Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 19, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment - The disposal of the objections was done in a mechanical manner. Even today, the Department has not been able to bring on record anything to suggest that the petitioner's frontal assertion that he did not have any bank account in Kotak Mahindra Bank nor did he make any cash deposit in the said bank account as alleged, is false - HC
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Invoking Section 80IA(10) while denying benefit of Section 80IC - As seen from the sale invoice there is definitely a reason to believe that assessee has inflated the profits in eligible unit because the same product is being sold from both the units for almost identical price - benefit was rightly denied - HC
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Entitlement to interest u/s 244A paid by them u/s 140A - The explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand u/s 156, he is not entitled to interest on refund u/s 244A - HC
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Additions on the basis of AIR information - if the payee does not amend its AIR information, the payer cannot be penalized for the same - AT
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Nature of interest received - revenue receipt or capital receipt - compensation for breach of contract relating to capital assets - Merely because the tax has been deducted by the builder and recorded it in his books of account as revenue expenditure, the same cannot be treated as revenue receipt. - AT
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Transfer pricing adjustment - When assessee is not able to bring on record anything to show any services to have been rendered by AE to it and there are no documentations to show any services to have been received from AE, in our opinion it will be fair conclusion that no services were in fact rendered by AEs to the assessee. - AT
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Search and seizure action u/s.132 - addition u/s 69 - Presumption u/s. 132(4A) is available only against the person from whose possession the document is found and not against the third person - AT
Customs
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Waiver of pre-deposit - mandatory or not - appeal were pending before 06.08.2014. The petitioner had a right to seek waiver of predeposit. The Tribunal would, therefore, restore such appeal and decide the same in accordance with law, after first deciding the petitioner's application for waiver of pre-deposit - HC
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Denial of refund claim - Unjust enrichment - When the refund claim arises within two or three days and within 15 days, a refund claim is filed, the obvious conclusion would be that the appellant was clearly aware that by the time, the crude palm oil got processed and cleared; the actual duty suffered to them was known to them. More over in this case on merits also, the appellant was eligible for refund. - AT
Corporate Law
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Omnibus approval for related party transactions on annual basis - Companies (Meetings of Board and its Powers) Amendment Rules, 2015.
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Removal of the attachment orders - it is appropriate to raise the attachment and permit the Official Liquidator to take possession of property and proceed in accordance with law. It is also necessary to direct the respondents to hand over books and records, if any with them, to the Official Liquidator. - HC
Service Tax
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Benefit of refund under Notification No. 05/2006, read with Rule 5 of Cenvat Credit Rules, 2004 - Notification No. 05/2006 was retrospectively amended and word "in” has been replaced by "in or in relation to" - AT
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Denial of refund claim - information technology service - Software Technology Parks of India (STPI) scheme - There are several decisions taking a view that on the ground that the invoice is in the name of different person, credit cannot be denied - AT
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Refund of CENVAT credit accumulated - the claim which was returned for the period from October 2006 to December 2006 cannot be held as resubmitted where the part of the subseqent refund claim submitted has to be treated as resubmission of the earlier claim - AT
Central Excise
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Imposition of penalty for abetment against the Chartered Accountant for giving wrong certificate - This action could not be described as an act to attract penalty under Rule 26 and 27 - HC
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Denial of suo moto CENVAT Credit - duty was paid earlier by utilizing credit - The decision of the Commissioner to disallow the suo-moto credit is legally correct. - AT
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Valuation - discount given on the Demo cars disallowed - value of the demo cars to be determined as per the price of normal cars cleared to the dealers - AT
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Manufacture - Steel tubular poles joining of duty paid MS pipes of different diameters by welding and swaging - appellant's activity would amount to manufacture - AT
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Denial of CENVAT Credit - if the department levies and collects the Central Excise duty on the goods remove from the factory, they can not claim for the purpose of allowing Cenvat credit that the process of manufacture had not taken place - AT
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Cenvat Credit - the rule provides for non-reversal of credit in respect of clearances effected to unit in SEZ or to a developer of SEZ. The Rule does not refer to supplies made to contractors of a developer or contractor of a unit in SEZ. - AT
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SSI Exemption - dummy unit or not - Merely because a common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw-materials cannot be held to be a reason for clubbing the clearances of both the units - AT
Case Laws:
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Income Tax
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2015 (12) TMI 989
Invoking of provisions of section 145(3) for rejecting the books of accounts of assessee - only reason for which the Assessing Officer has rejected the books of accounts is for non-maintenance of quality-wise and piecewise detail of polished diamonds and has prepared vouchers for payment of labour charges - Held that:- Assessee is dealing in polished diamonds, better GP rate in comparison to preceding year, no specific default in the books of accounts, prepared quantitative details with calculation of wastage and yield duly recorded in books of accounts and certified by Chartered Accountant. It seems that Assessing Officer has tried to impose his experience of similar types of assessment done by him in case of other assessee(s). This action of the Assessing Officer cannot be held correct. However, assessee has its own way of doing business and preparation of books of accounts and there is no set bench mark that the quality wise or piece wise details of goods dealt has to be kept by each assessee. Therefore, applying the ratio of the decision of M/s Dhami Brothers vs. ACIT [2010 (8) TMI 817 - ITAT AHMEDABAD ] we are of the view that Assessing Officer was not correct in invoking the provisions of section 145(3) of the Act and accordingly, we uphold the order of CIT(A) and reject this ground of Revenue. - Decided in favour of assessee. Addition on account of disallowance of excess labour expenses - CIT(A) deleted the addition - Held that:- The Assessing Officer has tried to compare the business style of the assessee with other assessees engaged in similar type of business, wherein in some cases he may have observed that other assessees paid to the labourers on the basis of their bills and the labour charges vary on the basis of quality of goods whereas in the case of assessee they have been paid on the basis of quantity. The assessee has been paying job charges @ of ₹ 375 per carat of roof diamond consistently since last three years whereas the Assessing Officer on the basis of his experience of assessing another unit has come to an average rate of ₹ 236 per carat of job work charges. This comparison and imposing of rates charged by other units can be justified only if the Assessing Officer proves that assessee had paid less amount than the amount actually shown in the supporting vouchers and there has been no such case observed by the Assessing Officer. So much so that when Assessing Officer called a few labour contractors for cross examining as to what is actual amount they have received, those labour contractors have confirmed that they have received the same amount of labour charges as mentioned in the supporting vouchers which have been countersigned by them.Therefore, considering the history of the assessee and nature of business and that profit is higher as compared to the preceding assessment year, would prove that assessee spent genuine expenditure wholly and exclusively for the purpose of business. We accordingly set aside the orders of the authorities below and delete the addition. - Decided in favour of assessee. Addition on account of suppressed yield - as per AO there was NIL rejection in the preceding year in comparison to 1.78% rejection during the year and secondly qualitywise and piece wise details were not available and he has tried to place in the facts of other assessees assessed by him - CIT(A) deleted the addition - Held that:- Assessing Officer did not appreciate the fact that yield in the case of precious stone cannot be set by a similar bench mark because no body can predict the possible yield of finished goods which can be derived from cutting and polishing rough diamonds and also rough diamonds are in itself different in their quality but generally when there is fine quality of rough diamonds there is always a possibility of higher yield and vice versa in case of inferior type of rough diamond. As submitted by assessee that variation in yield has arisen due to variation in rates and use of little inferior quality of rough diamond during the year in comparison to previous year. However, overall yield in Asst. Year 2008-09 is 29.25% in comparison to 29.12% yield in asst. year 2007-08. Further regarding rejection it is only from the rough diamonds of lower purchase price. Assessee has properly maintained quantitative details along with quantity of goods produced and quantity of wastage and yield. The very basis taken by Assessing Officer that there was no wastage in preceding year and, therefore, the wastage in this year is manipulated is far from truth and without any basis and therefore, there is no weightage in the observation made by the Assessing Officer. As discussed earlier business style of each assessee has its own unique way of working and all cannot be examined with a similar bench mark else there always be the similar percentage of profit earned by every assessee. Business is controlled by the owner or the management and the level of yield, GP/NP achieved will vary from case to case depending on the application of strategic mind by the businessman. In view of above discussions, we find no infirmity in the order of ld. CIT(A) and uphold the same.- Decided in favour of assessee.
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2015 (12) TMI 988
Addition made on account of alleged suppression of sales - addition based on consumption of electricity as per US standards and evasion of Excise duty by the manufacturers of TMT bars in Jalna cluster found by Director General of Central Excise and Customs - working out the addition by applying GP rate of 4% on the alleged suppression of sales, after rejecting the books of account under section 145 - Held that:- No extrapolation of sales for 300 days can be made in the hands of the assessee on the basis of the evidence found for clandestine removal of material without payment of Excise duty for few days, which in turn, has been admitted by the assessee by way of filing petition before the Settlement Commission, which in turn, has also been accepted by the Settlement Commission. Merely because the Settlement Commission accepted the claim of the assessee of additional Excise duty payable on the said clandestine removal of material without payment of Excise duty does not establish the case of the Revenue that the said figures of additional production should be utilized for extrapolating the sales in the hands of the assessee for the entire year. Admittedly, the assessee had offered additional income on the said clandestine removal of material without payment of Excise duty, which is to be added as income in the hands of the assessee. Assessee fairly admitted that in case the said additional income has not been added while computing the income in the hands of the assessee for the respective years, the same may be directed to be added in the hands of the respective assessee in respective years. Accordingly, we direct the Assessing Officer to verify from the records for the respective years and include the additional income on account of such admitted clandestine removal of material without payment of Excise duty, by the assessee either before the Settlement Commission or before the Excise authorities, in the hands of the assessee. We have heard bunch of appeals and in some years, there is no admission of clandestine removal of material without payment of Excise duty and in those years in the absence of any evidence and / or any investigation or inquiry made by the Assessing Officer and where the Assessing Officer has failed to collect additional evidence, no addition can be made in the hands of the assessee, by way of extrapolation of sales for 300 days on account of any evidence found in any preceding or succeeding years. Further, no addition can be made in the hands of the assessee, where no petition has been filed by the assessee before the Settlement Commission in any of the respective years or before the Excise authorities. In the case of Bhagyalaxmi Steel Alloys Pvt. Ltd., there is no investigation by DGCEI and hence, no addition on account of extrapolation can be made, in the absence of any evidence found against the assessee. Since we have deleted the addition in the hands of assessee on both accounts i.e. addition made on account of erratic consumption of electricity and addition proposed on the basis of evidence found for the part of the year of clandestine removal of material without payment of Excise duty, next addition made in the hands of the assessee i.e. alleged investment in the purchases for effecting such sales which goods have been clandestinely removed, is not sustainable. Accordingly, we hold that no addition can be made in the hands of the assessee on account of alleged investment in purchases under section 69C of the Act. In view of our deleting the addition in the hands of the assessee the grounds of appeal raised by the Revenue i.e. against application of GP rate and allowance of expenses are also dismissed. See Bhagyalaxmi Steel Alloys Pvt. Ltd. vs. Addl.CIT [2015 (11) TMI 14 - ITAT PUNE ]- Decided in favour of assessee.
