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TMI Tax Updates - e-Newsletter
December 29, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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EXPLANATORY NOTES ON PROVISIONS OF THE TAXATION AND INVESTMENT REGIME FOR PRADHAN MANTRI GARIB KALYAN YOJANA, 2016 AS CONTAINED IN CHAPTER IX-A OF THE FINANCE ACT, 2016 - Circular
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Levy of penalty u/s 271(1)(c) - Since the assessee was not aware of exact charge of the Department against him, then the initiation of penalty proceedings are vitiated and the same are to be quashed. - AT
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Assessing Officer lacks jurisdiction to carry out the scrutiny assessment in the present case and accordingly, assessment order passed by the Assessing Officer is bad in law. - AT
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Addition u/s 40A - Disallowing the payment for purchase of granites - vendors insisted for cash payment - in view of Rule 6DD(k) of Income-tax Rules, 1962, there cannot be any disallowance under Section 40A(3) - AT
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Penalty u/s 271(1)(c) - whether deceased deliberately concealing the income or filing the inaccurate particulars of the income - Since there was no willful and deliberate concealment of the income by the assessee therefore the appeal is required to be allowed. - AT
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Where it is only income tax that is paid under the provisions of section 115JB of the Act, it is natural that tax credit under section 115JAA of the Act will only be of income tax and not of surcharge and education cess.- AT
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The income from letting out and operation of the property to be treated as “income from business” and expenditure and other claims to be allowed in accordance with the law - AT
Service Tax
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Classification of services - the consultant has carried out market research activity in Europe and for this reason no service tax will be liable to be paid on reverse charge basis. - AT
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Waiver of penalty u/s 78 of FA, 1994 - invocation of section 80 - the appellant has been able to show the reasonable cause for non-payment of service tax on the element of cost of free supplied goods - penalty waived - AT
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Commercial coaching services - Discrepancy in Fee receipts - There is no proper basis adopted by the revenue for rejecting the books of account and the service tax Returns filed, and resorting to best judgment assessment - Demand of service tax set aside - AT
Central Excise
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Valuation - freight and insurance charges - The allegation that the buyers premises are the place of removal cannot be sustained in view of the observations - AT
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Whether the Appellate Tribunal was justified in sustaining the penalty on the husband of the dormant partner, while sustaining the penalty on the Partnership Firm? - Though his wife is the partner, for all practical purposes, he was acting on her behalf as the partner. - Held Yes - HC
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The products in question are Climbers and Thriller which are used for children's play & games and are installed in playground & gardens. As far as for small children, these are sports equipment for their play - benefit of exemption notification allowed - AT
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CENVAT credit - Security agency service received at the residence of the senior personnel of the appellant is nothing to do with the manufacturing activity - credit denied - AT
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Reversal of credit - selection of method out of various options as provided in the Rule 6 of the Cenvat Credit Rules, 2004 - The department has no say that which option has to be availed by the assessee - AT
VAT
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Whether sale of energy to BSEB is regarded as sale? - Whether sale of energy to BSEB is regarded as sale? - appellants are liable to Electricity Duty - HC
Case Laws:
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Income Tax
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2016 (12) TMI 1425
Disallowance of claim of deduction under section 80IC - misconstruction of the statutory provisions contained in the Act - Held that:- From the submissions of the assessee, it reveals that the assessee has laid emphasis only on the rule of consistency, as can be seen from the written synopsis filed by the assessee before us. The observations of the Assessing Officer and the ld. CIT(A) in the light of various definitions of ecotourism as well as the observations made on the basis of office memorandum of finance bill, 2003 noted above also have not been countered by the ld. Counsel for the assessee. Complete examination is required on the norms of ecotourism whether existing in the present case or not. We, therefore, deem it expedient in the interest of justice to restore the entire matter to the file of Assessing Officer for deciding the issue afresh after considering the rule of consistency if the identical facts and circumstances are proved to exist in previous and subsequent years and also in terms of various norms of ecotourism as envisaged in the decision of Hon’ble Uttarakhand High Court in the case of Aanchal Hotels (P) Ltd. (2016 (6) TMI 1033 - UTTARAKHAND HIGH COURT) relied on by the assessee before us. Needless to say, the assessee shall be given reasonable opportunity of being heard.- Decided in favour of assessee for statistical purposes.
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2016 (12) TMI 1424
AO assuming jurisdiction u/s 153C - non recording of satisfaction note by the Assessing Officer of the person searched - Held that:- From the satisfaction note it is evident that it is recorded in the case of M/s Sheetal International. Thus, this satisfaction note is recorded by the Assessing Officer in his capacity as the Assessing Officer of M/s Sheetal International and not the Assessing Officer of the person searched i.e., Shri Bal Kishan Saraf. Recording of satisfaction note by the Assessing Officer of the person searched is the primary condition for initiation of proceedings u/s 153C. Admittedly, no satisfaction note is recorded by the Assessing Officer of the person searched. Therefore, in our opinion, the proceeding u/s 153C is not validly initiated. The same is quashed. Once the proceedings u/s 153C are quashed, consequently, the assessment orders passed in pursuance thereto are also quashed. Accordingly, for assessment years 2004-05, 2006-07, 2007-08 & 2008- 09, the proceedings u/s 153C and the consequential assessment orders passed in pursuance to such notice are quashed. - Decided in favour of assessee
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2016 (12) TMI 1423
Withdrawal of registration u/s 12A - whether the object would fall within the ambit of the fourth limb of definition of Charitable purpose u/s 2(15) viz advancement of any other object of general public utility? - Held that:- The appellant is a society registered under the societies registration act in the year 1997 and has been granted the registration under section 12 A of the income tax act, w.e.f. 26/9 /2005. Main object of the assessee is to promote and develop holiday ownership and time-share concept in India. The appellant has at present 29 members as stated by the Ld. Commissioner of income tax appeal who are all hoteliers and the assessee is carrying on the activity of conducting consultancy services and taking membership fees from all these members for the purpose of its objects. This is not the 1st year of the assessee but it has been granted registration since 26th of September 2005 Without adjudicating on the issue whether the assessee is carrying on any trade, commerce or business or not, the issue is squarely covered in favour of the assessee because there is no change in the activities of the trust for the impugned assessment year and further the fact is not disputed by the revenue that registration under section 12 A of the appellant trust still remains in the force, we are not inclined to uphold the order of the lower authorities. Furthermore the case of the assessee is also squarely covered by the decision in case of director of income tax (exemptions) versus Khar Gymkhana [2016 (6) TMI 489 - BOMBAY HIGH COURT] wherein considered the issue of registration of trust vis-a-vis is the above circular issued by the CBDT and held that in view of the above circular the assessee was entitled to continue registration under section 12 A of the income tax act. Therefore, we allow ground No. 2 and 3 of the appeal of the assessee, in view of the circular issued by the CBDT holding that assessee is entitled to registration under section 12 A of the income tax act and its income shall be governed by the provisions of section 11 and 12 of the income tax act, 1961. - Decided in favour of assessee
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2016 (12) TMI 1422
Disallowance of expenditure - paper companies who owned no physical assets - Held that:- In the facts of the present case, it can be at best considered to be a written statement of facts voluntarily made by an affiance or deponent under an oath or affirmation administered by a person authorized to do so by law. Since the affidavits filed in the present case are at the instance of the tax payer and not mandated under any law, the Assessing Officer in order to highlight the serious consequences which may follow a false affidavit or statement under oath referring to sections 191, 193, 195, 199 of the India Penal Code which makes filing a false affidavit a criminal offence, may require the assessee in its own self interest to ensure that the deponents are aware that filing of false affidavits has serious consequences. The claim of any fact or knowledge known to the deponent to be false which he believe to be false and/or atleast did not know to be true is open to the challenge of perjury which though traditionally may not be invoked by the law enforcement agencies in every situation does not mean that it is legally acceptable to file irresponsible affidavits. Assertion of false facts knowingly is a criminal offence. Accordingly considering the submissions of the parties, the issue is set aside and restored back to the AO permitting the assessee for filing fresh evidences on support of the claim. - Appeal of the assessee is allowed for statistical purposes.
