Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 28, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
Highlights / Catch Notes
Income Tax
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Reopening of assessment - action for sanction by JCIT was without application of mind and as this was done in a mechanical manner - Apex court dismissed the revenue appeal after condonation of delay - SC
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TPA - AMP expenses - Revenue has not been able to demonstrate that there exists an international transaction involving the Assessee and a foreign AE on the question of AMP expenses - HC
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TPA - AMP expenses - Revenue has not been able to show the existence of an international transaction involving AMP expenses between the Assessee and its AE, B&L, USA. - HC
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When tax payable and when assessee deemed in default - the tendency of making high pitched assessments by the Assessing Officer is not unknown and it may result in serious prejudice to the assessee and miscarriage of justice & sometimes may even result into insolvency or closure of the business if such power was to be exercised only in a pro-revenue manner. - HC
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TPA - TPO confused himself in characterization of the assessee's functions as captive, routine, full-fledged distributor at one place and routine distributor in another place. The Transfer Pricing Officer is also characterizing the assessee as an agent in one place and captive distributor and agent in another place - matter remanded back - AT
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TDS - in case of short / lesser deduction of tax, the entire expenditure whose genuineness was not doubted by the assessing officer, cannot be disallowed - AT
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Rural Employment Cess and Primary Education Cess - whether would come under the ambit of provisions of section 43B? - cess collected from customers in the sale invoices shall not be chargeable to tax in the year of collection - AT
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Confession of additional income during the course of search and seizure and survey operations - no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assesee - AT
Customs
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Duty demand - Import has obtained the DFIA license by fraud - Transfer of licenses DFIA - Duty demands and interest have been correctly confirmed against all the appellants. However penalties are not imposable upon the transferee appellants as they have no knowledge of the nature of goods used and exported by the manufacturers/exporters - AT
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Whether the appellants are covered by the Target Plus Scheme, read with the provisions of Handbook of Procedure, in respect of the imports of RBD Palmolein oil made by them as against the export of Rice and Wheat - matter referred to third member - AT
Service Tax
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Business auxiliary service - Valuation - Inclusion of Royalty - Appellant provided service to telecommunication operators to make use of the contents provided to it though the copyright agreement entered into with the music companies - prima facie case is in favor of assesse - AT
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Rent-a-cab operating services for use by an educational body imparting skill or knowledge or lesson on any subject or field, other than a commercial training or coaching centre, are not includible in the meaning of "cab" and hence not taxable in the "rent-a-cab operator service" - prima facie case is in favor of assessee - AT
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Adjustment of the amount of service tax - No value of service or service tax had been realised by the appellant from the customers - appellant was entitled to adjust the service tax paid in excess if it had refunded the value of taxable service and service tax thereon from whom it was received. - AT
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Whether the activity of transportation services, that is carrying employees of companies from specific points to the factory/establishment and back can be categorized under “Tour operator” service - Held NO - AT
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Service Tax law, no where states that if two distinct activities are undertaken or provided in a single agreement, they should not be taxed under the same service category - AT
Central Excise
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Valuation - The appellant was correct in stating that any duty liability discharged on the goods cleared to their own unit is eligible for CENVAT Credit by the unit at Lote Parshuram and there could not be any reason to mis-declare the price - demand beyond one year set aside - AT
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CENVAT Credit - appellant themselves filed the revise return to regularize the amount. Thus, there is no material available of suppression of fact with intent to evade payment of duty under the Section 11AC - no penalty - AT
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The job worker is not entitled to avail cenvat credit after 10.9.2004 on endorsed invoices. - Central Excise audit officers during the verification of the records detected the irregular availment of the Cenvat Credit. Hence the extended period of limitation involved- AT
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Denial of cenvat credit to manufacturing activity on the ground that assessee is availing the benefit of composition scheme under works contract to pay service tax - There is no prohibition under the law for one person to be a manufacturer as also a service provider. - credit cannot be denied - AT
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Transfer of cenvat credit lying unutilized in the accounts of M/s. SPL Polymers Ltd amalgamated with the respondents M/s. Supreme Petrochem, Ltd. - n the present case there is no involvement of any transfer. - credit cannot be denied - AT
VAT
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Merely because a chemical may not be recommended for spraying on crops, it cannot be said that it cannot be used for plant protection as it could be added to seeds or to the soil. - HC
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Classification of uninterrupted power supply (UPS)- Whether IT product or not - Once the uninterrupted power supply and its parts have been specifically made referable to Entry No.56, then, there was no warrant for invoking and applying the residuary entry merely because that guarantees higher revenue - HC
Case Laws:
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Income Tax
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2015 (12) TMI 1334
Reopening of assessment - Commissioner quashed the notice under section 148 also upheld by ITAT and HC [2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT] as action for sanction by JCIT was without application of mind and as this was done in a mechanical manner - Apex court dismissed the revenue appeal after condonation of delay
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2015 (12) TMI 1333
TPA - AMP expenses - Does the decision in Sony Ericsson apply? - Held that:- As noticed in MSIL (2015 (12) TMI 634 - DELHI HIGH COURT ) the facts of the cases of the Assessees in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT ) did not give rise to a dispute that there is no international transaction involving the Assessee therein and its AEs. In fact each of the Assessees were receiving subsidies/subventions from their respective AEs. The second factor taken note of by the Court is that as BLT was invalidated as a means of determining the existence of an international transaction, the onus was on the Revenue to show the existence of an international transaction. In the present case, the existence of such a transaction was ascertained only by applying the BLT. For the above reasons, the Court is satisfied that the case of the present Appellant would not stand covered by the decision in Sony Ericsson (supra). Question (i) is accordingly answered in favour of the Assessee and against the Revenue. Existence of an international transaction - whether the Revenue has been able to discharge the initial onus of showing that there was an international transaction concerning the Assessee and its foreign AEs - Held that:- During the financial year 2007-2008 relevant to the AY in question, of the total turnover of ₹ 251.06 crore only ₹ 9.57 crore, constituting 3.81 per cent, is towards distribution activity whereas the balance revenue of ₹ 241.48 crore was from the manufacturing activity. Further it is pointed out that the contention of the Revenue that market development in India is the function of the AE is factually incorrect. It is pointed out that para 4.30 of the TP documentation has stated that the Assessee plans and executes its own marketing strategy as it considers necessary and appropriate. Further as an independent manufacturer the Assessee bears all the risks associated with its business of manufacturing and sale of products in India and abroad. The condition in the license agreement that the technology will be used for sale of goods in designated jurisdictions or specified territories is not an unusual arrangement. The question of re-characterising the Assessee as a ‘contract manufacturer’ was unwarranted. The Court finds that the Revenue has not been able to controvert any of the above submissions. In that view of the matter, the question of a benchmarking analysis by evaluating the AMP expenses incurred by the Assessee in relation to its total sales vis-à-vis its comparables is not called for. There is nothing to indicate that the AMP expenses incurred by the Assessee is at the instance of foreign AE and that the Assessee has to be compensated by the foreign AE in that behalf. Question is answered in favour of the Assessee and against the Revenue by holding that the Revenue has not been able to demonstrate that there exists an international transaction involving the Assessee and a foreign AE on the question of AMP expenses. - Decided against the Revenue
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2015 (12) TMI 1332
TPA - AMP expenses - existence of an international transaction - whether advertising, marketing and promotion expenses (‘AMP’) incurred by the Assessee can be said to be incurred not only for the benefit of the Assessee but also by way of rendering the services of promoting the brand of the foreign associated enterprise (‘AE’) namely B&L, USA? - Held that:- It was not disputed that the said international transaction of incurring of AMP expenses could be made subject matter of a transfer pricing adjustment in terms of Section 92 of the Act. The Assessee here has throughout been contesting the very existence of any international transaction involving AMP expenditure between the Assessee and its AE, i. e., B&L, USA. Further the Revenue has not been able to contest the submissions of Assessee that as far as the Assessee is concerned that it received no subsidy/subvention from its AE, which, however, was not the case of the Assessees in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT ).Therefore, it is not correct to contend that the decision in Sony Ericsson (supra), to the extent it has remanded the cases to the ITAT for a fresh consideration, would apply to the present appeals and that the same directions would have to issue in these appeals.Accordingly Question is answered in the negative, i.e., in favour of the Assessee and against the Revenue. Existence of an international transaction - Held that:- In the present case, the mere fact that B&L, USA through B&L, South Asia, Inc holds 99.9% of the share of the Assessee will not ipso facto lead to the conclusion that the mere increasing of AMP expenditure by the Assessee involves an international transaction in that regard, with B&L, USA. A similar contention by the Revenue, namely, that even if there is no explicit arrangement, the fact that the benefit of such AMP expenses would also enure to the AE is itself sufficient to infer the existence of an international transaction has been negatived by the Court in Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] On the issue of the intra group services, the Assessee is justified in contending that the re-characterization of its transaction involving its AE for the two years which have been fully disclosed in the TP Study on the basis of it not being for commercial expediency of the Assessee is clearly beyond the powers of the TPO and contrary to the legal position explained in EKL Appliances (2012 (4) TMI 346 - DELHI HIGH COURT ). For the aforementioned reasons the Court is satisfied that the Revenue has not been able to show the existence of an international transaction involving AMP expenses between the Assessee and its AE, B&L, USA. Question is accordingly answered in favour of the Assessee and against the Revenue.
