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Income Tax
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2013 (12) TMI 922
Deletion of penalty u/s 271(1)(c) of Income Tax Act, 1961 - Disallowance of expenses under section 14A – Inaccurate particulars of income furnished – Held that:- The penalty levied u/s 271(1)(c) of the Act was on the facts of the case and the law has rightly been deleted by the Ld. CIT(A) - the information and details in respect of exempt income and expenses incurred during the relevant year were available in the audited accounts filed with the A.O. - the information and details have not been found by the AO to be false or factually incorrect - Relying upon Godrej & Boyce Mfg. Co. Ltd. vs. Dy.CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D will not be applicable and the very foundation of levy of penalty in the present case i.e. Rule 8D for making disallowance u/s 14A in the assessment year under consideration stands demolished and therefore, penalty cannot survive. There is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false – Thus, there would be no question of inviting the penalty u/s 271(1)(c) of the Act - A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - Such claim made in the Return cannot amount to the inaccurate particulars – Decided in favour of Assessee.
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2013 (12) TMI 905
Pre-operative expenses - Expenses on business expansion activities - Held that:- The increase in capital base after issue of additional equity shares by private placement, the assessee-company intends to expand its existing project - The assessee has invested substantial amount in purchase of Machineries etc., Further, with the increase in number of Windmills, the sales turnover of the assessee has increased almost three fold from Financial Year 2008-09 to Financial Year 2010-11 - The expenditure incurred towards raising of additional equity shares by private placement can be attributed to extension of undertaking and is thus eligible for amortization under the provisions of section 35D - Following EID Parry (India) Ltd., Vs. DCIT [2012 (7) TMI 698 - MADRAS HIGH COURT] - where expenditure has been incurred in connection with issue of shares which are directly relatable to expansion to capital base of the company for raising of new projects, it would be allowable u/s. 35D - Decided in favour of assessee. Deduction u/s 80IB - Held that:- The assessee for the first time raised the issue of additional/higher deduction amounting to ₹ 50,61,142/- u/s.80IB before the CIT(Appeals) - This claim was never made before Assessing Officer - Decided against assessee.
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2013 (12) TMI 904
Applicability of section 50C - Held that:- Following ACIT Vs. P.R.Chockalingam [2012 (4) TMI 417 - ITAT CHENNAI] - The value of the property should be determined at the time of handing over of possession of the property and not at the time of registration - The value should be determined in accordance with the terms and conditions mentioned in MOU between the assessee and the developer - The provisions of Section 50C will not be applicable as they were inserted by the Finance Act, 2002 w.e.f. 01-04-2003 - Decided against Revenue.
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2013 (12) TMI 903
Loan taken from company - Deemed dividend - Held that:- The assessee has taken loan from the company in which he is substantially interested - Provisions of Section 2(22)(e) were attracted with respect to the loan taken by the assessee as discussed by the CIT in his order u/s 263 - The advance given by the company for purchase of property in the name of assessee also amounts to advance by company to the assessee, therefore, attracts the provisions of Section 2(22)(e) - The amount of deemed dividend cannot be more than accumulated profits - The issue was set aside for fresh adjudication by AO to determine the factual position and the quantum of advance given by the company and deemed dividend.
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2013 (12) TMI 902
Fall in G.P.rate - Held that:- Following CIT Vs. Smt. Poonam Rani [2010 (5) TMI 57 - HIGH COURT OF DELHI] - The AO has not pointed out any particular defect or discrepancy in the account books maintained by the assessee - The CIT(A) was satisfied that the assessee had furnished complete details, including quantitative details in respect of purchase of raw material, manufacture and sale of the finished products - The Assessing Officer had not invoked the provisions of Section 145(3) of the Act - The addition on estimate basis without rejecting the books of accounts was not justified - Decided against Revenue. Disallownace u/s 14A - Held that:- The assessee made an investment in tax free bonds and units and earned tax free dividend income - The partners current capital was non-interest bearing and used for investment in mutual fund - Following assessee's own case for earlier A.Y. 2007-08 and 2008-09 - Nothing was brought on record to prove the nexus between the interest bearing funds and the investment in bonds and mutual funds on which exempted dividend income was earned by the assessee - The disallowance made by the Assessing Officer and sustained by the learned CIT(A) was not justified - Decided in favour of assessee. Depreciation on WEG installed - Held that:- Following assessee's own case for earlier A.Y. 2008-09 - The assessee was eligible for depreciation under section 32 of the Act on the wind mills - The issue was restored for fresh adjudication. Interest on FDR - Held that:- The assessee pledged the FDR as security for export oriented units (EOU) - The FDRs were pledged for commercial expediency of the assessee - Following CIT Vs. Jagdish Prasad M. Joshi [2008 (11) TMI 326 - BOMBAY HIGH COURT] - It is to be considered as business income and eligible for deduction under section 10B of the Act - Decided in favour of assessee.
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2013 (12) TMI 901
Undisclosed investment - Held that:- No plausible explanation was furnished by the assessee to show that there was fall in the real estate prices during the past years - The value of another piece of land which was purchased by the assessee from 'Devabala Group' around same time had appreciated. This fact has not been disputed by the assessee - The CIT(Appeals) has only taken into consideration the amount advanced by the assessee to Shri C. Balan - Decided in favour of Revenue.
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2013 (12) TMI 900
Validity of assessment u/s 263 - Held that:- The subscription collected by the assessee is not its income and hence is not taxable in the hands of the assessee - The assessee is only a nodal agency for collecting subscription on behalf of M/s. Sun TV Network Ltd. - The amounts collected by the assessee are credited to the separate account 'Subscription Charges' - The said account is debited at the end of Financial Year when the amounts are paid to M/s. Sun TV Network Ltd. - As the subscription collected by the assessee from various cable operators is not the income of the assessee, the same is not shown in Profit & Loss account - The cable operators are deducting tax at source on the payments of subscription made to assessee - The assessee is remitting the gross amount to M/s. Sun TV Network Ltd., the assessee is entitled to receive credit of the tax deducted at source u/s. 199 of the Act subject to production of TDS Certificates received from respective deductors - Decided in favour of assessee.