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2016 (12) TMI 1421
Gain from sales of shares - business profit OR short term capital gain - Held that:- Assessee has dealt with in 8 scripts out of which in one of the script the assessee has earned a short term capital gain of ₹ 6731272/– and in other scripts there are minor profits or losses and further the assessee has also earned the long-term capital gain of ₹ 64905/-. On appreciation of the about transactions, The Ld. CIT appeal has held that the Scripts, which are held for less than 30 days, shall be chargeable to tax under the head business income relying on the decision of the Dreamland buildTech private limited. Subsequently, in that particular case assessee preferred appeal before the coordinate bench and vide order dated 12/12/2014 wide page No. 15 para No. 8.3 of the order of the appeal of the assessee was allowed and it was held that the entire profits from the purchases and sales of shares said to be assessed under capital gain, even though they are held for less than 30 days. The above finding of the coordinate bench was further affirmed by the Hon’ble high court vide its order dated 26/04/2016. Therefore, respectfully following the decision of the Hon’ble high court we also hold in the case of the assessee that even though the shares are held for less than 30 days same are chargeable to tax as capital gain and not as income from business profession in case of the assessee. Disallowance u/s 14 A - Held that:- Ld. assessing officer without recording the satisfaction that the claim of the assessee is incorrect has straightaway applied the provisions of rule 8D of the income tax rules, 1962. The above action of the Ld. assessing officer cannot be upheld in view of the decision of the Hon’ble Delhi High Court in case of CIT versus Taikisah engineering private limited [2014 (12) TMI 482 - DELHI HIGH COURT] that without recording the satisfaction against the claim of the assessee that it has incurred nil expenditure for earning of the exempt income the provisions of rule 8D cannot be invoked. In any case, the Ld. assessing officer has not pointed out any expenditure, which has been incurred by the assessee according to him for the earning of the exempt income of dividend of ₹ 8.60 Lacs. Further, the restriction of the disallowance to ₹ 40,000 by the Ld. 1st appellate authority does not have the support of the law. In view of this we direct the Ld. assessing officer to delete the disallowance under section 14 A of the income tax act of ₹ 40,000/- sustained by the Ld. 1st appellate authority. - Decided in favour of assessee
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2016 (12) TMI 1420
Canceling the registration u/s 12AA(3) - activities of the appellant institution treated as non-genuine - Held that:- AO in his assessment order dated 22.1.2016 relevant for the AY 2013-14 passed u/s. 143(3) of the I.T. Act, 1961 vide para no. 1 has observed that the assessee is engaged in the activity of organizing tours to religious and historical places in India for senior citizens. The society is purely religious and works for the charitable purposes. He further observed that if the society would have been carrying on the business activity for the motive of profit then it would have conducted a tour not to the religious place but to the places of fun and enjoyment not the religious temples but to the club and pubs, not in a second class third sleeper but luxury AC coaches would have been hired and instead of giving the knowledge of incredible India it would have given the lectures regarding dances and beaches. We find that it is a settled law when the registration was granted u/s. 12AA on the basis of objects and activities (mentioned at page no. 1 of the impugned order) and these very objects and activities are being carried out by the assessee, registration cannot be cancelled as held by the Coordinate Bench decision in the case of Sharda Educational Trust vs. CIT 2013 (5) TMI 832 - ITAT AGRA. We further find that registration cannot be cancelled by reexamination of the objects on the basis of which registration was originally granted and CIT does not have power of review. Objection of the Ld. CIT was relating to charging of fee from the passengers of Tirth Yatra’s However, on receiving of a token amount of ₹ 1000/- any person from general public can enroll for the Yatra. The said person becomes a temporary member of the society for the period of the Yatra. The total money charged from the individuals for the yatra is ₹ 21,500/- for a period of 31 days, which comes to less that ₹ 700/- daily. This includes provision of train tickets, bus hire, lodging charges, refreshments and three freshly cooked meals daily. Hence, it is established that charging such minimal amount could never be compared to an activity run with profit motive. - Decided in favour of assessee.
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2016 (12) TMI 1419
Computation of the capital gain - sisters share of the sale proceeds - absence of primary supporting fact - Held that:- The legal position as understood in law is that in the absence of primary supporting fact the affidavit cannot be said to be an evidence of a fact. It can be used as an evidence only by permission of the Court for sufficient reasons wherein the right of the opposite party to have deponent produced for cross-examination is protected. Thus, facts which are capable of being demonstrated by evidence cannot be generally concluded by way of filing affidavits. In the facts of the present case, find that critical facts and documents relevant for deciding the issue have neither been examined nor even been produced or directed to be produced for examination in reference to the bare affidavits filed by the assessee. As find that there is no discussion on the contents of affidavits whatsoever. Thus any conclusion without ascertaining the correctness of the affidavits is not permissible. It is further seen considering the doubts of the tax authorities that whether the specific piece of land was ancestral land which devolved on the assessee and his sisters by way of inheritance is a basic fact which too is not coming out from the record. It is noted that the AO has given a finding that from the bank statement of the assessee the payments to the sisters of their share is not reflected. In the circumstances it is deemed appropriate to address these obvious and patent shortcomings and thus restore the issue back to the AO for addressing the facts and the affidavits of the sisters on record. Accordingly after hearing the Ld.Sr.DR and considering the peculiar facts and circumstances of the case on the basis of material on record, the issue for the reasons given herein above is restored back to the file of the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided in favour of assessee statistical purposes.
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2016 (12) TMI 1418
Disallowance of privilege fee etc. - Held that:- The payment of privilege fee/special privilege fee etc., by whatever name called is an allowable expenditure. We direct the AO to allow the privilege fee, special privilege fee and the special privilege force as expenditure of the assessee u/s 37 of the Act. See case of Karnataka State Beverages Corporation Ltd [2016 (3) TMI 461 - KARNATAKA HIGH COURT] - Decided in favour of assessee Deduction under section 80G - contribution to the CM’s Relief Fund - Held that:- We find that the CM’s Relief Fund is an approved fund u/s 80G of the Act but the assessee is required to pay the privilege fee, special privilege fee etc, after setting off its expenditure only from the receipts and we have already held that privilege fee is an allowable expenditure. In these circumstances, the assessee would not be left with any fund to make a donation to C.M’s Relief Fund. Even otherwise, the contribution is an allowable deduction. Therefore, we are of the opinion that this ground of the Revenue becomes infructuous in view of our finding above. Group Leave Encashment claim addition as per provisions of section 43B(f) - Held that:- We find that the assessee’s contention is that the assessee pays the premium after the interest credited by the LIC is reduced from the premium to be paid. We are of the opinion that this contention needs verification. If the interest credited by LIC is taken as income of the assessee, the entire premium payable by the assessee for the next A.Y should be considered as expenditure of the assessee. Therefore, this issue is remitted to the file of the AO for verification of the assessee’s contention and allowing the same in accordance with the law. The net result would, however, be “nil” if the assessee’s contentions are proven to be correct. Addition made u/s 43B(f) - AO has disallowed the same on the ground that the remittance to LIC towards Group Leave Encashment Scheme is a remittance to an unrecognized fund and only recognized PF/Gratuity/Pension are exempt from the operation of section 40A(9) - Held that:- This issue is covered by the decision of the Hon'ble Supreme Court in the case of CIT vs. M/s. Textool Co. Ltd [2009 (9) TMI 66 - SUPREME COURT] held that true that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. As from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in Section 36(1)(v) of the Act were satisfied.
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2016 (12) TMI 1417
N.P. estimation - Held that:- Estimation of net profit of 5% on total stock put to sale net of all deductions is reasonable. Addition towards unproved, unsecured loans u/s 68 - Held that:- In this case, the assessee has filed confirmation letters and also filed bank account copy of the creditors along with their income tax return. The creditors have enough source of income to explain the loans given to the assessee. Therefore, we are of the view that A.O. was incorrect in making additions u/s 68 of the Act. The CIT(A) without appreciating the facts simply confirmed additions made by the A.O. Hence, we direct the A.O. to delete additions made towards unsecured loans received from G. Narayana Swamy and K. Rama Rao. In so far as unsecured loans received from G. Veera Swamy, the assessee failed to prove the credit by filing necessary identity, creditworthiness and genuineness of the transactions. Even before us, the assessee failed to file any details with regard to the unsecured loans accepted from G. Veera Swamy. Therefore, we are of the view that the A.O. has rightly made additions towards unsecured loans received from G. Veera Swamy, accordingly, additions made by the A.O. are upheld.
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2016 (12) TMI 1416
Penalty u/s 271(1)(c) - Addition on account of excess depreciation on tanker and disallowance u/s. 37(1) - Held that:- CIT(A) observed that during the course of proceedings u/s. 154 before the AO the assessee has given sufficient evidence to establish his claim. Moreover, the fact that the assessee has given the tanker on hire is also evident from the balance sheet of the assessee wherein an amount of ₹ 7,02,186 has been shown as the tanker hire receipts in the profit and loss account. The balance sheet was before the AO when the assessment u/s. 143(3) of the I.T. Act was framed. It was further noted that the assessee is also furnished letter dated 8.8.2014 addressed to the AO and furnished to the AO during the course of assessment proceedings, wherein at Point No. 14 it has been clearly mentioned that freight charges on tanker have been received from Anil & Company (which clearly shows that the tankers have been given on hire). Thus find that it is clearly established that the tankers have been given on rent and the allowable depreciation rate under these circumstances is @30% as against 15% allowed by the AO and 50% claimed by the assessee in his return of income. Thus the AO was directed to recomputed the depreciation on both the tankers @30%, which establishes that assessee has not furnished inaccurate particulars of its income and is not liable for penalty u/s 271(1)(c). Merely, because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty u/sec. 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty u/sec. 271(1)(c). - Decided in favour of assessee
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2016 (12) TMI 1415
Renewal of exemption granted under Section 80G denied - non charitable activities - ITAT allowed the claim - Held that:- It has not been disputed that the respondent-assessee is registered under Section 12A and that it has been held entitled to the grant of exemption under Section 10 (23C)(vi) of the Act. It has further come on record that the respondent-assessee was granted exemption under Section 80G of the Act from the year 1997 till the passing of the impugned order. Further, the finding of the Tribunal, that the assessee has never mis-utilized its funds, has not been assailed before us. The generated surplus having been ploughed back for expansion purposes also remains undisputed by the Revenue as no challenge to the same has been made. The Tribunal had further detailed in its order the receipts, expenditure, capital expenditure, income/surplus of receipts over expenditure, income applied for the charitable purposes and percentage of the income applied in a tabulated form, which clearly depicted utilization of surplus by the respondent-assessee for only charitable purposes. The table as placed clearly shows that the respondent-assessee has utilized its surplus only for charitable purposes. Revenue has also neither argued nor drawn our attention to any material on record to the contrary. The charges for its services were also considered by the Tribunal and were found to be extremely reasonable,concessional, highlighting the charitable character of the respondent assessee. - Decided in favour of assessee
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2016 (12) TMI 1414
Determination of arm's length price under Section 92C - whther net profit margin of the comparable company is required to be adjusted to bring the international transaction by the assessee Company and that of the comparable company at the same pedestal? - Held that:- Tribunal, after rightly observing that the adjustments in the net operating profit margin on account of any strike etc. was to be made in the profit margin of the comparable company, erred in rejecting the case of the assessee Company on the ground that the assessee had failed to bring on record any material to show that the profit of the comparable companies had been hit by a strike. The profit margin of the comparable company was required to be adjusted after taking into account a strike like situation as had taken place in the assessee company. Our order would show that qua question no. 1, we have upheld the order of the Tribunal remitting the matter to the TPO for fresh assessment in accordance with law. Questions no. 4 and 5 are also to be decided afresh. While deciding question no. 1, the second question would also be considered and decided by the TPO on making appropriate adjustments in the profit margin of the comparable company after taking into account a strike like situation in the comparable company as had taken place in the assessee Company.
