TMI Tax Updates - e-Newsletter
December 29, 2015

Case Laws in this Newsletter:

Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Adjudicating order makes a mockery of quasi-judicial process, can adversely impacting the ease of doing business environment in the country

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Articles

1. CONCEPT OF DUAL GST

   By: Dr. Sanjiv Agarwal

News

1. COMMITTEE ON REVISITING AND REVITALISING PUBLIC PRIVATE PARTNERSHIP MODEL OF INFRASTRUCTURE

2. Report of the Committee on Revisiting & Revitalising the PPP Model of Infrastructure Development Chaired by Dr. V.Kelkar Released

3. Appointment of Digital Amplification & Social Analytics agency for 'Start-up India, Stand-up India' for Department of Industrial Policy and Promotion

4. RBI Reference Rate for US $

Circulars / Instructions / Orders

DGFT

1. 51/2015-20 - dated 28-12-2015

Deletion of Panama from Country Group-C under MEIS Scheme

Highlights / Catch Notes

Income Tax

• Charitable Institution's Tax Exemption Upheld; Ticket Sales, Stall Rent, and Service Tax Deemed Incidental to Main Purpose.

  Case-Laws - AT : Claim of exemption as charitable institution - the collection of sale of tickets, rent on stalls and service tax are incidental to the main activity of the assessee. Therefore, it cannot be construed as trade or commerce - exemption u/s 11 allowed - AT
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• Bank Deposits as Sales Collections Shift Focus to Profit Estimation; Section 44AF Provisions Not Applicable.

  Case-Laws - AT : Additions of Bank deposits made u/s 68 - Once it is held that the impugned deposits may represent sales collection, then the question of estimation of profit would arise. - the provisions of sec. 44AF shall not have application in the facts and circumstances of the case. - AT
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• Unrealized Asset Revaluation Gains Aren't Taxable Income for Taxpayers Until Realized.

  Case-Laws - AT : Mere revaluation of asset would not increase income or receipt of the assessee, until and unless the said gain of revaluation is realised. Therefore, the gain on revaluation of the asset/investments without actual realisation cannot be treated as income of the assessee - AT
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• Court Allows Contractor Expenses After Sub-Contractors Confirm Payments Through Banking Channels; Commercial Necessity Proven.

  Case-Laws - AT : Disallowance of contractor expenses - whether payment made to sub-contractors are bogus - assessee is able to show the commercial expediency to incur the expenditure for the purpose of business and incurring of expenditure also confirmed by the respective sub-contractors and they have received payments through banking channel in subsequent assessment years - expenses allowed - AT
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Customs

• Appellants' 17% Commission on Indian Services Unrelated to Imports Not Applicable u/r 9(1)(a.

  Case-Laws - AT : Valuation - Where the appellants have received 17% commission from the supplier which is not related to the imported goods but for the goods supplied to the third party and the services rendered by the appellant in India on such goods, the application of the provisions contained under Rule 9(1)(a) is totally misplaced. - AT
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• Authority Uses USSR Manufacturer Prices for Accurate Import Valuation in International Trade Case.

  Case-Laws - AT : Valuation - reliance on the quotation price - The price in the ordinary course of international trade has been indicated in the price list published by the manufacturers in USSR - The adjudicating authority was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods - AT
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• Court Questions Smuggling Allegations as Seized Gold Bars Lack Foreign Markings and Consistent Purity.

  Case-Laws - AT : Seizure of gold - Smuggling - chemical examiner can only give the percentage of gold in the gold bars but cannot say whether the seized goods are of foreign origin - Seized gold bars do not bear foreign markings, do not have uniform weight/purity - allegation of smuggling is not tenable - AT
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• Concessional Duty Rate Applies Regardless of Import Chapter Heading; Procedural Lapses Excused, Demand Set Aside.

  Case-Laws - AT : Benefit of concessional rate of duty of import under Project Import Regulation, 1986 - same concessional rate of duty would have been available to the appellant if they had imported goods under chapter heading 84.79 and not as Project Imports under Chapter heading 98.01 - lapses condoned - demand set aside - AT
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Indian Laws

• Cheque Bounced for Insufficient Funds: Accused Claims It Was Security for Rice Storage, Not Payment. Favor Acquittal if Ambiguous.

  Case-Laws - HC : Cheque was bounced due to Insufficient Funds - nature of transactions - accused submitted that it had issued the cheque in question only on account of security against storage of rice and not to discharge their financial liability. - whenever two views are possible, the view which goes in favour of acquittal, is to be followed - HC
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Wealth-tax

• Exemption Denied: Land Purchased in 2003 Taxable as of March 31, 2005, After Exemption Period Ended.

  Case-Laws - AT : Denial of exemption claim - Since the land was purchased on 12.3.2003 , it will continue to claim exemption upto 12.3.2005 but not thereafter and accordingly comes under the ambit of taxable wealth as on 31.3.2005 being the valuation date - AT
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Service Tax

• Adjudicating Authority's Irresponsible Conduct Threatens Trust and Integrity in Quasi-Judicial Proceedings, Impacting Business Environment.

  Case-Laws - AT : Such conduct on the part of the adjudicating authority is too irresponsible to be ignored as it makes a mockery of the quasi-judicial process and can shake the faith of the assessees in the adjudication proceedings thereby inter alia adversely impacting the "ease of doing business" environment in the country - AT
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• Adjudicating Authority's Order Criticized as Cut-and-Paste; Remanded with Rs. 10,000 Cost Imposed.

  Case-Laws - AT : It seems that the "discussion and finding" portion of the impugned order is a shoddy and careless cut-and-paste job from another adjudication order which the adjudicating authority may have passed in relation to an earlier show cause notice - matter remanded back with cost of ₹ 10,000/- imposed on the adjudicating authority - AT
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• Service Tax Demand on Composite Works Contract for Erection, Commissioning, Installation Services from 2003-2006 Confirmed Indivisible.

  Case-Laws - AT : Demand of service tax - composite works contract - Erection, Commissioning and Installation service for the period 01.07.2003 to 31.03.2006. -the said contract cannot be vivisected. - AT
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• Service Tax Demand Upheld Due to Fact Suppression; Extended Assessment Period Invoked u/s 73.

  Case-Laws - AT : Demand of service tax - In the ordinary course it may have been possible for an assessee to have bona fides belief about the non-leviability of service tax, the fact that the appellant did not provide the information in spite of being asked to do so several times evidently tantamount to suppression of facts which as per Section 73 ibid is sufficient for invocation of extended period. - AT
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Central Excise

• Slice Mango and Slice Orange classified under Chapter 2202.40, granting exemption per Notification No. 6/2002-CE.

  Case-Laws - AT : Classification of Slice Mango and Slice Orange - Classification under CH 2202.40 or 2202.99 - exemption under Notification No. 6/2002-CE - Classification adopted by the assessee as 2202.40 is correct - AT
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• CAS-4 Valuation Rules Apply Retroactively and Prospectively for Goods Cleared to Sister Concern Before Feb 13, 2003 Circular.

  Case-Laws - AT : Valuation - clearance of goods to own sister concern - the provisions of CAS-4 will apply not only prospectively but also for the period prior to issue of Board’s Circular dated 13.02.2003 - AT
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• Department Must Prove Ownership Claim to Deny Exemption; Burden Not on Assessee to Disprove Ownership.

  Case-Laws - AT : SSI Exemption - If department wanted to deny the exemption notification on the ground that the brand name or their name is of another person, they must prove the case and the assessee cannot be asked to prove that trade name/brand name does not belong to any other person - AT
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• Appellants must pay duty for failing to submit export documents; no penalty imposed due to lack of evidence of fraud.

  Case-Laws - AT : Export of goods without payment of duty - procedure not followed - demand was raised for non-furnishing of export documents - appellants has to be pay the duty for failure to furnish the export documents. It is not a fit case for imposition of penalty since there is no clandestine removal of goods - AT
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• Packing Edible Oil into Small Containers Isn't Manufacturing Under Note 4, Chapter 15 of Central Excise Tariff Act.

  Case-Laws - AT : Manufacture - the activity of packing refined edible oil received in tankers into small containers cannot be treated as manufacturing activity in terms of Note 4 of Chapter 15 of Central Excise Tariff Act, 1985 - AT
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• Appellant Wins Central Excise Duty Refund Case; Successfully Proves No Unjust Enrichment as Amount Listed as Loan.

