Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 17, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
TMI Short Notes
News
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Text of Address by Ms. Nirmala Sitharaman Minister of State (Independent Charge) for Commerce and Industry of India at the Plenary Session of the 10th Ministerial Conference of the WTO on 16 December 2015
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Year End Review: Highlights of the Acheivements of the Department of Economic Affairs, Ministry of Finance
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, Rbd Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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RBI Reference Rate for US $
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Last Date for December 2015 installment of Advance Tax for taxpayers in Tamil Nadu and Puducherry extended till 31st December, 2015
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Purchase/ sale of any goods or services (including jewellery / bullion) exceeding ₹ 2 lakh per transaction will require quoting of PAN - List of various activities where PAN is mandatory and comparison with old provision - Rules regarding quoting of PAN for specified transactions amended
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CBDT takes various significant decisions in last three months for providing better taxpayer services, improving ease of doing business and reducing the burden of compliance on the tax payer
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CBDT takes Initiatives for reducing Tax Litigation as a part of its initiatives to reduce grievances of the taxpayers
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Taxability of income - Whether activities carried on by the Applicant, which is a Singapore based company and a non-resident, can be held to have earned any income taxable in India from its activities of execution of “Installation Project” ? - Held No - AAR
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TDS u/s 195 - The Supreme Court has clearly held that the provisions relating to TDS would apply only to those sums which are chargeable to tax under the Income Tax Act and also has clearly held that in a transaction of this nature, the assessee was entitled to take a plea that there arises no tax liability and therefore, the provisions of Sec. 195 do not get attracted - HC
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Valuation of property - Adoption of State P.W.D. rates or the Central P.W.D. - Tribunal was right in directing the Assessing Officer to adopt the State P.W.D. rates on the ground that the building is located in interior Tamil Nadu - HC
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Method of accounting of commission expenses on accrual basis - The payment of commission accrued only on realization of sale value and it is to be allowed when the realization of sale value which is in compliance with the agreement cited supra and disallowance is based on the above agreement brought on record by the authorities and hence, we do not find any infirmity in the orders of the authorities below, which is confirmed. - HC
Customs
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Re-determination of value under Rule 8 of Customs Valuation Rules, 1988 - A copy of the market inquiry report is available on record which we have perused. The said market inquiry report is not signed by anyone including the officer of the Customs and the representative of the respondent. Therefore, the same cannot be accepted as a valid piece of evidence - AT
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Denial of refund claim - Unjust enrichment - It is a settled position of law that, if the amount for which refund is sought for, has not been booked as an expenditure in the profit and loss account and shown in the asset side of the balance sheet as receivable, it is sufficient evidence that the incidence of duty has not been passed on - AT
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Valuation - Undervaluation of goods - The appellant having produced the invoice, in support of its declared value, has done his part of the duty. If the Revenue is not happy with the said declared transaction value, it is they who have to produce the evidence. There being none in the present case, we find no reasons to enhance the assessable value. - AT
Indian Laws
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Criminal Complaint under Sections 138 of Negotiable Instruments Act, 1881 - No merit in this petition. This petition amounts to gross abuse and misuse of process of law. The petitioners have succeeded in delaying the complaint before the Metropolitan Magistrate for more than four years. - HC
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Section 142(2)(a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015, vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction of the Court, where the cheque is delivered for collection - SC
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Purchase/ sale of any goods or services (including jewellery / bullion) exceeding ₹ 2 lakh per transaction will require quoting of PAN - List of various activities where PAN is mandatory and comparison with old provisions
Service Tax
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Denial of CENVAT Credit - A case for demand of CENVAT credit got converted to a claim for refund and was allowed by the Commissioner (A) - Since the Order-in-Appeal has not considered the subject correctly, the impugned order is set aside - AT
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Cenvat credit - Cash management including transport of cash to and from the currency chest is thus relatable to providing banking and financial services and the services (security services and rent-a-cab service), hiring security vans are clearly required for such cash management/transfer and therefore, they are clearly within the ambit of “input services” - AT
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Penalty u/s 76 - Adjudicating authority was correct in not imposing any penalty as there being no invocation of any provisions of imposition of penalties for wrong availment of CENVAT Credit in the show cause notice - AT
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Job Work versus Manpower supply services - CBEC Clarified the issue with regard to services received by apparel exporters in relation to fabrication of garments - Circular
Central Excise
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Demand of interest on reversal of CENVAT Credit - appellant could not have acted any other way than the way they did. In the circumstances, holding that credit was not admissible and was taken without eligibility and therefore asking them to pay interest was not correct. - HC
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Validity of tribunal order - The contentions of the revenue were not even recorded and no reason for dismissing the appeal filed by the revenue has been mentioned. - order of the Tribunal is devoid of merit, as it does not assign any reason for allowing the appeal of the assessee - HC
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Refund claim - amount was deposited willingly and voluntarily during the course of investigation - refund was rejected as Refund application is premature - in absence of determination of any outstanding liability, the amount paid by the respondent cannot be retained by the Revenue - AT
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As per Rule 3 of the Cenvat Credit Rules 2004 whatever input / capital goods have been received by the respondent in their factory they are entitled to take Cenvat Credit, it is immaterial that whether the impugned goods attract duty or not, when there is no dispute that these goods have suffered duty. - AT
VAT
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Disallowance of exemption on second interstate Sales - requirement under the statutory prescription is that an assessee should file E1 and C declaration forms. This has been done admittedly by the revision petitioner. Therefore, an obligation, which is not cast upon the assessee under the statutory prescription contained in Section 6(2) of the CST Act, 1956 cannot be imposed upon the revision petitioner by the Tribunal - HC
Case Laws:
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Income Tax
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2015 (12) TMI 843
Claim of writing off of bad debts - CIT(A) allowed the claim - main contention of the Department is that the assessee has written off the debts of Kinetic Motor Co. Ltd. a group concern, to reduce the profits of the assessee company and thereby reducing the tax liability - Held that:- A perusal of the facts clearly shows that Kinetic Motor Co. Ltd. was in financial distress and it could pay only part of its debts. Since, the assessee in its books of account had written off bad debts, the assessee was not required to establish that debts were in fact irrecoverable. The Hon'ble Supreme Court of India in the case of TRF Limited Vs. CIT (2010 (2) TMI 211 - SUPREME COURT ) has held that after the amendment of section 36(1)(vii) of the Act w.e.f. 1st April,1989 it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Both the companies i.e. the assessee as well as Kinetic Motor Co. Ltd. are separate legal entities and the assessee have been able to show that Kinetic Motor Co. Ltd. is a loss making company. Thus, we reject the contention of the ld. DR that the assessee and the debtor company are the part of same group, writing off of bad debts is a colourable device to set off the profits of one group company from the loss of other group companies being devoid of merit. - Decided against revenue
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2015 (12) TMI 842
Exclusion of excise duty and sales tax in the total turnover while computing deduction u/s 80HHC - Held that:- This issue is now covered, in favour of the assessee, by Hon’ble Supreme Court’s judgement in the case of CIT vs. Laxmi Machine Works (2007 (4) TMI 202 - SUPREME Court). - Decided against revenue. Proportionate allocation of expenses - CIT(A) directing that apart from indirect expense already considered by the assessee for proportionate allocation, only auditor’s expenses need to be allocated proportionately and directing the A.O. to rework the indirect expenses for export of trading goods - Held that:- This issue is also now covered, in favour of the assessee, by order in assessee’s own case for the assessment year 2001-02. - Decided against revenue. Disallowance of excess claim of depreciation - reducing the foreign exchange fluctuation gain from the WDV of plant and machinery in view of the provisions of section 43(1) - CIT(A) deleted the addition - Held that:- As learned CIT(A) has rightly held, the provisions of section 43A of the Act come into play only when the asset in question is acquired from outside India whereas, as is the undisputed position on the facts of this case, the related plant and machinery was “indigenous”. There is a categorical finding to that effect by the Assessing Officer himself. As such, the provisions of section 43A of the Act do not come into play at all. Learned Departmental Representative could not point out any other statutory provision under which impugned adjustment could have been made. In view of these discussions, we see no reasons to disturb the relief granted by the ld. CIT(A). We approve the same and decline to interfere in the matter. - Decided against revenue. Depreciation on computer software - Held that:- This issue is rendered infructuous as the matter has been decided , in favour of the assessee, in the case of DCIT vs. Icon Data Management Limited [2012 (11) TMI 1096 - ITAT AHMEDABAD]- Decided against revenue.