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2015 (12) TMI 987
Computation of capital gains - whether the date of agreement or the date of execution of sale deed has to be considered for the purpose of adopting the SRO value under S.50C? - Held that:- For want of any evidence to the contrary, we hold that the property in question was in residential zone on the date of transfer and therefore, the SRO value for residential property as on 6.3.2006 or the sale consideration received by the assessee whichever is higher is to be adopted under S.50C of the Act. Assessing Officer is directed to compute the capital gains in the hands of the respective assessees accordingly. Reopening of assessment - Held that:- As during the assessment proceedings under S.143(3) the capital gains was computed by taking the SRO value and the assessment order was reopened u/s. 147 of the Act for the very same reason, i.e. to consider the DVO report for adopting the value u/s. 50C of the Act. We find that after considering the fact that the DVO value was more than the SRO value, and hence the SRO value is to be adopted u/s. 50C of the Act, the Assessing Officer in the re-assessment proceedings confirmed the assessment order under S.143(3). Thus, as rightly pointed out by the assessee in his grounds of appeal, the assessment order under S.143(3) got merged with the assessment order under S.143(3) read with S.147 of the Act and the assessee’s challenge against the same before the CIT(A) is maintainable and the CIT(A)’s observations are not sustainable. Therefore, the order of the CIT(A) is set aside. However, since the common issue of computation of capital gains is arising in the case of all the co-owners including the assessee, we are of the opinion that no useful purpose would be served in remanding this case back to the file of the CIT(A). Therefore, we remand this case also to the file of the Assessing Officer for re-computation of capital gains in the hands of this assessee also in the light of the decision of this Tribunal in the case of other co-owners. - Decided in favour of assessee for statistical purposes
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2015 (12) TMI 986
Addition as income from other sources as against agricultural income declared by the assessee - Held that:- There is no dispute that there was earlier a search and seizure operation conducted in the case of the assessee in the year 2008, in pursuance of which an assessment was made under S.143(3), wherein the Assessing Officer had accepted the agricultural income declared by the assessee in the original return of income. It is also relevant to note that in the assessment order, the Assessing Officer has not referred to any incriminating material found, while disbelieving a part of the agricultural income and treating it as income from other sources. Consequently, it is well settled that if a particular income is subject matter of assessment in an earlier assessment proceedings and stands concluded, it cannot be reopened unless there are incriminating material found as a result of search to show undisclosed income. In this context, we refer to the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. V/s. DCIT (2012 (7) TMI 222 - ITAT MUMBAI(SB)). Admittedly, in the present case, as far as agricultural income is concerned, it has been considered in the original assessment proceedings. Therefore, in the absence of any incriminating material found during the second search and seizure operation conducted on 8.12.2011, to show that agricultural income was inflated, the Assessing Officer cannot consider this issue again in the impugned re-assessment proceedings. Accordingly, we delete the addition made by the Assessing Officer treating part of the agricultural income declared as income from other sources. - Decided in favour of assessee Unexplained investment under S.69B - Held that:- As the statement of Srhi T.Ranga Rao, the entire charge sheet(s) filed by CBI and information gathered by the department through enquiry have not been brought on record before us either by assessee or department, we are unable to examine the extent of assessee’s involvement, if at all, in the irregularities alleged by CBI or whether the assessee has also been implicated by the investigation agency or any other person. Therefore, in our view, issue relating to payment of on-money requires to be examined afresh by Assessing Officer after confronting evidence/material sought to be relied upon to the assessee and seeking his response on them. The Assessing Officer must also disclose to the assessee the material/information on the basis of which he has quantified the on-money payment of ₹ 1,99,20,000. If the Assessing Officer is able to establish on the basis of evidence gathered that the assessee has paid onmoney to the extent quantified by him, then he can make the addition under S.69B. On the flip side, if there is no evidence available on record to directly link the assessee towards payment of on-money, then merely on the basis of the fact that some other buyers have accepted payment of on-money, no addition can be made. With the aforesaid observations, we remit the issue to the file of the Assessing Officer with a direction to re-decide the same afresh in accordance with law - Decided in favour of assessee for statistical purposes. Disallowance of assessee’s claim for depreciation - as submitted by the assessee that Plasma TV and Home Theatre System were used by the assessee for his business purposes, because the assessee, being a film artist, these electronic items are required to view films, sequences and for finalisation of locations - Held that:- by looking at the nature of the assets and the fact that they are used in assessee’s home, we are unable to accept the assessee’s claim for depreciation. Further, assessee has not substantiated with any evidence that the TV or the Home Theatre System were used for business purposes. We accordingly confirm the disallowance made by the Assessing Officer, rejecting this ground of the assessee. Disallowance of 20% out of personal expenses - Held that:- We are of the view that the nature of expenditure claimed demonstrate that there would be some amount of personal element in the same, and hence, certain disallowance is warranted. We find that the disallowance worked out at 20% made by the Assessing Officer is reasonable, and the CIT(A) was therefore, justified in sustaining the same - Decided against assessee. Addition as undisclosed income - Held that:- On careful examination of the seized document, it is seen, against the name of every person to whom payment is supposed to have been made, a date is mentioned. Interestingly, against assessee’s payment no date is mentioned. Further, the payment dates are in sequence. It is to be noted, as per the seized document, the payment immediately after assessee is ₹ 10 lakhs to Puri Jagannadh in February, 2011. Since, all subsequent payments are in chronological order, assessee’s contention that payment made to him, if at all, is prior to February, 2011 is acceptable. Keeping these facts in view when the Bench made a specific query to Learned Departmental Representative to explain how Assessing Officer has correlated the payment to the impugned assessment year, he has no valid answer for the same. Therefore, even accepting for argument’s sake that contents of seized document are correct, but certainly, it cannot be linked to the impugned assessment year. Thus, looked at from any angle, the addition cannot be sustained. Accordingly, allowing assessee’s ground, we delete the addition of ₹ 2 crores. - Decided in favour of assessee Allowance of TDS credit of ₹ 5 lakhs - Held that:- Assessing Officer does not dispute the fact that the assessee actually received ₹ 45 lakhs by way of cheque and balance ₹ 5 lakhs by way of TDS. It is also not disputed that the assessee returned the entire amount of ₹ 50 lakhs received as Advance from Madras Talkies. Under these circumstances, the assessee in our view was entitled for getting credit of ₹ 5 lakhs deducted by way of TDS and remitted to the Government account, as it is in the name of the assessee. The apprehension of the Department that the deductor will take credit for the same, in our view is totally misplaced. Therefore, we do not find any infirmity in the order of the learned CIT(A) in directing the Assessing Officer to give credit to the TDS of ₹ 5 lakhs.- Decided in favour of assessee
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2015 (12) TMI 985
Reopening the assessment originally framed under Section 143 (3) - genuineness of the gifts and to scrutinize the corresponding entries in their books of account in their respective countries - Held that:- Below the office note, list of 16 donors has been set out. The office note states that in order to verify the genuineness of the gifts and to scrutinize the corresponding entries in their books of account in their respective countries, a detailed letter has been sent to the FTD Branch of the CBDT. It is, in that context, stated that “if anything achieve received from the FTD (Foreign Tax Division) Branch the assessment shall be reopened”. In other words, the reopening of the assessment was made contingent upon some material being received from the FTD. It is not denied by the Revenue that till date no such adverse material qua the Assessee has been received from the FTD. In the absence of any material, as anticipated by the AO in the office note, it is difficult to appreciate on what basis the AO could form the “reasons to believe”, that for the AY in question any income has escaped assessment. What seems to have been overlooked by the CIT (A) as well as the ITAT is that the original assessment was framed after detailed questionnaires were sent to the Assessee and replies furnished by him thereto giving the details of all the donors as well as their affidavits. These were examined by the AO. The mere fact that the AO may not have mentioned in the assessment order that the above exercise was undertaken need not mean that he did not pay attention to the materials before him. There was no warrant for the ITAT to have drawn such presumption. In fact the affidavits of the donors coupled with the confirmation letters of the Bank, as noted hereinabove, were materials touching upon the aspects of genuineness of the identity of the donors. Unless there was material which controverted the said documents produced by the Assessee in the form of the report of the FTD, it could not be said that there was any adverse material which could justify the formation of ‘reasons of believe’ within the meaning of Section 147/148 of the Act for reopening the assessment. - Decided in favour of assessee.
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2015 (12) TMI 984
TDS u/s 194I - Lease premium for the land given on lease - whether is in the nature of a capital expense not falling within the ambit of Section 194I - Held that:- In Durga Khanna v. Commissioner of Income Tax [1969 (1) TMI 1 - SUPREME Court ] the Supreme Court held that, prima facie, premium or salami was not income and the onus was on the Revenue to show that facts existed which would make it a revenue payment. As far as the present case is concerned, the facts brought on record, and which have not been contested by the Revenue, unmistakably show that the payment of the lease premium for the land given on lease to the Assessee for a period of 80 years with "all the rights, easements and appurtenances" was in the nature of a capital expenditure. This coupled with the fact that the MMRDA did not treat the receipt as income clinches the issue in favour of the Assessee and against the Revenue.
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2015 (12) TMI 983
Surrender of tenancy rights - ITAT treating not as capital assets liable for tax as long term capital gain - whether the assessee was tenant of the said property and surrender of tenancy rights amounts to Transfer u/s 2(47)? - Held that:- We find that on examination of the agreements, both CIT(A) as well as Tribunal have categorically rendered a finding that there was, in fact, no surrender of tenancy under the two agreements dated 9th May, 2007 and 25th July, 2007. Thus, no transfer for the purposes of capital gains. This finding on the basis of the examination of various clauses of the agreement coupled with the inspection report of the Inspector who visited the premises, concludes as a fact that the Appellant continues to occupy the tenanted property and the entire process of redevelopment is stalled because of a legal dispute. Further, Documents on record such as rent receipt, addresses in bank account etc., indicated that tenancy continued. In this case, the Respondent-Assessess disputes the surrender of tenancy and/or any transfer and on examination of the clauses of the Agreements, the CIT(A) and the Tribunal accept the fact that no surrender/transfer took place. - Decided against revenue
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2015 (12) TMI 982
Reopening of assessment - undisclosed cash deposit - Held that:- When the bank account was not only disclosed by the petitioner at the outset along with return but was also noticed by the Assessing Officer during scrutiny, the main foundation of the allegation of the cash deposit having escaped to the notice of the Assessing Officer of the bank account not having been disclosed, stands falsified. The question of application of Explanation-1 to Section 147 of the of the Act would simply not arise. Even otherwise, it would appear that the petitioner gave full details of the bank account. During scrutiny assessment, if the Assessing Officer had any curiosity about the deposits made in such bank accounts, it was for him to question the assessee on such cash deposits. He simply cannot take shelter of Explanation-1 to Section 147 by contending that since such cash deposit was not pointedly brought to his notice by the petitioner, he can reopen the assessment beyond a period of four years alleging that the assessee did not disclose fully and truly all material facts. Coming to the second element of the reasons for reopening the assessment, the petitioner pointed out to the Assessing Officer in objections raised to the reopening of assessment that he never owned or operated any bank account in Kotak Mahindra Bank as alleged. He would presume that reference to cash deposit of ₹ 14,67,075/- was to the loan sanctioned and disbursed by the said bank for purchase of car. These objections, however, met with a total silence by the Assessing Officer in the order that he passed on 15.06.2015 disposing of such objections. If his stand was that the contention of the petitioner that he never had any such bank account in Kotak Mahindra Bank was false, it was his duty to state so, with atleast prima facie material to so establish.The disposal of the objections was thus done in a mechanical manner. Even today, the Department has not been able to bring on record anything to suggest that the petitioner's frontal assertion that he did not have any bank account in Kotak Mahindra Bank nor did he make any cash deposit in the said bank account as alleged, is false. In fact, the petitioner reconciled the said amount of ₹ 14,67,075/- by pointing out that this was exactly the same amount which the Kotak Mahindra Bank released by way of car loan, which was, in fact, paid over directly to the dealer. - Decided in favour of assessee
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2015 (12) TMI 981
Addition of a loss incurred by the assessee for block assessment - ITAT deleted the addition - Held that:- ITAT correctly held that "there was no material with the Assessing Officer to disallow the claim of loss claimed by the assessee while filing its regular returns of income, because there being no material evidence found during the search and, therefore, it was beyond the power of the AO to review the position already accepted while passing the assessments u/s 143(3) on the basis of regular returns filed in due course of time. Accordingly, we delete all the additions made by the AO in the block period." - Decided in favour of the Assessee.