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2016 (12) TMI 1413
Rectification of mistake - HC order [2016 (4) TMI 263 - BOMBAY HIGH COURT] stating no fault with order of the Tribunal in rejecting the Petitioner's rectification application - Held that:- We direct the Income Tax Appellate Tribunal, to hear the appeal of the appellant afresh on the basis of the documents, which have already been found to be filed by the appellant. The appellant is directed to appear before the Tribunal on 5th December, 2016. We make it clear that the impugned order passed by the High Court shall not stand in the way of the Tribunal in passing the orders.
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2016 (12) TMI 1412
Disallowance made under Section 14A of the Act read with Rule 8D cancelled - Held that:- Section 14A(2) prescribes the mode or methodology for the disallowance and the steps for its calculation. Unlike the other part of the statute which decree or enjoin the actual methodology and are substantive, Parliament deemed it appropriate to leave it to the rule making authority to prescribe the methodology, i.e. computation. The question of applying the statutorily prescribed method would arise only and only if the AO expresses an opinion rejecting the assessee’s methodology and the figure offered at the time of assessment. This is material because the jurisdiction to go into the method prescribed in the Rules arise only if the amounts the assessee offers does not have any realistic correlation with the tax exempt income. For instance, in a given case, if a tax exempt income is to the tune of ₹ 5 crores and the assessee is able to satisfy that expenditure relatable to that income or the reasonable nexus to such income is ₹ 25 lakhs, there has to be strong reasons why the said amount of ₹ 25 lakhs are to be rejected. The opinion of the assessing officer in the latter part [of Section 14A(2)] is to be based upon an appraisal of objective material relating to the assessee’s voluntary disallowance of amount/amounts. Not only that, if in the course of assessment, the AO enquires from the assessee about the amounts spent, which are to be disallowed, and the assessee in fact discloses a larger amount (than the one given in the return), it is still incumbent upon the AO to enquire into such larger amounts and determine whether it has nexus with expenditure relatable to exempt income to attract Section 14A(1). Sans this procedure, Section 14A would be reduced to a mere formality which it appears to have become in the circumstances of the case. Consequently, we are of the opinion that there is no infirmity in the reasoning and conclusions of the ITAT. - Decided against revenue
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2016 (12) TMI 1411
Revision u/s 263 - Deemed dividend addition u/s.2(22)(e) - Held that:- The issue raised by ld. CIT in his notice u/s 263 of the Act has been adequately enquired and thoroughly examined by ld. Assessing Officer during the course of assessment proceedings and he has taken one of the legally possible views as per judicial pronouncements available at that particular point of time and has framed the assessment order by not invoking the provisions of section 2(22)(e) of the Act on the amount of ₹ 1.25 crores received by assessee from M/s Canon Lamination Pvt. Ltd. for the very reason that assessee firm was not registered beneficial shareholder of Canon Lamination Pvt. Ltd. and also for the reason that assessee was having regular current account transactions round the year for making sales to M/s Canon Lamination Pvt. Ltd. and impugned amount of ₹ 1.25 crores was accepted in the nature of trade advance by ld. Assessing Officer. Therefore, we are of the view that order of ld. CIT passed u/s 263 of the Act is invalid and liable to quashed and we restore the assessment order passed u/s 143(3) of the Act on 28.3.2013. - Decided in favour of assessee
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2016 (12) TMI 1410
Validity of Notice under section 143(2) of the Act and the assessment thereunder - invalid service of notice - Held that:- Revenue has not been able to prove that it fulfilled its legal obligations to show what efforts Revenue made between the date of issue of notice on 23.10.2006 to date of service of notice by affixture i.e. 31.10.2006 to effect the service of the said notice under section 143(2) of the Act in a normal manner. No material was placed on record before us to show that any effort was made by the AO to serve the notice in a normal manner before service by affixture was done on 31.10.2006. In so far as the applicability or otherwise of section 292BB of the Act to the case on hand is concerned, the ITAT Special Bench Delhi in the case of Kuber Tobacco Products (I) Ltd. (2009 (1) TMI 304 - ITAT DELHI ) has held that section 292BB of the Act inserted by Finance Act, 2008 w.e.f. 01.04.2008 is not retrospective and would apply prospectively for and from A.Y. 2008-09. Further, in the case on hand, this section would not apply in view of the proviso to section 292BB of the Act, since the assessee has raised its objection to the validity of notice under section 143(2) of the Act vide letter 07.09.2007, admittedly filed with the AO on 07.09.2007 itself before completion of assessment proceedings on 29.11.2007. Thus we are of the considered view that since the alleged affixture of notice under section 143(2) of the Act dated 23.10.2006 on 31.10.2006 is not in accordance with the law and procedure, the said notice is rendered bad in law and therefore the AO had no power to assume jurisdiction to take up the assessee’s case for scrutiny. Consequently, the order of assessment framed under section 143(3) of the Act vide order dated 29.11.2007 for A.Y. 2005-06 on the basis of such invalid notice under section 143(3) of the Act is bad in law and ab initio void and is liable to be quashed. - Decided in favour of assessee
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2016 (12) TMI 1409
Validity of reopening of assessment - Held that:- We hold that the proceedings u/s.147 of the Act were not validity initiated in the present case as the condition precedent for such initiation is absent in the present case. We therefore annul the order of assessment u/s.147 of the Act. In view of the above conclusion, we do not deem it necessary to deal with the ground of appeal raised by the revenue in its appeal. Suffice it to say that the issue raised by the revenue has already been decided by the Tribunal in the appeal u/s.158BC of the Act and decided in favour of the Assessee on merits.
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2016 (12) TMI 1408
Transfer pricing adjustment - Tribunal held that the TPO has applied the transfer pricing adjustment to all transactions, i.e. entity level - Held that:- We are in respectful agreement with the view of the Delhi High Court in Keihin Panalfa Ltd. (2016 (5) TMI 203 - DELHI HIGH COURT ). One must not loose sight of the fact that the transfer pricing adjustment is done under Chapter X of the Act. The mandate therein is only to redetermine the consideration received or given to arrive at income arising from for International Transactions with Associated Enterprises. This is particularly so as in respect of transaction with non Associated Enterprises, Chapter X of the Act is not triggered to make adjustment to considerations received or paid unless they are Specified Domestic Transactions. The transaction with non-Associated Enterprises are presumed to be at arms length as there is no relationship which is likely to influence the price. If the contention of the Revenue is accepted, it would lead to artificial increase in the profits of transactions entered into with non Associated Enterprises by applying the margin at entity level which is not the object of Chapter X of the Act. Absence of segmental accounting is not an insurmountable issue, as proportionate basis could be adopted as done by the Delhi High Court in Keihin Panalfa Ltd. (supra). Thus no substantial question of law arises.
