessee was rightly denied to him - CIT(A) allowed appeal of the assessee directing AO to consider the profits & gains of Roorkee Unit only for allowing deduction u/s 80IC of the Act and also to determine the losses of NOIDA Unit to be carried forward - Held that:- CIT(A), following the dicta laid down by Hon'ble High Court in the case CIT vs Dewan Krafts (2007 (2) TMI 149 - HIGH COURT , DELHI), held that quantum of deduction u/s 80IA(J) of the Act is to be computed on eligible unit as if eligible unit was the only source of income of the assessee. In the case of CIT vs Sona Koyo Steering Systems Ltd. (2010 (2) TMI 83 - DELHI HIGH COURT ), their lordships also expressed the similar view which supports the conclusion of the first appellate authority. Finally, we reach to a logical conclusion that the CIT(A) granted relief to the assessee on valid reasons - Decided against revenue
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2015 (12) TMI 702
Assessment u/s 153A - disallowance u/s 14A - Held that:- In the absence of any incriminating material found during the course of search and the assessment proceedings having not been abated at the time of search, the Assessing Officer has no jurisdiction to make the addition under sect ion 153A of the Act . - Decided in favour of assessee.
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2015 (12) TMI 701
Estimation of Gross Profit - CIT(A) deleted the addition - Held that:- As decided in assessee's own case for previous AYs 2005-06 to 2007-08 the rejection of books of account u/s.145(2) was not justified on the basis of defects pointed out by the A.O. Further, GP addition also is not required due to substantial trading in lignite during the year. The reasons given by the appellant is based on evidences. Thus, we allow the appeal of the assessee on both grounds. - Decided against revenue Disallowance on account of transportation charges (Noor & Jakat) - CIT(A) deleted the addition - Held that:- As decided in assessee's own case for previous AYs 2005-06 & 2006-07 This is not the case of the A.O. that payment of noor jakat expenses is excessive or unreasonable as compared to earlier years. It is also not mentioned that what type of details were called for and moreover, no actual addition was made by the A.O. in the computation of income in page 13 of the assessment order and it has not brought on record to show that the mistake was rectified u/s 154 within the time allowed under that section. Even if this has been rectified then also we feel that such ad-hoc disallowance without pointing out as to what was the details called for which were not submitted, is not justified. - Decided against revenue
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2015 (12) TMI 700
Disallowance of deduction u/s 80QQB - royalty - assessee has authored book on income tax problems in question answer form. - whether the assessee is eligible for claim of deduction u/s. 80QQB of the Act on receipt of royalty for literary work? - Held that:- The government i.e. CBDT has recognised assessee's work by awarding him Pratyaksh Kar Sahitya Puruskar on his Hindi Edition of the same book as second best literary work on Income Tax in Hindi. It is a fact that the assessee has authored this book on income tax problems in question answer form. His book is on a complex issue which really needs intellect and knowledge. He has received royalty on the same - The assessee's authored book is a literary work in term of section 80QQB of the Act and accordingly, assessee is entitled to deduction u/s. 80QQB of the Act. - Decided in favour of assessee. Notional rental income - whether the assessee can be treated as owner of the property in the absence of probate of the will and consequently, notional rental income can be assessed in the hands of the assessee? - Held that:- We find from the facts of the case that though the assessee has disclosed the property received from mother through will in his Balance Sheet but claimed that he is not owner as the will is not probated. There is no doubt that a will exists and it has not been probated. This is a concurrent finding of both the authorities below. In such circumstances, when the will is not granted probate, whether notional income can be assessed in the hands of the assessee. This issue has been answered by Hon'ble Supreme Court in the case of Mrs. Hem Nolini Judah (since deceased) v. Mrs. Isolyne Sarojbashini Bose [1962 (2) TMI 84 - SUPREME COURT]. From the above admitted facts of the case that the will is not probated and precedent cited, we are of the view that no notional rent can be assessed in the hands of the assessee while computing income of the assessee under the head income from house property because the assessee is not the owner of the house property. Accordingly, we delete this addition - Decided in favour of assessee.
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2015 (12) TMI 699
Penalty u/s 271(1)(c) - surrender of income - suo motu further income declared in the returns filed u/s 153A - Held that:- It is trite law that penalties should not be imposed unless the case falls under the four corners of law mandating the penalty. Thus such laws are to be strictly implemented. Adverting to explanation 5A to section 271(1)(c) if explicitly refers to “Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of”.. It is not disputed that during the search assessee was not found to be owner of any gold, bullion, a/c books etc. as no incriminating material was discovered. This is further confirmed by the fact that much alleged pharmaceutical business was not found to be at all carried out by assessee and the additions stand deleted by ITAT. Explanation 5A has specific application, the contention of ld. DR. that penalty are sustainable due to the implication of word transaction mentioned in sub clause ii of explanation. 5A cannot be accepted. This is simply so as there is no mention of any specific transaction. Beside there should be any evidence found during the course of search. Thus in my considered view impugned penalties cannot be sustained under explanation 5A to section 271(1)(c). While interpreting proviso to sec. 153A, various judicial forums have held that additions in respect of finalized assessments cannot be made unless incriminating material is discovered during the course of search proceedings. In these circumstances impugned assessments for AY 2003-04, AY 2005- 06 being unabated, no additions could have been made in the absence of any incriminating material. Besides for AY 2006-07 also small penalty for house renovation expenses can be sustained on merits as no incriminating material, evidence or nature of renovation is ever inquired. Assessee’s affidavit also remains uncontroverted on record. Thus impugned penalties confirmed by the ld. CIT(A) u/s 271(1)(c) are deleted. - Decided in favour of assessee.
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2015 (12) TMI 698
Registration under sect ion 12AA cancelled - as per CIT(A) activities of the assessee fall in the category of “advancement of any other object of general publicutility” and this phrase as provided in sect ion 2(15) does not now constitute a charitable purpose, therefore the same is purely commercial in nature in view of the proviso appended to the section - Held that:- The amendment to sect ion 2(15) of the Act cannot be the basis for cancellation of registration granted earlier under sect ion 12A of the Act . The two basic requirements for cancellation of registration as provided under section 12AA(3) of the Act , viz , the findings of the learned Commissioner of Income Tax to the effect that the activities of the assessee are not genuine or the activities are not being carried out in accordance with the objects on the basis of which registration under sect ion 12A of the Act was granted to it , have also not been fulfilled in this case. The learned Commissioner of Income Tax has nowhere given a finding in this regard. It is not the case of the Commissioner of Income Tax that the activities of the assessee are not genuine or not being carried out in consonance with the objects of the assessee. In this view also, the act ion of the learned Commissioner of Income Tax in cancelling the registration is not as per law. - Decided in favour of assessee.
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2015 (12) TMI 697
Rejection of books of accounts - estimation of net profit from civil contract receipts - inclusion or exclusion of work in progress for determining the gross turnover - Held that:- It is an admitted fact that the work in progress is not a turnover but it is a cost of material and other charges incurred on unbilled works. The assessee contended that the work in progress is carried over to subsequent year and recognized the income, therefore it cannot be taken into turnover for the current year. We find force in the arguments of the assessee for the reason that the assessee did not received any amount towards this work in progress. Though the income should be recognized on percentage completion method or completion contract method in civil contract works, the A.O. necessarily has to follow the method of accounting followed by the assessee from the earlier years. The assessee contended that it is recognizing its income only on completion contract method. When the assesse is following a particular method, of accounting, which was accepted by the department in earlier years, cannot disputed now. Therefore, we are of the opinion that the A.O. is not correct in including the work in progress for the purpose of determining the gross receipts for estimation of net profit. The CIT(A), rightly excluded the work in progress from the contract receipts. We do not find any error or infirmity in the order of CIT(A). Therefore, we direct the A.O. to exclude the work in progress from the gross turnover. The co-ordinate bench of this Tribunal in the case of ACIT Vs. Teja Constructions [2014 (1) TMI 832 - ITAT HYDERABAD ] has upheld the estimation of net profit at 9% from main contract works. Thus the CIT(A) has rightly estimated the net profit of 9% on the total turnover, excluding work in progress. - Decided against revenue
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2015 (12) TMI 696
Revision u/s 263 - CIT(A) revising the assessment order passed under section 143(3) read with section 153C for the respective assessment years - Held that:- We find that the assessee has given the venture-wise details of income from land along with the name of the party, the document no. and the consideration received and recorded in its books of account for all the relevant assessment years under consideration. We find that the assessee has filed all these details before the Special Auditor as well. From the assessment order under section 143(3) read with section 153C of the Act, it is seen that the A.O. has considered the findings of the Special Auditor under section 142(2A) of the Act and has observed that the Special Auditor has given only a proforma report without commenting on the aspects referred to him. He held that since the issue is critical for assessing the capital gains as arising out of the transfer of land in the correct hands and since the report is silent about it, the same cannot be relied upon. He observed that the sale consideration as per the registered sale deeds is declared by the assessee company and therefore, the same is assessed in its hands as it is voluntarily declared by the assessee company and protective assessment in the hands of the respective assignees has already been made. It was, after considering these aspects, that the A.O. estimated the income of the assessee. This itself clearly demonstrates that the A.O. has applied his mind to the facts of the case before him before estimating the income of the assessee. As regards the issue as to whether, the assessment order passed by the A.O. after due application of mind, can be revised under section 263 of the I.T. Act, we find that in the case of Spectra Shares & Scrips P. Ltd., vs. CIT-III, Hyd. (2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT) has considered the judicial precedents on the issue in detail and has culled out the following principles as to the exercise of jurisdiction of the CIT under section 263 of the Act.Applying the above principles to the facts of the case before us as brought out in detail in the above paragraph, we hold that the assessment order under section 143(3) read with section 153C could not be revised under section 263 of the Act. - Decided in favour of assessee.