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2015 (12) TMI 841
Addition made u/s.2(22)(e) - CIT(A) deleted the addition - Held that:- Not inclined to agree with the quantum of addition made by the Id.A.O. He has taken accumulated profits of M/s. K.V. Fashions Pvt. Ltd. as on 31.3.2009. Perusal of copy of account of M/s. K.V. Fashions Pvt. Ltd. in the books of the appellant i.e. M/s. Kamal Process reveals that the appellant has received the last installment of ₹ 13,00,000/- on 23.10.2008. As per the provisions of sec.2(22)(e) the accumulated profits for the purpose of 2(22)(e) is to be taken as on 23.10.2008 and not as on 31.3.2009 as adopted by the Id. A.O. The facts available on record further indicate that M/s. K.V. Fashions Pvt. Ltd. started its business from 1.10.2008. During the year under consideration M/s. K.V. Fashions Pvt. Ltd. has earned a profit of ₹ 2,25,678/-. This way it can be said that M/s. K.V. Fashions has earned a monthly profit of ₹ 37,613/- (Rs.2,25,678 / 6). In view of these facts, it can be said that M/s. K.V. Fashions Pvt. Ltd. was having accumulated profit of ₹ 37,613/- at the end of October, 2008. This way the accumulated profit as on 23.10.08 can at the most be taken at ₹ 37,613/-. In view of above facts, I hold that M/s. K.V. Fashions Pvt. Ltd. was having accumulated profit of ₹ 37,613/- at the date of payment of loan of ₹ 13,00,000/- on 23.10.2008 and accumulated profits to the extent of ₹ 37,613/- can only be taxed as per the provisions of sec.2(22)(e). Accordingly, addition to the extent of ₹ 37,613/- is confirmed. The appellant will get a relief of ₹ 1,88,065/- (Rs. 2,25,678 - 37,613). - Decided against revenue. Disallowance of interest on partner’s capital as well as secured and unsecured loans - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding in para-4.7 of his order that the assessee has got huge interest-free funds of ₹ 5,12,26,212/- [Rs.4,84,86,738/- as sundry creditors, ₹ 11,63,551/- as advances from customers and ₹ 15,75,923/- as unpaid expense] during the year under consideration. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any contrary material on record. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. - Decided against revenue. Rejection of book of account - Held that:- CIT(A) has not upheld the book of account on the ground that during the course of assessment proceedings the assessee has furnished details of sales and purchase, quantitative monthly summary of grey cloth and finished cloth sales. The details of income and expenditure were also available on record. The AO has not found any specific details either in the book of accounts or in the details furnished by the appellant. The ld.CIT(A) observed that the AO has not found any specific details either in the book of accounts or in the details furnished by the assessee. The ld.CIT(A) relied on the judgement of CIT vs. Vikram Plastic (1998 (8) TMI 43 - GUJARAT High Court). The AO has proceeded to reject the book of accounts on the ground that the yield shown by the assessee was not correct since in the subsequent year, the assessee has shown yield at 96.63% for AY 2010-11. We find that the AO has noted the fact that the certificate dated 12/11/2011 was given to the assessee by one Shri G.G.Shroff, B.Sc. (Hons) M.Sc. Tech. (Bom.). The assessee has also enclosed the test report dated 8/12/2011 of Ahmedabad Textile Industries Research Association (ATIRA). The AO has not conducted any enquiry on the facts given by the assessee and, therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld.- Decided against revenue. Addition made on account of suppression of production - CIT(A) deleted the addition - Held that:- The cost of suppressed production at the rate of ₹ 211.9 per meter as adopted by the A.O. is apparently wrong. The facts available on records indicate that the appellant manufactured 7,77,184 mtrs of cloth on his own account. This cloth was sold for a sale consideration of ₹ 1,86,31,031/-. This way the average selling price of cloth manufactured by the appellant works out to ₹ 23.96 per meter (18631031 / 777184). Thus the cost of production of cloth cannot be more than ₹ 23.96 per meter. It is seen that the A.O. has taken cost of production at ₹ 17,39,12,483 [cost of raw material of ₹ 12,56,95,265/- + direct manufacturing expenses of ₹ 4,82,17,218/-]. These expenses include, expenses incurred on job work also. Since, in the case of job work, cloth is not produced, considering these expenses for the purposes of suppression of production has given an erroneous figure. These facts, clearly indicate that the A.O. had adopted erroneous figures for working out the value of suppression which has resulted into disproportionate or unrealistic value of suppression - Decided against revenue. Addition made on account of fall in G.P. Ratio - CIT(A) deleted the addition - Held that:- AO himself has stated in his order that since the addition in respect of suppression of production and disallowance of interest u/s.36(1)(iii) of the Act has been made, therefore the ground raised is ill-conceived. We find that the AO, however, proceeded to make the addition of ₹ 24,33,112/- and decided not to make separate addition in respect of fall in GP rate. Therefore, this ground is not arising out of the assessment order and, hence, rejected. - Decided against revenue.
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2015 (12) TMI 840
Taxability of income - Whether activities carried on by the Applicant, which is a Singapore based company and a non-resident as per provisions of section 6(3) the Applicant can be held to have earned any income taxable in India from its activities of execution of “Installation Project” ? - Held that:- Since the project executed by the applicant in India for Brahmaputra continued only for 178 days in a fiscal year and as the duration of the project is less than 183 days in a fiscal year, Permanent Establishment of the applicant cannot be constituted in India for the FY 2012-13 as per the provisions of Article 5.3 of the India-Singapore DTAA. Hence, the business profits accruing or arising to the applicant by way of the execution of the project under reference is taxable only in the country where the applicant is a resident, as per Article 7.1 of India-Singapore DTAA. In view of this positive above response by the department, it is held that the income earned shall not be taxable in India. On this basis, the application is directed to be disposed of.
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2015 (12) TMI 839
Deductions under Sections 80-IB and 80HHC - whether Tribunal is justified in holding that the deduction u/s 80-HHC and 80-IB on the same figure of profit without reducing deduction allowed u/s 80-HHC ? - revision u/s 263 - Held that:- It is not a case where the assessment order is based on incorrect assumption of fact. We also find that it is not a case where the Assessing officer has not applied its mind to the provision of Section 80-IB (13) read with Section 80-IA(9) of the Act. The Assessing Officer after considering the matter in detail has passed an assessment order by applying its mind. The Assessing officer had allowed the deduction under Sections 80 HHC and under Section 80-IB of the Act to the extent of the amount of profits and gains as contemplated under Section 80-IA(9) of the Act. The question as to whether the deduction under Section 80HHC was to be computed after reducing the deduction under Section 80-IB of the Act from the profits and gains is a legal consideration. The Assessing Officer allowed the deduction in terms of Section 80 IA(9) of the Act and, therefore, it cannot be said that the Assessing Officer had not applied its mind and had failed to make an enquiry. We are of the view that there was no material to indicate that the Assessing Officer had not applied its mind to the provisions of Section 80IB(13) of the Act and Section 80IA(9) of the Act nor we find that the Assessing Officer had passed the order without application of mind or the assessment order was based on incorrect application of law. The assessment order, on the other hand, was passed under Section 143(3) of the Act by the Assessing Officer on applying its mind and after due discussion and enquiry. From the aforesaid discussion, it is apparent that the expression "prejudicial to the interests of revenue" appearing in Section 263 of the Act has to be read in conjunction with "erroneous" and that every loss of revenue as a consequence of the assessment order could not be treated as prejudicial to the interest of the revenue. Where the Assessing Officer has adopted a view, which is permissible in law or where two views are possible and the Income Tax Officer has taken one view, we are of the view that the Commissioner of Income Tax could not exercise its power under Section 263 of the Act to differ from the view of the Assessing Officer even if there was a loss of revenue. There is no doubt that the provision cannot be invoked on each and every type of error committed by the Assessing Officer. It is only when an order is erroneous then Section 263 of the Act could be invoked. In the light of the aforesaid, we are of the opinion that the Tribunal was justified in setting aside the order of the Commissioner of Income Tax passed under Section 263 of the Act. The appeal fails and is dismissed. - Decided in favour of the assessee
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2015 (12) TMI 838
TDS liability - tax liability in terms of Section 201 (1) - Held that:- In the present transaction, admittedly there is no liability to tax. As a result, the question of deducting tax at source and the assessee violating the provisions of Section 195 does not arise and therefore, the assessee cannot be treated as an assessee in default. The Supreme Court has clearly held that the provisions relating to TDS would apply only to those sums which are chargeable to tax under the Income Tax Act and also has clearly held that in a transaction of this nature, the assessee was entitled to take a plea that there arises no tax liability and therefore, the provisions of Sec. 195 do not get attracted. Once we hold that there is no tax liability, the question of deduction of tax at source, terming the assessee as ''assessee in default" will not also arise and the resultant question of levy of interest becomes purely academic and the demand unsustainable in law. In the instant case, we hold that the original authority having accepted "Nil" tax liability, the question of levy of interest would not arise. The C.I.T. (Appeals), in paragraph 24.1 of his order dated 30.01.2004, had held that there should be determination of interest under Section 201 (1A) contrary to his own findings in paragraph 24.2. The authority has accepted in the second limb that there exists '' no tax liability'' in terms of Section 201 (1) of the I.T.Act. By virtue of the ratio of the decision of the Supreme Court rendered in the case of GE India Technology Centre P. Ltd., [2010 (9) TMI 7 - SUPREME COURT OF INDIA ] the transaction in the present case will not fall within the para meters of Section 195 and 201 (1) of the I.T. Act. We, therefore, answer the questions of law raised in favour of the appellant and against the Department.
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2015 (12) TMI 837
Transfer pricing adjustment - Held that:- Since the provisions of the Act makes it very clear that under Section 92 CA of I.T. Act the only option is to place the matter to the TPO and the same has not been followed, this Court feels it appropriate to set aside the order of the assessing authority so that the matter can be referred to the TPO. Accordingly, the order impugned in this writ petition is set aside and the matter is remanded to the Assessing Authority who shall in turn refer the matter to the Transfer Pricing Officer. On such reference, the Transfer Pricing Officer shall proceed in accordance with the C.P.D.T. Regulations dated 20.05.2003. This writ petition stands disposed of in the above terms. Connected miscellaneous petition is closed. There shall be no orders as to the costs.