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2016 (12) TMI 1407
Levy of penalty under section 271(1)(c) - assessment proceedings under section 153A - Held that:- Assessing Officer while completing assessment proceedings under section 153A r.w.s. 143(3) of the Act in respect of additional income offered by the assessee pursuant to search, was satisfied that the assessee has concealed income and also furnished inaccurate particulars of income. It may be reiterated here that no further addition was made by the Assessing Officer except the additional income which was offered by the assessee in its return of income. So at best, it is the case of concealment of income where the assessee had offered the income on the basis of incriminating documents found during the course of search. Assessing Officer does not record satisfaction in this regard but is satisfied that penalty for concealment under section 271(1)(c) of the Act is to be levied on account of either concealment of income or furnishing of inaccurate particulars of income. The notice issued under section 274 r.w.s. 271(1)(c) of the Act also suffers from infirmity, where either of the limbs has not been struck off. Hence, there is vagueness and ambiguity in the notice issued. Since the assessee in the present set of facts was not aware of exact charge of the Department against him, then the initiation of penalty proceedings are vitiated and the same are to be quashed. Relying on the ratio laid down by the Pune Bench of Tribunal in Kanhaiyalal D. Jain Vs. ACIT (2016 (12) TMI 1238 - ITAT PUNE ), we hold that penalty notice issued in the present case suffers from infirmity i.e. lack of satisfaction and lack of notice being issued in making the assessee aware of exact charge against him, hence, the same is quashed. - Decided in favour of assessee
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2016 (12) TMI 1406
Capital gains income not offered to tax on sale of land - nature of land - whether the lands sold by the assessee are agricultural lands or capital assets liable for capital gains? - Held that:- No merits in the arguments of the assessee, for the reason that the Visakhapatnam Municipal Corporation is a notified municipality vide notification no.9477 dated 6.1.1994. As per said notification, any land situated within 8 kms. from the distance of Visakhapatnam Municipal Corporation is agricultural land coming within the definition of capital asset. We further observed that the Visakhapatnam Municipal Corporation has been upgraded to Greater Visakhapatnam Municipal Corporation by the State Government of Andhra Pradesh, vide notification no.937 dated 21.5.2005 with extended boundary. Since, the lands sold by the assessee are situated within 8 kms distance from the newly incorporated boundary of GVMC, the distance should be measured from the limits of GVMC to determine whether a particular land is a capital asset or not for the purpose of section 2(14) of the Act. In the present case, it is no doubt lands are situated within 8 kms. from the limits of GVMC. Therefore, we are of the view that the lands sold by the assessee are capital assets within the meaning of section 2(14) of the Act and liable for capital gains. The CIT(A) after considering the relevant facts, has rightly held that the lands are capital assets and liable for capital gain tax. Therefore, we uphold the CIT(A) order and reject ground raised by the assessee. Adoption of value u/s 50C for the purpose of determination of capital gains - Held that:- we find that the assessee has entered into a sale agreement in the year 2007 and as on that date, the stamp duty value of the property was less than sale consideration agreed to be paid between the parties. Although, stamp duty value of the property has been changed as on the date of sale deed, for the purpose of determination of deemed consideration u/s 50C of the Act, stamp duty value of the property as on the date of execution of agreement to sale should be adopted, instead of value on the date of execution of sale deed. Therefore, we are of the view that the A.O. was erred in adopting value of the property as on the date of sale deed to determine deemed consideration u/s 50C of the Act. Hence, we direct the A.O. to adopt value of the property as on the date of agreement to sale for the purpose of computation of capital gain u/s 50C of the Act. Disallowance of expenditure of transfer - A.O. observed that the assessee has failed to produce any evidences in support of expenses on transfer, therefore, disallowed entire expenditure of transfer for want of proper supporting evidences - Held that:- We do not find any merits in the findings of the A.O. for the reason that though assessee need to substantiate expenditure with necessary evidences, the possibility of certain expenditure on transfer cannot be ruled out. Therefore, considering the overall facts and circumstances of the case, we are of the view that certain expenditure being litigation expenses and development expenses should be allowed while computing the capital gains. Hence, we direct the A.O. to allow 50% of the expenditure claimed under the head litigation expenses and development expenses. Rejection of exemption claimed u/s 54F - Held that:- We find force in the arguments of the assessee, for the reason that the assessee has furnished a copy of valuation report in support of cost of construction of the property, wherein registered valuer has determined the cost of construction of ₹ 75,20,000/-. Though the A.O. has allowed exemption of ₹ 63,83,000/- in the consequential proceedings, the A.O. has not given any reasons for not considering the evidences filed by the assessee. Therefore, we set aside the issue to the file of the A.O. and direct the A.O. to examine the evidences filed by the assessee and allow exemption accordingly.
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2016 (12) TMI 1405
Validity of scrutiny assessment - AO jurisdiction to proceed with the scrutiny assessment in the case of assessee obtaining no approval of the CCIT / DGIT - guidelines binding upon the Assessing Officer - Held that:- Where the Assessing Officer has failed to follow the guidelines issued for selecting the cases for scrutiny and in the facts of the present case, where the case was selected manually for scrutiny, but no previous approval of CCIT was obtained, then the Assessing Officer lacks jurisdiction to carry out the scrutiny assessment in the present case and accordingly, assessment order passed by the Assessing Officer is bad in law. Hence, we hold so. Since the assessment order is held to be bad in law, the issue on merits becomes academic and the grounds of appeal raised by both the assessee and the Revenue in their respective appeals are infructuous - Decided in favour of assessee.
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2016 (12) TMI 1404
Addition u/s 40A - Disallowing the payment for purchase of granites - vendors insisted for cash payment - Held that:- We have carefully gone through the provisions of Rule 6DD of the Income-tax Rules, 1962 which categorically says that payment was made by any person to his agent, who is required to make payment in cash for goods or services on behalf of such person, the provisions of Section 40A(3) of the Act is not applicable. In this case, the assessee claims that M/s Rajham Impex and M/s Shri Bakia Trading Agency acted as agents for procuring granites on behalf of the assessee from quarry owners. Since the vendors insisted for cash payment, the assessee has to necessarily make cash payment to M/s Rajham Impex and M/s Shri Bakia Trading Agency so as to enable them to make payment in cash to the quarry owners. These facts were not in dispute. Therefore, in view of Rule 6DD(k) of Income-tax Rules, 1962, there cannot be any disallowance under Section 40A(3) of the Act. In view of the above discussion, this Tribunal is unable to uphold the orders of the lower authorities, accordingly the same are set aside. The addition made by the Assessing Officer is deleted.- Decided in favour of assessee Penalty levied under Section 271B - delay in filing audit report - Held that:- The object of filing audit report is only to assist the Assessing Officer to determine the correct taxable income. Since the assessee has filed return of income along with the audit report, the purpose of statutory requirement is complied with. The delay in filing the audit report did not hamper the assessment proceeding in any way. Therefore, this Tribunal is of the considered opinion that there is no justification in levying penalty under Section 271B of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities, accordingly, the same are set aside and the penalty levied under Section 271B of the Act is deleted. - Decided in favour of assessee
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2016 (12) TMI 1403
N.P. estimation - Held that:- Estimation of net profit of 5% on total stock put for sale net of all deductions is reasonable. Unexplained sources for opening capital brought forward from previous years - Held that:- Assessee failed to prove genuineness of the transactions and creditworthiness of the parties. Although, the assessee filed confirmation letters from the creditors, all the confirmation letters are in prototype form without any details as to how the loan was accepted. Though assessee claims to have accepted the loan from agriculturists, fails to prove the sources of the creditors to substantiate the creditworthiness of the parties. Thus the assessee has failed to discharge its initial onus cast upon him by furnishing necessary identity, creditworthiness of the parties and genuineness of the transactions. In so far as additions towards opening capital is concerned, though assessee claims to have explained the sources for opening capital out of his past savings, the assessee failed to prove the sources with necessary evidences. The assessee claims to have savings out of his salary income, however, on perusal of the submissions of the assessee, the assessee himself admitted that he was working with a meager salary of ₹ 10,000/- per month. The assessee failed to demonstrate how with a meager salary of ₹ 10,000/- per month could show such a huge opening of capital of ₹ 8,14,500/-. Therefore, we are of the view that the assessee failed to prove the sources for opening capital brought forward from previous years and accordingly, the A.O. has rightly made additions. Unexplained amount being difference between initial expenditure incurred and sources in the form of unexplained credits and opening capital balance - Held that:- We find that the assessee had been given sufficient opportunity to explain the case before the A.O. Though sufficient opportunity has been given, the assessee failed to file necessary evidences to prove his case. Even before CIT(A), the assessee failed to file necessary evidences to justify the additions made by the A.O. Therefore, we are of the view that there is no merit in the claim of the assessee for one more opportunity of hearing and accordingly the same is rejected. Additions towards income from other sources being interest received on fixed deposits - Held that:- No merits in the arguments of the assessee for the reason that at any stretch of imagination interest from fixed deposit whether or not the said deposits are kept for obtaining bank guarantee cannot be considered as income from business. Therefore, we are of the view that the A.O. has rightly taxed interest income under the head income from other sources. Accordingly, the addition made by the A.O. is upheld.
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2016 (12) TMI 1402
Transfer pricing adjustment - royalty payment - TPO concluded that the assessee did not show as to what is tangible and substantial commercial benefit derived by the assessee from the allied services and consequent payment of technical and management cost and on this basis, he disallowed the entire payment - Held that:- We find that the assessee is paying royalty @ 8% on exports and 5% for sale within India as per the license agreement dated 31.10.2003. Subsequently, the principal agreed to waive royalty in respect of Rudrapur plant of the assessee w.e.f. 1st April, 2007. It is not the case of the AO or the TPO that the royalty rate of other units excluding Rudrapur unit has been increased on waiver of royalty for Rudrapur unit. It is also not the case of AO/TPO that sales from Rudrapur unit was also included to compute royalty payable to the principal. Under these facts, in our considered opinion, no part of royalty payment can be considered as royalty of Rudrapur unit and therefore, the action of AO/TPO to apportion part of royalty payment to Rudrapur unit is not valid and proper. We hold accordingly and appeal of Revenue for AY 2010-11 is dismissed and ground Nos. 9 & 10 of assessee’s appeal for AY 2011-12 are allowed.
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2016 (12) TMI 1401
Penalty under section 271(1)(c) - whether deceased deliberately concealing the income or filing the inaccurate particulars of the income - Held that:- Nothing has been brought on record that deposit was made by the legal heirs of the deceased and more particularly the assessee before us. Besides the above, had the assessee was alive, then the assessee (late husband) would have given details of the income or the status of the amount deposited in the account i.e., whether the amount deposited was a loan, gift or tax exempted deposits, etc. Furthermore, if we accept the case of the learned DR for the revenue that the amount was deposited by the son of the appellant before us, then in our view the explanation should have been sought from the son and if the income belongs to him, then the income should be assessed in the hands of the son and not in the hands of husband or the wife of the deceased. Since there was no willful and deliberate concealment of the income by the assessee therefore the appeal is required to be allowed. Therefore in our view no case of imposing of penalty was made out by the revenue and in the result the appeal is required to be allowed and we therefore allow the appeal and direct the deletion of penalty imposed on the assessee. - Decided in favour of assessee.