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2015 (12) TMI 695
Addition on account of income siphoned out - benefit of section 10(23C)(iiiad) denied - CIT(A) deleted the addition - Held that:- As the society is definitely engaged in educational activity which is charitable u/s 2(15) of the Act and has maintained separate accounts in respect of each educational institution. The institutions of the society is entitled for claiming benefit of section 10(23C)(iiiad) of the Act being income of each educational institutions being less than ₹ 1 Crore, therefore, we observe that the AO has wrongly invoked the provisions of section 11 of the Act as the assessee society is running educational institutions which are exempt u/s 10(23C)(iiiad) of the Act. We also find that the assessee has fully explained the outflow of the amount of ₹ 17,00,000/- by requisite details/evidences from books of accounts which were produced before the AO also and clearly showed that the same has been invested in educational activities of charitable purposes which are exempt u/s 10(23C)(iiiad) of the Act. We observe that the AO just based his findings on the outflow without examining its ultimate use and its accounting done by the assessee. Further, we also find that the AO has not brought any adverse material evidence on record to conclusively hold that the amount of ₹ 17,00,000/- was utilized for other than educational /charitable purposes. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) on this issued and the same is upheld. - Decided against revenue Addition on account of excess income over expenditure by allowing the exemption u/s 10(23C)(iiiad) - CIT(A) deleted the addition - Held that:- We have concurred with the ld. CIT (A) that the assessee’s income from educational institutions is exempt u/s 10(23C)(iiiad) of the Act. Thus, the conclusion of ld. CIT (A) that excess of income over expenditure in Sarti Devi Raja Ram Public School at ₹ 15,32,930/- and from Hindu Mahila Vidhyalya at ₹ 2,16,117/- is exempt u/s 10(23C)(iiiad) of the Act and thus, net surplus determined by the AO at ₹ 13,92,059/- has no basis, is correct and needs no interference. There is no merit in the contention of the revenue on this ground and so dismissed.- Decided against revenue Addition on account of membership fee received during the year as the assessee was not registered u/s 12AA - CIT(A) deleted the addition - Held that:- We find that the amount is the membership fees received by the society from its regular and new members which is meant for Corpus fund of the society. We further find that such receipts have been corroborated with documentary evidences and which had not been rebutted by the AO even in the remand report, so we uphold that the nature of the receipts as claimed by the assessee was acceptable and there was no reason to tax the same as donation in the hands of the society. We further find that membership fees have been credited directly to the Corpus Fund in the Balance Sheet and the amount cannot be taken as income of the Samiti in any case. Accordingly, we do not find any infirmity in the impugned order of the ld. CIT (A), so the ground is dismissed. - Decided against revenue Disallowance of depreciation - CIT(A) deleted the addition - Held that:- In the Balance Sheet of Shamli Samaj Kalyan Samiti, the addition to the fixed assets i.e. Building of the degree college is well proved and fully verifiable. AO has not brought any adverse material evidence on record to hold that depreciation @ 10% was required for disallowed. Before us also, the ld. DR has not brought any evidence to substantiate the addition made by the AO. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) on this issue and the same is upheld - Decided against revenue
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2015 (12) TMI 694
Claim of exemption u/s 11 denied - CIT(A) allowed the claim - Held that:- It is seen that the assessee society was formed by Ashok Leyland Ltd., an Automobile conglomerate, on the request of Govt. Of NCT of Delhi to impart training to drivers of buses & trucks including DTC buses to make Delhi roads safe. The various training courses are designed and prescribed by Government of India, Ministry of Shipping, Road-Transport & Highways. The course content comprises of classroom instruction, training on simulator models, field instructions, practical training and examination. The fee to be recovered for different courses is determined and prescribed by the Transport Department. For each course certificate is awarded to the successful candidates on completion of the course which is signed by the Authorized Signatory of the Transport Department, Govt. Of NCT of Delhi, the Instructor & the Principal of the Driving Institute. The certificate issued is the Statutory basis on which driving license and PSV Badges are issued/renewed by the Transport Authority. A major part of the activity of the society is training of DTC drivers from grants received from Ministry of Shipping, Road Transport & Highways, Govt. of India (MORTH). Indisputably, substantial activity of the assessee revolves around providing training to drivers of buses and trucks. The training programmes are designed/ approved by the Ministry of Shipping, Road Transport and Highways which also gives grants to the assessee society from time to time. As such, the assessee cannot be equated with a private drivers’ training institute. There is no finding by the Department that any benefit of any kind has accrued to any individual member involved in the activities or day to day running of the society. Therefore, in our considered opinion and respectfully following the ratio of the judgments as laid down by the Hon’ble High Court of Gujarat in Gujarat State Co-operative Union vs. CIT (1992 (2) TMI 74 - GUJARAT High Court) and the Hon’ble High Court of Delhi in Institute of Chartered Accountants of India and Another v. DIT (Exemptions) and Others (2013 (7) TMI 205 - DELHI HIGH COURT ) we find no reason to interfere with the impugned order of the Ld. CIT (A). - Decided in favour of assessee.
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2015 (12) TMI 693
Registration u/s 12AA cancelled - applicant trust undertook only one activity out of 21 objects - Held that:- CIT has considered irrelevant factors in rejecting the application of the appellant trust. The objects of the applicant trust as mentioned in Trust deed are charitable in nature and the application for registration cannot be rejected merely because applicant trust undertook only one activity out of 21 objects and activities proposed in the trust deed. So far as the allegation of the CIT that the income derived by the trust either by way of donation or by way of fees from the students is concerned, there is no allegation that the receipts from fees were applied or used by the assessee trust for the purpose other than the aims and objects of the trust. From the impugned order, we further note that it is not the allegation of the CIT that the fees charged from the institutions or donations received have been used for the purposes other than running the institution managed by the assessee trust. Admittedly and undisputedly, this fact has been noted by the CIT that the appellant trust is running a school as per its charitable objects and it is not the allegation of the CIT that the activities carried on by the assessee trust are not in consonance with its objects as per trust deed. We are of the view that the CIT rejected an application for registration u/s 12AA of the Income Tax Act, 1961 without any justified reason and basis despite the fact that the objects of the applicant trust are charitable and no allegation has been brought out on record by the CIT that the assessee is conducting activities beyond its object as per trust deed or fees and donations are being used for the activities which are not charitable and beyond the ambit of the objects of the assessee applicant trust, hence, we direct the CIT that the applicant trust should be granted registration u/s 12A - Decided in favour of assessee.
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2015 (12) TMI 692
Addition on account of accrued interest receivable by assessee on unpaid compensation - CIT(A) deleted the addition - Held that:- In the instant case, the interest income is not from a definite source as it is subject to litigation. The assessee received a sum of ₹ 15.00 crores as part payment out of the total compensation and the balance was still to be received subject to the decision of the Apex Court. So it is quite clear that the interest income is also a subject matter of the final order of the court. Hence interest cannot be taxed till finality is achieved in this case. - Decided in favour of assessee.
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2015 (12) TMI 691
Addition u/s. 68 - Held that:- Different figures being claimed as the amount of cash loans, viz. at ₹ 3,55,330/- as per the memo of appeal before the ld. CIT(A); ₹ 4,59,500/- per the statement of cash loans received from 10.08.2008 to 05.01.2009 (adduced now); and at ₹ 3,85,430/-, per the summary of cash-book (adduced now). It has already been explained that the documents being relied upon cannot be said to form part of the record, being not per a paper-book, i.e., containing documents before the authorities below nor certified for being true copies. In fact, all that the assessee, to substantiate its claim, was required to do was to produce the A.O.'s letter dated 20.12.2011 (to him), calling for the explanation for the credits (refer page 2 of the assessment order), as well as the assessee's reply thereto in-as-much as, the difference being substantiate, this would be the first objection that the assessee would have raised in the matter. The A.O. has already confirmed per s. 159 order (supra) the figure adopted in assessment to be in terms of the cash-book produced before him during the assessment proceedings. The assessee's balance-sheet (as on 31.03.2009) (now produced), assuming the same as filed along with the return of income, itself shows the unsecured loans as well as the deposits from the patients to be at ₹ 15.96 lacs and ₹ 5.8 lacs (as on 31.3.2009) respectively. The addition u/s.68 is under the circumstances confirmed; the parameter of section 68 being clearly unsatisfied - Decided in favour of assessee. Disallowance of interest expenditure claimed on proportionate basis - Held that:- The assessee explained that the amounts were already advanced for the purchase of surgical instruments, on which therefore no interest could be charged. The same did not find favour as the contention was not substantiated with any evidence. In further appeal before this tribunal, no improvement in its case could be made by the assessee. The amounts, it is stated, had been advanced in earlier years. In that case, there would definitely be some correspondence for/or follow-up by the assessee seeking reasons for or to expedite the delay in the purchase, which would substantiate its claims and, besides, also reveal the reason for the non-supply of goods. The purpose of advance to Sushila Hospital is also not spelled out. It is only where the advance is shown to be for the purpose of assessee's business or profession, that interest attributable thereto could not be allowed. The assessee's case is wholly unevidenced. - Decided against assessee. Disallowance of consultation fees paid to three doctors - Non-deduction and deposit of tax at source (TDS) - Held that:- The default in the noncompliance of the TDS provision, i.e., in first deducting tax at source then depositing the tax, is admitted. Section 40(a)(i) only introduces a timing effect, so that on the deduction of tax and its deposit, the corresponding amount would stand to be allowed as deduction for that year, i.e., the year of deposit/payment - Decided against assessee. Levy of interest u/s. 234B is mandatory and consequential and, accordingly, there is no merit in the assessee's case.