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2013 (12) TMI 899
Deduction u/s 80IC - Held that:- Plant which was used outside India by a person other than the assessee shall not be regarded as plant and machinery previously used for any purpose - In the given case, the plant and machinery was never used within India, as per the documents submitted by the assessee and enquiries made by Ld. CIT(A) - Though the machinery was second hand but it was not used by the assessee outside India, therefore, it cannot be said that machinery was previously used for the purpose of computing deduction u/s 80IC(4) of the Act - Decided against Revenue.
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2013 (12) TMI 898
Unexplained investment and purchases - Held that:- There is no material on record to say that the purchases made by the assessee were bogus except the general statement recorded by the Department in the case of Shri Rakesh Kumar Gupta. which was later on retracted - In absence of any material brought on record against the submissions made by Shri Rakesh Kumar Gupta before the AO of the assessee the addition, if any, made in the case of the assessee will be based on presumption only - As against that assessee has submitted various evidences to show that the actual delivery of the goods was received by the assessee from the said party which has not been discarded by the AO - The addition cannot be made solely on the basis of the statement of the third party - The alleged bills through which the assessee has claimed to have purchased the material has not been examined - For all these 3 years the assessee has not shown any opening stock or closing stock which further supports the view of the Assessing Officer that there was no physical purchase and sale of the goods in question - To prove the genuineness of the purchase and sale the supporting material has to be produced to show that the transactions in question are backed by actual delivery - The issue was restored for fresh adjudication.
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2013 (12) TMI 897
Validity of assessment u/s 147 - Held that:- The AO in this case had reopened the assessment on three different grounds - The AO in the reasons recorded has not mentioned anywhere regarding any facts being not disclosed truly and fully by the assessee - The AO had reopened the assessment only on account of retrospective amendment to the Explanation 1 to section 115JB (2) by the Finance Act 2009 with effect from 1.4.2001 - As per amendment any amount set aside as provision for diminition in the value of assets has to be added to book profit - The retrospective amendment no doubt can be made the basis for reopening of the assessment but in cases where assessment has already been made u/s 143(3) as in this case and four years have elapsed from the end of relevant assessment year, reopening can be made only if there is failure on part of the assessee to disclose truly and fully all material facts - The provisions for bad and doubtful debts have been added by the assessee in the computation of income under the normal provisions which is clear from the details of computation of income - AO was not required to discover it from examination of book of accounts - There was no failure on part of the assessee to disclose truly and fully all material facts relating to provisions for bad and doubtful debts - Reopening on account of failure to add back the provisions to the book profit cannot be upheld. Deferred tax credit was because of reversal of provision made in earlier year, it was only an accounting entry and there was no real income and, therefore, it was reduced from the profit - The AO has reopened the assessment as per the subsequent amendment by the Finance Act 2008 w.e.f 1.4.2001 - Amount of deferred tax credited to the P&L Account is required to be reduced while computing the book profit in terms of clause (viii) of Explanation 1 to section 115JB(2) - The AO had reopened the assessment in 2010 when this particular provision was already on the statute - There was no escapement of income on this account and reopening based on this reason cannot be justified. Any income which is eligible for reduction u/s 10A is required to be reduced and expenses relating to such income are required to be added - Entire income which is eligible for exemption u/s 10A is required to be reduced and not only the income which is actually allowable as deduction u/s 10A - The assessee has acted clearly in accordance with provisions - Decided in favour of assessee.
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2013 (12) TMI 896
Leasing of property - valuation - nature of charges received towards amenities i.e renting out car parking spaces, high end air conditioning plant, lift, water supply with power back up, fittings, furnishings and fixtures like wooden cabins and wooden empanelling are common - Statutory deduction u/s 24(a) - Held that:- These are common in nature which are to be provided to the tenants/lessees to carry out their day-to-day works by the landlord, without these they cannot function - For this the assessee has executed multiple agreements with the lessee company - The treatment of an income under the head "house property" is dependent upon the intrinsic nature of the letting out and not on the fact of multiple agreements execution. All the agreements are executed on the same day and assessee has given a plausible reason for drawing different agreements for letting the same house property - All the agreements together constitute a composite transaction for letting out of house property; rent there from is liable under the head income from house property, eligible for statutory deduction u/s 24(a) - In all the earlier years the entire rental income from this property based on these agreements has been considered as income from house property - Following Radhasoami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME Court] - When facts and circumstances being same the revenue should not deviate and adopt contrary view unless there are extra ordinary circumstances - Decided against Revenue.
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2013 (12) TMI 895
Whether penalty u/s 271(1)(c) be levied on change of head of income - Rent received - Business income or income from house property - Held that:- The assessability of an income under a particular head depends upon various facts and circumstances - There is very thin line demarcation on which it can be adjudged the nature of income and its classification - It has clearly not been brought on record by the A.O. that assessee's explanation is actually false on the basis of some evidence or material. The penalty u/s.271(1)(c) cannot be sustained in such a situation - Decided against Revenue.
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2013 (12) TMI 894
Levy of penalty under section 271(1)(c) - Prior period expenses - Held that:- The assessee has furnished all the particulars along with the voucher numbers of these expenses in the Audit Report which pertain to the financial year 2003-04 i.e., the assessment year 2004-05 - The bills were received after 1st April 2004 - No material has been brought on record to prove these details incorrect or the expenses do not pertain to the relevant financial year - The assessee has not concealed particulars of income - Decided against Revenue. Genuineness of expenses - Held that:- Only part of the stitching charges remained unverified u/s 133(6) - In order to establish its claim of payment, the assessee has furnished copies of bills, details of account payee cheque, copy of bank statement reflecting such payments, Form-16A showing TDS deducted on such payments and also the details of Permanent Account Number of such parties - The assessee cannot be said to be guilty of furnishing inaccurate particulars of income - Decided against Revenue.