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2016 (12) TMI 1400
Revision u/s 263 - Held that:- In the present case on hand, the CIT alleged that the A.O. not only failed to examine certain issues, but also failed to apply his mind before completion of assessment, which render the assessment order erroneous in so far as it is prejudicial to the interest of the revenue. We find merits in the findings of the CIT, for the reason that although the assessee claims to have furnished all the details on the issues on which the CIT questioned in his proceedings, the assessee failed to prove the same with necessary evidences. We further observed that on perusal of the assessment records and also details filed by the assessee, the assessing officer had discussed none of the issues pointed out by the CIT. We also observed that the assessment order passed by the A.O. is brief and cryptic and the A.O. neither discussed the issue pointed out by the CIT in the assessment proceedings nor obtained any information on which he placed his reliance before accepting the claim of the assessee. Therefore, we are of the considered view that the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue and accordingly the CIT has rightly assumed jurisdiction to revise the assessment order. Hence, we uphold the order passed by the CIT u/s 263 of the Act and set aside the assessment order passed by the A.O. u/s 143(3) of the Act. - Decided against assessee.
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2016 (12) TMI 1399
Disallowance u/s 14A - Held that:- Following the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT ), we are of the view that no disallowance can be made u/s 14A of the Act, when there is no exempt income received or receivable during the relevant assessment year. Therefore, we direct the A.O. to delete additions made towards disallowance of interest under the provisions of section 14A of the Act. - Decided in favour of assessee
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2016 (12) TMI 1398
Compensation paid of to Microsoft Corporation, USA - allowable deduction in u/s 37(1) - Held that:- In the facts of the present case, use of pirated software by the assessee and its group companies which is the property of Microsoft Corporation and others admittedly, resulted in loss of business of Microsoft Corporation. Where because of civil suit between the parties, there was compromise entered into between the parties for payment of compensation for loss of business and also covering the cost of litigation, then such an amount is to be allowed as business expenditure in the hands of assessee under section 37(1) of the Act. The Explanation to section 37(1) of the Act does not apply to such understanding between the two private parties. The Kolkata Bench of Tribunal in ITO Vs. M/s. MPR Marketings Pvt. Ltd. (2013 (12) TMI 1061 - ITAT KOLKATA ) has laid down similar proposition, which has been approved by the Hon’ble High Court of Calcutta and we find support from the said ratio. Accordingly, we allow the claim in favour of assessee Computation of MAT credit - Held that:- The assessee is in appeal before us and the alternate plea raised by the assessee is that where the tax payable has been computed after including surcharge and education cess, then MAT credit should be allowed on the total amount i.e. tax with surcharge and education cess and should not be restricted only to the tax payable. This issue is decided by the Delhi Bench of Tribunal in the case of Richa Global Exports (P.) Ltd. (2012 (9) TMI 99 - ITAT DELHI ), wherein the Tribunal held that MAT credit payable under section 115JB is only income tax and does not include surcharge or education cess. Therefore, where it is only income tax that is paid under the provisions of section 115JB of the Act, it is natural that tax credit under section 115JAA of the Act will only be of income tax and not of surcharge and education cess. The said proposition was applied by the CIT(A) in denying the claim of assessee. The assessee has failed to controvert the same and in view thereof, we find no merit in the ground of appeal raised by the assessee.
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2016 (12) TMI 1397
Nature of Rental income - Assessment of income derived from the business of operation and maintenance of information Technology Park as "Income from house property"- Held that:- The main business of the assessee is to create the infrastructure and let out the same to earn income therefrom. Therefore, the decisions in the cases of CIT vs. Chennai Properties & Investments Ltd [2015 (5) TMI 46 - SUPREME COURT ] and Rayala Corporation (P) Ltd [2016 (8) TMI 522 - SUPREME COURT ] are clearly applicable. Respectfully following the same, we allow assessee’s appeal and direct the AO to treat the income from letting out and operation of the property as “income from business” and allow the expenditure and other claims in accordance with the law. - Decided in favour of assessee.
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Customs
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2016 (12) TMI 1373
Valuation - royalty - whether royalty to be added to assessable value or not where raw materials/inputs imported from collaborator? - Held that: - A plain reading of the agreement entered into by the appellant indicates that it is only a technical know-how agreement and running royalty is paid; no condition precedent that components cannot be imported from anyone else. Reliance placed on the decision of the case of Schenectady Herdillia Ltd. [2016 (3) TMI 887 - CESTAT MUMBAI], where it was held that The said agreement does not talk about or restrict the appellant to purchase or procure raw materials only from the parent concern. The loading of the value of by the amount of royalty paid by the appellant is not in consonance with the law settled by the higher judicial fora. Appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1372
Imposition of redemption fine and penalty - the redemption fine has been imposed exorbitantly without even conducting any market enquiry to ascertain the market price prevalent so as to determine the margin of profit, and were prayed to be set aside - Held that: - the appellant has declared values which are very much less than the minimum specified as above. Consequently, the import goods are liable for confiscation as has been held by the authorities below - however, the ends of justice will be met by reducing the redemption fine to 7.5% of the value of the goods approved for payment of duty. The penalties imposed are, however, upheld - decided partly in favor of appellant - appeal disposed off.
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2016 (12) TMI 1371
Condonation of delay - Held that: - There was no occasion for appellant to file the appeal unless and until the corrigendum was issued. It is admitted position that the appeal was filed within seven days from the date of issue of corrigendum. Since the corrigendum is part and parcel of the impugned order the period for filing the appeal should be reckoned from the date of corrigendum - no delay in filing the appeal. Even if there is a delay, the condonation of delay application has to be allowed. Application for early hearing - Held that: - even though it is the second round of litigation, the appeal is of 2016 only. This Tribunal is overburdened with cases running from the year 2005 onwards. Therefore, it will not be proper to take up the appeal of 2016 on out-of-turn. COD allowed - early hearing dismissed - decided partly in favor of appellant.
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2016 (12) TMI 1370
Refund claim - EPCG licence scheme - N/N. 1/91-Cus dated 01/06/1991 - tax leviable without the authority of law not to be retained by the government - Held that: - the appellant has no case on limitation as the Bills of Entry were finally assessed in 1991-92, we are at loss to understand how the said error was not noticed by the appellant till March 2003 when they filed the refund claim. Be that as it may, When the bills of entry were finalised and the goods were assessed under the Customs Act, 1962, any refund claim that arises in respect of such finally assessed bills of entry are governed by the provisions of Section 27 of the Customs Act, 1962 which provides for filing of refund claim within a period of one year from the ‘relevant date’ which is discharge of duty by the importer - section 154 also not applicable in the case - appeal rejected - refund rejected - decided against appellant-assessee.
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2016 (12) TMI 1369
Detention of goods due to dispute in country of origin - provisional release - denied on the ground that an order of provisional release was passed by the respondents on 16.12.2015, but the petitioner did not utilize the opportunity and complied with the conditions therein - Held that: - this Court suggested that if the interest of revenue is safeguarded, the prayer for provisional release can be considered by them. The gap between admitted duty and penal duty is wide. The petitioner is not in a position to make any reasonable offer to safeguard the interest of revenue. Therefore, the only option available is to direct the respondents to finally adjudicate the matter. When this suggestion was put to the petitioner, the petitioner has agreed to cooperate for adjudication process, provided strict time lines are followed - petition disposed off.
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2016 (12) TMI 1368
Unjust enrichment - Held that: - the price of the final product manufactured by the appellant was the same as the price of the other manufacturers/suppliers. Therefore, incidence of duty was not included in the price of the final product and was not passed on to any other person - reliance placed in the decision of the case of Commissioner of Customs (Import) v. Pudumjee Plant Laboratories Ltd. [2007 (10) TMI 196 - HIGH COURT BOMBAY], where it was held that if the price of the final product of the assessee is matching with the price of the other sellers in the market, the duty element cannot be said to have been passed on to the customers - the facts and the issue considered in the said judgment was not before the lower authority. Therefore, in our view the matter needs to be remanded. We remand the matter to the original authority for reconsideration of the whole issue in the light of the judgment of the Hon’ble High Court in the case of Pudumjee Plant Laboratories Ltd. - appeal allowed by wy of remand.
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2016 (12) TMI 1367
Refund claim of 4% Additional Duty of Customs (SAD) - Notification No.102/2007 - imported timber logs were sold as “cut sizes” - refund was rejected in regard to timber logs sold as “cut sizes” on the ground that there was no correlation with the goods imported and the goods sold - Held that: - The appellants have presently put forward the contention that dimensions shown in the sales invoices may differ for the reason that the logs are cut to facilitate transportation. This contention is put forward in the appeal filed in the Tribunal. As the appellants were denied a show-cause notice, I am of the view that this contention raised at appellate stage is acceptable - In obedience to judicial discipline following the dictum laid in the case of M/s. Variety Lumbers Pvt. Ltd.[2013 (11) TMI 1013 - GUJARAT HIGH COURT], I find that the appellants are eligible for refund. The denial of refund is unjustified - Decided in favor of assessee.