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2015 (12) TMI 690
Disallowance of investment allowance and the depreciation on Plant & Machinery relating to cement unit - Held that:- CIT(A) did not disturb the interest allowed on capital borrowed for the purpose of cement unit by holding that the cement business forms part of the fertilizer business. However, she disallowed the claim of depreciation and investment allowance. As regards the interest and other expenditure is concerned, we find that the findings of the Tribunal have attained finality that both fertilizer unit as well as the cement unit form part of the same business and has been accepted and followed by the Revenue. However, this finding will not apply to the claim of depreciation as well as the investment allowance. The claim of depreciation as well as investment allowance is asset specific and are allowable only when the assets are installed and put to use. In the case before us, the AO has clearly brought out on record that the machinery was not installed by the end of the relevant previous year i.e., 31-12-1983 in the case of assessee which fact has been considered and accepted by the Hon'ble High Court of AP. When the machinery has not been installed and used by the assessee for the purpose of manufacturing of cement, then the claim of depreciation and investment allowance is rightly not allowed by the AO. In view of the same, we do not see any reason to interfere with the order of the CIT(A) - Decided against assessee.
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2015 (12) TMI 689
Penalty imposed under section 272A(2)(k) - delay in filing TDS statements - Held that:- Undisputedly, it is a fact on record that there is a delay in filing TDS statements in respect of all the four quarters as far as Form no.24Q is concerned and as far as statements in Form no.26Q is concerned, there is a delay in filing the TDS statement in respect of quarter 2, 3 and 4. On a perusal of the details of filing of TDS statement, it is seen that the delay is substantial ranging from almost one year to about two years. It is also relevant to note that on a specific query from the bench it was submitted by the learned Counsel that in respect of some of the quarters TDS amount was remitted to the Government account beyond the prescribed date. As could be seen, in response to the show cause notice, the assessee has submitted its Explanation by stating that the deductee is the director of the company to whom rent / professional fee was paid and salary was paid to the family members of the company, hence, there is no willful intention to delay or deprive any deductee of the TDS credit. However, before the first appellate authority, the assessee has taken a completely different stand by stating that due to oversight of the staff, TDS statement could not be filed. When the learned counsel was specifically asked by the Bench why this stand taken before the first appellate authority was not taken before the Assessing Officer, he submitted that due to very short time given by the Assessing Officer for submitting the reply, the assessee could not take such stand. However, we are not convinced with the aforesaid submissions of the assessee. It is relevant to note that in response to the show cause notice issued by the Assessing Officer, the assessee did submit its reply. Therefore, the assessee could very well have taken the stand which was taken before the first appellate authority. Therefore, as it appears, the assessee has taken a completely new stand before the first appellate authority which is not available before the Assessing Officer. Moreover, the plea regarding oversight by the staff is very general in nature, hence, cannot be accepted. Neither the assessee has identified the concerned employee nor furnished any affidavit of the employee admitting such fact. Further, considering the period of delay, the plea of oversight by staff is not acceptable. Though, we accept the fact that imposition of penalty under section 272A(2)(k) is not mandatory as the provisions of section 273B is also applicable in case of imposition of penalty under section 272A(2)(k), but, at the same time, the assessee has to show reasonable cause for the default. Therefore, in our view, the assessee having not made out a case of reasonable cause for delay in filing the TDS statement, penalty imposed is justified. - Decided against assessee.
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2015 (12) TMI 688
TDS u/s 194C - Deduction of TDS on lorry high charges - applicability of provisions of sec.40(a)(ia) - Held that:- We are of the opinion that the provisions of Sec.40(a)(ia) of the Act are applicable only when the amount of expenditure is payable and outstanding as on 31st March of the previous year in which the assessee has claimed expenditure. The additional information was filed before the Commissioner of Income Tax (Appeals) and no remand report was called for from Assessing Officer. It is apparent that such statements and information’s was not available to the Assessing Officer at the time of assessment. Therefore, we are inclined to set aside the order of the CIT(A) and remit the disputed issue to the Assessing Officer with the direction to verify whether any amount is outstanding or payable as on 31st March of previous year relevant to assessment year so as to attract the provisions of sec 40(a)(ia) of the Act. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 687
Registration granted u/s 12A rejected - Held that:- The accounts of the assessee club being maintained in a casual manner, which is one of the observations of the Commissioner of Income Tax cannot be the basis for cancellation. It is not the prerogative of the Commissioner of Income Tax to compare the data of two years as has been done by him as these are the matters which are to be looked in by the Assessing Officer at the assessment stage. In view of these, we do not find that the conclusion drawn by the learned Commissioner of Income Tax on the basis of these observations that the assessee is not carrying on the activities as per the objects or activities of the assessee are not genuine, is correct. Section 11 provides for exemption of 'income from property held for charitable or religious purposes'. This gives the computational provision for availing exemption, which is not free from conditions and provision at every stage of availing it. This exemption under section 11 of the Act together with the frills attached with it are subject matter of assessments on year to year basis. This is not the end, further conditions and checks are provided under section 13 of the Act also, which provides for 'section 11 not to apply in certain cases'. Provisions of this section are also under the jurisdiction of the Assessing Officer to be carried on during the assessment proceedings. In fact, the whole exemption for the year is forfeited in case of violation of any of the conditions provided in section 13. In such a scenario, we do not understand why the Commissioner of Income Tax is bothering himself to carry out such a cumbersome exercise in order to cancel the registration. The assessee being granted exemption under section 11 of the Act throughout and the way the assessee is carrying out the activities for the promotion of golf are the same from the beginning. This brings us to a point, where we can infer that it was the introduction of proviso to section 2(15) of the Act, perhaps, which was at the back of the mind of the learned Commissioner of Income Tax at the point of initiation of these cancellation proceeding. However, that otherwise also, cannot be the basis for cancellation. The learned Commissioner of Income Tax has also relied upon the judgment CIT Vs. Queen's Educational Society (2007 (9) TMI 347 - UTTARAKHAND HIGH COURT) which is also not applicable to the present case in view of the fact that the said judgment has been reversed by the Hon'ble Supreme Court of India in the case of M/s Queen's Educational Society Vs. CIT (2015 (3) TMI 619 - SUPREME COURT ). - Decided in favour of assessee.
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2015 (12) TMI 686
Deduction of tax at source u/s.195(1) in respect of refund including the interest u/s.244A - DTAA - contention of the assessee is that interest on refund of tax is exempt from tax in India - Held that:- When we go through the definition of interest under Article 12(4) of of DTAA between India and Italy, this kind of interest is not envisaged in the definition of interest, therein. Being so, the lower authorities are justified in imposing TDS u/s. 244A of the Act, on the income tax refund and the case laws relied on by the ld. AR are not delivered with reference to DTAA between Government of India and Government of Italy. As such, those case laws relied on by the assessee have no relevance. In view of this, we are inclined to uphold the arguments of ld. DR and confirm the order of the CIT(Appeals). - Decided against assessee
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2015 (12) TMI 685
Deduction on interest of housing loan u/s 24(b) - Assessing Officer restricted it to 25% and 75% of the property is belongs to other co-owners - Held that:- In the instant case, the plot was purchased by four persons and their shares are not specified in the sale deed. Even the housing loan had also been taken jointly by the same four persons, therefore, the authorities below were justified in holding that since the individual shares were not specified in the sale deed, the logical conclusion is that everyone had equal share in the property. It is also relevant to state here that the assessee has claimed that she has invested for purchase / construction of the house property, but no evidence in support of this stand is available on records. Considering the entire facts and circumstances of the present case, fully agree with the observations of the CIT(A) that the allowable interest to the assessee will be 25% of the entire interest and the Assessing Officer was justified in his action. - Decided against assessee.
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2015 (12) TMI 684
Transfer pricing adjustment - selection of comparable as loss making company - Held that:- When loss making company has been selected for comparison in TP study for necessary, which is profit making one, there is a need for more attention qua the conditions prescribed in clause (a) to (d) of Rule 10B(2) of IT Rules, 1962 for an ultimate judgment of comparability of impugned transaction. So, the persistent loss making means continuous loss making for more than 3 years but in the case before us i.e. Stovec has earned a margin of 2.39% in comparable segment in F.Y. 2003-04. Hence, it could not be considered as loss making, so the same should be excluded for computing operative margin of comparable companies for arriving at ALP in relation to international transactions pertaining to EOU operations. The Assessing Officer is directed accordingly. Commission on marketing of machines and commission of marketing of spares - Held that:- The Tribunal further held that the international transactions pertaining to receipt of commission from marking of machines benchmarked by the assessee aggregating with domestic operations using TNMM should not be rejected. Nothing contrary has been brought to our knowledge on behalf of Revenue. Facts being similar, so following the same reasoning, Assessing Officer is directed to grant of relief to the assessee for the year under consideration i.e. A.Y. 2006-07 on the line of A.Y. 2007-08 discussed above.