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2013 (12) TMI 893
Validity of reassessment - Held that:- Following Hindustan Unilever Ltd. vs DCIT [2010 (4) TMI 206 - BOMBAY HIGH COURT] - All the four units of the assessee were eligible under section 10B - Three units had returned a profit during the course of the assessment year, while the sick unit had returned a loss. The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income - The reassessment proceedings were not valid - Decided in favour of assessee. Eligibility of loss for deduction u/s 10A - Held that:- Business losses of other units will not be set off against the profits of the undertaking engaged in export of computer 'software for the purposes of determining the allowable deduction under section 10A - Unabsorbed business loss is to be set off under section 72 and the same is not mentioned under section 29 - The deduction under section 10A in respect of the allowable unit under section 10A has to be allowed before setting off brought forwarded losses of a non-section 10A unit - Decided in favour of assessee.
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2013 (12) TMI 892
Receipts of crane hire charges, sale of empty gunny bags/drums and insurance claim - eligible for deduction u/s 80IA or not - Held that:- Following COMMISSIONER OF INCOME-TAX Versus ESCORTS FINANCE LTD.[2009 (8) TMI 677] - DELHI HIGH COURT - Even the ex-facie bogus claims attracts penalty - The assessee did not explain to the Income-tax Appellate Tribunal as to in what circumstances and on account of whose mistake, the amounts claimed as deductions in this case were not added, while computing the income of the assessee-company - The income should inextricably have a direct nexus with the ongoing business of the assessee. Insurance claim, sale of empty gunny bags and crane hire charges, though may be part of the business of the assessee but did not have direct nexus - Decided against assessee.
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2013 (12) TMI 891
Hoarding Maintenance Expenses - Held that:- The expenses for putting up new median hoardings has generated income to assessee not only for this concerned assessment year but also for the next three succeeding assessment years - Treating a part of the expenses as capital in nature and granting depreciation on the same is justified - The steel purchase was only a subject matter of appeal before the CIT (A) and not the whole hoarding maintenance expenses - The CIT (A) have considered only the steel purchases as capital expenses and not of the whole hoarding maintenance expenses - Partly allowed in favour of assessee.
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2013 (12) TMI 890
Leasing the quarrying by the Temple Management Committee - Liable for TCS - Held that:- As per decision in Jagannath Temple Managing Committee vs CIT & Others [2007 (10) TMI 173 - ORISSA HIGH COURT] - Shree Jagannath Temple Managing Committee has been constituted by the State Government under the provisions of Shree Jagannath Temple Act - As per section 2(31) - From the definition of the word 'person', it is apparent that an authority established by under Central, State or Provincial Act for managing affairs of the temple cannot be regarded to be a 'person'. Temple is different from its Managing Committee, which has been appointed under Shree Jagannath Temple Act - The order of the Assessing Officer did not make the Jagannath Temple Managing Committee to be responsible for collecting tax - The Assessing Officer has made Shree Jagannath Temple Office to be responsible to collect tax which cannot be a person - It cannot also be 'every person' as referred to Section 206(1C) - The order passed by the Assessing Officer is void ab initio - Decided in favour of assessee.
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2013 (12) TMI 889
Depreciation on assets – Application of funds – Held that:- Following Karnataka Reddy Janasangha in [2013 (12) TMI 163 - ITAT BANGALORE] - The income of the trust is required to be computed under section 11 on commercial principles, without reference to the heads of the income specified under section 14 – As per Circular No.5-P (LXX-6) dated 19th June, 1968issued by CBDT - The income of the trust is to be computed on the commercial basis - The normal accounting principles clearly provide for deducting depreciation to arrive at income. The income so arrived after deducting the depreciation is to be applied for charitable purpose. Capital expense is application of the income so determined - There is no double deduction as claimed by the DIT(E) in his order – Depreciation is allowed on cost of assets which have been fully allowed as application of income u/s 11 – Decided in favour of assessee.
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2013 (12) TMI 888
Depreciation on investments held to maturity - Held that:- Following assessee’s own case for AY 2006-07 - Value of the securities at cost or market value whichever is less should be accepted for income tax even if the banks in their books do not value on that basis - it is an accepted proportion that investment made by the bank to comply with the SLR requirement would constitute their stock in trade and depreciation in value of the same is an allowable deduction - Decided against Revenue. Broken period interest - Held that:- Following assessee’s own case for AY 2006-07 - The broken period interest included in the purchase price of Government securities held by the banking company to comply with SLR requirement is entitled to deduction - Decided against Revenue. Disallowance u/s 14A - Held that:- Following assessee’s own case for AY 2006-07 - The disallowance is to be made on reasonable basis - The disallowance is reduced to 2% expenditure as relating to earning of the exempted income u/s 14A - Decided against Revenue. Amortization of public issue expenses - Held that:- Following assessee’s own case for AYs 2000-01 to 2004-05 - The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself - The expenses are disallowed u/s 35D - Decided against assessee. Provision for bad and doubtful debts - Held that:- Following assessee's own case for earlier years - Irrespective of the debit to the profit and loss account on account of provision for bad and doubtful debts (PBDD), an Assessee is entitled to 10% of the AARA as deduction u/s.36(1)(viia) of the Act - Decided against assessee. Disallowance of unrealized interest - Held that:- Following assessee’s own case for AY 2006-07 - Income which was earlier recognised is not to be allowed in the subsequent year in case it is permissible for the assessee to write off such income in concerned assessment year when it was found that it was not recoverable - Decided in favour of assessee. Provision for leave encashment - Held that:- In view of the amendment to Section 43B by the introduction of Sub Section (f) which provides for allowing deduction on leave encashment only on the actual payment - There is nothing on record to show that the assessee has parted with the amount for making payment for the leave encashment - This was merely a provisions made by the assessee - Decided against assessee. Debts written off by the non-rural branches - Held that:- Following Catholic Syrian Bank Vs. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA] - The same is allowed as deduction - Decided in favour of assessee.