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2016 (12) TMI 1366
Illegal import - baggage rules - mis-declaration of description as well as value of goods - Held that: - For sustaining the allegation of misdeclaration of the imported goods as well as undervaluation thereof, the records needs to be corroborated on the basis of independent evidence. Testing of samples with imported goods could have been done to establish the correct nature of the imported goods. The documents recovered from respondent No. 3 have never been corroborated or supported by any statements from the exporters. It is also placed on record in the adjudication proceedings as well as criminal proceedings initiated, that the respondent No. 3 stands exonerate - order passed by the Commissioner (Appeals) justified - appeal dismissed - decided against Revenue.
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2016 (12) TMI 1365
Valuation - related party transaction - invoice value influenced by the relationship between parties or not? - Held that: - The original authority have carefully gone into the agreement between the importer and related supplier and after going through in detail other connected documents, has come to the conclusion that the invoice value of the goods imported are not influenced by that relationship. Invoice value accepted - appeal rejected - decided against Revenue.
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2016 (12) TMI 1364
Unjust enrichment - whether the refund arising out of provisional assessment prior to 13-07-2006 would be hit by the doctrine unjust enrichment? - Held that: - reliance placed on the decision of the case of case of CCE, Kandla Vs Hindustan Zinc Ltd [2009 (2) TMI 100 - CESTAT AHMEDABAD], where it was held that when provisional assessment is finalized, the assessee is entitled to refund and he does not have to make the claim, the provisions of Section 27 is not attracted. In the present case, as the period involved is prior to 13-07-2006, the refund is not hit by the doctrine of unjust enrichment - appeal rejected - decided against Department.
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Corporate Laws
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2016 (12) TMI 1361
Scheme of Amalgamation -directions of this Court to dispense with the requirement of convening the meetings of their equity shareholders and creditors to consider and approve, with or without modification, the proposed Scheme - Held that:- The requirement of convening and holding the meetings of the equity shareholders and creditors of the Transferee Company, to consider and if thought fit, approve, with or without modification, the proposed scheme, is dispensed with. Learned counsel for the Applicant Companies does not press prayer clause (iii) of the present application, seeking dispensation with the requirement of filing of the company petition or any further application by the Transferee Company for sanction to the proposed scheme. The said prayer clause (iii) of the present application is therefore dismissed as not pressed.
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2016 (12) TMI 1360
Winding up petition - outstanding dues - Held that:- The payments made through cheques detailed in the reply have not been shown to be even remotely related to the specific invoices for which the due outstanding amount has been claimed by the petitioner company in its statutory notice under Section 434(1)(b) of the Act of 1956 and in this winding up petition. There was admittedly a business relationship between the petitioner and the respondent companies for over three years to a tune of ₹ 7.5 crores turnover and about ₹ 6.5 crore was indeed paid by the respondent company. The winding up petition has been filed only for ₹ 1,00,54,187.24. The defence based on commission due (non specified) for supply of computers/ equipments to Modi Institute of Technology and Science and price of a computer supplied to one Siddarth Raval are ludicrous if not pathetic. The reply to the statutory notice under Section 434(1)(a) of the Act of 1956 on behalf of the respondent company effectively admits large parts of amounts due. In the facts of the case,it is of the view that the defence to the winding up petition is not based on a bonafide dispute substantial or otherwise. It appears to be meritless. The respondent company M/s. Sequel Infocom Private Limited has prima facie neglected to pay its debt despite a statutory notice under Section 434(1)(a) of the Act of 1956 without a bonafide dispute at all being made out and thus in the eyes of law is prima facie deemed to be insolvent. The petition is in the circumstances admitted. The Directors of the respondent company M/s. Sequel Infocom Private Limited are directed to file a statement of affairs of the company as of 31-3-2016 and furnish their current addresses. The citation of admission of winding up petition being admitted be published in two daily newspapers, one in vernacular and the other English i.e. Dainik Navjyoti, Jaipur Edition and Times of India, New Delhi Edition respectively. The citation be also published in the Official Gazette. All costs towards publication to the account of the petitioner company.
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2016 (12) TMI 1359
Permission to hold a Board Meeting on an urgent basis - Held that:- Application merits acceptance. It has already come on record by virtue of order dated September 5, 2016 passed in CA No.85/PB/2016 that applicant-petitioner holds 0.06% shares and there is a serious preliminary objection raised under section 244(1) of the Companies Act, 2013 with regard to maintainability of the petition. Even otherwise objections on some of the items raised by the non applicant-petitioner pertains to the appointment of Mr. Prakash Mishra as a director who is proposed to be given special charge to finalize the remuneration of statutory auditor of the company and Mr. Sandeep Vats, who was another director appointed by the company. He is sought to be given by draft agenda charge of asset of the company although his appointment is under challenge in the Company petition. Objections have also been raised with regard to the preferential shares amounting to ₹ 3440891 and confirmation of the minutes of the meeting held on 4.5.2016, 14.5.2016, 20.5.2016 and 16.6.2016; also in respect of some other items. Merely because the non applicant-petitioner has challenged the appointment of directors and some other actions of Respondent No.1-company could not be suffice to refuse permission to hold to a meeting to facilitate day to day affairs of the applicant-Respondent No.1-company. The activities and functions of the company cannot be stifled by passing a gag order especially to perform statutory compliance. However interest of the non applicant-petitioner could be protected by passing an order that passing of any resolution from the list of draft agenda would not cause any prejudice to the right of the non applicant-petitioner pending consideration in C.P. No. 122(ND)/2016
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Service Tax
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2016 (12) TMI 1396
Waiver of penalty u/s 78 justified or not - discretionary authority to penalise - Held that: - the respondent entertained justifiable doubts about liability to pay tax as provider of ‘works contract’ or ‘commercial or industrial construction’ service. The appellant has undertaken renovation and repair service for military establishments and defence public sector undertakings - Considering the confusion that prevailed on both classification as well as on computation of taxable value of the service in these categories and the fact that appellant did not collect service tax from the recipients of the service, it would appear that the impugned order has not erred in dropping the penalty u/s 78 of the FA, 1994 - waiver justified - appeal rejected - decided against appellant.
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2016 (12) TMI 1395
Classification of services - classified under the category of Management or Business Consultant Services defined in Section 65 (105) (r) of the Finance Act, 1994 or under Section 65 (105) (y) of the Finance Act, 1994 as Market Research Agency - reverse charge mechanism - Held that: - The nature of the activity undertaken by M/s Gamma for the appellant is to be inferred from the product of such activity available in the form of the report. Such report is titled Market Research. A perusal of the report clearly indicates that the consultant has undertaken research in different parts of Europe with reference to the technical textile business. They have considered the various types of products, their manufacturers, production processes and even the turnover. This activity undertaken is clearly in the nature of market research. Reverse charge mechanism - Held that: - the consultant has carried out market research activity in Europe and for this reason no service tax will be liable to be paid on reverse charge basis. There can be no service tax liability for entering into an agreement, however, the levy arises from relevant activities performed and the classification of such activities are to be decided depending upon which entry specifically covers the activity. The nature of the activity squarely falls to be classified as market research agency - demand of service tax set aside - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1394
Waiver of penalty u/s 78 of FA, 1994 - invocation of section 80 - Commercial Construction Service under Works Contract Composition Scheme. The appellant has been regularly paying the service tax. The short payment of service tax arose only due to the reason that the value of free supplies of goods was not included in the gross value of the construction service - Held that: - On the dispute that whether the cost of free supplies goods should be included or otherwise the Larger Bench of this Tribunal in Bhayana Builders (P) Ltd. [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] held that the same is not includible in the gross value of the construction service. Therefore the issue involved in the present case was not free from doubt. The appellant, immediately, on pointing out by the department, paid the service tax and the interest thereupon even before issuance of the show cause notice - the appellant has been able to show the reasonable cause for non-payment of service tax on the element of cost of free supplied goods - invocation of section 80 justified - penalty waived - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1393
Rectification of mistake - Cenvat Credit amount ₹ 1,44,76,395/- was wrongly mentioned in the Para 3.2 of the order - Held that: - the figure of ₹ 1,44,76,395/- was wrongly mentioned instead of ₹ 34,86,722/- We therefore order that in para 3.2 on page 5 of the Order No. A/1292-1293/14/CSTB-C-I dt. 23.7.2014, the figure i.e “Rs.1,44,76,395/-” stands corrected and be read as “Rs.34,86,722/-”. Time bar - Held that: - the order dt. 23.7.2014 appears to have been sent to the applicant but on going through the envelop enclosed by the applicant clearly shows that the order was not delivered to the applicant. It is also observed that the applicant made a specific request vide letter dt. 23.2.2016 for issuance of order copy and thereafter they received the order copy and filed the present application. Therefore we are of the view that the application is not time bar. ROM application allowed - decided in favor of assessee.
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2016 (12) TMI 1392
Rectification of mistake - It is the contention of the applicant that they have not been paying service tax on the commission/brokerage received from shipping lines and that the non-payment thereof is the subject matter of continuing dispute with Revenue. The applicant, therefore, seeks corrigendum to reflect the factual position - Held that: - the adjudication order leading to the appeal is restricted to the ‘ocean freight surplus’ - the appellant has admitted to receiving commission from shipping lines on account of freight and that the service tax authorities have been issuing demands for discharge of tax liability on those receipts which is stated to be separate dispute. However, we find no justification for fastening the same liability on all other receipts of the appellant - ROM disposed off.