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2015 (12) TMI 1331
When tax payable and when assessee deemed in default - powers under Sections 220(3) & 220(6) - validity of CBDT Instruction - Held that:- It is incorrect to state that DBDT Instruction No.1914, dated 02.12.1993 supersedes all previous instructions. Although instruction No.1914 specifically states that it is in supersession of earlier instructions, the position obtaining after the decision of the case in Volvoline Cummins Limited Vs. DCIT (2008 (5) TMI 20 - HIGH COURT OF DELHI ) is not altered at all. This is so, the DBDT Instruction No.95, dated 21.08.1969 was issued with the consent of the informal consultative committee held on 13th May, 1969 formed under the business rules of the Parliament, which even now holds the field. Hence, we are of the opinion that the tendency of making high pitched assessments by the Assessing Officer is not unknown and it may result in serious prejudice to the assessee and miscarriage of justice & sometimes may even result into insolvency or closure of the business if such power was to be exercised only in a pro-revenue manner. Hence, the powers under Sections 220(3) & 220(6) of IT Act have to be exercised in accordance with the letter and spirit of CBDT Instruction No.95 dated 21.08.1969, which is binding on all the assessing authorities created under the Act. Therefore, the impugned order passed by the respondent without considering CBDT Instruction No.95, dated 21.08.1969 is against the principles laid down in the judgments stated supra. In the absence of any specific bar to provide an opportunity in the provision, the respondent ought to have provided an opportunity to get absolute stay till the disposal of the appeal as well as in consideration of the reasons to treat the assessee as 'not being in default', in order to avoid interest and penalty. Whereas in this case the Assessing Officer had failed to provide an opportunity of being heard prior to disposal of the application under Section 220(3) for stay. Hence, the impugned orders are liable to be set aside. The respondent is directed to consider the petition filed by the petitioner under Section 220(3) and 220(6) of IT Act, in conformity with CBDT Instruction No.95, dated 21.08.1969, by providing an opportunity of being heard to the petitioner, and pass orders in accordance with law, as early as possible.
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2015 (12) TMI 1330
Addition u/s 68 - assessment u/s 153A - CIT(A) deleted the addition - Held that:- Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] has clearly laid down the law that once the assessee has given the complete details and the information of the investors who have made investments in the share capital of the company and proved identify then no addition can be made in the hands of the assessee company and in respect of such investments the department should proceed against the individual investor. In the case in hand also, the requisite details, proof, confirmation, evidences etc. are produced. The ratio of the decision of the Hon'ble Supreme Court is directly applicable on the facts of the case. In view of the above discussion of the matter, we do not find any infirmity in the factual finding given by the CIT(A) after duly appreciation of evidence on the file and the same is accordingly upheld. - Decided against revenue
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2015 (12) TMI 1329
Deduction under Section 80-IB - revision u/s 263 - Held that:- AO is bound to record reasons one way or other for the conclusion reached in the assessment order. The Assessing Officer is expected to discuss the claim of the assessee under Section 80-IB of the Act and record his own reason either for allowing or disallowing the claim of the assessee. Since this exercise has not been done by the Assessing Officer, this Tribunal is of the considered opinion that the order of the Assessing Officer is not only erroneous but also prejudicial to the interests of Revenue. Therefore, this Tribunal do not find any reason to interfere with the order of the Commissioner. However, the Assessing Officer, while passing consequential order, shall consider the decision of this Tribunal in the assessee's own case for assessment year 2010-11 in I.T.A. No.1174/Mds/2015 dated 29.09.2015 and other judgments, if any, brought to the notice of the Assessing Officer by the assessee in the course of proceeding. In other words, the Assessing Officer shall independently examine the issue afresh in accordance with law and thereafter decide the same after giving reasonable opportunity to the assessee.
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2015 (12) TMI 1328
TPA - Method of determination of arm's length price (ALP) - Transfer Pricing Officer confused himself in characterization of the assessee's functions as captive, routine, full-fledged distributor at one place and routine distributor in another place. The Transfer Pricing Officer is also characterizing the assessee as an agent in one place and captive distributor and agent in another place. - Held that:- In view of the misunderstanding of the facts by the Transfer Pricing Officer and Dispute Resolution Panel, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Dispute Resolution Panel once again on the basis of the agreement entered into between the assessee and Roca Sanitaria S.A. Spain TDS u/s 194C - disallowance can be made under Section 40(a)(ia) of the Act for short deduction of tax’ - Held that:- Section 40(a)(ia) does not envisage a situation where there was short deduction / lesser deduction as in case of section 201(1A) of the Act. There is an obvious omission to include short deduction / lesser deduction in section 40(a)(ia) of the Act. Therefore, this Tribunal is of the considered opinion that in case of short / lesser deduction of tax, the entire expenditure whose genuineness was not doubted by the assessing officer, cannot be disallowed. Accordingly, the orders of lower authorities are set side and the entire disallowance is deleted - Decided in favour of assessee.