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2013 (12) TMI 887
Bad Debts – Held that:- Sedimentation claims are the normal features of the business carried on by the assessee - The manufacturer has to bear the loss due to sedimentation - The loss on account of sedimentation which the manufacturers have to bear is a debt due by the manufacturer to the assessee - The assessee has therefore recognized the liability which the beer manufacturer has to pay the assessee on account of short supply of beer due to sedimentation loss in its books of account - This liability has all the ingredients of a debt - This debt has been taken into account in computing the income of the assessee in the earlier previous year - Following TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] - It was not necessary for the assessee to prove that the debt in question has become bad and irrecoverable – Decided against Revenue. Bad debts of earlier years – Held that:- The assessee has failed to explain the amounts written off with substantial evidence – The assessee was given opportunity at three appellate stages to substantiate his claim - The assessee has not filed any evidence to substantiate its claim for deduction on account of bad debts – Decided against assessee.
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2013 (12) TMI 886
Tax not deducted at source on commission to non-resident selling agents - Held that:- The assessee paid commission to M/s Wallace Cartwright & Co - None of the authorities have verified agreement between the assessee and the said company, based on which payments were effected to them - No examination has also been done as to whether there existed any DTAA between India and Tunisia and what was the definition of "technical services" if any in such DTAA. Reimbursement made to subsidiary for expenses incurred - Held that:- None of the authorities have verified the base on which the reimbursements had been done - The issue has been restored for fresh adjudication. Disallownace u/s 14A - Held that:- The disallowance under Section 14A could not have been made since Rule 8D of Income-tax Rules, 1962 was not applicable for that assessment year - Rule 8D is applicable w.e.f. A.Y. 2008-09 - Decided against Revenue.
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2013 (12) TMI 868
Disallowance of Gifts on account of personal user of business assets - Various additions made are not justified being outside the purview of s. 153A of the Act – Held that:- The assessee had already submitted his returns prior to search which had also attained finality - no document or incriminating evidence was found during the course of search which could be legally made a basis for disturbing the already settled issues – The documents submitted clearly prove the identify, creditworthiness of the donor and genuineness of the gift - Following Jai Steels (India) vs. Asstt. CIT [2013 (6) TMI 161 - RAJASTHAN HIGH COURT] - In an assessment under s. 153A, it is not open to the assessee to seek deduction or claim relief not claimed by it in the original assessment which already stands completed before the date of initiation of the search or making of requisition - The gifts already disclosed by the assessee in the returns of income, which have attained finality, cannot be disturbed. Unexplained gifts - Genuineness of Gifts – Held that:- After considering the proof regarding gifts, they are considered to be genuine gifts - The assessee has produced enough evidence to prove the identity of the donors, their creditworthiness and also the genuinity of the gift transactions - The gifts have been given through cheques and stand confirmed by the donors - The donors have also proved the sources of their respective gifts - No adverse materials was found during the course of search to even suspect the gifts – the gifts are otherwise genuine and have already been disclosed by the assessee in the returns filed before the date of search and which have already become final – Decided in favour of Assessee. Addition on account of unexplained personal expenses – Held that:- The disallowance out of expenses claimed on account of personal or non-business user of the vehicles is not justified - The auditor has simply mentioned that some personal use of business assets is not denied by the assessee and the value of the same could not be ascertained by them - ad hoc and baseless additions cannot be encouraged – Decided in favour of Assessee. Addition of gold ornaments – Held that:- The finding of the CIT(A) is not justified being simply ad hoc and without any valid basis - the additions made are deleted. Justifiability of the additions - No unexplained asset(s)/expenditure has found during this search –Held that:- There is no other unexplained asset or expenditure which can be said to have been found during the search - The additions made are not supported by any unexplained assets or expenditure - On the basis of assets and the expenditure theory the addition so made in the hands of the assessee is apparently uncalled for. Addition of unexplained expenditure on foreign travel – Held that:- There is no reason as to why the receipts of monies from his parents should not be accepted when even the source thereof has been explained and the proof is enclosed in the papers – the entire amount to be treated as explained.
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Customs
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2013 (12) TMI 885
Revocation of CHA License - Violation of provisions of Regulation of CHALR 2004 - Import of zinc ingots under Advance Licence Scheme - Held that:- appellant has obtained a letter from the importer to whom the goods be delivered after clearance and same is placed on record which clearly explicit that the goods are to be delivered at South Goods Carriers, Chatra Bhuj Bldg., 15, Ground Floor, 178, Sant Tukaram Road, Mumbai. Further, in the statement of clerk of the appellant who dealt with the clearance of the goods clearly says that the said consignment was transported by them in local vehicle for delivery to South Goods Carriers, Chatra Bhuj Bldg., 15, Ground Floor, 178 Sant Tukaram Road, Mumbai on account of M/s. Ventura Alloy (importer). It is further stated that Anthony D’Souza (importer) was waiting at the said address when the consignment was transported to the given address and he had taken the delivery of the same. Further, we find that in this case, the clearance took place in 2001 and DRI started investigation in the year 2004. It may happen that in the year 2004 the transporter might have changed their premise or may be non-existent in 2004. But investigation does not reveal that whether it was enquired that in 2001 said transporter was there or not - Following decision of M/s. Sainath Clearing Agency Versus Commissioner of Customs (General) Mumbai. [2011 (3) TMI 292 - CESTAT, MUMBAI] - Decided Decided in favour of appellant.
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2013 (12) TMI 884
Penalty under Section 112(a) and (b) - Confiscation of 750 bars of gold imported in concealed manner - Held that:- The appellants have not produced any evidence of their innocence except the devil of allegation. Therefore, the appellants have rendered themselves liable for penal action under Section 112(a)/(b) of the Customs Act, 1962. None of the co-noticees have retracted their statements. All the existing evidences are against the appellants. Ms. Nazeem was an abetter in the business of gold smuggling by her husband as she tactfully supported him. She was involved with the activity of smuggling of her husband by travelling abroad, having properties in her name - Therefore, the Revenue has been able to prove the guilt of the appellant with circumstantial evidences, the penalties are rightly imposed on the appellants - Decided against assessee.