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2015 (12) TMI 980
Capital gain computation - Whether ITAT was right in ignoring the fact that as per provisions of section 50-C (2)(b) the matter should not have been referred by CIT(A) for valuation as the assessee had already challenged the Juntry Value assessable by the Stamp Valuation authority, before the Nayab Collector and in that case, further reference to valuation is prohibited as per the Act and value determined by Nayab Collector has to be adopted as full value of consideration ? - contention of the DR is that where the value of the property made by the stamp valuation authority is higher than the value of the property determined by the departmental valuer, then the higher value should be adopted for the purpose of working out the capital gain of the assessee Held that:- Under clauses (a) and (b) of sub-section (2) of section 50-C, however, assessee has a right to ascertain before the Assessing Officer that the value adopted or assessed by the stamp valuation authority exceeds the fair market value as on the date of transfer upon which the Assessing Officer would refer the valuation of the capital asset to the Valuation Officer. Under sub-section (3) of section 50-C, where the value ascertained by the Valuation Officer exceeds the value adopted, assessed or assessable by the stamp valuation authority, the latter, i.e. the valuation of the stamp valuation authority, would be taken as the full value of the consideration for the purpose of computing capital gain. In other words, the valuation of the property adopted by the Stamp Duty authority of the State would be deemed to be the full value of the consideration for the purpose of computing capital gain. However, in case the assessee challenges such valuation before the Assessing Officer and the Assessing Officer calls for the valuation report from the Valuation Officer and the valuation adopted by the Valuation Officer exceeds the value adopted by the State Stamp Duty Authority, it would be the valuation of such stamp duty authority which would prevail for the purpose of computing capital gain. The Revenue intends to contend to the contrary which is simply not born out from the statutory provisions noticed. There is no error in the view taken by the Tribunal
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2015 (12) TMI 979
Revision u/s 263 - ITAT cancelling the order u/s 263 by holding that the order passed by the Assessing Officer is not erroneous and prejudicial to the interest of revenue where the Assessing Officer had failed to initiate penalty proceedings while completing assessment under Section 153A - Held that:- Initiation of proceedings under Section 263 of the Act was not justified and we uphold the order of the Tribunal cancelling the revisional order passed by the CIT as where the CIT finds that the Assessing Officer had not initiated penalty proceedings under Section 271(1)(c) of the Act in the assessment order, he cannot direct the Assessing Officer to initiate penalty proceedings under Section 271(1)(c) of the Act in exercise of revisional power under Section 263 of the Act. See Commissioner of Income Tax v. Subhash Kumar Jain (2010 (9) TMI 772 - Punjab and Haryana High Court) - Decided in favour of assessee
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2015 (12) TMI 978
Source of the deficit investment made towards the purchase of new agricultural lands - Sole source - Held that:- The cash flow statement furnished by the assessee had rightly been admitted by the ld. CIT(A), which is not in dispute. As mentioned the ancestral agricultural land had been sold, which was held jointly by the assessee along with his brother Sh. Amarjit Singh and agricultural land, which has been purchased by the assessee along with his brother Sh. Amarjit Singh in equal share is also not in dispute. Therefore, the deficit of ₹ 11,75,000/- belongs equally to the assessee and his brother Sh. Amarjit Singh and assessee alone cannot be said to be liable for the entire deposit of ₹ 11,75,000/-. The argument of the Ld. DR that Power of Attorney by Sh. Amarjit Singh brother of the assessee had been given to the assessee, does not mean the deficit or levy of tax in toto shall fall on the assessee. Accordingly, the deficit of ₹ 5,87,500/- is on account of the assessee and the other deficit of ₹ 5,87,500/- is on account of brother of the assessee, Sh. Amarjit Singh. Accordingly, the addition confirmed by the Ld. CIT(A) is restricted to ₹ 5,87,500/- in view of our findings hereinabove. As regards the arguments by the Ld. Counsel for the assessee that the assessee is having only source of income as salary income or agricultural income and the deficit so arisen should be treated as sale proceeds of the agricultural land and not to be accepted for the reason that the assessee had never treated the said deficit as agricultural income in his cash flow statement or recasted cash flow statement before any of the authorities below or even before us. Also in the absence of any cogent explanation or any evidence or arguments made by the Ld. Counsel for the assessee, the decision of Hon'ble Supreme Court in the case of Smt. P.K. Noorjahan vs. CIT (1997 (1) TMI 6 - SUPREME Court) cannot help the assessee. Accordingly, the AO is directed to sustain the addition of ₹ 5,87,500/- and is directed to delete the rest of the addition amounting to ₹ 5,87,500/-. Thus, the appeal of the assessee is partly allowed
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2015 (12) TMI 977
Undisclosed sources and the nature of credit entries mentioned in the UTI Bank Account - Held that:- Addition of ₹ 1.20 crores was made to the total income of the assessee for the period under consideration. The assessee filed revision petition before the CIT(C). It was inter alia recorded by the CIT(C) that the assessee was offered proper opportunity to give address of Pritam Singh and thereafter was also asked to produce Pritam Singh for recording his statement but the assessee failed to discharge his liability. He also did not disclose his bank account No.30210100009591. The money was received in the bank account of the assessee but was withdrawn in cash and thereafter there was no trace of the said amount. In case the transaction was so transparent, the money should have been returned by cheque in the same manner as it was received but this was not so. The petitioner was also asked to provide the original MOU and compromise deeds and other such documents. He had expressed his inability to produce the originals. The assessee had failed to produce sufficient material either before the Assessing Officer or CIT(C) in revisional proceedings on the basis thereof a finding of fact could have been returned in favour of the petitioner. The factual matrix was required to be established by producing material evidence in that regard before the assessing authority or the revisional authority. The learned counsel for the petitioner was unable to give any one good or sufficient reason which prevented him to produce material evidence in support of his version either before the Assessing Officer or CIT(C). The petitioner cannot be allowed de novo trial under the garb of this submission. In such a situation, in the absence of any material on record which could substantiate the claim of the petitioner, we do not find justification to entertain this petition under Articles 226/227 of the Constitution of India as there is no jurisdictional error in the order of the assessing authority or the CIT(C). - Decided against assessee
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2015 (12) TMI 976
Invoking Section 80IA(10) while denying benefit of Section 80IC - ITAT reversing the order of the CIT(A) - Held that:- The same products are being sold from both the units and at the same price ranging between ₹ 5,25,000/- to ₹ 6,25,000/- in both cases. How the machines were costing less at Baddi was not explained. When the end product is same, the cost would also be the same. By installing a machine of ₹ 6 lakhs it cannot be said that the assessee is achieving economy of scale or some other technological development. It is a simple case of inflation of profits in the eligible unit and in such situation the Assessing Officer has clear powers in terms of Section 80IA(10) to compute the reasonable profit. The Ld. CIT(A) has misdirected himself by observing that Assessing Officer has not pointed out any discrepancy because the Assessing Officer has clearly pointed out wrong allocation of various expenses which was accepted by the assessee before the CIT(A). Further, the Assessing Officer has also given reasons showing that profits in exempt unit have been inflated. In Section 80IA(10), it is clearly provided that if Assessing Officer has reasons that the business has been so arranged to show inflated profits in eligible unit then Assessing Officer has power to recompute the profits of such eligible unit. As seen from the sale invoice there is definitely a reason to believe that assessee has inflated the profits in eligible unit because the same product is being sold from both the units for almost identical price. In this background, ITAT correctly set aside the order of CIT(A) and restore that of Assessing Officer - Decided against assessee
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2015 (12) TMI 975
Levy of penalty under section 271(1)(c) on estimated brokerage income and qua non discharge of burden under section 271(1)(c) - Held that:- A perusal of the findings recorded by the Tribunal show that the assessee had not furnished his return of income for the year under consideration within the time allowed under section 139 of the Act. Survey operations were carried out under Section 133A of the Act at the office premises of the appellant who was engaged in giving accommodation/book entries on account of long/short term capital gains/gifts/loans by charging commission. The modus operandi was that cash received from different beneficiaries was deposited in various bank accounts of the appellant, his family members and other share brokers from where cheques were issued in favour of clients for bogus capital gains/share profits/gifts etc. The appellant in his statement recorded during the course of survey operation on 15.6.2004 admitted to have issued cheques/drafts for bogus profits in return of the cash provided to him by his clients. The appellant also disclosed the names of various concerns under which he was carrying on his business and also the bank accounts from where cheques/drafts were issued. The appellant after the conclusion of the survey vide letter dated 1.3.2005 made surrender of ₹ 27 lacs i.e. ₹ 15 lacs relating to the assessment year 2004-05 and ₹ 12 lacs relating to the assessment year 2005-06. The income surrendered by the appellant was disclosed in the return of income furnished for the assessment years 2004-05 and 2005-06. The appellant had not furnished any return of income since after the assessment year 1996-97 till the date of survey on 25.6.2004. Information was collected during the survey operation that the business was being carried out in the earlier years also. In view of the information gathered during the survey, the Assessing Officer found that the appellant's income relevant to the assessment year 2002-03 had escaped assessment within the meaning of section 147 of the Act and hence proceedings under Section 148 of the Act were initiated. The investments made by the assessee were not declared and thus there was clear cut case of concealment. - Penalty confirmed - Decided against assessee
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2015 (12) TMI 974
Penalty u/s 271(1)(c) - disallowance under Section 80IC - Held that:- A glance at the provisions of Section 271(1)(c) of the Income Tax Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars in his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, nor exact or correct, no according to the truth or erroneous - Decided in favour of assessee
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2015 (12) TMI 973
Excess wastage claimed - Tribunal had disallowed 50% of the wastage claimed by the assessee - Held that:- It is a question of fact adjudicated by the Tribunal which is a plausible view. In such circumstances, no interference is called for with the findings recorded by the Tribunal as held that we are in agreement with the stand of the CIT(A), still since the survey was made on 5.3.2004 and assessee made the claim of 22689.656 kg. as wastage the daily wastage, on average comes to 66.734 kgs. whereas during the impugned period (25 days) assessee showed the wastage of 8897.267 klgs. meaning thereby average daily wastage of 355.89 kgs. This increase is not supported by any commensurate increase in the production by the assessee. At the same time, the claim of the assessee also simply cannot be brushed aside, therefore, keeping in view the overall facts and circumstances, we reduce the addition to 50% of the total i.e. ₹ 10,06,000/- in place of ₹ 20,12,092/- made by the learned Assessing Officer, because firstly, upto 5.3.2004 no disallowance was made by the learned Assessing Officer himself, and secondly the steep increase in the wastage is not supported by any evidence like consequential increase in production etc. Lastly,if not the least, the Assessing Officer has not made blind addition and before 5.3.2004 it was allowed - Decided against assessee Deduction under Section 80HHC - Held that:- Deduction under Section 80HHC of the Act is available only on showing fulfilment of conditions specified therein and there could be no presumption that surrender made on account of unexplained stocks represented export income. The assessee was unable to give any explanation. There could be no presumption that additional amount surrendered represented income from exports. Deduction under Section 80HHC of the Act can be claimed only on showing facts which made the assessee eligible for the deduction. The burden to prove these facts was on the assessee and not on the Revenue. - Decided against assesseee Deduction on account of interest received on FDRs under Section 80HHC - Held that:- Tribunal while rejecting the aforesaid contention recorded as on the plea that in the impugned order on the ground that the learned CIT(A) erred in not allowing the deduction as claimed under section 80HHC of the Act. The claim of the assessee is that the deduction of ₹ 1,07,941/- under Section 80HHC has been wrongly worked out because the Assessing officer included 90% of the interest receipts and also reduced 90% of ₹ 20 lakhs being the sum surrendered at the time of survey from the profits of the business for computing the deduction. On appeal, the submission of the assessee is that the interest was received by the assessee on FDRs which was maintained for the purpose of taking limits from the bank. For the amounts surrendered by the assessee, it was claimed that it was also a part of business income. - Decided against assesseee
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2015 (12) TMI 972
Disallowance under section 14A - ITAT held no disallowance can be made under section 14A unless a clear cut nexus is established between the expenses disallowed and income earned ignoring the fact that both direct and indirect expenses are attributable to such investment - Held that:- The Tribunal after considering the matter held that no part of interest expenditure could be considered for the purpose of computing disallowance under Section 14A of the Act. Further, in the absence of any proximate nexus having been established by the lower authorities between the administrative and other expenses and the exempt income, no disallowance under section 14A of the Act could have been made for the assessment year under consideration. Learned counsel for the appellant-revenue has not been able to show any illegality or perversity in the approach of the Tribunal or that the findings recorded by it are erroneous. Adverting to the judgment relied upon by the learned counsel for the appellant-revenue, it may be noticed that in Walfort Share and Stock Brokers P. Limited's case (2010 (7) TMI 15 - SUPREME COURT ), it held that the assessee was entitled to set off loss from transactions against its other Income chargeable to tax. The said view was affirmed by the High Court. The question before the Apex Court was whether loss arising in the course of dividend stripping transaction taking place prior to 1.4.2002 was disallowable on the ground that such loss was artificial as the dividend stripping transaction was not a business transaction. After examining the legal and factual position therein, it was held that in cases arising before 1.4.2002, losses pertaining to exempted income could not be disallowed. Such is not the position in the present case. - Decided against the revenue
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2015 (12) TMI 971
Set off of tax credit under section 115J (correct provision is Section 115JAA) for the purpose of calculation of interest under section 234B - Held that:- The matter is no longer res integra. The Apex Court in Tulsyan Nec Limited's case (2010 (12) TMI 23 - Supreme Court of India) considering identical issue held that the Assessing Officer is required to give benefit of tax credit available under Section 115JAA of the Act and determine the interest payable under Section 234B of the Act thereafter.
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2015 (12) TMI 970
Unexplained expenditure under head "wages" - ITAT deleted the addition - conclusion of the authorities below was that the assessee had not booked the complete expenditure on wages in its books of account as the number of the workers found during the course of survey were more than the list of workers available in the books of account - Held that:- First of all the said survey was conducted at the premises of the assessee on 9.9.2004 when the said list was prepared. The conclusion of the said survey could not be applied while completing the assessment pursuant to search carried out at the premises of the assessee under section 132 of the Act. Secondly, there was no merit in the said addition being made in the hands of the assessee as the explanation of the assessee that the workers of the two concerns were totally considered in the list of workers prepared by the survey team for the assessee firm cannot be ignored. The said list of 59 workers was prepared on 9.9.2004 and the plea of the assessee was that the said 59 workers as on the date of survey belonged to the assessee and its sister concern. The requisite list of workers employed with either of the concerns were filed on record. Merely because the said statement was confronted to one of the partners who had signed the list does not establish that the workers belonged to the firm in which he was a partner i.e. the assessee firm before us. In the absence of any concrete evidence found, we find no merit in the orders of the authorities below and no addition is warranted in the hands of the assessee on the basis of said list prepared by the survey team where the assessee had clearly explained its case that the said total number of workers belonged to two concerns and not to the assessee itself. In any case, the additions in the hands of the assessee for the years under consideration have been made on pure estimation as no evidence of excess workers was found in the years under appeal. - Decided against revenue Addition on account of income of Smt.Meena Garg, Prop. of M/s Punjab Timber Trading Company being treated as income of the assessee on substantive basis - ITAT deleted the addition - Held that:- The Tribunal in the case of Smt.Meena Garg relating to assessment years 2002-03 to 2007-08 have held that the income arising from M/s Punjab Timber Trading Company was the sole proprietary concern of Smt. Meena Garg, consequent to which the income arising from the said concern was to be assessed in the hands of Smt.Meena Garg. In view of the income arising to M/s Punjab Timber Trading Company being assessed on substantive basis in the hands of Smt.Meena Garg, after holding that the assessee is the sole proprietary of the business being run under the name and style of M/s Punjab Timber Trading Co, there is no merit in making any addition in the hands of the assessee in this regard. Accordingly, we direct the Assessing Officer to delete the addition - Decided against revenue Addition on account of difference in valuation of building - basis of report of the valuation officer - ITAT deleted the addition - Held that:- The ratio laid down by the Hon'ble Apex Court in Sargam Cinema (2009 (10) TMI 569 - Supreme Court of India ) is squarely applicable to the facts of the present case where the books of account were not rejected by the Assessing Officer. On the other hand, the Assessing Officer had referred valuation of the building to the Valuation Officer who had reported the value of the building at ₹ 78,15.026/- as against the cost of the building shown by the assessee at ₹ 70,33,524/-. In view of the ratio laid down by the Hon'ble Supreme Court, no addition on this account can be made in the hands of the assessee where the books of account had not been rejected. - Decided against revenue Addition on account of estimated profit on short stock found - ITAT deleted the addition - Held that:- During the year under consideration, the assessee had shown fall in GP rate and the explanation of the assessee was that due to huge increase in the turnover there was marginal fall in GP rate, which undoubtedly has been accepted by the Assessing Officer in toto. In view of the totality of the facts and circumstances where we have already upheld the addition on account of sale depicted in the seized documents being outside the books of account and on account of the explanation given by the assessee that the discrepancy stands reconciled on account of the GP rate to be applied and other discrepancies explained by the assessee, there is no merit in any further addition. Another aspect to be kept in mind is that the information gathered by the Income tax Department during the search proceedings were forwarded to the excise department who in turn visited the premises of the assessee and found no discrepancy in the stock. Thus no merit in the addition made on account of estimated profit of short stock found on the date of search.- Decided against revenue
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2015 (12) TMI 969
Entitlement to interest under section 244A paid by them under section 140A - Held that:- The entitlement of a person to interest on the refund arises out of substantive part of sub-section (1) of section 244A. Clauses (a) and (b) relate only to the method of computation. The method of computation dealt with by clause (a) relates to specific cases of refund under certain provisions. Therefore, the starting point for calculation of the interest is fixed as 1st April in clause (a). Clause (b) is a residuary clause, as could be seen from the usage of the expression "in any other case". Therefore, the starting point for the computation of interest under clause (b) is the date of payment. The provisions under section 244A do not distinguish the cases where payment is made on assessment under section 140A. The explanation to section 244A does not really talk about the entitlement or disentitlement. The explanation, which we have extracted above, would show that the expression "date of payment of tax or penalty" means the date on and from which the amount of taxes or penalty specified in the notice of demand issued under section 156 is paid in excess. The above explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand under section 156, he is not entitled to interest on refund under section 244A. The explanation cannot, really, curtail the method of computation prescribed in clause (b) or the substantive part of section 244A. Therefore, the question of law is answered in favour of the assessee. The Tax Case Appeal is allowed. No costs. The connected miscellaneous petitions are closed.