  Case-Laws - AT : Refund - Excess tax paid - duty was paid on higher price - unjust enrichment - appellant has been showing the amount for which refund is claimed, in the balance sheet under head loan and in advances. - appellant has not expensed out the amounts which have been paid by them as excess Central Excise duty - Refund allowed - AT
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VAT

• AO Misclassified Asafoetida as Packed Masala for Higher Tax; Clarified to Be Taxed at 4% as Unmixed Spice.

  Case-Laws - HC : Classification - VAT - AO was of the view that in so far as Asafoetida (Hing) is concerned, the tax of 4% only was being paid but the AO was of the view that it falls in the category of Packed Masala and once it is a Packed Masala, it falls in the entry where levy of tax is @16% - When spices are not mixed, it remains Asafoetida (Hing) only and no new product emerges - to be levied @4% - HC
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Case Laws:

• Income Tax

• 2015 (12) TMI 1377
  Revision u/s 263 - Held that:- In order to invoke the provision of section 263 of the Act, the order passed by the AO has to be erroneous and prejudicial to the interest of the revenue. Whereas in the present case the order is not erroneous nor prejudicial. The AO had called for details from the assessee in respect of Manglad Flash Flood claim and after considering the reply filed by the assessee allowed and accepted the treatment given to disputed claim in respect of Manglad Flash Flood which had been accepted for the assessment year 2007-08. The order is also not prejudicial to the interest of the revenue as the assessee itself offered the amount of claim of Manglad Flash Flood in the assessment year 2011-12, when the claim attained finality and thus, no prejudice was caused to the revenue. In the case of CIT Vs. Greenworld Corporation [2009 (5) TMI 14 - SUPREME COURT OF INDIA] held that an order of Assessment passed by an ITO should not be interfered with only because another view is possible. Similarly in the case of CIT Vs. Max India Limited 2007 (11) TMI 12 - Supreme Court of India & Malbar Industries Co. Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court ) the Supreme Court has laid down the principle that when the Assessing Officer taken one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law. Considering the facts of the assessee and respectfully following the ratio laid down in various judgemenets (supra) we are of the considered view that the assessment order is neither erroneous nor prejudicial to the interest of the revenue and therefore, the order passed by the CIT u/s 263 is annulled/cancelled. - Decided in favour of assessee

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• 2015 (12) TMI 1376
  Exemption u/s 11 denied - Held that:- The assessee is wholly and solely engaged in business activity and the assesseeby itself is not engaged in any charitable activity except the donations made to HNF, which the assessee considers as a charitable organization. But it is seen that even the activities of HNF is not charitable as no free treatment or free medicines are distributed to the poor. The exemption u/s. 11 is available when the assessee is engaged in charitable activities, but in the present case it is an admitted fact that the assessee is engaged in business and is not directly involved in any charitable activity as provided u/s. 2(15). After considering all the facts and circumstances of the case, I am of the view that the assessee is not a charitable organization as provided u/s. 2(15) and as such assessee is eligible for exemption u/s. 11 and accordingly, the action of the AO in denying the exemption u/s.11 is confirmed - Decided against assessee.

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• 2015 (12) TMI 1375
  Rectification of error u/s 254 - Depreciation in respect of non-compete fee paid - Held that:- The depreciation cannot be allowed on an amount of non-compete fee, which was in fact paid to the Managing Director of the Company for not taking any employment. This cannot be considered under section 32(1) as an intangible asset. Thus we reject the contentions of the assessee on this issue, and direct the Assessing Officer to disallow the claim of the assessee for depreciation on brought forward written down value in respect of non-compete fee paid in assessment year 2007-08 to Sudhir Vaid in relation to Concord Biotech Limited. - Decided against assessee

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• 2015 (12) TMI 1374
  Addition u/s 69 for unexplained investment - Held that:- In the case under appeal also there has been no finding by the Assessing Officer about the defects of books of accounts as well as detection of undisclosed investment which may have been made by the assessee from the undisclosed sales. In these circumstances it will not be justifiable to impose GP @ 16.78% on the undisclosed turnover when separate additions has already been made for peak credit, cash deficit and payments towards capital nature of expenditure and as such Net Profit rate shown by the assessee on the disclosed turnover should be applied on the undisclosed credits of Rs. 25,64,264/- and by application of Net Profit rate of 4.8% on Rs. 25,64,264/- the sustained addition of Rs. 4,30,283/- will scale down to Rs. 1,24,110/-. In other words, assessee will get relief of Rs. 3,03,173/- and the total sustained addition of Rs. 8,39,832/- referred in ground no.1 will be reduced to Rs. 5,33,659/-. Addition on account of unexplained investment in FDI - Held that:- Assessee has accepted that the credits in the disclosed bank account were not shown in the books of account and did not put forth any proper explanation for these cash deposits in its account and further most of the withdrawals from this bank account have been made for payment to Kotak Securities Ltd. for share trading business. This means that flow of funds in this account was not at all related to the business of job of jari kasab done by the assessee and, therefore, the contention of the ld. AR for applying net profit rate on this amount of Rs. 2,25,977/- cannot be accepted and accordingly we are of the view that ld. CIT(A) has rightly confirmed this addition of unexplained investment in the hands of the assessee and as such this ground of the assessee is dismissed. Addition as unaccounted fixed deposits as income u/s 69 - Held that:- As during assessment proceedings Assessing Officer found that assessee had made investments in cash certificates in various banks in the form of Fixed Deports and these Fixed Deposits were jointly held by the assessee with either his father or mother or his wife and the photo of the assessee was appearing on these Fixed Deposits and these Fixed deposits were not reflected in the balance sheet of any of the other joint holders and therefore, this amount was added as unexplained investments. Even before ld. CIT(A) no evidence has been furnished by the assessee to show that he was not the actual beneficiary of the Fixed Deposits and was unable to prove that Fixed Deposits related to any other year and therefore, ld. CIT(A) did not give any relief to the assessee. Even before us also nothing contrary has been produced to prove that these Fixed Deposits relate to any other year or Fixed Deposits are not related to the assessee. Therefore, it seems that assessee has nothing to say more to substantiate its ground and in these circumstances, we dismiss this ground of assessee.