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2013 (12) TMI 883
Amendment of shipping bill - Correction in advance License number - Held that:- Under Section 149 of the Customs Act, 1962, the proper office has been given the discretion to authorize any document, after it has been presented in the Custom House to be amended. In the case of shipping bill, the amendment can be carried out even after the goods have been exported on the basis of evidence, which was in existence at the time the goods were exported - Thus, there appears no impediment in permitting the only amendment sought in the shipping bill i.e. of amending the Advance Licence number.” The mere fact that the export invoices were not produced initially and was produced later does not debar the exporter from claiming the amendment of shipping bill. For amending the shipping bill, the only condition is that the document should have been in existence at the time the original exports were carried out. That is not disputed. Therefore, the respondent is rightly entitled for amendment of the shipping bill - Decided against Revenue.
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2013 (12) TMI 882
Import of nylon filament yarn - Exemption Notification No. 29/2004-C.E., dated 9-7-2004 as amended by Notification No. 10/2005-C.E., dated 1-3-2005 - Held that:- claimed exemption under amended Notification No. 29/2004-C.E. is meant for processed filament yarn and the impugned goods under import are not processed filament yarns, prima facie, the appellants are not eligible for the duty concession claimed - The 2nd appellant has no doubt taken a ground regarding limitation but the same was not argued and further the claim of limitation has not been substantiated by producing a copy of the show-cause notice and the copies of the Bills of Entry. Hence, at the prima facie stage, no view can be taken on the claim of limitation - prima facie no case has been made out for total waiver of pre-deposit - Partial stay granted.
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2013 (12) TMI 881
Import of ball bearings of KG brand from China - Enhancement in value of goods - Held that:- Commissioner of Customs (Imports), Mumbai has issued the guidelines for adopting the assessable value of the lesser known brand Chinese brand therein. Such guidelines have been issued after taking into account the average cost of material, wastage, manufacturing cost and other charges etc. - in the light of the said guidelines issued by the Commissioner and the decision in the case of Techno Marketing [2003 (11) TMI 384 - CESTAT, NEW DELHI] upholding the applicability of such guidelines, we are of the view that the adoption of the assessable value at the rate of US $ 1.60 per kg cannot be faulted - appellate authority has taken into consideration the import of ball bearings from the same country i.e. China by other importers, assessed to duty at the rate of US $ 1.60 per kg. When the large majority of the importers were conforming to such norms, there is no special reason to adopt a lower value for the imports made by the appellant - Decided against assessee.
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Service Tax
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2013 (12) TMI 923
Denial of Cenvat credit – Services can be treated as ‘input services' under Rule 2(l) of CENVAT Credit Rules, 2004 OR not - Nexus between services rendered in Corporate Office and RDCs with the manufacturing activity - Waiver of Pre-deposit – Held that:- The services were rendered at the applicant's Corporate Office as RDCs - ECOF industries Pvt. Ltd Vs Commissioner of Central Excise, Bangalore [2009 (10) TMI 171 - CESTAT, BANGALORE] - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - The contention of the ineligibility of credit on the input service credit on transportation from depot to retail outlets by the revenue holds ground – Appellant directed to submit Rupees Fifteen Lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2013 (12) TMI 920
Stay application - Demand of service tax - Commercial or Industrial Construction Service - Held that:- applicant did not furnish any declaration to exercise the option as envisaged in the said rules. If they had exercised such option, Revenue would have had a chance to know whether option was in respect of on-going project or not and in the second place, there is no indication in the ST-3 returns that payment is in respect of on-going project. So, Revenue had no chance to know that payment under the scheme was being made for project for which service tax was already paid under construction service for the past period - The issue is contentious and it will be decided during the course of decision of appeal - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (12) TMI 919
Construction of residential complexes - appellant under Joint Development Agreements with land owners assigned portion of the constructed area, in the form of flats / houses, in favor of the land owners and sold remaining constructed area, in the form of flats/houses, to various buyers - dispute in the nature of non-payment of tax in respect of flats handed over to land owners - Held that:- Relationship of service provider and service receiver - In instant case, since UDS is registered in name of land owners and then the Developer constructs flats for the original Land Owner, becoming UDS holder after registering UDS in his name. Hence it is clearly outside the scope of the clarification given by CBEC and there is a service provided to the UDS holders including the original Land Owners. Also, residential complexes in question were not constructed for personal use of the owners of the land. It was predominantly for sale to individual buyers and was thus covered by the definition of the service. Time bar - Since there has been persistent resistance on the part of the appellant in providing the required information, hence appellant cannot claim benefit of bonafide belief and argue that demand for a period of one year from relevant date only will apply - Following decision of LCS City Makers Pvt. Ltd. Versus Commissioner of Service Tax, Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI] - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (12) TMI 918
Levy of penalty u/s 76 and 78 – waiver of penalty u/s 80 - Service Tax on Agent – Held that:- appellants paid the entire amount before issue of Show Cause Notice - provision of section 80 are invokable in the present case following the decision of Allahabad High Court in Commissioner Of Central Excise Versus M/S Auto World [2010 (1) TMI 21 - ALLAHABAD HIGH COURT] - We therefore set aside the penalties under section 76, 78 of the Act - Decided in favour of assessee.