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2015 (12) TMI 968
Disallowance under Section 40 (a) (i) - ITAT deleted the addition - whether the services rendered by the agents to the Assessee were in the nature of fee for technical services - Held that:- ITAT has analysed the agreements in question entered into by the Assessee with the foreign entities (agents) and concluded that the services rendered by the ‘agents’ were purely in the nature of advancement of the business of the Assessee which could not be categorized as managerial/technical or consultancy services. Consequently, it was held that the consideration paid by the Assessee to such agents could not be classified as fee for technical services. The Court finds that the view taken by the ITAT on the interpretation of clauses of the agreements in question was a plausible one. It is also consistent with the decision of this Court in DIT v. Pan Alfa Auto Elektrik Ltd. [2014 (9) TMI 706 - DELHI HIGH COURT] and the decision of CIT v. M/s. Grup ISM (2015 (6) TMI 10 - DELHI HIGH COURT). Consequently, this Court finds no substantial question arises for determination on this issue.- Decided in favour of assessee. Whether the payments could have been made by the Assessee to the foreign entities towards tour expenses without deduction of TDS? - Held that:- The CIT (A) has held against the Revenue on this issue. Where the recipient of the payment is not liable to tax in India, the question of deducting tax at source on payments made to such entity does not arise. - Decided in favour of assessee.
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2015 (12) TMI 967
Maintainability of appeal - monetary limit - Held that:- We need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds ₹ 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed ₹ 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity. While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than ₹ 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interests of the revenue. The liberty is, therefore, specifically granted to the Assessing Officers to approach this Tribunal in case there are any cases, inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 10,00,000, so that the related appeals can be recalled for adjudication on merits. Thus we deem it fit and proper to dismiss all these appeals as non maintainable.
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2015 (12) TMI 966
Transfer pricing adjustment - Held that:- Motilal Oswal Investment Advisors Pvt. Ltd. be excluded from the list of comparables in the case of investment advisory services as this company is engaged in the business of Merchant Banking and, therefore, is not a good comparable of a company providing investment advisory services to the AE. Brescon Advisors Limited be excluded from the list of comparables as this company has earned its revenue from debt resolution/debt syndication and financial restructuring advisory services. As per the profits and loss account, income is earned from debt resolution and debt syndication. It is further observed that this company also makes significant investments in companies using its own funds. Sundram Finance Distribution Ltd be excluded A this company is primarily engaged in the business of agency and retail distribution, operational income and income from brokerage service charges and incentives forms 96% of the total income. We also find from the Annual Report that the income is recognized from insurance agency commission and brokerage. Integrated Capital Services Ltd. be excluded as be excluded as this company is rendering advisory and consultancy services in the area or merger acquisition and reconstruction of business. Khandwala Securities Limited be rejected as this company as comparable on the ground that its income is very akin as security and stock brokers. Axis Private Equity Ltd., the related party transactions are more than 90%. Moreover, the principle product/services of the company as per balance sheet abstract show that it is into the asset management services. Thus, it can be safely concluded that this company has functionally different from the assessee. Therefore, it would be better to exclude this company from the final list of comparables. Computation of deduction u/s. 10A - assessee was asked to explain why 50% of the telecommunication expenses should not be excluded from export turnover for inclusion of deduction u/s. 10A - Held that:- Respectfully following the ratio laid down in the case of CIT Vs Gem Plus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT ] we direct the AO to exclude the telecommunication expenses from total turnover also. - Decided in favour of assessee Grievance related to ESOP cost - Held that:- Respectfully following the decision of the Special Bench of Biocon Ltd (2013 (8) TMI 629 - ITAT BANGALORE), we hold that discount on issue of employees stock options is allowable as deduction in computing the income under the head profits and gains of business of profession. - Decided in favour of assessee Disallowance of charges paid to National Securities Clearing Corporation Ltd, Bombay Stock Exchange and National Stock Exchange - Held that:- Respectfully following the ratio laid down in case of Angel Capital Debitt Market Ltd. [2014 (5) TMI 584 - BOMBAY HIGH COURT] , we direct the AO to delete the impugned additions as the amount paid as penalty was on account of irregularities committed by the assessee s clients. Such payments were not on account of any infraction of law and hence allowable as business expenditure. In such a case the explanation to Sec. 37 would not apply - Decided in favour of assessee Non-allowance of deduction on the ground that bonus expense not actually paid - Held that:- The assessee drew our attention to exhibit 275 which is Appendix-IV to the Audit Report for the year ended 31.3.2008. It was pointed out by the Ld. Counsel that the bonus amount of ₹ 36,46,21,050/- was not paid on or before the due date for furnishing the return of income out of which the assessee paid an amount of ₹ 35,34,72,734/- during the year under consideration. It is the say of the Ld. Counsel that the AO has not properly appreciated the facts of the case. The AO is directed to consider the facts of the case properly and decide the issue afresh after giving reasonable and sufficient opportunity of being heard to the assessee - Decided in favour of assessee by way of remand Addition on account of the difference between the actual payments made by the assessee to American Express Banking Corporation (AEBC) and the confirmation provided by AEBC - Held that:- We find force in the contention of the Ld. Counsel. A perusal of DRP s order also show that the corrected amount was provided to the DRP but the same was not accepted as it was not uploaded by AEBC on AIR. In our considered opinion, if the payee does not amend its AIR information, the payer cannot be penalized for the same. Once AEBC has confirmed of having received an amount of ₹ 11,55,45,253/- alongwith relevant bank statements evidencing the payment, we do not find any reason/logic in making the additions. The AO is directed to delete the same - Decided in favour of assessee
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2015 (12) TMI 965
Unexplained investment assessed u/s 69 - Held that:- As contended that assessee belongs to muslim community and according to shariat law applicable to her, she is not supposed to earn interest from any person including bank and she had kept her earnings in the form of cash which was duly deposited at the time of purchase of property. Be that as it may, assessee was not prevented from opening a current account with a bank on which assessee would not have earned any interest, but that was not done. Moreover, sudden deposits of ₹ 2,20,000/- by assessee within a period of 11 days starting from 14/09/2004 and ending with 24/09/2004 definitely proves the unexplained nature of cash deposits which was not related to any business but from some unexplained source. Moreover, these deposits were made immediately before the issue of cheques for either payment to builder or for meeting expenses/payment towards electricity, telephone, insurance payments, etc. and clearly shows that as and when assessee needed to make payments towards the cost of flat and/or towards other expenses, she decided to deposit cash in her accounts. Thus, all these submissions made by the assessee's CA are irrelevant and dismissed. Cash deposits made in the bank account of assessee's daughter Asma A. Sarang and entries in P&L Account, Capital Account and Balance Sheet for financial year relevant to A.Y. 2005-06 are held to be the property of assessee's daughter and therefore, these have been excluded while deciding assessee's appeal. It is a separate case by itself and these cash deposits require to be examined afresh by the Assessing Officer in assessee's daughter's case. Therefore, assessee has failed to provide explanation for the sources of unexplained expenditure/investments/deposits in bank account totalling ₹ 2,03,269/-(92,369+1,10,900) u/s 69, 69B and 69C of IT Act, 1961 of IT. Act, 1961 - Decided against assessee
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2015 (12) TMI 964
Assessment under section 158BC(c) - non issue of notice - whether issuance of notice happens to be within the statutory limitation of one year? - Held that:- A perusal of section 143(2) proviso as it existed being substituted w.e.f. 1.4.2008 makes it clear that no notice under clause (ii) of Section 143(2) shall be served after the expiry of twelve month from the end of the month in which the return is furnished. The expression “served” in our view happens to be much distinct than the expression “issued”. We make it clear that the present is a tax statute wherein such expressions used have to be literally interpreted. We are of the opinion that the word “shall” used in the provision also highlights the expression to be of mandatory character. A co-ordinate bench of the tribunal in the case of ITO Vs. Shri Dinesh B. Gandhi [2015 (12) TMI 756 - ITAT AHMEDABAD] has rejected a similar argument of the Revenue wherein the very dates of return followed by issuance and service of section 143(2) notices were involved. The Revenue’s fails to point out any distinction on facts or law. We accordingly reject its first contention.- Decided in favour of assessee. Whether Section 158BC in chapter XIV-B is a complete code in itself wherein section 143(2) does not apply in toto? - Held that:- Section 158BC(b) clearly stipulates the procedure to be followed by an Assessing Officer in determining undisclosed income of the relevant block period in the manner laid down in section 158BB and the provisions of 142 and 143(2) and (3) etc. We accordingly reject this second argument as well. The Revenue’s sole substantive ground fails. The CIT(A) order quashing the impugned assessment on the ground of validity of section 143(2) notice stands upheld. - Decided in favour of assessee.
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2015 (12) TMI 963
Penalty u/s 271(1)(c) - claim of revenue expenditure u/s 35(2AB) disallowed - Held that:- The claim of the assessee was not accepted by the Assessing Officer for the sole reason that the assessee could not get the approval from DSIR till completion of scrutiny assessment proceedings and therefore, in the facts of the present case, this judgment of Hon'ble Apex Court in CIT vs. Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT ] wherein it was held that merely because of the assessee's claim, deduction of the interest of expenses which has not been accepted by revenue, penalty u/s 271(1)(c) not attracted, for merely making of the claim, which is not sustainable in law by itself will not amount furnishing inaccurate particulars of income. - Decided in favour of assessee
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2015 (12) TMI 962
Nature of interest received - revenue receipt or capital receipt - compensation for breach of contract relating to capital assets - CIT (A) treated the interest received and tax deducted at source from the same u/s 194A as capital in nature - Held that:- We find merit in the submissions of the learned Counsel for the assessee. Merely because the tax has been deducted by the builder and recorded it in his books of account as revenue expenditure, the same cannot be treated as revenue receipt. The compensation received for breach of contract which relates to capital assets and, therefore, the learned CIT(A) has rightly held it to be capital in nature. Thus, we do not find any cogent reason to disturb the reasoned order passed by the learned CIT(A) and decline to interfere in the matter as such. - Decided against revenue
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2015 (12) TMI 961
Transfer pricing adjustment - adoption of Most Appropriate Method (MAM) - Held that:- We direct the TPO to adopt RSPM as the MAM in this case. Transfer pricing adjustment of AMP expenses - Held that:- As agreed by both the parties this issue is set aside to the file of the AO/TPO for fresh adjudication in line with the propositions laid down by the Special Bench of the Tribunal in the case of L.G.Electronics India [2013 (6) TMI 217 - ITAT DELHI] Treating foreign exchange loss as an item of non operating expenditure - Held that:- The Ld.Counsel for the assessee agreed with the contention of the Ld.D.R. that safe harbour rules should not be the basis of decision making. In view of the above contentions, we modify the directions of the DRP to the extent that safe harbour rules should not be applied while considering foreign exchange fluctuation loss while arriving at net operating margins. Decided in favour of revenue Addition on prior period expenses - Held that:- None of the expenditure identified by the AO has been claimed in AY 2009-10, as the relevant provisions were made in AY 2008-09 and the said provision expenditure ahs been allowed by the AO in AY 2008-09. Thus, the addition proposed by the AO does not survive - Decided in favour of assessee. Relief granted by the DRP on account of provision for warranty - Held that:- On the ground that the assessee has made provisions of warranty on a consistent and rational basis, the dRP directed the AO to grant deduction. We find no infirmity in this finding. Hence this ground of the Revenue is dismissed. - Decided in favour of assessee. Disallowance made u/s 40(a)(ia) with respect to advertisement expenditure - DRP delted the addition - Held that:- The DRP recorded that the assessee had complied with the statutory requirement of deducting tax at source and hence the disallowance u/s 40(a)(ia) is not warranted. There is no infirmity in this finding and hence this ground of Revenue is dismissed.- Decided in favour of assessee.