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2015 (12) TMI 683
Disallowance u/s 14A - Held that:- Disallowance under Rule 8D has been worked out by the AO on the total investment, which included investment made in mutual funds with growth scheme. Such mutual fund investment is required to be excluded while calculating disallowance under Rule 8D, since it is not generating any tax free income. The assessee has also filed copy of the scheme of UTI fixed maturity plan before us, according to which it is a growth oriented fund and not eligible for dividend. If we exclude the amount invested by the assessee in the growth plan, disallowance under Rule 8D @0.5% works out to be ₹ 1.39 lakhs. However, copy of scheme of UTI Fixed Maturity Plan was first time filed before Tribunal as an additional evidence along with application for admission of additional evidence dated 27-2-2014. We accept the additional evidence and matter is restored back to the file of AO for deciding afresh the quantum of disallowance keeping in view our above observations. Addition to book profit under Section 115JB on account of disallowance under Section 14A - Held that:- We direct the AO to exclude the amount of disallowance made u/s.14A, while computing the book profit u/s.115JB. Addition made in respect of corporate guarantee - Held that:- As decided in assessee's own case in an independent transaction, the assessee has paid 0.6% guarantee commission to IGIGI Bank India for its credit arrangement. This could be a very good parameter and a comparable for taking it as internal GUP and comparing the same with the transaction with the AE. The charging of 0.5% guarantee commission from the AE is quite near to 0.6%, where the assessee has paid independently to the IGIGI Bank and charging of guarantee commission at the rate of 0.5% from its AE can be said to be at arms length. The difference of 0.1% can be ignored as the rate of interest on which IGIGI Bank, Bahrain Branch has given loan to AE (i.e. subsidiary company) is at 5.5%, whereas the assessee is paying interest rate of more than 10% on its loan taken with IGIGI Bank in India. Thus, such a minor difference can be on account of differential rate of interest. Thus, on these facts, we do not find any reason to uphold any kind of upward adjustment in ALP in relation to charging of guarantee commission Addition on account of adjustment in respect of interest on loan advanced to EKC Dubai and EKC China - Held that:- The rate to be used for undertaking an adjustment should be LIBOR and not the average yield rates considered by the learned TPO. The LIBOR rate for March 2008 was 2.6798%. However the assessee has charged 7% from its AE as per the internal CUP available. Thus, the assessee has charged interest to EKC Dubai and EKC China at the rate higher than existing LIBOR rates. Accordingly, the said transaction of providing loan to EKC Dubai and EKC China is at arm's length. Additions made by the AO are accordingly set aside.
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Customs
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2015 (12) TMI 657
Re-Confiscation of car from purchaser after import - Under invoicing of value of cars - Evasion of duty - Imposition of redemption fine and penalty - Held that:- At the time of importation, the car was confiscated and allowed to be redeemed on payment of redemption fine and penalty imposed on the importer and the car was cleared by the importer, Shri Krishan Kant on payment of the penalty. The appellant is the bonafide purchaser of the car in question. - car is reconfiscated which is not permissible in the light of decision of the Hon'ble Apex Court in the case of Mohan Meakin Ltd. (1999 (12) TMI 58 - SUPREME COURT OF INDIA) . Therefore, we hold that the confiscation of car is not sustainable, the confiscation of the car is set aside. - Further the appellant is a bona fide purchaser of the car and have no role in importation of car, no penalty is imposable on the appellant. Consequently, penalties imposed on the appellant are set aside. - Decided in favour of assessee.
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2015 (12) TMI 656
Demand of interest on duty paid on DTA clearances of warehoused goods - 100% EOU - Held that:- Impugned goods were imported duty free and warehoused as per the warehouse provisions. The warehousing provisions specify that the same can be warehoused till expiry of three years as per Section 61 (i) (a) of the Customs Act, 1962. The duty liability on the goods will arise only after expiry of such time limit, or when the goods are cleared from the warehouse before that time limit. In the instant case, the appellants had imported the goods during the period June 2010 to March 2011 and they had cleared the goods on 13.09.2011. Therefore, clearances of the goods have been done clearly within the permitted period of three years and there is no contravention. As regards the duty, the appellant had sought permission from the Customs department for clearing the goods, and they had deposited the duty amount voluntarily. Therefore, there is no occasion to demand interest from the appellant as there is no delay in payment of the duty. Interest can be levied only if there is delay in payment of duty, which is not the case herein. Therefore, we find no reason to demand interest from the appellant. Consequently, there is also no reason for imposition of penalty, as the appellant has not violated any of the provisions nor delayed the payment of duty. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 655
Refund of excess duty paid - whether the refund claim filed by the assessee in terms of the Tribunal s order would be hit by the principles of unjust enrichment or not - Held that:- Admittedly the appellants have given a Chartered Accountant certificate indicating that duty element has not been received by them from their buyers. As per the majority order of the Tribunal in the case of Business Overseas Corporation Vs. CCE(Import & General), New Delhi [2014 (11) TMI 528 - CESTAT NEW DELHI (LB)], it was observed that the production of a Chartered Accountant certificate shifts the burden to the Revenue to prove recovery of extra duty collected from the customers by producing positive evidence. As the Revenue failed to advance any evidence to rebut the Chartered Accountant certificate, the allegation of unjust enrichment cannot be upheld. Similarly in the case of Deepak Internationa Vs. CC&ST, Kanpur [2014 (11) TMI 233 - CESTAT NEW DELHI], it was observed that Chartered Accountant certificate certifying extra duty paid not recovered from buyers to be given due evidentiary value especially when the said extra duty reflected in balance sheet as loan and advances recoverable from the Revenue. The appellants have taken a categorical stand in the present proceedings that the adjudicating authority examined the balance sheet of the year 2000-2001 whereas the importation was made in the month of March 2001 and it was reflected in the next financial year, which stands taken into account by the Chartered Accountant. Appellants have produced sales invoices indicating that the sales were made against cash and no excess duty was recovered by them. The adjudicating authority has not taken into consideration the said invoices merely on the sole ground that the buyers’ address is not given. Admittedly buyers’ names are there and mere absence of the addresses from the sales invoices cannot be adopted as a reason to reject the said evidence. - denial of the refund, which has arisen as a consequence of prolonged litigation by the appellant and the ultimate order of the Tribunal in their favour, on the ground of unjust enrichment is not justified. We accordingly set aside the impugned order - Decided in favour of assessee.
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2015 (12) TMI 654
Levy of CVD - whether or not goods imported by the Respondent under B/E No. 441168 dt 11/11/08 under RMS procedure, were cable Jointing kits not leviable to CVD as per CBEC Circular No. 583/20/2001-CX dt 20/08/2001 issued from F. No. 151/18/96-Ex-4 - Held that:- First appellate authority has held that the goods imported were described as cable jointing kits which is being contested by the Revenue that description in the B/E was given on the basis of product code & not as cable jointing kit. It is also the case of the Revenue in the grounds of appeal that classification of the imported goods was claimed by the Respondent under CTH/CETH 85359090 & not as cable Jointing kit under CTH/CETH 8547 - Respondent had to justify with documentary evidence that the goods imported were in fact 'Cable Jointing kit' falling under CTH / CETA 85.47. After deciding the classification of the imported goods, it is also required to be examined whether the ratio of case law M/S XL Telecom Ltd & others decided by Andhra Pradesh High court and the case law of M/s REPL & others dismissal by Supreme Court will be applicable to imported goods. Even if placing all the imported articles in one kit (as 'Cable jointing kits') does not amount to manufacture, whether the ratio laid down by the courts debar charging of CVD on individual articles as such when imported. In the interest of Justice the order passed by the first appellate authority is set aside and the case is required to be remanded back to the assessing officer as no speaking assessment order has been passed by the Lower authority on the issue of classification of imported goods. - Matter remanded back - Decided in favour of Revenue.
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2015 (12) TMI 653
Demand of differential duty - Undervaluation of goods - Held that:- There is no reference by the Revenue to any contemporaneous import declaring the price of identical goods at a higher value. The only reference is to those imports where the value was enhanced by the Customs Authorities based upon the letter of Commissioner of Customs (Imports) Nhava Sheva, Bombay. Merely because the value was enhanced by the Customs, the same would not become contemporaneous imports. In the present case also, the Customs have enhanced the value and the present enhancement cannot be considered to be contemporaneous for the other subsequent imports. - The value declared by the appellant is on the basis of the contracts entered into by them with the foreign supplier. There is no evidence on record that the value as declared in the invoices is not the correct value or is not in terms of the contract or any under-hand consideration has flown back to the supplier. The reliance on the letter of Commissioner of Customs (Imports) Bombay, which in any case has not been placed before us cannot be adopted as the sole reason for enhancement of the price. - enhancing the value based on cost construction method cannot be held to be a proper method to decide upon the value of the goods, especially when there is no evidence of any consideration flowing back to the foreign supplier. Adjudicating authority has observed that till February 2013, the lower assessable value was being accepted and the goods were being cleared by the Customs. If that be so, we find no justifiable reasons to enhance the value based upon some other enhancement order of the proper officer under the Customs and to hold the same as contemporaneous. The impugned orders are unsustainable - Decided in favour of assessee.
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2015 (12) TMI 651
Waiver of pre deposit - Import of parts of Switches and paid concessional rate of duty under exemption notification No. 25/09-Cus dated 28.02.1999 - Assessee did not fulfill all the conditions - Held that:- As per the condition of the exemption Notification, the imported goods would be used in the registered premises of the applicant. In the present case, the applicant failed to comply with the condition of the Notification as they have sent the imported goods to their other unit in Una, which is not registered for the purpose of the availment of concessional rate of duty under Notification 25/09-Cus. So, the applicant failed to make out a prima-facie case for waiver of pre-deposit of entire amount of duty alongwith interest and penalty - Partial stay granted.