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2013 (12) TMI 917
Waiver of pre deposit - Difference in the figures of receipts shown in their balance sheet and ST-3 returns filed with the department - Held that:- entire demand has been worked out on the basis of gross taxable value declared by the applicant in their ST-3 returns and that gross receipts shown by them in their respective balance sheets for the relevant period. The Ld. Advocate has fairly conceded that the data & evidences reconciling the differences relating to the taxable value received during the period could not be placed before the Ld. Commissioner. However, the reconciliation statement filed before this Tribunal duly certified by their Chief Accounts officer shows that there is an excess payment of 14.31 Lakhs. Prima facie we find that the Applicant is a Public Sector Undertaking and the Certificate given by the Senior Accounts Officer does carry some weight - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (12) TMI 916
Stay application - Waiver of pre deposit - Cleaning activity Assessee contends that that they are only evacuating ash from the silos and hydrobins and they are in no way concerned with the cleaning activities - Held that:- Tribunal has already allowed the stay application filed by the applicant [2013 (10) TMI 723 - CESTAT KOLKATA] on the Appeal filed by the applicant against the Revision Order of the Ld. Commissioner. The present stay application relates to the Appeal decided by the Ld. Commissioner (Appeals) on the same issue arising out of the Order-in-Original passed by the Additional Commissioner dropping part of the demand initially issued to the applicant. In these circumstances the present stay application becomes infructuous and accordingly the same is dismissed - Application dismissed.
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2013 (12) TMI 915
Demand of service tax - Tour Operators service - Held that:- assessees are only renting their vehicles. We also find that the department could not bring out on record that the assessees are engaged in the business of planning, scheduling, organizing or arranging tours. In these circumstances, the assessees cannot be termed as tour operators. Therefore, the demands of Service Tax against them are not sustainable in law. As the demands are not sustainable, the penalties also do not survive - Decided in favour of assessee.
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2013 (12) TMI 914
Commercial training or coaching services - Explanation added to Section 65(105)(zzc) of the Finance Act - Held that:- According to the retrospective amendment, the said expression shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit motive. Prima facie , the appellant gets covered within the ambit of the retrospectively amended meaning of the expression (commercial training or coaching centre). Even without considering the case on merits, the Hon'ble Supreme Court, on a similar set of facts, directed the appellant to predeposit 1/3 of the amount of service tax demanded. It is pertinent to note that such direction for predeposit was ordered vis-à-vis a demand confirmed against the assessee entirely for the larger period of limitation. If that be so, fortiori, the appellant is liable to predeposit in larger proportions in the instant case where the entire demand of service tax is admittedly within the normal period. Nevertheless, in a reasonable approach, we would like to restrict the predeposit to 1/3 of the total demand of service tax and education cesses. After taking into account the payment already made by the appellant and appropriated by the adjudicating authority, we direct the appellant to predeposit an amount of Rs.25 crores (Rupees twenty five crores only) within eight weeks (this much time specially prayed for by the counsel for the appellant) and report compliance to the Deputy Registrar on 26.06.2013. The Deputy Registrar to report to the Bench on 02/07/2013. Subject to due compliance, there will be waiver and stay in respect of the balance dues including penalties and interest on service tax and education cesses - Decided against assessee.
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2013 (12) TMI 913
Demand of service tax - Extended period of limitation - Management, Maintenance and Repair Services - Eligibility to exemption under Notification No.12/2003-ST dated 26.2.2003 - Held that:- In such matters involving different views given by Tribunal invoking extended period for demanding tax is prima facie not justifiable - Conditional stay granted.
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2013 (12) TMI 912
Transportation of the employees from residences to offices - Service charges collected from the corporate - Tour operators services u/s 65(115) of Finance Act - Waiver of pre- deposit – Held that:- The benefit of the said exemption would not apply as regards the exemption under notification no. 20/09-ST - the notification excludes from its scope such services if they are of the nature of tourism, conducted tours, charter or hire service – the service is rendered on charter/hire basis – Prima facie appellant has not been able to make a case for complete waiver – Appellant directed to deposit 25% of the amount of duty as pre-deposit – upon such submission stay would be granted till the disposal – Partial stay granted.
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2013 (12) TMI 911
Demand of service tax - Free Warranty Service - Held that:- There are different provisions and various decisions which confirm the position that the value of spare parts used while providing "Free Warranty Service" to motor vehicles cannot form part of value of service on which service tax has been paid. One such case is already cited by the applicant - "Free Warranty Service" the service is free to the customer but is billed to the manufacturer of the motor vehicle. So also the spare parts replaced is free to the customer but billed to the manufacturer. The applicant's submission that this fact is proved from debit notes is not considered by the adjudicating authority. Therefore, we grant waiver of pre-deposit of dues arising from the impugned order and there shall be stay of collection of such dues during the pendency of the appeal - Stay granted.
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2013 (12) TMI 910
Waiver of pre-deposit of Service tax - Penalty u/s 77 & 78 - Activity of packaging of paper - Held that:- packing activity in terms of sub-section 76(b) includes packaging of goods but does not include any packaging activity that amounts to ‘manufacture’ within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944. Said Section 2(f)(iii) defines ‘manufacture’ as a process which involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers or adoption of any other treatment on the goods to render the product marketable to the consumer - inasmuch as the paper becomes marketable only after the same is duly packed in the wrapping paper, the said activity has to be held as manufacturing activity - appellant has a good prima facie case in its favour so as to allow the stay petition unconditionally - Stay granted.
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2013 (12) TMI 909
Waiver of pre deposit - Waiver of pre deposit - Penalty u/s 77 and 78 - Valuation of taxable service - Whether the value of wall rent is required to be included in the taxable value for the purpose of discharging Service Tax and also further the cost of Flex and other material is to be included in the value of taxable service - Held that:- amount of wall rent was recovered by the applicant from the service recipients. Under Section 67 of the Finance Act and Rules made thereunder, where any expenditure or cost is incurred by the service provider in the course of providing service, such expenditure or cost is required to be included in the taxable value. Similarly cost of flex and other material is required to be added in the value. Prima facie we are of the view that the expenditure incurred on account of wall rent as well as on account of cost of flex and the other material is required to be included in taxable value - Conditional stay granted.
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2013 (12) TMI 908
CENVAT Credit - Onus to prove destination - Whether the inputs (sugar cane) used by the appellant necessitating security thereof at the cane collection centre suffering service tax on the security service available in this regard shall entitle the appellant to the cenvat credit thereof - Held that:- sugar cane collection centre was provided security service for securing such sugar cane which are said to be input of the appellant. This cannot be said to be not in relation to business - No doubt a service when claimed to be eligible to cenvat credit, assessees are obliged to prove that the said service is directly availed at the right destination i.e. either at place of manufacture or place of providing output service. It is necessary for the Revenue officers to safeguard interest of Revenue making scrutiny of claim on the basis of material facts and evidence without passing bald order - Stay granted.