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2015 (12) TMI 960
Penalty levied u/s 271(1) (c) - cessation of liability u/s 41(1) in respect of two trade creditors and in respect of one trade debtor - Held that:- It clearly emerges that the amounts in question were carried over trade credits from earlier year, corresponding purchases were included in trading a/c thus legally speaking if trade credits are added as cessation of liability, the relevant entries exist in books and if they are held as bogus then they belong to earlier years. Besides relevant information is furnished along with return of income. Though surrendered in assessment the assessee can take fresh pleas in the penalty proceedings which by settled law are distinct and separate. Assessee can make fresh submissions and lead fresh evidence. AO can take fresh investigations on the basis of new pleas and material. Thus when surrendered is technically rejected and assessee gives reasonable explanation, penalty can be imposed not on the sole basis of alleged refused surrender. AO has a duty to consider the material and submission of the assessee and decide whether income on the basis of these pleas was assessable in the year in question. AO has held that the surrender is not acceptable and chose to add it u/s 41(1) of the Act. Thus technically even the surrender is not accepted and unilateral cessation of liable is assumed ignoring the plea that in subsequent years trading liability amounts were paid. The details about trading liabilities and transactions were reflected in the accounting statements which were part of the return of income. Hon’ble Supreme Court in Reliance Petro Products case (2010 (3) TMI 80 - SUPREME COURT ) has held that if the relevant information is filed with the return of income in that case any variation in the claims of the assesse will not entail penalty. This judgment also supports the case of the assesse, in view thereof also the penalty in this case can not be imposed by merely referring to the alleged surrender and without considering the explanation. Thus, in consideration of entirety of facts, circumstances and case laws as relied on by assesse, we delete the penalty. - Decided in favour of assessee.
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2015 (12) TMI 959
Transfer pricing adjustment - Held that:- When assessee is not able to bring on record anything to show any services to have been rendered by AE to it and there are no documentations to show any services to have been received from AE, in our opinion it will be fair conclusion that no services were in fact rendered by AEs to the assessee. There is no dispute that both the AEs were subsidiaries of the assessee. Therefore, the agreements between such subsidiaries, which have been brought before us as well as lower authorities for justifying the payments could be best considered only as self-effectuating documents. There was considerable onus on the assessee to show that actual services were rendered by its subsidiaries. It is a well settled principle of law that a court has to go into substance and not be satisfied with the and form has to get behind the smoke screen to find the true state of affairs. In our opinion, the assessee was unable to show any services to have been received from sister concerns. When no services were received then lower authorities in our opinion were justified in considering the ALP to be zero. The assessee has not been able to show any services having been rendered by the AE to it. As to the claim of the assessee that natural justice was denied to it, we find that a number of opportunities were given by not only the DRP but also the TPO. Even during the remand proceedings before the TPO the assessee was unable to show any TP documentation with regard to the TP services rendered by AE - Decided against assessee Disallowance u/s.10A - Held that:- The reason why assessee was denied the deduction claimed u/s.10A of the Act on the export benefits received from this unit was that it was formed by splitting up or reconstruction of a business already in existence. By virtue of the agreement mentioned supra, we cannot say that there was a split up or reconstruction of a business already in existence. There is neither any split up or reconstruction of business of the assessee nor SSAPL. Thus we hold that deduction u/s.10A could not have been denied - Decided in favour of assessee Disallowance u/s.14A - Held that:- Interest ordinarily cannot be considered as having nexus with the business of the assessee. Such interest would normally fall under the head ' income from other sources'. No doubt, in assessee's case the Assessing Officer has not considered the interest receipt separately under the head 'income from other sources'. But this will not, in our opinion, change the nature of the transaction or character of the receipts. Rule 8D(2) prescribes application of the formula set out therein on the expenditure incurred by way of interest which is not directly attributable to any particular income or receipt. There is no case for the assessee that the interest expenditure of ₹ 335,169,433/- incurred by it were attributable to any particular income or receipt. There is nothing in the said rule which would allow for netting of interest. Rule 8D(2)(ii) states expenditure by way of interest. If we allow netting of interest income on such expenditure, it would be equivalent to adding something which is not there in the Rule book. Especially so, since interest received was not from any business activity but from FDs. We are, therefore, of the opinion that application of Rule 8D does not allow for netting of any interest income with interest expenditure. - Decided against assessee
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2015 (12) TMI 958
Search and seizure action u/s.132 - addition u/s 69 - Held that:- Presumption u/s. 132(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in question in assessee’s case. In view of above, we are of the view that the addition made by the Assessing Officer is not justified and the same is directed to be deleted. It is pertinent to mention here that this case is being decided in its facts and circumstances; it cannot be applied to other cases as such. - Decided in favour of assessee
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Customs
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2015 (12) TMI 931
Waiver of pre-deposit - mandatory or not - Recovery of custom duty - Held that:- Since there was only one show cause notice which resulted into one order of adjudication passed by the Commissioner, we wonder whether the petitioner was even obliged to file a separate appeal. Insofar as the petitioner is concerned, it received one show cause notice and was visited with one final order of adjudication. Its liability, therefore, was to file a single appeal challenging such order of the Commissioner. It may be for convenience and better appreciation of issues that the Tribunal insisted for separate two appeals. - when the petitioner merely re-presented the appeal which was already filed for the purpose of challenging the consolidated order of the Commissioner under both the laws, such filing of appeal must be seen as a continuation of the original proceedings and fresh presentation of the appeal would relate back to the original date of filing the appeal. The issue can be seen from another angle. If by the time the petitioner presented the fresh appeal within the time permitted and directed by the Tribunal, the period of limitation had expired, would such appeal be rejected as time-barred. It becomes clear that the amended section 129-E of the Customs Act with effect from 06.08.2014 would not apply to both the appeals of the petitioner which are pending before the Tribunal. The petitioner would, therefore, be governed by the original section 129-E as it prevailed prior to 06.08.2014. The petitioner had a right to seek waiver of predeposit. The Tribunal would, therefore, restore such appeal and decide the same in accordance with law, after first deciding the petitioner's application for waiver of pre-deposit. For such purpose, the impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 930
Revocation of CHA License - Forfeiture of security deposit - penalty under Regulation 18 of the Customs Brokers Licensing Regulations, 2013 - Held that:- Licence granted to the respondent herein had expired, on 24.2.2015, and therefore, the contentions raised by the learned counsels appearing on behalf of the parties concerned are academic in nature. It is noted that the respondent herein had submitted an application, dated 9.1.2015, for the renewal of Customs Brokers Licence. It is also noted that the impugned show cause notice issued by the appellant, dated 5.3.2015, has been issued, under Section 20(1) of the Customs Brokers Licensing Regulations, 2013, for the revocation of the licence issued to the respondent herein and for other consequences. In view of the fact that the licence issued to the respondent had expired on 24.2.2015, this court is not inclined to go into the merits of the matter in depth, except to state that the impugned notice issued by the appellant, dated 5.3.2015, is beyond the period of limitation of 90 days prescribed under the relevant Regulation, taking note of the fact that the investigation report had been received, by the appellant, on 29.5.2012, as stated in Paragraph-6 of the common counter affidavit filed by the respondent, on 26.10.2015 - it is clear that it would be open to the appellant to consider the application of the respondent for the renewal of the licence, taking into consideration all the relevant factors, prescribed by law - Decided against Revenue.
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2015 (12) TMI 929
Detention of goods - Provisional release of goods - Held that:- Show cause notice has been issued to the petitioner inter alia requiring the petitioner to show cause as to why the amount of ₹ 35,00,000/- deposited voluntarily during investigation should not be appropriated against the demand raised in the said show casue notice. This means that till there is an adjudication consequent upon the said show cause notice, the said sum of ₹ 35,00,000/- cannot be appropriated against the said demand. In other words, the said sum of ₹ 35,00,000/- is available to the petitioner for adjustment towards the differential duty which has been required to be deposited by virtue of the provisional release order dated 29.04.2015 - sum of ₹ 35,00,000/-, which was voluntarily deposited by the petitioner, ought to be adjusted against the estimated differential duty of ₹ 33,87,526/-, which has been indicated in the provisional release order. The respondents are directed to release the said goods within ten days subject to the other conditions being complied with. - Decided in favour of assessee.
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2015 (12) TMI 928
Restoration of appeal - Waiver of pre deposit - Import of machinery at a concessional rate of duty - appellant failed to achieve that target. Extension of time was sought by the appellant and the target period was extended up to 19.1.2007 - Levy of penalty - Held that:- Assistant Registrar of the Tribunal was directed to report to the bench on 7.2.2012. However, on 7.2.2012 itself, the appeal was dismissed on the failure of the appellant to make the deposit. It is stated in the appeal before this Court that the bank guarantee furnished by the appellant at the time of clearance of the consignment was in existence at the relevant time. This Court extended the time for pre-deposit by another two months as per the judgment dated 10.2.2012. A situation has arisen now that the judgment passed by this Court cannot be implemented, since, by that time, the tribunal has dismissed the appeal filed by the appellant - it is only just and proper to grant an opportunity to the appellant to pursue the appeal on merits and allow them to make pre- deposit - Decided in favour of assessee.
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2015 (12) TMI 927
Exemption of SAD under Notification No. 20/2006-Cus dated 01.3.2006 - Board Circular F.No. 620A6/2007-Cum.TU dated 11.06.2007 and Standing Order No. 51/2007 dated 04.12.2007 - Held that:- issue is no more res-integra in view of the Board Circular F.No. 620A6/2007-Cum.TU dated 11.06.2007 and Standing Order No. 51/2007 dated 04.12.2007 issued by the Chief Commissioner of Customs, Mumbai, Zone II. - No reason to interfere the order of the Commissioner (Appeals) - Decided against Revenue.
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2015 (12) TMI 926
Denial of refund claim - unjust enrichment - Held that:- Sub-section (2) of Section 18 of the Customs Act, 1962 provides when the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then, in case of goods, cleared for home consumption, the amount paid shall be adjusted against the duty finally assessed and if the amount is paid, the importer or the exporter be entitled to a refund claim as the case may be. It is clear from Section 18 that the appellant is entitled to refund of duty after finalization of the assessments under the said Section. - Commissioner (Appeals) directed to the adjudicating authority to examine the admissibility of the refund as per the prevalent law. In our considered view, the Adjudicating Authority should consider the case laws as relied upon by the Learned Advocate while the passing the order in denove proceedings. In view of the discussions, we do not find any reason to interfere the order of the Commissioner (Appeals). However, as the matter is for the year 1988, we direct the Adjudicating Authority to complete the denove proceedings within 3 months from the date of receipt of this order - Appeal disposed of.
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2015 (12) TMI 925
Denial of refund claim - Unjust enrichment - whether the appellant is eligible for the refund of Customs duty paid by them - Held that:- Appellant had produced Chartered Accountant’s certificate wherein it was clearly mentioned that on going through the records, invoices, etc. Chartered Accountant had found that they had not passed on the higher rate of duty suffered by them. In the balance sheet also, as per the original authority’s observation, the appellant had shown the amount as receivable from Customs. The eligibility for the refund arose because between the time of Bill of Entry and time of removal, tariff value got changed and therefore, within such a short interval, the appellant could have decided to transfer the liability and claim refund is also not reasonable. When the refund claim arises within two or three days and within 15 days, a refund claim is filed, the obvious conclusion would be that the appellant was clearly aware that by the time, the crude palm oil got processed and cleared; the actual duty suffered to them was known to them. More over in this case on merits also, the appellant was eligible for refund. Further they were not selling the goods as such but they were processing the same and thereafter selling. - Impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 924
Rejection of request to tale vessel to UAE - Revenue denied request since said vessel was confiscated and redemption fine and penalty was levied - appellant had not complied with the orders and as such the permission cannot be granted - Held that:- a Bond of ₹ 33 crores have also been furnished with the Revenue - Further collection of amount demanded towards penalty and fine has been stayed by this Tribunal vide stay order dated 15.7.2014. Further we find that the interest of revenue is secured in view of the Bond and Bank Guarantee and also the pre-deposit made vide the said order dated 15.7.2014 of this Tribunal. Thus, we permit the appellant to take the vessel out of Indian Territorial waters for a period of 24 months for execution of the Time Charter Contract they have entered into with M/s Middle East Marine LLC subject to the condition that the appellant shall file an undertaking before the Authority stating the purpose of taking out of the vessel and further undertake to bring back the same within a period of 24 months from the date of release of the vessel - Appeal disposed of.