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2015 (12) TMI 836
Allowability of depreciation on goodwill - whether the Tribunal was justified in permitting the respondent assessee to for the first time raise an additional ground on the issue of liability of depreciation on goodwill before it? - Held that:- Any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the tribunal when the facts necessary to examine such ground, contention or claim are already on record. In such a case, the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. Adverting to the facts of the present case, the Tribunal has, on facts found that the additional ground raised by the assessee is purely a legal ground. Moreover, as pointed out by the learned counsel for the assessee, the additional ground does not require further facts other than the facts which are already available on record. Under the circumstances, the above decision of this court in the case of Commissioner of Income Tax v. Mitesh Impex (2014 (4) TMI 484 - GUJARAT HIGH COURT ) would be squarely applicable to the facts of the present case. The impugned order passed by the Tribunal, being in consonance with the principles laid down in the above decision, the question is required to be answered in the affirmative, that is, in favour of the assessee and against the revenue.
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2015 (12) TMI 835
Revision u/s 263 - CIT(A) directing the Income-tax Officer to make enquiries regarding the sources of investment in purchase of silver bars - Tribunal has held that the Commissioner of Income-tax had no jurisdiction to invoke the provisions of section 263 of the Act in view of the fact that the material obtained from the custom authorities did not form part of the record of the Assessing Officer - Held that:- This issue stands concluded by the decision of the Supreme Court in the case of C.I.T. v. Manjunathesware Packing Products (1997 (12) TMI 4 - SUPREME Court ) wherein the court has held that the revisional power conferred on the Commissioner of Income-tax under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration. Also see COMMISSIONER OF INCOME TAX Versus VALLABHDAS VITHALDAS [2015 (5) TMI 615 - GUJARAT HIGH COURT ] The reference is, accordingly, answered in the negative, that is, in favour of the revenue and against the assessee. The Appellate Tribunal was not right in law in holding that the Commissioner of Income-tax had no jurisdiction to invoke the powers under section 263 of the Act and direct the Income-tax Officer to make enquiries regarding source of investment in purchase of silver bars - Decided against assessee
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2015 (12) TMI 834
Reopening of assessment - Held that:- This Court does not find any tangible material warranting the Assessing Officer to reopen the assessment. As far as the first respondent has no power to reopen the assessment year after a period of four years and the same is hit by limitation, the judgment relied by the petitioner reported Fenner (India) Ltd [1998 (11) TMI 66 - MADRAS High Court ] holds the field. - Decided in favour of assessee.
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2015 (12) TMI 833
Tds on commission paid to the agent who is a non-resident - Held that:- The commission amounts which were earned by the non-resident assessees for services rendered outside India cannot, therefore, be treated as an income which have either accrued or arisen in India. Therefore, the question of deducting TDS does not arise. - Decided in favour of assessee Reopening of assessment - whether non-speaking and composite order have been passed - Held that:- Pursuant to the notice issued by the assessing officer, he is bound to consider the objections of the parties and pass a speaking order. But, in the instant case, without passing a separate order by considering the objection of the petitioner, the respondent has passed a composite and non- speaking order. Since it is a non-speaking and composite order, the same is liable to be set aside. In the instant case, this Court does not find any tangible material warranting the assessing officer to re-open the assessment. ection 147 of the Act is exercised beyond a period of four years, therefore, the same is hit by limitation. Viewed from any angle, the respondent has not made out any ground to reopen the assessment order and the orders impugned in these Writ Petitions are liable to be set aside - Decided in favour of assessee
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2015 (12) TMI 832
Valuation of property - Adoption of State P.W.D. rates or the Central P.W.D. - Held that:- As decided in T.M.P.N.Murugesan -vs- Commissioner of Income-tax [2014 (8) TMI 57 - MADRAS HIGH COURT ] no justifiable ground to adopt the rate prevailing in cities like Delhi for the purpose of working out the cost of construction of house at Virudhunagar. When the details regarding the cost of construction at PWD rates for Virudhunagar District is applicable, there is no reason for the Valuation Officer to adopt the rate, which is prevalent at distant places and metropolitan cities like Delhi. As in the present case the Tribunal was right in directing the Assessing Officer to adopt the State P.W.D. rates on the ground that the building is located in interior Tamil Nadu. - Decided against revenue
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2015 (12) TMI 831
Addition on account of alleged excess cost of construction - as per AO cost should be taken at ₹ 511 per sq. ft. as against ₹ 750 per sq. ft. shown by the Assessee - ITAT confirmed AO order - Held that:- An authentic determination of the cost of construction for the flats which were sold during the AY 2010-11 is not available in the record. Dr. Rakesh Gupta, learned counsel for the Assessee, states that the Assessee has in its possession all the relevant records which it is prepared to produce for determining the cost of construction in any manner that may be considered appropriate so that an arbitrary figure is not adopted. In the considered view of the Court, the approach adopted by the ITAT in the matter was possibly not the best way of going about determining whether the CIT (A) was in error in adopting the figure of ₹ 700 per sq.ft. as the cost of construction of the flats in question. One method was to insist on a proper report of valuation taking into account the books of accounts maintained by the Assessee himself. The alternative method of taking the figure for 2008 and applying to it a 'mark up' by the cost inflation index should normally be resorted to when the Assessee is unable to produce its books of accounts or documents. Where it is prepared to do so, as in the present case, the former method should be adopted. In view of the statement made by the counsel for the Assessee before this Court, the Court is of the view that the ITAT should re-examine the above issue on merits by calling for a report of valuation by any approved registered valuer as may be considered appropriate by the ITAT. The ITAT will issue appropriate directions regarding the production by the Assessee of its records relevant to the issue of determination of the cost of construction of the flats sold during the AY in question.
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2015 (12) TMI 830
Penalty proceedings u/s 271(1)(C) - addition being the professional income included in the income from mutual funds and disallowance on account of partners remuneration debited to the P/L account - Tribunal upheld the order of the CIT(A) in deleting the penalty - Held that:- The mistake was committed by the accountant of the assessee. Even it was not noticed by the AO, and the assessee itself during the course of assessment proceedings while preparing the details from its ledge accounts came to know the said mistake had been committed by the accountant and proposed for addition. Therefore, through a bonafide and inadvertent error the assessee claimed the income as exempt and wrongly provided for partners’ salary. But the submissions of the assessee was that the error occurred by a mistake of its accountant, who treated the said professional income as income from Mutual funds’ and the salary was claimed on the basis of the clause mentioned in the original partnership deed was not found to be false. We, therefore, keeping in view of the ratio laid down by the Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt Ltd [2012 (9) TMI 775 - SUPREME COURT] are of the view that the ld. CIT(A) was justified in deleting the penalty so levied by the AO. - Decided in favour of assessee
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2015 (12) TMI 829
Method of accounting of commission expenses on accrual basis - Held that:- As per clause 4 of the agreement, the commission payable to KSB Singapore (Asia Pacific) at the rate not exceeding 12.5% on FOB value of the order in the currency in India in which the order is placed. These charges will fall due for payment on receipt of payment from the clients. Being so, it is clear that the payment of commission accrued only on realization of sale value. The assessee's claim is that it is booking expenditure on the basis of sale value and not on the basis of sale realization and this system has been accepted by the department in earlier years as well as in the subsequent year. In our opinion, we are not concerned with the any other year which are not before us. In our opinion, if the department has accepted in earlier year, it was a mistake and there is no merit in continuing the same mistake in the assessment year under consideration. The payment of commission accrued only on realization of sale value and it is to be allowed when the realization of sale value which is in compliance with the agreement cited supra and disallowance is based on the above agreement brought on record by the authorities and hence, we do not find any infirmity in the orders of the authorities below, which is confirmed. No reasons warranting interference with the order passed by the learned Appellate Tribunal by invoking the powers conferred on us under Sec.260A of the Income Tax Act, 1961 and necessarily the appeal has to be dismissed
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2015 (12) TMI 828
Penalty under section 271(1)(c) - wrongly claiming exemption under section 10B in respect of interest not derived as ‘Profits and Gains of Business’ - CIT(A) deleted the penalty - Held that:- We are of the opinion that there can be no gainsaying that the assessee had raised a legal contention which was not finally accepted. When that is the position, then the authoritative judgement of the Supreme Court in the case of Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT ) wherein opined that by any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars, as relied upon leaves no manner of doubt that the view taken by the CIT and the Tribunal was a correct view. - Decided in favour of assessee
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2015 (12) TMI 827
Receipt arising on transfer of TDER - whether are not taxable under the head 'Capital Gains'? - Whether the Tribunal was justified in law in allowing the appeal of the assessee by holding that there was no cost of acquisition of the TDR and thereby not subjecting the sum to Capital Gain Tax holding that the receipt arising on transfer of TDR are not taxable in the hands of the society? - Held that:- The questions as formulated by the Revenue stands concluded against the Revenue and in favour of the Assessee by the decision of this Court in CIT v/s. Sambhaji Nagar Cooperative Housing Society Ltd. [2014 (12) TMI 1069 - BOMBAY HIGH COURT ] - Tribunal was correct in holding that the receipt arising on transfer of TDER are not taxable under the head 'Capital Gains'. - Decided in favour of assessee
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2015 (12) TMI 826
Non-granting of deduction under sec.80IB - Held that:- The assessee is engaged in the construction work of buildings as a contractor and when the assessee’s job includes only controlling and directing the work of building construction as per plan and design by the land lord and hand over the constructed flats on behalf of the land lord to the eligible flat owners who have got registered undivided right in the property. It is only performed the work as a contractor and the assessee’s job is not included designing the project and selling of the project and the assessee would not get any share in the constructed area and in the undivided property and the assessee cannot be said to have invested its own money to carry on the project. Similar view has been taken by the Tribunal, Indore Bench in the case of M/s. Sky Builders & Developers vs. ITO [2011 (8) TMI 722 - ITAT INDORE] for the assessment year 2006-07. Since we have observed that the assessee is a contractor, there is no question of going to the merits of the case, as non-production of completion certificate of the project. The assessee is not eligible for deduction u/s.80IB(10) of the Act. - Decided against assessee.