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2016 (12) TMI 1391
Commercial coaching services - Discrepancy in Fee receipts - Whether the books of accounts maintained by the appellants and their Service Tax Returns filed time to time have been rightly rejected and the demand raised on the basis of statements under Section 14 of the Central Excise Act, 1994, whether the same is proper and/or whether the appellant have properly disclosed their turnover and maintained proper records which could not have been rejected on account of some variation noticed with the statement recorded by the partners of the appellant, their employees and students? Held that: - there is no proper basis adopted by the revenue for rejecting the books of account and the Returns filed, and resorting to best judgment assessment - no discrepancy has been found out by the Revenue during investigation and or at the time of adjudication in the Books of Accounts and records maintained by the appellant, in the ordinary course of business - The approximate figures, as found in the statements, cannot form basis of rejection of the Books of Accounts and estimation of turnover by way of wild guess work. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1390
Jurisdiction of Commissioner - power of revision of commissioner when the issue is pending before the Commissioner (Appeals) - imposition of penalty u/s 78 of FA, 1994 - natural justice - Held that: - reliance placed on the decision of the case of M/s Federal Bank Ltd. vs. C.C.E., Cochin [2016 (12) TMI 1271 - CESTAT BANGALORE], where it was held that natural justice is essence of fair adjudication and to be ranked as fundamental - the Commissioner has no power to revision under Section 84 when the issue is pending before the Commissioner (Appeals) - appeal allowed - penalty set aside - decided in favor of appellant.
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2016 (12) TMI 1389
Restoration of appeal - condonation of delay of 22 days in filing appeal - Held that: - the delay in filing the appeal before learned Commissioner (A) was not intentional and deliberate and therefore, delay condoned, and impugned order set aside and Commissioner (A) directed to decide the appeal on merit after affording an opportunity of hearing to the appellant - delay condoned - appeal restored - decided in favor of appellant.
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Central Excise
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2016 (12) TMI 1388
Classification of goods - Integrated Fixed Wireless Terminals CDMA-2000-1X (ETS 2288) - whether appellant is eligible to avail benefit of exemption notification no.6/2003-CE (Sr.no.264) for the CDMA WLL phones manufactured by them? - Held that: - the issue is no more res Integra. In the case of identically placed manufacturer from the same commissionerate, this bench in the case of Teracom pvt. Ltd. [2007 (10) TMI 47 - CESTAT, MUMBAI] going in to details as to how CDMA WLL and cellular phones functions, came to a conclusion that benefit of notification 6/2002-CE needs to be extended as the CDMA WLL phones function on cellular technology - The appellant assessee is eligible for benefit of exemption notification no. 6/2003-CE (sr.no.264) for the CDMA WLL phones cleared by them - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1387
Valuation - the goods were sold for delivery at a place (the buyer’s premises) other than the place of removal (the factory gate) - whether the transportation charges to be included in assessable value or not? - Held that: - we find that freight have been charged separately and received separately. We also take notice that the buyers of the goods-State Electricity Board have issued purchase order specifying the price for the goods separately and also specifying the transportation cost on per Kilometer basis for the supply of goods. Accordingly, appellant have supplied and raised separate invoices for the price of goods and the transportation. Thus, it amounts to showing the cost of transport separately in the invoices - transport charges not includible in the value of the goods - appeal dismissed - decided against Revenue.
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2016 (12) TMI 1386
CENVAT credit - forged invoices - time bar - Held that: - I find that there is no dispute that the Cenvat Credit availed by the appellant on the invoices were found to be fake. The appellant is duty bound to take reasonable steps while taking the Cenvat Credit. Therefore, the appellants are also responsible for availing the credit on the fake invoices - appeal dismissed - decided against appellant.
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2016 (12) TMI 1385
Valuation - freight and insurance charges - adding to assessable value the freight and insurance charges recovered - Section 4 (3) (c) of Central Excise Act, 1944 - place of removal - if the 'sale' has taken place at factory gate of at the premises of buyers and consequently if the value of freight and transit insurance from factory gate to the premises of the buyer needs to be included in the assessable value or not? Held that: - after 1/7/2000 there was no provision for considering any place, other than factory or any other place or premises of production or manufacture of the excisable goods or a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, as 'place of removal'. In these circumstances there is no ease for considering any other place like the Depot or place of Consignment agent etc as 'place of removal' after 1/7/2000 - the appeals so far as they relates to period after 1/7/2000 have to be allowed. However prior to 1/7/2000 the definition of 'place of removal' included 'a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory' as possible place of removal. Thus it was possible to consider any place other that factory or a ware house (where goods are permitted to be stored without payment of duty) as 'place of removal'. Hon Supreme Court in the case of ISPAT INDUSTRIES LTD [2015 (10) TMI 613 - SUPREME COURT] has observed that 'the buyer's premises in law, be “a place of removal" under the said Section'. This categorical observation leaves no scope for any interpretation. The allegation that the buyers premises are the place of removal cannot, therefore, be sustained in view of these observations - appeal which relates to period prior to 1/7/2000 dismissed. Appeal disposed off - decided partly in favor of assessee.
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2016 (12) TMI 1384
Whether the Appellate Tribunal was justified in sustaining the penalty on the husband of the dormant partner, while sustaining the penalty on the Partnership Firm? - Though his wife is the partner, for all practical purposes, he was acting on her behalf as the partner. Held that: - The said issue is no longer res integra, in the light of the Full Bench judgment rendered by Bombay High Court in the case of M/s Amritlakshmi Machines Work, Mr. N.K. Bramchari, Managing Partner, M/s. Amritlakshmi Machine Works Versus Commissioner of Customs (Import) [2016 (2) TMI 57 - BOMBAY HIGH COURT], where it was held that Simultaneous penalties can be imposed on the firm and the partners under the Act and more particularly under Section 112(a) of the Act. However as the Act itself stipulates, the same would be subject to the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention. The first portion of Section 112(a) of the Act is only to make person of first degree in relation to the act or omission strictly liable. Persons who are not directly involved in the act or omission to act, which has led the goods becoming liable for confiscation cannot be made liable unless some knowledge is attributed to them - penalty can be imposed on dormant partner as well as on the firm. Appeal disposed off - decided in favor of revenue.
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2016 (12) TMI 1383
CENVAT credit - tour operator service - rent a cab service - denial on the ground that tour operator and rent a cab services do not fall within the ambit of definition 'input services' specified under Rule 2(1) of the Cenvat Credit Rules, 2004 - Held that: - The scope of definition to the word includes has to be given a wider meaning and not a restricted meaning. The word includes denote in relation to manufacture or clearance of final products or in relation to providing an output service .All input services relating to 'activities relating to business' are eligible for service tax credit due to use of word 'such as' in the definition - availing of such services are necessary to the manufacture and transporting the workers to and fro from the factory is included under input services, in relation to the manufacture of excisable goods - credit allowed - appeal allowed - decided in favor of appellant-assessee.
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2016 (12) TMI 1382
Benefit of exemption N/N. 06/2002-CE dated 01.03.2002 - Climbers - Thriller Range - denial on the ground that the goods not fall under the category of sports goods - Held that: - the products in question are Climbers and Thriller which are used for children's play & games and are installed in playground & gardens. As far as for small children, these are sports equipment for their play - The lower authorities have contended that the sports which are played nationally and internationally only are the sports and play of the children in garden and playground, are not sports which is not agreed. For every age there are different type of plays & games, small children's sports is the games and plays which they play in the garden with the use of these equipment, therefore these are the sports activity for the children The equipment used in children's playground are falling under the classification of sports goods falling under Chapter 9506 as per Bureau of Indian Standards. Therefore there is no doubt that the product in question that being equipment used in children's playground are sports goods. Benefit of notification available - appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1381
End use of product - polyester texturised yarn - 100% EOU - goods detained on the belief that the same were diverted to open market instead of being sent to M/s RTPL, a 100% EOU for its use - whether confiscation of the goods seized by the Department and imposition of penalty on the Appellant are proper or otherwise? - Held that: - even though the goods were cleared against AR-3As, but instead of its further use by M/s RTPL, diverted on its way - the Appellants are required to pay the duty involved - it is not necessary always to prove mens rea on the part of the Appellant, also the Appellant has not disputed their liability of duty on the goods cleared by them from the factory against AR-3As which ultimately had not reached the destination, where these goods were to be used by M/s RTPL, In these circumstances, there is contravention of the provisions of the Central Excise Act and rules made there under - confiscation and penalty directed under Rule 9(2) read with Rule 209(1) of erstwhile Central Excise Rules 1944, are sustainable. However, the redemption fine and penalty imposed are excessive under the circumstances of the case. Consequently, considering the fact that the Appellant is a registered unit, the appropriation of entire Bank Guarantee amounting to ₹ 4,10,799/- on confiscation of goods is modified by reducing the fine to ₹ 1.00/- and penalty to ₹ 4.00 lakhs to meet the ends of justice - Further nothing has been brought on record by the Revenue to show that the Appellant is a habitual offender, warranting harsh action of confiscation of plants and machinery, confiscation of plants and machinery is set aside. Appeal allowed - decided partly in favor of appellant.