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• 2015 (12) TMI 1373
  Reallocation of expenses while granting Deduction u/s.80IB & 801C - Held that:- It cannot be said that the benefit of R & D activity at Goa- PTD unit has benefited all the manufacturing units of the assessee during the year. Even as discussed above, the assessee has not allocated expenditure of Banglore R&D unit on the ground that the assessee’s formulation units were not deriving benefit from the activity carried in Bangalore unit, hence applying the same analogy, the issue in the light of observations made above is required to be relooked into by the AO. We further find that even the above explanation was not offered by the assessee before the AO. The explanation given vide letter dated 30.03.10 for the first time was offered to the Ld. CIT(A), who has also not discussed it in the impugned order. Thus the above submissions of the assessee that the benefit of R&D activities of the assessee has been enjoyed by the other units manufacturing formulations have not been examined by either of the lower authorities. Even by the above submissions made before us without any supporting evidence are not sufficient to decide the issue under consideration. The matter under the circumstances required to be examined afresh by the AO in the light of the observations made above and considering the evidences that may be submitted by the assessee to support its claim. Under the circumstances, we restore this issue to the file of the AO to examine the contentions raised by the assessee in this respect and to verify as to which manufacturing units of the assessee had got the benefit of R&D activity and to what extent from the Goa-PTD unit and thereafter to decide the issue a fresh and to accordingly allocate the expenditure of the Goa- PTD unit to such manufacturing units proportionately. Disallowance under section 14A - disallowance restricted by the Ld. CIT(A) to the extent of 5% of the dividend income as against the suo-moto disallowance offered by the assessee @ 2% of the dividend income - Held that:- different coordinate benches of this Tribunal have observed that in such cases certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09. The Hon'ble Bombay High Court in the case of CIT vs. 'Godrej Agrovet Ltd.' (2014 (8) TMI 457 - BOMBAY HIGH COURT ) has upheld the order of the Tribunal directing the AO to restrict the disallowance to the extent of 2% of the total exempt income earned by the assessee. Under the circumstances, the proposition of law which emerges from the order of the Hon’ble High Court in the case of ‘Godrej Agrovet’ (supra) is that certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09 and not that in each every case, such percentage is to be restricted @2% only. The Ld. CIT(A), in the facts and circumstances of the case has restricted the disallowance @5% of the dividend income against Rs. 1,19,012/- which appears to be quite reasonable. We therefore do not find any infirmity in the order of the Ld. CIT(A) in this respect. Addition on account of adjustments under section 145A in relation to excise duty and sales tax on closing inventory of raw material, packing material and stores & spares - Held that:- The assessee was following Exclusive method in respect of raw material, packing material and spare parts and therefore adjustment on account of tax/duty is required to be made in respect of such items in the purchase/ sales, opening stock and closing stock. The auditors had computed the adjustment under section 145A at Nil as per clause 12(b) of the auditors report which has not been accepted by the AO without giving any reasons. The AO has made his own adjustment which does not give details of adjustment made in relation to opening stock, sales and closing stock in relation to items mentioned by him. The matter in our view requires fresh verification and AO is required to give specific finding as to how adjustment prepared by auditors was not found acceptable. We, therefore, set aside the order of CIT(A) and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of our observations made above and after allowing opportunity of hearing to the assessee Ad-hoc disallowance @ 5% of repairs expenses incurred at Mumbai - Held that:- We find that the AO has allowed the repair expenses in respect of other units except a few expenses about which the assessee could not substantiate its claim as discussed in the assessment order. In respect of Mumbai Unit, the AO had called upon the invoices of Rs. 50,000/- and above. It is an admitted fact on the file that the assessee has no evidence to support the claim as the same has allegedly been destroyed in fire. The AO thus could not verify the said claim of expenditure. The AO, despite the above fact, considering the overall facts of the case, has allowed the claim but has retained only 5% adhoc disallowance for want of supporting evidences, which action seems to be quite justified. We do not find any infirmity in the order of the AO in this respect. Addition made by the AO on account of capital expenditure as against the assessee’s claim that the same was revenue expenditure - CIT(A) deleted the addition - Held that:- This issue has been discussed by the Ld. CIT(A) after thoroughly examining the nature of expenses and relying upon the various case laws, has observed that these expenses were allowable as revenue expenditure because no new asset was acquired by the assessee and the expenditure was incurred to preserve the existing assets. He therefore held that the expenditure was allowable as revenue expenditure. However, the depreciation allowed on the asset in relation to the above amount of expenditure was liable to be withdrawn. After considering the submissions of the Ld. Representatives of the parties, we do not find any infirmity in the order of the Ld. CIT(A) in this respect. The appeal of the Revenue is therefore dismissed. Repairs and maintenance expenses was incurred for the maintenance and preservation of the assets and no new capital has come into existence. He, relying upon various judicial decisions of the higher judicial authorities, has held that the nature of expenses is revenue in nature.

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• 2015 (12) TMI 1372
  Claim of exemption as charitable institution - exemption u/s 11 - CIT(A) allowed the claim - Held that:- The receipt in question is only incidental to the activity of the assessee. In fact, the registration granted to the assessee was cancelled on the ground that the assessee is collecting sale of tickets on book fair, rent on stalls and service tax. For the very same assessment year under consideration, this Tribunal found that the cancellation of registration is not justified. In view of the decision of co-ordinate Bench of this Tribunal, to which the Ld. Accountant Member is a party, this Tribunal is of the considered opinion that the collection of sale of tickets, rent on stalls and service tax are incidental to the main activity of the assessee. Therefore, it cannot be construed as trade or commerce. Hence, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee under Section 11 of the Act. - Decided in favour of assessee. Claim of the assessee towards depreciation - Held that:- When the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset becomes NIL. Admittedly, depreciation under Section 32 of the Act has to be allowed only on written down value of the asset. When the written down value of the asset becomes NIL since the entire cost was allowed as application of income under Section 11 of the Act, this Tribunal is of the considered opinion that there cannot be any further claim for deduction under Section 32 of the Act. In view of the above, this Tribunal is of the considered opinion that the assessee is not eligible for deduction under Section 32 of the Act towards depreciation. However, it is made clear that the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration.- Decided against assessee.

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• 2015 (12) TMI 1371
  Deemed dividend made under section 2(22)(e) - CIT(A) deleted the addition - Held that:- CIT(A) has appreciated the fact that the amount given by M/s ADJPL to M/s DJPL was in connection with a commercial transaction involving purchase of a property. It is further fortified by the fact that it is not shown by the AO that the assessee herein did receive any benefit out of it. The explanations of the assessee were duly supported by the documentary evidences. During the course of appellate proceedings, the Ld CIT(A) has also called for a remand report from the AO. But the assessing officer could not contradict these factual aspects in his remand report. Under these set of facts, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference. - Decided against revenue

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• 2015 (12) TMI 1370
  Rectification of mistake - disallowance made out of labour charges - Held that:- Even if the claim made by the assessee in the applications filed under S.154 that the disallowance made out of labour charges in both the years under consideration is not sustainable separately was disallowed by the Assessing Officer in the orders passed under S.154 on merit, the same by itself will not enlarge the scope of proceedings under S.154, which is confined to rectification of only the mistakes apparent from record. As held in the case of Mepco Industries Ltd. Vs. CIT (2009 (11) TMI 24 - SUPREME COURT ) relied upon by the learned CIT(A) in her impugned order, the decision rendered on a debatable issue cannot be treated as a mistake apparent from record, so as to rectify the same under S.154. As rightly held by the learned CIT(A) in this context, the rectification sought by the assessee vide applications filed under S.154 for both the years under consideration, was on a debatable issue, and even the learned counsel for the assessee has not been able to dispute this position. We, therefore, find no infirmity in the impugned order of the learned CIT(A), upholding the orders passed by the Assessing Officer under S.154 for both the years under consideration whereby he rejected the rectification sought by the assessee on a debatable issue. Accordingly, the impugned order of the learned CIT(A) is upheld - Decided against assessee.

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• 2015 (12) TMI 1369
  Registration under section 12AA - CIT had rejected to grant registration U/s.12AA because the assessee was yet to commence its charitable activities and therefore, genuineness of the activities could not be established -BHeld that:- no justification in the action of the Ld. CIT for refusing to grant registration U/s.12AA of the Act on this flimsy ground. The assessee trust is in the incubation stage, and has not carried out its objects at the time of application seeking registration U/s.12A of the Act. Only after getting recognition of the Act, the assessee Trust will be able to seriously pursue its objects. Further on perusing the objects of the trust, we find that they are both religious and charitable in nature because the objects of the Trust provides so. Trust deserves to be granted registration U/s.12AA of the Act. Unless the registration is granted to the assessee trust, it would be difficult for the assessee trust to pursue its objects. Therefore, it is the primary duty of the Ld. CIT to grants registration U/s.12AA of the Act after examining the objects and genuineness of the trust. In this case before us there is nothing adverse to suggest the genuiness of the Trust or its objects. Considering the facts and circumstance of the case, we are of the considered view that the Ld. CIT ought to have granted registration when the assessee has categorically explained the cause of delay in conducting the activities of the trust. Therefore we hereby direct the Ld.CIT to grant registration U/s.12AA of the Act to the assessee Trust, needless to mention that at the time of assessment the Ld.A.O shall be at liberty to withdraw the benefits if the Trust has violated any of the provisions of the Act. - Decided in favour of assessee.