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2015 (12) TMI 650
Condonation of delay - inordinate delay of 603 days - Held that:- undisputedly, Dr. Kameswar Mishra had been appointed by the applicant to present his case before the ld. adjudicating authority. It is not in dispute that Dr. Mishra had received the impugned Order on 22-1-2012 and made an attempt to communicate the same on 3-4-2012. However, due to absence of the applicant in Indore, the impugned Order sent by Registered Post by Dr. Mishra, was returned, and there was no scope for Dr. Mishra to get in touch with the applicant in filing the appeal. On going through the application and also the affidavits filed by the applicant and his advocate, Dr. Kameswar Mishra, we are of the view that the applicant could not file the appeal in time, not because of his negligence, nor due to lack of bona fideness on his part, but the circumstances were beyond his control. In the result, in the interest of justice, the delay caused in filing the appeal before this Forum deserves to be condoned - Delay condoned.
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2015 (12) TMI 649
Condonation of delay - lower appellate authority did not examine the issue on merits but rejected the appeal on account of delay in filing of the appeal, though within the condonable period - Held that:- We are surprised at the way the appeal has been disposed of especially when the appeal was filed within the condonable period. The reasons adduced for the delay that the Managing Director had fallen sick and the Senior Manager proceeded on leave without notice cannot be said to be unsatisfactory. These things do happen sometimes and there is nothing unusual about it. Therefore, the lower appellate authority should have condoned the delay which was within his power and should have decided the matter on merits. Such mechanical disposal of the appeal, for statistics purposes cannot be at the cost of justice. Therefore, we condone the delay and remand the matter to the lower appellate authority for decision on merits after giving reasonable opportunity to the appellant of being heard - Delay condoned.
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2015 (12) TMI 648
Violation of Section 40 and Section 51 of the Customs Act, 1962 - confiscation of the goods under Section 113 (g) and to impose penalty under Section 114(iii) - Held that:- exporter and CHA have no control over the goods, once the goods enter into the port of export. I also find that the matter is squarely covered by the decision of the Hon'ble Bombay High Court in the case of Kusters Calico Machinery Ltd. (2010 (3) TMI 474 - BOMBAY HIGH COURT), relied upon by the appellant. Accordingly, following the ratio of Kusters Calico Machinery Ltd. (supra), I set aside the impugned order - Decided in favour of assessee.
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2015 (12) TMI 647
Valuation of goods - Enhancement in value of goods - Held that:- Revenue in their memo of appeal have neither produced any evidence to show that excess payment was made by the importer or has also not disputed the fact of contemporaneous bills of entries. They have simply gone to the arithmetical calculations of value starting from the cost of the raw material. We note that the goods were Stock Lot goods and as such the method adopted by the Revenue, based upon the cost construction basis, cannot be appreciated. As such, we find no infirmity in the view adopted by Commissioner (Appeals). - Decided against Revenue.
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2015 (12) TMI 646
Confiscation of goods - Enhancement of value - Held that:- Appellant have taken a categorical stand that the goods were purchased on stock lot basis and at the transaction value reflected in the invoice. This fact is clear from the fact that the different cosmetic goods like Air freshners, lipsticks, perfumes, eye liner, mascara, etc. were of various brand names like Yodernia, Revelon, Dove, Lamani, Loreal, etc. Further, we also find that the Revenue has not adopted the Customs Valuation Rules for enhancing the value and instead have gone to do the market survey in India. Such market inquiries reflected the sale value of the products in India and as per the settled law cannot be adopted as the basis for enhancing the value or the imported goods. We also note that the cosmetics carry an expiry date and it is a matter of common knowledge that the same are disposed of by the sellers at a very low cost if the expiry is about to be reached. In any case, we find that the Revenue having not adopted the Valuation Rules sequential-wise and having not produced any evidence of contemporaneous nature to reflect upon the lower value of the imported goods, the adoption of market price cannot be held to be a method in accordance with law. As such, we find no justification in the impugned orders passed by the lower authorities. Accordingly, both the impugned orders are set aside. - Decided in favour of assessee.
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2015 (12) TMI 645
Determination of assessable value of the Ball Valve (Brass Bib Clock) - Held that:- There is virtually no evidence on record to indicate that the transaction value of the imported goods is not correct. Revenue has not bothered to collect any evidence to first reject the transaction value. In fact, the adjudicating authority has not even doubted the transaction value and has simplicitor adopted the assessable value, as opined by the Chartered Accountant - supplier of the goods has given a certificate saying that the goods were manufactured at their factory for various other customers, who did not take delivery and the same were sold as stock lot on “as is where is” terms without any guarantee. In such a scenario, the transaction value as reflected in the invoice issued by the foreign supplier has to be considered as the correct assessable value when Revenue has not produced any evidence to rebut the same. Accordingly, we set aside the impugned order - Decided in favour of assessee.
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Corporate Laws
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2015 (12) TMI 638
Winding up petition - petitioner has approached this court alleging that the company is indebted to the petitioner a sum of ₹ 4,69,42,986/- on account of outstanding dues payable for services provided by the petitioner for transportation of the company's equipments from one place to another in India - Held that:- Where a company has a bona fide dispute the petitioner cannot be regarded as a creditor of the company for the purposes of winding up. Bona fide dispute implies the existence of a substantial ground for the dispute raised. Where a debt upon which a petition is founded is a hotly contested debt and also doubtful, the company court should not entertain such a petition. This court will go into the causes of refusal of the company before coming to the conclusion whether the dispute is bona fide or not. Thus satisfied that the dispute raised by the company is a bona fide dispute and not some ingenious mask invented to deprive a creditor. And that the defence is not moonshine. The petitioner chose not to disclose the very important fact of dispute between the parties and the arbitration proceedings. The petitioner cannot be allowed to use the threat of winding up petition as a means of enforcing a company to pay a bona fide disputed debt. The petitioner chose to reduce this court as a debt collecting agency or means for bringing improper pressure on the company to pay the bona fide debts thereby abusing the jurisdiction of the company court. In the circumstances, the company petition requires to be dismissed with substantial cost.
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Service Tax
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2015 (12) TMI 682
Demand of service tax - lump sum contract - Man Power Recruitment or Supply Services - Held that:- Tata Motors Ltd. had agreed to pay consideration to the appellant based upon the number of pieces that would be manufactured by appellant in the factory premises of Tata Motors. We find that the issue is no more res Integra in as much, in case of Bavariya Enterprises Ltd. Tribunal based on laser of contract purchase orders indicated execution of lump sum work as understood by appellant and service recipients. The case is in hand, the appellant as well as the service recipients understood the agreement between them as the lump sum agreement and not for supply of manpower. We find that this bench in the case of Shriram Sao TVS Ltd. [2015 (4) TMI 38 - CESTAT MUMBAI], in a similar kind of service of lump sum contract for harvesting, loading and unloading of sugarcane is not manpower supply service - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 681
Condonation of delay - Delay of 29 days - Held that:- LAA dismissed appeal on limitation by applying the provisions of new Section 35 of the Central Excise Act where the period is reduced from 3 months to 60 days. As per pre-amended provisions of Section 35 (30 of Central Excise Act appeal shall be presented within 3 months from the date of receipt of order and Commissioner (Appeals) may if he is satisfied allow further period of 3 months. In the present case, appellant filed appeal on 12.10.2011 immediately after three months and it well within the powers of Commissioner (Appeals) with a delay of one day which is condoned. Therefore, we find that appeal has been filed before Commissioner (Appeals) is well within the time limit as per Section 35 of the Act during the relevant period as the OIO was dt.5.9.2011 and the amended provisions introduced w.e.f. 28.5.2012. Accordingly, we set aside the impugned order - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 680
Demand of service tax - marketing and distribution of recharge vouchers of BSNL - Held that:- show-cause notice dated 16.10.2008 was issued by invoking extended period for demand of service tax from 01.07.2003 to 31.03.2008. In our considered view, invocation of extended period in this case seems to be incorrect as the issue was being agitated before the judicial forum. Accordingly, we hold that the show-cause notice which invokes the extended period for demand of service tax from the appellant-assessee needs to be set aside and we do so. However, for the demand within the period of limitation from the date of issuance of show-cause notice we hold that the appellant-assessee is liable to pay the service tax liability along with interest. To that extent we reject the appeal filed by the appellant-assessee. - However, penalty imposed is set aside - Decided partly in favour of assessee.
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2015 (12) TMI 679
Demand of service tax - abatement of value under Notification 1/2006-ST dated 01.03.2006 - Held that:- grounds of appeal which has been taken by the Revenue before us indicates only an unsupported plea that the appellant had availed benefit of Notification 1/2006-ST and benefit of Notification 12/03-ST. There is no supporting evidence to indicate that the respondent had availed benefit of Notification 12/03-ST. We find that the respondent has followed the condition laid down by Notification 1/2006-ST inasmuch as there is no allegation in the show-cause notice that they had availed Cenvat credit on inputs or capital goods or input services. We also find that there is nothing on record to indicate that the respondent had claimed or issued invoices for the actual material supplied for the services rendered by them; in this case, installation and commissioning service. In the absence of any evidence that the respondent had claimed dual benefit of Notification 1/2006-ST and Notification 12/03-ST, we find that the Revenue's appeal fails. - Decided against Revenue.
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2015 (12) TMI 678
Waiver of pre deposit - Demand of service tax - whether retreading of tyers would amount to manufacturer so as to attract the excise liability or the same would amount to providing of service falling under the category of repair and maintenance so as to attract the service tax liability - Held that:- Apparently, it seems that in terms of the various decisions of the higher courts such an activity of retreading of old and used tyres would not amount to manufacture. If that be so, the activity would get covered under the service category of repair and maintenance - appellant’s turnover is around ₹ 1 crore and it cannot be said that it is financially difficult for them to deposit the amount in question. - Partial stay granted.