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2015 (12) TMI 825
Reopening of assessment - Held that:- Undisputedly in the instant case, nothing has been brought out by the Assessing Officer that income chargeable to tax has escaped assessment on account of failure on the part of the assessee as the assessee has declared all the details and raised a claim of 100% depreciation. Moreover, the issue on which assessment was reopened was already examined by the AO while allowing the claim in the original assessment. In the light of these facts, we are of the considered view that the assessment was reopened without the jurisdictional foundation u/s 147 of the Act. Therefore, the notice u/s 148 and subsequent proceedings are without jurisdiction and liable to be quashed - Decided in favour of assessee.
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2015 (12) TMI 824
Allowability of exemption to the short term capital gain - sale of an agricultural land - eligibility for exemption from tax u/s 10 - Held that:- The assessee was not aware of this fact that the sale proceeds arised out of sale of an agricultural land is exempt from tax u/s 10 of the Act hence the assessee inadvertently could not adduce the said fact before the Assessing Officer as well as while filing the return of income. The assessee’s claim is in accordance with' the provisions of law and gets support from the CBDT circular No. l4 (XL-35) dated 11/04/1955, wherein it has been clearly stated that the officers of department must not take advantage of ignorance of an assessee as to his rights. It is duty of the department to assist a tax payer in every reasonable way, particularly in matter of claiming and securing reliefs. Due to non-awareness, the assessee could not file certificate from the "Group Gram Panchayat, Ambhai-Amgaon, Khutal" for justification of its claim. It is settled legal position that assessee can raise its legal claim at any stage. The course of appellate proceedings, assessee filed a copy of certificate from "Group Gram Panchayat, Ambhai-Amgaon certified by Gram Sevak and Sarpanch, which suggested that the land is not situated in area, which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population of not less than ten thousand or in any area within such distance, not being more than eight kilometer from the local limits of any municipality or cantonment board. This fact has not been disputed before us on behalf of Revenue. Taking note of all the facts available on record, the CIT(A) found the assessee’s claim proper and appropriate in accordance with the provisions of law and accordingly allowed the same. There is nothing brought on record by the Revenue against this factual finding of the CIT(A) allowing the exemption to the short term capital gain disclosed by the assessee in the return of income on the ground that subject matter of STCG was agricultural land as defined u/s 2(14) of the Act. - Decided against revenue
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2015 (12) TMI 823
Unaccounted gold jewellery found to the extent of 863.920 gms was treated as undisclosed investment - Held that:- This Tribunal is of the considered opinion that by taking into consideration of the status of the assessee and other family members, the gold jewellery owned by Smt. Sharmila, Shri Manivannan (HUF), Shri M. Ramalingam (HUF) cannot be totally ruled out. When the Assessing Officer accepted the jewellery to the extent of 1801.800 gms in the hands of three persons, he should have taken note of the status of the assessee as HUF, the status of Shri Manivannan (HUF) and the jewellery owned by Smt. Sharmila. Since they are family members, this Tribunal is of the considered opinion that they might have owned gold jewellery to the extent of 863.920 gms of gold jewellery. It is also an admitted fact that the assessee filed return of income in his HUF capacity for the assessment year 2006-07 and disclosed 410 gms of Jewellery. The assessee claimed before the Assessing Officer that the HUF purchased 410 gms of gold jewellery in the month of February, 2006. In the absence of purchase bill, the Assessing Officer made addition in the hands of the individual assessee. This Tribunal is of the considered opinion that when the assessee filed return of income for assessment year 2006-07 claiming that 410 gms of jewellery was purchased by HUF, the addition cannot be made in the hands of the assessee in his individual capacity. At the best, the addition could have been made in the hands of the assessee in HUF capacity. For the failure of the assessee-HUF to substantiate the purchase of 410 gms of jewellery in the month of February, 2006, this Tribunal is of the considered opinion that there cannot be any addition in the hands of the individual assessment of the assessee. - Decided in favour of assessee.
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2015 (12) TMI 822
Disallowance on account of entrance fees u/s.37 - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that the payment of entrance fees to the club was incurred for the purpose of business and was for smooth and efficient running of business enterprises and that the expenditure was wholly and exclusively for the purpose of business. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. - Decided against revenue. Disallowance on account of provisions for replacement & warranty charges u/s. 37 - Held that:- While deleting the addition ld. CIT(A) has accepted the contention of the Assessee that it was having present obligation as a result of past events resulting in a outflow of resources. Ld. CIT(A) has further given a finding that the method of accounting followed by the Assessee in respect of warranty provisions is consistent and is based on definite scientific method and that the provision of warranty made by the Assessee was not a contingent liability. Before us, Revenue could not controvert the findings of ld. CIT(A) and we therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed.- Decided against revenue.
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2015 (12) TMI 821
Amount received on account of Clean Development Mechanism (CDM) - capital or revenue receipt - Held that:- The amount received by the assessee on account of CDM (carbon credits) is capital in nature. See case of M/s My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT ]. The impugned order is set aside, the appeal is allowed. – Decided against Revenue.
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2015 (12) TMI 820
Amount received on account of Clean Development Mechanism (CDM) - capital or revenue receipt - Held that:- The amount received by the assessee on account of CDM (carbon credits) is capital in nature. See case of M/s My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT ]. The impugned order is set aside, the appeal is allowed. – Decided against Revenue.
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Customs
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2015 (12) TMI 795
Duty demand - Storage of goods in warehouse beyond warehousing period - Held that:- Commissioner (Appeals) passed the order on erroneous facts and therefore, the findings of the Commissioner (Appeals) cannot be sustained. In our considered view, the Commissioner (Appeals) is required to ascertain the correct fact and thereafter decide the matter in accordance with law. It is apparent that the respondent had not given the correct fact and therefore, such order cannot be sustained. The other issues as raised by both the sides would be required to decide after considering the correct facts of the case. - Impugned order is set aside - Matter remanded back - Decided in favour of Revenue.
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2015 (12) TMI 794
Clearance of goods without payment of duty under Notification No. 85/2004-Cus. for basic customs duty, Notification No.6/2006 for CVD and Notification No.20/2006-Cus. for SED purpose - Held that:- Appellant was not eligible for the benefit of Notification 20/2006-Cus. but they availed of the benefit of the said notification in view of entry at serial No.1 of the table annexed to the said notification. We also note that out of 72 bills of entry, approximately 40% bills of entry were passed through the officers and the remaining were cleared under RMS system. We note that even the bills of entry which were not cleared through RMS system were passed through the officers. The officers could not point out that since the appellant is availing the benefit of Notification 85/2004, they cannot avail the benefit of Notification 20/2006 in view of para 3 of the later notification. - ingredients of Section 28 are not satisfied so as to invoke the extended period of limitation in the present case. In the result, the demand of duty within the normal period of limitation is confirmed while the demand beyond the normal period is set aside. - Decided partly in favour of assessee.
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2015 (12) TMI 793
Penalty u/s 112(a) - misdeclaration of goods - hazardous waste oil - Held that:- There is no evidence brought out by the department in their process of investigation to establish that the appellant had prior knowledge that Raja Singh was speaking fake or that anything regarding the misdeclaration of goods. Further, the importer had imported consignments of same descriptions in the past through the port of ICD, Tughlakabad, wherein no discrepancy was noted. The appellant, therefore, cannot be found fault for not entertaining any doubt regarding the documents provided by Shri Raja Singh. The goods were found to be prohibited “hazardous waste oil”only after test by a laboratory. I find that the respondents have not been able to adduce any cogent evidence to establish the conscious involvement of appellant in the incident. The penalty imposed upon the appellant is unsustainable. - impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 792
100% EOU - shortage of goods while shifting goods in the new unit Imposition of penalty - Non production of the documentary evidence for such shifting and the presence of the goods in the new unit - Held that:- Revenue has not been able to rebut the findings given by the adjudicating authority as regards the malafide of the assessee. Their only case is that inasmuch the imported duty free goods were not available, it has to be held that there was malafide on their part, requiring higher imposition of penalty. - adjudicating authority has kept in view various factors and has come to a clear finding on absence of malafide on the part of the assessee. Admittedly the assessee has been able to establish the transfer of the item from one unit to their new premises to the extent of around 94%. The balance 6%, for which they were not able to show any documentary evidence was some minor items and cannot be held to be attributable to any malafide. As such we fully agree with the Commissioner that this act does not call for higher imposition of penalty. Commissioner has observed that the assessee has not been able to establish proof of having utilized the goods for the intended purpose and therefore the question of allowing depreciation on such bonded goods does not arise. - For the period from 2001 to 2005, the same were being used by the appellant and they would be in a position to prove it. If that be so, the duty required to be paid by the respondent should have been calculated on the depreciated value. Inasmuch as no such proof stands produced before us, we think it fit to remand the matter to Commissioner for entertaining the said plea of the assessee - Matter remanded back - Appeal disposed of.