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• 2015 (12) TMI 1368
  Transaction of shares - business income or Short Term Capital Gains eligible to concessional tax treatment u/s.111A - Held that:- The assessee has indulged in violation of SEBI Regulation while making investment in IPOs. However, whatever amounts the assessee had illegally earned, which could have been assessed as their income, has been taken away by SEBI from them. Once the actual amounts of income earned through the violation of SEBI Regulation have been disgorged by SEBI, ultimately no income has resulted to the assessee. Thus, applying the theory of real income and also relying upon the above decision of Shri Monal Y. Thakkar and Smt. Reetaben R. Thakkar [2015 (7) TMI 913 - ITAT AHMEDABAD ] we are of the opinion that the sum of Rs. 2,20,76,842/- is to be excluded from the assessee’s income. We order accordingly and hold that only the sum of Rs. 34,12,218/- is to be assessed in the hands of the assessee in the year under consideration. We express no opinion about the finding of the CIT(A) that the sum of Rs. 2,20,76,842/- is to be assessed as business income because since we have held that on account of disgorgement the sum of Rs. 2,20,76,842/- is not to be assessed in the hands of the assessee. Once the amount is not to be taxed because it has already been recovered by the SEBI and there is no real income in the hands of the assessee, the question of the head under which it is to be assessed could not arise. Now, we revert back to the question with regard to the head under which the sum of Rs. 34,12,218/- is to be assessed. The entire gain had arisen from the purchase and sales of one share, i.e., FCS share which was purchased once and was also sold once. Thus, there was a purchase and sale of single script at one time during the year under consideration – that too with assessee’s own fund. This statement of the ld. Counsel has not been controverted. In view of above, we do not find any justification to interfere with the finding of the CIT(A) in this regard upholding assessment of Rs. 2,20,76, 842 (out of Short Term Capital Gains of Rs. 2, 54, 93,060 shown in the appellant's return) as business income instead of as Short Term Capital Gains eligible to concessional tax treatment u/s.111A.

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• 2015 (12) TMI 1367
  Additions of Bank deposits made u/s 68 - applicability of provisions of sec. 44AF - Held that:- In view of the fact that the deposits were found to have been made into the bank account from various cities, the theory of unexplained cash credit may not be applicable in view of the explanations furnished by the assessee. Hence, inclined to accept the claim of the assessee that the same represents business receipts. Accordingly, in my view, the provisions of sec. 68 do not have application to the facts of the present case. Once it is held that the impugned deposits may represent sales collection, then the question of estimation of profit would arise. The assessee’s claim is that the provisions of sec. 44AF should be applied. However, in my view, the said provisions can be applied only if the assessee maintains some record to show that the business was actually carried on and further he satisfies about the quantum of sales. In the instant case, the assessee has failed to show any record and hence, in my view, the provisions of sec. 44AF shall not have application in the facts and circumstances of the case. Peak credit amount taken as income of the assessee - Held that:- As in the instant case, the assessee has not come out with details of actual sales and hence it cannot be said that the amount of Rs. 11,51,953/- represents the actual sales. The possibility of higher sales cannot be altogether ruled out. The assessee has also not furnished any details about the profit range earned by him. Further, these business transactions have not been disclosed to the revenue also in the income tax return filed by the assessee. Hence, taking into consideration all possible lapses, in my view, the present issue would meet the ends of justice, if the net profit from the alleged business activities is estimated at 25% of the aggregate amount of deposits of Rs. 11,51,953/-. Accordingly, the order passed by the Ld CIT(A) is set aside and the assessing officer is directed to sustain the addition to the extent stated above.In the result, the appeal filed by the assessee is partly allowed.

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• 2015 (12) TMI 1366
  Disallowance of purchases made - bogus purchases - CIT(A) restricted the disallowance to 7% as against 25% made by AO - Held that:- The assessee being in an export promotion zone, the movement of its goods is controlled and customs approved; that the purchases being approved purchases, there was no question of their being bogus purchases. The assessee enclosed the custom approved invoices in respect of purchases from Zalak Impex. These invoices have been produced before us also, in the paper book filed by the assessee. As per these invoices, the goods purchased had been verified and approved by the Customs Authority. This clearly shows that the goods had actually been purchased and received by the assessee. As such, these purchases could not have, by any stretch of imagination, been treated as bogus purchases. It is also noteworthy that the payments made by the assessee to Zalak Impex were through account payee cheques only. Neither of the Taxing Authorities, however, took these invoices into consideration and wrongly held the assessee’s purchases from Zalak Impex to be bogus purchases. Nothing has been brought on record to show that these invoices were self made or fabricated. Moreover, the comparative chart of purchases made during the year and the selling price (page 141-144), as filed before the ld. CIT(A) has not been refuted and this also goes to prove the theory of bogus bills and accommodation entries to be wrong. Therefore, the order under appeal is a result of complete misreading and non-reading of cogent documentary evidence brought on record by the assessee. For this reason also, along with the reason that the sales made by the assessee were never questioned, the addition is deleted in toto. - Decided in favour of assessee

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• 2015 (12) TMI 1365
  Depreciation on the asset put into use - assessee is a registered charitable trust - Held that:- As decided in CIT, Karnataka I Versus Society Of The Sisters Of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court ] it is not in dispute that if the mercantile system is followed, the depreciation allowance in respect of the trust property should be allowed - Decided in favour of assessee Carry forward of deficit - Held that:- There is no dispute that an identical issue was considered and decided by this Tribunal in favour of the assessee in the case of Dr. T.M.A Pai Foundation, Manipal [2010 (2) TMI 1156 - ITAT BANGALORE] the object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expend iture, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. - Decided against revenue Revaluation of investments treated as income of the assessee - Held that:- Mere revaluation of asset would not increase income or receipt of the assessee, until and unless the said gain of revaluation is realised. Therefore, the gain on revaluation of the asset/investments without actual realisation cannot be treated as income of the assessee - Decided against revenue

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• 2015 (12) TMI 1364
  Disallowance of bad debt - Assessing Officer after holding held that the same is related to Debentures held by the Appellant and cannot be deductible either as a bad-debt u/s 36 or as business loss - Held that:- acquisition of debentures, on the facts of the case before us, was in the course of the business carried on by the assessee and, therefore, it cannot be seen on standalone basis divorced from the peculiar facts under which the assessee company came to own these debentures and incur the loss on non-redemption of these debentures. The form of transaction is not important. What is important is that the de facto transaction was of finance and the amount advanced during the course of the financing business had become bad. It is a matter of record, as noted by the CIT(A), that the assessee pursued the matter before Hon’ble Calcutta High Court in winding up petition against IFB Finance Limited, and all this was essentially, and undisputedly, integral part of the financing business carried on by the assessee. As for the question whether the amount has actually become bad and whether loss can be claimed as a deduction for bad debts in the current year, suffice to note that the assessee has written off the amount in this year and, following the law laid down by Hon’ble Supreme Court in the case of TRF Limited Vs CIT [2010 (2) TMI 211 - SUPREME COURT ], the deduction is to be allowed in the year of write off. - Decided in favour of assessee. Disallowance of depreciation in respect of sale and lease-back transactions of assets - Held that:- We are in respectful agreement with the views so expressed by the coordinate bench. In this view of the matter, we deem it fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo in the light of the above legal position and the allow the relief, as admissible. As long as assessee is the legal owner of the asset and has used the asset in the course of his business, he is to be allowed depreciation in respect of that asset. The use in leasing business is also a use of the asset. The matter needs to be re-examined in this light. While doing so, the Assessing Officer will give a reasonable opportunity of hearing to the assessee, decide the matter by way of a speaking order and in accordance with the law. Order, accordingly. Disallowance of EMI residual account - CIT(A) deleted the addition - Held that:- In the case before us, whatever be certainty of the assessee realizing the profits in future as a result of this arrangement, these profits can only be brought to tax when these actually accrue and arise and that stage comes only when the recoveries are made from the individual borrowers. It is also not in dispute, in the light of the categorical finding given by the CIT(A), that the related incomes are brought to tax in subsequent period when these income accrue and arise. As for the reference to Hon’ble Supreme Court’s judgment in the case of CIT Vs Shiv Prakash Janak Raj & Co Pvt Ltd [1996 (9) TMI 5 - SUPREME Court], that was a case in which accrual had admittedly taken place. That is not the situation before us. In these circumstances, we see no infirmity in the well reasoned conclusion arrived at by the CIT(A) and decline to interfere in the matter. - Decided against revenue.