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2015 (12) TMI 1327
Disallowance of director’s remuneration - non deduction of TDS - Held that:- Original minutes of Board meeting were shown during the course of hearing wherein it was decided for increasing remuneration of director, Mr. N. C. Dalal from ₹ 20,000/- to ₹ 1,00,000/- per month w.e.f. 1.4.2007, along with ledger of director’s remuneration, form no.16 for certificate u/s 203 of the Act for TDS from income chargeable under the head salaries along with proof of deposit of TDS on salary for increased amount of remuneration effective from 1.4.2007 which was paid on 22.12.2007. All these evidences have not been controverted by ld. DR. As such looking to the above facts, we are of the view that there was a genuine increase in the remuneration of the director effective from first April, 2007 and, therefore, ld. CIT(A) was not justified in upholding the action of Assessing Officer. We set aside the order of CIT(A) on this ground and delete the impugned addition - Decided in favour of assessee. Disallowance of depreciation on the good-will - Held that:- As decided in assess's own case [2014 (12) TMI 1059 - ITAT AHMEDABAD ] it is now well settled that the goodwill is an intangible asset entitled to depreciation. The quantification of goodwill in this case seems to be reasonable. The assessee has filed a copy of working of the valuation of the goodwill as given by M/s.Anmol Sekhri & Associates, Mumbai, valuer, and a copy of which has been filed in the compilation before the Tribunal. A perusal of the said valuation report justifies the reasonableness of the valuation of the goodwill as claimed by the assessee. In these facts of the case, we hold that the claim of the assessee for depreciation on goodwill was justified - Decided in favour of assessee.
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2015 (12) TMI 1326
Disallowance u/s 14A - Held that:- We find from the facts of the instant case that the Learned AO has not examined the accounts of the assessee and there is no satisfaction recorded by the Learned AO about the correctness of the claim of the assessee and without the same, he invoked Rule 8D of IT Rules. While rejecting the claim of assessee with regard to expenditure in relation to exempt income, the Learned AO has to indicate cogent reasons for the same. We find that the Learned AO had straight away embarked upon computing disallowance under Rule 8D(2) of the Rules. Hence we hold that the action of the Learned AO in directly embarking on Rule 8D(2) of the Rules is not appreciated and hence no disallowance u/s 14A of the Act could be made in the facts of the instant case. We find lot of force in the argument of the Learned AR that computation of disallowance under Rule 8D can be used only for computation of income under normal provisions of the Act and not for book profits u/s 115JB of the Act. Unless an item is debited in the profit and loss account, the same cannot be the subject matter of addition to book profits under clause (f) of Explanation to section 115JB of the Act. The disallowance made u/s 14A of the Act read with Rule 8D is only artificial disallowance and obviously the same is not debited in the profit and loss account and the same cannot be imported into clause (f) of Explanation to Section 115JB of the Act. Rural Employment Cess and Primary Education Cess - whether would come under the ambit of provisions of section 43B ? - Held that:- In the facts of the instant case, the assessee had commenced its operations from Asst Year 2003-04 and in the very first year, this issue was taken up for disallowance and the same was deleted by the Learned CIT-A and the revenue chose not to file an appeal before this tribunal. The next scrutiny assessment was made for Asst Year 2006-07 wherein no addition on this account was made. This goes to prove that the revenue had already accepted to the contentions of the assessee on the impugned issue and satisfied that the cess collected from customers have been duly remitted in the succeeding year in accordance with the provisions of The West Bengal Rural Employment and Production Act, 1976 and The West Bengal Primary Education Act, 1973 and was also satisfied with the manner of treatment of the same by the assessee for tax purposes. Having done so, there is no good reason for the revenue to shift its stand in the assessment year under appeal. We hold that the cess collected from customers in the sale invoices shall not be chargeable to tax in the year of collection and accordingly, the grounds raised by the assessee in this regard are allowed. Entitlement to additional depreciation - whether coal mining is production of coal or not? - Held that:- This issue is squarely covered by the decision of the Jurisdictional High Court in the case of CIT vs G.S.Atwal & Co [ 2001 (2) TMI 32 - CALCUTTA High Court ] if the assessee owns the machinery for which investment allowance is claimed, and such machinery is used for production then the section applies, it does not matter if the use for production is made by the lessee or only in one industrial part of the assessee’s business undertaking. Accordingly, the transport business of the assessee does not tilt the question one way or the other - Decided in favour of assessee
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2015 (12) TMI 1325
Penalty u/s 271(1)(c) - Held that:- There is no dispute that quantum addition has been deleted by the Tribunal, therefore, in our humble opinion, the ld. Commissioner of Income tax (Appeals) is justified in deleting the penalty. Our view further finds support from the decision and the ratio laid down in CIT vs S.P Viz Construction company (1988 (10) TMI 24 - PATNA High Court ) and K.C. Builders vs ACIT (2004 (1) TMI 7 - SUPREME Court ). We are of the view that where the penalty for concealment or furnishing inaccurate particulars was levied and after deleting the quantum addition, there remains no basis at all for levying the penalty. Ordinarily, penalty cannot stand in itself if the addition made in the assessment itself is set aside or cancelled by the superior authority/Court. The penalty cannot stand by itself because false result may be produced by the falsity of one or more of the constituent items in the return. The word ‘inaccurate particulars’ would cover falsity in the final figure and also the constituent elements or items. They simply would mean inaccurate in some specific or definite respect whether in the constituent or subordinate items of income or the end result. Concealment or furnishing inaccurate particulars implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. Since, the basis of levying penalty remains no more in existence, after deletion of quantum addition, therefore, from this angle, the stand of the ld. Commissioner of Income tax (Appeals) is justified. - Decided against revenue
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2015 (12) TMI 1324
Addition on account of unverifiable construction expenses - CIT(A) deleted the addition - Held that:- The assessee had shown the additional income in the returns furnished by him and his son and the AO had not recorded any finding that there was any evidence of any unexplained expenditure/ investment or any income which was not covered in the additional income disclosed by the assessee. CIT (A) has rightly held that there was no justification for making ad hoc disallowance of 10% out of the expenditure claimed to have been incurred by the assessee in construction business. We agree with the Ld. CIT(A) that whether the assessee was a builder/developer or a civil contractor is not relevant and only the issue is estimation of reasonable net profit of the assessee's business. In any case, section 44AD of the Act is not applicable in the assessee’s case because the turnover of the business exceeded ₹ 40,00,000/-. When the assessee is a builder/developer and is engaged in construction activities, and the assessee had shown a net profit rate of 10% of his gross receipt, whereas the rate of 8% is given in section 44AD for civil contractor is to be taken only as a benchmark for the purposes of estimation of net profit in such cases. Therefore, we concur with the ld CIT(A) that the ad hoc disallowance was not warranted and we find no merits in this ground of appeal of the department. In view of the above, we hold that the ld. CIT (A) rightly deleted the addition - Decided against revenue Addition on account of cash expenditure exceeding ₹ 20,000/- - CIT(A) deleted the addition - Held that:- We find that the payments were made in cash to stamp vendors who acted as the agents of the Government for selling stamp papers, hence, such payments were covered under the exception provided in Rule 6DD(b). We further find that these payments were duly vouched by the physical existence of stamp papers in question which were actually utilized for purpose of acquiring the land in question. Therefore, we uphold the order of the ld. CIT (A) deleting the addition of ₹ 1 lakh made by the AO. Decided against revenue
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2015 (12) TMI 1323