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2015 (12) TMI 791
Import of heavy melting scarp (HMS) claiming exemption in terms of notification No.12/2012-Cus dated 17.3.2012 - Misdeclaration of goods - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- Contention of learned Counsel that the import of the goods contained only negligible copper scrap, brass scrap, stainless steel scrap and aluminum scrap is correct. These scrap were attached/intact with HMS. In such circumstances, redemption fine and penalty imposed, in my view is on the higher side. - Redemption fine and penalty is reduced - Decided partly in favour of assessee.
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2015 (12) TMI 790
Confiscation of goods - Imposition of redemption fine and penalty - import of MS Re-rollable scrap through high sea sale basis - goods were found to be seconds/defective/billets - Held that:- Issue in this case is not on unauthorized import or any restriction on import but on the question of classification and valuation whether goods are MS re-rollable scrap or defects. The Bills of Entry were ordered by Appraising Group for first check examination and on examination, the goods were found to be seconds and defectives and the value was enhanced. It is also an admitted fact that appellants have not imported their goods directly but purchased on High Sea Sale from High Sea Seller M/s.Modi Impex. Appellants being a manufacturer and imported the goods under actual user for their own consumption for manufacture of final goods. Further, I find that penalty imposed by the adjudicating authority on the High Seas seller, M/s.Modi Impex was set aside by the lower appellate authority in OIA dt. 27.12.2004. Therefore, taking into consideration overall facts and circumstances of the case, I take a lenient view and reduce the redemption fine and penalty - Decided partly in favour of assessee.
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2015 (12) TMI 789
Confiscation of goods - Re-determination of value under Rule 8 of Customs Valuation Rules, 1988 - Import of yellow poppy seeds - Held that:- If contemporaneous value of imports were available at US $ 900 PMT then re-determination of value should have been done either under Rule 4 or Rule 5 of Customs Valuation Rules, 1988, which has not been done and which clearly shows that department has not done the re-determination on the basis of value of on contemporaneous of imports. The very fact that redetermination has been done under Rule 8 clearly shows that the basis for re-determination is not contemporaneous value of imports. A copy of the market inquiry report is available on record which we have perused. The said market inquiry report is not signed by anyone including the officer of the Customs and the representative of the respondent. Therefore, the same cannot be accepted as a valid piece of evidence. While conducting the market inquiry, a representative of the importer should have been co-opted. Thus the evidentiary value of the so-called “market inquiry” itself is suspect. Further, we note that the lower appellate authority while considering the valuation done by the assessing authority has relied upon the decision of the Apex Court and the Tribunal in similar circumstances and has come to the conclusion that the loading of value done by assessing authority is without any basis. Therefore, we see no reason to interfere with the said order - Decided against Revenue.
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2015 (12) TMI 788
Suspension of CHA License - CHA committed contravention of Regulations 11(a), 11(d), 11(e), 11(m) and 11(n) of the Customs Brokers Licensing Regulations, 2013 - Held that:- CBLR, 2013 provides for a time-limit of 9 months for completing the enquiry proceedings and taking a final decision from the date on which the licensing authority comes to know of the contraventions by the CHA. From the impugned order, it is seen that the licensing authority came to know of the contravention for the first time on 19-5-2014 and the 9 months’ time period expires on 19-2-2015. Therefore, the present appeal and stay petition are premature and are accordingly dismissed. In any case, suspension is not a punishment. Punishment will come after enquiry is completed and the licence is revoked. On that ground also, the appeal is not sustainable. - Decided against the appellant.
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2015 (12) TMI 787
Denial of refund claim - Unjust enrichment - Held that:- The Assistant Commissioner, while sanctioning the refund, has not gone into the fact, whether incidence of duty, for which refund is sought for, has been passed on or otherwise. In my view, even if it is a case of refund of revenue deposit, test of unjust enrichment has to be passed on. The appellant during the proceedings before the Commissioner (Appeals) has submitted a Chartered Accountant’s certificate, which was issued on the basis of books of account of the appellant, wherein it has been certified that the amount of refund is shown in the balance sheet as recoverable from the Government. However, despite this submission of the appellant, the Commissioner (Appeals) has rejected the claim of the appellant on the ground that Chartered Accountant’s certificate is not a conclusive evidence to prove that the incidence of duty has not been passed on. It is utter surprise that, if at all, the Commissioner (Appeals) is not satisfied with the Chartered Accountant’s certificate, he should have called for other documents like balance sheet and other books of account to check the authenticity of the CA certificate, which he failed to do so. It is a settled position of law that, if the amount for which refund is sought for, has not been booked as an expenditure in the profit and loss account and shown in the asset side of the balance sheet as receivable, it is sufficient evidence that the incidence of duty has not been passed on. - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 786
Valuation - Undervaluation of goods - Import of old and used tyres - Held that:- 24 excess pieces of tyres cannot be held to be a mala fide misdeclaration in the quantum of tyres when the total number was more than 2500 pieces. As regards valuation, we find that the appellant having declared the transaction value, it was for the Revenue to rebut the same by production of evidence. The Appellate Authority has already observed that there is virtually no contemporaneous imports as no details are given. Otherwise also, we find that two different imports of ‘old’ and ‘used’ items can never be identical inasmuch as the value of the same would depend upon the number of factors including the usage years as also the condition of the goods. The Appellate Authority has rejected the transaction value by observing that the appellant has not produced any evidence to substantiate the same. We find no merits in the above reasonings of the Commissioner (Appeals). The appellant having produced the invoice, in support of its declared value, has done his part of the duty. If the Revenue is not happy with the said declared transaction value, it is they who have to produce the evidence. There being none in the present case, we find no reasons to enhance the assessable value. - Redemption fine and penalty is reduced - Decided in favour of assessee.
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Corporate Laws
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2015 (12) TMI 780
Relevancy of documents summoned - the award was passed in violation of principle of natural justice inasmuch - in the month of March 2001, the Stock Market all over the country had crashed and as a consequence certain members of the defendant who were required to make payment to the defendant (petitioner) were failing to discharge their obligation to the defendant from Settlement No.2001148 onwards. - Held that:- In the instant case, the order of the Joint Registrar which was confirmed by the learned Single Judge in the impugned order correctly identified the question whether the documents sought to be summoned by the petitioner are relevant having regard to the nature of the suit and recorded conclusion that the documents are not relevant. Such a conclusion of the Joint Registrar is itself based on an earlier finding recorded by the High Court in its order dated 19.01.2009 which became final. Even otherwise, to satisfy ourselves that there is no miscarriage of justice in the instant case, we have meticulously examined the written statement. We are satisfied that the matter does not call for interference in exercise of our jurisdiction under Article 136. Any further elaboration of the reasons for our satisfaction could have adverse impact on the case. Therefore, we desist. Special Leave Petition is dismissed.
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Service Tax
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2015 (12) TMI 819
Business Auxiliary services - Commercial concern - Invocation of extended period of limitation - Held that:- Since definition of commercial concern which have taken effect from 1.5.2006 wherein the word commercial concern has been substituted by any person. Therefore intention of the legislature is clear that prior to 1.5.2006, the services provided by an individual was not to be treated as service provided by commercial concern. Moreover in this case, show cause notice has been issued by invoking extended period of limitation whereas there is no suppression on the part of the appellant that appellant being a commercial concern suppressed the fact from the department not to pay the service tax. In these circumstances, I hold that appellant is not required to pay service tax for the period 2004-2005 and 2005-2006 under the category of business auxiliary service being an individual by invoking extended period of limitation. - Decided in favor of assessee.
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2015 (12) TMI 818
Classification of service - management, maintenance or repair service or Business Auxiliary Service - Held that:- assessee undertakes re-rubberisation of old and unused spindles for the printing industry by coating old and unused spindles with rubber compounds, (the spindles being supplied by customers); thereafter vulcanizing the rubber; thus rendering the spindles fit for use and supplying the re-furbished spindles back to the customers. The assessee classified this activity as business auxiliary service (BAS) and in view of the Notification No. 14/2004-ST dt. 10/09/2004 as amended by Notification No.19/2005-ST dt. 07/06/2005 (whereby all taxable services provided in relation to printing was exempted from the whole of service tax leviable thereon), the assessee assumed that there was no liability to tax. - In the assessee/appellant's own case, reported in [2013 (12) TMI 620 - CESTAT NEW DELHI], an identical activity of the appellant was classified by the Tribunal as falling under BAS, negating Revenue's contention that it should be classified as MMR service. - Decided in favour of assessee.