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• 2015 (12) TMI 1363
  Penalty order u/s 271D - Bar of limitation for imposing penalties - Held that:- The original assessment order had been passed on 30.11.2010 on which date the AO proposed to initiate penalty proceedings u/s 271D had been initiated. The notice u/s 271(D) was also issued on the said date. The penalty order u/s 271D has been passed on 08.06.2011. The relevant financial year during which the assessment order was completed ends on 31.03.2011. The period of six months from the end of the month in which the action for initiation of penalty proceedings expires on 30.05. 2011. The Hon’ble Rajasthan High Court in the case of ‘CIT vs. Jitendra Singh rathore [2013 (3) TMI 222 - RAJASTHAN HIGH COURT ] has held that the six month period for the purpose of clause (c) of section 275(1) of the Act is to be computed from the date of issue of first show cause notice by the AO and not from the date of issue of first show cause notice issued by the Joint Commissioner. In the light of the above decision, the order dated 08.06.2011 is hit by the bar of limitation as prescribed in clause(c) of section 275(1) of the Act and the same is accordingly set aside. - Decided in favour of assessee Penalty u/s 271D - Rs. 40,000/- i.e. the amount equal to the amount of cash loan accepted by the assessee - Held that:- The assessee has explained that the assessee lady has been engaged in the profession of tailoring. She had no intention to contravene the provisions of the Act. In fact, after receipt of loan from her daughter in law, a very close relative, she had deposited the amount in bank. Both the ladies were unaware of the provisions of law in this respect. Considering the status of the assessee being a small time tailor, her gross total Income mainly from tailoring and interest income for A.Y. 2008-09 only Rs. 158282/- , the total income in relation to which was returned and assessed at Rs. 150280/- and there being no intention to breach the provisions of law while accepting loan of Rs. 40,000/- from her daughter in law, we do not find it a fit case for levy of penalty u/s 271D of the Act. The same is accordingly ordered to be deleted.- Decided in favour of assessee

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• 2015 (12) TMI 1362
  Disallowance of contractor expenses - whether payment made to sub-contractors are bogus - Held that:- Assessing Officer cannot substitute his own standard of reasonableness of expenditure for that of the assessee, as the assessing authority has not brought anything to show that the assessee adopted colourable or illusory or fraudulent means to reduce the profits to show the expenditure. In our opinion, in the present case the assessee proved the genuineness of the payment by producing cogent evidence including identity of the parties alongwith payment details and the burden cast upon the assessee was discharged as there is no evidence to suggest the bogus nature of the expenditure and the conclusion of the Assessing Officer is based on the presumption to reach the conclusion that the payment are not genuine it cannot be upheld. Further, the assessee is able to show the commercial expediency to incur the expenditure for the purpose of business and incurring of expenditure also confirmed by the respective sub-contractors and they have received payments through banking channel in subsequent assessment years. Hence, we have no hesitation in confirming the order of the Commissioner of Income Tax (Appeals) - Decided against revenue

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• Customs

• 2015 (12) TMI 1345
  Valuation - Loading of transaction value of spares ordered by the DC (SVB) and whether the commission received from the foreign supplier is to be loaded to the transaction value or otherwise - Held that:- DC (SVB) while determining the relationship and while finalizing the transaction value held that 17% commission received from the foreign supplier be added to the transaction value of the imported goods, on the ground that this is on account of the goods imported by the third parties, which is indirectly flowed back to the Indian firm. The adjudicating authority in his findings also admitted that the agency commission received by the appellant is on account of the service rendered by the Indian firm, on behalf of the suppliers and the discounts they enjoyed. This admittedly confirms that the commission amount received from their foreign supplier is towards the service rendered by the appellant in India on third party imports. We also find that the appellate authority has not brought out any clear findings on the relationship between the appellant and the foreign supplier. In fact, the Commissioner (Appeals) has admitted that there is no detail available on the relationship between the supplier and the Indian firm but assumed that the parties are related on the presumption that M/s. Instron Holding Limited, UK controls the appellant firm and the supplier firm without any evidence. In this regard, we find that the Tribunal in the case of Mittal International Vs. CC, New Delhi (2002 (3) TMI 132 - CEGAT, COURT NO. I, NEW DELHI) has clearly held that 15% commission received by the importer is not related to the imports made by the appellant but in respect of imports made by third party. Where the appellants have received 17% commission from the supplier which is not related to the imported goods but for the goods supplied to the third party and the services rendered by the appellant in India on such goods, the application of the provisions contained under Rule 9(1)(a) is totally misplaced. However, we also find that even assuming that the parties are related, in order to invoke Section 14 and also Customs Valuation Rules for rejecting the value and the mutuality of interest between the supplier and the appellant has to be established. Whereas, in the present case, we do not find any justification or any evidence for mutuality of interest between the supplier and the appellant firm. - impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1344
  Valuation - reliance on the quotation price - Rejection and re-fixing of transaction value - Determination of value under Rule 8 - Confiscation of goods - Demand of differential duty - Held that:- Value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of the prices mentioned therein. The company has not only not disputed the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. Fact that the trade representative of USSR in his letter dated January 20,1987 has asked the appellant not to divulge the specially quoted price to any other party in India, in itself indicates that the price offered to the appellant was a special price and not the ordinary price of such goods in the course of international trade. The price in the ordinary course of international trade has been indicated in the price list published by the manufacturers in USSR. We, therefore, find no ground to interfere with the order of the Tribunal - Decided against Assessee.

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• 2015 (12) TMI 1343
  Duty demand - Goods imported duty free against the advance license were subjected to duty along with interest - Held that:- Revenue has not referred to any provisions of law under which it seeks stay of the order. We find that w.e.f. 6/8/2014 Section 129E of the Customs Act was amended. Prior to this date Section 129E provided that where in particular case the appellate Tribunal is of opinion that the deposit of duty, penalty, etc. would cause undue hardship to a person, the appellate Tribunal can dispense with such deposit under conditions to be satisfied. However, from 6/8/2014 there is no provision under new Section 129E that provides for stay by the Tribunal against order of the Commissioner or Commissioner (Appeals) - Request for Stay of operation of order denied.

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• 2015 (12) TMI 1341
  Waiver of pre deposit - Central Excise exemption based on the condition of non-availment of Cenvat credit on the input used in the goods is admissible for exemption of CVD on the imported goods - Held that:- As regard the prayer of the appellant that they were granted conditional stay despite the reference made by Chennai Bench to the larger bench, we do not agree with applicant for the reason that this Tribunal has passed stay order after considering this very aspect, in para 5.7 of the stay order dated 23/01/2015, therefore order cannot be modified on that ground. However on perusal of Hon'ble Supreme Court judgment in the case of SRF Ltd [2015 (4) TMI 561 - SUPREME COURT]. we find that eligibility of concessional CVD under notification 12/2012-Cus dated 17/3/2012 has been decided in favour of the assessee. Therefore, we are of the Prima facie view that applicant is entitle for benefit of concessional rate of CVD. After considering the notification as per submission of the Ld. Counsel the total duty demand stand at Rs. 1.19 crore. We therefore direct the applicant to pre-deposit of Rs. 60 lakhs within a period of one week - stay granted partly.

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• 2015 (12) TMI 1340
  Benefit of concessional rate of duty of import under Project Import Regulation, 1986 - Import of machinery for manufacturing pre-recorded audio casettes under Chapter Heading 98.01of the Custom Tariff Act, 1975 - Held that:- Even if benefit of Project Imports is denied, the goods were assessable at the same rate of duty in terms of Notification No. 49/95-Cus dated 16/3/1995, Notification no. 90/95-Cus dated 1/9/1995 and Notification No. 36/96-Cus dated 23/7/1996 in respect of their goods falling under Chapter Heading 84.79. During the course of arguments it became clear that the goods in question would otherwise get classified under chapter heading 84.79 and the machinery for production of commodities falling under this Heading is exempted under above Notifications. This issue has not been addressed by the Commissioner. - same concessional rate of duty would have been available to the appellant if they had imported goods under chapter heading 84.79 and not as Project Imports under Chapter heading 98.01, we condone the lapses in following Project Import Regulations and allow substantial benefit which in any case would have been available - Decided in favour of assessee.

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• PMLA

• 2015 (12) TMI 1336
  Maintainability of writ petition - Alternate remedy - Issue of notice under Prevention of Money Laundering Act, 2002 (PMLA) - Held that:- There is substance in the preliminary objection raised by Mr Bharadwaj and since Mr Sathe has fairly accepted the position that the alternate remedy is efficacious and complete, we dispose of this Writ Petition on the ground that the Petitioner has an alternate and equally efficacious remedy to challenge the notice at page 173 of the paper book. The Appellate Authority has also been approached with an interim application and we expect the Appellate Authority to consider all contentions of the Petitioner and equally those noticed by us today. The suggestions and proposals can also be placed before the said Appellate Authority. The Authority shall consider the matter on its own merits and in accordance with law. To enable the Petitioner to pursue the interim application, we direct that if the original Petitioners or their successor is in possession of the subject immovable property, then, they may not be dis-possessed therefrom for a period of two months - Appeal disposed of.