Clean development mechanism (CDM) receipts - whether are not subsidies but trading receipt? - Held that:- Commissioner of Income Tax (Appeals) allowed the claim of the assessee holding that clean development mechanism would constitute capital receipt in the hands of the assessee following the decision of the co-ordinate Bench in assessee's own case for the assessment year 2009-10. Thus we hold that carbon credit receipts are capital in nature and thus, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue on this issue. - Decided in favour of assessee. Foreign commission payment - TDS liability u/s 195 - whether made only for the purpose of managing sales of the assessee outside India by means of engaging agents and as per the provisions of section 9(1)(vii) of the Act any payment made for the purpose of rendering managerial services outside India shall be considered only as payment made for fees for technical services? - Held that:- Supreme Court in the case of GE India Technology Centre Private Limited Vs CIT (2010 (9) TMI 7 - SUPREME COURT OF INDIA) wherein held that the assessee is not liable to deduct TDS when nonresident provided service outside India. It was held that when the services are provided outside India, the commission payments made to non-resident cannot be treated as income deemed to accrue or arise in India, therefore the provisions of section 195 has no application. It is clear that in order to invoke the provisions of Section 195 of the Income tax Act, the income should be chargeable to tax in India. Here, the commission payments to non-resident in the case of the appellant are not chargeable to tax in India and therefore the provisions of Section 195 are not applicable. In the case of appellant, the facts are similar and the decision of the Hon'ble Supreme Court and also the jurisdictional Tribunal decision referred to above is squarely applicable. Hence, the Assessing Officer is correctly directed to delete the addition made u/s 40(a)(ia} for non-deduction of TDS in respect of commission payments to non-resident.- Decided in favour of assessee. Entitlement for deduction under section 80IA on windmills - Held that:- All the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. See Velayudhasamy Spinning Mills (2010 (3) TMI 860 - Madras High Court ) - Decided in favour of the assessee
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2015 (12) TMI 1322
Confession of additional income during the course of search and seizure and survey operations - Held that:- No hesitation in holding that no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assesee. We would also like to state that the assessee had retracted by filing a written submission before the DIT, Inv.-I, New Delhi on 28.11.2006 which is 6 days after the search. There was sufficient time with the Investigation Wing to carry on the investigation and to collect the evidence against the retraction. However, records show that nothing has been done in this regard. In such a situation, the retraction of the assessee cannot be said to be invalid in absence of any incriminating documents. In view of these facts, we uphold the order of the CIT(A) stating no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assesee - Decided in favour of assessee.
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Customs
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2015 (12) TMI 1303
Validity of Ex-parte decision of the tribunal to dismiss the appeal - CVD was paid utilizing DEPB Scrips - imported items were capital goods or not - Held that:- In a matter of this nature, where an ex parte decision has been rendered by the Tribunal, the prolongation of a decision on the same is not beneficial to either of the parties. After all, the appellant seeks an opportunity to appear before the Tribunal. It is not recorded in the order of the Tribunal that the appellant herein was habitually absented themselves before the Tribunal. In para 2 of the impugned order, it is just stated that the matter was adjourned on earlier occasions and nobody turned up on behalf of the respondent(assessee). But, it is seen from the tabular column given by the appellant herein that after 3rd September 2013, the date on which the adjournment was sought for by the appellant, the case was taken on two occasions viz., on 24.12.2013 and 25.9.2014 and the Tribunal rendered the decision. Therefore, we are of the considered view that one opportunity can be granted to the appellant, especially, in view of the fact that the benefit granted to the appellant by the Commissioner (Appeals) was confined only to one of the scrips, that was issued prior to the public notice issued by the DGFT. - Impugned order is set aside - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 1302
Demand of differential duty - Release of goods - Held that:- Following the precedent of this court, there shall be a direction that the differential duty is to be assessed by the authorities and on such assessment and intimation, the same shall be paid by the petitioner along with actual duty payable. On such payment, the goods shall be released forthwith leaving the other issues open to the respondents to proceed in accordance with law. The assessment of differential duty shall be completed by the respondent concerned within a period of one week - Petition disposed of.
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2015 (12) TMI 1301
Detention of goods - Smuggling of goods - Misdeclaration - Confiscation - Imposition of redemption fine - Held that:- Admittedly, the representation of the petitioner followed by the reminders have not been considered. The respondents are obligatory under law to take a decision for allowing re-export of the goods on payment of aforesaid fine and penalty. Not having done so, has caused serious prejudice and hardship to the petitioner, despite the order of the first respondent, allowing redemption of the goods under seizure for confiscation for re-export. The petitioner has not received any notice from any higher forum than the first respondent, by which, the order in adjudication passed by the first respondent is under challenge. In the absence of any appeal against the said order of the first respondent, there is no legal impediment for the respondents to act in terms of the order in adjudication dated 14.7.2010 and cause release of the confiscated goods on payment fine and penalty for the purpose of re-export. - There is no denial with regard to the availability of the goods by the customs authorities even after a period of 5 years. The note issued by the Superintendent of Customs dated 21.09.2015 supports the claim of the petitioner. The inaction on the part of the authority is not explained properly in the counter affidavit. In this view also, the continued detention and non-release of the goods at the hands of the respondents cannot be sustained or countenanced - Assessee directed to pay redemption fine - Petition disposed of.
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2015 (12) TMI 1300
Detention of goods - Provisional release of goods - Misuse of IEC Code - misdeclaration related to 'Superior' and 'Fantastic' brands were found - Undervaluation of goods - Held that:- Goods in question are freely importable goods and there is no restriction or prohibition for the same. When the SIIB by de-stuffing the goods inspected and found that the description and weight are fully tallied with the declaration, there is no justifiable reasons for delaying the assessment of duty and release of the goods. Hence, to give quietus to the issue, the respondent is directed to assess the value of the goods as expeditiously as possible according to the prevailing rate. In the meantime, in the interest of justice, as an interim measure for releasing the consignment, the petitioner is directed to pay the actual duty according to the invoice value and further, pay the differential duty to the tune of 30% and for the remaining 70% of differential duty, the petitioner is directed to execute a bond. On such compliance, the goods detained shall be released forthwith. Other proceedings in the manner known to law be proceeded with. - Petition dispose of.
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2015 (12) TMI 1299
Duty demand - Import has obtained the DFIA license by fraud - Transfer of licenses DFIA - Misdeclaration - Transferee Appellants purchased part of such transferable DFIA Licenses from the market after paying due considerations and after verifying these licenses from the website of DGFT - Held that:- A script obtained from the Licensing authority fraudulently cannot give licence to any transferee to avail any Customs duty exemption. Fraud in common parlance means dishonest dealing, deceit or cheating etc. It makes no difference whether fraud is committed by outrightly forging of documents or by willful misdeclaration/misrepresentation. A fraud is a fraud and there are no categories of mild frauds and severe frauds in taxation matters. - Section 28 AAA of the Customs Act, 1962 has been made effective from 28/5/2012 and cannot be made applicable to the present proceedings for the periods prior to 28/5/2012. This provision has been made to give the department a tool also to recover Customs duty even from a person other than the importer of the goods. It is also observed that proviso to Section 28AAA(1) does not absolve the actual importer from payment of duty. Further Hon ble Apex Court in the case of Tata Iron & Steel Co. Ltd. Vs. C.C. Mumbai (2015 (8) TMI 290 - SUPREME COURT) has held that extended period is available to the Revenue for demanding duty from the transferres also.State cannot be deprived of its share of duty if the same is claimed exemption by fraudulent acts of the exporters in the present proceedings. Duty demands and interest have been correctly confirmed by the Adjudicating authority against all the appellants. However, we are of the considered opinion that penalties are not imposable upon the transferee appellants as they have no knowledge of the nature of goods used and exported by the manufacturers/exporters. Accordingly, penalties imposed upon the transferee appellants are set aside. - Decided partly in favour of assessee.