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2015 (12) TMI 817
Waiver of pre-deposit of service tax - supply of tangible goods service - Held that:- on perusal of the supplementary invoice dated 31.05.2008 and 30.09.2008, we find that the applicant has discharged the excise duty on the value of FFC of ₹ 20,000/- per month, the same has been recorded in OIO. By relying the decision of the Tribunal Bangalore Bench in the applicants own case (2014 (10) TMI 566 - CESTAT BANGALORE), on the identical issue where the stay was granted, we find that prima facie, the applicant has made out a case for waiver of pre-deposit of service tax. Accordingly, the pre-deposit of the entire demand is waived and its recovery stayed during the disposal of the appeal. - Stay granted.
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2015 (12) TMI 816
Confiscation of capital goods - Improper availment of CENVAT Credit - Held that:- respondent assessee had availed Cenvat credit of the duty paid by the manufacturer. We also find the provisions of Rule 15 on which reliance has been placed is also not applicable inasmuch, that against the very same Order-in-Original the assessee respondent was in appeal before the Bench and the Bench vide its final order [2015 (4) TMI 395 - CESTAT MUMBAI], has upheld the ineligibility to avail Cenvat credit within the period of limitation and set aside the demands raised beyond the period of limitation. It is also seen that the Bench had set aside the penalties imposed on all the appellants therein and more specifically the respondent in this case. When the main appellant’s case itself is decided by setting aside the extended period of limitation and the penalties imposed, holding that this could be an issue of interpretation, the question of confiscation of the capital goods does not arise. - Decided against Revenue.
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2015 (12) TMI 815
Denial of CENVAT Credit - there was no nexus between the input services and the output service provided by the respondent - Held that:- original authority considered each input service and came to the conclusion that out of the demand for ₹ 14,25,029/- proposed in the show-cause notice the assessee is not eligible for CENVAT credit of ₹ 12,78,068/- and this was demanded with interest and he also imposed penalties under Section 77 and 78 of Finance Act, 1994. However, surprisingly and strangely, the learned Commissioner (A) considered the whole issue as a claim for refund made under Rule 5 of CENVAT Credit Rules and considered each and every input service and came to the conclusion that appellant is eligible for the refund and remanded the matter. A case for demand of CENVAT credit got converted to a claim for refund and was allowed. I find substance in the appeal filed by the Revenue. Since the Order-in-Appeal has not considered the subject correctly, the impugned order is set aside - Decided in favour of Revenue.
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2015 (12) TMI 814
Denial of excess CENVAT Credit - transportation charges - Notification No. 13/2008-S.T. - Held that:- As per Rule 3 of the Cenvat Credit Rules, 2004 an assessee is entitled to take Cenvat Credit of the duty paid. Admittedly in this case there is no dispute regarding the payment of duty. Therefore, whatever duty is being paid, appellant is entitled to take Cenvat Credit. In these circumstances, I hold that proceedings in this case were not required to be initiated. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 813
Cenvat credit - rent-a-cab service - service was utilised by Assessee for providing currency chest service which is not a taxable service and hence is exempted from paying Service Tax - Held that:- Indeed the currency chest is required and maintained for providing banking and financial services. It can be nobody’s case that the currency chest was not used to provide their output service viz. banking and financial services, inasmuch as such cash is required for providing various services which are covered under banking and financial services (as mentioned in para 2(iv) above. It is the appellants choice in how much safety they want to keep their cash and they have chosen “currency chest” for safety and security of their cash. Cash management including transport of cash to and from the currency chest is thus relatable to providing banking and financial services and the services (security services and rent-a-cab service), hiring security vans are clearly required for such cash management/transfer and therefore, they are clearly within the ambit of “input services” - impugned services constitutes input service in respect of the appellants non-exempt output service. Accordingly, the impugned input credit is clearly admissible which makes the impugned demand unsustainable. For the same reason, the Revenue’s appeal also does not sustain. - Decided in favour of assessee.
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2015 (12) TMI 812
Demand of service tax - surface and sub-service surveying - Imposition of penalty - Benefit of Section 80 - Held that:- Appellant has discharged the interest also along with service tax liability. In our considered view the issue of service tax liability on the survey and exploration was in the period when there was no clarity as to the taxability of work done for ONGC. We agree with the learned Counsels submissions that having discharged the entire service tax liability and the interest thereof, the penalty need not be imposed on appellant. We hold that the appellant has made out a justifiable cause for invoking the provisions of Section 80 of the Finance Act, 1994. Invoking the said section 80, we set aside the penalties imposed on the appellant under the impugned order and allow the appeal to that extent. - Petition disposed of.
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2015 (12) TMI 811
Denial of CENVAT Credit - courier service, air ticketing service/air travel agent service, technical training & coaching service and outward freight service - Nexus with manufacturing activity - Held that:- Services have been received to visit them in relation to procurement of inputs/sale of their final products. For technical training and coaching service, it is observed that the respondent is manufacturing automotive switches having joint venture with Japanese company. As all the technical know-how and documents in Japanese language, they are using Japanese language instructor for teaching Japanese language to their technician and availing the credit for this service. For outward freight service, this service has been availed by the respondent for transportation of the goods upto the place of the buyer and as purchase order, they are required to be delivered the goods at their door. And the respondent has paid Service Tax on outdoor catering service. - Commissioner (Appeals) has rightly held that these services being availed by the respondent in the course of business of manufacturing. Therefore, I do not find any infirmity in the impugned order of the Commissioner (Appeals) and the same is upheld. - Decided against Revenue.
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2015 (12) TMI 810
Penalty u/s 76 - improper availment of CENVAT Credit - Held that:- Show-cause notice to the respondent, is not invoking any provisions for imposition of penalties on the assessee for improper availment of CENVAT Credit. Adjudicating authority was correct in not imposing any penalty as there being no invocation of any provisions of imposition of penalties for wrong availment of CENVAT Credit. In our considered view when revenue has not challenged the non-imposition of penalties under relevant provisions; the argument put forth by the learned DR for imposition of penalty under Cenvat Credit Rules, 2004 are unsustainable and are rejected out-right. - Decided against Revenue.
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2015 (12) TMI 809
Waiver of pre deposit - Denial of CENVAT Credit - Held that:- Under Rule 3 of Cenvat Credit Rules 2004 in respect of input service, credit is admissible to a manufacturer or a service provider unlike the case of inputs where the receipt of inputs in the factory is required. For input services there is no requirement that it should be received in a particular place for availament of credit. One of the main objections in this case is that the services were received in R & D unit and there was no manufacture of excisable goods or provision of output service in the R & D unit. There is no dispute that R & D units belong to the same manufacturer and in the excise registration and service tax registration for the units, the manufacturer is one and the same. In the case of M/s Cadila Healthcare Ltd., [2013 (1) TMI 304 - GUJARAT HIGH COURT ] even the credit relating to R & D work in respect of product which was ultimately not manufactured at all was held to be admissible. The Hon’ble High Court of Gujarat upheld the decision by the Tribunal. R & D cost is necessarily factored to arrive the sale value of the final product. - Stay granted.
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Central Excise
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2015 (12) TMI 844
Denial of CENVAT Credit - Capital goods - machine/machineries installed in the factory - Held that:- Commissioner (Appeals) by relying on the report dated 06.12.2013 regarding the actual use of capital goods/inputs has allowed the cenvat benefit to the respondent. The stand of the Revenue in this appeal that since the heavy machines/machineries, where the disputed goods have been used as inputs /capital goods are permanently fastened to the earth, the same seized to be goods for the purpose of taking cenvat credit, I do not find any justification for the said ground. The cenvat credit rules entitles a manufacturer to take cenvat credit of duties paid on inputs, subject to the condition that the goods are used in or in relation to manufacture of the final product within the factory. Further, with regard to capital goods, it has not been disputed by the Department that the said goods are not confirming to the definition clause, entitling availment of cenvat credit. Since the disputed goods as per the verification report of the jurisdictional Range Superintendent are considered as capital goods/input as held by the Commissioner (Appeals), the same qualify for the cenvat benefit and as such the credit cannot be denied. Therefore, I do not find any infirmity in the impugned order passed by the Commissioner (Appeals) - Decided against Revenue.
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2015 (12) TMI 808
Demand of interest on reversal of CENVAT Credit - Credit on inputs used in manufacture of exempted goods - whether in terms of Rule 14 of the Cenvat Credit Rules, 2004, the appellant can be said to have taken credit wrongly - Held that:- When the credit was not taken wrongly, the question of payment of interest does not arise. In this case, the circumstances discussed above show that the appellant could not have acted any other way than the way they did. In the circumstances, holding that credit was not admissible and was taken without eligibility and therefore asking them to pay interest was not correct. Moreover, any assessee, if he has any doubt, has a right to ask the department and such action is not contrary to the provisions of law. Further, in the circumstances of this case, it cannot be said that the credit had been taken by the appellant wrongly. When credit is not taken wrongly, the question of payment of interest does not arise in terms of provisions of Rule 14 of C.C.R. 2004. In these circumstances, we do not find that the appellant is liable to pay interest since credit taken by them is not wrong in the first place. It is obvious that in March, 2010, the appellant in accordance with the relevant provision of law, did seek clarification from the department to know whether the goods on clearance to the respondent-assessee are exempted from payment of excise duty in terms of the Notification and only in the absence of such clarification from the department, they took CENVAT credit during the intervening period i.e. from September, 2010 to March, 2011. It is also clearly observed that after getting clarification from TRU in April, 2011, the appellant reversed the entire amount of Cenvat credit. In that view of the matter, the specific contention put forth by the learned Standing Counsel that the respondent-assessee, without any eligibility, has taken the Cenvat credit, as such, they are liable to pay interest, is not sustainable. - there is no perversity in the order of the Tribunal and it is purely a question of fact and there is no question of law much less substantial question of law warranting interference by this Court. - Decided against Revenue.