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2015 (12) TMI 923
Imposition of penalty on CHA under the Customs Act - Denial of benefit of DEPB Credit - Since the goods were of foreign origin and no manufacturing/processing had been undertaken in India, the exporter was not eligible for the claim of DEPB benefits - Held that:- The charge against the CHA is that they failed to advise the exporter that benefits of DEPB scheme could not be claimed in respect of the goods manufactured abroad and the contravention alleged is of Regulations 13(d) and 13(e) of the CHALR, 2004. It is also on record that the CHA came to know that the product has been manufactured abroad only when the goods were examined by the Customs. There is no evidence adduced by the Revenue to say that the CHA was aware of the misdeclaration by the exporter. In these circumstances, the question of CHA being responsible for any omission or commission, making the goods liable to confiscation would not arise at all. Consequently, imposition of penalty under Section 114 of the Customs Act, 1962 is not sustainable in law. If the CHA has contravened any of the provisions of the CHALR, then action should have been taken under CHALR and not under the Customs Act. Therefore, I am of the considered view that the impugned order imposing penalty under Section 114 is unsustainable in law. - Decided in favour of appellant.
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2015 (12) TMI 922
Denial of refund claim - Commissioner remanded matter for de novo adjudication - Held that:- Commissioner (Appeals) remanded the matter to decide afresh after considering his observations as well as the submissions of the appellant. Hence, I do not find any reason to interfere in the impugned order. Accordingly, the appeal filed by the appellant is rejected. - Decided against assessee.
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2015 (12) TMI 921
Refund of SAD - whether importer has passed on 4% SAD to the buyers as evident from certified copy of Excise invoices and RG 23 extract - Held that:- In addition to CVD there is mention of 4% SAD also. However, on the same invoices there is stamp affixed which indicates as no credit of additional duty levied under Section 3(5) of the Customs Tariff Act 1975 shall be admissible. I also perused certificate issued by the buyers of the goods wherein it is certified that the buyers have availed Cenvat credit in respect of CVD and Education Cess thereto and it also certified that Cenvat Credit of Special Additional Duty (4%) have not been availed. These certificates have been attested by the Jurisdictional Range Office - appellant has neither passed on Cenvat credit of 4% SAD to the buyers nor the buyers have availed Cenvat credit of SAD. I am of the view that as per the notification 102/2007-Cus and Board Circular prescribed the procedure. The only requirement, as regards Cenvat credit is that the claimant should make endorsement on the invoice that the Cenvat credit in respect of additional duty should not be availed by the buyers. The said compliance was undisputedly made by the appellant on their sale invoices. In view of the above discussions on the facts which is not under dispute, I am of the view that the refund of ₹ 5,51,761/- is admissible to the appellant. - Decided in favour of assessee.
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2015 (12) TMI 920
Suspension of CHA License - misdeclaration of the description of goods - Held that:- Initially the suspension order under Regulation 20(2) of CHALR Regulations, 2004 was passed on 16-10-2012 which was confirmed on 19-12-2012 but thereafter no proceedings under Regulation 22 of CHALR, 2004 has been initiated against the appellant. - as no proceeding under Regulation 22 of CHALR, 2004 has been initiated against the appellant, till date, the impugned order is not sustainable, therefore we set aside the impugned order - Decided in favour of assessee.
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Corporate Laws
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2015 (12) TMI 915
Removal of the attachment orders - praying the respondents not to proceed with auction sale of the property of the Company (in liquidation) - Held that:- Considering the scope of section 530(1)(a) of the Companies Act and section 178 of the Income Tax Act the Official Liquidator is bound to follow it. The attachment made by the Tax Recovery Officer, Raichur range, Raichur, is in force. Therefore, the Official Liquidator cannot take possession or deal with the property. The property is deemed to be in the custody of this court in view of the winding up proceedings. Therefore, it is appropriate to raise the attachment and permit the Official Liquidator to take possession of property and proceed in accordance with law. It is also necessary to direct the respondents to hand over books and records, if any with them, to the Official Liquidator. Accordingly application is allowed and the attachment made by the Tax Recovery Officer, Raichur Range, Raichur in respect of the property situated at No.24, Kolhar, IDA, Bidar, Karnataka, is hereby set aside. The Official Liquidator is permitted to take possession of the property belonging to the company (in liquidation) and proceed in accordance with law. The respondents 1 and 2 are directed to hand over books and records, if any with them, to the Official Liquidator. Insofar as the appointment of approved valuer is concerned, the Official Liquidator can move this court after taking possession of the property.
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Service Tax
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2015 (12) TMI 957
Renting of immovable property services - Penalty u/s 76, 77 & 78 - Held that:- Sub-section 2 of Section 80 provide that notwithstanding anything contained under the provisions of Section 76, 77 & 78, no penalty shall be imposable on failure to pay the Service Tax payable, as on 6th day of March, 2012, for the taxable service referred to under Section 65(105)(zzzz) subject to the condition that amount of Service Tax along with interest is paid in full within the period of 6 months from the date on which the Finance Bill received the ascent of the President. The reason for denying the benefit of sub-Section 2 of Section 80 as stated in the Order-in-Original, was only for short payment of interest of ₹ 3,734/-. However, there is no finding as to any default and the same on examination of the Order-in-Original appears to be difference in calculation by the appellant assessee as well as the Revenue. - denial of benefit under the provisions of Section 80(2) is bad and against the spirit of law Justification recorded by the Commissioner (Appeals) as to satisfaction of the service of the Order-in-Original is defective. Although the order was served on the son of the appellant, but the relevant fact is not on record as to whether the son is minor or major. Thus, the Commissioner (Appeals) have committed error in accepting the service of the Order-in-Original as proper. Moreover, the Order-in-Original itself is found to be bad and against the spirit of the Act and the Rules - Decided in favour of assessee.
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2015 (12) TMI 956
Imposition of penalty - Default in payment of service tax - appellant did not file ST-3 Returns - Held that:- Appellant got registered in July 2008 and visit of the officers tookplace on 29.1.2009. Even though the tax for January 2009 was liable to be paid only on 31.3.2009, the appellant paid the entire liability on 04.2.2009. In fact, some amount was paid in excess. This shows that the appellant had reasonable cause for non-payment which is financial difficulty and the appellant being new to the service tax provisions, I consider that a lenient view as regards the penalty is warranted. Accordingly, in my opinion, this is a fit case for invoking the provisions of Section 80 of the Finance Act to waive the penalty. Accordingly service tax amount paid with interest is confirmed as correctly paid and penalty imposed is waived by invoking the provisions of Section 80 of the Finance Act, 1994 - Decided in favour of assessee.
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2015 (12) TMI 955
Benefit of refund under Notification No. 05/2006, read with Rule 5 of Cenvat Credit Rules, 2004 - Advertising, Security, Manpower Recruitment and Supply service - Notification is restrictive since the word 'used' isservice used in providing output service - nexus between the input service and output service - Held that:- issues involved in the present appeal have been considered by this Tribunal in the case of Apotex Ltd. & Others - [2015 (3) TMI 346 - CESTAT BANGALORE]. In the case of Apotex Ltd. & Others , issue relating to nexus was considered and three services in question before us have been held to be admissible. Moreover, this Tribunal in the case of C. Cubed Solutions Pvt. Ltd. vs. C.C.E, Bangalore [2013 (7) TMI 347 - CESTAT BANGALORE] has considered the very same services and come to the conclusion that refund is admissible. This decision is squarely applicable to the facts of the present case also. As regards the Notification No. 05/2006, this notification was retrospectively amended and word "in” has been replaced by "in or in relation to". Therefore, this ground also cannot be sustained - Decided against Revenue.
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2015 (12) TMI 954
Denial of refund claim - information technology service - Software Technology Parks of India (STPI) scheme - rejection on the ground that appellant should have utilised the credit cannot be accepted - Held that:- Further the original authority had held that CENVAT credit of ₹ 35,445/- was not admissible and therefore not eligible for refund. There is no discussion about this in the order of the Commissioner (Appeals) and even in the appeal memorandum, no submissions have been made. On going through the table wherein eligibility has been considered, it is seen that in respect of three invoices credit has been disallowed on the ground that the invoices are in favour of Ness Technologies (India) Pvt. Ltd., Bangalore. There are several decisions taking a view that on the ground that the invoice is in the name of different person, credit cannot be denied. Rule 9(2) of CCR specifies the essential ingredients and also provides that if these are available, credit can be allowed by the concerned authority. While considering the refund claims afresh, the original authority may please consider this aspect. Two amounts of ₹ 809/- and ₹ 2971/- have been disallowed on the ground that the refund claim related to one month whereas invoices related to three months. - Decided in favour of Assessee.
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2015 (12) TMI 953
Denial of refund claim - Unutilized CENVAT Credit - Various service - Held that:- all the services in dispute are covered by the decisions relied upon by the respondent and I find myself in agreement with it and therefore the appeal filed by the Revenue has no merit. - Decided against Revenue.
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2015 (12) TMI 952
Rectification of mistake - refund in terms of Section 65(105) of Central Excise Act, 1994 - Held that:- there is a mistake apparent from the records since it was not a point raised before us by the Revenue at all. Nevertheless, we consider that when an individual buyer purchases a flat/apartment in residential complex, what he is purchasing is an apartment or a flat and not a 'part of the complex'. If the Revenue's contention was correct, there was no need to add explanation in the definition in the year 2010 to bring the individual buyers of flat/apartment in residential complex into service tax net. We do not intend to discuss the issue in detail since it is a legal issue and was not argued before us and it can be challenged in appeal. There is no mistake apparent from the records - Rectification denied.
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2015 (12) TMI 951
Denial of refund claim - tax paid on input services used for providing service exported - Agreement was with Silicon Valley Bank (SVB) whereas the service has been provided to M/s. SVB Financial Group - nexus between input service and output service - Export of output service - Held that:- Management Consultancy service is nothing but study of Indian market and submission of a report to enable the customer to make a decision for making investment in India. - in the absence of any dispute that service was rendered to the recipient abroad as claimed by the appellant and receipt of consideration from recipient abroad, I do not consider that agreement plays such an important role that the refund claim itself has to be rejected. In any case, assignment clearly shows that the agreement has been transferred in favour of the present recipient. Nexus issue has to be held in favour of the appellant in accordance with law. Nevertheless on merit also, the appellant is eligible for the refund, in my opinion, since services made in Order-in-Original are covered by precedent decisions of this Tribunal and the decisions of various High Courts in the country. Only doubt is in respect of Cafeteria service where this Tribunal has taken a view that if any amount has been collected from employees, admissible amount to be reduced proportionately. In any case, when the original authority considers the refund claim, Cenvat credit attributable to Cafeteria can be reduced proportionately. - impugned order is set aside and the matter is remanded to the original authority to consider the refund claim - Decided in favour of assessee.
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2015 (12) TMI 950
Denial of Cenvat credit - Courier Service - consolidated Courier Bills of Entry - Denial of credit on the ground that it is post manufacturing activity - Held that:- Cenvat credit on the input services is available if the same is availed by assessee in the course of their business of manufacturing of excisable goods. Admittedly, the respondent has availed the service in the course of their business of manufacturing. Therefore, the ld. Commissioner (Appeals) has rightly allowed the Cenvat credit on courier service. - For repair of fax machine, security service and insurance of Omni Van, all these have been used by the respondent in the course of their business in manufacturing. Therefore, I hold that they are entitled to Cenvat credit - Decided against Revenue.
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2015 (12) TMI 949
Denial of refund claim - Unutilized CENVAT Credit - Rule 5 of Cenvat Credit Rules 2004 read with Notification No. 5/2006-C.E. (N.T.) - whether the lower authorities were correct in rejecting the refund claim on the ground that the same was filed beyond the period of one year - Held that:- Tribunal has clearly held that the date of receipt of consideration is relevant for calculating relevant date and the limitation would be applicable as per the provisions of Section 11B and when these two principles are applied to the present case, the appellant would be eligible for refund in respect of the amounts received after 18-11-2007. Accordingly, the appeal is allowed to the extent of refund claim on the basis of receipt of payments to the services rendered from 18-11-2007 to 15-5-2008 which was not originally allowed by the Commissioner (Appeals). As regards decision in the case of mPortal [2011 (9) TMI 450 - KARNATAKA HIGH COURT ] of Hon’ble High Court relied upon, this was considered in Apotex case [2015 (3) TMI 346 - CESTAT BANGALORE] by the Tribunal - Decided in favour of assessee.
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2015 (12) TMI 948
Imposition of penalty - benefit of u/s 73(3) - Construction service - Held that:- Provisions of Section 73(3) of the Finance Act, 1994 as were in the statute during the relevant period when the show-cause notice dated 16.10.2009 issued needs to be considered; as appellant have discharged the entire service tax liability along with interest as has been ascertained by the Central Excise Officers i.e. audit party. In our view, provisions of Section 73(3) very clearly lays down that if service tax liability and the interest thereof is discharged on the direction of the Central Excise Officers, there is no need to issue show-cause notice. Adjudicating authority should have applied these provisions in the case in hand. We find a strong force in the contentions raised by the learned Counsel that they were under bonafide belief that the construction activity which was undertaken by the appellant was in respect of Government appointed statutory body hence tax liability may not arise. In our view the appellant could have entertained a bonafide belief that the activity undertaken by the appellant may not be covered under the tax net. In our considered view, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994. By invoking the said provisions of Section 80 of the Finance Act, 1994, we set aside the penalties imposed by the adjudicating authority under various sections - Appeal disposed of.