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2015 (12) TMI 1298
Denial of the benefit of the exemption Notification No.32/2005-Cus. Dt. 08/04/2005 - nexus between the imported and exported goods - Difference of opinion - In view of the difference of views between the two Members, the following points emerge for consideration by a Third Member: (i) Whether the appellants are covered by the Target Plus Scheme, read with the provisions of Handbook of Procedure, in respect of the imports of RBD Palmolein oil made by them as against the export of Rice and Wheat; (ii) Whether the appellants have satisfied the criteria of broad nexus between the imported and exported goods; (iii) Whether the disputed issue is covered by the decisions of the Hon'ble High Court of Bombay and the Hon'ble High Court of Delhi, as observed by Member(Judicial) or the same is distinguishable in the facts and circumstances of the case, as held be Member(Technical); and (iv) Whether the appeal has to be allowed as held by Member(Judicial) or to be rejected as held by Member(Technical).
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FEMA
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2015 (12) TMI 1294
Violation of Section 23 (1) read with Section 4 (1) FCRA, 1976 - Petitioner received funds without obtaining prior permission of the Central Government - Held that:- Foreign entities through whom such funds were sent were holding the same on behalf of his father. To this effect, Mr. Vipin Khanna made a statement dated 11.07.2006, whereby stated that these funds were sent on his instructions to the petitioner. Moreover, vide statement dated 13.04.2007, New Heaven Nominees’ stated that the funds sent to the petitioner by way of gifts were from funds standing to the credit of petitioner’s father with them. Moreover, similar gifts or funds were also given to the petitioner’s siblings, namely, Mr. Aditya Khanna, Mr. Naveen Khanna and Ms. Vineeta Singh by Mr. Vipin Khanna, i.e., their father. The statement dated 10.08.2007 made by CI Law Trust, corroborated that funds sent to the petitioner were paid by way of gifts from funds standing to the credit of Mr. Vipin Khanna and further stated that similar gifts or funds were given to other siblings mentioned above by father of the petitioner. Investigating and prosecuting the petitioner for an offence for lack of prior permission from the Central Government as per Section 8 (e) FCRA, 1976, has now a complete exemption under Section 4 (e) FCRA, 2010 Act and continuation of the same would amount to an action taken under the FCRA, 1976 which is now rendered “inconsistent with the provisions of this Act” contained in Section 54 FCRA, 2010. Thus, it amount to removing such action from the ambit of protective saving provided by Section 54 FCRA, 2010. The prosecution has relied upon Section 6 (d) and (e) of General Clauses Act, 1897 and contended that the repeal shall not affect offences, investigations, legal proceedings which were commenced under the FCRA, 1976. prosecution had no right of revision against order dated 05.07.2011 passed by learned Trial Court being an interlocutory order and hence order dated 20.08.2011 passed by learned Additional Sessions Judge which is impugned in Criminal M.C. No.3342/2011 is without jurisdiction and a nullity. Moreover, in terms of Sections 397, 399 and 401(2) Cr. P.C., no order can be passed in exercise of revisionary jurisdiction without notice to the accused person, as was done by the learned Sessions Court in this case, thus, on this ground also the order is bad in law. - In view of the material placed on record by the prosecution, ingredients of offence under Section 4 FCRA, 1976, are not made out as ‘foreign source’, as defined under Section 2 (1) (e) FCRA, 1976, or the offence under Section 4 of the 1976 Act has attended by the prosecution. The prosecution has alleged violation of Section 4 read with Section 23 FCRA, 1976, by the petitioner. In order to do so, the prosecution has failed to contend that the petitioner has received all foreign contribution within the meaning of Section 2 (1) (c) FCRA, 1976, from a foreign source. However, such ‘foreign source’ has been defined separately and categorically under Section 2 (1) (e) FCRA, 1976. As far as companies are concerned, only those which are the companies within the meaning of Section 591 of the Companies Act, 1956 where more than 50% of nominal value is held by the government or citizen of a foreign country or a corporation or trust, the society registered in a foreign country would come under Section 2 (1) (e) FCRA, 1976. As far as trusts are concerned, it is those foreign trusts and funds which are financed by a foreign country. The prosecution has not even adverted to foreign entities from whom the petitioner received the funds are companies or trusts/firms. The charge sheet has simply lumped on these entities by labelling them as overseas firms/companies/trusts whether these are collectively treated under Section 2 (1) (e) FCRA, 1976. The only barebones reference made in para 16.14 of the charge sheet is that bank account of such entities are in United Kingdom and hence, they are foreign sources. However, in my considered opinion, this is not the definition of a foreign source under the Act. Contribution made by a citizen of India living in another country (Non-Resident Indian), from his personal savings, through the normal banking channels, is not treated as foreign contribution. However, while accepting any donation from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian Passport holder. Admittedly, father of the petitioner is an Indian Passport holder and transaction is through banking channel. - material placed on record with chargesheet by prosecution is not sufficient even to frame charge against the petitioner. Therefore, I hereby quash the FIR mentioned above with all proceedings emanating thereto with liberty to the Central Government to compound the case of the petitioner under Section 41(1) FCRA, 2010. - Decided in favour of appellant.
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Service Tax
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2015 (12) TMI 1320
Business auxiliary service - Valuation - Inclusion of Royalty - Appellant provided service to telecommunication operators to make use of the contents provided to it though the copyright agreement entered into with the music companies - Held that:- There is a demarcated line in the licensing agreement itself demonstrating that the telecommunication companies were stranger to the copyright owners which were the music companies. There was a privy between the appellant and the music companies to distribute the copyright what was conferred by the music company on the appellant. Therefore, Revenue has nothing to do to make an exercise to bring music companies into the picture to determine incidence of tax. Revenue proceeded on the fact that what was realized by the appellant was undisputedly in respect of taxable service provided to the telecommunication operators. That receipt should be brought into the tax ambit. They have done so. The appellant has collected appropriate service tax in respect of the value of service provided to the telecommunication operators. That does not give any scope to bifurcate tax element. Prima facie, examination of the license agreement extracted by the learned adjudicating authority in the impugned order shows that the copyright holder was also aware that the appellant is going to exploit the copyright for mutual benefit of each other. Therefore, at this stage it looks like a case of advancement of business of music companies by the appellant. Therefore, prima facie, liability of appellant arises. - Partial stay granted.
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2015 (12) TMI 1319
Waiver of pre deposit - Recovery of tax by way of pre deposit - Revenue neutrality - Held that:- The partnership firm M/s. SKB entered into contract with the land owner and execution of the constructionwork was entrusted to the company M/s. SKBDPL. Service tax law is very specific prescribing incidence of tax on the service provider who provides taxable services except the cases of reverse charge mechanism levy. Keeping the provisions of the enactment in view and modus operandi of the parties, without prejudice to the grounds of appeal of the appellants, appellant SKBDL is directed to deposit ₹ 20,00,000 within four weeks - Partial stay granted.