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• Service Tax

• 2015 (12) TMI 1360
  Demand of service tax - works contract - Erection, Commissioning and Installation Services; Site formation Services and GTA Services - Held that:- As regards the service tax liability on the Erection Commissioning and Installation Services for MKVDC; the contract/work order is nothing but a works contract. Law has been settled by the Supreme Court in the case of CCE Vs. Larsen & Toubro Ltd. and others [2015 (8) TMI 749 SC] - As regards the service tax liability under the category of Site Formation Services, Larger bench has settled the law as to laying of pipes /conduits for lift irrigation system undertaken for government/government undertakings and involving associated activities like soil preparation and filling, supporting masonry services gets classified as works contract, and is exempted from the service tax liability by the exempted granted in definition of Works Contract Services under section 65(105) (zzza) of the Finance Act, 1994. GTA Service - Appellant is not seriously contesting the tax liability and has already discharged the tax liability and interest and the prayer is only for setting aside the penalties. We find that the appellant had discharged the tax under the head GTA services before the issuance of show cause notice and has also paid the interest due. In our view, the issue of taxability under GTA services is one of interpretation, hence appellant could have entertained a belief that the services are taxable in the hands of the transporters. Accordingly, we are on the view that the penalties imposed on the appellants on this count needs to be set aside - Decided partly in favour of assessee.

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• 2015 (12) TMI 1359
  Condonation of delay - Power of commissioner to condone delay beyond condonable period - Held that:- Supreme Court clearly held that the Commissioner (Appeals) has no power to condone the delay after expiry of 30 days period as provided under Section 85 of the Finance Act, 1994. We agree with the submission of the Revenue that there is no power of Commissioner (Appeals) to condone the delay. The wrong mentioning of the period of limitation in the preamble cannot override the statutory provision. We also notice that the Tribunal in the case of Raghav Industries (2008 (5) TMI 537 - CESTAT, NEW DELHI) and Sagar Enterprises (2009 (4) TMI 690 - CESTAT, CHENNAI) dismissed the appeal on the similar ground. - reason to interfere with the order of the Commissioner (Appeals) - Decided against assessee.

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• 2015 (12) TMI 1358
  Denial of the benefit of 67% abatement under Notifications No. 15/2004 - ST, dated 10.09.2004 and No.1/2006 - ST, dated 01.03.2006 - Inclusion of value of free supplies - Held that:- in the adjudication order there is no evidence mentioned which was relied upon to arrive at a finding that there were free supplies of material by the service recipients. It is also seen that the adjudicating authority has recorded the submissions of the appellant that the projects mentioned above were exempt and the reasons therefor given by it (i.e., the appellant). However, we find that in the "discussion and finding" portion of the impugned order, there is no discussion or finding on the appellant's pleadings/contentions with regard to the non-taxability of the service rendered to IIT Delhi, National Press Centre, Dame Depot of Delhi Metro etc. The observation of the adjudicating authority that " in this case the dispute does not relate to the services and service tax payable thereon but is solely revolves around the issue of short payment of service tax due to non-inclusion of cost of raw-materials and goods supplied free by the recipients of service " is totally absurd because the dispute clearly relates to the taxability of the service rendered as the appellant had contended that the projects named above were exempt from payment of service tax and, as stated earlier, the issue of free supplies is conspicuous by its absence (rather than presence) in the present case. It seems that the "discussion and finding" portion of the impugned order is a shoddy and careless cut-and-paste job from another adjudication order which the adjudicating authority may have passed in relation to an earlier show cause notice which finds mention in the show cause notice dated 24.05.2012 related to the impugned order. - we set aside the impugned order and remand the case to the primary adjudicating authority to pass a speaking order taking into account the pleadings and contentions of the appellant - Decided in favour of assessee.

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• 2015 (12) TMI 1357
  Demand of service tax - composite works contract - Erection, Commissioning and Installation service for the period 01.07.2003 to 31.03.2006. - Held that:- Adjudicating authority has recorded that the scope of work mentioned in tender documents includes supply, erection, testing and commissioning of electrical sub-stations and external electrification works. After recording such finding, the adjudicating authority has vivisected the said contract and charged service tax liability under "erection, installation and commission" services. We find that the issue is no more res integra as has been decided by the Apex Court in the case of Larsen and Toubro and Ors. reported at [2015 (8) TMI 749 - SUPREME COURT] - the said contract cannot be vivisected. - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1356
  Demand of service tax - Banking and Other Financial Services - whether the hire purchase service rendered by the appellant prior to 16.08.2002 was covered under the scope of BOFS as defined under section (65) (10)/(12) - Held that:- as evident that to be covered under BOFS prior to 16.08.2002 the hire purchase service had to be rendered by such body corporate which was a banking company or a financial institution including a non-banking financial company. As per section 65 (11) ibid banking company has the meaning assigned to it in clause (a) of section 45 A of the Reserve Bank of India Act, 1934 - appellant does not qualify to be called non-banking financial company. So, it is established that the appellant is not a banking company nor a financial institution including a non-banking financial company and therefore the service rendered by it prior to 16.08.2002 was not covered under BOFS because prior to that date financial leasing services including equipment leasing and hire purchase by a body corporate were covered under BOFS only if such body corporate satisfied the requirement of being a banking company or a financial institution including a non-banking financial company. All the hire purchase agreements in respect of which the demand has been confirmed under BOFS were entered into prior to 16.08.2002 and that this assertion was made even before the primary adjudicating authority and has not been contested in the primary adjudication order. CBEC vide circular No.B11/1/2001-TRU, dated 09.07.2001 issued at the time of introduction of levy of service tax BOFS in para 2.1.4 clarified that the hire purchase agreements entered into prior to the imposition of levy i.e. 16.07.2001 will not be chargeable to service tax provided the goods are also delivered prior to 16.07.2001. - in respect of hire purchase agreements entered into by the appellant prior to 16.08.2002 where the vehicles were also delivered prior to 16.08.2002 were not liable to service tax under BOFS. Ld. advocate for the appellant fairly conceded that (i) while all the hire purchase agreements in respect of which the service tax demand of Rs. 39 lakhs has been confirmed were entered prior to 16.08.2002, but he could not confirm whether all the vehicles thereunder were also delivered prior to 16.08.2002 (ii) in respect of such hire purchase agreements where the vehicles were delivered on or after 16.08.2002 the service tax under BOFS would be leviable and for that purpose the case may have to be remanded to the primary adjudicating authority for verification and computation. - service tax is leviable under BOFS in those cases where even if the hire purchase agreements were entered into prior to 16.08.2002, the delivery of vehicles took place on or after 16.08.2002. In the ordinary course it may have been possible for an assessee to have bona fides belief about the non-leviability of service tax, the fact that the appellant did not provide the information in spite of being asked to do so several times evidently tantamount to suppression of facts which as per Section 73 ibid is sufficient for invocation of extended period. We however need not dwell on this issue in greater detail as the impugned demand has not been found to be sustainable except to the extent of such hire purchase agreements where the delivery of vehicle took place after 16.08.2002 which the appellant has also conceded and this demand is likely to be very small. Penalty under Section 78 ibid will get attracted but in the wake of the decision of Gujarat High Court in the case of Ratnamani Metals & Tubes - [2013 (12) TMI 1397 - GUJARAT HIGH COURT], the appellant will be eligible for reduced (25%) of the mandatory penalty as this option had not been expressly given to the appellant earlier. - Decided partly in favour of assessee.

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• Central Excise

• 2015 (12) TMI 1355
  Duty demand - Clandestine removal of goods - Imposition of penalty - Held that:- The evidence that was furnished by appellant from the scrap dealers was not found to be reliable. Preponderance of probability went in favour of Revenue. There was also no permission granted to appellant to make weighment of the scrap outside. Various oral evidences gathered went against the assessee and that remained unrebutted. There was very precise case of Revenue that the very materials discovered from the premises of the assessee particularly computer record proved the higher generation of scrap and clearance thereof as compared to the lower clearances made through invoices and such clearance of higher quantity of scrap corroborated by the evidence gathered from different parties. Record does not reveal that the appellant had defended the charge of clandestine clearance of higher quantity of scrap before the authorities below. Even no evidence was adduced before the Tribunal to defend. The daily register reveals the respective entries of the scrap clearance while the questionable Modus operandi of the appellant proved clearances of higher quantity of the scrap to the dealers. - Demand of duty confirmed, however penalty is reduced - Decided partly in favour of assessee.