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2015 (12) TMI 807
Denial of CENVAT Credit - Whether CESTAT is justified in allowing the Cenvat credit availed by the respondent in respect of service tax paid on Goods Transport Agency Service in respect of outward transportation of the goods beyond the place of removal - Held that:- issue pertains to Cenvat credit on outward goods transportation agency service availed by the assessee for transportation of manufactured goods. This issue is covered by the judgment of Division Bench of this Court in case of Commissioner of Central Excise & Customs v. Parth Poly Wooven Pvt. Ltd. Reported in [2011 (4) TMI 975 - GUJARAT HIGH COURT] - Decided against Revenue.
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2015 (12) TMI 806
Exemption under Notification No. 50/2003-C.E. Dated 10.06.2003 - manufacture of various toiletry products containing alcohol - Assessee already paid excise duty under the Medicinal and Toilet Preparations (Excise Duty) Act, 1955 - Double taxation - Held that:- As per entry No. 84 of List-I (Union List) of 7th Schedule of the Constitution of India, medicinal and toiletry preparations containing alcohol are made subject matter thereunder. Under Article 268 of the Constitution of India, the excise duty on such products is leviable by Government of India but the same has to be collected through the State. From the impugned order, it is evident that the petitioner manufactures various toiletry products containing alcohol. The stand of the petitioner is that it has already paid excise duty under the Act of 1955. Hence, prima facie it seems that demand of excise duty from the petitioner under the Act would amount to taxing it twice. More so, vide notification dated 10.06.2003, the goods manufactured in the States of Himachal Pradesh and Uttrakhand are being exempted from excise duty for 10 years from the date of commencement of production under the Act. This issue has also not been considered by respondent No. 2. Hence, in our opinion, it would be expedient to remand the case back to respondent No. 2, for taking a decision afresh, after affording an opportunity of hearing to the petitioner and considering its stand including that raising the demand of any excise duty under the Act would tantamount to taxing it twice, more particularly, when the petitioner has already paid the excise duty under the Act of 1955. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 805
Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- Actual tax amount itself required to be re-determined as the matter has been remanded back to the adjudicating authority. In other words, the very tax demand itself is likely to workout to meager amount - what all the Tribunal has done is given a direction to the adjudicating authority in view of the facts of the case to take into consideration and limit the penalty not to exceed 10% of the tax demand. In such circumstances, we do not find any infirmity with the order of the Tribunal and we may also notice the very question raised in the present case would become academic in view of the fact that Section 11AC came to be substituted by Finance Act, 2011 with entirely new provisions where different rates of penalties have been prescribed. - Decided against Revenue.
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2015 (12) TMI 804
Condonation of delay - Non delivery of order - Held that:- If the order is served on a member of the family, it is duly served and in our opinion, there is sufficient service. No assertion was made by the appellant before the Tribunal that the service made upon Virendra Yadav was not a family member or that he was not connected with the business. Even before this Court, the appellant has no where stated that Virendra Yadav is not her nephew. Making the assertion at this stage that he was not connected with the business is irrelevant. Further, nothing has been stated that the address where the service of the original order was made was incorrect. - Condonation denied.
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2015 (12) TMI 803
Validity of tribunal order - Whether the Final Order of the Tribunal was right in passing non speaking order based on the submissions made on behalf of the assessee without going into the merits of the case - Held that:- All that has been stated in the order of the Tribunal is that the submissions made were found to be correct, without assigning any reason why the same were found to be so. The contentions of the revenue were not even recorded and no reason for dismissing the appeal filed by the revenue has been mentioned. - order of the Tribunal is devoid of merit, as it does not assign any reason for allowing the appeal of the assessee. - Decided in favour of Revenue.
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2015 (12) TMI 802
Valuation - Determination of assessable value - Clearances of ore concentrate made by Rajpura Dariba Mines unit of the respondent company - Held that:- While determining the assessable value under Rule 6 (b) (ii) of the Central Excise Valuation Rules, 1975, the dispute is only about the profit margin to be added. While according to the respondent, the profit margin of 10 per cent has been correctly adopted, according to the department’s profit margin to be adopted for determination of value under Rule 6 (b) (ii) must be the overall profit earned by the Respondent company and accordingly since during 1999-2000, the respondent company in its balance sheet had reflected the profit 15.24 per cent, it is this profit which is sought to be adopted by the department for determining the assessable value of ore concentrate - there is no justification for adopting the profit margin of the respondent company during 1999-2000 in its balance sheet and that the profit margin to be adopted is the profit margin in respect of the ore concentrate unit only - Decided against revenue.
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2015 (12) TMI 801
Refund claim - amount was deposited willingly and voluntarily during the course of investigation - refund was rejected as Refund application is premature - Held that:- Incidence of levy of Central Excise duty is manufacture or production of excisable goods. If any amount is collected or retained by the Central Excise authorities, which statutorily is not required to be levied, then on filing of formal application by the assessee, such amount has to be refunded. I find from the available records that duty liability on account of investigation has not been determined against respondent by adjudication process. Therefore, in absence of determination of any outstanding liability, the amount paid by the respondent cannot be retained by the Revenue, in absence of any specific authority provided under the statute. - No infirmity in the impugned order - Decided against Revenue.
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2015 (12) TMI 800
Denial of CENVAT Credit - Capital goods - Credit on MS plates, MS Angle, MS Channel, Steel, Aluminum sheets & bar & rods - Held that:- These findings have not been contravened by the Revenue with any cogent evidence and also have made allegations in their grounds of appeal without any supporting evidence. Therefore, I do not find any infirmity with the impugned order wherein both the lower authorities have examined the usage of these items and held that these items have been used in fabrication / repairs and maintenance of plant and machinery. - infirmity with the impugned order. Same is upheld - Decided against Revenue.
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2015 (12) TMI 799
Waiver of pre deposit - Whether the Melamine Formaldehyde Resins (MFR) and Phenol Cardanol Formaldehyde Resins (PCFR) which are made by the appellant for captive use in the manufacture of their final product are liable to duty or not - Held that:- identical issue was involved in the case of Archidply Industries Limited and Ors. Vs. CCE-Meerut-II and the Tribunal [2014 (8) TMI 499 - CESTAT NEW DELHI] had ordered pre-deposit of 50 per cent of the duty demand within normal limitation period. There is no reason as to why the stay order in case of Archidply Industries Ltd. (Supra) should not be followed in this case. In view of this order has to be followed. In the present case, the duty demand within normal limitation period is about 72 lakh. Therefore, the appellant are directed to deposit an amount of ₹ 36 lakh within the period of 12 weeks - Partial stay granted.
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2015 (12) TMI 798
Waiver of pre deposit - whether the appellant, during the forfeiture period i.e. during the period from 6.7.2012 to 7.3.2013, were, in accordance with the provisions of Rule 8(3A) of the Central Excise Rules,2002, required to pay duty without utilizing the cenvat credit - Held that:- In the case of Indsur Global Ltd. (2014 (12) TMI 585 - GUJARAT HIGH COURT), the High Court has gone into the question of constitutionality of the provision of the provisions of Rule 8(3A), which requires an assessee to pay duty without utilizing the cenvat credit during the forfeiture period i.e. during the period of failure to pay the duty in respect of a month beyond the period of one month from the due date and the Hon’ble High Court has held that this provision is unconstitutional. We, therefore, hold that the appellant have a prima facie case in their favour. Hence, the requirement of pre-deposit of duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.
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2015 (12) TMI 797
Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - Held that:- Stay Order directing the appellant to make pre-deposit of ₹ 5,00,000/- within a period of 8 weeks had been passed on 21.5.2008. But since the appellant failed to deposit the directed amount, the appeal was dismissed on 22.10.2008. However, before dismissal of appeal, out of ₹ 5 Lakhs, ₹ 2.5 lakhs had been deposited. The balance amount of ₹ 2.5 lakhs was deposited during the period from October, 2011 to June, 2014 i.e. under five challans dated 13.10.2011, 21.12.2012, 10.01.2013, 25.03.13 and 18.06.2014.The deposit of balance amount is not disputed. The point of dispute is as to whether in these circumstances, the appeal filed by the appellant is to be restored. In our view, the ratio of the judgement of the Honble Gujarat High Court in the case of Scan Computer Consultancy (2006 (2) TMI 189 - HIGH COURT OF GUJARAT AT AHMEDABAD) and also the decision in the case of S.T. Texturisers Vs. Union of India (2000 (5) TMI 50 - HIGH COURT OF GUJARAT AT AHMEDABAD) is squarely applicable to the facts of this case. Accordingly, the delay in compliance of the Stay Order dated 21.05.2008 is condoned and the Final Order dated 22.10.2008 dismissing the appeal for non-compliance is recalled. - Appeal restored.