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2015 (12) TMI 1318
Waiver of pre deposit - rent-a-cab operating services for use by an educational body - SEZ - benefit of Notification would not be available under Notification No.4/2004-ST dated 31.03.2004, which was superseded by Notification No.9/2009-ST dated 03.03.2009 and further superseded by Notification No.17/2011-ST dated 13.03.2011 - Held that:- Rent a cab service is an approved service for the unit located in SEZ. Accordingly, it appears that such service is wholly exempted being provided to the SEZ unit premises. So far the services provided to Educational Institute is concerned though a part of it is provided to another transporter, similarly situated, under the agreement to share mutual spare capacity, it appears that as the services are admittedly provided for transport of staff and student of the schools, the same appears to be permitted exemption/not taxable under the definition in Clause 65 (20) of the Finance Act, 1994. In view of the said proviso, provided under rent-a-cab operating services for use by an educational body imparting skill or knowledge or lesson on any subject or field, other than a commercial training or coaching centre, are not includible in the meaning of "cab" and hence not taxable in the "rent-a-cab operator service". Thus we find that the appellants have made out a prima-facie case for grant of stay. Accordingly, we grant the stay for demand of duty and tax, interest and penalty till disposal of appeal - Stay granted.
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2015 (12) TMI 1317
Adjustment of the amount of service tax paid in excess towards payment of service tax in the subsequent period in terms of Rule 6 (3) of Service Tax Rules - Non fulfillment of condition of the said Rule which required the assessee to refund the value of the taxable service and the service tax paid thereon to the person from whom it was received - Held that:- No value of service or service tax had been realised by the appellant from the customers - appellant was entitled to adjust the service tax paid in excess if it had refunded the value of taxable service and service tax thereon from whom it was received. It has been noted by the primary adjudicating authority and has not been disputed by the revisionary authority that the excess payment of service tax was not in relation to any amount recovered for rendition of service from any customer nor was the service tax paid in excess recovered from the customers as it was paid due to calculation errors. Thus, the adjustment made by the appellant is not in violation of the said Rule. - appellant was entitled to such adjustment - Decided in favour of assessee.
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2015 (12) TMI 1316
Demand of service tax - Tour operator service - whether the activity of transportation services, that is carrying employees of companies from specific points to the factory/establishment and back can be categorized under “Tour operator” service as defined under Section 65(105)(n) read with Section 65(115) of the Finance Act - Held that:- neither the adjudicating authority nor the Commissioner (Appeals) had brought out the clear distinction between the levy on tour operator service pre - 2004 and post - 2004. As regards the period pre - 2004, the issue has been dealt with total in Tribunal’s Order in the case of M/s Jai Somnath Transportation and Others [2015 (11) TMI 835 - CESTAT MUMBAI]. In the said order reliance was placed on various judicial pronouncements including of the Hon'ble Madras High Court in the case of Secy. Federn. Of Bus-Operators Assn. of T.N. Vs. Union of India [2001 (4) TMI 7 - MADRAS HIGH COURT] holding that the vehicles which are covered under the definition in Section 2(43) of Motor Vehicles Act read with Rule 128 of Central Motor Vehicles Rules alone would come within the definition of “Tourist Vehicles” in Section 65(115) and be covered under the Tour Operator service - intent of the legislature was to expand the levy of service tax for planning/scheduling/organizing/arranging the package tours for all modes of travel. It was not intended to expand the scope to cases such as the present one. In the present case, the appellants provide/supply the contract carriage business (not tourist vehicles) to their customers on their demand only. Therefore the activity of the appellant is not covered by the definition of “Tour Operator” for the period post 10-09-2004. Lower authorities have given no reasoning to state that the activity of the appellants post 10.9.2004 gets covered under the first part of the definition of Tour Operator service. As already observed above, the appellant were providing vehicles/buses to their customers on agreed terms during the period specified for an agreed commercial consideration for transportation of the company/factory employees, at specified places through specified routes and timings. It is also not shown by Revenue that the appellant had authority to pick-up or drop the said persons at any place/route of their choice or they had flexibility to alter the route or timings according to their own choice or whims and fancies. Therefore the employees of only those companies/factories etc., who had entered into a contract had the authority to board the buses at pre-determined pick-up points at fixed timings agreed upon. No element of planning or scheduling is therefore shown to have been done by the appellant. They only act at the company’s behest-II. Thus, we find from the above that appellant were not engaged in the business of planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of “tour operator” service but were adhering to the conditions laid down with various customers. Therefore it cannot be said that they were covered under the first part of the amended definition of “tour operator”. - Decided in favour of assessee.
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2015 (12) TMI 1315
Denial of Abatement claim - whether the appellant is liable for abatement of 50% of the gross amount charged by him under the Outdoor Catering Services, though he has been awarded the entire contract of maintenance of guest house which includes the cleaning and housekeeping services - Held that:- Adjudicating authority as well as the first appellate authority has come to a conclusion that the value of the contract awarded to the appellant, needs to be bifurcated and tax liability needs to be upheld under the category of cleaning and housekeeping services after denying them benefit of abatement of 50% of the gross value - both the lower authorities have mis-directed themselves in the entire case. On a perusal of the records, we find that M/s L&T has issued works order for annual maintenance contract of guest house which included the scope of maintaining the guest house providing the catering as per the terms and conditions. The appellant undisputedly discharged the Service Tax liability on the bills raised by them under the category of outdoor catering services after claiming abatement of 50% of the gross amount as provided. We find that the issue is no more res integra as this Bench in the case of Centre for Development of Advance Computing Vs. Commissioner of Central Excise, Pune - [2015 (8) TMI 642 - CESTAT MUMBAI] has held that the Service Tax law, no where states that if two distinct activities are undertaken or provided in a single agreement, they should not be taxed under the same service category. In view of the clear law as has been settled by the Bench, we find that the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.
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Central Excise
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2015 (12) TMI 1314
Milk Cans - Domestic Milk Cans - Classification of - Notification No. 5/99-C.E. - Supreme after going throug the order of Tribunal classifying the product in question under Chapter Heading 7323.90 and do not find any infirmity therein. The appeal was otherwise also of low tax effect - The appeal was filed by Revenue against the decision of tribunal [2006 (11) TMI 381 - CESTAT, AHMEDABAD]; wherein Tribunal classified the product under Chapter Heading 7323.90.
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2015 (12) TMI 1313
Validity of Tribunal's order - Clandestine removal of goods - Whether the Tribunal is justified in rejecting the appeal of the Department without discussing the arguments put forth and the relevant provisions of law regarding maintenance of records - Held that:- Tribunal had only recorded that the Commissioner (Appeals) had passed a detailed order by taking into consideration various precedent decisions of the Tribunal as also the provisions of Section 36B of the Act and also found that there was no evidence of clandestine removal. The charges of clandestine activities and removal of goods thereof are required to be adjudicated on the basis of appreciating factual matrix by giving sufficient and cogent reasons. A perusal of the order of the Tribunal more particularly para 8 thereof shows that no legally justified reasons have been recorded for rejecting the appeals of the revenue. The Tribunal being final fact finding authority was required to deal with all aspects of facts and law before recording its conclusions based thereon. - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 1312
Duty demand - Shortage of goods - Valuation - Inclusion of royalty amount - Held that:- Appeal filed by the Revenue is hit by 'Doctrine of Merger'. Vide appellate order by the Commissioner (Appeals), it was held that royalty paid is deductible from the assessable value and the same will not form part of the assessable value if there is evidence of payment to the principal. Against this order, the Revenue did not prefer appeal. According to the direction in the remand order of learned Commissioner (Appeals), the adjudicating authority examined the matter and found that royalty have been duly paid and accordingly allowed deductions in conformity with direction in the appellate order. Thus, the issue attained finality. Subsequent appeal by the Revenue before the Commissioner (Appeals) and before this Tribunal is hit by doctrine of merger. - Decided against Revenue.