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2015 (12) TMI 677
Waiver of pre deposit - Cargo handling service - Held that:- Appellant should at least deposit the collected amount. The Hon'ble Rajasthan High Court's decision [2015 (6) TMI 110 - RAJASTHAN HIGH COURT] referred to by the learned advocate does not declare the law that in all the stay petitions filed prior to 06/08/2014, the direction to deposit should be limited to 10% of the confirmed demand of tax. The Hon'ble High Court only took note of the amended provisions and in that particular case reduced the amount of deposit to 10%. However there is no law declared by the Hon'ble High Court that in the stay petitions filed prior to 06/08/2014, the amount of deposit should be limited to 10%. Otherwise also, the said decision would not be applicable to the facts of the present case, inasmuch as the appellant had already collected the tax from the customers, and we are of the prima facie view that appellant should deposit ₹ 1.05 crores along with proportionate interest with the Revenue - Partial stay granted.
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2015 (12) TMI 676
Denial of CENVAT Credit - Various service - Held that:- Services were utilized for export of the goods - After considering the decisions of the Hon’ble Gujarat High Court [2014 (8) TMI 713 - GUJARAT HIGH COURT], Tribunal [2014 (11) TMI 579 - CESTAT AHMEDABAD] and Both Circular, I do not find any reason to interfere the order of the Commissioner (Appeals). - Decided against Revenue.
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2015 (12) TMI 675
Denial of CENVAT Credit - health insurance service - Nexus with input service - Held that:- There is no dispute about the fact that insurance service was availed by the assessee in March 2011, the consideration of the same was paid by the assessee in March 2011 itself and the credit was taken in March 2011. As such, the amended provisions, which were applicable from 1-4-2011 would not be applicable to the activities which have been completed prior to the said date. - there is no dispute about the fact that insurance service was availed by the assessee in March 2011, the consideration of the same was paid by the assessee in March 2011 itself and the credit was taken in March 2011. As such, the amended provisions, which were applicable from 1-4-2011 would not be applicable to the activities which have been completed prior to the said date. - Decided against Revenue.
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2015 (12) TMI 674
CENVAT Credit - GTA Service - Held that:- In the decision of the Larger Bench in the case of Panchmahal Steel Ltd. Vs. CCE&ST, Vadodara [2014 (4) TMI 490 - CESTAT AHMEDABAD] it has been held that CENVAT credit can be used for payment of service tax on GTA service. The decision of the Larger Bench clearly covers the issue. Since the CENVAT credit utilisation is held to be correct, there were no need for the payment by the assessee to make payments in cash subsequently and therefore interest is also not liable to be paid. - Decided in favour of assessee.
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2015 (12) TMI 673
Disallowance of CENVAT Creit - use of input services for taxable and trading activity - Recovery of tax u/s 73 - Held that:- Major activity of the appellant was sale of motor vehicles and providing services incidental to that. They have not maintained separate record for sale of vehicles as well as for providing authorized service station. As per discussion above, it has clearly come out that most of the input service credit taken by them related to the activities of the sale of vehicles. There are a few activities out of which some proportion of the service has been used for repairing or maintenance but it has come out that no separate record in this regard have been maintained. This matter has been examined by the Commissioner (appeal) in his order in detail at para 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10 and 5.11. It was also placed before the Bench that wrong availement of input service credit came to the notice of department only when the detailed audit of the Unit was undertaken. But for audit, wrong availement could not have been detected. - Decided against assessee.
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2015 (12) TMI 672
Denial of refund claim - Whether appellant is eligible to the refund of service tax paid up to the period 19.01.2012 - Held that:- Appellant claimed that his business was transferred to one Shri Narendra Jain (Prop.) in October 2010 but by mistake appellant paid service tax of ₹ 24,59,006/- for the period 03.2.2011 to 02.4.2011. New Service provider Shri Narendra Jain (Prop.) obtaining registration on 19.1.2012 - New registration was obtained by Shri Narendra Jain only with effect from 19.1.2012. Before this appellant was the registered unit and correctly paid the service tax and also filed required ST-3 returns for the relevant period. In view of the factual matrix the order passed by the first appellate authority, in rejecting the appeal of the appellant, is correct. - Decided in favour of Revenue.
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Central Excise
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2015 (12) TMI 671
Manufacture - activity of grading of diamonds which have been imported or received by them in respect of their colour, clarity, cut and their weight in carats. - second activity undertaken is that of inscription - Held that:- Applicant does not manufacture the diamonds in the sense that it does not chemically bring out the diamonds and it is only the natural diamonds with which the applicant deals. Therefore, even by way of common sense this cannot amount to a ‘manufacturing activity’. All that the applicant does is, besides it undertakes the activity of grading the diamonds, it also does some activity of inscription because of which the essential character of the diamonds does not change and it still remains the diamond. - none of these activities could amount to the manufacture of diamonds so as to invite the provisions of Central Excise Act. A contention was raised by Shri Jain that the activity of certification may invite some duty as it amounts to service. However, we clarify that we are not deciding that issue, since, we are not asked the question as to whether the certification of diamonds amounts to service or not in this application. - activity undertaken by the applicant does not amount to manufacture and, hence, will not attract the provisions of Central Excise - Appeal disposed of.
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2015 (12) TMI 670
Valuation - physician samples were given free of cost by the distributors and not by the manufacturer - Determination of 'transaction value' - Held that:- Assessee had put up the defence that since physician samples were not meant for sale by distributors but were to be given free of cost to the physicians, the assessee had charged lesser price. This statement of the assessee had not been doubted. The only reason in the Show Cause Notice given was that since the physician samples were given free of cost by the distributors and no price was charged, the case was not covered by the provisions of Section 4(1)(a) of the Act. This is clearly fallacious and wrong reason. The transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the Show Cause Notice is clearly founded on a wrong reason. The case would squarely be covered under the provisions of Section 4(1)(a) of the Act. In view thereof, the Central Excise Rules would not apply in the instant case. - decision dated 10.11.2006 rendered by the CESTAT depicts the correct position of law and rightly holds that the case would be covered by the provisions of Section 4(1)(a) of the Act and in view thereof Rule 6(b)(ii) of the Rules would not apply. - Decided against Revenue.
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2015 (12) TMI 669
Valuation - manufacture of items of furniture on job work basis - inclusion of cost of raw materials, job-charges paid to M/s. SJA, plus drawings and design charges for the furniture items - handicraft items or not - banafide belief - Extended period of limitation - Held that:- Assessees had taken a specific plea to the effect that they bona fide believed that the manufacture of wooden furniture manually by artisans/craftsmen were wholly exempt from payment of duty under Notification No. 76/86-CE. It was also pleaded that as early as in the year 1986 the assessees had sought opinion from an expert and it was clarified by the expert that such furniture items were exempt from payment of duty. A specific declaration to this effect was furnished with the Central Excise Department at New Delhi vide letter dated 16.07.1987 about the activity carried out by the assessees and on that basis, it was claimed that the said furniture items supplied by the assessees under the aforesaid contract to M/s. ITC Ltd. were exempt for payment of excise duty. Thus, insofar as the appellants are concerned, they had taken a particular stand in the declaration filed as early as on 16.07.1987 disclosing all relevant facts. However, the Central Excise Department at New Delhi did not take any action thereof. Issuance of show cause notice on 22.10.1996, after a long gap, would clearly be time barred and under the aforesaid circumstances, it is not a case where the proviso to Section 11A(1) of the Act could be invoked inasmuch as there was neither any misrepresentation nor any misstatement for concealment of relevant facts on part of the appellants. - Decided in favour of assessee.
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2015 (12) TMI 668
Valuation - inclusion of interest and gains arising out of advance received against supplies - Misdeclaration of value - Held that:- Commissioner once again reiterated the conclusion of his earlier order which compelled the assessee to approach the Customs, Excise and Service Tax Appellate Tribunal again challenging the order of the Commissioner. The finding of the Commissioner was that the huge amount of customers' booking advances were used to meet their working capital requirements as well as were partly invested in deposits/securities. On that basis, he concluded that the interest, dividends and capital gains from such investment enabled them to meet the working capital requirements which resulted in lowering their capital borrowings. The Tribunal, after re-examining the entire material that was produced before it by the assessee, noted that the overall effect of the deposit on the financial position of the company or its profitability had no direct relevance to the dispute. It found that for excise valuation, the relevant consideration was as to whether the deposits had the effect of lowering the sale prices of the motorcycles or whether the sale prices were normal sale prices unaffected by the deposits. It is clear that each and every aspect of the issue is examined, on the basis of which finding is arrived at that the price of the motorcycle manufactured by it were market driven and it did not follow a cost of production plus reasonable profit pricing policy. - These are finding of facts which are arrived on the analysis of the evidence produced before it and do not call for any interference - Decided against Revenue.
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2015 (12) TMI 667
Valuation - sale of soft drink through unit II - unit II is doing printing on un-printed bottles - Determination of assessable value under Rule 6(b)(ii) - Held that:- Since the matter is back to the Commissioner for fresh consideration, it may not be necessary to interfere with the order of the Tribunal insofar as it directs remand of the matter. However, the grievance of the Department in the present appeal is as it is argued by Mr. Yashank Adhyaru, learned senior counsel for the appellant/Department that the Tribunal has restricted the period in which the issue is to be decided from January, 1997 to October, 1997 whereas the show cause notice covers the period from January, 1995 to October, 1997. Price list to which reference is made related to Rishikesh Unit and not to Pune Unit. Therefore, we modify the order of the Tribunal with clarification that the period would be the entire period that was the subject matter of show cause notice i.e. from January, 1995 to October, 1997. At the same time, we also clarify that it would be open to the assessee to argue before the Commissioner that it was not permissible for the Department to invoke the larger period of limitation as there was no suppression or misstatement on the part of the assessee. If such a plea is raised, it would be for the Commissioner to take the view thereon with reference to the record and decide the same in accordance with law. - Appeal disposed of.