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2015 (12) TMI 947
Refund of CENVAT credit accumulated - Rule 5 of CENVAT Credit Rules 2004 - Held that:- If a refund claim for the period from October 2006 to December 2006 was returned pointing out certain deficiencies, the appellant should have resubmitted the claim for the same period and segregated the claim for January to March 2007 and submitted it separately. If they do not want to claim refund for October and November 2006, the refund claim would have been filed only for December 2006. Unless, I am able to take a view that the claim which was returned for the period from October 2006 to December 2006 was resubmitted in the eyes of law, it may not be possible to uphold the stand taken by the appellant that the part of the refund claim submitted has to be treated as resubmission of the earlier claim. The claims for October to December 2006 and December 2006 to March 2007 have to be treated as separate claims and in my opinion this has been correctly followed. Therefore this ground cannot be sustained. - Matter remanded back - Decided partly in favour of assessee.
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Central Excise
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2015 (12) TMI 946
Imposition of penalty for abetment against the Chartered Accountant for giving wrong certificate - Applicability of rule 26 or rule 27 - evasion of duty - Held that:- In the appeal filed by the trader, the finding recorded by the Tribunal in its order dated 12th August, 2011 is categorically to the effect that the respondent cannot be said to have acted in a manner so as to hold him an abetter in relation to the commission of any alleged offence as described under Rule 26. It has also been found that the allegation which is being made against the respondent appears to be basically that of money laundering and the same is not subject to any penalty under Rule 26. - The certificate appears to have been obtained at the time of the proceedings that were initiated for the purpose of imposition of penalty and taking action against the trader. This therefore could not be described as an act to attract penalty under Rule 26 and 27, even though this may give a separate cause of action on the ground of money laundering or providing incorrect evidence in order to extend any benefit to the trader or the assessee. The penalty under Rule 26 and 27 therefore would not be attracted in the said background and accordingly we do not find any substantial question of law so as to entertain this appeal. - Decided against Revenue.
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2015 (12) TMI 945
Confiscation of goods - Invocation of extended period of limitation - Held that:- Assessee is aggrieved with that part of the order wherein it is stated that the appellants have no case on merits whereas the Revenue is aggrieved with the findings of the learned CESTAT that the extended period of limitation was not invokable. We find that in the interest of justice both the appeals deserve to be allowed by remitting the matter back to the learned Members of the CESTAT for considering the issue afresh by considering the rival submissions on behalf of both the parties. - Matter remanded back - Decided in favour of Revenue.
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2015 (12) TMI 944
Request for admission of additional evidence - Held that:- all the documents which the appellant wants to include as additional evidences were submitted by the department before the Court; there are mahazars, investigation report and the deposition made before the Commissioner. We also find that the appellant did not bring out any document or private document as new evidence. The mahazar drawn dt. 23.8.96 at the time of seizure during the investigation itself and also deposition of the investigating officer in Revenue case is legal documents. As regards Revenue's contention that Tribunal in their order dt. 29.8.2007 has already rejected the application of additional evidence, we find that Hon'ble Supreme Court has set aside the Tribunal's order and remanded the matter to Tribunal. - appellants agitating this aspect before the High Court on the additional grounds also needs to be considered. Therefore Revenue contention is not justified. We also feel that these additional evidences being only documents submitted by Revenue, therefore considering overall facts and circumstances of the case, and taking into consideration the Hon'ble Supreme Court's order (2010 (11) TMI 13 - SUPREME COURT OF INDIA) and the High Court order [2015 (2) TMI 232 - MADRAS HIGH COURT] we allow both the MISC applications. - Appeal disposed of.
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2015 (12) TMI 943
Manufacturing and Clearance of Tea - purchase of green leaf from the small growers - Benefit of exempted vide Notification No. 4/99-CE dated 26.11.99 - The contention of the department in the SCN that the factory was not worked for six months is not correct - Held that:- Adjudicating authority had correctly held that the appellant factory was working throughout the year and complied the conditions of the notification and eligible for the benefit of the notification. It is not the case of the department that the appellants not procured green leaves from small growers. The benefit of exemption is intended to promote small growers having less than 10 hectares. The appellants used not less than two thirds of green leaves which were procured from small growers. The exemption notification should be read and interpreted in right perspective. By respectfully following the Hon ble Supreme Court decision above, we hold that the appellants are eligible for exemption under Notification No. 4/1999. Accordingly, we uphold the adjudication order and the impugned order passed by the LAA is set aside. - Decided in favour of assessee.
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2015 (12) TMI 942
Denial of suo moto CENVAT Credit - department took objection to availing of credit suo-moto and issued show cause notice dated 09.10.2009 on the ground that the there was no provision for taking such suo-moto credit and the appellants were not legally empowered to do so - Held that:- The appellants on their own decided to pay the amount by way of utilising cenvat credit. However, later on, after an year, even though the show cause notices were in adjudication, they decided to take suo-moto credit of the said amount already paid. Therefore, we find that payment of the same by way of RG 23A Part-II cannot be treated as deposit. The same is depicted in their statutory books and returns as duty. Revenue has also accounted the same as duty. Payment of duty through PLA or cenvat credit is treated at par. The nine Member Bench of the Hon'ble Supreme Court in the case of Mafatlal Industries Limited (1996 (12) TMI 50 - SUPREME COURT OF INDIA) has held that whatever amount has been paid to the department has to be claimed back if eligible by the route of refund under Section 11B, except for those payments which are ultra-vires. The Tribunal in the case of BDH Industries Limited (2008 (7) TMI 78 - CESTAT MUMBAI) has gone into the issue in detail and has held that such suo-moto re-credit cannot be taken The decision of the Commissioner to disallow the suo-moto credit is legally correct. In the case of ICMC Corporation Limited vs. CESTAT (2012 (3) TMI 455 - CESTAT CHENNAI), the assessee had re-credited the credit reversed on those services mentioned under Rule 6(5) of Cenvat Credit Rules. In the case of Shyam Textile Mills & Ans. vs. UOI (2004 (6) TMI 590 - GUJARAT HIGH COURT), the issue pertained to deemed credit. In the case of Sopariwala Exports Pvt. Limited (2013 (5) TMI 430 - CESTAT AHMEDABAD), it was a question of duty paid twice over. - since the show cause notices have been set-aside later on by the Tribunal, we do not find any reason to demand interest. We also find that though the appellant has contravened the provisions by taking suo-moto credit, a penalty of ₹ 7 Crores is excessive, and it should be reduced drastically to be commensurate with the offence committed - Decided partly in favour of assessee.
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2015 (12) TMI 941
Duty demand - Abatement of proceedings since Respondent company is wound up - Held that:- Both the Respondent Companies are being wound up and no application was filed by the liquidator for continuance of the proceedings. Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 provides continuance of proceedings after death or adjudication as an insolvent of a party to the appeal or application. - On plain reading of Rule 22 of the Rules, 1982, it is clear that when a Respondent in the case of a company, is being wound up, the appeal or application shall abate, unless an application is made for continuance of such proceedings by administrator, receiver, liquidator or other legal representative of the appellant or respondent, as the case may be. In the present case, the Respondent companies are wound up, as revealed from the Letter dated on 12.12.2014. Hence, the appeal filed by the Revenue against the Respondent shall be abated. - Decided against Revenue.
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2015 (12) TMI 940
Valuation - inclusion of the cost of Pre-Delivery Inspection charges and After Sales Services charges, overriding commission paid to dealers on sale to canteen store-departm, Demo Cars, Cost of display kits collected from dealer through debit note, Recovery of incentive trip cost from dealers and profit margin at HMP - Incorrect availment of Cenvat credit on fabricated paint shop structural - Finalization of provisional assessment - Held that:- Revenue has filed the present appeals on the inclusion of PDI/ASS charges solely on the basis of said Board s circulars dt. 1.7.2002 and 12.12.2002. Since the Hon’ble Bombay High Court has quashed the said circulars, the revenue's plea for inclusion of PDI and ASS charges is not justified and beyond the scope of law. Further, we find that the co-ordinate Benches of the Tribunal at Mumbai, Delhi and Bangalore on identical issue of PDI pertaining to other Automobile companies followed the Hon'ble High Court order and allowed the appeal in favour of the assessee and rejected Revenue's appeals. - PDI/ASS charges are not includible in the transaction value of cars cleared by the assessee. Accordingly, we uphold the Commissioner (Appeals) orders to the extent of non-inclusion of PDI charges/ASS charges. Consequently, we set aside orders passed by Commissioner, LTU confirming the demand on PDI and also set aside the penalties and allow the assessee's appeals. As regards the inclusion of overriding commission paid to dealers on the sale of cars to Defence personnel through Canteen Stores Department (CSD), we find the cars were directly sold by the assessee to the CSD and not through the dealers. LAA clearly brought out that the amount which was paid to dealers is nothing but towards payment for providing after sales services of the cars sold to the Defence personnel directly. Revenue s plea is that it is a commission paid to be included as per Section 4 is not justified. Accordingly, the LAA order on this account is liable to be upheld. As regards non-inclusion of Display Kits and Recovery of Incentive Trips from the dealers, we find that both the transactions are related to post-sale transactions. Therefore, any recovery from the dealer on account of cost of display kits or recovery of expenses for the incentive trips does not form part of the assessable value. As regards the issue of non-inclusion of Profit Margin to Hyundai Motors Plaza (HMP), these are plazas/retail show rooms called as Hyundai Motors Plaza where the cars are sold directly to the customers on retail sale. The department had initially alleged that as per amendment of definition of place of removal , the depot becomes place of removal for delivery and sale and the price at which the goods are sold at the depot should be taken as the price. In this regard, we find that these plazas are not depot and there is no sale to whole sale dealers. Since in this case, there is no transaction of whole sale transaction to dealers but it is only a retail sale transaction and the term place of removal is applicable only in a case where the goods are sold in a wholesale transaction. - profit margin paid at the HMP is not includible in the assessable value of cars and LAA order on this account is liable to be upheld. Assessee sell cars through their dealer network and adopt two different price viz. for normal cars and for demo cars by way of giving special discounts. Adjudicating authority discussed the issue in detail in his findings and disallowed the discount given on the Demo cars and relied the Board s circular issued in F.No.6/40/2002-CX.1 dt.1.4.2003 and re-determined the price payable on demo cars as per the price of normal cars cleared to the dealers. In this regard, we find that the issue of valuation on Demo Cars stands settled by this very Tribunal Bench orders in the case of Ford India Ltd. Vs CCE Chennai reported in [2011 (7) TMI 1044 - CESTAT CHENNAI] and also in the case of Royal Enfield Vs CCE Chennai - [2012 (9) TMI 456 - CESTAT, CHENNAI] wherein the Division Bench of this Tribunal had consistently upheld the demand of differential duty on Demo Cars and rejected the assessee's appeals except waiving the penalties. - we uphold the impugned Order-in-Appeal No.41/2004 dt. 28.7.2004 in respect of value of demo cars and reject the assessee s appeal to that extent. Consequently, we set aside that portion of the orders of LAA in respect of OIA Nos.59/08 dt. 30.3.09; OIA No.64/08 dt. 30.3.09, OIA No.59/09 dt. 3.11.2009 and OIA No.60/09 dt. 3.11.09 relating to Demo cars and uphold the respective adjudication orders on the issue of valuation of demo cars and allow the Revenue appeals on this count. As regards the last issue of denial of cenvat credit on the capital goods viz. steel structuals used in the fabricated shops, we find that there is no dispute on the fact that the structurals are used in paint complex which is capital goods used in the manufacture of motor vehicles. - assessee is eligible for capital goods credit on the structural used in paint complex. The revenue relying on the LB decision in the case of Vandana Global Ltd. (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ) and Apex Court decision in the case of Triveni Engineering & Industries Ltd. (2000 (8) TMI 86 - SUPREME COURT OF INDIA) is not relevant in view of the jurisdictional High Court of Madras decision and other High Court orders - Decided partly in favour of assessee.
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2015 (12) TMI 939
Manufacture - manufacture of Steel tubular poles which are manufactured by joining MS pipes of different diameters by welding - Cancellation of excise registeration - Held that:- The appellant have two units in the specified area of Jammu Region of state of Jammu and Kashmire, and both the units were manufacturing same product which is made by joining MS pipes of different diameters by welding and swaging. There is no dispute that unit I had earlier taken Central Excise Registration and was paying duty and availing Notification 56/2002-CE, but in respect of this unit the Jurisdictional Additional Commissioner vide Order in original dated 31.03.2008 had passed an order holding that its activity does not amount to manufacture, in view of Apex Court’s judgment in the case of Hindustan Poles Corporation (2006 (3) TMI 2 - SUPREME COURT ) and on this basis, had ordered cancellation of the central excise registration and had also confirmed the cenvat credit demand alongwith interest. It is also seen that this order dated 31.03.2008 had been passed by the Additional Commissioner after the Apex Court’s judgment dated 28.03.2008 in the case of Prachi Industries (2008 (3) TMI 25 - Supreme court) wherein the Apex Court after distinguishing its earlier judgement in the case of Hindustan Poles Corporation, had taken a contrary view holding that joining of duty paid MS pipes of different diameters by welding and swaging would amount to manufacture. Commissioner while confirming the duty demand in the impugned order has also allowed the cenvat credit which according to the appellant is ₹ 23,59,833/- and thus, only the differential amount of ₹ 11.00 Lakhs may be payable by the appellant through PLA which would be exempt only if the benefit of Notification No.56/2002-CE is applicable. The question as to whether in the circumstances of the case the benefit of Notification No.56/2002/CE can be extended to them requires serious consideration which cannot be done at this stage. In view of this, we are of the view that this is not the case for total waiver. - Partial stay granted.