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2015 (12) TMI 1311
Valuation - whether the assessable value as adopted by the appellant based upon cost of production for discharge of duty liability on the goods cleared from their own unit is correct or the said duty liability needs to be discharged on the value which has been adopted by the appellant for the independent buyers - Held that:- Intermediate products cleared from the appellant factory are consumed by their own unit in Lote Parshuram for manufacturing of final product on which duty liability is discharged. Also undisputed is that the unit of the appellant at Lote Parshuram has availed the CENVAT Credit of the duty paid on the goods cleared from the factory - there was no reason to mis-declare the assessable value of the goods cleared to their own unit. The appellant was correct in stating that any duty liability discharged on the goods cleared to their own unit is eligible for CENVAT Credit by the unit at Lote Parshuram and there could not be any reason to mis-declare the price - impugned order to the extent it confirms the demand raised beyond the period of limitation is liable to be set aside and we do so. The demands raised within the period of limitation are liable to be confirmed with interest and we do so. Since the issue is of interpretation of law, penalty is not warranted on the appellant and accordingly, the penalty is set aside. - Decided in favour of assessee.
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2015 (12) TMI 1310
CENVAT Credit - Penalty u/s 11AC - whether the imposition of penalty of equal amount of Cenvat Credit under Rule 15(2) of the Rules and Section 11AC of the Act is warranted - Held that:- There was a balance in the Cenvat account, more than the amount as demanded. It is clear that the appellant themselves filed the revise return to regularize the amount. Thus, there is no material available of suppression of fact with intent to evade payment of duty under the Section11AC of the Act. It is consistently viewed by the Tribunal that to impose penalty under Section 11AC of the Act, it is required to establish the short levy of duty would arise by reasons of fraud, collusion or any wilful mis-statement or suppression of fact with intent to evade payment of duty - impugned order is modified in so far as the demand of Cenvat Credit/duty alongwith interest is upheld. The penalty imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act, is set aside - Decided in favour of assessee.
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2015 (12) TMI 1309
Denial of CENVAT credit - Construction Service and Sponsorship Services - nexus with output service - Held that:- Appellant was registered with the Service Tax authorities having Registration No AADCC6772BST003. The Learned Advocate placed the copy of the Service Tax Registration certificate. The appellant also drew the attention of the invoices issued by them as Service Provider indicating the Service Tax Code Number. It is evident from the record that the appellant was registered with the Service Tax authorities. - appellant placed the Service Tax registration certificate as well as the Service Tax Code Number as mentioned in the invoices before the lower authorities. Hence, there was no reason to remand the matter. In any event, there is no need to say that if the documents filed by the appellants are not legal, the appellant would be deprived from the benefit of this order. - Impugned order cannot sustained - Decided in favour of assessee.
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2015 (12) TMI 1308
Transfer of CENVAT Credit from service tax to central excise - Rule 14 of Cenvat Credit Rules 2004 read with proviso to Section 11A(1) of the Central Excise Act 1944 - respondents have taken Service Tax Credit in their ST3 return and transferred the said amount to ER1 return and utilized the same for payment of Excise duty but, the respondent had not debited the said amount from the said ST3 return - Held that:- Appellant had taken credit of Service Tax of the said amount in their ER1 return for the month of November and December 2005. It has been alleged in the show cause notice that the respondent had wrongly availed the credit of the said amount in their ER1 return which is recoverable under Rule 14 of Rules 2004, which provides recovery of Cenvat Credit wrongly taken or erroneously refunded, where the Cenvat Credit has been taken and utilized wrongly or has been erroneously refunded, the same alongwith interest shall be recovered from the manufacture or the provider of the output service. By Interim Order No 226/2015 dtd 1.5.2005 the Tribunal directed the Learned Authorised Representative of the Revenue to place the verification report dtd 7.4.2010 as mentioned in the impugned order, before the Bench. The amount of credit shown against the invoices issued by the service provider listed in the statement attached has been verified and original invoices found to be correct. The Commissioner (Appeals) passed the order on the basis of the said report - It is clear from the record that the credit of the Service Tax taken by the respondent is correct as per the report dtd 7.4.2010 of the Asstt. Commissioner, Central Excise, which was not disputed in the grounds of appeal. Thus, there is no scope to recover the said amount which was taken correctly under Rule 14 of the Rules, 2004. - Decided against Revenue.
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2015 (12) TMI 1307
Denial of CENVAT Credit - appellant availed the Cenvat Credit on Grey Fabrics against the endorsed invoices - Invocation of extended period of limitation - Held that:- Rule 9 of the Cenvat Rules prescribed the documents for availment of the Cenvat Credit - On perusal of the Rule 9 of the Cenvat Credit Rules, it is clear that the Cenvat Credit cannot be allowed on the endorsed invoice. So, the appellant is not entitled to avail cenvat Credit on the basis of the endorsed invoices for the period of December 2004 to July 2006. Further, the appellant is a job worker. They received the Gray fabrics from the merchant/dealer for processing. With effect from 1.3.2003, the Central Excise Simplified Textile Scheme was implemented on the textile and garment sector. According to the said scheme, the merchant/supplier of the grey fabrics has deemed to be as manufacturer and permitted him (Merchant) to pay duty on processed fabrics manufactured as purchaser on job charges. There was an option that the merchant/supplier may discharge duty through the processor (job worker) and permitted the processor to avail credit on invoices in the name of the merchant endorsed by such merchants. The said scheme was withdrawn with effect from 10.9.2004. To sum up, the job worker is not entitled to avail cenvat credit after 10.9.2004 on endorsed invoices. - Central Excise audit officers during the verification of the records detected the irregular availment of the Cenvat Credit. Hence the extended period of limitation involved. - Decided against assessee.
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2015 (12) TMI 1306
Confiscation of goods - finished goods found short in stock - whether on depositing the entire duty, interest and 25% of the penalty within 25 days of the show cause notice, all the proceedings against the appellant get concluded or not - Held that:- Once the appellant has deposited the entire duty along with 25% of the penalty amount within 30 days of the issuance of show cause notice, the entire proceedings against the appellant stand concluded. In this case there is no dispute with regard to deposit of duty and penalty within the stipulated period. In this view of the matter, the redemption fine imposed on the appellant is totally unwarranted and in contravention of the provisions as contained in Section 11A(2). Therefore, I set aside the redemption fine - Decided in favour of assessee.