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2013 (12) TMI 907
Service tax liability - Renting out of Immovable Property - Benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008 - Held that:- benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Prima facie, we find that the appellants have made out a case for waiver of pre-deposit of amounts involved - Stay granted.
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2013 (12) TMI 906
Demand of service tax - Construction of Residential Complexes - Works Contract Service - Held that:- definition of “Residential Complex” at Section 65(91a) will apply both for levy under “Construction of Residential Complex” as well as under “Works Contract Service” because this expression is used in Section 65(105)(zzzh) and 65(105)(zzzza). The clarification issued by C.B.E.& C. is prima facie applicable to the situation at hand. Therefore we grant waiver of pre-deposit of dues for the admission of appeal and there shall be stay on its recovery during the pendency of the appeal - Stay granted.
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Central Excise
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2013 (12) TMI 880
Maintainability of demand u/s 11D of Excise Act – Payment collected on increased price but accordingly duty not paid - Collection of Excise duty from the customers, on account of fluctuation in rates of the petroleum products – Whether the assessee is a dealer or manufacturer – Held that:- Following M/s BPCL Vs. CCE, Meerut [2011 (9) TMI 434 - SUPREME COURT OF INDIA] - There is nothing on record to show that the respondent is a manufacturer, on the contrary, from the initiation of proceedings at the time of issuance of notice till conclusion, they are treated as dealer - once the tribunal has decided the matter based on the principles settled, there was no reason to interfere in the matter – Decided against Appellant.
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2013 (12) TMI 879
Application for condonation of delay rejected – Compliance of Section 35(B)(5) of Central excise act – Appellant contended that the Tribunal has failed to take into consideration subsection 5 of Section 35(B) of the Central Excise Act which empowers the learned Tribunal to condone the delay – Held that:- It is not as if the appellants were not doing anything in the matter and have not taken any steps for filing the appeal - The delay has occasioned on account of the procedural aspects - After the Commissioner of Goa decided to accept the order, the matter was required to be sent to the Commissioner of Belgaum who was another member of the Committee - the Commissioner of Belgaum had proceeded on leave and the additional charge was given to the Commissioner of Mangaluru, the file was required to be sent to the Commissioner of Mangaluru - it would be in the interest of justice to condone the delay - Instead of non suiting the appellant on the technical ground, it would be appropriate that the dispute between the parties is decided on merits – Delay condoned – Decided in favour of Appellant.
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2013 (12) TMI 878
Liability to pay interest u/s 112 of the Finance Act, 2000 – Consequent interest under the Central Excise Rules, 1944 - Interest payable on wrongfully availed MODVAT credit – Held that:- Relying upon Sangam Spinners Limited v. Union of India & Ors. [2011 (3) TMI 4 - Supreme Court] - Section 112 of the 2000 Act did not take away any right of any assessee with retrospective effect - the HSD oil had been specifically excluded from the list of eligible inputs with effect from 16th March, 1995 and therefore, no assessee had any vested right to avail benefit of MODVAT credit on the HSD oil used as an input – Thus, if any benefit, which had been wrongly availed by any manufacturer, the benefit wrongfully availed had to be returned. Once it is certain that the MODVAT credit had been wrongly availed by the respondents, the Revenue cannot be blamed, if the amount wrongly availed by way of MODVAT credit by the respondents is recovered with interest - Revenue had given 30 days’ time to return the amount to the respondents who had wrongly availed MODVAT credit on the HSD oil used as an input - If anyone who had repaid the amount wrongly availed within 30 days from the date on which Section 112 of the 2000 Act got the President’s assent, that assessee had not to pay any interest on the amount of duty availed by him wrongly - But those who had availed the MODVAT credit on the HSD oil used as an input and did not return the said amount even within 30 days from the date on which the President had given assent to the enactment of Section 112 of the 2000 Act, had to return the amount wrongfully retained by them with interest at the rate of 24% p.a - such a course, adopted by the Revenue for recovery of the amount which was legitimately claimed by the Revenue, cannot be said to be bad in law - the High Court committed an error by not considering the aforestated factors – Order set aside and decided in favour of Appellant.
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2013 (12) TMI 877
Cenvat credit on Low Sulphur Heavy Stock – Use of fuel in generation of electricity further used - Held that:- The Commissioner (A) has set aside the order in original and allowed the appeal of the respondent holding that the cenvat credit is admissible on quantity of LSHS used in for generation of steam/electricity which is further used in the manufacture of fertilizers – M/s. Maruti Suzuki Ltd. Versus Commissioner of Central Excise, Delhi-III [2009 (8) TMI 14 - SUPREME COURT ] - the assessee is not entitled to cenvat credit in respect of LSHS used in generation of steam/electricity which is further used in the manufacture of fertilizers - the findings of the Commr (A) with regard to eligibility of cenvat credit on Low Sulphur Heavy Stock. Imposition of Penalty – Conflicting views on penalty - Penalty is not leviable on appellant/assessee, particularly when in large number of other cases, on account of conflict of views expressed by various Tribunals/High Court, the assesses have also succeeded - No penalty is imposable on the assessee – relying upon M/s. Maruti Suzuki Ltd. Versus Commissioner of Central Excise, Delhi-III [2009 (8) TMI 14 - SUPREME COURT] – Decided partly in favour of Revenue.
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2013 (12) TMI 876
Rectification of Appeal – Application rejected by Committee of disputes - Appellant contended that the payment was made under protest - Held that:- During the pendency of that application the judgment and order in the case of ECIL was passed by the Apex Court by which the Committee of Disputes was abolished - the application filed seeking clearance from the Committee of Disputes was dismissed on 2nd November, 2006 - Thus, the right of the appellant to pursue the challenge with regard to the demand for ₹ 15.66 crores was not permitted by the Committee of Disputes – Decided against Appellant.