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2015 (12) TMI 938
Denial of CENVAT Credit - Capital goods - HR sheets, HR plates, MS pipes, MS Flat, joist, pate mill pate, MS square, MS channel, MS TMT bar, MS beam, plate, steel pipe, MS tube, pipes and tubes, G I pipe, HSM plate etc. - Held that:- Cenvat credit is sought to be denied on the items mentioned on the premise that these items were used as structurals items, the usage of which items has been explained by the respondents in reply to the show cause notice and same has been recorded by the adjudicating authority but same has not been controverted by the adjudicating authority with cogent evidence and denied the Cenvat credit on the ground that respondent has not provided drawings and design but nowhere from the said order it is coming out that adjudicating authority has asked to show these documents from the respondents during the course of hearing. Therefore, evidence provided by the respondent before learned Commissioner (Appeals) for consideration are admissible as per Rule 5 (4) of the Central Excise (Appeals) rules, 2001. In these circumstances, learned Commissioner (Appeals) has considered the usage of all items and thereafter arrived at the decision that these items have been used in manufacturing or repair and maintenance of capital goods. Therefore, I do not find any infirmity in the impugned order - Decided against Revenue.
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2015 (12) TMI 937
Demand of interest u/s 11AB and penalty u/s 11AC - Short payment of duty - Held that:- Alleged short payment cannot be said to be attributable to any fraud, wilful misstatement, suppression of facts or deliberate violation of the provisions of the Central Excise Act, 1944 or of the Rules made there under with intent to evade payment of duty. During the period prior to 11.05.2001, the levy of interest under section 11AB was linked with the short levy, non-payment or erroneous refund being on account of fraud, wilful misstatement suppression of facts etc. Since these elements are not present in this case and since for this reason only, the Commissioner (Appeals) has set aside the penalty under section 11AC, there would not be any interest liability in this case, as the alleged short payment is in respect of the clearances made prior to 11.05.2001. Moreover, since the elements for invoking longer limitation period under proviso to Section 11A (1) are not there, in any case, the interest demand made after expiry of one year from the relevant date is time barred, in view of the Hon’ble Delhi High Court in the case of Hindustan Insecticides Ltd. (2013 (8) TMI 225 - DELHI HIGH COURT). The impugned order is, therefore, not sustainable. - Decided in favour of assessee.
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2015 (12) TMI 936
Denial of CENVAT Credit - activity of conversion of rods and rounds does not amount to manufacture and as such, the appellant should not have paid the duty on the final product - Held that:- Case of Super Forgings and Steels Ltd, vs. CCE, Chennai [2007 (7) TMI 77 - CESTAT, CHENNAI], CESTAT held that there is no question of recovery of Cenvat credit which has been utilized towards payment of duty of the final products even when the process did not amount to manufacture. In the case of CCE, Indore vs. M.P. Telelinks Ltd. [2004 (1) TMI 280 - CESTAT, NEW DELHI] CESTAT held that if the department levies and collects the Central Excise duty on the goods remove from the factory, they can not claim for the purpose of allowing Cenvat credit that the process of manufacture had not taken place. Similar view was held by CESTAT in the case of CCE, J&K Jammu Vs. North Sun Enterprises Industrial Estate [2012 (8) TMI 691 - CESTAT, NEW DELHI]. - Decided in favour of assessee.
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2015 (12) TMI 935
Duty demand u/s 11A - Reversal of CVD - Held that:- Appellant availed the credit of SAD during the period March 2005 to November 2006 and cleared the inputs as such without reversing the credit of SAD availed on such inputs, it was only reversed in the month of December 2006. In these circumstances, as the appellant had wrongly retained the amount of credit hence the appellants are liable for interest on the amount under Section 11AB of the Central Excise Act. In respect of penalty, I find that the appellant had only availed the credit but had not utilized and the credit was rightly availed at the time of receipt of the inputs in the factory. However, part of the credit was not reversed, i.e. of SAD hence it is not a case for imposition of any penalty. The penalty is set aside - Decided in favour of assessee.
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2015 (12) TMI 934
Rectification of mistake - Appeal dismissed for no pre deposit - Section 35F - Held that:- Three years later, on 15.1.2014, the appellant has filed this ROA application claiming that it had no knowledge of a requirement of pre-deposit or of the order dated 1.8.2011 and stating to have complied with pre-deposit requirement on coming to know of the dismissal of its stay application. Copy of challans are filed. These show a deposit of ₹ 2,68,964/- . There is however no deposit of the interest and penalty components as assessed by the adjudication order dated 18.1.2010 and confirmed by the Appellate Commissioner dated 13.8.2010 while dismissing the appeal by the appellants herein - since an incorrect assertion is made in the ROA application of having pre-deposited in terms of Section 35F - Rectification denied.
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2015 (12) TMI 933
Cenvat Credit - supply of goods to the contractor of the SEZ unit - ineligible credit availed by the appellant on the inputs/input services which were used in or in relation to the manufacture of excisable goods supplied to co-developers of SEZ and contractors who had undertaken operations in the SEZ - Held that:- Rule 6 (6) of the Cenvat Credit Rules specifically provides that, the provisions of sub-rules (1), (2), (3) & (4) shall not be applicable in case the excisable goods removed without payment of duty are either cleared to a unit in a SEZ or to a developer of a SEZ for their authorised operations. Thus, the rule provides for non-reversal of credit in respect of clearances effected to unit in SEZ or to a developer of SEZ. The Rule does not refer to supplies made to contractors of a developer or contractor of a unit in SEZ. In the absence of any specific provisions, the benefit of said Rule cannot be extended to supplies made to the contractors - appellant is not entitled to the benefit of Cenvat Credit in respect of supplies made to contractors. The amount of credit availed in respect of such supplies made works out to approximately ₹ 4.89 lakhs. Thus, the appellant has not made out a case for complete waiver of pre-deposit of dues adjudged against him - Partial stay granted.
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2015 (12) TMI 932
SSI Exemption - dummy unit or not - Clubbing of clearances - Held that:- Admittedly M/s. Saron Mechanical Works was established in 1994. The same cannot be held a dummy unit of M/s. Jagatjit Agro Industries, which was established in 2001. A unit which was already working for almost six to seven years cannot be held to be a dummy unit, which is yet to be come into existence - it is not the Revenue’s case that both the units are not having complete machinery so as to manufacture the goods in question. Merely because a common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw-materials cannot be held to be a reason for clubbing the clearances of both the units established when there is no dispute about both the units being complete in themselves and manufacturing goods independently of each other - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (12) TMI 919
Waiver of pre deposit - Duty demand for non-furnishing of declaration Forms in 'C' and 'E-1' - Held that:- Court notices that the central point concerning the prima facie case of the Assessee, in the manner projected by it, has not merited appropriate consideration in the hands of the Tribunal. The central issue was whether the Audit Officer could have picked up some transactions of the Assessee under Section 58 of the DVAT Act even when the original assessment order for the same period was already pending consideration before the OHA. This does not appear to have been addressed even from the point of view of the prima facie case of the Appellant. - Assessee has already deposited ₹ 20,79,660 during the pendency of the above proceedings was not noticed by the Tribunal. Considering that the total disputed tax is around ₹ 33,41,532 and the aforementioned deposit already constituted more than 60% of the disputed tax, this was a case where there should have been no requirement of any further pre-deposit of tax for consideration of the Appellant's appeal. - Decided in favour of assessee.
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2015 (12) TMI 918
Validity of SCN - Bar of limitation - Held that:- Petitioner on receipt of the notice, had filed the writ petition in this Court challenging the same to be without jurisdiction. The petitioner had neither filed any objection/reply to the said notice nor raised the pleas as have been raised in the instant writ petition before the competent authority. - we do not find any justifiable reason to interfere with the notice under challenge. However, we clarify that the proper course of action for the noticee is to file detailed and comprehensive objection/reply and to raise all the pleas as have been raised in the writ petition. In case any objection/reply is filed by the petitioner within a period of two weeks from the date of receipt of the certified copy of the order, the revisional authority shall decide the same within a period of six weeks from the date of receipt of the objection/reply in accordance with law after affording an opportunity of hearing to the petitioner and by passing a speaking order before proceeding further in the matter. - Petition disposed of.
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2015 (12) TMI 917
Jurisdiction under Section 9(2) of the Central Sales Tax Act, 1956 - violation of the principles of natural justice - Held that:- Unless the Tribunal makes findings on disputes as to fact, explains the exercise of discretion (by indicating the considerations that it has taken into account and relevant weightage assigned to them and give its answers to any questions of law, there can be no assurance that the Tribunal discharged its obligations to base its decision upon the material presented at the hearing rather than on extraneous considerations. It was further observed that decision is irrational in the strict sense of that term if it is unreasoned, if it is lacking ostensible logic or comprehensible justification. Absurd or perverse decision may be presumed when no reasons are assigned. Irrational decision to say is in the absence of logical connection between evidence and ostensible reasons for the decision, reasons must be adequate and notably intelligible. - when an applicant can show substantial prejudice resulting from failure on the part of the decision maker to demonstrate how issues of law had been resolved or disputed issue of fact decided or by demonstrating some other lack of reasoning which raised substantial doubt over the decision making process. - on one hand the Tribunal must not surmise conjecture or guess but on the other hand it may draw an inference from proved facts so long as it is legitimate inference. - Decided in favour of assessee.
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2015 (12) TMI 916
Levy of penalty under Section 9(2) of the CST Act read with 27 of the TNVAT Act - Suppression of sales - Held that:- Respondent is directed to furnish the correct particulars and also other necessary documents namely the Chek-Post Register and Bill copies to the petitioner within a period of two weeks from the date of receipt of a copy of this order. On furnishing such particulars, the respondent is also directed to give an opportunity of personal hearing to the petitioner and pass appropriate orders, within a period of four weeks thereafter. - Decided in favour of assessee.
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Indian Laws
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2015 (12) TMI 914
Monopolies and Restrictive Trade Practices Act, 1969 - Commission directed the appellant to cease and desist from continuing with the practices complained of and not to repeat the same in future - Held that:- Commission failed to keep in mind the precise allegations against the appellant with a view to find out whether the facts could satisfy the definition of Unfair Trade Practice(s) as alleged against the appellant in the Notice of Enquiry. The Commission was apparently misled by the Preliminary Investigation Report also which claimed to deal with reply received from the appellant in course of the preliminary enquiry but patently failed even to notice the stipulation as regards payment of interest on the booking amount although this fact was obvious from the terms and conditions of the booking and was reportedly relied upon by the appellant in its reply even at the stage of preliminary investigation. The Commission noticed the relevant facts including provision for interest while narrating the facts, but failed to take note of this crucial aspect while discussing the relevant materials for the purpose of arriving at its conclusions. Such consideration and discussion begins from paragraph 32 onwards but without ever indicating that the booking amounts had to be refunded within a short time or else it was to carry interest at the rate of 10% per annum. The order of the Commission appears to be largely influenced by a conclusion that the appellant should not have asked for deposit of an amount above the basic price because in the opinion of the Commission it was unfair for the appellants to keep excise and sales tax with itself for any period of time. Such conclusion of the Commission is based only upon subjective considerations of fairness and do not pass the objective test of law as per precise definitions under Section 36A of the Act. The submissions and contentions of Mr. Desai merit acceptance. Even after stretching the allegations and facts to a considerable extent in favour of respondent Commission, we are unable to sustain the Commission's conclusions that the allegations and materials against the appellant make out a case of unfair trade practice against the appellant. Nor there is any scope to pass order under Section 36-D(1) of the Act when no case of any unfair trade practice is made out. Hence, we are left with no option but to set aside the order under appeal.
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2015 (12) TMI 913
Appointment of an arbitrator - Held that:- There is no manner of doubt that the said MOU dated 17th July, 2013 was executed by and between the petitioner on one hand and respondent No.1 represented by respondent No.2 as its power of attorney holder on the other. Clearly and evidently, sale and purchase of the Helicopter and delivery thereof in terms of the aforesaid MOU dated 17th July, 2013 has not materialized till date. Whether the petitioner is entitled to performance of the terms of the said MOU dated 17th July, 2013 is the precise dispute between the parties. Therefore, in terms of the arbitration clause contained in the said MOU dated 17th July, 2013, the dispute is liable to be referred to arbitration by appointment of an arbitrator under Section 11(6) of the Arbitration Act. The grounds on which the respondent No.1 seeks to resist the appointment of an arbitrator, namely, that the period contemplated under the MOU dated 4th July, 2013 (one month) within which payment was to be made to the respondent No.1 by the respondent No.2 is over; that clause 12 and clause 19 of the MOU dated 4th July, 2013 had been materially altered by changing the period of payment from one month to three months; and further that the power of attorney was forged by the respondent No.2 are questions that cannot be gone into by the court in exercise of jurisdiction under Section 11(6) of the Arbitration Act. These are matters which can be raised before the learned Arbitrator and answered by the said authority. Thus the court allows the present petition and appoints Shri Justice Mukul Mudgal, Chief Justice (Retd.), Punjab & Haryana High Court, as the Arbitrator. All the disputes including the disputes raised in the present petition are hereby referred to the learned sole Arbitrator. The learned Arbitrator shall be at liberty to fix his own fees/ remuneration/other conditions in consultation with the parties.
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