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• 2015 (12) TMI 1354
  Classification of Slice Mango and Slice Orange - Classification under CH 2202.40 or 2202.99 - exemption under Notification No. 6/2002-CE - Held that:- During the period June 2002 to December 2002 appellant cleared the products "Slice Mango" and "Slice Orange" by classifying the same under 2202.90 claiming exemption from payment of duty under Notification No. 6/2002-CE dated 01.03.2002. The entry of Tariff at CH. 2202.90 reads as "fruit pulp or fruit juice based drinks" while the Heading under Chapter 2202.99 (the classification as claimed by the Revenue) is a residual entry which shows the description as "Other". It is undisputed that the appellant's products are fruit juice based drinks and it is also seen from the records that the Revenue authorities did not draw any samples as to ascertain the ingredients of the said products. We find that the learned Counsel was correct in relying upon the judgement of this Bench in the case of Parle Agro Pvt. Ltd. (2008 (3) TMI 67 - CESTAT NEW DELHI) - Bench was seized with the issue of classification of the product which is juice based drinks. The entry which has been considered by the Tribunal was the same entry having the same description as is being disputed in the case in hand. Since the judgement of the Tribunal was contested in civil appeal by the Revenue before the Apex Court and the same was dismissed, we find that the issue is no more res integra and the impugned order is unsustainable and liable to be set aside. - Decided in favour of assessee.

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• 2015 (12) TMI 1353
  Valuation - clearance of goods to own sister concern - inclusion of selling and distribution of expenses and expenses incurred by the corporate office at Nashik during the period October 1997 to June 2000 - Held that:- Issue is no more res integra inasmuch as in the recipient’s own case for the earlier period, this Bench on an appeal filed by Revenue on identical issue, held that the provisions of CAS-4 will apply not only prospectively but also for the period prior to issue of Board’s Circular dated 13.02.2003 - impugned order is correct and legal and does not suffer from any infirmity. - Decided in favour of assessee.

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• 2015 (12) TMI 1352
  Denial of cum duty benefit - Penalty u/s 11AC - Clandestine removal of goods - Held that:- There is no need to go into the facts of the case. Hence, the demand of duty alongwith interest and penalties imposed under Section 11AC against both the Assessees are upheld. The Appellant is entitled for the option to pay penalty 25% of the duty as per the provisions of the Act. - Appellants are directly involved in the clandestine removal of the goods and therefore, penalties imposed under the Rule 26 of the Rules would be warranted. The words ‘in any manner’ in Rule 26 of the Rules has wide amplitude and covered. The Appellants herein were directly involved in clandestine removal of goods. The decision of the Tribunal in the case of Dhanlaxmi Garments (2008 (4) TMI 296 - CESTAT AHMEDABAD) is in the context of the removal of the goods under CT-3 certificate and the said case law would not be applicable in the present case. We agree with submission of the learned Advocate that the appeal filed by Shri Matadin N. Sharma is to be abated as the Appellant died. Revenue filed the appeal against the order of the Commissioner (Appeals) for extending cum duty benefit. The Hon'ble Supreme Court in the case of CCE Delhi Vs Maruti Udyog Ltd - [2002 (2) TMI 101 - Supreme Court], held that the cum-duty benefit would be extended. - demand of duty alongwith interest and penalty on M/s Sarla Polyester Ltd and M/s Satidham Industries Ltd are upheld. The Assessees are given option to pay penalty 25% of the duty alongwith entire amount of duty and interest within 30 days from the date of communication of this order. The penalties imposed on Shri Matadin N. Sharma are abated - Appeal disposed of.

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• 2015 (12) TMI 1351
  SSI Exemption - Use of other's brand name - onus to prove that brand name not belong to any other person - Eligibility to avail benefit of small scale under Notification No. 8/2002 dated 1.3.2002 - Held that:- There is no dispute as to the fact that the respondents had produced metal label which is affixed on each and every machines and it is recorded by the first appellate authority that the name plate contains details, such as name of the manufacturer in full, name of the product, model, sr. no. address, telephone no., fax no. and e.mail no. The first appellate authority has recorded the findings to the fact that there were no words or letters which would indicate that "SAMS"is a brand name affixed on such machines. The said particular name plates were produced before us and on perusal of the same, we find that the said label does not indicate that the machines are cleared with a brand name ‘SAMS'. In fact the said label indicated exactly the manufacturer's name and details which is Sams Techno Mech and Sams Tool machine as the case may be. If department wanted to deny the exemption notification on the ground that the brand name or their name is of another person, they must prove the case and the respondent cannot be asked to prove that trade name/brand name does not belong to any other person. We find that said metal label which was produced before us, creates an impression that the said machine is manufactured by SAMS Machine Tools or SAMS Techno Mech as the case may be - impugned orders are correct and do not require any interference - Decided against Revenue.

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• 2015 (12) TMI 1350
  Export of goods without payment of duty - procedure not followed - demand was raised for non-furnishing of export documents - Eligibility of the benefit of exemption Notification No 125/84-CE dtd 25.5.1994 - Held that:- Appellants cleared the goods under the cover of ARE-1s without payment of duty under Rule 19 of the Central Excise Rules 2002. The appellant failed to furnish the proof of export. The goods were cleared in 2003. The appellant had not furnished any corroborative evidence to establish the export of the goods till date. Hence, the demand of duty is justified. - demand was raised for non-furnishing of export documents. The goods were cleared for export without payment of duty under 19 of the said Rules. As per the provisions of law, if the appellant fails to furnish the export documents they are liable to pay duty. There is no ingredient available on record to invoke Section 11AC in this case. So, the imposition of penalty under Section 11AC is not warranted. At this stage, the Learned Authorised Representative submits that the penalty was imposed under Rule 25(1) of the Central Excise Rule 2002. The appellant cleared the goods under the Bond without payment of duty and therefore, the appellants has to be pay the duty for failure to furnish the export documents. It is not a fit case for imposition of penalty under Rule 25(1). Sub Rule (2) of Rule 25 provides that notwithstanding the provisions of Section 11AC of the Act, if any manufacturer removes excisable goods in contravention of the Rule are liable to pay penalty under the said Rules. In this case, the appellant cleared the goods for export and there is no allegation of clandestine removal of the goods as stated above. Hence, the imposition of penalty is not justified. - demand of duty alongwith interest is upheld. Penalties imposed on the appellant firm and the appellant No 2 are set aside - Decided partly in favour of assessee.

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• 2015 (12) TMI 1349
  Denial of CENVAT Credit - Credit availed on MS wire rods and various chemicals - Held that:- After the judgment of the Apex Court in the case of Technoweld Industries - [2003 (3) TMI 123 - SUPREME COURT OF INDIA], the mere drawl of wire from wire rods does not amount to manufacture. Accordingly, CENVAT Credit availed during the period wherein the activity undertaken by the appellant will not get covered as the activity get manufactured, CENVAT Credit was correctly sought to be reversed. - Revenue is incorrect inasmuch as during the relevant period the issue was adjudicated before the various forums. Legislature has passed the Taxation Laws (amendment) Rules, 2005 wherein retrospective amendment was introduced to settle this kind of situation. - Board has specifically stated that the amendment has regularized the credit taken at the input stage (wire rods) and the credit taken by the downstream user who draws the wire. In our view as per the Board’s Circular, the demands raised on the appellant herein is incorrect and the impugned order needs to be set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1348
  Manufacture - repacked of edible oil from tanker to small containers - manufacture of edible oil which are branded as they repacked in the different quantity pack of edible oil from tanker to small containers - Held that:- the activity of packing refined edible oil received in tankers into small containers cannot be treated as manufacturing activity in terms of Note 4 of Chapter 15 of Central Excise Tariff Act, 1985 The first appellate authority, in our considered view, correctly followed the law as has been decided by the Tribunal in the case of Amonia Supply Company- [2001 (5) TMI 81 - CEGAT, COURT NO. III, NEW DELHI] to hold in favour of the respondent. - Respondent was receiving the edible oil in tankers. It is not bulk pack as the finding, which has not been controverted by the Revenue. - impugned order before us is correct and legal and does not suffer from any infirmity. - Decided against Revenue.