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2013 (12) TMI 875
Classification of Liquid Hair Dye – Under Tariff item 68 OR 14F - Re-determination of the assessable value after fixing an abatement of 8% - Unjust enrichment – Held that:- Following GODREJ INDUSTRIES LTD. Versus ASSTT. COLLECTOR OF C. EX., BOMBAY-II [2002 (9) TMI 128 - HIGH COURT OF JUDICATURE AT BOMBAY] - Where a person approaches the High Court but fails, he cannot take advantage of the amount of duty so collected - He is under an obligation to return the said amount to the Revenue - this is a clear case of undue enrichment. The appellant collected the duty liability at the enhanced rate applicable to tariff item 14F even though they were discharging the duty liability only at the lower rate applicable to Tariff Item 68 – the appellant wants to enjoy the benefit of duty collection at the higher rate from the customers without remitting the same to the exchequer - the appellant is liable to discharge interest liability on the duty amount as they have collected the same from the customers without remitting to the exchequer - Prima facie the appellant had not made out a case for complete waiver of amount till the disposal - the appellant is directed to remit the interest liability calculated at the applicable rate for the period 14/05/2003 the date on which the provisions of Section 11DD came into force till the date on which the duty liability was discharged –upon such compliance rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (12) TMI 874
Credit taken on duty paid on intermediate product - Waiver of pre-deposit of duty – Held that:- The applicants have paid duty on the intermediate product used in the manufacture of final product and they have paid duty while clearing these new products to their other units – Following Mahindra and Mahindra Ltd. vs. CCE Mumbai [2010 (12) TMI 403 - BOMBAY HIGH COURT] - if the duty illegally paid and once the same has not been refunded they cannot be denied the CENVAT credit - the applicants are able to make out a prima facie case for waiver of pre-deposit of amount – pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 873
Excisability of water treatment plant – Waiver of Pre-deposit – Held that:- Revenue contended that the Applicant had assembled the said industrial treatment plant in their factory and thereafter, cleared in knocked down condition and commissioned at the site of the customer – the assessee contended that the various other items, viz. pipes, pipe-fittings, valves etc. required to be laid along with civil foundation, which could be done only at the sites of their customer - excisability of the "Water Treatment Plant" is highly debatable and rests on the evidences adduced by both sides - the Department during the course of investigation had seized Rs.38.76 lakhs – the Applicants offered not to seek refund of the said amount during pendency of the Appeal – Thus, the amount seized would be sufficient to hear the appeals – pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 872
Addition of trial charges to the assessable value – Held that:- The trial of equipment is optional at the request of the customers - In certain cases the customers asked for trial of equipment to be manufactured and thereafter had not placed any order as they are not satisfied of the trial of the equipment – sometimes, the order was placed for supply of the equipment without asking for any trial – Thus, the trial of equipment is not condition precedent to the sale – Decided against Assessee.
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2013 (12) TMI 871
Credits taken did not relate to the goods that were received – Cenvat credit taken on scrap of Mild Steel – Held that:- The duty payment against which appellant had taken credit was not relating to material used in manufacture by the appellant is fairly clear - the contention of the appellant that they were not aware of the fraudulent nature of the document cannot be accepted - There were inherent contradictions that can be seen in the document with regard to price and also the mismatch of the description of goods vis-à-vis., goods received by the appellant -they had accounted the raw material and paid duty on the final product manufactured out of it does not in any way prove that duty was paid on the raw material – decided against Assessee.
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2013 (12) TMI 870
Improper benefit of Notification No. 23/1998 availed - Newsprint Rolls cleared Waiver of pre-deposit – Held that:- The papers which is intended for newspapers and should be cleared against a purchase order placed upon the manufacturers - the appellant is a manufacturer of paper of a kind which is intended for utilising in printing of newspaper - the news print Rolls stored in the unregistered premises were supplied against a purchase order placed by a newspaper on the appellant - the adjudicating authority has confirmed the demand but has not classified the product under which head he intends to demand the duty, as the classification under heading 4801 is not rejected and no other classification is made for the product, for demanding the duty – prima facie the appellant has made out a case in their favour – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 869
Short payment of duty – Benefit of Compounded Levy Scheme under Section 3A of the Central Excise Act, 1944 read with Rule 96ZO(3) of the Central Excise Rules, 1944 – Waiver fo pre-deposit - Held that:- The appellant did not file any appeal, the Department initiated recovery proceedings, against which the appellant went to the High Court pleading that they have not received the order passed by the Assistant Commissioner and subsequently on directions of the Hon’ble Rajasthan High Court, the appeal filed by the appellant before the Commissioner (Appeals) was considered and the same was decided vide order-in-appeal dated 6-8-2012 - this is a case where the proceedings for confirmation of duty demand had been concluded much before the repeal of Section 3A and as such the duty demand would not be effected by the repeal of Section 3A w.e.f. 11-5-2001 - the appellant have not been able to establish prima facie case – the appellant is directed to deposit entire duty – Stay not granted.
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CST, VAT & Sales Tax
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2013 (12) TMI 921
Goods in transit liable for seizure or not - Want of Transit Declaration Form – Held that:- Relying upon Prakash Parcel Service Ltd. Vs. State of U.P. & others [2013 (6) TMI 386 - ALLAHABAD HIGH COURT] - Transit Declaration Form produced in response to the show cause notice after downloading it subsequent to detention cannot be recognized as an authentic document, as possession and production of Transit Declaration Form for carrying goods through the State of U.P. is not a ground for seizure, the seizure is without jurisdiction - The absence of Transit Declaration Form only gives rise to a rebuttable presumption and may attract penal consequences but the goods cannot be seized for non-production of it - the goods cannot be seized for absence of Transit Declaration Form - the Act does not specifically provide for the seizure of goods for not carrying the Transit Declaration Form, the order of seizure dated 21.9.2013 is without jurisdiction and cannot be sustained – Decided in favour of Revisionist.
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