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2015 (12) TMI 1305
Denial of cenvat credit to manufacturing activity on the ground that assessee is availing the benefit of composition scheme under works contract to pay service tax - Revenue was of the view that inasmuch as the manufacturing unit of the appellant and the service providing unit of the appellant is one and the same, the manufacturing unit having availed the credit of duty paid on the steel plates used in the manufacture of pipes, which stand utilized by them for payment of excise duty on the pipes, would amount to as if the service providing unit has availed the CENVAT credit. Held that:- No objection was ever raised by the Revenues at the time of collection of duty of excise from their manufacturing unit located at Gowdavalli. It is only when the service provider located at an altogether different unit opted for composition scheme, the Revenue's objection in respect of their manufacturing unit at Gowdavalli was raised. Both the roles of the assessee are separately defined roles covered by different fields of law. i.e. one by the excise law and the other by the service tax law. Mixing up of the two cannot be appreciated. There is no prohibition under the law for one person to be a manufacturer as also a service provider. The activity of providing service starts from procurement of pipes, where the activity of manufacture of pipes ends. As such we find no justifiable and valid reasons to deny the CENVAT credit of duty paid on the inputs used in the manufacture of pipes manufactured by the appellant as a manufacturer. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (12) TMI 1304
Transfer of cenvat credit lying unutilized in the accounts of M/s. SPL Polymers Ltd amalgamated with the respondents M/s. Supreme Petrochem, Ltd. - Imposition of interest and penalty - Held that:- It is not the case of transfer of capital goods and inputs from one company to another. But, it is an amalgamation of M/s. SPL Polymers Ltd. with M/s. Supreme Petrochem Ltd., which have become one entity on amalgamation. The new entity is entitled to Cenvat credit which was lying unutilized in the accounts of the amalgamating company ie., SPL Polymers Limited. - The ratio of the above order squarely applies to the present case and in the present case there is no involvement of any transfer. Further, the Hon’ble High Court of Madras in the case of CCE, Pondicherry Vs. Cestat (2008 (7) TMI 383 - MADRAS HIGH COURT ) has upheld this Tribunal’s order and rejected the Revenue’s appeal. - appellants are eligible for Cenvat credit. I do not find any infirmity in the impugned order. - Decided against Revenue.
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CST, VAT & Sales Tax
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2015 (12) TMI 1297
Denial of exemption claim - whether the subject items/goods which are insecticides/pesticides are covered under Entry 38B of Schedule B appended to the HVAT Act or not - Held that:- As per language of the entry, two conditions have to be fulfilled in order to qualify for exemption. Firstly, the items must be pesticides or weedicides or insecticides and secondly, these should be meant for use for plants only. The Tribunal has considered the matter in detail and recorded that the products used by the assessee are pesticides, weedicides and insecticides. Further, they are technical grades in concentrated form and after dilution, these products remain insecticides/pesticides or weedicides and are used for plants after mixing inerts and other such agents to make them fit for use on the plants. - Merely because a chemical may not be recommended for spraying on crops, it cannot be said that it cannot be used for plant protection as it could be added to seeds or to the soil. In the said case, Chemical Aldrex 30 EC was held to be the pesticide used for plant protection and therefore the same was covered by Entry 27 of the Third Schedule to the Delhi Sales Tax Act, 1975 - Tribunal was right in concluding that the product of the respondent assessees was covered under Entry 38B of Schedule B of the HVAT Act. The substantial questions of law are answered against the State. There is delay in filing the appeals ranging from 442 to 756 days. No satisfactory explanation has been given for the same. With regard to delay in filing the appeal, in Amalendu Kumar Bera's case (2015 (9) TMI 117 - SUPREME COURT), the Apex Court held that merely because the respondent is the State, delay in filing the appeal or revision could not be and shall not be mechanically considered and in the absence of sufficient cause delay shall not be condoned. - Decided against Revenue.
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2015 (12) TMI 1296
Revision petition - Penalty u/s 78 of the RST Act - Upon checking of goods viz. zink ingots on the ground that ST-18A Form was not accompanying the goods in transit - Held that:- Decision in the case of Nahar Granite P. Ltd., Jodhpur [2015 (11) TMI 1141 - RAJASTHAN HIGH COURT], followed - Appeal disposed of.
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2015 (12) TMI 1295
Classification of uninterrupted power supply (UPS) with its parts ought to relate to the Information Technology products - Whether IT product or not - Held that:- Tribunal found that the lengthy discussion in the Commissioner's order omits from consideration the plain language of the Entry. If the Information Technology products and which are extensively used in modern day business and even at home require uninterrupted power supply then any facility or product ensuring uninterrupted power supply with its parts ought to relate to the Information Technology products. That is how the Serial No. 56 the Entry reads as above. In the light of the subsequent developments, the Notification has been issued. Once the uninterrupted power supply and its parts have been specifically made referable to Entry No.56, then, there was no warrant for invoking and applying the residuary entry merely because that guarantees higher revenue. The approach of the Tribunal is precisely on these lines. Once the product in question has been classified in the light of the plain and clear language of the entry, then, we do not see any question of law arising for our determination and consideration in these appeals. - Decided against assessee.
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Wealth tax
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2015 (12) TMI 1321
Valuation - Inclusion of value of assets - Levy of penalty - Held that:- Difference in the valuation of the property as declared by the assessee and as assessed by the Assessing Officer did not tantamount to furnishing of inaccurate particulars of the asset as it is well settled that valuation is a matter of estimation and estimation by registered valuer of the assessee and estimation by the District Valuation Officer being at variance did not attract the levy of penalty under section 18(1)(c) of the Act. Thus, the penalty was deleted in respect of the assessment years 1984- 85 and 1986-87. With regard to the assessment years 1987-88 and 1988-89, it was recorded that since the assessee had incurred losses in the assessment year 1987-88, its case fell within the purview of reasonable cause as it was under bonafide belief that no wealth tax was payable under the said years when it had incurred losses. Thus, the penalty in respect of these assessment years was also deleted. - no substantial question of law arises - Decided against Revenue.
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Indian Laws
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2015 (12) TMI 1293
Complaint under Section 138 read with Section 142 of Negotiable Instruments Act, 1881 - Held that:- In the instant case, it is submitted that evidence has already been concluded before the trial Court and the case was at the stage of recording statements of petitioner and other co-accused named in the complaint, under Section 313 Cr.P.C. There is specific averment in the complaint that on the representation of the petitioner and other coaccused, the MOU was signed. The mere fact that the cheque issued by respondent No.2 and the MOU signed by respondent No.2 do not bear the signature of petitioner, make out no case for quashing of the complaint and summoning order at this stage when the evidence of complainant has already been concluded. When the entire evidence before the trial Court is complete, it is not appropriate to record finding on the contention of petitioner that he was not the Director of the company at the time of issuance of cheque or was not responsible to the company for the conduct of its business. All these facts will be evaluated by the trial Court on the basis of evidence on record. The petitioner has not come up with any explanation as to what prevented him from filing the revision against the order dated 06.10.2012 vide which he was summoned to face the trial and against the order vide which he was served with notice of accusation. He preferred this petition at a very belated stage when the evidence had already been concluded by the complainant. Keeping all the above facts and circumstances in view, this petition has no merits and is dismissed. It is, however, made clear that nothing contained in this order shall have any bearing on the merits of the complaint or shall be taken as expression of opinion of this Court on any issue to be dealt with and decided by the trial Court.
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