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2016 (12) TMI 1380
CENVAT credit - Security agency service received at the residence of the senior personnel of the appellant - training services - incineration services - denial on the ground that the same have been availed after the manufacture of the goods and all the services have no nexus with the manufacturing activity or with the provisions of any output service - Held that: - training and coaching services very much fall in the definition of input service as contained in Rule 2(l) of CENVAT Credit Rules and the said activity is directly and substantially related with the business of the appellant. In the absence of which, it will be difficult for the appellant to promote his business. Further, the incineration service is also an input service as the appellant is under a statutory obligation to dispose of the waste, failing which, he would attract penal consequences - on both the services, the appellant is entitled to CENVAT credit - credit on training services and incineration services allowed. As regard to the security agency service, the learned counsel for the appellant did not press for CENVAT credit as the said security was provided at the residence of senior officer and the same has nothing to do with the manufacturing process - denial of CENVAT credit on security agency service upheld. Appeal allowed - decided partly in favor of assessee.
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2016 (12) TMI 1379
Reversal of credit - Subrule (3A) (a) of Rule 6 of Cenvat Credit Rules, 2004 - Rule 6(3)(ii) - whether the appellant is reqiured to reverse CENVAT credit availed under Rule 6(3)(ii), as claimed by the Revenue? - Held that: - as per amended Rule 6(3) (i) & (ii) read with subrule (3A), the option is available to the assessee whether to pay 10% of the value of the exempted goods or to pay equivalent Cenvat credit attributable to the input used in the exempted goods. The department has no say that which option has to be availed by the assessee. In the present case the appellant have opted for payment of proportionate Cenvat credit in terms of Rule 6(3)(ii) of Cenvat Credit Rules, 2004, which in my considered view is not incorrect. At the most if any lapse is there that is, appellant have not given written option to the department. In my view it is only a procedural lapse and for such procedural lapse, appellant cannot be fastened with demand of 10% of the exempted goods - the payment made by the appellant themselves equivalent to the Cenvat credit attributable to the input used for the exempted goods is in order. therefore no further demand could have been made from the appellant. Appeal allowed - decided in favor of appellant.
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2016 (12) TMI 1378
CENVAT credit - irregular availment - credit on invoices form certain dealer without receiving the goods - Held that: - On the identical facts and under same investigation in many other cases, demands were confirmed. On comparison with these cases disposed of by this Tribunal in particular Amar Ispat Pvt Ltd [2015 (11) TMI 373 - CESTAT MUMBAI], the facts, evidences and modus operandi of the appellants as well as in case of Amar Ispat Pvt Ltd are same therefore this case also can be decided only on the basis of decisions in above referred case - This Tribunal in case of Amar Ispat Pvt Ltd has considered all common facts and evidences and came to conclusion that it was case of fraudulent passing of Cenvat credit without receipt of input by the beneficiary - In the case of Amar Ispat Pvt Ltd decision important fact has been established that all the invoices issued by M/s. Jindal Iron & Steel Co. Ltd were issued in respect of scrap and addressed to the MITC Rolling Mills Pvt Ltd but goods were delivered to Viramgam based parties, are fake and without receipt and supply of the material. Thus appellant have availed fraudulent Cenvat credit. The appellant have availed Cenvat credit fraudulently without receipt of the goods - appeal dismissed - decided against assessee.
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2016 (12) TMI 1377
CENVAT credit - structural items such as M.S. structures, Plate, Flat, Angles, Channels, Bars and beam etc - penalty - denail of credit placing reliance in the case of Vandana Global Ltd Vs Commissioner of C.Ex. Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], where Hon’ble Larger Bench has taken a view that even prior to 7/7/2009 when the explanation 2 of Rule 2(k) was inserted in the Cenvat credit Rules, 2004, it is clarificatory nature and had retrospective effect. As per the said amendment structural steel was explicitly excluded from the definition of input. Held that: - much water has been flown on the issue as various High courts have either distinguished or overruled, the view taken by the Hon’ble Larger Bench in case of Vandana Global Ltd hence it is no more good law - reliance placed in the decision of the case of Chemplast Sanmar Ltd [2014 (9) TMI 535 - MADRAS HIGH COURT], where it was held that Cenvat credit is admissible on the structural steel, therefore Larger Bench decision in case of Vandana Global Ltd clearly stands distinguished, the entire foundation of the impugned order gets demolished - Cenvat credit is admissible on structural steel in light of the above referred judgments - the limitation aspect ignored - since credit allowed, penalty set aside. Credit allowed - appeal allowed - decided in favor of assessee.
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2016 (12) TMI 1376
Refund claim u/r 5 - assessee opted to avail full exemption by filing N/N.30/2004-CE dated 09/07/2004 w.e.f. 16/03/2005. At the time of opting out, the appellant had credit of AED (TTA) of ₹ 14,73,718/- to their credit - refund claim filed placing reliance on the case of Slovak India Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT] where it was observed that Rule 5 of the Cenvat Credit Rules, 2002 does not expressly prescribed refund of unutilized credit where there was no manufacture in the light of closure of factory. Held that: - in terms of the decision of larger bench, which has been given after examining the Decision of Hon’ble High court in case of Slovak, the respondents are not entitled to refund of accumulated credit lying in their accounts unless they are able to show that they are fulfilling the conditions prescribed u/r 5 of the Cenvat Credit Rules and the notification issued there under. The respondents have not done so - respondent not eligible for refund - appeal allowed - decided in favor of Revenue.
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2016 (12) TMI 1375
CENVAT credit - H.R. Coils, M.S. Channels, Beams, Joists, hot rolled sheets, H.R. Sheet Coils - credit denied placing reliance on the judgment in case of Vandana Global Ltd Vs Commissioner of C.Ex. Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)], where Hon’ble Larger Bench has taken a view that even prior to 7/7/2009 when the explanation 2 of Rule 2(k) was inserted in the Cenvat credit Rules, 2004, it is clarificatory nature and had retrospective effect. As per the said amendment structural steel was explicitly excluded from the definition of input. Held that: - much water has been flown on the issue as various High courts have either distinguished or overruled, the view taken by the Hon’ble Larger Bench in case of Vandana Global Ltd hence it is no more good law - reliance placed in the decision of the case of Chemplast Sanmar Ltd [2014 (9) TMI 535 - MADRAS HIGH COURT], where it was held that Cenvat credit is admissible on the structural steel, therefore Larger Bench decision in case of Vandana Global Ltd clearly stands distinguished, the entire foundation of the impugned order gets demolished - Cenvat credit is admissible on structural steel in light of the above referred judgments - the limitation aspect ignored. Credit allowed - appeal allowed - decided in favor of assessee.
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2016 (12) TMI 1374
Waiver of penalty u/s 11AC of the Central Excise Act - no deliberate intention - failure to discharge duty, on account of confusion - Held that: - for the penalty to be imposed, the alleged suppression of fact must necessarily be coupled with intent to evade payment of duty - MS plates and MS angles have been used as accessories of other equipments to make such equipments to be used more effectively. When once the audit has raised an objection on the ground that MS plates and MS angles fall under chapter 72 of the Tariff Act, but not under chapters 82, 84,85 or 90, the respondent has reversed the credit availed. The respondent has reversed it, no doubt, on its own, because of unavailability of adequate quantity of Bauxite. Be that as it may. It has also paid the interest for the delayed part of reversing the credit - there is no willful intent to evade duty and hence the question of invoking the penalty under section 11AC would not arise - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2016 (12) TMI 1363
Whether sale of energy to BSEB is regarded as sale? - Concealed sale of energy - Penalty - Held that: - the charging Section 3(1) of the Act when it speaks of levy of duty on either units or on the value of energy consumed or sold, has to be similarly read as the Constitutional Entry 53 providing the power to the State Legislature, to levy electricity duty either on the unit or on the value of energy consumed or sold for consumption - It is evident from the definition of value of energy in Section 2(ee) which is the computation provision brought in by amendment, after the earlier provisions and notifications had been struck down by the Court as providing no guidelines, that it provides for only two type of cases under sub-clause (i) that is, firstly, energy sold to a consumer by a licensee and, secondly, energy sold to a consumer by a person who generates energy - The petitioners are evidently not a licensee in the matters in hand, they are certainly not selling energy to the consumer; rather they are selling it to the BSEB, which is a licensee under Section 2(d) and which in turn sells the energy for ultimate consumption. Where the generator of energy does not directly receive payment of charges from the consumer, it can be covered within the purview of Section 2(ee) (i) of the Act. In this regard one should also bear in mind that the provision of a taxing statute should be strictly construed, and the benefit of any ambiguity must go to the assessee - Therefore, even on the ground of the applicability of the charging provision it has to be held that the charging provision under Section 3(1) read with the definition of ‘consumer’, ‘licensee’ and ‘value of energy’ as provided in the Act cannot be used to levy any tax on a generating company supplying energy to a licensee like the Electricity Board as in the present matter, as no tax can be computed in their cases - Decided in favor of the assessee.
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2016 (12) TMI 1362
Released of attached property - release of seized books - Sections 45 & 67 [4] of the Act - principles of natural justice - Held that: - the impugned orders passed under Section 45 and 67 [4] of the Act stand withdrawn on the statement made by the learned AGP. The relevant materials/documents/books of account seized in purported exercise of power under Section 67 [4] of the Act be returned to the petitioners within seven days from today, after copying the same and/or retaining copy of the same. In view of the above, no further order is required to be passed in terms of prayers made in para 8 [B] of the petition. Maintainability of petition at the SCN stage - Held that: - the present petition is preferred at the stage of show cause notice and ample opportunity shall be available to the petitioners to make submissions before appropriate authority and the appropriate authority is bound to consider the same in accordance with law and on merits - The petitioners are relegated to make appropriate submissions before the appropriate authority who had issued the show cause notice which shall be considered by the concerned authority in accordance with law and on merits. Petition disposed off - decided partly in favor of petitioner.
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