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2015 (12) TMI 666
Manufacture - Ready Mix Concrete - RMC or MC - Held that:- Respondent had taken a specific plea before the Adjudicating Authority that the produce in question is not RMC but only 'Mix Concrete' (MC). This contention was rejected by the Adjudicating Authority in Order-in-Original passed by it. The assessee had challenged those findings before the Tribunal. However, the Tribunal did not go into this aspect as it proceeded on the basis that even if it was RMC produced at site, the same shall be entitled to exemption under the requisite Notification. In view thereof, the matter needs to be remanded back to the Tribunal to decide the aforesaid factual aspect viz. whether the produce in question is RMC manufactured at site or is it MC as contended by the assessee. - assessee is to be given a chance to contest the finding of the Adjudicating Authority, once such a stand is taken before the Tribunal and there is no finding thereon recorded by the Tribunal. However, we make it clear that it will always be open to the appellant/Department to justify the order passed by the Adjudicating Authority on the basis of material which is relied upon by the Adjudicating Authority including the statements of the officials of the assessee and effect thereof. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 665
Manufacture - classification - fish, prawns, and other prepared food items packed in polythene pouches with brand name 'SUMERU' - classifiable under Chapter 16 or Chapter 3 - Held that:- The Tribunal vide its final order dated 17.10.2006 while allowing the appeal of the respondents held that on the basis of expert evidence and opinion, the products have not gone under any process. Therefore, the said products should be classified under Chapter 3 and not under Chapter 16. Emphasis was laid on the difference between two expression 'preserve' and 'prepared' i.e. prepare is more towards edible and preserve may not related to edible - conclusion is primarily rested on opinion of the expert bodies which include the Director of Marine Products Export Development Authority as well as the Director of Central Institute of Fisheries Technology. It is also pertinent to mention that the Department did not even cross-examine the experts who had given the opinion in question on the basis of which goods have rightly been classified under Chapter 3 by the Tribunal - Decided against Revenue.
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2015 (12) TMI 664
Validity of Notification No. 10/2004 CE(NT) dated 02.06.2004 - Prospective or retrospective amendment - Amendment relating to export procedure to prevent double benefit - The Amendment Notification No. 10/2004 dated 02.06.2004 has been held to be bad in law by the High Court [2005 (11) TMI 440 - GUJARAT HIGH COURT] - Held that:- Most of the demand in the instant case pertains to the period prior to the issuance of the said notification and so on this ground itself, the show cause notice pertaining to that period would be bad in law - subject matter has become almost tax neutral, it is not necessary to entertain this appeal - Decided against Revenue.
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2015 (12) TMI 663
Waiver of penalty and interest - penalties under Section 11AC - Invocation of extended period of limitation - Held that:- This is the case where the appellants have cleared the cotton yarn dyed woven fabrics without payment of excise duty whereas they collected the Central Excise duty from the customers and the same was not remitted to government account. I find that the adjudicating authority confirmed the demand of ₹ 34,72,714/- and appropriated the amount of ₹ 13,11,900/- and imposed equal penalty under Section 11Ac and also equal penalty under rule 25 on the appellants as well as on the partner of the company. Whereas the LAA in his findings considered the appellants plea and reduced the duty amount based on verification report received from the adjudicating authority - As regards invoking extended period intention to evade payment of duty which was already collected but not remitted to the government is suppression of facts has been clearly established and the same was admitted by the appellant and paid the duty amount - reduced demand ordered by LAA and consequent Section 11AC penalty and interest is liable to be upheld. Therefore, I do not find any infirmity in the impugned order in so far as the demand and Section 11AC penalty and demand of interest - Decided against assessee.
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2015 (12) TMI 662
CENVAT Credit - credit in respect of plastic crates, trolleys, welding table and welding chair - denial of CENVAT credit on the ground that the material on which credit was availed are neither inputs nor capital goods - Held that:- On going through the photographs produced by the learned counsel it is observed that all the items i.e. plastic crates is used for handling of the material, such as semi-finished goods in the factory of the appellant. The movement of semi-finished goods during the process of manufacturing is part of the manufacturing process of the final products of the appellant. The judgment of the larger bench of this Tribunal in Banco Products (India) Ltd. (2009 (2) TMI 101 - CESTAT AHMEDABAD) is squarely applicable in respect of CENVAT credit on the plastic crates. - trolley is specially designed to keep the machine parts which is used in the manufacture of their final products. The trolley is used as a material handling equipment within the factory during the process of manufacturing. The issue of eligibility to CENVAT credit on trolley has been dealt by the Tribunal in the case of Shinhan Plasto (I) Pvt. Ltd. (2008 (2) TMI 157 - CESTAT, CHENNAI) - trolley is used in or in relation to the manufacturing process of final products. Therefore, in my considered view, CENVAT credit on trolley is rightly available. - CENVAT credit in respect of welding table and welding chair, in my considered view, is rightly admissible. - Decided in favour of assessee.
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2015 (12) TMI 661
Excess stock found during stock taking - Confiscation of goods - Imposition of redemption fine - Penalty under Rule 26 - Held that:- Whatsoever method was adopted by the Central Excise officers and as a result variations of stock was found. If the appellant is not satisfied with method of stock taking, they had liberty to dispute method and would have suggested other method of stock taking. However the appellant has not raised any such dispute. Therefore in the facts and circumstances of the case, the excess stock found in the stock verification could not be disputed merely on verbal explanation. The appellant during the seizure of the goods could have represented for re-checking of the stock, which was not opted by the appellant. - excess stock was lying admittedly in the factory and was not cleared from the factory, therefore confirmation of demand and consequential penalty under Section 11AC is not correct. However the goods are very much liable for excise duty. If the same have already been cleared, the said duty shall stand adjusted towards the duty liability of the said goods and if the goods are still lying in the factory as and when the goods is cleared this duty shall be treated as payment of duty on the clearance of the said goods. As regard the penalty, I observed that excise duty at the time of seizure of the goods was not payable, consequently penalty under Section 11AC also wrongly imposed. However since goods were confiscated and I uphold the confiscation, penalty towards confiscation is imposable. - However, redemption fine and penalty is reduced - Decided partly in favour of assessee.
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2015 (12) TMI 660
Waiver of pre deposit - Clandestine manufacture and removal of goods - Shortage of goods found - Held that:- At night of 2nd and 3rd October, 2012, when the Jurisdictional Central Excise Officers visited the unit along with two punch witnesses at 00.30 hours, the factory was found to be working inasmuch as the generator was running. The fact that on the arrival of the Central Excise Officers, the labourers including the authorized signatory switched off the generator and running away taking advantage of the darkness and that subsequently when the officers switched on the generator and the lights, and inspected the factory, they found that seals of the machines had been broken and the same were being operated, as also not disputed. It is also a fact that when the stock taking of the stock of the finished goods was conducted, there was huge shortage in the stock of the finished cigarettes on which the duty involved was ₹ 62,42,566/-. The proprietor Shri Sudhir Kapoor who came in the morning also accepted the shortage. In these circumstances, we are of the prima facie view that even if the relied upon documents are not supplied, the non-supply of relied upon documents has not vitiated the proceedings. - this is not the case of total waiver - Partial stay granted.
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2015 (12) TMI 659
Area based exemption under Notification NO.50/03-CE dt.10.6.03 at new premises after shifting of factory - no production was undertaken by the appellant at new address on or before 31.3.10 - Held that:- It is seen that change of address has been intimated to district industries centre and district industries centre confirmed the change of address. When the information submitted by the appellant in respect of department’s letter dt.9.7.10, and the documents furnished by the appellant are not disputed, chartered engineer’s certificate has certified the existence of machinery and plant at the new premises and also the installed capacity, in our view, there is absolutely no ground to treat the appellant unit as having commenced their commercial production in July, 2010 and deny the exemption on this basis. Even in terms of Board’s circular dated 17.2.12, an eligible unit physically shifting to new location would be eligible for exemption under Notification No.50/03-CE for residual period of exemption. When the department does not dispute that the appellant had commenced commercial production with effect from 30.3.10 from their old unit and has accepted their Form A return for period from April, 2010 to June, 2010 wherein certain production of LED lanterns has been declared, when the district industries centre has confirmed the shifting of factory to the new location and when the installation of plan and machinery at the new premises has been certified by chartered engineer and besides this, there is evidence of transportation of machinery to the new location, in our view, there is no justification to treat the appellant unit as having commenced commercial production after 31/3/10 and denying the exemption on this basis. Therefore, the impugned order is not sustainable. The same is set aside. - Decided in favour of assessee.