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• 2015 (12) TMI 1347
  Demand of interest - whether short payment of duty should be adjusted towards the duty where the appellant had paid excess duty - whether the Tribunal was right in confirming the demand of interest under rule 7(4) of the Central Excise Rules, 2002 without harmoniously reading the provisions of rule 7(5) of the Central Excise Rules, 2002 - Held that:- On perusal of the records and the judgment in the appellant’s own case [2015 (12) TMI 730 - CESTAT MUMBAI] as decided on 3.11.2014, we find that the issue is same and squarely covered in the appellant’s favour. The reliance placed by the Tribunal in the case of Toyoto Kirloskar Auto Parts (2011 (10) TMI 201 - KARNATAKA HIGH COURT) is correct - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1346
  Denial of refund claim - Excess tax paid - duty was paid on higher price - unjust enrichment -Held that:- Agreement entered by the appellant with Karnataka Antibiotics I find that the reasoning adopted by the both the lower authorities is incorrect as clause no. 4.3 requires the appellant herein to discharge the Central Excise duty correctly and clear the goods after payment of duty while clause no. 3.17 is very particular as to the rates which are to be considered for discharge of duty liability by the appellant. - appellant has been showing the amount for which refund is claimed, in the balance sheet under head loan and in advances. This also indicates that appellant has not expensed out the amounts which have been paid by them as excess Central Excise duty in this appeal. - impugned order are held as unsustainable and liable to be set aside - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2015 (12) TMI 1339
  Detention of goods - Evasion of tax - Held that:- Goods transported from Gujarath already reached the destination of the petitioner's factory at Pondicherry and the petitioner who received the goods voluntarily appeared before the authority for obtaining necessary seal in the transport documents. There is no other allegation with regard to evasion of tax pointed out by the authority in the impugned goods detention notice - since there is no evasion of taxes mentioned in the impugned order, the authority is entitled to collect Rs. 2000/- only from the petitioner - Petitioner disposed of.

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• 2015 (12) TMI 1338
  Rectification of mistake - Opportunity of hearing - Section 84 of TNVAT - Held that:- Admittedly, as against the assessment order, a writ petition was filed before this Court, which was disposed of in favour of the Revenue. As against the said order, a Special Leave Petition was filed and the same is pending. In the meantime, pointing out certain errors apparent on the face of the record, the petitioner moved an application under Section 84 of the Act. Without passing any order on merits, the same was rejected by the impugned order. Section 84 of the TNVAT Act empowers the authority to rectify any error apparent on the face of the record. Sub-Section (4) of Section 84 provides exercise of powers under Sub-section (1) by the assessing authorities even though the original order of assessment, if any, passed in the matter has been the subject matter of an appeal or revision. - an opportunity should be given before rejecting the application filed under Section 84 of the Act. As far as the present case is concerned, the same is not provided. When such being the case, there is no justifiable reason for the assessing authority to reject the application filed under Section 84 of the Act - impugned order passed by the respondent dated 09.10.2015 is set aside and the matter is remitted back to the respondent - Decided in favour of assessee.

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• 2015 (12) TMI 1337
  Demand of tax and interest - Packed masala - AO was of the view that in so far as Asafoetida (Hing) is concerned, the tax of 4% only was being paid but the AO was of the view that it falls in the category of Packed Masala and once it is a Packed Masala, it falls in the entry where levy of tax is @16% - Held that:- When Entry No.82 is seen, the word used 'like' after masala and the legislature intended 'like' means mirchi, dhania, sonf, methi, ajwain, suwa, haldi, kathodi, amchoor and asalia jeera (cumin seeds), which, in my view, are illustrative and not exhaustive and therefore, all like items would also fall within the category of Entry No.82. The Entry No.184 prescribes Packed Masala where two or more ingredients are mixed and sold in packed conditions which was clarified by a notification issued by the Dy. Secretary, Finance Department (Tax Division), Government of Rajasthan vide notification dt.12/11/2001 to mean Packed Masala - Jaljira is made with grinding and mixing of different spices so that a new commercial commodity known by a different name comes up whereas in the case of preparing Asafoetida (Hing), spices are not mixed and only Gum Arabic and Wheat Flours are added which in my view are not spices. When spices are not mixed, it remains Asafoetida (Hing) only and no new product emerges. Even if we take common and commercial parlance meaning of the term "Masala", in my view, spices/Kirana items being sold singly would not come within the meaning of the term "Packed Masala" and in common and commercial parlance, Masala is always treated to be mixing of two and more spices and since Asafoetida (Hing) is not mixture of two and more spices, therefore, it cannot be termed as a Masala. It is also worth mentioning that the claim of counsel for the respondent that in most of the States Asafoetida (Hing) finds place in the list of Kirana goods, also supports contention of the Tax Board and the arguments raised by counsel for the respondents and not disputed by the counsel for the Revenue. - Tax Board has correctly analyzed the Entry No.82 and no contrary view can be taken in the facts and circumstances of the instant petitions. When the very levy of rate of tax @ 4% has been found to be properly levied then the question of penalty does not arise. - Decided against Revenue.

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• Wealth tax

• 2015 (12) TMI 1361
  Denial of exemption claim - whether the exemption provided in section 5(vi) of the Act in respect of plot of land not exceeding 500 sq,mtrs is also applicable to companies or not - Exemption for plot of land not exceeding 500 sq.mtrs has to be limited only to individuals and HUF and the proviso to section 5(vi) had only acted as a restrictive covenant and full effect needs to be given for the same. We also hold that the proviso needs to be read along with the main section and it cannot act as an alien to the main sub-section. Proviso in section 5(vi) is a qualifying provision to grant exemption for plot of land not exceeding 500 sq.mtrs and limiting it only to individuals and HUF and hence the argument of the Learned AR that exemption is also applicable for companies is not appreciated. - land was purchased by the assessee on 12.3.2003 and the said land is meant for construction of hotel. It is well settled that Hotel is an industry and hence the assessee is eligible to claim exemption for two years from the date of acquisition in respect of urban land held for industrial purposes. Accordingly, we hold that the assessee is eligible for exemption for urban land from wealth tax for Asst Years 2003-04 & 2004-05. It is well settled that the assets held as on the valuation date (i.e 31st march of each year) is the relevant date for bringing an asset under the ambit of wealth tax. Similarly the exemption provision also needs to be looked into as per the prevailing law on the valuation date. Since the land was purchased on 12.3.2003 , it will continue to claim exemption upto 12.3.2005 but not thereafter and accordingly comes under the ambit of taxable wealth as on 31.3.2005 being the valuation date. Hence the assessee is not eligible for exemption from wealth tax under this category for Asst Year 2005-06. - Decided against Assessee.

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• Indian Laws

• 2015 (12) TMI 1335
  Order of acquittal - Cheque was bounced due to Insufficient Funds - nature of transactions - accused submitted that it had issued the cheque in question only on account of security against storage of rice and not to discharge their financial liability. - Held that:- A bare reading of the impugned judgment of acquittal would show that the learned trial Court has considered each and every relevant aspect of the matter, before passing the impugned judgment. Documentary as well as oral evidence brought on record by both the parties, was examined, considered and appreciated in the correct perspective, before arriving at a judicious conclusion. Having said that, this Court feels no hesitation to conclude that the learned trial Court committed no error of law, while passing the impugned judgments of acquittal and the same deserve to be upheld. Learned counsel for the applicant failed to point out any patent illegality or jurisdictional error in the impugned judgment, so as to enable this Court to take a different view than the one taken by the learned trial Court. Further, it is the settled proposition of law that whenever two views are possible, the view which goes in favour of acquittal, is to be followed by the courts. In this view of the matter, it is unhesitatingly held that the impugned judgment of acquittal is well justified on facts as well as in law and the same deserves to be upheld, for this reason as well. It is unhesitatingly held that the learned trial Court was well-justified on facts as well as in law, for passing the impugned judgment of acquittal and the same deserves to be upheld, for this reason as well.

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