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2015 (12) TMI 796
Denial of CENVAT Credit - Whether Cenvat Credit is entitled to the respondent on the strength of the invoices issued by M/s. MPEL in respect of “Unpolished Granite Blocks” or not - Held that:- it is not rebutted by the Revenue without the evidence that M/s. MPEL has not taken any process in the factory of the respondent. Therefore, M/s. MPEL has made the goods usable to the respondent and on that process of making usable M/s. MPEL has paid duty which is not in dispute. Therefore, as per Rule 3 of the Cenvat Credit Rules 2004 whatever input / capital goods have been received by the respondent in their factory they are entitled to take Cenvat Credit, it is immaterial that whether the impugned goods attract duty or not, when there is no dispute that these goods have suffered duty. The said view has been affirmed by the Honble High Court of P&H in the case of Ranbaxy Labs Ltd. [2006 (7) TMI 216 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] and in the case of CEGAT. Therefore, I hold that respondent has taken Cenvat Credit correctly. - No infirmity with the impugned order - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (12) TMI 785
Disallowance of exemption on second interstate Sales - Discrepancy - Held that:- Petitioner filed a second appeal before the Tamil Nadu Sales Tax Appellate Tribunal. At the time of filing of the second appeal, the entire disputed tax had been paid by the petitioner. During the pendency of the second appeal, the petitioner obtained Form-C declarations for the balance turnover and offered to produce the same. However, the counsel for the petitioner failed to appear before the Tribunal resulting in the appeal being dismissed for non prosecution. The restoration application was also rejected. However, those orders of the Tribunal were set aside by this Court in a writ petition and the matter remitted back. Petitioner could have filed an application for rectification along with necessary forms would not preclude the assessee from producing them either before the first Appellate Authority or before the second Appellate Authority, provided the forms of declaration are genuine. Therefore, the Tribunal was not right in non suiting the petitioner on the short ground that they ought to have produced the forms before the Assessing Officer within five years, as per the circular of the Commissioner. - requirement under the statutory prescription is that an assessee should file E1 and C declaration forms. This has been done admittedly by the revision petitioner. Therefore, an obligation, which is not cast upon the assessee under the statutory prescription contained in Section 6(2) of the CST Act, 1956 cannot be imposed upon the revision petitioner by the Tribunal - Decided in favour of assessee.
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2015 (12) TMI 784
Condonation of delay - Inordinate delay of 200 days - Held that:- Admittedly, the appellate authority having found that the petitioner has filed the appeals with a delay of more than 200 days and also violated the 2nd proviso to Section 51(1) of the Act, which stipulates that no appeal shall be entertained unless the same is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be, and 25% of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant and since the petitioner has not paid the same within a period of 30 days and also withina a further period of 30 days, rejected the appeals as not maintainable. - appellate authority did not dispute the veracity of the statement of the petitioner nor it was its case that the petitioner filed the appeals belatedly for certain malafide reason with a deliberate intention to delay the matters. The appellate authority also did not record such a finding. - Delay condoned.
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2015 (12) TMI 783
Detention of goods with vehicle - no valid e-transit pass (or) transit pass from the assessing authority concerned was available for transport of 6th Schedule goods at the time of check - Held that:- respondent has detained the goods on the ground that no e-transit pass or transit pass obtained from the concerned Assessing Officer was available with the goods at the time of interception. However, if the petitioner comes forward to pay one time tax, the goods may be directed to be released forthwith. - petitioner has come forward to pay one time tax at 5% viz., ₹ 88,224/- in each of the case, the respondent is directed to release the goods along with the vehicles forthwith on payment of the said sum. - Decided in favour of assessee.
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2015 (12) TMI 782
Reversal of ITC - Violation of principle of natural justice - Held that:- When the respondent-Assessing Officer has applied the ratio laid down by the Calcutta High Court in Crompton Greaves's case (2014 (9) TMI 337 - CALCUTTA HIGH COURT), which cannot be done, in terms of Section 19(20) of the TNVAT Act, this is a fit case for the petitioner to appeal only before the appellate authority. - Decided against assessee.
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2015 (12) TMI 781
Exemption claim - Held that:- respondents is directed to decide the petitioner’s application dated 15.05.2015 for exemption from payment of advance tax under Section 6(7) read with Section 27(10) of the Punjab Value Added Tax Act, 2005 by 31.07.2015. - Petition disposed of.
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Indian Laws
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2015 (12) TMI 779
Criminal Complaint under Sections 138 of Negotiable Instruments Act, 1881 - whether a person simply being a Director of a Company is liable to be prosecuted by virtue of the provisions of Section 141 NI Act or the person who at the time of offence was in charge of and was responsible to the company for the conduct of the business of the Company would be prosecuted? - Held that:- The complainant has stated in so many words that the Company in question acting through the petitioners and other accused No. 2 and 3 placed orders for purchase of Urad for which invoices amounting to ₹ 53,54,449.67 were issued by the Complainant and as a part-payment of the said invoices, under the signature of Mr.Sushil Jindal and on directions and instructions of the petitioners and Mr. Anil Jindal, a cheque bearing No.361540 dated 23.11.2010 for a sum of ₹ 53,50,000/- drawn on State Bank of Bikaner and Jaipur, Khari Baoli Branch, Delhi, was issued which was dishonoured later. Whereupon, Mr.Sushil Jindal, Mr. Anil Jindal and the petitioners (accused No. 2 to 6) acting for and on behalf of Company (accused No.l) stated that there was financial crunch in the Company, however, assured that the cheque would be honoured at any cost and the balance principal amount alongwith interest shall also be paid very soon by them. Thus, specific allegations against the present petitioners, accused No. 4 to 6, have been made in the complaint. Therefore, in my opinion, the Metropolitan Magistrate was right in summoning the petitioners keeping in view the allegations made in the complaint. The petitioners can prove their innocence by taking recourse to proviso to sub-Section (1) of Section 141 NI Act. No merit in this petition. This petition amounts to gross abuse and misuse of process of law. The petitioners have succeeded in delaying the complaint before the Metropolitan Magistrate for more than four years.
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2015 (12) TMI 778
Misconduct on the part of the arbitrator - Challenge to the arbitration award since the award was passed in violation of principle of natural justice inasmuch - Held that:- At the very outset, we are obliged to state that the respondent has not challenged the order passed by the High Court and, therefore, as far as examination of the umpire is concerned, it stands foreclosed. - The High Court further appreciated the reasoning expressed by the rule making Court and ruled that even if umpire would be examined, no fruitful purpose will be served and, accordingly, gave the stamp of approval to the same. However, the High Court granted liberty to the writ petitioner to produce other available evidence to substantiate its claim and specifically permitted to examine its employee as a witness in the proceeding. In the instant case, the High Court has granted liberty to the respondent herein to examine its General Manager to substantiate its claim and further opining that the said evidence should be considered within the parameters of Sections 30 and 33 of the 1940 Act. The learned senior counsels for the parties have pressed their argument relating to legal misconduct. Both the learned senior counsels for the parties have construed the order that the said liberty has been granted to establish the misconduct and precisely that is the subject matter of challenge before us. Therefore, we have clearly opined that to substantiate a stance of legal misconduct on the part of the arbitrator, examination of any witness in court is impermissible. It is because it must be palpable from the proceedings and the learned single Judge has already directed that the proceedings before the arbitrator to be requisitioned by the civil court. Least to say, it will be open for the respondent to establish the ground of legal misconduct from the arbitral proceedings. We may hasten to add that we have not said anything as regards legal misconduct pertaining to the present case, although we have referred to certain authorities as regards the legal misconduct. In view of the aforesaid premises, the appeal is allowed in part as far as it grants permission/liberty to the respondent to examine any witness in court. The learned Civil Judge would requisition the records from the learned arbitrator, if not already done, and the respondent would be at liberty to advance its arguments for pressing the factum of misconduct from the said records.
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2015 (12) TMI 777
Jurisdiction under sub-section (2) of section 142 Negotiable Instruments Act - Held that:- Section 142(2)(a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015, vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction of the Court, where the cheque is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account). We are also satisfied, based on Section 142A(1) to the effect, that the judgment rendered by this Court in Dashrath Rupsingh Rathod’s case [2014 (8) TMI 417 - SUPREME COURT] would not stand in the way of the appellant, insofar as the territorial jurisdiction for initiating proceedings emerging from the dishonor of the cheque in the present case arises. Since cheque No.1950, in the sum of ₹ 26,958/-, drawn on the Union Bank of India, Chandigarh, dated 02.05.2006, was presented for encashment at the IDBI Bank, Indore, which intimated its dishonor to the appellant on 04.08.2006, we are of the view that the Judicial Magistrate, First Class, Indore, would have the territorial jurisdiction to take cognizance of the proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881, after the promulgation of the Negotiable Instruments (Amendment) Second Ordinance, 2015. The words “ as if that sub-section had been in force at all material times.” used with reference to Section 142(2), in Section 142A(1) gives retrospectivity to the provision. In the above view of the matter, the instant appeal is allowed, and the impugned order passed by the High Court of Madhya Pradesh, by its Indore Bench, dated 05.05.2011, is set aside. The parties are directed to appear before the Judicial Magistrate, First Class, Indore, on 15.01.2016. In case the complaint filed by the appellant has been returned, it shall be re-presented before the Judicial Magistrate, First Class, Indore, Madhya Pradesh, on the date of appearance indicated hereinabove.
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