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2015 (12) TMI 658
Valuation - Clearances of yarn for captive consumption within the factory - Bar of limitation - Penalty u/s 11AC - Held that:- Even if it is held that the yarn sold to independent buyers was that which had been manufactured by the appellant in their factory and accordingly in terms of the Larger Bench judgment of the Tribunal in the case of Ispat Industries Limited Vs. CCE (2007 (2) TMI 5 - CESTAT, MUMBAI), it is held that the yarn cleared for captive use must be valued at the price at which the same was being sold to independent buyers, the duty demand would not survive as in the circumstances of the case, the longer limitation period of 5 years under proviso to section 11A(1) is not invokable, as during the period of dispute not only there was conflicting judgments of the Tribunal on the issues, till this issue was resolved by the Larger Bench of the Tribunal in the case of Ispat Industries Limited (supra), even the Board s Circular dated 30/06/2000 clarified that in the cases where the goods manufactured by an assessee are cleared for captive use as well as are sold to independent buyers, in respect of the goods cleared for the captive use, the value would be determined under Rule 8 of the Central Excise Valuation Rules, 2000 Extended period of limitation - entire duty demand for the period from September, 2000 to March, 2003 raised vide show cause notice dated 4/10/2005 is time barred. The impugned order confirming the duty demand of ₹ 47,61,675/- along with interest and imposed equivalent penalty under section 11AC is therefore, not sustainable and is set aside and to this extent the appeal is allowed. - Decided in favour of assessee.
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2015 (12) TMI 652
Area Based Exemption - Declaration intending the availment the exemption notification 50/2003 was filed after 31-3-2010 - Held that:- Revenue further relied on the decision of Hon’ble Supreme Court in the case of CCE, Trichy v. Rukmani Pakkwell Traders [2004 (2) TMI 69 - SUPREME COURT OF INDIA]. No doubt filing of declaration is a condition precedent. But the appellant in the present case did not fail to file the declaration as is apparent from page 48 of appeal folder. Revenue also relied on the decision of apex court in the case of Indian Aluminium Company Ltd. v. Thane Municipal Corporation [1991 (9) TMI 162 - SUPREME COURT OF INDIA]. The ratio thereon is that the procedure prescribed cannot be given go-bye. We have no difference to such proposition. - present case is plain and simple and is governed by first principle of eligibility followed by procedural condition fulfilled by communication dated 30-3-2010 - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (12) TMI 644
Waiver of pre deposit - Tribunal erred in granting stay against recovery till the disposal of appeal by the first appellate authority - Held that:- Tribunal, it has considered the merits of the case and has found as a matter of fact that a strong prima facie case has been made out in favour of the assessee. It is in the light of the prima facie view expressed by the Tribunal viz., that its earlier decision in the case of M/s Vardan Petrochemical (P) Ltd. v. State of Gujarat would be applicable in the facts of the present case, that the Tribunal has thought it fit to restore the matter to the file of the Deputy Commissioner for the purpose of deciding the same on merits. - owers to direct payment of pre- deposit are discretionary powers and such discretion is required to be exercised by the concerned authority in a reasonable manner. Having regard to the finding recorded by the Tribunal whereby, it has recorded a prima facie view in favour of the assessee, it cannot be said that the discretion exercised by it in refusing the amount of pre-deposit is, in any manner, unreasonable, or arbitrary so as to give rise to any question of law. - Decided against Revenue.
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2015 (12) TMI 643
Levy of penalty under Section 10-A of the Central Sales Tax Act - Writ petition - violation of the principles of natural justice - Held that:- Court will not normally entertain writ petitions against orders, in respect of which an effective, alternative remedy is provided by the statute. But this rule is not without exceptions. In cases where there is gross violation of the principles of natural justice, and in cases where the very jurisdiction of the officer is questioned, this Court is not powerless to interfere with the orders so passed. Therefore these types of cases have to be examined with reference to the nature of the grievance of the assessees/dealers and the extent to which they are able to convince about the validity of such grievance - Additional Government Pleader produced the xerox copies of the certificate of registration issued to the appellant. The certificate of registration shows that the wooden strips, wooden insert cap, grey board, rose board, PVC sheeting, stamping foil etc., are also included in the certificate of registration issued to the appellant. Therefore, straight-away, the very basis on which the proposals were made under Section 10-A, is found to be shallow - Even the exports covered by Form-H, have not been taken note of by the assessing officer. They are also packing materials, which were covered against Form-H - levy of penalty set aside - Decided in favour of assessee.
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2015 (12) TMI 642
Validity of impugned order - violation of principle of natural justice - Held that:- no opportunity has been given to the petitioner and there is a violation of principles of natural justice. The impugned orders are set aside and the matter is remitted to the original authority. Accordingly, these writ petitions are allowed with a direction that the petitioner shall appear before the authority concerned on 18.02.2015 and shall make his submissions/objections. Based on the objections, which is going to be submitted by the petitioner, the authorities may pass appropriate orders, on merits, not being influenced by this order. In case, the petitioner is failed to avail the opportunity on 18.02.2015 for personal hearing for the reason whatsoever, the authorities are empowered to pass fresh orders, on merits and in accordance with law. - Decided in favour of assessee.
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2015 (12) TMI 641
Demand of advance tax in lieu of liability with respect to VAT - Assessee's TDS already deducted - Held that:- Government is in the process of clarifying that a person whose TDS is being deducted cannot be called upon to pay advance tax in lieu of liability with respect to VAT. - petition has been rendered infructuous - Petition disposed of.
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2015 (12) TMI 640
Claim of interest for delayed Refund - revenue contended that in the case at hand no excess deposit of tax was made by the assessee, but he was held entitled to a refund by the assessing officer only on account of the benefit of set-off. - Held that:- Section 23(2) of the Act of 1954 entitles an assessee to refund of excess tax paid to the Department along with interest at 15 per cent from the date of excess amounts obtain with the Department till date of payment. It is obvious that the section in issue incorporates a principle of equity. Money only has time value, i.e., the value is diluted with time. Interest compensates for dilution of money value. If the contention of the OIC were to be upheld, the assessee's entitlement to refund for reasons of set-off he would be made to bleed with passage of time and be left with no recourse. Such an interpretation would also confer arbitrary powers in the hands of the Department to hold back without limit money due to an assessee as refund. In the circumstances, I am not inclined to narrowly read section 23(2) to exclude payment of interest at the rate prescribed thereunder on excess tax in deposit with the Department arrived at by the assessing office for reason of the assessee's right to set-off and which amount was admittedly found refundable to the assessee. - There is no illegality or perversity in the impugned order passed by the tax Board. - Decided against Revenue.
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2015 (12) TMI 639
Benefit of tax under the Sales Tax Incentive Scheme for Industries, 1987 (Scheme) - Held that:- The impugned judgment dated January 31, 2005 passed by the Board is on the face of it contrary to the judgment of this court in the case of Om Shiv Shakthi Cement Private Ltd. [1988 (9) TMI 326 - RAJASTHAN HIGH COURT] and is therefore liable to be set aside. It is so directed. It is further directed that the eligibility certificate issued to respondent-assessee under the Scheme of 1987 would be effective starting the date of application, i.e., April 24, 1994. - Decided in favour of Appellant.
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Indian Laws
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2015 (12) TMI 637
Dishonoring of cheque - authority to file the complaint - Commission of an offence punishable under Section 138 of the Negotiable Instruments Act - whether the order of acquittal be set aside and respondent no.1 be convicted? - Held that:- All the cheques were favouring 'M/s. Bell Marshall Tele System Limited.' The complainant's case is that M/s. Bell Marshall Tele System Limited is a Company incorporated under the Companies Act. Company, being a juristic person, has a separate and distinct identity, apart from its directors. The payee was the company. If the complaint, as filed, is seen, it does not appear to have been filed by the Company. The complaint has been filed by the complainant in his name, and though he has given his description as the 'Managing Director of M/s. Bell Marshall Tele System Limited', it is difficult to spell out from the complaint, that the same had been filed by the said Company. From the demand notice that the same has been made on behalf of the Company M/s. Bell Marshall Tele System Limited. When the Company was aware of this position, that being payee, the Company itself was required to file the complaint, why the complaint was not filed in the name of the Company, is not clear. It is difficult to hold that this is simply an oversight or a mistake, and the possibility that the complainant wanted to keep this aspect of the matter rather vague, cannot be ruled out. This is particularly so, because, it does not appear to be the business of the Company to advance loans on interest. As per the case made out in the complaint, the transaction was a loan transaction. It is not clear whether the Company was authorized to do the business of advancing loan with interest. The possibility, of the complaint not having been filed in the name of the Company keeping this aspect in mind, therefore, cannot be ruled out. Though the entire reasoning of the learned Magistrate cannot be accepted, in the ultimate analysis, it must be held that, the complaint had not been filed by the payee or the holder in due course of the cheques in question. Section 142 of the N.I. Act leaves no manner of doubt that a complaint in respect of an offence punishable under Section 138 thereof, would be maintainable only if it is filed by a payee or the holder in due course. In this view of the matter, do not wish to interfere with the finding of acquittal recorded by the learned Magistrate.
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2015 (12) TMI 636
Non availability of Rajasthan Evaluation Service Rules, 1979 - Held that:- It is evident from the perusal of the reply and submissions of the learned Advocate General that all the Rules framed by the State of Rajasthan under Article 309 of Constitution of India have not been uploaded on the website of the Government and public authorities. If the rules, regulations and instructions issued by Government and public authorities are not made available to the public at large, it would defeat the purpose of the enactment of the Right to Information Act which is meant to bring transparency in the functioning of the Government and public authorities - As and when any amendment is carried out in the Rules, the same shall also be incorporated in the Rules made available on the website so that a person requiring a copy of the Rules can have the updated version. The Rules/Regulations/Instructions issued by various departments and public authorities shall also be uploaded on the website within the aforesaid period. The Chief Secretary of the State of Rajasthan shall also call a meeting of the Heads of the Boards/Corporations to direct them to do the same exercise namely, uploading of Rules/Regulations/Instructions issued by them on their concerned websites within four months. - all these Rules/Instructions/ Regulations shall also be published in the Government gazette and be made available for sale at nominal rate to public at all the District headquarters within a period of four months. - Petition disposed of.
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